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Moiz Doriwala: From Wall Street to Main Street- Navigating Real Estate and Entrepreneurship (#130) · Icons of DC Area Real Estate

• 0:00
  Speaker A: Foreign.
• 0:08
  Speaker B: Hi, I'm John Ko and welcome to icons of D.C. area real estate, a one on one interview show featuring the backgrounds, career trajectories and insights of the top luminaries in the Washington D.C. area Real estate market. The purpose of the show was to explore their journeys, how they got started, the pivotal moments that shaped their careers, and the lessons they've learned along the way. We also dive into their current work, industry trends, and some fascinating behind the scenes stories that bring unique perspective to our industry. Commercial Real Estate before we dive into today's conversation, I'd like to share some exciting news. The icons of D.C. area Real estate Podcast is now part of the Iconic Journey in cre, a nonprofit dedicated to supporting professionals at every stage of their real estate careers. With our new website www.ijcre.org, we're expanding opportunities for everyone in the industry. If you're a student or new to the industry, I encourage you to join the Iconic Journey and CRE community, an exclusive space for learning, mentorship and networking. If you're an early to mid career professional navigating career transitions, our career coaching curriculum provides structured guidance to help you move forward with confidence. If you're an experienced professional looking to give back to the industry, I invite you to consider sponsoring or donating to the Iconic Journey and CRE nonprofit to help foster the next generation of commercial real estate leaders. And for everyone, the best way to stay connected is to subscribe to this podcast, whether directly or on Apple or Spotify so you don't miss an episode. The podcast has been delivering twice monthly episodes since August 2019 and I'm thrilled to continue these conversations under the nonprofit umbrella. Expanding Our Reach and Impact. To learn more about our community, career coaching or sponsorship opportunities, please visit our new website, www.ijcre.org. thank you for being part of this journey and now let's get started with today's guest. Welcome to another episode of icons of D.C. area real estate. Today we feature our special guest, Moise Doriwala, whom I met about 20 years ago as a ULI mentee in my mentor group at ULI Washington. Moise is a uniquely accomplished person in our industry. He is the founder of Sterling Realty Advisors, an umbrella company he established in 2008. Initially, Sterling was formed to advise real estate operators and developers on raising capital, focusing on joint venture equity, mezzanine financing, preferred equity and debt. Over time, however, Sterling has evolved and now primarily serves as an investment vehicle for Moise's diverse business and personal investment activities. While he occasionally undertakes capital raising assignments. Sterling is now the entity through which he invests in various real estate projects and companies, often taking on passive or advisory roles. Under the Sterling umbrella, Moise manages and invests in several distinct businesses. One key entity is Book Hill Park, a finance company that manages a series of small funds and provides opportunistic lending across various industries and geographies. Not limited to real estate, their focus is on understanding the borrower and the path to repayment. Additionally, Moise is involved in investing in a number of mental health and behavioral health businesses. He also serves as the President of Superior Living Foundation, Inc. A 501c3 nonprofit organization focused on owning businesses in the health care sector such as senior housing and behavioral health facilities. Moise's journey into real estate and finance is multifaceted. Growing up in the suburb of Chicago, his father was involved in construction and development, providing early exposure to the industry. Despite initially aspiring to be a lawyer, he studied economics and entered the finance world, joining the rotational program at Bank One, which later merged with JPMorgan Chase after graduating from the University of Chicago. This program was unique as it allowed him to pursue an MBA at Northwestern's Kellogg School. Simultaneously during this time at the bank, he gained diverse experience including working in asset backed securities, commercial loan workouts, leveraged leasing, and even a rotation working in a strategic group for Jamie Dimon, who is the current chairman of JPMorgan Chase. He later moved to New York and worked in this financial sponsors group at JP Morgan, an experience he deeply valued. In 2005, a desire for better work life balance and his wife's wish to return to D.C. area led him to leave investment banking. He joined his father in law's land development business, gaining firsthand experience in entitling and developing land. Following the financial crisis, he transitioned back to finance within the real estate sector, joining Perseus Realty Capital to focus on raising capital for real estate transactions. This experience paved the way for him to establish his own venture, Sterling Realty Advisors, building on his diverse background in finance and real estate. Moiz's career is marked by an opportunistic approach, a strong network and the ability to navigate diverse and complex business ventures. So without further ado, please enjoy this wide ranging conversation with Moise Doriwala. So Moise Doriwala, welcome to Icons of DCRE Real Estate. Thank you for joining me today.
• 6:38
  Speaker A: Thanks John. It's nice to be here.
• 6:40
  Speaker B: That's great. So I've reviewed your background in the introduction. You are perhaps the most unique guest I've had on the podcast as you have at least three businesses you manage or participate in managing. Perhaps overview them and your role in each, if you would.
• 6:57
  Speaker A: Oh absolutely. So I have a kind of an umbrella company that I formed in two 2008 called Sterling Realty Advisors. The company was formed to advise real estate operators and developers on raising capital, mostly joint venture equity, mez, preferred equity, some debt financing. And that company has evolved into many different businesses for me. So today where I sit with that, you know, Sterling is the umbrella company for most of my activities, personal investment activities as well as business activities. And you know, I was just talking to John before, this is. I rarely do any capital raising out of Sterling any longer. Maybe every year I maybe do one or two assignments. But primarily it's the vehicle for us to invest in different businesses. So in out Sterling is the investor for me into a number of personal investments in real estate, individual real estate projects, individual companies, other things where I'm more of a passive investor or more of a. I'm kind of an advisor or maybe part of the gp, but I'm not the day to day operator on those investments. I'm also a manager and Sterling is my investment entity in a company, an entity we created called Buck Hill Park. Buck Hill park is the manager of a series of small funds and it serves as a finance company where we lend money to, we're agnostic to industry, agnostic to geography. It can be real estate, it can be an operating company, it can be another lending company where we make loans and you know, our big deal there is we look for who our borrower is and what the path to repayment is and obviously business margins and other things and that's book Hill Park. And then we have another entity that we invest in is a number of mental health and behavioral health businesses. And then I function outside of that. I'm also the president of a 501C3 called Superior Living Foundation Inc. We are a nonprofit focused on owning businesses in this healthcare region. So senior housing, behavioral health, substance abuse. So you know, that's where between all of those different businesses I primarily spend most of my time in the businesses of Brook Hill park as well as the Secure Living Foundation.
• 9:42
  Speaker B: That's great. Thanks for the overview. Before getting into your career in more depth, please share your origins and early life experiences. Moise particularly if they had influence on your career interest in real estate.
• 9:54
  Speaker A: Funny enough. So I grew up in a suburb outside of Chicago called Naperville, Illinois. You know, probably known it's always on that list of, you know, niche lists of best Places to live. You know, when we moved there in 1984, I was born in Cleveland, moved to Naperville in 19, no, not 1982. Naperville probably had maybe 30,000 residents. Today it's probably closer to just under 200,000. So it's probably the largest kind of city outside of the city of Chicago. Great place to live. Some people would say it was kind of almost too perfect of a place to live, similar to places around the D.C. area, I would say. But. But a city that's had tremendous growth. My father was a. When I was growing up, he left his job at a consumer products company and became a general contractor. So I kind of, you know, through middle school and high school, I grew up in, you know, with my family being involved in construction, you know, construction, industrial, commercial metal buildings, as well as being a developer. And so, you know, I had a little bit of a real estate vision growing up. But I had always wanted to be a lawyer, funny enough. And I always thought I would be a lawyer. But when I went to college, I studied economics at the University of Chicago. And I decided for some reason that finance and the banking world was the right world for me. So I went to, I became, I got my first job graduating college was at a bank called Bank One. It was a really unique program. I had decided I wanted to. It was a rotational program that was started at the First national bank of Chicago. First Chicago. That was almost a three decade year program. That was a two and a half year rotational program where you kind of make your own path at the bank. It was First Chicago and Bank One was a large national bank with also some international locations and businesses. And so you chose the path that you wanted and your interests. So if you wanted to do private equity, venture investing, trading, commercial lending, middle market lending community.
• 12:14
  Speaker B: Was Jamie Dimon chairman at that time.
• 12:16
  Speaker A: So Jamie Dimon was not. When I joined, Jamie Dimon was not the chairman, but my rotation. So during that time the bank had a lot of issues and Jamie Dimon was brought in to be the CEO and replace one of the McCoys who was the founder of Bank One, which was just basically a roll up of a lot of Nash, a lot of retailers. First Chicago was one of them. My rotations were interesting enough. My first one was on the asset backed securities trading desk. Second one was in the, we called it Managed Assets. That was the large commercial loan workout group, which at that time I had one of the largest for Chicago was a very large national lender, Commercial lender had one of the largest bankruptcies ever at that time. This was in 19 oh, this was like in 99, 2000 and then after that Enron hit and then I mean so many more. The bankruptcy I had with Safety Clean was just as a rounding error compared to what we've seen over the last two decades. From there I did a rotation in the leverage leasing group which was the bank's proprietary capital base where they did tax efficient leasing for the benefit of the bank's balance sheet. And then by that time Jamie Dimon had come to, to the bank and I worked for him for the night of rotation, working for him in a group called Skunkworks. So Jamie's very famous for this group at Aldi Banks, Skunkworks, which is basically a very undefined, it's a strategic group. Very undefined though. So you basically do anything that he thinks we should look into. So all sorts of very random projects but very high level access. So I would see Jamie almost every, I'd be on the executive floor, we'd have office there, we'd see Jamie almost every day he was in town. Although also many other senior leaders of the bank were on our floor or we'd see on a very regular basis.
