Who could have imagined a decade ago that the commercial real estate industry would become so sophisticated and dynamic? The good ole boys who once dominated regional markets have given way to a new breed of executives who compete fiercely in a global business where the speed of executing transactions is every bit as important as nurturing client relationships.
One of the primary drivers of this dramatic change continues to be Wall Street, which has made real estate investment trusts (REITs) a household word. The role of technology in this transformation can't be overstated, either. From real estate underwriting to property management, the impact of technology has been profound. In effect, the combination of Wall Street's influence and technological advancement has been the catalyst for other emerging trends, including consolidation and global expansion.
Against that backdrop, NREI has identified 10 movers and shakers helping to reshape the industry. Like the industry itself, the individuals on the “Ten to Watch” list are an eclectic bunch. Atop the list is Leo Wells, whose multibillion-dollar unlisted REIT is the talk of the industry. “Leo is perhaps the most controversial person in our industry today. He gets points for stirring things up,” says Kenneth Patton, associate dean of New York University's Real Estate Institute.
Meanwhile, Mary Ann Tighe was selected not only because she is a highly successful real estate broker, but because her departure from Insignia/ESG to CB Richard Ellis ultimately paved the way for the merger between the two giants.
Richard Kincaid, the former CFO whiz kid turned CEO at Equity Office Properties Trust, is navigating the nation's largest REIT through a stubbornly persistent office slump.
The remaining seven on our list of “Ten to Watch” have been making headlines as thought leaders andmakers — or, in the case of Robert Taubman, a deal breaker. How will these leaders fare in the year ahead? Stay tuned.
Leo Wells, President and CEO, Wells Real Estate Funds
Wells Real Estate Investment Trust stormed the office market last year, snapping up $2.6 billion worth of Class-A properties. That made the Atlanta-based unlisted REIT the year's leading buyer of office properties — no small feat given the heated competition and abundant capital chasing product.
“We've been so busy that we haven't had time to get excited yet,” says Leo F. Wells III, president and CEO of Wells Real Estate Funds.
Wells' effect on the industry has been palpable, judging from the heated reaction to how he's built his empire. Granted, unlisted REITs occupy a fraction of the REIT universe, but the Wells REIT has garnered the lion's share of publicity.
It's been a spectacular ride for Wells, 60, who in 1983 founded Wells Real Estate Funds in Atlanta. It was then a boutique firm specializing in real estate limited partnerships. He launched his first unlisted REIT in 1998, and, over the past few years, that REIT has experienced explosive growth. Wells says his 2004 acquisition target is $3.3 billion.
Wells is indeed a busy man. He's also a calculated salesman who is quick to defer credit to his co-workers for elevating the firm to such heights. “The only reason that I graduated from the University of Georgia is because I can milk with both hands. We've got some real smart people here,” says Wells, laughing.
He's also one of the more contentious REIT chiefs in the business today. Critics say the Wells REIT is essentially a limited partnership disguised as a REIT, something that is sold rather than bought. They cite illiquid shares, high front-end fees and little transparency as three areas of concern. The first Wells REIT carried 14% front-end loads, but Wells claims the second REIT that was launched last November carries front-end loads as low as 10%.
When asked to justify the loads, Wells offers an analogy that equates financial advisors with golf pros. “It's like buying golf clubs from Wal-Mart versus a pro shop,” he explains. “If you have trouble with the clubs, the pro shop will help you play the game. Most people who are serious about golf don't buy their clubs at Wal-Mart. Help costs money.”
Wells swings back at his critics, saying he has a theory about why so many pundits are concerned about his unlisted REIT, which pays a 7% dividend and carries little debt. “The people that are complaining are having trouble raising money. If they can't raise money, maybe they need to figure out a way to structure their business differently,” he says.
The Wells REIT owns 24.6 million sq. ft. of office space, and that portfolio is 97% leased, according to Wells. He is quick to note that most of his tenants are on long-term leases, with an average of seven years remaining until their leases expire.
