Real Estate New York

RENY: Has Madison W's strategy had to evolve at all in the current market?

Lewis: Madison W was really the culmination of the longstanding relationship between Bryan Gordon, the founder of Madison Capital Management, and me. We agreed that somewhere along the line, the markets would correct. Madison Capital's orientation has been distressed assets, and mine has been as an operator of real estate, and we realized that if we put some money together, there could be some good opportunities. It sounds kind of obvious today, but 18 months ago, nobody had any idea that this downturn would unfold as deeply and as rapidly as it has. The strategy from the inception has been to focus on distress; it's just happened in a quantity we never thought possible.

The basic premise of the firm, and implicit in the assets that we've recently acquired, is that it's not enough just to buy stuff that has issues or "distress." They have to be good assets, and they have to be able to withstand what I see as a very painful two to five years ahead of us. If someone gives you an opportunity to buy a shopping center where Circuit City and Linens 'N Things were the tenants, you'll be pretty guarded about what you're willing to pay. The game plan is to buy great assets at really good prices. It sounds like a very simple mantra, but except for this downturn and the effect it's going to have on owners, we would never be in a position to buy the assets that will be coming to market.