Tribute: Remembering Wm. Polk Carey

On January 2, 2012, the W. P. Carey School of Business lost its benefactor and friend, Wm. Polk Carey. At the January Economic Club of Phoenix luncheon, Dean  Robert E. Mittelstaedt delivered a tribute, speaking about Mr. Carey’s early interest in business, his innovations and his high ethical standards. Mittelstaedt also recalled Mr. Carey’s support of higher education, especially the school at Arizona State University that bears his name. [podcast] Text of Dean Mittelstaedt's speech: On January 2, we at the W. P. Carey School of Business lost our benefactor and friend, Bill Carey. I’m sure many of you know that Bill Carey named our school, but there are probably other things that you don’t know about this remarkable person. I want to give you a few things to think about with respect to Bill and his life. Bill was a philanthropist, but he was also a serious businessman who made his own fortune, and he has an interesting background. As a young person in the late stages of the depression, he sold ink and soda on the streets of Baltimore, showing at an early age that he could convince other people to do things that he thought that they should do, and that he could do business on a fair-deal basis. He went to Princeton and graduated from the Wharton School at the University of Pennsylvania, with a degree in finance. I’ve heard various versions of a story about his time at Princeton -- a couple of different versions from Bill himself. One version explained that he left Princeton because he was spending too much time selling used refrigerators to his classmates. One way or another, he was already trying to be in business before he ever got out of college. He went on to get a bachelor of science in economics at Wharton in 1953, and subsequently spent a couple of years in the Air Force. Then, needing to repay a college loan, he went to work in his step-father’s business selling cars. Remember that this is 1955: they were selling Peugeots, and it was tough. Bill and his step father figured out that maybe, if they leased Peugeots, perhaps they would be able to sell them faster -- and in fact this is how Bill got into the leasing business. He subsequently founded his first company called International Leasing Corporation in 1958. In 1960, Bill brought international to financing Australia, at a time when the government there had foreign capital controls in place. Bill helped get those regulations changed, and was very proud that he was the first to arrange direct foreign investment in Australia. So, at a very early age he was not only in the leasing business, but also doing international deals. I heard Bill say many times that he tried to lease just about everything in the world that you could lease. I’ll come back to what he settled on, but if you could lease it, he had been there and tried it at some point. In 1964 he merged International Leasing Corporation with another firm that was later acquired by Merrill, Lynch Hubbard. He then became head of real estate and equipment financing at Loeb, Rhodes & Co. -- which later became a part of Lehman Brothers. Then he went to DuPont Glore Forgan Inc., where he rose to vice chair of their investment banking board and director of corporate finance. Here’s a man who had accomplished a lot by the time he was in his early thirties. In 1973, he founded W. P. Carey & Co. with the idea of doing sale-leaseback transactions. This is an amazing story. (By the way, I am a board member of the company, so under Rule FD, I will tell you nothing that’s not already publicly disclosed.) He did an amazing job. He started by putting together partnerships and acquiring properties; then the company managed the partnerships. Over the years, the firm grew and eventually the parent company, W. P. Carey Company, went public. And so, Bill pioneered what’s called the sale-leaseback business for facilities. The easiest way to understand this is to consider the US Airways headquarters, located not far from here and visible from the Route 202. US Airways doesn’t own that headquarters, the W. P. Carey Company does: the W.P. Carey Company owns it, and they lease it back to U.S. Airways. The complexity of the business that Bill developed is in the relationship between the parent company and its various partnerships. I don’t know about you, but in my investing life, I would never invest in a front-loaded product -- I’ve never done that. When I became a member of Bill’s board and began to learn about his business and his record, I was stunned. Because in order to sell this product, Bill had to pay brokerage firms a fee to sell it for him, and so some of the money that you put into it immediately went to that broker. But the track record of this company over the last 30 years, including of all the partnerships, has been an 11 percent per year compounded return including the fees -- 11 percent per year compounded. Bill Carey had an extraordinary business record, and built a company that did unbelievable things in what most people would call the REIT (real estate investment trust) space. But Bill’s business was not a traditional REIT structure. In fact, many people in what’s called the net lease or the sale-leaseback business today will tell you that Bill Carey pioneered – started -- this industry. I know at least two people with substantial companies who will tell you that they learned this business from Bill Carey because he was the innovator. Bill was very proud of what he had done. I’ve heard him say many times in a very funny, but a very forceful way: “We’re not in the real estate business. We’re a finance company.” He wanted people to know that his was a finance company, a company in the business of providing finance solutions to corporations -- which just happened to provide these solutions through real estate. This was one of his hot buttons. W. P. Carey & Company was very successful, and that is how he made his money. Bill owned 30 percent of the company at his death. The market capitalization of the part of the company that’s public is something over $1.5 billion dollars. Bill made major commitments to higher education. He made a commitment to our school, to the W. P. Carey School in 2003. In 2007, he also named the Johns Hopkins business school at Johns Hopkins University, and just last year I attended, with many others, the naming of the University of Maryland’s Francis King Carey School of Law. There’s a funny little story from the time I was at the Wharton School. I knew Bill a little bit because he was a Wharton alumnus. In 2000 he called me and asked if I would do an analysis for Johns Hopkins University. For many years he had been