From Dallas, take Route 175 southwest, turning through the city of Kaufman, descending at Cedar Creek Reservoir, passing through Eustace, Mabank, Malakoff, and a few more turns before finally arriving in Star Harbor, Texas.
When we finally counted the population, it was 482 people.
On a good day, it's about an hour and 15 minutes from Dallas. That was long enough for four-year-old Graham Soden to hear his father's work call on the way to his family's lakeside home.
When Graham's father, Kip, bought the property, there was no indication that tapping these phones would help his son's future career in real estate. There was also no indication that he would join his father's business.
Almost 25 years later, Graham, 29, has joined his father's company, founded in 2010, and is working on the eventual acquisition of real estate platform RREAF Holdings.
Kip, 61, is the company's chairman and CEO. Graham is the firm's chief investment officer. The latter joined the company in 2016 after graduating from Rhodes University.
Since 2020, RREAF reports its assets have jumped more than 4,000%, from about $100 million to $4.5 billion. This is largely due to the company's aggressive focus on opportunities and hardships during and immediately after the COVID-19 pandemic.
The company's activity slowed last year due to interest rates, but it has not laid off any employees. In fact, it continues to grow, with the number of employees increasing from 279 in 2020 to 491 currently.
A spokesperson representing the company declined to provide employment and asset figures for 2020 to 2024.
Graham said 2024 will position RREAF to buy up real estate from overleveraged companies, particularly in the multifamily space and post-pandemic pop-up syndicators.
“While 2023 was a slow year due to acquisition challenges, we believe 2024 could be our biggest year yet,” Graham said. “There are really good opportunities for groups like ours that are well-capitalized and ready to take advantage of what's coming. There may be some owners who are struggling because of the way they use the deal. but we will be able to participate in the transaction at a very attractive price [prices]”
Graham said the company has a potential acquisition pipeline of $600 million to $700 million.
According to Kipp, he has tried just about everything in commercial real estate for the past 37 years.
“This is my last challenge, and I intend to really build a traditional company that all of my children can build and grow with,” Kipp said. “There is nothing more exciting than knowing that your son will take over your business and one day become CEO.”
Graham said it's a unique perspective to work for a company he knows he will one day lead. He learned at a rapid pace, and many young employees have become integral to the company's growth story over the past few years.
Kip's traditional approach has led RREAF to focus on regional assets that Kip believes are recession-proof. It summarizes the company's key areas in multifamily housing, developments, drive-to-leisure, beachfront hospitality, master-planned communities featuring both single-family homes and rental homes, and outdoor living.
“All of this caters to the largest segment of the U.S. population: middle America and middle incomes,” Kipp said. “I have a friend who runs a company that focuses exclusively on high-end skyscrapers in urban areas. We have to be prepared to continue.”
building a city
At the heart of RREAF's rapid growth is the growth of its employees and talent pipeline. I keep them. That means a catered lunch to the Dallas office overlooking Klyde Warren Park, a multi-week hands-on training program, and an in-house mentor.
Another secret sauce is RREAF's proprietary software platform that extracts and sifts data from internal assets and other sources.
“Growing from $100 million to $4.5 billion, it's hard to keep up with everything, but that's because of the systems we have in place,” Kipp said.
RREAF aims for further growth and expansion in all business areas.
The company plans to build 12 to 15 properties per year based on extended stay hospitality Split. While all other tranches of RREAF are confined to the southeastern United States for development and acquisition, this division has no geographic constraints. There are plans to delve into extended stay brands such as Marriott, Hilton and Hyatt.
“The idea behind it is that once you've built enough assets worth $1 billion or more, you'll sell them to some REIT,” Kipp said.
The two are especially excited to have two properties branded as Margaritaville Resort.
“The Margaritaville Resort we are planning in Galveston will be the coolest Margaritaville Resort ever built,” Kipp said. He admits that he is a parrothead and a fan of the late musician Jimmy Buffett.
334 hotel rooms and 278 cottages (each costing an average of about $2 million) will be built on Galveston Beach. The two-acre, 25-foot-a-ground resort will include the nation's largest podium water park with amenities such as a lazy river and swim-up bar.
The company is bullish on Interstate 35 and has multifamily projects in Salado, Belton and Temple. “Everything from Dallas to San Antonio is exploding,” Kipp said.
Following this observation, RREAF launched its venture into the outdoor living space last year by acquiring five properties.
Kipp describes the company's future developments in this area as building “horizontal resorts.” RREAF goes beyond traditional RV spaces and hookups by adding outdoor cooking facilities, family entertainment facilities, and restaurants.
