Zaya S. Younan

Chairman and CEO:
Younan Properties
Real Estate Holdings: $2 Billion

by David Wurth
photos by Cherie Steinberg & Hedley Jones / Cheriefoto.com

Two meticulously sculpted stone and marble lions surrounded my car as I pulled up to the gold encrusted gates of Zaya S. Younan’s 20-acre compound in Hidden Valley, Westlake Village. The iron gates slowly opened to reveal the road lined with similar sculptures and as my car passed between the last decadent set, I paused. I was briefly paralyzed by the surroundings that I found myself in that Friday morning in April, as they were nothing less than extraordinary. I soon found myself in front of the man responsible for this magnificent property and all that came with it.

At 44 years of age, Zaya Younan, owner and visionary of the multi-billion dollar commercial real estate firm Younan Properties, is still a young man. However, his soul and depth reach far beyond his years as the captivating wisdom he paid forward to me in our two-hour conversation would be impossible to translate in entirety. Those that know me will tell you I’m ‘a bit of a talker’. This was one instance where it was easy to recognize why I have only one mouth, and two ears.

Zaya was articulate and his perspectives were thorough, driven from both his calculated and arduous path to the top and cemented in with his expansive knowledge of history and warfare stretching back thousands of years. Zaya’s passion for learning is reflected throughout his 20-acre estate as it houses hundreds of strategically placed sculptures, artifacts, and historic artwork. His estate seems more like an elaborate museum than a residence, and this local conservation of history is also making history on its own.

Starting in the business of commercial real estate in 2001, Zaya Younan has taken less than seven years to emerge as one of the largest private landowners in the nation and has been acclaimed as the second largest landlord in the entire state of Texas. With his headquarters in Woodland Hills, and offices throughout the country, Zaya has amassed his wealth through the acquisitions and transactions of commercial property, specifically Class A office buildings, and has earned respect as a global economic maven. His firm currently holds more than $2 billion worth of property nationwide and has been involved in over $4.5 billion worth of transactions. He has lofty goals, as one would imagine, and is pushing to become the largest landowner in the country, which at the current growth rate of Younan Properties, he feels is attainable within the next five years.
On the exterior it might seem as if Zaya is driven by the ‘stuff’ in life, as he wore a beautiful custom-tailored Canali suit complemented by a striped Versace tie and matching handkerchief in his suit’s chest pocket. On his wrist was a diamond-encrusted Patek Philippe watch. There’s a Rolls Royce and Lamborghini parked in his garage, each worth a half million, an endless amount of artifacts, his Netjets membership, and his multiple homes throughout the country. There is no doubt that Zaya Younan is a man with ‘stuff’; hard work and dedication usually brings an accumulation of nice things. The difference is through Zaya Younan’s studies and experiences; he understands and appreciates the effort necessary to produce these fine things. “An entrepreneur notices the hard work and dedication and can appreciate the level of effort necessary to make a dream a reality.” Everything that surrounds Zaya Younan is there for a reason, and each piece has a history that he can recite from memory. From the artists that created his museum like collection to the dreamers that designed his cars and the companies that made them a reality Zaya Younan knows and understands the origins of greatness.

The origins of this man, as you would expect, are filled with meaningful stories and experiences. Zaya is the son of an Assyrian truck driver in Iran and his humbled beginnings couldn’t afford him his ticket to salvation in the United States and freedom from the fighting in his birth country. Recognizing this, he fixed bicycles and saved money for a year in order to buy his own ticket and start his inevitable trek to excellence. At thirteen, Zaya finally fled to the United States on his own to stay with a family member. This was an action that describes Zaya’s early recognition of the importance of being a doer and not only a thinker. Another early example of Zaya’s determination is that he graduated college at 20 years of age from one of the best universities in the U.S. for engineering. This determination is reflected in one of his philosophies: “some are destined to be successful but most are determined to be successful. I was determined to be successful.”

Aside from his devotion to perfectionism in business, Zaya’s wife of 17 years, Sherry and his five children, along with his philanthropy, are his deepest sources of motivation. With the Younan Foundation and countless personal acts of charitable gifting, Zaya passionately repeats throughout our conversation that he cannot stop working until he can spend the rest of his life helping others. His philanthropy is the true barometer for Zaya’s success and he has given generous amounts to a variety of non-profits. Locally, he is best known for his involvement with the Oaks Christian School in Westlake Village. In fact, through his recent donation of $500,000, which is only part of the total monies over the years assigned to the school; their basketball court now appropriately carries the name, The Younan Court. His eldest children currently attend Oaks Christian and his youngest (four years old) will in the future. He feels that he not only is investing in their education but investing in the futures of other children as well.

