The Geltmore Story
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it”. —Steve Jobs
Its beginnings were, in 1972 when Paul Silverman became the 6th man to be hired in the Dallas office of Coldwell Banker Commercial Brokerage Co, (the predecessor to CBRE).
After three years of good success doing retail leasing and land brokerage, Paul and his brother Harry, in 1975 formed an entity officially known as Geltmore Oil Co. to acquire an existing business on the Intercoastal Waterway in Surfside, TX. What was a essentially a tugboat filling station became a Texaco Marine distributorship that expanded into an oil field service business providing petroleum products to not only the marine business but also the off shore and on shore oil exploration business, It was here that Paul got his first taste of development by doing a dockside build to suit for BJ Hughes Co and a build to suit heliport for Air Logistics.
Geltmore Oil Co. in 1977
With the sale of the assets of Geltmore Oil Co. in 1977, Paul moved to Hobbs, NM to start a new chapter in his business and real estate career. While in Hobbs, he invested much of his proceeds from Geltmore Oil Co. into oil and gas opportunities, developed two mobile home parks with self-storage (Yeso Village and Sunrise Village), an office warehouse complex (Sunrise Business Center) and obtained his general contractors license to learn more about construction by doing a series of for sale residential projects (Peaches Lane residences). By 1979, he had traveled NM and West Texas extensively and found many commercial development opportunities that were not readily obvious to the local developers.
In June of 1979
Paul formed a partnership with the Trammell Crow Company, in Dallas (TCC) to exploit those opportunities and thus the next chapter in his real estate career began. The first property acquired was Plaza Princesa shopping center in Santa Fe which Geltmore still owns today. Next came the development of the Vista del Sol warehouse at 1480 Common Dr. in El Paso and then the acquisition of the rail served warehouse in Albuquerque at 8225 Washington which was lease to Smith’s Food Centers as their NM distribution center.
opportunities other than real estate also began to appear. This included the first investment in K-Bob’s Family Steakhouses which over the next several years turned in to an investment in 19 separate units in the Southwest. The first store was in Ruidoso, New Mexico in a leased building, but several years later, the real estate was acquired along with other land at the prime intersection in the town.
One of the most significant projects started in 1980 when First Interstate Bank put out an RFP for the re-development of their downtown Santa Fe location into what was then called First Interstate Plaza I & II, now known as 150 Washington and 125 Lincoln. Paul’s TCC partnership responded to the RFP and was selected to be the developer. The two-phase mixed-use development, took from 1980 to 1983 to complete which included financing the project in one of the most difficult financial periods of US history. A prerequisite to starting construction was the need to relocate the bank’s operations center so that the buildings on Lincoln street could be demolished before the underground garage could be excavated. The Marquez Place project proved to be the solution to that problem.
With several successful commercial projects in Santa Fe, a residential opportunity was uncovered. A home at 608 E. Palace Ave. came on the market which occupied a lot that extended all the way to Alameda. A plan was devised to add three new units with access from Alameda. The units were designed by Wayne Lloyd AIA, one of the more talented NM architects.
The period from 1983-1985
saw a series of projects around NM. These included the re-positioning of a ten story office building in Roswell, NM acquired from Sunwest Bank into Sunwest Centre, the acquisition of the former IBM building in Uptown Albuquerque that he leased to Gas Company of New Mexico as their corporate headquarters, the acquisition of two warehouses, 800 Comanche in Albuquerque leased to J.C. Penney and the Pan American Warehouse in El Paso that was a multi-tenant building.
From 1985 to 1987
the Albuquerque/Santa Fe market provided many retail and industrial opportunities. These included College Plaza South in Santa Fe on Cerrillos Rd., Four Hills Village at Central and Tramway in Albuquerque, the Balloon Park Warehouse at 8333 Washington Place in Albuquerque, San Mateo Theater and Restaurant Complex at San Mateo and Academy where the Geltmore offices were located from 2005-2016, The Shops at Mountain Run on Juan Tabo just east of Eubank in Albuquerque, the re-positioning and addition to Montgomery Plaza at San Mateo and Montgomery in Albuquerque, and the acquisition of the Pan American Industrial Center on I-25 south of Comanche in Albuquerque.
