John Ziegenhein-From Underwriting C-Plus Properties to Leading Chevy Chase Land Company (#108)

[00:00:09] Speaker A: Hi, I'm John Koh and welcome to Icons of DC Area Real Estate, a one on one interview show highlighting the backgrounds and career trajectory of leading luminaries in the Washington DC area real estate market. The purpose of the show is to highlight their backgrounds and their experiences and some interesting stories about their current business as well as their past, and to cite some things that you might take away both from educational standpoint as well as lessons learned in the industry and some amusing and sometimes interesting background stories. So I'm hoping that you will enjoy the show. Before I introduce today's guest, I wanted to thank you for listening to the show and share that we've had the privilege of interviewing over 100 real estate leaders from various disciplines right here in the DC area. From architects to brokers to developers and investors, we've covered it all. And guess what? 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My guest for today's show is John Ziegenheim, who is the CEO and president of Chevy Chase Land Company, a one 30 year old real estate operating company that started out as a land developer and built much of northwest Washington and Chevy Chase, Maryland. John grew up in suburban Baltimore to a blue collar family, was one of the first to go to college, and after college he ended up in the collections business, which taught him some interesting lessons. Later on, he pivoted into the real estate sector with REr Resources, which was an analytical firm for CMBS firms. During the transition from RTC into the CMBS industry early in the 1990s, he learned quite a bit there and analyzed properties up and down the east coast, primarily for CMBS investments. He then pivoted and went to work for a financial advisory for ASB Capital and went on to get his MBA. He learned about urban investing and also the union markets with ASB, got his MBA and then he went to the company called the Bear Company, which was a startup venture looking at real estate financing in a unique debt platform that led up to the global financial crisis, which then shook that business up. And subsequently he joined the McCaffrey organization, which is a development firm working with Dan McCaffrey and he worked with Dan up until 2020 when he was asked to become president of the Chevy Chase Land Company. He talks about that transition during the pandemic and the interesting way he took that role. He early on developed a rapport with his team, learned a lot about the company. Then he went on to share the history of the company Cheby Chase land and how it evolved and the board structure and the legacy of the Newlands family and what they've done to adapt that legacy over the years. He then goes on to talk about some of his projects, including the Bethesda Metro renovation and his leasing and management portfolio activities, his diversification now and with the strategic shift since he joined as chairman and looking at future investments. Instead of being an asset management firm, they now are looking to buy properties and invest some of their capital. He also talked about the Chevy Chase Lake development, which is a spectacular mixed use development. They joint ventured with Bozzuto in Chevy Chase, Maryland and some of the legacy properties that they've owned over the years and what their plan is with those. He then goes on to talk about their corporate sustainability and ESG policies and how they mitigate risk as a company. And then he talks about his personal wins and losses in his career and his 25 year old self advice, as well as the billboard statement that I asked all my guests so without further ado, please enjoy this wide ranging conversation with John Ziegenheim. [00:06:37] Speaker B: So, John Ziegenheim, welcome to icons of DC related real estate. Thank you for joining me today. [00:06:42] Speaker C: Thank you, John. It's such a pleasure to be here with you today. [00:06:45] Speaker A: That's great. [00:06:46] Speaker B: John, could you describe your role at Chevy Chase Land Company and your focus day to day? Keep only to your role and we'll speak about your company later. [00:06:55] Speaker C: Yeah, sure. So the Chevy Chase Land company, as many know, it's a privately held real estate investment firm. It's been around for quite some time, and I'm sure we'll talk a lot about the history. And today we are, we're governed by an independent board. I serve as the president and CEO, so I spend a lot of time overseeing the day to day activities of the company. I work very closely with our board of directors, and we also have a family council who I interact with frequently to help communicate to the shareholders who are still very close with the company. One of the key priorities that I have is focusing on our ten year strategy. We put that together two and a half years ago. So I work closely with our team and I leverage the knowledge and resources of our board so that as we plan for, you know, what's ahead for 2024, and we think about what's in the near term, going out a few years, everything that we do is aligned with our long term goals of the company, and obviously we'll get into that. And I'm very excited to share with you some of our growth ideas. [00:08:03] Speaker B: That's awesome. Thank you. So now let's turn back to your history a little bit. Your origins and youth and parental influences. Where were you raised? [00:08:13] Speaker C: So, yeah, I'd say my origin, certainly nothing extraordinary about it. I would actually claim that it's mostly ordinary. I was born in Baltimore City at Baltimore Harbor Hospital. I think it has a different name today. And I was raised in Pasadena, Maryland, not Gibson island, as many people have suspected in the past, the regular Pasadena. And my entire family is from the Baltimore area, and I don't know the number, but now, with all the cousins having kids, there's probably 75, 80 family members. Wow. I'm kind of the black sheep that left Baltimore and moved down to Washington, DC. But I grew up in a very working class environment, and I think the context is somewhat helpful to my story. You know, my high school went to a public high school, northeast high school, and I would guess of the 200 people that I graduated with, maybe 5% went on to a four year college. This was a community of get your degree and get to work. This was a working class community. Contribute to the community and produce. And so, and my family was the same way. My entire family, nobody had gone to college. So I was sort of raised in that environment where it wasn't really a thought when I was in high school. And this is part of my story, you know, I wasn't very focused because I never really thought about what my grades might mean for my future. Now, my parents, I had two parents, and I think they have somewhat of a unique story that you don't hear too much today. They both graduated high school in Baltimore county, and they both went to work for different companies. My father went to work for pool and Kent. He was a plumber, steam fitter, union worker. And my mother went to work for Baltimore Gas and Electric, and she started as a secretary on the retail side, if you remember, BG and e used to have stores where they would sell appliances, and they had a service team to help service those appliances. And some 45 years later, my father retired from Pullen Kent, and my mother retired from Baltimore Gas and electric. [00:10:35] Speaker B: So they were there 45 years. [00:10:37] Speaker C: They both got one job at one company, and they worked their way up through the corporate ladder, if you will, and they retired from the same company, which is somewhat unheard of today. But in that, I learned a lot from both my parents. My father and my mother both taught me the value of hard work. They taught me the value of loyalty and dedication. You know, my dad, you know, he put me to work when I was a young teenager on side jobs, eventually on a more full time basis. So I got to learn to use my hands. I got very familiar with what it meant to do some construction, and I'll talk about that. And one thing that he always said to me, and it resonated, but I kind of changed it in my mind. He said, he calls me Johnny. He says, johnny, keep your head down and work hard and money will follow. And that's sound advice. But I made a slight modification in my career in that I didn't keep my head down. I kept my head up, and I worked hard. So I was looking for opportunities. And my mother, she was a great example of how hard work can pay off. She graduated top of her class. She might have even been valedictorian. And so she went right to work. And throughout her career, she moved from secretary, and when she retired, she was holding a senior management position within the organization in charge of their entire customer service division. Wow. So she was a role model in that way, in that she showed me, no matter what your credentials might look like, you always have the opportunity to prove yourself through hard work and dedication. So those are great, great lessons. I would say both my parents are just, they're generally very nice, sincere people. They're very authentic. They were very well respected in our neighborhood, and they were always there to help people. Right. And so I was very fortunate to have that. And I'm very lucky that they're both alive today. So they're still alive. They're healthy, and they're doing well. I think they're probably golfing in Florida right now, which would be nice. So as I think about my life, like, through high school, as I mentioned, I wasn't very focused. I had no ambition, I guess is the best way to put it. And I don't really know why. I just didn't think it was really important. I was a class clown. I think it was voted class clown. In my high school days, I was playing soccer and lacrosse, and I really enjoyed playing my sports. That was fun. And then at some point, it was probably in my early junior year in high school, two things happened that caused a big change in my life. One, and I was, I think I was grounded for two years straight in high school because of my grades. My parents tried and tried and tried, but as they say, you can, you could lead a horse to water. And so I sensed a little bit of my parents not necessarily giving up on me, but kind of losing hope that there wasn't going to be a bright future in my path. And it was probably more subconscious because as a teenager, you're a bit rebellious and, you know, you don't think about those things. But I felt that, and it really bothered me. And then second, and I was very grateful for this, my father put me to work as a union laborer. So I spent several years every summer and every break that I had working in downtown Baltimore. And so I'm, you know, I'm a teenager. I've got the tripod vise over one shoulder, I've got the hammer drill on the other, and I'm starting work at six in the morning. And it was great experience. But the other thing that happened is I'm downtown Baltimore and I'm watching all of these, these things happen. The people around me, I'm looking at doctors and nurses because one of the projects was by Hopkins Hospital. I saw a lot of other things in that neighborhood as well. I was downtown, the Lake Mason building and all of these people. And there's so much energy, and there's people sitting out and having these great lunches, and there's people going out to the happy hours. And then here's me, right? I'm a dirty kid in my jeans. I was probably wearing a Def Leppard t shirt or something. And all of a sudden I thought, you know what? There's so much opportunity in the world, and I'm on the path towards none. And it kind of, like, it kind of woke up something in me. And so I changed my path. I made a decision at that moment that I wasn't going to continue down that path and that I was going to get my act together, get my grades straight. And then I made a decision that I was going to go to college. I didn't know what to study or why, but I wanted to go to college. I wanted to get an education. And I thought that might be an avenue to open up some opportunities. [00:15:10] Speaker B: Was there anybody like a counselor or a teacher or some person outside your family that might have said, you know, john, you ought to rethink this a little bit, what you're doing? [00:15:20] Speaker C: You know, there was one not necessary. There was not necessarily one individual, but there's one instance where a teacher pushed me. There was a speech competition, and I submitted something like I usually did, kind of half assed. And the teacher said, you know what? I like your idea. I'm selecting you. You're going to be the participant of our school to present this speech. And in hindsight, the teacher saw that I had a little bit more potential and put me in the hot spot. Put me in the hot seat and challenged me to do it. So I had to take it seriously. [00:15:49] Speaker B: How did you feel about that at. [00:15:51] Speaker C: The time, I was excited and nervous at the same time. And I did. I took it seriously. I had to write a speech, something about family values, and I had to present it to an auditorium of a couple of hundred people, and I got a nice certificate. I don't think I won the competition, but it was one of the first times that I was putting in the spot to say, why don't you try something and take it seriously and not make it a joke? [00:16:16] Speaker B: Did either of your parents see it? [00:16:18] Speaker C: They did. [00:16:18] Speaker B: What did they say afterward? [00:16:20] Speaker C: I think they were proud of the fact as I incorporated some of my views of my family and my parents in this speech. It was sponsored by the veterans of foreign wars, and my father, he served some time in Vietnam. It was not necessarily a moment that I recognized at that time, but later in life, as I looked back, I realized that that was a testing moment, and it was done deliberately. Yeah, that's really cool. Yeah. And so that was it. So I decided, I'm going to go to college. I started getting on the honor roll. My grades went from c's to a pluses and maybe a couple of b's. And as I told my parents, I'm going to go to college. And I think they chuckled and laughed, you know, as if you have a chance. Cause that's kind of who I was. [00:17:07] Speaker B: Mentality. [00:17:08] Speaker C: Yeah. And so I set my sights on that. And my mother worked with a woman whose daughter, when I was a senior in high school, she was a freshman at Randolph Macon College. And so when people ask me, why'd you go to Randolph Macon College? The answer is quite simple. It's the only college I'd ever visited or heard of, frankly. Right. Because there just wasn't that culture. She invited me down for a weekend, and I went down, and I'm walking around this campus, and students are hanging out and studying, and then they're going out in the afternoon and doing some activities, and people are going out at night. And I thought, this is amazing. I loved it. And so I said, that's where I'm gonna go to school. And that's what I set my sights on. And I learned at that time, you know, once, and I'm like this today, my wife still jokes that once I decide to do something, I'm all in. There is no halfway. There's 110%. And so that's where I ended up going to college. [00:18:06] Speaker B: You didn't look at any other schools. That's interesting. [00:18:08] Speaker C: Never thought to, huh? Never thought to, yeah. [00:18:12] Speaker B: And it was a good experience. [00:18:14] Speaker C: It was a great experience, you know, great friends. And it was a small school, which ended up being right for me. I gotta, you know, call it 20 to one ratio of