Feedback on risk & communications; MIPIM 2012

First, some feedback from OTR readers about a couple of things I wrote about in recent weeks: 

Risk:  "One thing I would add to your list is the lack of understanding about risk. Lots of people are talking about risk, but we don't have a good measure and even worse, investors don't have a good understanding of the risks they are exposed to. Some of it is a disclosure issue (which can be easily remedied) and some is a measurement (which we are working on)."

Communications:  "Something a client once told me, 'I can tolerate bad news; I can't tolerate surprising bad news.'  Get in front of of problems, not behind them and treat your clients like adults and speak up about everything, not merely the good news."

Curious as always, yesterday afternoon I had a chance to meander around the giant global real estate expo they call MIPIM held every year around this time and, as sometimes happens, I came upon a couple of stands (aka booths) that really grabbed my attention:

First, nef, a Turkish developer.  Very innovative.  You should watch their video.  Apartments, offices, dormitories are designed with the same underlying theme:  Why pay for space until you need to use it?  So, you have one of their 1+1 apartments (one bedroom/one bath).  They're small and let's say you want to have some friends to watch a movie.  You rent the "Movie Room" for the length of the movie.  Now your band needs a place to rehearse or your kid needs a place to practice the piano, drums, etc.  You rent the "Music Room."  Get the picture.  I love it.  

Second, Agencja Mienia Wojskowego, a Polish government agency, which is selling military installations (and other stuff).  I saw some very cool properties including a great former military barracks site on a river.  The price for that one was $10MM but during the MIPIM show I could have had it for $5MM.  Amongst their catalogue there's also a peninsula which might be a compromise location for the Isle of Steve but that's a story for another day.

The inherent optimism of the global commercial real estate community was powerfully evident at MIPIM.  Models of cities, master-planned communities and projects of huge scale (and dramatic design) were everywhere.  In some ways, if you were blindfolded and then shown the scale models of many of these buildings you would swear you were looking at early plans for what went on in Dubai!  We are deep into this new generation of spectacularly designed buildings, each one grander than the next.  But, while I wouldn't hazard a guess, I did speak with a few folks who brought their scale model to MIPIM hoping to find equity and debt or both and so, a good percentage of these buildings and projects will not get built, or at least not right now, not until there's clear evidence of enough demand for various types of space in different markets around the world that will justify the investment.

18,000 attended MIPIM 2012, that number being a testimonial to the impact that this truly global commercial real estate event continues to have.  A number of universities bring student groups as it's the next generations in our industry who will expand the envelope, or should I say the back of the envelope even further.  I got to see a lot of friends and there was a tremendous energy in the Palais (the primary expo building) and on the yachts, or as one friend called them "vessels", that some firms hire for the week as well as at the invitation-only luncheons and dinners.  I know I've said this before but if you are already playing in the global real estate world and want to build brand recognition or want to explore opportunities, you should plan on attending MIPIM 2013.  

Only one thing was a little disappointing.  Some of you may know Joni Mitchell's song, "They paved paradise and put in a parking lot."  Well, one of the things that I loved about the area around the MIPIM venue is that with all the hoopla, a good sized piece of dirt had long been a boules court (sort of like bocce but different).  Anyway, all through the days, you could see local men (I did see one woman once) playing.  But, while they didn't pave it over, it's now been lined so that cars can park there.  Hopefully it's only during the big expos but it really represented local color and the dichotomy of a simpler time amidst an avalanche of hard-charging real estate people moving at lightening speed to get to the next meeting.

Congratulations to my friend, Lee Menifee, who recently joined American Realty Advisors as Managing Director, Research & Strategy. 

On the road....

March 13-15:  Boston to attend the PREA Spring Conference.

March 26:  Please join me in celebrating the launch of Solutions by Steve Felix at Joe G Restaurant, 244 W. 56th Street (bet. B'way & 8th), downstairs in the DaVinci Hotel.  6-9ish p.m.  I'll provide the Joe G pizza made famous on the David Letterman Show.  You provide the drinks!  Bring your industry friends.

