1
00:00:00,000 --> 00:00:03,800
This is the real estate shop where each episode will bring you a top industry

2
00:00:03,800 --> 00:00:07,800
expert to share their current programs or projects that are making an impact in

3
00:00:07,800 --> 00:00:08,880
our communities today.

4
00:00:09,760 --> 00:00:12,680
Be sure to check us out on Spotify and Apple podcasts.

5
00:00:13,280 --> 00:00:17,400
In this episode of the developers, we had a privilege of tag teaming,

6
00:00:17,480 --> 00:00:21,480
Gregory Reeves and Leslie Smallwood, co-founders of the Philadelphia based

7
00:00:21,480 --> 00:00:23,320
Mosaic development partners.

8
00:00:23,720 --> 00:00:26,760
Let's join in on this incredible interview to learn how they got started.

9
00:00:26,760 --> 00:00:30,080
Leslie and I talked about this for some years that, you know, it'd be great to

10
00:00:30,080 --> 00:00:35,200
share our experiences in our journey, essentially, and what we've come through

11
00:00:35,200 --> 00:00:37,360
because we literally started from nothing.

12
00:00:37,400 --> 00:00:37,600
Yep.

13
00:00:37,640 --> 00:00:41,120
Greg, I still remember your story when we were at the happy hour.

14
00:00:41,960 --> 00:00:42,200
Yeah.

15
00:00:42,200 --> 00:00:46,680
And you're telling me when you left the corporate world, you went all in and

16
00:00:46,680 --> 00:00:47,840
things didn't go as planned.

17
00:00:48,560 --> 00:00:49,080
Right?

18
00:00:51,080 --> 00:00:52,160
That would be an understatement.

19
00:00:52,160 --> 00:00:53,920
So that still resonates with me.

20
00:00:53,920 --> 00:00:59,760
I planned to eat, that wasn't happening.

21
00:00:59,760 --> 00:01:00,920
I was like, you know what?

22
00:01:00,920 --> 00:01:04,280
I'm not eating, like literally my kids aren't eating.

23
00:01:04,320 --> 00:01:05,320
My wife's not eating.

24
00:01:07,440 --> 00:01:12,160
That was my experience going from the pharmaceutical industry, right?

25
00:01:12,160 --> 00:01:15,280
And Leslie and I met at the Goldenberg group.

26
00:01:15,280 --> 00:01:17,440
I don't know if you know that, Steve, we were both in the same group.

27
00:01:17,440 --> 00:01:22,360
Yeah, I thought you were there too.

28
00:01:22,360 --> 00:01:23,880
Yeah, well, Ken was a close friend of mine.

29
00:01:23,880 --> 00:01:28,360
I had known him for many years, but I didn't know what he did for a living.

30
00:01:28,360 --> 00:01:34,600
In fact, our kids grew up together and I was in the pharmaceutical industry,

31
00:01:34,600 --> 00:01:39,880
had traveled the world, frankly, and Ken talked me out of not staying in

32
00:01:39,880 --> 00:01:43,760
the pharmaceutical industry, frankly, and told me that I should stay in the

33
00:01:43,760 --> 00:01:47,720
pharmaceutical industry, frankly, and told me that I should stay at home

34
00:01:47,720 --> 00:01:50,560
and be closer to my family because I wasn't at that time.

35
00:01:50,560 --> 00:01:51,560
I was really never home.

36
00:01:52,200 --> 00:01:53,800
And I said, well, what would I do?

37
00:01:53,800 --> 00:01:55,080
He's like, well, you should come work for me.

38
00:01:55,080 --> 00:01:56,680
And I said, I didn't even know you worked.

39
00:01:59,840 --> 00:02:02,480
I never saw the guy in anything other than sandals.

40
00:02:04,360 --> 00:02:05,040
I'm serious.

41
00:02:05,040 --> 00:02:06,440
And Leslie will attest to it.

42
00:02:06,440 --> 00:02:10,560
He never came to work in a shirt that was ironed.

43
00:02:10,560 --> 00:02:13,880
I mean, it was a disheveled mess.

44
00:02:13,880 --> 00:02:17,040
And if you didn't know that he was Ken Goldenberg, you would think

45
00:02:17,040 --> 00:02:18,040
he was a homeless guy.

46
00:02:18,040 --> 00:02:22,640
But then he drove me around one day and showed me all of the real estate

47
00:02:22,640 --> 00:02:23,960
that he owned and I was shocked.

48
00:02:23,960 --> 00:02:26,880
And I didn't even know you could own real estate like that.

49
00:02:26,880 --> 00:02:29,800
You know, he took me to a Lowe's shopping center and a Home Depot.

50
00:02:29,800 --> 00:02:31,640
And he's like, I own this.

51
00:02:31,640 --> 00:02:33,000
I'm like, well, how do you own Lowe's?

52
00:02:33,000 --> 00:02:34,160
He's like, well, they rent from me.

53
00:02:34,160 --> 00:02:36,120
I said, how does Lowe's rent from you?

54
00:02:36,120 --> 00:02:39,360
So how does that work?

55
00:02:39,360 --> 00:02:41,560
I didn't know. I was in the front.

56
00:02:41,560 --> 00:02:44,320
And so he's like, well, why don't you join and figure it out?

57
00:02:44,320 --> 00:02:46,720
And I'm learning business.

58
00:02:46,720 --> 00:02:48,720
And I joined and that's how I met Leslie.

59
00:02:51,160 --> 00:02:54,560
Yeah, it's an interesting thing, because it's not an industry that you can kind of

60
00:02:54,560 --> 00:02:58,040
learn your way into in school.

61
00:02:58,040 --> 00:03:01,800
For example, there's not there's not a course you can really take to be a real

62
00:03:01,800 --> 00:03:04,080
estate developer.

63
00:03:04,080 --> 00:03:08,840
It's a business that is largely that has largely been driven

64
00:03:08,840 --> 00:03:11,720
by wealthy friends and family.

65
00:03:11,720 --> 00:03:15,080
Right. So when you see, you know, the Trump organization, the Durst

66
00:03:15,080 --> 00:03:18,600
organization, those are those are the family

67
00:03:18,600 --> 00:03:22,560
legacies that have been built up over years of wealth.

68
00:03:22,560 --> 00:03:25,720
Right. And some of them have turned into large corporations.

69
00:03:25,720 --> 00:03:30,840
Right. And now you have REITs and you've had REITs that have been large

70
00:03:30,840 --> 00:03:34,720
investment portfolios that are focused on whether it's apartment,

71
00:03:34,720 --> 00:03:37,360
whether it's shopping center related.

72
00:03:37,360 --> 00:03:40,440
It could be now it's there's there's office REITs.

73
00:03:40,440 --> 00:03:46,120
There are REITs that are only designed to support like Amazon warehouse.

74
00:03:46,120 --> 00:03:51,560
Right. So so those are the real estate industry classes.

75
00:03:51,560 --> 00:03:56,160
And what Leslie and I found in Goldenberg was that nobody looked like us were a

76
00:03:56,160 --> 00:03:57,160
part of it.

77
00:03:58,120 --> 00:04:03,160
And so when we talked to Ken about getting and having him really support more

78
00:04:03,160 --> 00:04:05,440
black developers and said, well, I have to do it.

79
00:04:05,440 --> 00:04:07,520
You know, like what else do I need to do?

80
00:04:09,360 --> 00:04:12,440
And I thought, well, that's interesting because we were longtime friends and it

81
00:04:12,440 --> 00:04:15,880
kind of slapped me in the face to be funny because I knew him on a personal

82
00:04:15,880 --> 00:04:18,440
level and I know him from business level.

83
00:04:18,440 --> 00:04:22,880
And I thought, well, this guy doesn't really want us to succeed in this way.

84
00:04:22,880 --> 00:04:27,120
And about two months later, he actually brought one of his black male friends in

85
00:04:27,120 --> 00:04:29,640
to help him start a real estate business.

86
00:04:29,640 --> 00:04:33,520
And this is after Leslie and I approached him about helping us start one.

87
00:04:33,520 --> 00:04:36,480
He said no to us and yes to a guy that knew nothing.

88
00:04:38,240 --> 00:04:44,000
So so, you know, over time, we just started getting more frustrated because we

89
00:04:44,000 --> 00:04:48,480
reached out. We were able to get a couple of people of color to be able to be part

90
00:04:48,480 --> 00:04:51,560
of the real estate infrastructure at Goldberg Group.

91
00:04:51,560 --> 00:04:56,200
So we were a guy named Ken Lawrence, who is now a county commissioner, but he was

92
00:04:56,200 --> 00:04:58,160
a consultant. We were able to get him hired.

93
00:04:59,680 --> 00:05:00,960
Yeah. Melanie Shaw.

94
00:05:00,960 --> 00:05:03,680
We got her as a consultant hired.

95
00:05:05,200 --> 00:05:06,440
That's that's my Alexa.

96
00:05:07,960 --> 00:05:15,720
We got a couple of attorneys, African-American attorneys, to come into his

97
00:05:15,720 --> 00:05:18,560
ecosystem where they could be a part of the development world.

98
00:05:18,800 --> 00:05:20,160
But nothing beyond that.

99
00:05:20,160 --> 00:05:25,160
I mean, we were really pushing to get engineers, construction companies,

100
00:05:25,400 --> 00:05:28,200
architects, and we were getting no traction.

101
00:05:28,200 --> 00:05:35,120
And and I remember going to a holiday party and you think about Philadelphia.

102
00:05:35,120 --> 00:05:38,880
I don't know if you all know Philly, but, you know, we had Gladstein there,

103
00:05:38,880 --> 00:05:41,440
Westings Company Tower Investments.

104
00:05:41,440 --> 00:05:43,640
We had Ken's company.

105
00:05:44,120 --> 00:05:45,480
Dranoff was there.

106
00:05:47,160 --> 00:05:52,880
PMC, you know, like the Brandywine, the top five or six developers.

107
00:05:53,240 --> 00:05:56,400
And one of the guys came up to me and he's like, man, isn't this great?

108
00:05:56,400 --> 00:06:00,080
I'm like, well, it's great. He's like, we can control all of the city.

109
00:06:00,520 --> 00:06:05,200
And it just, again, kind of scrapped me in the face because, you know,

110
00:06:05,200 --> 00:06:08,160
I said to Leslie, you know, somebody makes a comment like that.

111
00:06:08,160 --> 00:06:12,560
They have no regard for the fact that nobody looks like he was participating in this.

112
00:06:13,320 --> 00:06:17,080
And so we just decided collectively we wanted to go and try it on our own

113
00:06:17,240 --> 00:06:22,640
and build our own business that had a different mindset about inclusion.

114
00:06:22,640 --> 00:06:27,480
And we from the very beginning, we knew we wanted people and businesses of color

115
00:06:27,480 --> 00:06:30,360
to participate. This is back in 2008.

116
00:06:32,120 --> 00:06:36,640
And we also knew that we needed to work in neighborhoods that were being collected

117
00:06:36,800 --> 00:06:40,840
because we saw significant investment going in certain neighborhoods

118
00:06:40,840 --> 00:06:42,600
and zero investment going in others.

119
00:06:42,600 --> 00:06:48,360
So we frankly went after the two most difficult aspirations when we started our company.

120
00:06:48,360 --> 00:06:52,360
But we believe that that was the real gap that existed based on our experiences

121
00:06:52,360 --> 00:06:55,080
working with all of these large developers in Philadelphia.

122
00:06:55,560 --> 00:06:57,480
So Leslie and I started Mosaic.

123
00:06:57,480 --> 00:06:59,400
There were actually four of us when we started.

124
00:07:01,480 --> 00:07:06,000
And Leslie and I were the only ones to actually quit our jobs, though.

