RVM Development`s Patrick C

a Publication of RVM Associates
Investors and
Partners of Note
Marc Abramowitz
Stan & Suzanne Caplan
Patrick Chraghchian
Ned Comer
Barry Freeman
Dr. Albert Friedman
Dr. Richard Gilmore
Herbert & Sharon Glaser
Russ Hanlin
Elizabeth Levitt Hirsh
Robbin Itkin
Joel Leebove
Greg & Stephanie McLemore
Jake & Nancy Metzler
Howard & Kathe Pilch
Keith Pomeroy
Roger & Mary Richards
Michael Rosenblum
Andrew Sobel
Steven Stathatos
Linda Stern
Marla Tobey
Richard Wynne
Larry & Karoll Zabner
What’s Inside...
Curves.............................2
Classic Sleep Care..................3
Converting Fear to
Opportunity: Bail Out...........4
Investor Close-Up:
Keith Pomeroy......................6
Restaurant Row..............13-15
POP Champagne & Dessert..12
RVM Reports........................17
Red Brick Tour Photos..........22
Greetings from Doug..........26
Monica Lee Copeland
Managing Editor
Natalie Phillips, Designer
Worry gives
a small thing
a big shadow.
a Swedish Proverb
November 2008
Volume 1, Issue 2
RVM Development’s Patrick C:
Designing & Building Smarter Environments
Monica Lee Copeland
Managing Editor
What does it mean
to build a smarter
environment? This
question is posed
by Patrick Chraghchian several times
a day. He seeks answers in both micro
and macro terms. How do you design for
synergy between building user groups?
What design elements and materials
conserve the most resources for the
individual project and for the communityat-large? In
April 2008
issue, you learned How RVM Got its
Start and how Doug Huberman found
the inspiration to build his Pasadenabased commercial real estate firm. Now,
we introduce you to one of his business
partners in RVM Development.
But let’s back up for a moment. RVM
is comprised of three business units:
RVM Investments, RVM Property
Management and RVM Development.
RVM Development Partners (left to right: Patrick
Chraghchian, Jake Metzler, Steve Stathatos,
Doug Huberman, Joel Leebove)
The investment unit raises money for
new acquisitions and provides income
and distributions to our investors. RVM
Property Management oversees company
assets as well as properties owned by
outside groups while reducing expense
base and improving retention. RVM
(continued on page 10)
When Cash is King: Acquire
Doug
Huberman,
Founder
& CEO
RVM
Associates
The economy is a mess,
unemployment is climbing, the stock
market has turned into a mindless
roller coaster ride and it is without
a doubt the best time in decades to
buy value-added commercial real
estate projects. RVM just closed two
excellent value-added transactions
(Fort Lauderdale, Florida and Glendale,
Arizona). We are in escrow to buy a
major shopping center in Hawaii and,
and with a little persuasion, hope to
be opening escrow shortly on a major
property in Arizona.
(continued on page 20)
November 2008
Page 2
Volume 1, Issue 2
Tenants
“Curves was an
established business
and it was already
in the Verde Valley
Plaza. We decided
to keep it there
because it is a very
handy location. It
has easy access
from two of the
main roads that
intersect right out in
front of the plaza”
Trina Faust
Owner, Curves
Curves: No Men, No Mirrors,
No Make-Up
Gabriel
Sherrill
Freelance
Journalist
Back in 1992 when Gary Heavin and his
wife Diane opened the first Curves, they
could not have dreamed that it would
become the amazing success story
that it is today. Designed for women,
the fitness concept employs hydraulic
resistance to create a 30-minute
workout that combines both sustained
cardiovascular activity and strength
training. With 10,000 locations in 60
countries, more than 4 million women
worldwide have enjoyed the Curves
experience. Recently, I had the pleasure
of sitting down with Trina Faust, one of
those women and one of the owners of
the Curves location in the Verde Valley
Plaza, Cottonwood, Arizona, a property
owned by RVM.
Sherrill: Why did you decide to get
involved with Curves?
Faust: Insanity! [laughing] Actually
we thought it was a good investment.
S: What is it about Curves that you
saw as a good investment? Is there
something particular to their philosophy
or their way of doing business that
appealed to you?
Joyce Petry (member) and Elizabeth Swapp
(member turned staff member)
F: Yes, I am very pleased to be involved
with Curves. Their aim is to help
women improve their health and to
provide an atmosphere where women
can feel comfortable and welcomed. I
very much appreciate that as a woman
myself, and wanted to enhance that
whole philosophy for other women to
feel welcomed into a club where they
can get fit and healthy without feeling
intimidated.
S: So does that sense of intimidation
come from there being men around?
And is that tied to the hassle of being
hit on while at the gym?
F: That’s right. They can come in their
t-shirts and shorts; they don’t feel like
they have to have any special gear. It’s
women only. A phrase we like to use
is ‘no men, no mirrors, no make-up.’ So
you can feel comfortable here, and that’s
a good thing.
S: Is Curves for women of all ages?
What are you seeing at your location?
F: Yes. Our youngest member is 12 and
our oldest member just turned 89. It’s
tremendous.
S: Wow! Ignorant as it may be, I was
under the impression that Curves
only had middle-aged women and up
working out there. But you really are
seeing within your membership that it’s
for women of all ages?
F: I would say the average Curves
member is between 40 and 60. That
would be the bulk of our membership,
but we really do have members of all
ages.
S: And why did you pick Cottonwood,
Arizona? Are you from there? And
was there anything about the location
in the Verde Valley Plaza that made it
more attractive?
F: Yeah, this is where we live. Curves
was an established business and it was
already in the Verde Valley Plaza. We
decided to keep it there because it is a
very handy location. It has easy access
(continued on page 8)
November 2008
Page 3
Volume 1, Issue 2
in Focus
Classic Sleep Care: Sometimes Counting
Sheep Isn’t Enough
Gabriel Sherrill
Freelance Journalist
Sleep apnea, a sleep disorder
characterized by interruptions in
breathing during sleep, affects 24% of
middle-aged adults. Robert Fallon, one
of the founders of Classic SleepCare,
is one of those people. Located in
the Heritage Building, a property
managed by RVM, in Agoura Hills, CA,
Classic SleepCare is a durable medical
equipment (DME) company that
provides patients with CPAP machines
and specializes in follow up care. I
chatted with Mr. Fallon and found out
what his company was all about.
Sherrill: For those unfamiliar with
them, what is a CPAP machine?
Fallon: It is basically an air blower
with a mask that sits on your nightstand.
It sends air through and keeps your
airway open, which may be blocked by
fatty tissue or your tongue stopping you
from breathing many times throughout
the night. The CPAP helps you get into
your stage 4 sleep, your REM sleep,
your healthy sleep and helps get you a
good night’s sleep.
S: What does that follow-up care
consist of?
F: We have respiratory therapists who
assist patients in using their equipment
and in answering any questions that
they have. We do follow up 72-hours
after you’ve been set up on your CPAP
machine, 30 days after, and every 90
days as long as you’re on CPAP therapy.
S: Sleep medicine is a rapidly growing
field. How has that growth affected
you?
F: We see more and more doctors
paying attention and referring their
patients out for sleep studies because
all the new research indicates that if left
untreated, sleep apnea can ultimately
lead to heart disease and heart failure.
If you’re diabetic it can mess with your
blood sugar. If you have high blood
pressure, it keeps your blood pressure
high. There are a whole lot of things
that are affected if you have sleep apnea
and you are not getting enough oxygen
to your brain when you sleep at night.
S: Are there differentiations in the
machines you offer?
F: There are. Some have different
bells and whistles, like smart cards that
download various user information like
how long you slept, how many events
you have throughout the night where
you stop breathing, and for how long,
but they’re all basically just air blowers.
S: And the masks? I’m assuming the
big difference here is comfort?
F: Correct. There are some called fullfaced, which go over your nose and your
mouth. There are some that are nasal
masks, which just go over the nose.
There are nasal pillows that just go into
your nostrils. Each one is different.
Robert Fallon
“...all the
new research
indicates that if
left untreated,
sleep apnea can
ultimately lead to
heart disease and
heart failure. ”
Robert Fallon
Founder, SleepCare
S: Switching gears for a second, is
there any reason that you picked your
particular location?
F: Other than it being a beautiful
building that was one of the nicer ones
that we’ve seen and the location was
right, not really. I drove around looking
at buildings and this one jumped out at
me.
