1 00:00:00,000 --> 00:00:05,000 Welcome to the real estate shop where we bring in top industry experts with their current projects that are making an impact 2 00:00:05,700 --> 00:00:12,000 This podcast is brought to you by myself Steve Lawrence and my partner curving Latham this episode of the developers 3 00:00:12,000 --> 00:00:14,000 We had the privilege to interview Eddie Benoit 4 00:00:14,240 --> 00:00:20,420 President and CEO of the Atlanta based Benoit group. Let's join in and hear how they developed a vertically integrated company 5 00:00:20,420 --> 00:00:27,360 My actually my first job out of college. I was recruited out of college by a large construction company 6 00:00:27,360 --> 00:00:30,920 by the name of beers construction to move here to Atlanta and 7 00:00:31,880 --> 00:00:34,920 They were soon acquired by Skanska 8 00:00:35,720 --> 00:00:37,320 which 9 00:00:37,320 --> 00:00:41,360 Took over about a year or so after I joined that company 10 00:00:41,360 --> 00:00:47,520 I worked for them for about three and a half years and actually building projects was office buildings hotels 11 00:00:48,320 --> 00:00:50,800 and I'm working on some hospital projects and 12 00:00:50,800 --> 00:00:58,800 And the end of the three and a half year period and my goal was to always join a commercial real estate development company 13 00:00:58,800 --> 00:01:04,520 But I wanted to make sure that I had the opportunity to learn how to build projects first 14 00:01:05,200 --> 00:01:11,080 You know my undergraduate and graduate degrees were in construction and also in real estate science 15 00:01:11,160 --> 00:01:19,240 So that's why I chose that first route to learn about the bricks and mortar first before I started venturing into the development 16 00:01:19,240 --> 00:01:21,040 industry 17 00:01:21,040 --> 00:01:27,880 I actually worked for a development company for about eight years after leaving the construction company and 18 00:01:28,960 --> 00:01:32,640 During the eight year period of time. It was just really baptism by fire 19 00:01:33,400 --> 00:01:35,080 learned a lot 20 00:01:35,080 --> 00:01:37,080 develop office buildings 21 00:01:37,360 --> 00:01:39,360 retail developments 22 00:01:39,360 --> 00:01:41,280 hotels 23 00:01:41,280 --> 00:01:45,840 multifamily developments pretty much, you know throughout the southeast and mid-atlantic 24 00:01:46,960 --> 00:01:48,640 areas and 25 00:01:48,640 --> 00:01:53,160 at the end of the eight year period of time I decided that it was really time for me to 26 00:01:53,920 --> 00:01:55,920 become a little bit more entrepreneurial and 27 00:01:56,240 --> 00:02:02,740 The company was going through certain changes where they wanted to focus more on office and I thought at that time 28 00:02:02,740 --> 00:02:06,080 I wanted to focus more on multifamily. So 29 00:02:07,320 --> 00:02:09,080 It was really an 30 00:02:09,080 --> 00:02:15,360 Amicable, you know separation and I decided to go a different route and joined my ex partners of now 31 00:02:15,920 --> 00:02:16,960 that 32 00:02:16,960 --> 00:02:18,960 my handling partners and 33 00:02:19,760 --> 00:02:25,440 Opened the Atlanta office here and started focusing on multifamily development really throughout the country 34 00:02:25,960 --> 00:02:28,920 So we grew that company for about nine years 35 00:02:30,120 --> 00:02:34,020 to almost 1200 employees with five different offices 36 00:02:34,680 --> 00:02:41,760 Doing all types of development from affordable mixed income housing to lot developments to condominium 37 00:02:42,360 --> 00:02:44,360 developments to 38 00:02:44,560 --> 00:02:46,360 student housing 39 00:02:46,360 --> 00:02:48,000 luxury 40 00:02:48,000 --> 00:02:53,720 apartment housing just throughout the country when you when you first started how did you 41 00:02:54,560 --> 00:02:59,160 Overcome some of the obstacles that a lot of developers face like personal guarantees and such 42 00:02:59,680 --> 00:03:04,880 How did you overcome that and you know as you went on? How do you get a lot of your deals finance now? 43 00:03:04,880 --> 00:03:06,880 I tell you you never overcome 44 00:03:07,000 --> 00:03:11,480 Those personal guarantees those obstacles as long as you're in the game 45 00:03:11,480 --> 00:03:18,960 You are going to have guarantees somehow some way whether you're guaranteeing them personally or you know 46 00:03:18,960 --> 00:03:24,800 You have some type of guarantee fund that set aside that is at risk that you already worked for 47 00:03:25,280 --> 00:03:29,560 That's just the nature of the business. There's always going to be some type of financial guarantee 48 00:03:29,920 --> 00:03:33,240 but when we started it was in 2010 and 49 00:03:34,040 --> 00:03:37,320 We're right in the middle of the recession couldn't have been a worse time 50 00:03:38,120 --> 00:03:39,640 to 51 00:03:39,640 --> 00:03:41,880 split up, you know our companies and 52 00:03:42,880 --> 00:03:47,520 just kind of go on our own because it didn't matter how long we've been in the business and 53 00:03:49,160 --> 00:03:53,600 Once you have a new company you are a newbie lenders look at you as a newbie 54 00:03:53,600 --> 00:03:56,680 And so you couldn't get any lines of credit at that time 55 00:03:57,040 --> 00:04:02,320 Operating lines of credit because we were a newbie and plus we're in the recession and everybody was pulling back on 56 00:04:02,840 --> 00:04:04,600 operating lines of credit 57 00:04:04,600 --> 00:04:08,540 Underwriting was very very difficult at that time tax credit 58 00:04:08,540 --> 00:04:11,660 investment pricing was very low the 59 00:04:12,380 --> 00:04:19,660 Capital markets were sidelined so they weren't putting equity in deals for at least a good two plus years 60 00:04:20,700 --> 00:04:24,700 Pension funds reach everybody was just sidelined to see what would happen 61 00:04:25,500 --> 00:04:29,700 