Atkinson Native’s Million-Dollar Gamble Pays Off
News, Real Estate | July 16, 2015
THE PHONE RANG AND CHICAGO REAL ESTATE AGENT GERARD J. KEATING GRABBED IT.
The caller was a high-profile urban broker at a major real estate firm in the Midwest. He didn’t waste any words. After quickly introducing himself, he asked the Atkinson native and former president of the University of Nebraska student body if he might be interested in purchasing a 73-year-old, 12-story office building in the heart of downtown Lincoln.
Keating’s ears perked up when he heard the word “Lincoln.” But when he asked the broker how much the current owners wanted for their office building, he got a shock.
“Only $10,” said the broker … and then went on to point out that the historic old office tower at 13th and N streets was a moldering wreck. The once-luxurious Gothic Revival-style building — now a paint-peeling, mostly unoccupied derelict — had deteriorated so badly in recent years that it was scheduled for demolition.
Keating listened to the broker’s description of Lincoln’s time-ravaged Federal Trust Building, and then he surprised himself.
Instead of politely thanking the caller and hanging up, the entrepreneur uttered two words that would send him on a 10-year financial rollercoaster ride.
“I’m interested!” announced the unflappable Keating.
And so it began, on that fall afternoon in 1999, when the former farm boy from Atkinson took a huge gamble to “fix something that was broken” and bring a half-dead Lincoln landmark back to bustling, dynamic life.
During the next few years, as he struggled to raise the cash needed to renovate the once grand building in Lincoln, Keating came perilously close to losing more than $5 million.
But he also had a great deal of fun.
When Keating took the plunge in 1999 and decided to buy the badly decayed Federal Trust Building (the deal was formally closed in 2000), he was already a veteran real estate investor with a proven ability to transform run-down, failing properties into glittering gold.
In less than a decade, the fifth-generation Nebraska businessman had risen from neophyte real estate salesman to all-star broker at Chicago’s Hiffman Shaffer Associates Inc., one of the Midwest’s savviest and best-connected real estate brokerage firms.
So successful had the onetime UNL business student been — orchestrating a series of shopping center and agricultural and industrial manufacturing real estate deals worth tens of millions of dollars — that he was already planning to launch his own real estate investment firm during the next couple of years.
And then, out of the blue, Keating was presented with an entrepreneurial challenge: Find a way to renovate and revitalize a classic office building that for decades had been a shining symbol of Lincoln and all of Nebraska.
Could he really pull it off?
The obstacles were immense. To restore the building to its erstwhile luster, he would have to renovate it from top to bottom. For starters, the wooden flooring on all 12 levels would have to be torn out, so that the original marble beneath could once again gleam softly in the light from new overhead fixtures and lamps.
And there was much more. To become habitable again, the structure would require a new roof. Its interior would have to be gutted, then rebuilt and repainted. All of the window sills and frames and drapes would have to be replaced … and all of the elevators would have to be scrapped and then outfitted with new, top-of-the-line passenger cars.
And so he struggled. Night after night, as the 20th century gradually melted into the 21st, Keating sat alone at his desk and scribbled figures on a list that was headed in letters of bold black ink: PROJECTED COSTS. After months of relentless number crunching, he finally decided on a renovation figure he thought he could live with: $2.2 million.
After that, he took a deep breath. And then he took the leap.
The $10 check at the 2000 settlement was easy to write … but he swallowed hard when he signed on the dotted line for the loan that paid for the accompanying land: $242,000.
But he did sign … and the deal was done. With the swipe of a ball-point pen, the farm kid from Atkinson (population: 1,245) had become the owner of a 77,000-square-foot office tower that nobody else had wanted to buy.
Remembering that moment, more than a decade later, Keating smiled quietly. “I was very fortunate,” he said, “to have two very wise parents who encouraged their children to dream. Really, my father (Atkinson businessman John Keating, now 88) was probably the most entrepreneurial person I’ve ever met — and along with my mother (the late Dolores Batenhorst Keating), he taught us to focus on the possible rather than the impossible.”
