John Coe (00:00:00) - So Dave Pollin welcome to Icons of DC Area Real Estate. Thank you for joining me today. 

Dave Pollin- Thanks John. It's a pleasure. 

John Coe- So could you describe your current roles at Buccini/Pollin and PM Hotel Group and your other enterprises focus day to day? 

Dave Pollin- You bet. With PM Hotel Group, which is our hotel management affiliate. I'm the chairman and spend the majority of my time on strategy. At Buccini/Pollin Group. That's really the umbrella organization for the operating companies and the assets that we have ownership positions in. So that's a less formal role. My partners and I are co presidents legally, but what that means is we divide and conquer. So I spend my time exclusively on hotels and they spend their time. Chris Buccini on office. Rob Buccini Residential. And then we'll come together on youth sports, the BPG sports enterprise, which includes some athletic fields, a field house, interests in the Philadelphia Union Major League soccer team and then other stuff. So it's it's complicated in that regard. But my probably my only real executive title is chairman of PM hotel group. 

John Coe- Okay. But youÕre partners in those other enterprises?

Dave Pollin- Absolutely. We're equal partners in all things we do. 

John Coe- Right. So what do you spend your time on? I mean,if you're chairman, you're more strategic, but are you doing deals? Are you structuring transactions on the hotel side or I mean, are you letting other people do it? And you kind of drew the advisory people to your team? 

Dave Pollin- Yeah, that's a good question. Well, I'll just briefly mention how I think about my time and then I'll answer the second part of the question. I divide it into really 20% chunks. And I think the most important chunk would be the 20% where I'm thinking external to the organization. I'm trying to put myself, you know, 24, 36, 48 months ahead. What will the capital markets be like? What will the operating environment be like? What challenges are going to come up and how do we get ready for that? And it's hard to find that time. So then I spend about 20% on PM Hotel group in my chairman role. Again, more specifically, I am overseeing the board. We have external advisory board members who add a lot to the discussion for our board meetings and in between and connect us in different ways at capital providers and maybe M&A opportunities or identify talent, help me think through big issues. So a management company is an operating company, as you know, and it requires more day to day and more HR focus than traditional real estate investing, where you might have an asset management function. So then I spend about 20% in asset management. We own 25 hotels. PM Hotel manages a total of about 65. So as you can see, more than two thirds well, two thirds of plus of our revenue comes from third parties, our clients. So I spend about 20% of my time helping asset manage the hotels that we own. And then I'd like to spend about 20%, if I can, in the community. It's it's again, sometimes that is hard to do. We can't always control the the questions that come in or the refinancing challenges we might have or an operating issue that comes up. But I participated on a number of boards and support community organizations. And if you're not proactive about it, it's really easy for that to get squeezed out of your day. 

John Coe- I can understand that. So that's the that's the total of 100 there. Okay. So let's go back in time. Tell us a little bit about your orange origins, youth and parental influences. 

Dave Pollin- Yeah. You know, as I as I thought about what the back story would be, I'm really proud of my family. And it all started, at least for my little branch of the Pollin family. My grandfather grew up outside Kiev and it was Russia then, obviously Ukraine now. And he walked to Rotterdam when he was between 14 and 16 and got on a ship to the US. It was held at sea for two weeks while World War One began because it was a dangerous time. They finally got cleared and he had some relatives here, but really no money, didn't speak English, said Walk.

John Coe (00:04:27) - That's across Europe, across Europe. 

Dave Pollin- We're doing research. My sister's actually writing a book about how he might have done that. Was there a network of people like an underground railroad, the Danube River, for a bit part of it, right? I think you might. I doubt he had the money to do that. And he passed away when I was ten, so I never heard it directly from him. He didn't want to talk about it. He was never a fan of Russians. No one individually, of course, but just the culture and the difficulties that he had. 

John Coe- So Ukrainians and Russians, ethnically or different people is what you're saying? 

Dave Pollin- I believe so. I don't want to come across as an expert or out of my depth. But so he he knew that in order to have the life he wanted, he had to leave. Once he became established in the US, he sent for his siblings, a total of eight of them. But when he got here, he became a plumber's assistant, basically a ditch digger.  And when the Great Depression came, of course, in the 30s, the plumber had two employees, him and his son, and he fired his son and kept my grandfather because he did the work of two men. So that kind of drive and work ethic always inspired me. And then taking it one generation closer. My father and my uncle were both entrepreneurs and hard workers, and so I've kind of picked up on that and knew one day I wanted to have my own business. And while incredibly proud of both of them, I didn't want to join their organizations. I wanted to start something new. 

John Coe- So your uncle, of course, is well, well known in the Washington region, Abe Pollin. So talk about his influence on you specifically since you're in Washington. 

Dave Pollin- Yeah. So what an incredible mentor to have. Oh, my goodness. He was, first of all, just incredibly smart. Most people talk about his connection with the community and all the ways that he supported DC, including building the arena Downtown, of course, is now Capital One, when that was not the obvious move, to say the least. But he always had time for me. We had lunch about once a month and he was an incredible reference for me. So he would introduce me to potential lenders or investors and in every way had a lot to do with our being successful. My father is 12 years younger, was 12 years younger. He's passed as well. And so for him, it was hard to be his own person when he was always Abe's kid brother. And then Morris, my grandfather's grandson. So we moved to Portland, Oregon when I was a year old and my parents visited, loved it, Just found the people wonderful and the place beautiful. And probably housing was really affordable compared to other places they were looking. So we we have a great community there that I'm still connected with. My siblings are all on the West Coast. My sisters live in Portland, my brother in Palm Springs. And so that was a terrific place to grow up.
And I benefited from having really two hometowns, Washington, where my family's from originally, where I was born in Portland, where I grew up and my siblings are. So I had a great opportunity to learn from both my father and my uncle, and hopefully it took some of the best lessons and created this organization that we have here. 

Dave Pollin- So we're the hotel interest arise in your in your life as a kid? Yeah. So my father was a hotel developer and owner and operator in Portland, Oregon. He had three hotels there. And so I grew up washing dishes and doing every really tough job in hospitality. And John, there's a lot of tough jobs in hospitality, as you can imagine. The the first summer of washing dishes was a huge adjustment because it was hot and it was not my I wasn't controlling my circumstances. You know, I had a boss and that person was was differently abled, as we'd say today and not a good communicator. And so, again, 

John Coe- Why did your dad think that was a good thing for you to do? Yeah.

Dave Pollin- And I can't wait to do it to my son either. I think I think my father saw that his kids were growing up in a fairly privileged environment. And I don't want to say that we were flying around on private jets and had five houses. We didn't. We did. But but we had the basics. We had family vacations. And so I think he wanted to instill the culture of hard work in us. And so each of us worked either at the hotel or in construction in fairly demanding physical roles. And that was really, really helpful for me. I would say the thing I'm most happy about that now is that I have a really good connection with the people in my organization who do those jobs because I have the credibility of having done them, and I understand how difficult they can be. And whether it's a customer service issue where you're really trying to solve a problem that you didn't foresee, or if it's just the day to day tedium of washing dishes, you know, how do we create a company where those people feel valued and can thrive? And so we'll get there, I'm sure.

John Coe (00:09:38) - So you then decided to go to the Cornell Hotel School. Talk about that evolution of thought. 

Dave Pollin- Yeah, you bet. You bet. So when you grow up working in hotels and your family is in the business, for many of us, every Mother's Day birthday, we were at the hotel like three, 4 or 5 times a month for various things. And I loved the people who work there. I spent a lot of time with them. I was, of course, working there and my teenage years, and so it felt natural for me to to build on that. And the things I loved about it were the personal connections, but also being part of a team. So I've always played team sports as well, and we accomplish things together. Sometimes we lose, but most of the time we can achieve our goal and it feels better to do it as part of a larger team. So I love that about it. And it's also competitive. You know, you're trying to kick the hotel across the streets, but, you know, and there are just like NBA standings, there's the REVPAR index. So we know market share wise, are we doing better than our competitors? So I just loved all those things about it. And it's also really tangible. I don't know if you're trading bonds. If my father had done that, if I would have found it as attractive. But I love the design part, the construction and the people. Yeah. 

John Coe- So you're growing up. If you're in competitive sports, I'm guessing you played basketball because you're a tall guy and you're Abe PollinÕs nephew, so. And maybe and now you're a soccer owner. So obviously competition is interesting to you. But getting to Cornell from Oregon is interesting. So why why, Cornell, did you look at other schools? My brother is a graduate of Michigan State's hotel school. 

Dave Pollin- Yeah, yeah, yeah. So I'm just curious. Yeah, I just identified Cornell as, again, humbly at the time I thought was probably the the best hotel school. And I know there's many great ones. Michigan State, Unlv, and I could name probably ten others UCF recently I've been to. But but Cornell was to me iconic again. It was before the Internet in the 80s, but I was a pretty good football player and I actually had scholarships from a few PAC 12 schools, soon to be the PAC two, I think.
For the four. Oh no. So that's sad in a way. But my father tried to negotiate with me to go to a PAC 12 school. He said, Well, I'll split the tuition with you because I would have had a scholarship. I said, No, I really want to go to Cornell, so. Well, I'll I'll give you a car. I said, No, I want to go to court. You can use a vacation now. So but he was really supportive. The tuition was expensive and getting there was expensive. And so not only did he support me going there, but I played football at Cornell and he came to every game really. So he flew his butt to Hanover, New Hampshire, and Princeton, New Jersey, every weekend, got on a plane.  If it was a home game to Ithaca. And so I hope I can be that good of a father to my kids. That's awesome.

John Coe (00:12:44) - So did you have a good experience at Cornell? Do you enjoy yourself there?

John Coe (00:12:47) - I did. I think I met my lifelong best friends. I still have a connection with the school with some of the professors that taught me when I was there, met my partner at Cornell, a football player. Also, you get to learn a lot about people on the football field, especially during daily doubles when it's 100 degrees. And so I really was fortunate that I got to meet Rob and learn about his character and identify him as someone that would be a great partner one day. So yeah, so Cornell's had many positive influences. I'm up there frequently lecturing, involved with Dean's advisory board, and we hire as many hotels as we can get. So we try to keep that ecosystem really fresh and robust.
John Coe (00:13:31) - So you left there and then what was your thoughts? Process at that point. What was it? Did you want to get right into the industry? Did you think about your parents, your uncle? What were your thought process when you got out of Cornell?

