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Spotlight Luncheon on Real Estate

Alan J. Schnurman ’71, senior partner in the Wall Street law firm of Zalman & Schnurman and host and founder of Lawline, a television program focusing on legal news and real estate trends, is a firm believer in real estate as an investment and a legal specialty. “Anyone who’s invested in real estate in the last ten years has made money,” Mr. Schnurman told the audience at a Spotlight Luncheon on Real Estate on November 1st.

There are, however, some basic tenets that all real estate investors should follow, according to Mr. Schnurman. The first, he said, is the one everyone already knows: “location, location, location.” Mr. Schnurman added that patience, credibility with banks and brokers, and confidence are also key elements for a successful career in real estate investment.

“Real estate works over a long period of time,” Mr. Schnurman explained. “If you want instant gratification, do something else. But if you are patient, nothing guarantees financial security more than real estate.”

Mr. Schnurman advised his listeners not to become overly leveraged – “That takes patience out of the equation” – and not to chase every deal. “There’s always another deal,” he said. “Don’t chase a deal to death.”

Going into real estate investment requires a person to be entrepreneurial, Mr. Schnurman noted. When he began, he said, he had no money, no connections, no special knowledge, and no model to follow. “You learn little by little,” he commented.

Mr. Schnurman advised the audience to select a neighborhood and learn all about it. Then, he said, the next step is to go and see properties that are available with multiple brokers. Finally, you have to put out some bids, Mr. Schnurman said, to discover the real selling prices.

“Now,” Mr. Schnurman explained, “you still have no money, but you have knowledge.”

The next step is to gather a group of friends, try to get some financing from them and then go to a bank.

“Banks are there to lend money,” Mr. Schnurman noted. He said that his experience taught him that if you really know an area and you project the right kind of confidence, a bank will believe in you.

“You have to have confidence in your own decisions,” he said. “If you have a good attitude, everything will come.”

Mr. Schnurman said his personal mantra was “I can. I will. I must.”

Of course, he added, it is not easy. “I’ve been doing this a long time but every deal I do, I still lose between six and 10 pounds,” he confessed. “Real estate has its ups and downs. Be patient. Be methodical.”

And learn from past mistakes. Mr. Schnurman spoke about a time when he should have invested more seriously in Colorado real estate, but didn’t quite have the confidence. A few years later, that market exploded and fortunes were made.

“When I was crying, I should have been buying,” he noted.

Steven B. Jason ’90, Chief Operating Officer of Pantheon Properties, said he agreed with all of Mr. Schnurman’s observations. Mr. Jason oversees operations and management of Pantheon, one of the leading full-service owners, investors, and developers of industrial, mixed-use, office, and multi-family projects.

Mr. Jason said that to succeed in real estate, it was important to understand the goal of a project, the customer, and the constituency being served. Working in real estate requires an ability to solve problems, often by asking what the purpose of a particular law may be.

“Laws weren’t meant to be taken at face value,” he explained. “You have to understand the purpose of the law. If you take everything at face value, others will pass you in a millisecond.”

Mr. Jason related his later experiences to his motivation for going to law school.

His family, he explained, always said he was a perfectionist and a masochist.

“That’s why I went to law school at night,” he remarked. “I didn‘t sleep very much, but it really was a great experience.” Mr. Jason admitted that while he loved his law school classes, he hated doing the work.

He began his career at a firm and then went to a company.

“That was a whole different experience,” he said. “People may say where does the legal training come in, but it always comes in. It is invaluable. You learn to think outside the box.”

Mr. Jason said that while he was no longer a practicing attorney, being a lawyer is “kind of like alcoholism. I’m always recovering. It’s always there.”

He added that he had learned one thing he would have liked to know in law school and that was that “you can always change things and there’s always a way to figure things out.”

The Spotlight’s third speaker, Andrew S. Penson ’84, is the founder and President of Argent Ventures and a member of the New York Law School Board of Trustees.

Mr. Penson said his dream “was always real estate.” When he began at New York Law School in the early 1980s, the Tribeca area was largely undeveloped.

“I used to dream about the parking lot, so now it’s like a dream come true,” he recalled. Mr. Penson helped the Law School develop the plan to construct a new building in the parking lot on Worth Street.

Mr. Penson said his father was a real estate lawyer and investor and he had positioned himself to join a real estate law firm. He did join a small firm after graduation and then moved on to Jones Day, where he became more involved in the finance side of real estate. He went into business for himself in the late 1980s.

“The real estate business was in terrible shape then,” he said.

Eventually, Mr. Penson began to focus on buying mortgages that had been purchased by Japanese banks which were suffering from excess debt. He spent three years developing the business relationships and building the trust that enabled him to become successful in this arena. In 1996, he became connected with a banker at Lehman Brothers and “in rapid succession, we worked out much larger deals.” Mr. Penson said his legal training was very useful. “It was the bedrock I really relied upon,” he noted.

Mr. Penson said one of the highlights of his career so far was buying a participation interest in the Chrysler Building. His ultimate goal was to purchase the entire property. Describing the deal-making as a “game of three-dimensional chess,” Mr. Penson said he eventually partnered with Jerry Speyer and “together we ended up extending the ground lease” and buying out the other participants.

“It was an opportunity to use everything I ever learned in law school and in life,” he said.

Later, Mr. Penson changed his focus to Internet companies and then moved on to other interests after the Internet bust occurred.

Mr. Penson said he was happy to sit on the Board of Trustees of the Law School and to assist in any way he can. ““I have a tremendous debt of gratitude to this school,” he explained. “When I got into New York Law School, I remember thinking that I’m going to pay it back someday.”

Following the three speakers, Dean Richard A. Matasar commented that he was a big believer in stories and that one of the best ways to explain New York Law School to people is to share alumni stories.

“This is not a conventional law school,” he commented. “It’s not for everyone. The people who ‘get it’ are unconventional people.”

Dean Matasar said that the message the Spotlights convey is that hard work really does work and that people have to make their own luck.

“The only barrier is the one that comes from within.”