S: And what’s your relationship with
RVM like?
(continued on page 9)
CPAP machine
November 2008
Page 4
Volume 1, Issue 2
The Real Real Estate Economics
Converting Fear to Opportunity: Thoughts on the Bailout
and How it Affects Commercial Real Estate
“This is an excellent
time for strong
value investments.”
Tuan Nguyen
CFO
RVM Associates
THE BACK DROP
If economics were
fashion, panic would
be the new fall color. You can’t listen to
the news or enter a conversation without
landing in the dire subject of financial
crisis. The whole world seems to be
holding its breath. And not without
reason. Collapsing banks and frozen
credit markets are the stuff of fiscal
nightmares. But while there are real
things to fear right now, there are also
opportunities. Pessimism is as foolhardy
a strategy as the unbridled optimism
that caused this chaos.
Good news for commercial real estate investors.
In the last issue we addressed some
of the voodoo aspects of the housing
market in Why Commercial Real Estate
Makes Sense, which hypnotized lenders
and investors alike. Just how many
people fell under that heady spell, and
were hurt by it, became apparent as
we watched the subprime mortgage
crisis morph into a cascading crisis in
liquidity, spreading from Wall St. to
Main St. right into our own backyards.
The failures of Lehman Bros. and Bear
Stearns, largely due to risky mortgages,
triggered a near collapse of AIG, who
had written nearly $400 billion in creditdefault swap agreements. These “swaps”
began as a kind of unregulated insurance
policy for investors looking to minimize
risk, but they turned into a huge market
for speculators, who essentially bet on
potential defaults by bond issuers. To
paraphrase NPR pundits Alex Blumberg
and Adam Davidson, if bad mortgages
got the financial system sick, creditdefault swaps spiked an epidemic.
Because some of the same people were
both buying and selling CDS, they built
a chain of interlocking risk, a house of
cards, in which one failure can break the
house. And according to the Washington
Post, there is as much as $365 billion
in CDS contracts against a default by
Lehman alone.i
The collapsing structure that began with
Lehman and AIG sent panic through the
Money Market Mutual Funds, which are
among the key lenders of commercial
paper, a kind of short-term business
loan that helps fund everything from
corporate payrolls to manufacturing
inventory. If those companies could
fail, who was really safe? Frightened
banks essentially cut off corporate credit
lines, taking nearly $100 billion out of
the commercial paper market and into
treasury bills and government securities.
As a result, many solvent companies
are without funding, and there are
fewer loans for commercial projects.
Perception, in finance, being everything,
fear froze the market as surely as
optimism once fueled it.
(continued on page 5)
November 2008
Page 5
THE GOOD NEWS FOR INVESTORS
The recent bailout, if it has the intended
psychological effect, should start the
economy on a slow road to healing. But
we’ll have a few years ahead where
the patient still limps. And that, believe
it or not, is good news for investors.
Unlike single-family residential,
commercial real estate value is based
largely on the revenue it can generate.
And certain businesses will always do
well, even in a recession. Therefore,
this is an excellent time for strong value
investments. According to the Mortgage
Bankers Association, commercial
and multifamily mortgages have
continued to perform well despite the
credit crunch. Says Jamie Woodwell,
MBA’s VP of Commercial Real Estate
Research, “Most of these investors tend
to hold them to term, so they are less
affected by capital markets disruption.”ii
In fact, this could be the best time to
acquire commercial real estate in the
last twenty years…if you play by RVM
rules.
But go ahead and yawn now. There’s no
top hat or rabbit in this strategy, not even
a handkerchief. It’s no more exciting
than eat healthy, exercise, and floss your
teeth. But it is the secret to thriving in
these times (and that is the real magic).
BUY LOW, SELL HIGH…AND STAY
CALM.
“Buy low, sell high.” It’s almost a
bumper sticker, a truism that every
investor can quote in his sleep, but
few actually follow. Why? Because to
truly buy low and sell high means to go
against all your instincts and stick with
the supposedly sinking boat. It means
staying calm, hanging on, and riding out
the storm. Letting your brain override
your emotions. When the economy
stinks, your emotions say do nothing—
or they scream “Sell! Sell! Dump
Volume 1, Issue 2
“...commercial
and multifamily
mortgages have
continued to
perform well
despite the credit
crunch. “Most of
these investors
tend to hold them
to term, so they
are less affected
by capital markets
disruption.”
Jamie Woodwell
MBA’s VP of
Commercial Real
Estate Research
(continued on page 21)
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November 2008
Page 6
Volume 1, Issue 2
Investor Close-Up: Keith Pomeroy
Michelle L.
Johnson
Staff
Writer
Who is
Keith?
Keith Pomeroy started his own
real estate investment company
in the late 1970’s after earning
sociology and law degrees at
Wayne State University. Initially
investing in apartments, Pomeroy
moved onto office buildings,
shopping centers, hotels,
industrial parks and nursing
homes. He’s done it all, acquiring
and originating $1.5 billion in
real estate properties. General
Motors was a prominent tenant.
Keith says, “I was one of the
larger landlords to GM in the state
of Michigan.” Pomeroy projects
tend to be in prime geographic
locations and are high quality
Class A or Class B properties.
One of Pomeroy’s keys to success is that
he is very selective with properties. He
says, “Based on the risk, we determine
what yield will be required. Generally,
we try to manage properties more
effectively than previous owners. We
also try to find unique ways to enhance
value.” This is one of the reasons Keith
invests with RVM.
Singing His Praises
A prime reason Keith Pomeroy
is
’s first featured
investor is that Doug Huberman
freely sings Pomeroy’s praises.
According to Huberman,
Pomeroy, whether the news is
good or bad, walks his walk
and talks his talk: “Keith is as
solid as a rock, straight forward,
honest. If he says he’s going to
do something, he does it. If he
can’t or doesn’t want to do it, he
doesn’t hesitate. He simply says
‘No.’ Working with him is a joy
because you don’t waste a lot of
time and effort trying to figure
out if what he says is actually
what he means.”
The Beginnings
“[Pomeroy has] done
it all, acquiring and
originating $1.5
billion in real estate
properties.”
Keith is a savvy investor. A
35-year veteran of real estate
development, Pomeroy met
Huberman through Dan Levitan
while Doug was still with CNA
Enterprises, a commercial real
estate investment and advisory
firm headed by Arnon Adar.
Sharing mutual interests,
Pomeroy and Huberman talked
about eventually investing
together. As Doug developed
RVM Associates with Old
Pasadena Plaza I and Old
Pasadena Plaza II at its core,
Keith was onboard as an initial
investor. Pomeroy saw Doug and
RVM successfully refurbish the
properties and turn them into
office and retail complexes, increasing
their value. After RVM managed the
project and brought in new tenants, it
was sold. High yields were returned
to Pomeroy and other investors. From
the success of that initial investment,
Pomeroy has continued to invest
with RVM, most recently in projects
in Sedona, Arizona and Louisville,
Kentucky.
November 2008
Page 7
Turning Profit into Beauty & Hope
children.
In addition to being a savvy investor,
private art collector and a champion
of several charities. He is a founding
board member of the Museum of
Contemporary Art Detroit, and serves
on the California and Michigan boards
of Childhelp®, a national organization
that assists and supports abused
children.
Childhelp®
founders Sara
O’Meara
and Yvonne
Fedderson
have been
nominated
for the Nobel
Peace Prize
4 years in a
row for their
work saving
the world’s
Huberman says, “You can’t find
anyone better than Keith. He makes
a difference in his community. He
turns around the lives of abused kids.
Keith is the kind of man most men
should emulate, and it’s always nice to
do business with someone who cares
about more than just money.”
Left to right: Sara O’Meara, Keith Pomeroy, Yvonne Fedderson
Volume 1, Issue 2
“Keith is as solid
as a rock, straight
forward, honest. If he
says he’s going to do
something, he does it.”
Doug Huberman
Founder & CEO
RVM Associates
Page 8
November 2008
Volume 1, Issue 2
Curves cont. (continued from page 3)
from two of the main roads that
intersect right out in front of the plaza,
so it makes it very convenient for
people to see that we are there and to
come in and utilize the facility.
the Cottonwood location, what
kind of growth has your franchise
experienced?
F: We’ve it owned it for 7 months and
we’ve grown 30%. We feel that’s a
pretty good growth rate in these slow
economic times.
S: Especially in 7 months. Wow!