Critics also contend that the Wells REIT buys properties hastily just to keep up with its prolific fund-raising efforts. Not so, says Wells, who claims that the first Wells REIT only closed on roughly one-fifth of the properties it set out to buy in 2003.
According to Wells, the REIT made offers on $14.8 billion worth of office property last year. Of that total, the REIT closed on only $2.6 billion worth of deals — or 20% of those offered. The Wells REIT bought 30 buildings for $1.4 billion in 2002.
He also notes that his harshest critics are chiefly rivals from the listed side of the business. Fair enough, yet Wells has given his opponents some ammunition, especially those who level charges that reps aggressively push shares of the Wells REIT onto unsophisticated investors: Last summer, the National Association of Securities Dealers fined Wells Real Estate Funds for hosting lavish junkets for its broker-dealers. Such non-cash compensation is forbidden by NASD rules, and Wells was suspended for one year from the firm's broker-dealer arm.
Despite his detractors, Wells continues to raise millions of dollars every single day through his legions of financial advisors. It seems that the NASD fine hardly even put a dent in his REIT's ability to raise capital.
“What you do in business is take the structure that works best for your investors and you go with that. We just don't see the problem,” says Wells, referring to the furor over his REIT fees. “And our investors don't see the problem, either.”
— Parke Chapman
Andrew Florance, Founder, CoStar Group Inc.
The commercial property data industry has changed dramatically since 1987, the year that Andrew Florance founded CoStar Group Inc. What passed as data was essentially just “tea-leaf level analysis,” says Florance, who maintains that the industry was barely in its infancy back then.
He recalls several so-called vacancy reports covering the Washington, D.C., office market during that era. Naturally the vacancy spreads between both reports were huge, and his brokerage friends were struggling to find reliable numbers.
“People want to know what the actual vacancy rate is rather than a consensus estimate,” says Florance, 40.
Enter CoStar, whose highly detailed property database now covers 50 U.S. markets and serves roughly 40,000 real estate professionals nationwide. CoStar has brought commercial property data out of the Dark Ages by compiling detailed reports on hundreds of thousands of different properties. By doing so, it has also added transparency to the commercial real estate market, says Florance.
Additionally, CoStar has standardized the real estate data industry to such a degree that many brokerages no longer support in-house research departments. Brokerages aren't his only clients, either. Florance says that many principal-level executives use CoStar data to report back to lenders.
“Now firms take our data as a starting point, and a small boutique firm can have access to a $100 million research budget,” says Florance. While his budget has grown exponentially over the past few years, Florance notes that CoStar is showing strong earnings growth. Revenues from CoStar, which went public in 1998, increased 22.1% over the past year.
“Andy wants to position CoStar so that it's like the Bloomberg of the real estate industry. CoStar already has a dominant position in the industry, and it's good for the business,” says Peter Pike, who publishes the PikeNet Directory of Commercial Real Estate.
Over the next few years, CoStar plans to break into many new secondary markets such as Milwaukee, Memphis, Tenn., and Hartford, Conn. Florance says secondary markets like these will add another 6 billion sq. ft. of inventory to what CoStar now tracks.
“We've made a commitment to cover the entire market,” says Florance. “There are a lot of gas stations that need to be bought or sold in the United States.”
While CoStar is the dominant data provider these days, Florance is keeping an eye on the rearview mirror. He's spending a fortune on new technology — $2.5 million this past January alone — and he's also bolstering his customer service department.
His main competitor is LoopNet, another property data provider with a similar business model. Sources say LoopNet has stronger secondary market coverage and charges less for its services.
“The truth is, I'm afraid of competition,” he says. “Commercial real estate is a huge asset class. There's always someone there looking to take your clients.”
— Parke Chapman
Richard Kincaid, President and CEO, Equity Office Properties Trust
There is no inherent value in being a big company, Richard Kincaid constantly reminds his management team at Equity Office Properties Trust, which owns and manages more than 120 million sq. ft. of office space and boasts an $11.4 billion market cap. “It's only going to be valuable when it's worth more than the constituent parts.”
