The compactly built, ruddy-faced Robert “Bob” Flaxman throws off an unblinking stare that recalls another Bob,Bob Conrad, whose 1970s-era Duracell commercials dared you to knock the battery from his shoulder.
Extending his arm, Flaxman reveals knotted biceps that give him the look of someone who not only could cut a deal but who also could stand on the front line and help construct the buildings he develops.
Flaxman heads up Crown Realty & Development Corp., the Irvine-based commercial development and management firm he formed seven years ago with partner Jamie Sohacheski.
Crown’s developments include Anaheim’s Stadium Crossing, Venice Crossroads Retail Center and the Wateridge Office Campus in Playa Vista.
These days, Crown is busy buying buildings. The firm spent $120 million acquiring properties last year and is on pace to match that this year, the partners say. In all, Crown puts its portfolio at $380 million and expects to see $20 million in revenue this year, up a third from 2000. Earlier this month, Crown paid $33 million for properties in Brea and Colorado Springs, Colo., totaling 320,000 square feet and valued at $33 million. In a deal with Irvine-based Legacy Partners, Crown acquired two Brea buildings spanning 193,000 square feet in a deal pegged at $25 million. The site is home to the North American headquarters of Perrier, a unit of Nestle USA.
In Colorado Springs, Crown paid $8 million for a 126,200-square-foot logistics facility that includes land for future development. The site currently is leased to Entertainment Publishing Inc., a national distributor of entertainment coupon books that offer discounts on restaurants, movies, sporting events, hotels and other activities.
“Our primary portfolio focus is on properties in the Los Angeles Basin, with emphasis on Burbank, West Los Angeles, Beverly Hills and Orange County,” Sohacheski said. “When we finished our analysis of the market conditions in Colorado Springs, we made a decision to expand the geographic base of our portfolio to include property in this growth market.”
The partners,who had different experiences in the late-1980s real estate crash,say signs of economic slowdown aren’t altering their plans.
“Our strategy is to buy deals that make sense to us,” Flaxman said. “We have been aggressive in the past and will continue being aggressive in the future, even with the slowdown in the economy.”
As president and chief executive, Flaxman is Crown’s point man. Sohacheski is the silent partner. And while the buck stops with Sohacheski, he is content existing outside the spotlight’s glare.
The two have worked together on various projects since 1988 and decided to formalize their partnership in 1994.
“I had no formal training in real estate,” said Flaxman, who has a background in chemistry. “I realized you could make a living, but you could never arrive at wealth (in chemistry). I realized you needed to be an owner, and I’d always had an interest in real estate.”
Flaxman’s first commercial real estate venture in 1979 was in Fergus Falls, Minn. There he developed and managed a 500,000-square-foot mall. Flaxman said he learned something from that early project and his five-year association with American Investment Group: “In real estate, you can create wealth and maintain it and the tax laws in this country are geared toward real estate ownership,” he said.
Flaxman put that lesson to test in the late-1980s,the golden era of wheeling and dealing. He had a nose for deals, only he didn’t smell the recession coming on. He soon found himself $80 million in debt and avoided bankruptcy by giving back property.
“I learned about adversity,” Flaxman said. “It made me more conservative and taught me to make deals on the front end.”
Around that time, Flaxman met Sohacheski, who had amassed a fortune in redevelopment projects in downtown Los Angeles. Born and raised in Mexico City, Sohacheski earned an engineering degree from the National University of Mexico and a master’s in business administration from Stanford University. He then relocated to Los Angeles and founded Crown Development, a real estate company independent of Crown Realty & Development.
Flaxman and Sohacheski first worked together in 1988 on the development of an Albertson’s Inc. grocery store in Northern California. After weathering the early-1990s recession, Sohacheski presented Flaxman with a plan to develop more grocery stores and retail complexes.
A 400,000-square-foot shopping center in Chico got the ball rolling. Then the Venice Crossroads Project put Crown on the map. The firm had to deal with different factions from neighboring Culver City and Los Angeles. There also were environmental issues.
“About the only problem we didn’t tackle was wetlands,” Flaxman said.
After four and a half years and $20 million of their own money later, Crown finally acquired the land needed to develop Venice Crossroads.
Retail remained Crown’s focus until 1996 when the partners spotted a 12-acre parcel of mostly vacant land in Anaheim. This time, the focus would be office development, the first such venture for either Flaxman or Sohacheski in years.
During the 1980s, Sohacheski sought out rundown buildings in old parts of Los Angeles,a tactic the partners used in their 1996 acquisition and development of Stadium Crossing near Edison International Field. Sohacheski cut his first deal in 1978, acquiring a building on 7th Avenue and Spring Street.
“We converted the bottom floor into retail space, and the rent we were able to charge covered the debt load of the building,” Sohacheski said. “We were realizing a 30% cash flow.”
But Sohacheski got out just in time: he sold his entire Los Angeles portfolio just before the downturn hit in 1987.
“We have been very, very fortunate to have experienced such good timing. We have not been greedy,” Sohacheski said.
Timing also was on the partners’ side with Stadium Crossing. The Rockefellers bought the land in 1991 for $10 million. But a downturn in the economy,and uncertainty about the future of the Anaheim Angels and the expansion of the Disneyland resort,caused the property to flounder.
Crown took its chances and paid $4 million in 1996 for the plot. In doing so, the company enlisted an institutional investor for the first time and partnered with Ross Perot Jr.’s Hillwood Development. Then, things clicked in Anaheim.
Disney bought the Angels and decided to build California Adventure in Anaheim instead of Long Beach. The city signed off on bonds to improve the area. Crown scored a big coup on the 164,000-square-foot office building when Hewlett-Packard Co. moved its Fullerton operation to the site, taking up 60% of the space. A year ago, Crown sold Stadium Crossing to a Taiwanese investor for $36.2 million.
“We were in it for four years, and it was a good amount of time,” Flaxman said. “It was a home run and we’re ready to move on.”
Crown now is focused on the 330,500-square-foot Wateridge Office Campus and the 76,467-square-foot phase one development of Gateway at Burbank, among others.
In August, Crown paid $50 million to buy the first phase of Wateridge from Legacy Partners and The Goldman Sachs Group Inc. The 330,000-square-foot first phase is 99% leased to American Express Co., Traffic.com and others. The first building in the second phase, a 200,000-square-foot, five-story tower, is set for completion in October.
The company has brought aboard a notable new hire in Scott G. San Filippo. As senior vice president of operations, San Filippo is responsible for the daily operations of Crown Realty & Development, which includes projects in Burbank, West Los Angeles, Colorado and OC. He’s also overseeing management properties in Beverly Hills, Burbank, Los Angeles and Crown’s new corporate headquarters in Irvine near John Wayne Airport.
San Filippo previously worked as vice president of operations for Garden Grove-based Abbey Company, a building owner and manager. Previously, Crown brought on Jim O’Neil, a longtime Burbank developer, as senior vice president of the construction operations. n