F: Yeah! We’re pretty excited. We
feel really blessed.
S: Do see a specific reason why that
growth has occurred? Obviously
there is new ownership, but are there
any other factors?
Curves Staff members Jackie Maaske and Kathy Ruechel
“We have a good
relationship with
RVM. ...They are
readily accessible
and helpful.”
Trina Faust
Owner, Curves
Sherrill: Is there anything about
RVM in particular that you like?
What is your relationship with them
like?
Faust: We have a good relationship
with RVM. They were very
informative when we talked to their
representative, and any time we have
questions they are readily accessible
and helpful.
S: What about your future at that
location? Would you guys look to
stay there when your lease is up?
I know there are some planned
renovations over at the Plaza.
F: If things continue on as they are, I
would think that we would stay with
RVM. The price has been nice, and
the location, as I said earlier, is a very
nice one. At his point, we have no
plans to leave.
S: Back to Curves. Since you bought
F: We’ve put out some advertising.
We’ve sent out letters. Word of
mouth is getting out now. Prior to
our ownership, enthusiasm within the
facility itself had waned, but at this
point it has improved. When you have
happy members, they tell their friends,
and you have new members. We’re
making it fun.
S: That’s important. Because when
working out becomes work people
tend not to do it.
F: That’s true.
S: And how about yourself, do you
work out there too?
F: Yes I do, faithfully. And the
members make sure I work out.
S: Ah! They get on your case a little
bit.
F: [Laughingly] If I’m being lazy they
say, ‘hey get on the circuit.’
S: Wrapping up here, do you guys
have any initiatives, or are doing
anything in the community to spark
enthusiasm about Curves, good
health, or fitness in general?
F: Curves really does help out with
that. Currently, for the month of
(continued on page 9)
Page 9
November 2008
Curves cont. (continued from page 8)
October we are doing a breast cancer
awareness month wherein we are
giving out a free self-exam breast kit
when you sign up. Right when we
bought Curves, Curves did a food
drive where we were able to donate
2,500 lbs. of food to a local food bank,
and that was from members’ donations
and from a promotion where we
waived a portion of the sign up fee on
new memberships when they brought
Sleep Care cont.
in a certain amount of groceries. So
stuff like that helps the community,
and for women’s health it helps to
generate interest and a feeling of wellbeing.
Sherrill: That’s great. Finally,
is there anything else you would
like your current members, future
members, or those in the community
to know your location in particular,
or about Curves in general?
(continued from page 3)
F: They’ve been very nice.
Everybody over there, especially
Nicole and Nikki have been very
gracious and very nice to us.
S: What sets you guys apart from
other companies out there?
Fallon: The difference between us
and the other DME companies like
Apria, Lincare, Rotech, is that this is
all we do. We are not looking to sell
wheelchairs, or scooters, or hospital
beds, or oxygen. This is our only line
of business and we believe that by
focusing on this one area of patient
care, and doing it better than anybody
else, physicians will continue to refer
to you and patients will continue to be
loyal to you. The thing that separates
us is real patient care.
Sherrill: Is there anything else you
Volume 1, Issue 2
Faust: In general, I would say that
if they’ve ever thought about joining
Curves they should come in and give
it a try. I think they will find a very
satisfying, encouraging place to work
out, and that we really do care about
their health. We we’re not just there
just to get another member or another
membership fee coming through the
door. We really do care about the
people themselves and we want them
to be healthy.
want people to know about Classic
SleepCare?
F: We are a resource for patients with
sleep apnea. The number one thing
is that if anyone out there is currently
unhappy with the level of service from
his or her DME company, then give us
a call. We have licensed respiratory
therapists doing our follow-up care.
Patients can ask us any questions and
will assist in any way, and we will
replenish their supplies as needed.
H o t D ate s / H o t R ate s fo r G ro u p s t h r u M a rc h 2 0 0 9
November 2008
Volume 1, Issue 2
Page 10
Building Smart cont. (continued from front page)
Development finds ground-up, mixeduse and historical renovation projects
to design and build and
is led by five mavericks
strategically chosen for their
specific expertise.
Patrick Chraghchian surveying RVM
Development constructions.
“[We] use an
integrated designbuild approach
optimizing wholebuilding energy
performance and
efficiency.”
Former Air Force Top Gun
and economics professor,
Doug Huberman lends
the partnership his head
for acquisitions, property
management and investor
relations. Joel Leebove is
a shark at finance having syndicated
and managed the operations of 25 real
estate partnerships, mostly revolving
around hotels and motels, valued at over
$250 million. If you live in Pasadena,
you’re familiar with Stats, the only
stop for floor to ceiling decorations.
Partner Steven Stathatos provides
legal representation for family-owned
developer and retailer, Stats Group,
and brings his retail and legal acumen
to the table for RVM. A past Chief
Technology Officer for Packard Bell
and Computer Challenge Organization,
Jake Metzler is an authority on
technology and cost control.
This brings us to Patrick Chraghchian
who is seriously concerned about
intelligent buildings. Patrick is our
guru on design and construction. At the
helm of American General Design and
American General Constructors, fullservice, wholly integrated firms that
provide streamlined design-construct
solutions, Patrick erects a fair share of
RVM Development’s undertakings.
Increasing Building and Energy
Efficiency
Patrick begins every venture wondering
how he can increase energy and
building efficiency. If he can use the
building’s individual components more
efficiently and spend less money then
he’s reduced waste and costs for all
players. Property Management can
reduce energy and associated labor
costs. Building residents’ utility bills
can drop 50-57 percent.i The larger
community benefits through sustainable
density that has a smaller environmental
footprint than comparable buildings.
Investors are pleased with short-term
and ongoing cost savings, increasing
profits. They’re also pleased we’ve
created a more valuable asset. So where
does Patrick begin when building
smart?
Solar and Ground-up
Construction
Patrick starts by viewing solar energy
as a source of on-site power. His team
determines the best building orientation
to promote the greatest use of solar
energy. The right mix of sun, shade
and wind can create significant energy
and financial savings. “Solar design
[daylighting] is the technology of
heating, cooling, and lighting a building
naturally with sunlight rather than
with mechanical systems because the
building itself is the system.”ii RVM
is building two mixed-use buildings
in Pasadena, 123 Los Robles and
496 Arroyo Parkway, which will use
daylighting strategies.
Patrick’s teams use an integrated
design-build approach optimizing
whole-building energy performance
and efficiency. They employ southfacing windows, overhangs and the use
of thermal mass materials like brick
and tile, as well as control of electric
lighting systems. Chraghchian favors
solar construction products that can
be directly integrated into a building,
like shingles, slates and metal roofing.
According to the National Renewable
Energy Laboratory, “Lighting is the
largest single end use in commercial
buildings, at 30% of the total energy
used. From a national perspective, the
potential for daylighting savings is
significant.”iii
Our builder also seeks technologies that
(continued on page 18)
November 2008
Page 11
Volume 1, Issue 2
November 2008
Page 12
Volume 1, Issue 2
A Trip Down
“We want people
to see that
champagne can be
an everyday treat.
And one that is not
too expensive.”
Kristin Traylor
Co-Owner, POPs
Restaurant in Focus
POP Champagne
Nicole Breuklander
Vice President
of Operations
RVM Associates
Champagne.
Chocolate. Cheese.
Choice. All will be
on hand when POP
Champagne and Dessert Bar opens on
33 Union Street in Old Town Pasadena
in November. The brain child of Matt
Earhart and Kristin Traylor, POP is
a welcome addition to the culinary
offerings of the neighborhood.
Earhart and Traylor were friends and
co-workers who fell in love with
champagne during trips to California’s
wine country. One day, Matt said to
Kristin, “Have you ever heard of a bar
that specialized in just champagne?”
She thought the idea sounded unique.
When they considered that Matt’s sister,
Emily Earhart, was a Ritz-Carlton
trained pastry chef they decided desserts
would be the perfect complement to
champagnes. After securing investors
and a prime spot near Pasadena’s famed
Restaurant Row, POP was born.
Kristin Traylor and Matt Earhart, creators of
POP Champagne & Dessert Bar
It’s said that when Dom Perignon,
credited with developing the méthode
Champenoise of sparkling wine
production, first tasted champagne
he exclaimed, “Come quickly. I am
drinking the stars!” RVM recently spent
an afternoon with the couple who will
bring those stars to Pasadena, Matt
Earhart and Kristin Traylor.