• 14:20
  Speaker B: So was this before you went to.
• 14:21
  Speaker A: Northwestern, to Kellogg or I'll tell you about part of the program. So one of the, and my last rotation where I went permanent was in the bank's merger and acquisition group doing middle market M and A. But what was unique about this program, what attracted me to this program which was, which is very different than anything else is that you would get an MBA at the same time that you start this program. So rather than working for two years or three years or however long and then going to business school, one of the requirements of accepting a job and getting into this program was that you would then you would also have to get accepted into business school at either University of Chicago or Northwestern, Kellogg. And so you would get accepted and you would apply then for the part time program which was the evening program. So while you worked a full day you would also go to school two days a week in the evening for two and a half years, that includes summer quarter as well. So it was a lot. And as a 22 year old it was, you know, it was really interesting because most of the folks that are in the part time program are more seasoned in their career, you know, definitely, you know, at least five or six plus years older than us and have more experience in and they're, they're going to part time business school in the evening to Basically either maybe potentially look at a career switch, but more probably developing their career. So in that program, most companies pay for your mba, so the bank paid for our MBA as well. So that was a unique thing that attracted me to that program. In addition to all of that experience across the board, having very senior mentors, it was a fantastic program. Today, during my time at Bank One, Jamie Dimon came aboard. We did a merger with JPMorgan Chase. The name changed. JPMorgan Chase. I moved to New York and worked in the investment bank there in the financial sponsors group, which was also a great experience. And When I left J.P. morgan in 2005, I left. It was a job that I absolutely loved. And if people ask me today what was a job that you miss, I missed. I miss working in that financial sponsor group JP Morgan had and probably still today has probably the best financial sponsor group on the street. The balance sheet that the bank has very few competitors to, that size of balance sheet, the access to the private equity firms and the ability to originate and syndicate the types of loans that are needed to do for, for financial sponsors and leveraged buyouts, there's really no better place.
• 17:13
  Speaker B: So you got to the big leagues real quick.
• 17:15
  Speaker A: Yeah, and it was great. Out of college, I mean big time. I loved it. It was a great experience. I worked with a lot of very smart people. Just lots and lots of great experiences. And you know that.
• 17:33
  Speaker B: Did you build a network from that?
• 17:34
  Speaker A: I did. I built a very good network and I've done a good job through my career of keeping in touch with people. You know, I could always do a better job. But you know, I still talk to a lot of people that I worked with. So.
• 17:48
  Speaker B: If you called Jamie Gaiman today, would he recognize your name?
• 17:51
  Speaker A: Probably not. You know, that was 20 years ago, more than 20 years ago. And you know, I was a 23 year old. Yeah, 24 year old working for him.
• 18:04
  Speaker B: Okay.
• 18:04
  Speaker A: So I would say, I would probably say he probably would not remember me. I guarantee, you know, Jamie has like a photographic memory. And I guarantee he probably remembers some of the things we worked on, but also worked on. You know, we worked on the Executive Management report was one of our big projects for the banks. The bank can actually, you know, leadership of the bank can actually things real time financial metrics, et cetera. Real time versus taking days to put reports together. So there are a number of projects that we worked on that I think he would absolutely remember. But me personally, I'd be surprised.
• 18:38
  Speaker B: So why did you leave?
• 18:40
  Speaker A: I left. So, interesting enough, I left Because I had just gotten married a few years earlier in New York, I'd gotten married in Chicago. But my wife grew up in the D.C. area and so eventually she wanted to move back to the D.C. area. And I loved the job. But I think if you want to have a balanced life, if you want to have families, spend time with your kids and do all of that, investment banking at that level makes it very tough. It's just a totally different environment. And even though I loved the professional piece of it, I think it would have been hard to manage my personal life and what I wanted to do with the family and all of that.
• 19:23
  Speaker B: What kind of hours were you working?
• 19:26
  Speaker A: Oh my God. I mean 12 hour days. Oh, easily seven days a week. Wow. I mean I had times where I slept at the office. So you hear, you read these stories online.
• 19:38
  Speaker B: You were doing M and A work, right?
• 19:40
  Speaker A: We were doing financial space, sponsors M and A leverage finance. And so we're continually pitching new business and trying to close existing business. So seven days a week was very normal.
• 19:53
  Speaker B: And you were married at the time?
• 19:55
  Speaker A: Yeah, had gotten married during the time and that was fine. My wife also grew up in the industry so she knew what that job was like. But what brought me to what I left because my wife's family's business in the D.C. area was in land development. And my father in law was a land developer in the area who had retired, but he came out of retirement to help a friend who represented who came. A large home builder came to the D.C. area and my father in law was kind of convinced to get out of retirement to help acquire and develop residential lots for the home builder. And so he came to me and said, I have this great opportunity, years and years and years worth of work. You'll learn on someone else's dollar per se. And it's incredibly rewarding just from an educational experience, but also financially rewarding. If you're ever interested in getting into real estate, this, this is a great opportunity. And the D.C. area is just growing. So this was in 2000, I left 2005 before the financial crisis. The D.C. area was just booming, it was on fire. And I said, you know what, I could always go back to banking, I can try this, why not? And it would bring us closer to, it'd bring us to D.C. where my wife grew up and her family is and something she wanted to do. And I thought that was probably a good time to make that change. And so I did it and it was totally eye opening, very different than what I was used to. You Know, in kind of Wall street, you know, white collar professionals.
• 21:36
  Speaker B: So what exactly did you do there?
• 21:38
  Speaker A: So when we basically did two things. One, on behalf of the home builder, we entitled land and then we developed lots, finished lots for the builder. And then on our own account we would also go out. I spent hours and hours with individual landowners trying to parcel together subdivisions, assemble, assemble subdivisions, then working with different counties. We did projects in Loudoun, Fairfax, Prince George's, Montgomery County, Prince William, and spending time with government officials on the entitlements, lawyers. And it was just so different than I did in Wall street, because in Wall Street I was used to everybody around you worked 12 hours, 14 hours, seven days a week. In the land development world, while the private side might be doing that, your partnerships are with a lot of people in the public space and the public space aren't working those same hours. And so for me it took a while to get adjusted to, oh wait, it's 7:00, I'm not going to get a response till tomorrow if I'm lucky, maybe next week if I'm lucky. And so the patience that it created, it made me become very patient and candidly frustrated many times. And so that's what brought me to D.C. area. It was a great experience. And the reality is I learned that I probably, probably wasn't suited for land development, residential land development. And then the financial crisis is kind of what I'm not going to use the word ended that. But we were fortunate. We had sold our last project that we own ourselves. And we were very lucky because that industry got hammered. It got hammered. We were very lucky. So it was definitely financially rewarding that time, doing that, and also just professionally rewarding. But when that financial crisis hit and everything slowed down, I said, okay, well now this is a time for me to basically pivot because we don't own any land, we don't have to work out of any scenarios. We were very lucky. For my father in law, it was perfect timing because he was already going back to retirement. And so for me it was like, okay, well I've been in the financial world, I've done a lot of transaction work. I now have this great real estate experience because even though it was very land based, I understand dirt, I understand the vertical piece of it. So how do I put all this together? I went to go work for a newer company, Perseus Realty Capital, which was a broker on the helping to finance real estate transactions. So not in terms of investment sales on the finance side. So we.
• 24:38
  Speaker B: Why there?
• 24:39
  Speaker A: Why there? Because that was my experience and I wanted to continue down the real estate experience. And I'm a transaction person. So from those experience we helped raise, I helped companies in the area and you know, actually across the country raised joint venture equity, mezzanine, preferred equity financing.
• 25:01
  Speaker B: So why not go to one of the big national players like HFF or Northmark or some of the other bigger players and stuff. Why did you go to Perseus?
• 25:12
  Speaker A: Funny enough, I didn't interview around a lot of places and I was new to this space, so Gandali. I didn't know all the players in the space and I liked the opportunity to be kind of at a new and small firm. I had worked at very large firms. That was all of my experience. And then my entrepreneurial side where I worked at a small, you know, a two man shop, which was very different. So I thought this was a nice kind of way in between where, you know, you a lot of eat what you kill a lot of, you know, just I liked being in a small place and I think, you know, that that has been consistent kind of throughout the rest of my career. Where I am today, it's always been very, very independent or very generally a small company. You know, the big companies for me have always been, it becomes very bureaucratic politics, a lot of other things that are hard to control. And I like, I like places where, you know, you can have some, some control of your destiny.
