Latest / Icons of DC Area Real Estate / Sean Caldwell- Values Driven Developer (#112)

Transcript

Sean Caldwell- Values Driven Developer (#112) · Icons of DC Area Real Estate

• 0:09
  Speaker A: Hi, I'm John Koh and welcome to Icons of DC Area Real Estate, a one on one interview show highlighting the backgrounds and career trajectory of leading luminaries in the Washington, DC area real estate market. The purpose of the show is to highlight their backgrounds and their experiences and some interesting stories about their current business as well as their past, and to cite some things that you might take away both from educational standpoint as well as lessons learned in the industry and some amusing and sometimes interesting background stories. So I'm hoping that you will enjoy the show. Before I introduce my guest, I'd like to share that both this podcast and the community I started in 2021, called the Iconic Journey in Crew, is now part of a new nonprofit organization with that same name. The new company will offer opportunities for sponsorship to grow the community both in membership and in programs. It also allows you as listeners to show your appreciation for this podcast, which has delivered episodes twice monthly since August 2019 with a charitable contribution. Transitioning the community and podcast into the nonprofit organization is underway. The community, which is open to commercial real estate professionals between the ages of 25 and 40 years old, is currently up to 65 members and growing. If you would like to learn more about either joining the community or contributing to the podcast, please reach out directly to me at John coenterprises.com separately, my private company co enterprises now we'll focus only on advisory work for early stage real estate firms and career counseling. If you have interest in learning more about its services, please review my website@coenterprises.com. dot thank you for listening. Thank you for joining me for another episode of icons of DC area Real Estate. I'm so pleased to share with you my guest for today's show, who is Sean Caldwell, the executive managing director and co founder of Mill Creek Residential. Shawn takes us on a journey through this remarkable career, from his early days as a civil engineer to his pivotal role in shaping the landscape of real estate development. Sean shares his personal origin story, revealing how a mediocre student found his passion and became a leader in the industry. His transition from civil engineering to real estate development is a testament to the power of mentorship and seizing opportunities. He describes the formation of Mill Creek residential and its rise from the Trammell Crow residential ecosystem. He talks about the entrepreneurial spirit and the institutional discipline that fueled the company's success even in the wake of the 2009 recession. He talks about how Mill Creek Residential maintains its local business approach amidst institutional growth. He discusses the challenges of combining multiple operating partnerships into one entity when they were formed. He also talks about innovative capital strategies that they have with regard to joint venture and small funds. And he talks a little bit about their philosophy of either long term holding or merchant building, and they look at each property that way. We talk about several interesting projects, including the former italian embassy in Washington, DC, that they converted to residential property, along with a site that I actually financed back in the 1980s, which is now going to be redeveloped. It was a former shopping center in northwest Washington being redeveloped into a mixed use development called Lady Bird. He talks also about embracing technology and market trends. We talk quite a bit about the multifamily market and their foray into the single family build for rent business. We talk about what he sees as cultural influences on their business operations, comparing Maryland, DC and Virginia. And I discuss some of the history behind that. He also talks about his leadership and hiring philosophy, looking at values in young professionals, and his approach to fostering personal growth, leadership and work life balance. And then he also offers his sage advice for aspiring leaders, reflecting on his career and taking risk, embracing failure and leading by example. So without further ado, please enjoy this wide ranging conversation with Sean Caldwell. So, Sean Caldwell, welcome to icons of DC area real estate. Thank you for joining me today.
• 5:28
  Speaker B: Thank you for having me, John. It's thoroughly my honor.
• 5:31
  Speaker A: So please tell me about your role at Mill Creek residential and your day to day activities at a high level, and then we'll talk a little bit about your background after that.
• 5:40
  Speaker B: So my position is executive managing director and one of the founders of Middle Creek, where as we'll discuss, we're a spinoff from Tremulk Residential. I oversee the development operations in five markets, Boston, New York, DC and Charlotte Morale sit on investment committee. And that's what I do on a day to day basis, oversee, really spend time on the development deals and help structure the financing.
• 6:12
  Speaker A: Do you just do development or are you doing acquisitions, too?
• 6:16
  Speaker B: So personally, Mill Creek is active in the acquisitions market. We'll expand on that later. I see the acquisitions through the investment committee, but personally, I'm not involved with the acquisition teams. Separate groups, separate vertical that we'll chat about that's really growing in size and scope. But that's not on my day to day responsibility.
• 6:37
  Speaker A: But you will buy dirt?
• 6:39
  Speaker B: Absolutely will. We try to buy a lot of dirt. We try to buy that dirt right around construction start. But yes, we are in the acquisition. So sorry. So acquisition side? Yes. So the development, the developer at Milk Creek is cradle grave. So you're chasing land, you're tying up the land. You're getting it approved, designed. You're seeing all the way through completion and sale.
• 7:05
  Speaker A: So even asset management through the project, you're still involved, which is interesting.
• 7:11
  Speaker B: Yeah. Correct. Well, we have new verticals for that, but the developers are touching everything from a letter of intern. Developers are touching everything from a letter of intent all the way through sale. That's great. Yeah, that's fun.
• 7:24
  Speaker A: So let's go to your personal origin story, if we could. Shawn, where'd you grow up? And tell me a little bit about your family, your parents and background. Yep.
• 7:34
  Speaker B: Yeah, I'll start with my family. My parents and both of my parents are local, which I think is unique. I think, as, you know, being local. You're from Michigan, right?
• 7:44
  Speaker A: Right.
• 7:44
  Speaker B: So that's more common here than it is being local, of course. And my mom grew up on the Maryland side, grew up on this side. She was a BCC Bethesda Chevy Chase graduate.
• 7:56
  Speaker A: That's where my children went.
• 7:57
  Speaker B: Oh, is that right? Okay.
• 7:59
  Speaker A: Yep.
• 7:59
  Speaker B: Probably a different class. She was 55, so, yeah, my dad was a bit of a noma, had a nomadic childhood, but ultimately graduated from Falschurch high school. So what's interesting is both sides of the family have sort of a construction background. Mom's father owned a. An electrical contracting business called Bethesda Armature, which you may have heard from back in the eighties. So that was her dad's business. My dad's dad and my dad were both kind of working class guys at their heart. Do it yourself. If you weren't building it yourself, it wasn't going to be built. So there was a little bit of construction on both sides. So they met and raised our family in the city of Falls Church, three blocks from our founders Road community, which we'll chat about later. They raised three children there. I'm sorry. They raised three of my brothers and I, though there's four of us, so I've got three brothers, stayed there for pretty much their whole life. So I'm a local northern Virginia guy. As far as you know, the rest of my family, my modern day family, I have three great kids that are from a previous marriage. The oldest one is in Chicago. Jesse. The middle one's in Tel Aviv, married in Tel Aviv, and then the youngest one's graduating college in London right now. And the last part of my family that I'll share is you and I have something in common. You've been married for 41 years.
• 9:32
  Speaker A: That's right.
• 9:33
  Speaker B: You've been married 41 years. So I've been married for 41 days.
• 9:41
  Speaker A: Wife number two.
• 9:42
  Speaker B: What's that?
• 9:43
  Speaker A: Wife number two?
• 9:44
  Speaker B: Yes, exactly. Okay, so Jill and I have been married for. We just got married in March.
• 9:50
  Speaker A: Congratulations.
• 9:52
  Speaker B: Thank you very much. That's exciting. Very exciting. So this is a podcast on, you know, 41 days of successful marriage. I'll happy to expand on that.
• 10:00
  Speaker A: How did you meet your second wife?
• 10:03
  Speaker B: Oh, great question. So I'm sure the same way that you met your wife. It was on the apps.
• 10:09
  Speaker A: No, I met mine in a mailbox in our. We lived in the same community, and we just met at the mailbox.
• 10:17
  Speaker B: Is that right? Yeah, kind of. Very cool.
• 10:19
  Speaker A: Yeah.
• 10:19
  Speaker B: How old were you guys when you met?
• 10:21
  Speaker A: 28, 27.
• 10:24
  Speaker B: And what city were you guys in?
• 10:25
  Speaker A: We were in Wichita, Kansas. She's a Kansan, and I'm from Michigan, but that was one of my stops early in my career was down there.
• 10:33
  Speaker B: Very cool. That's awesome.
• 10:34
  Speaker A: Yeah.
• 10:35
  Speaker B: So we met. We met just before the pandemic, and I think the pandemic forced her to stop dating other people, and she had to pick somebody so fortunate that she picked me and.
• 10:46
  Speaker A: Online app.
• 10:47
  Speaker B: Online app, yeah.
• 10:49
  Speaker A: Interesting. And so my son and his wife met.
• 10:52
  Speaker B: Is that right? Yeah, it's interesting. It's much more. It's the modern world of dating. So, yeah. So, recently married.
• 11:01
  Speaker A: That's great. That's exciting. So you. Then you went to high school, I assume, in northern Virginia.
• 11:10
  Speaker B: I did so. Went to. Went to Bishop O'Connell High School in Arlington. So we. Which was, you know, I would say we'll chat about this more, but, you know, very mediocre student. Fortune of education. Being in the working class family that I was.
• 11:27
  Speaker A: Sports.
• 11:28
  Speaker B: So great question. I was. I did play sports, but I was not good. You know, I was very, like, I played a little bit of football. Wasn't that great? Found my athleticism, actually, in college, where I started playing rugby.
• 11:43
  Speaker A: Ah, okay.
• 11:44
  Speaker B: So in high school, I was just not, like, you know, very mediocre athlete. You know, mediocre student. Really, like, found myself later in life. Yeah.
• 11:56
  Speaker A: So you went to George Mason.
• 11:57
  Speaker B: That's right. That's right. So with my, you know, with my family, the choices were really. You're gonna go in state? Wonderful choices. In Virginia, I wanted to be an engineer. I had no idea what an engineer did, but I knew I wanted to be around designing things. What's interesting to step back is with my family's background. In high school, my first job was, I was 14 years old, and I worked at a local construction company called Marlowe's construction. So before I was even legally able to work I was actually working on construction.
• 12:35
  Speaker A: A laborer or what?
• 12:36
  Speaker B: A laborer. Yeah. So I was a laborer, and I was like, a carpenter's apprentice by age 16. So really? That's great. Yeah, it's cool. Summers in high school, summers in college, and so going into college, you know, I really thought, I'll be an engineer. I'll do something like that. And I took a very atypical path. George Mason, atypical university back then, much more of a commuter school. And the only program they had at that point was actually electrical engineering. And, John, after three years of electrical engineering, I realized I really hated it.
• 13:19
  Speaker A: Was it all the math in it or what was it?
• 13:21
  Speaker B: You know what it was. That's a great question, John. It was. I couldn't visualize it, and it was how I learned. Right. So the theme here we'll chat about is just who are you and how do you learn and what inspires you?
• 13:36
  Speaker A: Right.
• 13:37
  Speaker B: So at the end of three years, there was a new program. I am the very first. I was the first student at George Mason to register for a new program of civil engineering.
• 13:49
  Speaker A: Oh, interesting.
• 13:50
  Speaker B: Yeah. It was called urban systems engineering back then. And I had two choices. Right. I was living on campus playing rugby more than I was probably studying, and my two choices were probably quit engineering and go be a carpenter or try this civil engineering thing. So I decided to do both. I actually moved back home. I worked construction in the morning, and then I went to school at night, which made for a very atypical college path. One of my dad's. One of my favorite lines of my dad was he would always say to me that I was. I successfully graduated from college in three terms, Reagan, Bush and flank.
• 14:37
  Speaker A: So ten years or so.
• 14:39
  Speaker B: It was about six years. It was six solid years. Three years and three years. But it was a. It was. It was the perfect program. It was. Civil engineering was. Spoke more to me. I could see it. You can see a bridge, you can see water, you can see structural. I couldn't see circuitry. That's not how my brain worked. And the program was really strong on communication skills and how do you present and how do you write? And it was. It was a really. It was a really wonderful program for me. That's great.
• 15:11
  Speaker A: So then what?
• 15:12
  Speaker B: So then what? So then it's. So I get out of college in, like, 1993. Right. Okay. And this is so you know this. Right?
• 15:22
  Speaker A: Yeah.
• 15:22
  Speaker B: Not a great time to.
• 15:24
  Speaker A: It's a tough time.
• 15:24
  Speaker B: Yeah. Really tough time. And I think for the younger listeners, like, we all know we talk about zero nine law. Because that was just a horrible time, as you and I experienced. But that time was just a real estate depression. I was competing, and this is important. I was. When I was trying to get my first job, I was competing with people who had 20 years of experience because they were willing to take the pay of someone who was right out of college. That's how tough it was in the design world. So I was still working construction, swinging a hammer, and it took me ten months, 200 resumes, ten interviews, and no offers.
• 16:11
  Speaker A: Wow.
• 16:11
  Speaker B: Yeah, it's pretty wild. So I finally got an interview. This is actually a pretty good story. So I finally got an interview at a local civil engineering firm called Vika, which, of course, their 45th anniversary is this afternoon, tonight.
• 16:28
  Speaker A: Oh, really?
• 16:28
  Speaker B: Yeah.
• 16:29
  Speaker A: Going to the party there?
• 16:30
  Speaker B: Yeah. You're going to the party there. So I walked in and the owner of that company is a guy named John Ametevi. Do you know John?
• 16:38
  Speaker A: No.
• 16:39
  Speaker B: So he's the A invite guy. And he's a New York Italian at his core. You know, he is. He speaks his mind and.
• 16:50
  Speaker A: Civil engineer.
• 16:51
  Speaker B: Civil engineer.
• 16:51
  Speaker A: Okay.
• 16:52
  Speaker B: So in a New Yorker at heart. So he walks in looking at my resume. He just looks at me and goes, why the hell would I hire you?
• 17:04
  Speaker A: I love it.
• 17:05
  Speaker B: It's great, right? And I stood up and true story. He says it today. I stood up and said, because I'll work for free. And six months from now, you can decide whether you hire me or not. And he pauses and looks at me and goes, you're blanking. Higher. He's like. And it was literally like, I was desperate.
• 17:24
  Speaker A: I was desperate.
• 17:25
  Speaker B: You know, George Mason wasn't a name of a program, right? I was competing with kids from, you know, uva, Maryland, Virginia Tech, Maryland. All the classics in the junior school. So, yep, that's how I got in the program. So that's how I got in Viking. John was still, to this day, a great mentor. And so you learned a lot in.
• 17:47
  Speaker A: Those first six months then?