RVM: How did Old Town Pasadena
become the home of POP Champagne
& Dessert Bar?
EARHART: I was born and raised in
Pasadena and spent most of my life here.
When we were developing the idea, I
knew that Old Town was the center of
weekend activities. There are lots of
restaurants in the area—and not your
average run of the mill restaurants—but
we knew that POP would stand out. We
picked this site because it was a good
location with reasonable rents.
TRAYLOR: Also Brenart’s is nearby.
They lease from RVM, too. We hope
to turn this part of Union Street into
another Restaurant Row.
RVM: So what kinds of wines and
desserts will POP serve?
T: We’ll start with about 100
champagnes, sparkling wines, dessert
wines and artisanal beers. However,
what really makes POP distinctive is
that we’ll offer 30 wines by the glass,
which is almost unheard of. Eventually
we hope to offer up to 300 wines, giving
people a reason to continually come
back to expand their knowledge and
explore different tastes.
E: Most people associate champagne
and sparkling wines with weddings and
celebrations. They think it is only one
thing. But at POP they’ll discover what
we discovered: champagne has so many
types, kinds and flavors—from the driest
bruts to the sweet demi secs. And it’s not
just for holidays or events.
T: We want people to see that
champagne can be an everyday treat.
And one that is not too expensive. Two
glasses of house champagne and a
shared dessert will be about $20 on our
menu.
(continued on page 14)
November 2008
Volume 1, Issue 2
Page 13
A Trip Down
Deborah Brown
Freelance Journalist
n
‘L’: Unio
rant Row
u
a
st
e
R
The
There is an old story about a man
who goes looking for happiness,
traveling the wide world round
till, in the end, he finds it where
he started: in his own backyard.
So when RVM challenged me to
“walk the Block”—that choice
stretch of Raymond and Union
we renovated and still manage—I
was eager to see what Old
Town Pasadena could offer the
Restaurant Row
Brenart Restaurant & Wine
Bar, 53 E. Union St.
Yi-Fan Chu is probably the newest
restaurateur on the block. This
talented and friendly young chef
took over Brenart Café Gallery
in June, transforming the casual
hangout into a hip European
restaurant and wine bar with black
wicker barstools and a clean,
architectural feel. He practically
bubbles with enthusiasm
discussing his innovative and
seasonal menu, which now
extends into the dinner hour and
features fresh, handmade pastas,
stocks, sauces, and infused oils.
Even the ice cream is made on
pilgrim palate. I started at Café Bizou
(Raymond and Holly)
and tasted my way up N.
Raymond. I also hung a
right on Union to include
Brenart (POP is on
Union St. too). From
a culinary perspective
Restaurant Row is
really an L. What did I
discover? The world!
Behind the brick
aymond
facades of Old Town are portals to
France, China, Japan, England, Latin
America, and the borderlands of culture
that meet only in SoCal cuisine. Veteran
chefs rub elbows with newcomers.
Choices abound for romantic dinners
and holiday parties. And a girl can get
a serious case of happy mouth in a
one block area. Gas up your car if you
must, but I’ll tell you now, the blue bird
of pleasure has come home to roost.
&R
ReservationsLunch
DinnerURL & Phone
Bizou Recommended Tu-F 11:30-2:30 Daily 5-10
www.cafebizou.com
Sun. 11:00-2:30
(626) 792-9923
Chado Recommended Daily 11:30-7
Closed
www.chadotea.com
for Weekend
(626) 431-2832
Shaab Recommended Week 11:30-2
Week 5:30-9:45
none at present
(626) 683-1150
Mojitos Recommended Tu-Sat. 11:30-2:30 Daily 5-10
www.mojitosrestaurant.com
Sunday 11-3
Weekend live music
(626) 796-2520
Yujean Recommended Daily 11:30-2
Week 5-9:30
www.yujeankangs.com
Weekend 5-10
(626) 585-0855
Vive Recommended Closed
W-Th 4-9
www.vivelounge.com
F-Sat. 4-9:30 (dinner) (626) 583-8483
F-Sat. 10-1am (lounge)
Brenart Recommended Daily 11-3
Tu-Sat. 5-close
www.chefyifan.com
Weekends live jazz
(626) 796-7460
POP Recommended S-S 1-5
W-F 5-10 (1am Th-F) www.popchampagnebar.com
for 6+
S-S 5-10 (1 am Sat.) (626) 795-1295
site. The restaurant features live jazz on
Saturdays, but the real music happens
in the kitchen. I had the Dungeness
crab cakes, which were rich on crab,
light on batter, and came with chipotle
aioli. I also tried the soup of the day: a
purple cauliflower soup dressed with
homemade fennel oil and chives. It was
so silky, I wanted to
bathe in it!
n with
Chef Yi-Fa
writer Deb
Brown
November 2008
Café Bizou, 91 N. Raymond Ave.
Delicate sautéed sandabs practically
melt in your mouth as you assemble
the perfect bite, a neat construction
of creamy mashed potato, tender fish,
bright asparagus and tart, buttery
capers. Seared Sesame Ahi Tuna
salad wears a citrus ponzu sauce that
is light on the tongue. Since 1999,
Café Bizou has brought its wonderful
sauces and California French menu
to Pasadena, offering the best in fresh
ingredients and handmade food, from
pasta to dessert, at reasonable prices.
I met up with owners Philippe Gris
Page 14
Chado Tea Room, 79 N.
Raymond Ave.
Volume 1, Issue 2
retailer. Owners Reena Shah, Devon
Shah, and Tek Mehreteab have turned
the company into the largest tea
wholesale distributor in America,
supplying their rich blends to hotels
and restaurant groups. The Pasadena
tea room
also serves
soups, salads,
deserts, and
offers live
guitar music
three days a
week.
“Not for all the tea in China,” we say,
as if that’s the apex of abundance.
But Chado Tea Room offers teas
from everywhere: China, Japan,
India, Argentina,
Africa, even the
tiny Island of
Mauritus. Their
great wall of
canisters sports
almost 300
varieties of tea
from more than
Shaab,
10 countries,
77 N.
all of their own
Raymond
blending. The tea
Ave.
Chado’s near 300 varieties of tea.
list is a veritable
One of the
encyclopedia
of
things I love about Japanese cuisine
history and lore, and customers are
is permission to play with food.
invited to annotate their own copies
Chopsticks, rolls, and dipping sauce
for future reference. In fact, RVM’s
make each meal a tactile, as well
Doug Huberman has the
as culinary, adventure. So imagine
distinction of having tasted
my delight at Shaab, where people
every single tea in the
come from miles away to experience
house. His favorite, a fruity
“Shabu shabu,” a technique where you
Gold Tisane, was renamed
“cook” your own meal by swishing
“Doug’s Proper Tea” at the
the ingredients in a tureen of boiling
wedding reception Chado
broth, then dip each bite in sesame or
gave for he and his wife,
ponzu sauce. Shabu shabu literally
Monica. I tried it with
means “swish swish,” said co-owner
their classic Afternoon
Tommy Tamida as he placed platters
Tea, a three-tiered
of paper thin beef, vegetables and
serving of exquisite
noodles before me and showed me the
finger sandwiches, moist
ropes. The result is light and delicious,
cake,
and a warm scone
Neil Rogers
Café Bizou’s Chef
with Chado’s own
Devonshire-style
and Neil Rogers
cream. It was almost
at lunchtime and got to check out
intoxicating! Chado
Rogers’ sleek, efficient kitchen.
boasts two more
The brick and wood interior of the
restaurant itself is casual, comfortable, SoCal locations,
one in the Beverly
and large enough to handle parties
Hills area and at the
of 45-60 people. And the food is
Japanese-American
beautiful to behold. It was hard to
National Museum
disturb the pretty plate of sandabs,
downtown. Lauded
but hunger and pleasure, fortunately,
by NBC-TV as the
prevailed. Café Bizou has a second
“Best Tea Room
location in Sherman Oaks.
in Southern California” and
as each ingredient
praised by Los Angeles and Sunset
absorbs first broth, then seasoning
magazines, Chado is more than a
November 2008
Volume 1, Issue 2
Page 15
Restaurant Row
sauce. Who knew cooked lettuce could
taste so good? Shaab also serves sushi,
sashimi, salads, and seafood entrees.
Mojitos Restaurant and Rum
Bar, 69 N. Raymond Ave.
