In this unparalleled time, Bixby Land Company is adapting to the changing investment and business environment by upholding their legacy of Pioneering Exceptional Value. To learn more about Bixby’s strategy moving forward, CEO and President, Aaron Hill, provides his insight.
Q: The business environment has transformed at an unprecedented speed. How does this affect your business outlook for the next 6-12 months?
A: We began 2020 with strong consumer confidence, low unemployment, increased retail spending, growing e-commerce, low interest rates and an almost near-perfect U.S. economy. In just a few short months, we now find ourselves in a very uncertain environment and something very different from what we have experienced over the last 10 years. In the middle of this crisis, with very little clarity about when and how this will end, it is difficult to predict how the next 6-12 months will ultimately play out. However, we feel confident in the work that has been done to position Bixby Land Company for this type of uncertainty.
Q: What strategy did Bixby have in place to deal with the current market disruption?
A: We could not have anticipated the current COVID-19 pandemic and the impact of shutting down large sectors of the economy. However, we have a regular process of running multiple downside projections to stress test our portfolio and evaluate the impact of unknown future changes in the overall economy and commercial real estate, specifically. We use these stress tests to determine the appropriate investment risk to take both over the short-term and to develop long-term strategies for the company as well. Our goal is to not only position Bixby to weather a potential slowdown or shock to the economy, but also to capitalize on any opportunities that may develop in that environment.
Q: How have your constituencies benefited from Bixby’s strategic planning and forward thinking?
A: During the recent economic expansion since the last recession we have fortified our balance sheet, staggered debt maturities, reduced enterprise leverage, grown our assets under management, disposed of non-strategic assets, increased operating cash flow, improved operating margins, increased dividends, added strategic capital relationships, expanded geographically, diversified capital and enhanced the effectiveness and efficiency of the operating platform. This has placed Bixby Land Company in a better position to provide our shareholders, employees, and partners the benefit of stability over the short-term. Additionally, with the advantage of having conservative leverage and no near-term debt maturities we can withstand some revenue interruption giving us the opportunity to work with tenants to help them through this challenging time. We are also positioned to make strategic investments in opportunities that will add long-term value.
Q: How has Bixby adapted to support the internal team and tenants?
A: Since the beginning of this crisis our priorities have been the health and safety of our employees and their families, the continuity of our operations, increased communication with our tenants/vendors/partners/shareholders and risk mitigation in our portfolio of assets. As it relates to our internal team we developed a plan to get our entire team working remotely prior to the shelter in place order given throughout California. We then moved to addressing the emotional challenges and how we could support our team through this unprecedented time. This included things like regular video calls so everyone can see each other, which has a better and more supportive connection. We are now preparing for when we return to work in the office. This will include new policies and procedures that are dictated to us from a government standpoint but we also will be addressing areas that we can control so that our employees feel comfortable and productive while their health and safety are considered. We are serving our tenants in multiple ways such as providing regulatory and government updates, updating our cleaning and sanitization standards (or providing them guidance from the CDC if they perform janitorial on their own), providing rent payment flexibility in select cases, and providing them information on government support they may qualify for.
Q: What changes do you foresee in Bixby’s Industrial Acquisition strategy?
A: Our industrial acquisition strategy has been focused on institutional quality buildings in desirable locations that are not only functional for the demand of today’s tenancy but adaptable for those of tomorrow. Even though there might be some short-term challenges in the industrial sector, long-term we are still very bullish on this space and I foresee very little change to this acquisition strategy going forward.
Q: What changes do you foresee in Bixby’s Office Acquisition strategy?
A: I am anticipating more distress in the office sector than in the industrial sector. How we go back to work in the office is likely going to be different than before this pandemic resulting in the need to make changes within the tenant spaces, common areas and the site itself. Bixby has a successful history of repositioning nonfunctional office properties into assets that meet the demands of today’s occupiers and I believe there will be an increased number of office acquisition opportunities that fit one of our core areas of expertise.
Q: What other investment opportunities may surface during this time?
A: Economic environments like this will no doubt bring distress at the entity level for some industrial and office operators who were less prepared for the challenges we all currently facing. As a result, there may be an opportunity to purchase entities as opposed to just the real estate itself giving Bixby multiple ways of creating value for our shareholders.
Q: What is your advice to others when confronted with sudden change and challenges in the business environment?
A: First, stay focused on and continue to invest in your people. As a leader this is always valuable, but it is even more critical in uncertain and unusual times. Second, look for opportunities that are aligned with your core strengths and existing resources. Third, consume as much information as possible from as many different perspectives as possible. However, be careful not to casually filter or lean on your biases as you might under normal circumstances to evaluate this information. Filter at a very micro level to develop strategies and tactics that you believe in.
Q: Looking forward, what does the future look like?
A: In this time of uncertainty, I believe that Bixby Land Company is prepared more than ever to adapt to the changing circumstances and uphold our over 100-year legacy of pioneering exceptional value to our stakeholders.