The introspective president and CEO, who officially completes his first year on the job this month, is intensely focused on execution at all levels of the organization to leverage EOP's size and maximize shareholder value in a weak office market.
“We got really big before we knew how to be really big,” says Kincaid, 42, a 13-year company veteran who also served seven years as CFO and two years as COO. “We spent five years growing like crazy, and we needed to ask ourselves, “How do we change people, processes and infrastructure to make that size a competitive advantage?”
Expense control and efficiency are the buzzwords for office owners and managers today, and Equity Office is at the forefront of that effort. The company's EOPlus program is expected to reduce expenses by $75 million to $100 million. The savings will be achieved through procurement and the consolidation of property management offices from 170 to about 50, reducing employee headcount by about 400, or 15%.
The belt-tightening is imperative for Equity Office. Total revenues in the fourth quarter of 2003 were $828.7 million compared with $848.6 million during the same period a year ago, a 2% drop. The main hindrance to revenue growth continues to be a decline in the occupancy rate and high lease terminations. The REIT's occupancy rate has fallen more than two percentage points over the past year, from 88.6% to 86.3%.
Lease termination fees, including those recognized as income from joint ventures, totaled $27 million during the fourth quarter of 2003, compared with $44.7 million during the same period a year ago. “The most baffling thing about the early terminations is I wish there was a pattern,” says Kincaid. “It's been so incredibly sporadic and in some cases completely unforeseen.”
Still, the weakness in demand for space is primarily among large tenants, Kincaid believes, which creates an opportunity to attract small and mid-size tenants. Case in point: In 2003, the company rolled out its “Think Small” promotion, which paid brokers a bonus of $2,003 for signed leases of 5,000 sq. ft. or under before year's end. “Think Small” was a big success. The company's total square footage of small-lease deals rose 21% in 2003. Look for a series of new marketing initiatives this year.
The company also is disposing of assets in non-core markets. In 2003, Equity Office completed $933 million in asset dispositions totaling 5.4 million sq. ft.
The goodis that the turnaround has already begun, Kincaid believes. He expects office absorption this year to total between 25 million sq. ft. and 30 million sq. ft. in the nation's top 20 office markets.
But the executive understands recovery won't occur overnight. “Our view for 2004 is that we will have office job growth of 2.5% in our top 20 markets.” As recently as 2000, that job growth figure was 4%, Kincaid says. “We're not being Pollyanish here.”
— Matt Valley
Hamid Moghadam, CEO and Chairman, AMB Property Corp.
Hamid Moghadam, the CEO and chairman of AMB Property Corp., has a crystal-clear plan for growing his company's industrial portfolio. Quite simply, Moghadam wants to boost the company's holdings in the most important global markets.
Now that the San Francisco-based industrial giant has succeeded in disposing of $1.7 billion worth of assets in secondary markets over a three-year span, Moghadam has switched his attention to increasing the company's holdings in its core U.S. markets as well as overseas.
As Moghadam implements the next phase of AMB's growth strategy, the company's competitors will face heightened competition in the U.S. as he seeks acquisitions and new developments in core markets such as Chicago, Los Angeles, San Francisco, Boston, Seattle and Northern New Jersey.
The battle for market share in international markets also will heat up as Moghadam, 48, seeks to grow the company's international holdings from 6% of its total portfolio to about 15% over the next five years.
“We have become more sharply focused in what we do in the last 15 to 20 years,” says Moghadam, who has served as CEO of the company since it went public in 1997. “Now we have taken that very focused strategy in the industrial sector and are applying it to a global platform.”
Moghadam's pursuit of a well-defined investment strategy has been his hallmark. Born in Iran, Moghadam earned bachelor's and master's degrees in engineering from the Massachusetts Institute of Technology, as well as an MBA from Stanford. He began his real estate career in 1980, shortly after his graduation from business school, and co-founded AMB in 1983 with partners Douglas Abbey and T. Robert Burke.
