Robert Lieber, executive managing director of C-III Capital Partners, reflects on service in the New York City mayor’s office and 23 years at Lehman Brothers.
Robert Lieber joined C-III Capital Partners in August 2010 as an executive managing director after having served under New York City Mayor Michael R. Bloomberg as deputy mayor for economic development. He also serves as an executive managing director of Island Capital Group and a vice president for Anubis Advisors, which provides strategic planning, executive management, restructuring, merger-and-acquisition, and other financial services to Island Capital Group’s portfolio companies, including C-III Capital Partners.
Before joining the Bloomberg administration in January 2007, Lieber retired from Lehman Brothers after 23 years, serving most recently as a managing director in the firm’s Real Estate Private Equity Fund and before that as the global head of real estate investment banking.
Institutional Investor magazine honored Lieber with “Deal of the Year” awards in 1998 and 2003. Lieber also received the title “Financier of the Year” in 2005 by Commercial Property News. He serves as a trustee for the Urban Land Institute and vice chairman of the Zell-Lurie Real Estate Center at the Wharton School at the University of Pennsylvania. Lieber holds a BA from the University of Colorado and an MBA from Wharton.
What got you interested in the real estate business?
I got into the real estate business because, when I was starting out, I wanted to develop a skill base in the finance world. Prior to becoming a generalist in corporate finance, I was in the securities sales business and the word processing business, which gave me a background in sales. But I found that I was always selling someone else’s product. The finance and investment banking industry appealed to me because I saw the ability to create a product as well as to sell products. I thought that this intersection of creating and selling products was challenging, interesting, and remunerative.
When I got out of graduate school, I started out as a generalist and resisted going into real estate because I thought it would be better to have a broad-based background in corporate finance. I did general corporate finance for two years, but I also ended up in the first or second wave of the REIT phenomenon back in 1984 or 1985 with the FREIT, the finite-life real estate investment trust.
I was doing this when I asked myself if I was just wasting my time. I enjoy the tangible side of real estate instead of just coming up with financial engineering. I am more tactile in my interest. I liked the idea of understanding the bricks and mortar, the difference between a good floor plan and a bad one, and what works on the corner versus another location. I take pleasure in understanding the fundamental elements of creating value and how to realize that value through that type of mechanism.
Initially, I thought that I would go out and become an entrepreneur. I went to work on Wall Street to get five years of experience and three years of getting my head smashed in. I figured I would get trained and learn on someone else’s nickel before I committed my own money. While on Wall Street, I found that I liked the transaction environment; I liked the deal mentality, the competition. I like to win. I like to achieve. I like to have goals. I like to cross the finish line. I found it a really interesting environment combining being in the real estate industry with its physical nature of developing or getting properties financed and the deal business from start to end.
I was at Lehman Brothers for 23 years. Looking back, it was a great run through ups and downs. I learned a lot and worked with some great people. Toward the end, I said, “I am only 50 years old,” and I began wondering what else I was going to do. I didn’t know what it was, but Lehman helped out by changing the vesting schedule and allowing for a full retirement package. I retired two years after there was a qualified plan that allowed you to retire. It gave me options, and I had the flexibility to start thinking about other things to do.
I could never get fully vested if I went to work for a competitor. Plus, I didn’t really want to go to work for a competitor because I had a great platform at Lehman and liked my team. In 2004 or 2005, I started looking at what was going on in the public sector while New York City was competing for the 2012 Summer Olympics. I said, “Geez, there might be an opportunity for a real estate geek to make some kind of contribution, have some fun, and gain some knowledge.” It wasn’t necessarily a give-something-back mentality as much as maybe I can get something out of this, too. It turns out I knew some of the guys working for Mayor Bloomberg at the time, and I had a friend of mine call him on my behalf.
In 2006, real estate investment banking was a different business than it was in 2003, 2000, 1998, 1995, or 1984. As I took another look at the banking business, I asked, “Am I getting out of this as much as I am putting in? Or am I putting in as much as I want to get out?” I decided that it was time to get out and try the public sector for at least a year. So I called my friend and said I’d like to learn more about working with the mayor. At the time, my friend had been working for the mayor for five years; at the end of the sixth year, he decided he wanted to do something else, and I ended up taking over his job at city hall as deputy mayor. I have never taken a class in politics or public policy and am agnostic politically. It was a fascinating environment to learn how things happen. I knew how deals worked, but I didn’t know how other things happened.
What was the most important thing you learned from the Bloomberg administration, or from Mike Bloomberg, or just from being there at a different center of power than when you worked on Wall Street?
