Speaker Coe** (((00:00:03))) - - - So Jeff Berkes, welcome to Icons of DC Area Real Estate. Thank you for joining me today.

Speaker Berkes** (((00:00:09))) - - - Well, John, thanks a lot for having me. I'm not sure I rise to icon status, but I really do appreciate you thinking of me that way and having me on your show today. Looking forward, I did.

Speaker Coe** (((00:00:20))) - - - I did talk about your bio and the pre and the preliminary, but just reinforcing that you are currently the president of Federal Realty, one of the oldest and perhaps most successful REITs in US history you report. To my earlier podcast guest, Don Wood. How would you differentiate your differentiate your role compared to Don's as CEO? And how would you compliment him in managing Federal Realty?

Speaker Berkes** (((00:00:54))) - - - Uh, well, great question. Of course. And, you know, Don and I have worked together for a very, very long time. I think it's going on 23 years. And, you know, I think obviously, you know, you don't work someplace for somebody else for that length of time when you don't, generally speaking, have a meeting of the minds on the things that really matter in running a business like federal.

Speaker Berkes** (((00:01:22))) - - - You know, Don and I have a different angle of approach, if you will. You know, Don came into this business not as a real estate person, as a public company person. And he is he is very much a public company person that, you know, for 23 years has become a great real estate person. And I came into the business a different way. I'm I'm a real estate guy by background, and I've learned primarily from Don the, the corporate side of the business. So when there's an issue or a problem or, you know, some strategy that we need to think through, I think we we each have a different angle of approach, but kind of almost always end up in the same place or, you know, end up in the same place after a healthy discussion between the two of us or, you know, with the rest of the senior team here. And it's it's been a great relationship. You know, functionally, the corporate side of our business reports up to Don.

Speaker Berkes** (((00:02:19))) - - - So things like, you know, our general counsel and our CFO and all the accounting and reporting that gets filed and the real estate stuff reports up through May. So development, acquisitions, leasing, property management, asset management, that kind of thing. And then obviously I reported on as well. So we kind of split the business that way. And I think, you know, that's reflected in where we came from and our and our thinking. But like I said, 99 times out of 100 or something like that, we we end up in the same place and everybody gets a benefit of kind of a different way of thinking to get there, which I think is really, really cool. And it's been it's been fantastic for me, quite frankly.

Speaker Coe** (((00:03:07))) - - - Well, I think it's it's an excellent compliment because it gives you, you know, the corporate perspective and the real estate side. And sometimes they aren't always on the same page. Um, and we can get into that a little bit more in detail.

Speaker Coe** (((00:03:25))) - - - I recently interviewed Gary Rappaport, CEO of the Rappaport Companies, and he recognized Federal as the industry leader in grocery anchored retail, property ownership, management and leasing. We also discussed the impact of the pandemic on the industry and its surprisingly strong rebound, with both leasing and tenant sales improving significantly since the end of the pandemic. Any thoughts on those trends, Jeff?

Speaker Berkes** (((00:03:54))) - - - Yeah, absolutely. And you know, Gary's a legend in our business and one of the hardest working people in our business still. So he clearly understands the business very well and knows a lot about it and really from every aspect. So I'm glad he sees us in that light. Um, yeah. The pandemic, you know, the way I think about it, I guess kind of four, four things came out of the pandemic. The first and this we've seen this happen really whenever there's a major disruption. We saw this back in the financial crisis as well. But there's a flight to quality when there's a disruption. Right. So the tenants that are better tenants with a better business plans, a better balance sheets.

Speaker Berkes** (((00:04:39))) - - - When the real estate markets get disrupted, they tend to move towards quality and quality, not just in terms of the property and, you know, location code, tenancy, all that kind of stuff. But quality in terms of who owns the property. You know, do I have a landlord that's well-capitalized? Do I have a landlord that's going to think holistically about the property and put the right tenants in and maintain it the right way and market it the right way? So I, the individual tenant, have the best chance for success. And like I said, we saw that. We saw that coming out of the GFC. We saw that coming out of the pandemic. And we've we've, you know, since the the pandemic was over, really, really had a lot of great tenants to choose from and put it into our properties. So I would I would put that number one. Um, number two, and I'm sure you heard this from Gary as well, but the tenants really learned through the pandemic the importance of having a store.

Speaker Berkes** (((00:05:49))) - - - Right. There was a lot of a lot of goods delivered early on in the pandemic, when everybody was locked down for a long period of time. But as soon as we were released from our homes to go back out the importance of a store, and even when we were locked down, the importance of the store through buy online, pickup in store or curbside pickup, that kind of thing. It became very, very clear that if you want to make money getting goods in people's hands, the best way to do that is with a physical store. Closely related, I think would be number three, which is, look, you know, I think we all learn that. Or maybe we're reminded that we human beings are social creatures. And when you when you force us inside and don't let us get out and do what we normally do, that's not good. So when all the restrictions about, you know, staying at home or lifted and the tenants and restaurants and movie theaters, gyms, all that stuff were allowed to reopen.

Speaker Berkes** (((00:06:59))) - - - There was just a flood of activity at our properties. And, you know, the strength of that, you know, is just been overwhelming. And it's really great to see everybody back out having dinner, having lunch, shopping, going to a movie, working out and really enjoying being a physical, social creature which again, we human beings are. So that was that was a big lesson learned or a big reminder maybe coming out of the pandemic and probably the fourth kind of major thing we saw. And, you know, this could turn around or, you know, be alleviated somewhat. I don't think it will be was people want to do as much of their daily activity as possible, closer to where they live than where they work. Right. So a lot, you know, and we know our cities, the urban cores of our cities are struggling because return to office has been slow or people are working from home. You know, at least a day or two a week. So people have reorganize their lives around their homes.

Speaker Berkes** (((00:08:16))) - - - And most of those homes and the places we do business are in those close in densely populated, relatively affluent suburbs where we tend to own properties and the amount of traffic, the amount of shopping during the week, the use of the property during the week. Spending has really shifted out of urban cores into those close in suburbs where, you know, the the bulk of federal properties are located. And, you know, could that could that change maybe. I don't think it will though. So those those four things, John, really, you know, some some big lessons learned, things reminded and observations of the pandemic. And I would imagine that's pretty close to what Gary had to say. Didn't listen to his pod, but I would imagine he would have nailed all of those, or at least 2 or 3 of them.

Speaker Coe** (((00:09:11))) - - - Yeah, he didn't expect what, you know, going into it obviously didn't expect. But that was what happened. He'd never seen anything as bad as that. And he didn't.

Speaker Coe** (((00:09:23))) - - - I don't think he ever expected once he was in the midst of it, how quickly it came back out and what, you know, what the repercussions were of that. But the other thing he talked about, which we may or may not get into later, is the inflationary impact of what the Fed did. And then. You know, what's impact, how that's impacted the real estate markets as far as, you know investment opportunities. ET cetera. So and interest rates and everything else. So there's somewhat of a cross-current there a little bit on the investment side. But we can get into that a little bit later if you'd like. Sure. So in the meantime, uh, I wanted to focus a little bit about you and your background. Tell us about your origins, Jeff, and youth and parental experiences.

Speaker Berkes** (((00:10:17))) - - - Yeah. Yeah. Well, you know, I, I'm the one of the more unlikely guys to end up in a business like our business. It's focused on cities and densely populated urban areas on the coasts.

Speaker Berkes** (((00:10:32))) - - - I grew up in a small manufacturing and agricultural town in Iowa. Really? Yeah. Newton, Iowa, 15,000 people.

Speaker Coe** (((00:10:41))) - - - Wow.

Speaker Berkes** (((00:10:43))) - - - Former home and headquarters of the Maytag company. Oh, so not where you'd not where you'd expect somebody to develop an affinity for open air and mixed use retail properties and cities like Boston, New York, DC, Bay area and LA.

Speaker Coe** (((00:11:02))) - - - Sure. So is that near Des Moines, or is that.

Speaker Berkes** (((00:11:07))) - - - 30 miles, 30 miles east of Des Moines on Interstate 80?

Speaker Coe** (((00:11:11))) - - - Got it. Sure.

Speaker Berkes** (((00:11:12))) - - - Unless they've changed the exit numbers, exit 164 and exit one's five by 80. Uh huh.

Speaker Coe** (((00:11:19))) - - - Yeah, yeah. Well, Des Moines is the home, the original home of General Growth Properties. So they were, you know, big, big retail developer, right? Yeah.

Speaker Berkes** (((00:11:30))) - - - All all that went right over my head as a teenager in Newton, Iowa.

Speaker Coe** (((00:11:35))) - - - Okay. So what did your folks do? What did your dad do? Yeah.

Speaker Berkes** (((00:11:39))) - - - So both of my parents were the first people in their families to go to college.

Speaker Berkes** (((00:11:44))) - - - Oh, really? Yeah. They met at Colorado State University in the late 50s early 60s.

Speaker Coe** (((00:11:50))) - - - Uh huh.

Speaker Berkes** (((00:11:51))) - - - My mom was a journalism major. My father was a biology major. And after college and they got, I think they got married while my dad was still in college. Quite frankly, they got married really young. And his, his first job was with a pharmaceutical company that placed him in the middle of Iowa for his sales territory. He ended up working, I think, 33 or 34 years for Bristol-Myers Squibb.

Speaker Coe** (((00:12:19))) - - - Oh, sure.

Speaker Berkes** (((00:12:20))) - - - A good chunk of that in Iowa calling on doctors, hospitals and pharmacies with Newton as his home base, driving around in his car. And my my mother was a preschool teacher and then ultimately got into the paint and wallpaper and home decorating interior design world. She had her own business that she ran out of a small office in our downtown.