• 17:49
  Speaker B: Without paying? I did. Well, he did paint me. He did paint me. He did. That's interesting. Yeah, that was great. He did paint me. So we. But it was, I think that hunger of saying, I don't know if I'm going to be swinging a hammer for the rest of my life or if I'm going to actually get a job as an engineer, is where. Where it was. So I joined. This was probably late 93. Probably early 94, something like that. And worked for John for six or seven years. All my clients. All my clients were developers.
• 18:23
  Speaker A: Right.
• 18:24
  Speaker B: So, sure.
• 18:26
  Speaker A: We got to know everybody.
• 18:27
  Speaker B: Got to know everybody because Viko was.
• 18:29
  Speaker A: A major player in the nineties.
• 18:30
  Speaker B: Very much so, yeah, very much so. It was really a wonderful experience.
• 18:35
  Speaker A: So what of those clients, which one kind of stood out to you at the time and what triggered kind of your thought process going forward?
• 18:44
  Speaker B: Wow, great question. And this was. That's a wonderful question. And I had wonderful. Actually, I had really great clients. I had some good clients. I had some bad clients. I got exposure to a little bit of office and retail and a lot of single family homes. Right.
• 19:01
  Speaker A: You were sure the home builders.
• 19:03
  Speaker B: The home builders were really heavy on the civil engineering side.
• 19:07
  Speaker A: Well, land development, I mean, you know.
• 19:09
  Speaker B: Yeah.
• 19:09
  Speaker A: Guy like David Flanagan, you're going to do a lot of work for him.
• 19:12
  Speaker B: Absolutely. So David Flanagan's an amazing developer. Right. And so the groups at the end, I think I was with John for six or seven years. So let's just say seven. So in year six, I started to really come into my own and it wasn't, believe me, I saved the industry a lot of money by getting out of engineering. I was not a detailed oriented engineer, but I knew how to manage, had decent leadership skills, knew how to communicate, and at the end of the day, that's what you really needed.
• 19:48
  Speaker A: So you wouldn't have classified yourself as a design guy. You were more of a relationships guy.
• 19:53
  Speaker B: Yeah, I was more of a project manager, like, very good at like, manage. And the clients loved it. Right. I mean, it's in engineering, everyone's pretty good designers. You just got to have, you know, good leadership, management skills, plan interface, and that's when you can really succeed. And amateur saw that in me, which was wonderful. He gave me more, you know, he gave me much more authority than I ever deserved, which is a common theme. And in the 6th year, out of the blue, I got three offers from three different developers within the same month.
• 20:29
  Speaker A: You didn't seek them?
• 20:30
  Speaker B: I did not seek them. So I got an offer and I'll share it. It was like pulte homes reached out, which made sense. JPI reached out.
• 20:38
  Speaker A: Sam Settle.
• 20:39
  Speaker B: Yes, yes, yes. Sam Settle and Bob Jensen. And they're just wonderful. You know, they were doing everything. They were overwhelming how much they were doing, and they still are. Stan's still kicking it. Right. And then JPI reached out as a multi phone.
• 20:54
  Speaker A: Oh, okay, sure.
• 20:55
  Speaker B: And someone who I think you know, and then Forkis, of course. Yeah. I've interviewed Len. Oh, is that right?
• 21:01
  Speaker A: Oh, yeah, he's been on the podcast.
• 21:03
  Speaker B: Yeah, he's wonderful.
• 21:04
  Speaker A: Well, he's more than wonderful. He's just an incredible human being in many ways.
• 21:09
  Speaker B: Yeah. He's giving back on a very inspirational scale.
• 21:13
  Speaker A: Oh, absolutely.
• 21:14
  Speaker B: Yeah.
• 21:15
  Speaker A: Yeah.
• 21:16
  Speaker B: So I had three. Three folks who I admired, all three of them. Great.
• 21:20
  Speaker A: So what did Len offer you, just out of curiosity?
• 21:23
  Speaker B: So he was. This is. This is when he had milestone communities.
• 21:28
  Speaker A: Right.
• 21:28
  Speaker B: He had. I hadn't thought about this. So I had a. My grandfather passed away, and there was some land in Centerville that was in the family estate, and Lynn stepped in and helped me navigate how to, you know, how to dispose of real estate. Right. It was just wonderful. I mean, it was like a small piece of real estate in today's world, but it was the entire estate of my dad's side of the family. Right. So Len just was a wonderful person and helped me navigate selling it to Bob Hubble at cutscene homes. So Len was wonderful, and I guess he saw something and just wanted. He was a developer of one at that point, and he wanted to be a developer of two. So I had the. And this all happened at the same time. So I was like, oh, my God. Pulte and JPI and three very different worlds. Right. And I approached John Amatetti, and he was awesome. He said, give me one year. Give me one year. And at the end of the year, if you still want to be a developer, I'll make sure that you're a developer.
• 22:39
  Speaker A: Interesting.
• 22:40
  Speaker B: But if you stick around, you know, the world could be yours. Like, I want you to really give this thought, because it's a big change, and once you change, you can't really go back.
• 22:51
  Speaker A: So he was kind of like a mentor to you to some extent, where he said, you know, he was looking out for you. He said, you know, this isn't for me to keep you. It's more just to think about your long term. That's. That's really impressive.
• 23:04
  Speaker B: That's a really thoughtful observation, and that's why I want to go see him today. It's like, he's still my mentor today.
• 23:09
  Speaker A: You should tell him the story.
• 23:10
  Speaker B: Yeah, yeah, I will.
• 23:12
  Speaker A: But you would be interviewed about this, and that's what you said.
• 23:15
  Speaker B: I will tell him that. And he. And over that year, I was 100% committed to him. I never. I was 100% committed. And a year later, I met Chip a. Yeah, sure. And Chip offered me. He and I were working together on a project in Herndon, Virginia, to give.
• 23:41
  Speaker A: A little background on chip, if you would, first, before we.
• 23:44
  Speaker B: Yeah. So Chip A. He is. He was with Bill McDonald, and I'll share a little bit about this after he hire me. But Bill restarted Trombone Corps residential. His first hire was Chip. A chip worked at Bozuto. He worked at Elm street. His background was he was an army guy. Right? He went to Purdue and then went into the army and then got into home building and then got into development. He got into home building, I think somebody before Elm Street. I think he went Elm street and then Bozzuto, and then he had the chance to meet.
• 24:26
  Speaker A: So he didn't work with Thompson. John Slidell, then at Pluto Homes.
• 24:30
  Speaker B: Yeah. And actually, right. Here's something for you if you think about. We're going to talk about the history of tram Lacroix later. But Bazuto back then had, they called it Bay Bowles and butts. So Richard Bowles, Jim Butz and Chip Bay.
• 24:45
  Speaker A: All three of them.
• 24:46
  Speaker B: All three were working under either Slidell or Tom. But that's an impressive crew.
• 24:51
  Speaker A: It sure is.
• 24:52
  Speaker B: Yeah. Yeah. So, yeah, so chip, I met ship and. And to go back to the Vika thing, he made me an offer and I walked into John and I said, I got an offer from Trammell Crow. And he looked at me and shook my hand and said, best of luck. He knew I was done. I gave him his year. He gave me a year. And the best part of it is, I think the takeaway was I knew I'd be a better generalist than a specialist. John's an amazing specialist, and my passion was being a general single development. So that's the viking story.
• 25:28
  Speaker A: Well, you had six years under your belt and you worked with all these different developers. You had a sense of what the business was, obviously, at least the physical side, maybe the financial side, might have been a bit of an eye opening experience for you when you first came there.
• 25:44
  Speaker B: I'm going to guess it was a big eye opener.
• 25:47
  Speaker A: Yeah. Because that's, in my experience, that's the. The biggest challenge for people that come from the construction and physical side of the business to learn that if they hadn't already learned the relationship building, which you had. So you had two. In my, in my view, there's three legs to stool in real estate, analytical, communications and design, construction, physical. So you had two of the three, which is a great foundation.
• 26:13
  Speaker B: It was a good foundation. I agree with you, John. I do the same thing. No matter what world you come from, one of the other legs are going to trip you up. You're going to have the strength, you're going to have a weakness. Just be aware of your weakness that I 100% agree with what you're saying.
• 26:33
  Speaker A: Yeah. So how did you get disciplined to learn the financial side of the business?
• 26:38
  Speaker B: That's a good question. So, first of all, I think there was two paths for me. One was that was Bill McDonald. So we'll talk a little bit about the history of Bill McDonald after this. But you know that he is one of the sharpest financial minds that I've ever been around. I mean, he just, we call it today, Mill Creek, when there's some young folks who get exposure to him. We call it going to the school of Bill. And he can really just break down the financial side of the business. And he's actually been, like, writing all those notes down. Should be like a tutorial.
• 27:15
  Speaker A: Did he work with Ron Terwilderker?
• 27:17
  Speaker B: He did. Okay. So Ron is, as you can imagine, is one of the sharpest financial minds.
• 27:23
  Speaker A: In real estate, trained by Trammell Crowe himself.
• 27:25
  Speaker B: That's right. So let's go to Bill's story. Right. So Bill has. I've been with the company for 25 years. I think Bill's been with the company for 37 years. Something like that.
• 27:40
  Speaker A: Well, the predecessor.
• 27:42
  Speaker B: Yes. With our legacy. Right. And he was, before opening up the Maryland office, he was the CFO for Terwilliger for Iran down in South Florida.
• 27:57
  Speaker A: Oh, okay. That's interesting.
• 27:59
  Speaker B: So he was overseeing the southeast data in equity. And as you know, the history of Trammell Kerr residential, we were chatting earlier, is really deep. So in 93, or actually it was 94, the northeast group of Trammel Kerr residential, which was crow to Williger Michaud.
• 28:22
  Speaker A: Right.
• 28:24
  Speaker B: And then up in the Boston area, New York Boston area, it was Chuck Berman. Right, right. So you remember Chuck. Yep. So Dick Michaud was running the DC office. Chuck Berman was running the northeast office, and they spun off and they created Avalon. Right. So another spinoff from Tramcro. And so that happened in 94. So when Avalon had the spin off, there was a three year non compete. So obviously with an IPo, you want that group to succeed. So Crow and Terwilliger agreed that they would not compete from DC to Boston for those three years. As soon as that non compete ended, they really wanted to be back in this market. So Ron asked Bill. I think he gave multiple options, and I think he still. I think he said, you know, you can go to Dallas or you can go to DC. And I think Bill, if you know him, would say, I hate Dallas. So Bill came up to.
• 29:36
  Speaker A: Ron was in Atlanta, wasn't he?
• 29:37
  Speaker B: Correct. So Ron was in Atlanta.
• 29:39
  Speaker A: Right.
• 29:41
  Speaker B: Ron and Bill were very close. They had a very, very deep, deep, deep respect for each other. And then Bill came up to the DC market. He went to University of Maryland for undergraduate. He went to Columbia business school for graduate school, played football at the University of Maryland. So he knew, like, he, you know, living in Maryland was an easier concept for him than you and chip.
• 30:05
  Speaker A: And he hired you.
• 30:07
  Speaker B: That's right.
• 30:07
  Speaker A: Okay.
• 30:08
  Speaker B: That's right. So Bill hired. Actually, what's interesting about it, one of the wonderful things about Middle Creek, John, is, you know, Bill McDonald's first hires were chip a Shawnee Choochara, Sherry Brown, me, Sam, Simone and Chad. All of us are still with the company today. Sherry's sitting on a board seat, so she's not an active partner, but the rest of us are selective partners. So his, you know, his first hires are still following. It's pretty cool.
• 30:39
  Speaker A: And it's still a private company, correct.
• 30:41
  Speaker B: It is still a private company, yeah.
• 30:43
  Speaker A: You didn't want to go the roll up route.
• 30:44
  Speaker B: That's right. That's right. And we'll chat about public reits versus banking private, but it's.
• 30:50
  Speaker A: Sure, yeah. So talk about your early years and, you know, you're going building your business, and then at some point you jumped off and decided to go to graduate school. So talk a little bit about that, too.
• 31:07
  Speaker B: Sure, sure. So what's really. I'd like to chat a little bit about the early years at Trammell Crow residential, what it looked like, and to a certain degree, talk about diversity. Right. And what I mean by that is, in the old TCR days, in the old TCR days, everyone was at Harvard and Ba. Right.
• 31:33
  Speaker A: And why is that?
• 31:35
  Speaker B: You know, I.
• 31:36
  Speaker A: Because Trammel is anything but that.
• 31:38
  Speaker B: Trammel is anything but that. I guess I wasn't on the inside, but I'll say I think it was. I think it was Ron's bias. Right. It was his perspective on it. All the guys were like, you know, mbas from elite universities, and that's a wonderful way to go. And when I met Bill and Chip, I looked at the group that was around us, Sherry Schwann and all these folks. It was, it was the one, the thing that I really struck. And someone asked me after I joined the company, I said, is there a typical crow guy? And I walked in the room and said, absolutely not. I mean, these are really disparate, very different personalities. And Bill really embraced, raced, and it's really kind of stuck with me. A diversity of thought. And with that, the only way you can have diversity of thought is if you have a diversity of background.
• 32:38
  Speaker A: Right?
• 32:38
  Speaker B: Right, sure. And John, you and I know this, like, if you really have a diversity, if you're really open to diversity of background, you will have a diverse, thriving company. And I realized that as I was looking at, like, chip be, who's this military structure guy with the Shawnee Choo Choo, who's one of the most brilliant creative minds, and then working together, and they're, you know, they're just so different personalities. And the common thread and all of that in the early years were the core values that we have today. So it's really, you know, we have these core values that are in our company today. Six core values. And in the TCR days, we didn't have them on the wall, but you knew what you had when you hired them. And as a small company, we just always had these great, you know, you knew what you were doing. You were seeking these people who met that, you know, work hard, smart together, you know, be the best, and the rest will follow. All these tenors that are just ingrained in who we are today is what we were doing back then.
• 33:51
  Speaker A: Talk about why Bill wanted diversity. Was he looking for different points of view on looking at residential property? What was the angle there?
• 34:01
  Speaker B: Yeah, I think he knew. Well, first, let's step back. Bill's never been a developer, so Bill was a finance guy. He's a finance guy who is a sort of natural CEO. Like he can do. You know, he's a tremendous generalist, and he's one of those sort of like those you think about presidential leaders of someone who puts all the different opinions in the room.
• 34:26
  Speaker A: He's a team builder.
• 34:27
  Speaker B: Yeah. Yeah. So you get all the ideas on the table and you can come up with a great solution. So I think it was. He absolutely wanted people that were complimentary of each other.
• 34:43
  Speaker A: Exactly.
