Monday, December 29, 2008

RIP Bob White

Last night, a good man left this Earth.

Bob White was a quiet, unassuming man. Ex U.S. Special Forces, he led a hairy life in Vietnam. He only told me a few stories. Others he could not. After more than 20 years in the service, he retired with the rank of major and then broke into real estate. And never looked back.

A wonderful human being, a friend, a mentor, a truly gentle man, Bob -- principal broker of the Prudential CRES Commercial Real Estate practice based in Columbus -- passed away last night almost three months to the day after being given a 3-5 month life expectency from doctors, who diagnosed him with terminal cancer of the abdomen back in September.

I cannot even begin to share all this man has meant. But I can say this -- I would not be where I am today in the business were it not for him. As his pain increased, he carried it quietly. Oh, he would mention he was having pain but never let on just how much it was hurting him. The last two times we had real interaction (his visits to the office became sporadic in early November as he began to feel weaker) were at a regional Pru CRES meeting, and later, at his home. Despite his "discomfort," he never stopped working to help the agents in his office.

At the regional meeting, I gave a lead-off Best Practices presentation on exploiting bleeding edge technology for real estate marketing (blogs, video logs, podcasts, Twitter, etc.). I received a lot of positive feedback, but none of it more meaningful for me than from both Bob, and our company owner, David Mussari. Bob kept talking about it later on, and we took a moment after a special presentation of testimonial letters to him from colleagues past and present, to have a photo made together. It is pinned up at my home office. He is and will always be, an inspiration.

About a week and a half ago, I was at his house. He, I, and another ex military man, Ted Mosure, shared a beer. I never had the honor of serving, but I was honored to be in the company of these two men. Bob is a founding member of the Ohio Military Hall of Fame for Valor. He was doubly honored when those who determined who should be inducted into this hallowed hall chose him, and several others, to be the initial inductees. He later became one of the driving forces to keep this special recognition active, and has been instrumental in planning the annual recognition ceremonies. The OMHF ceremony held each May at the Ohio Statehouse is widely attended and is a highly moving and emotional service.

After Ted left, Bob and I,and his wife, Jody, had a long talk about business, life, what I want to do with my real estate practice, and so on. Knowing how little time he had left, here is this man feeling it is more important to keep instilling confidence in others, prodding all of us on, making sure we stayed positive when his life outlook was measured in days and weeks . . . and if he was lucky, months. He even recommended me to take his place on a particular Columbus city commission, though I don't know if that will come through. I may be the wrong political blood type. We will see.

That night I also got to closely inspect the 1954 MGTF he had lovingly been restoring for almost two years. He finally got to drive it in late November. Of that I am glad. He pored all his extra time into family, and his classic MGs.

In between the regional meeting and my visit to his home, Bob made sure to attend the Columbus Real Estate Exchangors holiday breakfast meeting on December 11. He had been busy the day before and was exhausted, I learned after. But he made made it a point to be there. Jody drove and actually, they were the first to arrive that icy, Thursday morning. I was glad to see them. Both, selfishly, for me . . . and because it was good to see him out, and not bed-ridden. As Jody noted in a wonderful comment to the post I wrote about the transition at CREE, he was glad I accepted the challenge of leading this dynamic organization for a year.

I still remember when I walked into the Prudential office a little over a year ago, and he said "Good Morning Mr. President." Seeing my blank stare back at him, he told me the CREE nominations committee was recommending me for president for 2008. My brilliant response was, "Nuh-uh!" Right. . . . really eloquent for a guy who usually has an opinion on everything. Still it was a great experience. And Bob was a cheerleader every step of the way.

He always had a grin on his face. Nothing seemed to get him down, even his illness. Forever the planner, he made his last remaining months one of making sure everything was taken care of so Jody wouldn't have more than her share to deal with, and meeting one-on-one with our office staff -- giving one final pep talk.