125
00:07:06,000 --> 00:07:13,000
So you can imagine when we started talking about what our interests would be.

126
00:07:13,000 --> 00:07:17,640
Everybody wanted to split 25 percent, 25 percent, 25 percent, 25 percent.

127
00:07:17,640 --> 00:07:19,880
25 percent, 25 percent, right. Four people.

128
00:07:19,880 --> 00:07:23,640
We said, but Leslie and I, those that quit our jobs, we're still working.

129
00:07:24,120 --> 00:07:25,760
That was that work.

130
00:07:25,760 --> 00:07:29,240
So we said, well, you know, we're not we're not good enough to leave our work.

131
00:07:29,240 --> 00:07:30,560
I said, well, I did.

132
00:07:30,560 --> 00:07:34,120
And and that was the conversation I had with you, and I went all in.

133
00:07:34,720 --> 00:07:37,440
And this is what I have a wife, you see three kids, right?

134
00:07:38,760 --> 00:07:42,080
And kids ready to one of them, you know, not far from

135
00:07:42,640 --> 00:07:45,160
from a couple of years away from going to college.

136
00:07:45,160 --> 00:07:48,240
And so it was a huge risk to take.

137
00:07:48,240 --> 00:07:51,880
And so Leslie and I decided that it was best that the two of us just go in alone.

138
00:07:53,160 --> 00:07:57,200
And we started really working on fundamentals in 2008.

139
00:07:57,680 --> 00:07:59,920
Steve, I don't know if you remember, but it was a terrible time

140
00:07:59,920 --> 00:08:01,800
in Philadelphia for real estate development.

141
00:08:01,800 --> 00:08:03,360
It's when the economy crashed

142
00:08:05,080 --> 00:08:07,520
and it's when really everything shut down.

143
00:08:07,520 --> 00:08:10,120
We started the business in July of 2008.

144
00:08:10,560 --> 00:08:13,120
And by October, nothing had moved.

145
00:08:13,120 --> 00:08:15,280
Like you couldn't get anything done.

146
00:08:15,960 --> 00:08:19,160
And so we spent the next few months talking to lenders.

147
00:08:19,200 --> 00:08:21,360
You know, we talked to TRF.

148
00:08:21,360 --> 00:08:23,520
We talked with you named the bank.

149
00:08:23,520 --> 00:08:25,000
They take us out to lunch.

150
00:08:25,000 --> 00:08:27,200
You know, really wonderful lunch.

151
00:08:27,200 --> 00:08:30,760
We did that for about 18 months, but just absolutely no traction.

152
00:08:31,000 --> 00:08:33,200
It was always a no.

153
00:08:33,640 --> 00:08:37,680
And so we were certainly disillusioned.

154
00:08:37,720 --> 00:08:39,960
But what we did, I think that was smart.

155
00:08:39,960 --> 00:08:43,080
Was that we started creating our own milestones of success.

156
00:08:43,560 --> 00:08:47,480
So the one thing I remember from the pharmaceutical industry was

157
00:08:48,320 --> 00:08:51,320
value was always measured in pharmaceutical industry

158
00:08:51,320 --> 00:08:53,080
and your ability to build a pipeline.

159
00:08:53,760 --> 00:08:57,880
And and so the real estate industry is really no different.

160
00:08:57,880 --> 00:09:01,400
People look at you not based on project you have,

161
00:09:01,400 --> 00:09:04,600
but the pipeline that you have and the projects you've done.

162
00:09:05,240 --> 00:09:09,400
And so Leslie and I early on focused on how do we do that?

163
00:09:09,400 --> 00:09:14,080
We focused on how do we build a pipeline with absolutely no money, right?

164
00:09:14,080 --> 00:09:17,080
Which is a tall task.

165
00:09:17,960 --> 00:09:21,800
But it's also it's also a requirement

166
00:09:22,800 --> 00:09:26,000
for companies of color because we don't come from families of wealth.

167
00:09:26,760 --> 00:09:29,840
So we have to think about what is the way to do that.

168
00:09:29,840 --> 00:09:31,560
One of the first things we did

169
00:09:32,480 --> 00:09:35,760
was we went to the school district of Philadelphia.

170
00:09:35,760 --> 00:09:38,800
They had a number of properties at that time that were for sale.

171
00:09:38,800 --> 00:09:42,520
If you know Edison High School, the former Edison High School on on

172
00:09:43,720 --> 00:09:46,080
on Lehigh Avenue, 7th and Lehigh.

173
00:09:46,080 --> 00:09:49,960
That property was for sale for, I think, two point seven million dollars.

174
00:09:49,960 --> 00:09:51,840
It was a full city block.

175
00:09:51,840 --> 00:09:55,560
It it is a curving and and I'm sorry, I'm

176
00:09:56,680 --> 00:09:58,040
I don't know your name.

177
00:09:58,040 --> 00:10:00,080
Victoria, Victoria.

178
00:10:00,080 --> 00:10:02,200
OK, Kevin and Victoria.

179
00:10:02,840 --> 00:10:05,680
Edison High School has an incredible history.

180
00:10:05,680 --> 00:10:07,360
It used to be an all male high school.

181
00:10:07,360 --> 00:10:11,400
It was around for over 100 years and it educated some of Philly's top

182
00:10:11,880 --> 00:10:14,880
male athletes, elected officials.

183
00:10:14,880 --> 00:10:17,640
Ken Frazier from Merck went to Edison High.

184
00:10:18,200 --> 00:10:20,240
He ended up becoming the CEO of Merck.

185
00:10:20,240 --> 00:10:22,600
You had some Olympians that were there.

186
00:10:22,600 --> 00:10:25,000
Teddy Pentagrass went to Edison High.

187
00:10:26,120 --> 00:10:28,640
So really, some known people were there.

188
00:10:29,280 --> 00:10:33,600
Edison High was also known because more people that went to Edison High

189
00:10:33,600 --> 00:10:36,120
died in Vietnam than any other high school in the country.

190
00:10:36,120 --> 00:10:41,400
So 64 high school graduates from Edison went to Vietnam and died.

191
00:10:42,360 --> 00:10:45,920
And and so that was the history that the neighborhood remembered.

192
00:10:45,920 --> 00:10:49,400
So Leslie and I said, well, let's try and buy this property.

193
00:10:49,400 --> 00:10:51,200
Well, we didn't have any money.

194
00:10:51,200 --> 00:10:55,840
And so it was the asking price was two and two point seven million.

195
00:10:56,280 --> 00:10:58,000
And we said, well, it's a bad economy.

196
00:10:58,000 --> 00:10:59,360
Nobody's building anything.

197
00:10:59,360 --> 00:11:02,400
Let's just give them a price we think we can afford.

198
00:11:02,400 --> 00:11:05,520
And so the school district wanted to get it off their books because

199
00:11:05,520 --> 00:11:08,720
it was a five hundred thousand square foot building

200
00:11:08,720 --> 00:11:11,400
where there was significant vandalism.

201
00:11:11,400 --> 00:11:14,280
There's a lot of drugs going on in that building.

202
00:11:14,280 --> 00:11:17,400
You know, any time you went in, you have to go in with police escorts.

203
00:11:17,400 --> 00:11:21,440
I mean, there was significant meth methadone activity.

204
00:11:21,440 --> 00:11:23,160
There was heroin activity.

205
00:11:23,160 --> 00:11:26,520
I mean, it was a drug haven because it was such a big empty building.

206
00:11:27,080 --> 00:11:30,920
And so we offered them six hundred thousand dollars for the property.

207
00:11:31,760 --> 00:11:34,080
And they didn't know what we were going to do with it because it took up

208
00:11:34,080 --> 00:11:35,000
the whole city black.

209
00:11:35,000 --> 00:11:37,120
We were our plan was we knew we needed to tear down

210
00:11:37,120 --> 00:11:39,120
a building, a community shopping center.

211
00:11:39,120 --> 00:11:41,720
But they accepted the offer.

212
00:11:41,720 --> 00:11:44,680
And then Leslie and I got scared because we're like, OK,

213
00:11:45,080 --> 00:11:47,840
so they're they're asking two points seven million.

214
00:11:47,880 --> 00:11:49,240
We offer six hundred.

215
00:11:49,240 --> 00:11:51,320
They they accept six hundred.

216
00:11:51,320 --> 00:11:53,200
We didn't have six hundred thousand.

217
00:11:53,200 --> 00:11:59,240
So now that now.

218
00:11:59,240 --> 00:12:07,200
All right. So we so I mean, just we started thinking.

219
00:12:07,200 --> 00:12:09,480
Leslie's like, oh, you know what?

220
00:12:09,880 --> 00:12:11,080
Let's ask them for a loan.

221
00:12:11,080 --> 00:12:13,040
Let's ask them to help us out.

222
00:12:13,040 --> 00:12:16,600
And so we went back to the school district and I said, well, what do you guys need?

223
00:12:16,600 --> 00:12:18,480
We said, well, we don't have the six hundred thousand,

224
00:12:18,480 --> 00:12:20,120
but we have an idea. We think we'll work.

225
00:12:20,120 --> 00:12:22,160
We believe this needs to be a grocery store.

226
00:12:22,160 --> 00:12:24,080
It was a food desert.

227
00:12:24,080 --> 00:12:25,880
We're going to we're going to tear this building down.

228
00:12:25,880 --> 00:12:28,080
We're going to put a grocery store here.

229
00:12:28,080 --> 00:12:32,320
And we just don't have all the elements together to make it work.

230
00:12:32,720 --> 00:12:34,000
They said, well, what do you have?

231
00:12:34,000 --> 00:12:37,000
We said, we have we can come up with twenty five thousand dollars.

232
00:12:37,640 --> 00:12:42,920
And so they said, OK, they accepted that as a down payment,

233
00:12:43,800 --> 00:12:45,880
but they said they had to get it off their books.

234
00:12:46,280 --> 00:12:51,320
So they took the twenty five thousand, sold us the property and then kept it on.

235
00:12:51,320 --> 00:12:55,600
And then. Well, they sold it to us, but we had a lease back situation.

236
00:12:55,600 --> 00:12:59,000
So we're not for their books, but they didn't transfer ownership to us

237
00:12:59,000 --> 00:13:01,400
until we were able to get the whole deal.

238
00:13:01,400 --> 00:13:04,840
So for twenty five thousand dollars, we got a two point seven million dollar

239
00:13:04,840 --> 00:13:10,480
asset just because we we refused to say no to this thing.

240
00:13:10,480 --> 00:13:13,400
And we're trying anything we can to have a lifeline. Right.

241
00:13:13,400 --> 00:13:18,000
But we knew once they accepted the six hundred thousand, that was milestone one.

242
00:13:18,000 --> 00:13:21,120
Once they accepted the twenty five thousand, that was milestone two.

243
00:13:21,480 --> 00:13:24,000
The next thing we had to do was get a grocery store to say,

244
00:13:24,000 --> 00:13:27,520
if we tore everything down, they would come there.

245
00:13:27,520 --> 00:13:33,200
So we we took that approach and we just started saying to ourselves,

246
00:13:33,960 --> 00:13:36,600
if we think traditionally, we're not going to be able to make it.

247
00:13:37,880 --> 00:13:42,280
We have to we have to come up with some new ideas and continue to build a pipeline.

248
00:13:42,640 --> 00:13:45,920
Same thing happened with our student housing development attempt in diamond.

249
00:13:45,920 --> 00:13:49,080
I don't know if you know Diamond Green, Steve. Yes.

250
00:13:50,120 --> 00:13:52,640
Three hundred and fifty bed student housing development.

251
00:13:52,640 --> 00:13:56,080
It was the first it was the largest modular building

252
00:13:56,080 --> 00:13:59,000
constructed in the city of Philadelphia in 2012.

