Friday, December 29, 2017

A Giant in Commercial Real Estate - a friend who has made a difference! Jim Hime

Jim's bio from the USAA RealCo website.
As Chief Operating Officer for USAA Real Estate Company (“USAA RealCo”). Jim manages the teams that are responsible for USAA RealCo’s asset management functions and asset dispositions. Jim’s remit also includes responsibility for USAA RealCo’s Capital Markets group, which sources and structures all debt financing on USAA RealCo’s portfolio and which also advises USAA’s Life Insurance Company affiliate with respect to its senior mortgage investment program. In addition, Jim chairs USAA RealCo’s Risk Committee.

It was during the heyday of commercial real estate technology.  Jim had left his position at Hines and joined a consortium called Zethus.  Zethus was going to, in the words of another friend in the commercial real estate industry, “boil the ocean.”  I was moderating a panel on real estate technology at some sort of industry event at the Waldorf Astoria Hotel in New York City.  Jim was one of the panelists.  One day, leading up to the panel, Jim was quoted in the Wall Street Journal.  In my infinite belief that sometimes surprise is a wonderful ice-breaker, I read the quote to the audience and then asked them if they knew who had made the statement.  Out of the corner of my eye, I saw Jim looking at me with at “What the heck?” kind of look.  Well, no one guessed it and I used that as a way to introduce Jim to the group.  That was the start of a long friendship between Jim and myself.  Jim is a very modest person so I’m going to tell you something about him:  he is a published novelist.  Here is Jim’s ‘Official SiteI encourage you to check out his books.  He’s a very talented writer. 

Q. How did you get your start in the commercial real estate industry?

A. It was my exit plan from a twenty-year career practicing tax law, during the course of which my main client, year in and year out, was Hines. In 1995 I had an existential crisis, to wit, I realized that if I did not make a move pretty soon, as a then 41 year old, I was looking at spending the rest of my days plumbing the depths of the Internal Revenue Code of 1986, as amended. In casting about for an escape hatch, my attention naturally turned to Hines because of their integrity, their collegiality, and their established excellence at what they do (all still true today, I’ll be bound). I let slip to Ken Hubbard, who then ran Hines’s East Region, that I might be primed for a career change, and he passed that along to then CFO, now Vice Chairman, Hasty Johnson. After an in person interview with the legendary Gerald D. Hines himself (who would have me know that my annual compensation might not be quite as, ahem, predictable as it was in the practice of law), I made the leap, on January 1, 1996, to the business side, and joined Hines in a capital markets role. I have never looked back.

Q.  What advice would you give to someone who has been in the industry for a few years or a student looking to get his or her start? 

A.  Nothing, but nothing - not money, not fame, not exciting and fun transactions – nothing is more important than the honesty, integrity and trustworthiness of the people with whom you work. I have been blessed to work with some of the best people in the business, really at every career stop along the way, but particularly at Hines, at the Abu Dhabi Investment Authority, and now at USAA Real Estate, where our core values are service, loyalty, honesty and integrity. Those are values that are not universally shared in the business world, as the newspaper headlines remind us regularly - but I must say that when they are the values that guide your behavior, both as respects your colleagues as well as others in the marketplace, they lend a kind of moral clarity to what you do. So my advice is, find yourself good people and stick with them. It’s even better if they have a big balance sheet - real estate is not a place for the faint-of-heart, or the undercapitalized.

Q.  As you look back on your career, is there anything you wish you had done differently? If so, what?

A.  Not spending my first twenty years in the workaday world as a practicing tax lawyer would have been a good place to start. In fairness, I did find tax law both interesting and intellectually challenging. But it failed to satisfy Aristotle’s test of happiness (as paraphrased by President John F. Kennedy): the full use of one’s abilities along the lines of excellence. I found that in real estate, especially here in the later stages of my career when I can sometimes fool myself into thinking that I sort of know what I am doing.

