Say your father’s worth millions. Chances are, you’ll do one of two things: Become a well-educated, Aspen-skiing, fun-loving trust fund mooch. Or follow in the old man’s lucrative footsteps.
Not Scott Wolstein.
Sure, he likes to have fun. But it’s mostly the good, clean kind. While his high-school buddies got into the whole hippie vibe, Scott, now 53, preferred to dress well and wear his hair short, lettering in five sports and earning good grades. “I always thought I was born 15 years too late,” Scott jokes.
His college roommate recalls his wildest escapade as the time Scott was the first person in line to wait all night for season tickets for the school’s basketball team. Or maybe it was that crazy scavenger hunt he organized for his fraternity. And, after law school, he moved back home with his parents. (They finally incented him to move out at age 31 by giving him land to build a house.)
But as square as he was, Scott was his own man with his own plans, which is why he didn’t take the easy path laid out for him. When your father is Bertram “Bart” Wolstein, the legendary real-estate developer who passed away last year, it’s hard to say no.
“I’d like to work with you, Dad, but not for you,” was the standard line Scott gave his father.
Bart’s response? When he built new headquarters for the company, he included an office for Scott, but Iris Wolstein recalls that he was far from certain that his son would ever occupy it. “My husband dreamed of it, but he was afraid it wouldn’t happen,” Iris says.
So Scott went to work as a lawyer at Thompson, Hine and Flory.
But, of course, that’s not the end of the story. The company Bart started is today the nation’s largest developer of big-box shopping centers.
And Scott’s the guy who got it there.
When asked how the company has changed since Scott took over, a local analyst who tracks retail developments nationwide says this: “There’s no comparison at all, really,” explains KeyBanc Capital Markets analyst Richard Moore. “They were insignificant in comparison to what they are now.”
These days, Scott not only runs Developers Diversified Realty Corp., but is gearing up to reinvent the East Bank of the Flats with $223 million worth of condos, apartments, restaurants and shops, a project called “the largest public-private venture since Key Tower,” by Chris Ronayne, chief of staff for Cleveland Mayor Jane Campbell.
Bart was a maverick. Scott’s a consensus builder. Bart worked such crazy hours that Iris used to bring Scott and his sister to the model home in Twinsburg their father sat in so that they could play together between customers, returning to the car to wait whenever a prospective buyer arrived. Scott takes special trips with each of his four children to celebrate their birthdays, including a recent outing to see a taping of “American Idol.” Bart attended night school to get his degrees. Scott attended the Wharton School at the University of Pennsylvania and law school at the University of Michigan.
But, for all their differences, Bart knew there was one thing alone that his son would need to succeed. When Scott was young, he questioned if his son had it. “I wondered whether he had the hunger necessary to be an entrepreneur,” Bart wrote in his book “Crossing the Road to Entrepreneurship.”
By the time of his death, Bart knew the answer. Together, father and son turned a sports franchise around, built a skyscraper in Playhouse Square and put up big-box shopping centers across the country.
Along the way, Scott caused his father one of the greatest heartaches of his life. It’s a time Scott struggles to talk about more than a decade later.
But this is not the story of a man who came from nothing and built a business worth millions. It’s the story of the son who took that business further than his father ever imagined.
All to make his father proud.
If Scott’s plan goes forward — which he expects to happen with a ground-breaking this fall and a spring 2009 opening — much of the East Bank of the Flats will be demolished. But, as Scott points out, it’s already gone — at least in spirit. When asked the last time he spent a night out here, Scott says it’s been ages. “I don’t think anybody else has either,” he quips. He says he knew the Flats were officially dead when “every one of my tenants stopped paying rent.” That was five years ago.
Today, we’re walking along River Road as Scott stops to take out his site plan and explain the project. The sidewalk’s a mess of cigarette butts and blotches of old gum. Reggae music blares from a speaker behind us, though we’re the only two people around to hear it.
The river, West 10th Street, the RTA Waterfront Line and the railroad tracks will frame the 15.4-acre site. All of the bars lining River Road will be torn down and the road itself will be relocated farther back from the river to allow for waterfront housing, a total of 331 condos and apartments. The ground floors of the nine residential buildings will house everything from an upscale grocery store to clothing stores to restaurants. There will also be a movie theater.
