The Pink Flamingo Pub outside the University of Wisconsin-Madison was known for its cheap beer.
But for David Kim, the basement bar is where his entrepreneurial spirit was given a “chance.”
Kim cofounded Bascom Group LLC with two buddies he went to school with at Wisconsin: Jerry Fink and Derek Chen.
The trio landed one deal in the mid-1990s for a 68-unit apartment complex in Ontario that the company bought from now defunct Downey Financial Corp. of Newport Beach with an initial investment of about $250,000.
“We originally expected to manage about 300 units,” Kim said. “I didn’t think it would last long, maybe a couple of years. It’s tough for friends to work together.”
Bascom now owns nearly 100 properties and more than 29,000 apartments. Last year it was ranked the 33rd largest apartment investor in the country, with its complexes largely along the West Coast and in the Southwest.
Kim, who used Bascom as the springboard to launch 10 other real-estate related ventures, was one of five entrepreneurs honored at the Business Journal’s annual Excellence in Entrepreneurship award luncheon held March 17 at the Hyatt Regency Irvine.
$6 Billion in Deals
Bascom’s been involved in more than $6 billion worth of transactions, including the sale of more than 20,000 apartments, since its founding. Officials report that Bascom posted a leveraged internal rate of return of about 45% on its investments since 1996.
Fink is in charge of property acquisitions and sales. Chen plays a chairman role.
“We turned out to be a good fit,” said Kim, Bascom’s managing director and self-described “operating guy” who heads up company tactics, business development and real estate development.
Turning the first Ontario investment into a long-term business ended up working “once we put our heads to the grinder, day-to-day, and looked at (the company) incrementally,” Kim said.
He also had a mission for the company to make apartment complexes a better place for families to live.
“I grew up in apartment communities in Chicago. I remember the landlords not being so friendly,” said Kim, whose Korean family emigrated to the U.S. from Germany when he was a child.
Bascom’s motto is “we run communities, not apartments. And they’re not tenants, they’re residents,” Kim said.
Programs for residents include financial workshops, tax assistance, job fairs, tutoring and after school mentoring and fitness classes.
“We might let a (teacher) take a unit for a nominal fee, in return for tutoring kids,” Kim said.
When the housing market turned south a few years back, other owners cut back or eliminated their social outreach programs. Bascom opted to increase its offerings, and that investment has been paid back in terms of increased resident retention, satisfaction and referrals, according to Kim.
The privately held company reported last month that its year-over-year operating income grew by nearly 12%, or $3 million, last quarter, despite declines in market rents of about 8.6%.
The company’s current investment strategy during the downturn is “hold and stay,” Kim said.
“You only lose money if you’re forced to sell,” he said.
The company invests money from pension funds and unions. Kim earlier worked investing money for the State of Wisconsin Investment Board. He also worked in a development unit of Walt Disney Co.
The company’s started up 10 other operating companies. Businesses include Irvine’s Premier Business Centers, an operator of executive office suites that counts about 50 locations, and the Realm Group LLC, a Newport Beach-based developer of housing and commercial projects.
Not all the companies have panned out. A business designed to buy and manage shopping centers in largely Latino neighborhoods had trouble finding interested buyers. Another company that aimed to develop properties in China faced too much resistance to start in earnest, according to Kim.
Disappointments haven’t discouraged Kim from taking on more deals.
“This is an amazing country,” Kim said. “No one ever asked me what my father did for a living. All they care about is if you can execute your plan.”
