This week on the podcast Matt sits down with Becky Lumly, Chief Financial Officer at Front Range Capital Partners in Denver. During the episode they discuss Front Range Capital Partners and their funding model along with Becky’s background and an overview of how she pivoted from the world of public accounting into hospitality and then to her current role. Front Range is a real estate private equity firm specializing in growth capital and property investments in partnership with other real estate operating partners. They have committed over $1 billion of equity capital to investments across the US since being founded in 2010.
Episode Transcript
Becky Lumly 0:00
Early on, I learned the way that you interact with people, the way that you motivate
the people around you. It's critical to figure out how that works and how to do that
if you are going to be successful.
Matt Waller 0:20
Excellence, professionalism, innovation and collegiality. These are the values the
Sam M. Walton College of Business explores in education, business and the lives of
people we meet every day. I'm Matt Waller, Dean of the Walton College and welcome
to the be epic podcast. I have with me today. Becky Lumly, Chief Financial Officer
at Front Range Capital Partners. Becky, thank you for joining me today.
Becky Lumly 0:47
Thanks, Matt. I appreciate it. It's good to be here.
Matt Waller 0:51
So, Becky, I know you got your undergraduate degree in accounting and your master's
in accounting from the Walton College right after it became called the Walton College.
And, and then you you started in public accounting. With you were an auditor with
Arthur Andersen KPMG in the Denver area. So one question I have for you is, I know
you live in Denver now. Did you? Did you go to Denver? Are you from where are you
from originally?
Becky Lumly 1:36
I was born in Mountain Home, Arkansas, actually. So yeah, so born and raised in Arkansas.
And, you know, it really is a testament to the Walton College, you know, going through
the accounting program, and then ultimately, the Masters, I got my Masters in Accounting,
they're all of the schools really tied into all of the big, you know, multinational
public accounting firms. At that time, it was the big five. So and, you know, so I
was recruited and connected to these firms through the Walton College, which was great.
Obviously, a lot of recruiting out of Little Rock and Dallas, which I considered Dallas
as well. But at the time, my mother had moved to Arizona, I had family in Arizona.
So when I wrapped up my undergraduate degree, I decided to do an internship or I applied
for an internship at Arthur Andersen in Phoenix. So I spent six months in that office
and then decided to go back to the University of Arkansas to get my Master's in accountancy.
And then, you know, through that process said, you know, where do I really want to
go after school and and I had visited Denver only one time, but I thought it was a
great place. And I said, I'd love to go to the Denver office. So I was able to join
Arthur Andersen in the Denver office at that time, which was in 2000.
Matt Waller 3:22
You went in to work in the hospitality industry after public accounting. Did you move
to Vail after that? Or did you stay in Denver?
Becky Lumly 3:36
I stayed in Denver, but I did join Vail Resorts. They were an audit client of mine
at Andersen. And during my time at Andersen, you know, sadly that company closed their
doors. You know, that was in during the, you know, Enron scandal. So the audit practice
in Denver was assumed by KPMG. So that that's how I ended up at KPMG for a short time
in their audit division. Still had Vail Resorts has an audit client and ended up being
hired, you know, by Vail. And, you know, a few years later, you know, that was the
time when Vail Resorts was looking to grow their hospitality division, obviously their
ski resort division was kind of the bread and butter of the company. They were looking
to really define the hotel division and grow it and, you know, kind of grow it into
something that could be more meaningful. The headquarters were then moved from the
mountains of Colorado into a suburb of Denver called Broomfield, Colorado and that's
where Vail Resorts headquarters still resides today. And so ultimately I moved from
Denver and an officed up there in Broomfield and I was with Vail for for about nine
years. And that did really start, you know, kind of what I call my hospitality journey.
So kind of out of public accounting into hospitality into the world of hotels.
Matt Waller 5:24
Then after that you became Chief Financial Officer of Belmont Cap Juluca. I don't
know if I pronounced that right.
Becky Lumly 5:34
You did, yes, Cap Juluca. And it Cap Juluca, as you know, you know, the Caribbean
at all, it is a very kind of prestigious luxury resort on the island of Anguilla in
the British West Indies. So I had been with Vail Resorts for eight and a half, nine
years. And, you know, thinking about what's next, I was young, I knew that I, you
know, as much as I loved Vail and I had learned so much and, you know, really grew
as a leader during my time there. I knew I wasn't going to retire there. So I needed
to, you know, kind of find my next, you know, my next step, and I had the opportunity
to join, you know, to move to this island, with my husband and 18 month old daughter
at that time to be the CFO of of the resort called Cap Juluca. But it wasn't only
just kind of operating resort, we, you know, looked at it as a really a real estate
development project, we, you know, entitled, land adjacent to the resort that was
operating, and then started to develop additional properties, condos, that would be
operated as part of the resort. The project itself was fascinating, the resort was
beautiful, but then also just navigating living on an island. And learning all that
comes with that. It was just it was a great, a great experience.
