Bob Murphy- Energetic Leader (#50)

Bio

Bob Murphy, Managing Principal of MRP Realty, has over 33 years of experience in commercial real estate operations, ownership and investment. He joined Trammell Crow Company (TCC) in 1987, managing the firm’s regional operations for many years as Principal. Bob’s last role with TCC was area president of the development and investment group in the Mid-Atlantic where Bob and his team completed $1.8B of investments totaling over 10 million square feet. He co-founded MRP Realty (MRP) in 2005, capitalizing on his in-depth knowledge of Mid-Atlantic real estate markets, extensive network of capital relationships, and his reputation as a collaborative and creative partner to drive the firm. Under Bob’s leadership, MRP has deployed nearly $6B of office, residential/mixed-use and industrial developments and acquisition investments with a current portfolio of 15 million square feet and an active pipeline totaling over 10 million square feet. He has actively participated in leadership roles at NAIOP and ULI and at various charitable activities during his career; currently serving on the board of Habitat for Humanity of Washington D.C. Bob received his B.S. in Civil Engineering from the University of Notre Dame; his M.B.A. in Finance at Columbia Business School; and was an officer in the United States Army.

Show Notes

• Role today- Problems and Opportunity person. Working with partners on business strategy. Deal structuring is shared. (3:45)

Origins

• Born in NYC (4:15)
• Moved to Wayne, PA at 6 yrs. old
• Dad big influence- Went to Fordham U. and worked at IBM subsequently (5:15)
  • Did presentations for IBM and was one of top salespeople there
  • Left in 1969 and went with a power plant company selling to the military and took the company public and became a CEO of a public company (6:00)
    • Traveled considerably
• Mom went to college with young children at home over time (6:45)
• Dad advised him to be an engineering to have a quantitative understanding (7:45)

Education

• Small town- Catholic grade school (9:00)
• HS- Archbishop Carroll in suburban Philadelphia (10:00)
• Attended Notre Dame and his Dad became a fan and several relatives have now attended (10:30)
  • Picked Civil Engineering as a major (12:15)
  • Army ROTC- helped pay for school ( 12:40)
• Commissioned in Army in 1982 in Europe (West Germany) (14:00)
  • Honoring America
  • Learned about mutual respect in the military (15:45)
  • Treat everyone respectfully- lesson learned (16:45)
  • Offered a command to stay in Germany (17:15)
• Columbia MBA– Went there due to a referral from his rugby buddy (17:45)
  • Did well on GMATs (21:15)
  • Mature to go there (21:30)
  • Another of his classmates (Chris Hoover) sent him a book about Trammell Crow Company (19:30)

Career Arc

Trammell Crow Company

• Joined Trammell Crow Company- Kevin Dougherty hired him (19:45)
• Chris Roth of Trammell Crow inspiring (22:45)
  • Started in development and quickly was involved in transactions (23:30)
  • Bob ran Mid-Atlantic for TCC (24:45)
• Joe Stettinius– Talented with people, wisdom for young guy (25:15)
  • Good at picking people
  • Good manager and broker (27:00)
• Projects (27:50)
  • Mid 1990s very active-8-9 buildings in NOVA (28:00)
    • Centennial Projects
  • Principal was main partner in that era (29:00)
  • Institutional partners and pension fund investments increased dramatically in late 80’s and surged again in the mid 1990s (29:20)
  • TCC became more centralized when they went public
  • Crow Family stayed involved in partnerships (32:00)