Speaker Coe** (((00:12:50))) - - - Wow.

Speaker Berkes** (((00:12:51))) - - - That's what my parents said. Nothing at all related really to business and nothing at all related to commercial real estate for sure.

Speaker Coe** (((00:13:00))) - - - So would you go to public school there and. Yeah. Yeah yeah.

Speaker Berkes** (((00:13:05))) - - - Yeah, all the way through. And we had one high school in our town. Yeah. Ten kids in my graduating class, but yeah, public public school all the way until I went to Colorado to go to the University of Denver, which is. Yeah, where I got exposed to commercial real estate.

Speaker Coe** (((00:13:21))) - - - Yeah. Talk about that experience.

Speaker Berkes** (((00:13:22))) - - - Yeah. Well, so if you grow up in a town like Newton, Iowa, and you go to a place like Denver, probably the last thing you want to do after your freshman year is go back to Newton, Iowa. And, you know, I certainly did not want to do that after 11, 8 or 9 months in Denver. And my parents were like, oh, hey, that's great if you want to stay in Denver for the summer. But, you know, you need to find yourself a job and pay your rent and all that kind of stuff because, you know, we're not going to do that.

Speaker Berkes** (((00:13:48))) - - - You could come home and live for free, but you don't want to do that, so it's on you. So I, I had no idea what I wanted to do when I went to college, like most people that go to college these days and back then as well. So I traipsed over to the placement office at the University of Denver, and there was a posting for an internship in what was called the data Bank. And this company called Coldwell Banker.

Speaker Coe** (((00:14:15))) - - - Oh, sure. Yeah.

Speaker Berkes** (((00:14:17))) - - - So, you know, I, I applied for that job and interviewed for that job, and it was one of six data bankers at the downtown Denver office of what is now CBRE. Yep. Hired for that summer. And that's that was the summer of 1982. And it was, for me, a life changing um, in 1982, there were 17 high rise office buildings. Under construction in downtown Denver.

Speaker Coe** (((00:14:45))) - - - Wow.

Speaker Berkes** (((00:14:46))) - - - Yeah, the place was just absolute oil boom.

Speaker Coe** (((00:14:49))) - - - Yep. Yeah.

Speaker Berkes** (((00:14:50))) - - - All oil boom. Developers from all over the country and Canada and putting up big buildings.

Speaker Berkes** (((00:14:57))) - - - And, you know, I got tapped of the six. I got tapped to be the guy that had downtown Denver is my territory. So this was back before the day of a PC on every desk. And yeah, I'd get up in the morning with a suit and tie on and a clipboard and go walk every floor of every high rise office building in downtown Denver and write down the name of the tenant. And then we all convene in the office later in the afternoon and get out the Yellow Pages and the phone, phone book and the phone and call this tenants and try and figure out who the decision maker was for office leasing. And then we type all that into a mainframe computer and pass any leads along. We got to the sales guys in the office leasing department.

Speaker Coe** (((00:15:49))) - - - So imagine imagine if you had ChatGPT and CoStar, then what you could have done.

Speaker Berkes** (((00:15:55))) - - - Yeah, I mean, this was as basic and as brute force, right? It was very educational for me because it was just, you know, incredibly exciting, positive time to be in that business.

Speaker Berkes** (((00:16:14))) - - - Or were guys fresh out of school, you know, that we're making the princely sum of $100,000 a year, as you know, 2324 year old junior brokers. Everybody had a nice car. The sales manager would roll in cases of beer on Friday afternoon. And, you know, it was just a really, really fun time. So after that summer, I'm like, you know, this might be something I want to do for a career. And I didn't realize that when I enrolled at the University of Denver. But when I went back in the fall and dug through the the curriculum book, found that you actually had a real estate, finance and construction major. I believe it was the second school in the United States, after University of Wisconsin, to actually have a major in real estate. And, you know, that was serendipitous. So I, you know, quickly realigned my classes and my major and got my degree in real estate finance from the University of Denver because of that summer. So that was the start.

Speaker Coe** (((00:17:20))) - - - Did you go every summer thereafter? Back to.

Speaker Berkes** (((00:17:23))) - - - Now? It was kind of a one and done type thing. I did ultimately go back and work for Richard Ellis a couple of years after I got out of college. They had a training program. It's called the Regional Investment Analyst Program. And so I did that. Yeah. Where you got paid a whopping $2,000 a month. Um, so 24 grand a year. And my job was to put together, you know, ten year cash flows for the investment, sales and mortgage brokers in the Seattle and Bellevue offices in the Pacific Northwest.

Speaker Coe** (((00:18:00))) - - - Oh, really?

Speaker Berkes** (((00:18:01))) - - - Portland, Salt Lake City, the couple offices in Denver, and I believe an office in Oklahoma City in Albuquerque. So I got a lot of exposure to the brokers I looked at and worked on a lot of deals, put together a lot of what we now call offering memoranda or OMS, which back then were called sales packages. Yeah, got to work on all different product types with a bunch of different people, and it didn't matter where I lived, really.

Speaker Berkes** (((00:18:29))) - - - So one summer I went and lived with a couple of young brokers up in Seattle and worked in the downtown Seattle office. So that that experience was was really, really great for me. I set right next to the the guy that ran the whole region, a gentleman by the name of George Callus, who is and probably was and probably still is a legend at CBRE back in the back of the day. So yeah, great. A great to your training program that I got a lot out of.

Speaker Coe** (((00:18:59))) - - - But you and I were employees at the same time.

Speaker Berkes** (((00:19:02))) - - - Oh really? I didn't know that.

Speaker Coe** (((00:19:04))) - - - I joined them in 1983. Okay. In Oakbrook, Illinois.

Speaker Berkes** (((00:19:09))) - - - Wow. Yeah, that was a big that was a big office.

Speaker Coe** (((00:19:12))) - - - We were the number two office in the country. Yep. And the number one office is right here in Northern Virginia. Yep. Tysons corner at the time. So we were I think it's like the first time in history the two the top two offices were outside of California.

Speaker Coe** (((00:19:28))) - - - At the time, and it was just because it was so much activity in suburban Chicago and then and here in Northern Virginia, just unbelievable at the time. So it was an interesting experience. That's Gary Beban sold a shopping center for him. Don't you remember Gary? Oh.

Speaker Berkes** (((00:19:46))) - - - Absolutely. Remember Gary, he would come and speak at some of the, you know, internal meetings and conferences and the investment salespeople would have. So, yeah, that was Gary was president, I believe, at the time. Yep.

Speaker Coe** (((00:19:58))) - - - Heisman Trophy winner from UCLA. He was something. Yeah.

Speaker Berkes** (((00:20:02))) - - - Yeah. Well you know Jim Didion and Gary Beban right. Quite the guys back in the day with CBRE.

Speaker Coe** (((00:20:10))) - - - Exactly. So you were there for a couple of years and then then on to you were at AT&T after that. Is that what. Well, so so what happened.

Speaker Berkes** (((00:20:19))) - - - You know, is that the whole idea, whether you're a runner for a leasing broker where you made 1000 a month or you're a regional investment analyst, where you made 2000 a month, the idea was you do that for two years and then you write brokerage.

Speaker Berkes** (((00:20:33))) - - - What happened towards the end of my two year period was when KB was acquired by Fred Malik's group. I don't know if you remember that that was in the late 80s, early 90s, and there was a hiring.

Speaker Coe** (((00:20:48))) - - - Freeze.

Speaker Berkes** (((00:20:49))) - - - So I could transition from planning program into brokerage. I had grown a little bit tired of living in Denver at that point. You know, when I when I first started at CB in the early 80s, Denver was booming. And when I got out of school in the mid 80s, the boom had gone and it crashed. And it was just a really, really difficult market, had become a little bit small for me and I really wanted to live on the East Coast. So I moved to Washington, D.C., and I moved to D.C. with an acceptance into the MBA program at Georgetown and an acceptance into the MBA program at George Washington University. And no job and no money.

Speaker Coe** (((00:21:36))) - - - So why DC?

Speaker Berkes** (((00:21:38))) - - - Well, you know it. New York was my first choice. But, you know, I didn't quite know how I would manage New York.

Speaker Berkes** (((00:21:50))) - - - You know, when I was in my early 20s, I really wanted to to move to New York and live in New York, but I just couldn't figure out how to do it on my own, with no connections and really no no financial backing. You know, I kind of had to do everything on my own through and after college, and DC seemed more manageable. Quite frankly. I had a girlfriend at the time who could transfer within her law firm to a Washington, DC office, so that made it easier. There you go. Um, but I got I got here in the middle of 1990 with no job, no money. Yeah.

Speaker Coe** (((00:22:26))) - - - No market to. Right.

Speaker Berkes** (((00:22:28))) - - - And a tough market and thank God I met Susan Carras, who's a first person in our business that I met when I came to DC. Really? Yeah. Through a guy that I used to work with that was friends with one of the and blacks.

Speaker Coe** (((00:22:42))) - - - And she was at Sonnenblick Goldman. Right.

Speaker Berkes** (((00:22:45))) - - - So he connected me with Susan, and she gave me some great counsel and introduced me to a lot of people.

Speaker Berkes** (((00:22:51))) - - - And I think through that I was able to get a job at it, you know, which unbeknownst to me, when I was. Starting the interview process also had a program where they would pay for your graduate school, so that made it an easy choice for me to go at it, because I could work during the day and, you know, then take Monday afternoon off basically, and get all my classes at GW done on Mondays and then the nights. And what were you doing.

Speaker Coe** (((00:23:23))) - - - Your lender or investor or what we did. Yeah.

