Before starting Next Realty, Andy Hochberg held various executive level positions with Sportmart, a company Andy’s father, Larry Hochberg, and Sanford Cantor started in 1970. In the 1990s, Andy served in many roles at Sportmart, including CEO & CFO. During his tenure, the business expanded, the company went public and they completed the sale of the family’s interest in the business.
Upon the sale of the family’s interest in Sportmart, friends and colleagues began to pepper Andy with the question, “What’s next?” The answer: Next Realty. Andy started Next Realty in 1998 to acquire and manage neighborhood shopping centers and to manage a portfolio of properties that were already owned by the Hochberg family. More than 20 years and nearly $600 million dollars in property acquisitions later, Andy continues to ask himself and his partners, “What’s next?” as they navigate a changing real estate landscape together.
In this issue of The Next Perspective, we interview Andy, Next’s founder and its original Nextpert.
What career event has had the single greatest impact on you as an entrepreneur and investor?
The sale of Sportmart was a pivotal experience in my career and, as such, had tremendous impact on my approach to future endeavors. The Sportmart sale was a long and arduous process. The agreement had a clause that the buyer could back out at almost any time before the sale was completed. This brought an elevated level of stress and uncertainty to the deal. There were other extenuating personal events going on at the time that made the situation exceptionally grueling, but we persevered. We closed the deal and helped in the orderly transition to new management. When the sale was complete, I then faced the monumental decision of what to do next.
What individual has had the single greatest influence on you as an entrepreneur and investor, and why?
My father, Larry Hochberg, has had the greatest influence on my life as an entrepreneur, an investor, active member of the community and proud supporter of worthy and charitable causes. Throughout the years, I have learned from his persistence, vision, and great instinct in business.
What is the greatest lesson you have learned as an investor and entrepreneur?
When you have been doing this as long as I have, there never is just one lesson to highlight. It is a collection of lessons learned along the way. Among the lessons that are most important:
- Know yourself, your strengths, your weaknesses, and your overall capabilities
- Work with good people
- Never use too much debt
- Situations always change; make sure you are mindful of the changes and adapt
- Success in this business is a blend of location, liquidity, luck!®
What lesson do you pass along to your kids and those you work with at Next Realty?
There are so many tidbits I have learned and I continue to learn each day. There are far more lessons than I can address in the scope of this article. I would like to think that I can pass along the lessons that have been the most beneficial to me … like those noted above, including the importance of persistence, and of supporting good works. As a business strategy, it’s important to read and learn about investment theory. Some very smart people have developed and written great theories on how to make good investments; you almost can’t read enough! From my reading and experience, I have learned that on the surface, no deal is a good deal or a bad deal. It all depends on the level of risk you are willing to take for the reward you are trying to achieve. It is a lesson that is practical in many aspects of life.
After 20 years you are changing it up, from a philosophical perspective. What prompted that?
Our approach to real estate is evolving as is the commercial real estate industry. Experience and current market conditions tell us that a lot of retail real estate cannot produce the reward (returns) based on the pricing that exists today. So, rather than focus on one specific property type and limit our opportunities, we are executing a multi-solution approach that focuses on multi-tenant opportunities and selectively investing in industrial and office properties. We are continuing to focus on investments in markets that exhibit dynamic economic drivers, high population density, and attractive asset pricing.
With all that is changing as a result of COVID-19 and the implications it is having on the economy, do you approach investing differently today than you did six months or two years ago?
Our approach to investing in commercial real estate continues to underscore the thoughts of Howard Marks, an American investor, who wrote in his book, The Most Important Thing, “Investment success doesn’t come from buying good things, but rather from buying things well.” In our practice, buying well means doing the necessary homework and being smart about how we invest and what we invest in so that we can deliver stability over extended periods of time and varying economic conditions. This is the way we have always approached investing, regardless of the timing in the real estate cycle. This approach has never been more important than it is today.
What part of the property life cycle is the most exciting and gives you the greatest satisfaction? Acquisition … problem solving/management … Disposition?
Acquisitions and dispositions – making deals – are the most compelling to me. I also enjoy contact with our investors and achieving good results for them. Because there are other very important stages in a property life cycle, it has always been important to have great partners, like Marc Blum, our President and COO, who thrives on the property operations, from leasing and management to redevelopment and repositioning and Eteri Zaslavsky, our Managing Director, who executes our acquisitions and capital markets strategies.