In the late 1990s, Moghadam sold the company's office and retail holdings to concentrate solely on the industrial sector. In 2000, he further narrowed the company's focus to industrial properties in markets tied to global trade. As part of that concentration, AMB specializes in high throughput distribution centers designed to move products to the market as quickly as possible.
The company — which was ranked No. 3 on NREI's 2003 Top Industrial Owners list — has dramatically increased its acquisitions. In the fourth quarter of 2003, AMB made $345 million in acquisitions compared with $11 million worth of purchases in the first quarter of the year. In December, the firm invested in $108.4 million worth of acquisitions and new developments in Paris, Frankfurt, Tokyo and Madrid.
Investors appear to approve of AMB's investment strategy. On Feb. 3, the company's stock reached a 52-week high of $35.86, up from a low of $26.38 in May 2003. Bill Camp, a vice president and analyst at St. Louis-based A.G. Edwards & Sons, gives AMB high marks for accelerating the pace of its investments. “I think as the economy grows,” says Camp, “AMB will have great internal growth.”
— Steve Webb
CEO, NorthMarq Capital
It's 22 degrees below outside Ed Padilla's office in frozen Bloomington, Minn. But to the CEO of NorthMarq Capital, it's still an inviting climate.
Padilla, you see, is insulated by perspective. Born under communism in Havana, Cuba, Padilla came to the states at a tender age and couldn't speak English until the third grade. Now, he's fluent in the languages of law, real estate and mergers, and grateful for the chance to speak them — opportunities that bypassed many countrymen.
“That's my personal driving force,” says Padilla, 48. “When the challenges seem to take over, I remember where I came from and realize that this is the greatest place to live in the world, with the most phenomenal opportunities.”
Real estate investment was the last thing on Padilla's mind when he graduated from William Mitchell College in St. Paul as a lawyer in 1982. But he went to work for a Minneapolis firm and soon immersed himself in mortgage banking law. Later, he left law to take a loan-production post with GMAC Commercial Mortgage.
In 1991, an executive opportunity arose with investment banker Northland Capital — NorthMarq's forerunner — and Padilla seized it. Or better, it seized him. “I can't imagine enjoying a career and an opportunity more than I have.”
Padilla has overseen several acquisitions with NorthMarq, including Trowbridge, Kieselhorst & Co. of San Francisco in 2000 and Askew/Reese Investment of Dallas in 2002.
But the most daunting merger came in 2003, when NorthMarq blended its 11 offices in the West and Midwest with the 17 East Coast offices of Philadelphia Legg Mason Real Estate Services in a cordial, but complex transaction.
The combined firms put Padilla, a believer in a “flat,” or minimally layered organization, in charge of a behemoth. The new entity likely will emerge as the nation's third- or fourth-largest commercial mortgage banking intermediary with a bulging portfolio in excess of $21 billion.
“It's harder to stay flat when you grow from 11 to 28 offices. But I always believed that real estate finance is driven locally. It's simply the job of the corporation to provide the platform.”
This year won't be as frantic as 2003, when NorthMarq's same-store sales soared 40% and the combined firms originated $7.5 billion in transaction volume. “We've budgeted a little lower number ($7 billion) because we believe things can't keep going like they have.”
Padilla is lauded for his informal but effective management style. “To Ed's credit, he's more results oriented than process oriented,” says Maurice Moore, senior vice president for ING Investment Management. “He's easygoing and has a refreshing way of coming to a point, which saves everyone time.” And it must be working, adds Moore. “He's taken two companies and merged them into a powerhouse. He's an exceptional leader.”
— Steve McLinden
Co-Chairman, Capri Capital
Like his father and his grandfather before him, Quintin E. Primo III seemed primed for the pulpit. But the Harvard MBA, who rose out of inner city Detroit, had different dreams. Today the preacher's son is co-chairman of the largest African-American owned real estate investment company in the country, Chicago-based Capri Capital, which manages $7 billion in assets, employs 120 people in six offices nationwide and operates a pension-advisory service.
