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Building for the long term: The Nagel family

B U I L D I N G A B E T T E R T O M O R R O W

The Nagel family

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BUILDING A BETTER TOM

Optimism and determination to solve problems enabled Jack and Gitta Nagel to thrive after coming to the US as Holocaust survivors. Today, the family is committed to helping others do the same, both within their business and across society.

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Building a better tomorrow

The building project had been a great success. It was the first that David Nagel had overseen as job superintendent since joining the construc-tion division of the family real estate development business. He could therefore feel justly proud of the sixty-three gleaming new single-family homes in San Dimas, California. There was just one problem, though: not one of them had attracted a buyer. It was the early 1980s and US mortgage rates were hovering in the high double-digits. The young David turned to his father and asked what they should do next.

“Solve it,” came Jack Nagel’s calm reply. “Someone out there is managing to sell homes right now. Let’s find out what those other builders are doing and we’ll figure it out from there.”

Jack spoke from long experience. He had rid-den out numerous downturns over the previous few decades. The first one – back in the late 1950s – had almost wiped him out. He and his then-new wife Gitta had sunk every penny they had into develop-ing seventy-eight homes in Anaheim, California. As that project neared completion, interest rates were on the rise. The following year, the US econ-

T omy would tip into a short but painful recession. However, he and Gitta came up with a solution that saved the day – see Gitta Nagel: Global Citizen.

“You could never get Jack down,” says Gitta Nagel of her late husband. “He’d survived so many disasters in his life and overcome every kind of adversity, including his parents, grandparents, and two brothers being murdered by Hitler. My father told Jack to cut his losses in real estate and to take a job instead. Jack was defiant, though. ‘I won’t take a job!’ he said. ‘I’ve lost my money in real estate and I’m going to make it back in real estate.’ And that’s exactly what he did.”

lasting solutionsThe young David reflected upon his father’s

sage advice. After doing some research, an idea came to him. “Rather than trying to sell the new homes, I suggested we rent them out instead. We’d then use half the rents received to help the tenants build up enough money to buy down the interest rates and offer affordable mortgages on the homes they were renting from us. With half the rent go-ing towards a future purchase, they were able to save larger down payments and get lower interest rates on their loans. It took us three years to sell all the homes, but it worked.”

The experience of that project led to far-reaching changes in how the Nagels operated. “The difficulties we went through really refocused our minds,” says David. “I said to my father that we ought to explore things other than just for-sale housing. I suggested we look at commercial real estate projects, like office buildings, shop-ping centers, and more apartment rental hous-ing. That’s ultimately how we ended up diversify-ing across those different real estate asset classes.

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Jack enjoyed early success building single-family properties under the Empress Homes brand

Jack and David Nagel at their Villa Francisca development project in West Hollywood in 1982

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“ We seek growth, but in a disciplined manner. Discipline and patience are great virtues in our business. They're critical to our success „

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Beyond Borders

Building a better tomorrow

And it gave our company many more opportuni-ties than if we’d stayed focused solely on homes and apartments.”

Decron Properties today is therefore a very different organization from the one Jack began in 1955 and indeed the one David joined in 1981. It builds, manages, and maintains multifamily residential developments, retail shopping centers, and office complexes. In total, its portfolio encom-passes more than nine million square feet of real

estate. On the residential side, it owns and runs more than forty communities with a total of eight thousand apartments, stretching from San Diego in California to Seattle in Washington State. That includes almost all of those that it developed as long ago as the 1970s.

“Something very important that we have learned down the years is that you cannot time

“Something very

important that we have learned down the years is that you cannot time

the market„

the market,” says David. “That’s why we don’t build single-family homes any more. During the good times, you can come up with a vision, buy the land, and build the homes. By the time you’re finished, though, the economic environment might have completely changed. So single-family housing is a very risky business, despite the long-term undersupply of homes. For us, multi-family residential and commercial pose fewer challenges. If the economy is difficult when the project com-pletes, you can lease spaces with short-term com-mitments, ride out the storm, and then seek new opportunities when the environment improves.”

long-term thinkingDecron’s approach to business reflects other

important pieces of wisdom that the Nagels have acquired over time. While the company’s valuation has risen more than twelve-fold to $2.5bn since David succeeded Jack as Chief Executive Officer in 1988, the way it has pursued that growth has always been disciplined and measured.

“We’re very mindful of not biting off more than we can chew,” says David. “We seek growth, but in a disciplined manner. Instead of chasing ex-tra yield by using more leverage, we keep leverage low. Investing during both good and bad times, we’ve been able to add more communities over time without pressure, not having to risk what we previously invested in our existing communities. Discipline and patience are great virtues in our business. They’re critical to our success.”