• 34:43
  Speaker B: And absolutely not mimics of each other. He did not want five or six bill macdonalds.
• 34:50
  Speaker A: Different opinions.
• 34:51
  Speaker B: Really different opinions, really different approaches. It creates a really healthy tension. But I think that, honestly, I think about what we need today, diversity of thought, diversity of background, and we gotta be open to it.
• 35:06
  Speaker A: Well, the key word you said there is open, correct?
• 35:10
  Speaker B: Yes, that's right.
• 35:12
  Speaker A: That's what's missing today in the discourse, certainly politically.
• 35:16
  Speaker B: That's right.
• 35:17
  Speaker A: Unfortunately.
• 35:18
  Speaker B: And that's right. There's a lot of people talking about. Many people listening.
• 35:23
  Speaker A: Exactly. So you then went to the Uva Darden school. Talk about that.
• 35:30
  Speaker B: Yeah. Thank you. Yeah, I like to. It's interesting when I was. This is something to share, which was, when I was 36 years old, I learned something about myself, and I. To go back. I struggled in high school, as I described. I kind of barely got through college. And when I was 36, I learned something about myself, that I actually had dyslexia. And it wasn't a big deal for me because I had kind of gotten to their side. I was a partner at Trauma Corps residential. I was successful in my career, doing better than I ever would have thought I would have done at an early age. But it was a real gift to learn something about that later in life.
• 36:13
  Speaker A: How did you learn about it?
• 36:16
  Speaker B: Actually, my ex wife was a therapist, and we were getting to know each other. Oh, really? Yeah. She pointed that out, and it just. This big light bulb went on for me, which was, now I understand why this was difficult. Now I understand why I do my investment memos in the morning, or now I understand these traits that I had built up over time, that I didn't really know why I was doing it. There were coping mechanisms. There were mechanisms to have not to just survive. How do I thrive and work around this? And the cool part of learning that later in life is, I want to make this clear. It was far. It was the opposite of being any sort of disability. It was a superpower. It was like I saw the world differently than most of my friends or colleagues. I wasn't afraid of failure, and I just. It was a real superpower I had. And the only thing that by learning that, the only thing that was left sort of unchecked for me was I still didn't. I still did not consider myself. I was a good professional, but I wasn't a good student. And I said, well, I can change that. Let me go back.
• 37:36
  Speaker A: So your therapy was to go to graduate business school?
• 37:38
  Speaker B: That's right. That's right. And so it was for two reasons, really. It was like, I did a lot of research, and I was like, you know, I'm gonna. You know, there's this little voice in your head, and there's a little voice in all of our heads as to what you're good at, what you're not good at, and a lot of it's just bullshit. So I was like, I'm gonna get rid of that voice. I'm gonna go back and really master this skill. And so I decided I'm gonna go back to graduate school. I decided on Darden at the University of Virginia, because I think one thing that's good for the younger listeners to hear is I do support. I really believe that pushing yourself in this way really benefits you, but it benefits you at two points in your career. Oftentimes someone's going back to graduate school so they can get a new job or they're going back to graduates so they could change careers or maybe try to get up in a job. And I. And that's great. I didn't do it for that. I did it for the latter reason I just described. And the other reason is it's also good for you later on in your career, right. As you're thinking about being on boards and you're thinking about what do you want to do when you retire from your day to day? Sometimes credentials matter. Yeah, sometimes they do. And I knew that I would never regret by just having that box checked.
• 39:08
  Speaker A: So how did you enjoy it? Did you enjoy. So did you like the case study method that they have there?
• 39:14
  Speaker B: Yeah. Yeah, it was. So there's a lot of friends of ours in the industry, and it pushes you, granted, like, I was listening to cameracraft, who was an HBS guy, I was working during the week and doing an executive program. So it was a different format. So there's no way that I'm going to say that the HBS full time case study is as intense as the program that I was in, but the program that I was in, you were working 50 hours a week. You were raising a family, you're going out to Charlottesville and you're spending probably 30 hours a week studying. So you're doing like a 90 hours week for two years. It's tough. It was tough, so it was different, but it was a wonderful program, wonderful friends. Many of them were at my wedding. Very, very fortunate, really. It was a lovely experience.
• 40:11
  Speaker A: So what if you had to say a few words about what you took away from that experience? What would you say about that?
• 40:19
  Speaker B: So the first is always, to me, it's network. And I don't mean that in the network of who I'm doing business with, the friends I have from that program are the friends that I can go to to say, hey, let me collaborate with you on something. I'm struggling over here. I need someone to chat about this in pure confidence. What do you think I should do? So they're just really remarkable humans.
• 40:47
  Speaker A: What's interesting, because of when you went, yeah, you weren't there for a career. You knew what your career was. You were there for more perspective and academic understanding, disciplines that you may not understood before, possibly, and it was you already, a lot of people go to graduate business school thinking, okay, I'm building credentials just to go to get a job, qualify for a job. You were already employed. You were already set. You're a partner in a company.
• 41:16
  Speaker B: That's right.
• 41:17
  Speaker A: A different angle there.
• 41:20
  Speaker B: And it was just as satisfying for me as it was for anyone. So it was wonderful.
• 41:25
  Speaker A: That's great. That's interesting. So let's see, we talked about Trammel Crow, talk about the formation of Mill Creek and the evolution of that out of the trammel crow ecosystem system and all that. And you became a partner. So, I mean, I assume you weren't hired as a partner, and maybe you were, I don't know, but how that all transitioned, that took place.
• 41:47
  Speaker B: Sure. So I think if we go back, what I really find interesting about Trammel Crow is, and we chatted about a little bit of, there's all the spinoffs of Trammel Crow again, you know, Avalon Gables, Mill Creek Wood partners, these are really the pillars of multifamily. And if it's not a spin off from Mill Creek, there's a leader from Trammel Crow that's probably in that organization. Right. And what's really fascinating is, in all those spinoffs, John, the Crow family never sold off the body. They always would do arms and legs, but they would always hold on to the body. And I really applaud Harlan Crow and Trammell for doing that. And so Mill Creek was really no different in that regard. It was coming out of the zero nine recession, right. We had built up a TCR, a very large portfolio of multifamily. Harlan was rightfully focused on this guarantee of all those assets. So this is probably ten and eleven where all the challenges are happening in the world, let alone the real estate cycle. And, you know, there was not going to be a large trammell crow residential platform. You know, and I used the sports metaphor that, you know, Crow holdings was very focused on playing defense, and we had to, but we did see the opportunity to play offense. We all know that in down markets are when you find your best opportunities, those are the deals that have the best returns, just like where we are today. And Charlie Brindle was our CEO at that point in time. Ron had stepped out, and both Charlie Brindell and Bill really saw that. Well, we had to, but saw that this was a great opportunity to start a new platform. So we went from, gosh, I bet we were well over 13, 1400 people at TCR, its peak, but there was only 70 of us that spun off from TCR. So rough justice at that point in time, I was a partner, but there was 35 partners and I was one of them and there was 35 associates. And you know, mainly really only, you know, development, some finance, some construction and then a couple, you know, chief Consec.
• 44:34
  Speaker A: You know, chief, what year was this now when they formed the company?
• 44:37
  Speaker B: So this is Middle Creek is a.
• 44:39
  Speaker A: Spin off in eleven, 2011. Okay.
• 44:42
  Speaker B: Charlie Brendell had a very good relationship with folks in the state of North Carolina. And so we launched the platform in eleven. We basically replaced the Crow family with the state of North Carolina who was being advised by Rockwood Capital. So Rockwood, representing state of North Carolina invested about a quarter billion dollars in our platform to really get us off the ground. And we were off and running. That's how we started. We had, so we had 70 people, we had five deals, right. We call them the Fab five. And so I think an investor said, you know, know, the, you would know as a Michigan fab five didn't win the championship.
• 45:35
  Speaker A: That's true. That's right.
• 45:37
  Speaker B: So, yeah, so it was 70 people.
• 45:39
  Speaker A: Two North Carolina teams beat em.
• 45:41
  Speaker B: That's right, exactly.
• 45:43
  Speaker A: Duke in North Carolina.
• 45:44
  Speaker B: I think it was a, that's funny. I think it was a North Carolina graduate who pointed that habits. Yeah. Our world's collide from Michigan.
• 45:55
  Speaker A: Yeah.
• 45:56
  Speaker B: Yes. That's really how Mill Creek started.
• 46:00
  Speaker A: And you had been there how many years prior to that start?
• 46:04
  Speaker B: So this is eleven. And I had joined the group in 99. So I had been there for twelve years.
• 46:09
  Speaker A: So you were already a seasoned developer at that time?
• 46:12
  Speaker B: Yeah, I was a seasoned developer.
• 46:15
  Speaker A: We met I think when you were still TCR as I recall.
• 46:18
  Speaker B: Exactly. I'm pretty sure it was Sherri Brown who introduced us.
• 46:20
  Speaker A: Yeah, well, I remember Sam too. I met you and Sam and you guys were on executive Boulevard at the time.
• 46:27
  Speaker B: That's right, exactly. We haven't moved far actually.
• 46:30
  Speaker A: It may have been actually Len Forkas introduced me to you guys, but possibly I just don't remember exactly.
• 46:36
  Speaker B: Yeah, small world.
• 46:37
  Speaker A: Yeah, exactly. So 2011 and then. So really the operating company, did it function differently or just more or less the same, but just a different name on the banner per se or did you have a new theme of what you wanted to do?
• 46:54
  Speaker B: Yeah, great question. So how we started was we knew that, oh, it was dead. Trammell Crow Residential was an incredibly, and is an incredibly entrepreneurial organization, of course. So our roots were really in the heart being an entrepreneur. And that was both their strength, our strength and our weakness. And what I mean by that is before that spinoff there were efforts to sell the company. There were efforts to really not recapitalize the company out of defense, recapitalize the company out of offense, go out and really do something big. And the lesson learned from that was we had 16 offices across the country that were really operating at 16 different confederations. So there were 16 different groups that were running in 16 different ways.
• 47:52
  Speaker A: Well, that's the way Crow ran his company generally.
• 47:54
  Speaker B: That's right.
• 47:55
  Speaker A: He set up different partners in different cities, and each city ran their own entity.
• 48:01
  Speaker B: They ran their own entity. Right. I mean, we had a. I think when one group was looking at us, they pointed out that probably 16 different offices and 16 different performers and all these different things. So if you start with that, when you go to Gori's platform capital of that magnitude, you can't be 16 offices. You need to be one company. So the biggest shift that happened from trauma Crow to Mill Creek was just that. And what I. And this is a great, great conversation to have, because the strength of Mill Creek and the tension of Milk Creek is that we've taken. We've held on to the entrepreneurial spirit of Trammell Crow, and we've overlaid the institutional discipline that's necessary to run a large organization. And the tension that I feel that I try to work around, and all of us in leadership do, is every day we get a little bit more institutional. You're always trying to get better as a company. How do you make sure you hold on to that entrepreneurial sphere?
• 49:14
  Speaker A: Interesting.
• 49:15
  Speaker B: That's huge. That is not an easy challenge. We are not always succeeding in that. But my personal passion is to make sure that real estate is still a business. At the end of the day, the local partners are driving that business, but they're doing it the Mill Creek way. Okay. And that difference is what makes Mill Creek different than traffic, essentially.
• 49:44
  Speaker A: Interesting. Well, when you broke away, you had to find a financial partner.
• 49:50
  Speaker B: That's right.
• 49:52
  Speaker A: And so the financial partner looked at you and said, wait a minute, now, am I investing in one company or 16 here?
• 50:00
  Speaker B: So, you know, you're right.
• 50:03
  Speaker A: They probably said, you know, you guys need to get your act together and help us figure this out, because, you know, I can't. We can't just figure out here, look at 16 pro formas and all these deals and the deal. And not only that, the corporate structure is probably different in each one.
• 50:20
  Speaker B: That's right.
• 50:21
  Speaker A: So the question is, how did you amalgamate 16 operating partnerships into one? Must be an interesting story there.
• 50:28
  Speaker B: Yeah, that's a great two hour podcast. I think if I'm brutally honest, John, not everyone makes that transition.
• 50:40
  Speaker A: There were a few parachutes out, right?
• 50:42
  Speaker B: There were. There were a few parachutes out, right. And there's no commentary on who left or who said. But I do remember looking around one day, and I turned to bill in one of the early Mill Creek meetings, and I'm like. And I looked around and said, these are all really good, like minded people. Like, we ended up, whether it was intentional or by accident, we ended up with a group of people who wanted to be entrepreneurs, who wanted to also be part of something. Of a company. Yep. And, like, when I interview people today, you know, I do not judge. You know, if you're the developer who just wants to do your deal and get your piece of the promote, like, if you want to do it the old TCR, way I get it, that's a. That's a good model. There's pros and cons with it that I lived with. I like this model better, but there's pros and cons with. And if that's what you want to do, do. This may not be the company for you. Right. There's a better company over here for you. You can go live and die by it. You know, we're a local partnership or part of a national partnership business on the local level, but we're having the benefits, and sometimes the drawbacks were part of a bigger company, so. And your question, though, is, you know, it's a massive evolution, right? That what we just discovered is what we just discussed was where Mill Creek started. I mean, that's 13 years ago. We've changed completely since then.
• 52:15
  Speaker A: But you said, you talked about your core values, so you kept those constant. But, of course, the real estate markets changed as dramatically, probably, as the company has. So to adapt to those things, you have to. You have to be flexible. So, you know, we talked a little bit about your career trick. How did your responsibilities expand? So you started out as soon as a project manager on a job or two and then just grew from there. How did you. How did that grow?
• 52:45
  Speaker B: My personal growth within the company.
• 52:47
  Speaker A: Right.
• 52:47
  Speaker B: So Chip and Bill gave me way more responsibility than I deserve. We were, the entry level position was a developer development associate, and Sam, Simone and I were the two developers. Sam's a friend of yours that says hello. And I think at one point, he's.
• 53:03
  Speaker A: On the west coast now, right?
• 53:04
  Speaker B: He is, yeah. So he's.
• 53:05
  Speaker A: I haven't seen him a long time.
• 53:06
  Speaker B: Yeah. So he is a leader in our fundraising business. So another way that we've evolved. So he's moved from the east coast to the west coast. He has moved from development to fundraising and he's doing fantastic.
• 53:20
  Speaker A: That's great.
• 53:21
  Speaker B: But Sam and I probably had, gosh, 910 deals between us. Neither of us probably knew what we were doing. We're making mistakes left and right. And it was. So this is in the early two thousands when Washington, DC was probably the best multifamily market in the United States. You know, the.com boom.