March 26-29:  New York

March 29-30:  Philadelphia, PA to be a judge in the Villanova University Real Estate Case Challenge

April 24-25:  Los Angeles for the PERE Global Investors Forum 2012

May 17-20:  North Palm Beach, FL to attend the annual meeting of The Homer Hoyt Fellows

NCREIF/Presentation Coaching/Davy Jones

This week, I was one of more than 200 people who attended the NCREIF (National Council of Real Estate Investment Fiduciaries) conference in Scottsdale, Arizona.  It was a diverse group made up of portfolio managers, research people, performance reporting people and more.  NCREIF, as many of you know, is the longest standing provider of benchmarking indices (and other products and services) for the institutional real estate industry.  Some of my takeaways:

• Many investors focus more on the multiple of the return on their investment rather than the IRR
• Supply creates its own demand
• Deals are taking forever to close
• Big office buyers use the 'capital stack' more than in other property types
• The savior of the financial markets is equity replacing debt
• Foreign capital is buying U.S. properties all cash in many cases...but that will change
• Real estate people like talking about the level of returns vs. the variability of returns (risk)
• Remember that credit risk is a partial exposure to the firm's equity
• Sustainability is like an annoying house guest that won't go away
• The name of the game in sustainability is in building retrofitting and not new development...but you need to understand what features pay off

Given available technology why are we still paying attention to surveys that have been conducted and compiled six months ago?  Things evolve more quickly than ever before, even in our old-fashioned real estate industry.  Who is going to take the lead in publishing either real-time survey results or really recent responses? 

Tip:  Many years ago, the head of events for a law firm taught me the following:  Put your name badge on your right lapel (as in right when you have your jacket on).  Why?  When people shake hands it's with their right hand.  When you extend your right hand your eyes naturally can see the right lapel easier than the left lapel.  As for women, I believe it depends on the outfit they're wearing but also good to think about badge on right.

Presentation Coaching:  There is a dire need in the industry to improve both people's presentations and presentation skills.  Abuse of PowerPoint must be curtailed!  It's the obligation of any company that has any of its' people speak publicly, to make sure that those people, have good presentation/public speaking skills.  They are representing your company.  They could be the first exposure that someone in the audience has to your firm.  Those people in that audience could be potential clients/customers of your firm.  First impressions are powerful.  What first impression do you want people to take away from seeing/listening to someone from your company present or be on a panel?  One of the services offered by Solutions by Steve Felix is Presentation Coaching.  Reply to this email if you'd like to talk about how I can help you present a better image and protect your brand.

I continue to learn:  When things are going a certain way, don't fight them, don't try to steer them in a way you think they should be going.  The energy of the universe is mysterious.  There are reasons that things happen (and don't happen).  I've been vividly reminded of this phenomenon recently regarding my career. Funny, most times, friends have a more objective view of you than you have of yourself.  But, if there's one things I've learned and continue to remember is to listen to people who care about me and I'm very fortunate to have a number of people in my life who do care about me and are open with their thoughts.  That is what helped me decide to launch Solutions by Steve Felix.  

Davy Jones of The Monkees died the other day.  When I was younger, 66, looked really old.  Now it looks pretty young.  Funny how perspective changes how we see things.  Isn't it.  And, now that we have the perspective and can look back at that time of The Monkees it was more than a period of innocence, it may represent the end of the innocence given what had begun happening in the U.S. and in Southeast Asia.  We were all about to lose our virginity in more than one way. The original band I played in called The Better Half (after a one panel newspaper cartoon).  In addition to playing some original songs we did some very interesting covers which included, I believe, one Monkees song.  It also included "I'm Not Your Steppin' Stone" by Paul Revere & The Raiders, "When Blue Turns To Grey" (Jagger/Richards), "96 Tears" (? & The Mysterians).  We rehearsed in someone's basement (some things never change although basements evolved into garages) and played the local community center dances on Friday nights.  They were jammed with kids.  We wanted to be rock stars and one of the members of that band, a very talented musician named Larry Ripley went on to find a little piece of fame touring with one of those 'Bubble Gum' bands called "The 1910 Fruitgum Company."  That band, which I just discovered has a website, and still tours (although Larry was only with them for a couple of tours and it not in this version of the band).  It was a safe time, a happy time.  But soon the world turned dark.  Davy Jones lived the dream.  Rock bands are fragile entities.  Egos get in the way.  Disagreements lead to people walking out (many or most times to their own detriment) due to 'artistic differences.'  But mostly it's immaturity.  The Monkees were a fun part of growing up, just like the Soupy Sales Show and others.  Other generations had their own experiences that contributed to them growing up but when some of the things that represent your youth start disappearing it's a rude wake-up call.  Cherish every day.  "Don't put off until tomorrow what you can do today", etc, etc, etc.  When you're young you don't think of time running out.  Davy Jones died suddenly.  Sometimes there is no warning and today is ours for the taking.

Craps coach of the week:  During NCREIF's "Casino Night" I found a guy at the craps table who is very knowledgeable (helped me turn $200 into $4200-fake money) and gives private lessons.  David Medansky, Walk Away Craps (http://www.walkawaycraps.com).

On the road....