So for us, we really had to focus on building our pipeline 62 00:04:29,700 --> 00:04:34,820 we changed our business platform and went to a very low to moderate risk business platform and 63 00:04:34,820 --> 00:04:38,140 We figured well the federal government is the only lender 64 00:04:38,660 --> 00:04:40,660 right at that time 65 00:04:40,660 --> 00:04:42,180 so therefore 66 00:04:42,180 --> 00:04:48,100 it made sense for us to focus on the affordable mixed income housing and also 67 00:04:48,660 --> 00:04:53,780 focus on you know, the services side of our business where we could actually 68 00:04:54,740 --> 00:04:58,420 you know grow a property management company and 69 00:04:59,140 --> 00:05:02,940 Keep some vertical integration. So we created Dorchester management 70 00:05:02,940 --> 00:05:05,980 which was actually a small acquisition of a 71 00:05:06,780 --> 00:05:14,460 an acquisition of a small management company that we we took over then we created a construction management arm and 72 00:05:15,420 --> 00:05:22,220 That actually oversees over all of our design and construction and also does some third-party work similarly 73 00:05:22,780 --> 00:05:25,420 Dorchester management does some third-party work, too 74 00:05:26,380 --> 00:05:29,100 And then we focused on our advisory business 75 00:05:29,100 --> 00:05:33,260 Where we would perform development advisory services 76 00:05:34,060 --> 00:05:39,260 Program management services for companies throughout the u.s. That needed development expertise 77 00:05:40,060 --> 00:05:42,860 Working with municipalities on a lot of program 78 00:05:43,340 --> 00:05:50,060 You know management and also working with governments abroad that needed program management and master planning and financial 79 00:05:50,380 --> 00:05:54,140 You know assistance on some of their large projects that they were looking to undertake 80 00:05:54,140 --> 00:06:02,780 So we diversified our business during that period of time to make sure that we had not only the at-risk side of our business from a 81 00:06:02,780 --> 00:06:07,500 Development standpoint that was pretty limited and focused primarily in affordable 82 00:06:08,060 --> 00:06:11,500 Low-income housing mixed income housing independent senior living 83 00:06:11,980 --> 00:06:19,260 But then we have the services side of our business that really that we could really count on as far as the monthly cash inflows 84 00:06:19,260 --> 00:06:25,020 In order to keep you know, sustain our business operations throughout that time. Wow. That's a 85 00:06:25,660 --> 00:06:30,380 Resiliency man. That's how you have to do it fast forward. I see you guys are in multiple states now 86 00:06:30,380 --> 00:06:35,820 So you're doing business, you know throughout the country. What's your investment thesis now? 87 00:06:36,540 --> 00:06:42,140 And is there um any go-to financing that you do or is it your project specific? 88 00:06:42,140 --> 00:06:44,860 I know you guys do some student housing some low-income housing 89 00:06:44,860 --> 00:06:50,220 How how's that priority work for you all these days? Well, first of all, we try to keep a good balance 90 00:06:50,860 --> 00:06:52,380 up until 91 00:06:52,380 --> 00:06:54,380 Last year our portfolio 92 00:06:55,340 --> 00:07:00,780 was primarily affordable mixed income housing with public private partnerships and 93 00:07:01,500 --> 00:07:02,940 with different 94 00:07:02,940 --> 00:07:07,980 public housing authorities municipalities development authorities and or phase-based 95 00:07:08,620 --> 00:07:09,980 organizations 96 00:07:09,980 --> 00:07:15,020 Whereby there was another um quasi governmental agency that was involved 97 00:07:15,500 --> 00:07:20,940 So that gave us, you know the leverage that we needed in order to get the different 98 00:07:21,420 --> 00:07:27,660 You know subsidies that allowed our you know deals, you know to be financially feasible in the markets that we focus on 99 00:07:28,780 --> 00:07:35,900 Which are primarily urban and suburban markets. We're actively in seven states right now and more recently 100 00:07:35,900 --> 00:07:43,420 Just was awarded a deal um in st. Thomas, us virgin island. So that will be you know, our eighth state 101 00:07:44,220 --> 00:07:45,900 and so 102 00:07:45,900 --> 00:07:49,900 Most of our deals we uh, we look at certain types of financing 103 00:07:50,620 --> 00:07:51,900 that 104 00:07:51,900 --> 00:07:56,860 Pretty much is in line with deals that are um focused on 105 00:07:58,140 --> 00:08:02,780 Delivering affordably priced housing, you know to the state of the country 106 00:08:02,780 --> 00:08:06,780 Delivering affordably priced housing, you know to that community 107 00:08:07,500 --> 00:08:11,900 Okay, so we're not necessarily doing every deal now as affordable housing 108 00:08:12,780 --> 00:08:17,820 With tax credits because there are deals that we're doing that are workforce housing that have no tax credits 109 00:08:18,220 --> 00:08:22,460 And there are deals that we're doing that are student oriented and workforce oriented 110 00:08:23,580 --> 00:08:29,660 Because of its location that have no tax credit investments. However, they're getting different types of 111 00:08:30,680 --> 00:08:32,300 governmental incentives 112 00:08:32,300 --> 00:08:33,660 that allow 113 00:08:33,660 --> 00:08:35,340 the affordability 114 00:08:35,340 --> 00:08:38,940 from a price standpoint as it as it competes with 115 00:08:39,820 --> 00:08:43,020 Other, you know properties and the surrounding area 116 00:08:43,580 --> 00:08:49,500 So and sometimes there's just not enough housing, you know to to meet the demand needs there 117 00:08:50,300 --> 00:08:52,140 and so ultimately 118 00:08:52,140 --> 00:08:53,500 we 119 00:08:53,500 --> 00:08:55,980 Finance most of our projects with taxes and bonds 120 00:08:56,860 --> 00:08:59,100 we use 121 00:08:59,100 --> 00:09:01,520 a lot of um tax abatements 122 00:09:01,520 --> 00:09:03,760 Whether we're in urban enterprise zones 123 00:09:04,160 --> 00:09:09,120 or whether we're in difficult to develop areas or we're in 124 00:09:09,680 --> 00:09:10,640 um 125 00:09:10,640 --> 00:09:12,960 housing opportunity, you know zones 126 00:09:13,520 --> 00:09:15,520 Um, or we're in corridor tads 127 00:09:16,160 --> 00:09:22,480 Or just regular tads or tiff districts where we can actually get these tax benefits that enabled us 128 00:09:22,960 --> 00:09:27,440 You know to provide a more affordable, you know price point to the end user 129 00:09:28,160 --> 00:09:29,760 Which are residents 130 00:09:29,760 --> 00:09:36,100 We also look at some of our financing with HUD insured financing that gives us the 40-year amortization 131 00:09:36,880 --> 00:09:38,640 and the lower interest rate 132 00:09:38,640 --> 00:09:40,640 benefit in order to 133 00:09:40,960 --> 00:09:46,480 You know get a higher leverage on the debt that we can actually place on these types of projects 134 00:09:46,860 --> 00:09:50,080 Therefore reducing the amount of equity that we put in 135 00:09:50,880 --> 00:09:57,440 We actually put in equity, you know ourselves, but we also participate some of that equity with just some outside 136 00:09:57,440 --> 00:10:01,040 You know investors and whether it's on a short term 137 00:10:01,600 --> 00:10:06,480 Horizon three to five years or long term depending on what the holding strategy is 138 00:10:07,200 --> 00:10:11,280 For that project and um every once in a while if we have tax credit deals 139 00:10:11,280 --> 00:10:14,160 Whether it's nine percent or four percent tax credits 140 00:10:14,240 --> 00:10:17,840 We may have the deals that are nine percent tax credits that have conventional debt 141 00:10:18,240 --> 00:10:24,480 And then the four percent tax credits we're dealing with taxes and bond your office is based in atlanta. You've got projects 142 00:10:24,480 --> 00:10:26,480 You just said in st. Thomas 143 00:10:26,480 --> 00:10:29,600 And in other parts of the country eight states total 144 00:10:30,080 --> 00:10:32,080 Can you walk us through like how you built your team? 145 00:10:32,800 --> 00:10:38,640 And how you how were you able to expand from a personnel perspective to take on those projects? 146 00:10:39,120 --> 00:10:43,600 Well from a team standpoint, we use we've had some people that have worked with us for 147 00:10:44,400 --> 00:10:48,400 Since my ambling days they've transitioned over and still working with us 148 00:10:48,960 --> 00:10:53,840 And we've had people who've been working with us since we started. Um, you know shortly after we started TBG 149 00:10:54,880 --> 00:10:56,400 typically we 150 00:10:56,400 --> 00:10:58,240 hire people 151 00:10:58,240 --> 00:11:03,760 And especially on the development side of the business where you have less attrition that are focused 152 00:11:04,080 --> 00:11:06,080 um, you know primarily 153 00:11:06,160 --> 00:11:07,440 on 154 00:11:07,440 --> 00:11:08,880 wanting to 155 00:11:08,880 --> 00:11:11,680 you know pursue the development and then 156 00:11:12,560 --> 00:11:16,720 That falls within, you know our vision our mission statement, you know for the company 157 00:11:17,360 --> 00:11:23,060 And if they're really not in tune to that then it makes no sense to really join our organization 158 00:11:23,060 --> 00:11:28,420 Because we're not necessarily trying to just offer a job or place them in a position in pigeon holder 159 00:11:28,660 --> 00:11:33,300 We're really looking to provide them a career to really become a real estate developer 160 00:11:33,620 --> 00:11:36,420 It doesn't matter what you focus on initially 161 00:11:36,420 --> 00:11:44,500 It's a matter of what your opportunities are within your organization as far as your upward, you know trajectory in our organization 162 00:11:45,140 --> 00:11:48,020 And the other thing is is that you have to be multi-dimensional 163 00:11:48,500 --> 00:11:52,020 It doesn't matter if you're a development analyst, you know today 164 00:11:52,020 --> 00:11:59,300 tomorrow you could be in front of you know in Bermuda and dealing with the 165 00:12:00,100 --> 00:12:08,180 Government there as a consultant in a consultant role that gives us the ability to deal with the real estate cycles 166 00:12:08,820 --> 00:12:14,500 And when you're going through a down cycle and you got to focus more on your services side, then we don't have to 167 00:12:15,300 --> 00:12:17,300 Lose some of our you know these key 168 00:12:17,300 --> 00:12:22,900 You know associates that have been working with us who's investing time with us and who we've invested a lot of time 169 00:12:23,620 --> 00:12:28,020 In as far as training them so they could easily transition over 170 00:12:28,420 --> 00:12:33,460 And work on the other sides of our business or focus on the asset management of our portfolio 171 00:12:34,020 --> 00:12:40,340 Making sure that we're yielding, you know the optimal results on you know, our properties cash flows 172 00:12:41,220 --> 00:12:43,220 Looking at a lot of our capital 173 00:12:43,220 --> 00:12:46,980 You know expenditures, you know on on our on our assets 174 00:12:47,300 --> 00:12:54,340 Those are the things that are very critical to us as far as each associate having the ability to wear multiple hats 175 00:12:54,820 --> 00:12:58,020 We've seen how that worked for us during the past recession 176 00:12:58,420 --> 00:13:02,740 We've also seen how it worked for us this past, you know 16 17 months 177 00:13:03,220 --> 00:13:05,220 With um, we're just uh covid 178 00:13:05,460 --> 00:13:07,940 I mean a lot of things pretty much stalled but 179 00:13:07,940 --> 00:13:14,740 When our team realized that there's only so many new deals we could do because equity was somewhat sidelined, too 180 00:13:15,300 --> 00:13:19,700 Because of the uncertainty of the market and people were not tenants not paying rent 181 00:13:20,100 --> 00:13:26,420 We decided that guess what we're going to focus all of our efforts now on building pipeline 182 00:13:26,980 --> 00:13:28,740 so we 183 00:13:28,740 --> 00:13:30,740 Put our hats on and started 184 00:13:30,980 --> 00:13:32,980 rolling on up our sleeves and 185 00:13:33,300 --> 00:13:36,580 and responding to rfp's and expanding on our 186 00:13:36,580 --> 00:13:43,220 Our geographic, you know footprint. That's how we expanded into virginia and also expanded into the virgin islands 187 00:13:43,860 --> 00:13:48,180 Just by virtually doing that as opposed to really trying to push deals that really 188 00:13:48,820 --> 00:13:50,340 You know 189 00:13:50,340 --> 00:13:53,940 Shouldn't be worked on at that time, you know lumber prices were through the roof 190 00:13:54,260 --> 00:13:57,540 You know debt was pretty decent because of the low interest rates 191 00:13:57,540 --> 00:14:02,980 But you know just the equity markets, you know, they were very you know, very uncertain as to how to underwrite a deal 192 00:14:02,980 --> 00:14:09,300 Because of the vacancy issues, um, or if you didn't have physical vacancy the economic vacancies were just so high 193 00:14:09,780 --> 00:14:14,180 So we chose, you know, you know to take that route. So from a team standpoint 194 00:14:15,140 --> 00:14:17,540 Uh, it's important for us again to 195 00:14:18,260 --> 00:14:20,260 to hire bring on 196 00:14:20,500 --> 00:14:28,340 Associates who are multi-dimensional and that can you know carry over their talents on some of the different parts of our business 197 00:14:28,740 --> 00:14:31,300 as we move along we have uh 198 00:14:31,300 --> 00:14:37,460 About 120 or so employees collectively amongst all four companies that we have 199 00:14:38,100 --> 00:14:43,300 Right now and we think that for us the optimal side will be somewhere around 200 00:14:43,860 --> 00:14:50,420 200 employees as we continue to grow and most of it will be in our property management company because we self-manage 201 00:14:50,980 --> 00:14:55,860 Wow, that's incredible. How many units do you uh, what you say you have under management currently? 202 00:14:56,660 --> 00:14:58,660 Um, we have under 4 000 units 203 00:14:58,660 --> 00:15:06,340 Um under management, you know currently most of which you know belongs to us about 204 00:15:06,980 --> 00:15:12,260 Easily 3 500 or so are our units and we have about another 205 00:15:12,900 --> 00:15:15,940 I think 1 100 or so units planned to develop 206 00:15:16,580 --> 00:15:22,180 Over the next 24 months nice nice. That's that's awesome. It's a follow-up question to the um 207 00:15:22,660 --> 00:15:24,660 To the previous questions about team 208 00:15:24,660 --> 00:15:29,220 About building your team, you know relation real estate's a real relationship driven 209 00:15:29,940 --> 00:15:32,740 industry, right, uh, you mentioned in 2010 210 00:15:33,460 --> 00:15:36,260 You know banks are looking at you as being a green company 211 00:15:36,900 --> 00:15:39,060 You're out on your own essentially 212 00:15:39,940 --> 00:15:43,860 How did you kind of foster those relationships and get you to where you are today? 213 00:15:44,580 --> 00:15:50,900 Was it you know, can you talk through some of the strategies that you employed in the beginning? Well, one of the first things 214 00:15:51,780 --> 00:15:53,780 that we had to 215 00:15:53,780 --> 00:15:59,380 Contend with is the fact that you know, we had nobody had a clean balance sheet 216 00:16:00,500 --> 00:16:05,220 Everybody had some some issues going on. It didn't matter the size of the company 217 00:16:05,860 --> 00:16:12,020 You know you had some workout you had that was going on. It didn't look pretty it was bad 218 00:16:13,060 --> 00:16:17,880 You had to explain the issues projects that were failed or fulfilling 219 00:16:18,740 --> 00:16:20,740 And it was across the board 220 00:16:20,740 --> 00:16:28,420 The so it was really important to get ahead of those questions and bring it to the table up front 221 00:16:29,300 --> 00:16:31,300 with lenders and equity partners 222 00:16:31,620 --> 00:16:33,620 And tell them exactly what's going on 223 00:16:34,260 --> 00:16:37,140 And what you plan on doing, you know to address it 224 00:16:37,940 --> 00:16:41,940 from a financial standpoint and from really a strategic standpoint 225 00:16:42,580 --> 00:16:45,860 and I found that to be very beneficial when you 226 00:16:45,860 --> 00:16:50,900 Apprise them of the issues without them asking about them 227 00:16:51,700 --> 00:16:52,740 You know 228 00:16:52,740 --> 00:16:58,020 As they discover the issues during their due diligence, you know process 229 00:16:58,340 --> 00:17:00,340 I think that's that's a bad situation 230 00:17:00,340 --> 00:17:06,340 You know typically when you're having to answer something when they've already gone down the road with you and you never brought it up 231 00:17:06,980 --> 00:17:13,060 The other thing is is that you know, most of the lenders and equity, you know partners were underwriting people 232 00:17:13,060 --> 00:17:16,980 They were underwriting the person not the project to a certain extent 233 00:17:17,780 --> 00:17:24,100 Because of the uncertainties at that time and you know projects were speculative. Yeah, they may like the deal 234 00:17:24,100 --> 00:17:26,420 But at the end of the day, they're like, you know what? 235 00:17:26,980 --> 00:17:28,980 I believe Eddie Benoit 236 00:17:29,700 --> 00:17:31,700 Is going to do the best he can 237 00:17:31,940 --> 00:17:34,260 To make sure that this deal is done 238 00:17:34,980 --> 00:17:36,980 He does not sacrifice quality 239 00:17:37,540 --> 00:17:39,540 He's not going to 240 00:17:39,540 --> 00:17:43,060 Sacrifice the quality in order just