Miscio & Stroud Inc. builds 20-year history

When Ellen and Ted Zibell, owners of the Perennial Gardener on College Avenue, wanted to expand by buying the pawn shop next door, they encountered an unmotivated seller.

“He wanted to move,´ said Ellen Zibell, “but the tax on his profit would have been prohibitive. So we called Larry Stroud to help us.”

Zibell said she and her husband had sought Stroud’s assistance because his wife, whom they had come to know, also has a retail shop downtown. They decided that he would be plugged in to what works for a small business.

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The solution to their problem turned out to be a Section 1031 exchange.

“We found a new property, the old Dimmers Brew Pub, that met the pawn shop owner’s specs,´ said Zibell. “That protection from a huge tax liability was the motivation he needed to sell.”

Stroud, one of the founders of Miscio & Stroud Inc. noted that in 1999 about 55 percent of the company’s income came from structuring IRS 1031 exchanges.

‘That 55 percent came hard,’ Stroud said. “There are very few things openly visible on the market. We had to dig to pull off good deals that are under very tight time frames. I think there has to be an easier way.”

A 1031 exchange certainly possesses qualities of some bizarre IRS tango. Step one: A buyer wants to sell a property for a substantial profit but does not want to bear the unbearable tax. Step sideways: The seller’s broker locates a property to buy to “replace” the sold property. Step quickly: The seller sells, stashes the profits with a “qualified intermediary,” seals the deal to buy the replacement property, all the while hoping that the replacement seller will not use the 1031 pivot point as leverage.

A short supply of commercial investment properties and peculiar IRS remedies for easing the tax burden are just two of the changes in the commercial real estate sector that Stroud has witnessed since he entered the trade in the late 1970s.

“I learned this business selling real estate that you couldn’t sell,” Stroud said. “And it only got worse with the tax reform act that took effect in 1987 and 1988. Land took the biggest hit. The recovery was very slow until 1991, then ‘boom.'”

In some ways Stroud regards his bad timing as an advantage. During those lean years he and partner Andy Miscio had to do a lot of leg work. As a result, they learned the business very, very well. They also learned how to be creative in crafting deals that would satisfy both the buyer and seller, not to mention the bankers.

In the 20 years that Miscio & Stroud has been a presence in Fort Collins, the company has collected an impressive list of local clients who keep coming back for help in their commercial real estate dealings.

“They have been our real estate dealer for about 12 years now,´ said Russ Kates, president of Steele’s Markets. “The first job they did for us was sell the ground in front of our Foothills store. They sold that property quickly and built our confidence in them.”

Since that time, Kates has continued to rely on Stroud for all his real estate needs.

“We said we wanted a Starbucks at our new location on Drake,´ said Kates. “So Larry went after them and leased the space. It doesn’t matter if we need a warehouse or an investor, he finds them.”

Other hometown favorites that call Miscio & Stroud their own include the Silver Grill Cafe, Spradley Barr, CooperSmith’s Pub and Brewing, Alfalfa’s Market and Poudre Valley REA.

Miscio & Stroud’s location downtown in an historic home suggests something about the attitude of the operation, but not the scale. The modest location hardly reflects the fact that with a cast of five – principals, Andy Miscio, Stroud and Brad Van Hull, leasing broker and marketing director Gina Donnan, and office administrator Bernita Canfield – ranked fifth among northern Colorado’s real estate brokerages in The Northern Colorado Business Report Book of Lists 2000.

Just as clearly as the numbers reflect the success of the business, the location reflects the attitude of the principals toward the heart of Fort Collins.

“Good things are happening downtown, a big improvement over 20 years ago,” Stroud said. “We now have a city full of committed people who plan well and who guard the quality of life. I don’t believe we will ever be a no-growth city, but we will have a good scheme to guide growth.”

Miscio, Stroud and now Van Hull will likely have some influence in how that scheme evolves. Miscio, who holds a degree from the Wharton School of Finance and Commerce at the University of Pennsylvania, has taught real estate courses at Colorado State University and was appointed in 1996 as a commissioner to the Larimer County District Court to resolve real estate conflicts.

Stroud, who holds an MBA from CSU, participates in the Downtown Development Authority, Sertoma and Leadership Fort Collins. He also sits on various city and county land use committees.

Stroud noted that traffic and parking are the only major constraints on growth in the downtown area. For instance, there is a new demand for high-end condominiums and high-quality office space, but only if the space can be offered for sale rather than to rent. Ownership becomes a crucial element in this contemporary equation because with the rising price of construction, rents are insufficient to recapture costs. But if the developer can sell halves of a building to small business owners, he can recapture his costs and the buyers have free and clear assets at the end of 15 years.

The new demand for high-end office space represents only one of the market changes that has challenged the ingenuity of the company.

“In 1995 Fort Collins hit the magic population number: 100,000,” Stroud said. “When a city arrives at that number, the big corporations and chain restaurants take notice. It looks as if that market has cooled down a bit, with a small flurry new restaurants along Timberline.”

What comes next is anyone’s guess. But do not be surprised if some interesting opportunities for owner-occupied businesses and high-end condominiums in and around the downtown area begin to appear.