• 26:17
  Speaker B: So Perseus has evolved now to PRP real estate pretty much, but they've gone out of the intermediary business and born more of an asset management firm now. So talk about that experience. What did you learn there? And did you learn about transactional real estate more? I mean what, what did you pick up there?
• 26:35
  Speaker A: You know, I had never raised capital for real estate ever, so learning all my financing experience came from the corporate world, a lot of it, more asset based loans, cash flow lending, the big high yield deals. And so traditional real estate, something that I had never spent a lot of time on financing. That's a huge learning curve on mortgage financing, how mezzanine works in real estate deals and obviously joint venture equity. Before when I was younger, you thought that the individual owners of property own or even office buildings or hotels own the project. But that's not the case. You learn there are institutional investors out there, there are private equity funds who focus opportunity funds who focus on real estate investing. There's big investment managers that have raised core funds and those are the primary backers. And so you learn that there are operators that joint Venture with institutional equity, and that's how they capitalize the equity portion of the deal. So I learned a lot about that. I learned a brand new network of investors, and we spent a lot of time meeting new investors, lots of new opportunity funds, lots of people representing family offices. So a lot of time networking and trying to find new sources of capital, because a lot of our clients were major D.C. developers, real estate people who already had existing relationships with the usual suspects. And so for someone to hire a small company and not go to HFF or East Dill or one of the big players, you have to have a competitive advantage. You have to be able to convince them you can bring a new source of capital to the table. Because every real estate operator is looking to expand their investor base. We spent a lot of time traveling around the country meeting new investors and capitalizing some really cool deals that were tough to do. That was our component.
• 28:41
  Speaker B: What was the most challenging deal you worked on when you were there?
• 28:44
  Speaker A: I would say we worked on. There was a high rise residential building in Denver, Colorado, that the developer decided in the midst of financial crisis, right before it started, before he had a senior loan in place, he decided to start going vertical with equity. He had a senior loan, working on a senior loan, almost financed. And then the financial crisis hit and the bank walked away and he was already up like six, seven stories. Oh, my goodness, it's a high rise. And we were brought in to help bring mezzanine financing in place to keep the project going. And funny enough, we did not bring in the senior lender. Another intermediary brought in the senior level lender, which was Coris. And it was crazy. During the financial crisis, Korus came into this deal and said, well, we don't have any exposure in Denver, so we'll do this deal. We can't do anything in the Midwest, but we'll do this deal. And so they became the senior lender and we brought in the mezzanine lender to bridge the gap between the aggregate.
• 29:58
  Speaker B: This is a rental project.
• 29:59
  Speaker A: This was a rental project.
• 30:00
  Speaker B: Rental, okay. Because Corus is huge in the capital.
• 30:06
  Speaker A: They finished the building in the midst of financial crisis, Starwood took over, of course. And for the developer, it became a major issue of just how to deal with an opportunity fund rather than a bank. But I would say that was trying to find that lender. It was quite an ordeal, but we did it. And so that was our competitive advantage.
• 30:30
  Speaker B: You found Chorus?
• 30:31
  Speaker A: No, we found the mezzanine lender that was brought in. Yeah.
• 30:34
  Speaker B: All right, well, Chorus of course had a rather spotty reputation.
• 30:41
  Speaker A: They did, I mean they financed, they successfully financed, you know, lots and lots of fort sale project around the country. Yes. But they also kind of grew, I think probably way beyond what they should have and probably, you know, did projects, we know they did projects that didn't make sense. And so, you know, very aggressive, the very aggressive lender.
• 31:02
  Speaker B: And it seems to me that maybe today we're back into that kind of framework again to some extent in the debt fund arena. So it'll be interesting to see if people are getting a little too ambitious.
• 31:14
  Speaker A: There's a lot of money out there. Right. And part of the problem is a lot of money out there. But I mean, I don't know John, from what you see with the different developers you talk to, but you know, in the, the kind of product type that I spent a lot of my time in the healthcare space, we don't see a lot of aggressive lenders. Still today everyone's still pretty cautious. Before COVID it was much more aggressive. But today loan to cost is down. Rates obviously are higher, the covenants are stronger even with the debt funds. They're expensive and their covenants are pretty sticks. And again, I don't know what's going on necessarily in the traditional real estate space or commercial space, but for the things that I focus on, I think.
• 32:05
  Speaker B: They'Re pretty well, the question is how patient is that money? And if that money's not patient, they're going to put it somewhere. And so the question is where are they putting it and how much risk it they taking and what kind of. Even with a higher yield, it's still high risk. So are you overfunding certain things that shouldn't be overfunded? I don't know. It's an interesting question today.
• 32:27
  Speaker A: Well, I mean I'll tell you if I put my other hat you talk about private capital, our funds that we manage under Book Hill park said earlier, Book Hill park is our manager of a series of funds where we lend opportunistically get not just real estate. Well, not just real estate. So on real estate we can do first mortgages, we've done second mortgages, we've done mezzanine, we've done unsecured loans, we've done secured loans, we've done asset based loans, financed inventory, done every, all the, all the random diff. We funded payroll loans to government contractors. That's how we actually started factoring all sorts of different things. I mean we started that business because a friend of mine was a friend with someone Who's a government contractor who left the State Department had won a big government contract and they had to go out and hire some engineers. And that person came from the government. Their net worth was sitting in their house. So they didn't have access to capital but they had to perform on their contract to build their business. And so, so we worked with them at that time the banks in this area weren't great at lending to new co government contractors. I think they're better today. They understand the business better that we went out and they said okay, well I have payroll in two weeks for a number of engineers that I had to hire to do this work. Lockheed, Northam, the prime contractors are going to factor me. I won't get paid for for 30, 60 days from them. So I need to be able to survive and pay her.
• 34:05
  Speaker B: So you lend against a factory, you.
• 34:07
  Speaker A: Can'T prime government contracts. So we couldn't do that. But we got around the way we secured that loan and that's how we got started. We started lending at 20%. I mean the margins were so big in that business and those were our first loans and we made loans. It was a return customer for couple years. We help them grow their business and that's what kind of started us. And we've done no marketing or advertising. It's all word of mouth. We have a number of repeat borrowers or people who say call, you know the guys at Book Hill. We've done, you know, I don't even know how many. We've done a lot of first mortgage deals and are in that business. You know it's always for us is who's the borrower, what's the business, what's business plan and what's our path to repayment? Right. We don't want to own any business. I mean we've had to God in all these years we had to go get a U.S. marshal to go take possession of a boat. We've been in a lawsuit with a major insurance company and a maritime claim of a damaged vessel. We've done all sorts of interesting things. But my point though is going back to you know, credit funds. You know, we've seen where our returns for years we were always looking for deals where we were charging rates of call, you know, 17 to north of 20% because we generally lent to high margin businesses. With the onset of all the private credit, even on the smaller side, you know those rates today, I'd say in our fund we're looking for 12 to 15 type of yields on our deals. So that's come down since we started. We've been in business there for almost 15 years now.
• 35:55
  Speaker B: It's interesting because interest rates are higher on a generic basis than when you started. So why is it just more efficient? I mean, how are you?
• 36:04
  Speaker A: Well, I'll say in the last couple of years, the rates have moved up a little bit because of interest rates. But I would say pre Covid, we had already started seeing, you know, we'd already seen. Yeah, we'd already seen our. We had already seen rates. You know, our rates had already started coming down. Now in the Last call it 24 months as interest rates had risen, we had seen the movement a little bit. But just, there's just. But there's also so much private credit out there that are chasing deals that there are other lenders who. Who may be willing to lend less than we owe.
• 36:39
  Speaker B: So what you're saying is it's become competitive, so you have to compete a little bit.
• 36:44
  Speaker A: But we also, I would say we're not generating as much business either because we're not in a hurry. No, for us, we want to do good deals. And a lot of the capital is our own personal capital and friends, family and investors who invested us through three funds time after time that there's no gun to our head about putting. We don't have to put out hundreds of millions of dollars by a certain time period.
• 37:09
  Speaker B: So your fund is open ended then?
• 37:11
  Speaker A: Well, it is, it's close ended. But at the end of the day, if we tell our investors, hey, we weren't able to invest this in the same pattern that we have and historically been successful doing, they're okay. Because this is not something we don't have. Huge infrastructure that we have to feed in order to keep operations going.
• 37:32
  Speaker B: Mostly friends and family.
• 37:33
  Speaker A: Yeah. And we'll just roll into another fund. If we go beyond the commitment period of our fund, it's not a big deal. And we'd rather do that because we're very cautious with it. And I think that's why we've had such a good track record.