“It gives young professionals a cool place to live in a neighborhood that has a lot of energy,” Scott says. In summer, they can walk to work. In the winter, they can hop a ride on the Waterfront Line of the RTA (long considered a pricey failure due to its lack of riders). Plans also call for a six-story office building nestled in the portion of the line that loops around the site where former Mayor Mike White planned to build an aquarium, according to Scott.
Scott and his father tried for years to get a Flats project going (Scott still has stacks of old site plans from his father), but were stymied. Scott remembers asking for a meeting one fall to discuss the project and being told White didn’t have an opening in his schedule till April.
But Scott has found an ally in the Campbell administration. Ronayne lists three reasons why the project is important for Cleveland. The first is that it will launch waterfront housing downtown. The second is that it will revitalize the East Bank. The third is that it will “showcase Cleveland beyond its borders.”
Currently, about $85 million in public funding has been committed to the project, including $65 million in bonds and $25 million from city, state and county grants (largely for infrastructure improvement). Those properties that Scott does not already own, he says he is fairly confident can be taken by eminent domain proceedings.
The last stop of our tour is a deserted parking lot near the railroad tracks. From here, you can see all of River Road, and anyone who spent the last decade or two in Cleveland can quickly imagine the place filled with people laughing and cars cruising by.
Keep that scene in your memory, because the new East Bank won’t look anything like it. It will be a place to live, to stroll, to eat out, to shop and to go out. But it won’t ever be the same.
“In its prime, the Flats was a fabulous playground, but nothing more,” Scott says. “My vision is to establish an urban neighborhood, with entertainment being just one component of the … community.”
When Scott was little, his father was not yet a wealthy man. “Far from it,” says Iris. “We were struggling.”
Typically, Bart left for work at 5 a.m. and didn’t come home till around 9 p.m. That didn’t leave a lot of time for Scott and his older sister, Cheryl, but Iris and Bart found creative ways to make the family work, like visiting their dad at the model home. The family took regular vacations. And, somehow, Bart almost never missed a school sporting event.
Scott is raising his own four children, ranging in age from 10 to 15, very differently. Each year, he and his wife, Jillian, plan a special trip to celebrate each of their birthdays, including a dog-sledding trip in Michigan, a trip to Nashville to cut a CD and even space camp. These trips are given in lieu of material possessions because “they have enough of those,” says Scott.
While Scott’s always “on the clock” and ready to return e-mails or take calls on his cell, his office hours hover around 40 a week when he’s not traveling. When it’s suggested to Iris that Scott probably put in a ton of hours when he was younger, she pauses for a moment.
“Eh,” she squeaks, then laughs before clarifying: “Scott worked a normal day.
“Scott never had to struggle the way my husband did,” Iris continues. “Scott never had the pressure of [wondering if he] could afford to pay his bills.”
That doesn’t mean he was pampered. When he was 13, while his friends went to summer camp, Scott began working with his dad, digging ditches, hauling trash and doing whatever he was asked “with no resistance,” notes Iris.
High school was a flurry of achievements, from lettering in football, basketball, soccer, track and golf to his stellar grades to his role as student body vice president his senior year (even though he had just transferred from Beachwood High to Hawken the year before). His bio in his yearbook says this: “Although one may not always agree with his ideas, one must still respect Scott for the courage he has shown in formulating plans for the betterment of the school.”
After college and law school, Scott took a job as an attorney at Thompson, Hine and Flory. Meanwhile, his dad was making his fortune developing sites for Kmart across the country.
In 1979, Scott got a taste of what it would be like to work with his father when he convinced Bart to buy the Cleveland Force, a fledging team in an even more fledging sport — indoor soccer. Together, father and son turned the team into a winner, both on the field and on paper. The first year they owned the team, its revenue was $55,000. Ten years later, when they sold the team, it was $3.8 million.
