Transcript
Atif Z. Qadir 00:03
Welcome to American Building. I'm your host Atif Qadir. Join me as we explore the skylines and strip malls, the crosswalks and rail crossings, the balconies, the buildings and the boroughs shaping the next generation of real estate. Let's build common ground.
Atif Z. Qadir 00:22
Today, our guest is real estate developer Michael Shvo, the founder, chairman and CEO of Shvo. Michael began his career as a real estate broker and then art collector with financial support from international investors, he evolved into a real estate developer. Since 2004 he has purchased and developed ultra luxury residential, hospitality and commercial properties around the country. He has particular interests in transforming iconic and historic buildings, and blending art and fashion as part of that process, all of which we will touch on today. He is also a frequent guest on network news, including Fox Business Bloomberg and CNBC. SHVO is a real estate development company based in New York City. It currently oversees $8 billion worth of real estate across the country, including the iconic am on New York, the red in Chicago, the Raleigh in Miami Beach, and the Transamerica Pyramid in San Francisco, which is the focus of today's interview. Thank you so much for being here with us, Michael.
Atif Z. Qadir 01:40
Michael, your start in the real estate industry reads like a Horatio Alger novel. Tell us about how you became a real estate broker and what you learned in that process.
Michael Shvo 01:49
I came to America from Israel in 1995 really, you know, $3,000 in my pocket after being in the Army and getting kicked out of high school, didn't really know what I wanted to do. I did a bunch of things, and then a woman by name of Roslyn Scott, was the leasing broker in the building that I lived in, told me, You should be a real estate broker. Now I knew nothing about real estate, and she arranged for an interview with a guy that was managing one of the Douglas Sullivan offices. He interviewed me. He did not want to hire me, but he did her a favor by giving me a job. Five years later, I was the number one residential broker in the United States. I worked 18 hour days. Used to show 40 apartments a day, and just I was the expert in kind of apartments that are less than $2,000 a month, because nobody wanted to handle those tenants. So anybody that wanted had people that they didn't want to handle, they'd send them to Michael show and that was kind of how I got my start in the residential brokerage business. At some point when I started selling as an outside broker, new development, I realized that new development is being marketed in a very poor manner. Was done with kind of plastic renderings on the wall, some plastic model that lights up was very primitive, in my opinion, particularly what at the time Time Warner was the leading development that's being sold with a billion dollars of sales, and they invested nothing in the experience.
Michael Shvo 03:09
So I decided to go start Shvo marketing was, which was eventually became the leading real estate marketing firm in the world. We did $15 billion worth of sales in the United States, in the Middle East and the islands and the DNA there was, I hired a bunch of people from the luxury brand industry. So people that worked for Bergdorf and for Chanel and for Gucci, and people for Brioni that understand how to market luxury, right? Luxury, it not had a market real estate. And my first project, 20 pine, was something that totally changed the market, because I went to George Armani, I asked him to design a building for me, and at the time, Armani said, I'm a fashion designer. What do I know about real estate? I ended up convincing him, after six months, to design a building for me. And that changed the landscape of real estate in the world, right? That started the branded buildings. That started that whole experience where real estate is not just four walls of kitchen a bathroom, it's an experience. And then, as you're familiar, endless brands came into real estate. I'm credited for marrying fashion real estate, and that was kind of my first contribution, really into that, into the market, and from there, at some point, I decided to retire. I thought, the world's coming 10, and, you know, I give, I give a speech at the for the board of Hilton. I'm in the end of 2007 and I said that the market's coming 10, and they're going to beast person. It's going to have a heart attack. I end up letting 75 out of 120 employees go in December of oh seven, Lehman brother collapses eight months later, and I go back to work after being retired for five years, 2012 as a real estate developer, and the rest is history.
Atif Z. Qadir 04:54
So you mentioned that start in terms of a high volume game showing apartments that were less than $2,000 in New York. What did you learn from that experience, and what were the any potential stakes that you made in that process?
