B. Franklin Kahn, Wharton Alum, Creator of REITs

Club, Wharton School and Community Mourn the Passing of
Frank Kahn, Esteemed Club Member, Wharton Award Winner,
Wharton Alum of the Month, Exemplar
Creator of Creativity Foundation, Founder of WRIT, Father of REITs

Frank passed away on March 8, 2007. The remarks below, a sort of brief Autobiography of Benjamin Franklin Kahn, if you will, are from Frank's comments on the Creativity Foundation's website [edits in brackets, followed by excerpts from the Post obituary; we'd welcome additional comments from Frank's many colleagues and friends. Just email them to our Club by clicking here .} We have sent our heartfelt condolences to Frank's family, but if you knew him, we are sure that your thoughts would also be welcome.
Born in Washington D.C. in 1925, I was the youngest of four children, a curious problem solver cum inventor. My father died when I was seven years old. As I was a slow learner, I tried harder, and I had confidence that any job was possible. Throughout my life I have been fortunate to have wonderful mentors, who encouraged and helped to develop my creativity.

At the University of Pennsylvania Wharton School, my major was Finance. However, half of my graduation credits were an admixture of architecture, history, literature, English, economics, cost accounting and sociology. Within the Finance major, my concentration was business cycle stabilization. I deduced that many business cycles became roller coasters, because of such unforeseeable exogenous factors as wars and "acts of God," including hurricanes and famines. My conservatism springs from the belief that unpredictability throttles long-term projections.

As President of the University of Pennsylvania Debate Team, I founded a new regional league with Bryn Mawr, Swarthmore, Haverford, Princeton and other excellent nearby colleges. We were delighted when the Mayor of Philadelphia presented the new Benjamin Franklin Debate Conference with a sterling silver trophy.

Upon graduating in 1946 with a Bachelor of Science degree, my professor of Real Estate Investment invited me to return annually and to give Spring and Fall lectures and/or case method presentations in his class. Wharton School professors continued this invitation for forty-five years, during which I simultaneously sharpened my real estate investment skills in Washington, D.C.

Iorking with the Boston firm of Minot Dubois and Maddison (founded 1773), together we convinced Lyndon B. Johnson, then Majority Leader of the US Senate, to sponsor a new type of mutual fund, which substituted real estate equities for stocks and mortgage debt for bonds. The name Real Estate Investment Trusts was adopted. As soon as President John F. Kennedy signed the new REIT bill into law, I immediately convinced Maryland, Virginia and the District of Columbia to enact identical legislation. In 1960 the Washington Real Estate Investment Trust was founded, the first REIT, dubbed WRIT.

In a thirty-five year odyssey between Washington, D.C., and the Wharton School, I taught the theoretical aspect, primarily with case method instruction, which posed "real life" questions in a Socratic atmosphere. WRIT both utilized students' analytical skills and recruited the brightest students from within the school. For thirty years I simultaneously taught at Wharton what I practiced at WRIT, and vice versa.

My radical ultra-conservative long-term investment strategy includes acquiring only investments with strong growth potential, paying off all debt, and a cheapskate's control of operating expenses. Resulting superior credit ratings and thirty consecutive years of increased earnings per share produced top stock price-earnings ratios. During three recessions, WRIT outgrew growth stocks, and cyclic gyrations were flattened into an upward long-term trend line.

In 1997, the National Institute of Mental Health Geriatric Psychiatry Section diagnosed me with early dementia. Their recommendation was, "Rekindle your creative mind. Use it or lose it." As the new millennium began in 2000, I reconvened Benjamin Franklin's Junto with several Nobel and Pulitzer Prize winners, and chairmen of the Smithsonian Institution, Library of Congress, National Institute of Mental Health, and the American Philosophical Society. The Junto's most important jobs are awarding the Laureate and Legacy Prizes and mentoring spectacular creativity among our youth.

Now eighty years old, I vividly remember at age 18 being awestruck as I walked through the University of Pennsylvania Hamilton Walk gates and read Virgil's words, "I will find a way or I will make one."

B. Franklin Kahn was a past Wharton Club of DC Alum of the Month. Click here to read the article by Dr. A.J. Schuler, a fellow alum and member of our Club.

B. Franklin Kahn; Innovative Real Estate Developer

By Joe Holley
Washington Post Staff Writer
Friday, March 16, 2007; B07

B. Franklin Kahn, 82, a real estate developer who was among the first in the nation to establish a real estate investment trust, died March 8 of congestive heart and kidney failure at his home in Chevy Chase. . . .

Shortly after the REIT legislation was signed into law in 1960, Mr. Kahn created the Washington Real Estate Investment Trust, and he was president and chairman of the board until retiring in the mid-1990s. He told The Washington Post in 1986 that he had a simple rule for investing in properties: "Buy the best, and make them better." He also counseled patience.

Benjamin Franklin "Frank" Kahn was born in the District into an old Washington family that was in the jewelry business and owned real estate. Although his given names came from two relatives, he took the Founding Father reference to heart. A daughter noted that, like the original Ben Franklin, he enjoyed coining aphorisms -- "Conservative principles create principal to conserve" -- and he came up with several useful everyday inventions, including a curved rear-view mirror.

His father died when he was 7, in the early years of the Depression. After attending Paul Junior High School and Devitt Prep School, Mr. Kahn studied finance at the University of Pennsylvania's Wharton School. He graduated in 1946, and in later years returned to Wharton every year to lecture on real estate strategy.

After serving in the Air Force in the early 1950s, he moved back to Washington and worked for several real estate companies before founding WRIT. The company owned shopping centers, apartment complexes and office and industrial buildings across the Washington area. In 1986, The Post noted that the company's stock had grown steadily over the years.

Unlike many real estate firms, Mr. Kahn's company did not rely heavily on debt to make its investments, which allowed it to weather recessions and a disastrous real estate downturn in the 1970s. By 1993, WRIT had paid its short- and long-term debt down to zero. "A certain smugness seems entirely appropriate," The Post observed.

In keeping with Mr. Kahn's conservative business principles, WRIT sold its headquarters building in Bethesda in 1994 and moved into a converted garage in Kensington.

Mr. Kahn was a member of the [Wharton Club of DC], the Cosmos Club and in retirement set up the Creativity Foundation to recognize and celebrate thinkers and innovators in the tradition of his hero, Ben Franklin. Beginning in 2002 and working in collaboration with the Smithsonian Associates, the foundation has honored Yo-Yo Ma, Daniel Patrick Moynihan, Eric Kandel, Sandra Day O'Connor and Jules Feiffer. Each year's winner also interacts with young people who show promise in the arts, sciences, public service and entrepreneurship. [This year's winner will be Ted Turner on Friday, April 20, at 7 pm].

[In 1977, the Wharton Club of Washington, DC honored Frank with its Joseph Wharton Award, its highest honor.]

Mr. Kahn's wife, Joan Freed Kahn, died in 1997.

Survivors include three children, Daryl Kahn Cline of Vancouver, British Columbia, Laurie Kahn-Leavitt of Watertown, Mass., and William Kahn of New York; and four grandchildren.