Empty shopping malls in California, idled oil fields in Texas and the highest unemployment rate since the Great Depression paint a dire picture for the American economy.

The reality is more complex, as evidenced by the closely held firms that will play a decisive role in dictating the size and timing of any recovery.

Bloomberg interviewed four billionaire owners of family-owned companies in real estate, oil, media and technology about their experiences during the pandemic and how they’re positioning their firms for the coming months. Here’s what they had to say:


The Retail Pioneer

Rick Caruso spent an afternoon late last month visiting three of his high-end retail properties in Southern California. Walking the largely deserted streets was a surreal experience for the Los Angeles-based developer, whose signature outdoor mall, the Grove, attracted more visitors than Disneyland before the coronavirus crisis.

Early in the year, closely held Caruso Affiliated — whose net operating income has compounded at an annual average of almost 20% over the past three decades — was exceeding its 2020 performance targets, he said. Then things ground to a halt in March.

“This is a survival-mode exercise,” Caruso, 61, said in a phone interview. “It’s a different mindset that I’ve had to to learn how to change into. It’s not how you grow the business. It’s how you survive and then recover.”

He has deferred rents for smaller tenants and said he now spends about half his time working to navigate the current crisis and ensure the company ends the year with enough available capital to execute on growth opportunities. He spends the rest of his time strategizing with his team about how to reposition the business for a change in consumer behavior and calling other chief executive officers to compare notes.

“There’s no playbook,” said Caruso, who’s chairman of the University of Southern California’s board of trustees and a former Los Angeles police commissioner. “So you’ve got to run on your best judgment, your gut.”

Retail may be in the doldrums, but Caruso’s confident his particular offering — built around plentiful outdoor spaces and high-end boutiques — will continue to thrive.

“Nobody is going to come back at 100% of what they were doing in revenue before it stopped,” he said. “You’re going to see a number of bankruptcies also. But do I think outdoor brick-and-mortar retail, street-front retail, is going to survive and then eventually thrive? Absolutely.”

The crisis has also underscored the benefit of keeping his firm private and conservatively leveraged.

“You look at the publicly traded real estate companies and they have just gotten destroyed in the market,” Caruso said. “We can make decisions in a split second and in these kinds of times, where you’ve got a crisis going on, we want the ability to do that.”

Post-pandemic, he’s expecting demand to soar for developments offering outdoor space and intends to push ahead with planned projects, though at a slower pace.

“We’re going to be in a very good place because people are going to gravitate to places where they feel safe, that are clean and they can see the sunlight and there’s fresh air,” he said. “It’s much more complicated reopening and rebuilding your business for indoor malls.”

By Tom Metcalf and Devon Pendleton

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