CEO Today Global Awards 2024 - 85 - - USA - investors, lenders, and other stakeholders. Developing high quality commercial real estate property located in demographically desirable, highly traveled, and densely populated locales will continue to command elevated rents from quality tenants, generate the highest occupancy rates, and garner the highest valuations from lenders and investors. We do not expect this sentiment to change in the next 2 years. At Ponderosa, we plan to position all of our efforts to take advantage of the continued growth we expect to see in the market for retail assets. Considering the economic fluctuations and market uncertainties, what are the most significant challenges and financial headwinds that could potentially impact returns on Ponderosa’s projects, and how are you strategizing to mitigate these risks? Economic fluctuations and market uncertainties are realities of the commercial real estate development business. Currently, the most significant challenges we see affecting Ponderosa’s projects are commodity prices, labor costs and availability, and interest rates. Almost every facet of our business, from cost of funds, rental rates, construction costs, and cap rates, is sensitive to these challenges in some shape or form. Ponderosa takes great measures to manage these uncertainties by carrying out a meticulous approach in underwriting our projects to achieve specific financial metrics and milestones that best consider these uncertainties. Further, real estate investments oftentimes affords more options than with other types of asset classes. For example, if you own stocks, bonds, or a private offerings, your success is largely dependent on factors outside of your control. At most, your options are to hold or sell. With real estate, there are many more flexible options that can come into play if market conditions turn unfavorable. Real estate can be refinanced, subdivided, or even sold outright (hopefully after some appreciation). No other asset class offers the same flexibility as a hedge against market uncertainties as real estate, and this flexibility is one of reasons that real estate investments have created more wealth than any other asset class. Ponderosa has adopted a detailed approach to the development of retail properties to enhance property values. Could you describe this strategy and its effectiveness in boosting the financial outcomes of your developments? The bedrock of Ponderosa’s approach to developing retail properties is discipline. Since inception, Ponderosa has developed and established a unique and proprietary set of metrics that all of Ponderosa’s projects must achieve in order for such project to come to fruition. These metrics consider many factors such as timing, internal hurdle rates, and exit strategy, as well as specific financial milestones. Any material deviation from this set of established metrics normally results in Ponderosa not moving forward with a prospective project. Requiring a potential project to strictly satisfy our internal metrics sometimes results in Ponderosa passing on opportunities which ultimately become profitable for others. However, we believe that staying true to our developed set of metrics has served Ponderosa for the past 25 years and will continue to yield long term success. Looking ahead, what are the long-term goals for Ponderosa, and what steps are you taking today to achieve them? At Ponderosa, our outlook on real estate is bullish. Without exception, we believe the business of real estate is the greatest business in the world, and owning real estate will remain fundamental to financial success. Access, optionality, inherent demand, tangibility, and diversification all contribute to incredible opportunities afforded from owning real estate. In fact, real estate will continue to touch all other business industries and sectors through its incredible depth and breadth as an asset class. In the long-term, we do not expect any systemic changes to the overall attraction that real estate offers offer to owners and investors. Our long-term objectives at Ponderosa are to refine and continue to carry out the mission of our core values in identifying, acquiring, developing, and owning exceptional commercial real property situated in premier locations and occupied by best-in-class tenants. For Ponderosa, we regularly work to stay in front of the growth curve in cultivating our relationships with existing and new national credit tenants. Many of these tenants expand organically through their own business operations or through private equity infusions which fuel various growth initiatives such as expansion into new or existing markets. As such, we constantly develop new approaches to partner with new tenants who are in growth mode, as well as foster ways to better leverage our strategic partnerships with existing tenants to assist in their ongoing expansion efforts. Ultimately, the enhancement of our orchestrated methodology and collaboration with tenants and stakeholders in all phases of developing, managing, and owning retail real estate assets results in maximizing project valuation and driving desired results.
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