Doug Firstenberg – Partnering to Success (#18)

Icons of DC Area Real Estate
Icons of DC Area Real Estate
Doug Firstenberg - Partnering to Success (#18)
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“Get a Mentor-The most important thing a young person can do,” Doug Firstenberg

Bio

A founding principal of Stonebridge, Doug Firstenberg directs firmwide strategic planning, oversees landmark development projects, and plays a key role in major transaction negotiations. Under his leadership, Stonebridge has developed several of the region’s most innovative and successful urban mixed-use properties, including breakthrough transit-oriented developments and public/private initiatives.

Doug Firstenberg has more than thirty-five years of real estate industry experience, leading complex development projects totaling more than 10 million square feet and $4 billion in value. Doug Firstenberg started his career with K.S. Sweet Associates, a Philadelphia-based real estate and investment firm where he was named partner. In 1993, he co-founded Stonebridge Associates in Washington, D.C., and led the transformation of the firm into an urban infill mixed-use developer. Doug Firstenberg graduated from Duke University with a Bachelor of Arts and currently serves in leadership roles of several industry and charitable organizations.

Show Notes

Role

  • Guide overall direction of firm (3:05)
  • Help in creation of projects and enjoys conceptualization (3:35)

Pandemic Crisis

  • Elderly at 60 (4:55)
  • 1982 closed a loan at 12 3/4% a 5 yr. deal (5:07)
  •  2008-09- Undertaking largest deal- Constitution Square spent 13 months cobbling together debt (5:40)
  • Today- 3 different projects underway and capital does come in on large development projects (6:30)
    • System is functioning yet the economy is fundamentally frozen now
    • We will get through it and hard to understand where we will be- we will all learn how
  • Out of crisis will bring opportunity (8:25)

Origins & Education

  • NY native- Doug Firstenberg grew up in suburbs and grandparents lived in Midtown Manhattan (101 Central Park West) (9:20)
  • Story about Macys Parade as a kid (10:00)
  • Moved to Princeton, NJ while in Middle School (10:40)
  • Grateful that he was not accepted at Princeton Univ. and was accepted at Duke Univ. (12:05)
  • Played lacrosse at Duke. Princeton and Duke look similar architecturally. (12:30)
  • Important to have changes in life was good for him
  • Foundations at Duke (14:00)
    • Lacrosse team influenced his passion toward teamwork
    • Public Policy major (14:45)
      • Faculty was young and engaged
      • Removed business program
      • Articulating policy presentations were great experiences  (16:08)
    • Sr. Yr. he was introduced to Ken Sweet, his eventual first employer- Offers him a summer internship (17:30)
  • Internship at K.S. Sweet evolved into his eventual career (19:00)