Michael Shvo 05:09
So, you know, when you start as a real estate broker, you think that the most important thing is to show a customer everything that's out there, 10 apartments, 20, whatever there is. Let me show it to you, and I did the same, like everything else, everybody else, what it did is it gave me an unbelievable understanding of the market, but then I realized that it's a waste of time. I ended up changing my strategy, and I used to show people 123, apartment snacks. I spent a lot of time up front, listening to them, understanding what the customer wants, how they live. Sometimes I go to their home to understand their environment, and at the same time, right at the same time, I knew the product really well, because I was showing so many apartments, and the whole idea of marrying the customer the product is what I specialized in. So I used to spend time understanding the mindset of the customer and knowing the inventory, and sometimes showing the one apartment it would be the perfect apartment, because I actually listened to what the customer wanted, and I provided the right product. This is something that my entire career then helped me, you know, because I knew what people want, I knew how people react to different design elements, to different services, but I also knew that how important it is to listen and to understand. And today, we create for people. We don't just sell them. Today, we create the product. But it's the same idea, understand the customer, understand who they are, how they think. I always say, we don't start designing a building until we know who our customer is, where they eat, where they shop, their social security number and the color of their underwear. There we go.
Atif Z. Qadir 06:43
I'm guessing that's part of the onboarding process for any new customer. Is the brand, the color of their underwear, etc. I mean, it's about understanding your client thoroughly so so you have in particular heads of tenant experience for a number of your properties, which is unique amongst, say, the dozens of developers that I've interviewed on the show so far. So tell me about how they influence your strategy and the execution of your business plans.
Michael Shvo 07:13
So if you're looking at the at the commercial portfolio, right? So office building, I'm going to say something. And no, we should take this the wrong way. But I always, I always describe the relationship between a landlord and a tenant, like sometimes the relationship between a kind of a bad marriage. You meet a partner, you meet a woman, you know, you take her out for dinner, you diner, you it's a whole you do everything to win her heart, and then you win her heart, and you get married, and it's great. Then 10 years later, she says, Honey, I want a divorce. Like, why? Because for 10 years, we lived together, and you really didn't do anything, and you don't really care about me. And then you start again to try to do everything to win her back. That is basically how landlords treat tenants. If you're a tenant in the building, the landlord will do anything for you before you're the tenant. Once you're in the building, they forget about you, and when the lease comes to renew and you want to leave, they're going to come after you and do everything for you again. It makes absolutely no sense. We lived together for 10 years. Why?
Michael Shvo 08:15
For 10 years, you're not treating the tenant in a way that they wouldn't even think of leaving or getting divorced. That's the basic DNA of how I think and how my company operates. We are here to provide experiences from the get go, from the beginning, from the leasing experience to the move in, to how we built custom space for you. It's all about giving you a hassle free experience and making sure that within the tenancy, within that period, if you're a tenant for 10 years or 15 years or five years, you're so happy that you're not thinking of leaving, and that is focused on a very high level of hospitality, which doesn't really exist in office buildings. I know it's a big word, everybody talks about hospitality, but these are office developers or operators that are trying to implement the hospitality strategy within their portfolio. I'm a guy that comes from luxury residential and from hospitality, you know, between building the Ammon and the Mandarin and rosewood. Now that's implementing that with those same people into my commercial portfolio. So the experience, and that you said, that's why we have people that are really focused on the experience. It's about making sure that it's not a reactive position. It's full proactive. I don't need people reactive in taking orders. I need people to think about thinking what it is that one would want, what it is that one could do. It's a very much a Disney Experience, right? When you go to Disney World, they have this whole strategy of foreseeing the customer experience, what it is that they were gonna want, and that's their success. We run the business in the exact same way.
Atif Z. Qadir 09:46
And that's something that you do across your large commercial properties, right?
