Family-owned and operated businesses are common in the commercial real estate industry. But unfortunately, so are struggles among family members when there are multiple generations involved in a company's ownership and management.
Halpern Enterprises, an Atlanta-based retail developer, decided to put a system in place to prevent family feuds, while ensuring continuity and well run operations in the future for its family-owned business.
Halpern Enterprises is owned by descendants of Bernard Halpern, who emigrated from Poland to the United States in the late 1930s. Bernard settled in Atlanta, where he initially operated a grocery store before transitioning into real estate development. The company has historically been a long-term holder of the properties it developed, and today owns retail centers in small towns and urban infill locations in Georgia, Florida, and South Carolina.
Bernard's five children all worked in the business at one point in time, but eventually son Jack Halpern’s Amsterdam Walk shopping center sits along Atlanta’s new Beltline, a walking trail that has become a main outdoor attraction to residents and visitors.Halpern and daughter Carolyn Halpern Oppenheimer assumed leadership roles and ownership of the company.
As the company grew over time, it also took steps to prepare for the future. In 2008, Bill Brown, a retail industry veteran, was brought in to be the company's president, running day-to-day operations. As members of the next generation came to work in the business — including Jack's son, Benjamin Halpern, and Carolyn's two sons, Matthew and Brad Oppenheimer — clearly defined policies were established to prepare them for their future role as the company's leaders.
"It is very much a family affair here," says Carolyn Oppenheimer. "Bill Brown leads the troops, while also serving as a mentor for the next generation of our family — the people who will hopefully run the business at some point in time."
To be eligible to work in the family business, the first requirement for Halpern's next generation is to graduate from college. They must then work elsewhere for at least two years, gaining valuable outside experience that they bring with them when and if they come to work at Halpern full-time. The four younger family members who have joined thus far — a group that also includes Jack's and Carolyn's nephew, Cary Halpern — each worked at different real estate companies prior to coming to Halpern Enterprises, bringing with them experience in property management, leasing, and development.
"We have focused on bringing them in, training them, and grooming them for future leadership," says Carolyn Oppenheimer. "And for Benjamin, Matthew, and Brad, we have also tried to teach them how to work together as owners as well as managers."
Halpern's properties are divided into four geographic regions, and each member of the third generation who has joined the company has started out as a property manager, rotating through each region. Halpern's retail assets — primarily grocery-anchored centers in strong middle markets — have a mix of local, regional, and national tenants.
"After four years, they each will have managed all of our properties," says Jack Halpern.
"Certainly, for those with leasing and development backgrounds, property management usually isn't their first choice," says Carolyn Oppenheimer. "But each one of them has grown and matured through that experience. When you are dealing with the properties on a hands-on basis, you not only learn the business and the properties, but who the tenants are and what their needs are day-to-day. It really gives the members of the next generation an understanding and appreciation of what we do."
Mentoring by more experienced staff — "listening and learning," as Jack Halpern calls it — is a big part of that experience.
"We've been fortunate to have built an organization of loyal and talented non-family individuals, most of whom have been with the company for many years and have helped grow the business," says Jack Halpern. "When the time came for the next generation to work here, there were many experienced mentors in place for them to listen and learn from, and to help them make the transition to leadership."
Benjamin Halpern was the first of the next generation to complete the four-year stint in property management, and has now moved into the company's leasing department, working with one of the company's senior leasing directors. Cary Halpern now serves as the company's director of acquisitions.
Amsterdam Walk carries a mix of local and regional tenants. The company also retains an outside consultant to help members of the next generation understand the issues that impact families who are in business together. Since a number of family members are owners but not actively working in the business, the consultant helps them learn not only about the business, but also about the responsibilities of ownership. Also, meetings with the consultant provide a forum in which opinions can be candidly shared and, where appropriate, suggestions can be passed along to management. "Often, that kind of feedback comes across better from a third party than from a family member," says Carolyn Oppenheimer. "And in the process of discussing business issues, the members of the next generation learn how to get along as peers, and not just as cousins and siblings."
One of the reasons Bill Brown was brought into the company was to serve as a bridge between the second and third generations, and to help guide the family in its decisions about future leadership.
