Question: What is it like working with your two sons?
Answer: I think working with people where you are totally confident that there are no hidden agendas and that your goals are pretty identical makes the relationship enjoyable. Rob has been with the company more than 15 years and Mike about 10.
Q: Is it ever challenging?
A: There are times where as the CEO I have to prevail. I can say we've never had a major disagreement. The shoe is on the other foot also. I am not right all the time and it is very important for them, as well as my other senior partners, to feel as though they can say, "Hey wait a minute, let's think about doing it this way." That's just as important.
Q: What effect has it had on your business career?
A: It certainly keeps me more involved in the firm probably longer to help move it from this generation to the next. When you have a company a business that is not for sale, but is being managed to move on and provide opportunities in the next generation you take a different point of view when you are in your late 60s.
Q: You're obviously supportive of your sons' career choices. What about when you were young?
A: Yes, my dad and mother were very supportive people. They taught us early on that we needed to make our own decisions. We had to be thoughtful because any decisions we made would reflect upon the family, but it was up to us to make those decisions. My dad always worked for companies, never had been an entrepreneur; coming out of the Depression, probably never really even had the attitude to become an entrepreneur. He was very proud that we were building a successful company.
Q: Were you always interested in real estate?
A: It became clear to me while I was at Stanford business school that I wanted to go into the real estate business. I think there were two or three important reasons why. One, I was motivated to be involved in a business that dealt with a tangible product. It seemed to me that if you were going to spend a lot of your time in business, where you are going to produce something that will remain for a long time, it's a lot more interesting than making, say, razor blades that people use and throw away.
Q: Why else?
A: It's one of the few businesses where finance is part of how you make money in it. I was always intrigued by finance and financial structuring. My dad had been in the mortgage banking business; obviously it was related to the real estate business and he always liked what he did. I am sure that impacted my decisions as well. Lastly, I've always felt people in the real estate business particularly people that are involved in the development side if they do it well, can make a lasting contribution to their community.
Q: So it sounds like you had a business bent early on.
A: I got very involved and very interested in economics while I was an undergraduate. There was a day in freshman economics I can remember sitting in the classroom almost by the hour where the professor, who was a very senior economics professor at Claremont McKenna College, suddenly made learning come alive to me. I went from going to class and studying because it was something you were supposed to do to get good grades, to going because I was excited about what I could learn. So I switched my major from management engineering to economics.
Q: What are you spending your time on these days?
A: Most of my time now reflects the problems in the economy and the real estate industry, and the collapse of the capital markets around the world. Our goals for 2009 are first to maximize the performance of our existing portfolio in this difficult market. Secondly, to identify capital that will invest with us alongside of ourselves in the investment opportunities that are going to come out of this downturn as the markets continue to progress. And then third, we are very focused on finding some opportunities where we can use our 37 years of experience in managing workout projects.
Q: For the real estate novices out there, explain a "workout."
A: A workout is the management of troubled real estate assets. It's an effort to return value to the lenders first and to the equity owners second. We've done them during all of the downturns that we've gone through.
Q: Do you relish the opportunities a downturn creates?
A: In each of the last major downturns, in the mid-1970s, '80s and '90s, we had a major involvement with various real estate owners largely institutional owners helping them resolve complex problems. So we are repositioning ourselves in this market to do the same.
Q: Can you talk about any ways the firm has changed to take advantage of the downturn?
A: People who had been focused on development are now being reoriented to focus on working out existing projects. Specifically, we have personnel that had been doing new development that are now available to manage troubled situations for third-party clients.
Q: Tell me about the Terranea project.
A: It was Marineland, which closed about 25 years ago. There were a couple of efforts by prior owners to build a resort here they were never able to get it financed and off the ground. The property actually went into the Resolution Trust Corporation in the 1980s and we bought it from a group that had acquired it from the RTC. We will be opening June 1 on schedule and look forward to that event.
Q: Aren't you concerned about opening the project in such a poor economy?
A: We are planning for a slower ramp-up. We believe that by the projected stabilized date, which is out in 2013, we will be back to the revenue levels originally projected.
Q: Trump National Golf Club is just down the road from Terranea. Have you met Trump?