Michael Shvo 09:50
And residential, let's just segregate this, because if you think about the experiences, hospitality, residential, office, right, just from the. From a time perspective, hospitality service and experiences were always at the highest level, residential then tried to be like hospitality, right slowly, but kind of they inched commercial was like the bastard child left behind. So today, there's a lot of good developers that are creating great residential projects that are very much infused with hospitality, or they merge, or they have a hotel component. On the commercial side, there's nobody meaning they very much as developers that say that they do hospitality, but it's at the surface. It doesn't grow from an attitude of hospitality experience. It's hospitalized. It's trying to be implemented on a system which the commercial system is broken to start with, as I told you, because the whole mindset of commercial owners is not starting from how do we take care of the customer? For us, the customer comes first. We are a customer driven company, and everything we do, from a design to activation to experiences, is all about attracting the customer and keeping the customers.
Atif Z. Qadir 11:05
So one other important area that requires a lot of care and effort as a developer is attracting and retaining your capital. So that's a major challenge in getting started in real estate and doing really large transactions. So tell us about who your first investors were and what practices you've developed to help build and maintain those relationships over time.
Michael Shvo 11:25
Like most people, you start with kind of friends and family, half a million dollars from this guy, a million 1000 small checks, and my own money that I made through the years, which was the big portion of it, you evolved from that to what I call kind of quasi institutional capital, which means institutional capital, but not the 10 but not the top tier institutional capital. And eventually, today, we're, you know, we're partners with some of Germany's largest pension fund and asset managers, pension like DFA insurance companies. DFA is a, is a fund to fund as an example. Again, it's very much. Goes back to brokerages, right? It's a marrying the capital to the project. It's no different. At the end of the day, your job as a developer, your job as a T V has this great podcast, what is your job? Your job is to find somebody interesting, right? So you can marry it with your listeners, right? It's all about bringing this together. It's no different than what I do. We just do it in different fields. You bring people that you think are interesting. You create an experience for your customers, which are your listeners, and they want to be here and they want to listen. We're doing the same thing. We're just building buildings. So we're creating the experience. No difference from the capital. If capital is looking for Super prime buildings that they don't have to think about. Because when you say we're buying the trans America building, we're buying the crown building, we're buying the Coca Cola building, it's a known entity. That's one type of investor that's looking for that you have investors, and it's a risk reward profile. So so matching the desire of the customer, in this case, the investor for the product is the same, like matching the apartment to the tenant, the same as matching the speaker to the listener.
Atif Z. Qadir 13:07
So I think as a developer as well, I can definitely appreciate that. And I'm I've kind of built in my head the the green flags and red flags to look for in terms of investors. Are there certain things that you mentally look for in terms of the types of investors you want to retain as you go from project to project.
Michael Shvo 13:23
Yes. Two things. Number one, never do. Never take close friends as investors. You know close friends, just take close friends, because if something goes wrong, you lose the friend. But more more importantly, there's a mistake that we all make, every single person. I make it every day. And it's not only investors, it's decision making in general. Every day, we make 1000s of decisions, and sometimes you know that it's the wrong thing, but you're convincing yourself why it's the right thing. And okay, it's one thing. If I know it's not the right thing to eat ice cream, because, you know, I'm gonna blow up from it after, you know, two hours at the gym. If it's something else, the you know, becoming a partner with somebody that you know is not the right partner, but you're saying, You know what? It's a lot of money. It's an opportunity. I should do it. I know there's some issues, but you know, you're focused on the on the wrong things, the priorities. I think that you learn as you age, and I've made endless mistakes. I make mistakes every single day. I continue to make mistakes. I just hope that throughout the years I make less mistakes. But you understand that sometimes what you're trying to convince yourself is is right, is probably not correct, and you know in your stomach is not correct, and you're trying to convince yourself why it is so, and it's difficult to say no. It's difficult to say no to deals. It's difficult to say no to money. I mean, I think that somebody calls me up and says, Listen, I have a great deal for buying the super cheap per dollar per square foot. So I tell the guy, but it's on Third Avenue. I don't know Third Avenue. I mean, there's people that this is what they do. It's. Not my market. If I'm not a specialist, I know it's on paper, a good deal, but I don't have a competitive advantage. So I've managed, thank God, to really stay very focused and very strict on the assets that we buy. I've always focused on Super prime real estate. If you look at our entire portfolio, I never veered right or left, and I'll tell you that during covid, it was a blessing, because we did really well through covid, because, you know, super prime went up class a kind of went out the roof, because people now all of a sudden wanted the greatest buildings, and everybody else died. If I veered a little bit from our core values, I could have been bankrupt today. I'm being being just very straightforward about that, it would have been very dangerous. So thank God I did not veer away from kind of what we believe in. And even though constantly, people try to convince me to do one deal or another deal if it didn't match the brand and didn't match kind of what I believe we should do, we didn't do it.
