Richard Ziman's office in Brentwood's World Savings building is crammed with family photos, bound leather volumes of real estate transactions and numerous trophies for business deals and philanthropic works. Ziman sealed his reputation in 1989 when he sold off a large portfolio he had amassed just before the real estate market crashed. He got back in the market and eventually took his company public. Arden Realty Inc. is now the largest owner of commercial office buildings in Southern California.

Question: Let's get down to it. You went to USC, but you have a school named after you at UCLA. What happened?
Answer: I spend a lot of time at UCLA and no time at my alma mater USC. I had a terrible experience with a professor in law school there. He tried to flunk me. He tried hard to flunk me. I went to the dean at the end of the first semester and told him the guy was terrible. They wouldn't do anything about it. He's still there. Steve Sample (the president of USC) knows. I went to USC to go to their dental school. I wanted to be a dentist. Dr. Ziman. I was only there for a day and a half.

Q: You built a reputation for buying low and selling high. How do you do it?
A: Timing. You can have the greatest location but if there's no timing, you've got nothing. You have to be patient to get to the next timing. Let me tell you, when you ride prime interest rates from 6.5 to 21.5 in 1980-1981, you know that it's all about timing. Look what happened in the real estate depression in the early '90's, buildings like this (World Savings Building in Brentwood) selling for half of what they last sold for and you couldn't find any financing because no one was making any loans. And when you said the word real estate, they laughed.

Q: Will we ever see that again?
A: The circumstances that led to what happened in the '90s do not exist today. You don't have banks that are way overfunded, you don't have massive overbuilding. I mean, from 1983 to 1992, we increased the inventory in office space in Southern California by almost 100 percent. You couldn't do that today. Today lenders are smarter and there are tremendous barriers to entry. Look, to build a building in Century City today, if you were going to buy the land at a regular price, you're talking well over $400 per square foot. That means to make a 10 percent return on your money you need triple-net rents of $50 a foot. So you do it at an 8 percent return. Why would you build a spec building at 8 percent? That's why we're not building right now.

Q: How did you know that real estate hit bottom in the '90s?
A: Everything has its timing and everything has its place. There were just all these burned and crashed office buildings lying on the ground and no one wanted them. You had lenders who didn't know what to do with them. There were banks from Canada and Europe and pension funds. It's not that all the buildings were empty, but occupancies were low, there were massive vacancies downtown. These lenders and the Japanese had invested so much money, they were paralyzed. I saw all this stuff on the landscape and I said, maybe it's bottomed.

Q: You had already sold off your entire portfolio before the downturn?
A: I had gotten rid of all my buildings in '89-'90 before the crash. I sold over 5 million square feet of property in 19 months.

Q: Why?
A: I went to a cocktail party one night and someone said: Have you heard about the Fox Plaza deal? It's a 5.5 percent return on your investment. I said, that's ridiculous, that's stupid. It was 1989. I went into the office the next day and I called the head of property management. I told them if it was true, we had to test the water with some of our properties. The first ones I thought we ought to test had asbestos. The first one I put up for sale was Gibraltar Square at Doheny and Wilshire, where Kate Mantilini is. The Japanese paid $33.5 million for this building, which was loaded with asbestos. There were no sprinklers. At the same time, we had this fire downtown and the city mandated that all buildings over a certain height had to be retrofitted with sprinklers. Well, if you did that, it means you had to deal with the asbestos to install the sprinklers. The Japanese still own that building.

Q: So you sold off at the top.
A: So they say. The aura began. He bought in the early '80s when no one was buying, and then he sold off before everyone else. We sold everything. The last one to go was the ABC Entertainment Center. That was a textbook class at Harvard. It was one of the most amazing economic deals. I bought it for $35 million and sold it for $55 million.

Q: You completely downsized?
A: We went from 85 corporate employees at the headquarters to eight. We started looking around and Victor (Coleman, Arden's president and chief operating officer) came to me and said, what are you going to do with the rest of your life? And he said, why don't you and I be partners? And I said OK.

Q: So then you started buying again.
A: We did trash-for-cash deals, cash-for-trash deals. A lender comes to you and says, hey, I've got this bad deal and I know you want this other deal. I take his trash and he gives me his cash. That's how we bought Warner Center, the Atrium in Beverly Hills, and lenders had equity pieces downstream and we'd just get them out of it and pay them off. We'd buy the loan at a discount. Then I went to Wall Street and met with eight of the big wire houses. They threw me out, literally.

Q: You were searching for more equity to buy up more properties?
A: I said we had to figure where the faucet is, the money to buy this stuff, because this is the greatest opportunity we're ever going to have in our lifetime. Buildings were literally selling for 30 and 40 percent of what they last sold for. No one was really in the market financing any commercial real estate. And we were one of the few people willing to buy this stuff.

Q: You bought a lot from the Japanese?
A: We bought from everyone, but mostly from banks and life insurance companies that had foreclosed on this stuff and didn't know what to do. When we came along, they had to take a little more of a write-off.

Q: You own tons of property on Wilshire Boulevard. Is that your favorite street?
A: Wilshire is the main thoroughfare through the Westside. It's got the nicest real estate, much more so than Pico and Olympic and Santa Monica, and it runs through the heart of Beverly Hills, which during the last real estate recession was our strongest sub-market.

Q: So are you a seller now or a buyer?
A: We're both. As part of our vision and business plan, we are selling off buildings that are not core to our portfolio. We've graded all of our buildings from the top on down. And we've assembled a list of priority buildings for sale.

Q: You're still staying exclusively in Southern California?
A: When we went public everybody said, Oh my God, you can't be dependent on one region, one economy. Well, Southern California is the strongest most diversified economy in the country. There are 325 million square feet in Southern California and we have 19 million square feet. So we're only 6 percent. We're the biggest, but look how much more there is to go.

Q: What do you think of the office REIT market for stocks?
A: Public real estate companies are here to say. In 1992, the industry was $20 billion. It's almost half a trillion today. The biggest office landlord in the country is a publicly traded REIT, the two biggest apartment landlords are REITs, the seven biggest mall owners are public real estate companies.

Q: What do you think of your competitors that have recently gone public such as Maguire Properties Inc. and Thomas Properties Group Inc.?
A: Oh, Maguire, Rob Maguire, how did we forget about him? He's an ambitious little dog. A tougher IPO was Jim Thomas'. He's a good guy.

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