A: I've had several constructive meetings with him about how our two projects could work together.
Q: Tell me about how your firm got started.
A: We started out as Destination Resort Corp. in 1972. Our first opportunity was in the hospitality area when we developed condominium projects in Aspen, Lake Tahoe and bought an old tennis resort in Palm Desert. Our intention was to use that as a base to diversify into other areas as well. It was our intention always to be multifaceted. We were just getting started when the most serious recession prior perhaps to this one we will see how this one plays out started in 1974.
Q: What effect did it have?
A: We were looking for ways to survive as a company in that downturn and that's when we entered into our first major workout assignments, managing complex workout problems for our clients. That's what really allowed us to build our organization and what eventually led us to the founding of our offices in Denver and Washington, D.C.
Q: How were you able to start your own company?
A: In 1972 I had left the firm I had previously been with Shareholders Capital Corp. and three of my associates from that organization were interested in joining me to start a new company. My boss when I first got out of graduate school, Victor Palmieri, was supportive, and was the only outside investor. He had hired me when I graduated from Stanford business school to work for the Janss Investment Corp. I worked there for four years, then worked for Shareholders Capital Corp. and then left there when I started what has become Lowe Enterprises. We didn't have any capital of any significance amongst the four of us the original founding partners and Victor Palmieri invested some of his personal funds to help us get started.
Q: Was it ultimately a good thing to get into the business during a downturn?
A: I think it was very helpful to us. It introduced us to a variety of projects and project types geographically. When you cut your teeth on solving problems in troubled times it makes you more thoughtful in the positive times on how to run and structure your business. That's not to say we didn't make some mistakes in the last boom time as well, but I think we are a much better company because we have come through the downturns and managed troubled assets in those periods.
Q: Has anyone been a strong influence over you in your business career?
A: I'd been fortunate in my early career to work with a wide variety of people that I'm sure all had an important impact on me; Victor Palmieri more than any other because he was the one that stood up and said, "Hey, I'll help you get started." And we are still very close friends today. I played golf with him on Saturday, and he and I had dinner Friday night. He's the one that I've been closest to for the longest. But my first boss at Janss Investment Corp., Robert Dallman, who has since passed away, he was the chief financial officer and I leaned a lot from him.
Q: Like what?
A: One of the stories I like to tell is this: I'm known for making lists and always having an agenda when I go to a meeting and that is one of the things he taught me. I can remember he said, "Never go into a meeting, Bob, even if you're not the chairman of the meeting, without an agenda. So you make sure you get what you want accomplished in that meeting." I've taken that to heart. I never go to a meeting without an agenda.
Q: Tell me about your daily routine.
A: I am an early riser. My time arriving at the office varies. My pattern is to get up early and work at my house and exercise at my house. I then get in the office, depending on what my meeting schedule is, probably between 7:30 and 9 a.m. But, I am up by 6 working at my house. And if it is my exercise day I am up on my stair stepper, and I flip back and forth between Fox News and MSNBC.
Q: You've lived in Pacific Palisades a long time. What do you like about it?
A: Beth and I bought our first house in the Palisades in the fall of 1968. And I moved once about three blocks. It's the obvious reasons. We moved to West Los Angeles when it was time to start raising our family because when I had grown up in San Gabriel in the 1950s the smog was really terrible. And I did not want to raise my family in that environment that I had, from an air issue. Today the air is much, much better but that was the principal reason that drove us to the Pacific Palisades. How can you beat the weather and the family environment there? So we just stayed.
Robert J. Lowe
Title: Chief Executive
Company: Lowe Enterprises Inc.
Education: Claremont McKenna College, B.A., cum laude, 1962; Stanford Graduate School of Business, M.B.A., 1964
Career Turning Point: Starting Lowe Enterprises in 1972
Most Influential People: "My dad, who taught me the importance of strong personal ethics. My many partners at Lowe that have made the values of teamwork real. My wife, Beth, who has supported me at every hurdle in life we have faced."
Personal: Lives in Pacific Palisades with Beth, wife of 46 years. Two sons, who are partners in Lowe Enterprises, and six grandchildren.
Hobbies: "My family is my most important commitment." Also, golf, the beach,
bicycling and travel.
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