The fund
When word got around that Kornblau and Ohly were creating a private equity fund, there were skeptics, Bud says.
“People said, ‘That’s just a scheme of Bud and Bryan’s to keep Eagle alive,’” he said.
What they wanted to create was a pool of money that could invest in real estate that banks were either too scared to touch or were forced to dump.
“It was to take the place of banks and be able to take advantage of the vacuum in the marketplace,” Kornblau said.
If that helped make investors money and create deals that could feed projects to the Eagle companies, all the better.
They started raising funds for E|Class MB Partners Fund One around 2008. Its first investment was taking a controlling interest of West Broad Village, which was on the brink of collapse.
Things further ramped up in February 2010, when Bryan had an appointment with Markel Corp. By May 2010, Markel’s investment arm, Markel Ventures, bought into E|Class, and it became Markel|Eagle Partners.
Tom Gayner, the head of Markel Ventures and a manager of Markel|Eagle, says his company typically doesn’t dabble in real estate. But in Richmond, when a Kornblau comes calling, you listen, he said.
“I’ve known the Kornblau family for multiple generations,” said Gayner, “back to the United Dominion days. I knew they had been successful at what they had done over time.”
Eagle’s step into controlling West Broad Village also helped show it means business.
“When they got involved in West Broad Village, obviously their profile went up,” Gayner said.
Kornblau and Ohly are deliberate when discussing the funds. They are very careful to show how the various business units are kept separate and carefully abide the federal regulations that govern Markel|Eagle.
All they’ll say is that Fund I is no longer raising money and that it has committed investments of about 90 percent of the money. A second fund was recently launched and has raised $21.7 million, according to SEC filings. Its target is $50 million.
The legal separate entities aside, the various units of the Eagle companies are like tentacles on an octopus. Each one grabs its own kill, but they help feed one another.
But if it’s such a great idea, why does it seem like they are the only ones doing it?
“We kept thinking with the fund we were going to see imitations,” Manoogian said. “It never really happened.”
“One of the key aspects was that a lot of people with execution capacity basically had their own mistakes they had to look after. A lot of people who were good at the real estate business still got caught in the bubble, and that kept them out of doing something similar.”
Persuading people to invest in a fund that was going to gamble on real estate at a time when most banks wouldn’t touch the stuff was a pretty impressive sell, too.
“The fact that Eagle had pulled away, gotten some liquidity and sniffed out that troubles were brewing — I thought that was a good indication of somebody that had street smarts and good horse sense,” Gayner said.
Again, that name doesn’t hurt either.
“You cannot buy reputation,” Kornblau said. “My dad is a tough businessman. But he did it the right way.”
At age 89, Sam Kornblau still plays a role at Eagle, albeit behind the scenes. Although he technically retired in the 1980s, he still can be found most days in his office at Eagle’s headquarters.
In addition to the clout his name carries, Sam Kornblau’s influence and experience are undeniable, Manoogian says.
Take Bryan’s gut feeling back in 2006. Instinctual – yes. Hereditary – perhaps.
“I don’t know that Bryan could sit down and give you a spreadsheet analysis of why that decision was made. But that’s the benefit of being around his father a long time,” Manoogian says.
“Sam has seen everything that’s gone on. He’s been an important part of shaping Bryan and Bud’s worldviews. He’s a guy people look to when there’s a key decision to be made.”
The fund
When word got around that Kornblau and Ohly were creating a private equity fund, there were skeptics, Bud says.
“People said, ‘That’s just a scheme of Bud and Bryan’s to keep Eagle alive,’” he said.
What they wanted to create was a pool of money that could invest in real estate that banks were either too scared to touch or were forced to dump.
“It was to take the place of banks and be able to take advantage of the vacuum in the marketplace,” Kornblau said.
If that helped make investors money and create deals that could feed projects to the Eagle companies, all the better.
They started raising funds for E|Class MB Partners Fund One around 2008. Its first investment was taking a controlling interest of West Broad Village, which was on the brink of collapse.