• 37:51
  Speaker B: So you talked about the framework of Sterling Realty. How did it all evolve? I mean, what was your thought process when you left Perseus? We'll talk about the formation of Sterling, basically.
• 38:09
  Speaker A: Yeah, so. Well, I mean, Sterling was. It was kind of in line with the entrepreneurial, our belief in trying to be an entrepreneur. We wanted to set up an organization. I had a former business partner that I worked with at Perseus that we decided to go on our own. We wanted to continue Doing what we were doing in raising JV Equity and Mezz for clients. I think we wanted to be more national and we wanted to focus on not just the D.C. area. D.C. area was a hot growth area and there were a lot of. There was a lot of competition in this area. And so we started looking at some more projects out west. We did some stuff in Arizona, stuff in California, stuff in. How did you find brokers relationships? You go to conferences, uli, go to national conferences, meet people. A lot of cold calling, a lot of picking up the phone and calling developers in areas reading different newspapers and online articles of people buying deals and calling them up and saying I'd love to. To come and meet you and talk about how to capitalize your next project. So lots and lots of cold calling, but emails and that's how we met investors, new investors and that's how we met clients too. So you had a partner? I had a business partner, yeah. And so I think that's really what kind of allowed us to be more than just D.C. focused.
• 39:36
  Speaker B: That's when you and I met.
• 39:37
  Speaker A: Yep, that's when we met. Correct. That's when I was very active in uli and that was the start of Sterling. And then I think over time my business partner left and wanted to go back into kind of the investment banking space. And so he moved back to New York and found a job in that space. And so I continued on kind of as a sole entrepreneur and kind of from that time I've had different kind of. I've had Sterling and I've done a number of placements in that space. But then the same token got involved, met different partners along the way and got involved in other businesses.
• 40:15
  Speaker B: So talk about the evolution of those businesses. So senior living business, the, you know, the private equity, private debt, private, you know, talk about how those evolved and how that started.
• 40:25
  Speaker A: Oh yeah, that's great. So when we, when we had Sterling, we met some partners who were. We did a couple health care deals with some partners at a healthcare reit raising capital for specifically in the healthcare space for the senior housing space. So we did a couple deals where we helped raise equity and debt financing with our partnership with a couple of my other partners and we were very successful doing that. So they had started, those partners of mine on the capital raising side had started, started kind of a new co. Senior housing business as operators. So owners and operators of senior housing projects, really mostly assisted living and memory care. And they asked me, hey, you can continue to do, we'll continue to do these capital Raising assignments on the senior housing side. But it'd be great if you can help us kind of with some of the infrastructure of our new senior housing company. So become the treasurer if you can. You be the treasurer. We trust you. We know you're going to make sure the money's there and help us build this infrastructure and the senior housing company. And so that's how I got involved with Meridian Senior Living. So that was a new code they had taken. They had a third partner. Meridian Senior Living originally had three partners. One of them was in North Carolina and was probably the largest Medicaid operator assisted living buildings in North Carolina. And so they had taken that portfolio with another portfolio and created a national platform that had both private pay and Medicaid in both assisted living and memory care and some little bit dependent as well. And so I came aboard as the treasurer and that was supposed to be a part time job and just a few hours a week so I can continue to do the stuff I was doing in Sterling. And the reality is in a size the company that they built, it really was, you know, more than it was like a two person job. But it was great because I learned a lot about, I learned a lot of organizational skills in terms of corporate organization because we, you know, it was, it's, you know, the healthcare business, it's, it's less, it's less of a operate, it's less of a real estate business as it is operations business. Right. We're taking care of people. We want to provide good care. We are open 24, 7, 365. We have employees around the country.
• 42:45
  Speaker B: How was the company financed?
• 42:47
  Speaker A: The company was financed. The real estate was all financed by traditional either opportunity funds. And there were leases, everybody mostly syndicated. The operations side of the company was really financed by the three partners and a lot of that was through fees and you know, management fees, et cetera. But all the real estate was generally owned in either a joint venture or was a lease. And so one of my tasks is given my, you know, experience raising capital was to help raise capital, which I did a little bit of.
• 43:21
  Speaker B: Did you organize all the banking relationships and everything too?
• 43:24
  Speaker A: I think, you know, all of the partner, all of the partners and the three partners already had a lot of banking relationships in the healthcare space space. There were former bankers who were, their experience had been in banking and healthcare banking. So did I bring some new relationships to the table? Yeah, but I think they had a lot of existing relationships as well and obviously brought new capital to the table. But the good part about this relationship was it was people who had experience with operations, but people who also had experience with the capital side of things. And so when we went to go present to new investors or lenders, we always did a really good job because we sat in those seats. And so everybody had a really good skill set and a good set of relationships that they brought to the table. And so again, I started as a treasurer and then I kind of outgrew that role because. Because we were doing so many other businesses out of there that we then hired at Meridian they hired a full time treasurer and assistant treasurer and some other people because then at Meridian we created an ancillary business line and we started two pharmacies that we sold, we started a therapy business and we've done all sorts of other different ventures outside of the senior housing business. So it's been a great opportunity to learn about really the backbone of a real operating business and the challenges and the difficulties of doing that, but also seeing so many successes. And I think we look at it as also giving back to the community because we are hopefully providing very good care to our residents. That's our goal and I think we do a good job.
• 45:14
  Speaker B: So then the private lending business, the.
• 45:16
  Speaker A: Park, Book Hill park and I think we talked about that, you know, and so some of the things that when we started Book Hill park, but some of the things that we was that.
• 45:25
  Speaker B: After you had done them already started.
• 45:26
  Speaker A: That was parallel, same time that was parallel to it. But what the senior housing business allowed us to do is we had relationships with other operators or other brokers in the space space who then brought us other deals. And so out of Book Hill park we have done a number of healthcare deals, a number of senior housing first mortgages. Because our view to that was if we underwrite it like we underwrite an acquisition and we like the deal and if the deal for some reason goes sideways, we have the ability with the operating company to take over management, which a lot of lenders don't have the ability. So we don't have to necessarily, necessarily be scared of. What if we get the keys back? Now again, at Buck Hill, we're not trying to, we're not in the loan to own program. We want repayment of our debt. That's what we lend. We want to follow that business plan. But should we have to foreclose on something or take back an asset, we think we have the operational expertise to do so.
• 46:26
  Speaker B: That's unique.
• 46:27
  Speaker A: That's unique. And we actually at Buck Hill, what we did was we teamed up with a couple regional banks to do basically an AB structure where we could do much larger loans. We could do a $20 million loan where we team up with a bank where we provide, let's just say a $20 million mortgage. And the bank was going to take the apiece and maybe take 15 or 18 million of it at a lower rate. And we engineer taking, taking down, you know, let's call it 10% of the loan at a much higher rate with fees and everything. It works out to our advance. We can. Originally we were, we had the ability with two regional banks to basically originate loans.
• 47:08
  Speaker B: So you're syndicating loans as well?
• 47:10
  Speaker A: We were syndicating, yeah. We were originating and you know, at the end of the day, it's like a syndication. Yes. Where we, we would lay off the APs and so, you know, forming your.
• 47:21
  Speaker B: Own CMBS, basically, kind of.
• 47:25
  Speaker A: But what we were able to do though was great, because those, those banks, it gave them access to senior housing deals too. And it also, they had, they knew that if something did go sideways that we could step in. We underwrote the deal as if we were as an acquisition. So we felt comfortable stepping in as operators. Fortunately, we never have stepped in as an operator. That was, that was never the game plan. But we have the ability.
• 47:50
  Speaker B: Operating company.
• 47:51
  Speaker A: Yeah, we have the ability. And we think we also have to know how to work out, work through challenging situations because nothing ever goes as planned. And so with every loan, some loans have been fantastic, never had an issue. And some loans have been. There have been challenges. Covid was a challenge for most people in the senior housing space. And those loans were challenging as well. But we worked through them and you know, we are, we. I think sometimes we can bring a different view or different angle to the problem than a nutritional bank can.
• 48:21
  Speaker B: Because you understand the business.
• 48:22
  Speaker A: Because we, because we are involved in the business.
• 48:24
  Speaker B: Yeah.
• 48:24
  Speaker A: And so, you know, sometimes we can be more understanding and sometimes we can be less understanding, you know, because we know the business.
• 48:30
  Speaker B: Yeah. So the other business you started was the mobile home park business. Could you talk about that a little bit?