253
00:13:59,520 --> 00:14:00,720
And we were able to build it.

254
00:14:00,720 --> 00:14:02,560
One hundred and twenty eight thousand square feet.

255
00:14:02,560 --> 00:14:07,920
We built it in nine months, broke ground and opened in nine months,

256
00:14:08,240 --> 00:14:10,400
which is pretty phenomenal.

257
00:14:10,400 --> 00:14:13,640
We haven't been able to do that since or before. So.

258
00:14:15,280 --> 00:14:20,560
But what we did there was we actually partnered with a CDC

259
00:14:20,560 --> 00:14:25,640
to work on that property and have the CDC become a part of the project.

260
00:14:25,640 --> 00:14:27,800
They own 22 percent of the project.

261
00:14:27,800 --> 00:14:30,960
And we brought a development partner in to help finance it.

262
00:14:32,960 --> 00:14:37,240
And actually, that's that we still own that project that's been operating now.

263
00:14:37,240 --> 00:14:39,200
It's been doing great up until COVID.

264
00:14:39,200 --> 00:14:42,640
You can imagine COVID, you know, the different product types

265
00:14:42,640 --> 00:14:44,920
have different success measures.

266
00:14:44,920 --> 00:14:48,000
That's that was some of the issues that we worked with.

267
00:14:48,000 --> 00:14:53,040
But really, the example I was making early on was to get started.

268
00:14:53,040 --> 00:14:55,560
We had to do some really pretty incredible things.

269
00:14:55,960 --> 00:15:00,640
We had to take risks that we that you would ordinarily think weren't possible.

270
00:15:01,000 --> 00:15:04,680
But then we had to maneuver, constantly maneuver to keep

271
00:15:05,400 --> 00:15:08,280
the ability for us to grow our pipeline.

272
00:15:08,280 --> 00:15:19,160
So our investment basis is don't lose money.

273
00:15:19,160 --> 00:15:21,400
We're not doing anything for charity.

274
00:15:23,680 --> 00:15:26,040
Because you can't take that mindset.

275
00:15:26,040 --> 00:15:29,360
These projects are way too hard to to be successful.

276
00:15:29,360 --> 00:15:32,520
But if you think it's going to break even or potentially lose money,

277
00:15:33,000 --> 00:15:34,760
it's going to lose money.

278
00:15:34,760 --> 00:15:40,080
And so we we are very careful about ensuring that, at least on paper,

279
00:15:40,520 --> 00:15:43,320
these projects can sustain themselves once they're built.

280
00:15:43,800 --> 00:15:46,360
We're not looking to add any additional assistance

281
00:15:46,360 --> 00:15:48,600
after after they're open and operating.

282
00:15:49,000 --> 00:15:51,240
The assistance we look for is in the very beginning.

283
00:15:51,240 --> 00:15:53,720
We've used you mentioned market tax credits.

284
00:15:53,720 --> 00:15:56,520
We've done for new market tax credit deals.

285
00:15:56,520 --> 00:15:59,320
We've done every we've done a light tech deal

286
00:16:00,640 --> 00:16:03,440
for a veterans housing project that we did at Edison Square.

287
00:16:03,440 --> 00:16:05,840
That was our third phase over there.

288
00:16:05,840 --> 00:16:11,000
But but our goal is really wealth building and not just for us,

289
00:16:11,000 --> 00:16:13,800
but for all of the communities, people who we work with.

290
00:16:13,800 --> 00:16:17,640
So when you think about that value creation, real estate,

291
00:16:19,000 --> 00:16:22,080
and it's different from house flipping because house flipping, you can go in,

292
00:16:22,080 --> 00:16:25,240
you can take an existing structure, you can add value to it and sell it.

293
00:16:25,240 --> 00:16:27,040
Right. You have your crew.

294
00:16:27,040 --> 00:16:30,520
But when you're doing development, you have to think early on.

295
00:16:30,520 --> 00:16:32,400
So there's the land cost.

296
00:16:32,400 --> 00:16:34,240
Then there's professional services.

297
00:16:34,240 --> 00:16:38,440
So you've got to pay an architect who had a minimum today is the architects

298
00:16:38,440 --> 00:16:41,160
were working for somewhere around two hundred fifty dollars an hour,

299
00:16:41,160 --> 00:16:42,960
up to five hundred dollars an hour.

300
00:16:42,960 --> 00:16:44,240
We have legal services.

301
00:16:44,240 --> 00:16:46,520
We have civil engineering, structural engineering.

302
00:16:46,800 --> 00:16:50,200
And then you're paying a general contractor their fee

303
00:16:50,520 --> 00:16:52,960
plus whatever bond requirement it is.

304
00:16:53,200 --> 00:16:56,920
And you have to make money above all of that and above your investors.

305
00:16:57,200 --> 00:17:00,240
So so the project has to be so good

306
00:17:00,240 --> 00:17:03,480
for everybody in that network to be able to be profitable.

307
00:17:03,760 --> 00:17:06,240
But you can't go in with the mindset of losing money.

308
00:17:06,240 --> 00:17:07,840
You just can't because you will.

309
00:17:07,840 --> 00:17:09,240
I mean, that's the reality.

310
00:17:09,240 --> 00:17:11,880
You think you're going to break even or you want to be a charity.

311
00:17:11,880 --> 00:17:13,280
You should be a charity.

312
00:17:13,280 --> 00:17:15,280
But this business is not built for that.

313
00:17:15,960 --> 00:17:17,760
It's not it doesn't work.

314
00:17:17,760 --> 00:17:20,880
And it's and they don't create sustainable models.

315
00:17:21,240 --> 00:17:25,680
The one thing that's been the investment strategy that we've tried to get

316
00:17:25,680 --> 00:17:29,680
is investors to look because we're working in more more

317
00:17:29,680 --> 00:17:33,240
more more disparaged communities.

318
00:17:33,240 --> 00:17:37,280
We've been we've tried to find an investor who's willing to take lower returns

319
00:17:38,600 --> 00:17:41,320
somewhere in the eight to 10 percent range.

320
00:17:41,320 --> 00:17:43,440
Haven't found them yet. Not 13 years.

321
00:17:44,960 --> 00:17:48,760
But we have found as more investors willing to invest at a higher return.

322
00:17:48,760 --> 00:17:52,000
But we haven't found investors willing to invest at a lower return.

323
00:17:52,400 --> 00:17:54,560
But they they actually keep you honest.

324
00:17:54,560 --> 00:17:57,560
I mean, when you bring in that that equity investor,

325
00:17:57,560 --> 00:18:00,800
they're reminding you every day that they're there to make money.

326
00:18:01,360 --> 00:18:06,280
And I think it's healthy in a way that it forces you to really think about

327
00:18:06,280 --> 00:18:09,680
how you're building your investment model, because that's what we're all doing.

328
00:18:09,680 --> 00:18:12,640
Is we're building not just buildings, but we're building investment models.

329
00:18:13,000 --> 00:18:14,880
We're building each time we build one.

330
00:18:14,880 --> 00:18:17,240
It is a separate investment structure.

331
00:18:17,240 --> 00:18:19,440
It's got a new set of investors.

332
00:18:19,440 --> 00:18:22,280
It's got a new address. It's got a new lender.

333
00:18:22,600 --> 00:18:26,480
So every time it's the setting up a separate business and your model

334
00:18:26,480 --> 00:18:28,920
has to be one that you find that works.

335
00:18:28,920 --> 00:18:34,040
Our model works because we do use a lot of new market tax credits.

336
00:18:34,760 --> 00:18:37,960
We have used light tech, not that much.

337
00:18:38,840 --> 00:18:41,840
We are looking at how do we build modulely

338
00:18:41,840 --> 00:18:44,760
because we know that modular construction done correctly

339
00:18:45,240 --> 00:18:48,560
really does level the playing field in terms of driving

340
00:18:48,920 --> 00:18:52,160
higher quality housing at a lower, consistent price.

341
00:18:52,680 --> 00:18:55,880
But the key is finding a whole team that understands modular

342
00:18:55,880 --> 00:18:59,040
development so you can get the level of quality that you want out of it

343
00:18:59,240 --> 00:19:01,640
and that it's designed correctly.

344
00:19:01,640 --> 00:19:04,200
So we've been looking at every aspect of

345
00:19:05,320 --> 00:19:07,600
what the cost structure is for real estate

346
00:19:08,920 --> 00:19:13,720
from the very beginning, from architects to engineers to construction type

347
00:19:15,120 --> 00:19:18,480
all the way through to the investment type to the return profile.

348
00:19:18,760 --> 00:19:22,640
And we're building a model around that to try and really minimize

349
00:19:22,640 --> 00:19:26,560
the overall cost of the project so we can maximize either

350
00:19:27,800 --> 00:19:31,040
not necessarily investment to our investors,

351
00:19:31,440 --> 00:19:35,480
but maybe we can provide more affordable offerings to our tenants.

352
00:19:35,960 --> 00:19:39,320
So if we have a

353
00:19:39,320 --> 00:19:42,680
we do almost exclusively mixed income developments.

354
00:19:42,680 --> 00:19:44,880
We don't do just market rate. We don't believe in it.

355
00:19:44,920 --> 00:19:48,600
We believe that there's every building should have a mix of people,

356
00:19:48,640 --> 00:19:52,600
a mix of communities of income levels, whether you're a doctor,

357
00:19:52,600 --> 00:19:55,920
or a garbage worker, or a student.

358
00:19:55,920 --> 00:19:59,560
You ought to be able to live in the same space and the space

359
00:19:59,560 --> 00:20:02,000
ought to be of a quality that everybody lives there.

360
00:20:02,280 --> 00:20:05,280
But the financing around that is more complicated.

361
00:20:05,480 --> 00:20:10,360
You know, it's much more desirable for developers

362
00:20:10,360 --> 00:20:14,320
to build just a market rate building that is a luxury building

363
00:20:14,320 --> 00:20:17,720
and to capture that network of people who are willing to pay a premium

364
00:20:18,080 --> 00:20:19,880
and then your performance looks a lot better.

365
00:20:19,880 --> 00:20:23,600
It's just not the decision we made about building our model.

366
00:20:23,600 --> 00:20:24,640
We don't want to do that.

367
00:20:24,640 --> 00:20:26,880
We don't believe that people need us in that space.

368
00:20:27,160 --> 00:20:31,720
So that's where the complexity comes in for us is building that level.

369
00:20:32,320 --> 00:20:34,320
Yeah, that's a great segue.

370
00:20:34,320 --> 00:20:37,760
One of the questions we had was like, how do you go about

371
00:20:38,080 --> 00:20:40,160
generally financing your developments?

372
00:20:40,160 --> 00:20:42,880
But even more importantly, you know, when you guys went in,

373
00:20:43,480 --> 00:20:47,160
a big part of financing is the personal guarantees.

374
00:20:47,160 --> 00:20:50,520
So we know when you guys were back to Edison High School

375
00:20:50,520 --> 00:20:55,280
and kind of progressed, how did that get you guys in the guarantee?

376
00:20:55,760 --> 00:20:59,000
Totally. Yeah, I mean, we were willing to give our personal guarantees

377
00:20:59,000 --> 00:21:00,680
and we did, but nobody cared.

378
00:21:00,680 --> 00:21:05,120
So they're like, oh, this is your guarantee.

379
00:21:05,120 --> 00:21:06,480
You can keep it.

380
00:21:07,880 --> 00:21:12,440
That's the number one question we get from us, how do we get over that?

381
00:21:12,440 --> 00:21:14,400
How do we get over that personal guarantee?

382
00:21:14,400 --> 00:21:17,440
This is for that, please sit down here and grab a seat.

