John Green & Joe Carrol – Inspiring Leaders Part 1 (#24)

Icons of DC Area Real Estate

John Green & Joe Carrol - Inspiring Leaders Part 1 (#24)

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Joe Carrol is Managing Principal at Cross River. Although its activities are diverse including a growing number of portfolio company investments, Cross River through its subsidiaries currently manages an over $450M real estate development pipeline with projects in the District of Columbia, Florida and Texas.  

Mr.  Carrol was formerly Senior Vice President of Acquisitions at Lowe Enterprises.  As acquisition officer, he not only purchased, financed and disposed of properties on behalf of Lowe but on select projects he also led project implementation and design.  While at Lowe he managed an over $1 billion acquisitions pipeline including multifamily, office and retail. 

Locally, Mr. Carrol led such prominent award-winning projectsas:

City Vista in Mount Vernon Triangle, the 1.5 Million square feet mixed use project inclusive of 685 residential units, 55,000 square foot Safeway Grocery store and 65,000 square feet of neighborhood serving retail. 

The Hepburn in Dupont Circle which received popular acclaim for not only its stunning architecture and unique interior design but also its ability to capture the very top of the market with average pricing hovering over 10% above its next highest competitor. 

Ft Totten Square a Walmart-Anchored 345 residential unit development in an area of Northeast DC which previously had limited grocer and retail options.  

He is a member of the Real Estate Executive Council, African American Real Estate Professionals, the DC Building Industry Association, the Washington DC Real Estate Group and the Urban Land Institute. He has received numerous awards such as Developer of the Year from DCNOMA, Philanthropic 4 in DC Business from Envest Foundation, and numerous awards fromBiznow DC and ULI.  Whlle at Lowe he received the Bob Weekley Spirit of Lowe Award, one of the highest honors bestowed on an employee by the company. 

He is an active member of New Bethel Baptist Church in the Shaw Community and various DC based civic organizations. He is admitted to the bar in District of Columbia and the State of Florida. Education: Florida A&M University, BS Civil Engineering; Harvard Business School, MBA; Harvard Law School, JD

Show Notes

Current

John Green

• Managing Principal of Blackstar Real Estate Partners (4:45)
• Opportunity Zone investments
• Fund investing in disadvantaged single family

Joe Carrol

• Founder of Cross River (5:40)
• $450MM assets under management
• 3 Different platforms- Software, Multifamily and Corporate Build to Suit

Origin Stories Until Harvard Business School

John Green

• Born in Norfolk, VA, Military family traveling to three different bases (6:45)
• Elementary school- Clarksville, TN (Near Fort Campbell)
• High School- Virginia Beach, VA
• Large family- Father one of 9 siblings, Mother one of 7 siblings (8:40)
  • Won’t get “outworked” (10:15)
  • Oldest of three siblings (10:30)
• 101st Airborne Division- Repelling off 50 ft. tower while in Middle School (11:30)
• Developed his interest in science and math in high school- especially physics (12:50)
  • Good academic opportunities (14:20)
  • Internship with NASA (14:45)
• Went on to UVA Engineering School (15:40)
  • Expanded world view at UVA with an internship in Applied Physics (16:30)
  • Minored in Management & Technology (17:10)
  • Interested in Economics- “The Physics of Money” Why things are with money and people (17:40)
  • Internship at Anderson Consulting (18:40)
  • Aha Moment- Related Nuclear Test Ban Treaty at DARPA- Program around testing (19:00)
    • Policy was flawed even though brilliant minds were focused on it (19:45)
    • Realized he wanted to apply efforts where impact was possible (20:20)
• Parents were pretty “lassez faire”
• Decided that he didn’t want to do investment banking in his Senior Year, but his mind was changed and he joined Goldman Sachs (23:00)
  • Moved to NY and worked for Goldman Sachs upon graduation
  • Went into opportunity pretty much blind as to what they do (24:00)
  • Goldman embraces fact that people rarely stay there, but expect quite a bit for training someone (25:00)
  • Communications and Technology unit at GS- Investment banking (25:30)
    • C-Suite clients
• Left GS to work for Viacom that had recently acquired BET (Black Entertainment) (26:15)
  • Film distribution, fashion (non core businesses) (26:50)
  • Video on Demand service (27:00)

