An optimist gambles on high-profile properties | CEO Stephen Goodrich believes investing in landmark properties today will pay off tomorrow
Photo/David A. Rodgers
What's in store?: Stephen Goodrich stands inside the former Portland Public Market, one of his three recent real estate purchases in southern Maine.
Stephen Goodrich, first of all, wants you to know he’s no big-deal real estate developer. A go-with-your gut type, sure. A risk-taker, certainly. But don’t get the wrong idea, he’s not on any kind of buying spree.
Of course, the pace and prominence of his three recent closings suggest otherwise.
On Halloween, Goodrich paid $2.1 million to buy the 32,000-square-foot Portland Public Market building, a downtown Portland landmark that closed in 2006 after its original use as an indoor food market failed to turn a profit for then-owner The Libra Foundation. In January, Goodrich bought the 331,000-square-foot Riverdam Millyard in downtown Biddeford at a foreclosure auction for $500,000, and also snapped up a vacant lot blocks away from the Public Market at auction for $340,000. Besides Goodrich’s apparent yen for popping in at auctions and popping out with real estate, he says the purchases just make sense — they’re the kind that slip by more conservative buyers during a recession. The kind that turn to gold during a rebound.
Time will tell what lessons there are to learn from Goodrich’s gut instincts, but Roxane Cole, immediate past-president of the Maine Real Estate and Development Association and principal of Ram Harnden Commercial Real Estate Services in Portland, believes Goodrich is a prime example of Portland real estate investors who are trolling for this slow market’s opportunities.
“I think the properties that he bought in Portland are excellent purchases because he’s an owner-user,” says Cole. As for the Riverdam Millyard, “it’s kind of a labor of love. The development horizon for when you can get them stabilized is much longer than an owner-user who does renovations and moves in on day one.”
At a time when commercial real estate sales are suffering, Goodrich has lately spent nearly $3 million from his own savings and from bank loans on the three significant additions to his previously modest southern Maine real estate holdings. Besides the new properties, Goodrich also owns 24 Preble St., the home of the bar Slainte; 28 Stroudwater St. in Westbrook, a mixed-use commercial building; and 116 Pleasant Hill Road in Scarborough, occupied by the grocer Goodrich owns, Market Fresh Produce. While all of these projects are profitable, Goodrich has not been immune to missteps — in 2005, he plunked down $11 million, by far his largest real estate investment, to buy a 600-acre orange farm in Florida that he hoped to subdivide into ranch homes. But the real estate market soured, Goodrich began to doubt the appeal of the location, and he ended up leaving the property as an organic farm. This year, his farm staff are pitching national grocery store distributors to sell blueberries grown on the farm under the label “Bluefield Organic Farms.”
“I think even in a good real estate market, it was an ill-advised endeavor,” he says.
A history of risk, gains
Goodrich, 50, appears to thrive on movement of all kinds. A family man with a crisp yacht-club style (think houndstooth blazers over mock-turtlenecks), Goodrich’s bright blue eyes, brisk manner of speech and down-home candor have served him well in the Maine business world and beyond. CEO of PowerPay, a Portland company that processes credit card payments for 30,000 clients nationwide, Goodrich was raised on a farm in Gorham and as a high school student launched his first business, a produce distribution service for Maine co-ops and restaurants.
“I was always kind of energetic and entrepreneurial and always optimistic,” he says.
Goodrich went to college in his late twenties, but dropped out to work in payment services, an area he felt was up and coming. He launched his own payment services company in 1989 in Maine with his brother, Jim. The company, First Merchants Bancard Services, was sold in 2002 to Nashville-based iPayment Inc. for about $30 million. Goodrich used his share of the profit from the sale to launch PowerPay in 2003. Today, the 125-employee PowerPay is ranked by Inc. magazine as one of the fastest growing companies in the United States (Goodrich says PowerPay adds over 2,000 new customers a month), and in 2008 generated revenue of $100 million.
