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Friday, Jan 27, 2023
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The Real Deal

The list of clients that NAI Capital’s Tim Foutz has represented over his four decades as a commercial real estate broker reads like a “Who’s Who” of the San Fernando Valley business community. Walt Disney Co., Capital Cities/ABC Inc., Dole Food Co., DTS Inc., Chatsworth Products Inc. and Sheridan Ebbert Real Estate Development are just a few. But that’s not surprising, given Foutz got into the business in 1971 when he was only 21, helping out a physician uncle who dabbled in real estate. So about now, he might be expected to retire to a low-key life at his 3-acre Somis avocado orchard. Instead, the 66-year-old Valley native is taking on the biggest challenge of his career. In March, he was named chief executive officer of the Encino brokerage, and last month he was elected to the firm’s five-member board of directors. The ascension was abrupt and followed the rare public airing of a tiff at the firm – said to stem from “philosophical differences” among its leaders – in an industry where appearances are critical. So Foutz’s long experience will be important as he seeks to put that turmoil behind the firm and close deals. “I’m here to educate, teach and inspire,” Foutz said. “That’s the value in having put in 44 years.” Michael A. Zugsmith, who serves as NAI Capital’s chairman, and Rachel Howitt, its president, are a husband-and-wife team who own a majority stake in the firm, which boasts 14 offices throughout Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. But Zugsmith stepped back from day-to-day operations last year after experiencing health trouble. That left former chief executive Bob Scullin, a longtime industrial broker, in charge. He also has an ownership stake in the firm and his wife, Cathy, is a broker there. She is listed as the owner of the brokerage’s Ventura Boulevard headquarters, which she purchased for $4.3 million in 2001, according to real estate data provider CoStar Group Inc. But over the years, there were underlying personal issues that festered between Bob Scullin, Zugsmith and Howitt, said a broker familiar with the firm who asked not to be identified. Late last year, those tensions came to a head. “There had been some strain. Eventually, there was a falling out between (Bob) Scullin and Mike and Rachel,” the broker said. “One day, (Scullin) just wasn’t there anymore.” Foutz, who joined the brokerage in 1994 with a team of eight industrial brokers he brought over from Grubb & Ellis Commercial Brokerage, was drafted to step into the leadership breach in March. In April, he was appointed to the board along with Chief Operating Officer Michele Stein as board secretary and Senior Executive Vice President Richard Gold as treasurer. “While change is never easy, I have had the pleasure of working with Tim, Michele and Rick for many years and know that they share the same values of integrity and hard work on which NAI Capital was founded 36 years ago,” Zugsmith said in a prepared statement. Important clients Foutz graduated from USC in 1970 and started in real estate at Grubb & Ellis, where he counted co-founder Harold A. “Hal” Ellis as a mentor. “He was a real hands-on manager who led by example,” Foutz recalled. He began finding space for companies relocating in and around Southern California, representing large concerns such as Prudential Insurance Co. of America and Trammell Crow Co. Persistence was key: It took five years before he got a meeting with Dole Chief Executive David H. Murdock in the mid-’90s. Foutz still refers to the billionaire as “Mr. Murdock.” During that first meeting, Foutz didn’t come out and ask for Dole’s business. Instead, he made himself useful, answering questions about the real estate market and offering up insider information. Then he waited, hoping Murdock would follow up. He did. Foutz wound up playing a critical role in helping consolidate Dole’s business operations in Westlake Village, including the leasing of over 175,000 square feet of office space and the acquisition and development of 29.5 acres of land for the corporation’s world headquarters. Ongoing relationships like that have proved important over his career. Foutz’ worked with Time Warner Inc. over many years, eventually brokering deals involving more than 10 million square feet to the media giant throughout the state, including the acquisition of land for the construction of Atari Corp’s world headquarters in Northern California. He arranged leases for Diamondback Bicycles as it outgrew its space on four separate occasions. He brokered the lease of 160,411 square feet to Packard Bell Computers in Westlake Village, then