• 48:36
  Speaker A: So bhp. Yes. So to totally parallel to all of this. Parallel to that too? Yes. So totally different set of group of partners. We got involved in some capital raising assignments that then evolved into our first purchase of a mobile home park. We met a partner out in Augusta, Georgia, and he was broker and he started buying mobile home parks. And so we got interested in the space. We did a lot of kind of analysis of the space and decided that it was the place we wanted to be. The reality is there are very few new mobile home communities in this country. It's a NIMBY issue. Nobody wants one in their backyard. So the supply is pretty limited. It's affordable housing. Is your, your true, true definition. It falls in the true definition of affordable housing. It truly is affordable to people. And it was very highly fragmented and institutional investors were not. When we started investing in the space, institutional investors were not interested in the space. It was ugly. People didn't want to do it. People didn't want to have to deal with collections. Projects were too small and it was so fragmented. Know individual owners that just own these parks. And so we spent a number of years buying parks, putting together portfolios of them. And over time, how big was your.
• 50:07
  Speaker B: Portfolio at the largest point?
• 50:09
  Speaker A: At the largest point, maybe we owned close to a thousand units. Yeah, probably over five parks or so, six parks. But we were also. We've always been opportunistic investors and everything that I've invested has always been opportunistic investors. So when the time is right to sell or there's a buyer that is willing to pay what we think is a fair price that financially incentivizes us, we are always ready to exit. And so over time, we have exited projects at different times. Some projects we thought we would keep forever. We owned a project in Maryland, here, right outside the Belt Beltway. Shocking enough, fantastic project. We thought we would own it for decades because it's irreplaceable real estate. And we sold it like a little bit more than a year of ownership because it was a great acquisition. I think we bought it. Right. We made a bunch of improvements to the property, we cleaned it up. And we had a very well capitalized bias by the very well capitalized buyer by the project. And what we've seen, the mobile home.
• 51:15
  Speaker B: Space, was it off market?
• 51:16
  Speaker A: It was off market, yeah. What we've seen in this space is that in the last. You know, I've been investing mobile home parks for close to 15 years and it's now become institutional. There is a lot of capital raised in the space. There are a lot more lenders in the space. I mean, capital1 does HUD financing in the space. I'm sorry, they do Freddie financing in the space. So there are a lot of investors in the space now. So it's become crowded. Crowded. It's become a lot. It's a lot more expensive to buy today.
• 51:45
  Speaker B: Channel mortgage structure for the units and some of them.
• 51:48
  Speaker A: Yeah, some of them, yeah. But it's just it's become very crowded. So the returns we were getting were just. It's very hard to find today. And so I don't know if I'd invest in the space today at the returns that, you know, institutional investors are willing to buy it. And the other issue is, you know, we used to be able to knock on doors and talk to owners, but there are now a lot of brokers in the space and the brokers are doing the same thing. So these owners are now also educated on what the markets look like. And everyone, you know, when broker goes in to talk to. It's more efficient. Yes. When a broker goes, talks to owner and starts quoting, you know, the highest values.
• 52:30
  Speaker B: Right.
• 52:30
  Speaker A: Not realistic values, but the highest values. Now owners in their head, that's their floor. So when you talk to them, you're like, there's no way we would buy this for that price. But that's in their mind, the floor now. And so it just is a very hard space. I think eventually some of that institutional capital will leave the market. Because this is not like traditional multifamily where you have an apartment building, you collect rent on the 1st. People have bank accounts. It's true. Affordable housing.
• 52:57
  Speaker B: You don't have the subsidy programs that you have.
• 52:59
  Speaker A: You don't. Well, in some counties you do have voucher programs and you do have some things, but not all the time.
• 53:07
  Speaker B: Section eight.
• 53:07
  Speaker A: No, you don't have section eight. Oh, no, actually, sorry, you do have section eight in mobile home. Yes, there was. Yeah, there was one project. Because if you, if, if it's, if it's just a rental community. You have a mobile home rental community, right? Well, that's true, yeah. So again, I think capital will come back. I mean, sorry, I think that's too capital. Eventually some of it will exit because it's not as easy of a space to be in. And so when that happens, I think it'll be another opportunity. So we're always looking to re enter. And I have some other partners that I. We have good. We have a great operator now that is. Has great infrastructure, great reporting.
• 53:42
  Speaker B: But you have none in your portfolio.
• 53:44
  Speaker A: I don't own any mobile home parks today.
• 53:47
  Speaker B: But you would if they price.
• 53:49
  Speaker A: I would love to go after it again. I would love to.
• 53:52
  Speaker B: Yeah. So let's shift back to the senior housing business because you recently, well, in 2017, you formed a, you know, a 501C3 talk. Elaborate on that, why you set it up and how the business evolved, you know, to where it is today. Because you had to reach a big closing which you sort of.
• 54:11
  Speaker A: So I didn't originally set up this. The 513, 501C is called superior Living Foundation, Inc. And I originally did not set it up. The principals at Meridian Senior Living set up the foundation in order to grow our presence in senior housing and healthcare. And the idea was there are a number of opportunities that we can work with tax exempt investors. We can do taxes and bond finance financing in order to grow a portfolio of healthcare assets where Meridian Senior Living can be the manager or actively involved in those assets. And then we can grow a portfolio from there, from a capital base there to continue to develop, acquire in the senior housing space.
• 55:02
  Speaker B: How do you avoid the conflict? I mean, IRS is going to look very carefully in situations where you have both parts, public, nonprofit and for profit enterprises kind of doing business with each other, whether the ownership is similar or.
• 55:18
  Speaker A: So in the nonprofit, it has a board that's completely independent of the company. So the officers don't make all the decisions. The board makes decisions and the board is independent. And so everything that we can provide in the nonprofit would be at market rates, market performance. And so no matter what you do there, you will have their scrutiny of the investors, the market and the board, the board of directors. Obviously the board wants to do what's best for the foundation. And so we think that where Meridian is a manager for facilities that the foundation owns, we think we can do a very good job at market rates and provide market level services. The foundation does not only have one operator, we have multiple operators. So we're able to compare what different operators do performance wise, but also from a rate. So I think, you know, to, you know, we started the foundation with one idea, but now knowing that it has to be independent and continuing to make sure that there is independence is very important. So we want to make sure there is no conflict because we want to make sure. I know our board wants to make sure for sure that everything we do in the foundation, we continue to evaluate the performance of the partners and the operators and make sure we're doing everything on a market basis.
• 56:54
  Speaker B: Pivoting away from your career trajectory, perhaps share some of your most interesting investments or financing assignments over the years.
• 57:05
  Speaker A: You know, I mean, God, I'll talk about two interesting kind of financing assignments. One of them we just settled on. So a number of years, it's been about two years or three years. I was working with a maritime attorney out of Annapolis on a. He represented us. We had, we had made a loan to an architect who, whose collateral the Collateral to us was his boat, this Park Hill, Bookhill, Book Hill. I mean, Park Hill. Yeah. And all these relationships are. Anyway, but this is a Book Hill. This is a Book Hill opportunity investment. And so I got to know this Annapolis attorney from that and he called me and said, hey, I'm working with a client who was a partner in a maritime business. And the vessel was damaged and the damage from it with the insurance company created all sorts of. Basically snowballed into shutting down the business. And there's a lawsuit that the receiver has now for this claim. And is that something you would be interested in continuing to pursue, Purchase the claim and pursue. And so I really don't know anything about this. And so it was a huge learning curve to learn about how does buying insurance claims work, how does maritime law work? Because it's very different. And we did our due diligence and we got involved in this claim and you know, we just, you know, we worked through the claim and we just settled. You know, I think all parties are happy. And, you know, it was just a totally outside. I always think the most interesting projects are the things that I don't do every day where I can learn something new, where I can, you know, where I can apply all the different skills that I've learned on something new. And, you know, something that's really just kind of mentally challenging.
• 59:11
  Speaker B: How much time did it take you to put that together, to get that deal structured?
• 59:15
  Speaker A: It took a while. I mean, it wasn't easy.
• 59:19
  Speaker B: It wasn't easy, but it was financially rewarding.
• 59:21
  Speaker A: It was definitely financially rewarding, yeah.
• 59:25
  Speaker B: Interesting. And you said another deal.
• 59:28
  Speaker A: Oh, another deal. I'll just talk about yesterday. We closed on Superior Living Foundation. I'm the president of Superior Living foundation as an officer of the, of the foundation. And we just closed on a 14 properties acquisition of a 14 property skilled nursing portfolio with some great operators. And it was, it was a, it was a tax exempt bond deal. So about just under $250 million of tax exempt bonds. Very, very. John, you said you have experience in tax exempt land. Extremely complicated. We have lots of different lawyers involved, different advisors involved. It took probably six months and we had lots of stops and goes.
• 1:00:11
  Speaker B: It's a heavily regulated industry, too.
• 1:00:13
  Speaker A: Heavy regulated. There's a public offering for it. We have a number of institutional buyers, brand name institutional buyers. And it's exciting for the foundation because it continues to help us grow the foundation in order to provide different healthcare services to people. You know, this is a Medicaid, mostly Medicaid portfolio. So we'll be able to provide. Continue providing skilled nursing services to the populations that we're going to serve in Texas. So it's pretty exciting for us. And it's, you know, it's just transformative for the foundation because hopefully we'll be able to use this as a track record, continued track record of successes and be able to find other portfolios to continue to grow our. To grow the foundation.
