Bill Hard- "Puppet Master of His Projects" (#8)

Bio

Bill Hard was the Executive Vice President and Principal of LCOR and led the Washington D.C. regional office in Bethesda, Maryland from 1994 until his retirement in 2018. He was a member of LCOR’s Executive Committee. Mr. Hard joined Linpro (the predecessor company of LCOR) in 1981. During his tenure LCOR he had completed several significant projects, including the 2.4 million sf U.S. Patent and Trademark Office (USPTO) headquarters facility in Alexandria, VA, which is still the largest GSA leased property in the country; the 2.7 million sf North Bethesda Center mixed use development at the White Flint Metro Station; and the redevelopment of The Commons of McLean residential community in Tysons, part of which was just sold in September, 2019 to Toll Brothers, who is planning a luxury townhouse development on the site leaving the remaining 20 acres that will be developed by LCOR with 2,500+ new high rise apartment units.

Bill is also active in the community, having set up the "Pamela R. Hard Endowed Nursing Scholarship" to support nursing students at Montgomery College (MC) in Montgomery County, Maryland. He also contributed considerable time and expertise to the Montgomery College Foundation, particularly toward its real estate activities, including a ground lease for the Holy Cross Germantown Hospital on the MC campus.

Bill is married with three grown children and five grandchildren. Two of his children are in the real estate business. One of whom, his son Matt, is a Vice President at LCOR in Bethesda.

Show Notes

My guest for Episode #8 is Bill Hard, who recently retired from leading the LCOR office in the DC area. I've known Bill since the late 1980s when we met when he approached me to finance one of his projects. While we never closed business together, we spoke frequently about opportunities, worked on committees together for the ULI and became good friends. Bill is the consummate professional and was a visionary leader at LCOR. He grew up in suburban Philadelphia and after graduate school at Penn, joined a local bank and after an 8 yr. banking stint, joined LCOR's predecessor firm, Linpro, and was moved to the Washington DC area in 1982 where he began his development career. Below are the key points from our discussion. I have emboldened his most interesting stories.

Background

• Joined LCOR (DC in 1982)- 50% office and 50% garden apts. Business evolved in mid 1990s to develop high rise/mixed use (5:10)
• Learned high rise business in mid 1990s (6:30)
• Born in Philadelphia suburbs- Dad a salesman and Mom a housewife- typical suburban life (7:30)
•  Raised there until HS when moved to Northern NJ at 16 yrs. old and was not happy initially- first day in HS he meets his current wife (9:45)
• Lafayette College was all men- finished in 1971 and joined National Guard (11:30)
• Married in 1971 and then attended Penn grad program (international relations)
• Philadelphia National Bank in 1973- First assignment with bank because he needed accounting, he was a "runner" for tellers.  After accounting courses, joined credit program. (13:00)
• Mortgage REITs were a disaster and Bill was assigned to manage the portfolio in workouts, which was a great opportunity as the youngest loan officer in bank.  Learned good lessons about risk from this experience. (14:50)
• Linpro senior partner drove Bill around NOVA after 8 yrs. with bank and asked him to join them and come to DC (17:05)

Linpro/LCOR

• Joined company in Jan. 1982 (18:10)
• Dad's reaction- Linpro is a "pyramid scheme" and you will be considered a "job hopper" after 8 yrs. with the bank (his Dad spent 37 yrs. with one company) (18:35)
• Germantown office and then was assigned to lease a building in Reston, VA and had not leased a building before (leased to AT&T) (19:50)
• 50%/50% between office and residential- Buying sites in the 1980s (21:00)
• Partnership structure early on- Individual properties had their own capital structure.  Partner in 1985 when acquired office sites (21:50)
• In 1989 Linpro expanded to be in 23 markets (23:20)
• Converted to corporate format in 1992 (no longer GPs on properties)- risk mitigation (24:20)
• 1985-1990 Bill ran Reston office. In 1990 consolidated offices in Bethesda.  Grew an office up to 15 people and laid off all but him. (25:30)
• Ran office from 1994 on.  Construction company initially, but let it go in the early 1990s. (27:45)
• Threshold level of development- Scaled up quickly from mid 1990s first in NY and NJ (29:40)
• IRS Buildings in Martinsburg, WV in 1990- found equity from the GC to fund the project.  "When you have a conversation with someone you never know where it goes."  Contractor said they could fund to help project and did a design/build with no change orders. GSA lease with a bond issue- Two separate buildings- 135,000 s.f. (30:30)
• Capital Markets relationships in early 1990s kept as they were honorable with lenders (33:10)
• Institutional partner for company- Lehman Brothers in 1999 derived from bond deal at JFK Airport- NY office built a strong team to develop it (35:00)
• Lehman relationship set the course toward larger transactions (36:20)
• LCOR's culture of underwriting- conservative developer on a relative basis (37:00)
• Project story about a church site on Thomas Circle- Lehman Bros. guy had just approved another deal nearby which gave credibility (37:50)

