From the Nashville Business Journal:
Lessons from the Great Recession
Bert Mathews: Be patient, yet keep moving
Premium content from Nashville Business Journal - by Eric Snyder, Staff Writer
Date: Sunday, October 17, 2010, 11:00pm CDT
ABOUT THIS SERIES: The Nashville Business Journal will be talking to some of the most respected business leaders in Nashville about their most valuable business lessons learned from the Great Recession. This is part 2 of the six-week series.
Bert Mathews likes to say he was born into commercial real estate.
Indeed, the company he now runs — The Mathews Company — bore his surname before he was born. The company was previously run by his father and his grandfather, who started R.C. Mathews Contractor in 1938.
Mathews’ life in commercial real estate, however, started outside the family, in 1976. At 22, the world he entered was in turmoil.
“My first job was dealing with foreclosed condominiums and loans that had gone bad,” said Mathews, who started his career with Regions Bank predecessor First American.
Having lived through it and subsequent downturns shaped how Mathews sees what’s around the corner and how The Mathews Company has operated in this latest crisis.
Getting to the other side will require patience and having an ear to the market, he said. It will create opportunities.
And the pain suffered in getting there will be worth it.
1. There’s no substitute for doing it the right way.
The slow start out of recovery, Mathews said, “is because we’re doing the things we need to do” — paying off debt, refinancing loans with lower interest rates.
“It provides substantial stability so that as we grow out of this,” he said, “we’re going to be able to grow with a strong foundation as opposed to a foundation that’s built on leverage and credit.”
The Mathews Company lived by this philosophy during this recession.
With one exception, the company hasn’t bought any land in recent years that was leveraged. Mathews learned the value of this in the late 1980s, when the company bought some land for $12,000 an acre. They then partnered on the project with an adjacent landowner who bought his property for $40,000 an acre.
“We thought we had tripled our money,” Mathews said. Until two years later, that is, when the land was appraised at $4,000 an acre. Because the company didn’t have to take on debt to buy the land, it didn’t have to sell the property before it was ready. Eight years down the road, Mathews made his move — and sold the land for $160,000 an acre.
2. Keep running. ‘You always score more touchdowns in chaos.’
Mathews, a graduate of the University of North Carolina at Chapel Hill and Harvard Business School, is an educated optimist. He recalls a saying his father often used: “You always score more touchdowns during chaos.”
“I would think that [anyone] can take advantage of where we are today by just looking around and matching what the business needs are,” he said.
If a company, assured it will be around in a decade, has a need and desire to own its own building, low interest rates make it a great time to buy. Companies that wish to lease space, but perhaps need more of it, can expand now at depressed rental rates to lock in savings.
For Mathews, deleveraging is a wise move. Standing stock-still, however is not. “It’s the time to be doing something,” he said.
3. Pay attention — or you’re going to pay.
The savings and loan crisis of the 1990s made an impression on Mathews’ father. “I can remember him coming in and saying, ‘I’ve never seen it like this,’ ”
Mathews said. “That was frightening in itself.” So too was a study, co-authored by accounting firm Arthur Andersen and the Massachusetts Institute of Technology, that said the United States had all the office buildings it would need for the next 25 years — bad news for an office-building developer.
Mathews’ father sold several downtown parcels, including a piece that would become the BellSouth Tower, and paid off debt. The Mathews Company relied on trusted bankers and attorneys during this time, just as the real estate brokers with Colliers International, the Mathews Company’s sister brokerage, helps watch the market today. It’s a useful set of eyes to have, Mathews said, as finding the right leasing rates is currently his biggest challenge.
While watching the market, Mathews said it’s important to remember the market is watching you, too.
“I’ve seen people who have been in difficult financial straits who have outlined ... their path to success and ... accomplished those things that they set out to do,” he said. “And those people you really, really admire.”
About Mathews Company: The Mathews Company/Colliers International
Career highlights: Current chairman of the Nashville Area Chamber of Commerce; past chairman, Urban Land Institute Nashville District Council; former vice chairman, Metropolitan Nashville Airport Authority; former chairman, Metro Transit Authority; past president, Adventure Science Center board; board of trustees member, University School of Nashville; board member, The Community Foundation of Middle Tennessee; board member, Central Business Improvement District.
Eric Snyder covers real estate, retail, restaurants, manufacturing and transportation for the Nashville Business Journal. He can be reached at email@example.com or 615-846-4254.