The financial crisis was in full effect, and the real estate boom had gone bust. For college buddies Al Goldstein and Steve Joung that was opportunity knocking in 2009.
They answered by launching Chicago-based Pangea Properties, a real estate investment trust that buys, restores, rents and manages distressed buildings in urban communities.
Pangea, which ranked No. 42 on Inc. magazine’s 5,000 fastest-growing companies this year — No. 1 in Chicago — has watched revenues soar from $447,000 its first year to $28.3 million last year. It expects to hit $55 million this year. What began as a three-person operation today employs roughly 360 people.
“Our goal initially was really pretty small,” says CEO Goldstein, 32. “We were focused on Chicago and we really had a two-year window because that’s what we believed the opportunity set was going to look like. That was almost five years ago.” They now own and operate more than 9,000 apartment units in several cities.
In the last four years Pangea has invested more than $150 million to renovate more than 250 distressed properties throughout Chicago’s South, Southwest and West sides and has expanded to add properties in Baltimore and Indianapolis, aided by $60 million in equity funding it attracted.
What has propelled growth?
“We stumbled upon a market that is gigantic with relatively limited competition because the larger institutional players really have not been able to crack the egg in terms of how to manage smaller buildings in urban markets,” Goldstein says. “We spent the last 4½ years building a business to do just that.”
The company made the crucial decision early on to manage their properties instead of using third-party managers — a key factor in its success, Goldstein says.
That meant “we had to build everything from scratch, to build an entire property management platform, to find, hire and train property managers, leasing agents, maintenance personnel, janitorial personnel,” he says.
COO Joung, 33, says having a community focus has been a priority for the company and that has also paid off at Pangea, which received the Chicago Association of Realtors 2013 Good Neighbor Award.
“We have neighborhood offices in all of the communities we serve,” Joung said. “Our property managers, they’re face-to-face property managers. … If there’s something our residents don’t like, they come into our offices. Understanding our residents, having employees that are from the neighborhood, that’s stuff that you really can’t replace.”
The duo previously launched and ran CashNetUSA, an online lending company, now Enova International, which they sold in 2006 after growing revenues to $200 million.
Their goal at Pangea is to triple in size to 30,000 units in the next 10 years and have a presence in 10 cities.
“We’re trying to create the Ford Motor Co. of real estate, to build an assembly line of how you handle distressed buildings and make them something that’s a proud part of the community,” Joung says.
ABOVE: Photo of Al Goldstein and Steve Joung by Heath Sharp.