OAK BROOK, IL—He was one of four friends to help start the Inland Group back in 1967 and, $38 billion in property transactions later, tells GlobeSt.com that he is “still standing.” But to Joe Cosenza, now vice chairman and head of acquisitions for the Oak Brook, IL-based company, what's more important when it comes to understanding his career is the number of individual deals that he has helped execute. The roughly 3,300 purchases are “probably significantly more than any other company,” many of which have grown over the years by swallowing whole firms and portfolios at once. “It's the individual deal that takes the most amount of stamina. It certainly hones your negotiating skills.”
Although the art of making a deal has not changed in any essential way over these decades, Cosenza says dealmakers need to be alert to when and how the business landscape shifts. When the great recession hit commercial real estate in 2009, for example, he decided that it was not the time to hunker down. In fact, Inland companies were among the most active retail buyers that year, regardless of the many vacancies created by the bankruptcies of Circuit City, Linens 'N Things and Mervyn's.
“All three completely shut down their business for good,” Cosenza says. But that spring, he advised the company that “we were big enough to withstand these blows.” Furthermore, it occurred to him that with new construction coming to a halt, other retailers would probably come knocking and want to occupy all those empty spaces. And, as he predicted, new retailers showed up, some of them, such as grocery stores, less susceptible to the jolts hitting the economy.
It certainly did not hurt that Inland was sitting on $1.8 billion in cash that year. “You could buy deals at cap rates that I had not seen since the '90s,” he says. “It was like a candy store.” And he made the most of the opportunity, snapping up shopping centers, offices, apartments and industrial buildings. Especially notable was the $427 million purchase of 30 US shopping centers from the Australia-based Macquarie Group.
But Cosenza still thought it was important to retain some caution in such a troubled economy. For example, Inland began underwriting deals so that vacancies within a prospective shopping center purchase were considered permanent, and the underwriting also took into account that some tenants that signed leases prior to 2009 may eventually find that the rent is too high. “If a deal worked with all of that in there, in the future, it should do better.”
Still, Cosenza notes that the 2013 holiday sales were up, not as many small shops are going out of business and Inland is backfilling spaces in many of their shopping centers. And this slowly gathering recovery has caused him to grow a little more comfortable underwriting a property. Although he continues to underwrite vacancies in the same manner, if a tenant seems healthy he won't include a possible rent reduction in the underwriting.
And through all of the economic ups and downs in the past few years Cosenza says he never really slowed down, and was ranked consistently as one of the fastest-growing acquirers of retail property in the US. “Over the last ten years I was always in the top five.”
That pace has continued, he adds, and in the last twelve months Inland has spent about $1.8 billion on new acquisitions, with retail comprising somewhat under $1 billion. “Slow is not part of our makeup.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
