The Road Not Taken

When I was the editor of my college newspaper I instituted some major changes.  One was the actual way the weekly paper was printed, another was recruiting a cartoonist that I came upon in the cafeteria, increasing concert listings and music related stuff and opening up the opportunity to work on the paper to anyone, rather than the small clique that had run it for years.  Those of us on that team put our hearts and souls into it every week just like when any of us is involved with something meaningful to us.  But in walking around the campus I had the feeling that not enough of the students were reading the paper or if they were reading it then they didn't appreciate it.  So, one week I made a unilateral decision to not publish.  My purpose was to see if anyone missed it.  Well, one person clearly did:  Barry Dancy, the Dean of Students, who called me on the carpet for it.  I won't bore you with the results of that inquisition but merely bring up the story to show how much times have changed.  


Why didn't I just run a survey asking students all the usual survey questions?  Today, everywhere you look, including sometimes in this column, people are looking for others to respond to something.  Do you 'like' this photo, book, movie, pizza joint, rooftop luggage carrier?  If elected, will Obama or Romney be better for your business?  Do you agree with this statement or opinion?   It seems we're constantly looking for validation or interaction or connection.  We should:  we're human.  But why have we become such a needy society?  Don't we trust our own opinions or what or who we like?  


I can't seem to turn my brain off and always think about how things can be done differently.  Just because something has always worked doesn't mean that there's not another way.  But 'new' requires taking chances, setting yourself out from the crowd, being labeled 'different.'  And doing things differently doesn't always mean it will work or it will be successful (whatever success means).  That's why I'm excited when I can share something with you about someone who is doing something differently or something new or something that could change the status quo.  And, even though the underlying business of making money from real estate is still pretty much the same as it's always been (Buy low, sell high!)   there are those who have changed the way we do things and others who will change things.


But you know what I mean.  It's the people who get an idea and aren't worried about failing.  Their gut instinct is that they believe that what they've come up with will be something that others will find useful, even valuable.  And when you have an idea, it's good to bounce it off positive-thinking people.  Not 'yes' people.  You know who they are.  They're the folks we know who have a 'can-do' approach to life and who, when they hear your idea, will give you their honest opinion.  


As always, one of my missions with this column is to be your eyes and ears at the events that I attend and share what I'm hearing with you.  You, gratefully, have sent me your thoughts as well.  It's a wonderfully special dialogue that has been established and flourishes through this weekly space.  That's why I'm excited when I meet or am introduced to someone who is doing something new, different and exciting.  


Robert Frost, great American poet, wrote The Road Less Taken.  I read it when I was a kid and it made an indelible impression on me.  It's not for everyone but it has worked for me.  And, when I soon have the opportunity to tell you about some new things that I will be doing, it will make all the difference. 


The Road Not Taken
By Robert Frost


Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;


Then took the other, as just as fair,
And having perhaps the better claim
Because it was grassy and wanted wear,
Though as for that the passing there
Had worn them really about the same.


And both that morning equally lay
In leaves no step had trodden black.
Oh, I marked the first for another day!
Yet knowing how way leads on to way
I doubted if I should ever come back.


I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I, 
I took the one less traveled by,
And that has made all the difference.




On the road...
July 10-13:  Lansdowne, VA to attend the NCREIF Summer Meeting
July 14-17:  Boston
July 18-26:  New York
Sept. 10-12: Paris to attend the GRI Europe Summit
Sept. 18-19:  Chicago to attend the NAREIM Human Resources Council Meeting
Oct. 3-5:  Special event in Europe...stay tuned!
Oct. 14-16:  Chicago to attend the NAREIM Fall Executive Meeting
Oct. 17:  Chicago, DePaul University to speak with students about Careers in Real Estate
Oct. 18:  (t) Chicago/Uni of Chicago to speak with students about Careers in Real Estate
Oct. 22-24: Los Angeles to attend the PREA Plan Sponsor Conference
Nov. 7:  Washington, DC/Johns Hopkins University to speak with students about Careers in Real Estate
Nov. 8-9:  New York to attend the PERE Forum

Congratulations....

Kevin Norton, Director of Investment Management, Archdiocese of New York

Jeroen Verheijde, Senior Vice President-Capital Raising-Clairon Partners.

Alex Jeffrey joining PruPrim.

Thanks to all of you who have bought or checked out our new album, 'Wait for Me.' It's available on iTunes (search 'felix wait for me').  I've signed up for this interesting service that helps match up songwriters and bands with people looking for material for TV/Movies, etc.  