Dave Pollin (00:13:46) - So being. Being relatively old, graduating in 1990, that was a terrible economic environment. It's tough. I interviewed with every company I could get, whether it was a Hilton or a Fairmont, and I never got a callback, not one. So I was not apparently qualified or amongst the top candidates to go into operations or any other job in hospitality. It was a scary time. As an aside, Rob Buccini, he didn't get a job for, I think, 6 or 7 months after graduation, and that was common. I'd say only about half of the hotels had jobs at graduation, and now more typically, there'll be 2 or 3 job offers, right? So just tough time. I was fortunate in that I had met the principal of the Leventhal and Horwath office in Seattle, Andy Olson, just a terrific person. And serendipitously, around the time I was graduating the Phoenix office, Leventhal was asking, Hey, anyone have any good candidates? We need someone quickly. So Andy said, Yeah, call Dave. So long story short, we connected. Before spring break, I went out there before spring break to interview and I was really fortunate to receive that job offer. Of course I took it immediately and Rich Warnick, who was my first boss, is still a mentor today and someone who taught me an incredible amount about hotels, underwriting, markets, capitalization. We did litigation support. So much of what I still rely on today. I learned from him and his team, including Greg Miller, another one of my partners out there.

John Coe (00:15:22) - Explain what Leventhal was doing at that time.

Dave Pollin (00:15:24) - You bet. Seventh biggest CPA firm at the time. They'd be five today if they hadn't gone out of business because two of the six merged or four of the six merged into two firms, but it was related to hotel capital markets work. So it was feasibility studies, market studies. I mentioned litigation support and it was during a difficult time. So we were doing a lot of work for banks trying to value assets. But again, having that perspective across hundreds of different deals really taught me what worked and why and I really still benefit from that.

John Coe (00:16:00) - So did you do economic analysis or more market analysis at that time?

Dave Pollin (00:16:05) - Yeah, it was both. It was both. And I was coming in not long after computers made our jobs actually doable because they were using like the ten column green and white paper. And if you had to go back and change an ADR assumption, it would take you a whole day.

John Coe (00:16:23) - Yes.

Dave Pollin (00:16:24) - Yeah, right. So I was really fortunate. One of my first engagements was the Boulders, where they had a resort golf courses, expansion plan, home sites, a mall, a retail center, power plants. We were evaluating the whole thing. Where is the boulders? Scottsdale.

John Coe (00:16:44) - That's right. Yeah. Okay.

Dave Pollin (00:16:46) - So just an idea of like, I didn't expect to learn about retail, but, but we learned about it because of that.

John Coe (00:16:50) - That's cool. And then Ellen H went out of business in 93, right? 90, is it 90? Yeah. Later than that. Okay.

Dave Pollin (00:16:58) - I was there about six months. That's it? Yeah. Rich Warnick. Another reason I'm very loyal and appreciative of him is he and two of his associates, very bright people, formed a firm that was successor. So I stayed with it for a couple more years after that. Or I should say he somehow saw fit to keep me employed for a couple more years, which I was very grateful for.

John Coe (00:17:24) - And then what?

Dave Pollin (00:17:25) - And then it was time to start this company. Rob and I had kept in contact after college. He was in New York working for a broker, and so he was continuing his real estate education in that way. But the the funny story was the NBA All-Star Game, the 9293 season happened to be in Phoenix. So my father and Abe came to Phoenix. We were having dinner, and I knew the question was coming, Hey, what are you going to do next? You've been here two and a half years. Maybe you like the weather and the girls a little too much and you've learned a lot. What's next? So I said, I want to go to Harvard Business School. And they almost fell out of their chairs laughing. They're like, No, no, no, you're a polen. You're going to go to work. You're not going to business school. So I said, okay, well, I'll start my own business. And so my dad said, Hey, why don't you come to Portland and we'll work together on entrepreneurial things. And Abe said, Or if you want to come to DC, I can help you get started. And I knew again I didn't want to necessarily join either of their organizations, but to start something new. And my my thought process as a 24 or 25 year old was, well, you know, I've already dated most. The cute girls in Portland had to try D.C. So ended up here with a great network of Cornell, friends and family. And Rob stayed in New York for a bit after that and then he ultimately relocated to Wilmington, where he grew up.

John Coe (00:18:53) - Yeah. So talk about I mean, your the formation of your company seems very unique to me. So about the thought process of bringing hotels and other products together like you do and that whole formation or did it evolve? You know, we started with hotels and then we say, oh, we're going to do some other things. How did that kind of of germinate?

Dave Pollin (00:19:16) - Yeah, no, we started from day one knowing that we wanted to be diversified and office and hotel were the first two ventures that we undertook. We also knew I think George differentiates us a little bit is that we want to be operators as well. And so as you know, from taking a little bit of a deep dive into our organization, we pretty much manage everything we own and we have really robust operating companies. So there's a lot of people, I would say, who like to get management fees but may not have invested really in the infrastructure to be best in class managers. And I leave that for others to decide whether we're best in class or not. And you know that because if you're being hired to do third party work, that's validation that you have great people, great systems, and maybe you are best in class. So that we do find that to be the case in our operating companies. But but I think those were the differentiators when we started. Like we wanted to be of scale. We wanted to have multiple geographies, multiple hometowns, not just DC, not just New York or not just Philly. And we wanted to do Office hotel and ultimately grow in to do other asset classes as well.

John Coe (00:20:29) - Did you look at on a national scale from the get go or were you focused on the local geographic markets that were initially focused on?

Dave Pollin (00:20:37) - Yeah. No, when when you get started, having credibility is really everything, of course. So being here or being in Portland were really my two best shots of having that credibility, having worked in both places and lived in both places.  So we knew that the first assets for the hotel, which I was overseeing, needed to be in this metro area. And the same was true really with Rob in office. So our first office project was in the Philadelphia suburbs. Again, I don't think we'd have that credibility nor connections to capital in a place like Phoenix, which I dearly loved, but again, just didn't have that head start for my family. And I looked at it as, you know, I have this quiver full of arrows, and one of them is my last name. And I felt that it was very appropriate to use that, not to capitalize it in a way that I think was, you know, inappropriate. But because I had that advantage, I took advantage of it.

John Coe (00:21:33) - So did Abe introduce you to some people as far as getting things started?

Dave Pollin (00:21:36) - 100%? He introduced us to Franklin National Bank, which ultimately, as you know, became part of BBA, which is now part of Truist. So he was friends with Bob Pincus, Bob Pincus, like many people were, and you probably as well.

John Coe (00:21:54) - His name has come up a few times. Yes. Yes.

Dave Pollin (00:21:56) - So those community banks are so crucial to new businesses and entrepreneurs and they help underwrite things like character and community as well as just a spreadsheet.

John Coe (00:22:07) - You and I know that hotel financing is not an easy science, so having a capital partner early on is a big help, I would think. Yes.

Dave Pollin (00:22:17) - Yes. So when when Abe said to Bob and other folks at bank, Hey, we'd like you to do this, it will probably get done. And I think that may have been the only way. And also, thinking back to that time, we broke ground in 94, and that was a tough time in the capital markets. Oh, yeah. The crisis was not fully behind us. The RTC was still there. And so again, we got very fortunate.

John Coe (00:22:43) - That was the big roll up of rights and all the things going on. Yeah, it was a, you know, Jay Roberts doing the RTC, the whole activity there. So the hotel business was struggling even at that point. And then it got stronger as the 90s went on. It did. It could see, yeah. So what was your first deal in Washington?

Dave Pollin (00:23:05) - So we built the best Western Gunston corner. Oh sure. In Lorton, Virginia. Yeah. It is now a Holiday Inn Express. But when we opened it, it was, I'm going to say, overbuilt. The the tendency was to add bells and whistles and make the finishes at a high level because we just didn't want to take a chance. And so we.

John Coe (00:23:28) Ð Best Western?

Dave Pollin (00:23:30) - I think that was the response that the market had to. So I grew up in Portland and my. My partner in hotel group, Greg Miller, who was overseeing the hotel. Yeah, we were we were exposed to Best Western in a positive way. And not everyone here in the East Coast was. So we within a year or two converted to Comfort Inn, which is based in DC or DC area. And we got we have found a lot of success. But I think the one lesson that I took away was when the hotel was under construction. I got this probably because I wasn't sleeping, but I had this huge wave of doubt watch over me. And I'm like, you know, I don't know if this hotel is going to work. It really isn't knowable right, until it opens. So I said, I think I better get the second hotel going before the report card is back on this first hotel. And so I had the credibility at that time of a building under construction. And that's a lot more than I had before because before I just had ideas. But now we had a site, we had permits, we had construction underway, we were capitalized. And so the second hotel was the comfort suites at BWI Airport. And as feared, the first hotel struggled out of the blocks. It was late, it was over budget and opened off season. But that second hotel opened about a year later in October of 97 and took off like a rocket. BWI was exploding with Southwest Airlines, so we got lucky. And that hotel was really, I think, one of the major catalyst for the growth of our company.

John Coe (00:25:02) - So going to school at Cornell, you understood the differentiation, differentiation of revenue sources and stuff for hotels. Yeah. So opening up a best Western down in Gunston, Virginia or that, you know, what was your thought process I mean what what was your know, where was your demand coming from? Was it the 95 corridor people? Was it, you know, Fort Belvoir is nearby. I mean, what was your thinking with regard to bringing in hotel rooms?

Dave Pollin (00:25:32) - Well, you nailed two out of the four for sure. Yeah, Fort Belvoir was important. Yeah. We also are right at the same exit as the Amtrak auto train. So that was a really important source of demand. Right. But it was a little more seasonal than I thought. It doesn't happen. There's not much going on in the summer. And then Potomac Mills was a tourist attraction.

John Coe (00:25:53) - There you go. 
Dave Pollin (00:25:56) - I don't think it is anymore. Oh, it was the number one in the state. Yes. Incredible. Right? It was. So, again, I don't want to I don't want to mislead you and tell you that hotel did 80% its first night. I would go down to the Citgo station at the exit exit 163 Morton Road, and I would hand out $50 coupons for the hotel to everyone getting gas because we were really struggling through that first winter just trying to pay payroll. And I would send a letter to the bank, Hey, is it okay if we stay interest only for another three months? And they were very accommodating and so we figured it out. And the hotel ultimately was a big success. But yeah, it really struggled out of the blocks.

John Coe (00:26:35) - So Potomac Mills was your savior to some extent. That was that it?

Dave Pollin (00:26:39) - You know what the Savior was? It was a really good move by Greg Miller to focus intently on the tour and travel market. Interesting. So a lot of kids groups, school groups. And so once we found that, it really helped even out demand.

