The Great Recession of 2008 and 2009 has hurt not just the everyday working person, but also those who harbored big dreams in real estate only to see fortunes vanish as the bubble burst. In this Recession Diaries three-part special, developer Paul Pierce (whose name has been changed) shares his story of boom to bust through exclusive WalletPop interviews and excerpts from the diary he began writing hours after the biggest deal of his career fell through -- leading to losses in excess of $40 million.
On Saturday, Nov. 1, -- All Saint's Day, as he knew from his Catholic upbringing -- Paul Pierce walked into a Philadelphia Rite Aid store, plunked down two bucks and bought a notebook with a marbled red-and-white cardboard cover, the kind grade school students use to do homework.
Then he returned to his luxury home in the Society Hill neighborhood just a few blocks away, a double-lot house that developers like Pierce dream of building or buying for their families once they hit it big.
His stomach in a knot, he sat alone at the island in his spacious, modern urban kitchen, and started scrawling:This is the diary of a guy that started his own real estate firm. He graduated to retail development and thought he was pretty successful. On paper, his net worth was close to $30 million and he enjoyed luxuries that most people well off enjoyed. But soon, without knowledge, he lost it all and his company.
Had he "lost it all"? Though a high-flying real estate wheeler-dealer, Pierce was not given to exaggeration, especially in a brand-new journal for his eyes only.
Only 48 hours earlier, he stood poised to close the biggest deal of his young, promising career. It would bring Target, Mervyn's, Lowe's and Best Buy to a mammoth suburban shopping center. But while Pierce had seen banks tighten their belts in previous months, he hadn't counted on the recession denting Target's sales to the point where they'd cut off construction of new stores -- like the one they'd promised him weeks earlier.
So Pierce was utterly unprepared when the Minnesota-based retailer pulled the plug during a phone call the previous day, a very scary Halloween. Then Lowe's caught wind of what Target had done and followed suit. Then more retailers backed out. The dominoes were tumbling.
"From a retail and financing perspective, the music stopped. It completely, 100% stopped," he recalls.
The project had taken Pierce years to arrange. He'd signed guarantees worth tens of millions of dollars, never thinking for a moment that the banks would have to come calling for their money. But in less time than it takes to hold a 24-hour clearance sale, Pierce's shopping center was dead. Pierce thought he was finished, too.
I never have been so buried, so depressed in my life. I don't think there's any chance I can conceivably ever get out of this Hell!!
For Paul Pierce, a Pandora's box of financial and personal nightmares had just taken flight. And like a prop from a Charlie Chaplin tramp film, the cardboard-bound journal became a humble, almost farcical blotter of solace as his corporation collapsed, and his net worth plunged into the negative eight digits.
Even the dream home he'd moved into just months earlier now faced a very uncertain future. So did his marriage to a patient Southern woman with a sharp sense of humor and copious coping skills. She was a teacher and longed for domestic sanity and stability, not Pierce's money. That week, Pierce wrote:
Came home and wife commented that I should fire two of my associates. Her point wasn't taken well but necessary; she was feeling that they were taking bread off our family table. She's willing to sell her jewelry to make ends meet.
So what made Pierce start the first diary he's ever kept? He couldn't pretend that keeping a journal would make total sense of his free fall, or that he'd find the insights to fix what the economy had irreparably broken. Instead, he used paper and pen to vent, to record events, to ask rhetorical and often bleak questions, and to claw to the heart of a yawning chasm in his life, one that predated his financial hole. He sensed that an inner emptiness had haunted him for some time -- even months earlier -- while deals still cruised through, before the real-estate market tanked, back when his Midas touch turned land to gold seemingly at will.
Pierce's self-styled assignment: To confront those gnawing feelings and make changes. Permanent changes. But first, he would have to fight every temptation to give up, and beat back recurrent thoughts of harming himself.
Tues. Nov. 11: Saw my therapist and told her the inevitable is going to happen. Bankruptcy. I now need to structure to protect my family. This is my worst nightmare. If I got hit by a truck it would either be over or I would have an excuse...
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