The Flywheel

Next Meeting: September 17TH

Breaking the Cycle, The Adolescent Parent Program

Teen moms

Moving forward in health, safety and education to address the challenges of children raising children. Patti Menjou, Program Coordinator for the Adolescent Parent Program at Richmond High School and Kathy Hardy, Associate Director of the YMCA Child Care Programs give us a perspective from the front lines of Richmond's high schools.


Last Meeting: September 10th

Welcome, Invocation, Thought for the Day

Prez Alan Baer rang the bell.  The flag was saluted with Chicago Joey Baggs Bagley doing the honors and Stoney Stonework leading the invocation for Peace, Freedom and Justice. Henry Kelman’s thought for the day was that the “media” should be ashamed of itself for raising an obscure religious nut to international demagogue status because he is crazy enough to think ‘burning the Koran’ will show those Islamic terrorists a thing or two. And, that this is somehow ‘good for America’.


  • Alan Baer encourage participation in the San Pablo Rotary October Fest Thursday October 2nd at the Rockefeller Lodge from Noon to 6 PM, .
  • Prez Alan then encouraged all members to get their $7 participation in the Dictionaries for Africa Program to Treasurer David Brown.
  • Prez Alan then cleared up the confusion over the WCCUSD 3rd Grade Dictionary giveaway which is different and is looking for volunteers to participate with the giveaway at school sites in Richmond.
  • Treasurer David Brown encouraged everyone to contribute to the Perez Teacher Support effort. This is our annual $100 gift to every teacher at Perez to help them defray the cost of all the incidentals they buy for their classrooms throughout the year. Judy Kafka enthusiastically chimed in saying this small gift is real ‘moral support’ for the teachers.
  • Past president Pam Jones reminded everyone of the BARSHEEP Rotary booth at the Solano Stroll on Sunday. (Hopefully you remembered because it is over now until next year)
  • Pam also encouraged participation in the District conference in Sacramento, November 4 and 5. If you want to advertise your business in the ‘participation baskets’ you can do so for free as an attendee. Contact Alan or Pam for details.


Jim ‘The Beav’ Beaver asked Jim Young, “What’s up?” Jim said that in addition to all the celebrating he and Linda have been doing this year Sunday September 12th is their 40th wedding anniversary. But who’s counting? Compared to the Italy trip this weekend will be low key. Doing some sort of math that involved the number 40, Jim contributed $200 to Polio Plus and encouraged the members to “match it, and wipe that scourge off the face of the Earth”.

Happy & Sad Dollars

  • Pam Jones had Happy $$ because her daughter was successfully married in Berkeley last weekend.
  • David Brown had Sad $$ as Rotarian Joe Nusbaum who was at Rotary a couple of weeks ago is not doing well.
  • Herb Cole had Confused $$ because he wanted Pam to tell more of the wedding story, about the Stanford wedding guests being trapped by the Cal Band on a bus and calling the cops and somebody getting run over by a bicycle, and stuff like that.
  • Erle Brown had Happy $$ because his good friend Chicago Joey Baggs Bagley will no longer have to travel to Chicago to vote two or three times a year as Richard Daley is stepping down as Mayor.
  • Jan Brown had Happy $$ for next week’s program, much planned and rescheduled, about the Adolescent Parent Program (APP) that exists in the school district in large part because of Rotarians like Jan, Rhonda Harris, Don Lau, and Herb Cole.
  • Between David Brown and Jim Beaver, Happy Dollars, or possibly ‘my dollars are happier than your dollars’ were thrown around about the Cal/UC Aggies football game. This ended when Tom Waller had terse dollars for the Aggies ‘academic prowess'.
  • The Beav concluded Happy and Sad Dollars with his sad observation that the Dodgers will probably not win the pennant this year.

Norm's Nonsense

Quotes from Mae West:

- I like two kinds of men: domestic and foreign.

- Mae West was showing a woman friend all the gifts she had received from men which included a fur coat, diamond necklace, bracelets, rings, and more. The friend exclaimed "My goodness!"
Mae West replied "Goodness had nothing to do with it."