John Coe (00:26:56) - That's what's so interesting about the hotel business that you just don't know what you're going to get until you open the hotel and get a sense of what were the demand metrics. And they change, I assume, periodically just with different demand drivers that open up, right?

Dave Pollin (00:27:12) - 100%, Yeah. Hotels are an operating business and real estate is not even the most important. Non operating component. Brand is arguably more important than your location. You know, in general terms, obviously you're in the middle of a desert. That's different. But yeah, there's so many factors that make a hotel difficult to underwrite, and not for amateurs.

John Coe (00:27:35) - Yeah, Yeah. So it appears, as you said earlier, it appears that your intention was to become vertically and horizontally integrated with all aspects of real estate, investment management, leasing, development and construction. From your inception, was that the case and why? I mean, that's a lot to take on all at once. I mean, it seems like there was some organic growth, right? See, let's start this way. But you just can't take everything on at once, right? Yeah.

Dave Pollin (00:28:05) - Yeah. Well said. Yeah. No, listen. So Rob and I had similar backgrounds that we were from families that were immigrant, you know, spirited families and worked hard. His parents owned a sheet metal contractor.

John Coe (00:28:17) - The only 24 hours in a day.

Dave Pollin (00:28:19) - Yes, it's true. But it was it was really inconceivable for us to, for example, build a hotel and have someone else operate it. Of course, we were going to scrub the toilets and make breakfast and, you know, order the sheets and do those things just, of course. And I. Just mentioned, too, that on the hotel side, because it's an operating business, we set hotel group up from day one as a separate entity. And Greg Miller, who I mentioned, who was actually my supervisor at Laventhal in Phoenix, he and I had started the company along with Rob.
Rob getting full credit. But Greg really spent all his time focused on operations where I would work with him there, but also try to grow the hotel footprint on the development side. So we believed that systems and people made a difference from day one, and that's still the case today.

John Coe (00:29:11) - So hiring, getting people and building culture, what how did that all kind of evolve? I mean, did you have this sense of what you guys what your message to the market was at that point, or did that evolve also?

Dave Pollin (00:29:27) - It definitely evolved. Greg and I had both worked in operations growing up and again, Rob had done construction and other hands on labor as well. So we knew what kind of bosses we liked and we knew where people got the most productivity out of us. And we just aspired to create a culture, not a company, a place where people wanted to work, a place to have a career, not a job. And so we've invested over time a lot in creating the culture of PM hotel group. And just a quick aside, this culture at this hotel company is very different than the culture at BPG 360, which is our office management company. And we don't really even do health benefits. We don't do property insurance together. And the reason is we just see the world very differently through different lenses. So even though we're same ownership, part of the same group affiliated and collaborated on many things, the PM Hotel group culture is its own standalone culture. And so we're here in D.C., the capital of the world for hotels, and we have a lot of different ways to reinforce that. Our turnover is extremely low as a result of it. We are about 10% in our professional ranks or above property ranks. Turnover. I'd say that's about a quarter of the industry. Even at the property level, we're less than 60% and across the industry it's over 120%. So we retain people at the above property level through profit sharing as an example of investing in them. And so they get their salary, of course they get incentives, but then this profit sharing allows them to share in the success of the organization. And it doesn't matter whether I like your hairstyle or not or whether you did a great job in the last assignment, it's you have to be here to get it. So we paid in August of the following year. So it's a retention tool as well. So it's good for the organization and there's several hundred thousand dollars going out the door. It's so it's your level multiplied by your number of years here. So there are people who get like very significant checks, five figure checks, and I think they feel like owners because of that. At the line level, we have MTV, which is in every breakroom and every hotel. And so we talk about our culture and the things that make us special. We celebrate together things, but that's an expense that we invest in. Because if you're in Oakland, for example, working for a PM managed hotel there, why wouldn't you go across the street for the same job for $0.10 more an hour? And the only answer is because you feel valued and it's a culture you aspire to be part of. So that's really our job at PMO, is to create a place that people want to be. And if that virtuous cycle manifests, then your replacement costs are your cost of recruiting and onboarding and training and retaining people is much lower. So it does benefit us. There's an ROI on that investment, but it's also kind of who we are as people and as a company.

John Coe (00:32:37) - So you mentioned that two thirds of your properties are third party management. Yes. So you're obviously trying to go out and do deals as an owner, but you've got your your client base that are that are maybe your competitors for transactions and stuff. So how do you separate the businesses? And, you know, I used to work for the B.F. Saul Company and when I started here, the company was we were mortgage bankers and the company owned it wasn't Saul Centers at the time. It was another form of a real estate investment, trust ownership. But it owned a lot of retail centers around the region that they had bought from Giant food over the years.  So we'd go out and try and pitch retail developers to to finance properties. And they said, No, we're not going to talk to you because you your company competes with us. You know, So how do you deal with that issue? I'm just giving as an analogy here.

Dave Pollin (00:33:41) - Yeah, yeah, it's a great question. So we have an example at BWI Airport where BPG owns the BWI Hilton, but hotel group doesn't own any hotels. It's completely a third party entity. And we offer a great owner who's also locally based. We manage the Westin, BWI, so one would consider them direct competitors in most instances. So that owner figured because. We shared with him, and he believed us that we could save him a substantial amount by complex things like van transportation to the airport, by having a chief engineer with remarkably high level skills, working on both properties that maybe each hotel couldn't afford on its own. The sales departments could work together when it made sense.

John Coe (00:34:33) - Complementary, then, yeah.

Dave Pollin (00:34:35) - So the Hilton would potentially sell out and well, we have this opportunity. Of course we're going to share it with the Westin and then vice versa. So it is a little bit different than the example you gave because there's more to be gained from collaboration than potentially lost due to competition. But I will also say that as really the owners representative on that Hilton, I do not look at the Westin statements. I don't have access to their daily reporting. I don't want it. And I do want the team at the Westin to try to beat the Hilton. They should. And I encourage that.

John Coe (00:35:12) - So you have kind of a Chinese wall in a way? To some extent, yes.

Dave Pollin (00:35:16) - At the owner level. But the operations teams work closely together. Okay, That's good.

John Coe (00:35:23) - So you talked a little bit about your struggles with your first couple of hotels. Any other major challenges you had getting your business off the ground and going? I mean, obviously, hiring had to be a big part of it. What other issues did you deal with? Yeah, yeah, Capital markets mostly, or hiring or what were the other issues?

Dave Pollin(00:35:41) - Yeah, that's a great question. I would say on the hotel side, wow, is it cyclical? And it seems to get more violently cyclical as we go. And we suffered through, well, the RTC days that the savings and loan crisis 9/11 was incredibly sad, but also very difficult for the hotel community and then the Great Recession and Covid. So we are used to the again, the ups and downs of the cyclicality. But the reason that we wanted to do multiple asset classes is because we recognize that Now, I didn't realize to the extent it would be beneficial, but if during the Great Recession we didn't have our scale, then we probably wouldn't have gotten through it. And during Covid, if we were exclusively hotel, I don't know what would happen. And so the additional way that we've really focused on diversifying our revenue and wealth and holdings is through third party management fees. And so that's been crucial on the hotel side, those third party fees. I mean, that's what the C Corp, Hilton and Marriott and Choice and Hyatt talk about is being able to provide a service and using your IP to generate revenue. And so that's another way for us to grow the enterprise and insulate ourselves when cycles happen.

John Coe (00:37:07) - Well, thinking about the early 90s and I mentioned this earlier, several of your competitive hotel investment companies are public companies, so you didn't have the scale in the 90s to think about that, but you probably do. If not now, You've had it maybe a few years from now. Has that ever been a thought process that you've had to roll up? Yeah.

Dave Pollin(00:37:29) - Yeah. No, it's a great question. And it's interesting because you talked to the CEOs who are all just really smart and talented and pretty people pretty well. And yes, you do. And they have great people skills and they're all here, right? So you get to see them. Sometimes it's their time and sometimes it's our time. So when their stock is performing, then no one can compete with them. But because they're public, sometimes their stock is not performing and they're not in position or, you know, today many of them are deciding, is it better for me to deploy capital into new assets or should I really be buying my stock back? So but when it's their time, their capital is so efficient that no one else can compete with them. So it's really interesting for us. We think about it a lot, but we're happy with our private structure. I will say that our sources of capital are really diverse. However, whether it's working with institutional joint venture partners, what could be a private equity firm or a life insurance company, or our friends and family investors, or if it's just me and my partners on a project, we found generally that we're able to do what we want to do without that public scrutiny and without potentially having things we can't control, force our hand. So if again, a REIT stock is way down, it may force them to do something they don't want to do. And sometimes also the additional scrutiny can be a distraction. So we feel private is better for us today.

John Coe (00:39:02) - And you also have more control over decision making, too. You don't have to sit with a board of directors and then have all these quarterly, you know, analysts telling you. Why are you doing this? Why can't you do what your other peers are doing or whatever? Right.

Dave Pollin (00:39:16) - And they spent a ton of time at Nareit and with other. Stakeholders. Yeah.

John Coe (00:39:26) - And the flip side of that is the financial flexibility they have of going either to raise capital on the equity markets or get a bank line that's really attractive financing to go. If you wanted to buy a hotel. Oh yeah, well, we'll just go down the drain on bank line. We don't have to raise the capital and do all the, you know, the equity raise, which is a lot harder, sometimes 100%. So anyway, you know there trade offs. Yeah. Sounds like you're not ready to make that trade off. But someday you might. Who knows? You're right. Right.

Dave Pollin (00:39:55) - Or maybe just call one of them and have them buy our portfolio.

John Coe (00:39:59) - Another way to do it. Yeah. So I mentioned earlier before we started, I listened to a conversation you have with Jake Wurzbach, who's obviously a very successful hotel operator. My audience is not as savvy in hotels. Perhaps you can further illuminate the complexity of hotel operations that integrate with traditional real estate operations. And what the difference is every day is a fresh revenue stream, whereas expenses are mostly fixed some variable. But managing this as a special effort perhaps explain what's important to be a great hotel manager and how it differs from other property management.