students to teacher. And so I got a lot of attention from the professors that kind of helped me get through it. [00:18:29] Speaker B: So it was an adventure when you started? [00:18:31] Speaker C: Oh, yeah. [00:18:31] Speaker B: And by the time you got done, what did it help you think about with regard to your future? [00:18:39] Speaker C: You know, it was an eye opener for me. I kind of felt like I didn't belong. Right. Everybody's got a moment in life where they're put in a situation you sort of feel like you don't loan. So I kind of had that feeling. And then I kind of realized that, you know, what it did. And I realized that the other students who were there, who probably were thinking about college well ahead of me, there weren't any better than me. Right. I had all the skills and tools that I needed, and it made me feel like postgraduate. I need to take that lesson and use it throughout my career. Right. Just again, it's like my mother and father taught me, hard work will prevail over a lot of other things. And so I took that work ethic with me. [00:19:21] Speaker B: Fascinating. So what about a career? What were you thinking about when you're coming towards the end of college? [00:19:28] Speaker C: Well, I studied political science and I had this fantasy that I would go to law school. Right. And political science at a liberal arts school was sort of a precursor to that. And then I realized that law school at that time would cost about $120,000 in another two years of my life. And I had no money. Three years, I had no money. And I realized that that was sort of not necessarily fantasy, but it was short cited. I thought if you were a lawyer, that would define success. Well, that would be successful. And so I got my degree and then my first job, I was in credit card collections for Signet bank, which is now part of capital one. And the reason I took that job was because I wanted income to stand on my own 2ft. That was my inspiration. I graduated on a Saturday and I started work that Monday. And at the end of that month I had income to pay for my apartment and my bills. And so my idea was, let's just get some work experience and let's stand on my own. Two. [00:20:29] Speaker B: Is that here in the Washington area? [00:20:30] Speaker C: That was in Richmond. In Richmond, yeah. So I stayed in Richmond for a couple of years. Yeah, it was a horrible job. Yeah, I mean, it was, you know, I was a robo caller and all I did all day long was as soon as I hung up, as soon as I heard the click, the computer dialed the next person, and I'm on the phone with it. So all day long I'm talking to people who are. I was in what's called the 90 day bucket. So you were three months or late later on your bills. But there was a valuable lesson to that. And it was, and I talked to a lot of doctors and lawyers who were in very big debt and very, very behind on their payments. And they all said, I just fell on hard times. I'm going to pay you back. Stop calling. And it was a really important lesson for me as a young person. And that lesson was, just because you're doing well one year doesn't mean you're going to do well the next year. Don't get ahead of yourself, if you've got a great job and you're making a great salary, you can never assume that that's what you're going to get for the next ten years. And a lot of these people made that assumption. And they had three or four credit cards and they were all maxed out because they thought, oh, I can pay it back over time. They were all in hardship. [00:21:44] Speaker B: And these are people that are making really good income. [00:21:48] Speaker C: These are professionals who had great educations, great backgrounds and great careers, but for whatever reason, things change. And so I took that valuable lesson because I heard it every day. [00:22:02] Speaker B: So you were there for two years and then what did you, I mean, you probably got fed up after a while doing hearing. [00:22:09] Speaker C: Yeah, I was there for a couple of years and I also wanted to change. Richmond's a very small town, right. When you're a young person, it's a great town. I think as you get older. I have a lot of friends that are there now and with family. So I came up here. I had some friends from college who lived up here. I came up here and I got my start in Rockville. I was working with an investment firm, and this was a very high net worth private investment firm with clients around the world. [00:22:36] Speaker B: How'd you find out about it? [00:22:38] Speaker C: Newspaper. [00:22:39] Speaker B: Really? [00:22:39] Speaker C: Yeah. [00:22:40] Speaker B: And why did, why that? [00:22:42] Speaker C: It was finance related. I started gravitating towards numbers. I felt like, you know, I was, I wasn't a, I wasn't a math wizard, but I was good with numbers and I appreciate calculations. Right. I'm very calculated and now I approach things. And so I sort of gravitated in that direction. And I, there was an ad in a paper, I submitted my resume and I went to work for this group and I was, I was the trader. So the, the portfolio planners would pick the stocks and they would hand me the stocks and I would call the trading debts and I would trade and I would reconcile things, and I would occasionally deal with some of the clients where they would call and they would ask for money. And very interestingly, they would ask for it in code. So there might be someone who calls me from Mexico and ask for 50 million catalogs to be shipped to their office in Switzerland, which meant I need that much money moved from this account to my swiss account, very private, very wealthy individuals. And so I was there for a couple of years. I really enjoyed it, and I didn't quite feel valued. I had asked for a raise, and at that time it was modest, a few thousand dollars. But it meant a lot to me as a young person. And they said, no. They said, that's too big of a percentage. And I said, but you love me. You think I'm doing great. All you do is praise me and tell me how wonderful I am. So don't think about the percentage. Think about, this is the total amount I'm asking for, and I think I'm worth that, if not more. They just kept going back to the calculation. So I was living with a few folks. One was in law school, and she was in law school with a gentleman named Jeff, and he worked at REr Resources, and they were growing this underwriting business for the CMBS market. And he was by one night, and he said, well, you know, I'm growing this company and hiring. Do you know real estate? I said, no. He said, do you know numbers? And I said, yes. He said, well, if you know numbers, you can learn real estate. And so that's how I pivoted to Rer, and that's how my real estate career started. [00:24:51] Speaker B: Talk about what Rer does and did. [00:24:54] Speaker C: And, yeah. So, rer originally was real estate recovery. It was formed in the RTC days by Chris Kalivokis. And at the time that I joined, which was around 1997, the CMBS market was in its infancy. And I think at that time, there might have been 200 million of production, approximately. And the originators, who were all in New York, they were so new that they didn't have underwriting in house. So they farmed out the service of doing the underwriting to a third party. We were one of them. So we were providing the underwriting to transatlantic Capital Corp, which was a part of Deutsche bank and Solomon Smith Barney. So I'm, you know, I'm a young man, and I'm tasked now with traveling the country, looking at C deals in some of the finest markets, like East Orange, New Jersey, parts of parts of Detroit, that I was in LA, a lot in Manhattan, and most of the. It was every property type, office, retail, multifamily, hotel. And we were underwriting. And there's a group of us, we were underwriting, you know, probably four or five properties per person per month. This is how fast things were going. And that meant traveling to the site. [00:26:15] Speaker B: How would you define a C property? [00:26:18] Speaker C: Very rundown, very sort of lots of maintenance, lots of deferred maintenance. That was one of the number one aspects to our underwriting. Typically not in a prime neighborhood. Sometimes you were escorted by a couple of maintenance people as you toured the property. Low occupancy, high occupancy, high occupancy. High occupancy. Yeah. Very densely populated areas. [00:26:44] Speaker B: I see. [00:26:44] Speaker C: But, you know, if the market rent at the time were. If the prime market rent was $2 a foot, we were looking at product that was a dollar a foot. Right. But they needed financing nonetheless, and CMBs was serving that need. [00:26:59] Speaker B: CNBs basically replaced the SNL industry. [00:27:02] Speaker C: Right. [00:27:03] Speaker B: As far as that type of lending. [00:27:06] Speaker C: Yeah. And I spent three years working in that business, and I can't tell you the number of properties that I looked at and visited and underwrote. And it was a very thorough underwriting. And, of course, when you're underwriting, you're getting market comps. And in the late 1990s, it wasn't on the computer. You were walking door to door. You were going to the comps, and you were trying to convince a property manager to give you information, which was very challenging. But I learned a lot about real estate. It was a great introduction to the business, and I got exposure to every asset class. [00:27:41] Speaker B: Did you have interface with the borrowers, too, when you were doing this? So no interface with borrowers? [00:27:46] Speaker C: Only a couple of times. Only a couple of times. And one, you might appreciate this quick side story. One was the Chelsea market building in Manhattan, and I believe it was owned at the time by Erwin Cohen. And I went to Manhattan, and I'm still not 25, I couldn't rent a car. So when I went to all these markets, I had to find a cab driver willing to stay with me, and I would pay them cash to drive me to all these different properties because I was too young to. [00:28:15] Speaker B: That's interesting. [00:28:16] Speaker C: Manhattan, it didn't matter. So I show up at the Chelsea market building, which is a million square feet, and the owner, Erwin, is there, and he's waiting for his lender. And it's me, and I'm a kid, and I think I got a clipboard with my form to write down. I think I've got my hP twelve C. And he introduces himself, and he's very kind, and he says, look at his watch. When's the rest of your team getting here? I said, I am the team. And he looked at me, he said, wait, you're underwriting this building? I said, yes, sir. And he kind of chuckled. He said, well, let's go. And he took me through the whole property. [00:28:54] Speaker B: Did you learn something from that meeting? [00:28:56] Speaker C: You know what I learned a lot about it was kind of an introduction to a number of aspects of the lending world. How these deals were getting processed, how decisions were made, relationships. You know, he was very surprised. I think he thought he had a relationship, and he did, but he was extremely gracious. And he. And he took me on a tour of a property that I'll never forget this had a, you know, had a recording studio, and Leibovitz had a photography studio there. The show Oz from HBO had its studio being filmed and just all kinds of facets of the building, very, very complicated. And, and then he was kind enough to invite me, and my friend was, we were going to the Yankees game that night, and he said, well, after the game, come down to my restaurant and have dinner. And so we went down to his restaurant and we didn't think he was treating us. And we were, you know, very budget conscious, so we had a very small meal, right, and maybe a glass of wine or a beer or something, nothing lavish. And of course, he picked up the tab, and I left there thinking, you know, here I am, right? A young person just learning real estate, and I'm underwriting a million square foot property in downtown New York City. So it's one thing that I'll never forget. It was quite an experience. [00:30:11] Speaker B: It's a great experience. So how long were you there? [00:30:16] Speaker C: I was there about three years. Yeah, three years. And then, of course, CMBS was exploding, and that's when these investment banks brought the underwriting in house. And so the need for our services started to go down and down. And then there were probably about ten of us at, at RER, and we all started to go our different ways. One went to HFF, one went to Transwestern. A couple went to Goldman Sachs in New York. One went to run Fortress's special assets program. One went to FBR. [00:30:45] Speaker B: So do you stay in touch with these guys? [00:30:47] Speaker C: We still do, yeah. [00:30:48] Speaker B: That's great. [00:30:49] Speaker C: It was a great, great network. And then I went, and then I went to ASP Capital. And again, I think that was another ASB. I think that was another, another job that I found. It was an advertised opportunity, and it looked like an interesting next step for me to go from learning real estate from three years to going and working with an investment office. And then this is where I sat down to interview, and I said, this is what I'm going to do, real estate. I was falling in love with it. I found it to be easy to understand. I felt that I got it in terms of underwriting and value. And then this is where my, you know, my years and years of summer construction kind of came full circle. So I'm, you know, downtown. ASB at the time was in the evening Star building, 1101 Pennsylvania. Avenue. So I go and I'm interviewing. My first interview was with one of the managing directors. His name's John Scram. I'm sitting in his office and he's got a nice. These are nice formal offices. ASB Pennsylvania Avenue. It was a very formal office. It used to be a very big investment bank in Washington, DC. And up on the wall behind the managing director is a picture of an office building. And that office building was called Westquest, and it's in Columbia, Maryland. And I'm just chatting with John Scram. And I said, you know, I said, I know that building. He said, how do you know that building? I said, well, I work there one summer during its construction. And, you know, I remember one of the projects, we had to cut the slab and we had to take some drainage pipe and do all this stuff. And, yeah, that was a great project to work on. And he looks at me and he says, well, we own that building. And so my experience of working. And again, my father was a union tradesman, and now I'm sitting in the office of a union investment shop whose goal is to take the union pension fund money on behalf of people like my father and invest their retirement funds into assets that are worthwhile assets, but also create union jobs. And I thought, this is now a full circle moment for me. [00:33:02] Speaker B: That's cool. [00:33:03] Speaker C: Yeah. And that's when I decided, this is what I want my career to be. I want to be in real estate, and I want to learn this business. And it just felt sort of good. Felt like it kind of got to that moment where I had some clarity, and I was no longer thinking, what's the next step? What should I explore next? [00:33:20] Speaker B: So you came from the debt world with Rer. Was this an equity job? Were you investing in equities, or were you doing debt as well? [00:33:28] Speaker C: No, this was 100% equity. And so my job, I started as an analyst, and my job was to help underwrite and help support the team as we were originating jv equity investments with developers predominantly in union markets, if not all union markets. I say predominantly because some of them were like, Washington, DC was used to be all union, and like many markets, that started to dwindle. And so we