• 1:00:55
  Speaker B: That's awesome. That's great. So going back to when we first met, which has been about 20 years now, not quite, but almost 20 years, I sensed you were destined to be very successful as either an investor or intermediary, and it's clear that I was right. Together we have transacted several times. Yeah, I introduced you to an equity investor for one of Meridian's senior facilities, living facilities in Florida. Separately, I introduced you to a multifamily investor owner who you've now invested in at least three of his projects, if I'm not mistaken. Talk about these investments and how our relationship has helped you over the years. Years. Be honest and don't gush, please.
• 1:01:38
  Speaker A: Well, I mean, John, you and I met when I was in the ULI mentorship program. Yeah, it was young leaders. ULI program. Yes. I guess when we were under 30, we were. I guess that's when we qualified for young members and the mentorship program that we had established. You were my first. No, I think you were my second mentor in that program.
• 1:01:56
  Speaker B: You were the coordinator of the group.
• 1:01:58
  Speaker A: I was coordinator of the group. Right. And you were. I think you were a fantastic mentor because you really engaged the responsibility and you wanted to set up meetings. I think you also enjoyed meeting young future real estate stars, or whatever you want to call them, because you've had a number of great mentees that have gone on to do really fantastic things. And so I think we hit it off when we met, I think over the course of years, lost touch, then kind of connected again. I think that's the beauty of just relationships, is you don't have to talk to somebody every day, every week, every month, every year. But if you have respect for each other, I think it means a lot. And so when interesting opportunities come around, it may just in the back of your mind say, hey, this would be great for this person or this person. I think we've talked over the years about things and just in spitballing, ideas have come up. I know on the senior housing deal, we were just chatting away and you said, oh, hey, I had a conversation with so and so they may be Interested in a new senior housing project, I go, perfect, let's connect them with our senior housing company. And that worked out into a joint venture transaction. And the same token goes with one of your former mentees who was looking to raise capital for some of their a new co company that he had, a fairly new co company and started raising passing the hat dollars to capitalize his first set of acquisitions. And then I loved meeting him and subsequently I probably invested in five of his projects. I think all well located assets, not necessarily institutional, but really good for kind of friends and family money. And I think I love to see kind of the next generation of real estate guys on their own doing things because that's a lot of opportunity. And I'm happy to be an investor because I think those individuals really have a lot of desire to do well and they're finding unique opportunities because they're hungry and they're out there knocking on doors. And so far that relationship has been great. So thank you for all those introductions.
• 1:04:20
  Speaker B: So broaden that talk a little bit for the listeners because a lot of them are young listening group. If you were to invest in future deals, what criteria would you set forth with regard to what you're looking for from an equity standpoint and even your private debt business? You know, what, you know kind of set forth what you're, what you'd be looking for and also the type of sponsors you'd want to invest with.
• 1:04:49
  Speaker A: I think kind of number one for us would be who the sponsor is. Right, because that's our partner. Not everything, as I said before, not everything goes as planned. And so you want to make sure you are partnered with the right people who are going to do the right things and who are going to communicate because that's the important things. The deal may just go backwards and sideways and may just be a zero or worse. But if you have the right partner who all along has been trying to do the right thing and have been communicative and wants to talk about things, we can help work through issues. And so I think having the right sponsor is important. I think number two for a person's starting a new co business, if I was going to look at investing in their project, I think location is going to be important because the alternative use, if it doesn't work out, there's potentially a good alternative use for recovery. I think if the location was less than ideal or something that was on the cuff of whether it works or not with a new sponsor may be more difficult because should it not work, I don't know what the recovery could be or the alternative use. So location is really important and I think the ability for that partner to be able to have some sort of financial resources. Because you can't have a partner who if something goes sideways says, oh my God, I need to go get a job because I can't pay my bills. You need to have somebody who has some, not a lot, but has some capital and some material skin in the game to be your partner. So they, they need to follow through and make sure it works. Otherwise it's really detrimental to them if you're unwilling to do that. I, you know, I have some partners, I own some real estate in Richmond in Boulder, Colorado and my partner there, I've been doing business with her for 10 years and she always laughs when people talk about I will only sign non recourse loans. She's like, I've been developer for 35 years. There was only a small period of time in those 35 years that I actually signed non recourse loans. I'm used to signing recourse. That's part of the development game, that mentality. She knows that every deal deal, she's putting her neck on the line and so that's important to us and it's important for that person to be able to do that. I remember when I was raising capital for real estate operators and developers in the D.C. area, no one would want to sign. Everybody was anti recourse and I get it, because the market also didn't require recourse. But when the market started turning, it got harder and harder to finance projects and have clients because all those clients, client's mentality was oh, I'm only going to do a non recourse deal. So they just didn't do deals.
• 1:07:43
  Speaker B: So would you ever go in on a, let's say a co. Co GP basis with somebody just to provide a guarantee because of your financial statement and just do that and be involved in a deal?
• 1:07:56
  Speaker A: For me, no, you wouldn't do. No. For me? No.
• 1:07:59
  Speaker B: Have you helped people find people that would be willing to do that?
• 1:08:02
  Speaker A: Yes.
• 1:08:03
  Speaker B: Yeah. Okay. So have you been in a deal where that's happened?
• 1:08:07
  Speaker A: Yes.
• 1:08:08
  Speaker B: Where you're an investor. Okay, all right. Because that's a common thing out there.
• 1:08:12
  Speaker A: Yeah. No. And that is, I wouldn't do it personally, but I know people who do it.
• 1:08:17
  Speaker B: Right, right. So you could bring, actually on a deal, you could bring equity and you could bring somebody like that on a construction deal perhaps, if it's a good enough real estate deal. Sure.
• 1:08:28
  Speaker A: You could bring Both together, yes.
• 1:08:32
  Speaker B: So the ability here, of course, is that you not only are a principal, but you can raise money too.
• 1:08:38
  Speaker A: Right. That's what we've always talked about is that's kind of where I started was raising capital as an intermediary. So building all of those relationships over time is something we have. And when I bring capital to the table, I have a number of partners of mine that invest alongside with me. So it's not just my capital, it's a group of capital that we bring to. We kind of invest as a larger.
• 1:09:04
  Speaker B: Group that makes you unique.
• 1:09:06
  Speaker A: When we do deals, there's very few people like you. So we're fortunate to have developed relationships with people who honestly just will trust us. And, you know, we worked hard to build that trust, and we continue to work harder to keep that trust. And so the important thing is that group of investors I've known since forever, and we would never ask them to invest in something that we wouldn't invest our own money in.
• 1:09:34
  Speaker B: Okay, well, that leads to my next question. Investing in real estate takes intelligence, understanding, perspective, and courage. Talk about your philosophy and what do you look for in opportunities that sets you apart from other investors?
• 1:09:51
  Speaker A: I think, number one, we're able to be creative. We don't have a box. And this is, even in our lending side is we don't have a box. We want to talk about the story, we want to talk about the opportunity, we want to talk about the exit. And then we want to try to craft a solution that accomplishes the goal of everybody around the table. And it may not be perfect and it may not accomplish everything, but we think that by not having a box and working through complicated situations, we can figure something out. We know not everything can be perfect. And so I think that's the number one thing that has, is our differential. And I say on the lending side, we get calls from people who have failed other financing routes because those were more traditional and their need required something that was different. So I think that's one. And number two, honestly, our other competitive. We say what we're going to, we do what we say we're going to do. We don't retrain people. We will be a quick no. We, we don't like, say, give us a deposit so we can underwrite and figure it out. We are truly committed. If we underwrite the deal and we say we're going to do something, almost always, sometimes there's some reason why it can't happen, but almost always we will do what we say we're going to do so. We have certainty of execution. We can do things quickly. We don't need. We don't have a huge committee. There's three of us that just talk about it, and we're able to be nimble. We can be quick. We think we're not burdened with tons of lawyers and lots and lots of legal costs. We do have good attorneys who document who do the documentation. So I think that's really our competitive advantages.
• 1:11:53
  Speaker B: Okay, so that leads to my next question. Other than Meridian, all your other business ventures are sole practices, if I'm not mistaken?
• 1:12:02
  Speaker A: No, that's not correct. No. So in almost every. So Sterling is my sole business. But outside of that, everything that I do, I have different partnerships. I do very little. Yeah. Even when I. Or investment partners. When I invest in deals, I'm generally one of others. Whether I bring the investor group or. Or I'm just a passive investor. But I'd say almost everything I do, I do in partnership with people.
• 1:12:30
  Speaker B: So you have people that you can bounce ideas off of on operating decisions?
• 1:12:34
  Speaker A: Of course. Yeah.
• 1:12:35
  Speaker B: On every one of your deal partners?
