On its face, Continental Realty Corp. looks like a typical real estate development firm.
Its vast holdings of apartments, strip shopping centers and industrial properties appear to be nothing beyond another amalgamation of property holdings.
But beneath the surface lies a sophisticated investment philosophy, which has employed land, buildings, bricks and mortar as common links in a series of profitable but unorthodox investment ventures throughout its 30-year history.
And, like Continental's foray into movie theaters more than a decade ago, the Towson-based firm's latest investment vehicle is an unlikely one: fast-food restaurants.
Since 1990, CR Restaurants Inc., the firm's restaurant subsidiary, has become the Baltimore area's second-largest Burger King franchisee, with eight locations from White Marsh to Columbia.
"It's become the major focus and fastest-growing part of our business," said John A. Luetkemeyer Jr., 54, Continental Realty's president. "Our anticipation is we'll do a minimum of two stores a year for the next five years."
And before one scoffs at fast food as a sophisticated investment, consider the profit potential. After accounting for upfront opening and other initial operating costs, a well-managed Burger King generates sales of $1 million a year.
"A lot of things that made us successful in the theater business work with Burger King as well," said Tom Herman, president of CR Restaurants. "It offers the unique opportunity to combine their operating excellence with our real estate and finance abilities."
Mr. Herman ought to know. A former executive with Burger King, a Miami-based chain that operates more than 4,000 stores nationally and had $7.5 billion in sales last year, he joined Continental 12 years ago as general manager of the firm's JF Theater chain.
Continental's foray into the world of the silver screen began in 1982, when the firm came to the rescue of a failing, 40-year-old theater chain. Like its involvement with the Reisterstown Road Plaza or the Hunting Hills Apartments, Continental based its investment decision on the real estate beneath JF's 17 screens and 11 buildings, with names like the Hippodrome, Town, Mayfair, Pikes and Rotunda.
"We basically always look for opportunity, and this seemed like a good one," Mr. Luetkemeyer said. "At the time, we thought we knew more than we did."
Fortunately, the folks at Continental are quick studies.
By late 1988, Continental controlled 66 screens -- 50 percent of all the screens in the metropolitan area -- and was building modern, if box-like, theaters in rising population centers such as Columbia and Owings Mills.
And revenue was rising like a Hollywood star, because Continental was one of the first to realize that the real money in the theater game came from the $3 tub of buttered popcorn and the $2.25 box of Raisinettes, not from ticket sales.
At the same time, though, Continental believed that the future of the movie theater business was shifting to larger players, so it sold the chain in October 1988 for nearly $30 million to a subsidiary of Columbia Pictures, a chain that would itself eventually be acquired by Sony Corp.
If location is everything in real estate, then timing comes in a close second.
Not that Continental became so enamored with film that it forgot about property. Even throughout the JF Theater era, Continental continued buying, developing, diversifying.
There was the 208-unit West winds Apartments near Annapolis; the $70 million, 40-acre Blakehurst retirement community in Towson, in which the firm is a partner with Mullan Enterprises Inc.; the Chartley Executive Park in Reisterstown, and the Wicomico Industrial Center in Baltimore.
In all, Continental and its affiliates control 2.7 million square feet of industrial, office and retail space, 4,500 apartment units and about 100 acres of undeveloped land valued at roughly $300 million.
Between the Burger Kings, apartment employees, administrative and retail personnel, Continental has 625 employees.
"Adding value is our whole business," said J. Mark Schapiro, 52, Continental's other principal. "We look for the new use, the mismanaged or undermanaged situation. And we're careful."
That care has allowed Continental to escape many of the pitfalls experienced by other local developers who got into trouble in the late 1980s by spreading themselves too thin or diversifying into areas out of their expertise.
"Many people are afraid to get involved in so many things," said Robert C. Levin, a KLNB Inc. principal and a partner of Mr. Luetkemeyer's in the past.
"But they've been successful in so many disciplines, which I think is real evidence of their talent."
Continental got its start in 1960, when Mr. Schapiro decided to renovate a group of town homes into office space in Pikesville. Mr. Luetkemeyer, who met Mr. Schapiro eight years later, completed the duo in 1979, after a stint as Baltimore City's treasurer and a career with the former Equitable Bank, N.A., where he rose to senior vice president in charge of lending.
"They combine two things you almost never see," said Mark L. Levy, who spent five years at Continental before forming his own firm, Rock Realty Co. "They're visionaries who execute details. And they complement each other well."
At first, the duo intended to focus exclusively on buying and renovating multifamily projects, Mr. Schapiro said. Their first apartment project, the 318-unit Brooklyn apartments, was purchased for $1 million. It remains part of the company's portfolio.
On the commercial side, Continental's first project involved 32 South St. downtown, a five-story building purchased for $210,000 and sold for $1 million.
"Their returns on investment have always been extremely high," said Richard Manekin, a CB Commercial Real Estate senior vice president who has known Continental for nearly 20 years. "Unlike traditional developers, they look at risk as being based on the amount of indebtedness incurred, rather than at the risk associated with finding tenants."
Not that Continental hasn't had setbacks.
In November 1994, for instance, a Continental-controlled partnership sought Chapter 11 bankruptcy protection on behalf of the 540,000-square-foot Reisterstown Road Plaza after a fight with lender Aetna Life & Casualty Co.
The insurer, which had lent Continental's principals $24 million in 1986, had attempted to foreclose on the mall after the partnership sought debt relief.
But, as it has countless other times, Continental came out on top.
Last month, the partnership emerged from bankruptcy protection with full control of the 33-year-old mall after persuading Aetna to cut $6 million off its mortgage and lower its interest rate by two percentage points.
With Reisterstown Road Plaza back on solid ground, Continental can now turn its sights on developing additional Burger Kings and new real estate projects.
There's just one slight problem.
"I don't have the slightest idea what we'll do next," Mr. Luetkemeyer said.
"That doesn't mean we won't tomorrow, though," Mr. Herman chimed in.