Dave Pollin (00:40:41) - Yeah. Our management company has the scale to have what I humbly believe are best in class leaders in most functions, but very importantly, commercial strategy or revenue. And a hotel will, if you broke it down into, say, two main sources of business, there's basically business and leisure. But from there, it breaks down quite a bit more granular. You have group, you have transient, and then there's a thousand different trip occasions within those. So youth sports. Is that group or is it transient? Well, it's kind of both. You have contracts that could be airlines or it could be a FEMA crew coming in to clean up after Covid. So a trillion different demand segments. And in order to really maximize or optimize hotels revenue, you have to really be able to understand all of them and deploy resources against them. So we really have three levels of revenue generation. The hotel sales team, arguably the most important relationships in the community. And I also started by just talking about rooms. So there's banquet and catering revenue as well. And that's part of food and beverage. The other part of food and beverage being outlets and bars. So you're getting a sense of it's remarkably complicated, but we need our on property team. Everyone is in sales from the general manager to the executive housekeeper. How we interact with our guests leads to more business. But so the revenue team on property for a full service hotel could be seven, eight, ten people. Someone focusing on business transient, someone focusing on social business like ethnic weddings, an Indian wedding or a kosher way. Then there's, of course, the group side of it. And then we're also spending a ton of time, mainly above property level at the regional level on revenue management, and that's working within the brand systems to deploy our hotel inventory at the best rate. Much of that is now algorithmic. But you know, there's when demand is going up, rates will go up. And if there's an external factor like Super Bowl in Las Vegas this year will obviously that's an important factor as we price our rooms over that period. But the additional factor there is you have things like OTAs or online travel agents like Hotels.com or Priceline. Should we be putting inventory into those channels because it's more expensive? So you only do that when you need it. You wouldn't do that midweek in a business city. So it gets really complicated on the revenue management side. And so we do let the algorithms run, but we have to provide fences and structure to that. So if our goal is to do 40% group mix, that's going to a certain hotel that's going to have a big impact on how we set rates for the balance of our inventory. And if we go into 2024 and a place like Baltimore with a great convention calendar, that will impact how we think about setting our transient rates. And if it's a terrible convention calendar, well, you can imagine, then we're going to have to do a lot of work with small group Et-cetera. So it's a really sophisticated jigsaw and we have to have really talented people at I mentioned the property level and the regional. Level. And then the thought leadership is really the senior leadership team here. It's led by Lavelle Castro and Tina McDonald and other people who really spend full time thinking about what is the way to optimize revenue. And we're competing. It's really smart people. Hilton and Marriott manage other independent management companies manage and then the OTAs are also competitors and collaborators in certain ways.

John Coe (00:44:34) - There's also a recent phenomenon known as Airbnb and Vrbo, which are another interesting phenomenon.

Dave Pollin (00:44:42) - That's true, yeah, we call people that don't stay in hotels but go that route that's leakage. So we do not like that shadow inventory. It's another term for it, but we understand that it's a part of life. I will say this, though, that people travel a lot more, maybe because those options are out there than they used to. And I've traveled as a family and sometimes we prefer to have a home by itself.
So there's a place in the market for them and we wish them success. We do feel like it's important that they be subject to the same rules and regulations we are. They should be providing occupancy tax to the municipalities to help pay for infrastructure, police, fire and other things that cities do. So as long as they're subject to the same rules of the game, then generally we support it.

John Coe (00:45:32) - Have you thought about that business?

Dave Pollin (00:45:34) - No. We feel like hotels are challenging enough and we really want to pour resources into being great there. And I do want to mention one other thing, John. I don't want to be too long winded on this because the rabbit hole is deep, but we've been spending a lot of energy over the past ten years or so on lifestyle hotels. And you might say, well, you know, Dave wants to be cool. And whereas black T-shirt and go to the Virgin Hotel in Nashville, which is one of our properties or one of the new ones that we're developing now, and I would only say that the the development cost difference between a true lifestyle hotel and by that I mean a one hotel virgin Hotels W viceroy is. 6060 great example. Yeah it's not that much more expensive to develop. But at the Virgin Hotel Nashville, our goal for this year was probably to do 15 to 20 million of food and beverage. If that were a traditional branded hotel in the same building, same location, even the same management. My sense is it probably wouldn't even do half that much food and beverage revenue. And the reason is, is the lifestyle hotels generally are successful in engaging with the community. And I often say if you took your spouse to a traditionally branded hotel for your anniversary dinner, that might be your last anniversary. But if you took him or her to the one hotel or the Virgin Hotel, they might think you're cool. And so that's really the difference through the same box. If I can do twice as much food and beverage, a lot of that marginal revenue goes to the bottom line, helps support debt service and create value. ET cetera. So that's what we've been spending our energy.

John Coe (00:47:14) - Have you melded the two ideas where, like, for instance, I think we're going to talk about this property soon, the Hilton, the Marriott that you just built downtown. Yeah, that has a signature chef, I believe in the top. So that's more of a traditional Marriott hotel. It is. And you've got boutique features to it. So talk about that meld there a little bit or. Yeah. Am I inaccurate in that?

Dave Pollin (00:47:41) - Oh, no, you nailed it. The the great thing about that specific hotel is I think it represents Marriott's vision for what that core brand is needs to be to be relevant for future travelers. Because remember, Gen-z and millennials, they react differently than we did. I think we were happy to have a clean room and breakfast, you know, a shower or even a bath that was hot. And so their expectations are much higher now, and they're seeing images on Instagram and other places of really experiential hotels. So whether they're going overnight for a work trip or whether they're going on vacation with their partners or friends, their expectations are higher. They want great design, they want great food and beverage, they want local relevance. So some indigenous touches, whether it's food or art or community based interaction, they want more experiential things. And so the brands that are continuing to be successful in the marketplace and we'll be continue are addressing that just like Marriott. So we think that Marriott's on the right track with their hard brand. But what we did in order to react or I should say react with the community was Yara, which is our rooftop restaurant. It's helmed by a terrific, terrific chef, chef Yuki McKendry, who has Peruvian and Japanese roots. So it wasn't some know, hey, let's do a white paper. We found talent and then built a restaurant and a menu around his skills, and he was already well known locally and it's been really successful. People are living in smaller apartments in DC and other major cities. They have less ability to interact with the environment. Maybe there's not a park nearby and so a rooftop or an outdoor space becomes even more relevant in a neighborhood like Noma, where the hotel is. Even though it's next to Capitol Hill, many of the residents are Noma. There's maybe 5000 apartment units on the way to 10,000. And so really, they're the people that we want to come to. Yara and Weekly and experience it 

John Coe- Millennials. Yeah, well, that's interesting. I'm just this whole boutique thing is just really taken off. And I guess what you're saying is this It's the image of this generation really wanting to spend the money to to enjoy that kind of an experience is what you're saying?

Dave Pollin (00:50:11) - Yeah, I think people have enough stuff. During Covid, they bought sofas and desks and chairs and computers and now they want experiences. And the last thing I'll say on the brand side is that could potentially have been an autograph collection hotel, which is a Marriott full service brand, and we could have managed it, but we felt that the Marriott brand would resonate in that marketplace because the demand generators to a large part are ATF, SEC and other large format government agencies, plus people doing business with the capital. So having the experience for them was maybe less secondary than having the reliability of what a Marriott is. And it's becoming something that's great. But again, it was less about the story and more about the execution. So we felt that the Marriott flag was a better fit there.

John Coe (00:51:05) - Well, I've been to the new Headquarters Hotel and they have two settings that are fascinating to me the courtyard, you know, ground floor seven, seven state, I think it's called, and then their rooftop hip flask is really an interesting setup. Yeah, I don't know if you've seen that.

Dave Pollin (00:51:23) - Proper have and they're doing great. The the community has really embraced the food and beverage there. Right.

John Coe (00:51:30) - It's interesting. Have you instituted hotel like revenues and other property types in your company's portfolio? I've noticed that apartments, office buildings and retailer incorporating hospitality themes in both design and operations. What are your thoughts on that?

Dave Pollin (00:51:48) - Yeah, I mean, I want to be really specific. So Rob Buccini oversees residential and Chris Buccini, who oversees office, they're extremely involved with PMO. They're on the board. So we're reporting them all the time right there in the properties. They're talking with our people. They're experiencing it firsthand. They're going through a design process with me, and they've pulled a lot of what makes hospitality feel special into those other asset classes. Exactly to your point. So the amenity space is now in our residential buildings. Could be a lifestyle hotel, same quality, actual activities, not just a pool, but things. Gyms that have cantilevered door cantilever and doors to the outside. So when the weather's good, you're actually working out this really unique, special experiential things. And then in the residential units too, pulling a lot of the materials from hotels. You know, we were some of the first people that put it into multifamily buildings, not carpet to put really high end showers into new apartment buildings as opposed to bathtubs, which again, are earlier apartment buildings were more traditional in that regard. So so hospitality is infused into all the asset classes that we're working in today. It's a good question.

John Coe (00:53:01) - I interviewed Toby Bozzuto recently companies and two things that he talked about and he's he's a musician. That's what he's his background is. He wanted to bring more of an artistic approach to managing. And they have 91,000 units in their portfolio spectacular And he's he's doing original artwork and he's bringing hotel designers in to to for his lobbies or common areas and wants that same feeling and now looking at the units too same thing same thinking you're thinking. And the other thing that I thought was interesting is whenever I go into a Bozzuto property, there's a unique smell that you have when you walk in. And it seems to me that came from the hospitality industry, am I right?

Dave Pollin (00:53:50) - 100%, Yes. We we definitely want it, whether it's subconscious or conscious. We want you to feel comfortable and maybe feel a little bit energized. And and that is a great way to do it.

John Coe (00:54:05) - So when's the first time you were exposed to that thought process? Just out of curiosity And.

Dave Pollin (00:54:10) - So I was on the canopy. I still am on the canopy brand Owner Advisory Council. Okay. And so before the first Canopy Hotel opened, the really enlightened leader of that brand, Gary Steffen, at the time, you've identified that as a real opportunity for us.

John Coe (00:54:27) - And so it kind of clicked at that point. Well, of course we're engaging all the other senses and thinking about how intimate a hotel is like compared to an office building. Like you sleep in our beds and you eat our food and you're in our shower like it's super intimate. And so that just made sense to engage that other sense as well. And and he was right. And I think it does.

John Coe (00:54:47) - Taste, of course, with food, too.

Dave Pollin (00:54:48) - Yes.

John Coe (00:54:49) - Yes. So you actually in the Hvac system, do you infuse some kind of a scent in that or how does how does that work? Yeah, it will vary.

Dave Pollin (00:54:58) - Sometimes it's a standalone unit. If it's for a smaller space or an older property.

John Coe (00:55:03) - Like the lobby, for instance, in a big hotel, what would you do? Well, that would.

Dave Pollin (00:55:06) - Be in the Hvac, you're right, because we're circulating, there's a central plant that we would circulate air. So yes, it would be in the system.

John Coe (00:55:13) - So you infuse a scent in that.

Dave Pollin (00:55:16) - And each brand has its own sense. And for independent hotels, we get a pick as the owner, which scent to use.

