Path To Success John Goodman, chairman of Pinnacle Realty Management Co., formed the third-party management company in 1980. The company was known as Goodman Management Group, a Seattle-based multifamily company that specialized in managing small local brick buildings and doing some brokerage deals. In 1983, Goodman met Stan Harrelson, now president and CEO of the company, in a recreational softball league. The two men got to know each other over softball and beer. In 1985, “we formed our partnership on a napkin at Denny’s,” recalls Harrelson. He knew the partnership would work because Goodman was a very talented transactional guy and Harrelson was a systems guy that loved management.
The company has grown and evolved from its early days. When Harrelson first joined the company, a large percentage of the properties under contract were syndicated deals that were 125 percent leveraged. “That over-leveraged situation created large accounts payable at the properties and the company was constantly challenged with vendor bills and no funds to pay them. We started out as a company with 3,500 units and we quit 2,700 units in the first six months [after I] came on board. There was a deliberate step to get away from business that we thought was unhealthy for us. We went 10 steps backward so we could rebuild our reputation,” Harrelson says.
Pinnacle began working instead with lending institutions, which at the time were heavily into the repossession scene. “There were a lot of failed condo projects or apartment projects that banks had taken back, and we became a recipient of a lot of that business – taking it over, getting it full, making it operationally sound, and then ultimately brokering it to a client, who hopefully would retain us [as managers],” he says.
But, being a local manager wasn’t enough for Harrelson. “Stan was behind the growth of this organization,” says Goodman. “Stan is a very hard worker and committed to growing this company. I think it was a personal commitment to himself to make it a national company and a leader in the industry.”
Now, Pinnacle represents more than 100,000 units in 41 states. It reached national status, and officially took on the name Pinnacle Realty Management, by joining forces with Phoenix Realty in 1994, which became an institutional partner owning 50 percent of the business. With additional funds from Phoenix Realty, Pinnacle was able to purchase Sovereign National Management Co. in ’94, a collection of five regional management companies, says Jay Martha, director of property portfolio management at Henderson Global Investors, a client of Pinnacle’s.
“We felt that John and Stan had the basis of a good management company and Sovereign had good, strong regional expertise,” says Martha. The joining of the two companies became the foundation of Pinnacle.
Over the next five years, Pinnacle learned a lot from Phoenix Realty and especially Martha and Jim Carter, another Phoenix executive, in terms of institutional disciplines and so forth, says Harrelson.
Goodman and Harrelson eventually bought back the outstanding 50 percent of the company. “When we bought the company back [in May of 2000], we got so fired up that all of a sudden the energy was flowing [again]. We were pumped, and it showed. The enthusiasm rippled through the company and last year was the best year ever. This year, we will double our results of last year,” says Harrelson.
Pinnacle knows it’s on the path to success because it continually sees growth through word-of-mouth recommendations and new business from existing clients, says Rick L. Graf, Pinnacle’s regional president of the Central division. “Our clients have entrusted us with their properties and rewarded us with more properties and business. I think it speaks to their confidence [in us] and our abilities to make [good] things happen.”