• 1:12:37
  Speaker A: Yeah. I rarely do things in a complete silo. And if I do, I usually still bounce the idea off. If it's a material decision, we'll have someone I can call up and say, what do you think?
• 1:12:49
  Speaker B: That's good. Elaborate on how you track your investments and manage your time with the idea that you are sharing this with other entrepreneurs and investors who are listening.
• 1:12:59
  Speaker A: So it's time management. I was talking to John earlier was just your skill sets, what sets you apart, what makes you different. And I think I'm really good at time management and making lists, prioritizing things, and managing multiple transactions, multiple things at one time. So I think that kind of what sets me apart. How do you physically do it? Ability to do it? A lot of it's just in my head. You know, it's really crazy is I keep my head and I keep a calendar. And whenever I wake up in the middle of night, I think something I put in my calendar. So my calendar, from the time I start the day to the end, I go through it. When I wake up, I wake up very early, so say five in the morning, the first thing I do is grab my phone and I look at my calendar for the day. I think about all the things that I have to do today, and I mentally organize how am I going to do all those things. And then I'm adding a bunch of things along the way. And throughout the day, I check my calendar to say oh, did I do this? Did I do that? If I didn't, I maybe move it to the next day, maybe move it down to a different time. But I feel like I'm pretty scheduled, and I think that helps me manage. Manage all these things.
• 1:14:16
  Speaker B: What about financial management? How do you. How are you managing that? So you're in, I don't know how many different partnerships. Let's say you're in 50 partnerships. How are all those? Do you have an accountant that you work with?
• 1:14:26
  Speaker A: Yeah, I have an accountant that I work with. And, you know, we use QuickBooks, you know, pretty basic, simple, cost effective to manage the accounting for a lot of these people.
• 1:14:35
  Speaker B: Do you have offshore people that help you with administrative assistance or anything like that?
• 1:14:40
  Speaker A: No, we're very, very lean.
• 1:14:42
  Speaker B: Okay.
• 1:14:42
  Speaker A: Yeah, a lot of it's just me.
• 1:14:45
  Speaker B: So you do your own books and.
• 1:14:46
  Speaker A: Everything, per se, so not for all of this stuff. Obviously, each one of these companies has real accounting team, back office. So I would get maybe a K1 or get financials from them. So a lot of the entities have like real infrastructure.
• 1:15:02
  Speaker B: You mentioned earlier, you pay out quarterly until your investors. So how do you manage that?
• 1:15:05
  Speaker A: So like in Book Hill, I manage it. I do it. I do it personally.
• 1:15:09
  Speaker B: Okay, so how many investors do you send?
• 1:15:12
  Speaker A: We have about 15 investors.
• 1:15:13
  Speaker B: Okay, so you send out checks every quarter?
• 1:15:15
  Speaker A: Yeah, we do it. It's very. It's not. It's, you know, would I like to not do that? Yes. But I'm also on this. I'm a control freak about it, and it's not that hard. It doesn't take that much time that I could do it eventually.
• 1:15:29
  Speaker B: So even your private investments, let's say with Colin, you have what, five investments with him? So you stay on top of all those things. And what you all. Is real estate, you kind of.
• 1:15:40
  Speaker A: Yeah. You know what's great is for people who want to start new companies, technology is fantastic and embrace technology because like, for example, Colin has great. He has gone to a technology. He uses a company where he can track all his investments and all his investors can log in and track their investments in his different projects. Get real time. All the reporting's there, all the financial information is there. So it's at your fingertips. So that's very important. And I recommend anybody kind of starting a new business is invest in that kind of technology. I did not invest in that technology, and I wish I had. But for me, being an investor, having the ability to see that technology, I love it because it helps me manage everything on my end Better.
• 1:16:28
  Speaker B: That's great. So speaking of technology, have you explored AI and have you used it at all?
• 1:16:35
  Speaker A: No, but I would like to. Yes, I want to. I have not done it personally, I've used it for very little, very small tasks. But I would like to become, you know.
• 1:16:44
  Speaker B: Well, with your financial wherewithal, it seems to me you could sit down with somebody and hire them to set me up and put it all on, you know, such that you can then have immediate access to everything that you have right at your fingertips like that, you know, and have it all reporting up to you in a certain way. And it's amazing what I've seen from what can be done.
• 1:17:06
  Speaker A: Yeah. You know, I would say one of the things I do is look like the investment manager that we use to manage our personal financials. They have great technology.
• 1:17:14
  Speaker B: Well, there you go.
• 1:17:15
  Speaker A: And so everything that I do, I tell them this is your family, this is our family. Right. And I tell them, hey, we made Sterling made investment in so and so book it. So they book it in their technology portal and then whenever I get financial updates or stuff I just send it to them and they keep, keep it updated. So in a way.
• 1:17:37
  Speaker B: So you have your own family office.
• 1:17:39
  Speaker A: Basically they manage, they're able technology wise, they keep track of a lot of things. So when we have to create a net worth statement or do things like that, we spend a lot of time feeding their system information. And so now it's much easier for me to do that than the old days. I would have to go and actually get the Excel file and update it and put everything in now real time. As long as I stay on top of giving them updates, they're able to track things real time and be able to provide. I can log into this portal and be able to see everything, mostly everything there.
• 1:18:14
  Speaker B: They're like a family office investor then. To some extent.
• 1:18:16
  Speaker A: Yeah. They track everything for us.
• 1:18:19
  Speaker B: Yeah, there you are. That probably is your, that's your go to for that.
• 1:18:24
  Speaker A: Yeah, so that's what I use. Like it took us a while to get it set up.
• 1:18:27
  Speaker B: Oh, I get it.
• 1:18:28
  Speaker A: That helps us keep track of things. And I always say, should something happen to me, my wife knows where everything is.
• 1:18:34
  Speaker B: Right. And you've got an advisor in terms that can explain it to her if she doesn't quite understand what you're doing.
• 1:18:41
  Speaker A: She's very smart, she knows a lot of this stuff. That's good.
• 1:18:45
  Speaker B: So shifting away from that, what trends do you see in investments and in the capital markets that are challenging and at the same Time offer unique opportunities today.
• 1:18:56
  Speaker A: I mean, today, on an investment standpoint, I don't know, because it's. So right now with the change in government and what's going on here in D.C. with the administration, every day seems to be a little different. And you see new tariffs, then you see tariffs getting rolled back. You see the financial markets are. Are. We're seeing a negative impact on the financial markets in terms of credit? I don't know. I think lending is still getting financing is still tough. With unemployment probably going up a little bit here, that's going to have an impact on real estate prices. Maybe if you're an office owner, it's a good thing because people are going back to work. More and more people I talk to, even outside of government, are now having to go back to the office. So that's a good thing. I own an office building in Richmond. I would love for that to happen there because we, you know, we've had a lot of vacancy over the last several years, you know, so it's hard to have a crystal ball. So I don't really know. I don't have a great answer for that question because I feel like every day in the morning I may think one thing. In the afternoon, my opinion may change based on, you know, more information that comes out.
• 1:20:15
  Speaker B: Well, let's look at the businesses you invest in. So thinking about the senior housing business, for instance, you know, looking demographic. Demographically is nothing but upside.
• 1:20:28
  Speaker A: Well, they say there's a tsunami, right? The silver tsunami.
• 1:20:31
  Speaker B: Yes.
• 1:20:32
  Speaker A: And I. We do see. We do see that. Absolutely. That the challenges in the senior housing business is one, the cost of labor is just. It's insane what happened over Covid is here to stay. Just a huge increase in cost of labor, the huge increase in food costs, huge increase in supplies. So all of those inputs have skyrocketed. The only thing that has not caught up with it is the rents. The rents have not caught up with the increases in all the inputs. And so the. There's still that imbalance and has to. There's some recalibration that needs to happen. And so from that perspective, you know, the stock market swinging and having any sort of a negative impact in the stock market affects our potential clients, our potential residents, because, you know, the affordability, the affordability of, you know, being able to come and stay with us, the ability for them to sell their house and try rates obviously has an impact on the ability and value of their homes. And so all these things we talk about impact our residents and our revenue stream and Then on the flip side, all the inputs into our business are much more expensive. So the demand is there, but you still have to figure out how to get the demand to work with the supply. And from a new supply perspective, you know, the starts aren't as great as they used to be because financing is very, very challenging. Building materials are a lot more expensive. So that forces rents up, basically, but forces rents up. But then there's the affordability factor. So that's, you know, in our space, affordability is huge. Now, you know, if you look at the skilled nursing space or even some of the behavioral health space, that takes Medicaid, you know, so, you know, there's a payer source there. But on the flip side, that payer source is capped in terms of what they pay you. You can't raise rates every year to match your expenses. You get whatever the CPI or Medicaid allows in terms of annual rate increase. And then now there's talk of Medicaid cuts. Right? And so with those potential Medicaid cuts in the unknown, everyone is nervous. We think that senior housing and skilled nursing won't have much of a cut just because they're, you know, they. There's a huge population that benefits from Medicare and Medicaid and needs it. And, but you never know. And so I would say, you know, it's hard to tell because, you know, the affordability is a huge, huge issue in what we do.