Things further ramped up in February 2010, when Bryan had an appointment with Markel Corp. By May 2010, Markel’s investment arm, Markel Ventures, bought into E|Class, and it became Markel|Eagle Partners.
Tom Gayner, the head of Markel Ventures and a manager of Markel|Eagle, says his company typically doesn’t dabble in real estate. But in Richmond, when a Kornblau comes calling, you listen, he said.
“I’ve known the Kornblau family for multiple generations,” said Gayner, “back to the United Dominion days. I knew they had been successful at what they had done over time.”
Eagle’s step into controlling West Broad Village also helped show it means business.
“When they got involved in West Broad Village, obviously their profile went up,” Gayner said.
Kornblau and Ohly are deliberate when discussing the funds. They are very careful to show how the various business units are kept separate and carefully abide the federal regulations that govern Markel|Eagle.
All they’ll say is that Fund I is no longer raising money and that it has committed investments of about 90 percent of the money. A second fund was recently launched and has raised $21.7 million, according to SEC filings. Its target is $50 million.
The legal separate entities aside, the various units of the Eagle companies are like tentacles on an octopus. Each one grabs its own kill, but they help feed one another.
But if it’s such a great idea, why does it seem like they are the only ones doing it?
“We kept thinking with the fund we were going to see imitations,” Manoogian said. “It never really happened.”
“One of the key aspects was that a lot of people with execution capacity basically had their own mistakes they had to look after. A lot of people who were good at the real estate business still got caught in the bubble, and that kept them out of doing something similar.”
Persuading people to invest in a fund that was going to gamble on real estate at a time when most banks wouldn’t touch the stuff was a pretty impressive sell, too.
“The fact that Eagle had pulled away, gotten some liquidity and sniffed out that troubles were brewing — I thought that was a good indication of somebody that had street smarts and good horse sense,” Gayner said.
Again, that name doesn’t hurt either.
“You cannot buy reputation,” Kornblau said. “My dad is a tough businessman. But he did it the right way.”
At age 89, Sam Kornblau still plays a role at Eagle, albeit behind the scenes. Although he technically retired in the 1980s, he still can be found most days in his office at Eagle’s headquarters.
In addition to the clout his name carries, Sam Kornblau’s influence and experience are undeniable, Manoogian says.
Take Bryan’s gut feeling back in 2006. Instinctual – yes. Hereditary – perhaps.
“I don’t know that Bryan could sit down and give you a spreadsheet analysis of why that decision was made. But that’s the benefit of being around his father a long time,” Manoogian says.
“Sam has seen everything that’s gone on. He’s been an important part of shaping Bryan and Bud’s worldviews. He’s a guy people look to when there’s a key decision to be made.”
Great to read this much-deserved praise for Eagle’s accomplishments. American exceptionalism is alive and well.
I couldn’t agree more with Phil. Eagle played the contrarian when it chose to sell its lot inventory to several builders who are no longer in the business. Eagle is now in position for the long haul and diversifying their business. Two good guys have done well together.
Could it be Bryan has the experience and foundation from Sam Kornblau and Realty Industries? Sam was always on top of the
real estate market. Good people make good decisions.
Go Gators!
Interesting story — nice to see an article of this length in BizSense. Congrats to Bryan and Bud for making some very smart moves along the way.
Can you believe a Buckeye actually worked for these guys? I too found myself at a drinking establishment and was never late in the morning. Some of the best homes built in America!
Risk and patience deserve the highest rewards–Yes they had the infinite wisdom of the”Chief” but also the many years of real estate hard knocks they each have endured–don’t think there have not been a lot of sacrifices-much like Florida football Bryan and Bud went for the extra 2 points to win instead of a tie-Congradulations to the biggest risk takers possibly on the East Coast much less Virginia
Great article. Should be required reading for MBA programs. What a perfect partnership for two different personalities and recognizing the strengthes of both. So glad Eagle is the “Eagle” in the Eagle Classic at RCC!