• 53:45
  Speaker A: I know. I remember a conference call with you, Sam, and Sherry Brown on a deal on a financing one time. I do remember that distinctly. In the early two thousands.
• 53:58
  Speaker B: We were very blessed to have Sherri Brown as our CFO back then. And I was chatting with her last night, so she's still a great mentor for us.
• 54:08
  Speaker A: That's great. That's great. So it's just this evolutionary press. So how did you grow your responsibilities?
• 54:15
  Speaker B: Oh, personally, yeah. So I think it was my responsibility is there was a natural progression that fortunately it was a meritocracy. You know, commonality between trauma, presidential and Milk Creek was that of a meritocracy. So as long as you, you know, did the right things and worked hard and frankly, created value. Right. Sure. There was always the promotional opportunity. So steps along the way was, I think I became a partner of tram and Crow. And in the Mill Creek years, I stepped into chip Bayes role and took over the DC office and oversaw at that point both construction and development. We were integrated differently where construction would report to the local developer.
• 55:01
  Speaker A: So I ran that operation was construction just vertical construction? Did you do underground and that kind of thing?
• 55:09
  Speaker B: Yeah, we've done it as we've always been, our own general contractor. It's been a core competency of ours. And so we've all, I think I would say, John, probably 98% of our deals were the GC from start to finish. And to put it in perspective, maybe if I can pause for a second and just, you know, it's pretty fascinating to think about where Mill Creek started with five deals and eleven. And if you fast forward with basically a construction development and a couple finance folks, if you fast forward to today, we have 25,000 homes under management, 15,000 homes under construction, and almost 20,000 homes and pipelines.
• 55:59
  Speaker A: Wow.
• 56:00
  Speaker B: So that's 60,000 homes to multifamily. We're about, we have 600 folks on the property management side, just over 400 folks in construction north of 100 folks in development. And probably, I think we're probably right around 1250 partners and associates today. So that's dramatic growth. It's really a really dramatic growth over just over a decade.
• 56:30
  Speaker A: That's fantastic. So I didn't want to get deep into the construction side, but in fact, I didn't realize that was kind of a core part of the business. It was interesting because that's unusual for most development companies to have that.
• 56:46
  Speaker B: It is. And when I was listening to, and I, and it works for, I listened to the wonderful interview you had with Cameron and they made a different business decision. Right.
• 56:57
  Speaker A: They completely left.
• 56:59
  Speaker B: And property management, as I'm listening to him and I'm thinking about, I think it was the right decision for future prep. We're fortunate we're in 24 markets. Yeah.
• 57:12
  Speaker A: Right.
• 57:13
  Speaker B: And so it's absolutely the right decision for us. But I sincerely appreciate, as I'm listening to the challenges that he had or a lot of our competitors when, you know, I'm not sure which one's probably profitable on a per person basis, but the way that he's managing for credit's doing, I get the business decision. It's not easy to.
• 57:38
  Speaker A: Well, the analogy I give to your company and I sat next to him last night. Was it last night or night before last at the was Toby Bazzuto.
• 57:49
  Speaker B: Oh, excellent. Yeah.
• 57:50
  Speaker A: And you know, Bazuto, they're very vertically integrated.
• 57:54
  Speaker B: Very vertically integrated, yeah.
• 57:57
  Speaker A: Somewhat analogous to you guys.
• 57:58
  Speaker B: Somewhat analogous. I think so. I like, Toby's a great guy. I've gotten to know Toby well over the years. Obviously, Chip knows Tom very well. One difference that separates us is we do not do anything third party. So our management company, it's only your own assets. Correct. And we're proud of it. You could go make a lot more money, a lot more fees by going third party. But every person in our company, property management, construction, asset management, everyone, they wake up thinking about the Mill Creek assets, the Mill Creek communities, our investments. And we did third party management on the property management side. We were at TCR and what we found, right or wrong, was the best in the business. The best in our business was spending all their time focusing on the other clients. They were trying to grow their business. And we'll give up on that revenue to have their focus and skill set and all their energy and have all of us running a company. Yeah.
• 59:25
  Speaker A: Well, that's why the world has a lot of different people, you know.
• 59:31
  Speaker B: Because.
• 59:32
  Speaker A: You know, I just interviewed Henry Fonville at Rappaport.
• 59:35
  Speaker B: Yeah.
• 59:36
  Speaker A: And he brought the entire third party, leasing and management, you know, brokerage business to the Rapoport company when he came over from Charles E. Smith. And it was just interesting to hear how that transformed their company into a massive retail engine. And Gary had that philosophy you were talking about before. Just doing my own deals.
• 59:57
  Speaker B: That's right.
• 59:58
  Speaker A: He had to do some third party management during the early nineties because a lot of companies had to look at fees and figure out how to stay in business.
• 1:00:06
  Speaker B: That's right.
• 1:00:07
  Speaker A: But he was doing a lot more, just more of his own business. And then suddenly all this came in was like, whoa, tremendous growth. But you guys have looked at it geographically, it sounds like, to me, by looking at other markets, sticking to your knitting and not third party services per se. That's what it sounds like.
• 1:00:29
  Speaker B: Correct. So we never wanted to. We wanted to stay. The culture was to make sure we stayed in our markets. And then the way that we grew, which actually is another crossover into another one of your podcasts, is strategic planning.
• 1:00:42
  Speaker A: Oh, there we go.
• 1:00:43
  Speaker B: Right, right. So, Charlie Hewlett. Charlie Hewlett. So who we actually use for our strategic planning, and so core strength of ours, as Charlie discussed, is, you know, do you have a strategic plan? Do you follow it? And then do you revisit it in every one of the growth areas that we've made as a company, whether it's regional growth, going to a new city, whether it's expanding our product line, getting into the build for rent space, whether it's attainable housing, whether it's doing investment management, and fun side has all come out of that strategic planning process. So we have. So when you talk about growth, it's like, it's a very intentional.
• 1:01:39
  Speaker A: Sure.
• 1:01:39
  Speaker B: Every couple year process, stepping back in.
• 1:01:42
  Speaker A: And saying, so what length do you write that plan for, just out of curiosity?
• 1:01:47
  Speaker B: So it's a. I think the last one we ran was a ten year vision. Ten that gets revisited every couple of years.
• 1:01:56
  Speaker A: Oh, so ten with a two. Two resets.
• 1:01:59
  Speaker B: Something like that, yeah. Okay.
• 1:02:00
  Speaker A: It's interesting because Willie Walker, I don't know if you heard the podcast with him.
• 1:02:03
  Speaker B: Yeah, he's wonderful.
• 1:02:04
  Speaker A: This is a five year.
• 1:02:05
  Speaker B: Is the five year. Yeah, yeah.
• 1:02:06
  Speaker A: He resets every five. And he's religious to that plan.
• 1:02:11
  Speaker B: Yeah, yeah.
• 1:02:12
  Speaker A: And success is 16 times multiple from his start.
• 1:02:19
  Speaker B: Oh, that's amazing. That's amazing. It's a remarkable growth story, and I think ours is, we will, we try to have a longer term vision, but also some shorter term goals.
• 1:02:32
  Speaker A: Right.
• 1:02:33
  Speaker B: What was interesting for us is I was in the most recent strategic plan, and the reason why we had it was we set a goal for where we wanted to be in seven or eight years volume wise. And we got there in 18 months.
• 1:02:48
  Speaker A: Oh, my goodness.
• 1:02:49
  Speaker B: Yeah. So we got to a place where we were ready to develop like 8000 homes three year from 2000 or 3000 per home. And Bill came in and restructured the organization to be more vertically integrated for volumes, and we just took off.
• 1:03:06
  Speaker A: So when you look back at that accelerated growth path and you sat down for the next planning session, how did that happen?
• 1:03:14
  Speaker B: Yeah.
• 1:03:15
  Speaker A: And how do we want to continue on this pace? Are we going to become a behemoth and we're going to be way over our skis too quickly? Because can you stay ahead of that business? I mean, you have to hire around that. There's just so many big decisions you make trying to stay at that kind of pace.
• 1:03:37
  Speaker B: Yeah, exactly. And it's. Exactly. And we actually, what was amazing about that is, of course, the joke was, well, we just didn't set the bar high enough. Right. And we're all kind of looking around going like, well, we really, it was hard. It was not easy, but we did, we saw that once we restructured, once we got everyone, and also just a alignment of interest that, yes, we can do this. And the simple metric was just, you know, can you do one deal per division per year versus point? And what does it take to do 1.5 maybe, you know, and we realized that for a company of Mill Creek, stature, access to capital, talent pool, and a leadership that has many layers of succession already built into it, there's no reason that we can't be building, you know, on average, multiple years in a row, 10,000 points per year. And now you're going to be market dependent. Right. There's going to be market cycles like we're going through now that we really try to visualize and structure us so we can have it sort of a long period of time.
• 1:04:54
  Speaker A: Interesting that, you know, you go along with this rapid growth pattern and then all of a sudden this very black bird starts flying out of the horizon known as the pandemic that lands on your lake and says, oh, my God, black swan is here. What are we going to do now?
• 1:05:12
  Speaker B: That's right. Yeah.
• 1:05:13
  Speaker A: And that came out of left field for almost everybody. And so the question is, how do you manage a process like that? If you'd been in the business in the early nineties and in 2008, you would understand what those things come out of left field sometimes.
• 1:05:31
  Speaker B: Well, I think that's, that's the benefit that we have when our leadership has had this sort of experience like you've had. Right. So Bill's been here for 37 years. I'll just take an example. You know, not a discipline we have in our investment committee in our company is you can never be levered on investment deal more than 65% loan cost. You just, we will not do it. If you have to get leverage higher than that to make the deal work. We're not going to do a deal. So our average leverage is probably being honest is probably around 59, 60% across.
• 1:06:15
  Speaker A: Your lenders love that.
• 1:06:16
  Speaker B: Right. And you would think that as you get more conservative, relatively speaking, it's going to be harder to get, it's harder to make your irrs work. Right. And so it's going to be hard to get deals done. But what has the intentionality behind that has yielded the fruit of when we started Mill Creek, I was looking at our list. When we started Milk Creek, there were 15 investors that we thought were fantastic investors for us sitting here today, John, we have 47, seven active capital partners that are investing in military deals. So as we've gotten more with a conservative or thoughtful or prudent, more institutional and entrepreneurial, more capital has approached us and wanting to invest. And maybe that structure and that discipline does not yield the biggest promotes on every single deal, but it yields a much more predictable, financeable pipeline, and it certainly protects you from downside when you're in the market where I wanted to throw this out there. In the past 18 months, we've refinanced or restructured three and a half billion dollars worth of debt. And so that's all just, they're all friendly extensions and refis and all that.
• 1:07:41
  Speaker A: So it's one philosophy I want to get into a little bit, and it kind of segues to my next question. To some extent, what is your, when you look at a site and a project, what's your projected hold period on a job? And to me, the hold period in reality and in projection, determines not only the, I mean, the philosophy of the company and the strategy, the company company and the structure of the company. All those things come into a play when you're talking about how long you're going to hold assets.
• 1:08:15
  Speaker B: Great question.
• 1:08:16
  Speaker A: So go into that.
• 1:08:18
  Speaker B: We'll do. So we look at first, let me go back to the basics that we have to look at everything today. Today's rents, today's cost, today's expenses, today's yield. It can never be. We're not going to trend anything to make it work. Does it work today? Does it work in today's economics? And then we really look at it, and our modeling internally is kind of a typical development model. Right. We look at it like, okay, we're going to build it, we're going to lease it up, we're going to get it stabilization, and six months after that, what do the returns look like? So that's how we model it internally. But in practice, what is happening as a company where we've really grown and set us apart is about a half to two thirds of the business is long term holds, and somewhere between third to half of the business is, we're doing it with capital that wants to sell the asset on the other side.
• 1:09:23
  Speaker A: So more of a merchant strategy.
• 1:09:24
  Speaker B: So there's both a merchant and longer long term strategy with.
• 1:09:28
  Speaker A: That's interesting.
• 1:09:29
  Speaker B: Right? So I used to joke, I mean, at TCR, we sold everything. Yeah. It was merchant, it was, landfills were the best thing ever. Right?
• 1:09:38
  Speaker A: Yeah. 100% of the profits driven all the way.
• 1:09:41
  Speaker B: Absolutely. So whatever we could, the quicker we could sell something. Actually, this is a fact. I did a lot of deals at TCR. I never took one deal to stabilize stabilization.
• 1:09:53
  Speaker A: Incredible.
• 1:09:54
  Speaker B: Yeah, I bet. I worked on twelve deals.
• 1:09:56
  Speaker A: Wow.
• 1:09:57
  Speaker B: And every single deal was sold before stabilization. Sometimes a land flip, sometimes a condo flip, sometimes a condo sale, sometimes at 50, 60, 70%, and never once I have to get to stabilization. Now, you know, two thirds, a third, I'm sorry, half to two thirds of our investors are holding it for, for seven to ten years. So it's a, we're a much more diverse aum driven.
• 1:10:24
  Speaker A: So when you look at a deal, do you know upfront whether that's going to be a merchant deal or not?
• 1:10:28
  Speaker B: Not really.
• 1:10:29
  Speaker A: You don't?
• 1:10:30
  Speaker B: No, it's, we have opinions. You know, you look at good real estate and good economics.
• 1:10:36
  Speaker A: Sure.
• 1:10:37
  Speaker B: And, you know, you can sort of know, like if you get into a garden suburban community, really low bases, you can kind of look at those economics and say, okay, that feels like the investor who wants the 20 IRR and wants to churn it pretty quickly. So you sort of have an intuitive feeling, and then conversely, you're in a really core location where probably the yield is a little lower. Like that's probably going to attract someone who has a more ten year horizon. You get intuitive, but honestly, Joe, John, I had examples of where it's been the opposite of that, doing a suburban deal in Boston where EQR is our investor and they're going to own it forever.
• 1:11:22
  Speaker A: Yeah. That's their mission. Well, that gets into the question. I was going to talk about structurally as a company. A lot of your competitors have not only rolled up publicly to form a REIT.
• 1:11:35
  Speaker B: Yeah.
• 1:11:36
  Speaker A: But some have formed a private rait for basically capital raising purposes, to be able to do a line of credit using the entire portfolio as your balance sheet instead of deal by deal, one off financing on every deal, or maybe roll up a portfolio to some extent, cross collateralized through however you want to structure it. But what's been the thought process, and have you looked at it as a roll up, potentially, just out of curiosity?
