From retail ‘debacle’ to real estate mega-success

Murray Dalfen, CEO of Dalfen’s Limited and Dalfen America Corp., found success by investing strictly in industrial property in the U.S.

Murray Dalfen considers his wife Karen to be the most important person in his life, not only because of their 46 years of marriage, but because she played a decisive role in what became his real estate investment success and the way he leads his life as a whole.

Dalfen, 66 — CEO of Dalfen’s Limited and Dalfen America Corp. — started off in the “shmata” retail business in 1970 working for his family’s chain of Dalfen’s department stores in eastern Canada and started investing in real estate a dozen year later.

“My wife, who had just finished a Masters degree in Human Relations at American University in Washington, D.C., did an analysis of our company at that time,” Dalfen told The Suburban during a recent interview at his company’s Westmount office. “She determined we had 400 employees in retail, and losing money; and four employees in our real estate division, and making money. I thought, ‘maybe I should be doing something else.’”

The store properties were sold in 1990 and that “something else” was investing exclusively in real estate, starting in 1992 with a retail property in Florida.

“I didn’t have much money because we had just gone through the retail debacle,” Dalfen said. “It compelled me to find investors. Six people had faith — I didn’t have a whole lot of experience. We filled up the building to 100 per cent occupancy over a year or two.”

Dalfen, with groups of investors, then bought retail, office and industrial buildings in the U.S. each year — until he saw a peak.

“In 2007, prices were too high, so I suggested to our investors that we sell everything. We sold about 75 per cent of the portfolio we had collected since 1992.”

It turned out to be a good time to sell. The next year, the American real estate market collapsed.

Then in 2010, Dalfen said they made a very important decision. “We collected 35 investors for one fund, Ashrei 1 — Ashrei is Hebrew for happy and praiseworthy — with a sole focus on industrial buildings, which became our most successful spaces.”

Ashrei 2, created in 2013, also invested strictly in industrial property in the U.S. and was almost double the size of Ashrei 1.

“We purchased about 30 buildings,” Said Dalfen, adding that they ended up with 60 investors. “The returns have been consistent with what we experienced with Ashrei 1 — 23 per cent a year. We’re now selling off the balance of the assets of Ashrei 2.”

Ashrei 3 was started this past January, and several hundred million dollars in industrial real estate in the United States will be acquired with an even larger group of investors (Full disclosure: Suburban ownership is an investor in the funds).

Dalfen says industrial real estate is the least expensive to operate, easiest to understand and involves facilities that receive and ship products — a booming sector thanks to online shopping.

“I would never invest in shopping malls,” he says. “The movement from retail to distribution centres is the most significant real estate change in history. If you’re doing online retail sales, your market is the world — 24 hours a day, seven days a week.”

Dalfen’s property investments are in states like Florida, Minnesota, Georgia, Texas, Nevada, North and South Carolina and Ohio. “We like to deal in one currency, and we know America better than we know Montreal. We have extraordinary contacts with the brokerage and the lending community.”

Dalfen is also deeply involved in philanthropy in the Jewish community, which began in 1982. That year, the Sabra and Shatila massacre took place in Lebanon, when Christian Phalangist troops killed Palestinian civilians.

“The whole world decided Israel was to blame for two tribes killing each other. I became incensed. On the next day, my father was with a gentleman representing Technion University, in Haifa. I was complaining ‘why does the world blame us?’ He said ‘why don’t you do something?’ I became involved in Technion as a fundraiser and a member of the board over many years, and I’m still involved as a contributor.”

Dalfen has also been funding a water purification research project. “The greatest waste of water in Israel is wastewater, and they’re now able to treat some 2 billion litres of water a year and recycle it, from the project that started in 1982. That’s very important to me.”

Dalfen is also involved with Chabad of Westmount, was co-chairman of Israel Bonds Canada with Ora Stolovitz, where they raised more than $100 million; and president of the House of Israel Synagogue in Ste. Agathe, where he participated in its reconstruction and renovation. He also financially supports the Jewish General Hospital and Federation CJA, as well as the Montreal Heart Institute.

Dalfen and his wife have two children — Sean, president of Dalfen America Corp., who lives in Dallas, Texas; and Jordana, who lives in Chicago with her family.

Dalfen is content with both his business and personal life.

“I’m really happy with the way things have evolved, and I’m grateful to God and to my family. My focus has always been on integrity, and that’s the core focus of our whole company. Everybody is dealt with in a transparent and honest way, and that generates confidence.”

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