The 2016 E.J. Plesko Distinguished Speaker Award in Real Estate Development was presented to John Rutledge at the Real Estate Club meeting held on November 17. The award is funded by a grant from the late developer and Graaskamp board member, E.J. Plesko. It honors practitioners who embody the “Wisconsin Tradition” in their spirit, imagination, entrepreneurial skills and enthusiasm for improving the quality of the built environment. The award ceremony is also an excellent opportunity to bring in real world development expertise to our undergraduate and MBA students.
Irgens Executive Director Michael Brennan, had the pleasure of introducing Rutledge at the gathering packed with students, UW staff and executives from E.J. Plesko and Associates. Brennan said, “John Rutledge is one of very few people who have such a vast body of work and high level of accomplishment, both personally and in the real estate area.”
“The University of Wisconsin’s real estate program has always been a preeminent real estate program, perhaps THE preeminent real estate program in the country,” Rutledge said as he accepted the award. “I have great respect for the school, great respect for the program and have met a lot of super accomplished people who have come through the program over the years. I know there’s a deep sense of loyalty connected to it, so I’m very honored to be a part of it.”
Rutledge is the co-founder, president and CEO of Oxford Capital Group, LLC, a national owner and development firm in hotel space, headquartered in Chicago. The firm not only operates in Chicago, but also other metro areas like Boston, Los Angeles, Miami, New York City and many more. His story to success was a trying one, and one for the real estate students to take to heart as they experience ups and downs while building their own careers.
The ambitious Rutledge came out of college at the University of Michigan and started working for an office developer in downtown Chicago. He apprenticed for a while, learning about the high-rise development business from the ground up. Then, at the young age of 24, Rutledge was asked to co-found Oxford Real Estate Corporation. It brokered a lot of realty projects in the market, optioned a piece of land and ultimately developed a skyscraper called One North Franklin. But about six months before opening, the anchor tenant in the building defaulted, and the building went back to the lender.
“I went from being sort of a high-flying young gun to having to go through a difficult transition,” Rutledge said. But Rutledge made it a point to acknowledge that this incoming group of real estate professionals shouldn’t avoid difficult investments.
“I like really complicated large-scale urban projects for a variety of reasons — the challenge is bigger and there’s less competition. Over time, I’ve always thought I’d rather do something large than small, and I’d always do something complicated,” Rutledge said. “That doesn’t mean there aren’t risks; there certainly are — you just have to assess them over time and do your best to offset them with thorough, vigorous analysis and underwriting.”
After the heartbreak, Rutledge went on a trip around the world to clear his head and think about the future before heading to graduate school at the University of Chicago. “I was hoping that trip around the world, which I’d always planned to do before I went back to grad school, was going to be a victory lap. But it wasn’t. It was a mixed bag,” recalled Rutledge. “Mentally, it was very good for me because I took time to think and I really enjoyed the journey, I enjoyed the great adventures. But I was very frustrated because I had this big setback. I thought, ‘Wow, I’ve worked so hard, I’ve been so focused and now I’m sort of back to square one’.”
In 1994, during his second year of school while also completing an extended internship with a Wall Street firm, Rutledge noticed that the hotel sector was overbuilt and over-leveraged, and everyone seemed to be running away from it. Rutledge saw this as an opportunity. He went to school on the sector and wrote a business plan to buy hotels, turn them around and reposition them to ultimately create a portfolio. He raised private money from a couple of family offices, and used money he already had saved with some other outside capital to buy a hotel and move into it.
He did a classical operational repositioning, streamlined the expenses, upgraded the physical plant and the real estate and leased out the restaurant connected to it. He then sold it less than two years later for a multi-billion dollar profit -- so Oxford Capital Group, LLC was off to the races. While priding itself on being a highly ethical investor, creative developer and savvy operator, the company has since successfully sponsored about $2.5 billion in hotel investments with over 13,000 rooms. It has employed over 5,000 people and has generated nearly $1 billion in profits for investors.
Rutledge pinpoints teamwork for a lot of his success, and advises others to follow suit. “None of us is an island. We all have to surround ourselves with a capable team. It’s a lot more fun to be with a team and collaborate with people, internally and externally, and you can get a lot more accomplished by leveraging off your respective strength,” Rutledge said. “I am the founder and CEO, but I have a whole bunch of members surrounding me — a couple thousand employees across multiple assets.”
Rutledge’s first major hotel project with the new company was a defaulted office building located a block east of Michigan Avenue. It was built for $100 million and sold for $20 million in foreclosure. Rutledge’s team negotiated a 99-year master lease and developed the Wyndham Chicago at 631 Saint Clair. The deal was complicated and competitive, but after everything they were able to sell the hotel to a REIT called Patriot American Hospitality where it transitioned to its current state, the Hyatt Chicago.
“Over the last 22 years, momentum begets momentum”, said Rutledge. “I built my career around acquiring, developing, repositioning hotel real estate around the country and we’ve been very blessed, not without that early big setback and not without some speed bumps along the way.”
Ninety percent of Oxford Capital’s activity has been acquisition and redevelopment — buying deeply distressed buildings and converting them to other uses or significantly upgrading them. An example of this is the Langham Hotel in Chicago. After partnering with a Chinese firm, Rutledge and his team built the super luxury hotel that was a finalist in Development of the Year, and was voted number one hotel in the country by Travel Leisure and Trip Advisor.
Oxford Capital has done business with most major banks and has invested in over 20 companies as an angel investor. While the company works mostly in the realm of hotels, it has also done projects on offices, studios, retail and a few other miscellaneous categories. Rutledge is a prime example of the idea that hard work really pays off, and to keep on trekking even when you want to give up.
Many students who heard Rutledge’s story were inspired, “John Rutledge was a fantastic speaker. Not because he shared stories of his successful projects, but because he gave considerable time to early failures. The tough times of his early career pushed him to succeed, and he learned from those early deals that did not produce profitable returns. As a student, I look to ways I can improve from every experience, and John definitely gave advice on how to come back from troubling times,” said Jose Nevarez, a second-year MBA student.
We want to thank John Rutledge for such an inspiring presentation and congratulations on receiving the 2016 E.J. Plesko Distinguished Speaker Award in Real Estate Development!
Click here to view John’s PowerPoint presentation.
Click here for audio of John’s talk.
Mr. Rutledge pictured with Real Estate Club co-presidents Brian Bienemann and Brian Hughes-Cromwick as well as Graaskamp Center executive director, Michael Brennan.