Social Entrepreneurialism at Work

“I believe in trusting men, not only once but twice - in giving a failure another chance.” - James Cash Penney, Founder of J.C. Penney

In early 2009, Signature Community had a lot of residents who were suddenly unemployed through no fault of their own. We were in the throes of a terrible economy, and a good percentage of the population was unemployed or underemployed. Our resident base tends to be a little less educated, lower income and younger than the general population, so they were hit somewhat harder than most.  

We realized we had some significant choices to make at Signature.  We could start mass evictions and try to re-lease the apartments to better paying residents.  Or we could work with what we had and make what we had work.  Fortunately we chose the latter and made what I feel is one of Signature’s greatest contributions to society. 

And so was born “Signature Works”.  Signature Works gave any resident who was behind on their rent the option to come into one of our offices at 9am any day and be granted a full day’s work - any work - in exchange for credit against their past-due rent.  Signature Works was a huge departure from the norm in the apartment rental industry and the way that landlords typically operate.  Concerns were raised that we could be taken advantage of and the program would get out of control.  Fortunately, only the best in people arose out of Signature Works.  Working together as a community and taking short-term hits paid off in the long run.

I am humbly proud of the opportunities that Signature Works gave to hard working, smart people that unexpectedly wound up in difficult situations.  My favorite story is about the young woman who lost her job at Toyota just after the gas pedal recall in 2009.   She was a resident in one of our lowest priced apartments, but with no commissions coming in she couldn’t pay the rent.  She heard about Signature Works and was at the office at 9am the next morning.  We put her to work in the office and quickly realized that she had a talent for sales, so she started leasing apartments. Soon she became a valuable part of our leasing team and ultimately made it to our corporate office in New York City to head our national leasing program.  This all happened because we gave a resident a chance, and she ran with it.

I look back now a few years later, and, although we did have some problems, I am proud of the overall outcomes and hope that someday I will be able to create a legacy program that extends substantially beyond our own properties.

The other day someone sent me this link: Schwab Foundation’s Social Entrepreneurs of the Year.  I was encouraged to see that so many of the programs developed by these trailblazers have a similar tenet to Signature Works.  Give people a chance and a few tools, then set them loose.  Although some will inevitably fail, others will soar beyond our wildest dreams. 

It’s great to see people creating opportunities for other people to change the world!

Biggest Deal of the Year?

Late last year, the biggest deal announcement in the real estate industry for the past 5 years was announced.  It was the purchase of Archstone Enterprise from Barclays (formerly Lehman Brothers) by Equity Residential and Avalon Bay Properties for $16 Billion.  Interestingly, this was hailed as a huge win for Barclays and a sign that the apartment business has come back.  While I agree that times have gotten significantly better for apartment building owners since 2009, it is also important to point out that Lehman purchased Archstone for $22 Billion in 2007.  So over the 5-year hold the apartment company lost $6 Billion in value.  Or looking at it from a more useful angle, this deal indicates that the market is still off by over 25% since its height in 2007.  

I was amazed to see how the industry boldly stated that the value of this portfolio had increased by 50% from its value of $11 Billion in late 2008.  This pitch seems to be the method that the real estate industry is using now.  Many are boasting that the gains since 2009 are significant, but we are still not back to where we were in 2007 when a huge amount of deals were place into service.  

It’s great to see positive momentum, and I hope that the general economy continues to advance so that it is not just low interest rates driving the value proposition.

Miracle on Ice

Miracle on Ice

I don’t mean to monopolize my blog with news of my daughter’s synchronized ice skating team, but no sooner did I praise the spirit and efforts of this team that keeps coming in last, than they came in 6th out of 16 teams competing for the East Coast title.  I wish I’d had my camera ready when their coach told them that they placed 2nd in the qualifying round.  There were shrieks, tears, hugs, jumps, and ear-to-ear smiles from skaters, parents, and coaches alike.  Their spirit never shattered, and that optimism and hard work paid off big time this past weekend at Eastern Sectionals in Lake Placid, home of the 1932 and 1980 Winter Olympics.   

Lake Placid was where the “Miracle on Ice” US hockey team defeated the Soviet team, who had won nearly every world championship and Olympic tournament since 1954.  They proceeded to go on to win the gold.  When I suggested to my daughter that her team is the new “Miracle on Ice”, she took offense.  She said that it wasn’t a miracle that they won.  They worked hard for it.  She had an excellent point, but I explained to her that it’s often a miracle that a last-place team will work so hard as to leap to the head of the pack so suddenly. 

One big change the team made was to utilize the entire ice rink and get as close to the edge as possible.  They had been staying in a smaller comfort zone, but it was restricting them from reaching their full potential and pleasing the judges.  Once they broke out of their self-imposed boundaries, it enabled them to gain more confidence in their abilities and talent.  Once they discarded the fear of failure, they excelled and succeeded.      

We have been spinning our wheels toward economic recovery.  It is often hard to see the light at the end of the tunnel, but all it takes is one break-through moment generated from weeks, months, and years of energy. Real estate can be a long frustrating process, but those who persevere are usually rewarded in the end.  I continue to applaud the Signature team for its Olympic attitude.