March 6-9:  Cannes, France to attend the MIPIM Conference

March 13-15:  Boston to attend the PREA Spring Conference

March 18-20:  Miami (South Beach) to attend the NAREIM Executive Conference

March 26-28:  New York
March 26:  Please join me in celebrating the launch of Solutions by Steve Felix at Joe G Restaurant, 244 W. 56th Street (bet. B'way & 8th), downstairs in the DaVinci Hotel.  6-9ish p.m.  I'll provide the Joe G pizza made famous on the David Letterman Show.  You provide the drinks!

March 29-30:  Philadelphia to be a judge at the DiLella Center for Real Estate, Villanova Real Estate Challenge 

April 24-25:  Los Angeles for the PERE Global Investors Forum

May 17-20:  North Palm Beach, FL to attend the annual meeting of the Homer Hoyt Fellows

  

MIPIM/Donating carries and fees/"Failure to Communicate" Epidemic

Last minute plans:  Today I decided to attend the MIPIM conference in Cannes, France from March 6-9.  It's an event that I've been closely connected to for many years and there will be too many of my industry friends there, from all over the world, to not be there myself.  If you're going to be at MIPIM please let me know as it would be fun to pull a bunch of people who are part of this OTR community together for a drink.

Craze Materializing?  I read with great interest this morning that a large U.S. public pension fund has allocated $15MM to an emerging real estate manager.  Of course, that in itself is not news as there are emerging manager programs/mandates within many pension funds investment strategies.  But what caught my attention was this comment in the article, "One aspect of the fund that appealed to the pension plan was that 10 percent of the firm’s carried interest and management fee income is donated to charity and other non-profit community organizations. “One of the cornerstones of the manager is they participate in the communities that they invest in,” said the pension fund's CIO.  That's a nice reason, isn't it?  And it's the first time I've heard of a manager making this part of their M.O. (Modus Operandi) It shows me how creative people are getting in figuring out different ways to get across the goal line when raising institutional money.  And, if our institutional investors can influence changes in the way things are done that also have a 'do good' feature attached to them, well, that seems like a win-win to me.  And, just like the idea of not charging asset management fees on committed, but only on invested capital, which has become more popular over the past couple of years, others will follow. 

But there are other 'new' ideas that I've been hearing about.  Not do to with the investment management business although one is a tool for the LPs of the world  Unfortunately, at this point, I can't share them with you because, in one case, it hasn't actually been launched yet and in the other case it's still being built 'in the garage.'  This one could be a real game-changer and both are very cool. Stay tuned!

Feedback:  It seems that people failing to circle back, to close the loop, to get back to you, is epidemic based on the number of emails I got from you last week.  "It seems to be more the norm than the exception," one of you wrote me.  From another long-time OTR reader, "I so agree with you regarding "close the loop!" I call it the "black hole."  I truly don't understand why some people do not just come out and say they have decided not to continue the conversation, the deal, finalize the agreement, etc." This is a sad state of affairs.  I believe communication, especially today, is pretty simple and why should it be so difficult to remember the the kindergarden adage, "Treat people as you would like them to treat you?"  Even if it's bad news, perhaps especially if it's bad news, communicate it, close the loop.  It's the decent, respectful and professional thing to do.  Any dissenters on this? (P.S.  I'm sure many of you recognize the phrase, "Failure to communicate" from the classic Paul Newman movie, Cool Hand Luke.

Solutions by Steve Felix Update: Two examples of consulting assignments I've completed

1.  Solutions provided to fund manager marketing to U.S. institutional investors for the first time.  

Marketing guidance:  Furnished ideas on what resources they'll need to be successful.  

Presentation coaching:  Assessed and evaluated their marketing materials and supplied ideas on what changes would make them more effective.

Brand awareness:  Suggested ways they can build awareness of who they are to an audience that really doesn't know them....yet.

2.  Solutions provided to an established fund manager who needs to broaden their outreach to the institutional investor community.

Marketing guidance:  Facilitated dialogue with two senior executives which resulted in agreement on some new and innovative ways they'll need to market themselves.

Educating the market:  Employed "Reverse Solution Engineering" to reach agreement that educating investors on the proven merits of their strategy needs to be the first step in successfully raising capital from new investors.

Btw, both clients have engaged me to provide additional solutions for them.

To schedule a free "needs assessment" conversation about how I can help you fill a need or solve a problem, please reply to this email.  I look forward to talking with you.  

Thanks.

Steve

On the road...

Feb. 28-Mar.1:  Scottsdale to attend the NCREIF (National Council of Real Estate Investment Fiduciaries) Winter Conference

Mar. 6-9:  Cannes, France to attend the MIPIM conference.