That's quite a leap from the early 1990s, when Primo and his business partner Daryl Carter launched their new firm, then called Carter Primo Chesterton, amid a real estate recession. Their ideas of targeting large pension funds and using debt-financing as capital resources raised a few eyebrows. One competitor warned them they'd never make it, and urged them to quit and join his firm before they lost their homes.
“The obstacles we faced were those that every new entrepreneur faces — lack of money and clients,” says Primo, 48, co-chairman of Capri and CEO of its pension advisory business. “In retrospect, it was the perfect time to start. We soon found ourselves with a very strong tailwind that would carry significant economic growth and investment through the 1990s.”
But the capital markets were in disarray, and thrifts and other lending institutions were failing. “We felt the pension industry would replace a number of those and realized early on that pensions were in need of (total asset) diversification” in real estate, Primo says. The company launched a $100 million co-mingled investment fund and started marketing mezzanine loans, partnering with several pension funds to offer a creative mix of equity and debt financing. “Debt financing was a relatively unique approach in a sea of me-too equity strategies. That was our better mousetrap.”
Today, Capri is the only African American-owned firm advising pension funds and is ranked as the fourth-largest Fannie Mae DUS (Delegated Underwriting and Servicing) lender in the U.S.
Primo also is known for his efforts to give back to local and minority communities. He chairs his namesake Primo Women's Center, a transitional shelter serving Chicago's impoverished west side and helped redevelop Chicago's Navy Pier.
In addition, he assists the Real Estate Apprentice Program (REAP) in attracting more minorities into commercial real estate, which is still 99% white. “Quintin is a guy who is poised to help change that,” says Mike Bush, founder and chairman of REAP, which provides networking and job opportunities for African Americans in the industry. “He is a man of tremendous energy and creativity and has the contacts, which is what our industry is all about.”
The next wave of investment, says Primo, will be in minority areas of major cities “where there are millions who are grossly underserved in housing and retail.” While it's challenging to build in the inner city, pension funds are already earmarking opportunities there, he says.
Primo advocates a progressive workplace and insists that all of Capri's employees have his home and cell-phone numbers. “We employ nice people who are also highly intelligent, driven and socially conscious. I want them to be as thrilled to go to work as I am.”
— Steve McLinden
CEO, Taubman Centers
After successfully fending off a hostile takeover of his company, Robert Taubman is determined to forge ahead with the retail strategy that he says makes Taubman Centers “different from everyone out there.” He wants to build the company's portfolio — regarded as the best collection of upscale shopping centers in the industry — at the rate of one new property per year while continuing to lead the industry in per-store revenues.
“We're very energized and focused,” says Taubman, 50, who has been CEO of the Bloomfield Hills, Mich.-based real estate investment trust (REIT) since 1990. Taubman Centers was founded by his father, Alfred, in 1950 and went public in 1992. “We like the niche that we operate in. We're very much an alternative to the consolidators.”
Of course, Taubman's jab at “the consolidators” of the retail industry was aimed at rivals Simon Property Group and Westfield America Inc., who withdrew their $1.7 billion bid to purchase the company last October after anti-takeover legislation was signed into law in Michigan. Taubman Centers, which introduced the bill that would allow the Taubman family to use its 33.6% block of shares to defeat the proposal, paid a hefty $30.4 million last year to defend the unsolicited bid.
Since the company has Michigan law on its side, analysts do not expect Simon and Westfield to renew their acquisition attempt. “I think it's totally over,” says Lee Schalop, an analyst at Banc of America Securities. “Any attempt to take over the company in my view would be a waste of resources.”
The contentious battle between the mall giants provided a contrast in investment strategies. Westfield and Simon have expanded their businesses with acquisitions of rival companies, including a partnership to purchase Rodamco North America in 2002.
Taubman, meanwhile, focuses on growing its portfolio — which now stands at 21 shopping centers — through new development and the acquisition of individual properties that fit into the company's upscale niche. The two sides traded barbs throughout the 11-month takeover fight, with Taubman claiming that Simon lacked its own meaningful growth opportunities and wanted his company's upscale properties to improve its “aging and tired” portfolio.
