Urstadt Biddle Properties (ePub)

The following excerpt comes directly in the book after a dramatic account of the attempted hostile takeover of Urstadt Biddles predecessor, HRE Properties, by a large real estate organization (latter a REIT) called Kimco. The fending off of that attempt and the elevation of Charles J. Urstadt to CEO marked the beginning of Urstadt Biddle Properties modern history and set the tone and general direction for the business that remains in effect today:


Chapter Four:
A New Business Plan

The elevation of Charles J. Urstadt to CEO of HRE Properties in 1989 was occasioned by the fight to keep the company from being swallowed up by Kimco. But the ultimate significance of the move went far beyond HREs prolonged struggle to remain independent. In fact, the consequences of Urstadts new position for HREs ongoing operations would completely overshadow Kimcos attempt at a hostile takeover.
Urstadt did not just represent a new face at the top of HRE. He was not at the helm just to guide it through the current storm. He was a man with a plan, and stood for an entirely new direction in the companys business. Indeed, at their meeting of September 19, 1989, the Trustees not only voted to make Urstadt HREs CEO, they also voted acceptance of his business plan to redirect the Trust, geographically consolidating its holdings in the Northeast while focusing on the acquisition and management of neighborhood shopping centers.
Urstadt dedicated himself to fending off Kimco because, first of all, he firmly believed that HRE could maximize its profits by staying small. For Urstadt, it was a matter of basic business philosophy. In large companies, entrepreneurial decisions do not exist, Urstadt, who had learned from experience, said. Only the political perspective does. People try to impress the boss as they seek various perks. Having served at or near the top in several major real estate firms, as the head of New York States Division of Housing and Community Renewal, and as the first Chairman and Chief Executive Officer of the Battery Park City Authority, where he had to deal with government bureaucracy at the city, state and federal levels, Urstadt knew what large organizations entailed. Size mattered, and he wanted to keep HRE small, flexible and responsive.
Related to size was distance the geographical distance from a real estate company to the properties it owned and managed. Shrink the distance and you achieve greater efficiency and with it, lower operating and managerial costs. Urstadt couldnt abide the Trusts scattershot approach to property location and the lack of real estate business savvy that attitude reflected. Years later he would criticize the Boards simplistic concept that had them putting two charts in each report: one was a chart of the United States and the other was a chart of the diversity of its property types. It seemed like the board was trying to color in all the states.
Urstadts grandfather, who had influenced him to go into real estate, had told him you ought to be able to walk to what you owned. In this day and age that was no longer always practical. But management should still be able to reach their companys properties with no more than an hour or two behind the wheel, Urstadt believed. Ultimately that would be refined to a geographical criterion for HRE acquisitions that confined most of the Trusts new investment possibilities to within about a 50-75 mile radius of corporate headquarters, a standard for acquisitions that remains in effect today at Urstadt Biddle Properties.
As with geography, so with diversity. Scattering HREs property over multiple types of real estate investment was not likely to produce the best result. Concentrating on one sector in the business, ideally one more insulated from the inevitable boom and bust cycles that affected office buildings, was a better bet. The investment also ought to be in something that best matched the experience and