Moore of the Same

Until the early nineties, Houston’s Jerry J. Moore was the shopping center king of Texas. He’d like to be again, and he has a plan.

WHEN YOU WALK INTO A ROLLS-ROYCE dealership, you expect to see mink coats, handmade suits, and Gucci loafers. But, until recently, the first person you encountered when you entered British Royal Motor Cars in Houston was a short, scruffy man in a rumpled, untucked short-sleeved shirt and wrinkled, high-water pants drinking coffee with the dealership’s sales manager. One of the mechanics? No, it was the owner. “ Texas Monthly?” he asked one day earlier this year, standing up to greet a reporter. “Jerry J. Moore. I’m going to make you a hero.”

The getup—and the remark—is classic Moore, who for years has charmed and disarmed people with his dressed-down attire and homespun witticisms. His blue-collar demeanor has also allowed him to escape notice from gypsies, tramps, and thieves. (A neighbor once mistook him for a gardener and asked him to clean up the lawn. “I got twenty-five bucks,” Moore says.) But don’t be fooled: Until the early nineties, the spry seventy-year-old was the shopping center king of Texas, worth an estimated $800 million—and he’s mounting a comeback. He’s once again buying up and developing strip malls around Texas and scouting for more all across the Southwest.

Moore has always had a flair for turning real estate into gold. Born in Houston in 1927 to Polish-Jewish immigrants (his father, who died in August at age 94, was a plumber), he dropped out of San Jacinto High School after the tenth grade and hawked vacuum cleaners door-to-door. In 1958 he founded his company, Jerry J. Moore Investments, and bought his first piece of real estate—a three-room shotgun house in North Houston—with money he borrowed from Irvin Shlenker, the legendary founder and chairman of Houston National Bank (“Money will buy time,” Shlenker advised the young entrepreneur). Once Moore fixed it up and sold it, he bought three more just like it. He then did the same with apartment buildings and small shopping centers, which often contained only a laundromat and a convenience store. Initially he focused on Houston’s working-class neighborhoods because in his experience, he says, people there “pay their bills.”

By the mid-sixties he had hit on a money-making strategy: find cheap, run-down strip malls in high-traffic areas, spruce them up, and jack up the rent by 20 to 40 percent. He was still able to undercut the developers of newer shopping centers across the street by as much as 40 percent because he didn’t have construction costs or high interest payments on his debt. He also saved money by employing his own construction and maintenance crews rather than subcontracting those jobs out. It all worked so well that he eventually dropped his home and apartment businesses to focus exclusively on shopping centers. In the seventies, particularly when the oil boom hit, he was able to charge higher and higher rents as leases expired. And after the bust hit in 1982, Moore was able to pick up shopping centers from debt-strapped local developers and fleeing out-of-state speculators, often for 20 cents to 40 cents on the dollar. Other real estate moguls were losing their shirts back then, but Moore’s gross income was $20 million to $40 million a year.

By 1989 Moore was the biggest individual shopping-center developer in the U.S., with more than 160 properties encompassing 19 million square feet of space around Texas, 70 percent of which was in the Houston area. His gruff mug graced the pages of Fortune and Institutional Investor, and he lunched with the likes of banker Walter Mischer. Snubbing River Oaks, he bought an eighteenth-century French château that the previous owner had transplanted stone by stone to the Memorial area. He also owns about seven hundred antique cars, one of the largest collections in the world, including thirty rare Duesenbergs. In 1991 Texas Monthly ranked him third on its list of that year’s one hundred wealthiest Texans.

But in the early nineties something changed—seemingly, at least. The real estate developer’s credo has always been “A dollar borrowed is a dollar earned.” And despite his limited education—he earned his high school equivalency diploma in 1987—Moore clearly knew his way around a banker. But the question he seemed to be asking was, “If I buy it, how much can I borrow against it?” How much exactly is uncertain, given that his company was privately held and therefore wasn’t required to release its financial statements to the public. But, in 1994, Forbes magazine dropped him from its list of the wealthiest Americans, saying his debt load was “greater than previously estimated.” Moore denies that he was ever overextended or had any problem with credit; rather, he says, he started moving assets into the limited partnerships of his children for estate-planning purposes.

In the fall of 1993 he had hired New York investment house Kidder Peabody to take his company public as a real estate investment trust ( REIT), a then-voguish investment vehicle that bundled properties together and sold shares in the bundle to investors. The proceeds could have paid off his debtors and allowed him to buy more properties, but it was too late: The market, which had been gobbling up REITs, had started to lose its appetite for them.

In the spring of 1994 Moore explored going public again, this time in partnership with Morgan Stanley. But while the New York investment bankers didn’t think he’d get many takers, they were interested in buying his properties for themselves. They had already invested $1 billion in distressed real estate and had recently raised another $1 billion from institutional investors to buy more. To Morgan Stanley, Moore’s shopping centers looked awfully enticing. So after five and a half months of negotiations, a deal was struck: In January 1995 Morgan Stanley announced it would acquire a controlling interest in more than half of Moore’s shopping center empire for a reported $400 million, a portion of which was assumed debt. Again, how much debt was anyone’s guess; neither side would say. But a person familiar with the deal told the Wall Street Journal

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