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Date: November 24, 1993

Location: Parsippany

Title: Real Estate/The Good, The Bad and SJP Properties

Author: Beth Ginsburg

Subject: Key alliances and savvy sales have made the company one of the leading developers

In the early summer, Crum & Forster, a troubled financial services company whose headquarters since 1984 have been in a 325,000-sq.-ft. office complex on Mt. Airy Road in Basking Ridge, announced that it is vacating its space. It should have been bad news for the landlord, Paul Ferber, a Basking Ridge developer. That, however, was not the case. Simultaneously with Crum & Forster”s announcement, AT&T Global Business Communications Systems said it would lease the entire complex for ten years. The deal, which involved a complicated partnership restructuring and a buyout of Crum & Forster”s lease, was one of the most complex transactions to occur this year.

The company that put together the deal was Parsippany”s SJP Properties, which over the past decade has grown into a leading developer of office space in Northern and Central New Jersey. The company, which was spun off two years ago from Lincoln Property, a Dallas developing empire, owns or manages more than 5 million sq. ft. of office space–including such projects as Morris Corporate Center in Parsippany and Crossroads Business Center in Bedminster–most of which are fully leased. The firm has the reputation of being in better financial shape than other debt-laden developers, because it was able to sell property at high prices at the peak of the real estate boom.

Pozycki now has two successful alliances: one with Ferber Associates to develop Ryland Place, a 300,000-sq.-ft. office complex in Whitehouse Station, and the other with Foster Wheeler, the Clinton engineering firm, to build Somerset Corporate Center, a six-building business park in Bridgewater. Though SJP Properties, like most developers, has built nothing during the past two years, industry insiders say the company should do well when real estate bounces back.

Despite its obvious success, SJP Properties is a company about which opinions sharply vary–from adulation to intense hatred. The latter feelings are often linked with the man behind SJP Properties, president Steven J. Pozycki. His partners almost adore him, but some former colleagues regret having done business with him, claiming they were burned. Still others see him as a smart executive who is sometimes too brash. Says partner Shields Ferber: “Steve is a wonderful person who is studied and careful. We couldn”t be more pleased.” In contrast, another executive alleges: “His word does not mean the world to him.”

The adjective used most commonly to describe Pozycki is “street smart,” with both its positive and negative implications. Most people say he has a sharp, aggressive business style, which has won him friends as well as enemies. One of SJP Properties” bitter rivals, according to real estate insiders, is Gale &Wentworth, the Florham Park developer and property management company.

As a result, SJP Properties has a mixed reputation in the market. While admirers praise Pozycki”s business acumen, critics contend he can rub people the wrong way. Says a broker: “Some people like doing business with him; others don”t. I don”t.”

Pozycki started out in real estate during the early 1970s, initially doing loan workouts and handling new loans for Metropolitan Life Insurance. After four years with the company, he joined Equitable Life Assurance, where he was responsible for commercial real estate projects and joint ventures. In 1982, Pozycki left the insurance business to enter the world of real estate development, which was then on the brink of a boom. He joined the New York City office of Lincoln Property, a national developer that had built more than 75 million sq. ft. of space. His main job: raise money for the company”s projects in the Northeast. Over the next five years, Pozycki reportedly raised $3 billion in construction and permanent loans, equity funds and sales proceeds. He also bought 135 acres to build Lincoln Property”s first office park in New Jersey.

The project was Morris Corporate Center in Parsippany. Located off Route 80, the office park initially consisted of Morris Corporate Center I and II, two buildings with 630,000 sq. ft., which were completed in 1986. The next phase, completed in mid-1990, was Morris Corporate Center III, which contained four buildings totaling 540,000 sq. ft. Also within the campus was the 88,000-sq.-ft. world headquarters of Electro Biology, a manufacturer of orthopedic devices, which was completed in 1987. The office park attracted such tenants as Armco, Mutual of America, American International Group and Transamerica. In addition, GPU, BASF Chemical Division, NCR and New York Life took over corporate-owned facilities within Morris Corporate Center. The most lucrative deal for Pozycki, however, was not signing leases with these high-profile tenants, but selling property. Real estate insiders say that as the property boom neared its peak, Pozycki was able to get top dollar for property at Morris Corporate Center. “SJP Properties is in half-decent shape financially because of those deals,” says a Northern New Jersey broker. The company”s other transactions included buying Metro Corporate Campus I, a 267,000-sq.-ft. office building in Metro Park, and also building there the 271,000-sq.-ft. corporate headquarters for Engelhard, the precious metals company.

With the onset of the recession, Pozycki and Lincoln Property parted company. In 1991, he bought the Dallas developer”s New Jersey operations. Pozycki says the separation took place because he wanted to focus on the region, while Lincoln Property had a national orientation. At around the same time, in partnership with Foster Wheeler, SJP Properties began to build Crossroads Business Center in Bedminster, which consists of two office buildings that have 135,000 sq. ft. of space. Over the past two years, the company has signed leases with such tenants as Blessings and McDonald”s. The project was fully leased in October, when the AT&T Information division took 28,983-sq.-ft. Somerset Corporate Center in Bridgewater is another project that SJP and Foster Wheeler are doing jointly.

SJP Properties” other major partnership is with Ferber Associates, which brought in Pozycki to work on the Crum & Forster-AT&T deal. The two are also partners at Ryland Place, located on Route 22 in Whitehouse Station. Situated adjacent to the Ryland Inn restaurant, the proposed 300,000-sq.-ft. site will consist of two office buildings and a conference center. The three-way partnership is between SJP Properties, The Ryland Inn and Ferber Associates.

What does the future hold for SJP Properties? Pozycki says the company does not want to start any development on spec, although Morris Corporate Center IV and Somerset Corporate Center are ready to go–with all approvals, permits and utilities up to date. Ferber contends SJP has some of the best sites in the state. Once the real estate market starts moving again, Pozycki hopes his company will be able to start construction.

And what about the tough-guy image? “We don”t care if the public overall knows about us, only if the corporations we serve know about us,” Pozycki says. u