What makes a man of such accomplishment and learned enthusiasm tick? How does he organize his thoughts to make the decisions he makes? In the following interview, Zaya Younan shares his stories and insight, as we covered entrepreneurialism, efficiency, the economy, philanthropy and the importance of work ethic. This leader of industry and gentleman in life represents all that the CSQ stands for; we now take a segmented look into the mind of a self-made mogul.

GREATNESS AND MOTIVATION

I often ask myself the question, “What do we need to do to be remembered thousands of years from now?” Unfortunately, I’m not skilled enough as an artist to be able to create a masterpiece (like the one’s found in his collection). So what kind of masterpiece or legacy can be left in the social community and work environment that a thousand years from now, people will remember?
ZAYA - Thousands of years ago, Achilles (a great Greek warrior) used to travel a year or two years to participate in a war. And sometimes he used to participate in a war that had nothing to do with the Greeks. And when they asked him, “Why are you here fighting, this has nothing to do with the Greeks?” He said, “This is the greatest war in the world; there will be stories written about this and I want to be a part of those stories.”

ENTREPRENEURIALISM AND PLANNING

ZAYA - Everyone has dreams in life, but an entrepreneur starts realizing his dream the day he or she thinks of it. There always will be new ideas and some of which have been thought of before, but it is the ones thought of by people who don’t procrastinate that end up being great. Procrastination can occur at all stages of the entrepreneurship process and it is important that once you complete one challenge, project or deal, you immediately start focusing on the next. This will create an organization that is like a machine and you can achieve things that it takes some companies centuries to achieve. True success is having a plan for the next step and the next hundred steps.
It is vital to recognize that anything is attainable; you just have to be willing to sacrifice, work hard and continue to pursue your dream.

This company has experienced tremendous growth in a very short period of time. In this environment, we will earn $100 million, $200 million, or even $300 million on a transaction and a minute later we are talking about the next acquisition. We beat the odds by being persistent. We must act now because what we imagine to be good enough today could be obsolete tomorrow.

HIS BUSINESS AND THE IMPORTANCE OF EFFICIENCY

ZAYA - It is important that we don’t get caught up in the things that we can’t control and we work on things that we can. In the business of real estate, if you can lower your operating expenses through efficiency improvements, that is in your control. Outside of that there are only slight levels of controls in place to produce significant profit. It’s amazing how much profit can be realized if you buy an asset at the right price and only to run it slightly better than the previous owner. The biggest challenge is convincing the rest of the organization that we can find ways to do things better.
With a background in mechanical engineering, it is in Zaya’s DNA to look at things through the eyes of an analyst and he uses the same techniques when assessing the worth of his own company.

ZAYA - Right now, we are on a mission. In the next five years, with the growth rate we have had in the past, we could be the largest commercial real estate company in the entire country, which translates into the entire world. As far as going public one day, we don’t need it. We have plenty of capital and we have achieved success and wealth, so we don’t need to go public to be wealthy, successful or be recognized. As a private company we are far more flexible and nimble when making a decision. We are more easily able to change our business model to fit the demanding need of the marketplace. Going public has crossed my mind but is not in the design. I think most of the people who go public are looking for an exit strategy. I’m not looking for an exit strategy; I’m looking for more involvement in tremendous opportunities in our industry.

It is a great time in the history of our company and in our economy to make a difference and achieve something that is sustainable and powerful. We want to make sure that we are not distracted from that vision, from that mission, from that goal to be the
best in our industry.

THE ECONOMY AND THE RECOVERY

ZAYA - As an economist, the current economic environment is not as bad as people think it is, yet in today’s environment liquidity has become far more important. It was last August when we recognized that sub-prime lending was imploding because the underwriting quality was so poor. These sub-prime loans only made up about 13 percent of total lending but soon after that, the effect spilled over to other financial markets and into residential markets and the global economy. As a result, we not only have experienced a market correction but also a credit crunch that is stifling growth.

The direct impact is on the financial sector, which represents only about 18-20 percent of our total GDP, so not a significant part of our national GDP. But if you take a look at unemployment, it is about 5.0 percent today, which is only 20 basis points higher than what it was prior to the credit sub-prime meltdown the first week of August 2007, and over 300 basis points lower than during the market crash in 2001, which was the beginning of one of our longest recessions. Corporate earnings remain solid with the exception of the financial sector, and manufacturing output is still very strong. Our trade balance is improving and our unemployment level is pretty healthy. We are not in recession; we still have positive GDP, and we haven’t experienced negative growth, which is representative of a recession.