Taubman says he will continue to seek revenue growth at his properties by filling them with unique, new-to-market tenants. The strategy yielded an industry-leading sales rate of $468 per sq. ft. in 2003 at Taubman's stores. But some analysts say Taubman's aggressive lease negotiations have resulted in the lowest occupancy rates of any retail REIT — 86.1% in 2003.
Taubman counters by saying the company's current lease negotiations put it in a position to boost occupancy rates significantly this year. “Occupancy is an important fundamental of the business, but we believe income is more important.”
The company's stock price — which was selling at nearly $24 per share in mid-February compared with $15 before the takeover battle — and the 14.2% increase in funds from operations (FFO) in 2003 also prove that the company is meeting its investors' growth objectives, he says.
“The high-productivity centers will continue to dominate the retail landscape,” Taubman predicts. “We've provided a heck of a return to shareholders for a long time now. We think the fact that we are different is a significant advantage for our company.”
— Steve Webb
Mary Ann Tighe
CEO, CB Richard Ellis Tri-State Region
When Mary Ann Tighe departed Insignia/ESG for CB Richard Ellis in 2002, brokerage circles were buzzing. Would her clients follow her? Who would she cherry-pick from Insignia/ESG's elite brokerage ranks?
Speculation ended abruptly in 2003 when CBRE acquired Insignia/ESG. This coup de grace only bolstered the Tighe mystique, which largely rested on her 44 million sq. ft. of leasing deals. “That was a validating experience for me,” says Tighe, 55, CEO of CBRE's New York Tri-State Region.
Asked if she had any doubts about leaving Insignia/ESG after such a fruitful run to join what was then an also-ran firm in Manhattan, Tighe says no. “The combination really worked well. I made a whole bunch of new friends and then brought them back to meet my old friends.”
Legendary broker Edward S. Gordon was her mentor at Insignia/ESG. Tighe says candidly that it took her seven years to stop being afraid of Gordon. But in the end, she says, it was an important apprenticeship.
“He taught me to think with clarity about business and how a CEO thinks,” says Tighe. Gordon also knew how to frame the sales proposition in a way that people could understand, she says.
Tighe has singlehandedly helped anchor roughly 5.5 million sq. ft. of new office construction in New York City. She has also negotiated myriad forms of deals that include ground leases, air rights, equity transfers and even government incentive packages.
One Manhattan landlord and developer who has worked with Tighe on several big leasing deals in the 1990s knows her brokerage talents firsthand. “She does these deals because she's incredibly smart, and she knows her clients very well. She understands all parts of the deal,” says Douglas Durst, president of the Durst Organization. His firm owns 10 major Manhattan properties. It will also develop Bank of America's new office tower near Times Square.
Tighe helped Durst lease his 4 Times Square building to Conde Nast, which anchored 720,000 sq. ft. in the property. That deal is proof that Tighe thrives on big leasing transactions. So far this year she has already co-brokered a deal to install PricewaterhouseCoopers in its new 800,000 sq. ft. headquarters on Madison Avenue. Tighe now represents the New York Times Co. in its bid to construct a 1.5 million sq. ft. tower on Manhattan's Eighth Avenue.
“Without exception, every company thinks about real estate differently and uses a different vocabulary to describe their business,” says Tighe. “If you don't learn their language at the top, you will never succeed beyond just filling an order.”
— Parke Chapman
CEO and Chairman, Loews Hotels
In a new reality series airing this month, Jonathan Tisch falls to the bottom rung of the corporate ladder. Tisch, the CEO and chairman of Loews Hotels, has to clean rooms, carry luggage and take on other unglamorous chores as part of The Learning Channel's series “Now Who's Boss?”
Tisch says his stint working in the trenches was such a valuable experience that he decided to implement a “Now Who's Boss?” day at hotels throughout his chain so executives can learn more about their properties. The 50-year-old executive, who received his initiation in the business by working an assortment of odd jobs at his family's Americana Hotel, has never lost touch with his service employees.
