Real Estate Executive Tom Nolan ’79 Seizes Opportunities from Adversity

“Anybody can be a genius in a bull market . . . but adversity might be your friend. People, in fact, might pay you to solve their problems,” emphasized Tom Nolan ’79 in his lecture in the Isenberg course, Real Estate Principles. Taught by HTM professor Robert Wilson, the seminar—the first offering in a new three-course series in real estate—is attracting students from a variety of Isenberg disciplines.

In his talk, Tom, who is Chairman and CEO of Spirit Realty Capital, a publically traded real estate investment trust that leases to single-tenant retailers, described a career of diverse challenges, employers, and emotions. After graduating from Isenberg, Nolan joined the accounting firm, Coopers & Lybrand, gravitating toward clients in financial services.

Following five years with the firm, he left to join Boston based AEW Capital Management, as its 50th employee. Hired as an accountant, Nolan exited 20 years later as head of AEW’s private equity group. “We were active in every sort of residential and commercial property,” he told the students. That included AEW’s 1989 purchase for $850 million of Chicago’s iconic Sears Tower. A year later, buffeted by a real estate recession, the building’s value plummeted by hundreds of millions of dollars. “Fighting with lenders to keep it, we managed to reach a ‘win-win’ restructuring arrangement in 1991,” he remarked. “Five years later, we sold the property for approximately $750 million. “Still a loss to be sure but a victory given the dire predictions of possible financial outcomes that existed in 1991.”

Financial Restructuring: Opportunities and Challenges

“I became known as someone who could restructure challenging financial situations,” Nolan continued. In 2004, he left AEW for the entrepreneurial role as Principal and CFO of Loreto Bay Company, developer of an 8000-acre upscale community in Baja, Mexico. “We got off to a fantastic start with 600 homes sold and built,” Nolan recalled. “But we struggled with the development of the infrastructure in a location that was beautiful but also in a very remote part of Mexico. And then everything crashed during the 2008 recession. We ran out of money and our lender foreclosed. You try to model for every possibility, but the world never works quite like a model,” he observed. “My effort there was a disappointment but I worked closely with the lender to assure a smooth transition and today Loreto is a thriving community.”

Less than a year later, Tom became President and COO with the Chicago-based real estate investment trust, General Growth Properties (GGP). The firm, whose holdings included malls and other shopping centers (over 200 of them, including the Natick Mall and Quincy Market), was financially stressed. “We lacked the capital to refinance our debt. They hired me to help fix the mess,” he explained.

In the spring of 2009, GGP entered bankruptcy, emerging 18 months later. To buy time with stakeholders and the public while in bankruptcy, the firm launched an aggressive national media campaign with Nolan as the key spokesman. “In the end, we fully paid back every creditor; jobs were saved; we even made every 401K match contribution to our employees,” he recalled. “And we secured equity commitments to move forward. Today GGP is one of the acknowledged leaders in the REIT industry. For me, the outcome was immensely satisfying. 2008 to 2010 were probably the most difficult economic times most of us have ever faced but for me they were the most satisfying two years of my professional life.”

A Successful IPO and its Aftermath

Tom’s current employer, Spirit Realty Capital, recruited him as its CEO in 2011 to lead the firm through an IPO. Fresh from his high-profile role at GGP, he embarked on a “road show” across the country that included visits to 75 financial institutions. His efforts helped raise $500 million. Today, the Company trades on the New York Stock Exchange (ticker SRC). It has a market capitalization of over $4 billion. Spirit’s 2,509 properties, noted Nolan, come with long-term, triple-net leases. They attract a variety of single-tenant retailers, including Applebee’s, ShopKo, and car dealerships. “For over 10 years the Company focused on properties with perhaps only modest appreciation potential but, importantly, that had stable and predictable cash flow. No doubt some might consider that investment strategy a little boring. “That’s OK,” noted Mr. Nolan, “there is nothing boring about being the CEO of a New York Stock Exchange Company. I have learned that you never know when you might face economic adversity or challenges. It is how you deal with them that can often define your career,” he said.

“I’m a proud graduate of this school,” Tom told the students. “My experience here helped me become more adaptable—and a problem solver in very different businesses.”