There’s nothing like a recession, especially this last one, to teach a veteran real estate executive like Bob Peterson that life is full of curve balls. Peterson, CEO of the Carter commercial real estate firm, has been in the business for nearly four decades. But when the Great Recession hit, Atlanta-based Carter’s annual revenue headed south, from more than $40 million to about half that much.
Peterson, 61, ended up selling two of Carter’s four business operations in 2011 to focus on real estate investing and developing. The privately held company, with $15 million in revenue now, is investing in commercial properties, such as data centers and health care facilities, and developing a range of projects, from mixed-use urban centers to apartments and student housing.
During the housing crisis, Carter stumbled when it bought 271 foreclosed homes in a depressed area of southwest Atlanta. After paying dirt cheap prices for the houses, the company hoped to resell them and turn a nice profit. But it will lose money instead. Peterson talks about that mistake, as well as what he learned from owning his own company and then leading Carter for the past 10 years.
Q: After graduating from college, you started out in sales. What did you learn early in your career while trying to lease industrial space?
A: I would knock on doors and ask tenants if they needed more space. It was just pure cold calling. Nothing takes the place of face-to-face relationships, period. You need to connect with somebody, get a conversation going.
I tell my children and others in the sales business who want to send an email — go see them instead.
I learned that there’s no one style for success. I know people who call 100 people a day, every day, and do extremely well. And I know people who say, “I’m going to think strategically,” and they call three people a day. They do just as well, or better.
You also learn that there are many people who are not going to be successful in the sales business. They’re not happy with it and it’s not going to work for them. The key is to find your own way.
Q: You found your way by investing in commercial properties. In 1979, you started your own company, which you sold 17 years later. What did you learn?
A: When I started out, I bought land to develop industrial buildings. It was important for me to have a niche, which is what I call high-end industrial.
The reason was that there were some well-heeled, very successful and capable industrial developers back then and, as a young man, I wouldn’t be able to compete against them. So we tried to build very high-end business parks — more office space, more parking, more plantings. We were doing some of the early office parks here, with 25 percent of the space used for offices and 75 percent of the space used for storage, distribution or light assembly.
We were a pretty large and fast-growing company in the late 1980s and early ’90s. Still, we sold out after 17 years.
In hindsight, we learned that we got too aggressive in owning large land sites, especially during recessions. We learned that development can be very active. But when it shuts down, it can shut down for a very, very, very, very long time. In my past company, we got stuck with too much land during recessions — and no way to develop our way out of that land.
In this recession, over the last five years, we didn’t have large land positions with debt.
Q: You’ve been CEO of Carter for a decade, which is a comparatively long time in the top job. What have you learned?
A: A successful executive never quits learning. I’ve learned more the last 10 years than I learned the first 30 of my career. It’s important to train yourself to learn from others and from reading.
As a CEO, the number one thing I continue to learn is that you can never communicate too much. You can never keep the people you’re working with too informed. Make sure they know what you’re thinking and bring them along. Collaboration is more important than I ever thought before.
Every single month, we will show the whole company our numbers about how we’re performing. We do that religiously — the good, the bad.
Also, I’m a big believer in building a strengths-based organization. Sometimes, team members completely understand their strengths, but they don’t understand their weaknesses. When you have someone who wants to spend his time in an area where he’s weaker, he can bottle up the process.
One of my greatest strengths is that I understand my weaknesses. It’s important to have a trust-based organization. Trust the competent people to handle a problem.
Q: You faced key strategic decisions during the real estate collapse of the past few years. You sold half your business and entered an unfamiliar arena where mistakes were made. Would you please discuss?
A: We had to grow or shrink our brokerage and property management business. But we were too big to become a boutique and when the recession hit, we couldn’t grow that business. You needed a national platform to deal with the big companies and we were mid-size. So we sold that business in 2011.
We’re focusing on real estate investment and the development business. It’s where we think we can do better, where the margins are higher. For example, we’re buying distressed commercial properties and have been very successful. We’re also focusing on owning data centers and health care properties, where we get revenue from long-term leases.
As far as the mistake we made in southwest Atlanta, we did get into an arena (buying hundreds of foreclosed homes in a depressed area) that we didn’t know a lot about. Pretty much everything we do has been high-quality real estate. But this was strictly a distressed acquisition.
We probably got over-excited about the price. We learned that some investments are not good investments at any price.
Sometimes, we make a bad investment and do quite well. And sometimes we make a good investment and do quite badly. So you need to really drill down and not be simple about your analysis about why you failed.
A cat who sits on a hot stove will never sit on a hot stove again. But a cat will never sit on a cold stove again, either. Don’t over-simplify your reason for failure.
Q: In June, you will have been married to your wife, Cathy, for 40 years. Any tips?
A: Number one, don’t forget the importance of luck. No one can make a decision at a young age and not be lucky to have had a good experience.
It’s all about not sweating the small stuff.
It’s all about realizing that the other person’s wants and needs are more important than your own. There are so many things in my life that are just not a big deal. Compromise is a key. Keep disputes short.
There’s nothing better in life than a good marriage. I’m still in love and I think she is, too.
Each week, Sunday Business Editor Henry Unger has a candid conversation, called “5 Questions for the Boss,” with a top executive in Georgia. Some remarks are edited for length and style.