Matt Waller 7:18
Well, I'm going to skip a couple of your adventures, one with two roads, hospitality
where you were Senior Vice President of Finance for many years, and also Hyatt Hotels,
where you were Vice President of Finance. And go to your current role, which you've
been in for almost four years as Chief Financial Officer of Front Range Capital Partners.
Could you tell us a little bit about that firm?
Becky Lumly 7:50
Absolutely. So Front Range is a real estate private equity firm, specializing in growth
capital, and property investments in partnership with other real estate operating
partners. So we really look for, you know, companies that are developing properties
that have a great track record. So really partnering with these other real estate
operating companies. Historically, our investments have been focused in multifamily
residential, but we also have investments across the real estate industry, self storage,
student housing, hospitality. We look at industrial properties. So we really have
diversified the type of real estate that we invest in. But like I said, historically,
it's been mainly multifamily focused. The firm was founded in 2010. And, as you said,
Matt, I joined in almost four years ago now, just before COVID, actually in January
of 2020. But since the time the firm was founded back in, in 2010, we have committed,
you know, more than 1 billion of equity capital to investments across the US. So we
do focus on the US solely in the US. But it's, you know, highly successful firm. And
I joined, you know, at an at an interesting time. Like I said, it was just before
COVID, it was in early 2020. And for me personally, it was a little bit of a pivot
in my career. I had been in the hospitality business for roughly 18 years after coming
out of public accounting. And you know, But hospitality is real estate also. So I
was very familiar with, you know, developing hotels, operating hotels, interacting
with institutional owners of hotels, and kind of all of the sides of real estate.
For me Front Range Capital was an opportunity to, you know, really come to the, the
other side, which is focused more on on the investing, you know, finding great assets,
investing in assets, or developing great assets, and then operating them in a successful
way, ultimately, with, you know, a goal of, you know, improving the value and in generating
returns for, for the investors. So, it, it's kind of, I switched from more of the
op-, you know, focused on the operating side of real estate to more of the investing
and the capital side, if you will, you know, Front Range. The other interesting part
about Front Range is that we are registered with the SEC. So, we're a registered investment
advisor, which in, you know, finance, accounting, legal, you know, that adds many
layers in terms of compliance and regulation, which to me is, is an interesting part
of our business. But that that was a new, you know, a new area for me to learn, and,
you know, kind of dig into which, which is great.
Matt Waller 11:42
Becky, how many funds do you have, so far? Have you gone through at front range capital?
Becky Lumly 11:50
So we have launched, what I would call four primary funds, one of which has been liquidated
and round tripped for our investors. But we also, you know, today are still investing,
and still have still have capital invested in three kinds of primary funds. But we
also have several, what we call co invest, which you're probably familiar with Matt,
where, you know, they're their vehicles that are offshoots of a primary fund, that
typically invest in one asset versus a fund, which invests in many, many assets, or
has many investments. So, I would say, you know, three primary funds, active today,
with several co invests as well.
Matt Waller 12:48
So just to be clear, when you said liquidated, that means that the assets were sold
from the fund, and you also said round tripped for investors, could you explain that?
Becky Lumly 13:02
Yes. So what I mean by that is really the the cycle of capital. So at the beginning
of the fund, investors will commit, you know, a certain amount of dollars to the fund
that we then invest on their behalf, we increase the value of those dollars through
our real estate investments. And then towards the end of the fund towards the end
of the life of the fund, we liquidate the assets, and then return capital plus profit
to the investors. So when I say round trip, it's really talking about the capital
itself.
Matt Waller 13:48
In terms of how you structure returning the capital, returning the results to the,
to the investors, do you use a, an American waterfall or a European waterfall?
Becky Lumly 14:04
Great question. We, we do both. So it really depends on on the fund. Most frequently,
we're doing the American style waterfall, and that's what we're we're looking at for
current funds or, you know, current to be launched funds. So I would say American
is more common, but we have have done both.
Matt Waller 14:27
My understanding is that the American waterfall just for the students that might be
listening is that you, you use your out, you apply the numbers for the returns to
each real estate investment. And instead of just apply it to all of them that that
are liquidated at the end.