• 1:23:05
  Speaker B: I mentioned AI earlier. What drives AI? Data centers. And so there is some segments of the economy that are just, just almost unlimited growth. It seems like the health care center business in general, not just in housing, is growing.
• 1:23:21
  Speaker A: Oh, yeah. And healthcare. Yeah, healthcare. AI is huge. It's gonna be huge in, you know, how you staff your call centers, how you staffing, even how, you know, how residents interact.
• 1:23:31
  Speaker B: Oh, yeah. And then, you know, as I said, the growth of data, the growth of, I mean, just there's. And I think the energy business is going to grow too. Not necessarily. Well, obviously the Trump administration wants to dig Drill Baby Brill, but I think the passive energy business continues to grow and become more and more profitable over time. It seems to me the more efficiencies in the industry, et cetera. So it's interesting. So a lot of people are concerned, obviously, in the office sector, you know, are people coming back to the office? You said they are, they're starting to. But how many days a week is it efficient? Does it make sense to operate buildings seven days a week when people are only there three? Does the numbers. How do you make the numbers pencil when that happens and what days of the week do people work and when do they. Not there. So how does that, how do you operate a building for that retail? What's the demand there?
• 1:24:28
  Speaker A: There's a lot of things to be answered.
• 1:24:30
  Speaker B: Yeah.
• 1:24:31
  Speaker A: And a lot of things be figured out, I guess. Yeah. Time will tell.
• 1:24:34
  Speaker B: It's interesting. So where do you see yourself investing the most time and capital going forward?
• 1:24:42
  Speaker A: I say be opportunistic. I don't want to be. Everything I've done has been opportunistic and that's why I'm all over the place. I feel like I'm all over the place. But it's been because I like to be opportunistic. Right. If I had a box or would in a silo, I probably would have never done mobile home parks. But you know, I really enjoyed. We first started investing in business. I enjoyed going to these kind of rural communities, mostly in the south, knocking on doors, spending two or three days there, going to the community that we bought and trying to figure out what the competition's like. That was fun. But if I had a box, I would have never, ever in my wildest dreams invested in that space. But it was great. And so, you know, I don't, I, you know, we'll continue to make high quality loans, we'll continue to look for good operators to partner with, continue to look for good real estate. I think real estate, you know, is not going anywhere and in, well, in, you know, prime locations, there's always going to be a demand. So I mean, I guess, you know.
• 1:25:45
  Speaker B: We just, you know, so it's open minded curiosity, basically.
• 1:25:48
  Speaker A: That's what I'm hearing. Back to my point is, you know, be curious, Right?
• 1:25:54
  Speaker B: That's great. Because there are very few people like you out there that have the depth of experience you have institutionally as well as your mindset of being in a small, you know, group. And then have both the agency experience as well as the principal experience. There are very few people that have that capability.
• 1:26:15
  Speaker A: So you are unique and sometimes things work great and sometimes things don't work at all and you learn a lesson. And so you have to be ready to also, you win some, you lose some. And my view is as long as you can learn a lesson from that, then I guess it's okay. You can't win everything.
• 1:26:36
  Speaker B: So on that point, what was perhaps the most surprising, surprising lesson you've learned in your career so far? Is it about people? Is it about a deal?
• 1:26:50
  Speaker A: Is it about. It's not necessarily a surprise. It's. Well, there's two lessons. One, there are no guarantees. If someone tells you there is a garret that this is a guaranteed return or guaranteed this thing is going to happen, guaranteed that there's no guarantees in life, we've learned that the hard way, even with diligence. And we thought we did, but we learned that there's no guarantees in life. And number two is within reason, meaning you know, the trust of your deal team and the people you work with, you know, on the most critical matters of a deal or of a business or operations, whatever you need to take ownership and agency of making sure you have checked the information is correct or have talked to the right experts to make sure the information is correct. Just because someone in your team or one of your partners tells you something doesn't necessarily mean it's actually correct. So we've learned the hard way that.
• 1:27:58
  Speaker B: Too sometimes it's not intentional too.
• 1:28:01
  Speaker A: It's sometimes absolutely not intentional. It could be an experience that someone's talking from and that may just not be the way it really is. But again, a lot of things are not intentional. I don't think. I would never say these are intentional by people, but I, from my lessons I've learned, you know, the hard way is, you know, important things you need to make sure you've heard from the horse's mouth.
• 1:28:26
  Speaker B: So that segues to the next question. What advice would you give your 25 year old self?
• 1:28:31
  Speaker A: So I actually made a list for this. I said this before and over and over again. Be curious, be patient, be a hustler, slow down. Don't do everything in her hustler and slow down. They're contrary, but they aren't because I look at them in different ways. You know, being a hustler means being opportunistic. Being in my mind, being a hustler is being opportunistic. Be out there, be talking to people. Don't just sit there and wait for things to come to you, because they probably won't. And when I look at slow down meaning with my, with my, you know, my second thing was be patient is, you know, you can't do everything at one time. You can't take on deal after deal after deal. You gotta actually work it and make sure it works and then you can move on to your next thing, right? So I look at them a little differently and I think you have to be passionate in the things that you do. And if you're not passionate, you get bored. And if you get bored just less involved and then it just becomes a chore, which is not fun. And then you avoid doing it.
• 1:29:41
  Speaker B: You want it to be fun.
• 1:29:42
  Speaker A: You want, if you do things that you're passionate about, generally I think the outcome will be a lot better.
• 1:29:48
  Speaker B: That's great. That's great. So talk about your priorities of family, work and giving back.
• 1:29:54
  Speaker A: I think obviously family is really important. I mean, one of the major career shift that I did was thinking about family. I have two great kids. I have a 16 year old and a 14 year old. I love spending time with them. You know, I see on the horizon here that they'll be going off to college soon. And so once spend as much time with our family. We love to travel. We're heavy travelers, heavy skiers. You're very involved. They both are athletic, so very involved in their athletic schedules and like school life and try to be there and then from, you know, giving back, I mean, for our family and my wife and I, education is a big deal. And we spend a lot of time and resources in getting back in the education space because we do want to make sure not just here in the US but kind of internationally as well in organizations that we participate in. We think educating people who don't have access or making sure people have access to some sort of education is important. So that's from a philanthropy standpoint, that's.
• 1:31:02
  Speaker B: Where we, you know, is there an organization that you support that you want to talk about or.
• 1:31:08
  Speaker A: I mean, we support a number of organizations, so. But I just think, you know, I look at it and everybody has something that they are really passionate about. And for us it's, you know, the access to education.
• 1:31:23
  Speaker B: That's great. So final question. If you could place a billboard on the Capitol Beltway for millions to see, what would it say?
• 1:31:32
  Speaker A: Trust your gut.
• 1:31:33
  Speaker B: Trust your gut for your business. That's critical.
• 1:31:38
  Speaker A: I think in life, if your gut's telling you something, there's probably a reason why it's telling you something. And that's another lesson I learned. And I think to that question, where.
• 1:31:50
  Speaker B: Is that lesson, that exact lesson paid off for you the most, would you say?
• 1:31:58
  Speaker A: You know, I don't know about paid off for me the most, but I have learned a lot of lessons by my gut told me not to do something and I did it anyways. And I learned the hard way that I, you know, if my gut first.
• 1:32:14
  Speaker B: Told me, what about the other way around where you said no, I'm not going to do that. And all of a sudden you, oh.
• 1:32:19
  Speaker A: My God, I'm sure I guarantee there have been lots of missed opportunities. I guarantee it. But I'm okay with it. Like, I don't look back. I don't really follow things that I pass on or I'm signing. I don't follow those things. I mean, maybe bitcoin. Not. I own, like, very little bit of bitcoin. Maybe I should have bought a lot of bitcoin or something, but whatever. I don't regret it. I don't do anything. But, you know, I can't regret all the things. I mean, if I did, I would spend. You know, I spend more of my. All my time regretting them. So for me, my perspective is. I know the hardest lessons I've learned is if I. My gut told me not to do something, but external forces somehow convinced me to do it otherwise, and I did it. I wish I had not done it. I learned many lessons that way.
• 1:33:14
  Speaker B: That's interesting. Well, thank you, Ramese, very much. Very informative. And I'm glad I asked you to do this.
• 1:33:20
  Speaker A: Yeah, no, this was fun. I know you'd asked me a while back ago, and we just got busy with a couple things, but I'm glad we got to sit down. It was fun to kind of think about, you know, life and all the things I've been doing.
• 1:33:32
  Speaker B: That's great. Thank you, Remus.
• 1:33:34
  Speaker A: Thanks, Joshua. It.