RCA Capital Trends / Real Estate Foresight / RetailMLS

RCA's U.S. Capital Trends for May 2012 was delivered to their subscribers this week.  Here are a few key stats:

Office: Sales volume $4.1Bn-down 31% vs. 2011

Industrial: Sales volume $2.5Bn-down 19% vs. 2011

Retail: Sales volume $3.3Bn-flat vs. 2011

Apartments: Sales volume $5.5Bn-up 15% over 2011

Hotel: Sales volume $1.8Bn-down 20% vs. 2011

Baseball/Softball Tip of the Week:  I've been watching a friend's son play 15-year old baseball.  I've also noticed this around softball fields.  When the ball is on the ground, either moving very, very slowly and especially when it's standing still, pick it up with your bare throwing hand, not your glove hand.  You lose valuable seconds if you pick it up with your glove and then have to transfer it to your throwing hand.  It could be the difference between letting a run score.

Anyway....this is a wonderful piece from the New York Times this past week that I just had to share with you:

The Old Neighborhood

If you’ve lived for long in New York City, chances are you’ve lived in several different places. On the map of where we dwell now is also where we used to dwell, just across the park, a borough away, a few subway stops farther north or south. That is one of the peculiarities of this city — the proximity of our geographical past. Some people move from Ohio to Oregon. We move from 93rd to 13th, from Alphabet City to Carroll Gardens, all over town.

And what becomes of the old neighborhood? In one sense, nothing. You were only a minor molecule in its chemistry. Go back a week after you’ve moved, and the same dogs are pulling their owners to the park, the same stoop-sitters sitting out. Let enough time pass, and things become a little ghostly. It begins to feel as though the neighborhood has forgotten you, instead of the other way around. When you lived there, nothing changed without your noticing it. Now the changes accumulate unperceived, and you begin to realize that a part of you has vanished into the past.

New York is a grand and public city. But it is also immensely personal and private. There is really no visiting someone else’s old neighborhood. You can walk past the shops and admire the brownstones. You can hear about the bodega or diner that used to be on that corner and what happened that one night. Try as you might to be a tourist in someone else’s past, you end up seeing only the present. That’s how the new neighborhood looks at first — the one you’ve just moved to. You settle into the present, and it ages around you until one day you end up with a new old neighborhood.

One of the cool new things of the week:  Recently launched,  Real Estate Foresight is the brain-child of my friend, Robert Ciemniak.  I met Robert a number of years ago when, while working for Thompson Reuters, he had just launched an intrepreneurial venture called Reuters Real Estate.  From their website, "Real Estate Foresight has been designed primarily for international institutional investors and fund managers active in private and public real estate markets, in their management, research, risk, business development and strategy functions." Through a number of services they help real estate investors assess strategic risks and develop new opportunities through foresight development, thematic research and analytics.  I encourage you to check it out.

Real Estate Foresight is just one of the next new things that I've been observing as they unfold.  It's great to see people thinking about what the industry needs and then building it.  Another one is RetailMLS.  When I was introduced to the service last week it reminded me of the Internet start-up that I was with in the mid-90's.  We were too far ahead of our time and undercapitalized.  Classic dot.com symptoms.  But RetailMLS has applied it's technology to a smaller niche than some of the other more generic 'listing' services.  If you're involved in retail real estate, or if you are curious as to what one of the relatively new entrants into commercial real estate technology have created, you should take a look.

Nora Ephron died this week.  While she was not a household name to everyone, many knew of her work:  Sleepless in Seattle, You've Got Mail.  But those are a couple of the more mainstream pieces of work in her portfolio.  Not too many years ago (which means I can't remember exactly when), my wife and I and some good friends were in New York.  We wanted to go see a show but Broadway tickets were simply too expensive.  I did some checking around and got us four tickets to an off-Broadyway (perhaps off-off Broadway) show that got some great reviews:  Love, Loss and What I Wore.  It was a chick play written by Nora and her sister, Delia.  The women in the audience loved it but it was also very entertaining for any man who has accepted his feminine side.  Anyway, Nora was a very, very talented woman who left us too soon at 71.

When too much is simply too much.  Recently, I've seen several violations of 'information overload' and it's made me say to myself:  "What are these people thinking?"  I don't understand why some firms believe that the more information they push out the better as if they expect people (i.e. existing or prospective clients and the industry in general) to say, "Gee, these are smart people; look at how much they write."  I don't think so.  My belief that less is more (a phrase sometimes attributed to blues guitar great B.B. King) grows stronger every day.  So, please, when you think about publishing something, put yourself in the recipient's shoes.  What is really important for them to know?  If you are considerate of their time, they will appreciate it (and there's a better chance they'll remember you for it).

Webcasts galore!  Have you noticed that there seem to be more and more webcasts being promoted around the industry?  Many of them are sponsored (like advertising); others are offered by an individual company, usually with some type of research as the theme.  I wonder:  are you watching these things?  