The Nagels’ urge to build and nurture for the long term extends far beyond their own devel-opments, however. Contributing to society as a whole is a driving force for the family. “We built a shopping center called The Plant in Panorama City, California,” recalls David. “It was in a chal-

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Building a better tomorrow

lenging neighborhood, which had a big crime problem. We had excess land left over from the original development. We offered to donate that land to the city on the condition the authorities would use it for a new police station and fire de-partment training facility, which we also volun-teered to build for them. We’re very proud to have helped contribute those facilities to the area.”

the gift of learningHowever, the Nagels’ building efforts are not

confined to physical structures. “Our family sup-ports education at every level,” says David. “My parents have been involved with elementary schools like Yavneh Hebrew Academy, high schools like YULA Boys and YULA Girls, colleges and uni-versities like Yeshiva University in New York, and Bar-Ilan University, near Tel Aviv in Israel. I my-self have been President of YULA Boys for more than a decade. In all of these cases, our focus is tui-tion affordability. Constructing the establishments is obviously important, but ultimately you need to make them affordable so that they are accessible to every family.”

Advancement through education is also a key value promoted within the Nagels’ business. “At Decron, we have many employees whose first lan-guage is Spanish. But while their current level of English may be adequate for their present job, it’s not always enough for them to take their career to the next level. So, we’ve created a program to give employees the time off they need to attend English classes. This will help them progress their careers and integrate more easily into society more generally.”

Helping new Americans to fulfill their ambi-tions in the US is perhaps the most fitting tribute of all to Jack and Gitta Nagel, both themselves first-generation immigrants – see Gitta Nagel:

Global Citizen. “My parents very much started with nothing,” says David. “They had to rebuild their entire lives in the US, having arrived here with no friends and limited family. So I think that just became part of who they were: start-ing with nothing and making it into something. Taking things from infancy to a finished product. They became part of the community in Los An-geles. They built homes for people. They founded schools. As a family, we take a lot of pride in that.”

“I feel that my parents ultimately felt that they received a gift by being alive,” continues David. “They’ve passed on their incredible optimism to their children and grandchildren. We all believe that if you put in the time and effort, there’s noth-ing that can stop you accomplishing what you want to in life. We encourage our employees to think the same way, never to dwell on setbacks, always to strive for solutions. Whatever the problems that arise, there’s always a way to figure things out.”

“Advancement through education is also a key value promoted within

the Nagels' business„

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Gitta Nagel visiting the YULA Boys High School

Jack and David Nagel at the dedication ceremony for land donated by Decron for a new fire department training facility

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Building a better tomorrow

“I am a Holocaust survivor. I was born in the Netherlands. My parents had moved there from Germany as they thought it would be a safe haven on the brink of another war. After all, Holland had stayed out of the First World War. Sadly, of course, they couldn’t have been more wrong. Hit-ler invaded the Netherlands on 10 May 1940. I was five years old and in kindergarten. I remem-ber looking up at the skies at all the parachutes opening up. I thought to myself that this was fun, like a fireworks display.

The reality of war, however, is incredibly ugly. You just want to live, you just want to survive.

The persecution of the Jewish people began immediately. We were forbidden from owning many things including radios, bicycles, and cars, and from going to restaurants. In July 1942, my parents were notified that they, my sister, and I faced deportation by cattle-car to Mauthausen, a murderous extermination camp not far from Vi-enna. Our parents simply told us we were going to another country. I was actually very excited: it was summertime and I had never left Hol-land. Thanks to my father’s courage, my moth-er’s beauty, and my grandmother’s ingenuity, we never boarded that cattle-car. The other nineteen hundred and ninety-six deportees were murdered upon arrival, on what would have been my sev-enth birthday.

We escaped death and miraculously survived the rest of the war. After Hitler’s defeat, we re-mained living in Amsterdam, where I graduated high school. The Korean War erupted in sum-mer 1950 and my father thought a Third World War was looming. Since we had only narrowly survived the previous war, he wasn’t taking any chances. He applied for visas for us to move to the United States. And that is how we came to this blessed country.