The best Mojito in Southern California
is right in Pasadena. Made with fresh
sugar cane juice, pressed right at the
bar, fresh lime, fresh mint, and Bacardi
Light Rum, it’s a drink worth naming
a restaurant for. Last year, owners
Carmen and Phil Castaneda thoroughly
gutted and remodeled the old Xiomara,
And, for dessert, the house specialty:
soufflé chocolate bread pudding served
warm with a coffee custard sauce. Be
careful though; the meal could end in
dueling spoons! Two private banquet
rooms can be combined for parties up
to 150, and they offer music on the
weekends.
Yujean Kang, 67 N. Raymond Ave.
“Opulence” is the word that that
comes to mind at Yujean Kang:
the saturation of red and black
décor, dark woods, white linens,
and a menu that
Erik processing sugar cane for Mojito’s owner Carmen Castaneda whispers unexpected
ingredients like
kumquat, passion
fruit sauce, silk
squash, and tea
smoked duck.
Named Zagat’s
“Top Chinese”
restaurant for LA
since 1992 and
an 11-year recipient of
Gourmet Magazine’s
“Top Tables Award,”
this venerable eatery
has offered up
gourmet delicacies
since 1990. Sampling their popular
Chinese Polenta with Shrimp and
Mushroom (LA Times Top 50), I was
surprised by crispy polenta squares
that gave way to creamy, warm centers
transforming it
and an aromatic blend of ginger
into a Mojito mecca. A gorgeous
and cilantro that begged slow
granite bar is the staging ground for
contemplation.
sybaritic sampling, from a rainbow of
And don’t be
fruit flavored Mojitos to an extensive
intimidated by
selection of domestic and international the accolades;
wines, and a rum list which boasts 44
you really
rums from 13 countries. But Mojitos
can order a
is more than its stellar bar. A South
wonderful meal
American sumptuousness speaks
here without
from the kitchen as well. Appetizers
ever breaking
like achiote grilled prawns over white
the bank.
bean hummus. Entrees like Chilean
Sea Bass with a crispy corn crust and
poblano goat cheese mashed potatoes.
Vive Restaurant Lounge, 61 N.
Raymond Ave.
Vive is not a nightclub, co-owner
John Pena tells me, “it’s a lounge with
dining.” And lounge is the operative
word, as a proliferation of colorful
booths and comfy couches invite
customers to kick back and indulge
in a drink or a meal. Opening daily
at 5 pm, Vive offers light California
cuisine with a Latin-Asian
Hanging out at Vive.
fusion. Just look at their appetizers:
chipotle chicken empanadas, crab
wontons with tomatillo sauce, and
an Ahi tuna ceviche that makes your
mouth pop with a sweet mix of tuna,
grilled pineapple, avocado, celery
and mint in a pickled ginger sauce.
The dark floor, brick walls and high
exposed ceilings give Vive a casual
loft atmosphere, and DJs play to Top
40 tunes on Friday and Saturday
nights. Salsa
Sundays
include free
salsa lessons
from 5:006:00 pm.
n Kang’s.
jea
Evening Dining at Yu
November 2008
Pop cont.
Page 16
(continued from page 15)
RVM: Tell us more about your
desserts.
EARHART: We’ll have 10-15 desserts
from the classic crème brulee to dishes
that are more edgy and experimental.
And even our classics will be very
sophisticated. Our pasty chef, Emily,
is a graduate of Pasadena’s California
School of Culinary Arts Le Cordon
Blue program. She’s excited about
using seasonal ingredients and finding
the best local produce at the farmers’
markets in Pasadena and South
Pasadena. We’re also going to have
small plates—meat and cheese plates,
sandwiches, pate, cavier, fruit soups
and salad.
RVM: With such a wide selection,
how will diners select just the right
drinks and desserts?
POP storefront
“Doug’s been great.
When we had our
beverage license
hearing, he and the
rest of [RVM’s] staff
came to testify on our
behalf.”
Kristin Traylor
Co-Owner, POPs
TRAYLOR: There will be a sommelier
on site, but our menu will concentrate
on pairings as well as the style of
champagne. We won’t overwhelm you
with knowledge. We want to allow
you to explore freely. On the menu,
there will be descriptions not only of
how the wine will taste, but how it
will feel in your mouth and what will
compliment it.
RVM: What champagne do you
expect that Pasadena will be excited
that you’re serving?
E: While our name is POP and
POP’s maker, Pommery, has a
special relationship with us, we
aren’t officially affiliated with them.
We went on a two week tour of the
Champagne region of France. We
visited 17 wineries, tasted more than
65 wines and Pommery really treated
us well. They are excited about
POP Champagne & Dessert Bar and
practically insisted that we offer all
of their wines and have a special POP
night, but we’ll offer a wide variety
of champagnes and wines. I’m sure
lots of people will be excited by
Armand de Brignac “Ace of Spades”
champagne, which is extraordinarily
limited, but we hope to have three to
six bottles on hand.
T: We’ll also be offering the wines
of Jacquesson. During our tour we
established personal relationships
with a lot of wineries including this
one. It’s a small family farm. One
brother makes the champagne and the
other runs the financial aspects of the
business. They create some really fine
wines.
E: A house may make a dozen
champagnes in a year, but they might
only release two in the States. We want
to make sure that we can offer some
wines that aren’t offered elsewhere
in the US. Because we established
personal contacts with Jacquesson and
Volume 1, Issue 2
others, I think we’ll be able to do that.
T: We’ll also carry some very fine
California sparkling wines, including
Iron Horse out of Sonoma.
RVM: Please describe POP’s
atmosphere.
T: There will be music, a nice blend
of ’20s and ’30s jazz and blues along
with some crooners and mellow
modern music. From time to time,
we’ll have live jazz.
E: The lighting will be subdued but we
want people to take note of the great
architecture. People won’t believe this
used to be an office building full of
plaster. We scraped until we found the
purple tile that was put in 100 years
ago. The floors are the original floors,
just restored and refinished. I think
people are excited to see the bricks
back in Pasadena.
RVM: So you really like this space?
T: Yes, and RVM has really worked
with us to remodel it to fit our needs.
They appreciate the work that we put
into the space, essentially stripping
it down and rebuilding it. As this is
a mixed use building, they’ve been
great at mediating between us and the
other tenants. We all want to be good
neighbors. For instance, there are
offices above us, but we’ve installed
insulation to dampen any noise where
our business hours might overlap with
theirs.
E: And Doug’s been great. When we
had our hearing for our beverage
license, he and the rest of his staff
came out to testify on our behalf. And
once we were approved, he took us all
out to dinner.
RVM: How can people find out more
about POP?
E: They can sign up for our
mailing list at our website,
www.popchampagnebar.com.
November 2008
Volume 1, Issue 2
Page 17
Wade Trefethen
Property
Manager
RVM Associates
RVM Reports
studying to become a history teacher.
Christine Claes
Christine works part time in our office
while pursuing a degree in Zoology.
When not working or going to school
Christine takes care of her 10 animals.
Space Available
Welcome To Our New Tenants
Daniel Wier & Associates
65 Raymond, Suite 235—Daniel Wier
& Associates is a retained Executive
Search firm that specializes in
recruiting top and middle managers
for a variety of industries with an
exceptional success rate. Daniel
Wier has over 20 years of recruiting
experience and has successfully
completed searches for presidents,
CEO’s, COO’s, directors, and vice
presidents in most line and staff
functions.
Architectural Resources Group
65 N. Raymond Suite 220
Congratulations on the expansion
of their offices.
Mojitos
69 N. Raymond—is creating a better
dining experience in their beautiful
atrium area with new lighting. Check
it out!
BrenArt Restaurant
53 E. Union—has a new Chef. Chef
Yi-Fan Chu graduated from the
California School of Culinary Arts
in Pasadena and had Michelin star
training in Germany for 2 years before
coming back to America to pursue
his career in the culinary industry.
Stop by and try the delicious purple
cauliflower soup.
introducing new staff
Jennifer Miller
Jennifer is our new Administrative
Assistant. Married for 9 years to
her husband Kevin she is currently
Contact me at (626)792-8220, if you
are interested in the following spaces:
Residential Lease at 35 N. Raymond
Ave—1,609 sq feet, 2 bedroom,
2.5 bath townhome with views of
Memorial Park and the mountains
from the large balcony. A roof deck,
Viking appliances, high ceilings, onsite parking and large master bathroom
tub make this unit, combined with the
Old Town Pasadena zip code, very
attractive.
