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 

Wednesday, December 20, 2017

Brian Stoffers: A Giant of the Commercial Real Estate Industry - a friend who has made a difference!

Brian's bio from the CBRE website:

CBRE-Global President, Debt & Structured Finance

Brian oversees the global Debt & Structured Finance practice at CBRE. Under his leadership, approximately 160 professionals have originated nearly $150 billion in loan volume since 2014.  Additionally, this practice maintains a loan services portfolio of more than $160 billion globally.  

Brian has extensive experience in the origination, structuring, placement, closing and servicing of commercial real estate debt for life insurance companies, pension funds, banks, debt funds, Freddie Mac, Fannie Mae, FHA and Wall Street sources.

Prior to the CB Richard Ellis acquisition of L.J. Melody in 1996, Brian was Senior Vice President and Southwest Regional Manager for CB Commercial’s mortgage banking division.  Brian began his career with Coldwell Banker Commercial in 1981 and became a senior real estate finance officer in the firm’s La Jolla, California office.

On our phone interview, Brian and I were trying to remember when we met.  We concluded that it was many years ago and may have been via this column.  Then, as has happened a number of times with folks that I’ve ‘met’ through “On the Road”, we got together.  Over the years, Brian has written to me when something I write resonates with him.  It’s great to see someone with the integrity and professionalism that Brian possesses rise in the industry to a very senior position.  While he used to be amazed at my travel schedule, the shoe is now on the other foot as Brian has travelled lots of miles in his global role. 

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

A.  Let’s call it serendipity.  I started in the business in 1980.  I went to work for a small tenant rep broker – when I say small it was a one-man band in Orange County in So. California.  The guy found me at a lunch & learn at Cal State Fullerton.  I was pretty much working my way through college as a grocery clerk. He did a presentation and said, “Hey, I need some help but I can’t pay you anything” – that was my entre into the business.  Working for nothing for 6 months was table scratch but it turned out okay.

Anyway, I ended up with a buddy drinking beer with our dates at an international street festival in the City of Orange where I was born and raised.  My date that day my turned out to become my wife and we’ve now been married over 33 years.  My buddy and I decided that it was far better for us to drink beer that was brewed in Europe rather than Orange County so two weeks later we were off to Europe to drink beer for 10 weeks.  It was a soul-searching time for me and it was during that trip that I realized I loved the commercial real estate business but I wasn’t getting near the training or exposure that I needed.

When I came back, I embarked on a job search and it turned out that my mother, who was a secretary at a local high school, worked with another secretary, who happened to be a swimming teacher who taught me how to swim when I was five.  Her son was the managing director of what was then Coldwell Banker Commercial in Denver.  He hooked me up with Personnel Director Tom Townley in Los Angeles. (they used to call it Personnel back in the day, now they call it HR).   After a battery of 8-hours of tests, mostly psychological tests with questions like, “Would I rather pick flowers or saw wood” kind of thing, I had 6 interviews with Executive Vice Presidents at the company.  None of the EVP’s ever returned a phone call – that was part of the tenacity testing I was unaware of at the time. I got hired into a yearlong training program and become a “Wheelie”.  I was one of 11 invited into the program. My fellow Wheelies were all male, they were all white – that was the day.   I was one of just a few that were not ‘Trustafarians’ – most had ample trust funds supporting their $1,000 / month salaries.

We rotated assignments in different departments every three months.  My second assignment was in the corporate marketing department in downtown Los Angeles.  Funny story: I met a guy who was also in the program and we agreed to have lunch together. We got in his new Beemer, which was parked next to my un-air conditioned Honda sedan and went someplace for lunch.  He asked me where I lived and I said, “On my Mon’s sofa in Orange County.” I asked him where he lived and he had just purchased a home in Bel-Air. He was obviously a Trustafarian. 

That training program was terrific.  The last 3 months my assignment was in the mortgage banking group in San Diego and that’s where I really found my passion and my niche. It required a combination of marketing and analytics - number crunching (I had been an accounting major at Cal State Fullerton).  They decided to hire me after that 3-month stint in San Diego and that was my real entre into the CRE business and the rest is history – 36 years later I'm still with CBRE.  

Q.  What advice would you offer someone who has been in the commercial real estate industry a short time or a student looking for his or her start?

A.  I would put a number of ingredients into that bucket. Tenacity – don’t give up. Be persistent but polite.  Work hard at it. Be yourself – don’t be somebody who you’re not and follow your passion. 

Q.  Looking back on your career is there anything you wish you had done differently and, if so, what? 

A. I don’t have many regrets.  I had many forks in the road and in retrospect, having followed any one of those forks would have taken me in a direction that may not have ultimately turned out as well as the path I chose.  That’s part of happiness in life - not having regrets, not looking back and not trying to turn back the clock.  We can’t turn back the clock, we must move forward.  I had a blood disease that nearly derailed me for good – I could have been dead at 29 - and those experiences made me a better person long-term.  I believe that life changing events can be a blessing. 

Q.  Who have been the greatest influences in your career and why?

A.  Wow.  Well if I start – there’s been a whole series of influencers over the years both internally, within the company and externally.  My grandfather was a great influence – a hard-working German who would handle a plow behind a horse or a tractor.  I learned a lot from him – I learned how to drink beer from him at age 10.  One at a time.  My grandfather was a self-made man, never graduated beyond 8th grade.  A hard-worker, honest as the day is long.  He was genuine and never had an enemy.  That taught me a lot.  I never heard him raise his voice. He personified a hard-working, ethical human being.  He was never a wealthy man but wealth did not measure his being.  He had people driving from LA to North San Diego County to buy his produce because they knew it was organic, unusual in the day, and he irrigated with water that never left his property.  They also raised beautiful fuchsias and other flowers.  He had a green thumb like nobody’s business and so did my grandmother. He had the best compost piles and he was an inventor.

One day I noticed this contraption that my grandmother had on the patio. I said, ‘Nana, what is that plastic bag hanging out of your ceiling?” “Oh, Grandpa made me a solar hair dryer.” He was just that kind of guy, always inventing – sort of a Rube Goldberg kind of guy.  Hard-working and solid.  He tragically died of prostate cancer that metastasized into bone cancer. He was a hearty, 5’10” and he died at 100 pounds of skin and bones.  But his mind was there until the very end…the very, very end.  I smile when I think about him. 

In my real estate career, there have been a number of individuals who have meant a lot to me. Chris Ludeman has many characteristics that I respect greatly. Mike Lafitte has been a wonderful role model, personally and professionally.  Bob Sulentic leads by example and is a tireless and passionate CEO. Larry Melody, whose company we acquired in 1996, was a great influence.  Larry was iconic in the business, he taught me a lot.  

I believe a successful human being is a compilation of not one but many characteristics found in those whose paths I’ve witnessed.  I’ve taken bits and pieces of elements lacking in my persona and have tried to learn from what I see in others.

Brian Stoffers

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