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Real (Estate) World Experience

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McCombs alumnus John Goff gives $6 million to make real estate program No. 1

By Avrel Seale

In the late spring of 2015, five MBA students and the dean of the McCombs School of Business entered the Fort Worth office of John Goff with an idea. The moments before reaching his door must have felt like something between TV’s Shark Tank and Dorothy approaching the Great and Powerful Oz. Goff is founder and chairman of Crescent Real Estate LLC, at one time the largest commercial real estate company in Houston, Austin, and Dallas with billions of dollars worth of properties from Los Angeles to Miami. Though his credentials can be intimidating, the man is anything but. Warm and down-to-earth, he talks about his own days on the Forty Acres as if he just graduated.

Goff, BBA ’77, grew up south of Houston in Lake Jackson, where his father worked at a Dow Chemical plant. He followed his older brother to The University of Texas at Austin to study electrical engineering. One of the perks of that program was the chance to intern every summer back home at Dow. One day during his third summer back, he got to interact with the business staff there about a chemical plant being built in Brazil. “I realized in that one meeting that I had more in common with the businesspeople than with the engineers,” Goff says. “I really enjoyed learning about the financing behind the project.” When he returned to Austin, he switched majors.

With a hard-won business degree under his belt, he eventually became an accountant at KPMG in Fort Worth, whose primary client was the city’s most famous billionaire family, the Basses. There, Goff interfaced with a fellow UT alumnus he came to idolize, Richard Rainwater, who had made a personal fortune working as the Basses’ chief investment officer. When Rainwater left the Bass family in 1986, he invited the young CPA to join him in the investment business. “I got to learn the world of investments at the heels of a master, and it was a wonderful experience,” Goff recalls. “I got to do a lot of things I probably had no business doing at the time, and I learned a lot of things the hard way.”

John C. Goff

John C. Goff in Fort Worth. (Photo courtesy Aaron Lambert)

Goff was only 32 when he pitched Rainwater on the idea of adding real estate to their investments. It was after the hard times of the 1980s, when depressed oil prices, S&L failures, and a stock market crash helped create a general malaise in Texas. The real estate market was significantly overbuilt, and properties could be had at a fraction of their construction cost.

“Richard said, ‘I think it’s a great idea. If you want to take charge of it, go do it.’ And so I did,” Goff remembers. Rainwater’s one requirement was that Goff put up his entire net worth. “That was always Richard’s style,” he says. “He wanted his partners to have their entire net worth on the line. It was very scary. I had started out with nothing, and by that moment in time I had built my net worth to probably $6 million, so I risked it all, and with a young family. Away I went.”

The decision paid off, big. He bought up large but struggling commercial properties “by the pound” and turned them into lucrative assets, like the company’s namesake, The Crescent, a hotel, office, and retail complex in Dallas. That was the genesis of Crescent Real Estate. He bought The Woodlands Corporation north of Houston. In 1994 he took the company public, and 13 years later he sold it to Morgan Stanley for $6.5 billion.

So when those five MBA students and Dean Hartzell came calling, they were calling on someone who knew the industry inside-out. One of the five students was Scott Sowanick, who says, “John is a legend. Meeting and talking with him about our idea was an incredible honor.”

Their pitch was to dramatically expand the McCombs School’s Real Estate Investment Trust Fund. The REIT Fund, opened in 2007, is a student-managed investment fund for which select MBA students serve as equity managers, while faculty members and an outside advisory board act as mentors and oversee the fund’s performance. The fund makes McCombs the only business school in the country where students have the opportunity

Goff remembers, “Jay Hartzell did a really good job of letting them get involved in the original template of raising money and how that money could be used. We ultimately modified and expanded the original concept, but it was energizing for him to come in with this elite group of MBA students to talk to me about this idea. That was compelling. I love being around young people and seeing great ideas and their energy. I was once in their shoes.”

The result? Goff has given UT Austin a total of $6 million, which will be divided among three areas at McCombs:

$2 million will go to the real estate fund, and he will match an additional $2.5 million. The McCombs School development office is now raising the matching donations. This will bring the total value of the fund from $3 million to $10 million. The fund’s earnings will be reinvested in the program.

Beyond that $4.5 million, he has donated $1 million to endow a chair. “We need to bring in a thought leader,” he says, “someone with a real estate research and finance background or experience. It could be a professor, researcher, or an industry veteran.”

The remainder will support the creation of the John Goff Labs in Robert B. Rowling Hall, the new home of McCombs’ graduate programs. Five conference and presentation rooms will be decked out with Bloomberg terminals and video equipment — “everything the students would need,” Goff says. “This will also let students work with alumni who run real estate investment businesses. That’s where the opportunities are going to come from. They’ll have to present to a board for approval.”

“What’s really important is Jay’s personal background and his passion for real estate,” Goff says. “That was the catalyst for my decision. I knew that we had a dean in place who was going to be a champion of an enhanced real estate program.

“I’ve been looking for the right opportunity to give back to the school that gave me so much in the way of opportunity and experience,” Goff says, “and this was good timing in my life. We have a great program in the business school for real estate and real estate finance, but I think we can turn it into the No. 1 program in the country.”

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