Real Estate Weekly: Red tape renegade has politics on his mind: Stephen L. Green, Chairman, SL Green

He was a major contributor to his brother Mark's mayoral campaign four years ago. He sits on a real estate lobbying panel in Washington. He boasts a rare level of achievement in the private sector, a credential that has been used as a springboard into politics for so many businessmen before him. His brother may even make a bid for New York State Attorney General and his son, Gary, has expressed interest in politics as well.

But ask Stephen L. Green, the founder and chairman of the board of SL Green Realty Corp if he'll ever run for public office and he'll respond with an emphatic and definitive "no."

That's not to say that he has never had a fleeting daydream or two about ascending the political ranks.

"I have no desire to run for office, but I have to say that I've dreamed of being the president," Green joked. "There's something in me that would love to be the ultimate leader. I think that everyone at one time or another might have had that thought though."

Unlike Green however, not everyone has shown the level of panache, leadership and business skill that has been his calling card in almost every professional endeavor he has undertaken.

Starting in real estate in the late 1980s, after a successful career piloting other businesses, he grew what was at first a relatively small operation, buying and renovating class B buildings, into a multibillion dollar publicly traded real estate empire that holds one of the largest portfolios of commercial property in Manhattan.

His REIT, which has a reputation as one of the city's hottest buyers, hasn't shown signs of letting up, despite the trend of rising interest rates and the staggering level of competition for Manhattan assets.

In 2004, the firm purchased 485 Lexington and 750 Third Avenue, renovating the properties recently and renaming them Grand Central Square. Under Green's management, the firm just recently purchased its biggest asset yet, One Madison Avenue, which at $918 million is one of the most expensive buildings ever traded in Manhattan.

While these accomplishments are impressive, according to Green they are the mark of someone far too entrepreneurial to endure the bureaucratic travails of government life.

"Although politics has been something that I have been interested in participating in for a long time, I never was excited by the prospect of working for government," Green said. "As a younger man especially, I always felt that my talent should take me where I want to go and that I should be able to earn for my skills what the market will bear. So civil service was always somewhat counterintuitive to my ideas of professional development."

What drove Green from the beginning of his career was his passion for competition, a trait that he says continues to drive him to make his firm the biggest and most successful among the many players in Manhattan real estate. It's one of the reasons why, at the start of his career, he took up criminal defense law, defending clients charged with everything from gambling to murder. The stakes were high, but Green was excited to put his skills to the ultimate test.

"Someone's life is riding on your skills, it's a very serious situation," Green said. "But I embraced that pressure and the level of performance you need to display to be successful at it."

He loved the competition of law, but Green soon was drawn to the lucrative world of entrepreneurship where he quickly developed a knack for buying and selling businesses. His most prominent work in this area was the purchases of an overseas manufacturing company that he eventually sold to Gillette and his buyout of a ski charter business he made hugely successful but also eventually sold.

While he was successful in both ventures and profited greatly in their sale, Green was eager to focus his entrepreneurial skills into one area.

In his 40s, he began investing in real estate, a pursuit that he found meshed instantly with his natural disposition as a highly competitive but practical businessman. Initially he bought loft buildings and converted them for mixed use but quickly shied away from residential ownership because it was prone to bureaucratic interference.

"There's a natural animosity between commercial and residential tenants that's brought out often when they're in the same building," Green said. "I quickly found that I liked the commercial side a lot better because residential is a lot more political. Local politicians are more apt to get involved in a residential building because they obviously want to cater to the voters there, so there's more chance for legal wrangling."

Green began investing in and repositioning commercial class B buildings in the late 80s because their cap rates were superior to those for class A assets at the time. As the firm amassed more and more property, Green decided to eventually take it public in the mid 90s so as to access cheaper sources of capital.

"Debt wasn't as cheap then as it is today and I thought that the only way to grow was to raise competitive capital rather than rely on costly financing," he said.

Had the interest rates been as low then as they are today, Green admitted he may have delayed the firm's transition to becoming a public company. But he was adamant in stating that going public was one of the biggest factors responsible for making the firm so successful.

"We are much more competitive in our ability to recruit talent," Green said, "It's not enough to just throw cash at somebody. Being able to provide your personnel with stock options that are extremely liquid is something that makes them want to join on. It's a huge draw. We would never have been able to get guys like Marc Holliday or Andy Mathias if this firm wasn't a public company."

Another thing that Green has done to continue to attract and retain the highest level of talent has been to avoid the temptation of nepotism.

Although he has three children, Green encouraged them all to start their own businesses and forge their own identities rather than struggle to escape from his impossibly large shadow. His son, Gary, despite beginning his career working for Green in the late 80s, quickly branched off and founded his own building maintenance and security businesses under the banner, Alliance Building Services, a venture that has been hugely successful.

"My opinion is that if you're going to build a great company, you want the young people in that company to feel like they can grow to the very top of the firm," Green said. "You don't ever want them to think that the top spots are positions reserved for the boss's kids."

"Gary hasn't needed SL Green though to experience success. I'm a big believer in him. He's enormously talented and, like me, he's a natural entrepreneur, he deserves his own recognition."

A devoted moderate democrat Green says that while he may not run for any office or enter the employ of government, he will be increasingly active in politics.

"With Marc taking over as CEO, I have a little bit more time than I used to and I plan to be more involved in policy matters, especially pertaining to real estate, for both the city and the state," Green said.

"I hope to grow in that area and become a lot more active because I think that I have a lot of experience and knowledge to contribute."