Speaker Berkes** (((00:23:25))) - - - So it was like a mini GE capital O okay. Back in those days. And in fact GE capital bought that business from from it after I left. But yeah we were a credit company lender you know high loan to costs or loan to value lender. We oftentimes took a participation in a deal or points going out of a loan because most of the loans we did were, you know, transition for transitional properties. So we did a lot of apartment building finance in Texas, you know, when you could buy apartments for ten, 15, $20,000 a unit.

Speaker Berkes** (((00:24:03))) - - - And, you know, they needed a little lipstick and rouge and some intensive management, and they could be sold for double or triple what you paid for them in a, in a five year period. And we took pieces of those deals. And we also did a fair amount of smaller shopping center acquisition loans, which was, you know, one of my first exposures to open air retail. So that that worked out really well. You know, I was able to get started working away a month or so after I moved here and able to work my way through GW at the same time. And, you know, that's all how that all happened. But had it not been for Susan, um, you know, I might have never found a job and not made it through GW so.

Speaker Coe** (((00:24:51))) - - - She had even unveiled at that point. Or was that before when I believe.

Speaker Berkes** (((00:24:57))) - - - It was pre CMBS.

Speaker Coe** (((00:24:59))) - - - That's what thought.

Speaker Berkes** (((00:25:00))) - - - Or of that started. It was in its infancy.

Speaker Coe** (((00:25:03))) - - - So in essence the essentials as they were fading out, you guys kind of stepped in their shoes to some extent then, right?

Speaker Berkes** (((00:25:09))) - - - Yeah, yeah.

Speaker Berkes** (((00:25:10))) - - - If you didn't have the quality of property, the track record or the equity to get a loan from a life company, and you weren't willing to sign on the dotted line, 100% recourse with the bank, then you could come to it or GE capital and, you know, get your loan done at 80 to 95% loan to cost. And that was our business.

Speaker Coe** (((00:25:33))) - - - Yeah. Yeah, I was a mortgage banker then. So remember talking to anybody who could make a loan at a certain certain levels. So yeah that was interesting. Yep. So you got your MBA and international finance at GW. So talk about why and what what the thought process there was.

Speaker Berkes** (((00:25:55))) - - - Well, kind of two reasons. One, I did want to do a check to make sure I was doing what I thought was, you know, the right career path for me. And, you know, being in DC, of course, was intrigued by all the different things that go on here, especially internationally. So that that was one reason.

Speaker Berkes** (((00:26:13))) - - - And a lot of the professors that taught at the graduate school at the time in that discipline worked at the world Bank or IMF or something like that. And, you know, completely different than anything else I'd been exposed to. So I wanted to learn a little bit about that. And then I didn't want to duplicate what I'd done in my undergraduate studies.

Speaker Coe** (((00:26:36))) - - - Oh, sure.

Speaker Berkes** (((00:26:37))) - - - You know, I understood real estate and real estate finance very well at that point in time and just thought that the classes would be duplicative and not that interesting. So I wanted something related and close, but not exactly what I'd gone through at the University of Denver. So that's why.

Speaker Coe** (((00:26:58))) - - - Did you consider the international investment market and real estate?

Speaker Berkes** (((00:27:02))) - - - Briefly, briefly. But you know, you know what it was like in the early 90s. It was it was tough. Yeah. So there was not an abundance of opportunities. So yeah, I'm sure I thought about that at the time and spent some time looking into it. But you know, obviously nothing materialized.

Speaker Coe** (((00:27:20))) - - - So so my guess is that Susan introduced you to her husband George. She did. She did. Correct.

Speaker Berkes** (((00:27:30))) - - - That's correct, that's correct. Actually, Susan and I actually did a deal together when I was at it.

Speaker Coe** (((00:27:35))) - - - Oh, okay.

Speaker Berkes** (((00:27:36))) - - - Yeah, that was pretty complicated and difficult to work through. And I think that worked out really well for her client and her. And then, you know, ultimately me, because she had enough confidence and, you know, my ability to do stuff to connect me with George. And George said, hey, you know, I'd love to hire you, but you've got to have an MBA. And I said, well, you know, I'll be done with that in a few months. And, you know, pretty quickly after I finished up at GW, I went to work for George and, you know, he and Susan or, you know, two of our nearest and dearest friends. And, you know, I've known them both now for 30 plus years and, you know, a great friendship and, you know, obviously learned a lot about investing directly in real estate from from George, who's in my opinion, one of the best.

Speaker Coe** (((00:28:27))) - - - Yep. I met him when I was at the Saul Company and we were in distress, and he was waiting in the wings for opportunity. Yes, but Mr. Saul was able to struggle through by selling a couple of properties to Giant Food and save the company at the time. So it was an interesting time. Yeah. 1991. Yeah.

Speaker Berkes** (((00:28:52))) - - - And we, you know, look, we had a good run at JMB and then subsequently Heitman. And it was it was nice being in the DC office because, you know, we had a bit of a mixed portfolio. We had office buildings obviously in DC. We had some apartment buildings in Northern Virginia and also some grocery anchored shopping centers in the portfolio that we ran. And, you know, we're able to to, you know, look, look for and sources deals for JMB and Hyman's clients at the time, which again, was great for me. That's where I continue to develop my interest in open air retail. Um.

Speaker Coe** (((00:29:30))) - - - So so how long were you with the JMB Heitman?

Speaker Berkes** (((00:29:35))) - - - Uh, from from roughly the middle of 93 till close to the middle of 97.

Speaker Berkes** (((00:29:43))) - - - Oh, okay. Yeah, I think I think actually it's like August and 93 through April of 97, and, and I got recruited to come to Federal in 97.

Speaker Coe** (((00:29:53))) - - - So you you were the height when Heitman took over GM's portfolio. In essence, you stayed here in DC. You didn't go to Chicago then? No.

Speaker Berkes** (((00:30:02))) - - - No, neither. Neither George and or wherever in Chicago. We traveled to Chicago a lot. But yeah, we're always here seeing and Jamie had a big office and a big presence through George's efforts, largely in D.C.. So there was, you know, a number of people in the office and, and property management, leasing, development, that kind of thing. And, yeah, it was a they had a big presence here.

Speaker Coe** (((00:30:25))) - - - I didn't really understand the dissolution of JMB because there was the formation of Walton Street, and then there was Heitman, and it just seemed to me that everything kind of scattered a little bit there. Can you maybe.

Speaker Berkes** (((00:30:37))) - - - Yeah. Yeah. So I worked for what was called JMB Institutional Realty, right.

Speaker Berkes** (((00:30:42))) - - - Was the pension fund advisory arm of JMB. Okay. Heitman at the time was owned by United Asset Management. Uh huh. Publicly traded company that owned money managers in different verticals. Right. And Heitman was their real estate was their real estate vertical. Right. So through Heitman, they acquired Jim's institutional business and rolled it into Heitman. And I was back. And I want to say that was in late 1994. So long Walton Street.

Speaker Coe** (((00:31:16))) - - - Evolved from a different part of the company. Is that what you're saying?

Speaker Berkes** (((00:31:19))) - - - That's correct.

Speaker Coe** (((00:31:21))) - - - Okay.

Speaker Berkes** (((00:31:22))) - - - That's correct. And, you know, honestly, my memory on how that happened and who went where and why is not that clear anymore. But yeah, yeah, my.

Speaker Coe** (((00:31:30))) - - - Officers.

Speaker Berkes** (((00:31:31))) - - - My opportunity was to go to Heitman and and I did and you know enjoyed working there with more. And everybody that's still at Heitman for a number of years before coming to Federal.

Speaker Coe** (((00:31:43))) - - - So when you came to Federal, what was your role?

Speaker Berkes** (((00:31:46))) - - - So Federal at the time had two acquisition shops, the street retail acquisitions team and the shopping center acquisitions team.

Speaker Berkes** (((00:31:56))) - - - And, you know, I got hired. Yeah, Federal big and street retail back in the mid to late 90s and had a completely separate dedicated group to buy and redevelop an asset managed, manage and leases properties within the company. And then they had the shopping center group as well, which Robert Winnett ran. And I worked for Robert when I first came to federal, and then he ultimately left and went on to found Starwood Urban. That's right. Right. And I stated I stated. Federal. After Robert Lofton ran the Ran, the East Coast Shopping Center acquisition suffered for federal.

Speaker Coe** (((00:32:35))) - - - Oh that's great. So how many properties did you buy in that in that, in that stint? How many properties did you acquire?

Speaker Berkes** (((00:32:42))) - - - Well, not many because and I think you're going to get to this. There was a handful or a little bit less than a handful, I think 3 or 4. There was a strategic shift at Federal right at that point in time, and the shift was away from acquiring existing cash flowing properties and into developing ground up, mixed use properties.

Speaker Berkes** (((00:33:07))) - - - So for somebody who is still relatively young, new in their career, on the direct investment side of the business, I really wanted to be someplace where I could, you know, do more deals and buy more stuff. So I left Federal in 97 to do that and went to work for Larry Horowitz at Velsor Properties.

Speaker Coe** (((00:33:29))) - - - So when you left federal the first time or the that time? Yeah. Don had not joined Federal at that point. He had.

Speaker Berkes** (((00:33:37))) - - - He had just joined actually.

Speaker Coe** (((00:33:38))) - - - He just joined. Okay. Yeah.

Speaker Berkes** (((00:33:40))) - - - Yeah. I think Don had been around for 3 or 4 months. Oh, really?

Speaker Coe** (((00:33:45))) - - - Okay.

Speaker Berkes** (((00:33:45))) - - - He was originally hired, I believe, around May of 1998 as a CFO, and I think I left in August of 98 or something like that.

Speaker Coe** (((00:33:54))) - - - Got it.

