For unto every one that hath shall be given, and he shall have abundance …. Matthew 25:29
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Franklin McLarty is standing beneath the eaves outside Andina Cafe downtown with his cellphone to his ear when I arrive. He puts it away. That will be the last time I see it out, a remarkable thing for anybody, but McLarty is chief executive officer of an auto dealership group ranked in Automotive News’ Top 25, and the founder of CapRocq Core Real Estate Fund, the largest real estate fund in state history.
“If I don’t put it on Do Not Disturb, when I feel it going off in my pocket, it starts my wheels turning, and I’m not as present,” he tells me, later. “I just think, whether you’re in business meetings or just individual human interactions, like bumping into a friend from grade school on the street” — which he’ll do shortly: Stacy Miller — “you want to be present. You want to be engaged and show that interaction the respect it deserves.”
On Saturday McLarty turns 40. He has accomplished so much in the 17 years since he graduated from college that, asked to name one goal he hasn’t reached yet, he puzzles for a moment. “Work-life balance,” he offers.
McLarty and his brother Mark are the only children of former White House Chief of Staff Thomas “Mack” and Donna Kay Cochran McLarty. It was his great-grandfather Tom who opened a Ford dealership in 1921, back when there was just one Ford, the Model T, in four models — touring, sedan, coupe and roadster, plus a Model T-based truck.
Each successive generation built on the family’s success in incredible installments, like the ablest servant in the parable of the talents. Tom’s son Frank built the dealerships across the southwest part of the state and began a truck leasing enterprise. Grandson Mack was just 31 when his father died and he took control of McLarty Companies, but at 40, he’d become chairman and CEO of Arkla, the state’s largest natural gas utility. Seven years hence, he had an office inside the White House.
There are now several for-profits and nonprofits branded McLarty, including McLarty Associates, an international strategic advisory firm (once Kissinger McLarty Associates), McLarty Companies and McLarty Capital Partners, and the McLarty Global Fellows (scholarships to work abroad on advancing economic and political empowerment).
Franklin McLarty has taken the family back into car dealerships in a meaningful way. About 10 years ago he partnered with regional car kingpin Steve Landers. Along with Chief Financial Officer Paul Hart, the three set their sights on a national confederacy.
In early 2008, on the eve of the market collapse, the two inked a deal to make billionaire Robert L. Johnson (founder of Black Entertainment Television) principal partner. That infusion of capital — McLarty won’t say how much; “a very significant amount” — ushered in a period of great build-out for the new RLJ-McLarty-Landers Automotive Holdings LLC (RML Automotive), which today has 25 dealerships.
This year, perhaps because of his family’s short history in trucking and his own in automotive retail, McLarty became the newest board member of PAM Transport, a trucking company and one of the state’s 16 publicly traded companies.
It’s quite a doubling back for a man who graduated from college “without any family business to come back to” and a wish to manage hotels.
LITTLE ROCK WALKABOUT
From the coffee shop, we walk down River Market Avenue toward President Clinton Avenue. On a block behind us once sat the old Arkla headquarters where his dad was chief for nearly a decade. It’s a soon-to-be Hilton Homewood Suites, owned by McKibbon Hotel Group, erstwhile employer of the younger McLarty.
After a jot we’re inside the plush lobby of the Marriott Courtyard, operated by McKibbon.
For most of his 40 years, Franklin McLarty thought he’d be in hotels, and a part of him thinks he will still.
As a lad he and his family took a vacation to the Bahamas. He remembers at one point facing the water from the deck of a boat — maybe it was a dock — and spying an island off in the distance, turned to brother Mark and wondering aloud what it would take to live there. “‘I mean, how would you do that?’ He said, ‘You either own a sugar plantation or you get into the hotel business’” — he may have said something about being a pirate; the memory’s hazy — “‘and that’s about it.’ Really, that comment piqued my interest.”
From there, he picked up the occasional article about some hotel magnate.
Never a stellar student, he neither made grades so poor it jeopardized college nor achieved quite like his brother (who was once the state’s top-ranked high school tennis player, and later, graduated magna cum laude from Georgetown University and eventually the Wharton School of Business). His mother graduated first in her class at the University of Arkansas. His father, second.
In high school Franklin read Heart of Darkness, which he now briefly misremembers as Shadow of Darkness, and recalls fondly English teacher Tandy Cobb. He started college at New York University but graduated from the University of Richmond with a degree in English, a truth that prompts him to utter the most ironic self-assessment of the meeting — “I was not quantitatively inclined.”
His first career began at the nation’s oldest continuous Forbes Travel Guide five-star, AAA five-diamond hotel resort — the Broadmoor in Colorado Springs. He started off living in an efficiency apartment and working the front desk for $8 an hour. There he experienced the greatest physical pain of his life when he tore his anterior cruciate ligament maneuvering on skis, and the greatest pleasure when he met assistant manager Gabriela Martinez, who was fascinated by Egypt and kept a framed photo of the Abu Simbel temples on her desk.
“I said, ‘That’s Abu Simbel.’ She said, ‘Yes!’ I said, ‘You like ancient Egypt?’ She said, ‘Yes.’ I asked her, ‘You ever been there?’ ‘No.’ ‘Why don’t we go to dinner some time and I’ll tell you about it.’ … Nobody else in the hotel could probably use that line on her.”