Atif Z. Qadir 15:57
That makes sense. And I think over that time as well, particularly during the pandemic, luxury real estate in class, I was a beneficiary of American economic policy. It allowed for agglomeration of wealth towards the higher end of the economic stratum. So that's it, buying a matching a potential buyer or renter with a product that you're offering. One of those properties is going to be the focus of this next phase of our interview. That's the Transamerica Pyramid. So let's shift gears. This is a 48 story tower, and it was originally designed by architect William Pereira and built by the insurance and investment management company Transamerica between 1968 and 1971 as its headquarters in San Francisco's financial district. So what stands out to you about the building from its past and what attracted you to it?
Michael Shvo 16:47
Yeah, most one of the most beautiful buildings in the world, in my opinion, it's an architectural marvel. When you stand next to it, it looks like a little triangle. It's not overbearing. It's light in the sky. Brilliant building. It's a brilliant architecturally it's a brilliant engineering building, and it's a brilliant from a product perspective, because no two floors are the same, right? So think about you're not competing with yourself traditional office buildings. You got, here's a 20,000 swivel floor plate, and I'm doing it 40 floors. So I'm competing with myself every time or now I had to start chopping floors here. Every single floor is different. If you want 5000 you go to the upper tier. If you want 20,000 you go to the lower tier, et cetera. So there's inherent marketing value just by the sheer shape of the building. But the building has so much history. You know, this building always was kind of the beacon of hope for San Francisco. It was extremely controversial in 1969 when it was built and when it was proposed, it was opened in 1972 and there were protests on the street. And we just opened an exhibition in San Francisco of a kind of capsule that we found 50 years later.
Michael Shvo 17:52
And it has all these articles and letters and stories and videos of the time that this building was built, because it was there were protests, and we have various Dianne Feinstein standing protesting on the street against this building. She was much younger, but in the late 1960s I don't know any building in the world, you know, maybe the Eiffel tower that had that kind of initial reaction. But then when it was built, it became an icon. It became the most beloved building. But for me, the opportunity of the pyramid was really amazing, because it's a building that was, you know, it's the most famous building on the West Coast, one of the most famous buildings in the country. But nobody goes there. And I always say, I want this building to be as famous from the inside as it is from the outside. And that was the mission, you know, mission statement for us, when we bought the building, we bid on this building against 44 different bidders over six months of bidding, and thank God, we won the bid. We were awarded the building. We got a letter from Transamerica Corporation saying we decided to award schmo the building because we believe that schroed would be the best steward of our brand, and that is, you know, there was a huge compliment for me, because they believed in I think today they understand that. They believe that, because of our experience in developing luxury residential and hospitality, we would create an experience there, and we presented to them our plan that is bar none. Now why does a seller care about it? They care about it because their name stayed on the building. It's still a trans American pyramid. It's not the show pyramid. So with that, while they don't have a financial interest in it, they have a brand interest, because if somebody bought the building and messed it up, it would negatively affect their brand. They were blown away by what we did, obviously, and I can tell you that they couldn't have been happier with results after three years of remastering this asset.
