Civic Association Board Member and real estate investor Jeff Greene was the key speaker during a Director’s Meeting and Luncheon held Dec. 13 at his Tideline Ocean Resort & Spa.
Chairman and CEO Bob Wright thanked Mr. Greene for underwriting the lunch. He also thanked the Worth Avenue Tiffany store and manager Jeff Sabean for providing gifts to the directors in attendance.
Directors were reminded that the 2017-18 Civic Association season is dedicated to the memory of Stanley Rumbough Jr., who died in September. Mr. Rumbough had served as chairman and was a chairman emeritus of the Civic Association at the time of his death. Mr. Rumbough’s widow, Janne, his son Stanley Rumbough, daughter-in-law Leah, and grandson Cole were recognized at the luncheon and were presented with gifts from Tiffany.
Question and Answer Interview
Mr. Wright conducted a question and answer interview with Mr. Greene, who has a $3.8 billion net worth, according to Forbes. He owns 3,500 apartments in Los Angeles, 2,500 units in Florida, 3 buildings in Manhattan and 5 homes. “And the best part about it is, he did all this himself,” Mr. Wright said. “He had parental advice and support, not money.”
Mr. Wright: Tells us about yourself and your background and the story of the post office.
Mr. Greene: I thank you for having me and I look around the room there are so many prominent people, I feel like I’m the last guy that should be being interviewed. It’s a real honor.
The truth is I had an amazing amount of help. I didn’t have financial help. I grew up in a middle-class family in Wooster, Mass. A pretty normal upbringing. I was born in ’54, so grew up in the 60’s, when neighborhoods were safe, the only rule was getting home before dark. It felt safe to ride your bikes around. People took care of each other. It was an easy time if you had the right background and the right value system to achieve whatever your dream was. I think that’s one of the issues today – communities are weakened, households aren’t as strong as they were. There are a lot more single-parent households. There’s a lot more income disparity. People are struggling.
Mr. Wright: And you came down here in 1970?
Mr. Greene: My dad was a textile machinery dealer and used to go from mill to mill. He did pretty well, because all of the textile mills were in New England. In the late 60’s all the mills moved south when the unions took over, so he lost his livelihood and moved here. He rented a studio apartment at 244 Sunset, that green building across from Publix and he bought a little rubber stamp business, which I was surprised to find is still on South Dixie. He did okay, but never got on his feet again. When he moved to Viking Arms, a little apartment building on South Flagler, he still kept a P.O. Box at the Post Office to keep a Palm Beach address. He always used to send me in to get his mail. My dad died, probably from the stress of losing his livelihood, at 51 of a massive heart attack at Good Samaritan Hospital. When the post office became available to buy, I snapped it up from the federal government. The craziest thing is that, because it’s a national landmark, all of the 1930’s post office boxes are still in place, including my dad’s box 227. So, we still have this connection.
Mr. Wright: You went to John’s Hopkins and Harvard Business School. Can you tell us about that?
Mr. Greene: My parents didn’t have any money, but in the 1970’s there were a lot of opportunities to go to college. At John’s Hopkins, I got student loans and with that got a job checking student ID’s at the gym for $1.50 an hour. I came down here on vacations and was working as a bus boy at The Breakers and lied my way into a job as a waiter during my vacation. I learned to speak Hebrew when I was an exchange student and taught Hebrew school three days a week. I had a lot of jobs and student loans and scholarships. I was able to make it through a great school on my own. Today, I don’t imagine anyone can come up with $50,000 a year. Tuition at Johns Hopkins was $2,700 a year in 1972. You could put the pieces together if you enterprising and lucky and worked hard, but today it’s a lot harder.
Mr. Wright: You had a very successful career in real estate by 2006 and 07 you were already well-established. There are stories about you and (John) Paulson getting together and talking about whether there’s a real bubble here and what can we do about it.