383
00:21:17,440 --> 00:21:19,760
Leslie's right here. She's coming around and saying, OK, OK.

384
00:21:20,000 --> 00:21:22,400
Hi. Hey, Leslie, how you doing?

385
00:21:22,400 --> 00:21:24,400
Oh, I'm good.

386
00:21:24,400 --> 00:21:27,920
Oh, great.

387
00:21:27,920 --> 00:21:29,360
Greg is doing a great job.

388
00:21:29,360 --> 00:21:31,320
Oh, look, I knew I left you in good hands.

389
00:21:31,320 --> 00:21:33,080
I don't need to say anything.

390
00:21:33,080 --> 00:21:34,880
You know, I was.

391
00:21:34,880 --> 00:21:38,760
Yeah, I'm leaving you in good hands.

392
00:21:38,760 --> 00:21:40,960
I don't need to be a part of this.

393
00:21:40,960 --> 00:21:43,160
I'm not trying my personal guarantees.

394
00:21:43,160 --> 00:21:45,560
And you know, how do we deal with power?

395
00:21:45,560 --> 00:21:47,320
We're dealing with the whole guarantee structure.

396
00:21:47,320 --> 00:21:50,440
It's like a number one question to get inspired developers like, well,

397
00:21:50,880 --> 00:21:55,040
that's just getting roadblock, you know, and for developers that it's talking to.

398
00:21:55,600 --> 00:21:58,960
We have kind of say, well, you know, how did you guys evolve around that?

399
00:22:00,640 --> 00:22:03,320
Yeah, it continues to be an issue.

400
00:22:03,320 --> 00:22:04,440
Absolutely.

401
00:22:04,440 --> 00:22:07,440
You know, the problem with it is we we got around it by forming

402
00:22:07,440 --> 00:22:10,120
joint venture partnerships with high net worth developers.

403
00:22:10,120 --> 00:22:13,560
So there are there are two issues that less is going to call it.

404
00:22:13,960 --> 00:22:16,440
There are two issues that you're going to be faced with.

405
00:22:16,440 --> 00:22:19,200
You know what? Yeah.

406
00:22:19,800 --> 00:22:23,600
One is is track record, which is a big one.

407
00:22:23,920 --> 00:22:29,520
And the other is the other is financing and the whole issue around guarantees.

408
00:22:29,720 --> 00:22:32,840
You know, it's interesting, Steve, is most of the people we deal with

409
00:22:32,960 --> 00:22:35,400
aren't required to provide personal guarantees.

410
00:22:35,800 --> 00:22:38,720
They are only we're required to buy.

411
00:22:38,720 --> 00:22:43,720
But so one of the things that is not funny, how that works

412
00:22:43,720 --> 00:22:46,880
is people that can most guarantee a project don't have to people

413
00:22:46,880 --> 00:22:48,520
that can guarantee the project.

414
00:22:48,520 --> 00:22:51,720
After that, that's credit, right?

415
00:22:51,760 --> 00:22:55,400
That's the way credit works, which is the fundamental problem

416
00:22:55,400 --> 00:22:59,400
that we believe is discriminatory in its basis. Right. No question.

417
00:23:00,680 --> 00:23:02,960
So so I mean, Leslie,

418
00:23:05,200 --> 00:23:07,600
it's a little bit of a issue we're dealing with every day.

419
00:23:07,600 --> 00:23:11,480
Absolutely. I mean, and that's why we had to like we said,

420
00:23:11,480 --> 00:23:14,040
we had to partner with high worth individuals.

421
00:23:14,040 --> 00:23:17,280
But the minute you have to do that, you know, you have to give up,

422
00:23:17,480 --> 00:23:22,320
you know, a good portion of your project, because I remember

423
00:23:22,320 --> 00:23:26,160
when we started the company, one someone said, that's cash is king.

424
00:23:26,520 --> 00:23:28,120
Right. Cash is king.

425
00:23:28,120 --> 00:23:32,640
And it won't. So, you know, and they say they leverage that they hold

426
00:23:32,640 --> 00:23:34,240
that over your over your head.

427
00:23:34,240 --> 00:23:38,400
So that's why we were talking to the city now.

428
00:23:38,400 --> 00:23:42,840
And we're talking to people's how can they make a difference for black developers?

429
00:23:43,320 --> 00:23:48,240
Create this mechanism for credit enhancement so that we don't have to do this.

430
00:23:48,480 --> 00:23:54,400
Create this, you know, fund of money that can offer letters of credit.

431
00:23:55,680 --> 00:23:58,560
Anything that's going to really bolster up

432
00:23:59,080 --> 00:24:03,240
black developers, balance sheets that all system

433
00:24:03,240 --> 00:24:07,080
because it's always going to be an impediment because we're so far behind

434
00:24:07,360 --> 00:24:12,200
and playing catch up that there's it's it's it's it's nearly impossible.

435
00:24:12,680 --> 00:24:16,240
You know, I will say Fulton Bank.

436
00:24:16,240 --> 00:24:18,240
I don't know if he's talking about Fulton Bank.

437
00:24:18,240 --> 00:24:19,760
They haven't gotten it.

438
00:24:19,760 --> 00:24:21,760
We're just getting to the finance part.

439
00:24:21,760 --> 00:24:25,680
But OK, because I will be on a commercial for Fulton Bank.

440
00:24:25,680 --> 00:24:27,720
They have been fabulous.

441
00:24:27,720 --> 00:24:29,520
TRF was great to us, too.

442
00:24:29,520 --> 00:24:30,960
I mean, they got started.

443
00:24:30,960 --> 00:24:32,960
The reinvestment was great.

444
00:24:32,960 --> 00:24:33,960
Right.

445
00:24:33,960 --> 00:24:37,720
They're specifically but they're supposed to be, though.

446
00:24:37,720 --> 00:24:39,680
Right. And they're CDFI.

447
00:24:39,680 --> 00:24:40,960
Right. I'm thankful.

448
00:24:40,960 --> 00:24:42,160
I'm grateful.

449
00:24:42,160 --> 00:24:44,240
But they're a little different than Fulton Bank.

450
00:24:44,240 --> 00:24:46,280
Right. But lastly, let's be clear.

451
00:24:46,280 --> 00:24:48,640
Not all CDFI is created the same year.

452
00:24:48,640 --> 00:24:53,440
No, we've had good experiences with CDFIs and we've had bad experiences.

453
00:24:54,040 --> 00:24:56,360
Yes. Yes. We've been through all of them.

454
00:24:56,360 --> 00:24:58,120
We've dealt with all of the lenders.

455
00:24:58,120 --> 00:25:02,840
Wells Fargo, US Bank, PNC, Fulton Bank, TRF.

456
00:25:02,840 --> 00:25:08,280
List. I mean, we've had loans or loan circumstances with every one of these folks.

457
00:25:08,280 --> 00:25:12,320
And we can give you the list of who's who's really trying to help the cause and who's not.

458
00:25:12,320 --> 00:25:15,000
Right. Fulton Bank arises to the top.

459
00:25:15,240 --> 00:25:18,120
To Leslie's point, there's no question they have.

460
00:25:18,120 --> 00:25:24,400
Just their willingness to really be creative, think outside the box, be flexible.

461
00:25:25,200 --> 00:25:26,640
And know where we are.

462
00:25:26,640 --> 00:25:30,040
Meet us where we are rather than have us meet them where they are.

463
00:25:30,240 --> 00:25:31,400
That's excellent.

464
00:25:31,400 --> 00:25:32,560
Excellent. Yes, it is.

465
00:25:32,560 --> 00:25:34,200
That's well said.

466
00:25:34,200 --> 00:25:36,000
Yeah. Yeah.

467
00:25:36,000 --> 00:25:42,480
And so so but I don't think you get around having somebody that's high net worth early on.

468
00:25:44,840 --> 00:25:46,680
Particularly if you don't have a track record.

469
00:25:46,680 --> 00:25:50,880
That's the other issue is you can't even just partner with somebody with liquidity.

470
00:25:50,880 --> 00:25:53,520
You need to partner with somebody with liquidity who's done it before.

471
00:25:54,720 --> 00:25:57,400
That's that's part of it. That's part of what you have to do.

472
00:25:58,840 --> 00:26:02,240
Yeah, especially early on, because Greg, you probably mentioned,

473
00:26:02,240 --> 00:26:06,640
you know, we both met at the Goldenberg Group and we thought that we're going to be able to

474
00:26:06,920 --> 00:26:12,000
kind of point to that experience and use that to really build our company.

475
00:26:12,640 --> 00:26:14,920
That didn't happen. They're like, that was there.

476
00:26:14,920 --> 00:26:17,560
That was no good. That was not now.

477
00:26:20,280 --> 00:26:23,440
You all did. Yeah, they're like, you all did that with his money.

478
00:26:26,200 --> 00:26:29,600
Yeah, I heard the story about that.

479
00:26:29,600 --> 00:26:31,600
Oh, my gosh.

480
00:26:31,600 --> 00:26:33,600
Unbelievable. Yeah.

481
00:26:33,600 --> 00:26:35,600
Unbelievable.

482
00:26:35,600 --> 00:26:38,600
So you guys have been involved with quite a few projects in Philadelphia.

483
00:26:38,600 --> 00:26:40,600
Yeah. Yeah.

484
00:26:40,600 --> 00:26:44,600
Share a few details on some of the some stuff you've done or you have in the pipeline.

485
00:26:46,600 --> 00:26:52,600
Yeah, I mean, we we have done about one hundred and twenty million dollars in

486
00:26:52,600 --> 00:26:54,600
direct cost business in the neighborhoods.

487
00:26:54,600 --> 00:27:01,600
What we're most proud of is that we haven't focused on Center City to to create

488
00:27:01,600 --> 00:27:03,600
the model that we've created.

489
00:27:03,600 --> 00:27:08,600
We've gone directly into the neighborhoods, invested in neighborhoods that everybody else has neglected.

490
00:27:08,600 --> 00:27:14,600
And I won't say everybody, because there are a number of black developers that have tried to gain traction and doing it.

491
00:27:14,600 --> 00:27:16,600
We've actually had success doing it.

492
00:27:16,600 --> 00:27:22,600
And we've been in like we've been in Fair Hill, Germantown,

493
00:27:22,600 --> 00:27:26,600
Strawberry Mansion, Brewery Town,

494
00:27:26,600 --> 00:27:29,600
Sharpswood, Blumberg, we're in West Philly now.

495
00:27:29,600 --> 00:27:31,600
We're in another part of Germantown.

496
00:27:31,600 --> 00:27:32,600
We're in North Philly.

497
00:27:32,600 --> 00:27:33,600
We're moving into Tioga.

498
00:27:33,600 --> 00:27:35,600
We have a project there.

499
00:27:35,600 --> 00:27:41,600
I mean, we're in neighborhoods where there's significant blight and refining solutions.

500
00:27:41,600 --> 00:27:44,600
And that's what we believe to be our skill set.

501
00:27:44,600 --> 00:27:48,600
What we've also recognized is if we can develop there, we can develop anywhere.

502
00:27:48,600 --> 00:27:52,600
So, you know, the other neighborhoods are not that tough.

503
00:27:52,600 --> 00:28:01,600
We now have developers that are coming to us to do developments in Center City with them and a number of significant developments.

504
00:28:01,600 --> 00:28:05,600
So right now we have a large project under construction.

505
00:28:05,600 --> 00:28:08,600
Leslie, if you want to talk about Sharpswood, Sharpswood Ridge.

506
00:28:08,600 --> 00:28:15,600
Yeah. So that was a project actually that we started in 2017.

507
00:28:15,600 --> 00:28:21,600
2017. It's in partnership with the Philadelphia Housing Authority.

