No blowhard, the L&B Group's new head honcho, G. Andrews Smith, has learned three invaluable lessons on his rise to the top: Listen to the client, listen to the client and, finally, listen to the client.

"It sounds quaint and easy to say, but we're out of business if we're not listening to our clients," explains Smith. "There are times when it is difficult because you may not think what the client wants is the best course of action but, typically, if you listen hard enough and deep enough, they are right."

After 18 years with the company, Smith was named the L&B Group's chairman and CEO in March. He says the Dallas-based services firm doesn't have a secret formula for success. Rather, the company uses a straightforward approach that blends hard work with plenty of research. "Our goal is trying to understand customers as well as they understand themselves," Smith explains. Some clients say the company comes close.

"The L&B Group has been one of our most innovative managers, precisely because they do listen," says Richard Tettamant, administrator for the Dallas Police and Fire Pension System, a $1.6 billion operation. When the pension board decided to change direction and reap profit rather than stick with a buy-and-hold approach, Tettamant says the L&B Group responded quickly and well.

"I guess you could say the proof is in the pudding," he adds. "We've made rates of return in excess of 20%."

Further north, in Juneau, Alaska, Peter Naovoz, manager of real estate investment for the Alaska Permanent Fund Corp.(APFC), echoes Tettamant's praise for the L&B Group.

"It's easy to say you listen in a marketing pitch," Naovoz remarks, "but it becomes more difficult when you have to satisfy requirements - L&B has done both."

A public company, APFC manages a conservative portfolio with nearly 50% of its assets in bonds. The 10% that goes toward real estate must be invested in domestic properties. Naovoz says L&B has maintained a very stable cashflow for the company, despite such restrictions.

"L&B does as well as anybody at listening to investors and responding to what they want," Naovoz adds. "We have 16 criteria for our managers, and one that's really obvious at L&B is that you get senior management attention, and we value that very highly."

Dallas firemen and Alaskan investors aren't the only ones banking on L&B's advice. The company services nearly 80 accounts including corporate clients: Ford Motor, Harvard University and Johnson & Johnson.

Since the acquisition of its first property in 1971, L&B has realized returns of 16.1% on all assets bought, managed and sold. And in the past 10 years, the firm has sold 56 properties for a total of more than $750 million.

An independent affiliate of Boston-based United Asset Management, L&B has 14 offices located throughout the United States. Together these offices manage a portfolio of $3 billion in real estate assets, including 27 million sq. ft. of property. The company hopes to reach the $5 billion mark by 2002.

Shortcuts can kill a company The true test of a company's achievement often lies in its reaction to adversity. These days, it seems, any idiot can make money in the real estate market. More importantly, however, is a company's long-term strategy and its plan for making money during lean economic times. Smith says L& B won't be taking any shortcuts.

"The No. 1 mistake firms make is taking shortcuts," he adds. "When that happens clients get lost, an investment sours or talent falls by the wayside.

"Thinking only of the 'deal' is a particularly odious shortcut. There is a huge gulf between a 'deal' and an investment," Smith continues. "Just because some project appears to be a good deal from a pricing standpoint, it doesn't mean it makes sense for any of your clients."

To underscore his point, Smith mentions the company's handling of its Core Group Trust, a 50-year life fund started in 1988. Three of the four participants in the trust wanted to redeem out of the project early. As investment manager for the project, L&B sold off the trust's underperforming, trophy-style office properties, and moved clients into smaller investments.

"The trust is going to terminate prior to its expected life, but that's OK," Smith remarks. "The good news is we have on-going relationships with some of the clients, and we'll get them into newer type vehicles, which is what their guidelines want now. Things didn't work out exactly according to plan, yet these clients are still doing business with us."

As part of its strategy to differentiate itself from competitors such as Invesco, L&B distances itself from what Smith characterizes as being "real Wall Street driven." He says the company isn't trying to put a lot of product in the marketplace. Rather, the focus is on fewer transactions with better opportunities.

In Arizona, L&B has successfully used that approach in several retail ventures. After meeting with clients who expressed an interest in the state's retail sector, L&B sent in a team of analysts to investigate. What they discovered is bigger isn't necessarily better.

"We had a situation where there was some retail that was smaller but smarter in the sense of demographics and purchasing power," Smith explains. "We see that type of retail outperforming other types of retail both in the near term and the long term."

Classic meets modern in '99 A timeless, perhaps even old-fashioned concept, relationship building and listening to clients always will be a priority for the L&B Group. Taking action on what clients request, however, often requires a more modern approach.

To that end, Smith says L&B plans to purchase a REIT management company by the end of the year.

A new direction for the company, Smith dismisses recent concerns about REITs, insisting that the move is part of the company's long-term mission to grow its services.

"The REIT business, as well as private investing, is here to stay," he says. "REITs will continue to be a very good business, so we want to offer our clients both ways of investing. It's that simple. Sometimes, one way will be better than another, but both ways will exist now and 10 years from now," he adds. "Why wouldn't you want to be able to offer both?"

Already, L&B offers advisory services for the office, industrial, apartment and senior sectors.

Noting its potential for future growth, Smith points to senior housing as a particularly attractive segment of the real estate market, calling it "a wonderful concept."

"When you look at the demographics of the country," Smith says, "a lot of us are getting older. Seniors is a logical extension of our apartment sector, and it is something we're going to develop more."

In an industry that is driven by satisfying pension benefits, Smith can't help but think of the staggering number of Americans heading toward retirement. Managing their money is a task he relishes.

"It's a big responsibility," Smith says, "but it's a lot of fun. I've got parents who are aging and who look forward to their retirement benefits every month, so this is a neat way to have a business that does well and yet seems to provide some social benefit."

So does he think his parents would be proud of how well he's listened to the needs of their generation?

"Yeah," Smith laughs, "especially when you look at the way the government is handling their money."