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Interview with Emile Haddad

Not sure the American Dream still exists? Meet this native of war-torn Lebanon turned industry leader.

RALPH PALUMBO

People often wonder how Emile Haddad has seemed to always be one step ahead when it comes to real estate and development. As president, CEO and co-founder of FivePoint Communities, California’s largest real estate and management company, he has been behind some of the state’s biggest master-planned communities – the most notable in Orange County being the Great Park Neighborhoods, formerly known as the El Toro Marine Base in Irvine. This giant, master-planned community will celebrate its grand opening later this month.

And while in his 30-plus years of real estate development experience Haddad has navigated three recessions successfully, they pale in comparison to the challenges of coming of age in Beirut during its bloody civil war. Then being one step ahead often meant the difference between life and death. One step ahead finally meant fleeing that country in 1986; Haddad landed in Los Angeles at the age of 28 with his parents and fiancée – and little else.

Here, Haddad tells about his journey from studying by candlelight and getting interrupted by bombs to occupying the corner office and chairing UC Irvine’s Strategic Planning Committee, among others.

What was your life like before the Lebanese Civil War?
I grew up in Beirut and up until then I was your typical teenager. I had an afro and bellbottoms and played in a band and was into sports and girls.

Then the war started, when you were 17.
Yes, and a lot of things changed for us. I lived in Lebanon 11 years into the war, from the age of 17 to 28. So I finished high school and college and started working during that period.

It’s amazing that you were able to accomplish those things in the chaos. What kept you motivated?
When you live so long in civil war you adapt, and you learn that life goes on. You can’t just sit still and wait because the rest of the world is moving and it becomes very important for you not to fall behind. I believe humans are optimistic and we all believed the war would not be as long as it was. And we all believed that we’d all make it out alive. We had to think that way. Not everybody ended up being so lucky, though.

What was the biggest difference between your life before and during the war?
The only difference is you grow up very quickly when the war starts and you adapt to things that you would never think you’d be able to, such as no running water and no electricity. I still went to college and graduated from American University of Beirut. But about two-thirds of the time I would have to study by candlelight and we had no running water.

Not your typical college experience.
No, but we still did everything that other college students would do – we played sports, we partied. But we’d often get interrupted by a bomb or something and pause for a little while and then go and do it all over again. It’s like a storm, but on a much bigger level. You prepare for the storm, you hunker down, and then you go to the beach.

Now your life is building communities, housing people. Basically, providing shelter. Do you ever wonder if that’s more than a coincidence?
I often think about that and whether it was because I’ve seen a lot of destruction both of structures and community that maybe I wanted to see communities being built, and I want to see all the elements that make a community stronger. Because in a war it’s not only concrete that gets destroyed; it’s also a lot of human lives and relationships. So maybe it is subconscious. But I think there’s an element of truth in that.

You’ve spoken a lot about the concept of being one step ahead. Explain that.
When I was young, my mom would very often read me the poem If by Rudyard Kipling [“If you can keep your head, when all about you are losing theirs…”]. The point is that everything that my parents did when I was young was to prepare me for the potential that my life might get a curve ball and that I must be one step ahead. And that became part of me. Everything I do is based on that; it’s in my DNA. I apply it to everything in my life – business and personal relationships. And that’s the reason that when the war started I very quickly realized that survival often meant just being a fraction of a second ahead. Quick decisions meant life or death. I know a lot of people talk about being quick to react, but it’s much harder than people think.

Did you lose people in the war?
Yes, I lost friends, I lost relatives. When there are 11 years of war and almost 10% of the population gets killed you see everything. So I saw death all around me. I volunteered in a hospital and witnessed a lot of things that I probably shouldn’t have. I didn’t get any medical training but they needed help so I helped. During the war, I escaped death many, many times, and I’ve asked myself many times, “Why me?” It’s a question that you ask yourself a lot when you are where I am today. You get philosophical answering that question.

How did you get out?
When we came to this country my dad was my age today and it was a much more difficult decision for my parents than me at the time. I was 28 and I still had the ability to adjust to a new culture, much more than my parents who had to abandon everything, including some prestigious jobs and their social relations, and jump on a plane for the safety of the kids.

You had a job and a fiancée at the time, though.
Yes. In fact, my fiancée used to pick me up at my house in the morning and take me to my job sites. In case somebody kidnapped me she wanted to be with me so she could at least inform somebody before it was too late. So, when we left, she followed me two weeks later. She was 19, and just out of college, and today, we’ve been married for 27 years and have two great kids. She has gone through everything with me; she is my life partner.