Atif Z. Qadir 19:41
So the you touched on the original opposition to this building, and looking back at news articles and information from that time, it seemed that the opposition to the building was kind of all over the board. It was about the design of it, how the shape of it was so different than the classic Victorian paint. Ladies that were so common in San Francisco, the height. So originally it was planned to be 853, feet tall. And I believe it's shorter than that in its final form, the height of it was an issue in terms of blocking views from Nob Hill. And then even the base, you mentioned, the connection to the public around it, the X shaped steel bracing, which was necessary in order to brace the building to its foundation. Also is relatively unusual and unique. And then finally, it was the financing, the tenant mix. Everything was a reason for people to complain. But I think you brought up a great example with the Eiffel Tower as well.
Michael Shvo 20:34
The most amazing thing when you look at the construction hoarding from 1969 it's set on it San Francisco landmark since 1972 they put that in 1969 what guts you had to do that? Right? That just shows you who trans America Corporation was and is. And they had this unwavering conviction that what they're doing is correct. But the most controversial thing was eventually the shape. Yeah, sorry, the shape of the building was, people didn't understand, but today you understand the brilliance of the shape. The shape was two things. Number one, it brings the most amount of light to the street, right? Because it's not blocking. It's because of the of the tip on the top, the narrow shape on the top, it lets light sunlight come to the street. On the other hand, it's also the most stable shape for earthquakes, so for seismic movements. So those two things were obviously today looked at after the fact, how brilliant they were.
Atif Z. Qadir 21:38
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Michael Shvo 22:37
Yeah, so we take the building, and my thesis about this was really simple. People want to be in one of two things, a brand new glass building, or historically important building that operates like a brand new building. What you don't want is an old building that operates like an old building. And that was what trans America was. Trans America pyramid was when I purchased the building. So I hired, we had a competition. We hired Lord Norman Foster, who became a very close friend of mine, him and his wife, Elena, and together, we remastered this building with a program that's very unique, right? We own the entire city block. We own the redwood Park, three buildings around it, Transamerica Pyramid, Two TransAmerica and Three Transamerica. We had the opportunity to really to reshape the entire block, but it's beyond that we had the opportunity to shape, to reshape downtown San Francisco. A funny story. When I bought the building, people told me, you know, the building is on the wrong side of downtown. I said, guys, I don't know. I don't think I can move the building, but I can't move downtown either.
Michael Shvo 23:38
That's true conversation. I said, But you know, it's a trans America pyramid we're going to create. We're going to make this center of downtown. If you're talking about you don't understand, you're from New York, it's done the wrong side. I said, Okay, I got it. I can't move it. Sure enough today that Hoyer is now called the pyramid district, and that entire area became the heart of downtown San Francisco, the area is the most lively area with the most amount of shops. Obviously, you have Johnny Ives that has a big investment in the neighborhood. And together, we've created something that everybody thought was impossible, which is bring back life to downtown San Francisco. We did it by two things. One, at the ground plane. I opened the entire building to the public, which means the park, the restaurants, the lobbies, the cafes, it's all open to the public while we own it and it's private. I opened everything to the public so you can come. And we're encouraging people to come, not just because they work there, but to come and experience that. We have a cultural program that every six months we have new exhibition at the sculpture park. We have different architects. We had a Lalanne show. We have a max earns show that just opened. We had the Norman Foster vertical city exhibition. We have the Eames institute that has an exhibition out there.
Michael Shvo 24:55
So we have constant exhibition, concert, music, all to give people research. And to come to downtown, because it's unbelievable to be in the middle of the redwood Park and listen to music, or come there and stroll the park between different sculptures. It didn't exist in San Francisco, and it definitely didn't exist in downtown. That is on the ground plane above that. All right, we've elevated the building to the highest standards of office building. Norman Foster is kind of the god of office design, and the offices on top are beyond being the premier offices in San Francisco. The Trans America pyramid today is the third most expensive building in America to lease space in in a market that everybody said is finished in a building that everybody said is old and in the wrong side of town. But today we've rented spaces. They're almost at $300 a foot. The only place in America that got these rents is New York City. The only two buildings is one, Vanderbilt and 425, Park. So when you think about that whole idea, they've taken a historic building in San Francisco with all the negative, with all the headwinds, with all the challenges, and managed to create kind of something that's so unique that people will pay almost anything to be in shows you that if you understand the customer and you create the right thing, they're going to come there.
