COVER STORY : Bud Smith’s Empire 54 Years in the Making and No End in Sight : The real estate baron continues to have confidence in Ventura County’s economy. And at 78, he is ready to tackle another tall challenge.
Like many who grew up in the Depression, Martin V. Smith tends to collect things, and he sometimes has trouble letting them go.
A drawer in the credenza behind his desk contains hundreds of business cards, some dating back to the 1940s. Sprinkled about his long, cluttered office are souvenirs from around the globe, including an authentic suit of armor from Europe, the foot of an elephant he shot in Africa and camel saddles he brought home from Egypt.
His most impressive stockpile, however, is the real estate empire he has assembled over the past 54 years. Between Santa Maria and Calabasas, Smith owns more real estate than just about anybody but the U.S. government--more than 200 properties that experts say are worth a combined $150 million or more, including restaurants, hotels, apartments and office high-rises. Unlike most real estate developers, Smith has held on to almost everything he’s ever built, and his empire is still growing.
Within two years he expects to begin building a 15-story, $50-million tower in the jewel of his empire: the Financial Plaza in Oxnard. Located just off the Ventura Freeway, the plaza is already home to the 15-story Ventura County National Bank building and the 22-story Union Bank high-rise, where Smith and his company, Martin V. Smith & Associates, occupy the entire 21st floor.
At age 78, Smith still maintains such tight control of his company that even those closest to him are unsure about what will become of the firm when he can no longer run it. Self-effacing and often generous, he attributes much of his success to plain luck and has given millions to charity. But despite his wealth, Smith is a frugal and conservative man who drives a 7-year-old Mercury station wagon and makes sure his four daughters live by similarly modest standards.
His plan for a new office tower might seem risky considering Ventura County is still recovering from the deep economic troubles of recent years and that 15% of the county’s office space remains vacant. But Smith said his Financial Plaza is already 94% full and in recent years he has had to turn away several businesses that wanted to lease 10,000 square feet or more.
Besides, “Bud” Smith has been flouting conventional wisdom since 1941, when he bought a run-down food stand along a lonely stretch of the Coast Highway in Oxnard and turned it into a bustling restaurant frequented by Clark Gable, John Wayne and other stars during their regular weekend excursions to Santa Barbara. Since then, Oxnard has grown from a tiny hamlet of 8,000 into a budding metropolis of 150,000, but Smith believes the region’s potential remains largely untapped. “I still don’t think Ventura County has been discovered,” he said.
By holding on to almost everything he’s built, Smith weathered the recent recession better than most. Developer Jack Gilbert, 73, owner of Camarillo-based TOLD Corp., said his company now has 31% fewer business tenants than five years ago and has cut its work force from 188 to 13. In contrast, Smith has 1,000 employees (down only 100 since 1989) and about 1,000 commercial and residential tenants, about the same as five years ago.
The difference, Gilbert said, is that Smith got into the market early and kept virtually all of his properties, so he can cover costs of newer projects with revenue from older properties that were either paid off long ago or today cost very little. “We had to sell 50% of what we built to create funds to keep going,” Gilbert said. But Smith “got over that hump, and competitively he’s in a unique position.”
Born in 1916 in South Dakota, Smith grew up in Beverly Hills, where his mother managed an apartment building. His father, a banker, suffered a heart attack and died after the stock market crash of 1929. Several years later, Smith dropped out of high school and went to work operating a network of vending machines stretching from Los Angeles to Santa Barbara.
Those lean early years offered little indication of the wealth that would come. Cindi Smith, at 43 the youngest of Smith’s daughters, said her father would often hitchhike to make his vending machine rounds because he didn’t have a car. Once, she said, he was so tired that when he finally caught a ride, he fell asleep in the car and started snoring so loudly that the driver of the car “pulled over and dumped him out.”
Soon thereafter, Smith swapped his vending machine business for a roadside food stand in Oxnard. The restaurant, called the Colonial House, wasn’t much, but it was one of the few stops along the narrow, windy Pacific Coast Highway route from Los Angeles to Santa Barbara.
By 1943, with World War II under way, Smith had joined the Air Force and left control of the restaurant (which has since been torn down) to his mother, sister and new wife, Martha. Under the management of these three women, the Colonial House thrived. “When I came home, I had money in the bank and everything was paid for,” Smith said.
A year later, Smith bought 50 acres of land on the nearby Oxnard flood plain for $50,000. Using Air Force barracks he’d bought and moved, he built the Wagon Wheel Restaurant and Motel on the property. To promote the new venture, Smith bought 200 chickens and set them loose in downtown Oxnard. Strapped to the chickens’ legs, he said, were bands bearing the words, “I just escaped from the Wagon Wheel, where they serve the finest chicken around.”