Bob, you built one hell of a team in the Columbus office from the ground up. From Day One you knew what, and who, you wanted. I was honored to be "Hire No. 3" among the agents and employees at our practice. We now have 19 agents and our commercial coordinator.

Even in his 70s, though he walked with a cane, I will bet he could still break someone in half with his bare hands. And yet, Bob White truly epitomzed the definition of a gentle man. All kidding aside, he will be missed.

The office has not been the same without you, Bob. I wish you well, my friend. You left a strong legacy down here in Suite 101 on Mound Street. I will do everything I can to make sure what you built continues to grow and prosper.

Just as you envisioned . . .

Sunday, December 28, 2008

Everyone Wants A Handout

I am not sure how I feel about the latest trade group to put forth a need -- just short of a formal request -- for participation in the latest bailout program coming out of Washington DC.

This time it is commercial office developers and landlords.

Read it here in The Wall Street Journal.

I need to process this some and come to some conclusions before I just spout off . . .

Wednesday, December 24, 2008

GM's Continuing Woes Heighten Shareholder Worry

Credit Suisse has just announced it is downgrading General Motors stock because -- get this, the bailout that everyone says is necessary will ravage the equity in the company.

Credit Suisse analyst Christopher Ceraso said in a report that the terms of Friday's government bailout of the auto industry will weigh on GM, with bond holders, the United Auto Workers and company executives all working to reach a compromise agreement. "It will become increasingly clear that the enormous sacrifice of value on the part of the union (upward of $10 billion) and bondholders (about $24 billion) will require the complete or near-complete elimination of the existing GM equity," said Ceraso in the report.

GM stock fell 21 percent on Monday to a little over three dollars a share. The drop occurred partly as a result of this news from Credit Suisse. And yet there will still be people racing out to invest in this giant of a company. Personally, I do not think the unions are making enough sacrifices. The company and the unions put the firm in this position in the first place -- no one else. The unions with their outrageous pension demands, and past leaders who went along. But this is common knowledge and no one seems to care.

What a I getting at? Sure it is tough enough for employees. But it is shareholders who will bear the brunt of this onslaught. Shareholders, in case you didn't know, are the last to be paid when a company sells product.

The vendors are paid, senior management and execs are paid, employees are paid, and if there is anything left -- the profit -- it is doled out to the entity responsible for keeping the entire thing afloat -- the shareholders. Yet these most important of people are the last to be paid.

Onc hell of a Christmas present....

One more reason why more and more investors are moving money out of the markets and into commercial/investment real estate. So they will be the FIRST to be paid.

Friday, December 19, 2008

How Do You Find A Qualified Investment Realtor To Help?

Occasionally I am asked, "okay, what separates you commercial/investment real estate agents from other real estate agents?"

A good question. The obvious answer is specialization. Residential real estate makes up the bulk of what we hear about and read about. It is what most people think about when someone asks them "hey, what do you think about what is happening in real estate today?" But commercial real estate impacts all of us, also, even though most consumers don't think of it immediately.

Let me put it differently. Where do most people work? In an office building? Large, medium or small, it is commercial real estate. In a retail center? Commercial real estate. Perhaps at a mill, or some other sort of manufacturing facility. Commercial real estate once more. Where do a lot of people live? If they don't own their own home they are in an apartment complex. Or a double, or a four-family, etc. Perhaps they are even in a rental house. Lets look at consumer habits. Where do you shop? At a retail center/shopping center perhaps? Of course -- its commercial real estate. That new development taking shape down the block from your neighborhood? Commercial real estate. Don't forget about grocery stores, auto repair shops, office supply centers, where you go to get your hair cut or styled . . . the list goes on and on. It is all commercial real estate.

To be succinct, commercial real estate touches us all.

Add to that the fact that the owners of these properties aren't doing it for the general good, but do it for business . . . an an investment for a profit. And voila! have commercial/investment properties!