were struggling to find those markets where union labor was readable and somewhat affordable. So Boston, New York, New Jersey, Chicago, Detroit, St. Louis, these are all markets that I was working in. And so I really learned how to. I really learned a lot. I started to learn about development. I thought I learned a lot about development, but I realized that it was just the tip of the iceberg and what development really means. But I was meeting with developers, understanding their projects, understanding their thought process, and then thinking about how we partner with those developers. It was very traditional equity, you know, 95, five or most ground up deals then mostly, mostly ground up deals. And it was office, office, sub retail. Retail is always difficult for unions because of the tenant improvement. [00:34:49] Speaker B: Did you take entitlement risk? [00:34:50] Speaker C: We did not. No, we did not. [00:34:53] Speaker B: So you would wait until they had something. [00:34:55] Speaker C: We were brought into all of these deals once entitlements were in place. Sometimes we were brought into the deal before entitlements, but we wouldn't close until entitlements were achieved. So we weren't taking that risk, even. [00:35:06] Speaker B: If unions were pushing real hard to get something done. Because what I've read and heard now, correct me if I'm wrong, that some union advisors listen very carefully to what the unions have to say about a project that's really important to them and they might lean over to get a deal done a little bit more, perhaps just because it's really important to their investors. [00:35:32] Speaker C: Yeah. And there was a lot of pressure. Oftentimes it came in markets where there was a union premium and it made the returns a bit more difficult to justify. And we had the pressure to get that project done because it helped support the union jobs. There was a generally, when I was there, about a 20% premium for a union project over a non union project. [00:36:01] Speaker B: Is that across the board with all trades or usually heaviest in some trades. [00:36:06] Speaker C: And not as it was generally across the board. And again, given my background, in my knowledge, union construction was a more. They were more skilled tradesmen. [00:36:16] Speaker B: Yes. [00:36:16] Speaker C: And the quality of the product was better. And so you were investing in. You were investing in legacy type assets. Right. We weren't investing in merchant build properties. And so you could justify that investment. [00:36:29] Speaker B: And sometimes the timeframes shortened because of the expertise. [00:36:33] Speaker C: And so, yeah, so, ASB, I was there for six years, and when I left, you know, I had learned a lot about structuring deals, how to structure deals, how to share risk. I had an appreciation, some appreciation for what developers brought to the table. I learned a lot more. [00:36:48] Speaker B: What were the unique deals that you did there that you can remember? [00:36:52] Speaker C: You know, there was a couple in New York, there were two condos that we did with a developer. Her name's Ronnie Hackett. She's actually on my Uli product council today. And these were in the Chelsea market. And they were. And Chelsea at the time was emerging and it was sort of becoming no longer. The gritty area was becoming kind of more of a upscale, upscale family type place, right. Which a lot of the locals kind of didn't really appreciate. But I really enjoyed looking at projects in Manhattan and learning that market. It's such a unique area and then just going through the development process there. It's its own sort of world, right? [00:37:35] Speaker B: It sure is. [00:37:37] Speaker C: You can't compare that market to any other market in the country. So those are really fun projects to work on. [00:37:44] Speaker B: Was there a big gap between union and non union labor in New York City? [00:37:49] Speaker C: It was a bit tighter. Yeah, it was insane with Chicago, especially. [00:37:55] Speaker B: For the larger structures, because you need union labor for some of those buildings. The superstructures are such that you couldn't find labor that understood it well enough unless they were trained. [00:38:09] Speaker C: And there was a culture in New York City as well within the trades, that if you were doing a project non union, you were going to get some backlash and you didn't want that. And so we learned that as well. We weren't doing, but you didn't want to be the investor coming into that kind of market and funding a project where the developer explicitly was trying to do everything non union. And by the way, there's no halfway, right? There's no. We're going to do. We're going to do these trades union and these trades. [00:38:40] Speaker B: It's all in. [00:38:41] Speaker C: It's all in. [00:38:42] Speaker B: That's interesting. So you've got a lot of business done that way and you learned. It's interesting. So you go from workouts and debt into union investing. Was it purely union or did you do non union investing to it? [00:38:58] Speaker C: It was purely union 100%. And it was a challenge. It was a challenge because every year it got harder and harder to find those union jobs because just the union trades were starting to dwindle in each of these markets. [00:39:14] Speaker B: So at some point you went back and got your MBA. Was it right after that situation? [00:39:19] Speaker C: It was while I was at ASB and it was great. I decided to, you know, so I studied political science. I didn't have any finance background, and here I am now, and I'm working on these complicated deal structures and talking a lot of money. And I thought I should fine tune my education by getting an MBA. And I focused on finance. So I deliberately went to now get the academic side of the business so that I was more adept at these models and understanding economics. And it just so happened that the University of Maryland Robert H. Smith School was starting an evening MBA program at the Ronald Reagan building, which was across the street from my office. Perfect. So I enrolled into that, and I would. And I lived on Capitol Hill. I lived on Capitol Hill, I worked on Pennsylvania Avenue, and I was going to school across the street. So if you think about time management, that was very helpful. So I was able to leave work, go to class, go home, study, wake up and repeat. [00:40:23] Speaker B: Did it help you to get an MBA? Was it a benefit? [00:40:27] Speaker C: Yeah, absolutely not. And not just the finance. There were a lot of other business aspects that you learn and, you know, marketing, for example, and you get into a lot of economics and supply and demand. And I think, not necessarily to apply these concepts on my day to day basis, but it gives you a lot of different ways to think about business in general and a lot of different ways to think about local economies because you might be investing in a specific project, but you're really investing in the market as well, and you need to understand those dynamics. And so it gave me, it gave me a little foundation that I think helped me throughout my career. [00:41:04] Speaker B: Well, I'm going to guess I'll just speculate that you wouldn't be in senior management without that today. It's just a guess, perhaps. [00:41:11] Speaker C: I think it helps. Yeah, I think it helps because you've. [00:41:14] Speaker B: Broadened your perspective a bit. [00:41:16] Speaker C: Yeah. Yeah. Certainly doesn't hurt. Certainly doesn't hurt. [00:41:20] Speaker B: Yeah. [00:41:21] Speaker A: So you were at ASB for six years. [00:41:22] Speaker B: You said, what made you want to make a change? [00:41:26] Speaker C: Well, so again, another bring it back moment. So a couple of folks at REr were starting up a business, and this is the fair companies. And I was in a very good position at ASB Capital. I think I was doing fairly well. I was getting promoted, went from analyst to associate to vp, and I was offered this opportunity to leave that and join a complete startup and go into a market that was brand new in the financing of real estate, hadn't existed before, and it was a risk moment. And I think everybody should have that moment in their career to take a risk and give something a chance. And it was the right time for me. Right single, no kids, I could afford to fall and be able to get back up, and it wouldn't have implications beyond myself. So I decided to go for it. And so I spent two years. Now I'm still in real estate, but this is a business where the bear companies who I worked for was in partnership with Manny Friedman, who was one of the founders of FBR. So Manny started EJF Capital. And so we were taking trust preferred securities, which is predominantly a commercial banking financing tool. It looks and feels like equity because it's 30 year debt and it's at a low rate. And so banks would use it to raise capital without diluting their shareholders. So it gave some flexibility in capital without having some really strong long term permanent debt. And so it sat in between on the balance sheet. And the thought was, let's take this financing instrument and let's introduce it to the real estate world for public and private reits and large portfolio holding companies. So my team was on the origination side, and Manny's team was on the pooling and selling of the securities. So we would, we would originate these pieces of paper, we would then put them into collateralized debt obligations, right? So. 20 07? 20 06. 20 07 so we put them in CDO's and then they were sold around the world. And I spent two years doing this. We, we had two different securities. The first one, we raised 125 million, and then we got a line of credit for a billion. So we're leveraging ourselves ten times. [00:43:53] Speaker A: Who are you competing with? [00:43:55] Speaker B: Capital? Who are you banging heads with? [00:43:58] Speaker C: You know, it was interesting because at first, putting this capital out was very challenging, because at the time, rates were relatively low. People could get equity instruments that were very favorable. There's other debt instruments that were favorable. So we're trying to wedge ourselves in between two competing worlds. And the idea was flexibility, working capital, right. Kind of bring it in, take it out. And there was one or two other competitors trying to compete with us in the direct space, but really nobody else. So it was really about selling this new instrument. Right. And bringing this new product to the market. And we successfully originated about $2 billion of product over the two years. And we were investing in a lot of subprime mortgage companies, a lot of other companies that were highly leveraged. So you can see where the story's going. [00:44:50] Speaker B: Was it mostly residential real estate, or what were you investing in? [00:44:53] Speaker C: We were doing some. We did a couple of small mall reits. We did a couple of private reits. There's some out in California, more family type structures that converted to a REIT business. And so when you have the REIT structure, it's easier to layer in this capital across the portfolio. [00:45:11] Speaker B: Got it. [00:45:12] Speaker C: It was difficult to put this capital to work for a portfolio with the traditional setup where everything's in a separate llc. Then we were. Then it got very complicated. We were trying to form these roll up entities, and then it just. It was so much brain damage that the borrowers felt like, I don't want to spend the money to do this. [00:45:29] Speaker B: That's the FBR roots there. [00:45:31] Speaker C: Yeah. There's a lot of complicated structuring going on behind the scenes, of course, FBR groundbreaking, and a lot of the REIT business. And so it was an exciting time. It was a very different time for me. And, you know, we would originate these deals, and then they would get rated by, you know, Moody's and Fitch. [00:45:51] Speaker B: Sure. [00:45:52] Speaker C: And then it would get sold. But no one asked about the real estate. And at this time. And this is kind of scary to think about, but it's part of the collapse. When the product was sold, when the bonds were sold, most investors weren't even allowed to look at the collateral. They saw a tranche and they invested in a tranche, and that tranche had a rating, and they were applying their capital to that rating for that return. And I think it was actually Jamie diamond himself. I think he had just stepped in as the CEO of JP Morgan, where we had a line of credit. I think he called Manny Friedman and said, lights are out. I mean, overnight, lights are out. Line of credit shut down October 2008. You cannot use that capacity any longer. And so just as quickly as it started, it ended. [00:46:36] Speaker B: Was this during the Lehman crash or. [00:46:38] Speaker C: Was it before that? No, this was that time. Oh, yeah. This was the end of 2007 and then into 2008. [00:46:45] Speaker B: Well, bear hit in March that year. They were out. And so we knew there was a crisis at that moment. And then, of course, it got worse and worse as the year moved on. And when Lehman went out, we knew that was it. [00:47:00] Speaker C: Yeah. It's frightening times. [00:47:03] Speaker B: I'll never forget. I mean, I remember reading the secretary of the treasury at the time, forgotten his name right now, but he said the world economy could crash, literally, because of this. And it was pretty frightening because we didn't know what that meant for any of us. Our personal income, savings, whatever. It was a pretty scary time. So what did you do at that moment? [00:47:27] Speaker C: Yeah. Well, so this was. This was one of the. This was the only time in my career where I experienced this abrupt shutdown. Right. And it had to be done. [00:47:35] Speaker B: Right. [00:47:35] Speaker C: There wasn't. No, of course, no black or. It was very black and white. So the company came together and we had a conversation and we all said, okay, that's it. And we all left. And then, ironically, you know, Manning is very brilliant. He went into market and started buying all the stuff, stuff that we were selling at a severe discount. Right. And so he's got his hedge fund and doing his thing. But I felt like I was so far away from real estate. Even though I was talking to real estate companies and I'm meeting with streets and there's real estate in the background, I really wanted to get back to the bricks and mortar. I explored a couple of things. You know, there wasn't a lot going on. A lot of people were taking breaks. I traveled a bit. I was going abroad, talking to investors and other companies, countries, thinking maybe there's a way to get some capital and bring it back to the US to find opportunities. Right. A lot of distress in the market. And then ultimately I went back to a relationship that was started at ASB Capital. While at ASB, we invested with Dan McCaffrey in the Cork factory in Pittsburgh. And I had a lot of respect for McCaffrey. And I remember Robert Bellinger, even when we were presenting the deal to invest committee, in saying, if we can get a deal done with Dan McCaffrey, we've done something because of his reputation in the market. So I had a good relationship with Dan. I talked to him and said, look, there's not a lot going on and you have an office in DC. I'm here in DC. Maybe I can try to bring in some business. We could work on some deals together. And we sort of tiptoe into maybe what could become a longer term relationship. And that's exactly what happened. So a couple of deals surfaced. I was working with some of my relationships that were local, and then I ended up being at McCaffrey for ten years. And it's funny, at ASP Capital, I was taught, and this is why I alluded to with, I