GREC: Real Estate Alumni Panel
November 17th, 2011 Oak Room Newman Hall
Joe Berko, President of Berko Associates and head of the Baruch RE Alumni association; Roget Lerner, Owner & CEO of The Music Building; David Roth, Palladium Management; and Eddy Antar, VP of Acquisitions MAS Management
What’s a recent or memorable deal?
JB: We are working on an asset on Bleecker Street. It’s a retail component of well-known condominium. Our firm came in and quietly marketed the asset and were able to sell the asset in a tough market.
RL: The Museum building is a building that solely serves as rehearsal space for musicians. It’s the highest and best use for the asset. It’s been a great business and looking to expand to Boston and Philadelphia.
DR: We are working on a suburban medical office building in a neighborhood with strong demographics. Understanding competition is critical in a suburban area. The property had 20% vacancy in the offices and soon to expire commercial lease. It’s a situation where I felt we could add value. Due diligence was essential. While it wasn’t rocket science, there was creativity and lots of footwork.
EA: There was a close-call on a renewing tenant that ended up turning out well for us. Due diligence becomes very important on many angles: gas lines, dry cleaners, certified rent rolls, structural issues and on to market analysis — anything that might negatively affect the property in the future. When you get information from others, independence (or lack thereof) completely informs the result.
How did your property have an impact on the surrounding community?
RL: Having families and strollers changed the neighborhood just by being there. Our building affected that by changing the rent rolls. First we got rid of the drug dealers. We found the names of the local police officers and learned that they liked cigars, so I would hang out with cigars and keep up a conversation. Soon no drug dealers. That the qualitative side of real estate you don’t learn in school.
How has the downturn affected your companies? What are some of your strategies?
EA: We adapted away from acquisitions and focused on leasing. We listened to the problems of tenants and looked for compromises when they had genuine problems and a solution.
DR: Moved from acquisition to asset manager. You adapt and learn how be creative and to be hands-on in service to your tenants.
RL: Assets outside of NYC were extremely hard hit. We cut our losses and refocused on what we did well — asset management. There are deals to be done, but you need to be nimble. Look where there is added value and where you can do things others aren’t doing.
JB: We could only pay attention to those who were truly motivated and those who really needed to
trade. We built up a portfolio that will serve in up and down markets.
What books do you recommend to read?
Maverick Real Estate Financing, by Steve Bergsman
The Real Estate Game: The Intelligent Guide To Decisionmaking And Investment, by William J. Poorvu and Jeffrey L. Cruikshank
Skyscraper Dreams: The Great Real Estate Dynasties of New York, by Tom Shachtman
Many thanks to our panelists for making the time to spend with Baruch students. We really appreciate your authenticity, your ground-level observations and your connection to the school.
Connect with alumni at the upcoming event on November 29th, 2011. Contact Joe Berko for more information.