I was going through my own archives recently and found this piece that I wrote somewhere in the early 2000's:

Standing Out:  Tips on Differentiating Your Business

Can people tell the difference between your company and your competitors?  Are you sure?  In the world of commercial real estate, with all due respect to data and technology, I believe the difference is people.

How do you decide which person you want cutting your hair?  Is it because that person uses the Roffler Model Z-28 scissors?  I don’t think so.  It’s because if a particular person cuts your hair, you will look better when you leave the salon than when you got there.  You trust your stylist, and you are loyal in return.

If I were looking to grow market share in the investment real estate transaction business I would:

• Hire the best people.
• Compensate them fairly.
• Invest in training on an on-going basis.
• Let my actions speak louder than words.
• Be memorable.

Here’s what you can do to differentiate your company from others: 

• Take stock of your assets and your liabilities.
• Find out how the market perceives you.
• Think about the future, not just today’s deal.
• Be helpful.
• Know what you’re talking about.
• Be known as someone who is on top of what’s going on.

Then one day you’ll overhear someone talking about your company and they’ll say the magic words you’ve hoped for all along:  “Those guys know the business.  They did what they promised.  I’ll be doing business with them again.”  And all the work will have been worthwhile. Then you can go out the next day and keep working at it.  Why?  Because that’s what the other guys are doing.

Congratulations to Peter Steil who has been named CEO of NCREIF.

Interesting conference:  IMN is having their second annual Real Estate General Counsel Forum in New York on September 10-11.  There aren't too many events that I know of that bring together this practitioner group.  In my mind, one of the good outcomes from the dialogue amongst in-house counsel and outside counsel could be how fees can be reduced.  It looks like the kind of event where you can really get to have substantative conversations with people.  

"Is Core Over-valued."  I've had some question about all the money that's been and still being invested in core real estate.  My thought is that, while it has been considered a 'safe' investment there will be some surprises down the road.  Be that as it may, NCREIF has posted a thoughtful piece by Jeff Fisher here. But, more than 'core' the words that I am hearing people utter more than any others these days:  Student Housing.

My new favorite video

On the road....

July 11-13:  Lansdowne, VA to attend the NCREIF Summer Meeting

July 14-17:  Boston

July 18-26:  New York

Sept. 11-12:  Paris to attend the GRI Europe Summit

Sept. 18-19:  Chicago to attend the NAREIM H.R. Council Mtg.

Oct. 14-16:  Chicago to attend the NAREIM Fall Executive Mtg. 

Oct. 17-19:  Chicago including speaking with DePaul University students about careers in real estate.

Oct. 22-24:  Los Angeles to attend the PREA Plan Sponsor Conference 

Nov. 7:  Washington, DC to speak with Johns Hopkins University students about careers in real estate.

Nov. 8-9:  New York to attend the PERE Summit

If you are at a university or have a connection to one with a real estate program and you'd like me to visit to speak about "Careers in Real Estate" please reply to this email.  Thanks.

I hope you enjoy your Independence Day holiday.

Au Revoir Jacqueline / Disfluencies / The Felix Consulting Group

Jacqueline Geoffrion died in Montreal this week.  She was my mother-in-law.  I first met Jackie in 1993.  She owned and operated a convenience store in the lobby of a huge apartment complex called Les Dauphins sur le Parc, across from Parc Lafontaine on The Plateau in Montreal.  Jackie worked hard from when she was 16 in various businesses she owned until she sold the store about eight years ago.  

In addition to being her livelihood, that store was her life as she also lived in the building for 30 years. Many of her customers became friends, coming down every morning to get their Gazette or a cup of coffee or one of those hundreds of other things that stores like that stock. They talked with her.  Shared their problems.  She listened.  She was a very good listener.  She was like the building therapist.  

Jackie was also a very generous person.  Over the years she helped many people out when they were down on their luck.  She had a soft spot and sometimes she lent someone a few bucks even though she knew she was not going to get paid back; but she did it anyway because they needed some help. 

For the past few years, sadly, she had really had no quality of life at all.  It was one thing after another.  I don't think she really wanted to live anymore and as I learned when I studied the stages of death when my Dad was near the end, under many circumstances, people can control when they decide to pass into the next world.  I believe Jackie did this on her own agenda.  She was a strong-willed woman (are there any other kind?)

Nevertheless, the loss, especially to my wife, an only child, is huge. Like many people who work hard all their lives and then 'retire' she didn't know what to do with herself after she sold the store.  She never seemed to show much interest in anything after that which was sad in itself.  The attending doctor told my wife that 'your mother died peacefully.'  I guess that's better than checking out some other ways but it doesn't do much to pacify the terrible feeling of loss.  Au revoir Jackie.

Word of the week:  disfluencies. Here is an interesting piece on the subject by Lisa Marshall who is a communication coach. 