Becky Lumly 14:53
That's right, so in an American style waterfall that really allows the general partner
or the sponsors. So this would be Front Range Capital investors, in in this case,
the ability to returns as each individual investment is monetized versus a European
style waterfall, you're looking at the returns in total for the fund. So usually in
a fund structure, there is a preferred return that LPs receive both the general partner
Matt Waller 15:35
LPs stand for limited partners, they're the
Becky Lumly 15:37
limited
Matt Waller 15:38
investors that don't have a say in how the investments go,
Becky Lumly 15:42
Yes, and then after that preferred return hurdle is achieved, the general partner
start sharing in the economics or receives what we call a promote, or a carried interest,
which is really the general partners profit. So an American style waterfall says,
as each individual investment is achieved, if there's, if that LP preferred return
hurdle is achieved just for that investment, then the GP can participate and, and
receive their share of the promote associated with that individual investment. European
is where you have to look at it, so in total, for all the capital that an LP has put
in, they're not going to achieve that preferred return until later in the funds life,
because you're looking at the, you know, in totality. So in that case, the GP shares
later in the fund's life. But really, the way I think about it is, at the end of the
day, at least in our structures, the general partner, you know, the dollars are the
same, it really allows flexibility for the general partner to receive part of the
profit along the way versus waiting until the end. But the preferred return is still
the preferred return. So we are, you know, obligated, and, you know, focused on making
sure our limited partners are achieving that preferred return in total anyway.
Matt Waller 17:39
So although you have a lot of experience in real estate prior to this, going into
private equity, there was a lot to learn, I would imagine. I mean, there's a lot of
idiosyncrasies like the private placement memorandum and the limited partner agreement,
and really just the things you were talking about right now.
Becky Lumly 18:02
Yeah,
Matt Waller 18:03
Did you? Did you see that from the other side?
Becky Lumly 18:06
I did, I did somewhat. And it really depended on so. So in hospitality, at least,
my experience in hospitality, you know, we were operating, I was more, like I said,
on the operating side. So we were, you know, managing the day to day have a portfolio
of hotels. And largely, the owners of the hotels were different, you know, every hotel
had a different owner. And like I said, a lot of those owners were, you know, institutional,
public REITs, private REITs private equity. So, my exposure to private equity was
kind of on the other side of the table. But I definitely, you know, got, you know,
the flavor, if you will, on how an owner looked at the investment, and what they expected,
and how they thought about the, you know, the value and kind of all of those things.
So it was a little bit through osmosis, I would say, again, on the other side of the
table, so that's, that's another reason why I was really attracted to this role is
just to learn the flip side, and really look at it from an owner and owner lens and
owner perspective, and really seeing kind of the full cycle of of capital.
Matt Waller 19:40
You know, Becky, your career path is really interesting. And I think it's good for
students to see because you really never know where these paths are going to take.
But it's it's, it shows the benefit of performing well along the way, because it keeps
opening new opportunities and whatever you learn, even though you, you hadn't worked
in private equity, you had worked with investors, so you learned about what they were
interested in, which certainly helped, when you did go in to private equity.
Becky Lumly 20:20
100% 100%. And I would say that, I mean, accounting and I talk to, you know, people
that we're recruiting, we're recruiting all levels of accounting, I mean, it's a small
team here at Front Range Capital, but, you know, we're kind of constantly recruiting,
that's part of our job and networking. And I talk to young people all the time about
the benefits of accounting, and it sounds, you know, somebody who in finance, or,
you know, MBA, which I think is a great path also, but just different career paths
out there, and different people, I explain that, you know, accounting can really open
up a lot of doors, especially if you go if you go into public accounting, so I was
able to, you know, I got exposure to Tech, I got exposure to oil and gas, hospitality,
aerospace, you know, so it really gives you a chance to experience a lot of different
things. So if you embrace that, and, and you know, maybe something, you know, one
industry really calls your name, or, you know, you find it exciting or interesting,
the fact that you can get exposed to so many different industries out there is a really
great way to start your career.
Matt Waller 21:46
So, Becky, you started your career as an auditor. And you've, you're now chief financial
officer. And in your role as Chief Financial Officer, and other roles you've had long
way, but particularly now, especially in a smaller firm, you have to bear a lot of
the leadership role of the firm, if you wouldn't mind sharing a little bit about your
your journey, growing as a leader and some of your perspectives on leadership.
