Lavander's investment is coming up all roses

     Friday, January 2, 1998

Developer sells holdings to newcomer Sentinel Real Estate Corp.

Minneapolis / St. Paul Business Journal - by Dirk Deyoung Staff Reporter


Just 11 years ago, John Lavander formed a company and developed his first multi-tenant industrial building in Plymouth, using his personal savings while taking on partners.

Last week, Lavander sold that building as well as 11 others that he developed since starting Plymouth-based Caliber Development in 1986. Neither Lavander nor the buyer, Sentinel Real Estate Corp. of New York, would disclose the sale price. But observers estimate that it probably fetched at least $30 million, or $60 for each of the 557,948 square feet that traded hands, based on recent sales of comparable property.

Sentinel, which acquires property for pension funds and other institutional investors, entered the Twin Cities market with the purchase. "We saw it as an opportunity to acquire a high-quality portfolio and establish a presence in the marketplace," said Ed Simon, Sentinel spokesman.

Caliber, which self-manages and signs tenants for its buildings, will assist Sentinel in managing the properties on contract while developing new office/showroom buildings in Plymouth and Maple Grove, Lavander said.

People in the local commercial real estate market point to Lavander as a developer who started with practically nothing and worked diligently at building a business that is now paying off significantly for him.

"John has built a wonderful portfolio, and he's capitalizing on it near the peak of the market, if not at the peak," said Eric Bjelland, a senior associate in investment services at Bloomington-based United Properties.

Lavander succeeded, making it through the industry's downturn during the late 1980s and early 1990s, by staying focused on a plan and staying closely involved with his properties, said Terry Kingston, principal at Eden Prairie-based First Capital and the broker who marketed the properties for Lavander. "He didn't over-finance his properties. He weathered the storm," Kingston said.

Lavander said his plan has been to construct high-quality buildings in the Plymouth area, where a lot of executives live. He also focused on leasing to small businesses, many of which use 3,000 square feet or less. "I love small business. That's where the growth has been. It's a good diversity of risk in each portfolio," he said.

When his tenants needed more space, Lavander would often build it for them, using a tenant's commitment to a new building to leverage bank loans for construction. If he didn't build new space for his tenants, they'd go elsewhere, he said. "Building buildings is almost a defensive strategy."

After being "moderately creative" in securing financing for a few years, Caliber got big enough where that was no longer necessary. "After a while you can start relying on your balance sheet more and more and get away from partners," he said.

While building his business, Lavander also built a reputation in the northwestern suburbs. "He has a brand name," Kingston said.

Anne Hurlburt, Plymouth's community development director, agreed. "John's buildings are all very attractive and have a high-quality look to them. They're flexible kinds of buildings that seem to fit very well with the market," she said.

Caliber's buildings in Plymouth include Parkers Lake Pointe I, II & III, which comprise 127,000 square feet on 21st Avenue North and Northwest Business Centre, which is 70,000 square feet on Xenium Lane North.

The buildings are different than almost anything else. While they are considered office/showroom buildings, which generally combine warehouse space with a significant amount of office space, Caliber's buildings have more office space than most, said Matt Van Slooten, managing director of investments for Minnetonka-based Carlson Real Estate Co.

Lavander might differ from the rest of the crowd in other ways, too. While his business has provided him with financial success, he has not changed his lifestyle, living in the same house, driving the same car, and donating a lot of time and money to charity, Kingston said. "John recognizes that his business doesn't define his life. You'll never find a nicer guy in the business."