508
00:28:21,600 --> 00:28:22,600
It's at 20th and Ridge.

509
00:28:22,600 --> 00:28:26,600
It's literally right across the street of Jefferson Street.

510
00:28:26,600 --> 00:28:30,600
And that's where PHA built their new headquarters.

511
00:28:30,600 --> 00:28:43,600
And that was all really to anchor that corridor, the Ridge Avenue corridor there and to play a part in a larger neighborhood master plan that PHA put together.

512
00:28:43,600 --> 00:28:51,600
They also are the recipient of a choice, a 30 million dollar choice grant for that neighborhood master plan.

513
00:28:51,600 --> 00:28:55,600
So what they brought us in to do, and it was kind of interesting.

514
00:28:55,600 --> 00:29:10,600
We were brought in to do the other side of Ridge Avenue, kind of a walkable individual, yeah, individual row homes and CMX2 structures that were partially occupied,

515
00:29:10,600 --> 00:29:24,600
primarily not occupied, which was a lot more difficult to to really make something happen because it wasn't like a large consolidated site that everyone could say, oh, you know, build something large here.

516
00:29:24,600 --> 00:29:30,600
But we were still making traction. We were really securing interest of tenants, getting LLIs.

517
00:29:30,600 --> 00:29:37,600
And they had hired another developer, not of color, to develop the shopping center.

518
00:29:37,600 --> 00:29:44,600
And it was just lagging. It really, I guess they just weren't giving it the type of attention that it really deserved.

519
00:29:44,600 --> 00:29:49,600
So their time expired under contract with the housing authority.

520
00:29:49,600 --> 00:29:53,600
And they looked at us and said, you know what, you've got like three executed LLIs.

521
00:29:53,600 --> 00:30:00,600
Do you think you can bring those tenants from your side of the street that you're working on and bring them in to the shopping center?

522
00:30:00,600 --> 00:30:05,600
And can you help us finish a grocery market deal?

523
00:30:05,600 --> 00:30:10,600
And we're looking at their life.

524
00:30:10,600 --> 00:30:13,600
We did.

525
00:30:13,600 --> 00:30:18,600
We're going to give you our tenants.

526
00:30:18,600 --> 00:30:21,600
No, that's right. That's exactly right.

527
00:30:21,600 --> 00:30:27,600
They did say that the time was expiring or or just had recently expired on the other side.

528
00:30:27,600 --> 00:30:34,600
So we did negotiate the deal to then become the developer for the shopping center.

529
00:30:34,600 --> 00:30:38,600
Now, it immediately became a very large project at that point.

530
00:30:38,600 --> 00:30:49,600
So just for resources, we asked and actually PHA thought that we needed to ask because it was such a large project to bring in another developer.

531
00:30:49,600 --> 00:30:52,600
So we asked Shift to join us on that project.

532
00:30:52,600 --> 00:30:56,600
So we are partnering with Shift on that. And that's a 52.

533
00:30:56,600 --> 00:31:03,600
Well, now it's it's probably it's really more like a 54 million dollar project.

534
00:31:03,600 --> 00:31:12,600
Yeah. All of the increase of the material cost that has been has incurred over the last six months.

535
00:31:12,600 --> 00:31:18,600
We have been right in the midst of it. But at the end of the day, it's probably a 54 million dollar project.

536
00:31:18,600 --> 00:31:27,600
It's a supermarket. It's an additional 50,000 square feet of other retail, which urgent care.

537
00:31:27,600 --> 00:31:35,600
We have Santander that wins to go. We've got a restaurant coming and then about 8000 square feet more space that we are now leasing.

538
00:31:35,600 --> 00:31:42,600
But wanted to wait until there was some some real prods construction going on on the site.

539
00:31:42,600 --> 00:31:47,600
So that's a very complicated capital stack. And you know what those are.

540
00:31:47,600 --> 00:31:50,600
We have a hundred units a thousand.

541
00:31:50,600 --> 00:31:54,600
I'm sorry. Yeah. Yes. Thank you, Greg.

542
00:31:54,600 --> 00:32:02,600
So complicated capital stack. We've got twenty eight point five million dollars of new market tax credit allocation on it.

543
00:32:02,600 --> 00:32:11,600
We've got a RACP two allocations of RACP grants, that multimodal grants.

544
00:32:11,600 --> 00:32:17,600
We've got subordinate debt from PIDC. We've got Fulton in the fold.

545
00:32:17,600 --> 00:32:21,600
Capital One is our new market tax credit investor.

546
00:32:21,600 --> 00:32:25,600
We had to create a condo structure to make it work.

547
00:32:25,600 --> 00:32:32,600
We have a brown lease with the housing authority. So it was one of the most complicated deals that you could imagine.

548
00:32:32,600 --> 00:32:36,600
The legal fees alone were over a million dollars.

549
00:32:36,600 --> 00:32:44,600
Easily. And then we had then we had the audacity to even create more complexly by doing the crowdfund.

550
00:32:44,600 --> 00:32:53,600
That's the other thing that we decided. And Leslie and I were trying because again, our whole model is.

551
00:32:53,600 --> 00:33:00,600
Keep in mind, too, everything that we do is designed that we're not just doing this for Mosaic, but you know,

552
00:33:00,600 --> 00:33:09,600
in all of our projects moving forward, anywhere from 50 to 100 percent of our professional services are either African-American or women owned businesses.

553
00:33:09,600 --> 00:33:18,600
I mean, we are we are identifying those key companies and bringing them with us in everything that we're doing.

554
00:33:18,600 --> 00:33:24,600
The one thing that we found from financing standpoint is very difficult to get African-American investment and community investment.

555
00:33:24,600 --> 00:33:32,600
And Leslie was able to we had had multiple meetings, I think two years worth of meetings to try and get local folks to invest.

556
00:33:32,600 --> 00:33:36,600
We started out. We thought it would be a small amount. We said, well, what they said, what are you looking for?

557
00:33:36,600 --> 00:33:41,600
We're like, we're going to start small at about seventy five thousand dollars for investment.

558
00:33:41,600 --> 00:33:44,600
And everybody left. Nobody came back. Then we had the next meeting.

559
00:33:44,600 --> 00:33:48,600
We're like, OK, we're going to try fifty this time because now we'll get people.

560
00:33:48,600 --> 00:33:54,600
Nobody came back. Twenty five and ten and five. We got no takers.

561
00:33:54,600 --> 00:34:02,600
So I mean, zero takers. This is 10 meetings in. I got to talk with, I don't know, five, six hundred people, Steve, that we're trying.

562
00:34:02,600 --> 00:34:08,600
No takers at five thousand dollars invested. And Leslie's like, well, I did this thing.

563
00:34:08,600 --> 00:34:15,600
It's a crowd fund and and it allows non accredited investors to go in next to accredited investors.

564
00:34:15,600 --> 00:34:20,600
We actually don't have a problem getting people to invest half a million to a million dollars in our projects each.

565
00:34:20,600 --> 00:34:28,600
They just never look like us. So but Leslie found this community crowd from where you could invest as little as five hundred dollars

566
00:34:28,600 --> 00:34:32,600
and get the same return as if you're investing five hundred thousand.

567
00:34:32,600 --> 00:34:35,600
So we decided to include that in all of our projects.

568
00:34:35,600 --> 00:34:40,600
We started with our Germantown project and now that Sharjahood project we have it and we're doing it.

569
00:34:40,600 --> 00:34:45,600
Frankly, Leslie's working on it now at the Navy Yard.

570
00:34:45,600 --> 00:34:51,600
So it's going to be a citywide investment model for as little as it might be a thousand.

571
00:34:51,600 --> 00:34:55,600
I think Leslie, what do you think? It might be a thousand, but it's still going to be a very achievable amount.

572
00:34:55,600 --> 00:35:00,600
So, yeah, yeah, yeah. We're working that out now.

573
00:35:00,600 --> 00:35:06,600
Let's hear about the Navy Yard project before I jump on to the next one, because I mean, being from a product here,

574
00:35:06,600 --> 00:35:12,600
the Navy Yard has always been there and now they've got it to the point where if you tell me it's almost going to be a city within a city.

575
00:35:12,600 --> 00:35:16,600
It will be. What's going on there? I love to hear about it.

576
00:35:16,600 --> 00:35:23,600
Oh, my gosh. We are in the throes. We're like drinking water through a fire hose on that project.

577
00:35:23,600 --> 00:35:34,600
We're designing the first phase. So the Navy Yard is a multi-phase multi-year project where we sign an agreement with PIDC.

578
00:35:34,600 --> 00:35:40,600
When did we sign it? March? March. We were awarded the project last July.

579
00:35:40,600 --> 00:35:47,600
It took us until March to actually negotiate and sign the agreement. So it tells you how long this stuff takes.

580
00:35:47,600 --> 00:35:54,600
I see. Right. Yeah. That's the sign of the agreement. Now, the agreement is a two point six billion dollar project.

581
00:35:54,600 --> 00:36:01,600
So we are the co-development lead along with a group called Ensemble Development Ensemble Investments.

582
00:36:01,600 --> 00:36:06,600
They're out of Long Beach, California. Good group of people.

583
00:36:06,600 --> 00:36:12,600
The big big time hotel developers around mostly in California and Phoenix.

584
00:36:12,600 --> 00:36:17,600
And I think they have some some property in Vegas, but they came to Philadelphia.

585
00:36:17,600 --> 00:36:23,600
They built the Marriott Courtyard in in the Navy Yard. That was how they first got into the space.

586
00:36:23,600 --> 00:36:31,600
And then when Liberty Property Trust sold their company ensemble by all of their buildings at the Navy.

587
00:36:31,600 --> 00:36:38,600
So they own about three hundred and fifty million dollars worth of assets that the Navy Yard already.

588
00:36:38,600 --> 00:36:44,600
And they called us and asked us to partner with them on this project on the Navy Yard project.

589
00:36:44,600 --> 00:36:51,600
So we went we went against thirty five companies. They shortlisted it to five.

590
00:36:51,600 --> 00:36:57,600
The five companies were I think Gullbane and Zaire Lynch were partnered.

591
00:36:57,600 --> 00:37:05,600
We were partnered with Zaire. Yeah. We were partnered with with Ensemble.

592
00:37:05,600 --> 00:37:09,600
Trammell Crowe was a part of it.

593
00:37:09,600 --> 00:37:16,600
Heinz out of Texas. Heinz Hoffman. Hoffman did the wharf. Right.

594
00:37:16,600 --> 00:37:22,600
Hoffman was partnered with Gattuso who is a big who is the president of Liberty Property Trust.

595
00:37:22,600 --> 00:37:25,600
So they're the guys that did the war from the D.C. Wharf.

596
00:37:25,600 --> 00:37:28,600
So we ended up being selected out of those folks.

597
00:37:28,600 --> 00:37:35,600
And now we're working on our first base which is about four hundred eighty million dollars for space.

598
00:37:35,600 --> 00:37:46,600
It is six hundred and twenty apartments to lab buildings two hundred and thirty to one hundred and fifty thousand square foot lab buildings.

599
00:37:46,600 --> 00:37:55,600
A six hundred and fifty car parking garage and a four or five star hotel that we're all that are all in design right now as we speak.

600
00:37:55,600 --> 00:38:01,600
We plan to break ground early next year on on the whole development.

601
00:38:01,600 --> 00:38:06,600
But each building will start in sequence. We're not going to start all six buildings at once.

602
00:38:06,600 --> 00:38:12,600
But we plan to have them all done by 2024. And that will be the first phase of development.

603
00:38:12,600 --> 00:38:19,600
We hired Moody. So just to let you know as a part of that project we're very concerned.