Q.  Who has influenced your career most and why?

A.  My first boss at the law firm Baker Botts, a man by the name of George H. Jewell. He was a gentleman through-and-through, the consummate professional, as smart as a tree full of owls, and as humble and compelling a person as I have ever known in my professional life. Working for him helped me understand the power of kindness, laughter, unselfishness and grace under pressure. While I have not always lived up to the standard he set, I have never stopped trying to. The way he conducted himself, as a colleague and a leader, has guided me for the entirety of my forty-plus year career.

A year-end message from Steve
All my best wishes to you for a healthy and happy New Year!  Let 2018 be a year where all the senseless killing & hate end.  "Come on people now, smile on each other, everybody get together, try and love one another right how."  Written by Chet Powers (more popularly known as Dino Valenti) and recorded by a number of people. The most well-known version was released in 1967 by The Youngbloods).

Someone's house where I attended a Christmas Party.  The woman is a mannequin! 

Wednesday, December 27, 2017

A Giant in the Commercial Real Estate Industry - a friend who has made a difference! Mark Rose

Mark's bio from the Avison Young website.

Mark E. Rose is Chief Executive Officer of Avison Young and Chair of the Board of Directors of Avison Young (Canada) Inc. He manages all strategic, financial and operational activities of this full-service commercial real estate company, which provides solutions to real estate investors, owners and occupiers throughout the world. In his nine years with the Toronto, Canada-based firm, Mark has overseen its growth from 290 real estate professionals in 11 offices in Canada to more than 2,600 professionals in 82 offices in Canada, the U.S, Mexico and Europe.

Mark joined Avison Young after holding executive positions at two global publicly traded commercial real estate firms. He served as Chief Executive Officer of Grubb & Ellis Company from 2005-2007 and was previously Chief Operating Officer and Chief Financial Officer of the Americas for Jones Lang LaSalle. Prior to his 12 years at Jones Lang LaSalle, he ran Metropolitan Realty Advisors, the brokerage and investment firm that he founded in 1993. Previously, he was Chief Executive and Chief Financial Officer of the U.S. Real Estate Investment Trust of British Coal Corporation Pension Funds.

Mark and I met during the early heyday of commercial real estate “Internet” days. He was Chief Operating Officer and Chief Financial Officer of the Americas for Jones Lang LaSalle. JLL was part of a consortium of companies that had invested in finding “the one thing” that would bring together many, most or all of the technology needs of commercial real estate companies. One day, I’m sitting in Mark’s office in Chicago, and we’re talking about that consortium, Octane. He says to me, “Turn around.” Behind me is a large white board with all kinds of stuff – some circled, some connected by dots. “That’s the whole thing right there!” It’s been great to watch Mark’s career evolve. Within a few years, he had become CEO of Grubb & Ellis during a challenging time in the firm’s history. He turned that company around – when a lot of folks in the industry thought it was a goner. Shortly after leaving G&E, he took the helm of a Canadian-based real estate brokerage company called Avison Young. As CEO, Mark has both grown and geographically expanded that business tremendously. 

Q. How did you get your start in the commercial real estate business?

A. Upon graduating from university, I joined Eisner & Lubin, a New York public accounting firm. The partner and manager, who hired me, had me auditing and preparing tax and financial statements full-time for several of the firm’s real estate clients, including Harry & Leona Helmsley and the related Helmsley entities. Over time, I added more real estate syndication clients and public companies and was motivated to engage further.

A few years later, I joined Pan American Properties Inc., a U.S. real estate investment trust controlled by the British Coal Pension Funds, as Controller. The role led to me becoming the CFO and then, as part of a strategy to liquidate and repatriate the REIT assets back to the pension fund, I became CEO in 1989. Upon the successful liquidation of the Watergate Complex and $1 billion in British Coal assets in 1993, I started my own company called Metropolitan Realty Advisors in Washington, DC. I then merged Metropolitan Realty Advisors into Jones Lang Wooten and became both a Managing Director and head of the Washington, DC region in 1995. As a leader of JLW’s U.S. business in 1997, I was part of the deal team to negotiate and merge JLW with LaSalle Partners to create Jones Lang LaSalle on March 11, 1999.