Mar. 13-15:  Boston to attend the PREA (Pension Real Estate Association) Spring Conference

Mar. 18-20:  Miami (South Beach) to attend the NAREIM (National Association of Real Estate Investment Managers) Executive Officers Spring Meeting

March 29-30:  Philadelphia, PA to be a judge in the Villanova University Real Estate Case Challenge

April 24-25:  Los Angeles for the PERE Global Investors Forum 2012

May 17-20:  North Palm Beach, FL to attend the annual meeting of The Homer Hoyt Fellows

Cuba, Close the loop...please!, Networking, The Flying Wallendas

An article this week about a new law that was passed in Cuba last November reminded me that are some things that we take for granted in the 'developed world.' One being the ability to buy and sell a house or apartment that you own.  While this article described the 'hot' real estate market in Cuba, it's not what one would necessarily imagine.  "While the new market dynamics may help some, many worry they will do little to solve the housing problems faced by many Cubans, whose wallets would not stretch even to buy a $3,000 one-bedroom apartment." "....an average of three buildings collapse in Havana each day, victims of neglect, overcrowding and improvised construction. Well over 100,000 people are waiting to move to government hostels."  A government estimate suggests that it would cost about $3.6 billion to build the 600,000 houses Cuba needs. Independent estimates are more than double that. The creation of construction and housing cooperatives is one step being discussed: such arrangements would reduce building costs and allow groups of individuals to build, say, a small apartment block."

Of all the markets in the world, I have not heard anyone in the institutional real estate world yet utter the word "Cuba" except for those who have gone there to party.  And, if you look at the yellow or red flags that might be raised when you are considering where in the world to invest, government instability is definitely one of them.  So, while entering 'emerging markets' is not for the faint of heart, if I were a betting man, I would  bet that somewhere, behind closed doors in a fancy high-rise office building in some city in the world, there are people, right now, talking about the real estate opportunities in Cuba.  Who in our industry will be the first to dip their toe on that long-troubled island in  the beautiful Caribbean?

I'm wondering if any of you is also experiencing this phenomenon:  you have a conversation(s) with someone, on a rather serious subject. Or you may have several interactions, in person and on the phone.  And then you never hear from the other person again, like they drop off the face of the earth but you know they didn't.  As as student of people I can't for the life of me comprehend what those people are thinking (or perhaps they're not thinking).  Does this type of behavior leave me with a feeling that they are really professionals?  People of character?  Someone I'd want to do business with?  I don't think so.  I believe that we all are just looking for the same thing from someone in these situations:  close the loop.  If it's not something that's going to move forward have the common courtesy to tell the other person.  With all the talk about 'lessons learned' over the past four or five years and the word 'transparency and open, timely communications' flowing off every powerpoint slide in every presentation I've seen, as well as out of people's mouths, don't people realize, after all that's gone on, that you actually have to walk the walk and not just talk the talk?  Our industry is a very small one, even on a global scale.  Our reputation is everything.  I'd suggest that some people look at themselves in the mirror tomorrow morning and do a self-assessment about certain things, before it catches up with them.  

Someone asked me recently about how you go about networking when you're at some type of event and you don't know too many or any people?  How do you approach those people?  Are there any tactics or standard lines that have proven successful?  It got me thinking about the times that I've been in that situation (yes, it still happens).  I don't think there are any secret tactics or magical words.  No one really likes approaching someone or a group that they don't know and that doesn't know them.  This is especially true if body language and/or facial expressions suggest they don't want to be approached (or include you in their group).  


However, I have found it easier to approach a group than certain individuals, those who make an attempt to look at your badge and if you don't resemble somebody they 'have' to meet", they'll just walk away or walk past you without even cracking a smile (and remember, these folks are at events where people are supposed to be interested in networking!).  Now, there are 'Networking Rules" that I've accumulated and make my best effort to go by. But getting back to the uncomfortableness of 'cold networking:'  It's all a matter of one's threshold for 'pain' in those situations.  However, much as I am 'inclusive', there are sometimes when someone who has joined my group ends up being really obnoxious, or someone who is trying to hard-sell someone I'm talking with or is a glommer (der.  spammer:    Someone who finds a person who knows a lot of people and hangs with them or follows them around expecting to be introduced to all the people that they know.  And, while, thankfully, that hasn't happened too many times, I've generally found that a smile and a "howdy-do" works in more cases than not with people you don't know.   Probably worth a try. 

