An Interview with Chuck Schreiber


by Phil Diment

Premier Office Magazine Editor, Phil Diment sat down recently with KBS CEO, Chuck Schreiber to discuss how he started in the real estate business and insights on what it takes to compete for business in a competitive market.

Phil Diment: How did you get started in the real estate business?

Chuck Schreiber: I developed a real interest and passion for the investment side of real estate years ago as a student at the University of Southern California. That passion has never left me. I was fascinated by how commercial real estate can be operated to generate cash flow and value. I started my own company, but I did not have the real estate resources to really make it work, so, in 1988, I joined the Koll Company to run the investment side of its business. Koll Management Services (KMS) was growing to become the second largest property management company in the United States.

PD: What attracted you to the KMS?

CS: Resources. Because of KMS’ huge management portfolio, they had data resources. This was back in the 1980s, when the only organizations that had market data were brokers involved in leasing properties located in the sub-markets. Today, we have great real estate research companies that produce detailed market reports, but, in 1988, that kind of research, for the most part, was not available. It’s worth noting that, even with some of the great market research organizations we have today, the live data we derive from a well-connected asset management team is still as much a key to our success as it was back then.

 

…Peter and I do not have a desire to build something up to spin it off and sit on the beach.

 

PD: Peter Bren has been with you from the beginning. How did the two of you get connected?

CS: Peter had a close relationship with Don Koll, and, in 1991, Peter came in with a strategy to work with pension funds to buy sub-performing loans from banks. Peter had already closed a significant transaction with a major national bank. Like me, Peter was attracted to a firm with resources. We set up a partnership with Koll Investment Management (which had been acquired by KMS) and formed as a pension fund advisor. In 1997, KMS was sold to CB Richard Ellis in what was one of the largest commercial real estate buyouts of that time. Shortly thereafter, Peter and I separated from Koll Investment Management and formed Koll Bren Schreiber Realty Advisors, which later became KBS.

PD: Both you and Peter have been a team since the early ’90s. These days it’s hard to find partners that stick together for this long. What’s the secret?

CS: There are a couple fundamentals to maintaining this relationship. The recognition that we each have our own unique strengths is a key element. Peter brings a tremendous amount of thought, real estate expertise and creativity to KBS. Also, Peter and I do not have a desire to build something up to spin it off and sit on the beach. We know dozens who believed in the fallacy that retirement is the path to take. Repeatedly, we are seeing that being detrimental to people’s life and relationships. I enjoy golf, but I do not want to play golf every day.

PD: Not long after forming KBS, you made the strategic decision not to employ KBS personnel at the property level (property managers, engineers, etc.). Why not?

CS: When we go into a market, we select professionals in that market who are best able to conceive and execute upon the asset’s highest potential. This strategy is the most accretive for our investors, as it allows us to always take advantage of the best existing talent the market has to offer. The third party relationship we have with these professionals is very close, and, in many respects, they are our front line. When we enlist a third-party provider to lease or manage a given property, we don’t just hand them the keys and then walk away — it is very much a collaborative effort to deliver our unique brand of service and to make sure our properties perform at the top of their respective peer sets.

PD: How important are these broker relationships to you?

CS: This is a relationship-driven business. We are always in the market fully engaged with the brokerage community. We work very close with these professionals because we know the relationships and the market knowledge they bring to the table. Getting to know them, especially on a personal level, is very important.

PD: You currently service thousands of tenants nationwide. What is your philosophy towards service?

CS: We have an obligation to provide a business location that will maximize the success of each tenant. We have to enhance their success — we want them to be more successful because they are in our building. Our goal is to always be attentive and in tune with our tenants’ needs. Being responsive, at all phases of the leasing cycle, from negotiating space to building out the space exactly how the tenant wants it, and then hopefully keeping them in the building on a long-term basis.

 

We have an obligation to provide a business location that will maximize the success of each tenant. 

 

PD: What are your target markets?

CS: We certainty have our favored markets, but we are careful not to isolate our activities in any one market or submarket, or to any one property type, for that matter. While we may like high-rise office buildings in the nation’s top financial districts, that’s not our only strategy. We own and lease space to Home Depot, Lockheed, Oracle and Microsoft. We have positioned ourselves as a diversified firm, and a tenant-rep broker can come to us representing virtually any industry sector, and there is a good chance we can find a great fit for their client.  We are also presently involved with four development projects.

PD: What property types are you looking at for 2016, and how much do you expect to spend?

CS: We will continue to invest money on behalf of our pension fund clients and our REITs. We invested just over $1 billion in 2015, If you look at our company’s history, we have always modified our strategy and our operations to align with the best opportunities in the market. Today, you will see us looking for the best two or three properties in the nation’s top-performing markets and also pursuing some development opportunities.

PD: You have bought deals that other buyers might find too complex or difficult. What’s the secret?

CS: We have an underwriting, finance and closing team that is second to none. Our vice-chairman, Jim Chiboucas, is one of the best real estate legal minds in the nation. He is very well-respected, and buyers and sellers know, when they work with Jim, the deal is going to get closed and that we execute on an extraordinarily high level.  That kind of talent runs through our entire organization.

 

…a tenant-rep broker can come to us representing virtually any industry sector and there is a good chance we can find a great fit for their client.

 

PD: There are two other partners who have a stake in the ownership of your company. Who are they?

CS: Peter McMillan and Keith Hall joined Peter and me as co-owners of the capital raising platform and the advisor for our REITs. Keith and Peter are hands-on partners who have a vested interest in the success of our operations. Keith is a veteran investment-banking executive with experience in high-yield real estate products. Peter was chief investment officer with SunAmerica, which was acquired by AIG. Both of these partners bring extensive experience to our investment strategies.

PD: To what do you attribute your success?

CS: I see every day that I come to work as a blessing. The opportunity to work with such a talented team of professionals is the reason why KBS continues as a very successful respected investment advisor.