Mr. Greene: My career was straight up from my first paper route. In the early 90’s with the S&L crash, my loans were more than my assets. I spent three or four years in guerrilla warfare, not going bankrupt. I managed a big recovery in the mid-90’s and by 2006, I had about a billion-dollar real estate portfolio parlayed into a $500 million net worth. By that time, the interest rates were so low, and I thought I didn’t want another problem and wondered if there some way to get a hedge in case we get another slowdown like in the early 90’s. I went to John Paulson, one of my closest friends, to talk to him and he said I’m shorting sub-prime mortgages…So I went home and did my homework and figured out how this thing worked and it wasn’t a hedge at all for my apartment building portfolio, but I could see it was one of the most compelling and exciting trading opportunities that I had ever imagined and it worked out in a big way. When I was cashing in at 2008, when we came to Florida, here I am someone who’s always been in real estate. Like everyone in real estate, when the market crashes, I’m usually the guy in the crash. All of a sudden, now I’m the guy with the cash, not the crash. It was like a kid in a candy store, because I had all this liquidity and the markets are collapsing in real estate and that’s how I got involved here in real estate.
Mr. Wright: Are there a couple of things that you can share that you think are keys to your success?
Mr. Greene: I’ve always worked very hard. I’ve gone and looked at buildings at midnight and at 4 in the morning. I was focused and hard working. I think like others who achieved the extraordinary amount of finances I’ve achieved, there’s a huge amount of luck factor. There have friends who were much better students than I was at Harvard Business School and they make a nice living, but they haven’t achieved the success. I bought my first property in Harvard Business School. I bought an old three-family house and paid $37,000 for it and sold that property three years later for $185,000, not because I’m a genius. I just wanted somewhere to live rent-free when I was in HBS. Then it turns out the market quintupled. I felt so great about myself and had this whole level of confidence. What if it was the reverse and I had bought it for $185,000 and it went to $37,000? I might have spent the rest of my life scared to take a risk. I worked very hard, but basically, I’ve caught some amazing cycles of good luck in my life … A lot of people who’ve made so much money in the last 10 years think they have the secret sauce. But I think a lot of it, they’re riding this giant wave. I don’t know when it’s going to end, but the reality is that a lot of people’s success is just riding waves.
Mr. Wright: Is that a capsule view of the sense of the economy as it exists today?
Mr. Greene: It feels like there are bubbles everywhere. I mean it feels like one giant bubble and they’re all attached to each other. Everything, it seems, is priced to perfection. Technology and globalization have had a tremendous effect on the global economy. You have low inflation because there’s this global surplus of labor, which I think is going to get much worse very soon. We’re heading into a period of unprecedented job destruction in the white-collar workforce. But I think what we’ve seen until now is they’ve kept wages low and inflation low. A result of the slow-growing economy is low interest rates and that’s the reason asset prices are high. We could be in that position for a long time, but, unfortunately, it’s unsustainable because the wage earners aren’t going anywhere and the asset-owners, our finances are going through the roof. At some point, the wage earners aren’t going to be able to take it anymore, so it’s unsustainable. How long will it go on? Who knows? It could be another three months. It could be 10 years.
Mr. Wright: You own a good deal of real estate in West Palm Beach and have construction plans in West Palm Beach. Can you talk about that?
Mr. Greene: We moved here at the end of ’09. The first investment property was on Flagler by Currie Park. It was an assemblage of two and a half acres and had been eight properties that someone had cobbled together. He sold it for $25 million and the loan on it was $15 million. We bought it for $2.5 million. It was two and a half acres across from the water. You can’t lose money there. So, it was just a great deal and I bought more and more properties. Now, I’ve got a lot of plans for different things. It’s difficult here, because you don’t have a lot of mid-income wage earners. To give you an example, I bought the land where the Atlanta Braves used to train over behind Home Depot. 25 acres. That loan was $65 million, and I bought it for $6.7 million. We built 548 units and we still have 80 vacancies two years later … This is a beautiful building and we still can’t fill it. There’s lot of people who can afford $1,300 or $1,400 a month, but when you get to $1,700 or $1,800 a month, they just can’t afford it. So, it’s tricky developing here.