thought I was learning development, but I really wasn't. I really started to learn development when I was at McCaffrey and what it really means. But at ASP capital, you're taught there's no such thing as sweat equity. And if a developer is not writing a check for three or 4 million, they don't have any skin in the game, right? And so I came to realize very quickly that sweat equity is very real and it's very underappreciated by the capital markets. The folks that are sitting at the large investment funds, if they haven't sat in the shoes of what it takes to take a project from there's a piece of land or there's a site that I like to creating a vision and then taking that vision through the planning process and getting your architects and your engineers and getting everybody on board and constantly getting pushback and pushback and facing headwinds, but sticking with that vision and ultimately three or four years you get approval, right? And then you just start the project then. So it was great experience. It was very eye opening for me. I learned a lot. I think Dan McCaffrey always called it, we got to fly in the gray. Not a lot of clarity of what we're doing, but we've got to fly in the gray. I like to think that we were finding opportunity between the method and the madness. I'm more on the method side. I'm more the analytical structure person. And then you've got the madness, which is, I don't care what we're facing, we're going to move this project forward. And we worked on a lot of exciting projects. I worked on a number here locally. The last project that I worked on was up in your neighborhood in Kensington. It was my first senior housing project where we did the Solera project. And then through those ten years, I was working on developing a team here. We had at one point about 15 employees locally, and we were working on a lot of projects and getting a lot of opportunity. And I was also working closely with the leadership team in Chicago and working with the team there on projects in Chicago, Denver, and we were growing the portfolio in Pittsburgh. So I was kind of had my feet in a lot of different things and a lot of great experiences. [00:51:40] Speaker B: What's interesting to me is how your career evolved. And I'm going to go, I'm going to just kind of do a little path here as it starts out. You learn starting out with the RER in the workout area. So you saw risk at a different level there. You saw that people are willing to do this with these very tough assets. Then you go into the union investing business, which is a whole different orientation to the marketplace and investing from a union perspective. Then you go into this really structured capital business, which is not real estate, but more in the securities industry, really is a structured finance type business, really financial engineering as opposed to real estate investing per se. And then you get really into the bricks and sticks with McCaffrey. And McCaffrey was known as somebody who was very cutting edge, pioneering really risk, very high risk reward investor. I mean, where the mall business, once you have the anchors, you're in pretty good shape to get a mall built and get it leased up. What Dan did, as I recall, and you can correct me if I'm wrong, he would take sites that were completely different, use different perspective, totally different thought process before, and then create something out of, almost out of nothing to a lot of value. And so I remember the crossroad Matzah Gallery the project there. Now you did have an anchor. You basically had a retail market there. But you can probably cite one or two projects where in Chicago particularly or in Pittsburgh you mentioned where it was a completely different use before and he had the vision to come in and do that. Now where I'm going here is you becoming from your background, had to look at Dan like he was a Martian almost. Some of the things he'd bring into the. And say we're going to get this done. And you say how can, where do you come up with these ideas to do this? You know, and you're coming from this, you know, very pragmatic background. So how did that dialogue, how did that work out? [00:54:07] Speaker C: Sometimes you know, it worked out, but you're right, there were no easy projects. Right. And when I say development, there's a lot of developers who have a product that they like and then they stamp that product in various markets. They find the sites, they've got the process down. They know, right. And still a challenge. But you know, one day, you know, one day Dan could say I'm going to work on the market common in Clarendon, which was big box retail in the rv corridor back in the late nineties and convert that to one of the most awarded mixed use projects in the country. And then the next day you're looking at a project we worked on in Pittsburgh, the produce terminal, which is an old produce terminal that's a single story building, it's 1600ft long and it's just nothing but loading docks and it's in this amazing neighborhood. And Dan said this is going to be an amazing retail mixed use destination and he spent five years working on that process. [00:55:10] Speaker B: Right? [00:55:11] Speaker C: And yeah, there was, it was almost like what's he going to, what's next? Right? What can we come up with next? And you know, I think, I think Dan had the reputation that if someone had an idea of something that they knew would probably be one of the most challenging problems projects to pursue and get approved, they think of Dan, call them right and get it done. And I was in some ways I was thinking about the growth of the company and how do we think about a path that might not be as risky so have those risky projects and have those legacy things, but also think about some projects that we can do that are lower on the risk profile. And I thought maybe we could try to do more garden style apartments or low rise apartments, you know, stick over podium and 200 unit type products and maybe we could come up with something that's unique and we could plant that in a few different markets, and that could be some recurring revenue, but that was a model that just didn't really fit with the McCaffrey bulk. But, yeah, when you walk away from that experience and you look at projects that other people would call somewhat ordinary, things seem a little bit easier and a little bit more achievable. But many of the projects that we dealt with were, they were all exciting, they were all fun, and they all took a lot of hard work, and, you know, there was no stopping. Right. Once that vision was conceived and that project was getting pursued, that that train was going. [00:56:43] Speaker B: So what roles did you play there? [00:56:45] Speaker C: So originally, you know, I was, I was sort of serving as finding opportunities and underwriting opportunity and then thinking about how to structure the equity. So I took my experience from ASP capital, and I worked locally with Dan's partner, Juan Cameron. And Juan's a great bird dog. So Juan, sort of the visionary, would find a deal and find something that no one thought you could find. And then we worked really well together because then I would look at it and think, okay, well, here's how we're going to, here's doing, how we're going to get at finance, and here's how we can structure it. So spending a lot of time on the structuring and thinking about how we could get value from the risk that was taken, I came up with a couple of different ways where we could sort of enhance our equity position and deals by the gain in the value of the land through all of the hard work, which was something that not all developers had done. So we were sort of getting a little bit creative on our structuring, and then we were sort of thinking about how do we grow the business? There's a couple of different platforms on property management and development, and we had in house leasing, and we were growing, you know, the company, I think at one point when I was, there was probably 60 plus people with offices, you know, here, small office in Pittsburgh and in Chicago. And so, you know, Dan and his partners were sort of running the vision execution of the projects, and then sort of the next level of management was helping to organize the team and get everybody on the same page and kind of developing that culture. And, you know, it's. I mentioned method and madness, and it's always a little bit crazy when you're working at a development shop and you're always kind of pivoting and chasing different things. So we were always pivoting and being nimble, I would say, towards, you know, towards the end you know, my relationship with Dan was, was close and became family. And we were talking about the family dynamics of a business, talking about succession. And I was very involved with a lot of the conversations. And just through my work at McCaffrey, really gained an appreciation for what it means from a developer's point of view and a real estate owner's point of view of that capital and how significant that capital is relative to an institutional investor who's got a billion dollar fund and how they view that capital. And I think when I was leaving McCaffrey and I was entertaining the idea of joining the Chevy Chase Land company, at first I thought, well, I don't really want to go into a family business. Right. Because that's, I think, the perception of the Chevy Chase Land company. It's a family business. And I quickly learned that, well, it's still in the family. It's still a family business, but the way it's structured from a management point of view and the way it's governed, you're not dealing with the legacy founders, and you don't have that dynamic of other family members with different wants or desires, trying to move things in a different direction. And I felt that I could bring a lot of value to this organization because I understand the importance of what the family assets mean. Right. I'm not here because I've got a pot of money, of other people's money that I'm allowed to invest and play with. I was brought in here as a fiduciary to the family assets and to be a steward of their cause. So that was actually a nice transition for me to step into this role. [01:00:19] Speaker A: That's interesting. [01:00:20] Speaker B: So you got understanding the family dynamics in another company to understand how it works and how it might not work. And did you help the thought process with regard to the tax aspects of this and estate planning and some of that kind of thing? Were you involved in all, in any of that thinking? [01:00:42] Speaker C: To some extent, not a lot. And partly because each individual asset in my past has always been through the LLC. So each asset had its own sort of planning. [01:00:54] Speaker B: But you weren't involved in the roll up of those, of that capital? [01:00:57] Speaker C: No. And it hadn't happened. Right. It was discussed and it was talked about, but those things never actually took place, so. But I became familiar with the concepts and the different dynamics and how important they would be and what it means to be a shareholder and who should be, be a shareholder and who should not be a shareholder. Right. [01:01:17] Speaker B: That's interesting. [01:01:18] Speaker C: And a lot of privately held family offices have certain rules in place. Like, for example, one would be bloodline only. That way you would prevent in, you know, 75 years later through divorce or whatever other relationships you've got people that no one knows, and they're shareholders. And so there's a lot that goes into the planning and a lot of challenging conversations that go a lot along with that, especially with a company that's going through its first transition. I'm here, and we're talking six 7th generation shareholders, because the company was founded in 1890. [01:01:58] Speaker B: So coming into Chevy Chase Land Company, what were you told when you came in about corporate structure and how that worked? And then what was your role? How did you. You already talked about your current role, but how when you came in, was it different then than it is now? And that was, what, three years? Three, four years ago? [01:02:18] Speaker C: Yeah. July of 2020. So the sequence, I had lunch with the chairman of the board in January of 2020 as a meet and greet. [01:02:26] Speaker B: Is that Kate Carr? [01:02:27] Speaker C: At the time, that was Scott Price. [01:02:29] Speaker B: Scott Price, okay. [01:02:30] Speaker C: Yeah. And Kate was on the board for a couple of years. She just stepped down. And then we had a great conversation. And then he called me and said, you know, we're actually, we're going to start a formal search for a new CEO. And then I spent several months meeting with the entire board and some of the management team, and it was all virtual because this started after pandemic. Right. So we're in the middle of the pandemic, and I even offered to meet some of the board members at a public park to sit on a bench outside, just to meet face to face. Face. Because, you know, I really appreciate the conversation and looking someone in the eye and having that kind of dialogue. But I interviewed 100% virtually, and the role described to me was, you know, the business was going through a transition. Obviously, they needed a leadership change. I knew that I was coming into a difficult transition with a company, and. But the role itself, obviously, to sort of lead things. And at the time, we all thought that the pandemic was at its peak, summer of 2020. By the end of the year, things would taper off, and then we would enter, you know, 2021, and we would start focusing on a lot of different things that aren't related to the pandemic. And obviously, we now know that that was not the case. And we're still sitting here today dealing with a lot of lingering impacts to the real estate industry. [01:03:59] Speaker B: So it was kind of taking the reins and learning the people, I assume. Right. Getting to know the people both internally and your relationships outside the company, I would imagine. [01:04:12] Speaker C: Right. It was all of that. And, you know, so when I came in, I had met a couple of the management team, but I didn't spend enough time with them to really get to know them. And again, this is somewhat of a risk for me. I wasn't very familiar with the Chevy Chase Land company. I had heard of it. I called a few folks that I thought might know more about it than I did, and they didn't know much about it either. And so I kind of thought, let's give it a shot. The board was great. I really appreciated everything that I heard from the board, and they all felt very supportive. I felt like we would make a good team. And so, yeah, I came into a number of challenges, and obviously, the first was, it is a pandemic. What does that mean? And then the second was the transition management. Right. And that kind of abrupt change can disrupt any type of culture, no matter how strong it is. And so when I started, I really made a point to I met with everyone in the company face to face when I could, because a lot of us were here in the office. A lot of our property management teams had to be on site, and we would sit outside here and have conversations. And I tried to somewhat diffuse unwarranted concern and fears. Given the fact that we were in the pandemic and there was so much uncertainty, the one thing that I knew I had to do was create some sense of stability. And so I sat with everyone. I told them about my background, where I came from, and I talked a little bit about why I was excited about the opportunity. I talked about things that I thought we would work on together immediately, so that we're a team here, and I'm here to work with you as a team. And I let people know that change is inevitable. But