Kitson & Partners is a rare breed in the high stakes world of real estate management and development companies. While K&P has many development success stories, they are best known for taking on real estate projects in trouble and then quickly and efficiently turning them around. The K&P management team could best be described as being both aggressive and patient. While at first that may seem like a contradiction, it is in fact their unique style of business and recipe for success. They don't simply sweep in and make massive changes for the sake of change. Rather, as K&P CEO Syd Kitson explains, they carefully evaluate a project applying specific solutions to turn it around. As soon as that is accomplished, they dispose of the property with as much profit as possible for their clients.

The K&P relationship to their clients is to create a true partnership with aligned goals. These clients are most often lenders and land owners who find themselves with a problem project they are unable or unwilling to manage.

In addition to handling problem properties, K&P also purchases specific types of properties to hold for the long term. The K&P development team painstakingly analyzes hundreds of projects yearly, targeting under-performing properties that may offer turnaround potential. Once they acquire a property, they install proven K&P management expertise and methods to bring the property back to market.

K&P has an impressive track record with numerous success stories, such as the reclamation of Ibis Golf & Country Club in West Palm Beach. When Syd Kitson's management team took control of Ibis in 1996, the country club community was owned by Michigan National Bank and was financially moribund. Today, it is a stunning success and is the largest selling premier golf community in the Palm Beaches.

I sat down recently with Kitson & Partners Chairman and Chief Executive Officer Syd Kitson to find out the secrets to his company's success.

GS: Your method of doing business seems very different - and sounds a little complex. Exactly who do you work for?

Kitson: Well, we work for two different groups of people, really. In a number of cases we work for the original owners of under performing real estate properties...these are investors who have seen less than satisfactory results from their investment and are looking for change - and more importantly, looking for profits. The other group of K&P clients would be institutional lenders who suddenly find themselves as managers of struggling real estate assets. In many instances they have taken back a property, and are in dire need of someone to right the ship, so to speak. They look for us to quickly examine the situation, make immediate and aggressive changes in management, and get the project moving to a quick and profitable conclusion. With both of these groups speed and profits are the watchwords. By the way, I'd like to mention that in addition to working for our clients, we also purchase a limited number of certain types of assets for K&P ownership.

GS: You just mentioned that you look for "a quick and profitable conclusion." I also note that your company literature frequently mentions that K&P "manages properties to disposition." What exactly does that mean?

Kitson: Our expertise lies in managing, in a relatively short term, distressed real estate properties to disposition. In other words, we take over management of a project that's struggling, introduce sound, proven management principles, as well as marketing programs, and then reposition the project for a profitable sale. In many cases our clients want to quickly increase the value of their asset, and then divest themselves of that asset. That's what we do.

GS: How do you accomplish that?

Kitson: Our goal is to align our interest with the client's interest. Traditional management companies simply come in and manage properties for a fee. It's an open ended arrangement with them. Now, we'll do that if the client wants us to. But what we prefer to do is say, "Look, we'll get you as much money as possible and turn this thing around as quickly as possible, and get you out of this whole thing." We become a partner with our client, with our incentive to quickly turn over the property.

GS: So both sides win.

Kitson: Exactly. It becomes a win-win situation . That's why it is important for us to always align our goals to our clients.

GS: Who finds whom? Do project owners seek you out? Or do you have to turn over stones to find them?

Kitson: I guess it's a little of both. In many cases there are a group of asset managers at institutions whose sole responsibility is to figure out what to do with these properties. Most times they have either heard of us, or have had an experience with us, and call us in to take a look at the property. I guess you'd call us the extra-strength aspirin for the huge headache they have.

GS: Tell me about some of those success stories.

Kitson: Where do I start? I guess our biggest, most recent success is Ibis Golf & Country Club in West Palm Beach, Florida. When we arrived on the scene things were pretty ugly. A Michigan bank had taken over the property from the original developer, and sales were flat. Also, there was no ongoing development of the amenities that make or break a golf course community. Once we arrived we made fundamental changes relatively quickly. We completely restructured the land-sale program and accelerated cash flow in very short order. We completely changed the management of the club operation, and strengthened our relationships with local builders. We totally overhauled the advertising campaign, and turned what had been considered a negative into one of Ibis's most important assets. As a result of massive corrective action, a struggling community turned into a thriving success. Home sales have increased 200% in five years, homeowners have seen impressive appreciation in the values of their houses, we’ve completed our third Nicklaus family designed golf course, and we have achieved a very profitable turnaround.

GS: Another success story?

Kitson: Another big recent success is Cherry Valley Country Club in Princeton, New Jersey. This was a community in trouble when the original owners of the project asked us to come in. One of the big challenges at Cherry Valley was to improve the financials of the club itself. It was in a huge annual deficit situation, and we were able to turn it around, relatively quickly, into a break-even operation. Now, of course, anyone can cut expenses. Our goal, and our skill set, is to cut expenses through efficiencies, and increase revenues through improved service. We successfully turned the club operation around, while at the same time took over all home construction, and made the community profitable. I'm proud to say that Cherry Valley is a complete sellout.

GS : How do you turn these properties around so quickly? What are your magical management secrets? And l remind you I am taking this all down.

Kitson: Uh, oh. I can tell you all our secrets, but then of course I'll have to destroy your tape (laughs). No, all kidding aside, there is no voodoo or magic to our management principles. I'm fortunate enough to have a very talented group of senior managers who know the business inside and out. We also have very sound, time-tested methods of operating a business efficiently and profitably. And our expertise covers a wide range of specialties: home construction, home marketing, home sales, membership marketing, food and beverage, human resources, management information systems, community security, retail shopping centers, clubhouse operation, golf course construction and golf operations.

GS: That's a pretty extensive list. What else are you dipping your toes into? What else does K&P tackle?

Kitson: The bottom line is we develop properties - all kinds of properties. In addition to our management to disposition engagements, we buy, develop and operate master planned communities, golf courses, raw land, even commercial properties. We buy from bankruptcy trustees, startup real estate investors, and other owners of distressed assets. We also will manage properties long term. We buy and manage resorts. We are also homebuilders, golf course builders, engineers, marketers, financial advisors.

GS: Could you be accused of doing too many things?

Kitson: Actually that's one of K&P's strong points...an advantage we bring to the table. For example, take a master-planned community. Many of those disciplines are involved in these properties. You may have home building and selling, you have land, you have the commercial properties at the gate...grocery stores, dry cleaners, restaurants, etc. A whole mixed bag. If you can have one company come in that has the experience and expertise to handle all of the various issues associated with the property, it's a lot more cost efficient than hiring piece meal.

GS: Been there, done that, huh?

Kitson: Yea, I guess you could say that. For our clients, it's nice to know that we've been there before, and we know how to confidently turn a losing situation into a winning situation. From that standpoint, we've definitely "been there, and done that."

GS: Thanks for speaking with me today. I think I have a much better idea of what Kitson & Partners is all about.