Fiercely private developer built strip-center empire

Sid Eskenazi was living in a tiny house south of downtown during the Great Depression when he discovered the board game Monopoly.

Buying and developing make-believe properties with make-believe money inspired the grade-schooler. And he was good at it.

So several years later, after earning a law degree from Indiana University, Eskenazi began playing what he likes to call
"adult Monopoly." He bought one property at a time with real money. His game pieces were retail strip centers. Again,
he was good at it.

His firm, Sandor Development Co., now is one of the largest strip-center developers in the nation, owner of more than 7 million
square feet of retail space in 22 states. The privately held, Indianapolis-based company is an industry powerhouse, flush
with cash and long-standing relationships with retailers such as Wal-Mart and Kohl's. It has grown from six employees
in 1989 to more than 50 today.

Sandor has stuck with strip centers since the 1960s, ignoring fads like outlet malls and lifestyle centers. The company–named
for Eskenazi's daughters, Sandy and Dori–also has developed a mystique, thanks largely to its tendency to be private
and frugal.

Its headquarters are in a sagging limestone building at 22nd and Meridian streets, in stark contrast to the gleaming digs
of fellow developers. And Sandor's booth at this year's International Council of Shopping Centers convention in Las
Vegas was constructed of simple partitions and modest desks, unlike the luxurious, high-tech headquarters of most everyone
else.

The three principals rarely talk to the media. The company doesn't advertise, and its marketing efforts are a fraction
of its competitors'. The receptionist at Sandor answers the phone by saying "9011"–the last four digits of
the phone number.

"They do their projects and let them speak for themselves," said Brian Chandler, principal of locally based Eclipse
Real Estate. "They're as capable as any firm in town or in the country. They know everybody, and they're hard
workers."

Sandor's evolution

Staying below the radar is becoming more difficult as the company's profile rises. Locally, Sandor has been tackling
complicated infill projects such as a new Walgreens at 16th and Meridian streets and a Starbucks strip at Michigan Road and
Kessler Boulevard. The company owns dozens of strip centers, and its signs adorn properties all over the city.

Sandor also is grabbing more attention with charitable giving. Eskenazi has given to the Jewish Community Center, IU and
arts organizations. His gifts to arts causes are inspired in part by his wife, Lois, as well as his love of modern art. Herron
School of Art & Design named its new building after the Eskenazis in 2005.

In Lynchburg, Va., the company donated an aging shopping center appraised at $11.7 million to Liberty University, the conservative
college founded by Jerry Falwell. And for the Walgreens project north of downtown, Sandor donated to local shelters hundreds
of TVs, beds and other furniture from an old hotel that stood on the site.

The company's approach also is evolving. Sandor has been known for bare-knuckles negotiation and for lax maintenance
of some of its properties. Eskenazi-and-company still aren't pushovers, but they're spending more on landscaping and
upgrades to their centers.

The owners may even splurge on a new headquarters building just north of their current home. And in a rare exception to their
media-shy habits, the three principals sat down with IBJ this month to talk about Sandor's philosophy and outlook.

The company's owners are Sidney D. Eskenazi, the founder and CEO; his son, David N. Eskenazi, president for Indianapolis;
and his nephew, Jay D. Stein, president for Scottsdale, Ariz.

Sid Eskenazi said the company's philosophy hasn't changed much since he started Sandor in 1963.

"We buy, we sell, we build, we lease," said Eskenazi, 77. "Not everyone would agree with us, but we think
we add to the economy by putting together projects that provide jobs."

Keys to success

After getting his law degree, Eskenazi went to work with Melvin Simon, another poor kid with big dreams, who was busy starting
the predecessor to mall giant Simon Property Group Inc.

Eskenazi, the firm's original attorney, often was paid with ownership stakes in projects, since money for legal fees
was scarce. He'd hoped to partner with Simon, but after Simon teamed with brother Herb instead, Eskenazi struck out on
his own.

At first, he focused on practicing law. But on the side, he continued to buy and develop property. Shopping centers were
in their infancy, and Eskenazi was a pioneer.

One of Eskenazi's original principles was a conservative approach to financing. The company doesn't have external
partners and borrows only what it needs. And Sandor has more equity in its projects than do most developers. The conservative
approach allows the company to act on deals quickly and finance only if terms are right.