These properties are important because, unlike single family home ownership, there is business incentive. The best real estate agents working in the commercial/investment field have a skillset that goes beyond residential brokerage. An understanding of financial analysis, commercial trends, and building plans for the future.

What makes for a good commercial/investment real estate agent? Don't take my word for it. Look to the recommendations of the National Council of Exchangors (NCE) -- a loose confederation of member-driven organizations specializing in real estate exchanging. You know, the IRS 1031 tax deferred exchanges about which I often write. Columbus Real Estate Exchangors (CREE), the organization of which I am the immediate past president, and the Ohio Commercial Realtors Exchange Association (OCREA), a group I want to spend more time with, both are affiliates of NCE.

Here are the skills NCE says buyers and sellers of commercial/investment real estate should seek out when evaluating whether to use a particular real estate agent.

1) Client Counseling - The art of questioning and listening to achieve a close working relationship with the client and to understand fully the client's needs and objectives.

2) Formulas - The knowledge of a wide range of techniques used to structure transactions in the exchanging, financing, acquisition and disposition of property.

3) Taxation - A working knowledge of the income tax impact on various real estate transactions.

4) Forms - The ability to effectively use standardized forms common to the exchange marketplace.

5) Marketing - The skills, forms and methods of presenting property to the exchange marketplace and the professional conduct expected of a member working in the National Council of Exchangors Network.

So there you have it. The basis for a list of questions one might ask when looking to partner with a commercial/investment real estate agent on a transaction -- whether buying or selling income-producing property.

Thursday, December 18, 2008

Transition Period

The transition is complete.

Here are a few photos from the Columbus Real Estate Exchangors (CREE) meetings these past two weeks. Last week I presided over my last meeting -- the annual holiday breakfast and awards program. This event is a time for CREE members to just relax, socialize and recognize outstanding work in the field of commercial/investment real estate. A super event, filled with wonderful food and great friends and colleagues. We feasted on a sumptuous buffet breakfast at Little Bear Golf Club in southern Delaware County, Ohio, where the organization meets weekly for its marketing sessions and information exchanges.

Even with icy roads and cars spinning off highways and into ditches, nearly 100 members of CREE and their guests braved the weather to attend this annual event. Officers for 2009 were sworn in and we presented awards for outstanding IRS 1031 transactions by members during 2008. In addition, a number of members were recognized for special service to the organization during the past year.

Long-time CREE member (and past president) Judy Tackett swears in the 2009 officers (from left): President, Phil Manogg, Furman Tinon Real Estate; Vice President, Jim Simmons, Prudential CRES Commercial; Treasurer, Ryan Puckett, Columbus Financial Group; and Secretary, Amber Balo, Prudential CRES Commercial.

Judy Tackett has a gift for verse and her stuff can be pretty funny. Per tradition, she wrote a send-off to the outgoing president. She got some laughs, and pretty much did a nice job capturing the essence of the year. Titled "Brent Greer Your Time Is Near," here are a few of my favorite lines from her piece:

As our leader, you've learned to be quick
Guiding our eetings with precision and wit

Controlling our meetings is no easy feat
But you are up to the challenge each time we meet

Had we known you were a teacher of self defense
We might have reacted better when things got tense

Good for us you never needed that training
When you found the attention of the group was waning

Nicely done Judy. Thanks for the time you put into this epic ballad of a humble commercial/investment agent leading the most sophisticated, creative minds in this industry in Central Ohio. Like you said in your lyric, some days it was magic, some days it was like trying to herd bumble bees. But each day, it was truly a joy.
Judy pointed out something else interesting to me -- an observation that gave everyone in the room a kind of "how the world has changed" moment. As readers of CASH ON CASH know, I am an avid blogger. This site for real estate, another site for my interest in politics, etc. Judy observed how amazed she was that CREE has a president who utilizes blogging to help not only his practice but to benefit his clients, a true exploitation of new technology. And yet it wasn't all that long ago, she reminded everyone, that women were not allowed to be members of the Board of Realtors.
The first female president of CREE, Elly Creager (1969), was not permitted to join. Yet male members of the Board regularly snuck data and the property books to her not only to help her with her successful practice, but to give her access to rudimentary trending information as to what was happening in Columbus real estate at that time. Her husband, a builder, later obtained his real estate license so Elly could obtain needed information to run her business without haveing it "smuggled" to her by the male members.
Indeed, we have come a long, long way.