years later sold the property to an investor who developed it into the Calvary Community Church and Oaks Christian High School. At Grubb & Ellis, Foutz was repeatedly named top salesman for the San Fernando Valley and Ventura County. At NAI Capital, he has been named the brokerage’s top producer four times and consistently ranked in its top 10. The secret to Foutz’ success? He believes he is able to gain clients’ trust by persuading them he’s concerned about their best interests. “What sets people apart is truth and honesty. It makes deals go a lot faster when you’ve got credibility with them,” he said. The caring Foutz showed wasn’t phony: Many clients became personal friends. “I still see Al Sarnoff (former treasurer of Time Warner) today,” he said. He was best man at the wedding of another client-turned-friend. And once deals were done, Foutz said he made a point to stick around, often helping manage properties for his clients – including collecting rent checks. That kind of integrity has earned Foutz an excellent reputation among his peers. David Young, NAI senior vice president, came over from Grubb & Ellis’s industrial brokerage group with Foutz. “Tim is the embodiment of integrity and thoughtful leadership,” he said. Foutz will need all that personal capital as he leads a firm seeking to regain its balance. Last year, the Encino-based firm rose from the fifth to the third spot on the San Fernando Valley Business Journal’s list of commercial real estate brokers, eclipsed only by CBRE Group Inc. in Universal City and Marcus & Millichap Real Estate Investment Services in Calabasas. Since 2011, NAI Capital’s reported deal value has risen 50 percent, from $453 million to $683 million, and its total annual transactions have grown from 503 to 652 in that same time period. But the brokerage suffered a setback last June when retail broker J. Richard Leyner departed after more than two decades at NAI Capital. He and his six-member retail team jumped to rival Encino brokerage illi Commercial Real Estate, saying they wanted to affiliate with a boutique firm more focused on retail leasing. Evolving business The firm also is facing industry-wide pressures from two related trends: Technology and consolidation. As mobile devices deliver reams of market research and transactional data directly into the hands of buyers and sellers, the role of the individual broker is becoming less important, said Fred Cordova, executive vice president at Kennedy Wilson, a Beverly Hills real estate investment firm. “Particularly on the institutional (investor) side, brokerages have to define their distinctiveness and earn their spot” in the industry, Cordova said. That imperative to deliver more value has fueled a wave of consolidations in recent years, as brokerages attempt to widen their reach and influence. NAI Capital has latched onto that trend with its longstanding affiliation with NAI Global, a real estate service network with 375 local offices in 55 countries around the world. In 2012, Texas-based real estate investment firm C-III Capital Partners LLC acquired NAI Global, making its primary and special loan services, loan origination and multifamily property management services available across the network, including at NAI Capital. One of his Foutz’s first actions as chief executive was to upgrade the firm’s research department, knowing how important market data is for brokers in their dealings with investors and lenders. To that end, he brought in J. C. Casillas, former regional research manager at Grubb & Ellis, as NAI”s director of research and public relations last month. But after all his years of experience, Foutz values the personal touch above all. He is making himself available to his brokers between 5:30 a.m. and 7 p.m. Technology’s great, he acknowledged, but face time still closes deals. “The large developers get lost with five or six people on a team but no one having a strong personal connection to the clients.” Chris Jackson, executive vice president and branch manager at NAI Capital’s Encino office, said Foutz’s experience gives him an avuncular, almost grandfatherly presence at the office. “It is great to work with him, because he understands what the broker’s needs and wants are. When you go to Tim with a problem, he solves it right away,” he said. Still, Foutz isn’t retiring from the field. He expects he will be out there, scouting space and inking contracts. Just last month, he oversaw a 10-year lease of 77,000 square feet at Westlake Plaza Center East for a longtime client: Dole Fresh Packaged Foods LLC. “I still enjoy the chase and the negotiations,” he said. Apparently, those avocados will just have to ripen on their own.

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