Q. What advice would you give to a person in the commercial real estate industry for a couple of years or a student looking to his or her start?

A. Two very important pieces of advice: 1) Seek out and learn all aspects of real estate. Having exposure to the property management, leasing and capital markets of all product types makes you a more well-rounded and knowledgeable real estate professional. Then focus on what interests you and gets you excited. The more you love the product and service, the happier and more productive you are; and 2) Keep physical and mental wellness (whole wellness) top of mind. We are operating in trying times and our youth need to be mindful of the toll that stress takes on our bodies and minds.

Q. Looking back on your career, what do you wish you would have done differently?

A. What would I do differently? Hard to answer… I was a 26-year-old CEO of a $1-billion REIT and had the trust, strategy and confidence to liquidate it before the 1990s crash would have wiped out significant gains. With that said, I always wished I had the experience at that time to recommend to British Coal that it should reinvest in the U.S. in 1994.

Q. Who have been biggest influences on your career and why?

A. The answer to this question, for the last 20 years, has been my mentor: James O. Boisi. As Vice-Chair of Morgan Guaranty and Chair of Pan American Properties, Inc., British Coal Pension Fund’s REIT, he taught me to focus on stakeholder returns and making everyone around me better than I believe I could be. He convinced me that listening was more important than talking and that those who have come before us have forgotten more than we know.

Jim played a major role in defining and promoting me at such a young age, but as I look back today, there are others who need recognition. My wife Allyson has been the rock of a 30-year marriage that left her alone with three children as I traveled and built companies. Her confidence in me and encouragement to chase what I love, and believe in, has allowed me to pursue my dreams. Finally, over the last nine years, my partners and family at Avison Young have reinforced my belief in culture and working with partners who believe in doing what’s right first and what’s profitable second.

Mark Rose


Friday, December 22, 2017

Norman Kranzdorf: A Giant in the Commercial Real Estate Industry - a friend who has made a difference!

Norm’s bio from Amterre Property Group website.

Norman Kranzdorf has had a distinguished career in the real estate industry spanning more than 50 years. He founded Kranzco Realty, Inc., a general commercial real estate management and brokerage company, in 1979 and in 1992 was a co-founder of Kranzco Realty Trust, A New York stock exchange Real Estate Investment Trust. He served as its President and Chief Executive Officer until the June 2000 merger with CV REIT, which created Kramont Realty Trust. He was Chairman of Kramont until he retired in 2003. From 2003 until 2013 he served as Senior Vice President for Retail at Urdang Capital Management, Inc., a unit of The Bank of New York Mellon. From 1972 to 1981 he was president of Amterre Development, Inc., a successor to Food Fair Properties, Inc., a major shopping center owner and management company.

Norman is a founding member and past Trustee of the International Council of Shopping Centers.

He was also a founding member of the University of Pennsylvania Wharton School Real Estate Center and served on its Advisory Board.

He currently is an occasional lecturer at Hunter College in New York City. He has lectured at the ICSC University of Shopping Centers since its inception in 1957 on various real estate topics and has written or co-authored a number of real estate books. (Steve note:  Norm’s autobiographical book, A Man of Many Centers, is a must read for anyone in the shopping center industry).

Mr. Kranzdorf also served on the Board of Directors of NAI Global, one of the largest commercial real estate organizations in the world.

Norm and I first met via the ICSC probably in the mid-1980's.  He is one of the most respected men in the industry and he has always been an approachable guy. While we never did any deals together, our paths would cross from time to time. Norm has always been passionate about the shopping center industry - and his enthusiasm has never waned.  Norm's son Mike, who is President of Amterre Property Group, and I met during the early commercial real estate Internet days when CREOL, the company I was with, had launched the first data platform focused exclusively on retail real estate. Mike has been a great friend, sounding board and trusted advisor for me.

