President and CEO Jim Pisula

For starting out as a side business of an energy trader back in 2003, The Woodlands, Texas-based Pinecroft Realty has done rather nicely in the healthcare real estate (HRE) sector.

The full-service commercial real estate firm, which focuses on HRE development, also acquires, leases and manages facilities.

Since its founding by Tom Pisula – the former energy trader – the firm has developed and/or acquired more than 90 projects with a total of about 3.1 million square feet of space. The firm also provides property, asset and facilities management services for more than 2.5 million square feet of commercial real estate.

Along the way, Tom’s brother, Jim, joined the firm in 2008 and served as chief investment officer and partner ever since. By the time he joined Pinecroft, Jim Pisula was an HRE veteran, having worked with Fort Collins., Colo.-based The Neenan Company and then helping launch an independent offshoot of that firm, Denver-based NexCore Group LLC, which was co-founded by current CEO and President Greg Venn.

On April 12, Pinecroft announced that Jim Pisula had been promoted to president and CEO of Pinecroft, with his brother, Tom, transitioning to the role of chairman.

In a news release, Tom Pisula noted: “Jim has been a driving force behind evolving Pinecroft Realty into a nationally recognized healthcare real estate developer and investor. When I started Pinecroft 20 years ago, I had no idea it would become the firm it is today. I am looking forward to working with and supporting Jim as our company continues to grow.”

HREI^TM reached out to Jim Pisula after the announcement to learn more about his career, his promotion and his plans for the future.

HREI: Jim, congratulations on the promotion. Pinecroft Realty probably isn’t quite as well-known as some of the other developers and investors in the HRE space. So can you tell us a little bit about the company and its history? Also, as kind of a side question, will Pisula Development continue to exist?

Pisula: Our firm has been around since 2003. My brother Tom started the company as a side business. He was an energy trader for 20- plus years. At the same time, I also entered the healthcare real estate industry and helped form a large development group in Denver.

For years we would talk about trying to work together but the timing never made sense. Then in 2008, in the early part of The Great Recession, we both took the leap. We figured that with his connections and business development skills and my experience in structuring deals and raising capital we would figure out the details. I always joke that 2008 was a ‘great year’ to kick off a new venture, but it ultimately was.

Since we were focused on medical office, especially in Texas, we didn’t get hit like the other asset classes. And because it was partly a family business, we were always looking long term, so we weren’t as concerned with the short run. My ‘elevator pitch’ about our company is that we are a full-service commercial real estate firm focused on healthcare real estate assets.

For starting out as a side business of an energy trader back in 2003, The Woodlands, Texas-based Pinecroft Realty has done rather nicely in the healthcare real estate (HRE) sector.

The full-service commercial real estate firm, which focuses on HRE development, also acquires, leases and manages facilities.

Since its founding by Tom Pisula – the former energy trader – the firm has developed and/or acquired more than 90 projects with a total of about 3.1 million square feet of space. The firm also provides property, asset and facilities management services for more than 2.5 million square feet of commercial real estate.

Along the way, Tom’s brother, Jim, joined the firm in 2008 and served as chief investment officer and partner ever since. By the time he joined Pinecroft, Jim Pisula was an HRE veteran, having worked with Fort Collins., Colo.-based The Neenan Company and then helping launch an independent offshoot of that firm, Denver-based NexCore Group LLC, which was co-founded by current CEO and President Greg Venn.

On April 12, Pinecroft announced that Jim Pisula had been promoted to president and CEO of Pinecroft, with his brother, Tom, transitioning to the role of chairman.

In a news release, Tom Pisula noted: “Jim has been a driving force behind evolving Pinecroft Realty into a nationally recognized healthcare real estate developer and investor. When I started Pinecroft 20 years ago, I had no idea it would become the

Our core competency is ground up development although we also acquire, lease and manage properties. To date we have completed or acquired over 90 projects totaling 3.1 million square feet of space. Historically we have flown under the radar – our team has been content to create our portfolio without much fanfare. Self-marketing has not been our focus, hence the multiple company names used by our firm, including Pisula Development, Pinecroft Realty and RRC Medical. Hint: Look for a change this summer/fall.