Large Projects

• USPTO- largest GSA lease in size and dollars in the US.  18 buildings in Crystal City were vacated to relocate to site in Alexandria (39:40)
  • 2.4MM s.f. project located in the Carlyle PUD in Alexandria
  • Norfolk and Southern issued an RFP in 1996 for a site bid on Carlyle site
  • Strong development team- SOM Architect, Turner GC.
  • Landfill site and had to do extensive analysis of soil
  • Jeff Zell, the broker for Norfolk and Southern, said that LCOR was the only company that walked the site to evaluate the environmental issues and assessed it and was willing to proceed anyway-- Norfolk & Southern had already done extensive DD on site to do the work- $22.4MM cost
  • Lesson learned on environmental investigation: "You got to do your homework"
  • Awarded in May, 1999 and it took until June, 2000 and had closed in December, 2001
  • 9/11/01 changed some of the metrics of the project.  GSA made some improvements regarding security
  • Approval process was lengthy yet had City help to get through it.  Delivered the project in 2005.
  • Fiscal impact study determined that the net revenue to the City paid for a new HS in Alexandria. 
  • 50 community meetings demonstrated both positive and negative feedback and capital coming to the City helped
• White Flint Master Development Agreement- WMATA (51:25)
  • 32 acres
  • Selected in 1997 with multiple ground leases starting in 2001
  • Two residential high rises delivered and two more residential projects now underway (one under construction the other in planning)
  • Office Building for GSA (Nuclear Regulatory Commission) completed
  • Development agreement lapsed in 2016; however the two residential projects were retained.
• Other projects (54:40)
  • Condo in Arlington in 2005
  • Historic School in DC (Oyster School) in Woodley Park
    • PPP with DC Public Schools (while Financial Control Board managed the DC Government from 1995 until 2001)
    • Strong partnership with DC and Northwestern Mutual Life
    • Dedication of School was "one of the most rewarding days in his business"…first school in DC built in 15+ yrs.

Trends, Advice and Values

• Trends in Real Estate since 1982
  • LCOR has evolved to being a mixed use residential developer now (1:00:15)
  • Technology- Company's mobile app new (1:00:50)
  • Use of space- Parking has changed (1:01:45)
  • Amenities dramatically increased (1:02:40)
  • Service oriented- system available for video plugin in buildings (1:04:30)
  • Short term leases (master leasing)- concern about too much of this (1:04:45)
  • From 1999 to today…changes in DC have been dramatic- Union Market, Wharf, 14th St. (1:07:30)
• Perception of development business- "Everyone lives, works and shops in a developer's property" (1:09:30)
• Proud of industry's accomplishments
• Story about partnering session on USPTO- Moderator to draw a picture of roles on project.  Bill drew a stick figure with a marionette that indicates a "puppet master" role- a developer's role (1:12:15)
• Career counseling- "If you need immediate reward or not a patient person, this is not a profession for you" His liberal arts background helped him to understand (1:13:00)
• Where did the concept of understanding "patience" and knowing things take time? He learned when he opened an office and keep it running. (1:14:20)
• Knew he was a patient person as he liked a steady lifestyle and was not overly impatient to get results (1:15:30)
• "Stay true to your values". "There's always another deal" "Be prepared to fail". "Work with people you want to work with" (1:17:00)
• "Show your vulnerability by bringing in the right people"
• Looking for "honest" people to work with.
• "Trust internal values- do what you know is right"
• Proud of family
• "Give more than you take and be grateful" (1:20:00)

Contact Info

Bill Hard Email: [email protected] (Bill has retained access post retirement)