Tailwind Group & North Star Aviation
It would be easy to assume that Tailwind Group and North Star Aviation Inc. have nothing in common. After all, these two Mankato-based companies are in very different industries. Tailwind is in real estate, while NSA is in aviation.
But a deeper dive reveals that these companies have more in common than you’d think. For starters, they share the same ownership team. Partners Reggie Reed, Michael Sather, Kyle Smith and Landon Smith founded Tailwind in 2005, then went on to acquire NSA in 2018.
The similarities don’t stop there. Both businesses are growing exponentially, with locations scattered across the heart of the U.S. They also share similar work cultures, with seasoned business professionals leading young teams with a high-energy, go-getter approach. Perhaps most significantly, they both serve a common demographic: college students, colleges and universities.
The Quarters at Mankato
North Star Aviation Fleet
“That’s the connecting link between these two business operations,” Jerry Redman said. “They both serve universities, but in different capacities. Tailwind has other commercial properties, but its core business is student housing. North Star has other business operations with general aviation services, but its core business is flight training with colleges and universities.”
Redman is vice president at NSA, which provides state-of-the-art flight training at three different flight schools. His counterpart at Tailwind is its president, Lane Gravley, who oversees the acquisition and management of dozens of student housing developments. They share a passionate, dynamic approach to leadership and an ability to steer their companies through the challenges of rapid growth. I sat down with both men to talk about the obstacles and opportunities facing their companies today.
The Tailwind Group’s focus is real estate acquisition, development and management. Based in Mankato, it specializes in amenity-rich student housing.
Portfolio: 80 percent student housing, 20 percent commercial development
Locations: Alabama, Florida, Indiana, Iowa, Michigan, Minnesota, Mississippi, Missouri, Ohio, Oklahoma, South Dakota, Wyoming
Could you give me a brief recap of your career and what led you to Tailwind Group?
I worked for Precision Press, which is a Taylor Corporation company, for about 30 years. I started fresh out of high school on third shift and worked my way up through the ranks into management. In my early 30s, I started night school to earn my bachelor’s degree, which took about six years. At that time, I was raising my family; we have four daughters. It was a busy time, but we got it done. Around 2008, I became the leader of the label division and eventually became the general manager.
I had several mentors at Taylor. They taught me how to lead people, helped me create a positive work culture and taught me how to grow a business. In many ways, the Taylor principles of always a better way, and creating opportunity and security for your people remain part of who I am today.
In the summer of 2020, I received a phone call from Turning Point Management, a consultant company that was working with the Tailwind Group. Tailwind was in an aggressive growth mode and was looking for a leader for the business that could grow people and scale with the growth. I was at a place in my career where I wondered if I could take my skills outside the walls of Precision Press. I lacked real estate knowledge but enjoyed people development, leadership and working with a team to produce a positive financial statement. I think it has been a great fit, and I’m having a blast.
What is Tailwind’s focus?
About 80 percent of the business is student housing, and about 20 percent is commercial real estate. We have approximately 25 large student housing complexes throughout the country. We typically focus on Power Five conference schools, big schools where enrollment is growing. We tend to concentrate on colleges that are located in the center of the country. We have found it best to bet on Midwest stability and values.
A core focus we have is looking for a value-add opportunity. Many of our competitors want to buy an asset that is already stabilized and will pay a good distribution to investors. Often we improve a property and incorporate our management principles into the property over the course of a year or two. Ultimately these changes help grow our revenue and the reputation of the property.
We also build developments from the ground up. This building (Profinium Place) is one example of our commercial real estate. Our most recent developments are in Iowa City, Iowa and Lincoln, Nebraska.
Who are your customers, and where are they located?
We think of our tenants and our investors as our customers. Most of our residents are college students who are looking for an education and an experience. They want to live at a nice property that feels like a community where they can play, study and rest. Our properties have ample study lounges, a swimming pool, a fitness center and a game room. We usually have fun outdoor spaces, such as volleyball and basketball. Residents can get out of their rooms, get away from their roommates and have some fun or study. Our hope for our residents is that they feel loved and cared for by our staff, that they are safe, and that they build memories that will last a lifetime.
Our investors are people that have trusted us with their investment dollars. They want a return, obviously, and they want us to manage it well. If we do that and they’re getting a great return, usually they’re a return customer and they grow their investment with us.
What’s new at Tailwind? Are there any projects you’re particularly excited about?