How did you find work?
It was hard. We came here in March of ‘86 with nothing and were living in Newbury Park. We went to a garage sale and bought a typewriter for five bucks and I’d type resumes and sit there with the Yellow Pages and send them to every engineering firm I could find within a100-mile radius. And my younger brother had been here and knew some people, so I was doing some tenant improvements on the side. About six months later I got a job with an engineering firm. It only paid $10 an hour and was far away in Diamond Bar, but I was pleased to get it. So I left for work at about 5:30 in the morning, then I’d go to my few tenant improvement jobs in San Pedro after work, then drive home at night. And on weekends I took courses and studied to get my [U.S.] license in engineering.

You’ve come a long way, so what was your big break?
A client from the engineering firm was a home builder in Century City who asked me to get involved on the development side. So I started as a junior person at that development company, in 1987, and the rest is history. So anybody who has any doubts that the American Dream is still well and alive, I tell them all they have to do is look at me.
 
Since then you and your companies have survived a lot of ups and downs.
Yes. I got into the development business in the late ‘80s, which were the good years. In 1990, we ended up with the real estate recession. And between ‘90 and ‘96, the market was in bad shape in California. In 1995, our parent company [a Canadian firm] filed bankruptcy, so we had to file for bankruptcy. And the thought was that we would have to liquidate the company and give the assets to the Canadian banks and then figure out what we were going to do with our lives.

Instead, you reorganized the company, attracted investors and teamed up with Lennar to become the largest builder and developer in the state. Do you think your background and instincts for being one step ahead helped you through that?
I do. Because when the market shifted I was able to make decisions that might have been very painful, but they needed to be made and they needed to be made quickly. I couldn’t afford to assume things would not change.

That’s a perfect transition to your role in the re-use of El Toro Marine Base. Why did you initially get involved?
In 1996 we looked ahead and realized that the demand and the supply side of the equation is shifting. On the demand side we saw that GenY, retiring baby boomers and immigrants were going to become a much bigger factor in buying and being part of communities. Then we looked at the supply side; all the regulation and environmental constraints started making it much more difficult to get green fields developed. We wanted to get into more regional and urban areas. So we made the decision to get into Navy base conversions. By the time the fight for the airport was over, and El Toro was becoming considered, we had become the largest developer of Navy bases in the country.

But the Navy decided to split the parcels up into four parts and open them up to bids. How did you win?
We spent three years reviewing over 9,000 documents that were associated with the project. We spent a lot of money and energy understanding what the project was all about, and then put together a consortium of investors that were really best of their breed at the time. And we ended up winning all four parcels. That was our strategy, so we could create one master plan instead of having four separate projects.

With one master developer, the city of Irvine didn’t have to assume that role?
Right. And that, in 2006, led to a decision to eliminate about 1.1 million square feet of industrial use and convert that to residential. It meant more money to the city for the Great Park and it meant more of a job-housing balance within the project.

The past five years were tough. What happened?
In 2007, the market shifted, so we spent from 2007 to the end of 2010 dealing with the implications of that. And in 2008, what made it more interesting was that Lehman Brothers filed bankruptcy. Since they were our lender, it created a lot of challenges for us. So I spent between 2007 and the end of 2010 flying to New York almost every week trying to negotiate the restructure of the entire capital. At the end of 2010 we were successful and in 2011 we filed our first plans, broke ground in early 2012, and just sold our first 726 home sites to eight builders. Homes are under construction now and we’re going to have our grand opening of 10 products September 28.

Are we out of the great recession?
Yes, definitely. We’ve been seeing a real and sustainable recovery in housing for a while now. And I’m personally very bullish about the U.S. position globally. I think that it looked like we had a bigger mess on our hands than a lot of countries. But fortunately we are a much more transparent economy, so we tend to deal with our issues very quickly. I think that history will show that that’s what ended up saving us.

But many are becoming disillusioned by the American Dream. What do you say to them?
Sometimes I listen to people starting to question if we are off track and if the American Dream is dead, and I get this angst in me because it is not. It’s still the best place in the world. It still provides you with opportunities. We might just have to remind ourselves of that and have more faith. That’s the one thing you get when you come from the outside; you see things through a different lens than when you’ve always seen them from the inside. We are so blessed to be part of this country.


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