Becky Lumly 22:22
Sure. Yeah. I mean, I think leadership and connecting with people is critical, right,
to growing in your career, it's really critical to having a successful life in general,
I think. But I would say early on I, I learned that the way that you interact with
people, the way that you connect with people, the way that you motivate the people
around you, and which all is kind of all encompassing leadership, the way that you,
you know, it's critical to figure out how that works, and how to do that, if you are
going to be successful in life and in business. And I think it's such a critical part
of an organization success. And I've had the opportunity to work at very large companies,
and smaller companies. And I can tell you, that this concept of leadership and connecting
with others and motivating people, and making sure that everybody around you feels
connected to the company's mission, per se, is is crucial, again, large or small company.
So I think, you know, that's been important to me over time. And, you know, it's something
that I have found to be kind of critical to my success. You know, I think when I look
back at kind of the most successful parts in my career and the organizations I've
been with, the first thing that comes to mind is the team that I was a part of. So
I think it's just something that is is critical, and you know, and that shouldn't
be a focus it really in any organization.
Matt Waller 24:29
Becky, you've had a very successful career. I would love to know, you know, we always
encourage students to be lifelong learners. Don't just quit learning when you finish
school, keep learning. There's so much to learn. And books are a great way to learn
from others. What are some books that have really spoken to you and helped you?
Becky Lumly 24:54
I could not agree with you more, Matt, I think, you know, especially out of of school,
I still love to read. But there was a point in my earlier career, where I, you know,
kind of hit all of the, you know, famous leadership books out there. And, you know,
I really wanted to focus on being a good leader. As I said earlier, I just, you know,
it resonated with me early on that, and that's probably because I had great leaders
and mentors around me. So I wanted to emulate that. And I wanted to also be a great
leader and support those around me. So in my pursuit of that I looked for, you know,
books and mentor opportunities, a few books that come to mind, all of which I'm sure
you've heard of, I'm sure you've read them. But there really are timeless, and I would
recommend that even new, you know, new graduates, look at these books and consider
reading them. But I mean, you have the Seven Habits of Highly Effective People, Stephen
Covey. And now that's one that I've reread. So that one does not go out of style,
if you will, with great lessons.
Matt Waller 26:22
That is there a book I agree with you? And I've read it twice as well.
Becky Lumly 26:29
Yeah,
Matt Waller 26:29
I'm curious. And if you don't have one, that's fine. But is there a particular habit
that really stood out to you and helped you?
Becky Lumly 26:39
I think the one that's helped me the most, is really start with the end in mind. And
it's interesting, when you think about that, in the context of accounting, I, you
I don't talk about it specifically in that way. But accounting is a very, you know,
can can be a very detailed, you know, you're in the transactions you're in, you know,
in a very detail, you're looking at things in a very detailed way. But sometimes you
can get bogged down by doing that. And it's really important for everybody, including
accounting teams everywhere, including parents, including graduates, you know, to
really focus on the goals to the extent that you can, and figure out what you're trying
to solve for and where you're trying to be and then work backwards from there. Or
at least have that in mind as you're working working toward it.
Matt Waller 27:44
That has stood out to me and helped me especially if you've got something that has
a lot of equivocality and uncertainty that you're dealing with?
Becky Lumly 27:55
Right,
Matt Waller 27:55
you know, you might change what the end is, and be fine with it. But I think starting
somewhere, helps you order the discussion, order the questions, etc, etc. Becky, what
message or advice do you have for either, you know, freshmen, seniors, students have
just graduated, alumni. What message would you like to share with them?
Becky Lumly 28:25
I would say, you know, keep an open mind. And, you know, you can hear from my career
journey, that there have been twists and turns, I would never have predicted, you
know, where I would be today, 23 years ago, when I graduated from the Walton College,
I was focused on being successful. And I knew that was my goal. And I wanted to have
a very fulfilling career. But it's hard to really say what that's going to look like.
So have an open mind. You know, work hard, and really soak up everything that you
can, because really everything in every role, even if at the time it doesn't seem
like the most fulfilling role or, you know, the, you know, it's not making you extremely
happy in the moment. There's always something to learn and where you want to go.
Matt Waller 29:26
Well, Becky, thank you so much for taking time to visit with us. I really appreciate
it.
Becky Lumly 29:31
Thank you, Matt. I appreciate it too.
Matt Waller 29:36
On behalf of the Sam M. Walton College of Business, I want to thank everyone for spending
time with us for another engaging conversation. You can subscribe by going to your
favorite podcast service and searching be epic B E EP IC
Transcribed by https://otter.ai