Tax Reform Act of 1986
Shortly after Congress passed the Tax Reform Act of 1986, at the end of the year, a major land and retail acquisition (Sierra Court at Mesa and I-10 in El Paso) was made that proved untimely. With the change in the tax law, real estate became much harder to finance and vacant land sales slowed to a crawl after a sale to Home Depot was completed. That trend continued through 1988 when it ground to a halt. Meanwhile in Albuquerque, the market was still strong and allowed the development of Midtown Business Center, a build to suit for the Atchison, Topeka and Santa Fe Railway Company in Journal Center, and a build to suit for Wal-Mart in 1988 at Riverwalk Marketplace on Albuquerque’s west side. And then the party ended.
the Trammell Crow Company metamorphosed from a development company to a brokerage and property management company. As a result, 183 of 186 project development partners left to do other things. This was the genesis of Geltmore as it was born in May 1991 as Paul severed his relationship with the Trammell Crow Company and began the next chapter of real estate development. Geltmore, Inc. as a newly formed real estate development company, had to adapt to the new realities following the real estate depression period of 1989 to 1992. The prior fifteen years of the business saw too much debt, too little equity and too much bank financing of real estate. In this new era, it took much more skill, deal making savvy and ability to structure transactions that would work.
Fortunately for Geltmore, the two prior chapters of his career prepared Paul for the these new challenges. The first fruit of that labor was the Bookstar project in Uptown Albuquerque which was executed under the most difficult of circumstances but got done none the less in October 1992. Similar deals were hard to find and Paul and his brother Harry teamed up again to acquire a sheet metal manufacturing business (Comfort Air Systems) in 1993 that they owned for two years. With the success of the Bookstar deal, Barnes and Noble asked Geltmore to do a build to suit for them in Phoenix at Metro Center Mall. In 1983, Geltmore was able to assemble two different properties, both on ground leases, demolished one building for parking and rebuilt to the other to the bookstore’s specifications.
Geltmore Land Ltd. Co. was formed by Paul and his brother to take advantage of land being disgorged from the RTC. A 31 acre tract of land with solid volcanic rock under about 6-8” of blow sand on top of the west mesa in Albuquerque was offered. After many attempts at creating a dense plan, an elegant solution was designed to overcome the very expensive cost of accommodating underground utility lines in the solid rock. Chamisa Ridge subdivision was constructed as a one acre view lot development which was very successful by offering a housing option which did not exist on the west side of Albuquerque.
Shortly after the construction on Chamisa Ridge was completed and the sales effort commenced in 1996, Geltmore was asked to consult with one of it’s lawyers family on a retail development in Grants, NM which turned into a commercial land development and sale to Wal-Mart and Denney’s in early 1997. This was a very time consuming, tedious exercise as the property had major ownership issues, transportation issues, and soil conditions issues that required creative solutions. However, the time ended up being well appreciated by all who were part of the transaction.
With the ascendancy of the computer, tech, and cell phone revolution of the late 1990’s, Geltmore participated with two Albuquerque design firms in 1998, to do a build to suit for Sprint PCS in Rio Rancho. Due to a very tight time line for delivery, and the lack of any tangible net worth of the tenant at the time, a very creative financing structure was devised to allow the project to move forward with the construction taking only 91 days in order to meet the needs of Sprint to get the facility open and operating to service a burgeoning book of new business.
On June 30, 1998
Geltmore got a call from the New Mexico Wal-Mart Real Estate Manager, with whom he worked with on their Grants location, to request a meeting later that day to review potential new sites on the west side of Albuquerque. He knew that Paul could solve difficult real estate problems through his diligence, hard work and creativity all of which were demonstrated in the Grants situation. The site chosen for the new west side store presented a myriad of such problems. These included an assemblage of 35 different tracts of land from nine different ownership groups composed of over 100 different individuals. But that was just the beginning of the problem as the more difficult problem to overcome was a handful of neighbors who just didn’t want the project even though the zoning had long been in place. After two trips to the NM Supreme Court, the land purchase was finally consummated in October, 2000 and West Bluff Center opened in late 2001 at virtually full occupancy.
The events of September 11, 2001
put a chill on the US economy and all but destroyed the US travel business. Paul had been studying the hotel business for about three years thinking that was a use that would work nicely with future mixed-use developments that he had visions of pursuing. In the fall of 2002, he felt that the travel market was ready to rebound and that it was an opportune time to buy a hotel to ride the wave back up. In November of 2002, Geltmore closed on the Park Inn & Suites in Santa Fe to provide it with a hands on experience in the hotel business.