New gigs:  

• Sherry Rexroad, Chief Investment Officer of Blackrock's new global real estate securities platform
• Tim Bellman, Head of Global Research, Invesco
• Claiborne Johnston, Client Portfolio Manager, Invesco 
• Noah Shlaes, Senior Managing Director/Global Corporate Services, Newmark Grubb Knight Frank
• Michelle Fang, Product Specialist, Principal Real Estate

Update:   I've decided to change the name of my consulting business to The Felix Consulting Group.  So, who's in the group?  Well, I'll be announcing something soon but, trust me, it'll be more than just little ol' me.  In the conversations I've been having with CEO's and other very senior people, I'm getting the most 'head-shaking' (yes, we could use your help) when we talk about:  Presentation Coaching, Investor Conferences and "How do we get some of that there pension fund money?"  

This last question is one that I've been asked for many years.  The source of the question is typically a successful real estate firm that has developed or acquired income-producing real estate but usually in a one-off style, gathering money from investors on an as-needed basis ("I've found this great deal. How much would you like to come in for?") But, and especially now, when there are a lot of sweet opportunities out there, it'd be good to have money at the ready.  

So, depending on the degree of experience that these firms have with raising and managing institutional capital, my coaching session may run the entire gamut of the philosophy and process involved when you are looking to get into the institutional real estate game (i.e.  Patience, patience, patience and how not to take rejection personally).  Also with firms who have had separate accounts with pension funds and want advice on how to launch and operate a fund (and at the same time, which is what makes today's landscape very interesting those who have historically operated in a fund format who want to get into the separate account business).  

So, I've been pretty busy, both with providing value to clients and with having conversations (face2face is best) with people who already know and trust me.  It's in those conversations that people think about how I could help them.  I'm having a great time and all of my clients have offered to provide testimonials for me.  It feels good. It feels right.  

"CD Update."  Thanks to all of you who have bought our new CD, "Wait for Me."  It's available on iTunes (search "felix wait for me").  I also carry them with me when I travel! I'm still trying to figure out how to spread the word virally.  For now, I need all the help I can get.  Thanks.  

Here's some feedback on the album:

"Great work Steve...loved the Lennon Song (SF note: My song called John Lennon) .....and really like the "feel" of everything...who's the girl singer?"  CFO of Real Estate Investment Manager and garageband keyboard player.

"Enjoying the music very much. Several really good songs. Will see who I can expose it to." Broadway show producer (retired real estate investor)

"Well done. I haven't listened to all of them yet. Great recording on "Wait For Me".Who's singing that one? "Québécois" is a real departure." Professional photographer, great guitarist and my former longtimeago songwriting partner.

"Its great! And what a joy it must be to produce this CD with your sons, Brian, Kevin and your musical friends. What a great guitar player Ernie Hendrickson is. My compliments to all musicians on this CD. Great solid drumming and basswork. Its really hard to pick a favorite song from this album, but I played "Thank You" and "Distance" both four times. "Quebecois" is really fun song, there is some magic in the harmony that makes this a song can that should go on forever." Real estate publisher, former bass player in a popular European band and, most importantly, my good friend.

On the road....

July 11-13:  Lansdowne, VA to attend the NCREIF Summer Meeting

July:  New York & Boston

Aug:  New York & Chicago

Sept. 11-12:  Paris to attend the GRI Europe Summit

Sept. 17-18:  Chicago to attend the NAREIM HR Roundtable 

Oct. 14-16:  Chicago to attend the NAREIM Fall Executive Meetings

Oct. 17-19:  Denver to attend the ULI Fall Meeting

Oct. 22-24:  Los Angeles to attend the PREA Plan Sponsor Real Estate Conference

Nov. 7:  Washington, DC to speak with a group of real estate students at Johns Hopkins University about careers in real estate (Note: I'm putting together my fall "tour" speaking with graduate real estate students.  If you're interested please contact me).

Nov. 8-9:  New York to attend the PERE Summit-New York

Reinventing Yourself & Your Company / Franny's Pizza / Moody's RCA CPPI / Bice Ristorante / Rate Your Boss

I’ve reinvented myself many times in my real estate career and lately I’ve been having conversations with a number of people and companies who are thinking about how they can reinvent themselves. 

On the individual side, it’s about both finding job opportunities and finding something you really like doing.  Some go back to school to get a new degree, let’s say Masters in Real Estate or M.B.A.   It’s reasonable to assume that these folks were in the real estate industry in one, way, shape or form and wanted something different.  So they invest the time and money to get this next degree, one of the steps on the stairway to re-invention heaven.  Then they’re ready to come back into the workforce and, oh no, they can’t find a job.  Why?  Employers want to and are able to find people who fit nicely into their job box.  Someone who has done exactly what they’re looking for someone to do and they’ve done it before.  Many employers consider that a much ‘safer’ hire. 

