There are many unique personalities in the executive suites of CRE investment and development companies. CRE is a difficult entrepreneurial business and most individuals who become CEO's derive their character and personality traits from this experience and their upbringing. In the exclusive commentary below, written by Joseph Ori, executive managing director of Paramount Capital Corp., he discusses these personality traits and how they can be good or bad depending on the specific individual and their life experiences. “Some traits are positive and produce great CEO's and others are negative and may cause individuals to become flawed executives.” Three primary CRE personality traits that he discusses are: the Deal Junkie, the Brain and the Sleazeball.

The views expressed below are Joseph Ori's own.

The Deal Junkie is a CRE CEO who excels at making deals, however, they end up making some good, but mostly bad deals. They are more interested in how many deals they make and money they earn than if the transactions make financial sense or are profitable. They usually excel at making the deal, but leave the details and closing issues to someone else. It appears the Deal Junkie CEO obtains a certain thrill from the deal aspects and the notoriety but has little interest in the specifics of the transaction. They get great press and complimentary articles written about them in major newspapers and magazines. They are invited to speak at key CRE industry conferences and are lauded at their deal making prowess. The Deal Junkie usually grows his firm quickly by the rapid deal making, but inevitably, gets into financial trouble when the economy turns down or the real estate market crashes. The Deal Junkie doesn't realize that a lot of deal making requires a lot of real estate debt and when the market turns negative, the high debt load becomes a big problem. Since the Deal Junkie's skills are in doing the “next deal”, they usually lack the management, operational and risk containment skills that are necessary to run a large real estate organization and for long term success in the CRE industry. Most Deal Junkie CEO's have a meteoric rise in the industry followed by a big crash.

The Brain is a CRE CEO that is super smart, attended the best Ivy League schools and is the “smartest person in the room.” The Brain can do time value of money transactions in its head and cite the specifics of each lease in a 50-tenant office building. They write articles for real estate and finance journals that contain very esoteric equations and analysis. This

CEO usually builds or runs a successful CRE investment private equity firm that invests institutional funds in real estate assets. The Brain CEO will also have an advanced degree or even a PhD and superior analytical skills in evaluating real estate deals. However, they are usually very conservative in their investment and financing policies and prefer a lower leverage and slower, but measured growth policy, for the company. The Brain CEO typically makes money and derives wealth, the old-fashioned way, slow and steady.

The third type of CRE CEO is the Sleazeball. The Sleazeball CEO becomes the head of a real estate firm by cutting corners, cheating partners and investors or in general, greedy business practices. This type of real estate CEO has poor ethics and will usually do anything to make a buck on a real estate deal. The Sleazeball CEO is usually a poor company manager, which leads to high personnel turnover in the company due to authoritarian management policies and corrupt business practices. Their real estate deal philosophy is to try and sell junky class C properties at a 5% cap rate and buy class A properties at an 8% cap rate. Many real estate companies that are run by a Sleazeball CEO don't last long as eventually their poor reputation gets out to the market and over time fewer and fewer people will do business with the firm.

Think about your current CRE organization or ones that you have worked at in the past and do you recognize any of the above personality traits?

The views expressed below are Joseph Ori's own.

Think about your current CRE organization or ones that you have worked at in the past and do you recognize any of the above personality traits?

Instant Insights /

Personality Traits of Commercial Real Estate CEOs

Related Stories

Recommended For You