Arsenault, Wells keep step ahead of real estate cycles

LOUISVILLE — Serial entrepreneur Marcel Arsenault of Superior applies math and science to the cycles of real estate to achieve a hugely successful capital solutions enterprise.

One of his partners, Peter Wells of Denver, likes the creativity and problem-solving aspect of investing through Real Capital Solutions, 371 Centennial Parkway, Suite 200, in Louisville, an international private commercial real estate company Arsenault founded in 1984.

“The scientific approach seems to make sense, not by the seat of your pants. … He put a lot of mathematical metrics to the real estate industry early on,” Wells said about Arsenault. “He is very, as we sometimes say, pointy-headed, very disciplined, very thoughtful, thinking through projects ahead of time.”

Arsenault left his studies toward a doctorate degree in microbiology (he completed all but his dissertation) to pursue business. Wells closed a dentistry practice he owned for nine years for the same reason, later joining Arsenault as managing partner of Condo Capital Solutions.

In 1971, Arsenault initially used his knowledge of science to found and operate Boulder-based Mountain High Inc., which had five ice cream parlors and natural yogurt and ice cream food brands in the United States and Canada.

“It was fascinating growing a business,” Arsenault said. “The yogurt business and ice cream (business) was so much more varied and complex than working in a lab. You have got to work with people, figure out systems. You have to know everything in business in order to be successful.”

Arsenault sold Mountain High to Beatrice Foods Co. in 1983 and thought with cash on hand, he could invest in real estate. A year later, he founded Colorado and Santa Fe Land Co. in Broomfield, the predecessor to Real Capital Solutions, where he serves as CEO.

“As we grew to a national and international company, the name became appropriate because Colorado is about Colorado,” Arsenault said about the name change more than 10 years ago. “Now, we own real estate all across the country, and we own it in Spain. … It says better what we do. We have a lot of capital, and we have a lot of solutions.”

Real Capital Solutions buys, manages and divests of real estate, especially in opportunistic and value-add situations through renovation and redevelopment projects that position the properties to a higher price point. Since its founding, the company has purchased, managed and sold more than 265 real estate investments worth approximately $2.5 billion. The company currently carries $1.5 billion in assets, achieving returns in the top 5 percent of private equity real estate firms in the United States.

Arsenault uses his macroeconomic expertise to study the ebbs and flows of the real estate market, predicting and buying at cyclical lows and selling at the right times. During dips in the market such as the Great Recession, he bought up properties from various lenders and federal institutions that took over bank loans. Now with a more stable economy, he buys from owners and investors who are unable to add value and want to sell.

This expertise and a deep study of the industry give Arsenault a competitive advantage, he said.

“I enjoy understanding the industry and what drives it,” Arsenault said. “I know how to do research and figure things out. … I understand what drives real estate values and what comes next. … It’s a wonderful puzzle for me, why and when things happen.”

Arsenault’s company works with outside investors and 20 operating partners, co-investing and providing equity capital and bank financing. The company helps its partners acquire and finance land development, condo construction, apartment and commercial real estate projects.

In 1995, Arsenault and Wells partnered to invest in condo conversions in Colorado, Arizona, Wyoming, Texas and Florida. They also invest in apartments, office and industrial properties, and ground-up development — they handled a total of about 90 to 100 deals so far.

Before joining Arsenault, Wells had operated a dental practice in Vail from 1972 to 1981 after receiving a doctor of dental surgery degree in 1970 from the Medical College of Virginia in Richmond, Va. He then became a broker with Marcus & Millichap Inc., and later with the former Frederick Ross Co. He called Arsenault on a Sunday in the early 1990s to inquire about his company’s recent purchase of several properties and was surprised he answered.

“As a broker, you try to put buyers and sellers together,” Wells said about his cold call. “I was trying to find out what kind of properties they were interested in acquiring. … I was trying to find out what they were looking for, what their business plan was.”

Wells brokered deals to Arsenault’s firm for a few years before they became official partners, buying their first condominium project in 1995.

Arsenault handled the accounting, bank loans and other financial aspects of the investments and Wells oversaw the marketing and sales, property rehabilitations and conversions, and property management until there was a sale.

“Marcel is a financial wizard and would handle all of the acquisitions we did together,” Well said. “Marcel is one of the best business people that I have ever met.”

Arsenault called out the Great Recession in the mid-2000s when he noticed homeowners’ eager buy-up of condominiums, demonstrating the top of the cycle, Wells said.

“We decided it was time to get out,” Wells said, adding that by the time of the crash, they sold upward of 95 percent of the property they owned.

From 2009 to 2013, Arsenault and Wells focused on purchasing distressed properties, but by 2013 when the market righted itself, they identified the coast of Spain as a good location to buy distressed properties. They engaged in seven deals there, including two development projects from the ground up that they then sold. Now they focus on condominium and multifamily developments.

“There’s a certain amount of creativity either if you’re developing and creating something from scratch or going in and buying basically someone else’s problem. You have to apply creativity to turn situations around,” Wells said.

Wells and Arsenault also are world-renowned philanthropists. Wells served on the board of Alliance for Choice Education, which funds scholarships for underprivileged students. Arsenault founded three foundations, including Broomfield-based Our Earth Future Foundation, where he serves as chairman. He and his wife, Cynda, have contributed more than $100 million to the foundation and two related foundations to enhance maritime cooperation, create sustainable jobs in fragile economies and contribute to thought leadership in global issues.

Arsenault believes he is responsible to give back after acquiring a great deal of wealth through his business dealings.

“Money is an enormous privilege and an enormous responsibility,” Arsenault said. “It doesn’t really belong to us anymore than the earth belongs to us. … I’m good at the game, the money game. What’s the end of the money game? I don’t think the answer is spending.”

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