We just recently bought a property in Columbia, Missouri, that needs a renovation, a big face-lift. All of the units will be renovated, as well as the exterior of the buildings. It’s going to be great when it’s done.
Our two new developments in Iowa City and Lincoln are just moving in their first residents now. Both assets have been two to three years in the making, so it is fun to see them come to fruition.
We are also seeing some good commercial growth in the Mankato area. We’ve recently purchased the Mankato Heights Mall and a small strip mall on Sioux Road. It’s fun to renovate and improve these spaces after purchase and to help bring new businesses into the area.
How many people does Tailwind employ?
We’ve gone from about 180 employees in 2020 to about 250 today. Corporately, we have 48 employees across the country that support the business as accountants, financial analysts, sales leadership, etc. Our team really is the heart of the company. We have a dedicated staff that embodies our core values and strives to support and challenge each other.
Your website describes your team as “…unconventional thinkers who cannot and will not be out-hustled by any competitor.” How do you achieve that?
One of the things that really attracted me to Tailwind is the high energy of the workforce. For many of our employees, this is their first full-time job. They’re young and hungry to learn and grow their careers. They have a competitive spirit and a refuse-to-lose mentality. Our team takes pride in out-hustling the competition. This shows up across the organization as a nimble, effective team. You won’t typically see long, drawn-out plans for improvement, but instead see real-time solution management that simply solves problems on the spot. A mantra we follow is, “If you’ve got a good idea, why haven’t you done it already?” Our ownership models this mentality by digging in and helping, even if it means pulling weeds or pressure washing.
The current staffing environment is tough right now. Are you having a hard time finding employees?
We normally have openings at various locations. Certain roles can be challenging to fill, but we have a really good “farm” system to grow and promote talent. Each of our student housing sites has four to eight community assistants, or CAs. They are college students that live on the property and work 12 to 20 hours per week. They help lease the place, give tours, answer questions and solve problems. When they graduate, if they enjoy the work and like Tailwind, they will move into full-time jobs with us. It becomes their first real job. Being fresh out of college and having responsibility for the property’s revenue or joining as an accountant with several properties to look after can give a young person a real sense of accountability and responsibility. They get the opportunity to learn how to engage with people and how to manage a business. It’s great training, whether they stay with us long term or move into a different field.
What are you doing to attract and retain talent?
We focus on leadership development and building an empowered culture. We do this by creating a high support, high challenge environment that creates opportunities for our people. It calls people up versus calling them out.
At the same time, we challenge our team to always improve and to aspire to our core values. We believe in versatility and responsiveness, to name two of them. We set challenges and goals in these areas and work towards excelling in them. For example, we have a goal of reaching 100 percent occupancy at each site. If you do, you win a sales trip. Excelling in responsiveness, versatility and innovation will have a big impact on whether or not you reach this goal.
We also encourage teamwork across the portfolio. Many of our sites are within driving distance of each other, so we encourage working together and learning from each other. I’m very proud of how our teams join forces to execute our business plans at each property. Our hope is our staff all feel connected to the team, know that their voice is heard and recognize that their leader will fight for the highest possible good for those they lead. This way of leading creates the kind of culture where people will stay and grow.
Lastly, with both our employees and our residents, we strive to show that we love and care for them. Parents are part of our customer base, and they want to know that their student is safe and cared for. So, we use terms like “love” and “care” with our residents often. We use them internally, as well, with our employees. We don’t think you can challenge someone effectively unless they know you care about them. That permeates our culture and it really starts with our owners.
Those are not terms you hear in a lot of workplaces.
No, it’s different. When you get into corporate America, it can be very performance-based, results-based. That can be successful; it really can be. But how do you keep people loving where they work and who they work with? A key for us is conducting our one-on-one meetings with each staff member. These meetings are designed to be meaningful conversations that allow the manager to get to know their direct employee in a deeper way. What is their life situation, what are their strengths and their goals? It drives engagement and inclusion.
Property values are currently pretty high. Are you putting on the breaks at Tailwind?
We haven’t yet. As long as the opportunities that are coming before us make sense, we’re going to keep growing. When they don’t make sense, we’ll hold. In the COVID years, most people pulled back and even started selling assets. We were fortunate that we kept moving forward and kept going after assets. We were able to find some great diamonds in the rough that gave us value-add opportunities. Hopefully, that will continue to be the case as we strive ahead.