Michael Shvo 26:13
Now let me take you back 20 years. We started this when I told you that our competitive advantage and my competitive advantage is simple. I understand the customer, not because I'm some genius. I got kicked out of high school, but I took so many people by the hand to see real estate that I got that experience on how people think. So, you know, when young kids come for advice and reach out and, you know, and I meet everybody. I have kind of an open door policy. Once a month, I meet everybody that wants to come and talk and get advice, and I always say they asked me, How can I start? I said, I can't tell you how you can start. But my experience was being a real estate broker gave me such a great insight to what people want. You could be a commercial broker. You could be a residential broker, but you got to be in the customer side. If you want to create products for a customer. You can't think that you're gonna sit in an office and think I don't want people want or listen to some third party broker. You gotta know yourself if you're gonna go put money, and when I go to raise money, you know that is exactly my competitive advantage.
Atif Z. Qadir 27:14
When you were initially bidding on this property and you were underwriting it, there were certain problems and opportunities that you wanted to capitalize on. So you laid out some of the opportunities in terms of its location, in terms of its iconic shape. What were some of the challenges that you made sure to take a close look at during that due diligence process?
Michael Shvo 27:36
Those things that take something that popped up that we didn't look at. So, you know, we sign a contract to buy the building, and part of it is that you have to go do kind of a search for any open permits. You buy a building, 10 open permits, 12 open permits. I get a call from my lawyer, so we have a problem. So what's the problem? He said, There's 600 open permits in the building. There's permits that were never closed since 1972 now we're in covid. The building department is closed for nine months. We couldn't close on the property because there were all these permits, and covid happened, and the lender walks on us, and disaster happens, and we persevered. So I think that anything that I could have thought that could go wrong. It went wrong a lot worse, not because of anything, because covid hit, and covid just messed everything around. And I had to make a decision, do I still believe in San Francisco? Do I still believe that people will come back to work and do I still believe in this property, even with covid, which was the big unknown, you said in your opening here, that frequent visit on Bloomberg and CNBC and fuck, I was like the one holding the flag saying, no, no, you guys don't understand. People will come to work. Work From Home is not a sustainable strategy, and San Francisco's gonna come back. It's one of the greatest cities in the world. And we'll tell you how I knew that. It's not that I just, you know, was a this was not with some epiphany or just a gavel.
Michael Shvo 29:04
So I started by telling I'm a religious Jew. And, you know, I studied the Bible every day, and part of it is that that is for me, like the manual, when I don't know what the answer is, I go back to the Bible, and I give an interview in the middle of covid to the real deal. And the publisher there asked me, So what's going to happen with covid? I said, Hold on. I go take the Bible. And said, Listen, we all think it's the end of the world under covid. We were spraying boxes. We're sitting at home. We thought the world's coming to an end. And I said, you know, God said to Noah, when there was a flood, I will never again destroy the world. This is in first two weeks of covid. I said, if that is the case, and we know it's not the end of the world, we know we should be buying real estate. I ended up buying $4 billion of real estate after that interview because I knew that the world's not coming to an end, but most people thought the world's coming to an end, no different than people not working alone. Right? To go back to the Bible, the first chapter of the Bible, you know, God said to me. Man, I'm creating a woman for you, because it's not good for a person to be alone.
Michael Shvo 30:05
So the whole concept of us sitting in our pajamas in our kitchen and zooming is just not in the DNA of human being. We were not created like that, if you understand that. But again, you have to have tremendous amount of belief. And again, this is, I think, part of what got me here today is my religion and the belief that I had because I knew that that there's a set of rules in DNA of how human beings were created that will never break. So all these challenges are bumps in the road. And if you stick to the core values into how people think and goes back to how people create and think, then we will win. And of course, today, you know that, in hindsight, that was the right decision. Furthermore, I was borrowing money at the time at sub 3% for 10 years in CMBS loans. Think about that. Today, I have loans that are 2.83% on our portfolio, when today, if I had to deal in the sevens again, why? Because I knew that it's a moment in time you had to take the opportunity against all odds, was because the market was market was not good. So the conviction and the belief is how we got here, and without that, I could tell you I wouldn't be here.