John Coe (00:55:22) - That's crazy. There's just these nuances in the hospitality space that's unique to any other real estate that I'm aware of. Am I right there?

Dave Pollin (00:55:30) - I agree. I agree.

John Coe (00:55:33) - It's it's fascinating. Pivoting from management to investments and development. How do you pursue new opportunities that don't interfere or compete with your existing management clients? We talked about that. And then talk about your hotel lens. What's your lens for deals today? What are you looking for? What what makes sense to to either buy or develop? I mean, your first two deals were development deals. I mean, most people don't go out of the shoot, you know, ground up on a hotel that's kind of like, whoa, So what what would differentiate buying a property as opposed to developing one ground down?

Dave Pollin (00:56:07) - Yeah, yeah. Just really quick. We started Bpg to buy RTC assets and we missed the window by six months. So land is the last asset class typically to recover value. So we bought some land at great values where we wanted to be okay. And because our families had both been in construction in a way we weren't really scared of it, we probably should have been. We weren't. I would say, John, you might if I had to just like put my job in a one sentence. It's to deploy capital at every point in the cycle. Sometimes that's development, sometimes that's acquisition, sometimes that's what we're doing with Corten, which we can talk about. Sometimes it's all three depending on where the opportunities are. But I would say the first thing is going back to the culture. I have really talented partners and people that I'm fortunate to work with who are better at what they do than I would be. So on the investment side, Darren Anzalone has been chief investment officer for our hotel group for Bpg for 15 years. And so he's in the marketplace every day. He oversees the negotiating of contracts. He'll identify the opportunities that he thinks will resonate based on the strategy that we outlined. We do strategy every six months whiteboard because or white sheet because the inputs are changing in the background. Interest rates, construction costs, operating metrics, what's happening, various demand segments, various markets, for example, business transient. We don't think it comes 100% back to where it was. We think it's going to be 75 to 80%. So that affects how we think about hotels and where to invest. So all that's happening in the background and if you just keep doing what you were doing, you'll be wrong. So we make ourselves start from scratch. It's painful. I don't think people really enjoy it anymore, but I get all my hotel senior leaders in a room and we go through 3 or 4 different two hour meetings to talk about this, and we do a new clean sheet strategy for hotels every six months. We present it to the advisory board, including my partners, including outside members, and they pick it apart and ask questions and push and pull. And so I think that's keeping us ahead of the game and able to be smart about not only investments, but what to sell as well. So I would just boil it down there. Having really talented people like Darren and then thinking widely about the best thing to do.

John Coe (00:58:31) - So how do you make decisions on buying and selling? I mean, is it just market by market, deal by deal you look at it, or is there a global decision making? You know, we're not going to limited service. We're going to sell all those or you know what? What kind of is it or is it just individual assets? Is this the right time? You know, is there enough demand in the marketplace to buy? Are the rights actively buying right now? So it's a good time to sell this asset? I mean, what how do you how do you think that through.

Dave Pollin (00:59:03) - Yes. Yeah, you said it. Well, I don't want to oversimplify it because it's really. Complicated. We probably own $1 billion worth of hotels and have other asset classes as well, and they're all different. For residential, we're a buy sorry, we're a build and hold because they're really difficult to replicate. We have a land bank that is difficult for others to match in the markets that we're active in, which is really Wilmington, Philadelphia. So we have a pipeline of 3 or 4 years of development sites.

John Coe (00:59:37) - Even office and residential.

Dave Pollin (00:59:39) - It's just residential. Yeah, office is different as well. It's going through some unique challenges right now, but bringing it back to hotel where I spend most of my time again, about 20% of my time is on asset management, and that's thinking about each hotel. Frankly, right now, a lot of our decision making is driven by loan maturities. So that may force our hand. I mean, just being very humble, if a lender says I can't renew it or I'm going to underwrite it, you need to curtail this loan by $10 Million. You know, we'll have to make decisions. Do we bring in Rescue capital? Do we invest more friends and family dollars? Do we sell it? If we sell it, are we willing to take a loss? So I don't want to oversimplify it. Each asset gets a really deep dive review. And again, we do that every three months because our board meets every three months. We do strategy every six months, but going deep dive on each asset happens every quarter.

John Coe (01:00:33) - So capital markets are tough for hotels right now? I would think so. I mean, I don't know how you do a ground up hotel today unless you get subsidies of some sort from somewhere, it seems to me.

Dave Pollin (01:00:44) - Yes. Well, it's part of kind of my perspective of survive till 25. We have two development projects, so we're really excited about. I think we'll get both of them in ground by Q1 in a very difficult, if not the most difficult capital markets environment I've ever seen. If we're successful, which I think we will be, there's not going to be many other projects going. So yeah, so supply should be cut in half for the next five years or so. Now there'll be lots of new stuff built in the hotel space, but it'll be more select service, maybe more suburban. And so the luxury lifestyle stuff that we're focused on, not many other folks will be able to get their projects going. I think we will, and that should give us an advantage.

John Coe (01:01:29) - There's a lot of people talking about converting office to residential. Has there been a thought process at all looking at about office to hotel at all in the thought process?

Dave Pollin (01:01:39) - Yeah, we've done four office to multi conversions in our portfolio, so we agree that's a great potential solution and we'd add value on the hotel side, though we have not found, we've thought about it, we've tried to come up with ideas, but it's such a heavy lift. The value add component of it is extensive, more so than residential because you're adding amenities, right? You have to add services and laundry and things like that you may not need in multi. So you're less efficient in terms of using the square footage, but you also have the constraints of window line, etcetera. So you have all the challenges you have even more than than the resi conversion.
And frankly, there's not much capital out to do anything value add in hotel today anyway, so that might slow it down. It feels like there still is more capital for residential though than there is for hotel.

John Coe (01:02:30) - Yeah. Although just today the Wall Street Journal came out with an article that there's $1 trillion of rollover going on in the apartment space over the next four years and interest rates are probably double what they were when they were capitalized initially. So the question is, what happens? How do they get that done?

Dave Pollin (01:02:49) - They call Corten!

John Coe (01:02:52) - There's a good segue right there. Tell us about Corten and how that all originated. Yeah.

Dave Pollin (01:02:56) - You know, from from humble origins, you know, quite frankly, if you talk to many developers or sponsors, if you want to use the institutional language, the least efficient, most difficult part of our job is not necessarily finding deals or executing. It's raising capital. So a lot of times I'll call friends from college and say, Hey, we're working on this. Is this something you're interested in investing in? And that takes a lot of time. And frankly, it's not that fun. And I'm 55 now, and so some of my friends have said, you know, look, I'm no longer interested in doing that. And so, you know, that capital formation part of the business is kind of like the knuckle dragging Neanderthal part of real estate, what.

John Coe (01:03:43) - I did for 30 years.

Dave Pollin (01:03:44) - So yeah, you understand the challenge. Oh, yeah. And it's not necessarily up to you whether you can raise it or not. There's capital markets challenges and your competitors. So anyway, so the idea originally behind Corten was let's have a sponsor fund where we'll raise institutional money to be the Bpg capital. We shifted violently during Covid for the better. Corten is really a special situation. Vehicle now and we are no longer going to invest it into bpg deals. We have now ever done a Bpg deal with core ten. It's separate and standalone.

John Coe (01:04:22) - Explain the origin of Corten and what it does.

Dave Pollin (01:04:24) - You bet. So Corten is a multi asset class special situations Real Estate Private Equity fund. PJ Yeatman is the thought leader and the day to day leader for Corten. He's based in Philadelphia where we have the idea of Start.

John Coe (01:04:39) - How did the idea germinate?

Dave Pollin (01:04:40) - Yeah, so because we were having, you know, all these hours dedicated to calling friends and raising capital, that's where the fund idea came in. But a fund is not real estate. Matter of fact, only about one third of what a fund does relates to real estate because you have so much investor relation, right? And compliance and fundraising. So we did not have that expertise in house. We knew that if we wanted to do a fund, we needed to bring in someone that was capable and talented and had relationships and a reputation, and that describes PJ (Yeatman) to the core. We've done several hundred million dollars of projects with PJ while he was at Louis Adler Sure. And then he ran in Center Square, right, exactly. So we've loved him. He actually grew up with Rob and Chris, so we've known him for a long time. The greater we. I met him shortly after we started Bpg, so he was the perfect fit. And so when he was willing to consider it, that's when we really started down the path of forming Corten. And so he again is an equal partner in it and he runs it day to day. It's doing investments in hotels and residential multifamily mostly today because that's where the opportunity is. And I think it's fairly straightforward for people who are exposed to real estate capital markets that the situation you described where if interest rates are the only things that have changed, it'll be difficult for projects to underwrite an extension or new loan. They may need more capital. So the three options are sell, put in your own money, or put in someone else's money. So Corten's really there for that third option, and it's capital that's priced opportunistically, but it's still less expensive than equity. And people have also access to that capital for things like redeeming out a partner. Hey, I built this great project. My institutional partner needs to go, but I want to hold on to it. And so it's a great solution for that situation as well. And it's also as people see opportunities in this market to acquire a portfolio, for example, or even a single asset that might be distressed. We're seeing a lot of those opportunities.

John Coe (01:07:01) - So is it mostly subordinate financing or is it bridge bridge capital on a first position typically, or all the above kind of thing?

Dave Pollin (01:07:10) - Yeah, we've done whole loans and that's something we aspire to do more of, but quite frankly, it's mostly been subordinate. We are common equity in some of our investments. So we actually are the owner of or the only owner. So yeah. So Corten will acquire assets on its own. It's flexible and I think the term special situations really describes it best. We're not programmatic that we're going to go buy 10,000,000ft² of office in Manhattan. That's just not how we see the world. We want to work with sponsors, but we also want the discretion to do things that we think are interesting on our own. And we've been able to deploy over 450 million so far. We're almost done raising fun to thinking about fund three for next year. So it feels like a platform that's got a long runway ahead of it.

John Coe (01:08:03) - So apartments are the biggest chunk of that or hotel? 

Dave Pollin (01:08:08) - Yeah. I mean, we're. Able to deploy capital into multifamily with great sponsors and great markets and get common equity type returns. Interesting. So no need to be common if you can be in a pref situation or pref position and get common type returns.

John Coe (01:08:23) - Are you looking nationally?

Dave Pollin (01:08:25) - We are. We are. We've invested in California, Oregon and Louisiana. Washington state. Yeah. So absolutely. Of course up and down the East Coast.

John Coe (01:08:38) - So you're you're a private equity firm too, in addition to being a hotel operator and all that. That's a lot.