Great Pasadena Retail Space—is
available on 37
E. Union St.
2,800 sqare feet
of ground floor
space with high
ceilings right
next to POP
Champagne
Bar. With
refinished,
original
hardwood floors
in a historic
building, this
space is perfect
for a retail
or restaurant
operation.
Located just
in front of the
exit for a public
parking garage,
customers
can park
conveniently.
Expandable
basement space
also available.
Pasadena Storage spaces—available
in several buildings.
Our Happenings
Investor Holiday Party on Sunday,
December 7—Investors please save
the date. Shortly you’ll receive an
electronic invitation followed by a
mailed formal invitation for this mustdo event.
Cassie & Dexter If you ever visited
the RVM office you
may have met two small
pugs loved by CEO
Doug Huberman. Due
to these rascals, Doug
discovered the beauty
of historic Old Town.
Cassie passed away
August 7th and Dexter shortly after
on October 1st. They will surely be
missed.
November 2008
Page 18
Building Smart cont. (continued from page 10)
harness the sun for building heating
and cooling. “Some of these new
design packages and processes have
reduced energy consumption in new
commercial buildings by as much as
70% or more.”iv
Chraghchian would concur. RVM /
AGD is LEED (Leadership in Energy
Environmental Design) certified.
LEED provides a mechanical checklist
of things to do for systems integration
and efficiency. In addition to green
technologies, Patrick is out to ensure
his projects remain competitive in
the long run. With over 60 years of
continuous professional experience,
Patrick’s teams have implemented new
construction, renovation, expansion
and modernization projects totaling in
excess of $500 million nationally and
over $1 billion internationally.
Building Smart Improves
Competition: The BostonCentennial Example
Patrick cites the historic renovation of
The Boston-Centennial Building at 35
N Raymond in Pasadena, as a good
example of an RVM Development
Project where smart building led
to greater market competitiveness.
RVM Development took a 100year-old building with an imploded
roof, preserved three-foot brick and
terrazzo exteriors and built an entirely
new structure within, above and
below. Now, it is a mixed-use building
with retail tenants, renovated lofts,
new luxury town homes with views
and roof decks, and a modern garage
with hydraulic lift parking spaces.
Resident and Tenant Synergy: Patrick
describes the elements of design in
Boston Centennial as intellectual:
metal paneling; commerical grade,
glass glazing not typically found in
residential; glass and concrete; and a
combination of historic and modern
attributes. With lofts beginning in the
$400,000’s and town homes ranging
from $700,000 to over $1 million,
these residents are affluent, urban
and prefer live/work environments.
They care about sustainability and
conservation. The residential target
was not an accident. According to
RVM CEO, Doug Huberman, “there
are no good or bad residents and no
good or bad tenants, just residents and
tenants that are appropriate for project
demographics.”
The partnership team at RVM
Development wanted to attract the
right residents and tenants for the
buildings long-term success and
maximize tenant synergy. “That’s
why Famima as a retail tenant
was a coup for the building,” says
Chraghchian. Famima, located at 25 N
Raymond, is part of a chain of small,
upscale convenience stores based
on and owned by Japan’s successful
FamilyMart. “We realized that the
suitable residents for the building and
for Old Town would prefer to shop
where they live. These are busy people
who want to save time, gas and the
environment by leaving their cars in
the garage.” Famima benefits from
the nearby offices and residential
buildings. When the Pasadena store
opened it became the #1 store in the
US during its first month.
Renewable and Recyclable Materials:
One of Patrick’s first thoughts
with mixed-use assignments is
determining “What will take less out
of the environment?” He uses many
renewable and recyclable materials.
Carpeting and cabinet materials as
well as lighting and plumbing fixtures
can all be reused. With BostonCentennial, revitalizing historic or
stylistic components added to the
building’s intrinsic and economic
value. The 18-feet high exposed brick
lofts all maintain unique floor plans.
This same brick stores up heat during
Volume 1, Issue 2
the day and keeps the building cool at
night.
For commercial property tenants,
Total Cost of Occupancy is the
number they are concerned about. It
is composed of two ingredients: base
rent plus variable costs (sometimes
referred to as triple nets). Utility
bills are a large part of variable
costs. If a building is designed with
greater energy efficiency, property
management can charge the same base
rent, but the Total Cost of Occupancy
is lower for the tenant because their
variable costs are lower. This provides
competitive edge for the smart
builder/developer. There is another
option as well. The developer can
charge the same base and decide to
pass on a fraction or none of the triple
net savings due to improved energy
efficiency to the tenant. In this event,
the additional profits would benefit the
investor.
Let’s Do the Numbers: Nicole
Breuklander heads up RVM Property
Management. More than anyone,
she’s aware of the cost savings due
to preserving Boston-Centennial’s
100 year-old, brick walls. “Typically,
triple net costs for a building of this
size would be $10-11 per square feet
on top of the building’s base rent. In
this building, we save substantially
on heating and cooling the common
areas, so we operate on less than
$3.95 per square foot. We’re able to
charge less for triple net up front,
and as energy costs rise, our costs
will go up more slowly.” This is what
Patrick’s means by going further than
green and LEED, and delivering the
benefits of long-term competitiveness
to investors. “If we build smart, our
investors earn more, and we can keep
building smart.”
BUILDING FOR A HEALTHIER PLANET
There are a number of smart
construction materials and coatings
(continued on page 19)
November 2008
Volume 1, Issue 2
Page 19
Building Smart cont. (continued from page 18)
on the market now (plaster, mortar,
architectural concrete) containing
titanium dioxide, which can capture
and absorb organic and inorganic
air pollutants after being exposed to
sunlight. The degraded air pollutants
then can be washed away by
rainwater or neutralized by alkaline
calcium carbonate in the materials.
For Patrick, this is another way that
developers and city planners can
eradicate the challenge of urban smog.
Patrick received a civil engineering
degree from the University of
Southern California. At heart, he’s
an engineer so his thought process
always goes back to solving some of
the macro issues affecting the way we
all live together.
saving gas, car maintenance, reducing
road work and decreasing accidents.
The individual saves too, but the
community saves also. The way we
build has a dramatic effect on green
space. With the subdivision, there are
set backs of 10-15 feet on 4-5 small
and mid-sized buildings. With higher
density buildings, 60-70 acres can be
saved, enough space for a
park with lakes and trees.
Manhattan’s Central Park
is a wonderful example.
It’s 843 acres of land
reserved for recreation in
the middle of a densely
populated city. It’s the
largest city park in the
world.
Whenever possible, Chraghchian
wants to purchase from local material
suppliers. “I like to have relationships
with local distributors. If I use an outof-state or foreign vendor, there’s the
cost of shipping, gas and staffing as
well as extra traffic on the roads and
waterways.”
BUILD SMART INFLUENCES
Another concern of Patrick’s is the
erroneous way that some of the
industry, local governments and
residents view land. “Land is not
being looked at as a resource. There
is this misguided focus on reducing
density, but reduced density just
leads to more pavement, more roads
and more underground utilities.”
Local preferences for low density
has a tremendous affect in Southern
California where many people have
to drive to work, to law and dental
offices and even to the grocery
store. Patrick says, “This is not great
planning. This is waste. Wasted
resources. Wasted land.”
Take a 300-home subdivision. The
person at the end of the subdivision
drives everywhere. With an 18-story
building, the car stays in the garage,
Chraghchian’s father, Hamlet
Chraghchian, has originated over
$500 million in development projects
and manages over $30 million in
new construction annually. As a
child Patrick followed his dad to
construction sites and was soon sitting
behind a drafting table. However,
Baron George-Eugène Haussmann,
responsible for building modern Paris,
France between 1852 and 1870, shaped
his thoughts on urban planning.
Haussman’s restructuring created
the long straight, wide boulevards
of Paris, as well as designated green
space for large parks like bois de
Boulogne, bois de Vincennes and
smaller residential parks for each
arrondissement (district). He built
Gare de Nord (1865) and Gare de
Lyon (1885), providing Parisians with
a modern mass transit system that is
still used today.
If Patrick has his way, RVM will
leave a legacy of smart building. He’s
determined to make efficiency and
conservation the standard.
France’s Baron George-Eugène
Haussmann and Patrick’s father,
Hamlet Chraghchian
“Land is not being
looked at as a
resource. There is
this misguided focus
on reducing density,
but reduced density
just leads to more
pavement, more
roads and more
underground utilities.”
