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Q&A with Allegiancy CEO Steve Sadler, Part 1

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Q&A with Allegiancy CEO Steve Sadler, Part 1

By: Baker Lynn

February 15, 2015

Steve Sadler, CEO of Allegiancy, a Richmond-based commercial real estate asset manager, answers frequently asked questions about his ever-changing industry, and what his company brings to the table.

Allegiancy is changing the business of asset management for commercial real estate owners and investors. With an advanced technology platform and singular focus on serving as the owners’ advocate, the company brings fresh vigor to an often poorly understood business.

Here’s how, in Steve’s words:

What is the history of Allegiancy? What does it do today?

My partner, Chris Sadler, started in commercial real estate in the mid-1980s, and I started in the early 90s doing investments and syndications for institutional investors. In 2005, we entered the industry as direct participants, rather than employees of large companies. We founded our predecessor company, Real Estate Value Advisors and our management firm, REVA Management, which has now become Allegiancy.

Allegiancy is a pure-play, fee-for-service asset manager. We operate commercial office buildings for the benefit of the owners. Functionally, we are the guardians at the gate to protect those owners’ interests. We make sure that their properties are being run as efficiently and effectively as possible to maximize the return they get on their capital.

What qualities do you seek in potential clients, and on the flip-side, what qualities do you and Allegiancy have that prompt potential clients to select your services?  

Functionally for us, we look for the opportunity to serve an investor in commercial real estate – someone who owns anywhere from one building to a portfolio of buildings. We have several clients who are considered small players in commercial real estate – they may own a single 50,000- or 100,000-square-foot building. And we have clients that are large institutions, with millions of square feet under management, in which we may manage part of their portfolio.

The central element we look for is the opportunity to add real value, so we can deliver a meaningful improvement in bottom line performance for that investor. That covers a wide array of assets and geographic locations.

Allegiancy has developed a sophisticated technology platform that leverages our performance, while many of our competitors are still operating with pencil-and-paper technology platforms. So when we take over asset management, it’s very rare that we don’t find meaningful savings and revenue potential in a property.

Allegiancy talks about integrity being your best property. Can you explain why that’s important, especially now after all the financial debacles of the housing bubble and advisors scamming their clients?

For most commercial property owners and investors, their investment is physically not near them. So they’re investing in assets that are far and wide. Because they can’t keep their eyes on their properties, these owners need someone looking out for them.

That’s why you as an owner have to have a partner you trust to keep your best interests in mind – a partner who will do the hard things on your behalf, and sometimes a partner who will give you the bad news you don’t want to hear.

For us, integrity is about telling the truth and working hard for a client as if it is our own money – as if it’s our daughter’s college tuition that’s at risk.

For the most part, there’s been a huge disconnect between the service providers and the people whose money is at risk. What we see day in and day out is that investors aren’t getting a fair shake a lot of the time. They really are being taking advantage of because they’re not able to pay close attention to their property.

In the real estate business, it’s all too common for a property manager to write a $10,000 check to replace an air conditioning system, when a $1,500 check would have solved the problem. But for a lot of property and asset managers, it’s not their money so they’re not as concerned about the efficient use of it as we think they should be.

A big differentiator for Allegiancy is that we operate on a different ethical plane, where we’re looking at every dollar, every capital expense, every bit of income, and every operating expense, as if the dollars were our own. We are weighing expenditures carefully to make certain it’s the highest and best use of a limited resource, and that’s someone else’s money.

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