"Bringing on executives with outside experience allows for different opinions and perspectives to be introduced," Brown says. "Sometimes decisions can get clouded within a family atmosphere. When you have a third party involved, it eases the transition and any fear of change that goes with it. Shifting leadership to the next generation doesn't just happen by flipping a switch; it's a long-term process. It's admirable to me that Carolyn and Jack have not just left this transition up to the members of the next generation, but are taking a proactive role in the process."
Another way the company encourages joint decision-making by members of the next generation is to involve everyone in philanthropic efforts. The Halpern-Oppenheimer Family Foundation has been a vehicle for helping a variety of charitable causes in the Atlanta community for more than 15 years.
While the next generation is being groomed, Jack and Carolyn say that they still enjoy coming to work and don't plan to go anywhere for a while. Jack has served as the company's chairman for the past few years, stepping back from day-to-day operations after Bill Brown joined the company in October 2008. Carolyn serves as the company's executive vice president, overseeing operations, maintenance, construction, and capital expenditures.
The company's third generation has joined the company at a time that Halpern Enterprises is acquiring new properties and expanding its geographical footprint. Halpern currently owns 30 centers, with a concentration around the Atlanta market. It has worked over the past few years to add value to its existing portfolio through creative leasing efforts, and in the process has increased its portfolio-wide occupancy rate to 93 percent. That success has required significant capital investment: the company continually makes improvements to its centers. It enjoys the benefit of having relatively low debt on its properties, having owned many of them since the 1960s, '70s, and '80s.From left: Jack Halpern; Bill Brown; Carolyn Oppenheimer
"Our financial strength gives us the flexibility to create value within our existing portfolio, and has also enabled us to respond quickly when new opportunities become available, whether through acquisitions or new developments," says Jack Halpern.
Halpern Enterprises has purchased a few centers over the past three years. The first was the 46,020-square-foot The Shoppes at The Royale in St. Petersburg, Fla. The acquisition of the two-year-old center expanded the company's geographic reach to Florida. The center was half empty when Halpern acquired it out of receivership for $7.5 million in late 2011, since the initial lease-up had not been completed when the former owner ran out of funds. Over the past few years, Halpern has succeeded in hitting its leasing goals for the center.
In Rock Hill, S.C., the company purchased the 50,000-square-foot Rock Hill Crossing in 2012, and East Athens Marketplace in Athens, Ga., in 2013. This 24,000-square-foot center, which is fully leased, is shadow-anchored by Walmart.
The company recently sold one of its properties, the 191,000-square-foot Doraville Plaza in suburban Atlanta, to take advantage of the current seller's market and make equity available for other projects. "We are definitely in a growth mode, continuing to look in the greater Atlanta area and throughout the Southeast for acquisitions and opportunities for new development," says Jack Halpern.
When the company does buy an existing center, it generally looks to add value through physical improvements, leasing efforts, or management expertise. At Carrollton Crossroads in Carrollton, Ga., Halpern recently worked with Kroger to implement a $15 million expansion of the center, including a 65,000-square-foot expansion of the Kroger store.
Halpern is also known for its ability to work successfully with a variety of smaller mom-and-pop tenants, many of whom are going into business for the first time. In the case of a number of its tenants in the Doraville area, English is a second language, so being successful as a landlord in this market has required some extra sensitivity to those tenants' needs. The company enjoys helping immigrant families start their own businesses, just as Bernard Halpern did when he came to the United States more than 75 years ago.
"The inability of small merchants to obtain financing to grow, or to go into business without some level of help, has been a problem that many shopping center owners have faced," says Jack Halpern. "Not too many years ago, home equity lines were a good source of capital for people who were interested in opening a retail business. Now, that has vaporized as an option for most people."
Halpern periodically reviews its existing portfolio and remodels or reinvests in its properties whenever an opportunity to create value presents itself. At its Covington Corners shopping center in Covington, Ga., for example, the company recently signed a lease with Ross Dress For Less, while agreeing to remodel the center to accommodate Ross's new façade.
"Ross is beige and blue, and the rest of the center is red and white," says Oppenheimer. "When we see something like that, we start thinking that it may be a good time for a renovation."
While day-to-day activity never slows down, Jack and Carolyn also want to stay focused on seeing that Halpern Enterprises thrives for generations to come. "One of our goals is to increase the chances that the business will endure," he says, "and we make investments and decisions that we think will increase those odds."
— Randall Shearin