But there’s a lot more to think about when adding a person to your team and I challenge you to look holistically at the person who has taken the time to reinvent themselves and consider whether they bring something to the table far beyond that of simply done that particular job before.

When companies want to reinvent themselves it’s equally challenging.  The industry sees them a certain way. But they want to be seen differently.  Well, we’ve all seen cases where companies, both in our industry and outside, have reinvented themselves.  And it takes a good idea, a plan, the team to execute it, the investment of some money and, what I believe is most important, patience.   When a supermarket company has a successful store they use the analogue process: finding something that is similar to something else.   So, one piece of advice that I give to firms looking to reinvent themselves is to look around and see who has done it before and learn from them.  Decide what you want your firm to look like and then start behaving like that.  And, while it's not that simple, perception is reality.  But, you’ll still need to be very patient.

When an internationally famous restaurant consultant suggests you go out for some pretty good pizza, the immediate answer is, "Yes."  Last week, my good friend (and international restaurant consultant), Michael Whiteman took me to Franny's on Flatbush Avenue in Brooklyn.  I have always loved pizza and could probably eat it every day.  When we got there it was crowded but we managed to get a table even without a reservation.  Michael told me that Franny's is considered one of the top-10 pizza places in the U.S.  Without rambling on let me say this:  it is!  

The Felix Consulting Group: Someone once told me that if you don't toot your own horn once in a while there's no music.  So, I got an email from someone I met at the ULI Capital Markets Conference a couple of weeks ago.  He said, "On the elevator down, after the final ULI Panel (the one I moderated), someone remarked:  "If only all the other sessions had a moderator like the last one.  It was great...he involved the audience, he asked intelligent questions and everyone was engaged."  Five other heads nodded in agreement."  Moderating panels is something I love doing and I get good reviews.  If you're firm is running an event and you're interested in considering the value to the audience of having a knowledgeable, independent, third-party as moderator, host or facilitator, let's talk.

The Moody's/RCA Commercial Property Price Indices (CPPI) report was published this week.  These measure price changes in U.S. commercial real estate, based on completed sales of the same commercial properties over time, known as the “repeat-sales methodology.

Notable Observations and Themes 

• Apartment prices were down 1.2% in April after increasing by 37.4% from their January 2010 trough. 
• Industrial saw the only gain among the property sectors in April at 1.1% and was the biggest gainer over the last quarter at 3.9%.
• CBD office in non-major markets was the first sub-sector to bottom, 31 months ago, but it has yet to gain traction, retracing only 7.5% of its peak-to-trough decline.
• Suburban office in major markets has seen a significant setback to its nascent recovery, falling by 14.4% over the last 5 months. 
• Prices of non-distressed properties in major markets have recovered to 90.9% of peak levels in nominal terms. Distressed transactions are showing price recovery in major markets, up 27.8% from the trough 19 months ago, while distressed transaction prices in non-major markets continue to languish, essentially flat since Q4 2009. 

What and where are you buying today?

I got an interesting survey in the ‘mail’ this week: It's called “How do you rate your boss' performance?”

1.  Behaves professionally towards employees.

2.  Encourages employees to excel.

3.  Communicates a clear vision of success.

4.  Is willing to undertake the hard jobs.

5.  Expresses values and personal beliefs in work.

6. Sets a good example for employees.

7.  Earns the trust of employees.

8.  Deals capably with workplace conflicts.

9.  Is open about own strengths and weaknesses.

10.  Delivers on promises made.

11.  Acts in an ethical manner.

12.  Performs well under pressure.

13.  Does not let emotions get in the way of decisions.

14.  Motivates employees during adversity.

15.  Listens to employees work concerns.

16.  Is even-handed in dealing with employees.

17.  Is open to suggestions and new ideas.

18.  Finds a way to show appreciation for a job well done.

19.  Is collaborative and works well with others.

20.  Looks for ways to improve leadership skills.

Maybe at least or more important than the way the employee rates the boss is the boss looking at this list and thinking....how would I rate myself?

In 2006 I spent a month in Monrovia, Liberia working with The MacDella Cooper Foundation, which helps needy children.  Since then the foundation has made great strides including building and opening The MacDella Cooper Academy: Free boarding school for orphaned and abandoned children.  They're having another one of their very cool events and I thought some of you that will be in the Hamptons might like to go.  The DJ Universe & All White Party/July 14/15 Prospect Avenue/Southampton.  If you’re interested let me know and I’ll forward the invitation to you.

