A flurry of W2s and 1099s is about to descend on us this tax season. Once, they might have been headed for Andy Glick’s desk.
If he had stuck with accounting, Glick no doubt would be pulling down a high-six-figure salary and a bonus as a partner with one of the big accounting firms. But Glick is blessed with an entrepreneurial gene. It kicked in during the 1980s, when he was earning $43,000 a year as a 20-something number cruncher at Coopers & Lybrand, then one of the “Big Eight.” In those days, his eyes widened as he filled out income tax forms for Washington’s real estate moguls.
“I saw how entrepreneurial they were, how creative their minds were,” said Glick, 50, a University of Florida graduate and the son of a Miami obstetrician. “My job was structured and very methodical. I saw their tax returns and the wealth they had accumulated. How they lived. It spoke to me.”
The accountant-turned-real estate entrepreneur now owns shopping centers across the mid-Atlantic region, including Fredericksburg and Dulles Town Center in Sterling. He and his partners have also invested in distressed properties, with financing from a group of wealthy local families.
If you want to control your destiny and create wealth, you probably need to own something. You can make a decent living as a salaried employee — no complaints here — but if you have the nerve and you think big, starting a business offers the possibility of significant rewards.
“The carrot is always dangling in the real estate business,” Glick said. “To be your own boss is the American dream. Thankfully, I had a wife who could support our family while I chased the dream.”
Glick and his partners operate under the Rock Creek Property Group brand. It has two parts. One is a long-term portfolio with 16 legacy properties that Rock Creek has never sold. Those 16 properties include shopping centers, apartment houses, warehouses and office space.
The returns on those legacy properties vary. The company had to scramble after the 2007-08 financial crisis, hiring a manager to hold the hands of tenants who might be tempted to bolt. Despite some down years, the majority of the legacy properties currently show a profit, Glick said.
An important part of Rock Creek’s legacy strategy is buying what the company calls retail “shadow centers.” Rather than pay top dollar to own a strip center anchored by a Giant or Safeway supermarket, the partners bought the strip center across the street, piggybacking on the anchor’s traffic but without the expenses of the higher-priced real estate.
“We like to feed off the bigger guys,” Glick said.
The other side of the business, which is where Rock Creek is focused, is a $25 million “opportunity fund” that buys and sells distressed properties. Rock Creek started the fund in the middle of the recession so it could take advantage of the downturn. The fund has six properties, and Rock Creek plans to sell some this year.
The fund follows a plan similar to a private equity model, in which the investors get back their money, with interest and profit, within seven years. The firm is contemplating raising money for a second fund this year.
Properties purchased for the opportunity fund tend to be troubled. Five of the six were either acquired from banks that had seized them or purchased in foreclosure auctions.
“There has to be some juice in it . . . some hair on the deal,” said Glick, who has a full-time construction manager to oversee the rehabilitation of the distressed properties.
The company typically puts up $1 million to $5 million in equity on each deal in the opportunity fund, and it buys only what he calls “off-market properties.” That means Rock Creek hunts for properties before they go on the market, which allows the company to avoid expensive public bidding.
“We have never bought on the public market,” he said. “We buy it at a lower [cost] than the competitors.”
He has what he calls three “hunters,” who operate much like reporters, searching back channels for real estate deals.
The hunters pore through bankruptcies, read the tiny print in newspapers, take people to lunch and knock on doors. They call accounting firms, lawyers, bankers and anyone else who might know of a landlord behind on his payments or a bank stuck with something it doesn’t want.
When Rock Creek sees an opportunity, it pounces.
“You have to close. You have to go hard immediately,” Glick said.
When the former Ben Franklin School, at 16th and L streets NW, went up for auction last year, Rock Creek arrived at the auction with a $500,000, nonrefundable check in hand. The company bought the $4.7 million property within 30 days. Once it’s fixed up, the partners hope to sell the property to an embassy or an association for a handsome profit.
Glick’s foray into entrepreneurship has yielded more than just real estate returns. He lives in the tony suburb of Potomac, and his wife was able to quit her successful legal career and become a yoga instructor. He hikes the Alps, skis the slopes in Colorado, and shares to-die-for tickets to the Washington Nationals (a few rows in front of me). He is also a longtime Wizards season-ticket holder.
Glick, who is friendly and likable, is part of a cadre of well-connected Washington real estate entrepreneurs who have networked to fund their growing appetite for real estate deals.
He met real estate broker Alan Zuckerman through a woman he was dating back in the late 1980s, and he eventually decided to leave accounting to join Zuckerman in the brokerage business. He did not collect a paycheck for 18 months, until the partners earned a $50,000 commission on the sale of a shopping center.
After matching commercial real estate sellers and buyers for several years, Glick convinced Zuckerman that they should become real estate owners instead of just brokers. Glick would be the financial engineer, and Zuckerman the marketer.
They found investors and bought a $4 million strip center in Fredericksburg, which they still own. Glick and Zuckerman took in three more partners, and the five founded Rock Creek in 2002. Rock Creek’s day-to-day operations are run by Glick and Gary Schlager, working out of offices on Wisconsin Avenue in Bethesda and on Connecticut Avenue NW, just south of Dupont Circle.
Despite his success and substantial real estate holdings, Glick said he might have done better. He regrets that he didn’t sell everything just before the financial crisis hit in 2007.
Don’t we all?
For previous Value Added columns, go to washingtonpost.com/business.