Q: This isn’t the best of times for real estate. How are you handling it?
A: Homebuilding has obviously taken a huge hit, and that has taken a lot of capital out of that space. It is a good business selectively. The big companies are going to have to pare down some of their scale and in many cases discount their land. We are trying to take advantage of that; we are trying to buy it with a longer term of view. I am only interested in growth markets, affordable residential lots. There is opportunity to participate whether through loans or equity with a number of land developers. Phoenix is growing 110,000 plus a year, Florida is growing, Texas is growing, Southern California is growing.
Q: Where is your biggest project?
A: We don’t have any one big one. I am involved with a banking fund, and they’re primarily in Arizona, Colorado and Las Vegas. Also we have got a fund here called strategic real estate investors, and we are providing mezzanine loans on commercial property. We are assisting people to be able to purchase properties with a little bit more leverage.
Q: Where are you from?
A: I grew up in Cleveland much the same as every kid I knew. I grew up in a 99 percent Jewish neighborhood. Pretty much everybody’s parents were second generation and all of our grandparents were from Europe. I thought the world was that way.
Q: How did you get your start?
A: After college I went to US Realty Investments. There was an energy embargo in 1973 and 1974, oil spiked and most of our equity was on half-built properties. It was a terrible debacle. I became the self-appointed workout guy. We had almost every category of real estate, and I traveled the country. Normally, a kid, 26, 27 years old, you are going to be selling newspapers, so it was “let the kid do it. This is crap.”
In the end it turned out to be a unique opportunity because the company got slammed and the stock went from $26 to a buck-and-a-half. I had inherited $50,000 from my grandfather, and I borrowed $50,000 from my sister. I started buying the bonds at about 24 cents on the dollar, and I started buying the stock at a buck-and-a half. So even though I was 30 years old I had already become a significant shareholder.
Q: How did you meet Larry Mizel?
A: In the process of traveling the country, I was meeting the smartest people. I had an apartment building in Denver, it was empty and I didn’t know what to do. I learned that the way you do a workout is you find the smartest people in that particular industry. If you have got an apartment, you had better find apartment guys. So I am with these people from Wisconsin and this guy walks through the door, and this woman says this guy is Larry Mizel, this is the smartest guy in town. Times were tough when I met Larry. He had just built a building, and he was trying to figure out how to jump out of a window.
Q: Why did you move to Denver?
A: US Realty ultimately solved its problems. We did a bunch of joint ventures with Larry. He started growing. US Realty made the determination to liquidate. Larry said, ‘You don’t have to worry, you are going to come here and run my business.’ It was an amazing experience. Aside from a business opportunity, if you are just so lucky to work with someone who wants to mentor you, you are so many light-years ahead.
Q: You are involved with the Allied Jewish Federation. Tell us about that.
A: Throughout my career I worked with and for people who were involved in the federation, giving back to the community. It registered to me that there has got to be something good about giving back, that the smartest people who don’t waste their time are doing it.
I came from four grandparents who came from nothing, zippo, steerage on a boat, and I am not a religious person, but my whole life is just about being the next guy to help somebody a little bit, to make a difference.
Edited for space and clarity by staff writer Tom McGhee.