Congratulations: 

• Mike Everett, CIO at Sage Hospitality Resources
• Byron Carlock, global real estate leader focused on the U.S. at PwC 
• Tom Calahan, investment associate at Aviva Investors

Restaurant of last week:  Bice Ristorante:  7 E 54th Street, New York (212.688.1999).  My review of this place is simple:  Things Done Right.  It's amazing how few restaurants really get it.  This place, where I've been to about six times, is always on top of their game.  The staff is friendly and professional, the room (and sidewalk dining) is welcoming and the food is very, very good.  Perfect for a business lunch or dinner and a hangout for commercial real estate people.  You never know who you may run into.  

Please check out our new CD of original tunes which is now available on iTunes (search 'felix wait for me').  And, yes, the cover photo is from the Summer of 1982.  With the guitar is my son Brian, formerly co-leader of the touring jam band, OM Trio, who produced the album and played keyboards and  now is an assistant professor of music at UNC-Asheville.  On drums is my son Kevin, formerly a member of the band, "Fear of Sheep," who wrote the words to "Me Who Sticks Around" and "Robot Mannequin" and is a producer of TV reality shows. More photos here.  Thanks.

On the road....

June 18-20:  Chicago 

June 21:  New York for client consulting/coaching sessions

June 28: New York to attend the invitation-only Asset Management Roundtable

July 11-13:  Lansdowne, VA to attend the NCREIF Summer Conference

Sept. 10-12:  Paris to attend the GRI Europe Summit

Oct. 14-16:  Houston to conduct presentation training classes for one of my clients

Oct. 22-24:  Los Angeles to attend the PREA Fall Conference

Nov. 5-10:  New York for client meetings & other stuff

Nov. 7:  Washington, DC to speak with real estate students at Johns Hopkins University about careers in real estate

Nov. 8 & 9:  New York to attend the PERE Forum

"Core is just a moment in time" / ULI Capital Markets Conference / How to run a successful panel

I've been having some very interesting new business development conversations lately with real estate companies who are thinking about what they'd need to do to get into the institutional real estate fund management business. 


Yesterday, apropos of that,  I moderated the closing panel at ULI's Capital Markets Conference in New York.  You and I have both been to enough conferences to have seen that the closing panel is quite often populated by enough attendees to sport a baseball team (for those not familiar with baseball, that would be nine!).  However, yesterday, our room was full to capacity (120+).  I first thought it was because we had such a great panel.  Then I thought it was because I was hosting the session :-)  But the real reason was a combination, which also included the topic:  How To Raise & Manage A New Fund (although we also discussed more than just the commingled fund structure).  The number of people in the audience who raised their hands when I asked 'How many of you are in the market now looking to raise capital?' was way more than the majority.  


It was a great session (based on feedback we all got after leaving the stage) due to the experience and willingness of my panelists to share openly, and without self-promotion, what they know:  Claudia Faust, Hawkeye Partners; Jennifer Morgan, Kirkland & Ellis; Bill Cisneros, GTIS Partners and Tom Mizo, HFF.  Thanks you guys.  


The formula for a successful panel session is pretty simple:  A topic of real interest to the audience, a good moderator, experienced panelists and making sure to give the audience ample opportunity to join in the discussion (I allow and encourage questions at any time).  


Oh, one more thing:  the entire conference was really good.  Why?  Here are just some of the people who spoke there:  Steve Furnary, Clarion Partners; Jacques Gordon, LaSalle Investment Management; Tom Arnold, Abu Dhabi Investment Authority; Joh Kukral, Northwood Investors; Steve Kohn, Cushman & Wakefield (who is a very good moderator); Ron Kravit, Cerberus Capital; Lee Neibart, AREA Property Partners; Wendy Rowden, Jonathan Rose Company; Gil Tenzer, Contrarian Capital; Doug Cameron, CRL Senior Living; Robert Byron, Blue Vista Capital; Chris Merrill, Harrison Street; David Maki, Heitman.


A few interesting comments I heard this week at various stops along the way:

• "Are U.S. pension funds really Sovereign Wealth Funds?"
• "Being a core asset is only a moment in time."
• "Looking solely at IRR is a poor measure of things."
• "There are unintended consequences of every decision we make."
• "We are in a world of turmoil.  World events are affecting this country.  We are really scared."
• "The world wants to invest in the U.S."
• "More institutional investors are trending towards direct relationships with real estate operators to get away from the double promote."
• "Lenders are not comfortable underwriting to retrofit benefits."
• "Value-add is all about buying 'under-loved' assets."

You've probably experienced this too:  the wonderful thing about attending an industry event is running into someone you haven't seen in many years (although this can also happen when you bump into someone on the street).  This happened to me yesterday at the ULI conference and we're going to get together in a couple of weeks and catch up on the past 20 years or so.  

Cool & new:

(1) KossREsource.com:  recently launched, this is a website that, while it offers a lot more, is designed to become a commercial real estate industry specific Linkedin.  I got a drive-through from with the architect behind the design of the site and it's definitely something worth checking out. 