I made sure they knew that I was not brought in as a change agent. So I wasn't coming in to just shake everything up right away. So I tried to really give everyone a sense that we're all in this together. We're in a very difficult time. I want to kind of learn all the resources of the company. I want to get to know everybody and get to know their strengths, understand what you were thinking about before. And I was formulating at the same time the direction I thought the company needed to go in. So that was a difficult first six months. And the third objective, obviously, was I felt like I had a good relationship with the board, but I knew with this transition that I had to work really hard to gain their trust to be overly transparent and overly communicate with them. And so those are sort of the three different factors that I was dealing with. [01:06:48] Speaker B: So when you were interviewed and when you were talking, how deep did you go into the history of Chevy Chase Land company, and how did you, what did you learn in the interviewing process that made you comfortable taking the role, doing it at the time? [01:07:03] Speaker C: You know, I was focusing a lot on the portfolio and the opportunity. The history wasn't talked about much. And some of the challenges, frankly, that I was faced with weren't really discussed. I wouldn't say they were not disclosed. I think some of them weren't. They weren't aware of some of the challenges, and I think that was part. [01:07:22] Speaker B: So you didn't learn until after you joined the firm about a few things that you. [01:07:26] Speaker C: I learned a lot more. Yeah, I learned a lot more, and maybe that was somewhat intentional, but I felt like I knew enough coming in. I knew enough that I could make that decision and I could join the organization. The people that I was interviewing with all have great reputations in the industry. We have a very strong board, and the family members, they're all very engaged with the company, and they all gave me the confidence that what was needed was leadership, real estate knowledge and expertise as well. But what the company really needed was some leadership and some direction. [01:08:02] Speaker B: Well, there are two board members that I know quite well on your board, and knowing them, they would be very supportive of you coming in. I'm sure. Those are Art Greenberg and Bill Norton. [01:08:16] Speaker C: Yeah, and Art's our newest. Art just joined last year, and he's been a great addition. [01:08:21] Speaker B: Yeah, I've known both of them for almost 40 years. Long time. Solid guys. [01:08:29] Speaker C: Yeah, they are. They are everyone on the board. And again, if it did feel like a partnership, I report to the board. So I always, you know, keep that in mind. But it felt like we were going to work on this together, and they were going to support me, and I was going to support them. And so here we are now. [01:08:45] Speaker B: Let's go. The history, a little bit of the land company. You talked about the board, and I, you know, it started out as a family business, basically building out northwest Washington into the Chevy Chase, Maryland, in the 1890s. And it was the family was the Newlands family out of Nevada. He's a senator in Nevada. He lived in California. So before the interview, I did a little bit of reading about Mister Newlands and himself and his background. Maybe you can go into that. But I also like to understand how the board structure was built. If you know, in the first place. [01:09:20] Speaker A: And why it was done. [01:09:21] Speaker B: It diversified the perspectives of the company as opposed, you know, which in my view, has really helped the company over the years. So I'd like to get your perspective on that. [01:09:34] Speaker C: Yeah, well, I'll start a little bit with, with the history. It's a very rich history, and I myself have done a lot of reading and research, and it's just amazing when you think about how people were living and how people were thinking in the late 18 hundreds and, you know, riding horseback to get across the country, you know, and some of the aspirations that people had that they would see through. And so it's interesting just to go back to the history, but this company, you know, it was started in 1890, and the story goes back to the late 18 hundreds when Francis Newlands, he was a lawyer in San Francisco. He was very involved and started to get very involved in politics, and then became a senator from Nevada. He returned to Washington, DC. He had spent some time in Washington previously. And in between being a lawyer and returning here, he inherited through his marriage a rather large estate which had significant assets out west. And I think he was working to sort of unwind that estate. And I think there were some issues and some litigations he was dealing with. But when he first moved here, he started to acquire what was farmland. Where we're sitting today was farmland. Right. And he bought close to 2000 acres of land from Calvert Street, DC, up to what is now Chevy Chase Lake. And he was doing this piecemeal, right. He was not coming in and trying to capture everything at once, but he was assembling the land. And then he started to build. And it's important to recognize this wasn't a public private relationship. This was 100% funded by. He had the land from Calvert street up through here, and he started to grade a rail line so that he could put in a trolley from downtown DC up north to Chevy Chase Lake. That rail is now Connecticut Avenue. The lake was drained in 1930, but that was a man made lake from a tributary to Rock Creek park. So it was also involved in Rock Creek park and formed the Rock Creek rail. And a lot of that, over time, became one of the key arteries to our current metro station today. So his idea was he was going to develop this land and he was going to provide transportation to Chevy Chase Lake as one of the main destinations for entertainment. So this was where you would go to, you know, public musical plays, and people would come there for entertainment and dances and picnics. And it was considered sort of the refuge from downtown DC. So I'm trying to think in today's world what that might feel like. Maybe it's going out to Middleburg or it's going out to the eastern shore. But for the folks in Washington, DC at the time, this was going way out into the country to get away from the heat and the swamp environment, that was decent. [01:12:36] Speaker B: Higher elevation. [01:12:36] Speaker C: Higher elevation. Right. Cleaner air. And the name. So it's important to understand the name. One of the first pieces of land that he bought, I think, was about 175 acres, was originally a grant from Lord Baltimore back in the 17 hundreds. And Lord Baltimore had named that entity, the legal entity that owned the land. Some. Some variation of Chevy Chase, I think it was Cheviot Chase. And historians claim that that name came, and we all assume it came from the ballad of Chevy Chase, which was a ballad written, I think, in the 14 or 15 hundreds to commemorate a massive, fierce battle between the Scots and the Brits in the Cheviot Hills, which is the territory between the two countries. And as the history goes, it was about 2000 swordsman against. Or spearmen. I'm sorry, 2000 spearmen against 2000 archers. And about 170 people survived this battle. And it's just across these hills, right? And so there's this ballad of Chevy Chase and this first piece of land from Lord Baltoire with that name. And so Newlands decided that he would name the company the Chevy Chase Land Company. And, of course, I was born the subdivision of Chevy Chase, Maryland. So when you get to the original development of Chevy Chase, he decided that he would first start to develop the northern part of the territories, which is, you know, where we are now. And he put together some of the top architects, engineers, and I wouldn't use the word planners because planning didn't exist at this time. And this is one of the first master planned suburban communities in the country. There was none other than this. No one thought about master planning in a residential neighborhood the way newer ones did. And so that included wide streets and well organized streets and flat streets, and included pure water, which he provided through 20 wells. It had a sewage sanitation system that was the best in the region, which was rare in those days. The downtown sewage system, I think, was repulsive, according to most people. So he was creating this park like setting, and he was using some of the best people to help lay out and design it. He even built a nursery to grow shrubs and trees to plant along the streetscapes. He provided, built schools, built a shopping center, and donated land to churches for the. For churches. And then started to sell some of the lots. [01:15:16] Speaker B: So when did the District of Columbia next the land that up to Chevy Chase Circle. Do you know when that happened? Because I know that was state of it was Maryland all the way down to what's now where Rock Creek crosses at Taft bridge. I believe it's the state of Maryland owned that land at that time. Do you know when that happened? [01:15:38] Speaker C: I think it was in the early 1990s. Hundreds. I think it might have been. I think it might have been around 1910, I'm not certain and it's not really widely discussed in terms of the history of the company or how things sort of transpired. [01:15:53] Speaker B: So I shared with you that when I worked for the BFSOL company, which was founded in 1892. So it was only two years younger than Chevy Chase Land Company. And I'm guessing and I don't know know the history of it that B Frank Francis Saul I who was the founder of that company and Mister New senator Newlands were acquainted and knew each other at that time because there's actually one of the subdivisions in northwest Washington's a sol addition to Chevy Chase. So clearly there was a relationship at that time. But my working there for seven years at the salt company, I learned about the relationship. But I also came across a book and it's actually about one of four volumes called the based Baist book, which is in the Library of Congress. It really is the first plat map of Washington DC, which came right around the turn of the 20th century, 1905 or so. [01:16:59] Speaker A: But it's interesting. [01:17:00] Speaker B: It was Washington DC. So at that point it apparently was the city because they showed Western Avenue on that map that there was a break at that point. So it's interesting. It was right around that time, but we don't know exactly when. It sounds like it's interesting. [01:17:18] Speaker C: No, and you know, when Virginia, when Arlington and Alexandria were sort of broken off of. There's no clear. I'm sure it's somewhere, but I just haven't seen it. [01:17:30] Speaker B: Interesting. So talk about the evolution of the company then from there and how that all took place. [01:17:37] Speaker C: Yeah, so I would say so. Francis Nolan's, he was president of the company until his death in 1917. But I would imagine when you say president of the company, it's not like I'm president of the company today. This is like my full time job. He was president of the company. He was also a senator and he was also handling business in Nevada and throughout California. So I imagine he had his team sort of here running the company. And the first phase was mostly selling the lots and Chevy Chase for residential development for the most part. And then it went through the next phase. The company, through different leadership, started to sell tracts of land south to builders, to builders, developers. And that was sort of, I think, harvesting some of the investments. And I don't know for sure if that capital was reinvested into the company one way or another. But there was a decision, and this came post World War two, that the company would stop simply selling land, but it would start to enter into the business of developing the land and creating assets for the company. And that that's what led to where we are today. So some of the developments, some of the earlier ones, Chase, Mander and Preston place townhomes, which are up in Chevy Chase, they were built in the sixties. And so the idea was, let's build commercial residential assets that can be put into the portfolio as legacy cash flowing properties. And it's interesting, and this was publicly stated by leadership of the company. It was very much into the community. It was very much into providing something exceptional for the community. And I think it was in the 1930s, it was a statement that simply said, we want to provide something exemplary for the community that we're in. And if it means significantly less returns financially, so be it. So the culture of the company was, we want to create world class product. We want to deliver above and beyond. We don't want to be seen as simply for profit trying to get every nickel and dime out of a deal company. And that culture somewhat exists today as we think about legacy assets and holding onto properties. And that sort of ties a little bit into my thoughts for the future. [01:20:06] Speaker B: Interesting. So how did the board structure evolve? Do you know how that all kind of came about? [01:20:13] Speaker C: I don't have the exact details. As you know, the company over the last 30, 40 years has transitioned through a couple of different leaders. And I think over time, the board was once more colleagues, associates of the company and family and leadership. And then I think it started to transition into more of an independent governing board. The structure is very, I would call it, it's a very proper structure. Right. So when you think about how we're set up, we have our. We have a chairman of the board, and we have our committee system, so we have an audit committee, governance committee. We have a family council liaison board member who works with our family council, and we have Bill, who leads our investment committee. And we all support one another, and we all have a good relationship, meaning the management team here works well with the board. So I think it provides a lot of good stability and guidance for the company. I don't know when the decision was made to have the board be so independent, because, as you know, with most family companies, when family's involved, it's more of a family reunion conversation for an update on the, on the company than it is. [01:21:29] Speaker B: I mean, you look at some of the large family oriented enterprises, and one that comes to mind, because I grew up in the Detroit area, is the Ford family and the way they set it up as a public company, but they have these super stock structures so that their votes mean more than the rest of the public is. And in your case, you're a private organization. But it sounds like because of the governance structure that you've just talked about, it sounds more or less like a public company type of structure from a board standpoint. I may be wrong, but that seems to be where you're. [01:22:07] Speaker C: No, I think that's the independence that we are striving for. And obviously, the family is very important, and we have that relationship and we have that dialogue, but the family looks to the board to oversee the business. [01:22:24] Speaker B: What's interesting about the Maryland portion of Cheby Chase is that it's divided up into at least six, maybe seven municipalities. It's interesting how that all happened and why it didn't stay under one thing and how it all divided up. Now, maybe that was by design. I don't know. I'm just kind of curious, if you know anything about how that all. [01:22:46] Speaker C: I don't know what the thinking it was by design, and I don't know what the