People & Companies: Remembering Bob Rosenthal, an HRE ‘pioneer’

Founder and longtime president of PMB passed away on July 3 at the age of 91

By John B. Mugford

As far as Mark Toothacre is concerned, the most influential and positive person in his life has been his wife, Alice, to whom he has been married 34 years.

Next on the list is Robert A. “Bob” Rosenthal, the man whom Mr. Toothacre succeeded at the helm of one of the healthcare real estate (HRE) sector’s pioneering development firms, San Diego-based Pacific Medical Buildings, or PMB.

“He was a giant in this industry, and a true pioneer in that he was focused on developing medical office buildings before it was really a business in and of itself,” says Mr. Toothacre, who became president of PMB when Mr. Rosenthal retired in 2007 and is now the CEO and managing partner.

“Not only was he my main business mentor who taught me how to act with integrity in business and to treat our clients and tenants in the best way possible, but he was also a great family man,” he notes. “He worked very hard but he also never forgot to spend time with his wife, Sandy, their children and his grandchildren.”

Mr. Rosenthal passed away on July 3, not long after it was discovered that a tumor in his colon had metastasized.

As for his stature in the industry, Mr. Rosenthal in 2013 was named the first-ever HREI™ Lifetime Achievement Award winner.

In an email he sent on July 8 to PMB’s employees, which now number more than 100, and to other friends and colleagues in the industry, Mr. Toothacre wrote: “It is with very deep sorrow that I must let you know that Bob passed away peacefully on Monday evening after a short illness and recent surgery at the age of 91. Bob played an enormous role in the lives of all of us who worked with him. Bob’s continuing impact also extends to those at PMB who didn’t have the pleasure of working with him as well as many of our industry partners.”

In a conversation with HREI, Mr. Toothacre recalled the life of Mr. Rosenthal and how he ran PMB, which experienced many strong years of growth as well as some difficulties during which times in which the firm’s executives had to navigate economic downturns and slowdowns in the HRE sector.

“In 1991, during the savings-and-loan banking crisis, PMB dramatically downsized and Bob made the crucial decision to partner with Dr. Jeff Rush (a local radiologist who eventually owned dozens of centers offering magnetic resonance imaging, or MRI) to restructure PMB and put it on its course for what it has become today.”

What it has become today is a firm that is as “busy as we’ve ever been, with about $1 billion worth of projects currently taking place, most of them being MOBs,” notes Mr. Toothacre. In recent years PMB has expanded into the development of seniors housing facilities, life sciences projects and other types of healthcare facilities, including inpatient rehabilitation facilities (IRFs).

“He was proud of what the company has become,” Mr. Toothacre says of Mr. Rosenthal. “After all, it was his baby and he had groomed me and taught me how to take over his role. We have good people, and Bob was certainly proud of them, and he put together a structure in which the people here have a stake in the success of our projects. It’s proven to be a good way to give our people rewards for the jobs they do.”

An interesting path to HRE

These days, many young professionals are choosing career paths in the HRE sector. But when Mr. Rosenthal was starting his career, there really wasn’t such a path – because an HRE sector didn’t really exist.

After starting his career as an architect in Madison, Wis., in the 1950s, Mr. Rosenthal met Marshall Erdman, who started the well-known healthcare architectural firm, Marshall Erdman & Associates, which is still going strong today as Erdman, an advisor, designer, builder and developer of healthcare and senior housing facilities.

Mr. Rosenthall started doing “overflow” design work for the company, eventually doing more of the “front-end work,” Mr. Rosenthal told HREI in a 2007 article. “I got to learn all of this while my firm – Fritz & Rosenthal – grew at the same time. It got to the point where about 25 percent of my work was for Marshall Erdman and his company.”

In the early 1960s, Mr. Rosenthal was sent to San Diego by a non-healthcare client to do some work and “fell in love” with the city. He sold his architecture firm in 1967 moved to the San Diego area.

After buying a mailing list of doctors and group practices and an IBM Selectric typewriter, he and his wife, Sandy, started “grinding out” letters of introduction. Things went well, as he lined up several projects along the West Coast.

Within a few years, Mr. Rosenthal was asked to run a new West Coast office for a former client of his, American Medical Buildings (AMB), a Milwaukee-based firm that designed and developed healthcare projects. The company was going national and the offer it made to Mr. Rosenthal was “too good to refuse.”

Mr. Rosenthal recalled, “I started the West Coast office doing architecture – construction management still came out of Wisconsin.” As he built up the business on the West Coast – contributing about 40 percent of the volume for American Medical Buildings – he vowed to someday go into development on his own. He would tap into his background as an architect to build a company that did things differently – namely not squeeze an architect’s fee.