Joe Carrol

• Born and raised in Jacksonville, FL (28:15)
• Raised in a “village”- Grandparents were very involved, but has a small family with two siblings (28:30)
  • Curated environment (29:15)
  • Father a postal worker and Mother worked in a logistics company (neither went to college) (29:50)
  • College became an expectation (30:20)
  • Sister is an investment banker in NY and brother is a geriatrics specialist in LA (30:50)
  • Created a cocoon of discipline among grandparents (31:15)
  • Parents worked hard to provide for the children (31:55)
• Was “disruptive” in class due to his intelligence and his teachers recognized it in him and helped him (32:30)
  • Was in Special Ed due to speech impediment (34:00)
    • Moved in 1st Grade into a more advanced level due to his intelligence- unique experience (34:20)
    • Recognized he was on a “faster” track (34:50)
    • Special Ed strong in intelligence, yet with a speech issue (36:45)
• Sister went to a college prep school (Stanton Preparatory School) and encouraged him to attend (38:00)
  • HS was “magnet” school program- His HS had a strong history of being a Black school (38:45)
  • Became President of Class in Senior Yr. (70% White)…becoming comfortable in a predominately white school was a critical moment in his life (40:15)
• Went to Florida A&M (FAMU), a Historically Black College (40:50)
  • Amazed when he went to the FAMU campus to see excellence in an All Black environment (42:20)
  • Became an engineer and felt isolated since the school was remote from Main campus (44:15)
  • Transition from segregation to various forms of integration (45:40)
• Went to work for Accenture during tech bubble growth after FAMU (47:00)
  • Financial Services segment (47:50)
  • Working with Jamie Dimon at Banc One to bring banking into the online mode at the time (48:30)
  • Crash occurred in tech (49:00)
• Decided to go to Harvard Law School and eventually a joint degree in the Business School (50:00)

Harvard Experiences

John Green

• Had lived in Brooklyn prior to HBS (50:45)
• Bought first real estate investment there while working at Goldman Sachs (50:50)
• Wanted to understand drivers of Brooklyn market (51:30)
• Decided to go to combined program of Harvard Business School and Kennedy School of Public Policy (got the run of the house on classes around the University and at MIT) (52:30)
  • 30-35 people in the joint program offered a tremendous opportunity (54:30)
  • Listen and interact on complicated problems (55:00)

Joe Carrol

• Applied to Law School first to be “different” and then joined the joint program with HBS (56:15)
• Feels blessed to have both liberal arts and technical education in one lifetime (57:15)
• Laws are tools to manipulate human behavior (policy background) (58:00)
  • Learning about the relationships among ideas in all the disciplines was fascinating to him (59:00)
  • Law School Informing his mind and viewpoint whereas Business school was about influence (59:50)
  • Understanding and “getting it right”
• HBS helped him with relationships and influence (1:00:00)
• Socratic method in both schools applied his thinking considerably
• Helped him understand real estate considerably- Lifting up from the page how things worked in the whole about real estate and responsibilities to the world, owners and tenants (1:01:45)
• How they Met
  • Joe met John and his wife on a visit to Harvard (1:02:00)
  • Developed a good relationship from their experiences there (1:02:50)
  • John said it set the foundation for a 16 yr. relationship (1:03:30)

Post Graduate Career Arc

John Green

• John interned with the Community Builders and so did Joe while they were there (1:04:50)
• John interned subsequently with MacFarlane Partners, which led to his eventual hiring there. (1:06:00)
• Joined MacFarlane Partners after internship the prior year in 2007 (1:07:30)
  • Lehman Brothers/Monument
  • Trammell Crow Residential
  • JBG
  • Jair Lynch
  • DC would be the center of MacFarlane East (1:08:40)
  • Looking to expand team to 40+ people to manage relationships (1:09:30)
  • After 2008 crash by Lehman, the company transitioned into the workout mode with fewer employees (1:10:20)

Joe Carrol

• Joe learned a lot at Community Builders (1:11:00)
• Joe had a law internship his 2nd year at Paul Hastings in Atlanta (1:11:45)
• Joe then interned at GE Real Estate (Met Leslie Hale (now CEO of RLJ) while she was there) (1:12:15)
• Joined Lowe Enterprises after interning for them- Was assertive to work there (1:14:00)
• Interviewed with Mike Balaban, Eileen Circo, and Steve Evans and eventually worked with them (1:15:00)
• Wanted to be with “sticks and bricks” (1:16:00)
• Lowe had just won the CityVista project and was assigned working on the project (1:16:45)
  • It was in a good place but market was in a bad place financially (1:17:20)
  • Selling condos through downturn, leasing apartments and sold retail in project (1:17:35)
• Managed Fort Totten Project also (1:18:00)
  • Brought in JBG as a partner to keep the project going (1:18:15)
• Conscious of who partners are and CIM provided stability on CityVista Project (1:19:00)
  • Worry about paying contractors allayed by CIM’s financial strength and presence (1:20:20)
  • Lowe and CIM worked together to weather the crisis
  • Lowe kept its standards and brand through the crisis, as well.