HREI: Can you tell us a little bit about your career path and how you came to be CEO?

Pisula: I started out on a pure finance track but then ‘fell’ into real estate. For the first nine-plus years of my career, I was on the capital side with large equity groups, such as Prudential and The Related Company, a subsidiary of DLJ/Credit Suisse, working mostly in acquisitions and asset management. My preference was also acquisitions and transactions, but I would step back into asset management when needed. Both disciplines taught me to analyze investments – first, acquisitions because of the number of deals I would see and identification of opportunities, and then, asset management for realizing those opportunities.

Prior to 2003, I had never worked in development and was eager to learn that side of the business. I joined The Neenan Company, but pretty quickly our development team was tasked with forming ourselves into a new firm – which became NexCore Group. Working there I learned the development business and, because we were brand new, I learned about forming and growing a company.

In the early days it really had the start-up feel. As mentioned above, I joined my brother in 2008 as chief investment officer, but that was basically because I was the only one working the numbers. At that time, we were a very small group, roughly eight people, so again it had the start-up feel, which was fun. But it also meant we all wore a lot of hats to help push the company to a new stage.

It might sound funny, but I think this industry suits me perfectly – it is very quantitative. Information does not flow well, so you need to have close contacts and, in the long run, if you are patient, there is a path to success. I guess what has really driven me in my career is challenge – I like solving difficult problems and enjoy new obstacles.

At many points in my career, I have been presented with hard tasks, which came with experience, or easier ones, which might come with more financial reward. And I have almost always chosen the path of experience, which at this point has given me exposure to nearly all aspects of our business. Honestly when I was back in school, I thought I would join a company and work there for 30 to 40 years, get the gold watch and retire. I never set out to be an entrepreneur.

HREI: As CEO, do you plan to make any changes to the company’s strategy or business model? If so, what?

Pisula: Our firm has reached the point where we need to be more institutional, more structured. Coming from the capital side, I am used to that structure and it seems like a natural progression for our firm.

With that being said I think our core values will remain the same, as we are in business to serve many clients each day, such as our tenants, health systems, partners and investors. Simply put, our goal is to help make all of their lives easier. As we say, ‘We are not curing cancer, but many of our tenants are.’

I think you will also see us form joint ventures (JVs) with firms that might have been seen as our competitors in the past. We are also decentralizing decision-making in order to empower our team. We now have 43 employees, some of whom have been with us for five to 10-plus years. They know as much or more about our properties and tenants as our leadership team does.

HREI: What are the biggest opportunities and challenges for the company today? And for that matter, for the HRE sector as a whole?

Pisula: I think the biggest challenges that we are facing today are similar to the rest of the industry, and which was so apparent in the conversations at the BOMA (MOB conference) last week (in Chicago) – everyone is busy analyzing deals but not many projects are getting done.

This is due to many reasons, including the disconnect between buyers and sellers, weakened capital market conditions coupled with higher interest rates, and of course much higher construction costs. Rents have moved up from two to three years ago but not necessarily enough to outweigh these challenges.

We are continuing to actively pursue new development and acquisition projects but are using this year to get our firm set for future growth. We are not sitting around lamenting a challenging market. We believe it is in times like these that you set yourself up for the future.

HREI: What are your goals for Pinecroft this year? For the next five years?

Pisula: The main goals for this year include getting the right people in the right places and becoming more involved in our communities. As a small, entrepreneurial firm, we have all had to wear many hats for many years. Now that we are much larger, we are asking for people to focus on particular areas and ‘own’ those areas.

One of the principles of our firm has always been to be involved in the community. Now we are looking to make this part of our company culture, including ongoing quarterly volunteer events. We do this during the work week so that people can take time away from their work to help others and still have their family time. (Our parents) were involved in non-profit work for much of their careers, so community involvement is in our blood. Long term, we will start looking at different asset types and possibly new offices and JVs.

HREI: Is there anything you’d like to add?

Pisula: Once again, I am happy to be in healthcare real estate! The financial markets are again under intense pressure and our asset type continues to be strong – or at least stronger than most asset types. Luck and hard work always play an important role in any achievement, and right now I am feeling extremely lucky.