Dave Pollin (01:08:44) - Also, I think we call ourselves the largest food service venture capitalists in the mid-Atlantic because we put so many restaurants in business to be amenities for our other asset classes in Wilmington. We love to start businesses and we love to work with brilliant entrepreneurs and have been fortunate to be able to do that.

John Coe (01:09:03) - So what is I mean, we talked individually about that. There's no typical hold strategy. So it just. Varies across the board on all your assets, then.

Dave Pollin (01:09:12) - Yeah, we'll try to adhere to the investment thesis when we wrote a deal, but we're very humble and sometimes you have to pivot and today it would be hard to sell hotels. And we acquired a number of properties. One of our strategies before Covid and after the Great Recession was called an SFS, so it was stabilized full service suburban hotels, which no one else wanted. So we got them for like $0.60 on replacement. We, they were mostly renovated, didn't need a value heavy lift. We were able to generate great yields. Day one, good overall yield on cost, but it would be a great time to exit those now based on their vintage. But that's not possible. So we're going to be agile and if we have to put in more capital or extend loans, we'll do that on behalf of the ventures.

John Coe (01:10:05) - So March 2020 comes along and you own some full service hotels in urban markets. What happened?

Dave Pollin (01:10:14) - Do we have to go there? Oh, no. Yeah. As as expected, it happened fast. And when Covid first became part of the consciousness, we were thinking here, okay, so we have a lot of third party management engagements and we'll be fine. And we were not fine because two and a half or 3% management fee of zero is still zero. But yes, we have this huge infrastructure to to support and I think every single one of my peers, as well as the Hiltons of the world, went through the same thing. So, John, thank God we were diversified. Our office performed well, our multifamily performed well, and then we stepped up as principal, as individuals, as did many of our investors. And we put a substantial amount of capital into the hotels. We did not give up on them. We did not throw the keys back and make it the lenders problem. We were collaboratively and we think in hindsight that was the right strategy. We're not out of the woods entirely on that. But to answer your question, we closed about five hotels during that time. We went through an analysis of was it better to keep them open and operating? Was it better to close them? Operating costs don't go to zero when you're closed. You still have utilities. You have to run the mechanical systems on these big, sophisticated buildings. You have to have security, for example. And then when people are trying to cancel or move dates, you need people in sales. So and then there was FEMA business out there. We had to go get that, too. So we couldn't just fire everybody and we love our people and wouldn't do that anyway. So the hotels that we closed were all in markets where we had another hotel, so we would consolidate close one of the hotels in that market where we had 2 or 3. And so those ones we closed, we kept our people employed to the extent we could. It's a tragedy in this industry that people who work at the line level many times are laid off because of these cyclical factors. And so it makes it less likely they'll return. Or other people might look at the industry and say, Hey, I don't want to go into hotels because they lay people off when there's a tough time. So it's horrific and it was horrible from the human perspective. We did support people who we laid off the best we could with salary and things like grocery cards and then bring them back as soon as possible.

John Coe (01:12:37) - So did you reopen every of the hotels that you were involved in or. We did some closed.

Dave Pollin (01:12:41) - We did. There was one hotel that went back to its lender, but we only owned 5% of it. And it was really the decision of our institutional joint venture partner. We didn't agree with that decision and we wanted to keep going, but unfortunately they precluded that.

John Coe(01:12:56) - Did you manage it? We did.

Dave Pollin (01:12:58) - Oh, sorry. No. Afterwards? No. Did not manage.

John Coe (01:13:02) - All right. Even with adequate equity, how is the interest rate market affected your opportunities? Do you use MBS CPUs, potentially public subsidies that help bridge the gap on your deals?

Dave Pollin (01:13:15) - 100,000%, yes. Every source of capital is crucial in addition to what you've mentioned and all of which have been employed in deals past and present. We've used Crowd Street for outsourcing and they've been just incredible to work with and brilliant guys, great investors, great model. We love them and wish them all the success in the world. So it's really difficult to source capital today. I'd say the most difficult is the institutional joint venture equity for hotel development. Today I would say that market is almost nonexistent and we're going to be resourceful and find sources of capital to to build the deals that we want to build. So for example, we're pivoting to union pension funds. They're precluded from going directly into deals except under certain circumstances. But we may have found a way to to do that, for example. So we spent a lot of our time and the 20% of my time that I need to spend thinking big thoughts. A lot of it is about access to capital, managing relationships in the capital markets, you know, being ready when opportunity strikes and really talking to the smart people like you in our space to hear what's going on.

John Coe (01:14:37) - What's interesting about the hotel business is the personnel side, because you're one of the biggest employers in many markets when you go downtown. And I mean, it's a I don't know what the size of the pie, the slice of the pie in urban markets that hotels provide. But it's a it's a big slice. And I assume you work with economic development. People say look at these trade offs. So just to give you a little history of my background in the hotel investing space I was involved in, in the financing of the Mandarin Oriental Hotel in downtown Washington, which was the first TIF financed hotel in the marketplace in D.C. We actually were involved in the origins of the TIF legislation in Washington when Anthony Williams was mayor. And it was a fascinating process going through that. But you do what's called a Òbut forÓ test for I don't know if you've ever done a TIF financing on any of your projects, but you have to demonstrate. You get consultants and all these attorneys and everything they pulled together to explain how these bonds are going to be repaid, which are basically for the audience, a Tiff financing basically is taking surrounding real estate and using the real estate taxes to subsidize the development of a of of another property and in this case is hotel and the drivers are the tax revenues coming out of that property including you know all the hotel taxes, property taxes and food and beverage taxes, all these different revenue streams that come out of a hotel. So to me, that's the argument. You go as a as a hotel developer to an urban market and say, we're bringing all this revenue to you guys plus unemployment. Why don't you help us out?

Dave Pollin (01:16:22) - Yeah, yeah. John We have access to public funds for some deals. I would say that a cautionary note is that the labor unions, the hotel unions are so strong in places like New York and.
And Philadelphia that if you use Tiff financing or other public funding or even if you need required variance and you need city council approval, you're going to have to sign a card check neutrality agreement. There you go. And so you're signing up to be union, which greatly increases your operating costs. So your but for is but probably not work.

John Coe (01:17:04) - Okay. So you have no union hotels.

Dave Pollin (01:17:07) - We do. We do have one. We have one. And we we absolutely love our people at that hotel. We believe that the union provides things that they appreciate. We would also provide things like health benefits. So we understand why they are part of union. We respect that the union is part of that hotel and always will be. But it does make the operating structure inflexible. It limits the amount of money we can invest in the hotel as a result. And so I'm not sure that it's great for all stakeholders, but certainly for the employee, as it seems.

John Coe (01:17:47) - Is your joint venture partner a union pension fund in the property?

Dave Pollin (01:17:50) - No, it is not.

John Coe (01:17:51) - It seems to me if you did have that, you go to those guys and say, Hey, how about investing here? You know, if you want to keep the property, really?

Dave Pollin (01:17:59) - Good idea.

John Coe (01:18:00) - You bet. You know, that might be. One way to do it. Yeah. Aligning interests.

Dave Pollin(01:18:04) - Yes. Yes. Yes. Also.

John Coe (01:18:09) - So let's pivot to your your company's culture. You talked a lot about it already. The hotel industry is known for its emphasis on hospitality and creating memorable guest experiences. How do you spirit you infuse the spirit of hospitality in all aspects of your activities from the real estate development to the hotel management side.

Dave Pollin (01:18:28) - I want to mention that it's important to measure whether what you're doing is working and culture is such an important part of hotel group and the efforts that myself and the senior leadership team put in that it's great to get a report card once in a while. So PM did two acquisitions in 2021, what a locally based firm called MOTUs and then other was a New Jersey based firm called Paramount Hospitality. And so we added between those two about 20 hotels to our portfolio, all third party management and the feedback from the senior team and then the property teams was really positive that they appreciated many of the programs that were available, whether it's 401 K match or other opportunities that we give them. Career pathing. We have a terrific online training infrastructure so we can track people and they can access. Classes, whether it's brand or things that we put on there, or from third parties that allow them to progress their career and gain new skills and hence get promoted. So the point being that overwhelmingly the feedback from people joining PM Hotel group from those two very strong professional organizations was positive and told us that what we're doing is resonating with our team. In addition, we were able to add significant market share to both of those portfolios, benefiting their owners significantly because of the people and systems that we have. So more skill gives you more resources which we deploy, I think effectively. So again, getting hired to do third party work in a competitive environment and then getting feedback from people that have joined our organization has told us that we're on the right track. And so it starts with me. I think I can be a team member to dishwashers through general managers, through a senior leadership team, because I've done what they're doing. I appreciate what they're doing. Our core values are start with respect. And by the way, we also respect our guests and our community and the environment. So it's not just internally facing, but but that underlines everything we do. Teamwork, because a hotel is by definition, a team, whether it's the person checking you in, driving the van, cleaning the room, cooking breakfast, booking your stay, etcetera. It takes a team. We believe in people who are driven and we want people to employ an entrepreneurial spirit. So those are the four core values. And every decision we make it through that lens, every interaction with our people and the things that we talk about are through that lens. And we're not the only management company out there. We're not the only good one out there. We're not the biggest, we're not the most successful. But it is working for us and it is leading to more M&A opportunities for us as people understand how we approach the business. The retention is a direct ROI, so replacing people is difficult. And when you don't have a person in a key situation or position you need, you'll lose revenue. So again, that virtuous cycle seems to be working on the culture. So I'll pause there.

John Coe (01:21:44) - How about hiring? Go to that next level?

Dave Pollin (01:21:46) - Yeah, we do get a better response to our open opportunities through LinkedIn, etcetera. Because of the reputation we have. We have a really significant alumni group and a lot of people have left and come back because they appreciate the way that we look at them and their career opportunities. So I feel like we're typically getting best in class people. Obviously I'm not able to put someone in Hong Kong like Hilton or Marriott can and or Four Seasons, and so we respect that. PM Hotel group is not the perfect fit for everyone in every stage of their career. But we love promoting from within and we think about things like, Hey, if someone's washing dishes in our hotel. We're not executing the most difficult culinary environment. So no, we're not doing six course plated chef's tasting meals and most hotels. So why couldn't that person who already works with us in international culture, why can't we train them to be a cook? And so we really think about things that way too. Why can't someone who's in housekeeping work in front office when there's an opportunity? So we try to look internally first for people. And again, I think that that resonates and goes well. But we're probably about 50% of the industry turnover level, both at the property level and above property, which we track, which means we'll have to do less of that recruiting.