Atif Z. Qadir 31:20
You mentioned that there were issues during the financing process. You're confident about the property. You're confident about the property, specifically, despite the legal and the permit issues and people believing that San Francisco's dead. So actually getting the project across the finish line at the closing was a challenge as well. So you and your investors bought the property for six, $50 million in 2019, and you mentioned one of the the lender had backed out. Could you talk about the process of putting the deal together and the challenges you faced in getting across the finish?
Michael Shvo 31:51
Sure. So if I recall, I believe AIG was our lender when we thought was supposed to be our lender, and when covid hit, they backed away, reneged on the deal. They I can't blame them, by the way. I probably, as a lender, I do the same. They're not lenders, not compensated to take risk. Lenders are the exact opposite side of the spectrum. So of course you would think that they would do that. And it was interesting, because I had the idea of going to trans America Corporation, Aegon. And Aegon, which bought trans America is actually a lender, so we made a deal with them to be our lender. They had multiple interests. One, they were selling the building. Two, they wanted me to own and develop that building, because they wanted that to elevate the Transamerica brand, which it did, because of what we did in the building. So it worked out really well. They're great people, one of our my favorite lenders, and were super aligned. So obviously it took time, but we managed to get that there, and they've been a happy lender, and we've been a happy borrower. I can tell you, it was not without losing lots of sleep in the process, before we managed to put the pieces back together again. These were very, very scary times, and not many people were willing to take risks.
Atif Z. Qadir 33:01
So the two interesting facts on the lending on the property, the original lender for the development of the trans America pyramid was Bank of America, which, I mean, obviously a well known name, but the Forerunner bank to bank of America was Bank of Italy, and the founder of that was a first generation immigrant to the United States. So it resonates with the story that you shared earlier. And then in particular, Transamerica, the company is now located in Baltimore, and its logo is still the Transamerica tower in San Francisco.
Michael Shvo 33:31
Yeah, which is exactly the reason why they cared about who owns the building. It was not about who paid the highest price. Actually, our bid was maybe not the highest price. It was all within a $5 million range. The last four bidders out of the 44 that say that survived all the different rounds, but it was about who's going to take care of their brand in the most appropriate way. And I can tell you that I've been very fortunate to have some great success in my career. This was the most humbling experience within my real estate career. Because, you know, when you get a letter from a big corporation like that, then I bid against, you know, Vornado and Blackstone and RX. Sorry, everybody that you think was bidding on, on this, on this deal, it was the trans America pyramid. And you know, they end up writing in a letter that they decided to award us the building because they think we will be the best steward of their brand going forward. It's something that can't tell you, that the Goosebumps that I got getting that letter, and it's like say it's a humbling experience, because you understand that all the hard work, all the sweat, all the tears, everything that goes into the creating a perfect product and really making sure that you take care of the experiences is recognized. And not recognized just by tenant or a buyer, but recognized at a point where a brand like trans America says, Here Michael schwe, we will hand you our brand, in essence, as you said, the logo. Still the building, because we believe you will do the best. You'll be the best guy to handle this and take care of our brand. It's an unbelievable compliment and a very, very humbling experience, and because I never forget that, now I'm going to tell you something else, which is even will tie the trans America story even at a crazier level. We didn't discuss it.
