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 As a whole, the recent economic downturn has proven turbulent and relentless, but for a fortunate minority, it has been the source of big opportunities. When the bottom fell out of the lending market in 2008, individuals and businesses across the country were forced to put many of their projects and plans on hold, and the real estate market took a huge hit.
Right now, most companies are still feeling the heat, but Edward Kobel said DeBartolo Development isn’t one of them. In fact, Kobel and his team are taking full advantage of the environment that has been created, which is a great buyer’s market.
“We try to run the business in light of what is happening in the global and US economies,” said Kobel, who serves as president and CEO of DeBartolo Development. “It’s a great time to be a buyer because there are so few interested parties in the market. There’s a lack of financing right now, and that created a disconnect between the bid and ask on most properties, which means we are able to buy them at a significant discount.”
Some might say “a significant discount” is an understatement. Recently, Kobel and his team bought a note on a 408-space apartment building in Fort Myers, Fla. The note secures the building for the organization and allows the team to foreclose, and eventually own, the property. The building was originally financed to the tune of $80 million; Kobel and his team paid $25.5 million. 
Kobel said the property is in a prime location, situated next to one of the largest regional hospitals in the area.
It’s also in close proximity to the bridge connecting the mainland to Sanibel Island, which means the surrounding region is densely populated with hotels.
“Sanibel is full of hotels, and all the people who work at those properties need a place to live,” Kobel said, noting the apartment building is in a great location, in terms of their commute.
A second property DeBartolo Development recently invested in is a 165-acre plot of land in Tampa, Fla. As
with the note on the apartment building, Kobel and his team were able to gain a significant discount because of the market.
“The plot was purchased three years ago for $185 million, and in the past three years, a significant amount of developmental work has been done on it,” Kobel said. “We were able to secure it for just $30.5 million.”
Reaching out
DeBartolo Development, which has been in operation for seven decades, is a family owned business, and as such, its ownership has always been very philanthropic. The owners consistently donate a portion of the company’s profits to charity through a nonprofit entity called The DeBartolo Family Foundation.
In addition, the company set up a community re-investment fund to help its team acquire, renovate, and reposition retail shopping centers located in low-to-moderate income neighborhoods throughout the US.
“We wanted to find an area in which we could use our core competencies, which include real estate acquisition, development, and redevelopment, to impact urban communities in a significant manner,” Kobel said.
“We use our funds and our skills to help improve existing properties or develop new properties in low-income areas,” he continued. “By doing this, we create a number of jobs for the people living in that area. We have found several significant partners throughout the years willing to invest in these projects.”
Last year, DeBartolo Development acquired a property in Tampa that had been run down under the previous owner. After purchasing the property, the company’s team added lighting to the outside and revamped the interior. In less than a year, Kobel and his team were able to lease out the majority of the space, creating hundreds of jobs, and the area’s crime rates have dropped.
This is just one example of a project the team has worked on recently. To date, DeBartolo Development has worked in several regions of the US. Although it’s focused in the coastal regions stretching from Boston to Florida and Vancouver to San Diego, Kobel and his team are also working on a project in Kapolei, Hawaii.
The project encompasses a total of 1.6 million square feet and includes an open-air mall, two office buildings, and two hotels. Kobel said that once the project is complete, the area is sure to become a new hub for the area’s growing community.
Part of a team
Per its operating model, DeBartolo Development recognizes each of its employees as a key asset. The company’s senior managers are equity owners on all of the company-funded projects they are involved with. This means each manager’s compensation is tied directly to his or her work.
According to Kobel, this method has worked well for the company and the senior managers. “It has given the senior managers an opportunity to feel like they’re part owners, and it really gives them a sense of remuneration, seeing their hard work pay off,” he said.
“Of course, it also makes my job easier. When the employees are part of the bottom line, they’re more motivated to work hard all the time,” Kobel added.
Thus far, the model is working great. The staff is nearly identical to the one hired when Kobel joined DeBartolo Development’s team six years ago, a great indicator that business is booming and employees are satisfied.
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