impetus was to sort of move in that direction. But as I sort of alluded to, every intricate detail of the beginning of the community was thought out and deliberate for a reason and for a purpose. And, yeah, I'm sure there was some method behind that decision as well. Yeah. [01:23:16] Speaker B: Chebyche Historic Society has considerable information about the formation development of the area. Unfortunately, there were deed restrictions imposed on most of the property when developed, that became unconstitutional with the Civil Rights act in the mid 1960s. We've come a long way, and now the demographics of the area have diversified. Talk about the evolution of companies views in Europe, current people. [01:23:40] Speaker C: Yeah, sure. And, you know, this is what I guess I would call sort of a dark cloud over the Newlands legacy. You know, for, for listeners that don't know the details, there were, there were deed restrictions. Now, the deed restrictions were not put into place until after his death, but what Newlands did is when he, when he put the community together, he had zoning restrictions, and those zoning restrictions, restrictions prohibited apartments they prohibited townhomes, they prohibited alleyways, and they also had minimum values associated with the lot. So the lots on Connecticut Avenue had to have a home value of at least $5,000, and the lots on the side streets were $3,000. It was home value or the lot value. But regardless, it was very clear that number, that valuation was only attainable to a very select group of people. And so, you know, this is something that, when I joined the company in 2020, not just the pandemic, but there was a lot of civil unrest. And this was a topic that was front and center. And, you know, it was a good opportunity, I think, for us as a company to bring this history to light and to talk about it. I think it was a great opportunity for us as a country, because this was. This topic was surfacing in every community with history and things that we thought we knew, but we really didn't know. And so we use it as an opportunity here in the company to surface it, to talk about it, and to address it. We all agreed that for us to think about moving forward, this is the part of history that we must acknowledge and accept. And we made a decision to make one. We made it very clear to the community that. That the views of the past in no way, shape, or form reflect any of the views that we have today. We very much embrace diversity and inclusion and many of the things that we do outside of the company work that we do in the community. You know, we're striving to support equality for all. So to Bethesda, Metro was the Newlands building. So we removed the Newlands name from the building. We've rebranded that property. We're actually 45 days away from completing a major renovation, which I'm extremely excited about. And then there's Chevy Chase circle, where that was named after Newlands with a plaque, and that plaque was a national landmark. And so we worked closely with the Chevy Chase Historical Society. They're a great friend of ours and an ally. We worked closely with the Chevy Chase Circle foundation, and we fully supported the initiative to remove the name from the circle. That, in fact, required an act of Congress because it was a landmark. And so we were, you know, kind of along the way and making sure that happened. And, in fact, last year, the plaque was removed from the circle, and there was. There was a nice celebration to commemorate that. So the whole community was together. We were there. Mayor Bowser came up and gave a nice talk to the church, and, you know, she was sort of emphasizing what we were all talking about that we're recognizing this and we're taking this opportunity to, you know, to move forward. And I would say today, you know, the company, the entire company, all of our board members, every one of them, and our shareholders, you know, we all believe that his views on race completely contradict the ideals of the company today. And as we think about who we are, it's our intention, you know, for us to be an active force for change and progress in the community. And when we think about what we do and the product that we deliver, it's part of our mission and it's part of our core values, and that is we want to build, you know, welcoming communities where everyone is welcome and we have a value that, you know, together we thrive, and that's really important to us. So, you know, this is sort of very representative of, I think, the culture that we've been working, working to build. And I think it's given us an opportunity to think about as we move forward. You know, what are the ideals that we embrace and how do we make sure that everything that we do exhibits and projects those views? [01:27:55] Speaker B: That's great. Sounds like you've pivoted quite nicely there. In my early tenure in the 1980s, Chevy Chase Land Company owned 8401 Connecticut Avenue to Wisconsin Circle, an office building that had been built at that time and a joint venture with Northwestern Mutual. And Bill Norton was leading the office then at that time. So I'm sure that's how the relationship developed, him and the company and scattered other investments, including land on Wisconsin Avenue, which became the Chevy Chase collection we're sitting in, and part of the Bethesda metro area, which became to Bethesda Metro. Doug Furstenberg of Stonebridge Fee developed both of those projects in the 1990s, as I recall. Talk about the current portfolio and its growth. [01:28:42] Speaker C: Yeah. So it's interesting that you mentioned all of those projects because we still own all of those projects. And that's something that we're talking about a lot in terms of legacy assets. Right. There are legacy assets that can contribute a lot of value to a portfolio, and there are legacy assets, assets that can drain your portfolio. Right. Office being one very capital intensive. So as we think about our current portfolio, we're thinking about our shift. We're thinking about diversification, and we're thinking about growth. Those assets are key assets that we're very actively sort of generating value through, and we're thinking about what is in store for the next three to five years. Other assets include here, the collection, where we sit today. When I started, somewhat unfortunate that it was the pandemic. But more than that, Amazon was under construction and not open. We had two restaurants that had signed leases. They weren't under construction. We had a lot of vacancy here because this project was going through a transformation and it just got hit headfirst with the world shutting down in 2020. We've really worked hard to bring this back to life. And now we have five restaurants. We have a lot of exciting, engaging activity. So this has been a great asset for us to continue promoting. And then to Bethesda Metro, which, you know, is one of our key assets in downtown Bethesda, sitting on the metro station, that's a project that as soon as I started, I felt like it needed a complete new life. And in my first six months, I started working with an architect. Think about a new plan. And we spent quite a bit of time revising that plan. And we made a decision a year and a half ago. I would call it a rather contrarian position if you think about where office was then and where it is today. We embarked on a $22 million renovation to Bethesda Metro. Full renovation of the building, the lobby going vertical. And then there is what I call the annex building, which goes up three levels from the ground floor to the mez to the upper plaza. And that looked like something that was very underutilized and it was. And there's a lot of failed retail concepts that tried to be there. So we've taken that, we've popped it up, we've brought it over, we've expanded it. That's going to be the new amenity pavilion for two Bethesda Metro. So in two months, I think we're going to have one, one of the best products in the market that's not a brand new trophy asset. I think it's going to be a really special renovation and I think it's something that you have to do in this market if you're going to survive what we're seeing in the office segment. [01:31:24] Speaker B: How's your leasing going there? [01:31:26] Speaker C: We're getting a lot of tours. We've had some activity. I think we've leased in the last six months, about 30,000ft, not including a lot of renewals, a lot of tenants who were. We're subprime tenants, we've taken prime and subleased tenants. Sorry, I'm thinking back to the. [01:31:44] Speaker B: I think Costar was the first big tenant you had there, I recall, and. [01:31:50] Speaker C: We had Aries capital, and that deal was done 13 years ago. [01:31:54] Speaker B: Right. [01:31:55] Speaker C: And so when you think about legacy assets, and you think about when do you harvest an investment? It's one of the things we're working to change here is to think more about of a portfolio management. That was a great lease at a very high number. It set the market at the time. And that's an asset that you would think, maybe let's harvest that, let's think about our capital, and then let's redeploy into other properties. And so we're starting to take that mentality in terms of we don't need to have two Bethesda in our portfolio because it's been in our business for decades. So that's going to be a big part of our shift in a direction that we're heading. [01:32:33] Speaker B: Interesting. Other assets. [01:32:36] Speaker C: Yeah. So we've branched out into Virginia. We've got a couple of properties in Virginia, one in Boston. We have a shopping center in Reston that performs very well. We had a development site in Reston. When I started, it was an office building, one of the old, you know, three story, 70,000 square foot office buildings that really was obsolete in its use. And we were moving in the direction of redevelopment. But we also felt like we had too much development exposure. When I started, this company was a very opportunistic, high risk portfolio, and it really needs to be a core portfolio. So we've been very strategically stabilizing certain assets and working to move out of what might have been a high risk development and putting more capital into more core, stable, cash flowing properties. [01:33:29] Speaker B: So you're starting to acquire assets as opposed to developing on that at this point, yes. [01:33:34] Speaker C: Yeah, we want to be. We're not finding much in the market today. It's too low. [01:33:39] Speaker B: Yeah. [01:33:39] Speaker C: And of course, our money market, at 5% is competing with the real estate market. [01:33:45] Speaker B: Exactly. Well, I mean, there's repositioning opportunities, but that involves usually development risk involved. [01:33:52] Speaker C: So a little more of that. [01:33:54] Speaker B: So, for instance, taking one of your office buildings and converting it into a residential structure might be an interesting play. [01:34:02] Speaker C: And we've studied that. We've studied it with two, Wisconsin, and I've studied that market a bit. And it's a very challenging market. Very challenging. It's a unique deal that works. And I think it's even getting more challenging, as I've heard from others, that your basis needs to be close to zero to make it, you know, underwrite. [01:34:24] Speaker B: Well, either that or you're going to go really high end. You're not going to do affordable with that, but you might go really high end. And I interviewed a fellow recently Matt Pestrunk, who came here from Philadelphia and acquired two large assets downtown. And they're doing really high end luxury type apartments and then with older office buildings. So the, an interesting thing to see how that all transpires. So you're looking to acquire, but you're struggling to find deals. Any other repositioning is going on in your portfolio now, or are you pretty much just kind of steady as she goes at this point? [01:35:02] Speaker C: We're wrapping up the repositionings, and I'm happy to say so because again, we're really focused on getting to that stabilized recurring revenue. We do have two assets in Chevy Chase that we'll be selling. They're under contract. We'll be selling one in the next 90 days, and then phase two will sell somewhere in the next year or two. That's going to be fresh dry powder. So that's going to be the next play for the company. We're not thinking about repositioning any other assets at this time. We're studying to Wisconsin for a couple of different. We're thinking about this site here and the SACS property. I think we're going to look at the sector plan with the county soon. [01:35:45] Speaker B: Do you own the SACS property or Sachs own that property? [01:35:48] Speaker C: We own the ground. [01:35:49] Speaker B: Okay. [01:35:50] Speaker C: We own the ground. And I mean, that's an amazing site. And so we've got our eyes on, you know, what that opportunity might mean. But we all know when we talk about doing a sector plan that's not going to be in the next two to three years. [01:36:04] Speaker B: Right? [01:36:04] Speaker C: So that's a long term play, and I think we're going to embark on that. But really in the near term, I'm thinking about as we get the, as we get proceeds from sales, we're doing a lot of structuring behind the scenes to get off the 1031 highway because traditionally the company would sell a building and buy a building and do a 1031 to avoid the capital gains. So we've got some structuring and we've got some losses and some things that we've generated through hyper amortization with our development projects and doing cost segregation so that we can minimize our capital gains and we can take capital and put it to the side and have it parked for future investment. And I think that's a big opportunity for us as a company because what I'd like to see us do, instead of taking the proceeds and then buying, and let's just say it's 25 million, rather than buying one asset for 25 million in equity, we'd like to think about 25 million as available capital for maybe five different investments. And so we're building our asset management team. Interesting. We're bringing in a portfolio savvy way of thinking about things. We're bringing in a team that can find opportunity and that can generate value in the real estate world. And so that's a big shift from what was the land company, the Chevy Chase Land company. The value was, we had land. Now we're a little bit short on our supply of land, so we need to be thinking about what's our expertise and what value do we bring to the market? And that value is going to be the team here, and that value is going to be us uncovering opportunities. And so we might identify a few investments and say we'll seed invested with some of our capital, but we'll leverage the capital markets and we'll go out and we'll talk to some of the other institutional investors or other family offices, frankly, that may be more aligned with us, principally long term and more longer term. And so rather than sell one and buy one, we may sell one and buy five. And now we've diversified our property types, we might diversify geography, so we spread our capital out. We mitigate our risk a little bit more. And I think that's going to be a big shift for us. We're starting to talk about it. We're working on that conversation internally, and I think we'll start to bring that to the market later this year, and we'll start to have more conversations about what that means. [01:38:38] Speaker B: I'd like to talk about two Chevy chase assets, more specifically, one of which is the building that I first worked in, 8401 Connecticut Avenue. So I have two doctors that are in that building. And in fact, I have my physical this afternoon in one, in that building, my annual physical