Achieve Your Dream:  Nik Wallenda, a seventh-generation circus performer, has been granted permission to cross Niagara Falls on a tightrope.  Mr. Wallenda, 33, has called his ultimate professional dream. “I had a few tears, but it hasn’t sunk in,” he added. “We were told by not one, not two, but probably 50 people: ‘This is impossible, not going to happen.’ This is to prove that if you pursue your dream and never give up, you can achieve your dream.”  (Note:  The Flying Wallendas is the name of a circus act and daredevil stunt performers, most known for performing highwire acts without a safety net. Sadly, they may have had their most publicity as a result of tragedy. Karl Wallenda developed some of the most amazing acts like the seven-person chair pyramid. They continued performing those acts until 1962. That year, the front man on the wire faltered and the pyramid collapsed. Three men fell to the ground, killing two and leaving one paralyzed.  But, for performers, the show must go on. If you want to see something that will give you goosebumps (in a happy way) watch this video. 

Solutions by Steve Felix Update:  Thanks to all of you who have sent me congratulations and good wishes on the launch of my new consultancy.  It's off to a good start.  Having operated consulting businesses before I know that the key is to get two or three 'retainer' clients to give the venture the financial foundation it needs.  I have a couple of prospects in that area but, while those evolve, I am doing work for several clients.  Two involve facilitating brainstorming sessions on how to raise capital in this market, how to market to investors and consultants where there is no prior existing relationship, review, discussion and reworking of presentation materials and ways to educate rather than sell.  For the other client I am doing some research that will help them be more efficient in the growing of their investment management business.  While my official press release is still a few weeks off, it's been heartening at the reaction I've received already:  almost everyone I speak with has something they need help with and, either me or a member of my Consultants Collaborative, may be able to provide just the kind of expertise that the doctor ordered.  Stay tuned!

Congratulations to my friend, Eyal Bilgrai, who is joining the consulting firm Wurts & Associates. 

On the road...

Feb. 21:  San Francisco

Feb. 28-Mar.1:  Scottsdale to attend the NCREIF Winter Conference

March 13-15:  Boston to attend the PREA Spring Meeting

March 29-30:  Philadelphia, PA to be a judge in the Villanova University Real Estate Case Challenge

April 24-25:  Los Angeles for the PERE Global Investors Forum 2012

May 17-20:  North Palm Beach, FL to attend the annual meeting of The Homer Hoyt Fellows


Special note to Kal:  Are you happy now?!

Aisle of Solutions, RREEF, World Trade Center

Walking the aisles of one of the large chain "pharmacy" stores this week and seeing the signs above the aisles got me thinking:  wouldn't it be great if there was a place like that where we could find cures for our real estate ailments?  Need a tenant to fill a long vacant space:  Aisle 1.  Trying to find some gap financing to close a deal:  Aisle 7.  Feeling under the weather because your key first close investor just told you they were going to wait a little longer:  Aisle 2.  You get where I'm going, right?  Maybe some of you reading this are saying, "Well, there are firms that offer solutions to problems like those."  And you are right, they're called "Service Providers."  And while solving one of these problems doesn't happen as quickly or reliably as, say, taking aspirin for a headache or rubbing Ben-Gay on a sore shoulder or gulping down Vicks Forumula 44 to stop your cough, there are people out there who have proven to be good at delivering "a cure for what ails you."  But, try as we might to find simple, quick and painless solutions, sadly, it's rare in our industry that there is one.  

This week, roaming the streets of New York and speaking to a number of people from all different parts of the commercial and institutional real estate world one thing is clearer than ever before:  Things are not clear by a long shot when it comes to us knowing what we'll find around the next curve in the road.  We have a lot more questions about our careers, our businesses and our personal lives.  There is a lot of stress out there and we can hope that things will just get better.  But, remember how the hopes fans in the famous baseball poem, "Casey at the Bat."  (Ernest Lawrence Thayer, 1888) were dashed in the end:

Oh, somewhere in this favored land, the sun is shining bright;

The band is playing somewhere, and somewhere hearts are light,

And somewhere men are laughing, and somewhere children shout; 

But there is no joy in Mudville-the Mighty Casey has struck out.

Even if you don't know anything about baseball, the phrase 'struck out' is easy to understand.  We're all trying to either 'get to first base' or 'hit singles and doubles' or 'make the big play' but success is not guaranteed, not by a long shot, no matter how hard we try and no matter now much success we've had in the past.  Some firms have or have had their own "Mighty Casey" who were relied upon to make things happen, to bring home the bacon.  But those folks are not magicians.  So, when we're faced with situations where we've run out of brilliant ideas or we keep talking and talking and talking and coming back to the same old thing, it's sometimes helpful to bring in an objective, knowledgeable third-party to help you get 'unstuck.'  In line with my policy of full disclosure, this last sentence is somewhat self-serving as I have been working with clients in this capacity for years, with good results and excellent feedback.  You know why it's helpful:  people that work together, just like couples in a committed relationship, sometimes have difficulty being open about things with each other and the conversation slips into a finger-pointing argument which does no one any good.  When an intermediary joins the party, they bring one really important thing to the table:  they are only interested in helping; they have no axe to grind, no hidden motive, no issues, no politics to play....just helping their clients find a solution to what ails them or at least bring to the surface the root of a problem.  Maybe it's something to think about next time you're in a similar predicament.