Q.  How did you get started in the commercial real estate industry?

A.  I graduated law school in 1955 and went to work in a law firm that did all of Food Fair Supermarkets work.  Food Fair Properties was the company started by Food Fair Stores to build shopping centers.  That happened in 1955 or 1956.  They hired Ralph Biernbaum to run that new company.  Ralph, who later became President of ICSC (International Council of Shopping Centers), wanted his own staff, including an accounting and a lawyer. I was a young lawyer working at Food Fair Real Estate at that time and they said, “You go over there and work for Ralph and become part of his team because you’re the youngest man, maybe you know something about shopping centers.”

Food Fair Properties was a separate company, independently owned, listed on the stock exchange by itself but basically controlled by Food Fair through some common stock and bonds.  Ralph hired me as house counsel, which was almost like a Vice President of Real Estate.

There were only four employees at the company at the time:  Ralph Biernbaum, Roger Smith, a secretary and me - otherwise we hired all outside consultants. Ralph then started teaching me the business. We started getting into bigger projects like regional malls.  I stuck around with Ralph and then in 1965 or 1966 Ralph decided he had made enough contacts, while President of Food Fair Properties, to go out on his own. I then was appointed president of the company because I had learned enough from Ralph to take over.  At that time we were a pretty big company. We had our own real estate department, which included architects and contractors and everything.  So that’s how I got into the real estate business – as a lawyer assigned to a real estate company.

The Beginnings of the ICSC: I have a picture on my wall of the 2nd ICSC convention ever held. This meeting was in February 1958, so 1957 was the first meeting of the original members of ICSC. Leonard Farber was a developer in Westchester County, NY and he had the inside track with A&P Supermarkets. He built a lot of A&P strip centers but he was tired of getting beat up by the A&P lease negotiations. He decided there should be a group where all the developers got together, exchanged information and had a standard lease and discussed how do deal with the chains and the problems presented by dealing with chains.

In 1957, Len called a meeting in Chicago and he asked all the companies that were interested in retail development to come to the meeting. There were not more than a dozen of us. It was Len Farber and the guys from Monumental Properties and some others.  We were the founders of ICSC. We hired an Executive Vice President named Al Sussman to run the organization.  Al got paid based on the number of people he could get to join.  It got so big, we had to change his contract – he was making too much!

Q. What advice would you give to someone who has worked in the commercial real estate industry for a few years or a college student looking to get his or her start?

A.  First of all, if they are sure they want to be real estate people, then they have to devote their time and effort to the real estate business.  They can either go to work for one of those very large companies, CBRE or JLL, and get training there. Or they can go to work for one of the REITs. As a number of people who have law degrees go into real estate (like me) across have done they could go to work for one of the retail chains in the real estate department.  

I give all of them the same piece of advice: take advantage of the ICSC and what it does for students.  You know the ICSC has special programs for people who are in college or law school. It’s very inexpensive to join and go to all their meetings. They now have a whole division called "Next Generation." Its' job is to help younger people get involved more.

The ICSC is where Ralph and I got much of our training and where we really helped run the ICSC for a long time.  Ralph became President and I became Secretary/Treasurer. I was very involved in their legal work. Ralph was still at Food Fair Properties.  When Ralph left we had come to the understanding that the words “Food Fair” in our title was really hindering the company. Nobody wanted to open a ladies wear store in a shopping center owned by a company called ‘Food Fair’.  So, I hired a Madison Avenue ad firm, I don’t remember their name but they were very big and expensive at the time. They did word searches and came up with the word Amterre - American Terre (Terre is French for 'Earth').  We adopted Amterre Development Inc. as the company name.  Food Fair properties went away and it proved very beneficial and we were able to grow the company considerably. We did try some other things besides retail, like apartments but none of that worked and we stuck to malls and strip centers. 

Q. As you look back on your career, is there anything you wish you had done differently?  If so, what?

A.  I stayed at Amterre too long.  It was a public company but Food Fair had a lot of control over the company.  There were only two outside directors on the Board, the rest were Food Fair people. So they basically controlled a lot of the big decisions.  They did not give the employees of Food Fair Properties, like myself, any encouragement other than our salaries.  They wouldn’t give us stock options; they didn’t give us any equity in the company. Looking back, I realize I had stayed there too long.