"Felix...Wait for Me."  After playing my new album for two of my former bandmates last weekend they told me how I should answer the question I get asked most:  "What kind of music is it?"  The answer: R&B.  Please check us out on iTunes (search 'felix wait for me').  Thanks.


Something I've noticed:  When answering a question, too many people start of by saying, "I think...."  I think (woops) this is an attempt, conscious or sub-conscious, to soften their response and perhaps not sound like a know-it-all.  Maybe I'm totally wrong.  But if you're answering a question, about something you know about then you don't 'think' you 'know.'  I don't know when this started. Maybe it is really part of "How to Talk Like A Valley Girl" (see tips below):

Instructions:

1. • 1
     Speak with what linguists call a high rising terminal. That means end your sentences with a rising intonation. It's as if you're asking a question with every statement you make.
   • 2
     Say the word "like" at least once in every phrase you say. For example, "She like totally went to the store."
2. 3
   Use the words "totally" or "way" in place of the words "very," "really" or anywhere in the sentence where it can add some emphasis. For example, "The milk is way creamy."

   
   

   On the road....

June 25-29:  New York for new client meetings.
Sept 10-12:  Paris to attend the GRI Europe conference
Oct. 14-16:  Houston to conduct a class in "Improving Your Presentation Skills" for one of my client firms.
Oct. 22-24:  Los Angeles to attend the PREA conference.
Nov. 7:  Washington, DC to speak with a group of real estate students at Johns Hopkins University about careers in real estate.
Nov. 8 & 9:  New York to attend the PERE Forum

Interesting view of The Chrysler Building I took from the Sentry Conference Center  at  730 Third Avenue

IMN, RCA and Rock and Roll

I've been in New York this week and will be here until next Friday. Other than the terrible news about losing our friend Deb to Glioblastoma on Monday it's been another good week. It included a consulting gig with a new client and attending and moderating a panel at IMN's Opportunity & Private Fund Real Estate Investment Forum. My estimate is that about 900 commercial real estate professionals, from all walks, were at the IMN event. Also, yesterday morning, I attended the Asset Managers Roundtable which has been hosted for the past eight years by my great and good friend, Ed LaGrassa.  Some things I heard as I roamed around this week that I want to share with you:

• "We hired some people who are not the typical opportunity fund wise guys and actually have some real estate operating experience."
• "Alignment of interests is at the top of the list of institutional investors and consultants."
• "It's important to have the ability to change course in your investment strategy as economic factors dictate."
• "Foreign capital sees investing in the U.S. today as their 'flight to safety."
• "The only investors in our first (time) fund who wanted to beat us up were the hedge funds."
• "We like to be stealth sometimes when looking at buying mezz pieces."  
• "There is definitely an informational (lack thereof) risk when buying CMBS debt today."
• "You're getting a discount on the mezz piece; we don't feel obligated to give you a lot of information." Mezz piece seller.

At the Asset Management Roundtable yesterday I was reminded how great it is to listen to real estate people talk about a deal they've done. The good ones of course!  They know all the details and want to share the adventure of what twists and turns it took from the start to the finish. Those of us who have been dealmakers can totally relate to it. They're our war stories and today, with the capital stack so complex and convoluted, some of the stories I've heard make me just shake my head.  But I guess, in the end, it's all worth it.

RCA (Real Capital Analytics) had their first rooftop party of the season last night and it was a perfectly beautiful evening with moderate temperatures, low humidity and a peaceful, easy breeze.  I got to spend time with my old Internet-era buddy, Michael Stewart and his partner, Neville Teagarden of Lucid Holdings who are involved in some very, very cool stuff, as their website states, "Leveraging the Power of Casual Learning AI (Artificial Intelligence)."  What they've developed will be a true game-changer in our industry.  

Solutions by Steve Felix update:  Each of my consulting clients has asked me to help them in different ways.  Generally, I'm hired by the CEO.  This week's client story:  Investment Management firm.  Has been investing in apartments for 20 years.  Their CFO is changing jobs and taking the role of marketing and raising new institutional capital.  While he's been involved in 'pitches' before, until now that had not been his primary job.  Basically, I've become his coach.  Getting him ready to go on the road to call on pension funds, endowments, foundations and consultants.  They have a long and successful track record, their stable of institutional investors has been a small but loyal group.  Those of us that have been in the marketing/capital raising role can appreciate that one of the things you have to prepare yourself for is rejection, on a regular basis.  But it's part of the game.  So we worked on developing a logical process to setting up meetings, how to most effectively tell their story, how to respond to certain questions and what you need to do to break in with the consulting community, among other things.