One more thought on this general topic.  There's someone who's website bills her as "America's #1 Female Talk Radio Host" who, after listening to one of her callers tell a story of relationship woe, told that woman, "Whatever you're doing is just not working!"  None of us is happy when we admit that what we've been doing is not working but it's a very important step in finding something that will work.  We need to remind ourselves from time to time that doing things the way we used to do them won't work in a world that is changing around us.  More and more people are talking with me, seeking a different way to do something, particularly in the area of raising capital for real estate funds, joint ventures, etc.  The appetite of the many investors has changed and you need to change your menu to give them what they want.  Change is not easy but change is good and those that recognize the need for change are the ones who will be the winners.  If things aren't happening for you, slow down, take a break, get away from things for a day and think.  Or find a confident to brainstorm with.  As Einstein said, "Insanity is doing the same thing over and over again and expecting different results."  

There's lots of talk on the street about the future of RREEF.  From what I can tell, the only people who really know what's going on are those people directly involved in the discussions.  I'm not a rumor guy; I don't start them and I don't pass them along but society is built on them.  The media is grasping at straws, hoping that something that someone told someone else has an ounce of truth in it.  But, until it's a done deal (or until some 'Deep Throat" source leaks the news), we'll just have to sit and wait but, like with lots of big corporate stuff, we aren't alone as employees of companies involved in M&A deals are kept in the dark and learn about things at the same time as the rest of the world.  For the sake of my friends at RREEF I hope something definitive happens soon so they can get on with business and with their lives.

You know how sometimes you'll walk by a place hundreds of times and never go it?  Then one day, for some reason, you do and you say, wow, this place is great, why didn't I go in before?  Well that happened to me this week when a good friend of mine invited me to join him for breakfast at Casa Lever in New York (390 Park Avenue [entrance is on 53rd St.).  It's a great room and the food is really good.  (Note:  It gets busy for breakfast starting at 7:30 and I'm told that lunch is crazy so make a reservation).  

Early in the week I was driving back to Manhattan on the New Jersey Turnpike. It was a beautifully clear night as I got to the part of the turnpike approaching the Holland Tunnel.  The World Trade Center jumps up like a proud child saying "Look, here I am."  It's an wonderful sight to see; construction lights blazing from bottom to top; it's the most massive and dramatic structure in the New York skyline.  Yes, it's taken way too long for this building to be built and that's a sad commentary on politics.   But it's now at 90 floors and it is a sight to behold.

Phrase of the week:  "Brand Guardian."  A strong brand identity is more crucial today than ever before.

Always the last to know:  Today I became the 417,795,817th person to watch this cute video.

On the road...

Feb.  13-17:  San Francisco Bay Area

VIP, Brainstorming, Accelerated Disintermediation

This week, IREI held it's annual institutional real estate industry 'homecoming', VIP.  More than 350 people were there.  Lots of people who knew each other and lots of people looking to meet people they didn't know, particularly if those people were institutional investors and especially if they had money to invest.  VIP has grown exponentially since Geof Dohrmann and I launched it six years ago.  Yes, there was a lot of good content offered but the most interesting time for me to both participate in and observe are those when people have the opportunity to "network."  The participation part for me is easy as a bunch of those attending knew me or knew of me.  The difference this time was that, having recently launched my new company, Solutions By Steve Felix, I too had something to promote.  So here are a few of my takeaways:

• Things are going well-in the context of 'the new normal.
• We don't like investing where there's a 'leap of faith' involved.  (Comment about investing in certain emerging markets)
• It's the uncertainty in the Eurozone, not how horrific the situation is, that is causing investors to sit on their hands.
• The most danger to the U.S. recovery?  U.S. Political Gridlock and Uncertainty (Audience Quick-Tally Response)
• One year from now there will be fewer countries in the EU.
• I don't believe that Greece runs out of money on March 20th.  I believe they're out of money now!
• 2012 will be the worst year for commercial real estate loan defaults.
• Investors just don't invest in assets that are over-leveraged.
• Some of the best opportunities today are in preferred equity but off-shore investors have to be educated.
• Accelerated disintermediation of the sale of loans via an eBay type auction process has become an extraordinarily powerful tool in selling loans.  This could be the thing we look back on and say it was a game-changer for the commercial real estate industry.
• Tenants don't like being called tenants anymore but they are the people who truly Occupy Wall Street.
• The Greeks invented defaulting on debt.