Speaker Berkes** (((00:33:55))) - - - We're going back a long time now, John. You're really you're really testing the.

Speaker Coe** (((00:33:59))) - - - Well, I'm just trying to understand, because Don went into quite a bit of detail as to what happened with his predecessor and the whole transition, and you are not there at the times it sounds like.

Speaker Coe** (((00:34:13))) - - - So.

Speaker Berkes** (((00:34:14))) - - - No, no, I wasn't I wasn't that, you know, right when Don came in was when Steve Guttman was really transitioning the company to be a developer of mixed use properties, largely based on Steve's vision as a related to retailers wanting to get out of malls and closer to people onto the streets, which is why federal got into the street retail investing business a few years earlier in the early to mid 90s. And then, of course, with the success of Bethesda. So, you know, Steve saw an opportunity to basically take that model and, you know, take it to other cities around the country and that's, you know, where the focus of the company was, and that's where capital was directed at that point in time. And, you know, somebody in the old line of business, the shopping center acquisition side of the business, you know, I thought it would be best if I went somewhere where I could get a little bit more transaction activity and experience doing deals and doing direct investment in real estate.

Speaker Berkes** (((00:35:22))) - - - So yeah, I left shortly thereafter.

Speaker Coe** (((00:35:25))) - - - So then you went on to Velcor, talk about that experience. Yeah.

Speaker Berkes** (((00:35:29))) - - - You know, George and Susan introduced me to Larry. I'm sure you know, Larry, great great real estate mind. And he saw an opportunity. Give us a little.

Speaker Coe** (((00:35:40))) - - - Background on Larry here.

Speaker Berkes** (((00:35:42))) - - - Well, you know, Larry's Larry's been in the real estate business for a very long time and has a very, very good big picture real estate investment mind and just incredible savvy deal acumen. And he'd been buying and developing warehouses in Florida, in and around Miami and in and around Tampa. And he saw an opportunity at that time in the late 90s to basically bring that investment strategy up to Northern Virginia and started buying industrial flex and smaller office buildings in and around Dulles Airport. There was just tremendous activity in Miami, particularly around National Airport, with all the goods that were coming in not only directly. Yeah, on on transport planes, but effectively goods being transported in the belly of passenger planes.

Speaker Berkes** (((00:36:43))) - - - And it really drove the real estate market and demand for space around the airport. And you know, Larry again has great vision and saw that opportunity in Northern Virginia. Good friend of George and Susan's. I'd known Larry a little bit before I started working for him, but, you know, went to work with with him and his wife Beth and small team that they had to basically build a base of properties in Northern Virginia. So I did that for a couple of years. And, you know, Larry was very active. I think while I was there, he bought like 18 buildings in 18 months or something like that. And, you know, the. The market was starting to cool off a little bit. You know, cap rates were starting to go down, starting to get a little bit more competitive, a little bit harder to do deals. And about that time, Steve and Don knocked on my door and said, hey, do you want to come back to Federal? We'd like you to come back in a different role.

Speaker Berkes** (((00:37:48))) - - - And, you know, that's how I ended up coming back to Federal, but had great experience working with Larry and, you know, truly one of the one of the great real estate minds and in D.C..

Speaker Coe** (((00:38:00))) - - - So why did you go back? I mean, why didn't you stay since you were having such a good time with with Larry?

Speaker Berkes** (((00:38:06))) - - - Well, the opportunity to come back to to Federal again was was on a bit of a different world. So, you know, Don and Steve asked me to come back to work closely with Don to reset the strategy of the company. They had gone down the path of doing juice development and had teed up a number of deals and, you know, largely because of the size of the investment in Santana Row out in San Jose relative to the size of the company, you know, that wasn't exactly well received by the equity markets. So, yeah, needed to, you know, needed to reset the course for the company. So Don and I spent, you know, a year or so maybe it was a little bit longer than that kind of working through where we thought we fit in the public markets and what we, what we thought the opportunities were to reset the direction of the company.

Speaker Berkes** (((00:38:59))) - - - And, you know, when you looked across the publicly traded shopping center group at that point in time and you said all the mixed use and street retail stuff aside and just looked at federal shopping centers, they were on many different metrics, far and away better than the competition. So the decision was relatively straightforward that we need to get back into what we've been doing for years, which was acquiring and redeveloping larger, older shopping centers and close in densely populated and usually affluent communities in our target markets or core markets on the East Coast and in California. And that's what we did. And I think that was about 2002 or 3 when we formally, you know, reintroduced that strategy and started buying, started buying and redeveloping shopping centers again.

Speaker Coe** (((00:39:56))) - - - Mhm. Yeah. Don went into quite a bit of detail about that. And then his thought was he wanted to bring balance back to the portfolio and use that word several times. He probably still does. Yeah.

Speaker Berkes** (((00:40:10))) - - - Believe me all of us who work at Federal Realty have heard balance about 359 million times.

Speaker Berkes** (((00:40:17))) - - - So, you know, it's it's it was absolutely the right thing to do. I mean, clearly when you're when you're developing a property, you're taking all kinds of risks, right? And you can do a little bit of that in a public company, but it needs to be balanced with a portfolio of existing cash flowing properties. And again, we really like and I know you know this, but we really like buying larger, older centers that we can apply our leasing, management and redevelopment skills to. We have great teams that do that and great teams that know how to market those properties and asset, manage those properties, improve the merchandise mix over time, and help the tenants do better sales so they can afford to pay higher rents. And that's really, really been the the model here of Federal Realty for now a long time. But we needed to get back to that and balance the ground up development risk with existing cash flowing real estate. So that's why we did that. Yeah, at the same time.

Speaker Berkes** (((00:41:23))) - - - And it's been a great it's been a great run.

Speaker Coe** (((00:41:25))) - - - Yet at the same time you continue with some development activity. That's pretty interesting and cutting edge too. So and that's you're balancing the steady as she goes with a little bit of risk. Right. And so Pike and Rose was certainly a big risk when you guys jumped into that deal. And then of course Santana Row. In essence you were brought in as a fireman for that one. Well, in more ways than one, because not not.

Speaker Berkes** (((00:41:55))) - - - Really actually, you know, I moved to California. I moved to California in early 2004 after Santana Row was already up and running. And the main reason I moved out there really for two reasons. One, okay. Yeah, one is we really only had one senior person in the company on the West Coast, a guy by the name of John Swetnam, who is still with us, he's our chief investment officer, said right next to him and have for the last 19 plus years while I've been in California, a great, great partner and one of the great team members here at Federal.

Speaker Berkes** (((00:42:31))) - - - But John was all by himself out in California, so he he needed somebody. Up here, you know, to bounce ideas off and solve problems with and, you know, celebrate with and commiserate with depending on what was going on at the time. So that was one of.

Speaker Coe** (((00:42:51))) - - - The row was a major issue for you guys. Oh for sure, for sure.

Speaker Berkes** (((00:42:55))) - - - And then the second reason I went out there, John, is we we wanted to grow the company and we wanted to grow in California. And I'd been working, let's call it the D.C. to Boston corridor for, you know, either lending or direct equity investing in real estate. For a long time, I knew the markets, I knew the players, and it was much easier for me to focus on growing the company, um, even on the East Coast from the West Coast, than it was to try and grow the West Coast that I didn't know at all from the East Coast. So that's the second reason I moved. But I was yeah, I was I was not out there to to fix Santana Row, if you will.

Speaker Berkes** (((00:43:34))) - - - I mean, we had a good a good team on the ground that, you know, needed some support occasionally day to day.

Speaker Coe** (((00:43:39))) - - - But uh huh.

Speaker Berkes** (((00:43:41))) - - - I was not the fireman.

Speaker Coe** (((00:43:43))) - - - Okay, okay. Even though there was a fire physically on the property.

Speaker Berkes** (((00:43:47))) - - - So there was a fire in August of 2002. You're right, you're right. I didn't show up until 2004.

Speaker Coe** (((00:43:55))) - - - Got it? Okay, I'll understand. So let's turn to your current role. Yep. You're promoted to President right before the pandemic in 2019 and remained on the West Coast. How has that transition gone with the challenges the pandemic inflicted? We may have covered this before, but, you know, give me a little bit more perspective from your standpoint.

Speaker Berkes** (((00:44:17))) - - - Yeah. Yeah. So my my job now is is effectively to manage real estate functions for Federal Realty on both coasts. And you know, we have a great team set up to do that. Wendy Seher who's been a Federal for a long time, is a president of the East Coast.

Speaker Berkes** (((00:44:35))) - - - You probably know Wendy. She's great. Yeah. She's great. She has a great team of asset managers and leasing people that that report up to her and just do a fantastic job with our 80 or so properties on the West Coast. And then she has a counterpart on the East Coast. She has a counterpart on the West Coast by the name of Jeff. It is worked with federal for a long time as an employee, and even longer as a partner of Federales when he was a sim, so. Oh, sure. Yeah, very experienced real estate professional like Wendy, a leasing background. So Wendy and Jeff on the operations side. John on the investment side, that's that's my my core team for the bulk of the portfolio. And you know, the pandemic was the pandemic was something else for us to work through. And it really was all hands effort here at Federal Realty. And Don did a really good job leading us through that. You know, if you look for silver linings and clouds, I think one of the things that the pandemic did for us was, you know, made us all work together more closely than we were pre-pandemic during the pandemic.

Speaker Berkes** (((00:45:51))) - - - We were getting, you know, 15 to 16 people on the phone every day to talk about what was going on. And then, you know, on the West Coast, we had a separate group of people that got together every afternoon to talk through what's happening with the tenants and how to help them resolve their issues, how how to get them to pay us. And, you know, pandemic's been long over and we don't get together every day. And we haven't gotten together for every day for a long time. But we still get together every week. And it's a really good way to make sure everybody at the company, the that has influence, is understanding everything that's going on in the company.