I've also had a breakthrough in my own new business development:  my eight current clients have all known me so there was a basis of trust established long ago.  The hiring of me came as a result of each of those firms determining that there was something I could help them with that would add value.  But last week I got hired by the first firm that didn't previously know me.  They had heard me speak recently at an industry event and something caught their fancy.  They checked me out and then reached out to introduce themselves. We scheduled an exploratory phone call during which they explained to me where they are now and where they'd like to be.  I told them I could help them and sent them an agenda for a day-long consulting session.  They asked me for two references. They reached one quickly and came back to me and said, "Let's do it."  So that felt pretty good to me and I'm meeting with their senior team next week.


I got an email last week from the real estate investment person at a college endowment:  "I have noticed  that many real managers are not on point with their fee structure. I have seen two offerings in the past week that charge 1.75% management fee, 8% pref, 20% incentive up to 12% net return then 50% carry after 12%. Expected return is stated at 12% net. From an LP's perspective that is very rich in any market. I politely declined meeting with them. If this was a one off, I would just think that the one fund just was off, but I see it in too many funds. Is this an industry thing, or are the present offerings just way off base?"  I gave him my opinion.  Do you guys have any thoughts you'd like to share?


Some very interesting stuff from an interview I read with Kyle Zimmer, president, chief executive and co-founder of the nonprofit, First Book, which provides books for children in need:


Q. Let’s talk about hiring. What questions do you ask?
A. I’ll say, “Have you ever started anything? From the time you were little, did you invent anything? An organization? Did you start a club?” Then I’ll ask, “What was the hardest part of that? What about failure? Talk to me about failure.” I think that is really important, because if you’re pushing, you’re going to fail. If you’re pushing in whatever you’re doing, you’re going to fail way more than you succeed. It’s that old saying: “You can fail without ever succeeding, but you can’t succeed without ever failing.”  The culture we live in teaches us to fear failure, and I think that’s a huge mistake. When I look back over the history of our organization, the times we’ve been most creative were a result of the pressure of a failure or near failure.  So I’ll have people talk about that, and see if, in their narrative, they blame other people. Or do they have some degree of humility in what they maybe should have anticipated and didn’t? And what they would do differently? We try to detoxify that at First Book.  Occasionally, we give out a Brick Wall Award for an idea that should have gone really well, but ended up crashing into a brick wall. It’s a way of saying, “It’s O.K., you did the thinking, and you gave it your best shot, and it crashed, but it was an honorable step.”


Q. What else?
A. I think that somebody with a sense of humor is really important, both directed at themselves and others. So I have an anti-bump policy. We don’t hire people who don’t have a spark. If they seem like they’re just a bump in the road, they’re not going to do well.


Show this one to your son or daughter who is taking piano lessons.


Music news:  Our new album, "Felix...Wait for Me", is now available on iTunes and I'm starting to get emails from people telling me what their favorite tune is.  We're pumped about this and hope you'll take some time to at least listen, perhaps buy a song or two, and spread the word.  Thanks a lot.


On the road...
June 4-8:  New York for client meetings and to attend and moderate a panel at the ULI Capital Markets conference on June 6 & 7.  I believe you can still register for it.
June 25-29:  New York for client meetings
Sept. 10-12:  Paris to attend the GRI Europe Conference.
Oct. 14-16:  Houston to conduct a training class on improving presentation skills.
Oct. 22-24:  Los Angeles to attend the PREA conference.
Nov. 7:  Washington, DC to speak with a student group from Johns Hopkins University on careers in real estate.
Nov. 8 & 9:  New York to attend the PERE Forum.

Glioblastoma takes our friend Deb

We lost our dear friend Deb to Glioblastoma on Monday.  She outlived the doctors' original prognosis by many months but we all knew all along that there is no hope of surviving this most aggressive of brain tumors known to man.  Even knowing that, the news was devastating and just so, so terribly sad.  Deb and I first met in summer camp when we were teenagers.  She was my brother Jay's first girlfriend.  We were out of contact for many years until a camp reunion in 2003 brought us all together again.  Coming from here adopted home in Guatemala she assembled us in a circle and gave out friendship bracelets that had been made by natives in that country.  Those of us who were there will always remember that special ceremony.  That bracelet remained on my wrist for almost a full year before it simply wore out.  It was at that reunion that Deb and my wife met and became instant friends.  A few years later, when Deb was in a soul-searching period her life (aren't we all from time to time?), they went on a Thelma & Louise road trip in the southwestern U.S.  The stories and photos of that trip are fantastic (even though I'm sure there are some adventures that they'd always kept between themselves!).  Some years back, Deb lived with us for a few months and at one point moved to Geneva where her writing talent landed her a great job with Rolex.  She had rediscovered herself and created a new life there.  Deb was a also a breast cancer survivor. She loved music.  She loved life.  She never said a bad thing about anyone.  She was 59.