What is the biggest challenge facing Tailwind today?
The current economic climate is challenging, but we are navigating through it. Our biggest challenges are rising interest rates and increased expenses. Interest rate uncertainty has made it more difficult to secure financing. It’s very similar to finding a loan for a home mortgage. When rates increase, sales slow down and prices taper as well.
Expense management overall has proved more challenging. Obviously, high inflation is affecting pricing in everything from a gallon of milk to rent. Property taxes have jumped, insurance rates have increased and utilities have seen increases.
Do you foresee rents increasing to meet these economic challenges?
Rent is increasing across the country in order to keep up with expense growth. Student housing normally lags the traditional market as we lease our apartments a year in advance. We work hard to manage our expenses tightly, but we do need our revenue growth to keep up with expense growth.
Have supply chain issues affected your business?
It’s affected us quite a bit in our new developments. For example, getting countertops and cabinets and appliances used to take four weeks, and it can now take 16 to 20 weeks. In some cases, it’s stunted our ability to finish projects on time. For example, we built a property in Lincoln that was only about 75 percent complete when school started. Fortunately, we were able to work with the city and open the finished portion of our property for students, but we still are completing a portion of the units and amenities. Delays in the supply chain and workforce shortages were the primary contributors.
What are your future goals?
We want to continue to grow our portfolio, create opportunities for our employees and remain nimble as we grow and exceed our investors’ expectations. That’s a mouthful for sure, but we believe if we stick to our core values and to what got us to this point, we will achieve all of our aspirations.
100 Warren St.
Mankato, MN 56001
Phone: (507) 322-1200, ext. 970
North Star Companies is the parent company for three Part 141 flight schools that provide pilot training for private, instrument, commercial and instructor licenses. It also provides Fixed-Base Operator (FBO) services for the Mankato and New Ulm airports.
North Star Aviation, Mankato
• Business and operations headquarters for North Star Companies
• Flight training for Minnesota State University, Mankato
• FBO providing fuel and maintenance services for both the Mankato and New Ulm airports
• 115 employees, 36 planes
Bowling Green Flight Center, Bowling Green, Ohio
• Flight training for Bowling Green State University
• 75 employees, 18 planes
Premier Flight Center, Springfield, Missouri
• Flight training school for Ozarks Technical Community College
• 20 employees, 9 planes
What led you to North Star?
My background is heavy in finance and accounting within businesses, more so on the construction side. I went to MSU Mankato for business. I have a business degree, with concentrations in construction management, finance and an accounting minor. I’ve spent the majority of my career in construction, whether it was highway or building construction, and some light manufacturing. But I was always heavy into the finance and accounting side of business operations.
In 2018 there was a transition in owners at North Star Aviation. I had a connection with someone at Turning Point Management who was on the board of directors for North Star’s previous owners. Turning Point Management was instrumental in introducing me to the new ownership group. I became vice president of NSA in 2018. I’m also part of the North Star Companies ownership group.
What I have learned over the years is a common theme in business operations: assets, people, customers and regulations. North Star is heavy in assets, whether it’s buildings or planes, and we’re dealing with people, university contracts, and government regulations. It’s been a privilege to work here. It’s been a lot of fun.
You’ve been at North Star for four years. What have you been focusing on?
Operations, finances and investments; we literally grew from 90 employees to 210 employees in four years. I am always looking forward to see what our business structure looks like. Growth makes us continually adjust our employee work loads. When do we have you take the top five tasks on your list and bring in somebody underneath you to take on your other tasks? That kind of divide and conquer has been my focus, trying to stay ahead of hiring and building the structure that supports it. That’s probably the biggest achievement, developing that structure fast.
Our growth has also created demand for more equipment and facilities. We went from 36 planes to 63 planes in four years. Everything we deal with has such long lead times. We fly Piper aircraft, and their lead times are typically 10 to 14 months. So, we’re always placing orders with long lead times, and we’re trying to project our growth in that time frame. It’s always very exciting and kind of fun when we can say, “Yeah, we got that correct.”
Are there any projects that you’re particularly excited about right now?
We’ve been building a lot of infrastructure to support our growth. We built another hangar here in Mankato, and went through a terminal remodel in 2019 and 2020. In Bowling Green, we did a flight operations and hangar expansion. In Springfield, we did a hangar remodel. There are always projects going on at each location, which excites customers and employees and helps us to handle the growth.