Patrick Chraghchian
i
ii
iii
iv
http://www.eere.energy.gov
http://www.eere.energy.gov/buildings/
highperformance/technologies.html
http://www.nrel.gov/buildings/building_
solar.html
http://www.schlecht.com/Vancouver_
Office_Chosen
November 2008
Page 20
Volume 1, Issue 2
When Cash is King cont. (continued from front page)
“Cash is only king if
you put it to work…
two years ago we
sat on the sidelines…
the values are
now there and it is
definitely time to put
our money to work.”
Warren Buffett
Berkshire Hathaway
Not since the Tax Reform Act of
1986 decimated America’s Saving
and Loans have we seen the prices
of stabilized assets fall despite
steadily increasing net operating
incomes. Even the prices of properties
with countercyclical tenants that
thrive during recessions have fallen
significantly. While everyone knows
the axiom “buy low, sell high” very
few investors are willing to put those
sage words into action. In fact, next to
“eat right and exercise” they just might
be the most neglected four words in
the English language.
Nonetheless, it is unequivocally time
to buy and we are not the only ones
who think so. In the midst of the
doom and gloom prognostications
buffeting the airways, low key, long
term investors are quietly buying tens
of billions of dollars of quality stocks
and real estate. These are not bottom
fishers looking for scraps. Quite to the
contrary, they are savvy, blue chip and
long-term, value-added investors.
In an October 1st interview, Warren
Buffet—perhaps the most successful
long term investor in the history
of the planet was asked, “If cash is
king, why is Berkshire Hathaway
buying billions of dollars of new
assets almost weekly?” His answer
was simply, “Cash is only king if you
put it to work… two years ago we
sat on the sidelines… the values are
now there and it is definitely time to
put our money to work.” When the
interviewer then summarized, “There
is a time to accumulate cash and the
time to spend it is now” Mr. Buffett’s
answer was a simple, but emphatic
“Yes.” His only caveat, focus on
businesses run by management teams
you trust and who have proven track
records in their industries.
While financial and capital markets
are changing radically, operational
real estate fundamentals are by
comparison a constant. It is true that
consumers generally spend more in
good times and less in bad. However,
consumer preferences regarding
physical property characteriscs do not
change radically based on economic
conditions. Experience with millions
of square feet of neighborhood retail
centers has taught RVM that the
properties with excellent visibility,
high traffic counts, appropriate
signage, easy access (signalized
left turn in and out), generous glass
storefronts, high ceilings, tenant
mixes appropriate for the surrounding
demographics and limited competition
thrive while those without these
attributes struggle in all but the densest
urban environments.
Why Buy? While we have not
completed our due diligence and—as
of press time—do not know if
the project will close, our escrow
in Hawaii strongly illustrates the
opportunities available in today’s
market. The property is the dominant
neighborhood shopping center in a
12-mile radius. Located on a major
highway, it has the highest traffic
counts in the region. The property has
two signalized, left-turn in/out access
points. The major tenants (Longs
Drugs, Pizza Hut, Jeans Wearhouse,
etc.) have sales per square foot that are
off the charts… 3-4 times the national
average. Competition is severely
limited due to radical antigrowth
zoning. Within 10 miles there is only
one commercial land parcel larger
than 4 acres…Only one. And, most
importantly, this opportunity is a
product type RVM knows well and
has a proven track record of managing,
leasing and renovating.
Why now? First, the price of the
property has dropped $3 million
because of general market conditions
that have NOT impacted retail sales
at the center. Quite to the contrary,
tenant sales are up dramatically.
The demographic norm for the area
surrounding the property is large
multigenerational families. There are
six to eight residents per household
with an average household income
in the $50-$60,000 range. As a
result, virtually all of their household
income is spent on necessities. Add
to the equation high gas prices, and
sales are up significantly because
less and less families are willing to
make the 24-mile roundtrip to the
nearest competitive shopping centers.
Secondly, there are the near doubledigit, first-year returns and significant
upside. Twenty-five thousand square
feet of the center is vacant and an
additional forty thousand square feet
is leased at rates well below market
rate deals completed within the last 12
months. As a result, year-five returns
are conservatively projected to be in
excess of 15%. These are yields that
were clearly unavailable prior to the
financial market melt-down and are
highly unlikely to be available again
once markets stabilize.
Quite simply, the time to benefit from
“Buy Low, Sell High” is now. Or,
as Warren Buffet aptly stated in his
recent interview, “Cash is only king if
you put it to work.”
November 2008
Bail Out cont.
Page 21
Volume 1, Issue 2
(continued from page 5)
everything overboard!” Precisely the
reaction that sparks a run on the bank
or a slump in the stock market. Those
same emotions tell you to buy when
the economy is thriving. But that’s
completely backwards; it’s buying
high and selling low. It may make you
feel safe, but it does nothing for your
portfolio.
At RVM, we take “buy low, sell
high” very seriously. We believe that
half our profit is made by buying
below market, the rest by adding
value, and that once we have finished
renovating and releasing a project, it
is time to sell. Consider our sale of
Old Pasadena Plaza, the four building
mixed-use historic renovation project
that spans a whole city block. We
renovated, managed and repositioned
the properties during the precarious
boom and bust of the dot.com
era. Then, in January 2008, with
renovations complete and over 90%
of the tenants re-leased at higher post
renovation rates, we sold it, earning
our investors a 198% return over the
5-year holding period.
Now, for the same reasons, RVM
is focused on acquisitions. This is
an ideal time to pick up long-term,
cash-flowing properties for less. The
aggressive pricing of property is over,
and sellers no longer have unrealistic
expectations. Not unlike a biannual
sale at Nordstrom, this is when you
get high quality at a discount. For
instance, we are currently negotiating
a deal in Hawaii that made sense last
year at $33 million. But the seller,
hoping to ride the rising balloon,
turned us down. Now we’re in escrow
on the same property at $30 million.
The income is higher, tenant sales are
higher, all the real estate fundamentals
are stronger, and we’re getting it for
$3 million less. Why? People are
running scared, and there are fewer
buyers. When times are good, and that
property is worth $40 million, we’ll
take that extra $3 million in profit.
That’s no sleight of hand, just Econ
101. So stay calm, trust your reason,
and save your heart for love.
BUY SMART
Buying low is meaningless unless
you also buy smart. While you
shouldn’t pass up good investments
out of fear, neither should you go on
a shopping spree just because things
are cheap. You still want solid real
estate fundamentals. Smart investing
requires a level head and a steady
hand. Right now, that means keeping
two key things in mind:
Think Counter-Cyclical. Business
opportunities come in two basic
flavors: pro-cyclical, which follow
the ups and downs of the market, and
counter-cyclical, which go up when
the economy drops. By focusing on
mixed use development and multiple
product types, a savvy investor can
always maintain balance. And in a
downturn market, counter-cyclical
components provide extra ballast. For
instance, this is not the time to invest
in sexy, pro-cyclical packages like a
tourist retail center in Costa Rica or
high end mall in Vail. But those same
areas still have smart counter-cyclical
opportunities: businesses that trade in
the goods and services people always
need—drugstores, grocers, barbers—
and those that draw extra crowds in
harder times—discount stores, rent-toown, even pizza parlors. Think about
it: when things get tight, Whole Food
shoppers go to Ralph’s, and Ralph’s
shoppers go to Food for Less. You
might not buy a flat screen TV, but you
might rent one. And you can feed the
entire family for just $18 in pizza and
soft drinks. In a recession, inexpensive
eateries and value retailers experience
an increase in profitability.
RVM has made its reputation in
stable, mixed use projects, and one
of our key criteria is a diversity of
No Bail Out for RVM:
It’s Time to Buy!
“Now as luxury
good retailers pull
in their horns and
close locations, we
are negotiating
new deals with Big
5 and expanding
Rent-a-Center.”
revenue sources. By ensuring our
tenant mix includes pro- and countercyclical tendencies, we are subject to
less volatility when things change.
Now, as luxury good retailers pull in
their horns and close locations, we
are negotiating new deals with Big
5 and expanding Rent-a-Center. We
are also acquiring projects with a
larger proportion of counter-cyclical
tenants, like the Jeans Warehouse in
the Hawaiian project, Food City in
Verde Valley, and a Peter Piper Pizza
in Glendale, Arizona. Of course, each
of these projects has its pro-cyclical
tenants—Jamba Juice, Curves,
Starbucks—but that just positions us
for whatever the economy does next.