after this interview. And I remember that building being completely different than it is today. It's just, you know, you guys have really transformed that property, not only physically in the common area, but the tenant mix is almost now, well, I don't know, maybe 75% medical. And there's two issues with that. One is parking. So there's a challenge there now. And then you have construction with the metro, right, or with the purple line going on there. So it's an interesting situation. And of course, adjacent to it used to be a shopping center called Chibichi Shopping center that the company owned, had, you know, a big anchor grocery store and then had strip along Connecticut Avenue and then a wrap in like a u shape. Now it's a huge mixed use development and joint venture with Bazuto. [01:39:57] Speaker C: Right. [01:39:58] Speaker B: And you're just apparently gotten approval for phase two, which is the old retail on the other side of Connecticut Avenue, for a phase two project. I assume you're pretty proud with the phase one at this point. [01:40:11] Speaker C: Yeah, absolutely. And I. And I think when you look at phase one and you mentioned the Chevy Chase shopping center, I, when I finished at ASV Capital, we were up in Bethesda, so I got to know this, this neighborhood quite a bit as well. And there was a lumberyard. [01:40:26] Speaker B: Right. [01:40:27] Speaker C: And tw Perry, you know, and this is an example. This is an example of when you bring together some of the greatest minds in real estate and developers and architects, and you stand there and you're at a lumberyard and you're thinking about what could be. And that was a very bold vision, and it's what was needed. And so it's obviously for us, it's a flagship development. We've been completely thrilled with our relationship with Bozzuto and couldn't be more proud with how the projects turned out. We're still leasing up our second apartment building, the Claude. We are stabilized at the Barrett. The Barrett, by the way, was named after the landscape architect Nathan Barrett, who was part of the original design of the neighborhood Chevy Chase. And, yeah, we're so thrilled, which is why we're across the street right now with bozzuto again working on getting our approvals in place for the next phase of development. I'd like to say we would start right away, but we've got some more work to do with the county, probably another year, and then we have another year of design development. But that site was always intended to be the next chapter for Chevy Chase Lake. Yeah. And 8401, that's an asset that it needed to be. It needed some sort of shift in its use. It's a great location. And you mentioned parking. As we started to convert to medical, it was our number one concern. Our solution was the purple line, because I think the purple line is going to be a great amenity, a great asset. It's just taking a lot longer than we anticipated, and it will likely be several more years before it's done. But there are solutions that we've thought about for parking, and there's some ideas that we have, and I hope you have a good experience today. See your doctor. I hope your blood pressure is under control when you get there. But we have a couple of ideas of what we might do there, including leveraging some of the excess parking that we have and some valet uses. But, yeah, we've been intently working on shifting that building to a more medical use. [01:42:44] Speaker B: Yeah. And that's. I think that's a winner for it. I noticed that the Capital one bank branch is going to close very shortly, too. I'm curious if you have a substitute use for that space. [01:42:58] Speaker C: We don't at this time. We're exploring some ideas, and we've got some activity where, you know, we're challenged. I think, like, everybody is in the market when they explore uses. And of course, course, some of the retail concepts that we might be thinking about are probably attracted to Chevy Chase Lake as that sort of gets completed and becomes sort of the townpeace center. [01:43:22] Speaker B: Yeah, I just went to one of your tenants this week, stretch lab, and started my workout routine there. So that was great. It's a good little tenant. I enjoyed that. So since joining the company in 2020, we talked a little bit about this. How has the company evolved culturally? You've kept existing culture, talk about your team and management style. John. [01:43:45] Speaker C: Yeah. So touched on it a little bit earlier as I came in, it was a big transition, and I really tried to get everybody on board with who I was and what my vision is. And at the same time, I was crafting that vision and what the future the company would be. And obviously, a little bit of change was needed in the company. But I feel like I was getting more and more buy in because I'm analytical and I like things to be structured. I introduced what's called EOS. It's called the entrepreneurial operating system. But don't worry about the vernacular. It's really what it gets boiled down to. It's a structure for how you run your business. It's a structure for how you plan your annual goals and how you run meetings. And so I introduced that, and I quickly found that many people here were looking for a structure. They were looking for an idea of what they were doing. And we started to have some deeper conversations, and we started to break down some barriers, and we did a bunch of trust exercises where just to get people to feel a little bit more vulnerable. And that sort of started to lay the groundwork for a culture today where we all see eye to eye on what we're trying to do. And one thing that I think is really important for a company is, and I think culture is, I think sometimes it's a little bit overthought. I think it's very simple. I think you make sure that there's a vision, and you make sure that you clearly communicate that vision to the people. You make sure that people understand their role in the organization. And we have an accountability chart. It's not an.org chart. It's a little bit different, but it's a chart that shows everything that we need for the company. And one person has a name on each one, so everyone knows what they're responsible for. So that when you come in, you know what your purpose is. And I think we need a purpose. And then finally, you show people that you value them and that you care for them and you want them to be a part of that team. And that's resonated so well. And we are now we're at the point where I like, I'm thrilled with where we are culturally, we are firing on all cylinders. We have a great team environment. We have a lot of fun. We have a lot of random games in the office. We have Lydia. She's great. Last Friday was National Pizza day. She had a big pizza party and pizza trivia. But really, you know, we're all bought in on where we're going. We all know the direction of the company. We all know what's expected of one another, and that really pulls it all together to where we support one another and we show up for one another. [01:46:28] Speaker B: So where did this eos concept come from? [01:46:31] Speaker C: You know? Well, when I was about to join the company, do you know Bonaventure? Dwight Dutton is the CEO of Bonaventure. He started the company, and he'll be happy that I mentioned him because we were on a bike ride together, and he said, if you're starting this new job and you're about to take a, you've got to look into eos. And so I did, and I met with his consultant, and we hired Ben. And Ben's been kind of our employee. Like, he's helped roll it out through the organization, and now the board loves it. And everything's run through in apps. We document everything that we're doing. We track our, we have measurables, we track our quarterly goals. They all tie into our long term strategy. So it's one of those things where at first, if I were to tell you about it and say, we're going to roll it out, you would feel like it's a big homework assignment. You would feel like it's an extra layer to your job. Once it's in place, it falls to the background, and it's just how you operate. It's just how you run your day to day business. It's how you communicate and it's how you understand that we're on track and we're not on track. And it's really been a benefit because work from home now is a permanent change in our market. And so when you have people in the office or out of the people, you don't really worry so much. Are they getting their job that or not? Because you have an idea of who's working and who's not, because of, you know, interest in a system. [01:47:58] Speaker B: I was given advice one time about how to approach work, and especially in our industry in real estate, and what I was told is, think like an owner. And that's, in essence, what I sense, what the EOS program is. Think like an owner. So what you're doing is you're taking ownership and responsibility for everything you're doing. [01:48:23] Speaker C: Right. And that's critical. And people. And people understand the ownership. And one of the most important things, when I mentioned the accountability chart, when we started that conversation, some people would say, oh, well, that's Jeff, and that's James. No one person has the ownership, and that's it. Right. And so that kind of sets the stage for that conversation. [01:48:46] Speaker B: That's great. That's great. I'm glad you were able to do that. What's your criteria for hiring, and what do you look for in people? [01:48:54] Speaker C: So, I learned a lot about, I've hired a lot of people in my career, and I I think a lot of people I work with get frustrated because I do take my time. For me, I could assess someone's capabilities and experience and ability to do the job very quickly. I think that's the easy part of hiring. The hard part is the personality assessment and whether or not the person has the right character and whether or not that person's gonna fit in with your team. And again, once you've got a great culture, it only takes one toxic person to destroy it. And so you have to be very, very careful when you're bringing someone new into the company. So I do spend a lot of time, and I do try to break down the conversation to get to a very personal level. But collectively, as a management team, we look for people that share our core values. These are core values that we, as a management team, came up with when I started at the company. And we spent probably four or five months kind of defining them. So they're not phrases that we just threw on the wall and thought, they sound good. They're things that we live by. And every quarter, we sit down and go through our core values and ask ourselves, are these still our values. And so that's one of the things that we do. We have a thing called do they get it, do they want it, and do they have the capacity? So that phrases some of the questions that we look for. But really, at the end of the day, we're just looking. We're looking for good people, people who are authentic, people who are sincere, and people that we feel like aren't coming in, you know, with an ego for their own, you know, advancement in life or business. But people that would stand by this team and support us, and I think that's the most critical. It's just, you just look for someone who you would feel proud to be a part of your company, whether they're in the office or out at dinner on a Saturday night. [01:50:52] Speaker B: Great. So, John, tell me a little bit about how the company is reinvesting in the community and what initiatives have you instituted? [01:51:01] Speaker C: John, I would tell you, I'm happy to say that I didn't have to initiate any planning. The company has a longstanding tradition of being very generous and giving back to the community. We donate generously, both in terms of money and in our time. So throughout our history, we've been involved with over and supported over 500 local charities. We have a committee that's part of the family council where we do annual planning together. So we would lay out the capital budget for the year, which is pretty substantial in terms of money that we give out. We come up with ideas of who we should be supporting. Some are recurring, some are new, but they're all sort of tied to. Again, it gets to our values, and where do we see a need in the community? Where do we see that we could make an impact? And then we work on that dialogue of agreement, and then we sort of initiate that plan. But we also make sure that it's not just writing checks. We get involved with the company here, and we're very active with daily charity events. We do a couple each year with the Mount Zion. It's an old cemetery in Georgetown, predominantly a burial for early slaves in the DC market. It doesn't really get much support, so we got there and worked throughout the cemetery and cut the weeds, we cleaned the stones, we helped build stairs through the hills, and that's just a nice way to give back to that part of the community. We, we sponsor a young student at WJA, the Washington Jesuit Academy downtown. He's an amazing young guy, and we spend a lot of time with him. We go to his sporting events, we go see him at school. He gives us a tour of his classrooms. Interesting. So, and there's a number of other things. We're going out in a couple of weeks to support one of the children's hospitals, and the team will go out shopping one day, and then the team will go out to the hospital the next day and deliver gifts and presents. So it's always been sort of something deeply rooted in the company. And I was very happy to hear it as we were talking about me joining the organization. And it's. It's. It's a lot of fun, and it's somewhat fulfilling to be a part of those decisions and be active. [01:53:20] Speaker B: That's great. That's awesome. So how do you view sustainability? And has that definition changed as a result of a pandemic? [01:53:28] Speaker C: We're very sustainable driven. We obviously think it's an integral part of our industry and our business and everything that we do, whether it's a major tenant build out, whether it's some modification to a project or a major renovation, we always strive for leed certification on all aspects. We're cognizant in all of our annual budgeting processes that we do in terms of what can we be doing to create more efficiency. The one thing that we're talking about that does relate to the pandemic is we've got these large office properties which are very energy. They're using a lot of energy. 