I was there for almost 25 years until Food Fair went bankrupt and there was a huge bankruptcy case between Food Fair and Amterre.  Amterre never went bankrupt and but Food Fair wanted to take control of our company and liquidate it for their own benefit.  I went to court and got the judge to agree that I would liquidate the company. By the time the case was over they got their 40% which is all they were entitled to. 

Q. Who has most influenced your career and why?

A.  Ralph Biernbaum was definitely a major influence. I got 10 or 12 years of his experience.  He was a developer when Food Fair first hired him. He took me to every negotiation.  After, he would decide, for example, “I’ve made a deal with Federated for a department store in Baltimore. Norm, take it over from there.”  He was the front man and then he gave it to me and I had to make all the decisions, not just legal, but the business decisions as well.

I was involved with all the top guys at ICSC. One of the great things about the early years of the ICSC was the camaraderie amongst the developers. I was very close with both Mel Simon, one of the co-founders of what is now Simon Property Group and Eddie DeBartolo, founder of The Edward J. DeBartolo Corporation.

One of my favorite stories: Eddie DeBartolo and I bailed each other out numerous times because, even though we were competitors, we liked and trusted each other. I once got stuck with a piece of land outside St. Petersburg, FL and I didn’t know what to do with it; I just didn’t know.  Eddie said, “I’ll put something together.  Sell it to me for what you paid for it.”

But the biggest example of the relationship he and I had is this: We were building a mall in Beloit, WI. Ralph Biernbaum and I started it; he left and I took over. The anchors were Montgomery Ward and J.C. Penney. That was a big deal in those days and we had an additional piece of land for a third department store. I made a deal with what was then called Weise Department Stores to go in as the third anchor.  They drove a hard bargain, which included a clause that said if I don’t get the store built and open in time for Thanksgiving business, they didn’t want the store and they could, and would, cancel the lease.

In the summer of that year, it became evident to me that I wasn’t going to make the deadline.  I went and got an extension on the construction mortgage and I really didn’t know what to do. The contractor was way behind and I became desperate and I called Eddie.  He had just built a Weise Department Store in a mall about 60-70 miles away.  He had his own construction company. “What should I do, Ed?” He says, “On Friday, fire your contractor. On Monday my company will show up and finish this store.” Monday his company showed up, had the store open in time for Thanksgiving and then he sent me a bill.  That’s the kind of relationship there were among the major players then.

And then I once went to Mel Simon to see how he was handling his Woolworth leases – which were horrible.  He said, “I’ll tell you what I’ll do, I will FedEx you a copy of my last Woolworth lease and you can read the changes I got them to make before I signed it.” Cooperation on things like that was common.

One of the things that you, and probably most people don’t know about, must’ve been in early/mid-70s when malls were really starting to flourish, The department stores who had all the power insisted that their leases (or operating agreements if they owned the land under their building) had restrictions against the developer leasing to more than 2 shoe stores, for example, and absolutely no discount stores, like E.J. Korvette’s.  We developers had no choice so we signed those leases. The SEC and FTC sued all of us both individuals and corporations for restraint of trade - they sued Federated Department Stores (which, over the years included Shillito's, Lazarus & Company, Abraham & Strauss (A&S), Filene's and Bloomingdales, Foley's, Stern Brothers Burdines, Rike's, Goldsmith's, Bullock's I. Magnin and Rich's). They sued The May Company (a holding company whose brands included Famous-Barr, Filene’s, Foley’s, Hecht’s, The Jones Store, Kaufmann’s, Lord & Taylor, L.S. Ayres, Marshall Field’s, Meier & Frank, Robinson-May, Strawbridge’s and Caldor). And they sued the developers.  There was no defense against it, it was wrong.  We all had to sign a 20 - year consent decree that we would take those restrictive clauses out of the lease document.
And, 20 years to the day, I got a certified letter that the restriction was released! 

Norm Kranzdorf 

Blog Archive