The Wagon Wheel restaurant is still there today, and the surrounding 50 acres are now worth about $30 million, he said. Spurred by the success of the Wagon Wheel, Smith began assembling a real estate portfolio that today includes 25 restaurants, nine hotels, two high-rises, two mobile home parks, three gas stations, and a small railway. He also owns hundreds of apartment units, many of them in Oxnard’s Channel Islands Harbor, where Smith and his wife live in a four-bedroom apartment just steps from one of his few extravagances, an 86-foot yacht called the Dry Martini.
Despite his vast wealth, Smith’s family and associates say he would rather acquire it than spend it. His executive vice president and assistant of 20 years, Richard Spencer, said the two often joke about which of them is wearing the oldest suit. Longtime friend Bob Nesen, owner of a group of car dealerships in Thousand Oaks, said Smith “never carries money on him. I’ve had him borrow money from me because he didn’t have any.”
Even his yacht is a converted sea-air rescue boat built in 1944 that Smith uses primarily for fishing, often delivering his catch to one of his waterfront restaurants. When Smith entertains guests on his yacht, his daughter Cindi said, he often serves drinks in plastic foam cups. When the cups are empty, she said, he collects them, washes them and puts them back in the galley to be used again next time.
“He’s a puzzle to me,” Cindi said. “Here’s a man who spent his life building an empire, and he’s never really stopped to enjoy the fruits of his work.”
His daughters say they are expected to live by the same standards. “People always ask why I’m not living in Montecito and driving a Mercedes,” said Cindi, a real estate agent who lives in a rented house in Ventura and drives a Jeep. “If we need money, he’s there. But he always felt to give us money was to give us a false sense of reality.”
Meanwhile, Bud Smith’s empire keeps growing. His new 15-story Oxnard tower won’t be his tallest, but with 300,000 square feet, it will be his most spacious. Financing for the project isn’t in place yet, but Smith said that will come when his company starts signing up tenants. Smith said his company is already talking with several East Coast insurance companies about leasing large chunks of the new building.
Local environmentalists aren’t wild about the new project. “He’s started on what would be the beginnings of another Century City,” said Stewart Mimm, a slow-growth advocate in Oxnard. Others wonder whether Smith might be a bit too eager, given the region’s recent economic troubles. Vacancy rates in Ventura County office buildings are still 15%, down from the peak of 26% in 1992, according to CB Commercial Real Estate. But the county has lost more than 9,000 jobs over the past five years and few are being replaced, according to a study by UC Santa Barbara.
But Smith, a cigar-chomping optimist, believes Ventura County’s clear skies, warm climate and uncrowded roads will continue to lure businesses away from Los Angeles and other areas, and he points to a number of promising signs: Oxnard’s Port Hueneme is handling one-third more cargo than it was a decade ago and has been increasingly effective in attracting fruit and automobile carriers. The Cal State University system has agreed to buy 260 acres near Oxnard for a new campus, promising a steady supply of educated workers for the region. And a government group is looking into building a modern commercial airport at nearby Point Mugu.
Some say the new office building will succeed simply because it’s Bud Smith’s project. “He has the Midas touch,” said Tim Grant, a broker with CB Commercial Real Estate Group in Ventura. “He’s done things people have doubted, but nobody doubts him anymore.”
Well past retirement age, the 6-foot, 4-inch Smith has white hair, poor hearing and legs so wobbly that he recently had to give up duck hunting, one of his favorite pastimes. But he comes to work every day and still makes all the major decisions for his company. “They’ll have to drag me out of here feet first,” Smith said.
When he does leave, the fate of his company is unclear even to those closest to him. If anything happens to him, Smith said, the firm will be run by three of his longtime associates, including his attorney, Stanley Cohen, Controller Herbert McReynolds and Executive Vice President Richard Spencer. But ultimately, Smith said, the company will belong to his four daughters, who range in age from 43 to 50.
Margie Tegland, the purchasing agent for Smith’s hotel chain, is the only daughter who currently works for the company. None of Smith’s daughters has been groomed to take over his empire. “He’s always run it on his own,” said his oldest daughter, Toni Gardiner. “I don’t think he considers us capable.”
Smith said he doesn’t even expect his daughters to try to keep the company going. “If they sold everything and divided up the money, I wouldn’t really blame them,” he said.
But Smith’s daughters say they believe he would be disappointed if his life’s work was simply parted out like an old automobile. “The company isn’t anything without him being there,” Toni said. “But we’re interested enough to keep it going as far as we can.”
When it comes to Bud Smith’s empire, maybe even his daughters will have trouble letting things go.