604
00:38:19,600 --> 00:38:25,600
And and part of our ethos was to bring in African-American and women development team.

605
00:38:25,600 --> 00:38:34,600
And on all of that project we have over 50 percent participation of African-American and women on special services.

606
00:38:34,600 --> 00:38:40,600
So for example we scoured the city looking for African-American architects.

607
00:38:40,600 --> 00:38:46,600
I don't know if you know Kelly Maiello. They're probably the largest in the city.

608
00:38:46,600 --> 00:38:53,600
Emanuel Kelly he worked on for example I think the last project he had was the convention center.

609
00:38:53,600 --> 00:38:59,600
But he's a 20 person shop and he just isn't big enough to do the work we're talking about.

610
00:38:59,600 --> 00:39:07,600
So we actually went out to Ohio and found a group called Leslie Moody.

611
00:39:07,600 --> 00:39:16,600
Moody Nolan. Moody Nolan. I don't know if you all know Moody Nolan but they're the largest African-American architecture firm in the country.

612
00:39:16,600 --> 00:39:24,600
And they just won the 2021 AIA award. So we brought them in and they're the architect of record on the project.

613
00:39:24,600 --> 00:39:28,600
We also brought in Rodriguez. Do you know Lou Rodriguez? I've heard of Lou yeah.

614
00:39:28,600 --> 00:39:34,600
He's a civil engineer in Philadelphia. Latino brother. We've known him for a long time.

615
00:39:34,600 --> 00:39:39,600
He Pinone had had the Navy Yard exclusively for the last 20 years.

616
00:39:39,600 --> 00:39:42,600
They're now sharing those responsibilities with Rodriguez.

617
00:39:42,600 --> 00:39:46,600
So the project moving forward they're about 50-50 on that project.

618
00:39:46,600 --> 00:39:54,600
We brought in all women on landscape architects. We brought in 20 firms that are minority and women owned.

619
00:39:54,600 --> 00:39:58,600
MEP, landscape architecture, etc. that are working right now.

620
00:39:58,600 --> 00:40:07,600
In fact, in the first four months of this year, we spent nearly eight million dollars on minority and women owned firms.

621
00:40:07,600 --> 00:40:12,600
So if you think about procurement and the issue around procurement in Philadelphia,

622
00:40:12,600 --> 00:40:18,600
you'd be hard pressed to find a company that spent eight million dollars on minority and women owned businesses.

623
00:40:18,600 --> 00:40:21,600
We've done it in the first four months.

624
00:40:21,600 --> 00:40:30,600
We're expecting our average spent on women and minority owned businesses with the majority needs to be for minority, not women,

625
00:40:30,600 --> 00:40:35,600
to be somewhere in the neighborhood of 50 million dollars a year for the next 15 years.

626
00:40:35,600 --> 00:40:40,600
So that's part of what we're doing. It's more than just what we're building.

627
00:40:40,600 --> 00:40:45,600
It's who we're building it with and who gets to use those services once it's built.

628
00:40:45,600 --> 00:40:54,600
That's what's most important to us. So we're excited that we're actually a part of the team so that we can keep that front and forward.

629
00:40:54,600 --> 00:41:01,600
Fortunately, Ensemble has really accepted and adopted and embraced all of that.

630
00:41:01,600 --> 00:41:06,600
But we're always challenging every conversation.

631
00:41:06,600 --> 00:41:15,600
We're bringing it to even the majority firms that we are using. We're like, well, what does your personnel look like?

632
00:41:15,600 --> 00:41:18,600
Is it diverse? That's something that you need to think about also.

633
00:41:18,600 --> 00:41:22,600
So we're challenging everybody, which is important.

634
00:41:22,600 --> 00:41:27,600
Yeah. Well, we tell literally everybody if you don't change course, we're not working with you.

635
00:41:27,600 --> 00:41:38,600
So, I mean, we're and I think the key for us is that if you're in a place where you have influence and you don't use it, shame on you.

636
00:41:38,600 --> 00:41:49,600
And so we're just at a point where we're not willing to to really take anybody's approach for granted because we believe our approach is the right way to go.

637
00:41:49,600 --> 00:41:53,600
So, you know, we had we had a conversation with the first organization.

638
00:41:53,600 --> 00:41:58,600
I know you probably know them. They have Penn's Landing, which is another two billion dollar project.

639
00:41:58,600 --> 00:42:06,600
And they asked us about they're looking for a 20 percent minority investor and developers part of their team.

640
00:42:06,600 --> 00:42:16,600
And the first thing, Leslie and I said to them is that, you know, we may not be the right team for you because if we come in and work with you, we're not we're not a pass to the group.

641
00:42:16,600 --> 00:42:24,600
Like, we're going to insist that you bring in black architects and black engineers and and Latino engineers and women on businesses.

642
00:42:24,600 --> 00:42:27,600
And they've got to be a part of this design team or it's not going to work.

643
00:42:27,600 --> 00:42:32,600
I said, you just you have to know that up front. We're not because we will fight.

644
00:42:32,600 --> 00:42:34,600
So, you know, you have to do that.

645
00:42:34,600 --> 00:42:47,600
And right. And so by creating that system, that's what really starts to force the man. That's what we're seeing is forcing the man for for many businesses.

646
00:42:47,600 --> 00:42:49,600
Excellent.

647
00:42:49,600 --> 00:43:05,600
I think we did. I think we talked about eight developers now.

648
00:43:05,600 --> 00:43:13,600
What is your internal development company looks like and what type of traits go after some of the folks you bring on board.

649
00:43:13,600 --> 00:43:20,600
So it's the question is so timely because we are right at that. We're talking about it every day.

650
00:43:20,600 --> 00:43:26,600
Oh, my gosh. Where we know that we need to hire additional people and have already started to.

651
00:43:26,600 --> 00:43:32,600
But we started to really structure the org chart and we don't want to get too large. Right.

652
00:43:32,600 --> 00:43:41,600
But we also know we have way too much work and too much in our in our pipeline, our portfolio to not bring on additional people.

653
00:43:41,600 --> 00:43:53,600
I mean, one of the things that is very important to us is bringing in folks younger than we are that they can really get exposure, they can grow and they can advance themselves in the career and their career.

654
00:43:53,600 --> 00:44:06,600
So we are we have brought it on. And the other thing that's important to us is just like majority firms, they are able to bring on their daughters and their sons and they can continue to build legacy.

655
00:44:06,600 --> 00:44:16,600
Right. We want to do that at all as all as they are. So Greg has a couple of his sons that work with us, my goddaughter.

656
00:44:16,600 --> 00:44:22,600
She works for us. And we just said today, I said, they're so worthy. They all have master's degrees.

657
00:44:22,600 --> 00:44:28,600
They're incredibly they're incredibly talented. They really are. They really are.

658
00:44:28,600 --> 00:44:37,600
Our three kids are the most educated group. No question. No, no. It's it's wonderful. Right.

659
00:44:37,600 --> 00:44:46,600
And we're creating a path for them if they elect to go in that direction. But it's important that we have been able to create it if that's something that they want to do.

660
00:44:46,600 --> 00:44:54,600
But, you know, one has their master's in construction management, another one in master's in finance, another one in master's in urban development.

661
00:44:54,600 --> 00:45:01,600
So it's very they're all very appropriate and relevant degrees for what we're doing.

662
00:45:01,600 --> 00:45:10,600
But we're also needing a first. Right now they are. They're not going to stay.

663
00:45:10,600 --> 00:45:27,600
Because that's all I've been very thrifty. We've been very thrifty and frugal, but we are also recognizing that that is no longer the market. Like there's some of the salaries we're hearing are daunting.

664
00:45:27,600 --> 00:45:41,600
They're insane. And and here's the thing. This is the dilemma that African-American and businesses are going to face. Ninety six percent of African-American owned businesses, solo operators, right?

665
00:45:41,600 --> 00:45:49,600
The sole entrepreneurs. This is across all industries. And the biggest way to ensure failure is to own a business by yourself.

666
00:45:49,600 --> 00:46:00,600
And so what we realize is that we needed to be more than one person owning a business. We were always careful about growing it because we didn't have the money.

667
00:46:00,600 --> 00:46:10,600
Right. We didn't want to go out of this. And so Leslie and I had come up with all of these creative ways of staying afloat among all of them being as thrifty as you can possibly be.

668
00:46:10,600 --> 00:46:20,600
I don't know anybody that could have a dollar spread further than we can. We do. We'll do our own designs if we have to. We'll wait a couple of months to get an architect in and we'll do the designs ourselves.

669
00:46:20,600 --> 00:46:27,600
We'll run all the financials. We'll make sure it works. And then we'll think about getting an architect. But because that money spent is money gone.

670
00:46:27,600 --> 00:46:40,600
And so so when you start dealing with majority firms that have full staffs, they don't think that way. They just spend the money. But because they have so much more capital available to them to do that.

671
00:46:40,600 --> 00:46:51,600
But you can't grow this business without people. You just can't do it. And so as what you have to think about is what are the skills.

672
00:46:51,600 --> 00:47:05,600
One thing that Leslie and I did is we didn't kind of build this business on friendship really was built on skill sets. Right. We have compatible and comparable skill sets and we kind of do what we do in our space.

673
00:47:05,600 --> 00:47:15,600
And we're looking for people. And whenever we have the conversation, we don't ask who we like. We ask what their skills are. And those skills don't have to be fully developed in real estate.

674
00:47:15,600 --> 00:47:26,600
But do they have a good financial background? Do they know how to work with Excel? If they do that, we can have them working with us in this space. You know, do they understand community? Do they know how to work with communities?

675
00:47:26,600 --> 00:47:33,600
You know, are they good community organizers, community developments? Do they write well? Writing well becomes a very important skill in this industry.

676
00:47:33,600 --> 00:47:41,600
Leslie and I found that out the hard way because we started submitting a bunch of stuff. We had people do it and they can't write. We have to rewrite the whole thing.

677
00:47:41,600 --> 00:47:55,600
So, you know, you start looking for we start we want young people because we can't find seasoned people of color to get into our space. So we're basically organically growing it.

678
00:47:55,600 --> 00:48:02,600
But we're doing it around specific skills that we think we can develop into into something.

679
00:48:02,600 --> 00:48:11,600
And the main thing is just right. I mean, we say that also. But anything else, you're smart. Right. Smart.

680
00:48:11,600 --> 00:48:21,600
We don't care what background you came from. It doesn't matter. None of us came from real estate. Right. Well, that's the beauty of real estate.

681
00:48:21,600 --> 00:48:24,600
But you got to be smart. Yep.

682
00:48:24,600 --> 00:48:34,600
On a similar front, how do you kind of foster and grow your external relationships? Are you on boards or how do you source your deals currently?

683
00:48:34,600 --> 00:48:43,600
You know, we never did that sourcing deals. Yeah. Yeah. We always try to stand with the radar. Yes, indeed. Yes, we did.

684
00:48:43,600 --> 00:48:51,600
And the reason why is we thought people could take them take the deals from us because they always people if we had a good deal, somebody would want money to get it.

685
00:48:51,600 --> 00:49:01,600
Yeah. So we we primarily kept those hidden. It wasn't until we had success that actually these boards started reaching out to us and asking us to participate.

686
00:49:01,600 --> 00:49:07,600
Leslie sits on a couple of boards. I sit on a couple of boards. But that hasn't been the way that we built our business.

687
00:49:07,600 --> 00:49:12,600
No, I was going to say that's not how we started even now. Yeah.

688
00:49:12,600 --> 00:49:17,600
We have been we've tried to stay quiet, frankly, you know, just put our heads down, put the work in.

689
00:49:17,600 --> 00:49:25,600
We've met. I mean, I'm not a big fan of networking. I think it's nonsense. I think it's helpful.