John Green

• MacFarlane Partners Issues (1:22:20)
• Huge portfolio amassed in 2006-2007 that needed reworking (1:23:00)
• More asset exposure in DC than anywhere else ((1:24:30)
• More efficient operators as capital allocators- (1:25:30)
• Two funds- Opportunistic Investments and Emerging Manager Funds
• Jair Lynch was the primary Emerging Manager investment
• MacFarlane dug in to bear down on issues
  • John reported to leaders of the organization to help in restructuring the properties and keep the fund investors informed-Greg Vilken (President) & Chuck Berman (Vice Chairman)
  • More efficient operators
• Flagship funds- Urban Funds 1 and 2- Large investments with JBG with capital from CALPERS and because of unrelated issues the funds were reconstituted property by property (1:28:30)
• 2010-11- Actually began to reinvest capital
• Eventually “worked himself out of jobs” (1:29:00)
  • Fund lives expired on funds that commenced in 2008
  • Important investments made including the CALSTERS relationship for the Emerging Manager fund
  • Large investments in NY in Williamsburg, Brooklyn

Joe Carrol

• Story about Washington Hilton then Hepburn Apt. Projects at Lowe Enterprises (1:32:00)
• Plan to convince investors to build condominiums (1:33:00)
• Brought in National Real Estate Advisors into the project- union job was a learning experience (1:34:00)
  • Hepburn project was to “dream big”- Wanted to delight visitors and residents
  • Curvilinear design to give views
  • Extraordinary project down to unit amenities
  • 195 Units that became rental (1:35:30)
  • Bozzuto was the leasing and management company
  • No one believed the numbers except Joe and Mark Rivers, the new leader of Lowe in DC (1:36:00)
  • Project had impact (1:37:20)
• Transitioned to acquisitions prior to departing to start his own company (1:37:45)
• Cross River (1:38:00)
  • Technology- Invest in companies- early stage tech related to real estate or application (1:39:15)
  • Multifamily Investment/Development- 3 Projects in DMV have been slow during the pandemic (1:39:40)
  • Industrial/Corporate interests (1:40:00)
    • Corporation spinning off real estate or build to suit
    • Consumer based packaging company in Florida in zoning for 1.5M sf development and a land break off for additional density (165 acres of land) (1:42:20)
    • Another client in Texas to spin off holdings from corporate entity for a new user to occupy (1:44:20)
  • Strategy is to keep steady revenue with corporate revenue (1:40:30)
  • Redeploy capital in property investments (1:41:00)
  • Currently a solo practitioner but needing to staff up as project move forward (1:45:20)

John Green

• Blackstar Real Estate Partners (1:47:30)
  • Co-Investing and arranging capital for Opportunity Zone investing (1:48:20)
  • Emerging Sponsor investments (1:48:50)
  • Social Impact Fund- Strategy focused on addressing predatory lending practices through investing in packaged contracts for deed, land contracts (1:49:30)
    • Closing initial fund in 4th quarter (1:51:00)
    • Closing 120 properties across 16 states (1:51:10)
    • Separate entity from Blackstar REP (1:51:30)
    • Two partners are former public officials in Portland, OR and initialized the concept of getting the foreclosed properties using TARP funds to structure short sale purchases and restructure the properties to allow families the opportunity to own real estate at an adjusted pricing, however it was an inefficient process (1:52:00)
    • Migrated strategy to a national NPL (Non-Performing Loan) and REO properties. (1:54:50)
    • Apply strategy to “contracts for deed” on single family homes. $200B of these contracts active in the country usually in low income neighborhoods with properties valued $75,000 or less. Above 2MM families affected by these predatory investments. (1:56:15)
    • 120 properties under contract and only 12 properties are “recorded” with the local jurisdiction. The transaction requires a pre-execution of a “deed in lieu of forfeiture” in case of default (1:59:10)

Postscript

• Tom Amos- Education review (2:02:00)
  • HBCU (Historically Black Colleges & Universities) research (2:02:45)
    • Started after Civil War providing higher education for Blacks
    • 101 of them today with only 2 universities offering real estate- Allen University and St. Augustine University
    • Howard University in DC (2:03:00)
      • Started 1867 and educated 15,000 freed slaves in first three years
      • Notable alumni- Toni Morrison, Thurgood Marshall, Kamala Harris
  • Workout process- 2008 crisis (2:04:45)
    • Joe Carrol with Lowe Enterprises and was involved with CityVista
      • Selling 300+ condo units and sold retail and leased apartments (2:06:00)
    • John Green with MacFarlane Partners (2:07:00)
      • Relationships with Monument, JBG and Jair Lynch
      • Sustained through the crisis (2:07:45)