BRIEFING BOOK Data Information Knowledge WISDOM JOHN CATSIMATIDIS is the chairman, owner and CEO of the Red Apple Group, which owns hundreds of millions’ worth of property, including New York’s Gristedes grocery chain. Location: Forbes, New York, New York About Catsimatidis .............................................................................. 2 Debriefing Catsimatidis ...................................................................... 3 Forbes on Catsimatidis “Inside A Billionaire Poker Game,” 12/12/08............................ 7 “America’s Largest Private Companies: #100,” 11/03/08....... 11 “Secrets of the Self-Made,” 09/17/08........................................ 12 “Richest Americans: #215 John Catsimatidis,” 09/07/08........ 14 “How Self-Made Titans Got Their Starts,” 06/03/08................. 15 “Buying City Hall,” 03/24/08.................................................... 17 The Catsimatidis Interview…………………………………………......... 20 ABOUT JOHN CATSIMATIDIS Intelligent Investing with Steve Forbes John Catsimatidis is the chairman, owner and CEO of the Red Apple Group, which owns hundreds of millions of dollars worth of property, including New York’s Gristedes grocery chain. He is also chairman and CEO of United Refining Company, which owns an oil refiner and over 300 gas stations. In December of 2008, a subsidiary, United Refining Energy (URE), went public on the American Stock Exchange. Forbes estimated his wealth at $2.1 billion in 2008, ranking Catsimatidis at #215 on The 400 Richest Americans list. Though a lifelong Democrat, Catsimatidis has public mused running as a Republican for mayor of New York City. A devout Greek Orthodox, Catsimatidis helped raise funds for a new chapel at Camp David during former President George H.W. Bush’s term. Catsimatidis has his pilot's license. He ran a business, using a small fleet of corporate jets to shuttle gamblers from New England cities to the casinos in Atlantic City, N.J. Catsimatidis sold the business, which ran under three different names, in 1990. Catsimatidis’ love for flying also inspired him to buy regional airline Capitol Air, but it went bankrupt by the mid-1980s. Catsimatidis and his family immigrated to the U.S. from Greece when he was six months old. He studied at New York University but left to open his first grocery store in 1969; he owned 10 stores debt free by the age of 24. In 1977, he invested $5 million into Manhattan real estate; within five years, the property was worth $100 million. Catsimatidis and his wife, Margo, have a son and a daughter. They live in New York City. - 2 - DEBRIEFING CATSIMATIDIS Intelligent Investing with Steve Forbes "I'm not the same type of billionaire as Mike Bloomberg. He came from Boston; I came from the city of Manhattan. I know these people--I know these people as well as anybody in this city. I used to play stickball on 135th Street." --John Catsimatidis Interview conducted 2-25-09 By David Serchuk Forbes : What is one misplaced assumption in the business world? John Catsimatidis: A misplaced assumption? That everything goes up forever. I think we went through a period of overexuberance ... I looked at it and said, "This can't be that high that soon." I also looked around and said, "There are too many rich people around. Somebody has to work." A year ago, I looked around and that's what I actually said. Don't rich people work? Presumably, unless they're sitting around thinking their hedge fund will earn them 15%. I think that's a wrong assumption. Life is not that easy. You're not going to sit around and collect 15% on your money forever. What is the greatest financial lesson you've ever learned? That there's no free ride. You have to work at everything. You've got to make it work. How did you learn this? Just from life in general. Things are not that easy, and you actually have to work at it. You try to teach it to your kids. How's that going? It's hard to teach. Because my kids, who are 16 and 18, were born in a country-- what is the expression in the movie The Way We Were?--"a country made of ice cream." They never saw bad times. Will that change? - 3 - I think it will be a lot tougher in the future than it's been in the past. It will be tougher--the large salaries earned on Wall Street will not be there anymore to the extent they were in the past. As they used to say, we're going to have to make money the old-fashioned way: work for it. Who is the greatest financial mind working today? There are several. I had dinner with Carl Icahn last Thursday; I think he's a bright guy. Very analytical. As far as Washington is concerned--well, if you would have asked us a year ago, we could have said Greenspan, but I don't think we can say that anymore. A lot of this stuff happened under his watch. All these bonuses that [were] taken back in 2005- to 2007 were based on projections and based on financial models. And I'm not sure they ever deserved to make those bonuses. What is your bold prediction for the future? I think America will recover. America always recovers. It's going to be a lot more restrained than the over-jubilance we had ... I think it will take at least two years for real estate values to work themselves out. The banks are getting mixed signals from the government: One signal says increase your capital positions, and the other says lend to the public. Every time they lend to people and mark it to market, it reduces their capital position, which is a Catch-22, and you've got the bankers running scared. American business will not recover until the bankers stop running scared. So you have two aspects of the country recovering. The federal government has to assure banks they have to put out the money and not reduce the value of the loan on their books the day after. And unless we fix that and the banks open up and start lending again, America can't recover, because the federal government is giving them money, but they're scared to lend it back out again. Also, people that want to buy homes have to realize you have to work hard, save money, and put up 20% to buy a home. Not that there's free ride to buy a home on 100% financing--it doesn't work. The other way, the banks have to make money the old fashioned way. Collect deposits from the public to lend it back out again. Not to create all these elaborate financial instruments and become financial casinos, to actually be banks. If you borrow money, you pay depositors at 3% and lend at 7% and make 4% in between. They have to pay for the cost of money and the borrower had to pay for the loan, and they make the spread in between. They make all these financial instruments; - 4 - nobody knows what the balance sheet of the banks looks like. The balance sheets have no transparency--this is why nobody wants to invest with money- center banks. You made a killing in real estate in 1977. Do you see a similar buying opportunity now? I think there are key portions, key items you can buy in real estate. You've got to buy quality and key areas. Location, location, location. If you buy on the ocean, or you buy on Manhattan on key avenues, yes. If you buy in Perth Amboy, N.J., I'm not sure you're going to make a killing. Do you have any property in Perth Amboy, N.J.? I don't have any property there. Real estate goes up by people's desire to own. Ocean-front property. Manhattan. Europeans, South Americans, Asians want to own it. It goes back to supply and demand. If a lot of people want to own it, prices will go up. If nobody cares about it, the price isn't going to go anyplace. What are your plans for mayor now? It looks like Mayor Michael Bloomberg is staying put. My plans for mayor are [that] we have our exploratory committee; we will wait and see what happens. The person who becomes mayor will become the last person standing. Now there are outstanding lawsuits against the mayor for trying to overturn the city council and for using the city council to overturn the referendum that the people of the city of New York voted for, for term limits. And they voted for it twice. To use the city council, a lower authority … I look at the people as a higher authority. Would you run against him? We would look at it. I don't have a desire to run against [him]. Let's see what the courts say. Today the state senate and state assembly progressed a bill to overturn the city council's extension of term limits. Is it healthy to have two billionaires battling it out for mayor? I don't know. I grew up on the poor side of New York at 135th Street. I do business in the Bronx, Manhattan and Brooklyn. I'm a neighborhood kid. Maybe the value of my real estate is higher, but I'm still the same neighborhood kid I was around 20 years ago. I'm not the same type of billionaire as Mike Bloomberg. He came from Boston; I came from the city of Manhattan. I know these people. I know these people as well as anybody in this city. I used to play stickball on 135th street.