690
00:49:25,600 --> 00:49:34,600
So it's not nonsense. No, it's not. It works. It works. It does.

691
00:49:34,600 --> 00:49:39,600
I found to be a relationship business. You just work.

692
00:49:39,600 --> 00:49:51,600
You just network differently. Great. That's all. Like now that you're on the Chester Economic Development Council for you're doing a lot of networking with your board members.

693
00:49:51,600 --> 00:49:55,600
You just don't like having to go to social events. Right. Right.

694
00:49:55,600 --> 00:50:00,600
Yeah, I don't want to I don't want to just sit around and talk to people.

695
00:50:00,600 --> 00:50:09,600
I mean, you're still old school and pick up a phone and call people and that's networking. You just do it differently. But you network a lot.

696
00:50:09,600 --> 00:50:18,600
And maybe you're right. Right. Right. Right. Right. Never. Never mind.

697
00:50:18,600 --> 00:50:24,600
Greg, you talked a little bit about modular housing. You might just expand in that. What's your what's your company's.

698
00:50:24,600 --> 00:50:33,600
We are all in on modular. See, think about every industry you know.

699
00:50:33,600 --> 00:50:39,600
Think about the automotive industry. Think about clothing manufacturers. Think about everything that's made.

700
00:50:39,600 --> 00:50:45,600
It's all made unless you're getting cheap labor in a third world country.

701
00:50:45,600 --> 00:50:50,600
It's all made in a factory by some robotic element. Right.

702
00:50:50,600 --> 00:50:56,600
The only exception to that is real estate development where they're making it the same way they made it 100 years ago.

703
00:50:56,600 --> 00:50:59,600
And all you're doing all they're doing is charging you more for it.

704
00:50:59,600 --> 00:51:05,600
So you're building a house and you're paying not only all the architects, engineers, all the people to get it permitted.

705
00:51:05,600 --> 00:51:15,600
Now you've got to pay the plumber, the laborer, the electrician, the carpenter, the masonry, the roofer, you know, and then the person supervise.

706
00:51:15,600 --> 00:51:21,600
Right. And then the finance people above that. And Leslie and I always believe there's got to be a more efficient way to do this.

707
00:51:21,600 --> 00:51:26,600
Right. And the efficiency comes when you have a factory built product.

708
00:51:26,600 --> 00:51:32,600
You can actually design it correctly, build it in actually comfortable conditions.

709
00:51:32,600 --> 00:51:37,600
You don't have weather as your enemy when you're building a modular box.

710
00:51:37,600 --> 00:51:44,600
And if you can develop a box that is like a Honda Accord, you're building the same type of thing over and over again.

711
00:51:44,600 --> 00:51:47,600
You can actually get really great economic efficiencies.

712
00:51:47,600 --> 00:51:56,600
And so that's what we find. We're trying to really master building these boxes that bring great economies to scale.

713
00:51:56,600 --> 00:51:58,600
And we want to do it in a factory setting.

714
00:51:58,600 --> 00:52:04,600
Leslie and I also observed that when we went to modular factories, we actually saw women working in there.

715
00:52:04,600 --> 00:52:08,600
They were working as plumber. They were working.

716
00:52:08,600 --> 00:52:17,600
So so what was interesting is the climate had something to do with gender in this industry and that if we can create a better climate for women,

717
00:52:17,600 --> 00:52:19,600
maybe that's the way to get women in.

718
00:52:19,600 --> 00:52:25,600
And if we were able to get modular manufacturing in Philadelphia rather than the outskirts of Pennsylvania,

719
00:52:25,600 --> 00:52:31,600
that's how we can get more people of color in manufacturing and in construction.

720
00:52:31,600 --> 00:52:40,600
And so that's really where our focus is now is how do we take a modular format, bring it into a place that's diverse and get more women,

721
00:52:40,600 --> 00:52:46,600
people of color to actually work in that industry and drive more affordable pricing around the whole housing model.

722
00:52:46,600 --> 00:52:51,600
So we think we can do that. We've been working on that for a year and a half, two years.

723
00:52:51,600 --> 00:52:54,600
We've done three or four modular buildings.

724
00:52:54,600 --> 00:52:57,600
Yeah, I was going to say we bought modular coming right out the box.

725
00:52:57,600 --> 00:53:04,600
Our first project was designed modularly. So, but now we see that 2010.

726
00:53:04,600 --> 00:53:08,600
Yeah, 2010. We've been building modular since 2010.

727
00:53:08,600 --> 00:53:15,600
But now we see systemically how it can add to both women and minorities getting in the industry.

728
00:53:15,600 --> 00:53:20,600
That it's a direct line to get them skills in the industry where the unions wouldn't get them in.

729
00:53:20,600 --> 00:53:25,600
So we have another way to do it. So we're big, big fans of that.

730
00:53:25,600 --> 00:53:29,600
Yeah.

731
00:53:29,600 --> 00:53:36,600
We think that it will be the next phase. We're actually, we were awarded the tiny home development.

732
00:53:36,600 --> 00:53:41,600
I don't know if you were aware of that for today, but I didn't know you guys got that.

733
00:53:41,600 --> 00:53:47,600
Yeah, there was a, Melissa, can you explain what happened with the homeless camp encampment?

734
00:53:47,600 --> 00:53:51,600
Yeah, I mean, I'm sure you were aware of the one that was on the parkway,

735
00:53:51,600 --> 00:53:57,600
but then there was also another encampment on our site, actually, at 20th and Ridge.

736
00:53:57,600 --> 00:54:02,600
And they were there because it was proximate to PHA's headquarters.

737
00:54:02,600 --> 00:54:09,600
So from that came negotiations with the organizations to find them housing.

738
00:54:09,600 --> 00:54:15,600
And one of the, well, there's two projects right now that are on the books

739
00:54:15,600 --> 00:54:21,600
that are really addressing the concerns that they had been discussing and negotiating.

740
00:54:21,600 --> 00:54:27,600
One is in the Northeast, which is more a transitional homeless facility.

741
00:54:27,600 --> 00:54:32,600
And then the one that we were awarded in West Philadelphia, yes.

742
00:54:32,600 --> 00:54:39,600
But the one that we were awarded in West Philadelphia is for people transitioning permanently out of homelessness.

743
00:54:39,600 --> 00:54:45,600
So they are actually full apartments, just smaller, and that's why they're calling them tiny homes.

744
00:54:45,600 --> 00:54:57,600
They're less than 700 square feet for two bedrooms and about 400 square feet for single unit apartments.

745
00:54:57,600 --> 00:55:02,600
So that's 375. OK, OK. Thanks.

746
00:55:02,600 --> 00:55:07,600
So, yeah, so that's what we're doing. We were awarded that earlier this year.

747
00:55:07,600 --> 00:55:11,600
Yeah, we're unleashed for us to really get going.

748
00:55:11,600 --> 00:55:16,600
I think it was March that we were unleashed. So we are.

749
00:55:16,600 --> 00:55:20,600
Yeah, we're doing that in West Philly. Those are being placed in West Philly.

750
00:55:20,600 --> 00:55:25,600
And we're doing 20 of those units as and it will be the first done in Philadelphia.

751
00:55:25,600 --> 00:55:29,600
And we plan on building them modulately. So what we'd like to do is master that.

752
00:55:29,600 --> 00:55:36,600
How do we master the tiny home, the tiny space development in a manufactured environment?

753
00:55:36,600 --> 00:55:40,600
That's our goal. That's excellent.

754
00:55:40,600 --> 00:55:44,600
And we don't think that it has to be limited to the homeless community.

755
00:55:44,600 --> 00:55:50,600
There are there are millennials that are very cost conscious that want to keep that, you know,

756
00:55:50,600 --> 00:55:54,600
disposable income to do other things, but you want to live by themselves.

757
00:55:54,600 --> 00:55:58,600
And this could give them an opportunity or live in a community.

758
00:55:58,600 --> 00:56:03,600
Right. So if you have a development where you have multiple kind of cottage,

759
00:56:03,600 --> 00:56:08,600
you know, kind of a village of these tiny homes, they could also be for millennials.

760
00:56:08,600 --> 00:56:11,600
And say a community garden that goes with it. Right.

761
00:56:11,600 --> 00:56:14,600
We can build these homes and either rent them or buy them.

762
00:56:14,600 --> 00:56:17,600
But the rental rate, you know, say they're renting this for six hundred dollars a month.

763
00:56:17,600 --> 00:56:20,600
Right. And they have their own space. It's brand new.

764
00:56:20,600 --> 00:56:25,600
It's in the community and gives them the ability to to have real disposable income

765
00:56:25,600 --> 00:56:30,600
where the cost of real estate isn't overburdening your life.

766
00:56:30,600 --> 00:56:35,600
But now you also have an environment where the community where you can participate in other community activities.

767
00:56:35,600 --> 00:56:38,600
That's what we'd like this to morph into.

768
00:56:38,600 --> 00:56:41,600
In terms of how we create the space.

769
00:56:41,600 --> 00:56:46,600
We had a question kind of morphed in and started talking to developers and, you know,

770
00:56:46,600 --> 00:56:51,600
considering like some of the folks who were aspiring to be developers, this was really false.

771
00:56:51,600 --> 00:56:53,600
You know, this perfect question for you all.

772
00:56:53,600 --> 00:56:59,600
How do you work in your personal life when I mean, I used to work for Michael's.

773
00:56:59,600 --> 00:57:02,600
I used to go to the job before the authorities.

774
00:57:02,600 --> 00:57:05,600
And I think I kind of neglected the whole thing.

775
00:57:05,600 --> 00:57:10,600
I didn't have balance. But how do you all feel?

776
00:57:10,600 --> 00:57:13,600
But look, I was less than you had to go. I'm a failure.

777
00:57:13,600 --> 00:57:18,600
I admit I can tell you at Merck, I was a failure.

778
00:57:18,600 --> 00:57:25,600
I was a failure. I had incredible success there, but I failed at my thing.

779
00:57:25,600 --> 00:57:31,600
And that is a fact. And so but when I met Leslie and she was at the Goldenberg Group,

780
00:57:31,600 --> 00:57:34,600
she would have her daughter in the office when she was in the office.

781
00:57:34,600 --> 00:57:37,600
Most of the time she wasn't. She wouldn't even come in.

782
00:57:37,600 --> 00:57:45,600
She was one of those early adopters like, you know, if there was a Zoom call, I don't think I would have ever met less.

783
00:57:45,600 --> 00:57:48,600
Leslie was all about her daughter from the moment I met her.

784
00:57:48,600 --> 00:57:52,600
And I admired that more than anything else that I knew about her.

785
00:57:52,600 --> 00:57:55,600
And I said that person I need to pick.

786
00:57:55,600 --> 00:58:02,600
And when we started this company, that was the one rule we had is that family will always come first.

787
00:58:02,600 --> 00:58:09,600
So whenever we're on a call with anybody and her daughter calls or my son calls, we let people know, oh, that's my daughter.

788
00:58:09,600 --> 00:58:12,600
That's my son. I got to go. Or I'll be right back.

789
00:58:12,600 --> 00:58:15,600
We don't care who it is. We really don't.

790
00:58:15,600 --> 00:58:20,600
So I feel like I have the best family balance I've ever had in my life

791
00:58:20,600 --> 00:58:26,600
because we started this company with that mindset that that is going to be what's first.

792
00:58:26,600 --> 00:58:30,600
Yeah, we do. And we live by it.

793
00:58:30,600 --> 00:58:32,600
We live by it.

794
00:58:32,600 --> 00:58:35,600
Now, I will say that. Oh, yeah, our kids absolutely know it.

