Phil Ruffin describes this company’s strategy of purchasing distressed properties in prime locations.

You could say that real estate is in Phil Ruffin’s blood. His career began in the early 1980s with one convenience store/gas station, and by 1993, he had accumulated 65 in four states. Since then, Ruffin has owned property in various industries, including a dairy, which supplied the convenience stores with fresh milk; a bank that was sold to Bank of America several years ago; and several gaming properties.

“The business went from $20 million to $1.5 billion,” said Ruffin, president of the Ruffin Companies and sole owner of all its real estate holdings. Today, Ruffin Companies owns eight Marriott hotels from Gaithersburg, Md. to Long Beach, Calif.; more than 4 million square feet of commercial real estate, including office space, shopping centers, and strip malls, primarily in Kansas and Oklahoma; 65 oil wells; and a race track/casino in Wichita, Kan. Ruffin also owns Harper Trucks, Inc., the world’s largest manufacturer of two-wheel hand trucks.

Trumping the competition
Ruffin’s strategy has been to purchase distressed properties in prime locations, spruce them up, and make them profitable again. For instance, Ruffin Companies purchased a 300,000-square-foot Pizza Hut building in Wichita that had been empty for about four years. After injecting some capital into it, Ruffin Companies leased it to a major tenant. The company also recently purchased a Bank of America building in Wichita and is in the process of filling it up.

Phil Ruffin

Most recently, Ruffin entered into a joint venture with Donald Trump to build the Trump International Hotel and Tower in Las Vegas. The 2 million-square-foot tower was constructed on a portion of the New Frontier Hotel and Casino property, which Ruffin purchased in 1997. At the time, employees of the New Frontier Hotel and Casino had been on strike for six and a half years—the longest running strike in US history. Ruffin worked with the union and immediately settled the strike to get the hotel back on its feet. “It was simply a matter of paying the employees and getting them back on the job. We converted the property from a $2 million-per-year loss to a profitable venture,” said Ruffin.

But the New Frontier Hotel was always considered a holding pattern for Ruffin Companies, which had bigger plans in mind. “We purchased the hotel because the surrounding land is some of the best in Las Vegas.” In 2007, Ruffin sold the New Frontier Hotel and 34 acres of property to ElAd Properties for $1.24 billion. He held on to seven acres, three and a half of which have been dedicated to the Trump International Hotel and Tower. The remaining acreage is slated for a second tower, which will break ground next year.

In some cases, Ruffin’s knack is making existing businesses better. For instance, when Ruffin purchased Harper Manufacturing from a retiring friend in 1981, he had no intentions of re-selling the property. Instead, he invested his money in automation. Today, Harper Manufacturing’s hand trucks are assembled by robots. “A welder can weld 35 hand trucks a day, but a robot can do 165 in the same eight-hour shift, substantially bringing the cost of product down and allowing us to remain competitive,” said Ruffin. “I purchased Harper because I knew I could turn it around.”

Staying connected
With dozens of properties across the United States, a major challenge for Ruffin is keeping all of his employees connected. Ruffin Companies employs 1,000, only eight of whom work in the corporate office. Each hotel has a general manger and an assistant general manager, and each commercial property has a building manager and engineer on staff. “They have all been with us a long time and know what our strategies are and report in to my office every day,” said Ruffin, who motivates employees by offering end-of-year performance bonuses.

Ruffin’s children’s involvement in the company keeps the lines of communication open as well. Son Chris runs the real estate department, while Phil Jr. manages the race track/casino in Wichita. Daughter Michelle is the general manager of the Wichita Marriott. According to Ruffin, his legacy will be passed to his children some day—just not any time soon. “Kirk Kerkorian is 90, and he is still buying and selling businesses,” Ruffin laughed.

The employees at the company’s Wichita headquarters are charged with reinvesting the company’s money. “We go through the list of available bonds—some taxable, some nontaxable—to stay as liquid as possible. Those investments alone can earn $50 million to $60 million a year.”

Looking ahead
Looking to the future, Ruffin is considering possibly getting back into the gaming arena. The company has sold all of its gaming properties but is working with the Kansas legislature, senate, and governor to legalize gambling in the state.

Ruffin expects the company to continue making cash purchases for a while, but at some point, he would like to purchase a large company. “With this kind of equity, we could probably buy a $5 billion corporation,” he said. “It would have to be in an industry we like and something we see a profitable future in. It wouldn’t be a distressed property, so it would be a dynamic move for us.”