Speaker Coe** (((00:46:34))) - - - So what percentage of the of your tenant base had to renegotiate their leases?

Speaker Berkes** (((00:46:41))) - - - Just a you know, I can I can ask somebody with better memory than me. You know, there might be some scar tissue there, but it was it was high. And, you know, we viewed the pandemic as something that we would get through.

Speaker Berkes** (((00:46:56))) - - - And what we were trying to do was make sure that when we got to the other side of the pandemic that we were we in the properties were in the best possible shape, right? So we made a real effort to have those tenants that could afford to pay us, continue to pay us and those that couldn't. We tried to work out some sort of creative deal with them where they would stay in business and then, you know, ultimately pay back some or all of the relief we gave them. And yeah, we did a really big program with a lot of our restaurants to help them through. And it was it was, you know, prescient, if you will, to make those decisions at that point in time, because when the stay at home rules were lifted and, you know, like Gary said, and like I said a few minutes ago that the rush of people came back to the properties, our tenants were set up and ready to go and ready to capitalize on that business as opposed to, you know, us having a bunch of dark restaurants and dark storefronts.

Speaker Berkes** (((00:48:04))) - - - So that was really, you know, a really important focus of ours in the depth of the pandemic in 2020. And in hindsight, it worked out well. Happy that we took the approach that we took. But it was very, very hands on. Property managers, leasing agents, asset managers, all of us on the senior team, you know, working through every imaginable circumstance you could think of. And then the back office of Federal, you know, the people that have to redraft those leases or amend those leases and then administer those, those drafts, you know, that was a big ask of them as well. And everybody here stood tall and carried the weight and got through that. And, you know, we're in hindsight very thankful for that.

Speaker Coe** (((00:48:56))) - - - One. One thing Don is very proud of is the idea that you're able to keep your dividends not only firm, but continue to increase throughout the pandemic, which, yes, was pretty impressive. Yes. Probably the only REIT in the country that was able to do that, I'm guessing.

Speaker Berkes** (((00:49:14))) - - - Well, I think there were others, you know, I'm not exactly sure, but there if there were others, there weren't many others. But yeah, we and on in particular view, that is, you know, kind of a contract, if you will, with our shareholders. That is an important part of the reason they bought our stock in the first place. And we were going to do everything in our power to make sure we lived up to our end of the bargain, so that that was important. And it does separate us, John. Mean, look, at 56 years of consecutive annual dividend increases is pretty impressive. And there's not one else, does it? No one else. Well, there's nobody else. There's nobody else in the publicly traded real estate sector that does that. And when you look through all publicly traded companies, we're we're in some really, really good company and very, very proud of that record.

Speaker Coe** (((00:50:07))) - - - That's great. Since you moved to California, what markets have you seen adding most to federal Western strategy and why do you do you notice differences among consumers and tenants in the West as opposed to the East Coast markets? Just out of curiosity.

Speaker Berkes** (((00:50:23))) - - - Yeah, I would I would say there are there are probably some differences there, there, subtle. Taking the last part of your question first there, but there's subtle, you know, I think in the markets we're in, most people want to gravitate to the same types of things. Of course, you know Federal long had a strategy in our in our food, the food side of our business to lease to strong local and regional operators. Right. You know, make the properties unique and exciting and give people a reason to continue to come back. So you won't see a lot of crossover, obviously, in the restaurant base within our portfolio, because we really are trying to support and grow the strong local and regional operators. But a lot of the other categories, you you see some similarities in the merchandising. You know, we we've grown quite a bit in Los Angeles, which started, I think, in 2012 when we bought Plaza El Segundo, and then in 2015 when we developed the point, which is right next to Plaza El Segundo, we bought the bulk of the land for the 0.1.

Speaker Berkes** (((00:51:39))) - - - We bought Plaza El Segundo. So that's a a big property in our kind of the anchor property, if you will, in LA for us. And then in 2017, we recapitalized and formed a joint venture with Prime Store, which is a Los Angeles based owner, developer of high quality retail properties and largely Latino communities in Southern California. So that transaction added, I think, close to one point 7,000,000ft² to our Southern California portfolio, which was big. And then most recently, and I think we closed our first deal in June of 2021, we've moved into the metro Phoenix market. So Phoenix, Scottsdale, Chandler, and I think we've invested somewhere between 350 and $400 million in that market in the last couple of years, which we really like. We see great growth prospects in greater Phoenix largely driven by the universities there. There's over 100,000 college students in metro Phoenix. And what we learned when we were doing our due diligence and market research is a very high percentage of those students stay in that market after they graduate.

Speaker Coe** (((00:53:01))) - - - So they're interesting.

Speaker Berkes** (((00:53:02))) - - - Yeah, there's a fantastic labor pool in.

Speaker Coe** (((00:53:06))) - - - ASU is the largest. Think it's the largest undergraduate campus in the country. It is close to 100,000 students there. Yeah like that.

Speaker Berkes** (((00:53:15))) - - - Yeah. And and something like 75, 80% of the kids that graduate every year from the Phoenix area colleges stay. So yeah. So if you look at some of the tech businesses that have moved to that market, certainly the chip manufacturing industry that's in that market, a lot of the reasons they've gravitated towards it is there's just a very, very good labor pool. So that along with, you know, look at you back up 20 years or so ago and we we always said, well, we don't want to be in Phoenix because it's growing horizontally. Right? So, you know, every time there's growth a new shopping center gets built. And. New apartment in the new mall.

Speaker Coe** (((00:53:58))) - - - It's a sprawling city.

Speaker Berkes** (((00:53:59))) - - - Not anymore. Not anymore. Really? And what we noticed. And if you go to that market and you look around the properties that we own, the areas in that market where we've invested.

Speaker Berkes** (((00:54:14))) - - - What's happening now is there's no place to grow horizontally and it's starting to grow vertically. So the.

Speaker Coe** (((00:54:21))) - - - Mountains that protect the, you know, the growth there's.

Speaker Berkes** (((00:54:24))) - - - There there's some geographic boundaries. There's some Native American reservations.

Speaker Coe** (((00:54:30))) - - - Are.

Speaker Berkes** (((00:54:31))) - - - Boundaries. Sure. The the availability of water in certain.

Speaker Coe** (((00:54:35))) - - - Parts of utilities are an issue there.

Speaker Berkes** (((00:54:37))) - - - We'll create a, a boundary. And what we what we saw when we really dug into the market 3 or 4 years ago was, you know, a single story shopping center with a parking lot in front of it, built at a 0.25 far, was likely not the highest and best use of land anymore. Right. So you're seeing classy office buildings, smaller shopping centers, freestanding restaurants getting torn down and apartment buildings and going going vertical and getting built. And to me, you know, is a long term owner of real estate. That's how we look at real estate here at Federal. We we think we're going to own it indefinitely. That's that's exactly what you want to say.

Speaker Berkes** (((00:55:21))) - - - Yeah. Because that means the piece of land you're buying that's built to a 0.25 far is likely not the highest and best use of that land over time and as leases expire and as you're able to rework the property, you can either add density or you're likely to have less supply in the market, and you can really push rents or both. And that's how we like to invest. So that market we're really excited about. And one of the big growth avenues for us in the West Coast.

Speaker Coe** (((00:55:53))) - - - So you're in LA, you're in Phoenix, you're in San Francisco area. Are you in San Diego as well?

Speaker Berkes** (((00:55:59))) - - - Yeah, let's in the Bay area. We're really in Silicon Valley. We're not in.

Speaker Coe** (((00:56:04))) - - - You're not in the city.

Speaker Berkes** (((00:56:05))) - - - So now we had one property there for a number of years, which we sold a number of years ago. So the bulk of our holdings are in Silicon Valley.

Speaker Coe** (((00:56:14))) - - - We're you're not a Marin or no. East East Bay.

Speaker Berkes** (((00:56:18))) - - - We are in the East Bay. We we own a couple of properties in the East Bay.

Speaker Berkes** (((00:56:21))) - - - We had a very, very infill power center that's partially in Emeryville and partially in Oakland with Home Depot.

Speaker Coe** (((00:56:30))) - - - Oh, sure.

Speaker Berkes** (((00:56:31))) - - - Safeway, target, Nordstrom Rack, Ulta. Yeah, it's and the retailers that are very, very productive. We own a grocery anchored center in San Ramon, which is kind of the next ring to the east, if you will. Right. But otherwise otherwise everything we own in the Bay area is in Silicon Valley. We've grown our portfolio fairly significantly in LA. And then if you go down to San Diego, we added a property a couple of years ago called Grossmont Center that's in la mesa, out in the east part of metro San Diego. That's interesting. Well, it's one of the most fascinating real estate deals I've ever done. It's it's a huge site. It's right on I-8 at an interchange. Yeah. And an interchange with a heavily traveled highway. It's 60 some acres, 1,000,000ft². With only a couple of exceptions. All the leases expire in 2025. Ooh, so it's a huge redevelopment opportunity for us.

Speaker Coe** (((00:57:38))) - - - Oh my God.

Speaker Berkes** (((00:57:39))) - - - And we're not you know, it's not going to be the Santana Row of San Diego by any means. We're not going to go vertical. Likely. They're in this development cycle. But we are going to be able to transform the property and, you know, completely change the rent roll. And really what's.

Speaker Coe** (((00:57:55))) - - - Your tenant demand there? It's strong.

Speaker Berkes** (((00:57:58))) - - - Yeah very strong.

Speaker Coe** (((00:58:00))) - - - So you have you're going to be like a congressional type of layout or what's the thought process there.