In 1981, Scott finally decided to join the family business — sort of. He and a colleague, attorney Jim Schoff, proposed forming a company with Bart called Diversified Equities, with Bart providing the equity and Scott and Schoff doing the work. The reason Scott wanted to work with his father, but not for him, says Schoff, is that he figured it was the best way to make his father proud of him, by becoming a success instead of just joining in Bart’s success.
The new company lived up to its name, taking on just about any project that seemed promising, from operating a river barge company to building a country club (Barrington) to buying a $4 million steel mill that came in giant crates and needed to be assembled (they eventually found a buyer from India but made no money).
While Scott says the company was “definitely profitable,” it was nothing compared to what was to come.
It’s easy to guess what kind of a guy Scott’s going to be. After all, he’s a rich CEO. You expect him to be tough. Kind of cold-hearted.
You don’t expect to hear (from his wife) that he bawled his way through “Terms of Endearment” (and many other movies, too). You don’t expect to hear that he’s a talented sculptor or that he sleeps with six cats on his bed. (He once found cats to be “gross and a little bit scary,” but his wife’s passion for animals has rubbed off on him, Jillian says.) You surely don’t expect to hear that his kids attended public schools until recently. (“I just think there are certain things you learn from public schools,” he explains.)
“He comes across as having kind of a tough exterior,” Jillian says. “But that’s because he’s such a mush-baby. He has this hard outer shell, but that’s just because he has to protect that soft underbelly.”
His personality, says Jillian, has translated into integrity in his business practices. “It would offend him to take advantage of somebody, and I think everybody in his business knows that,” Jillian says.
The praise from family and friends goes on and on: He respects the Ten Commandments, quietly paid the mortgages for his wife’s siblings, always observes Jewish holidays, humored his wife’s crazy dead-tree revulsion when she was pregnant by having them all cut down immediately, drummed up business for a dentist friend who just moved back to town and needed clients, has been an energetic fund-raiser for United Cerebral Palsy of Greater Cleveland (and is involved with many other charities, though he never mentions it to this reporter).
“I don’t know what his weaknesses are,” says one friend. “Maybe he’s too nice?”
You’d hope your friends and family would say such things. What about more objective sources?
“He has an extremely good reputation,” says Moore, the KeyBanc analyst. “It’s extremely high.”
“His sense of integrity is so clear,” adds
Jim Ratner, chairman of Forest City Commercial Development. “A representation is a fact.”
The elevation of DDR from a success to a phenomenon can be traced to one pivotal moment. It was — at the same time — the best thing that happened to the company and the most painful experience of Scott and Bart’s lives.
In the aftermath of the federal savings and loan scandal, banks suddenly viewed developing as a risk they wanted no part of. Without capital, DDR stalled. While talking to a friend one day, Scott heard about a company similar to his that went public as a real estate investment trust. Immediately, he knew it was a great fit.
He easily sold the idea to his dad and — less than a year later, in 1993 — DDR went public, raising $202 million. Scott served as president and CEO of the new company and Bart as chairman of the board, an arrangement they had agreed upon together.
Success swiftly followed. And so did an almost debilitating depression for Bart. “He felt like he was pushed out of the company,” Iris says bluntly.
In his book, Bart is no less candid: “I was chairman of the new company … but I had nothing to do. I had no responsibilities. No one called me seeking advice. No one asked me anything. I had no stock options, no health insurance, virtually no salary. I was a nobody. A rich nobody, but a nobody nevertheless.
“I was miserable,” Bart went on to write in the section of his book titled “How I Let My Company Get Away.” And perhaps the most wrenching for Scott, Bart said: “I learned a painful lesson that regardless of who is sitting on the other side of the table, you can’t assume that your interests are their paramount concern.”
Scott grows silent when asked about this quote. “I’m not sure I want to talk about it,” he says softly. He will only say that he thought his father had a good understanding of what his role in the new company would be and that he never intended to hurt his dad in any way. He still seems confounded by his father’s unhappiness.
“At the beginning of the deal, when it was first going through, Scott was very excited about it,” Jillian remembers. “But when his dad started having these negative connotations …” Jillian drops the thought as she struggles to explain what happened. “Scott’s main motivation always was — and still is — his desire to make his dad proud. His greatest need is to be a good son, to make his parents proud. Not to be successful himself, but to make them proud. Scott would never intentionally do something to upset his dad, ever.”