John Coe (01:23:18) - So the industry is so segmented. Do you manage anything like a Four Seasons or a Ritz-Carlton or something at that six star level, 5 or 6 star level? Or are you mostly aimed at the four, three, two, say four and three level as far as stars and motel sector? Yeah. What's your target market for management?

Dave Pollin (01:23:40) - Yeah, well, 75% of our revenue comes from full service hotels, so we really do a great job with select service and extended stay and we have an intense focus, but the majority of our hotels are full service. When you then divide it a little differently between traditional branded hotels, like we talked about, the Marriott in Washington, Capitol Hill versus a lifestyle hotel. We are in the luxury lifestyle space. We have about ten hotels there today. And so I define that by elevated food and beverage by an average rate above the comp set or the more traditional full service hotels and much more experiential, all urban. One example would be the Hotel DuPont in downtown Wilmington. It's a beautiful classic hotel. It was owned by the DuPont Company forever over 100 years. And their real goal for it was really just to accommodate executives. So we purchased it in 17, 2017, and we've turned it around to, we think, perform at a high level both financially but also in the type of services it provides. We have a chef partner from Philadelphia who's a star in that market, Tyler Aiken. So the signature restaurant there is called Le Cavalier to great acclaim. We took the historic green room and made it a modern French bistro, but in a historic setting. So my point was not to belabor it, but that we have the tools to really execute in that luxury and lifestyle space. That part of our business is growing with a strong emphasis. There's a number of hotels that are under construction that we will manage where we're working closely with the owner to create the food and beverage concept today and to get it open and get the community excited about the restaurant and bar that will be there on site. But that is a passion of ours, an area that we really want to grow in.

John Coe (01:25:37) - What about the other end, the budget sector? Is that something you just avoid or don't get involved in? I mean, in the very, very commodity oriented hotel?

Dave Pollin (01:25:46) - Well, there's really good success stories, especially of late with Wood Spring and other extended stay hotels. So it's an area that we've looked at. We think that our skill set translate into that asset class, but it's not a place that we've focused. We don't have an ecosystem today that exposes us to opportunities in that space. My sense is that if Bpg were to develop ten of the new Hilton, Marriott, Hyatt or IHG. Midscale extended state brands, that we could do a good job. But we've really chosen to focus our energy and luxury lifestyle today.

John Coe (01:26:27) - I would think it's more profitable long term for you.

Dave Pollin (01:26:31) - Yeah, I was thinking about how many resources it would take to go find ten sites go through entitlement and unless.

John Coe (01:26:37) - You were to buy a portfolio, let's say 30 or 40 of them scattered around the country in good locations, that you can just implement your systems very quickly and you're off to the races. I RLJ would do the same thing, right or.

Dave Pollin (01:26:53) - But unfortunately still with Blackstone. So they've got very inexpensive capital or actually a very efficient capital.

John Coe (01:27:00) - Interesting. Yeah. Let's see an important trend that has emerged even before the pandemic, and that is ESG consciousness. Talk about Buccini PollinÕs and PM Hotels. Focus on these principles.

Dave Pollin (01:27:19) - Yeah, I'm really glad you asked that. I'd like to think we were ahead of the curve. PM Hotel Group started creating sustainability reports about seven years ago, well before many of our peers even thought about that. So sustainability has been a focus of ours. Why? Well, you know, I grew up in Portland, Oregon, and I believe that recycling started there. I think you're right. And if I threw a can, man, my mom let me have it. So it's always been in my consciousness. We were always conscious about saving water and recycling and being responsible to the environment. And I think I think at the time there was a greater understanding of the interaction and how important environment was back then. And if you're not aware of it today, then you're not paying attention. Lots going on. That is the result of climate change. And so humans are affecting the environment again, in my personal opinion. But so we're doing the right thing for our communities, for our planet. And honestly, being mission driven is so important to our people. They want to know that the organization they work for cares not just about them, but about the environment. So we didn't do it to recruit Gen Z and millennials, But boy, you better be able to talk about it if you want them to work for you, and especially if they're investing, they want to hear about that. So the point being that we're talking all the time about energy conservation measures. We have probably a dozen projects underway right now in our hotels. Everyone knows about converting to fluorescent lighting, but we're going way above and beyond that. Converting steam plants to boilers, trying to get natural gas out of our buildings as we go forward to electrify them, making sure that each of our hotels has EV charging easy access to that, and that's difficult to do. So that takes a lot of energy sourcing, 100% sustainable energy. We were the first independent hotel management company to do that in 2020. I think we did in 2020. We're the first and only to do that. So we do walk the walk. And if you were to ask me who's on the Energy and Sustainability Committee, well, me, Joseph, you, the President, the CFO is on it. And then we have a sustainability leader in our organization. That's his job full time. And he just hired a full time associate. So I don't know if anyone has more resources dedicated to that area than we do. But but that's not the only part of it. There's a corporate responsibility part of it, and that comes in to the SMEs, the government, the governance and societal. And so we do a lot in those as well. And now our sustainability report is really a corporate responsibility report which you can access online.

John Coe (01:30:09) - So are you is there a net zero goal with any of your hotels at all? I mean, are you trying to get to the point where you're.

Dave Pollin (01:30:18) - Absolutely. We are. We are measuring it. We are working with Hilton and Marriott, especially high ICI are also important partners. We are relying on them for some of the thought leadership because they drive brand standards. So if we're making so if we're doing stay over housekeeping, I mean, I'm cleaning your room every night, that kind of goes against that objective. So it has to be a balance. It's not just us. We also can't control what the source of power generation is on our grid. And it's different in Texas than it is in Virginia. So we're humble about what we can do, but we are employing every single tool available water.

John Coe (01:30:57) - Recycling and that kind of thing. I mean, do any of that or.

Dave Pollin (01:31:00) - We well, we're doing composting and in one hotel we're doing a beta test with a digester. So instead of composting the food we're putting in the digester and the bacteria are digesting the food and then it can just go as greywater. So we're really reducing waste in that way as well. But we're thinking about everything.

John Coe (01:31:20) - So you're testing a lot of things is what you're doing to some extent?

Dave Pollin (01:31:23) - Well, we're doing things at scale, but we're also working on the next things to do.

John Coe (01:31:30) - With the emergence of AI and other technology impacts on both hospitality and real estate, how have your companies leverage these tools in a productive way?

Dave Pollin (01:31:40) - Yeah, well, as you know, I's been around, I'd say in the hotel space. What people have experienced most frequently is if you make a reservation at, let's say, our Canopy Hotel in Portland, Oregon, we will offer you parking at a discount. We'll offer you breakfast and maybe other things based on your propensity to buy those things in the past. So. That's I. And so the goal is to really maximize revenue. I would say the way that I would love to see AI employed in the future is to give us more tools to compete with the online travel agents. If you think about their model, they'll get anywhere from 10 to 25% of our revenue, depending on the hotel and the source of the booking and have no expense, no property tax, no labor costs, no sheets. It's just pure revenue for that without any direct expense. And then they use a lot of those proceeds to market against us. Do you see Trivago as on CNN a lot these days? So we feel that the most revenue that we can keep within the lodging industry ecosystem, the better. So we think I can be a tool and helping identify when people are going to make travel decisions and having them book directly versus book through formats, platforms like that. So that's the goal for us. We also think it'll help us with things like scheduling because associates want predictable, consistent schedules, but our business flows are not always predictable and consistent. They're cyclical and the seasonal and day week is different. So if we can use AI to get to a win win there, for example, in the near term, that would be fantastic.

John Coe (01:33:30) - So do you have systems as far as rate management? So something can you look at trends of things or you know, times of the season or different days even looking at 365 day analysis? So today we typically have this and we've got all these different factors. I mean, does AI incorporated any of those decision making process at all or not?

Dave Pollin (01:33:55) - Absolutely. Absolutely. Yeah. The the idea is that revenue management is reacting to thousands of different inputs. Right? The ultimate goal would be so what's happening in the hotel, i.e. in terms of demand, the next step is what's happening in our peers with their demand and how do we get smarter based on that? Then the ultimate is how do we think about your propensity to buy, right? So what rate should I show.

John Coe (01:34:22) - You inside somebody's.

Dave Pollin (01:34:23) - Head? Yeah. Are you going through the honors app or are you going through hotels.com? Are you calling the hotel? And what rate is your propensity to buy higher in one of those channels? And hence, should we offer you a different rate or a different package based on that? And we know potentially that, hey, last time you wanted parking breakfast, so this time we're going to lead with that. And we know that if you like a high floor, far away from the elevators, then maybe we'll start with that. And so, yes, there's a lot to do on that front. Interesting.

John Coe (01:34:53) - Interesting. So what we talked about employment, but what characteristics do you look for in a prospective employee? If somebody comes to interview with you.

Dave Pollin(01:35:07) - Yeah, okay. I want to tell a quick story. So when when we were a small company with maybe 3 or 4 hotels, I used to interview the general managers and I was really busy and I'm still fairly busy. And so Greg Miller, my partner again, who I still partners with today and who I love, you know, Greg brought a general manager to meet me. I had like one minute and so I shook this person's hand and, oh, you know, Bill seems great. I can't remember his name. And so a couple weeks later, Bill didn't work out and it was really bad. And so as we were talking about that and lessons learned, Greg said, Well, you interviewed him. I was like, Well, I had one minute with him and you said, This is the guy. So I just stopped interviewing general managers at that point. And it really hit home to me that, you know, people should have the ability but also the responsibility to hire their team and then be responsible for and accountable for the performance of that team. And so I really don't get involved in hiring at the senior levels. Even I have really four direct reports. So the leader of our asset management group, Chief Investment Officer Darren Hanselman, again, he's terrific. Joseph Bucci, my partner, who's president of the hotel group and my assistant. And that's really all I want. And I see people that have ten, 12, 15 direct reports and I don't know that they would have that 20% of their time to really think big thoughts. And if I'm not doing it, who's doing it? So I don't.

John Coe (01:36:39) - Do personnel issues come to you? Occasionally, I assume for assets 

Dave Pollin (01:36:46) - infrequently. Yeah. I will get feedback from time to time from a partner that, hey, the leader of this asset or this company did or didn't do something great. And so I will take that under into account.

John Coe (01:37:00) - So let's shift some personal things here. What are your. Life priorities among family work and giving back.