Restricting Retail?

A proposal is being considered in New York that will limit the ground-floor width of all new stores to 40 feet (and new banks to 25 feet) on two major streets on the Yupper West Side, Amsterdam and Columbus Avenues.  "Across New York City, the proliferation of chain stores, banks, pharmacies in the past decade or so has robbed many neighborhoods of the quirky one-of-a-kind shops that give those places their distinct personalities and where customers can form a relationship with their shopkeepers."  In Napa, California, there is a group called, "Napa Local" that was formed to protest against a Starbucks leasing space at the corner of First and Main (really!).  They want the city to adopt an ordinance controlling "Formula Businesses," i.e. chain stores to "preserve the unique quality that is downtown Napa."  Hmmm, let's see, in both cases, as a landlord, you would be restricted from who you can rent to.  While tenant mix and use-clause restrictions have been used in the shopping mall industry (where one landlord controls the whole shebang), trying to stop individual landlords, who own a building, from renting their space is not a good direction to be going in.  Can you imagine the lawsuits that would be filed against municipalities if they were successful in enacting this type of legislation?  Also, to me it's pretty simple why the independent retailers have disappeared from the landscape:  customers don't support them.  People talk about having quaint shops and no chains but if you can't pay the rent, how are those specialty stores going to stay in business.  It'll be interesting to see what evolves.  By the way:  the 'unique quality' of downtown Napa is vacant.  While there have been some wonderful additions in the past years, including a new hotel and several 'celebrity chef' restaurants, if you drive down First or Second or Third Street you'll notice that there are so many vacant or 'fake' storefronts you'd scratch your head...maybe.  In Napa Valley, the town that has the 'one of a kind shops' is  St. Helena and those merchants have chosen to open stores there because people who spend money go there.  I spent many years in the shopping center, shopping mall and outlet center industry.  At one point, I developed the "Everything's Big/Everything's Small" theory of retailing.  I won't bore you with it now but when reading about these cities (and how many others may be talking about it) it's like you're trying to control things a little too much and, if you look back in history, there are serious prices to be paid when that starts happening...it may be only the beginning.  

I've always been a proponent of value of brainstorming.  I found this comment from a piece I read this week particularly

enlightening.  Early brainstorming advocates strongly recommended that the "Do Not Criticize" rule made those sessions more effective.  But recent studies suggest differently:  "....debate and criticism do not inhibit ideas but, rather, stimulate

them....imagination can thrive on conflict....dissent stimulates new ideas because it encourages us to engage more fully with the work of others and to reassess our viewpoints....maybe debate is going to be less pleasant, but it will always be more productive."   Pretty interesting, huh?  It comes down to the idea that we can't get bent out of shape when someone comments on an idea we have but rather take it as contributing to the group goal of coming up with the very best idea or solution.   Sometimes easier said than done.

Wouldn't it be great if our memories only remembered happy things?  But that's not the way it works.  Yesterday, the weather was really nice where I live, probably about 65 degrees in the afternoon.  I was driving somewhere and out of the corner of my eye saw a dad and his son throwing a baseball back and forth.  What jumped into my mind was a day, a long, long time ago, when I was throwing a baseball back and forth with my older son.  It was obviously a moment which I have never truly forgotten. It had been sitting in my sub-conscious all these years. Funny how the mind works isn't it?

More kids:  Congratulations to my nephew and his wife on the birth of their little girl.  Our family now has five cousins born within less than three years of each other!  Are they going to have fun or what?  

With gratitude:  Thanks to all of you who sent me notes (or talked with me in person) about last week's story of my friend in Geneva. It meant a lot to me. 

Final item:  Angelo Dundee died on Wednesday (90).  If you aren't a fan of boxing (or in my case grew up in a boxing family) you probably don't know his name.  For 60 years he was a trainer and manager of professional boxers, the two most well known are Cassius Clay (Muhammad Ali) and Sugar Ray Leonard.  My uncle, Barney Felix, the senior boxing ref in New York State at the time, was in the ring when Clay took the heavyweight championship from Sonny Liston in Miami Beach in 1964.  Barney told us one story about that bout that never made it into the papers.  One day, when we're having a drink together make sure to ask me about it..... 

On the road next week...

Feb. 6-10:  New York

Go Giants!

He not busy being born is busy dying

"He not busy being born is busy dying."  Bob Dylan from It's Alright, Ma (I'm Only Bleeding). 