09:00 to 05:00 Monday through Friday, just to be open. Unfortunately, they're not getting used. We're thinking about ways that we can modify the usage in certain aspects of the building so that we're not wasting energy through h vac or for lighting when 80% of the tenants aren't coming to the space. So that's sort of near and dear to us. And it's a bit of a challenge. There's a lot of different aspects of things that you can put into place, but we have older projects, and as you know, it's sometimes difficult to marry some of the new innovative ways of environmental efficiencies with an older building. [01:54:48] Speaker B: So you've had to upgrade buildings to increase its. [01:54:51] Speaker C: We are, yeah. [01:54:52] Speaker B: So what about ESG in general? Do you have a company policy for that? [01:54:58] Speaker C: We do. We do. And we developed that last year. I think we're a company that sort of always had ESG. It was just never defined. Right. So we talk about the environmental impact that we think about on the social side. Obviously, we're involved with the community and all of those charitable organizations as a management team. We're also very involved in our neighborhoods and just from the, you know, from the Friendship Heights alliance and what we're trying to do with the community here, engaging with the members of the community and supporting and making it a better neighborhood. So the management team's very involved, not just from a charitable community purpose, but also impact. And again, working with the Chevy Chase Historical Society and others, that, again, has been something, and then governance has been in place, that we were always sort of monitoring and checking the integrity of our work from a number of different angles. But obviously, the board of directors, as we've discussed, is very structured. We've got very stringent policies and procedures. Some we've developed recently. We have a code of conduct within the organization, and obviously, we have bylaws that were governed by. [01:56:11] Speaker B: Sure. [01:56:12] Speaker C: And so EOS, I feel like, is a new part of our governance because it's also a way, if you were to come into the company without any knowledge, you could access that information and kind of see what we're doing, and that creates transparency. So I feel like we've always had the ESG, but we've recently defined it, and we've kind of rolled it out to the company and to our, to our peers. [01:56:33] Speaker B: That's great. In development projects, you manage. What are the best ways to mitigate risk, in your opinion? [01:56:40] Speaker C: You know, that's a great question. And the first reaction, I would say somewhat facetiously, is you should know all of the risks before you embark on one. Right. But we all know that that's not possible. I would tell you, John, based on my experience, the number one way to mitigate risk is to have great partners. You got to have a strong working relationship, and you've got to trust the team that you're with. You can diligence something as much as you want, and you can think you've uncovered all of the risk, and then you can embark on a project. And if you embarked on that project in the summer of 2019, you would be about to be faced with a massive worldwide pandemic. You can't underwrite that. You can't anticipate that. And that's where the strength, you know, of the partnership comes into play, because. Because you can weather any storm if you've got the right group of people together. I've always found in my mind, the best. The best partnerships are the ones that when you're finished the project and it's done and it's sold, you've never once pulled out your operating agreement. You've never had to reference a clause and say, this is why you need to be doing this. Those documents are heavily negotiated, but if you're with the right team, they should be put onto the side and you should complete the project. And if there's a challenge, you sit down and you talk to each other and you tackle it together. [01:58:11] Speaker B: Well, you talk about partnership from an equity standpoint, is what I'm gathering. But to me, partnership is not only that, but with your contractors, with your tenants, with the governments that you're in. [01:58:26] Speaker A: All of those are partners. [01:58:27] Speaker B: Right, right. And so each of them have their own intricacies in the relationship, but you want everyone to kind of work in concert. So it's a win win win win across the board, right? [01:58:39] Speaker C: Absolutely. Yeah. And that's obviously ingrained in my upbringing in the real estate world, from the equity joint ventures and that kind of monetary aspect. But it, you know, and it's obviously the development partnership and the equity partnership are critical. But if everything below that is weak, well, that's just a crumbling disaster. [01:59:02] Speaker B: And especially now, if you're in the office building, business relationships with your tenants are probably more important now than they've ever been. [01:59:10] Speaker C: Yeah. And that's one thing. When I started, and I learned a little bit of this throughout my career, this company has today, really one source of revenue, and it's a rent check. [01:59:25] Speaker B: Yes. [01:59:25] Speaker C: Okay, so those are our partners. Right. So every tenant in our. Throughout our entire portfolio, you know, from the restaurant downstairs to the 30,000 square foot office user, that's our partnership. And in today's environment, we need to be treating them like partners. We need to be working together. [01:59:45] Speaker B: Exactly. [01:59:45] Speaker C: There should not be a landlord tenant relationship. There needs to be. We are invested together. You've invested in your business, you're in our property, we want to invest in you, and we want to see you survive. And so that's the mentality that we take with people. And it's especially true with our restaurants. Right. There's a challenge across the industry on a number of fronts, and everyone's dealing with it, and we need to be sitting with them at the table to help work through that. And it's becoming more of a win win conversation because we can't impose a lease that was negotiated five years in today's environment. We just can't. We would hope so. Cause that's our contract. But we want all of our tenants to survive. We wanna work with them to get through these challenges. And that's the mentality that we have to take. [02:00:35] Speaker B: I didn't put it on here, but I'm curious if you've had attorneys that have helped you structure a relation, you know, your leases to make it more like a partnership as opposed to a landlord tenant relationship. Just out of curiosity. [02:00:49] Speaker C: Not specifically. Not specifically. But we do make a point. We do make a point that when we do a lease with a tenant, we're not putting a document together that sets them up for failure. Right. Because that's the last thing you want and you almost want to look at it. And does this make sense for you? Right? Does these numbers really work for you? Because I would rather us sign a document that you feel good about than for us to feel like we got this win and it feels good on this side of the table. And a year later, we're dealing with a challenge. [02:01:23] Speaker B: At retail, it's easier to measure that. It's harder in the office side to measure that. But you have to learn it's not easy. So now let's shift to personal things. What are your life priorities among family, work and giving back? John? [02:01:39] Speaker C: Somewhat cliche. I have a wife and three children. They're younger. And you always hear that, you know, enjoy the time while you can. I've heard that for a long time. And I love my family immensely, and it's my number one priority. And I try to give them as much as I can and I try to be there, you know, every step of the way. And I, and I do really appreciate the fact, fact that, that, you know, my daughter, she's 13, the window that I have, you know, the window you have with your child, your children are with you for your entire life, but there's a window that's the most important window, and that's a very brief period of time. Right. So I'm trying to really take advantage of that because she's already, she's a young lady. She's, she's making friendships. She's becoming independent. She's thinking about her future and were here for her to support her. But I have to recognize that she's her own individual. And very soon, you know, my wife and I, we're going to blink our eyes and wonder, maybe we'll see the kids this summer, maybe we won't, depending on what they're doing with their lives and their families, right? And so I am trying to really harness the moment. My children are 1310 and six, and so it's great. They're kind of my life. They make me young. I feel great when I get home and there's, there for me. And then after that, I actually try mentally and physically to make my second priority, a little bit about myself. I know it sounds selfish, but I feel like too often we sacrifice everything else and we don't really look too much at our own well being. And I personally feel like I can't be my best to everybody else unless I feel like I'm my best to myself. So I mentally layer that into the conversation, and then outside of that is professional activities and giving back to the community. And then I'm so passionate about what we've got going on here at the Chevy Chase Land company. And I love the people I work with, and it's a blessing that I get to come in and be excited about my day and get excited about the people that I'm working with and excited about the projects that we're working on. And I've always been doing someone to be involved in the community, and I'm involved in several boards outside of the company. I have made a conscious decision. You know, I'm pulling back a little bit because I do feel like sometimes I'm just getting pulled in too many different directions, and that's coming back to my number one priority. And so I've got to balance that for now because I do think. I do think there's ebbs and flows in life and how you dedicate and, and share your time. [02:04:14] Speaker B: So, yep, it's a balance, but it's a balance in some respects. And then it's priorities. And as you say, things change over time. You just have to kind of let it evolve. [02:04:28] Speaker C: Right. [02:04:30] Speaker B: What are your biggest wins, losses, and most surprising events in your career? [02:04:36] Speaker C: I would say as I think, as I think about that question, I think your first instinct with wins is the deal. What deal was the best? And there's a couple of those. But as I reflect on my career, I think my biggest win is falling into the space. I was lucky that I was invited to join RER resources because that's what put me into real estate. And frankly, I don't know if I would have found my way into the space without that opportunity. But more importantly, I've had a great career, and I love the space. And I think we're all privileged to work with so many great, inspiring people, and I'm very thankful for throughout my career, I can't really recall ever working with someone who wasn't a good, kind, sincere person. I've been very lucky that everyone that I've worked with, I view them as just high integrity, great representatives of our industry, people that always give back. And, you know, I can't be more thankful for that. I would say if you ever find yourself in a situation where you feel like you're working with someone who makes you feel bad about yourself, when you get home, you got to make a change. I never had that thought, and I'm lucky that I didn't. So that's great. So I think that's probably, probably my biggest one, I would say, from a loss. And again, when you think about loss, you think about, you know, think about the global financial crisis, think about the company shutting down those difficult times. I've worked with several great teams of people in every step of the way, from rer to ASB to Barricko to McCaffrey to here. And oftentimes I feel like I'm always a part of the team, and I'm always interacting and social and trying to help cultivate culture, and you get to a point where you feel like you've got a group and you feel like we can do anything. We were just clicking on all cylinders, coming in together, and we can tackle the world, and then things change, events unfold, and you've got to make a change, and that's difficult. Leaving those environments and then moving into the unknown, I feel like, is always a bit of a challenge. It always has been for my career. I'm lucky that I still keep in touch with people, you know, every step of the way. And then I would tell you, you know, my biggest surprise, and probably this is a little bit more about who I am and, and my earlier life, the biggest surprise is it's not the smartest person in the room that's going to be the most successful. It's the most determined and the most passionate person who's going to lead a team or lead a project. Those two traits trump intelligence any day of the week. And, in fact, I've learned in commercial real estate, especially, you know, ignorance is bliss. Sometimes a little bit of not knowing can help you get through a deal, because there's. There's a lot of ways for you to say no to something when you uncover, like, everything. So, so that would be, you know, in my mind, a bit of a surprise. It's really passion and grit that gets you through this world. [02:07:46] Speaker B: No question, our industry takes passion and grit to get things done. [02:07:50] Speaker C: Yeah. [02:07:50] Speaker B: One of the most exciting things for me is just the. Every day is a new day, and you have, you just don't know what you're going to be in for. So being ready and building up for that and having that belief that what you don't know, you don't know. You just got to keep going. [02:08:10] Speaker C: Right. [02:08:14] Speaker B: So what advice would you give your 25 year old self today? [02:08:20] Speaker C: I would, as I think back to my 25 year old self, there's a lot of different things I would probably say, and one would be, keep doing what you're doing. But one thing that I heard a lot and never fully appreciated was your network. And I had a close network, but I was never one that was really out and about. And I don't mean network in the sense that you're trying to leverage other people. But I would tell my younger self, take every opportunity that you can to sit down with someone senior in your profession or in any profession, ask for 30 minutes coffee, ask for a dinner or a lunch, and just listen to that person's experience and listen to their story. And I think I find so much knowledge and insight just by listening to other people. And I feel like most people in our space, you, especially, if you're persistent and you demonstrate a genuine desire to sit down and talk with someone, that person will find time for you and they'll be open to share those thoughts and ideas. But don't do it because you're trying to gain something from the conversation. Don't come at it with a. All right, now I have that meeting, and now I'm going to. I'm going to. I'm going to work that angle and I'm going to try to get personal. Just learn, be a sponge. Listen to what people have experienced, and you'll find that down the road in your career. Some things that you hear are things that have resonated and that add value to you. [02:09:58] Speaker B: Did you have mentors in your career? [02:10:03] Speaker C: I wouldn't say I had people that looked after me. I had people that I think thought that I had some potential and gave me some advice and suggestions. I never really had a proper mentor, but I have had the privilege of working with a lot of people that I sometimes tried to emulate, sometimes thought those are values that I want people to see in me. And like I said, I've had a lot of people that have. They've been very helpful for me and they've guided me in certain directions. Directions. That's great. [02:10:39] Speaker B: So if you could post a statement on a billboard on the Capitol Beltway for millions to see, what would it say? John? [02:10:46] Speaker C: You know, I knew that question was coming, and obviously it's one that most people probably give a lot of, a lot of thought to. And I love the question. I would say John, in honor of Bob Marley's docu drama release yesterday one Love. I would want the billboard to say every little thing is going to be all right. [02:11:07] Speaker B: That's great. [02:11:08] Speaker C: And I say that because I feel like too many of us, me included, we oftentimes carry a huge burden on our shoulders of things that are rather trivial in life when you compare them to what's really important. And so, yeah, just let some of the little things go. Don't worry. [02:11:27] Speaker B: So, John, thank you very much. [02:11:29] Speaker C: Thank you, John. [02:11:30] Speaker B: Appreciate it. It's been very good. [02:11:32] Speaker C: Yeah, this has been wonderful. Thank you. [02:11:33] Speaker B: Thank you very much. Appreciate it.