What do an office tower in Indianapolis, a human services building in Utah, and an office building in Colorado Springs, Colorado, near an Air Force base all have in common? They were all bought up by Fairbridge Properties, a Vreeland Drive-based real estate investment company that uses a math-based analytical system to scour the country for stable, undervalued commercial real estate investments.
Fairbridge was founded in 2013 by Dmitry Gordeev, right, a Russian immigrant who moved to the U.S in 1999 to further his education and put his existing degrees in economics to use in the real economy.
Gordeev came of age during the collapse of the Soviet Union, when Marxist ideas about economics were being thrown in the dustbin of history and private business had a chance to flourish for the first time. His father, a pilot and engineer, took advantage of the collapse of the state-run economy to start his own business building container ships.
Gordeev said he learned a lot about business from his father, and learned to apply a numbers-based approach from his education. Old enough to benefit from the USSR’s strong system of science and math education, Gordeev earned a bachelor’s in management of foreign trade activity from the Taurida National University in Simferopol, Russia, and a doctorate in economics from the International University in Moscow, graduating in 2003. (He finished his dissertation while living in the U.S.)
In 2005 he began study at Temple, graduating two years later with an MBA. He settled in the Princeton area when his wife was accepted to Princeton University as a graduate student in 2000.
Gordeev said he became interested in economics in the early 1990s when he was entering college. “I was always fascinated by macroeconomics and microeconomics,” he said. “Becoming an economist was very difficult to achieve in the former Soviet Union because, having a socialist economy, all they had was Marxist economics. But when I went to university, it was 1993, so it was just on the brink of transformation. The old ways of doing things were abandoned.”
When Gordeev moved to the U.S., he quickly realized that his doctorate in macroeconomics, while beneficial, was by itself not enough to get ahead in the real business environment, so he decided to get an MBA to gain more practical knowledge of the American ways of doing business. After graduation he worked as the director of finance at On-Board Engineering, and then founded IDG Group, a concierge healthcare provider. In 2013 he founded Fairbridge Properties to combine his theoretical background with his practical know-how.
He said real estate appealed to him because of its ability to generate passive income and its scalability. “We are super conservative because it is very easy to make a mistake. You have to follow a very strict strategy.”
Fairbridge’s acquisition of the CBD Landmark Center in Indianapolis is an example of that strategy. In July, 2015, Fairbridge paid $21.5 million for the 12-story office tower, located in the city’s central business district. The tower’s former owner, Ambrose, had bought it out of receivership for $8 million and established a stable tenant base, to the point where it was 94 percent leased. By the end of the summer it was fully occupied.
“We are very averse to risk,” Gordeev told a real estate publication at the time. “Ambrose was able to sell the property at lower than market price. At the same time, the building was now stabilized thanks to Ambrose’s ownership. So we were able to get a stable, high-quality office property at a price below market.”
Gordeev said Fairbridge purchased Landmark Center for $70 a square foot in an area where office space typically went for $90 to $100 a square foot.
The company typically buys properties in the $10 to $50 million range, focusing on office, retail, industrial, healthcare, and senior housing projects with one to five tenants.
Fairbridge now has four employees and more than $100 million under contract or management. It recently moved from Overlook Center to Vreeland Drive. To keep overhead low, Fairbridge hires local property management companies to look after its investments.
So far Fairbridge has bought, improved, and sold two properties, one in Minnesota and the other in Utah. In the first case, the value of the investment doubled, and in the second case it tripled.
Gordeev said he looks for properties in strategic locations, occupied by Fortune 500 or Fortune 1000 tenants. So far, he said, no properties in the Route 1 corridor have fit the bill. However, he said that with Bristol-Myers Squibb building a new headquarters, its old 730,000-square-foot location will create a lot of vacant office space in the market.
“It will create good acquisition potential for value-seeking investors,” he said.
Gordeev said the company will seek capital from outside investors within the next year.
Fairbridge Properties, 30 Vreeland Drive, Unit 1, Skillman 08558; 609-580-1831; Dmitry Gordeev, president. www.fairbridgeproperties.com.