By Matthew Bechard

Taking the reigns of a well-established public company can be a daunting task, especially when you have spent the majority of your career in the private sector. But Glenn J. Rufrano dove in head first as chief executive officer of New Plan Excel Realty Trust in March 2000. New Plan, which was incorporated in 1962 and became a REIT in 1972, is one of the longest-standing companies in the industry and under Rufrano's watch has refocused on its retail franchise.
Recently, Rufrano spent some time talking with Portfolio about New Plan's longevity, the company's expanding investor base and his favorite island retreat.

Portfolio: What do you attribute New Plan Excel Realty Trust's longevity and success over time to?
Rufrano: Any company around this long has to have performed well. The basis for New Plan's success has always been its status as a very conservatively run company. It operated without debt until 1991. The company has been conservative, providing reasonable and adequate returns and as a result, New Plan has been able to withstand the cycles that ultimately hurt real estate companies if they're not conservative or over-leverage.

Portfolio: New Plan receives a lot of attention from individual investors. Is that a segment the company targets?
Rufrano: It has been traditionally. The company's shareholder foundation has been retail investors. New Plan's initial marketing and foray into the marketplace was concentrated in that area. When I got here, retail investors accounted for roughly 85 percent of the total shareholder base. That segment has been very loyal, and we continue to pay attention to this core group.
We have tried to augment that existing base by bringing in more institutional shareholders to create more demand for the stock. It is a simple equation-the more constituents you have for the stock, the higher the stock price may be. Retail investors and institutional investors are both targets of New Plan. As we speak today, the breakdown is roughly 30 percent institutional and 70 percent retail.

Portfolio: And what are some of the outreach efforts your company undertakes, whether it's reaching out to the growing institutional segment or the traditional retail base?
Rufrano: One of my goals when I first started was to make New Plan more of an "institutional" company. That is an often-used phrase. I will define institutional as a company that communicates well with its constituency.
Our first foray into making sure we're more institutional was communication and disclosure. Those points started out with our quarterly supplemental reporting. There's a good deal of data available for any institution or retail investor who would want to understand us so they can make an investment. Understanding the information, the transparency we talk about in our business, is really a number one priority. Otherwise people would not, can not or should not make decisions to invest.
The second step is governance. We have supported the general attitude of an independent board. We have also spent a good deal of time making sure our governance and procedures are fair and equitable.

Portfolio: Communication and outreach are two topics that seem to be coming up a lot lately. Are those areas that you think the real estate industry as a whole needs to improve?
Rufrano: Yes, without a doubt. The context that I bring that statement from is the private market. With my old firm, The O'Connor Group, our primary constituency was public and private pension funds and endowments. We spent an enormous amount of time educating our investors on risk and return relationships and how we would interact in the marketplace and make money.
I don't think in the public market there has been, until recently, as much activity bringing the institutions into the thought process on a market and/or strategic basis. The public market actually is making great strides in this, but has some room to advance relative to the private market.

Portfolio: Do you hit the road to spread the company's message?
Rufrano: Since I have been here, we have had about 300 meetings with major institutions educating them on New Plan, what was New Plan's process and procedure? What was our game plan? We recognized that until we started executing on the game plan we may not get investors to invest but they need to start out with us early on. We have been proactive in that outreach program for two years now and it is starting to pay off.

Portfolio: There was a lot of expectation for the retail sector to slump dramatically after September 11, but despite all the negative projections it seems like the sector in general has maintained itself pretty well. What do you attribute that to?
Rufrano: First of all, I would agree the sector is doing fairly well. We've had about 2 percent to 3 percent growth in sales over the last six months and that's astounding actually relative to what happened in September and some of the bankruptcies and overall economic difficulties that were occurring prior to September. September 11 was important, but we all know we were on a downswing before then.
Despite all that, the retail sector has been relatively robust, especially discount. What I'd attribute that to is consumer spending. It's clear to me that consumer spending has carried us through the last 12 months and the question going forward is how much it will continue to carry us.
It's been very clear also that the recession-resistant type of retail-discounting, grocery, mid-priced apparel-has had very good play over the last 12 months. The higher-end retailers clearly have been beat up a bit depending upon who they are and how much they expanded in the prior 24 months. But if the retailer had reasonable inventory and reasonable storing, they could have fared higher than anybody's expectations. I think we have to attribute the reasonable market to consumer spending buoyed by low interest rates and home equity loans.

Portfolio: Now taking a look at New Plan more specifically, how are occupancy rates currently?
Rufrano: Occupancy rates have been holding approximately stable for the last 12 months. We have had pretty good leasing activity. In fact, in 2001 our leasing activity in terms of square footage was 10 percent ahead of 2000. Naturally, we were very satisfied with these results. So from our standpoint, even though leasing has been ahead, you take two steps forward and you take a step back in terms of some of the occupancy changes that we've had at our centers primarily due to the unforeseen (tenant) bankruptcies over the last 12 months.