795
00:58:35,600 --> 00:58:41,600
But I will say our spouses are wonderful because we work all the time, though.

796
00:58:41,600 --> 00:58:42,600
All the time.

797
00:58:42,600 --> 00:58:50,600
So I mean, we will stop. We will be interrupter and we'll carve out the appropriate time to do stuff with our families.

798
00:58:50,600 --> 00:58:54,600
But other than that, we're constantly working and we're constantly thinking.

799
00:58:54,600 --> 00:58:59,600
We're constantly strategizing. And he and I are on the phone all the time.

800
00:58:59,600 --> 00:59:07,600
Oh, my gosh. Oh, my gosh. It's awful.

801
00:59:07,600 --> 00:59:13,600
But what we do is whenever our child needs something, we're there for them.

802
00:59:13,600 --> 00:59:16,600
Oh, absolutely. We don't miss child events.

803
00:59:16,600 --> 00:59:21,600
We don't have that demand of anybody who works with us.

804
00:59:21,600 --> 00:59:24,600
If they say they've got something for their kid, we're like, we get it.

805
00:59:24,600 --> 00:59:28,600
We wouldn't sacrifice our time for you if our kid has a priority.

806
00:59:28,600 --> 00:59:32,600
If your kid has a priority and you're dealing with us, you've got a problem.

807
00:59:32,600 --> 00:59:34,600
That's how you do it.

808
00:59:34,600 --> 00:59:48,600
And we don't and we don't micromanage. We always say, if you want to be up at 10 o'clock at night doing your work because you know you have something to do with your daughter or your son in the middle of the day, fine.

809
00:59:48,600 --> 00:59:54,600
It's all about production. It's all about getting the outcomes and getting it done.

810
00:59:54,600 --> 00:59:56,600
So how you do it, it's up to you.

811
00:59:56,600 --> 00:59:58,600
We're not that good at all. We're outcome driven.

812
00:59:58,600 --> 01:00:06,600
If you can get some if you're that skilled that you can get work done ethically, we're not trying to break any laws here.

813
01:00:06,600 --> 01:00:12,600
You can get any work done in four hours and it takes somebody else four weeks.

814
01:00:12,600 --> 01:00:14,600
We don't care.

815
01:00:14,600 --> 01:00:20,600
From an entrepreneurial standpoint, what would you rather have?

816
01:00:20,600 --> 01:00:28,600
That's what we measure you on is how good are you? Can you get it done fast? And if you're dealing with that free time, you need to go play basketball and do it. You need to go do it.

817
01:00:28,600 --> 01:00:30,600
We don't care.

818
01:00:30,600 --> 01:00:36,600
Yeah. Yeah. This next question I had to throw in just for you guys, Steve, I know Leslie Collective.

819
01:00:36,600 --> 01:00:45,600
But since the George Floyd incident, how have things changed or have changed for black and brown developers?

820
01:00:45,600 --> 01:00:50,600
If I should carry out that, if at all a lot of talk.

821
01:00:50,600 --> 01:00:55,600
I don't know if we've seen.

822
01:00:55,600 --> 01:00:59,600
I don't think we've seen the effect yet.

823
01:00:59,600 --> 01:01:02,600
Like Greg said, it's a lot of talk.

824
01:01:02,600 --> 01:01:06,600
I think that there's initiatives out there that people are trying.

825
01:01:06,600 --> 01:01:15,600
I know I've had a lot of conversations with the Commerce Department and PIDC and PRA.

826
01:01:15,600 --> 01:01:21,600
You see the accelerator fund that they've created and the recovery fund money that's coming in.

827
01:01:21,600 --> 01:01:30,600
The city wants to do something to help black and brown businesses and black and brown developers.

828
01:01:30,600 --> 01:01:44,600
I think that there's a heightened sensitivity to it, which is causing a lot more discussion and at least thought being put forth to more creative approaches.

829
01:01:44,600 --> 01:01:48,600
Now, where it takes us is still yet to be seen.

830
01:01:48,600 --> 01:01:53,600
But I think at least more attention is being given to it.

831
01:01:53,600 --> 01:02:00,600
What I will say is it's involved in people that thought that, for example, PIDC has been great.

832
01:02:00,600 --> 01:02:04,600
In the same way that Fulton has been wonderful to us, so has PIDC.

833
01:02:04,600 --> 01:02:13,600
And they, in the way that Leslie and I have insisted on inclusion and diversity in our business model, they're requiring it.

834
01:02:13,600 --> 01:02:17,600
And I think they feel emboldened to stand up to it.

835
01:02:17,600 --> 01:02:27,600
And an organization like them, where they may not have taken such a strong position, is taking a stronger position than what we've seen in the past.

836
01:02:27,600 --> 01:02:31,600
I sit on the board in Chester County, an economic development council.

837
01:02:31,600 --> 01:02:35,600
It's a group that's largely conservative. It's 90% white.

838
01:02:35,600 --> 01:02:40,600
And we're having serious conversations about equity and inclusion in that county.

839
01:02:40,600 --> 01:02:44,600
And so when I say a lot of talk, some of that talk is actually meaningful.

840
01:02:44,600 --> 01:02:48,600
Because if we were before the George Floyd incident, there would be no talk.

841
01:02:48,600 --> 01:02:51,600
There was no discussion. Exactly.

842
01:02:51,600 --> 01:02:58,600
And I don't think it's just George Floyd. I think it's George Floyd in the combination of what happened with the virus.

843
01:02:58,600 --> 01:03:04,600
Because the reality is that the George Floyd incidents have been happening for years.

844
01:03:04,600 --> 01:03:10,600
That wasn't new. What was new is that it happened in a framework where we were all watching the same movie.

845
01:03:10,600 --> 01:03:22,600
So for the first time, you didn't have the distractions of kids out playing sports or moms at work or some kids at school or everybody sitting at home watching that happen.

846
01:03:22,600 --> 01:03:28,600
And it was almost impossible to reconcile during COVID that it was anything but—

847
01:03:28,600 --> 01:03:38,600
In me, the spirit doesn't provide the right word—anything but dehumanized.

848
01:03:38,600 --> 01:03:43,600
And if you couldn't get to that point and recognize that, there's clearly a problem with you.

849
01:03:43,600 --> 01:03:50,600
And I think that's what that incident did in combination with us being at home because of COVID.

850
01:03:50,600 --> 01:03:53,600
I don't think it was the incident of love.

851
01:03:53,600 --> 01:03:56,600
Last couple of points.

852
01:03:56,600 --> 01:03:58,600
Is it something COVID, Kervin?

853
01:03:58,600 --> 01:04:07,600
Yeah. Last question that we have. If you were to do it all again, would you do anything differently?

854
01:04:07,600 --> 01:04:09,600
I would have had more money.

855
01:04:09,600 --> 01:04:16,600
That's exactly what I was going to say. But you know what? We just didn't have it, right?

856
01:04:16,600 --> 01:04:18,600
So that would have been a nicer way to do it.

857
01:04:18,600 --> 01:04:23,600
Whatever we had, we spent. Let's put it that way. Every penny we had.

858
01:04:23,600 --> 01:04:31,600
I will say this, that the journey has been gratifying overall. It has been the hardest thing I've ever done.

859
01:04:31,600 --> 01:04:34,600
And I would imagine, Leslie, it was the hardest thing you've ever done.

860
01:04:34,600 --> 01:04:41,600
And there were so many times that we know others would have quit and did quit along our journey.

861
01:04:41,600 --> 01:04:49,600
We've seen people give up, start to give up and get out. And we had, we think, a harder road and we just didn't give up.

862
01:04:49,600 --> 01:04:57,600
And the resiliency of never giving up is something to behold when you look at what you're capable of doing.

863
01:04:57,600 --> 01:05:10,600
And it's that that I honor more than anything. Is that, you know, just the resiliency that we've had over these 13 years to get to where we are today.

864
01:05:10,600 --> 01:05:16,600
And the opportunity that it gives us for the next 13 years, I think, are pretty incredible.

865
01:05:16,600 --> 01:05:21,600
But that is, that's the lesson in all of this is the journey.

866
01:05:21,600 --> 01:05:27,600
And I would add one thing, because you mentioned that a lot of our businesses are sole proprietors.

867
01:05:27,600 --> 01:05:40,600
I do think that it has it has served us well, that it was two of us that were able to really start the business and persevere persevere through the trials.

868
01:05:40,600 --> 01:05:46,600
Because when one was discouraged, the other one was strong, you know, and vice versa.

869
01:05:46,600 --> 01:05:52,600
And because we all had our moment, you know, we both had moments like, wow, this is rough.

870
01:05:52,600 --> 01:05:59,600
This is rough. Not only our moments, but our thousands of moments.

871
01:05:59,600 --> 01:06:12,600
Well, because we had children going to college and having major life moments, you know, that we still had to we had to accommodate for and it was tough.

872
01:06:12,600 --> 01:06:20,600
Yeah. Yeah. Yeah. Her doesn't stay in the past like other people have the rich uncles in the family.

873
01:06:20,600 --> 01:06:24,600
Like, I really didn't know. Yeah.

874
01:06:24,600 --> 01:06:32,600
And look, we have people that are now working for us who watched our journey and weren't willing to step in with us because it was too hard.

875
01:06:32,600 --> 01:06:38,600
And we understood it. Yeah. So so it's it's it's a journey that is not for the meek.

876
01:06:38,600 --> 01:06:42,600
Yeah. For sure. For sure.

877
01:06:42,600 --> 01:06:48,600
I tell people like that. But was that everybody would be doing it now. Exactly. Exactly.

878
01:06:48,600 --> 01:07:00,600
You're right. But there's nothing when we talk about being able to spend the time with our children and our families to be able to get up every day and literally do what we want to do.

879
01:07:00,600 --> 01:07:04,600
That's what we saw in real estate. That's what I saw in Ken Goldberg.

880
01:07:04,600 --> 01:07:08,600
Twenty years ago, but this was a guy that got up every day and did what he wanted.

881
01:07:08,600 --> 01:07:12,600
And I thought, gosh, what does that feeling feel like?

882
01:07:12,600 --> 01:07:18,600
I didn't know. Right. I didn't know that feeling. But I know it now. Yeah.

883
01:07:18,600 --> 01:07:21,600
Now, that's an excellent start.

884
01:07:21,600 --> 01:07:27,600
And our goal is to become the largest African American developer in the East Coast.

885
01:07:27,600 --> 01:07:34,600
We hope to build to 10 billion dollars of assets under management the next 10 years. That's where we go.

886
01:07:34,600 --> 01:07:41,600
But to do that, we can't work on small stuff.

887
01:07:41,600 --> 01:07:49,600
Yeah. Everybody improves with that platform. And with that platform, what we can do is now be a catalyst for other black and brown developers.

888
01:07:49,600 --> 01:08:04,600
So when we had to joint venture partner, we had to joint venture with a predominantly white developer. There weren't any predominantly black developers who we can rely upon for credit worthiness or for any potential guarantees.

889
01:08:04,600 --> 01:08:13,600
But if the younger developers coming up are looking for that platform, we would want to be part of that platform where they can join venture with us.

890
01:08:13,600 --> 01:08:31,600
And I want to share with them our model about a different way of doing it, not just getting the project done, but getting it done with black, black, black and brown architectural firms, black and women, law firms, Hispanic engineering firms.

891
01:08:31,600 --> 01:08:37,600
I mean, that's our model. So it's not just a mosaic on it. You have to think what comes with it.

892
01:08:37,600 --> 01:08:43,600
I got a jump onto a 430. So it's been great guys. Appreciate it guys. Thank you.

893
01:08:43,600 --> 01:09:12,600
Another day at the shop. Content they can't get anywhere else.