• 1:12:04
  Speaker B: It's a great question. I'm gonna go back to Willie Walker for a second.
• 1:12:07
  Speaker A: Okay, sure.
• 1:12:08
  Speaker B: And he said. I heard him say, he goes, you know what? No one goes public to have fun. It's a great line.
• 1:12:17
  Speaker A: But he does.
• 1:12:17
  Speaker B: But he personally does. He does. He does. He's having fun, but he goes, you do it for access to capital. Right? Right. I mean, that's, at the end of the day, you go, at least you go public. So the question you have to ask yourself is, do you have access to capital to run your business? And would doing something like that attract more capital? Because at the end of the day, the ability to raise capital and the talent you have in your company, those two things combined will define whether you can have volume amounts. And we're very fortunate, first and foremost, with the people we have in the organization, and therefore, we're very fortunate to raise the capital that we're able to. Almost all these, a large portion of our business are one off joint ventures. We do have multiple SMA funds going. So $400 million fund that will have seven or eight deals rolled into one.
• 1:13:26
  Speaker A: But is there a theme behind those funds, or is it just a pocket of capital you get from an investor and say, okay, here's the amount of money I've got, a seven year horizon. Get it invested, and then you sell it off or roll it out to something else.
• 1:13:42
  Speaker B: Right. So we. So from the theme is that it's the same sort of capital partners that we're doing business with on the JV side that just wants the benefit of having multiple assets with some. Look at a pipeline, say that they get, you know, they don't get. They want to make sure that they get decent looks at deals.
• 1:14:03
  Speaker A: So it's more than a strategic relationship where, you know, you have a box to fit in.
• 1:14:09
  Speaker B: That's right.
• 1:14:10
  Speaker A: That's what a lot of guys do. They set up a box. If it's in that box, then it's approved.
• 1:14:16
  Speaker B: That's right.
• 1:14:17
  Speaker A: But you're aggregating capital in a box, and you got to move this money out of here and get deals into it and that kind of thing.
• 1:14:25
  Speaker B: So that's. I mean, that's. So we. Our longer term view, a lot of our assets have that longer term view either through a fund life or one off investors who are built core. In each of those instances, Mill Creek is crystallizing their promote, maybe leaving some money in the deal, generally finding a way to crystallize the promote. And then we'll oversee the equity through a, and Ms will oversee the property management for seven or ten years. So we're enjoying that side of the business. But it comes back to also, I think this is an important concept. Think about good going public. The values aren't there today, right? No, they just aren't. But a wise advisor to Dick Michaud was on our board for a long time. So that was wonderful. And I remember him saying once, so.
• 1:15:20
  Speaker A: He was chair of Avalon and he was on your board.
• 1:15:23
  Speaker B: So he had left Avalon.
• 1:15:24
  Speaker A: Oh, he left Avalon.
• 1:15:25
  Speaker B: So Tim Naughton had taken over.
• 1:15:27
  Speaker A: Okay.
• 1:15:27
  Speaker B: And he was retired and living in the area. And, you know, he came from TCR earlier.
• 1:15:33
  Speaker A: He knew the culture.
• 1:15:34
  Speaker B: Yeah. So he sat on board. He was awesome. So I remember him saying to us one day, you know, you don't have to go public, but if you build the organization with the discipline to go public, every exit strategy will be at your disposal. Right. So if you think about good governance and culture and how you run your business and how you present yourself, then you can do whatever you want. I think that's a guiding principle. That's been lovely for us.
• 1:16:08
  Speaker A: Yeah. So you're, on the surface. On the surface, you're like a public company, but you're really a private company.
• 1:16:15
  Speaker B: Yeah. We're still entrepreneurial. We're not answering to quarterly earnings calls. We're still making, you know, none of us have to get drilled by analysts.
• 1:16:24
  Speaker A: But you have a board of directors.
• 1:16:25
  Speaker B: We have a board. We have a board.
• 1:16:28
  Speaker A: So you have all the governance issues?
• 1:16:30
  Speaker B: We have a management committee. So we really operate a gold standard. Yeah.
• 1:16:38
  Speaker A: And I assume you have audits very similar to public companies, too. To some extent. Right.
• 1:16:43
  Speaker B: We value our company every quarter, and we do that through an audit system. And that's interesting. Yeah. I sit on audit committee and, you know, we very much value ourselves in a. In a public manner.
• 1:16:59
  Speaker A: And I'm guessing that the RCL Co. People advise you to do it that way to some extent, to give you some structure and organizational correct ability.
• 1:17:08
  Speaker B: Correct. And it's really? I think what's important concept here is all of that makes for an evergreen company.
• 1:17:20
  Speaker A: Yeah. Continuity. So important.
• 1:17:23
  Speaker B: Yeah.
• 1:17:24
  Speaker A: I'm forming a nonprofit right now, so I'm trying to build continuity with that. I mean, I can be a one man band and do what I do, but I'd like it to last longer than my life, if possible.
• 1:17:35
  Speaker B: That'd be wonderful.
• 1:17:36
  Speaker A: If I can finger crossed. That's a goal of mine. So we'll see. So, let's go now into your transactions, some of your local deals, and the first one I have on my list here is Madeira Siddichi. I guess I assume you pronounce it, which is the former. Which is the former italian embassy in town. And I'm gonna guess. I'm speculating. This is not a deal that you're gonna merchant deal. This is one you're gonna hold long. Am I right?
• 1:18:04
  Speaker B: That is 100% correct.
• 1:18:07
  Speaker A: Talk about that deal.
• 1:18:08
  Speaker B: Sure. So, that was a very, very special investment, special community. I think, you know, this was the historic italian embassy. It was built 100 years ago. The first building permit was signed by Mussolini.
• 1:18:24
  Speaker A: That's something.
• 1:18:25
  Speaker B: Oh, my God. That was neat. And I sort of joked that ilduche. Yeah, exactly. I got to sign the second building permit. So maybe that's. That's funny. But it was great. It was a lovely community. Great story behind that building. What's really fascinating about that? Well, first of all, there's a great story, which is that embassy was owned by three different developers that tried to develop it. One of those developers who bought it, tried it and failed was Christian Laetner. So when he was at the wizards, he was trying to get into.
• 1:19:01
  Speaker A: Oh, my goodness.
• 1:19:03
  Speaker B: Yeah. He was trying to be a developer with his colleague Brian Davis, and he bought it, and. And it didn't work out that well, and I'm sure he tried. And. But I did a. As I was pitching our investor, which was the state of North Carolina, and all of them were tar heels. I absolutely brought that story. They were in ready to advice, and said, you know, if Leitner can't do it, we can.
• 1:19:29
  Speaker A: No love lost there.
• 1:19:32
  Speaker B: So it was. What was. I'm very proud of this team locally is a lot of these investments that are on here are extremely complex, more complex than Bill would like me to take on. And the execution on this was exceptional. I mean, they took on an embassy that was 100 years old, and they built it on schedule and on budget, and it was just a giant, giant custom home. So that was a special community. It was. It delivered in a horrible time, you know, to deliver in the pandemic.
• 1:20:07
  Speaker A: How many units in that project?
• 1:20:08
  Speaker B: There was 134 homes in that community. Okay. And, you know, it's on 16th street. So you think about beautiful building that's delivering in the pandemic and all the challenges that we saw with, you know, all the challenges we saw with the district of Columbia and the pandemic. And so that definitely struggled.
• 1:20:33
  Speaker A: Cool. The next one is founders row, which you mentioned earlier near where you grew up. So talk about that project.
• 1:20:42
  Speaker B: So, yeah, it was three blocks from my home in Falls Church. We were buying 14 parcels, one of the largest assemblages ever put together. One of those parcels was the 711, where I used to buy bureaus and underage gift. So there's all these great connections. But that's a. You know, that's a fascinating investment. Cross harbor is our capital partner, and painst is our lender. And a. It's a 400 home community with 90,000 retail. What's the structure of the buildings? So it's high density stick. So it's five stories of stick over one a retail. We have age restricted homes in there, which we've never done, 55 and over because of the local school system, but a small amount from 70. What's really interesting about that deal, and, you know, with one of the bigger mistakes that I've made in my career, was we. I agreed early on that this. The retail would be anchored by a movie theater. It was a condition of the city, and the deal wouldn't have happened if I didn't agree to the theater. So it was just a very clear business, like, you want to do the deal or not? So there was no, like, working your way around if you didn't agree to the. There was going to be no deal, and I did, and Joe Muffler and the team flipped. We've had a decision ever since. But in the. I mean, in the pandemic, we closed. We closed with a theater, signed lease, and in the middle of the pandemic, that theater just goes bankrupt.
• 1:22:17
  Speaker A: Yeah.
• 1:22:18
  Speaker B: So then we're negotiating with a new theater in the middle of a pandemic. And it's, if you ever want to feel, do a negotiation when you have no leverage, try negotiating with the theater in the middle of a pandemic where you need to have a theater. Right. And the market's better now, but we did it successfully.
• 1:22:40
  Speaker A: That would have been one where you sit down with a city and say, how about a public private partnership? You guys own the theater, we'll own the residential.
• 1:22:52
  Speaker B: It was. We Joe Muffler with that deal, so well in that decision. And I worked on it for three years, four years. And he's worked on it for ten years. And they should put a monument in Joe's honor in the city of Folks church. But he did a remarkable job bringing this one to success. And the theater's gonna open next year, and we have.
• 1:23:19
  Speaker A: Who's the operator for the theater?
• 1:23:21
  Speaker B: Paragon.
• 1:23:22
  Speaker A: Oh, okay.
• 1:23:23
  Speaker B: So good group. I feel very good about them. Good. But he has a. There's a restaurant there called Elly bird now, which is New York Times ranked at the best restaurant in Virginia. It was a difficult deal, way too much complexity to on the team. But it'll be a special community. It'll be a special investment.
• 1:23:47
  Speaker A: Is this project close to what Eya did with their project? Yeah. Okay. Which was tied into their schools there. That's right, yeah.
• 1:23:55
  Speaker B: Right. Next. Right. Apart of their George Mason High School.
• 1:23:58
  Speaker A: Right, right. Interesting. So the next one I have is Madeira on H Street, northeast. Talk about that project. And I. Interestingly, back in. Oh, boy. It was probably 2008 or nine, I just wandered up and down 8th street because it was really, you know, I think the first deal that I remember being done was Jim Abdo's the children's museum update. I think that was really the first project that I remember being done on that segment of the area. And then I saw Gary Rapoport's redevelopment with Chris Smith. The two buildings on 8th and 8th street, which is quite a project.
• 1:24:37
  Speaker B: That's quite a project. You know, and then you have JP Morgan with insight at Apollo.
• 1:24:43
  Speaker A: That's right. That theater.
• 1:24:44
  Speaker B: Yeah. Wonderful.
• 1:24:45
  Speaker A: That was an incredible project.
• 1:24:47
  Speaker B: Yeah. So we. And we missed out on that initial run on H Street. Right. There's a lot of folks who were a little bit more. More forethought than I did, so they.
• 1:24:57
  Speaker A: Stan Slaughter did a deal there.
• 1:24:59
  Speaker B: Stan Slaughter did well there. Yeah. And so it's a. It's a quarter. That's. That was a vibrant revitalization of the district. This opportunity. This was land that was owned by JBG.
• 1:25:11
  Speaker A: Oh, okay.
• 1:25:12
  Speaker B: So they were the seller on it. You know, they. They had to sell some of their assets off.
• 1:25:17
  Speaker A: Was it entitled at the time?
• 1:25:19
  Speaker B: It was entitled. It was entitled. It was. I mean, like the. That's going to be an interesting investment. It's an op zone deal. Our investor is an op zone investor. So they're going to. They have a ten year horizon on it, so they're going to be very happy. I do think that area in DC has been hit pretty hard.
• 1:25:42
  Speaker A: Yeah.
• 1:25:43
  Speaker B: So it will be like when we close that deal. That was a thin deal. That was a sub six yield on cost, and that's with the low interest rate environments. So we've got patient capital. The execution is really strong on that one. And so it's one of those things where, as a developer, you have to look at it and say, the investor is going to be happy we put the right capital partner on that location. Pretty confident the promotes won't be there. Right. But we've also low leverage, so there won't be any distress there. And then you just. You execute it.
• 1:26:24
  Speaker A: Where is it now on the operational standpoint?
• 1:26:27
  Speaker B: So it's under construction.
• 1:26:30
  Speaker A: So you're not even at lease up yet?
• 1:26:31
  Speaker B: Not even. At least up. So we're. I think we're probably eight or nine months away from anything delivering homes there.
• 1:26:39
  Speaker A: Is that at Bladensburg in H?
• 1:26:41
  Speaker B: Yeah, yeah, exactly. So 17th in h. So just. Just a couple blocks from bleeding.
• 1:26:46
  Speaker A: Got it.
• 1:26:47
  Speaker B: So it's.
• 1:26:47
  Speaker A: I think that, Mark, you're near the star intersection.
• 1:26:50
  Speaker B: That's right. Exactly. Yeah. Yeah. So we'll see how that one does.
• 1:26:55
  Speaker A: I'll never forget the early nineties. I went out and looked at Heckinger mall to refinance it.
• 1:27:00
  Speaker B: Yeah.
• 1:27:00
  Speaker A: For the Heckinger family.
• 1:27:01
  Speaker B: Oh, sure. Yeah.
• 1:27:03
  Speaker A: I said, I'm gonna have a hard time with this one. That market was a little different. That.
• 1:27:09
  Speaker B: A little different. That's right.
• 1:27:12
  Speaker A: Yeah. So, Madeira, Clarendon.
• 1:27:14
  Speaker B: Yeah. So that one is. I mean, I just absolutely love that investment. It's outside of the. It's a great example of terrific real estate. It's where the old sport and health gym was located, right on Washington Boulevard. I think. I honestly think that it's one of the best. Best pockets of real estate in the DC metro area. So it's one of our funds that invest in it, so they're thrilled. And it's. It comes back like, it's a great example of great real estate, good economics, good partner in our funded quadrille, and we're partnering with Promark, who's a local developer. They're wonderful. And right now, we have a math problem. Right. The values aren't there because the cap rates are up. So, you know.
• 1:27:59
  Speaker A: So it's a long term hold.
• 1:28:01
  Speaker B: Long term hold. So, yeah, it's a long term hold, but it'll be a terrific investment long term, so.
• 1:28:07
  Speaker A: Well, Clarinda's just an amazing market.
• 1:28:10
  Speaker B: Yeah, it really is.
• 1:28:12
  Speaker A: I think McCaffrey is really what made that market.