Here I am, flanked (from left) by Phil Manogg, Furman Tinon Real Estate, and Jim Simmons, Prudential CRES Commercial, 2009 CREE president and vice president, respectively.

At this morning's meeting, I was honored by 2009 President Phil Manogg and members who were present for the last marketing session of the year. They presented me with this beautiful plaque as thanks for my year as president of CREE. It was a good year for the organization. I believe, marked most importantly by a significant increase in membership.

Without question, I am honored to have been been asked to guide this ship during 2008. While it is called the "Columbus" Real Estate Exchangors, it truly is a multi-county, regional organization. Central Ohio covers some seven or eight counties and agents and brokers have clients not only here, but throughout the nation.

Founded in 1959 as The Trade and Exchange Association, its first president was Larry Horn. I was the 50th president. It is an incredibly dynamic organization of which I am proud to be a part. The most creative minds in real estate -- it sounds arrogant, even pompous -- but it is true. To be asked to lead this organization was humbling, to be sure. It was stressful, it was time-consuming, it was challenging. Most of all, in the end, it was fun.

Phil, Jim, Ryan, Amber, and all the members of CREE, here is to a fantastic 2009!

Monday, December 8, 2008

Keeping Renters Happy

Whether they be office, multifamily or warehouse tenats, your renters are your lifeblood if you are an investor in commercial property.

With that said, a colleague of mine -- wanting to spread some good will, and share in her good fortune in 2008 --has invited all of the renters of her multifamily properties to an open house at her church. No preaching on this night. The facility was conveniently available. But she is reaching out to do something nice for those folks who help her pay the bills all year long.

She is a good owner too, very responsive to her renters' needs. For if they don't stay, it messes with the business model and the revenue stream.

I thought it was something nice to write about as we had into the holiday season.

Wednesday, December 3, 2008

Passing The Gavel

A week from tomorrow I will preside over my final meeting as president of Columbus Real Estate Exchangors (CREE). December 11 will mark our annual holiday breakfast and awards program.

CREE, this remarkable organization of individuls -- truly the most creative people in real estate from throughout Central Ohio -- meets weekly to exchange ideas, learn about new commercial/investment properties on the market, and build on the use of 1031 exchanges to help our principals. As one member refers to it, our business is "the art of the exchange."

It is an exclusive group, I believe. For out of some some 7,300-plus members of the Columbus Board of Realtors, we number less than 200. But the impact we have on the industry, and for our clients, is infinite.

In the year since I took hold of the tiller, steering CREE through 2008, we have:

- Moved to a beautiful new meeting site, the Little Bear Golf and Conference Facility in southern Delaware County. It is a site that befits this group, as one of our members stated when we voted to make Little Bear CREE's home. After years of meeting in dank basements of masonic lodges, or forgotten (and smelly) rear training rooms of telecom companies, it was time, members said, to meet in a comfortable location. A location reflective the work we do on behalf of our clients. A location that spoke of the success we bring our clients who rely on our expertise to help them build wealth through real estate. Bill McCorkle, owne of Little Bear, is a great host and I thank him for making CREE feel so welcome.

- Grown membership from around 140 to nearly 200 real estate professionals and affiliate members servicing the real estate industry.

- Helped mediate a dispute between two respected commercial real estate agents. A team of CREE officers and members sat through meetings with both parties. While neither was likely happy with the outcome, the effort further facilitated communication and helped the parties avoid going to war with each other in court.

