On Thursday, September 22, 2022, the Cornell Baker Program of Real Estate hosted David Lupert (BA Economics '79), vice-chairman of Griffin Capital, a full-service real estate investment and management company that owns institutional quality assets across the United States.
Rupert, the founding officer of Cornell University's Baker Program, love for education, gave a 90-minute talk full of information on interrelated aspects of the real estate (RE) market. Recalling her time as an MBA student at Harvard University, Rupert believed it would be helpful to provide students with an overview of most perspectives on the US real estate market and transactions early on. At Socrates' deadlock with students, Rupert described the relative size of public and private debt and stock markets, the spectrum of lease terms within commercial property, and the “winners and losers” of property types during the community pandemic. Rupert also shared the role of alternative investments in a well-diversified portfolio. This is something that has been increasingly emphasized by institutions and donation funds since the 1990s. It is important to add assets that move your portfolio to the top left of an efficient frontier. Passionate Teacher – Rupert has expressed his happiness in expanding the diversity of the Baker Program background since its inception, urging students to challenge him with questions.
Students appreciated the REIT team's investment decisions and learning about the overall impact on the RE market. Rupert elicited a direct link between the role of emotions in trading and asset valuation and its impact on prices. He distinguished between the fundamental value of an asset and the “price” determined by the buyer and seller, and emphasized how this leads to the creation of informed investors' opportunities. “Emotions are the number one reason why individual investors are underperforming in a balanced strategic portfolio,” he said. “The institutional model for investment proven successful at Griffin Capital uses mathematics rather than emotion. Emphasis on numbers is not an option, it's a need.”
Rupert urged students not to leave stones behind in finding everything they need to know about the market and the assets they are considering. When assessing a tenant's creditworthiness, he said, “reading footnotes can reveal true cash-generating capabilities and/or the inherent risks of a company.” He stressed that with all the information available to investors today (many of it via the Internet), there is no reason to be less informed than to get enough information when making important decisions.
When answering a question about recent trading volumes, which averaged below the recent annual average of $800 billion, Rupert said, “The market today is extremely difficult. Many buyers use leverage. In this cycle, market participants tend to overreact.
Rupert then moved on to sharing stories and photos of some of the buildings the company has owned over the years. It began as a two-bedroom apartment in Manhattan Beach, California (not zoned for office use), and now operates from the large Open Formats headquarters in El Segundo, California (just south of LAX Airport). Amazon, Pepsi, etc. Griffin will purchase an existing building and develop it with two notable transactions. It is a million-square-foot warehouse in RH in California and an 800,000-square-foot fulfillment center on Amazon just outside Columbus, Ohio. That warehouse was delivered within 12 months as Amazon must close before the peak holiday delivery season. The warehouse has more than seven miles of conveyor belts inside, with over 8 million packages per week. One of Griffin's most successful investments was not at the warehouse, but at the headquarters of DreamWorks in Burbank, California. So Griffin bought it with the belief that streaming services were beginning to take off (Netflix was the early days when Griffin bought the building), and the content creation space was extremely popular in land-constrained Los Angeles. The strategy was spot, with Griffin selling his property to institutional investors with beneficial profits.
Rupert also shared photos of the team building and photos of the company's philanthropy. He said it helped to build a corporate culture of giving back to the communities in which employees live and work. Two charities featured over the years were home building with Habitat for Humanity and a month's activity for breast cancer recognition.
As farewell advice, Rupert reminded Baker students that experts should not take their eyes off the ball. “We know what is going on in the market, we know what competitors are, when we are investing, but we also know where it relates to the market and what to say about what is possible and what is possible.
Students in the Baker Program thoroughly enjoyed Rupert's extremely energetic, interactive, fast-paced stories. The Baker Program thanked Rupert for his visit and continued contribution to the program as a board member and wished to continue its future success.