MRP Realty

• Formation of MRP Realty (34:00)
  • Ryan Wade came on as analyst to him at Crow (Co- Founding Partner)
  • Fred Rothmeijer (Co- Founding Partner)
  • Rick Sass joined (Co- Founding Partner)
  • Zach Wade
  • Focused on office originally (38:30)
  • Did mixed use as well (39:00)
  • Diversification of risk was done by product diversification (39:30)
    • 2012- first multifamily project (40:00)
    • Matt Robinson
    • Built a team (John Begert, Kevin Schaar)
  • Industrial entity- Dan Hudson who followed Bob at TCC then came on to run new industrial entity- MRP Industrial (41:00)
    • Reid Townsend
    • 8M s.f. underway
  • Started buying properties after 2008 crisis (44:15)
    • Studied deliveries over supply (45:00)
  • Angelo Gordon became a partner (46:00)
    • Reid Liffman
  • Washington Harbour– April 2010 with Rockpoint (47:00)
    • Ice Rink added (48:15)
    • Majority of office tenants stay there (49:00)
    • Flood right after purchasing caused closing of much of retail (50:00)
    • Renegotiated retail spaces
    • Restaurant business challenges (51:15)
    • When flood happened in 2011 half of company focused on WH to bring it back (53:00)
      • 50M gallons of water in the parking garage (54:00)
      • Fixed flood gates with a fork lift (55:00)
      • Rockpoint stayed at the table to help (56:45)
      • Generators needed to bring tenants back in
      • One year to renovate the project (58:00)
    • Sold the property with a $100M profit to a Korean Pension Funds through Principal (58:45)
      • JIm Halliwell
  • Always in the buying market from the initial time (1:00:00)
  • Office market has gotten more challenging in the DC market (1:00:30)
    • Operator has to work hard to keep and attract tenants (1:01:20)
    • MRP started Heyday– a special formatted office layout (1:01:45)
    • Passport– a conference room business format (1:02:30)
    • MakeOffices- They closed during the pandemic (1:03:45)
    • Flexibility now offered allowing for higher rents (1:04:00)
    • Co-working business they want to keep in house (1:05:00)
    • Spontaneity is important for office users (1:07:30)
    • Perfect office building- 50% long term leases with flexible space beyond this (1:08:45)
  • Industrial is a separate entity (1:10:30)
    • Dan Hudson and he were partners and so he gave them the latitude to run the business (1:11:15)
    • Liberty Park at Dulles Tech and sold demolished buildings to residential projects (1:13:30)
  • Residential (1:15:00)
    • Believer in urban residential real estate (1:15:30)
    • Affordability- Working on several affordable projects (1:16:00)
      • Subsidized financing (1:17:00)
      • Government programs limit potential (1:18:00)
      • 20% of portfolio is affordable
      • Mostly “mixed income” development
      • The Wren (1:19:30)
      • Bryant Street project had 70 community meetings for support (1:22:30)
  • Two Clients (1:23:00)
    • Tenants
    • Capital Partners- Institutional capital
      • Understand the property and the business plan
      • Decided not to go into the “fund business” to compete with institutional partners (1:25:00)
  • Expansion geographically due to relationships (1:27:00)
    • Philadelphia
    • New York- Found most deals off market (1:28:30)
    • North Carolina
  • MRP Realty corporate structure (1:29:00)
    • No in house brokerage or construction
    • Not in apartment management
    • Merchant building in industrial
    • Good internal conversation (1:31:00)
    • Over $2B in projects underway now (1:32:00)
    • Product type and geographical diversity
    • Complete reliability on partners to manage their respective businesses- Office, Residential and Industrial (1:33:00)
• Pandemic (1:34:00)
  • Good management team on office
  • Residential properties have performed well and especially recently
  • CDC announcement triggered leasing activity
  • Rates have dropped though
• ESG (1:38:00)
  • Contribution in affordable housing
  • LEED and air handling systems
  • Fairly diverse
• Trends (1:40:30)
  • Affordable housing trends continue- Timing slows it though
• Filter for new business (1:43:00)
  • Good at balancing the risk return balance
  • Stopped buying in 2006 through 2009
  • Selective in DC for office now
  • Apartment and Industrial returns low for new construction
  • Looking to longer term investments
  • $900B looking at real estate investments (1:46:00)
• Risk mitigation (1:46:45)
  • Pre-development management- construction documents and negotiations
  • Tight numbers
  • Flexible debt
  • Good contingencies
  • Avoid going to documents to negotiate
• Dispute resolution (1:50:15)
  • Collaboration
  • Never get a deal done with “everything he wants” (1:50:45)

Personal and Lessons Learned

• Personal (1:52:00)
  • Family first
  • Giving back- Affordable housing
• Wins- Washington Harbour the biggest (1:53:30)
  • Sold “Mill Road” project in 2008 prior to crisis (1:55:30)
• Losses- No losses during the recession, but needed to renegotiate a few loans
  • Got ahead of themselves on valuations and the MakeOffice business (1:54:00)
• Surprises- MRP Industrial investment (1:55:00)
• Advice for 25 yr. old self- Learn your craft and read international news to its local impact (1:56:00)
  • What did I want?- A place to go to work and wants opportunity
  • Keep learning and keeps company values
• Ted Lasso sign- “Believe” (1:57:30)

Postscript

• Colin Madden
  • Ted Lasso show- Yogi Berra like character
    • Meridian Company sign
    • “The Team, The Team, The Team”
    • Iconic Journey community reference
  • Employment culture
    • Maslow Needs- Hiring has reached the top of the Hierarchy of Needs
    • How to give back to employees is the right question today to hire
    • Landlord more involved with tenants’ workers
  • Learn your craft and understand the root of a problem
  • Flexibility is critical today due to continual disruption
  • More diverse uses of office space and adapting businesses
• Iconic Journey of CRE– Mid September rollout
  • Contact John Coe at [email protected]
  • Multidisciplinary Approach to Industry

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