The calculus is much more complicated about how you can be effective in the public sector than anything I have ever contemplated. In fact, it is much more complicated than anything in the private sector. You don’t measure your success or failure by how much money you made because money is not a part of the game. You realize how you accomplish goals and how to develop a strategy and tactics to execute those goals as well as the fourth and fifth derivatives that are involved in trying to get something done in a system that is infinitely stacked in favor of not getting stuff done. It was an enormous challenge akin to the idea of pulling barges upstream just to stay in place. If you really wanted to make progress, you had to lean into it and get a team to help you get things done.
What was reinforced to me in working with Mike Bloomberg is the idea of being able to build consensus. Do not draw or let people draw bright lines in the sand. People will tease me and say that I will be the one to make the quick decision, and that it is my way or the highway. In this job, it is much more effective, as in anything, to be patient and to stick with it.
Even though people will yell and scream, being successful means doing the things that people who aren’t successful won’t do. It was fascinating to go sit in front of a community board on a Wednesday night in February. Who goes to a community board on a Wednesday night in February? It is a self-selecting group, and it is not a majority of people. But it is an important voice in terms of how policy and decisions are made. You have to be able to listen, and you have to be able to compromise. That was the fascinating part of watching how these pieces fit together. It is not money that defines success. It is getting projects done and completed that defines success and the impacts that those projects will have—not a year from now, but in a decade or a generation from now.
For me, it was really satisfying to say I made a difference here. My kids know that, and someday they will tell the story to their kids about their grandfather and say, “Do you see that? It wouldn’t be there if he hadn’t done something.” There were things like that which were incredibly exciting and rewarding. You’ve got the legislature and elected officials. You have the community board, which the legislature represents. You do not have money as a motivating factor. It is power and influence that [are] being traded.
You do not have the media in the private sector. The media, the public scrutiny, the review, the community boards—everyone wants to defile you with name-calling, innuendos, and bad motivation. It is unbelievable. If you take it too personally, you will fail. When I started, I sat with Amanda Burden, the director of the New York City Department of City Planning and chair of the City Planning Commission, on a Wednesday night in Jamaica, Queens, at a community board meeting. I did not know what we were doing yet, but the stuff they called her, the insults they hurled, and the racism were just stunning to me. She had a strong back and stood up and took it. She didn’t take it personally but recognized that the decisions we were making were in the best interest of this community and the citizens of New York in the long term. It was fascinating.
The thing you learn about Mike Bloomberg is that he knows how to build consensus. He has been incredibly successful in business, and he brings those deal-making skills to the tasks of convening people and having a discussion in a way that prior mayors had not done. That is part of the magic of Mike Bloomberg. The other thing that was great about working for him is that you got tons of rope. Even if he was angry at you and didn’t like what you did, he would stand up and defend you to the end of the day. He would stand up in front of the media or anyone who was trying to undermine you. His leadership skills in how he motivates, supports, and reinforces people were also incredibly interesting to watch.
Have you been able to practice what you learned in the public sector now that you are back in the private sector? Has it made you a better manager?
There is an appreciation [for] and a renewed understanding of listening and having a conversation. I do not jump to conclusions, and don’t immediately view opponents as the enemy. There have been several circumstances that we are in now in which people have come after us—or me. Rather than fighting back, I thought the best way to deal with it was to have a discussion. Often, the problem with conflict was that people do not have any understanding, let alone any appreciation, of another’s views. It doesn’t mean you need to agree, but if you can discuss, inform, and educate, at least they will have a better appreciation of where you are coming from. If you can do the same in return, you will be more effective in coming up with a satisfactory agreement. This is a refinement of the deal instincts. It is not just you say ten and I say five, so let’s add and divide by two to come up with 7.5. This is about being able to listen, understand, and relate to people. It made me more effective for what I am doing now.
When I look at your résumé, it talks about all these deal-of-the-year awards. I was in the business and I know what it takes to win one of these. It is not only competitive, but it also recognizes the practice and skills of you and your team. Tell us a little bit about how you lead a team that ends up winning one of these awards.
I am a little embarrassed that those are even on the résumé anymore. Those were back in 1998 and 2002. It was being part of a team and leading a team that tries to fight its way to success. These were financial achievements. We were innovative. We did the first and the largest of this and that. It pushed the industry to move in a direction that it hadn’t before. It also involved a lot of flexibility and understanding the ability to negotiate. I got recognition as being part of some of these teams. I would like to take credit for those, but I think part is letting other people share and enjoy the success. I got credit for it, and they did, too. I do not know how I got a couple of those awards. I do not know who nominated me. I think I know, but no one would ever ’fess up to it. That’s because the people I worked with liked me and knew that I was supporting them and what they were doing. It was reciprocity.
So here we are. You leave the public sector and are back in the private sector. What is Island Capital, and what drew you there?