“Before we got married, and even now — Franklin’s just entertaining, ” says Gabriela McLarty. “He’s a fun person to talk to. It’s always been that.”
He eventually rose to the level of supervisor at the hotel’s four-star restaurant, then left in 2000 to get a Master of Business Administration from the University of Miami and work for Gene Prescott at the tony Biltmore Hotel.
“We in Miami, as you probably know, as much as any city on the East Coast except New York, have more diversity … and Franklin is excellent in dealing with certain people and instilling confidence,” says Prescott, head of Seaway Hotels Corp. “He’s also attuned to being a moneymaker, and though we often say that, not everyone thinks in terms of … enterprises are supposed to make money.”
DAD
Let’s address the elephant in the profile, and let’s be plain — there is no question but that Franklin McLarty is a great beneficiary of his father’s success.
In Miami, it was Mack McLarty who arranged a sit-down with Prescott. In 2007, when Franklin McLarty and Steve Landers were looking for a principal investor for their fledgling auto group, it was Mack McLarty’s friendship with billionaire Robert Johnson that ultimately fixed the troika — “my father had crossed paths with Bob Johnson at an event in Washington 15 years [earlier] and been friends since.” In between, when the McKibbon Hotel Group came looking for investors in what is now the First Security Center downtown and the Marriott Courtyard, they sought Mack McLarty.
“That was the initial relationship, but our family didn’t have any direct involvement or expertise in the hotel business” outside of his own, Franklin said.
In fact, when I asked him to point to a time he most felt like his own man, he said that first meeting with John McKibbon, a relationship that began with a call placed to Mack McLarty.
“I don’t feel [my work at McKibbon] was diminished by the fact that that initial outreach was to Dad. Really, the meeting I had with John McKibbon, I was the only one there, and he ended up offering me a job without any discussion” of Dad.
In fact, from his perspective, personal success and family success — parlaying one into the other — aren’t mutually diminishing.
“It’s nice to have family involved.”
But “whatever you do it’s always going to be, ‘Well, how could that guy miss?’” his brother Mark says.
“It’s certainly [a claim] that we both have lived with … but a lot of kids from privilege do [well on their own] and in dramatic fashion.”
And “Franklin and I didn’t have any capital that we inherited or were given. When we started out of school, we worked for other people, me at J.P. Morgan in New York, he [in hotels] — graveyard shifts, in towns we had no family. We put enough together that eventually we had enough to invest in things. We invested in RML, a much smaller amount [than Mack McLarty or Steve Landers], but it was our liquid net worth. That money came pretty dearly for us.”
CAPROCQ CAPSTONE?
And now they’re both investors, significant ones, in a fund Franklin McLarty co-founded.
In 2013 he was the entrepreneur along with Kevin Huchingson behind CapRocq Core Real Estate Fund L.P., investors specializing in the acquisition of midmarket office buildings. The firm began with about $50 million and two acquisitions: a five-building, 162,500-square-foot office campus in Lowell and a two-building, 157,000-square-foot one in Columbia, S.C.
Today it has more than tripled its assets to $165 million with properties from Willow Creek in Johnson to Halifax Media Group in Daytona Beach, Fla.
“The thesis was, on the core assets strategy, we could go into underserved markets, put deals together with very low leverage, high equity — generally one-to-one debt to equity — stabilized properties [that are] 75 or 80 percent leased,” he says.
“Basically we’re just doing a yield play, not trying to find deep turnaround [such as] 20 percent return. We didn’t think we needed that. People were happy to get a relatively low-risk, low rate of return right now because … bonds are yielding so low.”
“He had the connections to the investment bankers we used out of New York,” Huchingson says of McLarty. “He and his family’s history, and you know, Mack … he brought a lot there.”
In fact, Mack McLarty’s lifelong relationship with the late J.B. Hunt greased Johnelle Hunt’s sale of the Lowell office park —CapRocq’s first portfolio piece.
Now there’s CapRocq Automotive, a fund exclusively for automobile parks and dealership properties, a venture that is uniquely Franklin’s.
“Particularly with CapRocq Automotive,” Huchingson says, “he had the relationship with manufacturers … with other dealership owners across the country.”
Over a fish lunch at Brave New Restaurant, just a stone’s throw from CapRocq’s Riverdale office suite, I tell McLarty he has outperformed his teenage dream of running some kind of equatorial bed and breakfast. He says no, he hasn’t. I tell him as CEO of RML Automotive and co-founder of a significant real estate investment fund, he simply can’t extricate himself. Not now.
Yes, he says. He can.
“I believe, and I really hope in my core, that I will always have the strength of character to do what is intellectually fulfilling to me, and never do something just because my life is wrapped up in it,” he says. “It’s not about scale. It’s not about being big for big sake.”
“My bet will be that Franklin is doing even more 10 years from now than he is today,” says Mark McLarty. “He’s got a real interest in entertainment and writing.”
He sits on the Little Rock Film Festival board of directors; he was schoolmates with Craig Renaud and family friends with Jamie Moses and Owen Brainard, all festival founders.
“He’s got a real interest in politics. Maybe I’ll be attending his inaugural dinner 10 years from now. … Business, politics, writing, entertainment — he’d like to do all those things and still have [daughter] Brianna living a block away.”