In the meantime, the ten year lease Geltmore had signed with Bookstar in Uptown was about to expire and Barnes & Noble had already replaced the Bookstar (which Barnes & Noble acquired in the mid-1990’s) operation with a brand new Barnes & Noble store in Coronado Center next door leaving the Bookstar building empty. The building had originally been constructed as a furniture store and had been under parked for normal retail. With no multi-tenant retail on Louisiana for small tenants, Geltmore seized this opportunity by taking the existing building down to the slab and reconstructing a smaller building to better balance the parking ratio and to create tenant spaces suitable for smaller tenants. The strategy worked and a the very beautiful Uptown Park retail project was created and opened for business in October 2003. To further benefit the parking situation, at the time Geltmore closed on the permanent loan for the retail, it also acquired the Morgan Stanley building next door at 6701 Uptown Blvd.
Intense twelve years
After a pretty intense twenty three year run of development, Paul was in need of a vacation and spent a couple of weeks touring Italy with his good friend and former El Paso Crow partner RAD Morton. As they parted ways in Rome, RAD headed back to Australia by way of Singapore to check out self storage opportunities in the island nation city state. After a couple of months, an opportunity arose to create what was then the second self storage facility in Singapore and Geltmore was invited to participate. Geltmore jumped at the opportunity to have foreign development experience. The result was a very successful operation known as Store-It! self storage.
While working on expansion plans for Store-It! by working on a mixed use concept with credit retail tenants, an opportunity to explore retail development in China presented itself with a visit to Wal-Mart China. With the demographics and economic growth of China, it was simply too good of an opportunity to ignore. Asian Development Group LLC was formed with Geltmore being a co-founding member. A Rep office was opened in January 2005 and a long cultural learning process commenced. After visiting 28 different cities and looking at many deals over four years (with 25% of Paul’s time being spent in country), the right opportunity never surfaced. Beginning in October 2007, the Chinese government recognized that real estate development in China had gotten out of hand. To dampen the problem, a barrage of new taxes and regulations began to appear. In August 2007, when housing in the U.S. had gotten out of control, the market peaked, and was headed for a major real estate depression and in May of 2008, ADG closed its office with a desire to return to China at a future date when the market matures and becomes more rational.
Meanwhile, back in the U.S., the better anchor tenants still had some expansion opportunities available to them in third tier markets. Blue Mountain Junction shopping center in Roswell, NM was one of those opportunities. This project was under the control of an El Paso based general contractor who was unable to find financing. A joint venture was structured and the first phase was successfully completed. However, by the time the leasing stabilized in 2009, the next great real estate recession was upon us and the second phase had to be delayed until the downturn abates.
As Geltmore goes into the future, it has an outstanding community build development which it fully entitled in 3Q 2009 that consists of 562 home sites and 174,000 sf of retail known as La Plata Ranch in Farmington, NM and is a 8-10 year build out.
The Great Recession of 2009-2012 was a challenge to individuals and businesses throughout the country, and ours was no exception. But it was nowhere near as devastating to the commercial sector of real estate as the Great Real Estate Depression of 1988-1992. But then after going through two oil shocks in 1972 and 1974, 21.5% interest rates in 19981, a recession in 1983 and the uncertainties caused by Y2K in 1999. Nevertheless, in January of 2011 State Regulators closed First Community Bank and sold the financial institution to US Bank. While this was bad for us as shareholders of the bank, it turned out to be a great opportunity for us on the real estate side.
Due to the closure of First Community Bank, two of our commercial loans, Blue Mountain Junction Shopping Center in Roswell, and Park Inn and Suites in Santa Fe, were subsequently transferred to US Bank, in their “special asset” division
Around the same time, at our Uptown Park development, Morgan Stanley, who occupied a 23,000 SF office space, adjacent to our retail building, had a lease coming up for expiration and due to the overall economic climate, was going to relocate from our property into another office space and downsize significantly. The project had been financed with a CMBS loan in the early 2000’s, and communication began with the lender about the train wreck that was approaching. Eventually, we defaulted on the loan in order to create a work out with the special servicer, CW Capital, who stepped in. They were selling tranches of notes, and during our default period sold our note, as part of a larger package, to a vulture fund called Iron Point. Iron Point moved to foreclosure.