A few days before the interview with Zaya, Fed Chairman Ben Bernanke echoed that sentiment but he felt that a recession is still a possibility. He also mentioned that we could hit the bottom in the second half of this year. Zaya Responded, “We still have healthy fundamental growth and the global economy is still very strong: developing countries are at about 16 percent of global GDP (on average). Unemployment numbers are still healthy at the global level as well. The issues we do have include the possibility of inflation and lower consumer spending, but we should start to see the beginning of a recovery by the third quarter of this year.”

CAPITALIZING ON THE CURRENT ECONOMIC ENVIRONMENT

ZAYA - Because liquidity now rules as banks have tightened their lending standards, we must recognize that although this is today’s economy, we are not frozen in time. We are more active today in running our businesses then we were prior to the credit meltdown. The Younan Finance Group is in the process of buying mortgage debt and mortgage paper from major institutions as well as banks in Australia and London. We will put $200 million to work, which will be funded directly by us in the next 30 to 40 days. We plan on paying sixty cents per dollar, where we are getting an average interest rate of 15%. By the time it is all paid off, we should attain a 30%-45% IRR. We previously sold some of our assets to create a track record and to show people that we can add value to assets. We’ve bought buildings from companies like GE, Morgan Stanley and the largest player in our industry EOP (recently acquired by Blackstone). Although we would be much bigger than we are now if we hadn’t sold so many assets ($1.4 billion at the height of the market), this created liquidity for us that we can now use to capitalize on this market. For us, this is a great time in the market and we are making much more money than we thought we would make. It is vital to know how to navigate in this difficult time but it can be a very beneficial time as the biggest wealth in real estate always has been made on the downside, not the upside.

REAL ESTATE DEVELOPMENT

ZAYA - Development and construction is a very undetermined science. Anybody can be a developer and everybody in good times and can borrow money to develop something. And often, they overdevelop, creating a downturn in the cycle. That was the cause of the FDIC meltdown and one of the longest recessions in real estate from the late 80s to early 90s. It was a result of everyone building without understanding demand levels. One third of office buildings in the country were built from 1980 to 1988.

Right now developers and construction companies have limited access to capital to finance their projects, which actually is a very good thing. As a result, it is creating positive absorption for existing assets. If there are too many new homes and office buildings on the market no one will buy existing properties. So this is a good correction time in our real estate cycle. It is like an oven that is self-cleaning. Lack of development creates positive absorption for existing assets. And once this cycle is completed, more development can start.

LA UPTOWN

ZAYA - Unfortunately some of the issues of the mismanagement of businesses have hit our local economy as well. The LA Uptown area was electric not too long ago but unfortunately the tremendous layoffs at both Amgen and Countrywide have significantly impacted this area. I think it will recover and correct itself in the next 12 to 24 months. Uptown is fortunate, with its high density demographic of wealth and such a good quality of life, both reasons why we were drawn here. When we came here, we fell in love with the area. It’s secluded and proved to be a perfect place to find refuge from my hectic schedule. Being so close to the mountains and ocean makes this the perfect place to raise my family. The one thing that concerns me the most (he laughs), are the lack of restaurants in the area. I eat at Hampton's, Mastro’s, Tuscany and Suki 7 quite a bit but there are immense opportunities for those willing to open good restaurants in the area.

RELAXATION

ZAYA – The best form of relaxation for me is enjoying a cigar with my wife and reading. We find a corner on the property, sit under a tree, relax and smoke a cigar. Sometimes with my hectic schedule, it is the only time we can share and catch up. I come from a poor background and I am the first generation in my family where a Younan is making a difference in the economy and in the world. So, I have a long list of things to do, and I’m still trying to catch up with that. I keep that list in my heart…and when I am caught up with that list, I will find time for more things that I enjoy doing. But right now, there is no time for vacation.

FALLUJAH

ZAYA - There are reminders, that we as humans, we must naturally be satisfied with the things we are doing, with the things that can leave positive impressions on our society. We must be satisfied with all of it, not only in our community but also in the country and in the world as a whole. I think that’s the least we can do. The Younan Foundation has been giving support to the families of fallen U.S. soldiers for the last five years. I contribute to their children’s education, cars for the families that don’t have cars, or if they’re late paying their mortgage we try to help them out. Although I have many possessions, my most valuable piece is one of sentimental value. It is an American flag that flew over the battleground of urban Fallujah, Iraq and was signed by the Commanding General. When the flag arrived at my house it brought tears to me and my wife, and it’s been a long time since we have cried over anything. So I have it in my office and it serves as a very powerful reminder of how we can make a small impact in a free society that has given us so much.

FINAL THOUGHTS

We must realize the sacrifices we need to make today for us to reach our goal for tomorrow. In this country, I believe if you can dream of anything, you can make that dream come true if you put effort and determination first. I probably could not have had the success I’ve achieved, if I was in any other country but this one. It truly is a country that is blessed.