Mr. Wright: I see you got final approval for a very large project in the center of West Palm Beach – two 30-story towers.
Mr. Greene: When I first started developing I was surprised there was no project that had everything – hotel, office, apartment – everything in one place. The only place I could find land zoned high enough was just north of the State Attorney’s Office, just across the North Bridge. We have it approved for two 30-story towers. It’s 200,000 square feet of Class A office space. Our lowest floor will be above the Darth Vader Building. The lower floors are all-suite hotel rooms, average over 500,000 square feet – short-term, long term. Then we have 330 apartments, all luxury tower, heavy amenities. I think it’s going to be a great project.
Mr. Wright: The mayor (of West Palm Beach) is trying to push pedestrian-friendly areas and the issue of traffic on Okeechobee. What’s your opinion of that?
Mr. Greene: The Related Project came up and not because I’m against competition. As a Palm Beach resident, I take my kids to school every day and sit at that light for three or four lights. People all come at the same time. If you’re talking about 600 or 700 cars being added or leaving the corner of Flagler and Okeechobee every day and added to what’s already there, I think it’s just insane … I think that the strength of this area is that most of us drive five or 10 minutes and get to where you’re going, along the beautiful water. We can’t mess that up by putting a 25-story tower on a five-story zoned site and causing a grid-locked traffic jam.
Mr. Wright noted that The Related project was turned down by the West Palm Beach City Commission. We did sponsor a traffic study that came out very negative.
Mr. Wright: Would you talk about the Greene School and tell why it is so special.
Mr. Greene: My wife (Mei Sze) and I started the Greene School. Our kids were at the Palm Beach Day Academy and they were getting a perfectly good education. We felt our kids’ education wasn’t at the same level as it would be if we were living in L.A., New York, or Boston … There are a lot of young highly educated families who really want their kids to have every opportunity. It’s no longer a town of just seasonal, charity balls. Some people were frustrated, and we put our money where our mouth is and opened a school. It was an old Mazda dealership and it’s Pre-K to sixth grade and extra space to expand seventh and eighth grade. We gutted it and made it really cool … We have all master’s degree teachers, two for every classroom if there’s more than eight kids. A full-time yoga dance teacher, physical education teacher, art history teacher, music teacher. It’s the type of place where everything has a purpose. There’s no dead time. We have an emphasis on technology. We want our kids to be digitally fluent, so that they’re as comfortable talking to a machine as I am talking to you right now … Right now, we’re under construction on a new 30,000 square-foot building. I’ve always done passive philanthropy, where I write checks and go to dinners. This is the first time I’ve done active philanthropy and it’s the most fulfilling thing I’ve ever done.
Mr. Wright: You’ve talked many times about the future of the country and the future of Florida and acknowledged that you’re thinking of running for governor. Can you talk about that?
Mr. Greene: I was approached by a number of people who are elected officials, who probably recognized that in the last election, Rick Scott was able to write a big check at the end and put him over the top. It’s a very close state here and maybe they thought I could write that kind of check as a Democrat. The school is really fulfilling for me and that’s what I most get excited about. I think my understanding of where the economy is going is different than a lot of people in elected office. Not because I’m a genius. I just think I spend a lot of time trying to understand what big data and robotics are going to do to our workforce and economy will be mind-blowing. It’s not just about bring jobs back from foreign countries. We need to be thinking way, way outside of the box if we want to have an inclusive economy that works. We’re going in the exact opposite direction now. I think some things in the tax bill will certainly help. We must have a much bigger vision … I have three little kids – four, six and eight years old – and I take them to school every day. I’m not necessarily willing to give that part of my life up, but haven’t ruled it out.
In Other Business
Gerry Frank – a longtime member, director and member of the executive committee – resigned from the board, because of his move to Delray Beach. The directors voted to appoint Mr. Frank as an honorary director.
To fill Mr. Frank’s position on the executive committee, the directors nominated and approved former Town Council President Michael Pucillo to fill his position as a director and on the executive committee.