In the meantime, understanding that the 23,000 SF of office space was in the prime retail center of the State of New Mexico, it had significant opportunity to be redeveloped into retail space. We were negotiating behind the scenes with multiple national retailers to take the space, but we just needed the assurance that we could keep the property. Our legal team was able to lead us to a mediation with Iron Point in which we walked in with our Transactional Attorney and Bankruptcy attorney, and let them know that we were there to either make a deal, or bankrupt the special purpose entity that owned the property. In the background, we had a fully negotiated tenant executed lease, and financing lined up with a local bank to take out the current note holder subject to coming to an agreement with them. We were able to make the deal with Iron Point, immediately signed the lease with Total Wine and More, and closed our financing to take out Iron Point, and redevelop the Morgan Stanley Building. Disaster had been averted.
As US Bank was getting their arms around what they’d been forced to acquire from First Community, we started to try to line up financing to buy our notes back at a significant discount, which we successfully accomplished. What otherwise might have caused us to become another casualty of the Great Recession, we actually came out of it in a better position than when we went into it, positioning ourselves for the next chapter.
Imperial building in 2015/2016.
The next chapter begins in July in 2012 when David moved home to Albuquerque to be a part of the family business. The first week he returned, July 7, 2012, the City of Albuquerque issued an RFP for a mixed-use development anchored by a grocery store at the ½ city block along Silver Avenue between 2nd and 3rd streets in Downtown Albuquerque. Paul had worked on downtown revitalization efforts for many years, including trying to get a grocery store there for 15 years, but was never successful. The City of Albuquerque had a very capable staff in their Metropolitan Redevelopment Department (who administered the RFP and was responsible for deal making). Our proposal was selected in November of 2012, and we had to get to work. During the first six months of 2013, in our due diligence and negotiation of a development agreement, one major challenge after another arose. After a geotechnical study revealed a loose soils issue that would require removing all of the material 20 feet below the surface, the project had to be completely redesigned from a physical and financial standpoint. Given that the project was already in an underserved area that couldn’t be developed based upon market rents, the City’s manager of the MRA suggested pursuing low income housing tax credits to shore up the subsidy necessary to do the project.
Having never done any low-income housing development, we brought on a consultant to help us further understand how to structure a project of this type. We were able to model a financial structure that would work, and then engage the architectural design required to enter the project into the once a year cycle of 9% LIHTC projects thru the NM Mortgage Finance Authority. Submissions were due on 12.31.13, and projects awarded tax credits in April of the following year. During the fall of 2013, as we modeled the financial structure of the project, we made a strategic decision that we did not want to be in the business of owning low income housing.
In order to do that we chose to move forward with a condominium ownership structure that would bifurcate the ownership structure of the project where we only owned the retail space. We were able to come to an agreement with YES Housing to be our partner, whom we ultimately assigned the Tax Credits that the Project was awarded, and the project moved forward. What is now known as the Imperial Building, broke ground on January 13, 2015. The building was completed in April of 2016, and the Silver Street Market and supporting retail and apartments had a grand opening celebration on August 26, 2016. The addition of a grocery store in Downtown Albuquerque was deemed to be a catalyst for additional residential development in the Downtown Core, and that has proven to be the case.
While the Imperial Building was in development, we were testing a partnership with a firm that specialized in urban architecture and planning. In an effort to see how we worked together, before jumping into an expensive development project, and in an effort to provide some land development experience with David, we purchased 14 residential lots out of bankruptcy at the intersection of 14th Street & Coal Avenue in southwest Albuquerque. At this point four homes have been built, and ten homes remain. As the residential market tightens and lot supply continues to decrease, we plan to sell the remaining ten lots to home builders or individuals interested in a custom home.
Also during the time the Imperial Building was in development, Adam decided to relocate his family, from Orange County California back to Albuquerque in July of 2015. Paul’s mission was finally complete. He’d gotten both of his sons to boomerang home to work together and pass his knowledge on to the next generation. Now that the small office that had been world headquarters was at capacity, it was time get a little bit more space and a different vibe to move the company forward.
Given the commitment to Downtown Albuquerque Revitalization that the Imperial Building and the lots at 14th and Coal represented, we knew that our new office location needed to be in Downtown Albuquerque. In addition, David and Adam both landed in homes in a near Downtown neighborhood as part of that commitment to Downtown Revitalization. We then found a small 3,000 square foot office building at the corner of 2nd Street and Coal which we acquired. The building needed a lot of work to become modern office space, but also with the vision of the building being used as retail space to better serve the downtown area down the road. We moved in on November 1, 2016.