In the spring of 1992, when my mother was dying of brain cancer, I watched as she used her brain to try to fool the doctors.  They would ask her questions, "Good morning.  Can you tell me your name?" (Her name was Lorna).  And some days she got that right.  But as she deteriorated, often she couldn't answer that one, or what day it was or what month or what year.  Yet my mother was a very sharp cookie.  When asked questions she rambled around, telling the doctors about a variety of things, most of it not making any sense depending on which electrical impulses happened to make their way through the frayed wires of the plugs in her brain that used to fit in the right sockets.  It was heart-breaking.


While in London this week I took a planned side trip to Geneva to visit my old friend Deb.  She was my brothers' first girlfriend when we were all in summer camp.  We reconnected after many distant years in 2003 at a camp reunion.  My wife and Debbie hit it off and a couple of years after that took a "Thelma & Louise" road trip through the Southwest U.S. which they documented with some incredible (and funny) photos.  


As a group, we counselled each other (not the summer camp variety but the kind that good friends do for each other).  Deb has always been a brilliantly talented writer (and deft Scrabble player) who for the past number of years has been living in Geneva and working for Rolex, creating and editing some of their most prominent and visible marketing materials.  Before taking that job, she was free-lancing as a web music journalist and interviewed some very well-known names in rock, blues and jazz.  Music has always been a strong bond amongst our camp friends and her appreciation and love of music even led her to taking up blues harmonica which she played with friends in her adopted country of Guatemala (Debbie grew up in Montreal).  We've all seen each other through some of life's growing pains and soul-searching times.  Deb is a breast cancer survivor which is one reason why her current condition is so sad.  She is suffering from Glioblastoma, an inoperable and except in rare circumstances, incurable brain tumor.  More than a year ago doctors gave her three months to live.  She embarked on a series of experimental chemotherapy and while it hasn't been any fun (the side effects and what-not) she is still with us.  But, her brain is messing with her too.  


My wife and I call her periodically and on those calls she sounds extremely lucid and her memory seem phenomenal.  She sounds up-beat and tells us of the books she is reading, the writing she is doing and other stuff that had us feeling more hopeful.  But a few weeks ago, one of her sisters' told us that all Deb was telling us was fantasy.  Well, I witnessed that first hand yesterday and today at her bedside.  Yesterday, her 59th birthday, she remembered me as soon as I walked in the door.  But this morning she didn't know who I was at first and as the time wore on, she knew me and called me by name.  She drifted in and out of making sense or talking nonsense.  At times, she used a word that she knew was wrong and tried desperately to correct herself.  This morning, a doctor and his colleague came in to talk with her about how she wants to live the remainder of her life.  The "living will" stuff.  And while Deb gave some conflicting answers (I think I would have too if I was her) she did tell the doctors that her best friend was the one who knew her wishes and should be the one to have the legal authority in such circumstances.  It was a heavy scene for me to observe.   


The weirdest thing was that during the time I spent with her she got two phone calls and was talking as lucidly (or perhaps even more) than you or I.  She remembered projects she'd worked on, the names of children and grandchildren.  She said some random things which I told her I'd make into a song and send her the demo.  The first line (all her) is "You can't take the sunshine with you no matter where you go."  We had a great time writing those lyrics together.  The brain is an unbelievable thing; how it works and how it fails to work in almost the same moment.  


She is in the palliative care unit of a wonderful hospital just outside Geneva.  It's for end of life care, usually very short term, but she has fooled them.  There are people who have helped her draw her will for the first time and prepare for death.    To some of us, death comes sudden and without warning.  The rest of us don't want to admit to ourselves that Bob Dylan's lyric is totally true.  And who is to say that we will be given the luxury, of sorts, to have the time to wrap things up in a tidy package and say, "There, I've done what I wanted to do and I am at peace."  Deb told me that she's heard how some other patients answer the question, "What do you dream of?"  One said, "To swim with dolphins."  Deb's dream is simply to see another spring.  I don't know that she will.  Do we know how many springs we will see?  Does anybody really know what time it is? Shouldn't we start caring?




On the road....


January 30-February 1:  Scottsdale, Arizona:  IREI's VIP Conference
February 6-10:  New York
(NEW) February 15 & 16:  London and Frankfurt to moderate breakfast briefings for RCA (Real Capital Analytics).
February 23 & 24:  Chapel Hill, NC to be attend the UNC Kenan-Flagler Real Estate Conference and be a judge at their case competition.
February 25-26:  Asheville, NC
March 29-30:  Philadelphia, PA to be a judge in the Villanova University Real Estate Case Challenge
April 25-27: Vienna, Austria to attend the INREV Annual Meeting
May 17-20:  North Palm Beach, FL to attend the meeting of The Homer Hoyt Fellows.