Michael Shvo 35:22
But in I grew up in Israel in 1978 and 1979 we lived in the States. My parents used to be organic chemistry professors, first in Israel and then in Stanford and in Yale. They came for a sabbatical. And, you know, we had no we didn't really have much money, but my parents, every weekend used to take us on road trips to go see buildings, to go see towns, to go see America. We came from Israel. It's 1978 Israel was like a third world country at the time. It's not kind of the empire of technology that it is today. And okay, so we lived in Palo Alto for a year and a year in New Haven a year ago was the 50th year anniversary for the Transamerica pyramid. It was also my 50th birthday. We're two weeks apart. I called my sister in Israel. I said, do me a favor. My mother, after my father, passed away, scanned every single photo, every document we had. She spent 10 years of her life documenting everything. I always thought it was a total waste of time. But my mother passed away, I asked my sister to send me anything that you can find of us in San Francisco by the pyramid, and sure enough, she finds four photos of us by the foot of the Transamerica Pyramid. My father sitting there. My sister and I as kids, I was in at the time, standing by the foot of the pyramid. I said to my sister, I said, Are you sure that's it? My mother was obsessively taking pictures. I don't remember any of this, by the way. Said, I'm sure that's it. I said, Send me the hard drive. Because she put everything on a hard drive. She FedEx it to me.
Michael Shvo 36:50
So one night, I'm looking and opening and my mother labeled everything I look at every photo. So I'm not in 1978 1979 okay? 1980 at the end of 80, we go back to Israel. I said, Let me continue. Maybe, because I remember we came back to America for some trips and see if there's a week maybe became the center. I just wanted some more stuff to show kind of the crowds that I was in this building just after it was opened. It's five, six years. So I find the file. It says, Michael's promise. Everything was labeled years, name trip. Michael's promise. I opened because I opened everything because I was so obsessed that it was wrongly categorized. And it's not a photo, it's a PDF. I double click on the PDF, I see a scan of a drawing that I made in 1981 of myself next to the trans America pyramid. Okay? And it said in Hebrew, I want to be a teacher. This is a school, basically, for me, what it was is it symbolized, it's just after we came back from Israel, the trans America pyramid for me as a kid, and you can see that symbolized the American dream. 40 years later, I ended up buying the building. I fell off my chair. It was an unbelievable experience that to find a drawing that I did when I was eight of myself next to trans America pyramid, because it symbolized, for me, the American dream. That's what I took home from me, from America, of myself next to the pyramid, and that, for me, symbolized America, and then four years later, you end up buying the building.
Michael Shvo 38:18
Now that's also not a coincidence, and I have many other stories. We don't have all the time to tell you every story, but I can go on forever on how the trans America pyramid was eventually something that started in 1979 for me, that whole purchase. Now, it didn't start three years ago. It just took 40 years to get there. Now it's not something that I remembered, but it's something that clearly was somewhere, somewhere in my head, and what we've done since we started a program called the pyramid dreams, and we bring every year kids from public schools in San Francisco. Last year, we had 1400 kids that we bring once or twice a week. We have groups come to the building. We bring them into the building. We tour them the building. They understand kind of the history of the building, what it's about, what a developer does. And on video there, I tell them the story of my dream like that, a kid from Israel came here, and that was his dream, the trans American pyramid. And 40 years later, I ended up buying the building. And I said, if a kid from Israel could do that, have a dream when he's eight, and four years later by the building. And any, any of you could fulfill your dreams. And we make them draw themselves next to the trans America pyramid with what they want to be when they grow up, we end up having an exhibition. Exhibition is open year round of all those drawings. Then, then there's a competition, the 50 top drawings that are selected by a committee that is between myself, Sam Altman, Jony, Ives, Norman Foster and the mayor of San Francisco. The top 50 kids get to go to the top of trans America pyramid. We publish these amazing books with all these drawings and. And really the idea is that this building always symbolizes the hope and the strength of San Francisco. It's a city of dreamers. It was my dream, and I want to give that to the next generation that again, if you can dream it, you can make it happen.
Atif Z. Qadir 40:17
I'm Atif Qadir, and thanks for joining me on American Building. If you enjoyed this episode, be sure to subscribe on your favorite listing app and leave a rating and review. America's housing crisis is one of our greatest challenges. But what are the real solutions? Hear from the developers and other industry experts driving meaningful change. Get our exclusive guide housing in America, eight ways we can solve our way out of a crisis at American building podcast.com.