Ex-NBA great is realty star

7-foot-tall Hakeem Olajuwon is `pretty imposing when he ... sits down to negotiate'

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December 07, 2006|By NEW YORK TIMES NEWS SERVICE

HOUSTON -- Hakeem Olajuwon, the soft-spoken Nigerian emigre who led the Houston Rockets to two NBA championships, is becoming as celebrated in the city's real estate circles as he was on the basketball court.

Following an unorthodox yet disciplined strategy, he has managed to make as much in real estate in the past 10 years as he did in 17 seasons playing professional basketball.

"He buys high and sells higher," said David L. Cook, executive vice president with the commercial real estate firm Cushman & Wakefield, who has represented Olajuwon in several transactions.

Many of the former NBA All-Star's real estate plays caused market watchers in Houston to shake their heads because they felt he overpaid.

"He buys expensive user land that is already fully developed," said Marvy A. Finger, president of the Finger Cos., which specializes in developing multifamily properties in Houston and other cities in the South and Southwest.

Such land is usually excruciatingly slow to appreciate and even at risk of depreciation. But Olajuwon, 43, has managed to at least double and even quadruple his money, reselling often within a year or two of purchase, according to brokers and lawyers involved in the deals. Judging from changes in county appraisal listings, profits from his 25 total transactions have easily exceeded $100 million.

"His timing has been amazing," said Ed Wulfe, president of Wulfe & Co., a retail broker and developer in Houston.

The properties Olajuwon buys are often ripe for further development, such as parcels near Houston's new light-rail line, in the Texas Medical Center and close to the city's baseball stadium, Minute Maid Park. He also has bought and sold centrally situated, inner loop properties near major intersections and highway exits. And in November he bought a prime 41-acre tract near the National Aeronautics and Space Administration's Johnson Space Center.

Olajuwon, who retired in 2002, divides his time between homes in Houston and Amman, Jordan, where he is studying Arabic, the language of the Quran. He speaks English and Yoruba, a West African language.

Reached in Jordan, Olajuwon said he used his imagination when looking at a property. "I try to see its potential; what it could be used for," he said, adding that he studies satellite views of Houston to help him identify good investments.

His advisers said he studies maps and seeks more information about nearby building valuations, planned public improvements and traffic patterns.

It has not hurt his fortunes that the real estate market in Houston has been on an upward trend in recent years.

"Houston real estate has continued to be strong across the board - apartment, retail and office," Wulfe said. "We added 75,000 jobs this year, so we're not feeling the pinch like other places."

Regardless, Olajuwon's friends said it was no accident that he had been so successful. He was well known for his intelligence and diligence as a basketball player. He won a gold medal with the United States at the 1996 Olympics, and is the top shot blocker in league history.

"The guy's really smart and will not stop working at something until it's right," said a former teammate, Clyde Drexler. "I mean, the guy lived at the gym when we were playing."

Though real estate speculation is inherently risky, Olajuwon said he was more comfortable buying land than stocks: "I like real estate because, you know, it's real."

And because he only buys Main Street-type properties, he is safer than investing in outlying areas, where value is less certain.

"He's an astute and opportunistic buyer who seems to be keenly aware of opportunities," said W. Michael Hassler, first vice president at the commercial real estate company CB Richard Ellis, whose clients have sold property to Olajuwon.

"He buys whole or half-blocks and outparcels," which are valuable "doughnut hole" properties surrounded by land owned by someone else.

Olajuwon also minimizes risk via cash-only transactions. It is against Islamic law to charge or pay interest, so he never seeks outside financing.

"I have been blessed thus far to be able to work with my own capital, which gives me the ability to decide when I want to sell as opposed to having a bank loan hanging over my head that in some cases, can force you to sell even though you may not be ready to," Olajuwon said.

It also gives him a leg up on other buyers who may hesitate trying to cobble together funds. "Cash on hand immediately gets you a front-row seat," Hassler said. "You're viewed as higher priority."

Adding to Olajuwon's cash flow is his recent purchase of a parking garage in Houston's central business district. The garage had 150 parking contracts when he bought it in October and now has 900, thanks in part to nearby construction that eliminated much of the surface parking in the surrounding area.

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