CEO Interview | David Brain

David Brain is a household name in Kansas City and well known to real estate investors around the world. He is the founder of EPR Properties, a REIT (real estate investment trust) specializing in underserved real estate segments which provide the potential for outsized returns. Founded in 1997, David remained at the helm until 2015, maneuvering the company from start up to a firm of 230 properties in 39 states with record investments that year of over $600 million and revenue up 12%.

 

Data-driven Individualist Doesn’t Follow the Herd

Brain’s approach to leadership is as unique as he is. He doesn’t “follow the herd” and is “undaunted by public opinion”. He follows the facts. David has always had a bent for predictive analytics from college forward. His specialty is creating models that forecast future results. It was a consistent factor in his career track which included developing models to support insurance damage claims for a family insurance brokerage business to M & A modeling for KPMG and later George K Baum. He regards himself as a data driven independent thinker who can find solutions to problems others choose not to or ignore.

Creating Value Where None Existed

Brain’s passion is creating value where none existed before. EPR was born when a good new idea couldn’t get funded because it didn’t fit the traditional investment models. One of his clients, AMC Theatres, known for leading innovation in their industry with the first multiscreen theatre in the early 1960’s, had another brainchild—the multiplex theatre. The vision was for a 24-screen theatre sitting on multipleas many acres. AMC got started with their own funding and early performance was strong, andeven ahead of plan. The projectmultiple site rollout plan, however, was too big for AMC alone and funding was non-existent due in part to a slim balance sheet with no inventory or receivables and in part due to the lack of proof of concept. AMC got started with their own funding and early performance was strong, and ahead of plan. When funders couldn’t be found, the solution was to form a specialized REIT that focuses on select type of property. There were a handful out there focusing on car dealers, prison, or golf communities—but not yet entertainment. In a few short months, they went from a $20,000 investment to an IPO raise of $275million and with newly offered lines of credit pushing $300million,000 were a half a millionbillion-dollar firm. They quickly deployed deployed the capital and the rest is history.

Success Requires Being an Evangelist

When one makes a living bucking what is popular and “not just going along to get along” there is selling involved. It is not enough to believe you are right; if you want people’s money you have to prove you are or at least can be right, according to Brain. In fact, Brain will tell you that the secret sauce to business success is the ability to evangelize what you believe in, to tell the story in a way that others understand, and create new disciples for the opportunity. It is what he believes enabled EPR to survive and thrive for several decades under his leadership in spite of circumstances, not because of them. He admires Warren Buffet for this very reason—Buffet’s strength of conviction, discipline in analytics, and that he is not a follower but often a leader in the markets.

The Best Deals are Fair Deals

Something else Brain shares with Buffet are values. One of Brain’s principles is to structure deals that are win-win. Before he ever gets to the table he looks at a deal from both sides to ensure it is fair to both parties. He likes to make it simple and easy not complicated or painful. “If the deal is a belt, some people ask for suspenders too” says Brain. They want all they can get—the best deal—because they only look at it from their vantage point. According to Brain, “It is not about what you could ask for, it is about what you should ask for. Making deals attractive was part of our continued success and fuel for growth. I walk in the room knowing what I need from the deal and I am done when I get there and I don’t keep pushing for morebefore I step foot in the door. It is never a fishing expedition.”

Growth Is in the DNA

Brain is a believer in the concept of corporate DNA—every organization has a makeup that drives its results. His market Intelligence DNA is strong—for him, growth is about the data. Data tells you what is working and what is not; it encourages you to remain dynamic and change when the market changes; and it gives you confidence to stand your ground and convince others to get on board. Brain recalls that upwards of 70% of the people they approached about investing in EPR originally were not interested. But he didn’t stop when he heard, “You know this will never work, this is not what everyone else is doingdoesn’t make any sense.” Rather than be discouraged, he just kept looking until he found the right investor with influence in the market, that saw his vision and understood his story.

New Data Driven Frontiers

As Brain looks ahead he seeks to use data to change the world for the better. He has two passions where he is applying his analytics to solve problems and tell the story. The first is the concept of urban spaces and how to bring them back to life. He currently has a co-working space in Kansas City which is a multi-use complex designed to facilitate entrepreneurial success, encouraging others to create value by solving problems they are passionate about. He is also involved in renewable energy. His goal is to facilitate the deployment of renewable energy in the same way EPR facilitated the revolution of the Megaplex movie theatre. “We want to be a catalyst for change”, says Brain, “We didn’t invent It but we were able to connect capital with the creative idea.” No doubt with his record of accomplishment and resolution to stand his ground, he will make it happen.

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