Having closed the deal and signed the papers, Keating went to work on the renovation of the Federal Trust Building.
Things seemed to go smoothly at first … as dozens of workers swarmed through the building with clattering power-saws and pneumatic hammers and thousands of square feet of new lumber. During the first 10 months or so, Keating’s renovation schedule — and his costs — seemed to be fairly well under control. But then a series of delays caused by bad weather and a shortage of building materials began to gnaw away at the budget.
One year into the massive refurbishment, he realized that its actual cost would be double his early estimates. To finish the project, he had to find another $2 million … somewhere. After being turned down by several potential lenders, Keating knew he was down to his final hope — Kenneth Morrison, a good friend and mentor who also happened to be one of the most successful agribusiness entrepreneurs in the history of Nebraska.
A resident of Hastings for more than 60 years, Morrison had put together a global network of agriculture-based enterprises, headed by his successful Morrison-Quirk Grain Corp.
The two men had worked together on several projects in the past, and Keating knew that Morrison respected his skills and his experience as an entrepreneur. After taking a few deep breaths, he called the mentor and laid it on the line: “Ken, I’m gonna need $2 million more to make the Federal Trust deal work.”
Morrison didn’t hesitate.
Rescued by the Hastings mogul’s last-minute cash infusion, Keating was able to complete the renovation, even though it came in several years behind schedule. Then, in 2011, having rented 95 percent of its space to a dozen different Lincoln-area businesses (including “anchor tenant” First National Bank of Omaha, where Keating had worked for a while right after graduating from UNL), the entrepreneur made headlines by selling the resurrected office tower to a team of California investors for a cool $5.8 million.
In the end, Keating made more than a million bucks on his $4 million investment — while also restoring a historic landmark and helping to create new jobs and new property tax revenues for the citizens of his beloved Lincoln.
“That deal worked out very well,” said Keating, “but the hero of the story is really Ken Morrison. He believed in me, and he believed in the project — and for that I will always be grateful.”
But then the entrepreneur’s face fell, as he went on to describe his 93-year-old friend’s death in January. “Ken was a Nebraska legend, and he was a wonderful mentor,” Keating said. “And only a few days before his death, he was working with me on another huge project in Miami. He was full of energy and full of optimism, and he kept on going right to the end … because he believed in the possible.”
Spend a few hours hanging out with Gerard Keating, his 17-year-old son Alec and their energetic, curly-coated retriever, Dash, and you’ll quickly discover that this entrepreneur prefers to focus on the future rather than dwell on the past.
But when he does open up about his early years in Atkinson — where four generations of successful Keating farmers and businessmen (Patrick, Frank, Phillip and John) had preceded him — you can hear the reverence he has for that world in every sentence.
“The values we lived by when I was growing up, those are the values of Nebraska,” said the indefatigable deal maker, who in recent years has invested tens of millions of dollars in agricultural and industrial projects in Latin America, Louisiana and Florida.
Keating also maintains 5,000 acres of prime farmland near Atkinson, where he, frequently spend time to enjoy “the peace of the Niobrara Valley” at the ranch they built a few years back.
“Nebraska teaches you that your reputation is everything and that you will be judged by how well you keep your promises,” he said. “But Nebraska also teaches you how to dream … how to believe in your dreams and work for them as hard as you can. I think it goes back to the frontier days on the prairie … back to people like my great-great-grandfather Patrick, who came to this country from Ireland with nothing and built a new world for his family through sheer effort and determination and hard work.”
And the future? Ask the 50-year-old Keating to predict where the next few years will take him, and he’ll tell you flat out that he has “no plans for retirement — ever.
“There are several different types of investors,” he said while describing the huge kick he still gets out of risking millions of dollars on far-sighted projects each year. “Many people like buying a stable business that’s operating well; they like the cash flow they can get from that.
“But that’s never turned me on. What I like is buying things that are broken, things that have failed or are declining in value. And then I try hard to add value to them. I do think that God gave me this gift for finding value where others might not see it … and what I enjoy most is using that gift to try and improve things a little bit now and then.
“The simple fact is that I truly love the game, so why would I ever want to quit?”