It is going to be incredible what this does for the city of High Point.
We have sold to a company called Vornado, a very large real estate
investment trust listed on the New York Stock Exchange run by some
quality people. The head of Goldman, Sachs
Page 9Real
Estate, a guy named Mike Fassitelli now runs Vornado. Goldman Sachs is a
great investment banking firm. But he is going to use his expertise to
really make this REIT, one of the real leaders in that industry. They
have a strategy that I'm very impressed with. This weekend I was in
Madison Square Garden, and they own most of the real estate around
Madison Square Garden, the old Alexander's block next to Bloomingdales
that they are going to build a major complex on. They own the
Merchandise Mart in Chicago, which gets them into that niche of the
business, which got them into buying Market Square. So they are great
operators, but they understand the dynamics of real estate. They are not
just the typical apartment REIT or shopping center REIT. They understand
niches and the potential of niches and the maximizing of return. At
least I hope they do. I've invested in them in the future, and I hope it
pays off.
But as to how we got here, Market Square is an idea that came about
because of me going to the furniture market, regional furniture markets.
I came back from San Francisco market in the late '70s. The way I used
to come to work was right across from Market Square. I looked up and I'd
been passing this building my entire life. I said that it was identical
to the building I was in in San Francisco called the Icehouse, which was
a wonderful old plant that had been turned into a furniture showroom
complex for decorators in San Francisco. We had, we meaning, I had also
invested in a company called Behrends and Company, which is an
advertising agency. They used to do the state of North Carolina's work.
Used to be called Bennett Advertising and then Bennett, Harwell and
Henderson. They were a major tenant of mine in another building. I had
been asked to invest and became the Chairman of the Board and Dick
Behrends ran it. Anyway, the man who used to run the International Home
Furnishings Market in High
Page 10Point, which was
originally called the Southern Furniture Building, which is the main
complex in this town. A fellow by the name of Leo Herr, he had come to
work for Dick Behrends and said to me in a meeting that he thought High
Point needed more showroom space. I said, 'I've got a great idea.' I
pointed to this building out the window, and they both thought I was
crazy. Because everybody has a feeling that
[cough] this place was old and has windows and is two blocks
from downtown. It just doesn't fit. I said, 'Well fellows, I have just
been to San Francisco and this and that.' They had never seen the
building. I paid for their tickets to go to San Francisco. They came
back. They were suitably impressed.
That's when I called Mr. Tomlinson and came over to the building and sat
down with him in his office and said, 'Would you give me an option to
buy your building over a period of time or part of it or half of it or
what have you.' It's five hundred and fifty thousand square feet, but
there is a 200,000 square foot section and then there is a 350,000
square foot part. They debated it and he did. So we called it, Dick
Behrends named it Market Square. We tried to get some people interested
in doing it, the Furniture Manufacturing Association was still taking
place but we would sandblast brick and bring people down here and what
have you. Century Furniture Company were good friends of mine,
fraternity brothers of mine. I called Buck Shuford and I said, 'Buck,
would you consider coming to High Point.' We felt that the whole market
was going to start migrating to this town away from Hickory and Lenoir
and whatever it used to be called, the Figure Eight. The buyers would
come down here and travel over this region of the state because there
was not enough showroom space in High Point or accommodations. He said,
'No. I'm not going to leave my home. I don't want to come down there and
live
Page 11in a motel room', which shows you the
attitude. It's not what the customers want; it's what the suppliers
want. We had a lot of comments like that. My option expired. I was never
able to put it together. Then Tomlinson went on into bankruptcy.
The best thing that happened then was the people that bought Tomlinson
out of bankruptcy came back to me and said, 'You had this idea. Would
you do it again?' and at a much better price. I said, 'Well, for that
price, I'll do it again.' Let's talk about it. It was a very reasonable
price. Your talking about not spending very much money at all for a five
and a half thousand square feet, twelve acres. It's phenomenal. So we
put an investor group together, and the people who had bought Tomlinson,
two people got in, Chuck Haywood and Jake Froelich. Jake and Chuck, they
had been fraternity brothers, not fraternity brothers but roommates in
boarding school. Chuck was in the furniture business, and Jake was in
the veneer business. I said, 'I think y'all should be part of this thing
because as you exited the machinery and slowly move out and we put
together a group and slowly move in, let's all do it together.' So they
became part of it. A guy named Dave Zagarolli who is a furniture
designer in Hickory was the person we asked to be the general manager
who would develop the property who would actually design it. He had had
some restorations in Hickory. We thought he was pretty good. We got
other investors like George Lyles who is a dear friend of my father's
and a dear friend of ours. Then Sandy Rankin who is a dear friend. There
are some other names. One was the plant manager that we asked to be an
investor, and I've forgotten his name. But anyway, there were originally
eight investors.
We went back to Buck Shuford. Buck Shuford said that the time had
changed. It was a couple of years later and he felt that he had to go to
High Point because his
Page 12customers told him he had
to. So he would lease, he would be our biggest tenant with 45,000 feet.
But he wanted nine percent ownership for that because he was renting
nine percent of the building. We said, 'Okay. You've got it.' But our
first tenant was Kittenger. Kittenger had never been to High Point. We
called up Kittenger. He said, 'I don't want to come to High Point. We do
all this stuff all over the world, the White House and this and that, on
and on, the State Department. We don't need to come to High Point.' I
said, 'Would you please consider a great deal from us?' I sent a plane
for him and picked him up and brought him back down here. We gave him
the Tomlinson showroom that was already upfitted free. He said, 'I can't
turn it down.' He said, 'That's just too good.' The Kittenger name at
that time was the best name in furniture in America. So they were really
our bell cow. You aren't talking about giving them three thousand square
feet of showroom space where you can try to lease 550,000, but that was
the stamp of approval.
Within two years, this place was full. It was an incredible success
story. We found people like Natuzzi. Natuzzi now is across the street
just moved out. We came across him in Copenhagen, Denmark in a furniture
show. He is a baldheaded Italian with a great flair and is the largest
leather manufacturer in the world. He is vertical where he grows his own
cows, has his own tannery, makes his own foam, makes his own furniture,
puts it in boxcars and ships it all over the world on containers. He's
phenomenal. But he had never been to the American Market. He came here,
rented a little space, took off, and now he does close to a billion
dollars around the world. He's built a fabulous new building across the
street, cost him fifteen million dollars. It's his showroom that he uses
twice a year. So it's just lots of interesting folks like that.
Page 13
If I could just add on to that. The Market in High Point, the 1.1 million
square feet that we've evolved into, we added a tower. The tower was the
first mixed use building in the state of North Carolina. We were amazed
that it was. We felt Charlotte or somebody had already done something
like this, but they had not. The rules had to be rewritten to
accommodate us.