Contact Us

Lesson Learned: Due Diligence Is A Safeguard Against Bad Deals

Houston Retail

When it comes to commercial real estate investment, the due diligence process is key. Overlook one red flag and the problems can be rampant — from an out-of-balance tenant mix, to hidden language within a lease or undiscovered issues with a property. 

The Richland Cos. CEO and President Edna Meyer-Nelson — who prefers to tweak older properties to make them more profitable rather than purchasing new assets — learned this lesson the hard way.

The Richland Cos. Director Angie Steadman and CEO Edna Meyer-Nelson together at the company headquarters in Houston.

It was her first property in Houston that taught the lesson.

In 1992, Meyer-Nelson purchased an 87K SF shopping strip located off Fry Road and Interstate 10 for $2.1M. However, she overlooked the fact that the seller had recently signed a game room as the new anchor tenant.

The entertainment-driven retail concept attracted not only family and children, but gangs, Meyer-Nelson said. The business trashed the value of the center and tenants began to move out. Many early mornings she spent sweeping up the parking lot.  

Meyer-Nelson said she was determined to turn it around. She approached Harris County to open a storefront police station inside the strip center. The county agreed and paid a nominal fee.

In return, the strip center became an indirect route to nearly all of the offices in the area. The delinquency subsided and eventually, the game room closed. The center turned around, became profitable and she eventually sold in 1996.

Another time, she wanted to secure a lease with Tuesday Morning — a big-box home décor retailer — for a shopping center in San Antonio, but she almost had to drop the deal because it conflicted with another tenant’s lease. A high-end menswear store had a clause that the center could not welcome another men's clothing retailer.

Richland was able to renegotiate the clause and put in Tuesday Morning because it only sold men’s shirts and coats. There were other contractual agreements like distance from strip clubs and adult sex stores. On the flip side, some landlords restrict marijuana-based concepts.

Who Runs The World?  

The Richland Cos. Chairwoman Suzanne Klein, The Richland Cos. President and CEO Edna Meyer-Nelson and Women’s Guild at Cedars-Sinai President Gina Furth

Meyer-Nelson said she embraces the opportunity to work with other women. Ninety percent of the employees at her Houston-based real estate investment firm are women.

The women-led leadership includes co-founder and chairwoman Suzanne Klein, who is also a partner at SKK Oil and Gas Investment, a subsidiary of the Republic of Indonesia, Chief Financial Officer Jennifer Theriot, who has been with the company for 21 years, and Director Angie Steadman, who is on her second stint. 

Meyer-Nelson is the muscle behind the machine. “She runs this company,” Steadman said.

Steadman said she appreciates working for a woman who is fair and equitable. One of Meyer-Nelson's greatest strengths is that she stands by her choices, Steadman said.

“We got to get on with it,” Meyer-Nelson said regarding her ability to move on after a final decision.

Meyer-Nelson noted the pace for women in commercial real estate has shifted. The elevated opportunities for women in the workplace and in society have ushered in a new generation of fearless women.

Fewer women feel guilty to pursue any career, Steadman said, reflecting on how her father thought she was having a midlife crisis when she announced plans to transition from banking to the real estate business. 

Women are finally getting a fair shot to join their preferred industry, step into leadership roles and in some cases start their own businesses, Meyer-Nelson said.

The empowerment of women continues to be a part of her mission. She is involved with the Commercial Real Estate Women network as a speaker, mentor and company sponsor.

She has also served on many boards, such as Houston Children's Charity, the University of Houston's C.T. Bauer College of Business and the Houston Police Foundation. 

To date, Meyer-Nelson has managed over 120 properties totaling 4M SF and valued at an excess of $425M throughout the southern United States.