As the person who knew both men the best, Iris now understands the incident to be a misunderstanding. “I think Scott thought that my husband wanted to retire. But my husband had no desire to, at the time. It’s still a touchy subject that we just don’t talk about.”
But it was never an issue that destroyed the family. “They were loving father and son, all the way through,” Iris says. “It was like I said, family was very important to both of us and my husband was wounded, but it was still his son. He loved him, and Scott felt the same way as Bert.”
Eager to get back in the action, Bart formed a new company, Heritage Development, in 1998 and went back to his roots by developing, including the Bertram Inn and Conference Center in Aurora.
DDR, meanwhile, was well on its way toward world domination, which is only a slight exaggeration.
The company owns and manages more than 470 properties, mostly big-box shopping centers (also called power centers), in 44 states and Puerto Rico, totaling about 110 million square feet. Locally, DDR’s properties include The Plazas at Great Northern and Uptown Solon. “They’re the biggest developer of power centers in the country,” says Moore.
And they’re looking to expand abroad. Scott recently returned from a trip to China, where he scouted potential sites.
Scott is always ahead of the trends, says Forest City’s Ratner. One overriding example: He was one of the first to see the potential of 600,000-square-feet-plus outdoor shopping centers anchored by such tenants as Target, Wal-Mart and Home Depot.
Others attribute Scott’s success to his “bright financial mind.” “It allows him to see, more so than others, how you put together financing with equity,” says DDR’s Jim Schoff. “That’s why he seems to be ahead of the pack all the time.”
Jillian says she suspects her husband has channeled his artistic urges (he no longer has time to sculpt or draw) into his company. “His enjoyment has always been coming up with creative ideas, not so much looking down the road toward anything specific. The creative process is really what gets him going.”
Moore agrees: “One thing I’ll say that is a major plus for him is he’s been very creative in raising capital. It’s unique. He does that with joint ventures, foreign money, pension money. He was ahead of others.”
Scott doesn’t attribute his success to any particular brilliance. Instead, he says he thinks a far simpler skill has gotten him ahead: his listening ability. “I already know what I want” when I walk into a room to do a deal, he says. So his first question is always the same, “If you could make this your dream deal, what would it look like?”
“When you’re talking,” he adds. “You can’t learn anything you don’t already know.”
W hen Scott’s wife, Jillian, who is from Arizona, complains about the gray Cleveland winters, Scott gets upset. “He is so fiercely protective about Cleveland,” Jillian explains. “If I ever say anything about Cleveland, he takes it like I’m insulting him personally.”
Early in their marriage, Jillian tried to convince Scott to move “anywhere where it’s sunny more than it’s not.” She quickly gave up on that notion. “He would never, ever leave here,” she says.
While Scott and his wife are planning to leave their Pepper Pike home, it’s only because they’re building a new one in Hunting Valley. Scott declines to discuss details of the project, but the sheer amount of land involved and the address lead one to deduce that it will be a rather significant estate.
Back to a topic Scott will talk about: In addition to his love for the city, Scott has another motivation to take on the East Bank.
“[The Flats project] is very important to him, because it was very important for his dad,” Jillian explains. “And for years they tried to do something. Mike White was incredibly difficult to work with. This great vision when Bart was alive never got off the ground.”
Bart passed away in May 2004 three weeks after going to the doctor to complain of what he thought was a stomach ulcer. In reality, the prostate cancer he thought he had beaten had metastasized and was spreading aggressively.
When asked what she misses most about her husband, grief flushes Iris’s face as she says simply, “him.” There is a long pause. “Just being together.”
The Flats project, which is not part of DDR’s portfolio, is a personal mission that Scott and his mother are working on — and financing — together. “When I wake up every morning, that’s what I’m doing,” Iris says. “I’m trying to fulfill my husband’s mission.”
More than a year after Bart’s death, Scott says it’s still his first reaction to call his father when he’s received good news about some deal or another.
While negotiating and planning the Flats project, he’s wanted to pick up the phone many times.
Then he remembers: “There’s nobody there to make proud.”