Look for assumable loans. Focusing
on commercial properties with
existing loans also makes a lot of
sense right now. As long as the real
estate fundamentals are sound—easy
access, drive-by visibility, a tenant mix
that encourages multiple stops, stable
sales—the only challenge is to raise
(continued on page 24)
November 2008
Volume 1, Issue 2
Page 22
Red Brick Tour Captured
Thank you investors, sponsors and guests for a great event!
Fung-Blatt Family checking in
Joao & Tammy
Huang-Anacieto
Linda Stern
Mrs. John Cullen
Copeland-Huberman Condo
Tuan Nguyen
Reporters
Doug with Don Sloan
Grant Graves
The Zulch Family
Greg & Stephanie
McLemore
Sunny, Wade Trefethen,
Tenny, Peter (photographer)
Carole Sapp
Jake Metzler with
Jeanetta Crittenden
Howard & Kathe Pilch
The Morgan Skelton
Family
November 2008
Volume 1, Issue 2
Page 23
Andre Holley with Monica Lee
Copeland
Aroon & Surinder Chinai
Mark Rubin
Dr. & Mrs. Albert Friedman
Grace Ma-Nguyen
Debby Loesch with
Bernie & Donnamae Doug en route to Café Bizou
Huberman
Bob Coleman, VP PADI
Nicole Breuklander
Albert & Maxine Friedman, Sonia Sloan,
Leon & Bettie Sclar
Don & Sonia Sloan
Christine & Natalia
is distributed free to 11,705 RVM Investors, tenants,
vendors, and residences and businesses adjacent to our
properties. Locations include Pasadena and Agoura, California,
Phoenix and Sedona, Arizona, and Ft. Lauderdale, Florida.
If this appeals to your market, place an ad in our winter issue.
Call (626) 744-0593 or
email: [email protected]
Full Page Ad: Half Page Ad: Quarter Page Ad: 7.5”x10”
7.5”x4.875”
3.875”x4.875”
Demographics available upon request.
$500
$300
$250
is published tri-annually.
Page 24
November 2008
Volume 1, Issue 2
Bail Out cont. (continued from page 21)
the equity and wait.
Be Conservative
Even though bankers seem to be
hiding their funds in financial
mattresses right now, and most
builder/developers are folding up their
tents to wait out the storm, there are
still loans to be had, if you play your
cards right. Because ours are right on
the table, RVM is still able to borrow
for construction and acquisition. In
fact, we are currently finalizing a
construction loan for 123 Los Robles
and have been able to close on two
more acquired properties in the last 90
days—the one in Arizona and another
in Florida. As lenders and investors
both know, ours is, and has always
been, a clean and conservative hand.
We have an excellent track record.
Projects like Old Pasadena Plaza,
Park Sedona Plaza, and 35 Raymond
speak to RVM’s track record for
creating value in a short frame of
time. RVM’s average 5-year returns
have been in excess of 110% since
2002. In addition, RVM is headed
by economists with experience in
real estate—myself and CEO Doug
Huberman—not just builders with a
dream.
We design in-house. Lenders are wary
when design and build functions are
separate entities; there are too many
ways for a project to lose time and
money. By having in-house design/
build capabilities—where designer,
engineer, and general contractor are
in constant conversation—RVM
mitigates the risk of a design that’s
great on paper but not buildable.
(Check out our cover story, Designing
and Building Smarter Environments
on page 1.) Less risk makes happy
lenders.
We build to hold. Two plans are
always safer than one, and by building
with the intention of holding the asset,
we create two winning scenarios:
sell in a strong market or manage it
profitably in a soft one. To that end,
we dual underwrite and dual appraise
all projects. The lender is never betting
the farm on a single exit strategy.
We manage our own assets. We
don’t sale assets off to other groups
to manage; when you buy with RVM,
you get RVM, from design and build
to property management.
We only seek private investors. RVM
projects are based on relationships
not committees. Our investors are all
private individuals, or couples, who
we can actually sit and talk with, not
financial institutions or companies, so
we are not locked into Wall Street. As
a result, we’re less affected by its ups
and downs.
Each investment stands alone. Every
RVM project is its own individual
limited liability company, an
independent legal and economic unit.
Nothing is bundled or commingled
like other financial assets. That means
that no asset can
be adversely
affected by the
activity of another
or by a change in
the company as a
whole.
research, physical and environmental
inspections, financial due diligence,
loan assumption fees, travel, and all
the other line items required to vet
a credible investment. One hundred
percent of that risk is ours, and we
typically go through that process two
to three times for every project we
bring to investors.
Hang Onto Strong Assets
Again, don’t let your emotions
override your business sense. Don’t
let fear keep you out of projects that
have strong fundamentals. And don’t
sell strong, viable assets just because
you’re scared. “Unless…, says CEO
Doug Huberman, you really feel you
must, in which case, please, please—
sell them to us.”
To learn more about RVM
Investments, please contact me.
i
ii
http://www.washingtonpost.com/wp-dyn/
content/article/2008/10/10/
AR2008101003050.html
http://www.financialweek.com/apps/pbcs.dll/
article?AID=/20080923/
REG/809239979/1001/rss11
Need Cost Effective
Marketing Materials?
108 design is your answer.
We fund our due
diligence. Every
discovery period is
paid for by RVM.
Before investors
even hear about
any project, we
have fronted the
time and money to
confirm that it is
sound and viable.
For instance, on
the Hawaiian
project, we have
already spent more
than $150,000
on market
We create unique,
customized brochures,
invitations, newsletters
and marketing collateral
for small businesses
and individuals. We vet
printers to reduce costs.
Call 707/454-6195 for a free quote.
1 0 8
design
Portfolio available at www.coroflot.com/nataliep.
Sedona and Phoenix, Arizona • Old Pasadena and Agoura, California • Ft. Lauderdale, Florida • Louisville, Kentucky
a Publication of RVM Associates
RVM Associates
35 N Raymond, Ste #213
Pasadena, CA 91103
Phone: (626) 792-8220
Fax: (626) 792-8228
www.rvmassociates.com
Greetings From Doug
It’s with
great
pleasure that
I dispatch
our second
issue of
,
which should arrive at your doorsteps
not a moment too soon. Everywhere
you turn there’s pandemonium about
the economy. People are selling off
assets faster than they can blink and
newspapers are cranking out one story
after another urging folks to bail.
At RVM, we believe it’s
unequivocally time to buy and we
are not the only ones who think so.
Warren Buffet is snapping up bank
stocks left and right and we’re getting
our hands on properties at basement
prices. Take a look at my front page
story When Cash is King: Acquire to
learn what we are buying and why.
My right hand guy and CFO, Tuan
Nguyen, delves deep into the heart
of the bail out issue. In his Real Real
Estate Economics column, Tuan talks
about Converting Fear to Opportunity:
Thoughts on the Bailout.
The mission of
is to
create a deeper dialogue with you, the
investors, clients, tenants, vendors
and neighbors of RVM. And with that
in mind, we open up with Monica
Lee Copeland’s report on Patrick
Chraghchian and his raison d’être
‘building smart’ in Designing and
Building Smarter Environments on the
front page.
We’re proud to introduce you to RVM
investor, Keith Pomeroy: his work,
his charitable endeavors and what led
him to RVM in Michelle Johnson’s
Investor Close-up on page 6. Journalist
Gabriel Sherrill and our own Nicole
Breuklander shine the light on three
tenants. Sherrill converses with Trina
Faust about the growth of her Curves
franchise in Cottonwood, Arizona then
speaks with Robert Fallon, Founder of
Agoura Hills-based Classic Sleep Care
on page 2. Breuklander is bubbly over
Kristin Traylor and Matt Earhart who
will open up POP Champagne. Read
about their hip location on page 13.
We urge everyone to visit.
Some of you may recognize the name
Deborah Brown from her regular
contributions to Time Magazine or
from Grandparents as Parents a book
that she co-authored with Sylvie De
Toledo. We sent Deb on A Trip Down
Restaurant Row (see center spread).
Discover what her fork has to say
about our culinary ‘L’.
Finally, I want to thank everyone that
made it out to The Red Brick Tour
on May 24, which was followed by a
private investor dinner at Café Bizou.
If you attended, your photo might be
on page 23.
Enjoy your holiday season, and be
sure to VOTE on November 4. I’ll
have another note for you in February.
All my best,