"It's not our motivation to build something and pull out cash in the short term," said David Eskenazi, 42.
"We're more about building for the long term and creating that value."

Another of Sandor's virtues is patience. It often buys land that won't be "ready" for development for several
years. Sid bought the southeast corner of 86th Street and Michigan Road in the late 1960s. He didn't build anything on
it until the early 1980s, when he built a theater. Today, it's a sprawling Wal-Mart-anchored center.

Five or so years ago, the company bought roughly 150 acres at interstates 74 and 465 for a project called Hunter Point. Sandor
isn't in any big hurry to develop it, either.

"We have large land holdings because we want to have land available when we want to build, instead of trying to find
some," said Stein, 42. "There are some pieces we know are right; they're just not ready."

The principals would not say how many acres they own. They also declined to provide revenue figures.

Tough dealmakers

Over the years, Eskenazi has upset his share of people in the real estate community and rubbed some tenants the wrong way.

Some of the tension stems from an aggressive approach to deals that is less about schmoozing, more about the bottom line.
Some of Sandor's local centers, including the one at 86th and Michigan, are riddled with potholes and screaming for maintenance.
The owners have been slow to act.

"I think we do a reasonable job of maintaining our properties," Eskenazi countered. "Could it be better? That's
something we're working on now."

People who have done business with Eskenazi say he's hands-on and tough.

"He negotiates a very tough deal," said Jeff Gould, a longtime friend and managing partner in the local office
of Columbus, Ohio-based Schottenstein Property Group. "He pretty much tells you what you're going to get. But you
know once you cut a deal, you're going to get what you expect."

The company's track record is so strong that banks will lend just about anything Sandor wants, Gould said. And Eskenazi's
relationship with some of the nation's big-name retailers is equally impressive.

"He's a brilliant entrepreneur," Gould said. "Probably one of the most brilliant guys I've ever met."

Each of the other principals also has a law degree and is a student of the strip-center game, taught by Eskenazi.

"They know what they do and they do it really, really well," said David Ponader, a former leasing agent and developer
for Sandor who now is a principal at Resource Commercial Real Estate. "Everybody in the retail development world–Midwest
and the nation–know who Sandor is. And know they're very shrewd guys."

The basics

Sandor built a few apartment complexes several years ago, but mostly the company has stuck with retail. These days, Sandor
doesn't stray from a strip-center comfort zone and doesn't give a thought to bidding on high-profile projects like
redevelopment of the Market Square Arena site.

"We are strip retail people," David Eskenazi said. "We're not mixed-use or multilevel. Our stuff is one-story
retail."

Sandor still does a lot of work in Indianapolis, but the majority now is out of state. It had to expand outside the city
thanks in large part to a glut of high-powered local developers.

Sticking to the basics has helped Sandor prosper, and now is no different. The credit market turmoil has presented Sandor
with opportunities since the company is less reliant on traditional financing.

In fact, the company recently formed Sand Capital, a division designed to purchase underperforming mortgages secured by retail
centers. The owners view it as a good way to grow for what has traditionally been a ground-up developer.

In July, Sand Capital made its first deal, acquiring Lafayette Place, a 379,000-square-foot center on the west side for $14.5
million. Sandor bought the property, which had been owned by The Broadbent Co., out of foreclosure from Nationwide Life Insurance
Co.

At the helm

A few years ago, Sid Eskenazi gave some thought to slowing down, spending more time in Florida. He's worked all his life
and could afford to spend some of his fortune.

But instead, he immersed himself in the Walgreens deal at 16th and Meridian. Others had failed to spark redevelopment of
the site, so Eskenazi decided to take a shot.

Mr. E, as they call him at the office, was back at work. And he pulled off the deal.

Stein said he expects Eskenazi will retire from Sandor "a couple of years after he leaves the planet." David Eskenazi
said his father just loves the game too much to consider it work.

Years ago, in a way many dads join their kids for catch, Sid challenged his three children to a game of Monopoly. David Eskenazi,
who was 12 or 13 at the time, remembers it vividly.

"[My father] all of a sudden got excited," he said. "He played Monopoly for keeps. He wanted to win."