to preserve developer fee 241 00:17:43,540 --> 00:17:49,300 Even if he has to defer all his fee to make sure that we have a quality project. He will do so 242 00:17:50,020 --> 00:17:55,380 And if he has to put in more money and above and beyond the developer fee, he will still do so 243 00:17:55,860 --> 00:17:57,860 then those conversations 244 00:17:58,420 --> 00:17:59,540 were 245 00:17:59,540 --> 00:18:01,540 Pretty much what we had 246 00:18:01,780 --> 00:18:04,100 with the with these investors 247 00:18:05,380 --> 00:18:06,660 During 248 00:18:06,660 --> 00:18:13,460 That period of time of the recession, you know, they you know, the deal is kind of just you know, especially when you're doing an affordable deal 249 00:18:13,780 --> 00:18:19,940 It either works or it doesn't either you like the location or you don't either the market study supports it or it doesn't 250 00:18:20,260 --> 00:18:25,940 You know once you get beyond some of those, you know, the the main underwriting thresholds, then it's a matter of 251 00:18:26,500 --> 00:18:28,500 Okay, is this 252 00:18:28,820 --> 00:18:30,340 Client here 253 00:18:30,340 --> 00:18:33,300 The client that we want to do business with it was the same thing 254 00:18:33,300 --> 00:18:38,900 With some of the state agencies, you know, which clients did they look at as tier one clients? 255 00:18:39,460 --> 00:18:45,620 Same thing with the lenders same thing with HUD as far as you know having HUD sponsorship experience 256 00:18:46,180 --> 00:18:47,540 so 257 00:18:47,540 --> 00:18:51,300 The because we had all of that experience 258 00:18:51,620 --> 00:18:57,460 It really helped us it gave us a competitive edge even though we were you know a new company 259 00:18:57,940 --> 00:18:59,940 And we were still able to compete 260 00:18:59,940 --> 00:19:07,220 With some of the larger companies even though we had a significantly smaller balance sheet than some of the larger companies 261 00:19:07,620 --> 00:19:09,620 But when we competed 262 00:19:10,020 --> 00:19:13,060 on RFPs, you know, we're able to win 263 00:19:14,580 --> 00:19:19,780 Even though we were the smaller, you know company because of our experience in our track record we 264 00:19:20,580 --> 00:19:23,300 in addition to that so you look at some of the 265 00:19:24,020 --> 00:19:26,820 equity partners and lenders that we 266 00:19:26,820 --> 00:19:30,580 Did business with back in 2010 and 11 267 00:19:31,300 --> 00:19:33,380 We're still doing business with them today 268 00:19:33,940 --> 00:19:41,060 And they're doing the lion's share of our business some of the companies have changed but who the 269 00:19:41,700 --> 00:19:43,700 relationship person 270 00:19:43,700 --> 00:19:47,860 Is the same we just ended up following the same relationship person 271 00:19:48,580 --> 00:19:53,940 So we're big on relationships whether it's with our equity partners our lenders 272 00:19:53,940 --> 00:19:58,980 You know consultants designers, you know, you'll see based on our 273 00:19:59,940 --> 00:20:04,820 Track record how much repeat business did we have with some of the same groups? That's excellent 274 00:20:05,380 --> 00:20:10,100 Looking at our emerging developers who might be looking at this or listening to this podcast 275 00:20:10,500 --> 00:20:12,500 What's your number one piece of advice? 276 00:20:12,820 --> 00:20:16,180 That you would give them as they look to kind of break into the game 277 00:20:17,220 --> 00:20:20,020 Capita making sure that they have capital 278 00:20:20,020 --> 00:20:25,140 And capital is key, you know, this business is all about, you know learning every day 279 00:20:25,140 --> 00:20:28,020 That's what really gets me going. That's what gets me out of my bed 280 00:20:28,740 --> 00:20:31,940 That I get to learn something every day. I'm nearing 30 years 281 00:20:32,660 --> 00:20:34,660 here in this business and 282 00:20:35,300 --> 00:20:38,660 It's been fun. It's been a roller coaster ride. Some days you ask yourself 283 00:20:39,220 --> 00:20:44,580 Why am I in this business? But then you wake up another day. You have an opportunity to go at it again 284 00:20:45,220 --> 00:20:46,580 and 285 00:20:46,580 --> 00:20:53,220 So I guess you know this for those of us who are thrill seekers and deal junkies, you know, it just works very well for us 286 00:20:54,100 --> 00:20:55,620 but if 287 00:20:55,620 --> 00:20:57,620 One major thing that I would do 288 00:20:58,180 --> 00:21:03,380 If I had to do it over again, just as I recommended, you know early on with 289 00:21:04,180 --> 00:21:10,420 Question, you know about the young entrepreneurs that I would have aligned myself with a 290 00:21:11,380 --> 00:21:13,380 strong capital partner 291 00:21:13,380 --> 00:21:16,820 Under front end. I had, you know, my own capital 292 00:21:17,380 --> 00:21:22,340 After I screwed up with my partners at Amblin and thought it'd be enough 293 00:21:23,220 --> 00:21:25,220 Okay based on my business plan 294 00:21:25,700 --> 00:21:31,700 Just to find out that it definitely wasn't enough because I didn't know how long this recession would last 295 00:21:32,500 --> 00:21:37,300 Most of us start when it hit and we recognized we're in a recession 296 00:21:38,020 --> 00:21:40,020 For those of us who are in active development 297 00:21:40,020 --> 00:21:43,060 around late 2007 298 00:21:43,380 --> 00:21:48,580 Some others took them until mid 2008 to realize that we were in a recession or accept it 299 00:21:49,140 --> 00:21:54,020 And we thought it'd probably be a 24 month, you know situation 30 months 300 00:21:54,020 --> 00:21:58,020 But it went well into started started to recovery around 2013 301 00:21:58,900 --> 00:22:04,180 So I needed a lot more capital not only to continue to grow our business 302 00:22:04,820 --> 00:22:06,900 And because we were getting larger 303 00:22:06,900 --> 00:22:12,660 Deals