“Hotel employees are the ones who really make a difference for us in terms of the services they offer, and ultimately our profitability,” says Tisch, who was named CEO of New York-based Loews Hotels in 1989.
Loews, which owns and operates 20 hotels in North America, invests in what Tisch calls one-of-a-kind properties such as the House of Blues Hotel in Chicago and the Mediterranean-themed Portofino Bay Hotel in Orlando. The company is not one of the biggest owners in the country, but it has the resources to compete against some of the biggest names in the business.
That's because the company has access to the deep pockets of its parent, Loews Corp., a holding company founded by his father, Preston, and his uncle, Laurence, that contributed $100 million toward the recent construction of three hotels in Orlando. Loews Hotels also beat out nine other bidders to partner with the City of Miami Beach on the construction of the Loews Miami Beach Hotel eight years ago.
Loews Hotels continues to rebound from the travel downturn that caused industry-wide occupancy and revenue declines in 2001 and 2002. In 2003, net income at Loews Hotels was $11.2 million, a 29% increase from $8.7 million the previous year. Revenues increased 7.5% from $266 million to $286 million in the same time period.
The company's latest investment is proof that Loews is determined to grow its portfolio by acquiring and building the unique properties that are its trademark. In December 2003, Loews purchased a 20% interest in the historic Don CeSar Beach Resort in St. Pete Beach, Fla.
As Tisch continues the Loews' careful investment strategy, he is eyeing some crucial markets where the company has yet to establish a presence, including San Francisco and Boston. Although he is determined to grow the firm's property base in North America, he has no plans to plant the Loews flag overseas.
In his words, “We want to be a great American hotel company.”
— Steve Webb
Fred Van Wagenen, Acquisitions Director, Jamestown
Fred Van Wagenen is a syndicate boss with a big stake in East Coast real estate and backing by foreign muscle. But don't expect an international rumble, although Van Wagenen, acquisitions director for Atlanta-based Jamestown, has grabbed more than his share of premium turf in recent years.
Jamestown buys high-profile U.S. properties, but raises most of its money through closed-end German “syndicate” funds, where individuals historically invest as little as $10,000 in one property and get at least a 7% yield.
Under Van Wagenen's leadership, Jamestown has acquired $4 billion in office and retail properties, employing almost $2 billion in equity. Recent acquisitions include a pair of $300 million New York buildings — the 1290 Avenue of the Americas office tower in Midtown Manhattan, and 620 Avenue of the Americas, a retail/office building in Manhattan's Chelsea District. The firm also acquired downtown Boston's landmark One Federal Street office tower. “I have a nose for real estate,” Van Wagenen says.
Jamestown is practically a household name in Germany, where most of its nearly 40,000 investors reside. “We are the brand in Germany and probably have the most extensive fund-raising business there,” says Van Wagenen. “The reason we're so successful? We never stubbed a toe.”
While his fellow MBA grads from Emory University were marching off to accounting firms, Van Wagenen established an early footing performing workouts for a Florida REIT. He was also real estate director for major financial firms, launched a real estate advisory/brokerage and handled acquisitions for two European firms, landing at Jamestown in 1996. “My diverse background helped familiarize me with industry problems, and the ways to solve them,” he says.
But the key to deal making “is trust,” he adds. “Without that, you're nothing.”
Van Wagenen, 57, isn't one of those guys who waits for a deal to drop in his lap. “It's better to do your own research,” he says. If a building isn't for sale, that's no deterrent, he emphasizes, pointing to the “relationship” purchase of 620 Avenue of the Americas.
Ed Maher, executive director for Cushman Wakefield, recalls a transaction with Van Wagenen. “Fred came into town to look at (One Federal Street) and he said, without a hint of cockiness, ‘I just want you to know I'm going to buy your building.’ And he proved himself right. Fred's very sure of his abilities. He's not just interested in the deal, he's interested in the people. He knows the value of relationships,” says Maher.
This year promises to be Jamestown's best, with the debut of another $1 billion German fund and the likely establishment of a U.S. fund, Van Wagenen says. “If we do that, watch out.”
— Steve McLinden