• 1:28:14
  Speaker B: McCaffrey their project and market commons. Yeah, absolutely.
• 1:28:18
  Speaker A: That was a phenomenal project. Yeah. And then Madeira Mosaic, which is at Eaton's project.
• 1:28:23
  Speaker B: That's right. So we were the, I guess Avalon was the first one to develop in mosaic and we were the second. But I teased the Avalon guys that we got a better site. And so that was a terrific investment. I mean, I really, you know, Eden is a unique group to work with, very good at retail. But I think what I learned from the Founders row experience versus mosaic is mosaic is perfect for us. Right. We're very creative at partnerships. Eden says a group is better at retail than we are. We're doing good retail. Founders row, we're doing a good job there. But Eden is fantastic at it. Right. Right now we're partnering in Texas and Carolina with the Asana Group. Right there are the spin off. Very good doing creative structures. Let them do more on the retail side, will create a lot of value. We'll take construction risk. And that's what we did here. We came in, they were the master plan. They had the benefit of the master plan value from a land value perspective. And then we built it out and we delivered them the retail and they just crushed the retail. And then we had the value of the multifamily above it. So that's done very well. We still own it long term hold. Again, that one is with the state of North Carolina, our original platform program. But it's, Mosaic's been special for us.
• 1:29:44
  Speaker A: Well, let's say, I mean, that's a critical mass project that just, it's similar to urban mark, you know, their, their union market deal in DC. It's just they build this critical mass. It's just everything kind of surrounds around it.
• 1:29:58
  Speaker B: What's really interesting about that, and you could talk a lot about this is we did a big mixed use deal right up the street. So we did Delmore Metro. It was the avenue investment with JP Morgan.
• 1:30:10
  Speaker A: Okay?
• 1:30:11
  Speaker B: And that was anchored. And you just think about this, which is, it was anchored at metro with the grocer, with inline retail. Okay. And mosaic is not at the metro. No. Right. No real grocer. So uli, all day long would say this is the better investment. But the reality is that what Eden's created, where there's a nightlife there, a vibrancy there, where, as you described, there's real synergies there. The rents are much higher in mosaic than they are done.
• 1:30:48
  Speaker A: From an academic standpoint, you'd look at it and say, wait a minute, does this make any sense?
• 1:30:53
  Speaker B: That's right. Yeah. You're 100% right. And you would have said they would at least be equal if not put a metro premium on it.
• 1:31:04
  Speaker A: Tell me how you were sold on doing the deal at Mosaic even after doing your Dun Lauren deal. Or was that. I assume that was done first, right?
• 1:31:11
  Speaker B: Dun Lauren was first. Then we ended up. Mosaic caught up, and then we ultimately did Mosaic, too. Really, it was a belief, you know, in what Eden was pulling off. They at that point, had pulled off target Angelica theaters, and as they were like, as they were like, know, I'll throw us under the bus. You know, we're pulling off nail salons. They're pulling off chef driven restaurants. Right.
• 1:31:41
  Speaker A: Okay.
• 1:31:41
  Speaker B: You sort of see what's happening. You're like, all right, I'm really glad of my urgent care. And they have these, you know, amazing, vibrant restaurants, and, you know, I don't know, on the retail side, who did better financially because there was such credit challenges, you know, in the early years of. But just from a livability perspective, you could really see the value that with mosaic, with what Eden's was creating, was special and a takeaway for the younger audience. And you realize that's not us. We will pay them for that.
• 1:32:18
  Speaker A: Well, for the listeners, if you want to know more about edens, listen to Jody McLean's interview with me. And she talks about the philosophy that she has about both, you know, union market as well as the mosaic, and she talks about the distance from our customer, the time they spend on the shopping center, the whole thing. She's got it down to a science.
• 1:32:40
  Speaker B: She really. She's having her supper dinner this Sunday down at Union Market. But she's really design focused. The details matter.
• 1:32:50
  Speaker A: Oh, yeah.
• 1:32:51
  Speaker B: She's very good at what she does, no question.
• 1:32:56
  Speaker A: So there's a project that has a little bit special to my heart that I wanted to bring up that I heard a rumor that you guys were pursuing, but I wasn't sure if you were because I haven't read anything recently about it. Maybe you pulled away. There's a shopping center at the corner of 48th Street, Yuma in Washington, DC, which was the second property I financed when I moved to Washington, DC.
• 1:33:19
  Speaker B: Is that right?
• 1:33:19
  Speaker A: It was anchored by superfresh at the time. And KB theaters had their screening room in the basement of the property. And so the land is owned by the Cogon or the Berka family. The Berka family owns the dirt, and Melvin Lincoln built the office building next door, which is now the American University law school. And he was involved in the shopping center as well, and owning that. And I think that was kind of a. When he built the office building, he had to assemble that whole site because the center had been there before he was involved. So he was my borrower as a leaseholder on the burqa property. So it was a small deal, only $2 million loan, but it was the most complex $2 million loan you can imagine because it was a ground lease and whatever. And Melvin was an interesting guy. I don't know if he ever had a chance to meet Mel Lincoln, but.
• 1:34:17
  Speaker B: So did you actually work with the Burqa family?
• 1:34:21
  Speaker A: Well, only to get approvals for the ground lease, because they weren't our borrower. They were just the ground less sore. But they had a. It was an unsubordinated ground lease.
• 1:34:31
  Speaker B: Yeah.
• 1:34:31
  Speaker A: So, you know, they were. You know, we had to subordinate to them. Our lender was a canadian life insurance company at the time. Anyway, that deal closed the day my oldest son was born.
• 1:34:47
  Speaker B: Is that right?
• 1:34:47
  Speaker A: Yes. And the attorney was one of my podcast guests, Fred Klein of DlA Piper. And Fred's birthday was that day as well.
• 1:34:58
  Speaker B: Fred is a true icon.
• 1:35:01
  Speaker A: Fred has been around a long time.
• 1:35:04
  Speaker B: Yeah. So I can tell you that the burqas owned that land up until about six months ago.
• 1:35:10
  Speaker A: Really?
• 1:35:10
  Speaker B: Yeah. So we bought it. We. We worked on. So, yes, this is our Modera lady bird community.
• 1:35:16
  Speaker A: Lady Bird.
• 1:35:17
  Speaker B: Lady Bird is our brand name there. Modera is our brand. We actually tied that up in 2016. We got it approved through the pud process in 2019, and we got it out of appeal about two weeks ago.
• 1:35:37
  Speaker A: Oh, my goodness.
• 1:35:38
  Speaker B: So it was a five year arduous process of zoning approval denial, approval appeal, and it was rewarding. We are 100% out. We're starting construction this September.
• 1:35:56
  Speaker A: Really?
• 1:35:56
  Speaker B: Yeah. And we're announcing our grocer here in a couple weeks. So it's super fresh, as though we'll have to invite you out for the groundbreaking. And we're very excited.
• 1:36:05
  Speaker A: I mean, that house, I mean, that site. I mean, it just. It was so unique, such a different, such a asset property that, in fact, I had lunch at the wagshalls, which is right around the corner from there. Last bond.
• 1:36:21
  Speaker B: Wonderful. Yeah.
• 1:36:23
  Speaker A: And, you know, the. What's the name of the family? The Miller family, of course, is a major investor in that whole area. And recently, Percy is her PRP, bought the Creighton barrel center that was across. So they have that, and they're building residential over there. I understand. Or thinking about it from Wash Reed.
• 1:36:41
  Speaker B: I guess maybe elm community now? Yes. Elm, Houston.
• 1:36:45
  Speaker A: Elm.
• 1:36:49
  Speaker B: Yeah, it's a special location, but his prudential's our partner on that.
• 1:36:54
  Speaker A: Oh, interesting.
• 1:36:55
  Speaker B: And, yeah, that appeal process was something. It was very much. It was. What's really interesting about it is we had every political support you can imagine. The mayor was supportive of it.
• 1:37:11
  Speaker A: What are you going to build there?
• 1:37:12
  Speaker B: So we have on that community, we're looking at 200 and 235 homes, and we're gonna. Plus a grocer. So high density stick construction again. But it'll be a special community.
• 1:37:30
  Speaker A: So you're not gonna do concrete there. That's interesting.
• 1:37:33
  Speaker B: Yeah, it's, you know, that's one of the markets where you. The economics could support it, but the zoning would never like. It was thick frame. Construction was even too high for the neighborhood. Really? Yeah.
• 1:37:50
  Speaker A: Interesting.
• 1:37:51
  Speaker B: It was one of the challenges we had. It's the neighborhood. There was a lot of folks who wanted to see change there. They knew that it was just going to be a dormant vacant grocery store for the next decade if we didn't do something.
• 1:38:09
  Speaker A: Yep.
• 1:38:10
  Speaker B: But then, you know, there's some. There's a lot of very active residents who just change is hard sometimes.
• 1:38:18
  Speaker A: So when I was financing a property, this was 1986, I learned that that was where Nancy Reagan got her hair. Hair done.
• 1:38:25
  Speaker B: Is that right?
• 1:38:26
  Speaker A: In that property?
• 1:38:27
  Speaker B: Yeah.
• 1:38:27
  Speaker A: And she was. She was the first lady at the time.
• 1:38:29
  Speaker B: Time. I did not. Oh, she came out and she came.
• 1:38:33
  Speaker A: Out there to get her hair done while I was financing the property.
• 1:38:37
  Speaker B: Yeah, I had to change the ladybird name. We have a first lady theme here going. That's pretty cool.
• 1:38:46
  Speaker A: There you go. I thought I'd dovetail that in there. So anyway, that was fun. Are there any other projects that you want to share and talk about that? Are you unique and something that would be worth considering?
• 1:39:00
  Speaker B: Sure. I think, you know, we're always, always active in the market here. You know, right now, our local team is led by Joe Muffler. The next generation is really exciting. So Joe Muffler and Peter Bronholler and Chad Price are. They're always got something exciting.
• 1:39:20
  Speaker A: Chad is in my community.
• 1:39:21
  Speaker B: Chad is, yeah. So Chad was the one who coached me going into this, so he told me what his community wanted to hear. Okay, good. That's awesome. So, yeah, so we have a community in old Town Alexandria. We're just on the north side of old town where the Samuel Madden housing project is existing, and we're actually partnering with a local affordable housing developer.
• 1:39:48
  Speaker A: Interesting.
• 1:39:48
  Speaker B: And we're so fair, you know. Arha. So, Arha is the local developer owner of the existing.
• 1:39:57
  Speaker A: Yes. The head of that group was honored the other night at Uli.
• 1:40:01
  Speaker B: Yeah, they're wonderful. So we're partnering with Arha, we're partnering with Fairstead, and they're gonna build a liHtc building, and we're gonna build a market rate building with really deep affordability.
• 1:40:14
  Speaker A: Did Bret Meringoff structure that deal for Brett?
• 1:40:17
  Speaker B: Did. Brett did, yeah.
• 1:40:18
  Speaker A: He's no longer there now. His own company.
• 1:40:20
  Speaker B: He's spun off on his own, and he's going to do fantastic Brett special. So he. He brought us in, I think, very highly to Brett. You know, they'll be breaking ground on the light tech building later this year. Will be breaking ground probably a year from today, plus or minus. But it's the first one, I think, in northern Virginia, where, you know, it's truly mixed income. You know, our am. Some of the units are as low as 30%.
• 1:40:43
  Speaker A: So you're west of Washington street then.
• 1:40:45
  Speaker B: You got it correct.
• 1:40:45
  Speaker A: Yeah. You're towards the Braddock street metro in that direction. Okay. Yeah. Yep.
• 1:40:50
  Speaker B: So that's an exciting project, and it's exciting community. And I guess when I think about DC real estate, it's, you know, we'll talk about DC. But, you know, the local team, I think that the second best market in the DMV is Richmond right now. Right. Northern Virginia has always been exciting. Richmond is much more of a primary market. And so the team is trying to find opportunities down there now, too, which is different.
• 1:41:19
  Speaker A: Well, this market continues to expand in every way. I mean, you go north into Frederick, it's almost up to Pennsylvania. Stuff going on in West Virginia.
• 1:41:32
  Speaker B: That's right. That's right.
• 1:41:34
  Speaker A: I don't know if you're going those directions or not.
• 1:41:36
  Speaker B: Not that far out. Yeah. Maybe one day.
• 1:41:40
  Speaker A: Yeah. The data center growth, too, in this market has been spectacular.
• 1:41:44
  Speaker B: It's been amazing. It's been really remarkable. My mom lives out in Ashburn. You go out there, it's just crazy.
• 1:41:49
  Speaker A: Yeah. So just earlier today, in a fundraising discussion, I was talking to Bob Kettler.
• 1:41:54
  Speaker B: Okay.
• 1:41:55
  Speaker A: And he's now getting into the data center business, which I think is really interesting.
• 1:42:00
  Speaker B: Yeah.
• 1:42:00
  Speaker A: Yeah. Because he has a lot of land development experience. As you may remember, the multifamily business is evolving due to several factors, including work from home, amenity wars, the capital markets, affordable housing crisis, among others. Describe some of the innovations that you believe have the greatest impact in both developing and operating properties. What is happening today that has been the most impact on current business in your mind?
• 1:42:27
  Speaker B: Yeah. So that's a great question. I think so. I think. Let me describe it like this. Where are we on the technology spectrum? We're the second mover. Right. When you think about technology and how much we push the envelope, I was with one of our public REIT competitors, and they share that they invest $25 million per year on AI and sort of AI adjacent. Right. And that's both human capital, their own designers, and investment in Propco and all that. And they. And that's good for them. That's not us. So there are leaders in the multifamily industry, generally more on, I think more in the public read space that you were describing that are really on the forefront, edge of technology evolution. John, we're really right behind them. Right. We're probably ahead of most of our private competitors, but we're not right on the forefront. So as an example, this public lead's doing that. And all of their. In the past year, 95% of their residents do not talk to a person, new residents that are signing a lease. We'll be at that same ratio of about 95% to 96% residents being introduced to a middle Creek community whose the bot's name is Millie. They'll meet Millie. Probably 95% of our residents will meet then, and that'll just be a few months from now. So we're rolling out that sort of technology a little bit slower than maybe the reeds do, but generally ahead of.
• 1:44:19
  Speaker A: So let's say I've got a backed up toilet in my unit.
• 1:44:22
  Speaker B: Yeah.
• 1:44:23
  Speaker A: So I get on the Internet and type up Millie. Right. A chatbot, and say, I got a backed up toilet. My unit number is x. So within a certain period of time, there will be a response to that.