According to Mr. Toothacre, Mr. Rosenthal found plenty of success developing MOBs before taking a “short hiatus” in the early 1980s to develop condominiums and hotels.

“Bob was joined in his hotel venture by Jim Rohan (who would eventually join him at PMB) and they were successful in landing multiple hotel RFPs, including one that became the Hilton Torrey Pines adjacent to Torrey Pines golf course,” notes Mr. Toothacre.

However, by the mid-1980s. Mr. Rosenthal wanted to get back into the MOB business, and he acquired the West Coast office of AMB in 1988 and formed what he decided to call Pacific Medical Buildings.

“Bob pioneered the strategy of using third-party capital to deliver on-campus medical office buildings to hospital clients so that they could preserve their own capital and use it for investment in their core businesses rather than in outpatient real estate,” Mr. Toothacre says, adding that PMB was one of the first firms to use the ground lease structure to develop projects for hospitals and health systems.

Mr. Rosenthal remained the president of PMB until he retired in February 2007, when Mr. Toothacre, who had joined the firm in 1989 as a 28-year-old and performed a variety of jobs over the years, became president.

The two spent plenty of time together, including long periods of time living in the same house in Honolulu while working on a project for a health system there. They worked hard and played hard.

“Bob lived his life with zest and style,” Mr. Toothacre wrote in his email about Mr. Rosenthal’s death. “He was often referred to as a Renaissance man, and this was undoubtedly true. Bob was an architect by training, an artist – one of (his) pieces was titled ‘Burning Bush’ and is prominently displayed in PMB’s Los Alamitos building. He was also) a filmmaker, an entrepreneur, a wine enthusiast, a classical music aficionado, an excellent cook, an avid swimmer who swam regularly into his late 80s, a diver who went on many exotic dive trips – always complete with a very interesting narrated short film documenting the trips – a tennis player, a writer of short stories and political commentary, and an inventor, (as) he was working on a patent for a battery charging technology just last year.”

During his time leading PMB, Mr. Rosenthal also launched and for a period of time managed, what became the company’s “best-in-class, award-winning property management company, PMB Real Estate Services (PMB RES),” notes Mr. Toothacre.

He remained on the PMB RES board of directors for several years after his retirement. As his career at PMB was coming to a close, Mr. Rosenthal was also a supporter of and an initial member of the inaugural Healthcare Real Estate Insights Editorial Advisory Board (EAB) in 2006.

Murray W. Wolf, founder and publisher, notes, “We at HREI will always be grateful to Bob because he was one of our earliest and most enthusiastic supporters. Back in 2002, when others questioned the viability of a healthcare real estate publication, Bob was positively thrilled that we were planning to shed some light on what he felt had been an overlooked niche. When we started finding more people like Bob who were excited about the idea, that helped give our fledgling little company the confidence to move forward.”

Remembering Bob Rosenthal

HREI reached out to members of our board who knew Mr. Rosenthal and asked them to share their memories and comments about him.

■ “Bob was not only an icon in the industry, he was a man of character and integrity. I still remember my first PMB holiday party. Bob and Sandy went out of their way to spend time with (my wife) Ellen and make sure she felt comfortable. A small gesture, but one that had a great impact. Bob embodied the culture that defines PMB.” – Shawn A. Janus, national director of healthcare at Seattle-based Colliers International.

■ “I am very sad to hear about Bob’s passing. Needless to say, he is an icon in our industry. I will always remember Bob as one of the most gracious and intelligent people in our industry. I always looked forward to meeting with him, probably more than any client in my career. My first meeting with an MOB developer was with Bob in 1991. As he neared retirement, I remember talking to him about his swimming and tennis. He was an inspiration for me in that I decided to follow Bob’s example in order to stay fit and healthy as I got older. And I’ve done that – in fact, I’ve played over 10 hours of tennis this week alone. I remember the call Bob and I received about being asked to attend the first BOMA healthcare conference. We talked and thought it would be a good idea to attend and that we should try to invite other people. I think there were about 15 people that attended that first conference. I wish we could reverse time and have Bob attend another HREI board meeting. He will be missed!” – John R. Smelter, one of the MOB sector’s longest standing sales brokers and now the senior managing director with Monterey, Calif.-based Unity Medical Properties REIT.

■ “When I was first getting into the healthcare real estate business, Bob had long been an icon in the space. I was new, trying to find my way, and Bob was always someone willing to take my calls and would offer a helping hand. There was a reason he was so successful; it came down to how he treated people, no matter who they were.” – Christopher R. Bodnar, vice chairman and managing director of the U.S. Healthcare and Life Sciences Capital Markets team with CBRE Group Inc. (NYSE: CBRE).