- I may be over forty but every morning when I get up I feel like a twenty-year-old. Unfortunately there's never one around.


Global Real Estate Securities

Joel Beam

Jim Young introduced today’s speaker Joel Beam, a 40-year old Cal grad and Fund Manager for Forward Management, an investment management and advisory firm in San Francisco where he manages the Forward Select Income Fund, a $1B mutual fund that specializes in investing in the preferred stock of Real Estate Investment Trusts and real estate owning corporations.  In 2009 Beam’s fund out performed 93% of its peer group and was recognized for this accomplishment by Bloomberg.

Beam started working at Liquidity Fund Investment Corp. in Emeryville while he was a sophomore at Cal as an analyst. After graduation he joined Liquidity Fund but then followed some of his former colleagues when they formed the Kensington Investment Group, “…in a garage in Kensington.” KIG prospered in the late 90s and early aughts and was acquired by Forward Management after the liquidity collapse in 2008. Beam was pleased to transit to Forward Management with the core team of colleagues from KIG and has continued his successful strategy of selective preferred REIT acquisitions as described above. Beam made the following points about global and US real estate markets:

  • The global ‘investment real estate market’, including commercial, industrial and multi-family residential housing in the US, Europe and developed Asia (Japan, Singapore, Hong Kong, Australia and New Zealand) and excluding agricultural land and less developed countries is valued at $17T.
  • US investment real estate is valued at $6T.
  • 10% of the investment real estate in the US is owned publically, mostly in REITs.
  • Real Estate Investment Trusts (REITs) are an efficient way to own real estate because they are traded on markets and provide liquidity that is unavailable to real estate ownership, and because their income is paid to dividends instead of income taxes. This can provide for material tax avoidance when properly placed in tax exempt investment funds like IRAs.
  • Historically REIT mutual funds have paid dividends 4% - 5% over similar non-REIT mutual funds.
  • In addition to resolving tax liability issues REITs historically have provided incomes that continue beyond owner’s life span and have effectively preserved original capital investments.
  • While Beam is not shy about identifying the benefits he sees in REIT mutual funds he says they are not risk free.  Noting that we are in the “…Mother of all recessions…”  Beam said REITs are cash dependent and need access to capital because they pay out all their income as dividends.
  • The current anemic capital markets have created problems, especially for highly leveraged REITS and you can expect them to get a lot of media attention as they fail over the next several months.
  • Beam also said that the continuing need to ‘rollover’ 5, 7 & 10 year commercial property financing for highly leveraged properties (and he mentioned a couple in New York but I didn’t get their names) will be dramatic, but not representative of all investment real estate.

Rotarians asked some cogent questions:
“What about loan maturity risk in a REIT portfolio?
Beam said it is very real and one of the primary things he considers before investing in a REIT.

“What do you think of the warehouse investor ProLogis?”
Noting that they are a global leader in warehouse real estate investment, Bean said he considers them a ‘fallen angel’ that is on the road to recovery. He noted that they got in “at the top of the market and were very highly leverage. Beam said there was a serious management reorganization that has stabilized the firm and that in his opinion they are, “no longer at risk”. He expects them to, “…make a lot of money.”

“The typical management fee for real estate is 5%. What is the all in management cost of a REIT mutual fund given the internal management costs of individual properties, the REIT and the mutual fund?"
Beam said it is about 5% suggesting that the efficiencies of scale and the quality of ‘investment real estate’ maintained that cost expectation.

Beam said that he thinks market fundamentals will favor investment real estate in the future because a healthy economy requires about a 2% annual addition to investment real estate stock and the ‘Mother of all recessions’ has halted that process. The standing stock will benefit from the lack of competition and it is likely that the process of launching new projects will be slow. (Mr. Beam has previously observed that not all real estate is created equal.)

Unfortunately our program ran out of time. Joel Beam’s program outline called for discussing his views of what is ‘right and wrong’ about local real estate markets. That is a program for another day.

- Jim Young, rotating scribe