• 1:44:33
  Speaker B: There is.
• 1:44:34
  Speaker A: By a human being.
• 1:44:35
  Speaker B: Yeah. So we. So, I mean, Millie can't fix your toilet yet, which would be wonderful if AI can figure that out. We're going to really have some.
• 1:44:46
  Speaker A: Well, you'll have robots come up. A fleet of robots coming.
• 1:44:49
  Speaker B: So right now, Millie's focus, it's very funny to refer to her as a person. So Millie's focus is really when you. The better example is when you call for a new home, Millie will be the person you chat with and engaged and very friendly. And Millie will absolutely reach out to you and set you up and set you up for a tour and answer all your questions. Very interactive, very customer focused, very thoughtful program. Millie will also call you and remind you that you may be a little delinquent on your rent in a very kind way. So Millie is very customer focused and will ultimately be involved in the operational side of business about your, you know, your clogged toilet or whatever. It is not quite there, but it is an AI technology. Right. So we're very. We're so we're pushing the envelope there, just frankly drafting off where other people have invested in prop tech. So we've got a solid. You know, I think we're doing well there. I think more for us, where I think this is interesting to go is more macro issues. Right. Millcree, the way I describe the Milk Creek product is we're the Lexus and BMW of the rental market. We're a luxury. That's the Modera brand. What we've also now gotten into is the Amavi brand. We're also single family. You know, single family for rent, build for rent. We're out building town homes, cottages and duplexes further in the suburbs. So we've now embraced that.
• 1:46:35
  Speaker A: How did you get into that business?
• 1:46:37
  Speaker B: So that was really quite a few of our. If you just look at the world, there's a big movement due to the lack of affordability. Right, right. So a large population that doesn't really want to live in the city, doesn't want to live in a five story multifamily park underground, but they can't afford to buy a home in the suburbs. That's a huge portion of the population. Right. So we're really delivering new luxury living at a very affordable price in a good school district. Very important distinction. You know, that feels like single family living. Right. A duplex, you feel like you're living in a single family home. It's a very different model. We're going to be a big player in that space. So, you know, I think that's a byproduct. That's a bigger byproduct. But the pandemic really supported that. As you work from home, where can.
• 1:47:46
  Speaker A: You do that economically? Around the DC area. Cause the land values here are so high.
• 1:47:51
  Speaker B: Yeah. So we're not. So, Nash, this is more of a national comment. So we're in a sunbelt. So we're Carolina through Texas and Phoenix.
• 1:48:00
  Speaker A: That makes sense.
• 1:48:01
  Speaker B: Right. So that is a good model there. You really couldn't do it right now. Now in the suburbs that we operate in because, frankly, the home builders would come in and pay $300,000 for 300 grand per lot for land and sell town homes for a million bucks. We're not going to compete against them. But I can tell you, Carolina's part of my footprint. We're very active in Charlotte. We'll be very active in Raleigh down there. Great opportunity for that. So that, coupled with Mill Creek, is going to be. We have rolled out a new attainable housing brand called Beckett, which is. I like to think of it as entry level luxury, but it's multifamily. Right. It's three story living going back to our roots of just simple products.
• 1:48:55
  Speaker A: Gardens.
• 1:48:56
  Speaker B: Gardens. What's interesting for the listeners is it's very hard. It's very easy. I shouldn't say it's easy when you go from garden to high density, there's a growth curve there and it's very hard to go from high density back to garden. Very hard to go from a Lexus or BMW back to a Toyota. It takes. It really is a mindset.
• 1:49:22
  Speaker A: So where would you build those? In exerbia or what?
• 1:49:27
  Speaker B: So I like to think it's suburbia. I think that right now we're. We started in Houston, Texas, and that's. That's working fantastic. I honestly think that there's a spot for attainable housing in most of these markets. I think that it's going to be hard to do it in the DC.
• 1:49:44
  Speaker A: Area, but we just have to explore Charles County.
• 1:49:47
  Speaker B: Charles County. I mean, Charles county would be a great market for. For that.
• 1:49:50
  Speaker A: Even parts of Anne Arundel.
• 1:49:51
  Speaker B: Anne Arundel, Prince William county.
• 1:49:54
  Speaker A: Right.
• 1:49:54
  Speaker B: I mean, these are areas where, you know, a new home with great, good amenities. Yep.
• 1:50:04
  Speaker A: Even if you want to go as far south, it's Culpepper county.
• 1:50:07
  Speaker B: Possibly so. Possibly so.
• 1:50:10
  Speaker A: Stafford.
• 1:50:11
  Speaker B: Yeah. So those are the sort of markets that we have not been operating in. And over the next ten years, I hope we do. Yep.
• 1:50:19
  Speaker A: Interesting. So. And that answers somewhat of my question about the future of the DC real estate market, in a way. But I also want to ask, will Amazon's hq, two and other tech company expansions in the region over time have impact? Has the pandemic's impact created secular changes and why?
• 1:50:37
  Speaker B: Yeah, that's a great question. And I think, and I know that you feel similarly, but you have to step back and say the DMV are really, really distinct markets. And if there's one thing that we've learned from the pandemic, it's that public policy matters. Right. And I actually like to think about this as it relates to. There's actually a competition. I like to see it as a public policy competition that exists between DC, Maryland and Virginia and the scorecard. And I don't blame the politicians, but to a certain degree, the politicians are voted in to have the scorecard being services, and the real scorecard is jobs and do their. If your policies can really yield jobs, then they can yield services. And as we all know, I think that a fair assessment is that Northern Virginia has done very well in that regard. The district has tried and trying, and they have a big challenge ahead of them. But Maryland has really struggled.
• 1:52:03
  Speaker A: Well, I'll take a historic perspective, and when I talk historic, I'm talking maybe back to the origins of each state. Virginia was founded by businessmen in 1607. They came here for that purpose.
• 1:52:22
  Speaker B: That's a great point.
• 1:52:23
  Speaker A: Yeah, they were tobacco farmers. They wanted, the whole idea was oriented that way. Maryland was Catholic, was founded by Lord Baltimore and the Carroll family, the whole. So they came as very religious from that standpoint. The District of Columbia was formed for the federal government in John Adams administration, named after our first president, of course, and who had actually done the. The C and O Canal. He, you know, surveyed himself along the Potomac river where he grew up down in Mount Vernon.
• 1:53:03
  Speaker B: So.
• 1:53:05
  Speaker A: And the city was a swamp when it was first built. Why they decided that site, I don't. I still haven't figured out that to this day. But anyway, the orientation of the history of each of those jurisdictions leads to what I moved here in 1985. I saw the conflict and the total different orientation politically. And it came from those cultures of that era. And then if you've ever read the book James Michener's Chesapeake, which also talks about the origins, even, even though it was a fictional story, but it does talk about the history of the Chesapeake Bay and how you had the indigenous cultures here and just how all those things evolved into today.
• 1:53:56
  Speaker B: That's fascinating.
• 1:53:57
  Speaker A: So people don't think about those things when they talk about current politics in this region. But if you think about it, where the orientation came from, from, it makes sense. You know, Bethesda, Maryland, was formed because of the nasty hospital that's there. You know, the Bethesda Naval Hospital, the whole healthcare orientation of Montgomery county comes from that. You know, if you look at really.
• 1:54:23
  Speaker B: Part of our DNA, it really is.
• 1:54:26
  Speaker A: Yeah. So. And there's a very social perspective in Maryland that is not the same Virginia.
• 1:54:33
  Speaker B: That's right.
• 1:54:34
  Speaker A: So it comes a little bit more from the religious social side. And you look at Virginia was a business community, you know, the whole thing. And even during the Civil War, you know, they fought for slavery because that was the business of Virginia was to the crops and do the whole thing. So George Washington and Thomas Jefferson and they all had slaves. Right. And the Lee family of course, was the origin of all of it. They, they were the part of the original, you know, settlers of Virginia.
• 1:55:08
  Speaker B: Great perspective.
• 1:55:09
  Speaker A: And Robert E. Lee had to give up his land and now Arlington National Cemetery. Right.
• 1:55:15
  Speaker B: It's fascinating. You know, it's, I mean that's a great perspective. I'm going to read, I'm going to read that now. So that's, but you know, when you translate all that, it's fascinating to think about how that DNA really influences, has established the roots for the opportunities and challenges we have today as a business that operates here. I mean our offices in Maryland, since I've been with this group, we've built, built 11,000 homes here.
• 1:55:45
  Speaker A: Okay.
• 1:55:46
  Speaker B: And 484 were in Maryland. Wow. So that says something, right?
• 1:55:52
  Speaker A: It sure does.
• 1:55:53
  Speaker B: And we would, you know, we, we work here. We'd love to do more, but it's less than 500.
• 1:56:00
  Speaker A: So taking it to the, today, the attitudes and the perspective of the federal government and the overlay of the federal government and its influence is way heavily to the eastern side of the, of the, the Potomac river than to the west, except for the Pentagon. So when I first moved here, you had, they called it the death sciences on Maryland, Virginia and the life sciences on Maryland.
• 1:56:32
  Speaker B: Right.
• 1:56:33
  Speaker A: And that's the more soft side. The whole, and government. The whole government orientation. So government is more dominant in Maryland and Virginia than in Maryland and DC than in Virginia per se. It's more of an independent thought process in Virginia.
• 1:56:53
  Speaker B: Yeah.
• 1:56:54
  Speaker A: So that's the cultural difference.
• 1:56:57
  Speaker B: I do like, I would like to have us do more in Bethesda. I believe in the Bethesda market. We've tried many times. We get to be successful. We will. I do struggle at the end of the day with the job growth story of the 270 quarter between the regulation not being able to get out of their own way. It's just more and more gravitated towards better opportunities. What I do see, everyone says business friendly. Right. I would say this. I like when we work in areas, areas that are difficult. I want it to be difficult. Right. I want to be able to create value.
• 1:57:40
  Speaker A: Spring Valley is a case in point. Right.
• 1:57:42
  Speaker B: Spring value is a case in point. That's maybe a little bit too much, but falls church, like we weren't, you know, I don't want the DC area to be Houston. Right. But you can't be San Francisco either. Right. And Maryland just has to see and I'm not going to change Maryland of DNA of it, but it's a competition and we're going to naturally gravitate there's nothing easy about working in Arlington or Falls church, but you kind of know the rules you're going to play by. You know, the jobs are going to go there. It's difficult enough that the supply can stay controlled, but it's predictable enough that the demand drivers will be there. There's one takeaway that this pandemic has taught us, and I've heard you say this, which is the biggest challenge the multifamily has, is just supply challenges that are happening throughout the nation. But we also have some demand challenges. You know, we had an investment in Oakland, California, that wasn't a supply issue, that was a demand issue. So we've learned the difference between. And I'll take a supply challenge over a demand challenge any day. Look at office.
• 1:58:58
  Speaker A: The pandemic just crushed it.
• 1:59:00
  Speaker B: That's right.
• 1:59:01
  Speaker A: So, yeah, it's, yeah, so I get it. And, you know, it seems like the, you know, the center of gravity is moving across the Potomac into Virginia and, you know, the recent caps wizard situation.
• 1:59:17
  Speaker B: Right.
• 1:59:19
  Speaker A: You know, Virginia said we're not going to pay for it.
• 1:59:22
  Speaker B: That's right.
• 1:59:23
  Speaker A: You know, the downstate folks said, nah, why should we subsidize Ted Leonzo to build a stadium there? And so, and I somewhat agree with that decision, why they did that. So I'm switching to another point. Hotelization.
• 1:59:43
  Speaker B: Yeah.
• 1:59:44
  Speaker A: Which is kind of the trend that I've seen. And it's not just in the residential sector, but it's also the office sector too, with Oliver Carr does that in his buildings and just this whole hospitality orientation. And it's an attitude thing. So I toured Chevy Chase Lake, which is Zudo's trophy project in Chevy Chase. And they've got a Ritz Carlton.
• 2:00:10
  Speaker B: Yeah.
• 2:00:11
  Speaker A: Residents there.
• 2:00:12
  Speaker B: Right.
• 2:00:12
  Speaker A: And it's, it's for sale condominiums. But I sat with the, you know, with the Bizzuto folks and I asked them and they all said, we learned a lot with that about the whole orientation. I mean, the Ritz Carlton playbook isn't pretty impressive, apparently, for that.
• 2:00:33
  Speaker B: So that's a special investment. Mill Creek has not played in that. I think there's value there. So in case Bill McDonald's listening, I'm not going to embrace hotel. I've done enough in age restricted, mixed use. I don't need to go there. But I think that like the y hotel folks. Right, right. They were fantastic. And I, we would, I would personally look at something like that if we had a really big community. The placemaker guys are smart where you have a 400 500 unit community in an exceptional location where the hotel rates are really high and you want to have a slower lease up. It's a pretty smart concept for a multifamily person. You got to be really focused on your brand, you know, introducing hotel and the same process. The bottom line, John, is we haven't done it, but studied it, but I can see that happening in the future.
• 2:01:31
  Speaker A: Well, I, you know, I toured Reston station recently with Chris, Chris Clementi, and he's doing an interesting structure. I don't know if you're familiar with what he's doing there. He's got a JW Marriott motel and then condominiums on top.
• 2:01:45
  Speaker B: Oh, wow. Okay. Wow. Okay. Yeah, that sounds branded.
• 2:01:51
  Speaker A: Branded condominiums on top of that building. Yeah, it's under construction now. They have four cranes there. At last. I was there with office, residential, you know, hotel, all kinds of.
• 2:02:04
  Speaker B: In today's world, well, an office, they.
• 2:02:06
  Speaker A: They'Re leasing up like that.
• 2:02:07
  Speaker B: That's amazing.
• 2:02:09
  Speaker A: And it's because the court, you know, the tech corridor there, and, you know, their anchor is Google.
• 2:02:15
  Speaker B: Yeah.
• 2:02:15
  Speaker A: So that's a pretty good start.
• 2:02:17
  Speaker B: That's impressive.
• 2:02:18
  Speaker A: Yeah. So, you know, people say office is dead. Well, it's not necessarily dead, necessarily.
• 2:02:26
  Speaker B: Quality office is not. Yeah.
• 2:02:29
  Speaker A: So let's see, when you interview people, what characteristics you look for with young professionals?
• 2:02:36
  Speaker B: That's a good question. I think at our core, this is one of the things that makes this special. Just, you know, who you hire and how you hire is the most important decision you make. And we have a very structured process and very specific things that we look for. And obviously, it has a lot to do with the core values that we talked about earlier. There was a tenor that I heard which was higher, slow, and fire fast. Fortunately, we don't have to fire fast because we do fire stuff. And personally, what I really, really look for, we've taught this. A big cornerstone of the company is the education you've had through the Bell Institute in Chapel Hill, North Carolina. Doctor Bell has guided us on so many levels of personal growth and what great leadership means.