■ “I admired Bob very much and saw him as such a fine leader in a relatively new real estate field. He brought such credibility, prestige and knowledge early on to the medical-healthcare industry. Bob paved the way for so many careers, more than he would ever know, and is admired by more than he would ever know – a sign of such an excellent trailblazer.” – Sharon Harper, chairman and CEO of Peoria, Ariz.-based Plaza Companies.

■ “I thoroughly enjoyed working with Bob and PMB on a number of transactions; he will be sincerely missed by all who knew him. Trained as an architect, Bob Rosenthal was a visionary who had the creativity and foresight to recognize that healthcare real estate was a great sub-sector to focus on. He was one of the first people in the country to see this opportunity and to capitalize on it. Further, his company, PMB, continues to this day as a testament to the principals and mission that he instilled in the company. Being a leader in this industry seemed to come easily to Bob, but he still worked hard at it and took on some serious risk to build PMB into one of our industry’s very best healthcare real estate development companies.” – Philip J. “PJ” Camp, managing director, head of real estate investment banking with New York-based H2C

■ “I remember early on in my career when I first started focusing on the medical office business, I would see Bob at conferences and various events and he was generous with his time and treated me as if I’ve been in the business as long as he had. I remember a funny story he told me about mentioning to a commercial office developer that he developed medical office buildings. The developer said something to the effect of, ‘That’s a nice little thing to do.’ I guess Bob had the last laugh. Although he had not been active in the industry for some time, Bob will be missed by the many who knew him. A great man for sure. My thoughts are with Bob, his family and all those at PMB.” – Jonathan “John” Winer, president and chief investment officer with White Plains, N.Y.-based Rethink Healthcare Real Estate.

■ “Sadly, maybe not everyone in the sector remembers Bob, but maybe I am wrong. It is quite sad to see Bob pass away, as he was such an amazing and kind person. I feel fortunate to have had the opportunity to work with him over the years. One of my first interactions with Bob was when we were contributing some medical assets from PMB to NHP (Nationwide Health Properties Inc.) in late 2009 and 2010. He and I were working through some items associated with the transaction over the phone … this was pre-Zoom call days. We had some good back and forth and give and take and we were able to get the deals closed, which was great for all of us at that time in the market. Later that year, we had a planning meeting with PMB and NHP folks and it was the first time I was able to meet Bob and really spend some time with him, not negotiating. He was an absolute joy to be with and it was great to hear his history as well as how PMB had been formed and how it evolved to where they were at the time. Bob made the comment to me at lunch one day that sticks with me to this day: ‘You are much better in person than talking on the phone.’ We both laughed at our recent negotiations and were both pleased it was over and we could continue to grow our partnership. That conversation will stick with me, along with the smirk and smile as he delivered the line that has stuck with me ever since. He will be missed and he is part of the reason we are all able to have such successful careers in this space.” – Shane Seitz, senior investment officer with Chicago-based Ventas Inc. (NYSE: VTR).

As noted above, Mr. Wolf of HREI is grateful to Mr. Rosenthal for being an early support of the publication. He adds, “On a more personal level, I just enjoyed Bob. He had an infectious enthusiasm for the HRE business – and life in general. He was obviously very bright and successful, but he was also kind, down-to-earth and simply fun to be around.”

Mr. Wolf recalls how, after being presented with the inaugural HREI Lifetime Achievement Award in 2013, Mr. Rosenthal lifted the award above his head and quipped, “This proves that if you stay with anything long enough, you’re bound to get one of these.”

But that sort of recognition requires more than longevity, Mr. Wolf says.

“Back in the early 2000s, Bob and his wife, Sandy, were passing through the Twin Cities on their way to Wisconsin for a school reunion, and they made it a point to invite me to breakfast at their hotel while they were in town,” he recalls. “HREI was still a pretty new and obscure publication back then, yet here was the founder and CEO of one of the biggest firms in the industry taking the time to have breakfast with me.

“There was no compelling business reason for us to get together. I wasn’t working on a story and Bob wasn’t seeking publicity. But what followed was a delightful breakfast with Bob and Sandy. I soaked it up as Bob regaled me with amazing stories of the ‘old days’ of healthcare real estate, and Sandy was equally charming. It was a classic Bob moment. I left wishing that I met him earlier in my career – and that I had been taking notes, because our ‘off-the-record’ chat would have made a great story.

“It was those kinds of gestures that endeared Bob to so many of us. I miss him already.” ❏