- Seen our reach grow, as commercial agents and lenders from areas far outside Central Ohio began making the weekly trip to the Columbus area to take part in what is now the largest regular gathering of real estate exchange experts anywhere in the state of Ohio. We have brokers coming from Medina (near Cleveland); Dayton (an hour to the west); Newark (45 minutes east); and lenders regularly coming up from Cincinnati (two hours).

I believe the infusion of new members speaks not only to the energy present in this dynamic group, but also to the wealth of knowledge available to those who take part on a regular basis. Forgive me if this sounds arrogant, but I know more than most real estate agents about weighing commercial/investment opportunities. It isn't just about getting a good price. It is far more complex. And yet, I am humble enough to admit I know I don't know everything -- that I would make it a point to be at CREE weekly even if I didn't have to. Because there is just that much new information shared weekly. I come out of there some weeks astounded at what I have learned.

I am proud of what we have accomplished during 2008. And am doubly honored not only that the CREE nominations committee back in 2007 asked me to serve as president, but that so many of CREE's esteemed long-time members have passed along their words of support for the growth, new vitality, new ideas and the even keel evident during the past year. My best wishes to my former right-hand, Tony Yacoub, who served through the first half of this year with me as CREE vice president, but who left Ohio for a tremendous opportunity in New York City. I have missed you these past few months my brother.

And I send my best wishes for a successful 2009 to the slate of officers nominated for the coming year: Phil Manogg of Furman Tinon Real Estate, president; my office mate Jim Simmons of Prudential CRES Commercial, vice president; Amber Balo, another sister of "The Rock" (forgive my Pru humor . . . she, too, is an agent with me at Prudential CRES Commercial); and Ryan Puckett, money coach and personal economy adviser with Columbus Financial Group, treasurer.

Special thanks for Ms. Balo who, as secretary, has followed through with my request to take detailed notes regarding the weekly marketing sessions, and "the sermon." Running a meeting, I don't hear the opportunities and details -- they don't process as well for me since I am keeping an eye on the room, moderating Q&A, and lining up the "next" presenter. Amber, thanks for making sure the notes were detailed so I could digest them each evening following our weekly Thursday sessions.

To my many colleagues at CREE, the Ohio Commercial Realtors Exchange Association (OCREA), and the Columbus Board of Realtors, I thank you for your support and friendship this past year. I could not have done it without you.

Finally, to one who when I was low reminded me that when handed lemons there is only one solution -- to make lemonade. You know who you are. I thank you from the bottom of my heart.

Tuesday, December 2, 2008

Guess What? We're Aging!

I bet it doesn't come as a surprise that the U.S. population is aging. "So what?" you ask.

Here's why this is important. For real estate investors, medical office development is hot. Lots of new facilities being developed for expanding medical practices and service providers for the needs of that aging population. As one writer put it recently, "Even with an ailing economy, this product type remains a sound long-term investment."

Specifically, with sustained demand expected for healthcare services, experts anticipate the sector to remain a perennial favorite. I concur.

Medical office leases typically are for long terms. Think 10 years or better. Physicians and other service providers build out, often, with expensive assets. Doctors rarely move. Frequently these are Triple-Net leases with renewal options. Another advantage of medical office as an investment? Cash flow, stability and best of all -- predictability. Finally, the cap rate on medical office is often higher than most other investments . . . for all of the aforementioned reasons.

The November 2008 edition of Real Estate Forum magazine notes that the U.S. Census predicts more than 85 million people in the U.S. aged 65 and older by the year 2050. Even between 2010 and 2020, the population projections show the number of people aged 65 and older will increase by 36 percent.

The downside, and it is minimal, is that there may be a leveling off of sorts on occupancy rates as so much new product comes onto the market. Still, medical office appears to be a strong investment for real estate investors looking for steady, stable growth. Plus, I believe they are a good choice for investors using IRS 1031 tax-deferred exchanges to move up and build larger portfolios.