Between 25 percent and 50 percent of the space will be taken up by tiny homes, making the site available to non-RV travelers. The concept was inspired by Kip's daughter, who lives on a farm in Virginia in a converted log cabin with a near-zero carbon footprint.
For the company's master-planned RREAF communities, being 20 to 30 minutes from school districts and major MSAs is key.
This led to RREAF being established in Heirloom, a community spanning 3,300 acres in both Midlothian and Waxahachie. The amenity-rich development will include approximately 8,500 single-family homes and 3,000 rentals between multifamily communities and build-to-rent.
“With the RREAF community, we are actually building a city,” Kipp said, adding that the Royse City rental housing community known as Capstone Court and along the Texas 130 toll road connecting Austin to Austin , a master-planned community of more than 3,200 acres. San Antonio.
The company's expansion was also enhanced by expanding its base of capital sources. The company currently works with registered investment advisers and, in Kipp's words, “quasi-institutional investors” in common stock.
RREAF has also used corporate funds for acquisitions when it comes to large transactions in its portfolio.
bubblegum king
Kip recently built a new lakefront home for his family on the original property site on Cedar Creek Lake, chosen because of its proximity to Dallas. Of course, the company has an office, from where you can keep up with the company's rapid growth.
The latest version of the Lake House is more spacious and has rooms for family and friends.
The design incorporates his passion for his alma mater, the University of Texas at Austin, with burnt orange accents. The shark emblem, a kind of mascot for RREAF, can also be seen throughout the grounds.
The overall orientation of the home celebrates access to the water, including bedrooms with lake views and spacious porches with outdoor kitchens.
“We're water babies. We got our kids skiing as soon as we could,” Kip said. Kip taught water skiing as one of his many side jobs as a child.
An early entrepreneurial spark is something Kip and Graham share.
Kip's first adventure was to use 60 cents from his lunch money at Bradfield Elementary School to buy gum for his third graders.
“I would wait until I saw my mom's station wagon turn the corner, then sprint across the street to the 7-Eleven in Highland Park Village and buy 60 of them,” Kip recalls.
He then sold them for a nickel each at lunchtime, making five times as much money each day. During other lunch hours, he would recruit his classmates and share the sweet profits with them. The principal ultimately burst the bubble and economic boom.
“He was the bubblegum king of Bradfield,” Graham said.
“I spent many Saturdays cleaning gum off the bottom of my desk,” Kip retorted with a laugh.
Graham started by painting sidewalk curb numbers himself for about $25 (with the benefit of receiving $100 tips from some patrons). He then set his sights on an establishment similar to his father's at Highland Park High School. He ordered 5,000 power balance bands from China at about 5 cents each and sold them to his classmates for $20.
“He had a much bigger margin than me,” Kipp said.
Kip was never cut out to work for anyone, he would say. He honed his talents working in the real estate investment banking divisions of Lomas and Nettleton. The company, once the nation's largest mortgage lender, offered Kipp the opportunity to relocate to Tampa and establish and operate a new office.
“I figured if they had that much faith in me, I should have that much faith in me,” Kipp said.
So in 1987, he returned to Dallas and started his own store.
There's no room for mistakes
The freedom Kip found in running his own store endures as RREAF insists on remaining independent.
“One of the reasons we're successful and want to stay private is because we can take advantage of the disconnects we see in the market and move very quickly,” Kipp said.
For example, during the COVID-19 pandemic, RREAF saw RV sales soar and focused on that category. The same was true for drive-to leisure and hospitality transactions.
“We are always asked to go public, but we want to remain a family company. Together with the Graham children and their children, I hope that RREAF will continue to exist long after I am gone. I hope,” Kip said.
Kipp and Graham acknowledged there have been challenges in the market of late, particularly as the company maintains spreads and yields for equity investors amid continued confusion over interest rates and construction costs.
“We have to be even more careful about the economic situation than we were before. There is no room for error,” Kipp said. “You have to be focused and make sure you choose the right place and the right product to develop at the right time. It's much more difficult today than it was 24, 36 months ago.”
But what happens next for the family isn't all business.
Graham will marry Caroline Palms in June. Kip is a great guy. The question was asked over breakfast after Sunday Mass at Angela's Cafe in Dallas.
The next few years will likely see Kipp take a step back to allow Graham and the children of RREAF's other leaders to begin taking the reins.
“I'm 61 years old, so I'll probably be working for at least another 30 years,” Kip said with a laugh. “Maybe you don't work as hard and spend more time in your office overlooking Cedar Creek Lake than in Klyde Warren Park.”