Portfolio: That was another issue I wanted to touch on. How seriously did Kmart's financial troubles impact your company and have you been able to find new tenants for the stores that were closed?
Rufrano: We had 44 Kmart stores in our portfolio at this time last year. We have already gotten two of those leases back. During this last round where Kmart closed roughly 283 stores, they announced they would close an additional five of ours around the end of June. We feel comfortable that we have good real estate and we will be able to lease these stores over time.
We can only work on the two (already closed) and we have a number of tenants looking at the spaces. On the other five, we are proactively talking to prospective tenants.

Portfolio: Could you elaborate on the CenterAmerica deal, and are there more acquisitions in the pipeline? And is that a growth strategy that the company likes to explore?
Rufrano: Well, let me start out with the rationale for CenterAmerica. When I got here, we created a business plan which was the refocus on our retail franchise and to strengthen the company in all respects relative to community shopping center retail. We did recognize that we had some cleaning out to do to strengthen ourselves so that we were going to shrink before we grew.
In fact, all property types that were not necessarily community retail were evaluated. The first form of non-retail assets that we sold were apartments. We had 53 apartment projects, 12,500 units-quite a big portfolio. We went to the market and sold those at $380 million.
We also had a variety of other properties that didn't fit our strategy and we sold a number of those properties. By December 2001, we had sold $544 million worth of total assets out of a company that had about $3 billion in assets, a very substantial portion. In doing so, we essentially took those funds and placed them back into the portfolio to upgrade what we had and pay down debt.
In order to fulfill our diversification goal, we knew we were going to acquire other assets, especially with the $544 million that we had disposed of. CenterAmerica came along as a portfolio in a region of the country (Texas and some parts of the Southeast and Southwest) where we did not have a large presence. Geographically it fit very well.

Portfolio: How about in the future?
Rufrano: Going forward, our balance sheet is positioned to acquire other assets, but we won't grow just for the sake of growing. We would grow because we want to continue to have a fully diversified portfolio. If we can buy assets that give us more geographic and tenant diversification, increase income and provide value at the same time, we will be moving forward to achieve our goal of providing a sound financial product. One that has a diversified portfolio in a relatively stable asset base with a conservative balance sheet. When you couple all those levels of safety and diversification and debt, we can provide a very reasonable rate of growth and a reasonable dividend. We would expect our shareholders to feel comfortable with an adequate return with a safe portfolio, well managed and diversified.

Portfolio: I understand that you are an avid scuba diver. Where is your favorite dive location?
Rufrano: Oh that's easy; it's an island in the Bahamas called Walker's Cay. It is a little 100-acre island in the northern chain of islands called the Abacos Islands. There is a small hotel and all you do is scuba dive and fish.

Portfolio: It sounds like quite the hidden paradise. How did you find it?
Rufrano: On Saturday mornings in New York there's actually a television show called "Walker's Cay Chronicles." My son saw the show, called up and had them send a brochure.

Portfolio: What is it about scuba diving that you enjoy the most?
Rufrano: Well, actually it started as a family activity when my son, who is now 23, was about 13 or 14. He was one of those typical kids who said, "gee, Dad, I want to bungee jump. I want to sky dive, and I want to scuba dive." And I said, "well look, out of the three there's only one that sounds reasonable to me." (Laughing) So I made him a deal, I would take scuba diving lessons with him if we could hold off on the other two for awhile.
That's how we started. So he's a scuba diver. I'm a scuba diver and my daughter, who is 25, is a diver. My wife is not, but she snorkels. So the three of us have been diving ever since. We scuba dive around the world, but mostly in the Caribbean. Actually, I live on Long Island and we scuba dive off there as well.

Portfolio: Diving off of Long Island sounds interesting, have you seen anything out of the ordinary scuba diving there?
Rufrano: Yeah, the real question is do you see anything at all. But seriously, I have to tell you it's a wonderful place to scuba dive. There are a lot of wrecks and they built reefs right off of Jones Beach. If you can get some decent visibility it's very interesting.

Portfolio: I was also told that running was one of your hobbies. Do you run competitively?
Rufrano: Basically, I run to stay in shape. But once a year there's a race on Long Island that I run the half marathon-which is about 13 miles or so. It's really just for fun with a bunch of friends and that's the way you claim you haven't aged. As long as each year you can run a half marathon you're not old.

Portfolio: Between scuba diving, running, raising a family and running a successful business, it sounds like you are always on the go. What do you like to do when you unwind?
Rufrano: I'm not sure I like to unwind or if I do a whole lot of that. The fun part of a Walker's Cay vacation, for instance, is you start out at 7 a.m. and scuba dive until noon or 12:30 p.m. Then you come back and get something to eat. Then at 1 p.m. you go out fishing until 4:30 p.m. After you finish that, you come back and jog three or four miles, go in the pool and then go to dinner. That's a perfect vacation.

Portfolio: And then the last question, seeing as it's the heart of baseball season, Yankees or Mets?
Rufrano: Definitely the Yankees, forever. They're both great teams but I am absolutely a Yankees fan.