Speaker Berkes** (((00:58:05))) - - - Just yeah. No it'll be it'll be it'll be bigger and different than that. There's a very productive Walmart on the site. There's a very productive.

Speaker Coe** (((00:58:12))) - - - There you.

Speaker Berkes** (((00:58:12))) - - - Go. You know, we'd like to see them stay long term. And there's some other don't.

Speaker Coe** (((00:58:16))) - - - See Federal having Walmart on many of their centers. That doesn't strike me as the demographic you're aiming at there.

Speaker Berkes** (((00:58:22))) - - - Well, you know what we like. You know, what we like is we like a lot of people that come and spend a lot of money and.

Speaker Coe** (((00:58:30))) - - - Yeah.

Speaker Berkes** (((00:58:30))) - - - Okay, they do here in, in, you know, spades. It's really, really a strong location and going to be a nice growth vehicle for us over the next two, 3 or 4 years as we, we work through the expiration of those leases. So that's that's where we are in California.

Speaker Coe** (((00:58:49))) - - - When think of your strategy, always think if you're going to go down to that market, would want to be in La Jolla, I'd want to be in, you know, Rancho Santa Fe, you know, places like that where the demographics are such that, hey, here we go. You know, this is Federal country. So, yeah, well, it's Federal company.

Speaker Berkes** (((00:59:08))) - - - It's federal country in terms of population density and traffic and ability to rework a rent roll. Right. I think the average rent at the property is in the low to mid teens.

Speaker Coe** (((00:59:19))) - - - And.

Speaker Berkes** (((00:59:20))) - - - Probably more than double that.

Speaker Coe** (((00:59:22))) - - - So yeah, there's your real estate hat coming on. And that's right. Come on, you know.

Speaker Berkes** (((00:59:28))) - - - And we'll we'll Federalize it. It will be a much better place when we're done. Okay that's for sure.

Speaker Coe** (((00:59:34))) - - - So an analogy to that maybe is two properties that I looked at by a guy who the name of Sam Redstone think his name was down in Mount Vernon. Virginia, which is, you know, right on Route 1 And you guys acquired them, there were two centers. I don't think they were both owned by them. It was two different ownerships. But you guys combined the centers talk about that deal a little bit with that Mount Vernon Plaza.

Speaker Berkes** (((01:00:02))) - - - Yeah. Well, that's a good deal to bring up for a handful of reasons. You know, one, if you dial back to what we were talking about a few minutes ago and. Yeah, well, getting back to the strategy of acquiring and redeveloping. Yeah. Well, located shopping centers that, you know, need some investment and need our merchandising and leasing skills. That was the first center or actually, you're right, it was two different centers, two different owners.

Speaker Berkes** (((01:00:31))) - - - That was the first deal that we did after we reset that strategy.

Speaker Coe** (((01:00:36))) - - - Ah, okay.

Speaker Berkes** (((01:00:37))) - - - So it was hugely important from that standpoint. And then it was probably one of the most complicated and fascinating right deals that I've ever had the opportunity to work on.

Speaker Coe** (((01:00:48))) - - - I think I talked to you about financing it at one point. Yeah.

Speaker Berkes** (((01:00:51))) - - - You may, you may have.

Speaker Coe** (((01:00:53))) - - - Because you guys weren't trying to figure your strategy out at the time. And even looking at third party financing and you weren't sure what you're going to do is I recall, right.

Speaker Berkes** (((01:01:02))) - - - But we knew it was we knew it was a great piece of real estate. Right. And we, you know, here are the elements we had to pull together there. So the land was owned by a couple of families that are maybe it was 3 or 4 families in Canada. And we had to rework the ground lease.

Speaker Coe** (((01:01:19))) - - - Right, right.

Speaker Berkes** (((01:01:20))) - - - Groundless. Under Mount Vernon Plaza, we had to deal with the seller of Mount Vernon Plaza. You probably don't remember, but at the back of the center, on the Mount Vernon side of the line plaza side of the line was an old Ames store.

Speaker Coe** (((01:01:34))) - - - Right? Remember that?

Speaker Berkes** (((01:01:36))) - - - And one of our public piers had acquired that chain of stores and our leases.

Speaker Coe** (((01:01:43))) - - - Uh huh.

Speaker Berkes** (((01:01:44))) - - - We had to figure out a way to get control of that lease while we were doing the acquisition, without anybody knowing that it was us getting control of the lease. And then we had to buy. Then we had to buy at the time, what was called South Valley, which is south side of the parking lot. That property was owned by the real estate investment arm of a large insurance company. And, you know, I basically had to coordinate pulling all these various pieces together at the same time because we didn't want to have one without the other. And we certainly didn't want to own Mount Vernon with a name store in the back that was controlled by one of the editors. So yeah, that was that was quite the deal to pull together. And, you know, a lot of moving parts. I remember sitting in my office, a Congressional Plaza on Christmas Eve and talking with the gentleman that ran the the real estate investment arm of the life insurance company that controlled South Valley.

Speaker Berkes** (((01:02:53))) - - - And having him telling me we had no deal.

Speaker Coe** (((01:02:57))) - - - Oh my goodness.

Speaker Berkes** (((01:02:58))) - - - You killed the deal on Christmas Eve. Oh, and then on New Year's Eve, a short week later, 3 or 4 in the afternoon, I'm back in the office on the phone with him again, putting the deal back together. So it was, you know, it was a hairy deal, but we were able to get everything sewn together and, you know, pretty much simultaneously closed the ground, lease, modified all that kind of stuff. And then fast forward or effectively, 20 years later, we own the interest in the land. We've redeveloped the center, we added a fair amount of GLA and it's, you know, one of the one of the shining stars, if you will, in our Northern Virginia portfolio. We're really, really happy to have it. It's been a been a great property for us. But it was it was a it was a fine line to walk at the time, that's for sure. And I could not, you know, I could not let it fail.

Speaker Berkes** (((01:03:54))) - - - We we had to get that deal done that put us back on the map of being back in the business of acquiring and redeveloping shopping centers. So it was absolutely critical that that happened. But it was an interesting one.

Speaker Coe** (((01:04:08))) - - - Let's let's go back to the roots of Federal for just a moment, because I moved here in 1985, okay. And Federal at that point was about 20 years old. So, you know, it was you know, it was a fairly mature shopping center company owned maybe 4 or 5 centers in Montgomery County. And it started out apparently, as as Don had recited, was a residential REIT. Initially it was they own apartments, got into retail. The first shopping center they acquired apparently was at the time a CVS anchored center on Old Georgetown Road known as Wildwood Plaza, which was the first center that Federal had. And I shop there when I first moved here, and I thought it was the coolest center I'd ever seen.

Speaker Berkes** (((01:04:54))) - - - Well, hopefully you still shop there, John and I do.

Speaker Coe** (((01:04:58))) - - - Occasionally. Yeah. When I really want to go upscale and groceries, I'll go over there to Balducci and we'll we'll poke around there a little bit, find something interesting. But. That center and then congressional and then Federal Plaza, which is where Trader Joe's is now. And. And then, uh, you know, of course, the predecessor to what Pike and Rose is now, which was a toys R us anchored center, which think its name. I do not remember that center.

Speaker Berkes** (((01:05:36))) - - - Well you can't well, first off, I'll give you the name of a second, but you can't forget G Street Fabrics.

Speaker Coe** (((01:05:41))) - - - Oh, yeah, I remember.

Speaker Berkes** (((01:05:42))) - - - That.

Speaker Coe** (((01:05:43))) - - - Center was la madeleine was in there and.

Speaker Berkes** (((01:05:46))) - - - It was called Mid Pike.

Speaker Coe** (((01:05:47))) - - - Plaza. Mid Pike Plaza. That's correct. And it also had a big what was it, a big landscape deal or something that was off to the side as you face the property to the east. I can't to the north mean can't remember what it was, but all kinds of stuff there.

Speaker Coe** (((01:06:04))) - - - Yeah. On on site. Was it a bus depot there of some sort to or something?

Speaker Berkes** (((01:06:09))) - - - Yeah. The county owns some land on the north part.

Speaker Coe** (((01:06:12))) - - - That's what I thought. Yeah. So the visual of the property. If that hasn't been the most transformative piece of real estate Montgomery County, I would say that I don't know if there is another one other than the inverse of that of what happened to White Flint. All right. So if you want to look at two completely contrasting situations over the last 20 years, is the White Flint Mall site and Pike and Rose. So there's an interesting backdrop to a story there for sure.

Speaker Berkes** (((01:06:43))) - - - And we're really proud of what we've done at Pike and Rose. It's you know, it's a fantastic property. And, you know, every every day or week or year or whatever that we we operated and invest in it. It just gets better. The the food line up here is fantastic. We have a, you know, some exciting new, new restaurant coming into the 915 meeting office building that's just getting finished and starting to have its first tenants build out and move in.

Speaker Berkes** (((01:07:14))) - - - So it's only going to get better over time. It's a fantastic location, as you know. And so it was.

Speaker Coe** (((01:07:22))) - - - Was that property of Steve Guttman vision initially or was that something that came after his departure?

Speaker Berkes** (((01:07:30))) - - - It came after Steve's departure. You know, the way we got into that asset, we masterless that property along with, I think, six other properties in new Jersey and one on Long Island from a family based in northern new Jersey, really was another deal, another deal that we had to do. I think it was back in 2007. We had to make a deal with that family to unwind the master leases, and effectively, what we ended up doing was trading them our interest in 4 or 5 of the shopping centers for their interest in Mid Pike and a property on Long Island, or we're just wrapping up a redevelopment. I'll come back to that in a minute. Um, for their interest. So that allowed us to control the fee at Mid Pike, which is what allowed us to go into the county and rezone and re entitle the property.

