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.

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.

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.

Thanks, Matt. I appreciate it. It's good to be here.

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?

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.

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?

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.

Then after that you became Chief Financial Officer of Belmont Cap Juluca. I don't know if I pronounced that right.

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.

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?

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.

Becky, how many funds do you have, so far? Have you gone through at front range capital?

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.

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?

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.

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?

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.

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.

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

LPs stand for limited partners, they're the

limited

investors that don't have a say in how the investments go,

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.

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.

Yeah,

Did you? Did you see that from the other side?

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.

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.

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.

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.

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.

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?

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.

That is there a book I agree with you? And I've read it twice as well.

Yeah,

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?

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.

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?

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?

Right,

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.

Well, Becky, thank you so much for taking time to visit with us. I really appreciate it.

Thank you, Matt. I appreciate it too.