Q&A with Murray Wise
Murray Wise, chairman and CEO of Murray Wise Associates and former CEO of the Westchester Group, was recently chosen as Parkland College's 2014 V. Dale Cozad Entrepreneur of the Year. He will be honored June 12 in a fund-raising banquet for the college's entrepreneurial program.
The Champaign businessman, who has been involved in farm management and farm real estate for four decades, recently discussed his career, his sale of a majority interest in the Westchester Group to financial services giant TIAA-CREF in 2010 and prospects for U.S. agriculture with The News-Gazette. Here are excerpts from that interview.
Greg Cozad described you as a "high-energy" person. Is that so — and if so — where did you get it?
I do have a high-energy level. My wife frequently says, "You remind me of the Energizer Bunny." I turned 65 in February, and I don't think that's old. The last couple years, it's been a little less energy. I still put in a lot of hours and absolutely love what we do.
Tell me about the farm where you grew up.
I grew up on a grain and livestock farm between Buffalo, N.Y., and Detroit — in southern Ontario, near Hamilton. I had the great fortune of buying my first farm at the age of 17, then went to Iowa State University, where I got my undergraduate degree. I then came back to Ontario and farmed for three years.
The Midwest caught my attention. I used to stay up and watch the 10 o'clock news. I couldn't believe they had ads regarding farming — ads for herbicides — it was so interesting to be immersed in an economy that was so ag-oriented.
I was interested in returning to Iowa or Illinois. I came back with the idea that I was going to farm, but it was an inflationary time that made it hard to buy farm machinery.
How did you get interested in agricultural real estate?
Due to the barrier of not having enough machinery to go into farming in 1975, I needed to find a job. I worked for a division of Continental Grain for a short period and became aware of a position open at the Sandage Companies. ... If I wasn't going to farm, farm management/farm real estate was as close as I could get to what I really wanted to do.
What was your first job at the Sandage Companies?
My first job was as a farm manager leasing property to Iowa and southern Minnesota farmers. Duane Sandage's uncle, C.H. Sandage, was a professor of advertising at the University of Illinois.
Later you had an opportunity to acquire and develop the businesses that eventually became the Westchester Group. How did you choose that name?
We referred to maps of New England, trying to find a name that had longevity to it. We were kicking around names ... Westchester, Winchester. We sent the names to the spouses of our investors, and there was one vote for Winchester and 13 votes for Westchester. Everyone assumes I was from Westchester, Illinois, which was not the case.
What were the biggest risks you took in developing the business?
In the early years, we borrowed capital, in addition to the capital that we raised. I think the peak line (of borrowing) was $125,000, which doesn't sound like much money today, but it seemed like $3 million to $5 million. I was happy all the indebtedness was paid off before 1990.
What influence did Dale Cozad have on your thinking — and business dealings?
I was involved in creating a series of five limited partnerships of individual investors. Dale moved us to the next level in 1989. There was Stu Meacham, Dale and myself.
Dale said, "You should be going to the institutional marketplace and be pursuing the pension industry (as investors). You two kids don't think this can be done ... but I'm going to prove to you it can be done."
Six months later, we made our first institutional presentation to the Illinois State Board of Investment, which serves a combination of state judges, highway patrol officers and (General) Assembly members in Springfield.
Union Bank of Switzerland and Prudential Life Insurance Co. were presenting, and we were presenting against them — and we landed the account. ... That first account was of paramount importance, from a land ownership point of view.
During your years at the helm of the Westchester Group, how large did it become?
We had $990 million of institutional capital under management and $175 million in individual investor capital.
What part of the business did you find most interesting and personally satisfying?
I found all of them fascinating. The auction company was an area I always enjoyed. Jointly with another firm, we developed a unique computer software program to run multi-parcel auctions, and it was a real game changer.
It was appealing because it catered to the little investor, someone who wanted to buy 40 or 80 or 120 acres. (Other systems) left the little buyer, the moms-and-pops, out of the auction. With our system, those bidding for pieces of land could continue to compete against the buyer who wants to buy it all.
How many other companies in the U.S. resembled The Westchester Group?
I don't think there is — or was — anybody that had all the market niches that Westchester had. When we entered the ag management business, there were nine or 10, and there are really about five today. There's been a lot of attrition. Most went out of business because they weren't able to raise capital.
How has the Westchester Group changed since its acquisition by TIAA-CREF?
It's gotten a lot bigger. They have over $3 billion in capital under management. They've tripled in size the last two-and-a-half years.
All of our institutional investors were domestic. They've taken on investors from outside the U.S.
What's your strategy for developing Murray Wise Associates? What do you see as your best opportunities for growth?
Last summer, we had a series of large auctions in Florida and Virginia for the U.S. Bankruptcy Court. We had done a few small Florida auctions before. Now we're doing a significant number of large Florida auctions. In May, we have a large auction in northern Michigan.
Did the rapid run-up in farmland prices during 2011 and 2012 surprise you?
Absolutely. I had no idea we would have deposit rates of less than two-tenths of 1 percent. I never dreamed we would have borrowing rates as low as what they've been.
High commodity prices, incredibly low borrowing rates and people getting only two- or three-tenths of a percent on deposits.
When they could go out and buy farmland and get a 3 or 4 percent return on it, that made more sense than leaving money on deposit at the local bank.
What do you think are the best types of farmland to own today, and what crops look most attractive in terms of investment?
High-quality Midwestern land growing corn and soybeans. I like the consistency, the productivity.
In the Southeastern states, Texas and Oklahoma, the risks of water (availability) is very dangerous, and in the Western states, the risks are unbelievable. ... It makes the Midwest look like a very attractive place for crop production.
Do you invest only in the most productive soils, or do you see value in investing in a range of soils?
Only in the most productive soils.
Brazil and Ukraine are gaining market share in global grain markets. Would you consider investing in farmland in either of those countries or other places around the world?
TIAA-CREF has made major investments in Brazil, as well as Australia. They're looking at Ukraine, but I don't know what their decision is.
But Murray Wise still comes back with a phrase an investor coined: "There's nothing better than the 'I' states: Illinois, Indiana and Iowa." Invest in those, and you'll be all right.
As a businessman and as an investor, what have been the most valuable lessons you learned?
Having a good strategic plan is incredibly important. A lot of people who have one file it away or put it on a hard drive. But if you really want to be successful, you have to get it out and think about it from time to time.
Greg Cozad described you as someone "always looking toward the future." What do you see coming for your business and for U.S. and global agriculture?
For U.S. and global agriculture, there will be a continuous consolidation of farms. They're going to get bigger and bigger. The efficiency of farming today just amazes me. The time it take to harvest 80 acres of corn today is so short compared to when I was a child.
Feeding the world will continue to be a very important assignment. It will not be as easy as in the '60s, '70s and '80s. We don't have the surpluses and inventories we had.
Our auction business will continue to increase by 20 to 30 percent a year. I think the geographic areas we conduct business in will increase over the next 10 years.
The V. Dale Cozad Entrepreneur of the Year banquet honoring Murray Wise is scheduled for 6 p.m. June 12 at the I Hotel and Conference Center in Champaign, with a reception beginning at 5 p.m.
The banquet is a fund-raiser for the Parkland College Entrepreneurial Program. The suggested donation per ticket is $50.
Tickets can be reserved by contacting Susan Goldenstein at the Parkland College Foundation, 351-2464.