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Tuesday, Jul 23, 2024

Wealthiest Ease Back Into the Good Life as Their Losses Slow

This year’s San Diego Business Journal list of San Diego’s Wealthiest shows most of the local richest are still losing some of their net worth, but the losses in 2011 appeared to have slowed for most.

Of the 10 wealthiest, six experienced losses but the rates were below the overall contractions that just about everyone experienced during the Great Recession’s heyday and the years following it.

Two of the richest San Diegans’ wealth stayed about the same, and two, Conrad Prebys and Ernest S. Rady, experienced an increase in their net worth from the year before.

The numbers were derived from The Rich Register, an independent research firm that compiles data on some 6,000 high-net-worth individuals in the nation.

The overall list hasn’t changed that much. There were four newcomers: Massih Tayebi, who is ranked at No. 16 right behind his brother, Masood Tayebi, at No. 15; William Stensrud, at No. 18; Mark Dankberg, No. 19; and Richard Sulpizio, No. 20.

Looking at the contraction of the net worths of the seven wealthiest, only two fell by double digits in the past year: Charles Brandes and John Moores, both of whom were affected by costly divorces.

In the case of Moores, the divorce resulted in the sale of the San Diego Padres ballclub in a phased transaction that will take a few more years to complete.

Upside of Downturn

Despite the global downturn that has caused harm to most investors’ portfolios, there are a few that have apparently benefited from macro economic dislocation, particularly those engaged in commercial real estate.

Prebys, No. 8 on the list with an estimated net worth of $400 million, started in the construction of single-family homes, and then moved to storage facilities. In the early 1980s, Prebys said he discovered the real secret to making lots of money — investing in apartments.

Today, his company, Progress Management Co., owns about 7,000 housing units, primarily in larger complexes that average about 125 units.

“I was buying about one (apartment complex) a month during the mid-1990s,” Prebys said. “And I was buying a lot of the stuff at 15 to 20 cents on the dollar from banks’ REO (real estate owned).

“I don’t go for trophies. I go for cash flow and my properties throw off cash flow like a stuffed pig,” said Prebys, 75. During the past decade, he has embarked on giving away most of what he’s accumulated. For example, this year he donated $45 million to Scripps Health for a new heart center.

Sandy Shapery, a local developer who isn’t on the list of the top 20 but says he’s “in the vicinity” of those on the lower tier, said the recession “has been good to me.”

Rewards of Real Estate

“A lot of my income comes from fixed, triple-net leases on the buildings I own like the Sempra Energy building, and most of them are growing at 3 percent annually,” said Shapery.

As the financial crisis took its toll on residential markets, Shapery shifted from commercial development to hotels and historic preservation. Thanks to the depressed markets, he said he’s been purchasing properties “at wonderful prices.”

Rady, No. 6 on the list with an estimated net worth of $420 million, is another example of someone who amassed a vast portfolio of companies and real estate that once made him the richest in the region. In 2006, his net worth was in excess of $2 billion, but then the financial crisis of 2008 happened.

That year, a major part of his investment portfolio, stock in Wachovia Corp., was practically wiped out when the company’s main bank subsidiary was purchased by Wells Fargo & Co. in an arranged sale by bank regulators.

Rady’s net worth this year grew 62 percent over where it was in 2010. He remains the chairman of American Assets Inc., a diversified financial services firm he founded in 1966. Rady is also a major philanthropist who has gifts including some $60 million to Rady Children’s Hospital-San Diego, and $30 million to UC San Diego to help fund the Rady School of Management in that university’s business school.

The top half of this year’s Wealthiest list shows some jockeying among the richest, but all the same familiar names are intact.

Topping the List

Irwin Jacobs, the founder of Qualcomm Inc., remained at No. 1 with an estimated net worth of $1.5 billion, and Walter Zable stayed at No. 7 with $420 million. Zable, chairman of Cubic Corp., also takes the crown as the oldest on the list at 96, and continues working daily at the defense business he founded.

Theodore Waitt, the founder of Gateway Inc., moved up two slots to No. 2 with an estimated net worth of $710 million, but in 2007, Waitt had a net worth of $1.7 billion.

Moores fell two slots to No. 5 with $475 million. After his divorce to wife Becky was completed, he moved back to Texas, sources said.

Rounding out the top half of the list are Andrew Viterbi, Jacobs’ partner in Qualcomm, at No. 9 with $390 million in net worth; and Martin Wygod, at No. 10 with $290 million.

This year’s Wealthiest list should have included two names: Robert S. Howard and Gary L. West. Howard, a longtime newspaper entrepreneur, had an estimated net worth of $375 million. West, whose net worth is estimated at $1.1 billion, founded West Teleservices, an operator of call centers, in 1986 and sold it in 2006.

They were not included on the Wealthiest list this year because the Business Journal intended to show a comparison of people who were in the top 10 last year and where they stand this year.

While the ultrawealthy have seen their overall net worths decline, some observers say their contributions to charitable organizations hasn’t waned.

If anything, many of the wealthy have increased their donations to a wide range of organizations and causes, said Joyce Glazer, who sits on the boards of four nonprofit groups and is an active fundraiser.

Lewis Haskell, managing director for Tiger 21, a self-help group for the ultrawealthy in San Diego and San Francisco, said members of the groups, whose wealth ranges from about $15 million to hundreds of millions, haven’t reduced their giving in any significant way.

“Most of their commitments are to personal causes and charities such as schools and hospitals, and they haven’t cut back or stopped their giving,” he said.


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