Moving forward we’re focusing on the technology side of flying. When these students are in the cockpit, they’re basically working on a computer-based operating system. There is so much information the plane can display. They have to learn to fly the plane and manipulate that screen at the same time. Their focus can’t just be on the controls, they’ve got to also focus on the horizon. The question is, what can we do to advance these students, not just with airplanes, but with training devices that help them learn the skills they need? So, we’re introducing two new simulators and we have five Precision Flight Controls devices on order that will be coming in January to all locations. That’s the next big goal.
It sounds like training pilots is an expensive business.
New airplanes and upgraded simulators are what makes us stand out, that’s why we’re seeing the growth. The average age of our aircraft is 4 years old. One of the things that draws our students, is the newness of the planes. They get to learn to fly in the latest technology, Garmin G1000 Ndi cockpits in the simulators. It’s the same technology that you’re seeing in the airlines.
What makes your flight schools stand out from your competitors?
We are an independent contractor that partners with colleges and universities. In our program, the university provides the core classes, but students do all their flight training out here with us. Being an independent contractor means that we can react faster on hiring or buying assets or making improvements. That makes us different. Most university flight schools are run by the university, so they have to deal with budget constraints, academic priorities and hiring freezes.
Another difference is the student-to-staff ratio. At the university, they may have a professor teaching four classes a semester at 30 to 35 kids a class. So, their student-to-professor ratio is very limited versus ours. In Mankato, we’re servicing roughly 600 kids and we have 110 employees here, so we’re almost one employee for every five students. Back to the numbers, it takes roughly 2.2 Certified Flight Instructors to keep each plane flying, but then we also need an average 1.8 other people per aircraft: schedulers, dispatchers, line service, fueling, maintenance, administrative staff.
What is your current enrollment?
We are at 600 here in Mankato, 350 in Bowling Green and roughly 75 in Springfield, so we have about 1,025 students between all three locations. This fall our combined enrollments were up 19 percent over fall of 2021. When you start looking year over year, we’re always pushing that 20 to 25 percent increase. Aviation is the #2 program at MSU Mankato right now and it continues to grow. We had 160 new freshmen coming in this fall.
The aviation program is very demanding on the kids. They fly roughly 250 hours for their flight training here. They come in their freshman year, and they’ll start flying right away. Their first two lessons are ground lessons. For their first lesson, they sit down with their flight instructor and go through FAA regulations and guidelines and make sure they have all the paperwork in place that allows them to fly. The next lesson is getting into the basics: understanding the plane, its operation and its controls. The third lesson is up in a plane. Obviously, the instructor is the pilot in command, but they’re getting up there, and they’re both flying the plane at the same time.
How many flight hours are required to complete the University program?
Two hundred fifty hours. They’ll go private their first year, then they earn their instrument readings their second year, which allows them to fly in the clouds. Their junior year, they start getting into the commercial side of flying. Once they’re seniors, they’ll take classes to become a Certified Flight Instructor, along with training on an advanced CRJ700 simulator. The majority of them will become an employee of ours, because they have to get 1,000 hours of flight time in before they can apply to go to the airlines or commercial flying. So, they become an employee to build their time up in the sky. When they go up with a student for 1.5 hours, they can also log that time, because they are the pilot in command.
That’s one of the benefits of our partnership with colleges and universities. We are a Part 141 flight school, so the flight hour requirements to become an airline pilot are lower than at schools that are not associated with a college. Our students only need 1,000 flight hours. Other programs require 1,500 flight hours.
How many years does it usually take to hit that 1,000-hour target?
Usually, a year and a half to two years, then they’re off to the airlines. So, we have a high turnover with our CFI group. We have 70 CFIs in Mankato, 35 in Bowling Green and 10 in Springfield; we will typically turn over half of them a year, if not more. It’s exciting for us.
What types of careers are your graduates pursuing?
The majority of our students, I would say 80 percent, go off to the airlines. But we’re starting to see increasing interest in corporate flying and companies like NetJets and FlexJet that rent planes for business or for personal use. That side of things is really picking up since COVID. The standards are typically a little bit higher if you’re going to go after the corporate world. They want to see you at 1,500 or 2,000 hours of flying to start.
Are there jobs waiting for your students once they’re done?