Dave Pollin (01:37:06) - Yeah. One, two, three. I'm really fortunate. You know, I've got three kids who they're my priority. Spending time with my wife is what I love to do. And so every opportunity I get to do that, I do. And you see the 20 year old, 18 year old and 14 year old turning into really great, responsible, thoughtful people is my greatest joy. So that that is number one by far. And then then work. It's more to me than just a job because I think about my responsibility to the people in this organization. And my responsibility is to provide opportunity so their careers can progress and grow, by the way, or they'll leave. So in a sense, it's good for me too. So I don't know that I'll ever be able to put the ore down and just coast, you know, be rowing hard for the rest of my career. I hope that's a long time, but I do spend 50 to 60 hours in typical week. I'm on the road once a week because I love what I do. I love to be there in person. It's a tangible business. You have to be on site. You have to interact with people, investors, stakeholders as well. And then on the community front, I really have kind of three main focuses there. I'm really a firm believer in education and that's not controversial. I don't think anyone would be surprised by that. But I support Cornell not only because of the benefits I've gotten from it, but I really want future leaders to have the best possible experience with the resources they need to learn so that they can come work with me and with others. I'm a huge believer in women's education. My daughters both went to Holton Arms here, in Bethesda. I served nine years on the board, which just concluded, and I know firsthand that these are the women who will change the world. And we look at societies that have high levels of girls women's education, and they're the most successful societies. So I'm a passionate supporter of women's education. I'm also a supporter of Jewish causes. And the way that I arbitrage, because there are so many great ones, is I work with the Jewish Federation of Washington. They're kind of like my wealth management advisor. But on philanthropy, because they're so close to all the local organizations. And then we're very close with a group here, a group called Feed the Fridge. So I really want to do something tangible where I can be hands on, packing lunches and giving dollars directly to a cause that directly impacts my neighbors. So it's a worthy organization. It's run by this incredibly brilliant and talented guy, Mark Bucher, who founded Medium Rare. And his story is incredible. Maybe worth talking to him one day about what he does, but they actually office right next to us and sublease space and we work closely with them.

John Coe (01:40:00) - That's great. So what were the biggest wins, losses and surprising events in your career?

Dave Pollin (01:40:11) - Every day is a surprise. Gosh. I didn't think it'd be this exciting going into real estate, but I'd say the probably the biggest win was when that second hotel really took off. Not yeah, not taking anything away from the office, but I would just have to be closer to that hotel that was really reaffirming for us and allowed us to have a track record. And it's really fun to make money because you're working hard anyway, right? And so you hopefully you're making money and if you're not profitable, then maybe that's the community you're in or the society or part of telling you something that maybe you should be doing something else. Not you, of course, but but in general. So we know that being profitable is important. So we were able to kind of prove the concept. It just felt great to close that deal and recycle the capital to our investors who had taken a huge flyer. We were so imprudent, so paying their repaying their faith in us was so that was great. That felt great. I would say that, you know, the the downsides have been the cycles were really nothing that we did contributed to the Great Recession or Covid, certainly. But having to navigate that and the impact it had on our people just just was heartbreaking. You know, people when I gave someone $100 grocery card and they cried because they couldn't imagine someone being that generous, you know, that was so powerful and poignant. And so that that really is the worst part of this business is what the impact of the cycles have on the people you work with and love. And the surprise would be how we got into professional soccer, and it was not something that we set out to do. My partner and I actually. Robert and I and his brother Chris, who's been a partner since 1998. So almost as long as Rob and I started the business, we all played football. Did. I played, I ran track and do other things, but no one was a soccer player. So we owned property in Chester, Pennsylvania. And long story short, Major League Soccer identified that site as a potential MLS stadium. We met the developer sorry, the owner of the team, Jay Sugarman, who was already awarded the franchise, is a brilliant real estate guy. iStar, Yes. Public. He's actually CEO of 2 or 3 public space.
I think it's.

John Coe (01:42:45) - His latest venture, right?

Dave Pollin (01:42:46) - Yes. And I literally cannot say enough good things about him. He's so kind and so smart and strategic that it's been probably the best part has just been learning from him and being part of his organization at the union. But so we own land not for the stated goal of building a stadium, but that's how we got involved. We met Jay, we hit it off and Jay said, Hey, even if I don't build on your site, let's team up. So as developers, we were able to entitle the site, finance it, get it built. We bought construction actually at the very bottom of the Great Recession. So what would have cost or what cost, let's say 130 million back then would be So is.

John Coe (01:43:26) - It a privately owned stadium?

Dave Pollin (01:43:28) - Well, it's on a lease like pretty much every other property. But we the source of capital was a mix of public and private to your point earlier. So the state and many agencies were supportive with capital for that. It's been a pretty positive economic catalyst for that area. Team headquarters is there now. We've moved the academy down there, which is really a high school. The team runs a high school with a headmaster.

John Coe (01:43:54) - So does a soccer team make money?

Dave Pollin (01:43:57) - I would say we think it's a good investment.I don't. Want to betray too much, but we have yet to have income tax problems through our ownership of.

Speaker 4 (01:44:08) - The Philadelphia Union.

John Coe (01:44:11) - So it's more fun than profitable per se today.

Dave Pollin (01:44:16) - Listen, the goal is you can see what the last franchises were awarded for hundreds of millions. It's public that the team paid 30 million for its license back then. So we hope that there's some appreciation along the way.

John Coe (01:44:31) - Well, looking at the owners of most professional sports teams, it's more of a toy than it is really something to make money with. Yeah, I mean, I look at the Lerner family with the Washington Nationals and my guess is they don't make a whole lot of money there, but it's more of an ego, somewhat of an ego thing there.

Dave Pollin (01:44:51) - Yeah, it brings joy. You know, one thing you're talking about with leadership, too, if you looked at the 22 years prior to Dan Snyder's 22 years of ownership, three Super Bowls, 18 wins if playoff wins. And during Dan's tenure, one playoff win. So do you think there's some lessons on leadership there? Yeah.

John Coe (01:45:10) - I mean, Jack and Kirk really knew what to do and find the right people.

Dave Pollin (01:45:15) - And let them do their job. Yeah.

John Coe (01:45:17) - Stayed out of their business. Yeah. Yeah. 

Dave Pollin (01:45:21) Ð What inspired you to start the podcastseries?

John Coe (01:45:23) - Well, that's an interesting question. I just believe that. The our industry has not been talked about. And in our in this market and there are so many interesting people that I've talked to in this marketplace that have shared their stories. It's been a great, fun thing to do. And I just recognize being a podcast fan for several years before starting it, I got a sense, Hey, why don't I do this for the people that I know in this marketplace? And now I've met a lot of people through it, of course. And I mean, I've never done business with you before, but I've done business with an awful lot of people that helped me get started with this whole process. And that's been fun. And my my goal and I've told this to the guests before the listeners before, is that I'm paying it forward after a fairly successful career. Yes. Mortgage banking and investing and that kind of thing. So that's my that's my duty right now. And I have a community of young people and I'm trying to foster that with.

Dave Pollin (01:46:28) - So as we know, no industry can be successful without talented leaders. And I think real estate is a difficult industry to break into for young people. So thank you for doing that because we really want people to think there's a future for them in our business. There is. And you know, whether it's brokerage or consulting or working with a sponsor like US Capital Markets Design or even working on the engineering or design or municipal side, there's so many ways to be involved in this incredible industry.

John Coe (01:46:59) - It's so multifaceted. I mean, as I've said in the. Past. There are three legs to the stool in our industry and in a lot of industries communications, analytics and form or architecture, art. Those are the ways I look at it. And real estate is unique. And instead of trading bonds and stocks on a on a on a terminal, you're out there every day as you like to do, get out and kick the bricks, be out on the real estate, talk to the people, you know, be involved and physical assets. You can see the physical aspect of it. That's the exciting about real part, about real estate.

Dave Pollin (01:47:35) - And if you want a new challenge every day, this is your industry.

John Coe (01:47:39) - Particularly hotel.

Speaker 4 (01:47:41) - That's right.

John Coe (01:47:41) - So what advice would you give your 25 year old self today? Ah.

Dave Pollin (01:47:45) - Oh. Myself. Okay. Yeah. Just okay. It's it's hard to stay present in both today and in the future. And our business is so capital intensive and strategically sensitive that you can't make decisions through the lens of just what's good today. Conversely, it's really hard to get out of bed sometimes because it's so difficult, the environment that we're in right now. So you have to get up every single day and just think about what do I need to do today one day to be successful? The balance being that those things that you are doing should be sitting out for success in the future. So do you make that investment in an existing property or do you have to say, No, I can't do that today because the value may not be there in the future. So it's really challenging. I would say just take it one day at a time. But the direction that you're headed, make sure it's taking you where you want to be.

John Coe (01:48:48) - You have a North Star.

Dave Pollin (01:48:49) - Well said. Yeah, well.

John Coe (01:48:51) - Said. Yeah. So if you could post a statement on a billboard on the Capitol Beltway for millions to see, what would it say?

Dave Pollin (01:48:59) - Okay. You know, I'm going to say ÒPut down your phone and pay attention.Ó Yes, of course, to the car in front of you. But I feel like we have these really existential challenges today. Our generation is. I don't know if the word is blessed or really challenged because there's macro factors like global warming that it doesn't feel like everyone's getting the message. And if you weren't getting it this summer between the forest fires and the heat waves and all the other manifestations of climate change, the 100 degree ocean in Miami or Florida.

John Coe (01:49:43) - Like violent thunderstorms we've had just recently this week. Right.

Dave Pollin (01:49:45) - Bring it home. Listen, I think Netflix is great and YouTube is great and whatever else you do. But I think people need to be engaged. We think about it through the sustainability lens. That's how we can better we can make the world a better place. But I also worry about our country and some of the political dysfunction where it's not necessarily about doing what's best for the country, but more how do I make the person who's in power now lose so that I can win or raise more money? And, you know, I think about our fiscal challenge as a country.
We don't want to end up where Greece was, where we lose our financial freedom. We also have issues well, way beyond that, like immigration, where we have to come together as a country and decide what's in our country's best interest, whether that's in the best interest of the people immigrating or not. You know, that's a secondary factor. It's important, but we just should decide what's best for us and then do that. We're very sensitive to that in the service industry because those are the people who are taking care of us every day in our hotels and restaurants and construction sites. ET cetera. So we just we want to value them. And if the country decides that you're replacing its workforce so that we can support the people who are retiring is a laudable goal, then let's get on with it. So I'd say engaged.

John Coe (01:51:05) - That's great. Well, Dave Pollin, thank you very much for your time. And this is a very informative interview and I appreciate it very much.

Dave Pollin (01:51:12) - Thank you for giving me the opportunity to be so thoughtful and have a discussion with somebody who understands the big picture.

John Coe (01:51:17) - Thank you very much.