In his office at the PowerPay headquarters on Fore Street in Portland, Goodrich plucks the rendering of his plans for the Portland Public Market out of a knee-high pile of papers on the floor. He unrolls the rendering on his conference table, pinning down the curling edges with a mug of his son, Freddie, in a football uniform, and a paperweight with a framed photo of Freddie and daughter Mary on his wife Kimberly’s lap.
The idea behind the Public Market purchase, Goodrich explains, was to find a space where PowerPay could grow. While the Fore Street offices are maxed out at 125 employees, the Public Market, once Goodrich installs the mezzanine floor he points to in the rendering, can accommodate around 240 employees. Goodrich doesn’t expect to rent any of the space, because within three years he says PowerPay will occupy all of it.
“Obviously, it’s just an interesting time as far as the economy goes,” says Goodrich. “I think some people just don’t know what’s around the next corner and, as a result, they might not be willing to take a chance on that property that in ordinary times would be a great deal.”
The renovation of the Portland Public Market is expected to be done by the fall and cost Goodrich in the neighborhood of $4 million. He says the buy wouldn’t have been possible without the chance to qualify for the new market tax credit administered by Coastal Enterprises Inc., which would knock up to 30% off the cost of the renovation.
The possibility of tax breaks and grants also motivated Goodrich’s other recent marquee purchase — the troubled former textile mill now known as the Riverdam Millyard. The building, which in 2007 was cited for 13 fire-code violations and which was eventually foreclosed on after the previous developer dumped a reported $500,000 in upgrades into it with little discernible benefit, comes with a $350,000 Maine Dept. of Economic and Community Development grant. While Goodrich’s plans for the Public Market are ready to go, his vision for the 0.4-acre dirt lot at 409 Cumberland Ave. and the Riverdam Millyard remain sketchy. Goodrich plans to use the Cumberland Avenue property to house some of the construction materials and equipment he’ll need to renovate the Public Market. As for the sprawling Riverdam, the property, Goodrich says with a sigh, could use about “a million upgrades.”
“The purchase price is almost secondary to the price of owning it,” Goodrich says. “That’s the kind of building that if someone offered it to you for free, you’d think twice.”
Goodrich plans to upgrade Riverdam’s heating and sprinkler systems and repair broken windows, and then sit tight on further renovations until the market improves. He thinks he has about “a couple of dozen” tenants — artists who use the stripped down space for studios — but don’t ask him exactly how many because, well, he’s really not sure.
Projects for the ages
Goodrich says he enjoys renovating old buildings (Riverdam and 24 Preble St. were both built in the 19th century), and he has some experience doing so thanks to one of the first properties he owned, the Tracy-Causer building, built in 1866, at 505 Fore St. (the home of Una bar, Rivalries and Mainebiz). He bought the property for $670,000 in 1995 and sold it in 2002 for $1.9 million. On a wall of his office, Goodrich has hung a photograph of a graffiti-covered, boarded-up brick edifice. This was Tracy-Causer, he says, when he bought it. Below that photo is another, of the building as it looks today, the boards replaced by large windows, the graffiti gone, the brick cleaned and the trim neatly painted. Goodrich says he spent $500,000 renovating the building, which was so rundown the back wall caved in while his crew was working on it.
Despite his experience with Tracy-Causer, Goodrich is intimidated by the enormity of the Public Market renovation. On a recent afternoon, he wanders inside the building, a gloomy husk with dusty concrete floors, display cases stripped bare, gas lines that had been used to supply ovens and refrigerators capped dormant. There are structural deficiencies to remedy here — the floor from one end of the market to the other slopes about 10 feet, Goodrich will have to construct a second floor — as well as countless details like converting one corner of the building into a cafe, installing lighting and replacing kitchen hook-ups with the type that support office work, and pursuing LEED Gold certification from the U.S. Green Building Council with environmentally friendly elements like channeling rooftop rainwater into the building’s toilets.
“Just the sheer size of it, it is a little ... daunting, I guess is the word,” says Goodrich, surveying the empty market. “There are times when I look at it and think, what the heck am I doing here? But you know, things usually always work out.”
Sara Donnelly, Mainebiz managing editor, can be reached at sdonnelly@mainebiz.biz.
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