Yes. A lot of them start the interview process and start signing contracts their sophomore or junior year. We just had a kickoff event here at NSA for our incoming freshmen. We had 10 airlines there with booths set up because they all want to start getting in front of these kids. From Sun Country to Delta to SkyWest to Envoy, all these airlines are handing out stuff and saying, “Think of us.” Plus, we’ve had corporations like Target and Cargill here in the past representing the corporate side of flying. Once the semester starts, airlines are down here on a monthly basis recruiting.
There’s a shortage of pilots right now. During COVID, the airlines … stopped hiring for a six- to nine-month window. Then they also had retirements, along with early retirement. So now things have picked up again, and they’re backlogged on hiring and they can’t train new pilots fast enough.
Once they’re hired, our graduates are starting out at $80,000 plus, with maybe a $20,000 plus signing bonus that will pay out in a couple of years. They’re highly sought-after. They’ve just got to make it to that 1,000-hour mark. To do that they’ve got to be disciplined, they’ve got to be passionate about it and they’ve got to be very professional. If they have one little hiccup in their training, it gets disclosed to the airlines.
What kind of a hiccup?
As you go through private, instrument, commercial and CFI ratings, you have FAA stage checks and check rides built within that. You sit with a designated pilot examiner, an FAA employee, that tests you on your skills. If you fail one of those, you must retake your exam, and that is disclosed to the airlines. If you have an incident on the ground, let’s say you cause some type of damage to an airplane, that gets disclosed. If you have a safety violation, that gets disclosed. So, they’ve got to have a pretty clean record with their flying, and for very good reason. It’s all about safety.
These kids are taking on a lot.
The students are taking on a lot of responsibility in handling this career path: discipline, time commitment, mental stress and the financial commitment. In today’s environment their return on educational investment has never been better.
Do you see much attrition as a student gets in and realizes how challenging it is?
We see that freshman year, which I think is typical for universities. We see probably about 15 percent drop out that freshman year. Once we get them past their first year, only about 2 to 2.5 percent leave the program. That’s all we lose going forward. Most of these kids, they probably knew since they were 5, 6 or 7 that they were going to fly. They have that passion. That’s something different about this group of students, they’re very passionate.
I see that passion in you, too, when you talk the program.
It is exciting. You meet these students when they start their freshman year, then you see them go through their flight training and then become employees for a year or two. It’s a positive transition. We see high turnover in our business because our flight instructors are always leaving. We celebrate that because that’s success within our program. It’s high turnover, but it’s good turnover.
This passion in flight training stems back to NSA’s previous owner, Mark Smith. I’d like to give him credit for developing this program and maintaining it from 2001 till 2018, except for a five-year period when NSA stepped away. He held that baton for flight training with the university.
Mark was very passionate, and he just loved the kids. He was instrumental in getting the Bowling Green contract in 2014 and the Premier Flight Center contract in 2016. He set the stage for our growth now. So that North Star passion started with Mark.
Two members of our ownership group, Kyle Smith and Reggie Reed, went through the NSA aviation program and knew Mark, and were employees of Mark’s at one point. When it came time and Mark wanted to retire, they stepped into the business, along with the other owners.
Matt Holt, human resources; Ryan Williams, director of maintenance; Chris Plasek, chief flight instructor; Bryant Stiernagle, controller; Rob McGregor, general manager.
2022 Department of Aviation Orientation featuring Minnesota State University Provost and Senior Vice President of Academic Affairs David Shaen Hood (located in the front row with red tie).
What is the NSA work culture like?
Consider the fact that our core customers are students and over half of our 210 employees are between the ages of 21 and 24 at each location. It’s very high energy. They’re in a race, and we’re just here helping them along in the race. They’re excited to become a flight instructor, and they’re excited to get through that and become professional pilots. There’s a lot of passion.
We talk about the high turnover of our flight instructors, but we have a core group of employees that have been with us for a long time. I have three outstanding general managers at each location; Rob McGregor at North Star Aviation in Mankato, Melissa Webb at Bowling Green Flight Center in Bowling Green and Corina Bond in Springfield; they all lead by example and continue to raise the bar on safety, compliance and staff development.
I think our culture is another thing that differentiates us from the competition. Whether it’s here or at Bowling Green or at Premier Flight Center, I think we have a very good culture. You see it in how we respect people in the industry, in how we treat people coming in and in how we treat our employees. It creates an energy that staff, students and customers like. It makes it fun and exciting.