and these larger deals as we were expanding required more money 304 00:22:13,700 --> 00:22:21,220 Okay, so which is a great it's a great problem to have but it is really a problem because you still have to operate 305 00:22:21,620 --> 00:22:23,620 Your company from an overhead standpoint 306 00:22:24,660 --> 00:22:26,660 And then we had workouts 307 00:22:27,540 --> 00:22:31,540 You know from a previous partnership deals that we were working out with the lenders 308 00:22:32,500 --> 00:22:34,500 That had failed 309 00:22:34,500 --> 00:22:37,300 And so that required another level of capital 310 00:22:37,780 --> 00:22:41,860 That really had nothing to do with our day-to-day business that I needed to resolve 311 00:22:42,820 --> 00:22:45,220 And these were not you know small checks 312 00:22:45,940 --> 00:22:47,540 and so 313 00:22:47,540 --> 00:22:48,500 I 314 00:22:48,500 --> 00:22:52,820 It definitely put a strain on us, you know for a few years 315 00:22:53,380 --> 00:22:56,900 And so had I had a strong capital partner, you know 316 00:22:57,460 --> 00:22:58,900 in the company 317 00:22:58,900 --> 00:23:00,900 I would have 318 00:23:01,380 --> 00:23:03,380 I would have been able to do that 319 00:23:03,380 --> 00:23:08,660 I wouldn't have had to you know deal with some of the financial hurdles I had to 320 00:23:09,460 --> 00:23:13,620 Um, you know face in the early years of the company and growing the company 321 00:23:17,380 --> 00:23:22,740 I guess to close out one of the questions we ask all the developers knowing just how hard this journey has been 322 00:23:22,820 --> 00:23:24,580 It seems like everybody 323 00:23:24,580 --> 00:23:28,900 Kind of fell into that 2007 2010. It's amazing how many 324 00:23:28,900 --> 00:23:34,580 Of the developers we talked to came in came in the business around that time and the first thing he said 325 00:23:34,580 --> 00:23:36,100 Yeah, it was a recession 326 00:23:36,100 --> 00:23:40,180 But as you got over those hurdles as you progressed and as you grew 327 00:23:40,820 --> 00:23:42,100 How did you balance? 328 00:23:42,100 --> 00:23:46,900 You know the personal side of your life with the business side because that certainly is a challenge as well 329 00:23:50,580 --> 00:23:54,500 It was it was very difficult, you know because on the personal side 330 00:23:54,500 --> 00:24:01,060 I you know suffered because of the fact that you know, we were focusing all of our you know, just uh 331 00:24:02,560 --> 00:24:04,900 Finances in rebuilding this company 332 00:24:06,660 --> 00:24:12,900 Rebuilding and building I guess at the same time because as we worked out some of the issues from the 333 00:24:13,700 --> 00:24:17,540 Previous partnership so, you know, it took nine years 334 00:24:18,500 --> 00:24:20,500 To close out the last 335 00:24:20,820 --> 00:24:22,260 workout 336 00:24:22,260 --> 00:24:29,860 Okay, so it's kind of like we always had an albatross around our neck and had to explain these issues to lenders on every deal 337 00:24:30,260 --> 00:24:35,220 As to what's going on with this project, you know, is it a threat is a financial threat things of that sort 338 00:24:36,180 --> 00:24:40,100 But on the personal side, you know, we just really had to dig deep and 339 00:24:40,660 --> 00:24:46,180 made you know certain decisions that hey, we're going to be in a rebuilding stage and 340 00:24:47,300 --> 00:24:49,060 we're 341 00:24:49,060 --> 00:24:54,100 going to be very judicious as to you know, how we spend and 342 00:24:55,140 --> 00:25:01,540 Going to leverage, you know everything that we have in order to you know, put into this company and to grow it 343 00:25:02,100 --> 00:25:04,820 so, um, you know my spouse and I we were 344 00:25:05,680 --> 00:25:08,180 Definitely, you know on the same page relative to that 345 00:25:08,180 --> 00:25:15,300 So we we didn't have any issues as to when it came up to guarantees and just putting more money into the company in 346 00:25:15,380 --> 00:25:17,380 order for it to grow 347 00:25:17,380 --> 00:25:21,540 Um, but the other thing that you know, I know I made a decision 348 00:25:22,820 --> 00:25:24,820 About was to make sure I had a good time 349 00:25:25,460 --> 00:25:31,380 I'm like can't have a a difficult time at work and I was having a difficult time at home on my personal side 350 00:25:31,860 --> 00:25:33,540 That's very important 351 00:25:33,540 --> 00:25:37,220 You have to have fun. You have to enjoy it, you know, then what's the purpose? 352 00:25:38,420 --> 00:25:40,420 you know, so I um 353 00:25:41,060 --> 00:25:44,660 I get to enjoy this business in so many different ways 354 00:25:44,660 --> 00:25:52,180 Um, it's not really about the financial side. I get to enjoy just to see you know, just our associates 355 00:25:53,060 --> 00:25:54,740 How they grow? 356 00:25:54,740 --> 00:25:57,480 Their wins their successes within the organization 357 00:25:58,100 --> 00:26:03,860 You know the uh get to see you know my residents when I go on site to see how happy they are 358 00:26:04,420 --> 00:26:11,300 Uh with the property, you know that they're living in and what we're doing how we're engaging, you know with them 359 00:26:11,300 --> 00:26:18,020 From a resident activity standpoint, um, I also get you know, have fun just doing things like this 360 00:26:18,660 --> 00:26:23,860 As far as um, you know talking, you know to you guys or mentoring a lot of young 361 00:26:25,140 --> 00:26:28,580 You know professionals or even those who are still in college 362 00:26:29,140 --> 00:26:32,580 Or those who are entering, you know college for a real estate, you know 363 00:26:33,460 --> 00:26:34,660 degree 364 00:26:34,660 --> 00:26:40,020 Um, just also engaging in all these other professional organizations that are part of our different boards 365 00:26:40,020 --> 00:26:42,980 You know, I find a lot of you know fun, you know