The October 31st, 2005 edition of Fortune magazine featured a cover story on Colony Capital’s chairman, Tom Barrack. In the article, Barrack, who is an avid polo player, offered the following parable:
“I feel totally safe playing polo on a field full of pros,” says the bronzed 58-year-old. “But when amateurs are all over the field, someone can get killed. They have more guts than brains. They charge after every ball and don’t know when to hold back.” It’s the same with the U.S. real estate market right now: “There’s too much money chasing too few good deals, with too much debt and too few brains.” The amateurs are going to get trampled, he explains, taking seasoned horsemen, who should get off the turf, down with them. Says Barrack: “That’s why I’m getting out.”
While the real estate market remained robust for another 2 ½ years, his words were prophetic.
Property prices soared. Rents rose significantly. Tenants over-expanded and in inferior locations. Debt was plentiful. Banks relaxed their underwriting standards. Young, inexperienced leasing brokers became developers overnight. Sell-side brokers made money hand over fist as West Coast buyers flush with cash employed the 1031 tax-deferred exchange to acquire property elsewhere in the country where they could obtain high yields.
During the same year of the Fortune article, I sold a triple-net property to a west coast buyer who never even visited Cleveland to see the property.
Overall, the commercial real estate industry displayed a great deal of bad conduct. In mid 2008, Barrack’s prediction came true.
Ever since the Fortune magazine feature, I have routinely read Tom Barrack’s Chairman’s Corner online (http://www.colonyinc.com/) as I find him to be insightful on current trends in the real estate industry.
Below is an excerpt of his 12/31/09 message that I find very interesting and share with you.
Happy New Year!
The following could bring about baby steps of change in the current course of frighteningly bad conduct and get us back to integrity.
1. Learn like you are going to live forever; live like you’re going to die tomorrow.
2. Punctuality is the courtesy of kings.
3. If you are a fisherman don’t give your children fish, teach them how to fish.
4. The young man knows the rules but the old man knows the exceptions.
5. Be careful what you set your heart upon for it will surely be yours.
6. Spend time with your mother; she is cooler than you think.
7. Nothing good ever happens after 3:00am.
8. Keep your word – reputations are won in inches and lost in miles.
9. When you are going through hell just keep on going.
10. On matters of style, swim with the current and on matters of principal, stand like a rock.
11. Courage is not the lack of fear it is acting in spite of it.
12. Hide not your talents. They for use were made. What’s a sundial in the shade?
13. Courtesy is as much a mark of a gentleman as courage.
14. When you greet a person look them straight in the eyes and shake their hand firmly and solidly.
15. Remember first names.
16. Be like a duck – remain calm on the surface and paddle like hell underneath.
17. Don’t screen phone calls.
18. Write thank you notes.
19. Hold doors, pull out chairs and easy on the swears.
20. Don’t confuse efforts with results.
21. If you are a thoroughbred don’t train with donkeys.
22. Practice random acts of kindness and compassion often.
23. Upsets are usually caused by unfulfilled expectations – be clear with everyone on your and their expectations.
24. You will find fulfillment by “pushing through comfort barriers” and obliterating the status quo.
25. “Imua”- Hawaiian chant that means whether you know where you are going or not – go and go hard!