From real estate exec to business journalist

by
Ben Thomas

Brad Thomas has more than 25 years of experience in the commercial real estate brokerage business.

But more than three years ago, he switched careers and moved into business journalism.

Thomas currently writes frequently about investing in real estate investment trusts for Forbes, The Street, Seeking Alpha, and The Motley Fool. In addition, Thomas also owns a research website called The Intelligent REIT Investor.

Thomas received a Bachelor of Science degree in business/economics from Presbyterian College and still lives in South Carolina.

Thomas spoke with Talking Biz News via email this week about his career switch. What follows is an edited transcript of that conversation.

How did your career in real estate help you become a journalist?

Real estate is in my blood. My family used to own hotels in Myrtle Beach, and as I was growing up it was always fascinating to see growth and more specifically, to see huge wealth creation in brick and mortar.  Also, my mother has been in real estate for more than 30 years and she has been a mentor to me.  So naturally, I entered college with a bias for real estate and I took as many courses that I could in finance, economics, and real estate.

When I graduated I went to work for a developer and soon we became business partners. I spent 15 years building a variety of projects that ranged from Wal-Mart anchored shopping centers, single-tenant drug stores, to free-standing auto parts stores.

That “organic” experience became extremely valuable for me as I was able to gain considerable knowledge in capital markets. That is, arranging debt and equity – building a capital model – that would in turn provide long-term value.

One of my biggest lessons of all came about during the Great Recession. During most of my early career, debt was available and my career path was trending along with the credit markets. However, 2008 and 2009 was a whole different subject. Most of the equity that I had worked years to create was wiped out. Many of the properties that I co-developed became over-leveraged as commercial property valuations dropped significantly.

So, in 2010 I had a decision to make. Try to stay in the same profession of building shopping centers or trying to guide investors down the road to wealth creation. In other words, I had to decide if I wanted to focus on real property or intellectual property.

When did you decide to start writing about real estate? What was the impetus?

One of the most difficult events in my life was unwinding a 15-year partnership. My best explanation is that it is like having 20 kittens in one room and trying to force them to line up together while a dog is standing in the same room. Of course, the dog is the economy and the kittens are the partnerships.

Unlike real estate investment trusts (REITs), partnerships are not liquid. That means that I could not get out of these deals easy. When you invest in a public security and you see the share prices fall, you can sell and move your principal into an alternative asset class (including cash). However, in a partnership the only way to sell is to find a buyer. That concept was hard pill for me to swallow.

Had I invested in a REIT structure, I could have sold shares and taken my equity in cash. But I didn’t. Instead I had one partner – which means no diversification – and I lost most of my equity as the Great Recession rolled on.

That’s when I decided I needed to become a voice for the average REIT investor.

How has your writing improved since then?

My first on-line article was published on Seeking Alpha on Dec. 14, 2010. Since that time I have written over 250 articles for Seeking Alpha as well as hundreds of other articles for  Forbes.com, The Street, and The Motley Fool.

Today I’m writing at least one article a day. I guess it’s like the saying “an apple a day keep the doctor away” but for me writing keeps my brain sharp. I have found that research is critical and I enjoy researching real estate and the more I know, the better I write.

Reading is a must. I read all of the time. Forbes, Barrons, The Wall Street Journal, Fortune, Time, Seeking Alpha, The Motley Fool, The Street, and others. In addition, I have also expanded my rolodex to include many industry experts including the big hitters like Donald Trump, Marty Cohen (Cohen and Steers), and Tom Lewis (CEO of Realty Income). I tell people that I’m the ultimate sponge for commercial real estate. I try to speak with a REIT CEO at least once a day and that gives me valuable “real time” intelligence that allows me to communicate effectively with my audience.

What did you do to learn about writing and about writing business journalism?

I majored in business, not journalism. I think I was a B- student in English so I never ever thought I would make writing a career. In fact, although I am a writer, I don’t consider myself a writer. I like to think I’m a REIT investor and I simply write to articulate REIT valuation and investment strategies.