there 366 00:26:43,780 --> 00:26:47,940 I'm just that kind of guy. I'm very i'm more of an optimistic type of person 367 00:26:48,420 --> 00:26:50,420 from a personality standpoint 368 00:26:50,420 --> 00:26:51,220 and 369 00:26:51,220 --> 00:26:53,220 This business is very stressful 370 00:26:53,620 --> 00:26:54,500 and 371 00:26:54,500 --> 00:26:59,140 It's all about how you approach it and how you let it affect you 372 00:26:59,860 --> 00:27:01,860 You know, um even keel guy 373 00:27:02,420 --> 00:27:04,420 And as I said before 374 00:27:04,740 --> 00:27:08,660 I've never seen a similar day over the past 29 years 375 00:27:08,660 --> 00:27:13,060 So there's as usual always light at the end of the tunnel. It doesn't matter how bad the deal is 376 00:27:13,620 --> 00:27:15,620 Or the news is today 377 00:27:16,340 --> 00:27:22,500 There's always some kind of silver lining down the road and the more you can stay calm and focused 378 00:27:22,900 --> 00:27:27,460 The quicker you're gonna, you know recognize what the solution 379 00:27:28,020 --> 00:27:31,940 You know is and um, so from a personal standpoint 380 00:27:32,500 --> 00:27:34,500 Make sure you balance it 381 00:27:34,500 --> 00:27:41,140 As much as you can have fun, you know, if your deal is cycling running playing golf swimming 382 00:27:41,460 --> 00:27:43,460 Whatever it is do it 383 00:27:43,460 --> 00:27:45,460 Don't let the job 384 00:27:46,100 --> 00:27:48,820 Create an excuse for you not to have fun 385 00:27:49,700 --> 00:27:51,700 and you know this uh 386 00:27:52,180 --> 00:27:58,980 One developer told me one time a little bit, you know older than me. He said you know what in 40 years of development 387 00:28:00,100 --> 00:28:03,220 He can't even remember some of the deals he did 388 00:28:03,220 --> 00:28:07,540 Um what year he did him and whatnot. I mean he pretty much remembered 97 percent 389 00:28:08,180 --> 00:28:13,940 But he said he remembered every vacation he took with his family and sometimes remember what kind of clothes they had on 390 00:28:16,100 --> 00:28:19,620 And that right there really changed my approach 391 00:28:20,580 --> 00:28:22,580 He remembers every vacation 392 00:28:23,220 --> 00:28:24,500 Yep 393 00:28:24,500 --> 00:28:26,020 Yeah 394 00:28:26,020 --> 00:28:28,660 All right, so that makes you think 395 00:28:30,180 --> 00:28:32,180 Yeah, it does it changes 396 00:28:32,180 --> 00:28:34,180 Yeah, it does it changes the perspective 397 00:28:36,020 --> 00:28:37,300 You know 398 00:28:37,300 --> 00:28:39,300 Yes 399 00:28:39,460 --> 00:28:41,540 Now we uh, we certainly appreciate it, uh 400 00:28:42,260 --> 00:28:44,260 Appreciate the time. I know cal 401 00:28:44,660 --> 00:28:50,900 Kerber and I can both relate just the the stress and the balancing act and you know, certainly the entrepreneurs we talk to that's 402 00:28:51,300 --> 00:28:54,100 a lot of things that we let them know that you know, this is a 403 00:28:54,660 --> 00:28:58,180 This is a this is a profession that can consume you 100 percent 404 00:28:58,180 --> 00:29:02,420 If you're not willing to dial it back to you know 60 or 50 to balance it out 405 00:29:02,740 --> 00:29:08,900 Well people contact us, you know every day. I mean either via email or jesus called the main office 406 00:29:09,220 --> 00:29:11,220 I think what's um 407 00:29:11,380 --> 00:29:13,140 the most important 408 00:29:13,140 --> 00:29:15,140 part is the fact that 409 00:29:15,460 --> 00:29:19,860 It needs to be a deal that fits within our vision and mission statement 410 00:29:20,660 --> 00:29:23,700 Okay, if it's not it has to be in 411 00:29:23,700 --> 00:29:27,860 You know areas that we're interested in developing it 412 00:29:28,580 --> 00:29:32,740 Um, so if it's not an urban or suburban location and if it's you know 413 00:29:32,740 --> 00:29:36,180 If it's rural it needs to be pretty much close to a university 414 00:29:36,820 --> 00:29:43,140 That's um, you know, that's where any rule deal we have a couple of rule deals, but they're right adjacent to tier one university 415 00:29:43,780 --> 00:29:45,780 Because it gives us um 416 00:29:46,420 --> 00:29:47,300 just 417 00:29:47,300 --> 00:29:49,300 multiple options from an exit strategy 418 00:29:50,500 --> 00:29:52,100 but otherwise 419 00:29:52,100 --> 00:29:55,300 You know we get these calls every day. We get the emails 420 00:29:55,860 --> 00:29:59,060 Every day or they reach us through social media. I have land 421 00:29:59,540 --> 00:30:02,740 You know, I want to figure out how to develop it and they're like, you know 422 00:30:02,740 --> 00:30:08,180 I want to do senior housing when I want to do a mixed use development we get those, you know a dime a dozen 423 00:30:08,740 --> 00:30:10,740 But um every once in a while 424 00:30:10,820 --> 00:30:14,420 um, you'll find one that makes sense and um 425 00:30:14,740 --> 00:30:18,900 We're in it falls pretty much within what we would call our sweet spot 426 00:30:19,620 --> 00:30:21,300 and we're able to 427 00:30:21,300 --> 00:30:25,940 You know, uh, you know bring a deal like that to fruition the deals have to make 428 00:30:26,740 --> 00:30:28,500 Have to have a purpose 429 00:30:28,500 --> 00:30:30,820 We don't just chase deals just to do deals 430 00:30:31,620 --> 00:30:33,620 I have every deal that we've done 431 00:30:34,420 --> 00:30:36,420 You know under the banois group 432 00:30:37,380 --> 00:30:40,420 Um has had a story behind it 433 00:30:41,060 --> 00:30:44,980 A story as to why it was important enough for us to pursue that deal 434 00:30:45,620 --> 00:30:47,620 And the story of how that deal 435 00:30:47,620 --> 00:30:53,800 Not only changed the residents that live there but also how it impact the surrounding neighborhood 436 00:30:55,540 --> 00:30:56,980 And so 437 00:30:56,980 --> 00:31:01,380 That's what's more so we get we have an