Speaker Berkes** (((01:08:28))) - - - I think Mid Pike had roughly 300,000ft² of retail on roughly 20 acres. And we've got now 3,000,000ft² of entitlements on that same 20 acres. So oh yeah, it's worked out well for us. And you know, clearly something we've been working on for a long time, but we think it's a great, great addition to the community, a beacon, if you will, in southern Montgomery County. And again, really proud of the effort the team here has put into it. But that was a, you know, post Steve Guttman effort by by the team here.

Speaker Coe** (((01:09:03))) - - - So Evan Goldman, who think was the first project manager on the project gave me a tour when they just the site plan was just being finished and just starting to clear dirt there and said, wow, Evan, this is exciting. And then he showed me the renderings and I was like, whoa, this is going to be really special. Yeah, at the time. And, well, you know.

Speaker Berkes** (((01:09:24))) - - - Whether it's Pike and Rose or Bethesda or Assembly Rose and Hannah Rowe, you know, which we affectionately refer to here is the big four.

Speaker Berkes** (((01:09:33))) - - - There are big mixed use properties. You know, all of those all those properties are, you know, local landmarks, if you will. They are a big part of the communities in which they're located. You know, we hope that the people that live in each of those communities use the property, if not daily, weekly for all different kinds of things. And they've been very, very well accepted and woven into the communities that surround them. And, you know, they all have future phases. You know, we're nearing the end of that. And Bethesda, because we started it, you know, over 25 years ago. But there's still a lot to do at Pike and Rose, a lot to do with Santana Row and a lot to do at our Assembly Road project up in Somerville, Massachusetts. So, you know, over time, they're only going to get better and better each time we build a building. It seems to change the nature of the property a little bit. It brings more people.

Speaker Berkes** (((01:10:30))) - - - It makes it feel like more of a complete neighborhood. And, you know, we're just really happy to have those. And, you know, it's one of the things that differentiates federal from all the other publicly traded shopping center companies. Nobody else has assets like that or the skill set to conceive of them, develop them and then operate them. So it's a real, real differentiator for us, John.

Speaker Coe** (((01:10:55))) - - - What? You know, one question want to get into philosophically is it's clear that there is a special ambiance. It almost you know, I'll start with Wildwood. When I went there the first time, there's an ambiance to a Federal property. And it's something that is hard to explain, but. You know, maybe it's signage, maybe it's, you know, the sense of place, the thought process going into the traffic pattern, the both pedestrian and and vehicular, the access points and then the storefronts mean there's, there's a, there's the physical side, but there's something more to that. So maybe you can speak to that a little bit if you know what I'm saying Jeff.

Speaker Berkes** (((01:11:41))) - - - Yeah I do. And you know, maybe let's step back or go up 10 or 20,000ft. And let me tell you kind of where the thinking comes from there. So. Our goal or what we endeavor to do. When you come to Federal Realty Properties have a great experience. We don't want to be a commodity experience. We don't want to be just a transaction, right? If you want to do just a transaction, there's probably a more efficient way to do it, right. But we want you to whether it's Wildwood or whether it's one of our more traditional neighborhood grocery anchored centers or one of the big four, we want you when you're at a Federal Realty property, to have a special experience. So clean, safe, convenient, great landscaping, like you said, great signage, a lot of places outdoors to sit down and have a cup of coffee or or something to eat, or maybe a cocktail after work. We want to be part of your life and part of the community. That's the goal.

Speaker Berkes** (((01:12:51))) - - - So that's why we put a lot of extra time and effort into thinking about things like signage and storefronts and paint colors and landscaping and maintenance of the property. And it all comes from this core. Belief. And it's, you know, quite frankly, more of an art than a science that if you put together the right retailers and the right businesses and the right restaurants and you create this synergy, it's better for everybody that's leasing space and doing business of that property. They're more successful as a whole, and it's a better experience for the customers that come. So the customers will come more frequently, and when they're there, they'll spend more time. And when they spend more time, they spend more money. And that's great for the that's great for the tenants. It's great for us. And, you know, really makes the place feel like your center and part of your community, not just someplace you go to conduct a transaction. And that's that's really the goal.

Speaker Coe** (((01:13:55))) - - - Another example of a growth trend is economic development.

Speaker Coe** (((01:14:00))) - - - Northern Virginia seems to be accelerating and Maryland are stagnating. How does this impact your investment strategies going forward in this region? Perhaps overlay that on other metropolitan areas where you invest?

Speaker Berkes** (((01:14:13))) - - - Yeah, I mean look at we we long term need to be in places where employment and incomes are growing. Right. Right. And you know, there's a lot of a lot of talk about people racing to the Sunbelt and, you know, going to this small city, that small city and all this population growth and isn't that great. And we've always thought that, yeah, well, population growth is important. But a lot of times if population growth is in an area with a lot of land that hasn't been developed, that also means a lot of new supply. And, you know, this is in many ways a very simple business. It's a difficult to execute business, but a very simple business. It's it's all about supply and demand. Right. And we want to be in areas where there's a lot of demand and we're new supply one way or the other, either because all the land is already built out or political.

Speaker Berkes** (((01:15:15))) - - - Politically, it's very difficult to get entitlements and build new product where supplies in check. Right. And so, you know, whether it's Northern Virginia or Montgomery County or Metro Phoenix or Silicon Valley, you know, there's a lot of different things that drive the two parts of that, those equations in each of those markets. I can't really point my finger at one or the other and say, it's better because of this or better because of that. There's a lot of things we have to take into account when we think through that. But, you know, that's what we're looking for when we invest capital and when when you when you think that way and you think long term and you're in areas where income growth is materially outstripping inflation, then you have the ability to have your businesses that are located in your properties, your tenants do better and they can pay more rent and you can add value to the property faster. It's really the investment philosophy here.

Speaker Coe** (((01:16:21))) - - - Is federal in the southeast at all. I'm trying to remember we're in.

Speaker Berkes** (((01:16:25))) - - - We're we're in South Florida.

Speaker Coe** (((01:16:26))) - - - Okay. So you're down what Lauderdale or Miami or.

Speaker Berkes** (((01:16:31))) - - - Yeah. We have a big property in Davie called Tower Shops. We just bought the shops at Pembroke Gardens, okay. Out west on 75. And then we have a smaller center called Del Mar Village in Broward. And we just redeveloped Cocoa Walk in Coconut Grove, and that's a fantastic property. A good example of the property that's, you know, benefited from what we talked about several minutes ago, which is people wanting to conduct more of their daily lives closer to where they live, as opposed to where they work. Coconut Grove is just a fabulous community. You know, if I was ever to to relocate to the Miami area, wouldn't think about living anyplace else other than it's just it's beautiful. There's great schools. And, you know, we own the biggest and best property right in the heart of the city called Cove. Yeah, and complete redevelopment. We tore down a big chunk of the retail space and rebuilt more functional retail space with Class-A office above it, and redid the rest of the the retail that was left and re merchandised.

Speaker Berkes** (((01:17:42))) - - - It brought in some great restaurants and it's just, you know, again, really the heart of the community. And that's that's what we're looking to do when we when we redevelop real estate.

Speaker Coe** (((01:17:53))) - - - Well let me talk about some other markets. So think of Atlanta as being a market that, that you guys should be in probably if you're not. Charlotte. Raleigh. Durham. Charleston. Maybe I don't know. You're in Charlottesville, which is interesting because my son went to UVA and. I was first time I went down there to visit, I said, whoa, this is Federal Realty owns this property, said, this is interesting. So wonder how that happened. So it was interesting. I'll leave that at that.

Speaker Berkes** (((01:18:30))) - - - Well, those are all great markets. Um, the the thing we have to think about when we think about going into a new market like that is, you know, can we build over time, enough of a portfolio to actually be an influential player in the market?

Speaker Coe** (((01:18:49))) - - - So it's not a single property strategy you want.

Speaker Coe** (((01:18:51))) - - - This is a market strategy, right? Right.

Speaker Berkes** (((01:18:54))) - - - So you know, not only does there need to be enough of the type of properties that we want to own, but they need to be owned by people that we ultimately think we can buy from.

Speaker Coe** (((01:19:03))) - - - Got it.

Speaker Berkes** (((01:19:04))) - - - So we are very careful about that. And the three you mentioned, you know, Charleston might be a little small for us, but the other three you mentioned, yeah, our great markets. And, you know, we've just not been able to figure out a way to efficiently and strategically get into those markets. Um, we like the ones we're in. We still think we have plenty. Got it. Markets. Sure. So. But you will see us from time to time like Phoenix add a new market. But that was very strategic for us. And we went in in a fairly big way, buying one of the bigger, better shopping centers right in the middle of Phoenix. And we've bolted on to that since that first acquisition.

Speaker Berkes** (((01:19:44))) - - - And, you know, like I said, close to $400 million with a property there now. So we've got to be able to see our way clear to that to to go into a new market.

Speaker Coe** (((01:19:53))) - - - Interesting. Yeah, interesting.

Speaker Berkes** (((01:19:55))) - - - And that matters from an operational standpoint. And, you know, being able to hire a team, right. Or to hire a team that can really, you know, run the property the way we like to see properties run. And it also, you know, we want to be able to be a first stop for tenants when they're coming into the market. And if you only have 1 or 2 centers to offer them or they're smaller or, you know, insignificant, you don't have that. And, you know, we don't think that's the best way to go about expanding into a market.

Speaker Coe** (((01:20:25))) - - - So with Charlottesville, you kind of coupled that in with your portfolio. Assume that, yeah, it is.