Reading has helped me considerably. It keeps my brain fresh and it allows me to learn from the best experts in the world. One of my favorite books is The Intelligent Investor by Benjamin Graham. I will make sure that all five of my kids read the book before they’re 18 and as a teacher, I would strongly encourage all students to read it as well.

In fact, you could read the last chapter (chapter 20) which is called “Margin of Safety as the Central Concept to Investment”. The common thread for the book is on Graham’s principle of the “margin of safety”. In its simplest, that means you must “but low, and sell high.” But as Graham believed, all investments need some kind of buffer to protect against market fluctuations. That is one of the most — if not the most – important lessons to learn. I always make a point to define the margin-of-safety in my writing as it applies to any company that I write about.

As Warren Buffett said, “Rule #1 is Don’t Lose Money. Rule #2 is Don’t Forget Rule #1.” In short, I’m not a speculator (any more). I look for sound stocks are in Graham’s words:  “investment operations that, upon thorough analysis, promises safety of principal and satisfactory return. Operations not meeting these requirements are speculative.”

What outside of business journalism did you use for your research?

For research I use SNL Financial, NAREIT, Yahoo Finance, and Morningstar. Recently I started using FAST Graphs.  I have found that FAST Graphs provides me with some extremely important valuation charting data. I research all of my articles I usually construct my owns charts and graphs (using excel). FAST Graphs is a powerful tool and it tells me if a certain company is trading above or below (or in-line) with earnings trends. I will admit, FAST Graphs is my new addiction.

What mistakes did you make in the beginning?

My biggest mistake was not analyzing all of the risks of an investment. In other words, not focusing enough on what could happen if? As you know, there are some really good companies that have paid out dividends for a long period of time; however, the question I have trained myself to ask myself is “what is the sustainability of the business model?” Once I learned that, I have found that my readers really like reading my articles more. It’s like I tell my kids, “Don’t tell me the good news, just give the bad news.” I owe that to me readers too. They need to know the risks, as well as the returns.

For example, I really like Federal Realty (FRT), the oldest REIT in existence today. The shopping center REIT is over 50 years old and it has paid out and increased dividends for over 45 years. That’s an amazing feat! But, Federal Realty’s common shares are trading around $105 per share and the dividend yield is 2.8%. The company’s earnings multiple (or P/FFO ) is 23.2 – a very high multiple for the sector. So just because I love the track record, I cannot recommend the shares today because there is no “margin-of-safety.”

How did you start writing for Seeking Alpha?

I sent an article to Seeking Alpha and asked them if they would consider publishing it. Since that time, I have grown to become the No. 1 writer in both REITs and Finance. My articles average over 10,000 page views per article and a few weeks ago I had a record of 45,000 page views for one article. Seeking Alpha has grown in size, and I enjoy reading many of the articles written by some leading investment advisors and individual investors.

How did your writing end up in Forbes magazine?

Forbes asked me to write articles for the magazine. My first article appeared in the December 2012 edition. Forbes has an excellent reputation and the editorial staff is second to none. I have been amazed at the degree in which the company has evolved from its 100 year-old paper model to become a multi-channel brand with leading investment and leadership content. There is no doubt that Forbes has assembled some of the best experts in the industry and I’m glad to be a part of the success.

Do you think it is a conflict of interest to be writing about real estate while also involved in the real estate industry?

No. I live and breathe real estate so it’s important for me to stay actively engaged with the fast moving pace of commercial real estate. The most important thing is to disclose any relationships that could be a conflict and also disclose any stocks owned. The most important thing to me is to provide full transparency and I have found that my readers really appreciate being honest and it’s amazing to see the fruits that result from building trust.

Would you foresee becoming a full-time writer, with journalism as your sole source of income?

If you were to ask my wife, she would say that I am a full-time writer now. I work constantly and I usually get my best articles done during the weekend. Sometimes my kids help me pick out titles and I usually try to get my oldest daughter to proof read for me.  I like what I do and I think the next step for me is to increase my research platform. I am also writing a book and one day I would like to teach at the college level.  But I’m always learning and one thing I learned from Ben Graham is that “the most durable education is self education.”