opportunity to cherry pick what we pursue 438 00:31:01,700 --> 00:31:06,180 We don't just do deals just to do them, which is the reason why we're not a big 439 00:31:06,740 --> 00:31:12,180 9 tax credit developer because the 9 tax credit, you know processes, you know 440 00:31:12,500 --> 00:31:14,260 It's really more social engineering 441 00:31:14,260 --> 00:31:18,100 It's a matter of where can you find a site that's going to meet? 442 00:31:18,740 --> 00:31:22,260 You know as many of the requirements of the qap 443 00:31:23,060 --> 00:31:25,060 And where you can score the most? 444 00:31:25,380 --> 00:31:26,340 well 445 00:31:26,340 --> 00:31:29,780 Sometimes I may not want to be in that market because I see some of the risks 446 00:31:30,180 --> 00:31:35,620 Some of the inherent risks that may be on the front end or the inherent risk that may be on the back end. Yeah, exactly 447 00:31:36,980 --> 00:31:38,980 No question. Yeah, so 448 00:31:39,300 --> 00:31:42,500 um, so for us, you know, we we partnered with 449 00:31:42,500 --> 00:31:43,540 At least 450 00:31:43,540 --> 00:31:49,140 Uh, man, maybe at least half a dozen churches. We've got we just finished 451 00:31:50,100 --> 00:31:54,580 Two projects with two churches and I think we have another two going on right now 452 00:31:55,620 --> 00:31:56,580 um 453 00:31:56,580 --> 00:31:58,580 In the pre-development stage 454 00:31:58,980 --> 00:32:04,500 And we'll continue to do business with with the churches because they typically have some great land holdings 455 00:32:04,900 --> 00:32:09,860 And assets in these urban and suburban markets the housing authority is the same thing 456 00:32:09,860 --> 00:32:12,100 they have 457 00:32:12,100 --> 00:32:15,300 properties that are in excellent locations because 458 00:32:15,860 --> 00:32:22,180 40 50 years ago when those that housing was developed it was considered to be on the outskirts 459 00:32:23,540 --> 00:32:28,660 Of these urban and suburban markets, but now they're in very desirable locations 460 00:32:29,140 --> 00:32:33,940 And so the ability to work with them and redevelop tear down 461 00:32:34,500 --> 00:32:37,780 Deconcentrate, you know the the low income and poverty 462 00:32:37,780 --> 00:32:40,340 uh within you know their 463 00:32:41,460 --> 00:32:43,460 their portfolio 464 00:32:43,460 --> 00:32:49,620 Makes a lot of sense for them to them. And so we get very creative as to how we were to redevelop 465 00:32:49,620 --> 00:32:56,580 You know those properties and you know do a more of a mixed income approach and a mixed demographic 466 00:32:57,460 --> 00:33:02,580 Where we were to segregate the seniors, you know from just a regular multifamily 467 00:33:02,580 --> 00:33:08,980 I think before before curving jumps into the last question, uh, since you guys are in multiple locations 468 00:33:09,860 --> 00:33:11,860 from a strategy perspective 469 00:33:12,660 --> 00:33:16,580 What is your I guess your geographic strategy like for instance i'm in philadelphia 470 00:33:16,580 --> 00:33:20,900 Would you come far as far north as philadelphia or you guys just content with the southeast? 471 00:33:21,940 --> 00:33:28,580 How do you approach those opportunities that they come as they come up? It's a great question great question 472 00:33:28,580 --> 00:33:32,360 I would never say no, that wouldn't come to your great state of pennsylvania 473 00:33:32,900 --> 00:33:35,860 It would have to make sense for at least three 474 00:33:36,660 --> 00:33:38,660 Of our four business verticals 475 00:33:39,460 --> 00:33:45,060 We don't go into a state, you know a new state or a new territory just for 476 00:33:45,700 --> 00:33:47,140 one deal 477 00:33:47,140 --> 00:33:51,620 It has to make sense for development where we know we can do more than one deal 478 00:33:52,340 --> 00:33:55,540 We know there's going to be a regional focus. We're going to learn that state 479 00:33:55,540 --> 00:33:58,340 We're going to build relationships, you know there 480 00:33:59,060 --> 00:34:03,380 And we can our management company can not only manage manage our assets 481 00:34:03,860 --> 00:34:07,940 But also can have other management opportunities for third-party owners 482 00:34:08,820 --> 00:34:11,220 Same thing with our construction management company 483 00:34:12,340 --> 00:34:15,060 And then last but not least in that market 484 00:34:15,860 --> 00:34:18,420 When the real estate cycle were in a down cycle 485 00:34:18,980 --> 00:34:21,700 We could always do some of our advisory services 486 00:34:21,700 --> 00:34:28,340 So that's how we pretty much shop cherry pick, you know the different cities and states that we're actively, you know 487 00:34:28,740 --> 00:34:32,900 Developing and own, you know assets in right now. I do a lot of things differently 488 00:34:33,780 --> 00:34:35,300 but then 489 00:34:35,300 --> 00:34:36,740 If you ask me 490 00:34:36,740 --> 00:34:41,700 After I did those things differently, would you do things differently again? I'd say yeah, I do things differently again 491 00:34:42,340 --> 00:34:44,340 Our vision plan 492 00:34:44,340 --> 00:34:46,340 for the next five years 493 00:34:46,660 --> 00:34:48,660 Over the next five years 494 00:34:48,660 --> 00:34:55,300 Hopefully by 2026 is to really you know do a 2x multiplier 495 00:34:55,860 --> 00:35:00,580 Of our portfolio size, you know currently we have about 22 496 00:35:01,540 --> 00:35:04,100 So properties that are under operations 497 00:35:04,820 --> 00:35:07,300 within these states and we think that 498 00:35:08,340 --> 00:35:16,180 We have based on the pipeline that we have with deals and we have a great opportunity to double that size 499 00:35:16,180 --> 00:35:18,180 Over the next five years 500 00:35:18,180 --> 00:35:20,180 Another day at the shop 501 00:35:20,180 --> 00:35:46,180 Another day at the shop content they can't get anywhere else