How a cowboy made it big by taking risk out of real estate

The companies Glade Knight founded are now worth billions of dollars.

"I started with $100," said Knight, chairman and CEO of the four Apple REIT companies based in Richmond. "Anything over that is a profit."

Not bad for a Utah cowboy.

Today his companies and their 80,000 shareholders own more than 200 hotels, almost exclusively top-line Marriott and Hilton brands, in 31 states, making them one of the nation's largest hotel owners.

Locally, he owns the Richmond Marriott Hotel downtown.

Knight's horse-riding-to-hotel-riches story is unbelievable, said Rodney K. Smith, president of Southern Virginia University in Buena Vista, where Knight is chairman of the board of trustees.

"But it's real," Smith said. "You can poke him."

Knight's secret for success is simple: work hard, stay out of debt, treat people well.

"I've done nine public companies. We have raised over $5 billion. We pay all cash for our hotels," Knight said.

Real estate investment trusts -- REITs -- own and operate income-producing real estate: hotels, apartments and office buildings. Individuals buy shares to invest in the firms.

Most of the difficulty in real estate comes from over-leveraging, he said.

"We took the risk out of the real estate market," the 66-year-old Knight said. "We became our own bank."

Well-located properties producing good incomes that aren't burdened by debt are "pretty safe," he said.

"If a property falls on difficult times, you don't default on your mortgage," he said. "You don't have a mortgage to default on -- and you wait for the property's value to increase."

The Apple REITs hold properties for five to seven years, then sell or merge the companies, Knight said. "You build value, and then you sell that value."

. . .

Life has not been all high flying and easy triumph for Knight. One of five children, he grew up on a horse and cattle ranch in Utah.

"I can't remember when I didn't have a chore," he said of working while growing up and getting up at 4 in the morning, "every morning."

At the age of 7, he helped herd cattle over the Utah mountains on weeklong cattle drives. "I had boots, hat and spurs. I saddled my own horse. I was part of the drive."

He discovered the value of hard work in his tightly knit Mormon family. "Boy, are you going to have a sad life if you don't enjoy work."

His boyhood experiences kindled a lifelong passion for horses and ranching. "He's a cowboy at heart," said his son Justin, now president of the Apple REIT companies.

Knight also learned the worth of a dollar on his parents' ranch. "I remember them struggling to pay the bills."

His son Nelson, who is the Apple REITs' senior vice president of development, said, "My father said he learned the art of negotiating through buying and selling cattle, and horse trading."

. . .

Glade Knight was drafted into the Army in 1968, during his senior year at Brigham Young University. He was stationed at Fort Lee.

Through his membership in The Church of Jesus Christ of Latter-day Saints, Knight met local business people and became involved in real estate partnerships.

Knight was in a hurry to start his own business, Property Enterprise. "No contacts, no money, very little experience," he said. "I just started making it happen."

He put together investors that bought apartments, office buildings and hotels. He merged his business with a Washington company.

Eventually, he was involved in nearly 100 tax-sheltered partnerships. Then the bottom fell out.

In the 1970s and early 1980s, tax-sheltered properties with their substantial deductions and credits were hot investments. "The purpose was to borrow as much as you could and get the tax write-off," Knight said.

But federal tax law reforms in 1986 got rid of those tax shelters, smashing the value of the investments.

"It was just devastating," he said. "People were going out of business. Real estate values plummeted."

For Knight, it was a time of sleepless nights, of getting up at 3 a.m. and going into the office early.

"I spent a number of years just working out difficult partnerships," he said. "We never lost any properties. We performed quite well."

"Though it was difficult, it was a most creative time," he said, "to learn how creative I could be."

During that tough period, he went into his office one day and said, "I'm going to raise $250 million, $300 million. I'm going to pay all cash, have no debt and I'm going to take advantage of the real estate market."

"They thought I'd lost my mind."

He set up Cornerstone Realty Investment Trust, took it public in 1997 and merged with Colonial Properties Trust in 2005. And, Knight said modestly, "We did very well."

Still, Knight, a trim, firmly built man, says he never anticipated having his business listed on the stock exchange, never expected that he'd run a slew of companies and that he'd oversee a college or own large ranches.

His plan was "just do the very best you can every day."

For Knight, doing the best he can is doing service for others: family, church, community, shareholders, customers.

. . .

Despite the pressures of business, "there's always an overriding focus that family is the most important thing," said his wife, Kathleen.

They have two sons and two daughters and now have 13 grandchildren.

Though family is everything to him, he was no pushover. "He always said he liked to spoil us until we acted spoiled," Nelson Knight said, "so we didn't act spoiled."

Bill Marriott, chairman and CEO of Marriott International Inc., has been Knight's friend for years.

"He is an outstanding businessman and generous philanthropist," Marriott said. "He is a great family man, church leader and superb horseman."

Lauren Thompson, a front desk agent at the Richmond Marriott, the city's largest hotel with 410 rooms, also speaks highly of Knight. "He's always very personable, always comes for a chat."

. . .

Knight has been very active in The Church of Jesus Christ of Latter-day Saints. The church has a lay ministry, and Knight served for years as the church's Midlothian Ward bishop and moved up to become Midlothian Stake president.

In 1996, Knight led a group of fellow Mormons in taking over what is now Southern Virginia University, which was about to close its doors.

"In 60 days, I put together a board," he said. "We came in with . . . a new work-out plan. In an afternoon, I had a university."

Now thriving, the liberal arts college in Buena Vista caters to members of The Church of Jesus Christ of Latter-day Saints, though it has no official ties to the church.

"Without his support, we would not exist," said Smith, the university president.

"With a major supporter like Glade, you want to name this or name that after him," Smith said. "And he just shrugs and says, 'No, we don't want to do that.'"

"I'm very comfortable," Knight said, "but I never feel that way. It's our insecurities that give us security."

. . .

Knight unwinds on horseback.

"It's therapeutic," Knight said. "When I ride my horse competitively, I clear my brain out."

He competes at the highest level in cutting-horse events, where riders demonstrate the ability of their mounts to quickly separate cows from a herd.

"It's like ballet," he said. "It's all perfect motion."

"One of the great things about Glade," said Jeff Hooper, executive director of the National Cutting Horse Association in Fort Worth, Texas, "is that people like him and respect him because of who he is, not what he has."

Knight has won $481,411 on his cutting horses -- as a non-professional rider.

When someone pointed out that, at age 66, he might want to find another recreation, he just grinned.

"I'm winning," Knight said.

Contact Peter Bacqué at (804) 649-6813 or pbacque@timesdispatch.com.