• 2:03:36
  Speaker A: Is he on your board?
• 2:03:37
  Speaker B: He is not on our board, but I get to see him in two weeks. But he is a constant advisor. He is part of succession planning. We are sending key associates and every partner down for personal assessments to understand who they are as a person and a leader, and understanding your strengths and weaknesses. And he has taught me to hire in a manner that has allowed me to really bring the right people, which is a look for three qualities, which is technical, skills, personality and commitment. And the quick summary of this for the listeners is the least important is technical skills. And I mean that if you get the right person, anything can be.
• 2:04:20
  Speaker A: You can teach them.
• 2:04:21
  Speaker B: That's right. And then no one's ever been fired for not being able to do an excel spreadsheet sheet. Right. It's really about personality and commitment. And the concept there that we look for is commitment is non negotiable. It's a hundred percent. If you're not 100% committed, then anyone on the interview committee can say, this interview is done. And you don't do that by asking them, are you 100% committed? You go back to their past life and you walk through their behavior as to how they have demonstrated commitment since they were a young child. How old were you when you had your first job? When someone first gave you a nickel for doing a job, what did you like about that? Walking through your whole life to understand what commitment means to that person. It's cool, right? That's cool. And everything you learn from the first time someone gave you a dollar affected you today.
• 2:05:19
  Speaker A: I like that. So let me, let me, let me jump in.
• 2:05:23
  Speaker B: Yeah, please.
• 2:05:23
  Speaker A: Because there's somebody that works for you. And I'm going to ask if, did you hire Chad Price?
• 2:05:29
  Speaker B: Yes.
• 2:05:30
  Speaker A: Okay, tell me what characteristics.
• 2:05:32
  Speaker B: Well, Joe Muffler, Peter Braun, Holland Mile.
• 2:05:36
  Speaker A: Talk about Chad. Yeah, if you don't mind.
• 2:05:38
  Speaker B: Wonderful. So it's, you know, Chad's a very bright guy, right? So he quickly met the technical skills. Right. Then it was commitment and personality. So commitment. We went through Chad's life from beginning to end. And what was it that did we think that he was passionate? Do you think he loved what he was going to do? And was he driven? And the answer was yes. Yes.
• 2:06:14
  Speaker A: How did you determine that?
• 2:06:16
  Speaker B: So going through the questions on commitment, of what did you do when you were, what was the first job you had? So the questions go like this. What's the first job you had? Okay, how old were you? What did you like about it? What did you not like about it? What did you like about your boss? What did you not like about your boss? Why did you leave?
• 2:06:34
  Speaker A: Is there something about Shad that stood out to you?
• 2:06:37
  Speaker B: Dynamic. He was obviously incredibly hard working. He was. I think he was a good student who pushed himself to be a great student. Right. He has, his background is a little bit like mine, like he wasn't just naturally gifted to crush school or anything like that. He actually had to see through that and get to the other side to get to Georgetown. And he had to really overcome his own challenges to be the best person he could be. And for Chad, though, I want to pivot, though, to the other one, which is there's commitment, which was pretty obvious. And Chad still, he gets in before me. He's here, you know, he's here after me. His commitment's off the charts. Personality wise. Personality is really about awareness, compatibility, and really understand. So it's not about saying we need to have a certain personality type in the organization, rather, do you know who you are? And with Chad, you know, he just lights up a room and he knows he does, and he can do so in a very humble way, and it attracts people. Right. And so that's exciting. If he did not know that, that can be dangerous. Being a really nice guy who's not aware of it can be. Can be a liability. So his awareness was really high. His commitment was off the chart, and he was smart, and we knew that we could teach him. So it's very hard.
• 2:08:16
  Speaker A: Well, when I met him, and, of course, in the community, I just am immediately noticed his enthusiasm.
• 2:08:22
  Speaker B: Yeah, right. Commitment. Enthusiasm. Yeah.
• 2:08:25
  Speaker A: Just had this, you know, curiosity and wanting to learn and just grow.
• 2:08:31
  Speaker B: That's awesome.
• 2:08:32
  Speaker A: And he's going to hopefully help us to build a partnership with project destined.
• 2:08:37
  Speaker B: Oh, good.
• 2:08:37
  Speaker A: Which is the minority group, you know, Cedric Bobo's group, to bring on new members to our community, which is exciting. Okay, let's shift to your personal philosophy, Sean. When you were fully engaged in multiple projects, how did you see balance among family business and giving back?
• 2:08:58
  Speaker B: So it's really like, I like that question a lot. Balance in real estate is really a tricky thing, and living balanced lives is one of our core values. And I've learned over years that it takes a lot of it. When you hire someone enthusiastic like Peter Braunhall and Joe Muffler and Chad Price, you don't have to kick him in the pants to get him going, but you do have to kick him in the pants to say, don't open up your phone when you're at dinner with your wife. Don't answer emails when you're on vacation. You have to really force them, and I have to do that by doing it myself. I have to make sure when I'm on vacation, I don't email them, I don't check in with them, because when they're on vacation, I want them making those deposits with their spouse and family that they're really with them because you know the business well, John, when it's on, it's on. When you have a closing or a big hearing. There's nothing you can do about it. You're on. And I love the concept of deposits and withdrawals and relationships with my wife. And when I have to do those multiple nights in a row, that's a withdrawal in the relationship. Yeah, it is.
• 2:10:27
  Speaker A: Been there, done that.
• 2:10:28
  Speaker B: Right. So I have to acknowledge that our job has a lot of withdrawals where they may miss a soccer game. Right. And so you hear people say, well, just don't miss the soccer. Well, you're going to miss some soccer games. But let's make sure that those happen in the most important times and it's not a pattern and that we really encourage to check out, really support them. Take as many. I never turned anyone down for a vacation. More of how do you encourage them.
• 2:11:05
  Speaker A: To take a vacation?
• 2:11:06
  Speaker B: So that's really the balance in life. I think as an organization, we're pretty darn good at that. We encourage people to go check out. As far as giving back, I think that you're an inspiration for me. The way that I've given back to date is I'm at the start of that point in my career, early years. Right. I'm really enjoying teaching. That's great. Yeah, I love it. It's like I still, a few times a year I'll do a case study at american. I'm going to start doing it at George Washington and start doing Georgia. And I go back to come full circle on this conversation. You know, I was a mediocre student who learned a very odd way and which makes me a pretty darn good teacher to go in and say, you know, teach people in a much different way and get them excited about real estate.
• 2:12:06
  Speaker A: So that's an interesting tippet. So let's assume you're teaching yourself.
• 2:12:12
  Speaker B: Yeah.
• 2:12:12
  Speaker A: When you were 1920 in college, how would you get your attention at that point? How would you have gotten your attention? So as a teacher?
• 2:12:22
  Speaker B: That's a great question. I think. I've never thought of that, but I think I teach in a way that would, I'm absolutely teaching to my 1918 year old.
• 2:12:34
  Speaker A: There you go.
• 2:12:35
  Speaker B: Right. Which is with enthusiasm, with good descriptions of what it's about, understanding why, you know, really taking it in interesting directions and then throwing numbers at the end, but really explaining the core competencies of why I'm there.
• 2:12:56
  Speaker A: To get attention, in my experience, is you gotta have a storytelling orientation that gets to their level and speaks their language.
• 2:13:08
  Speaker B: Yeah, it is a storytelling.
• 2:13:09
  Speaker A: So you almost have to bring in something that might not be directly related, but that ties in somehow and they say, oh, now I see.
• 2:13:23
  Speaker B: I think that's right. I think being irish, the storytelling comes naturally to me. So that's. I think you're right.
• 2:13:29
  Speaker A: But I mean, another subject that kind of gets there on a roundabout way. So I haven't told this to too many people yet, but I'm considering writing a book.
• 2:13:40
  Speaker B: Good for you.
• 2:13:41
  Speaker A: That's great, considering. And I'll just leave it at that because it's a commitment. When you talk about commitment, it's a commitment. But I now have enough content that I think I can come up with something that's certainly pretty interesting. So the question is, you know, what's the framework of what that's going to be? I don't know, but I'm trying to take it from a storytelling standpoint, and that's what I tried, why I do what I'm doing with this podcast, because every person has a story to tell and the question is, how are they all kind of interrelated from a, you know, a typical developer story? Is there such a thing? I don't know if there is, but are there common themes? Yeah, there are a few.
• 2:14:29
  Speaker B: That's great, John. I look forward to reading it.
• 2:14:32
  Speaker A: It should be fun. So what lessons would you share, both in career planning and in business performance, to the young leaders within the listening audience?
• 2:14:42
  Speaker B: You know, here's two things that I would say is don't be afraid to take risk. Failure is not that bad, right? It's not that far. You'll grow more from that than anything else. And so don't be afraid to take.
• 2:15:01
  Speaker A: Risks, especially young people.
• 2:15:03
  Speaker B: Absolutely. You know, never be afraid to make a well informed mistake. Well informed is important. We'll chat about that on the map. But lastly, I have a cultural thing that I wanted to throw out there, which is no company is perfect, no leader is perfect. We as individuals are perfect. So when you're in an organization and it's really a good, Mill Creek's not perfect. Right. And I say this to myself, is Mill Creek's not a perfect organization. And the ways that there are, am perfect that I don't like. I lead the way. I want to be led. I do, I do it. I just say if you don't, if there's something you don't like in the company that you're in, just lead that way. Don't wait for someone else. Don't expect someone else to do it.
• 2:15:52
  Speaker A: As long as you're not completely contradictory to what the culture is of the firm.
• 2:15:57
  Speaker B: Right? That's right. It's not about taking it in a different business direction. It's normally. It's normally those values with talking about, which is my company doesn't celebrate success enough. Then do it yourself.
• 2:16:09
  Speaker A: There you go.
• 2:16:10
  Speaker B: Start it. Like, do it yourself and people will follow you. And I think it's. People wait for it to happen by their loss.
• 2:16:19
  Speaker A: One of my core values of this community that I started is going first.
• 2:16:23
  Speaker B: Going first. Going first, right. That's right.
• 2:16:27
  Speaker A: And that's taking initiative. You know, use your gut to figure out what the right thing is to do.
• 2:16:34
  Speaker B: That's right.
• 2:16:35
  Speaker A: Do it.
• 2:16:36
  Speaker B: Exactly. Your gut. This is a great. You'll like this. Your gut opinion is your subconscious telling you something that your conscious is not ready to hear. Right, exactly.
• 2:16:49
  Speaker A: That's excellent.
• 2:16:50
  Speaker B: That's excellent.
• 2:16:52
  Speaker A: How do you see the advantages, disadvantages to acquisitions versus development, and to long term holding and merchant building? Do market cycles have the most impact on those decisions?
• 2:17:03
  Speaker B: So, yeah, I think we've covered that. I think it's. Yeah, you know. Yeah, I think we've. You know, we're a long way. We're all the above. We're doing acquisitions. Yep. I think if you're a small shop, you kind of figure out exactly what you do in our platform. I see. We're fortunate that we have a well rounded platform. Yep.
• 2:17:21
  Speaker A: So tell us about some of your biggest wins and failures, along with some of the most surprising events in your career.
• 2:17:30
  Speaker B: That's a wonderful question. You know, I go back to one of the biggest challenges I had as a young developer was just a deal that went sideways, and we got over our skis on the sort of product that we were building, and, you know, so it was such a God awful process. The project really, really sad was only. And Bill and Chip just stuck by me, and I should have been fired, and they stuck by me, and I just. One of the biggest things I learned around failure was sure about great. You know, it was really about communication. At the end of the day, when I think about that project, about drawings, and you think about all these things and just everything that went poorly that I could have done, had everything to do with communication.
• 2:18:23
  Speaker A: Did it get built? Yeah, it did get built.
• 2:18:25
  Speaker B: Got built. It made a lot of money, too.
• 2:18:27
  Speaker A: Interesting.
• 2:18:28
  Speaker B: But, you know, I never want to go through that process again. So, so many of these things that we challenge with, whether it's a project or a team or culture, it all comes back to being a good leader, having great communication skills, and ultimately, like, the core to all that is just being a good listener. So at the end of the day, every success and every failure revolves sort of around what, whether I was in a good leadership place and good communication. Those are the things.
• 2:19:11
  Speaker A: Great. So if your 25 year old self were sitting here, what would you tell him?
• 2:19:16
  Speaker B: You know, it's what you said just a second ago, off of which is take more risk, even bigger.
• 2:19:24
  Speaker A: Were you apprehensive originally? At that time I was.
• 2:19:27
  Speaker B: So it's a great question. You know, growing up in a working class family, stay humble, work hard. Right. You're a good number two, but you don't need to be a number one. And I sort of, whether it was darden or working for Bill and shit and all that, it's like now you can be a number one. You can lead.
• 2:19:48
  Speaker A: Did you have imposter syndrome at one point in your life?
• 2:19:50
  Speaker B: I think I did. I think I probably do. I think you're probably touching on something and I think I probably did. That's a great, you know, you, when you get to the other side of that, it's a pretty powerful experience to know that and get to the other side of it. Yep.
• 2:20:06
  Speaker A: So if you could put a billboard on the Capitol Beltway with a message for millions to see, what would it say?
• 2:20:14
  Speaker B: So I've had some fun with this one. And I realized, john, that there's an inner loop and an outer loop. So I have two science. I love it. That's great. And they're both communication science because ultimately I think that's the foundation of great leadership and great business models. And on the outer loop, the outer expression of communication, I quote a good friend of mine who, Clarence Williams, who's a writer of the Washington Post, and he reached out to the editor in chief of the Washington Post and said, how does my reporting get on a one? And the editor in chief responded with, you want to write better? Ask better questions. Profound. And so my, so to the young listeners, be curious. Ask what the question.
• 2:21:17
  Speaker A: That's great.
• 2:21:18
  Speaker B: And the interlude is a little bit more internal, which is very simple. And Sherry Brown taught it to me, which is listen well for what's not being said. So at the end of the day, if we can be curious, ask better questions and listen well. What's not being said?
• 2:21:39
  Speaker A: We'll create amazing communities and nonverbal communication.
• 2:21:45
  Speaker B: Interesting.
• 2:21:46
  Speaker A: That's great. Well, Sean Caldwell, thank you very much for a very insightful conversation. I appreciate it. Thank you. I appreciate it. Take care.