trying to get Johns Hopkins to start a business school, and had offered to give them the money. Being a loyal Wharton person -- and I was also responsible for fund raising for the school at that time -- I tried to pitch something [for Wharton]. He said, “No I want to do this for Hopkins. Go down there and talk to them.” So I agreed to do that. I looked at the situation and Hopkins wasn’t ready. They didn’t want to [found a business school], and so Bill began to fish around for another place to become involved with a business school. Some months later – I think it was in 2001 -- he called me back and said, “I’m thinking about giving $50 million to Arizona State University to name their business school.” Again, still loyal to the Wharton School, I said, “Why in the world would you do that? You need to give that money to us at Wharton, we can use it.” He said, “If I gave you the money, I would be your second $50 million donor, and I don’t want to be second.” He said, “And if I give to Arizona State, they’ll name the business school for me.” I said, “Well why Arizona State? What’s your connection there? I don’t get it.” Then Bill told me this story: John Samuel Armstrong, who was his grandfather, was a legislator here in Arizona, and he was the person who conceived and pushed for the idea of starting a college here. He negotiated and cajoled and finally pushed through the legislation that established the Tempe Normal School, which evolved to become Arizona State University. Bill had a family tie to Arizona, and that’s part of his story. He was a man with tremendous respect for family. He had respect for history, for roots, for his heritage. In fact, when he named the law school at Maryland he was honoring his other grandfather, who had graduated from that law school in 1880. His grandfather also was friends with and related somehow to Johns Hopkins, so Bill had been on the board at Johns Hopkins for many years. I’m pleased today to have with us Jack Armstrong, who is Bill’s first cousin, who lives here in Arizona and has lived here his whole life. To his right is Sam Armstrong, who now lives in California. Sam’s a graduate of our school. His sister, Leila Armstrong-Winssinger is the wife of Reggie Winssinger, who’s a member of our Dean’s Council and our Economic Club. The Armstrong family has deep roots here, and once Bill told me that, I understood why he was doing this. Of course he went on to make this gift. Jack Armstrong just reminded me about a story this morning, about when Bill came out here to visit. He went to the business school [to discuss a donation].They didn’t seem terribly interested at the time and didn’t ask him for the gift, even though Bill indicated he was thinking about it. Bill sort of groused to Jack, saying “Maybe I’ll go over to Thunderbird and see if they want it.” Jack called Lattie Coor, who was ASU’s president at the time, and said, “Gee maybe you better get on this right away,” so they met, and the rest is history. The tie to the Armstrongs is a very significant one and that was part of the reason that Bill ended up out here to name our business school. This happened in 2003, when the school was named and the name was unveiled. It was obviously something that was significant for this school. Bill began to be engaged -- he was proud of this relationship. He visited out here many times, was engaged with us in many ways. After I came here and became dean, Bill eventually invited me to join his board, so I saw him on a regular basis. He would call frequently just to find out how things were going. He was very interested in what was happening, but one of the things that he often said was, “Who’s your admission’s director?” I’d tell him the name of our admission director. He would say, “You know that person’s more important than you are?” I would reply, “Yes Bill, he’s a very important person to the organization. You know he’s our touch with the frontline.” He wanted to make sure that we were enrolling the best students, doing the best job with them and graduating them into a world where they were going to be successful. So he was involved with a number of us in different ways over time. Bill was so interested in business schools that in 1999 he took a sabbatical and spent six months at the Harvard Business School just to see how they operated. One of his big passions [was the W. P. Carey School's presence in China]. As our success with the W. P. Carey School in China became larger and more visible and obviously tangible with all of the great graduates that we have there, Bill became very interested. A number of times he visited China with us and with Buck Pei, who is here today, who runs our China program. Bill attended a number of graduations and spoke with the Chinese folks, and obviously was interested in China from a business standpoint, but he was genuinely fascinated with China because of its history, its culture and where it’s going economically, and was out there with us on numerous occasions to see what was going on. Bill has created what is going to be a lasting impact at ASU and at our business school. This business school would not be where it is today had it not been for the $50 million commitment that Bill made to us. Part of that money has been spent to accelerate programs and a substantial portion has been put into an endowment that will go on forever. That’s what endowments do -- they go on forever -- and so Bill’s legacy will live on as long as Arizona State University exists. It lives in his name imprinted on the business school, but also through the student and faculty achievements that the endowment makes possible. Bill's gift advanced our ability to hire world-class faculty. We accelerated our faculty hiring both in quality and quantity following this gift. It advanced our program development. It advanced us in so many ways that have helped us move toward our goal of being a top-tier business school. So we will miss Bill: we will miss his candor; we will miss his humor; we will miss his commitment to education. His financial support has truly changed this business school and Arizona State University, and hopefully the state of Arizona and the Southwest, and will do so over a very long period of time. The final thing I’ll leave you with about Bill Carey is that he said he would never retire. He had slipped out of the day-to-day stuff, but he was still a very active executive chairman in the firm. In fact, he did not retire. He was active right up until the end. Today I extend the significant appreciation of our school and university to Bill Carey, and promise that his memory will be honored with affection and respect. Biography: Wm. Polk Carey