Back in the early days at Lehman, I enjoyed working with successful people on things that I could learn from. I had some really good clients who turned into good friends. Andrew Farkas, the founder and CEO of Island Capital, is one of them. I believed in Andrew early on, and our team at Lehman Brothers was willing to champion his cause. He was able to find opportunities where other people found only problems.
When I signed up with the mayor, I thought there would be a two-term limit. So, I thought 2009 would be the end. My friend used to say that he would be the longest-serving deputy of economic development because he made it six years. I was there for 3.5 years in the economic development role either as the deputy or president of the Economic Development Corporation. I told Mike [Bloomberg] when he asked me to stay for the third term that “I am flattered, but 7.5 years in the seat is going to be very difficult. I promise that I’ll give you my best every day that I am here, and I will give you enough notice if I decide to go somewhere else.” I didn’t think it was going to happen this fast. Andrew called me in 2010 and said you are not going to believe what is going on and cannot believe what an opportunity exists here today. This is going to make what happened in the 1990s look like small change. There is an opportunity to recapitalize the commercial real estate industry, and we are going to be at the fulcrum point or the point of inflection where we can [have] great influence in how it turns out.
The industry was completely upside-down financially, and it was affecting the quality of the real estate. I didn’t do this back in 1990 as a principal. I had been on the advisory side and learned a lot, but I said this is an opportunity at a stage in my life in which I can be a principal with a guy whom I know really well, whom I respect immensely, and who is also a great friend. In addition, I knew the team that was around him. It was not as if I was parachuting in and starting all over. I had an opportunity to jump on a train that was moving along pretty fast, and I could play an important role from the very beginning. Who knows where we were in the market and world for the commercial real estate industry? But I believe that we are in a five-to-seven-year run on the structured finance side of the debt and mortgage markets. If we do not have things squared up by 2015 or 2017, then we have real big problems. I think we are at an inflection point, and I believe that we are playing a leadership role in the industry. It is a little different doing good and doing well. It is not quite that. We are doing good or very well and that’s okay, too. At this stage in my career, the fact that I can get up in the morning fired up about new opportunities and new challenges that were unanticipated and be able to learn and apply new things is really fun. I was also fortunate that my three-and-a-half- to four-year stint in the public sector was a long-enough time that I think I was able to accomplish some meaningful things, but it wasn’t so long that trying to carry those barges upriver every day all day sapped the energy out of me. I am still charged, and I think there are still opportunities out there. I just don’t know what they are going to be.
Last question: We all get these phone calls from young people trying to get into the business of real estate or investment banking. What do you tell someone in today’s environment and looking forward to the future what the best course is? Is it a finance course or a physical course, or going to work for a service firm until they get dirty fingernails?
I am going to answer the question a little differently. People will come to me and say, “You were in the private sector, [then] went into the public sector, and now are back in the private sector. What should I do? I want to do something in the public sector someday. What is the best course of action? Should I try to go into it now or later?”
It depends on who you are and what you want to accomplish, but I think the public sector is generally better if [it has] people who have private sector experience. I think the discipline and regimen of deadlines and rewards and recognitions [are] important and powerful if you are going to get people to play in the public sector who can make a difference. I generally would encourage people to get five years’ experience in the private sector to be able to accomplish something. You will be infinitely more valuable in the public sector, and you will not necessarily foreclose the opportunity to go back into the private sector.
The problem with the public sector today is that it is loaded with so many people who have never done anything else. When they reach their end, they have nowhere else to go and they hang around and you get the Peter Principle. It is really important to have a more dynamic environment between public and private sector experiences. I would also answer that I think it really depends on what people’s interests and personalities are. Some people are detail-oriented and will stay with things with patience and run with it for a long time. I could never be a developer—I just don’t have that mind-set. I do not have that patience or focus. Now, perhaps that has evolved from where I started, but I am more into the immediate gratification. In the public sector, there were things that you could do with long-term gratification consequences.
There is always an advantage to gain experience by learning from others—being in a transaction environment or an environment where you meet other people and can learn what it is that they do that defines their success compared to somebody else. I have worked with Mort Zuckerman, and I learned a ton just sitting across the table and watching how he does things. The guys I was able to work with all had their unique styles, and it was a fascinating way to try and learn. I think young people should go a little broader and maybe not quite as deep so they can see a little more about the horizons of opportunity instead of picking one thing and seeing it play out.
There was always the debate in the banking world of “do I want to be a coverage banker or a broad banker? Do I want to be a fixed-income debt capital specialist, an equity capital market specialist, or an industry rep that covers the natural resource or real estate industry? What do I do?” I learned the products and the people, but I don’t know the products as well as the guys who know exactly how derivative trade works. I tended to go broader and shallower than going real deep on one thing.
Stephen R. Blank is senior fellow, finance, at ULI.