Career Arc

  • Doug Firstenberg plans for post undergraduate work fell through and Sweet offered him a full time job that has evolved to his job now at Stonebridge (20:15)
  • He was the youngest person at K.S. Sweet and he was able to run a marina on the Eastern Shore and he got the property to “breakeven” (21:55)
  • At 24 he got the opportunity to go to Chicago to asset manage a 600,000 s.f. office project in Downtown Chicago (23:00)
    • Wiley Tuttle was the partner on 150 N. Michigan Ave.– “Diamond Shape building” (24:00)
    • Story about “water view”
    • Gave building back to lender in 1993- Real estate didn’t love him, but he loved it
    • Margins were too thin during market issues (27:00)
  • Early 1990s the firm did not have a “business plan” and the firm split up in the mid 1990s (27:50)
    • Doug went to Ken Sweet and was asked whether the firm could continue without him and it did not happen well (28:15)
    • He had come to DC area and his partner Ellen Miller had come to manage projects in the DC area in 1987 (29:20)
  • Stonebridge started in 1993 with Doug and Ellen and representing high net worth investors and advised academic institutions (30:20)
    • $300,000 in capital to start firm (31:25)
    • Didn’t spend as much time on investments (32:00)
    • Built consulting practice in academic institutions based on his parents’ influences
    • UVA was first large client (32:15)
      • JV between UVA and VA Tech (33:00)
      • Leonard Sandridge at UVA Foundation hired them to build a campus of buildings in Charlottesville (33:30)
      • Built a series of 60,000+ s.f. office and research buildings over a 10 year period on fee development basis (33:50)
    • First vertical project was a warehouse in Connecticut (34:45)
    • Relationship with Chevy Chase Land Company (37:45)
      • Introduced to Ed Asher and mentioned Newlands Building (2 Bethesda Metro) (38:20)
      • Entered in as a JV investor and brought in TIAA-CREF as lender (39:20)
      • Took over development lead on Newlands project with help of a new development manager, Kevin Cosimano from Shooshan Company (39:45)
      • Delivered Newlands on time and on budget
      • Chevy Chase Center and retail- Stonebridge became fee developer of complicated mixed use project
    • George Carras returned from NY and came into their office to sublet (42:00)
      • Met George in late 1980s (42:45)
      • In 2004 George and he began looking at deals together, but in 2005 formed StonebridgeCarras (43:15)
      • George was a partner at JMB Realty from Chicago and led DC office for them (45:20)
        • Worked with a bank and subsequently joined JMB in Florida
        • Portfolio Mgr. for Penn State Employment Pension Fund
        • George was a tough negotiator
        • JMB sells firm to Heitman and George joined them (47:30)
        • John Schreiber hires George at Blackstone as a RE partner
        • George is a detail guy
        • George decided that the Blackstone way was not a fit for George (50:30)
        • He wanted to join a developer and joined Doug
    • Constitution Square– 2.5MM SF Mixed use development (50:55)
      • Walton Street Capital- George’s former employer at JMB (Neil Bluhm) became their partner(51:30)
      • Land purchase on a speculative basis- Walton St. believed in George, but they wanted to see CC Center and Newlands to verify capabilities (52:30)
      • Harris Teeter lease was transformative to the project (53:20)
      • Half office and half residential with retail on the ground floor (55:30)
      • DOJ solicitation comes out during construction (56:00)
        • Won because of HT and residential mixed use
        • March 2008 lease signed
        • Term sheets with lenders all went away in Fall 2008 before closing
      • Walton St. funded construction according to lease requirements for construction- $88MM land loan was paid off (56:40)
        • StonebridgeCarras paid $1MM of personal capital to keep the deal going with Walton St. (57:15)
        • Residential and retail delivered and then DOJ took occupancy
        • P.N. Hoffman helped with residential (1:00:15)
    • Residential experience gotten from Chase Point with P.N. Hoffman (Monty Hoffman) (1:00:30)
      • Condo project
      • Harder to build residential- Up to 60 different unit layouts (1:02:00)
    • Lot 31, Bethesda– JV with P.N. Hoffman (1:03:15)
      • Doug decided to keep Woodmont open and split the project on each side of Woodmont Ave. (1:04:10)
      • Won a significant competition on a MoCo RFP (1:05:15)
      • Tipping point for company (1:05:45)
      • Apartments, Condominium, Retail
      • Placemaking is the mantra at Stonebridge (1:06:15)
    • Two business lines (1:07:00)
      • Mixed Use development
      • GSA Platform
        • Purchase of 5001 Eisenhower-Victory Center with Rockwood Capital (1:07:40)
          • Checks all boxes for GSA
          • Tee it up for a new GSA lease
          • Sold site for townhouses
    • Flats at 8300– Purchased site for mixed use project with Harris Teeter (1:10:15)
      • Walton St. was partner
      • Harris Teeter lease at closing of site
      • Sold project for Walton St. fund liquidation
    • Clark Building, Bethesda– Acquisition with Rockwood (1:12:17)
    • Oakville, Alexandria- Blackstone is partner (1:12:50)
      • Mixed use project
      • Inova Healthplex
      • Third iteration and was originally retail and now mixed
    • Carlyle Crossing, Alexandria– (1:14:10)
      • Wegmans agreed to come to the site on 2nd Floor of project
      • 700 unit project, 1.7MM s.f.
      • Transformative for Carlyle
    • Wheaton, MD- MNCPPC HQ relocation from Silver Spring, MD (1:17:30)
      • Town square in Wheaton next to new building
      • JV with Bozzuto to do the existing site (1:18:20)
      • PPP with MoCo
    • Avocet, Bethesda– Partnered with OTO Development (Hotel developer bought site) (1:19:40)
      • Mixed use project- Hotel and Office
      • “Better lucky than good”
      • Spec office
      • Well positioned for COVID- Highly efficient and flexible that is adaptable
      • Core factor very good
      • Aspects of building will allow for accommodating for “social distancing”
      • Well positioned for post COVID
      • David Kitchens architect

Company Strategy

  • Filtering Process for New Business (1:24:00)
  • Services (1:25:20)
    • Development & Asset Management
    • Commercial Property Management
    • Outsource residential PM, construction and design
  • Hiring and Company Structure (1:26:30)
    • Development
      • Hired Architects and Engineers out of undergraduate programs
      • Looking for technical expertise
      • Leaders of development group- Jane Mahaffey and Kevin Cosimano are technical people and that has influence
      • Having the technical expertise gives them an edge on complicated projects
    • Finance team led by Kent Marquis (1:29:00)
      • Analyst program
    • Advantage of understanding complexity of mixing use in projects is more important than the numbers (1:30:00)
      • Example of Wegmans situation at Carlyle Crossing to fit on 2nd Floor (1:30:50)
    • Corporate structure (1:32:10)
    • Characteristics (1:35:00)
      • Smart and hard working
      • Looks for balance- most people do charity work
      • Passion for education
      • Jubilee Housing
      • Well rounded people
      • Diversity- women and minorities
    • Ellen Miller was his original partner and has retired

Personal Balance, Challenges, Surprises and Advice

  • Life Balance (1:37:30)
    • Parents influenced him to care about children
    • Halloween is best day
    • Family is most important- didn’t miss any of his children’s events
    • Important to give back- 25 yrs. coaching lacrosse
    • Involved with Duke U. and local colleges
      • Working with Bill Hard on Mont. College efforts
      • Involved with UDC in helping them to help their turnaround
    • Work, Family, and Charity- Make the time.
  • Challenges (1:41:10)
    • Chicago building failure
    • Not many bad real estate decisions
    • Dealing with people
      • Only get upset when someone says they don’t have time
      • Sometimes faith in people does not work
      • Want to do good projects with good people
      • Hilary Goldfarb– Enjoys the relationship
    • Building relationships is critical- Able to pick up the phone and work it out
  • Surprising event (1:44:35)
    • Being wrong about the firm when Ken Sweet asked him whether it would work and it didn’t and he forgave him
  • Get a Mentor- Most important thing for a young person to do (1:45:30)
  • Advice- The World is different and simpler in the 1980s (1:47:00)
    • Loyalty is not what it was
    • Understand it will get a little while to get someplace
    • Have patience and work hard- “It’s a long game”
  • Posting a sign on the Clark Building saying “Thank you to our heroes” due to the crisis (1:49:15)

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