December 18, 2017
Real Estate

Sentry’s entry into property management is a backstory about trust

R. Michael Levin, Founder, Commercial Property Advisors
Mark Duclos, Founder, Sentry Commercial
Gregory Seay

Real estate brokerage and property management are among industry sectors where relationships based on trust are highly coveted.

Take the recent investment by Hartford realty broker Sentry Commercial, for a minor stake in Commercial Property Advisors, an Avon property management firm started in 1984 by R. Michael Levin.

Levin, a lawyer who built a thriving enterprise initially as a developer before moving primarily into managing apartments, office buildings, shopping centers and mobile home parks owned by others, is 78 now but insists he is nowhere ready to retire.

However, for the purpose of succession planning and for the stability of Commercial Property Advisors and its landlord clients, Levin said he began several years ago thinking about consolidating his operation with that of a seasoned partner.

Three years ago, Levin opened talks with a longtime friend and realty associate, Mark Duclos, a veteran broker and Society of Office and Industrial Realtors (SIOR) member, who formed Sentry in 1991.

Though they knew each other, they said crafting a transaction that represented the best interests of both parties and their clients took some time. Three years of on-again, off-again discussions ultimately led to their Nov. 10 deal announcement. Neither financial terms nor Sentry's stake in Commercial Property Advisors have been disclosed.

"The most important thing for me is trust,'' Levin said. "It's important that I trust the people I do business with.''

For Sentry, the desire has long been there, Duclos said, to extend its reach into fresh markets through new services, like property management. At the same time, venturing into an unfamiliar real estate niche was daunting, he said.

"We wanted to diversify. We're all in complementary businesses,'' Duclos said of Sentry and Commercial Property Advisors. "We've always been reticent to go in because we didn't want to be in the day-to-day operations'' of managing properties.

Yet, the cross-sell opportunities that property management offers, Duclos said, are too lucrative to ignore.

For example, most commercial real estate across the U.S. and globally is in the hands of equity and pension funds, real estate investment trusts, and other institutional investors, many of whom lack time and expertise to do all that's necessary to effectively manage their properties. Institutional owners with Hartford area and Connecticut real estate are who Sentry Commercial and Commercial Property Advisors covet, Duclos said.

In terms of property-management responsibilities, there are tenants to recruit and keep happy by ensuring the heat, air conditioning and lights are on when they're supposed to be, and that the grass is mowed in summer, and sidewalks and driveways plowed in winter.

In return for those responsibilities, property managers like Commercial Property Advisors collect monthly or annual fees, typically 3 to 5 percent of a property's yearly gross receipts.

Brett Watson, a Commercial Property Advisors manager and Levin's "right hand,'' said that while firms like his mainly "monitor and protect the assets'' on behalf of landlord clients, today those clients insist on more. They also want, Watson said, their assets efficiently managed, and that usually means cost savings.

A typical Commercial Property Advisors-managed property, Watson and Levin said, is a 65,000-square-foot suburban medical-office building, with a fitness center and other amenities that make it accessible for long hours in a day.

For brokerage firms, offering property management provides a revenue hedge against slumping broker sales and leasing. Brokers, too, who manage properties usually have a leg up on the marketing when a landlord wants to lease or sell.

Duclos and Levin said they are moving purposefully yet slowly with their consolidation. Among other considerations for the deal, they said, was that Sentry lacked expertise in managing properties.

So, Commercial Property Advisors will continue to manage its property portfolio while simultaneously training a Sentry staffer who will eventually assume responsibility for that function, Duclos and Levin said.

Within a few years, according to the plan, Commercial Property Advisors will be fully absorbed into Sentry, whose broker staff, Duclos said, so far are on board with the concept.

"It's kind of a new barrier for us,'' he said. "It's more of a management challenge.''

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