By Susan Warner, Inquirer Staff Writer
The next time you feel old, perhaps it might be better to think of yourself as
"cycle-tested."
Mark Rubenstein, an engineer by training, had been in the real estate business nearly
20 years when the industry's cycle began to test him.
Prices for properties skyrocketed but Rubenstein wouldn't pay.
"The prices were crazy," said Rubenstein, 58 "As a result, from 1983 to 1989, I did
nothing. I traveled."
Now, Rubenstein's little known family real estate company, is riding the cycle up and has become the largest owner of first-class office space in Center City.
"Mark Rubenstein has been cycle-tested," said Murry Gunty, chief investment officer
of Lazard Freres & Co.'s real estate funds and Rubenstein's partner in a private real
estate investment trust. "He went through the 80s and stayed on the sidelines. We
like to work with people who have been in business 30 years and have come through it
all."
The Rubenstein Co. with Lazard Freres last month took a controlling interest in One and Two Logan Square, adding them to its Center City portfolio of 2000 Market Street, One Commerce Square and 10 Penn Center. It owns 3.5 million square feet of office space in Center City, and manages the Bell Atlantic Tower.
Rubenstein also owns suburban office parks in Radnor and Plymouth Meeting. And last
month, the company signed an agreement with the Church Farm School in Exton to buy
195 acres that could accommodate 1.75 million square feet of office space.
In all, the company owns 7 million square feet in the Atlanta, Pittsburgh, Washington and Philadelphia areas valued at $1 billion.
The Rubenstein Co. has kept a low profile while amassing the portfolio it shares with
institutional investors.
"Mark Rubenstein is not a flashy guy. He would never compare to Donald Trump," said
Gunty, who manages a total of $3 billion in real estate funds.
Rubenstein said he brings a scientist's objectivity to a business often infused with
emotion and ego.
"I was trained as an engineer. I am a technician," said Rubenstein, chairman and chief executive of the company, which has 110 employees, 40 of them at its Center City headquarters atop One Commerce Square.
Rubenstein grew up in Wilmington and earned a master's degree in engineering from Johns Hopkins University in Baltimore. In 1965, he joined Builders Development & Service Co., of Philadelphia, a major family-owned developer.
While there, he helped manage 1,500 apartments, developed more than 700 new ones, and
built several shopping centers, including the Concord Mall.
In 1969, with some partnership interests from Builders Development, including the
mall, he started his own company. He did some new development along with construction
and building management.
The company grew steadily, but new opportunities began to dry up around 1983, when
the commercial real estate market began to get hot.
Huge pension funds, Japanese investors, and flashy, fee-hungry developers were
bidding up the price of real estate to heights that made absolutely no sense to
Rubenstein.
He put in bids for projects, but never won.
"I wasn't even close," he said.
But Rubenstein never bid more than what he thought a property was really worth.
"Things have an inherent value," said Rubenstein. "If that value is exceeded, sooner
or later it's not going to work."
Meanwhile, his son, David, was flying around the country working as an acquisitions
specialist for JMB Realty in Chicago, perhaps the glitziest of the booming national
real estate development firms.
David Rubenstein worked there for two years right out of Duke University, then got a
business administration degree from the Wharton School of the University of
Pennsylvania. He joined his father's firm in 1991.
By then, the real estate market had cycled again, this time into a crash.
In 1991, The Rubenstein Co. got back in the development business, helping one of its
lenders, PNC Bank, refurbish a problem property in Atlanta.
Other workout jobs followed.
Then, in 1994, Rubenstein acquired 10 Penn Center, the Radnor Corporate Center, and
the Plymouth Meeting Executive Campus from Radnor Corp., Sun Co. Inc's troubled real
estate subsidiary. With backing from a group of pension funds managed by E. Scott
Utdang Real Estate Advisors, of Blue Bell, Rubenstein paid about $165 million for the
properties.
While Mark Rubenstein had been working in Center City for nearly 30 years, he had
never bought a building in Philadelphia before acquiring 10 Penn Center.
That would continue to change.
In 1996, along with the Blackstone Group, a New York investment firm, Rubenstein
bought the debt of Two Logan Square, and nine months later bought the debt of and
foreclosed on its neighbor, One Logan Square. Both buildings had been developed by an
affiliate of JMB.
In 1997, Rubenstein bought 2000 Market Street, and in December of that year formed
its partnership with Lazard Freres, which has committed $220 million to REIT. Last
month, the REIT bought out Blackstone's interests in Rubenstein properties.
Now the company is the largest Center City landlord, just ahead of HRPT Properties
Trust of Boston, according to the Philadelphia office of Insignia/ESG
Jackson-Cross.
David Rubenstein, 33, the company's president, said the firm probably would not
aggressively seek new Center City properties to remain diversified. But he did not
rule it out completely, if the right deal came along.
While hard-hit by business consolidations that included the loss of Conrail's
headquarters and CoreStates Financial Corp., Center City is attracting strong
interest from companies looking for regional operations, Mark Rubenstein said.
He said it will continue to grow steadily, as long as the national economy remains
healthy.
"I don't think people are rushing to get into Philadelphia," he said. "But at least
people are looking at it. Two years ago, they weren't even getting off the train."