In the US, I was a pre-med student at UCLA and I was working towards becoming a pediatri-cian. My parents remarked to some friends that I was studying so hard that there was no time to date. The friends mentioned they had a cousin, Jack Nagel, a very eligible bachelor living in New York. He agreed to come on Christmas Day and so we met that evening. We had a blind first date in a very trendy nightclub on Wilshire Boulevard. I had never been in a nightclub before and we were chaperoned by my parents and Jack’s two cousins! On our third date later that week, which

GITTA NAGEL: GLOBAL CITIZEN

was in a nostalgic diner in Beverly Hills, Jack took out a book of matches and a pen and scrib-bled something inside. He passed it to me but I replied I didn’t smoke. He told me to look inside and read. “Will you marry me?” it said. I had a premonition that he might propose. And I cried tears of joy when he did.

Back in New York, Jack had been a very suc-cessful importer of Swiss watches. However, I per-suaded him to move to California. Jack’s cousins offered us a chance to purchase a remote piece of raw land in Anaheim they wanted to dispose of. We sank all of our money – including everything Jack had managed to save up in New York – into developing seventy-eight homes. But the project’s completion coincided with a nasty recession and we did not even sell one home. We then showed the pastor of a new local church around the de-velopment and asked if we could give out leaflets to his congregation, and he agreed. Many of them were Korean War veterans and the US govern-ment had a scheme to help them buy homes. The veterans themselves had to pay only one dollar each. What a wonderful country!

Jack learned the business more or less from scratch. He went to night school to learn to read construction blueprints. And then he hired a tu-tor to teach him the basics of construction, from laying the foundations to putting the roof on. Jack actually remembered a few things because his fa-ther had been a builder back in Poland and he had helped him as a teenager. After a few years in business, we began developing very up-scale homes in Northridge. When that area was struck by earthquakes in 1971 and 1994, not one chim-ney came down from those homes. Jack was not just a great salesman but a great builder!

Jack and I considered ourselves citizens of the world. We always tried to help others. Jack loved making money – just so that he could give it away. Our own lives taught us that education is the key to success. So we created scholarships at the YULA High School, which we founded and constructed ourselves. We helped fund the expansion of a university in Israel and the estab-lishment of its medical school.

I was always brought up to work and to strive. That means setting a goal and persevering with it. If you fall, you get straight back up and try again. That way, you end up meeting your goal. My motto is: “have patience, resilience and courage.”

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Beyond Borders

practical experience behind me.Education is a huge focus for our family. My

father was robbed of his education. At the time when he should have been in high school, he was facing death in Auschwitz. While he was fortu-nate to escape being murdered, he never could catch up on the lost years of schooling. He had always dreamed of becoming a lawyer. But he discovered when he came to America that he couldn’t become a lawyer without having at-tended an undergraduate college. And he didn’t have the time for that, as he had to make a living. That’s why he, my mother, and the whole family have supported education at every level.

My father took great pride in my being in business with him. That made a big impression on me. I realized that I’d be equally proud if any of my children, nieces, or nephews came into the business. I’m delighted that two of my nephews have indeed done that. They’ve been with De-cron almost ten years. The beautiful thing is that my father got to work with them for much of that time. They came in knowing little about real es-tate, but with an amazing work ethic, they have become real stars within the business. Daniel now serves as Chief Financial Officer and Zev as Chief Administrative Officer.

My sense of global citizenship goes back to our parents and to our upbringing. My parents came to the US as immigrants who didn’t even speak English. So it was a great achievement for them to come here and manage to integrate. Los Angeles is a melting pot, with people from all these different backgrounds coming together, working as one united team, towards one goal. That’s the essence of global citizenship for me: working as one, with people from totally differ-ent communities and working together. Our slo-gan here is 'One Decron.'”

“My parents both came from Europe to the US. Their experience as Holocaust survivors clearly influenced them, both in how they lived their own lives and in how they raised us as a family. They wanted to ensure not only that they led meaningful lives, but also that their children did the same.

I don’t know if it was always obvious that I would join the family business. While all of my siblings took an interest, I was probably the most interested. As a child, I’d always accompany my father on his Sunday visits to the sites he was de-veloping, if only to pick oranges from the trees growing behind them! My mother actually want-ed me to become a lawyer or a US senator. But my father dissuaded me from the law and politics. I instead got my masters in real estate finance from the USC Marshall School of Business and joined my father at work straight out of college.

My father was smart: he made sure he wasn’t my direct boss. Instead, he put me to work on the construction side. My original training was as an assistant job superintendent. I did that job for five years before going to work on the corporate side of the business. By the time I did so, I re-ally knew about how things need to be reworked when a challenge arises. And that really helped me in my career and in my relationship with my father. I was able to contribute meaningfully in meetings. He knew that when I spoke, I had

DAVID NAG EL:MY L IFE

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