Speaker Berkes** (((01:20:31))) - - - It is by far and away the dominant shopping center in Charlottesville. So and we've we've had that in the portfolio for a very long time.

Speaker Berkes** (((01:20:39))) - - - Right. Great asset. And I hope your son was at UVA. You spent a bunch of money at Barrick's. Oh, we.

Speaker Coe** (((01:20:44))) - - - Had a good time there. Good. Good restaurant.

Speaker Berkes** (((01:20:47))) - - - Yep.

Speaker Coe** (((01:20:48))) - - - Oh, yeah. So. Uh. Inflation and interest rates have risen considerably over the past year. Plus, how is federal adapted to the capital markets changes? Have rents kept up with expenditures in your portfolio? You caught up with the collections that you were deferred during the pandemic?

Speaker Berkes** (((01:21:09))) - - - Yeah, yeah. To answer the last part of your question, yes, I mean, collections have gone very well for us coming out of the pandemic. And, you know, we've we've had an effort here for a long time to make sure that we're getting. Rent bumps during the terms of our leases that help us keep up with inflation. So that's been a focus of ours for a long time, I would say, when, you know, the handwriting was on the wall, that inflation was going to kick back up again.

Speaker Berkes** (((01:21:38))) - - - We spent a lot of time with our leasing people, explaining to them the importance of getting bumps during the term of a lease and showing them why that's essential to growing the value of our properties and or leasing. The team has done a fantastic job delivering not only good starting rents for us, but also growth during the term of the lease, which has helped us to deal with the inflationary period we're in right now. If you step back and look at us and our public peers, federal has, you know, significantly higher built in rent growth and its existing leases when compared to anybody else. So always been a focus of ours, but definitely heightened or sharpened by the the environment we're in right now. And then, you know, obviously everybody's dealing with this higher interest rate environment that, you know, is even higher today than it was last week. Right? I mean, we're in a we're in a pretty tough cycle right now. So that's caused us to, you know, refocus on how we allocate capital and, you know, raise the hurdles for in investing new capital, whether that be in a development or an acquisition.

Speaker Berkes** (((01:22:45))) - - - And I think that's just going to be part of our business for a while. I don't think anybody here expects the rates to go back to what they were. Hopefully they'll be lower when the fed stops raising rates. And, you know, the market settles down a little bit and we get into a more normal interest rate environment. But yeah, been watching that and to a degree expecting it for a while and making the appropriate adjustments. Sales.

Speaker Coe** (((01:23:12))) - - - Sales been affected by interest rate growth I mean.

Speaker Berkes** (((01:23:16))) - - - We haven't seen it yet. And that's again John, you got to you know, if you you know our assets locally and if you go to any other market or located, we're in similar type areas. And you know, generally the people that frequent our shopping centers are not financially stressed. So they're able to doing what they were doing before interest rates ticked up. So we've seen a really nice response in tenant sales at our properties the last couple of years, and traffic's up as well. So I think everybody's been able to work through it.

Speaker Berkes** (((01:23:56))) - - - Maybe not the, you know, maybe not the case in smaller markets or further out suburbs or, you know, certain parts of the country. But you know, where we've where we've elected to invest our money and deploy our capital. We've generally got a lot of people that make good incomes around each property. And, you know, people are still spending and, you know, working through the inflationary environment.

Speaker Coe** (((01:24:23))) - - - Two recent guests, including Gary Rappaport and Art Fuccillo of Lerner, have discussed the decline of the regional mall business. Federal has benefited from not entering in that space as well. How do you see inordinate amount of regional mall and big box inventory being repurposed? Is there any opportunity for Federal to get involved in in those assets potentially. Yeah.

Speaker Berkes** (((01:24:51))) - - - Just to clarify, I assume you're talking about the anchor boxes at malls and not big boxes. Yes, general. Because the big box part of our business, the leasing, is very, very strong. And I think that's true throughout the public peer group.

Speaker Berkes** (((01:25:07))) - - - Anchor occupancies at at our properties are very high.

Speaker Coe** (((01:25:11))) - - - Guess let me clarify. Big box. In my opinion it's less than 10% shop space and the rest is big. It's big, you know, 150 to 100 to 150,000 square foot box.

Speaker Berkes** (((01:25:22))) - - - Yeah, that's like a department store at a at a mall or something like that. Right.

Speaker Coe** (((01:25:26))) - - - But very little inline space.

Speaker Berkes** (((01:25:28))) - - - Yeah. Yeah.

Speaker Coe** (((01:25:29))) - - - Which I've not seen at any of your properties.

Speaker Berkes** (((01:25:32))) - - - No, that's that's not what we write down or endeavor. Endeavor to go after and. Yeah. Look at the. The A or A+. Malls in this country are doing exceptionally well, and they've all been able to deal with the shrinking department store footprint and brought in different uses to those department store boxes where the department stores left, you know, whether they're retail or entertainment. So I think in the better malls, that's gone just fine. And, you know, in a lot of cases, I would expect even more productive use of the space than the department store that was in the space just prior.

Speaker Berkes** (((01:26:15))) - - - Right. So you may have had a department store move out, and that box got caught up into 2 or 3 different spaces for retailers, restaurants and entertainment. And I would guess the redo of those boxes are drawing a lot more traffic to the malls. And the department store was prior. You know, we're still overbuilt, like you said, with with malls or under demolished. Yes, probably the other good way to say it. And, you know, we're not in that business. I don't see us getting into that business we know and our markets where we want to invest. You know, what those malls are. And generally none of them have appealed to us to acquire. You know, we always keep our eye open for stuff, but that's that's not really a path we've chosen to walk down.

Speaker Coe** (((01:27:05))) - - - What new concepts have you seen in the entertainment oriented retail, including food and recreational uses? Your Bark Social here at Park Bike and Rose is one example. Many others.

Speaker Berkes** (((01:27:15))) - - - Yeah yeah yeah. Well yeah everybody loves Bark Social right.

Speaker Berkes** (((01:27:20))) - - - And what's not to like about dogs, beer and coffee.

Speaker Coe** (((01:27:25))) - - - There you go.

Speaker Berkes** (((01:27:26))) - - - It's a great complement. We're happy to have them here. Similarly up at Assembly Row on one of the future development sites, our team up there did something really creative and they brought in Volo. Are you familiar with Volo? No. So? So Volo is an organization that effectively arranges sports games for, I think, primarily people in their 20s and 30s, and they built a bunch of sand volleyball courts and pickleball.

Speaker Coe** (((01:27:54))) - - - Oh, cool.

Speaker Berkes** (((01:27:54))) - - - And then our team also got one of the local craft brewers to set up shop next door. So I think it's Tuesday and Thursday nights. If you go to Assembly Row, there's something like 5 or 600 people engaged in their activities of the property, and then they hang around and have a beer, and I'm sure they walk down the street and go to another bar or restaurant and at Assembly Row. So.

Speaker Coe** (((01:28:19))) - - - So how does federal get paid for that? Just out of curiosity, what what's the deal?

Speaker Berkes** (((01:28:24))) - - - Yeah, it's you know, it's not a robust economic return from the.

Speaker Coe** (((01:28:30))) - - - You want the ancillary behavior. Yeah, absolutely.

Speaker Berkes** (((01:28:33))) - - - I mean, it's another 5 or 600 people at the property twice, right. And another 5 or 600 people that are learning about assembly row and probably coming there other times of the week. So think it's great. And our teams have been real creative at finding uses like that to, you know, weave in to weave into our properties before we go vertical on a site. Pickleball is obviously very big right now. I mean, you can't really read a real estate publication without reading about some pickleball concept that's gone somewhere. And, you know, I'm sure a lot of people are doing those and leveraging off the popularity of that activity right now at their properties. But, you know, we've always been more focused on on, again, being part of the community and being part of what you need every day or every week or every month, and not necessarily hugely entertainment driven. We have a handful of movie theaters that are at our properties. We have a few other uses, you know, like.

Speaker Berkes** (((01:29:43))) - - - Like bowling concept or or something like that. But we don't go we don't go overboard on the entertainment. We want it to be a little bit more, you know, daily, weekly needs organic, shopping oriented, you know, food and beverage oriented. So but the interim uses like bark social and like follow up and assembly row have just been fabulous ads for us.

Speaker Coe** (((01:30:11))) - - - So maybe it Bark Social eventually redevelop that land. Well the.

Speaker Berkes** (((01:30:17))) - - - Long term that's the plan.

Speaker Coe** (((01:30:18))) - - - Sure I see interesting. So federal has recently broadened its real estate use focus to health care with biotech plans at at Pike and Rose and Assembly Row in Somerville, mass. Your office building expansion at Pike and Rose is interest is unique as your place quote unquote has seemed to attract users. Our recent other recent trends attracting other user types. What else are you seeing as far as attraction?

Speaker Berkes** (((01:30:51))) - - - Well, mean again, step back or step up to 10 or 20,000ft. And you know if you build a property like assembly row or bike and rows and you've created this great place on the on the ground level, right, the place with the the restaurants, the retail, the services, the great outdoor dining, the parks, the places to sit and have a conversation or a cup of coffee with a friend.

Speaker Berkes** (((01:31:17))) - - - What you want to do then is, is capitalize on that place you've created. You've drawn people to the properties. So, you know, now let's let's build some apartments. Let's add a hotel. Because not only do people want to shop and eat out and, you know, go to a movie, these kind of places, they're great places to live as well. They're also great places to work. So whether that means, you know, occupying traditional office space or occupying a life sciences space, we want to capitalize on the place we've created and, you know, not only create a great, great place to shop and be entertained and live, but also a great place to work, which is why you've seen us add office. And, you know, ultimately when the market's right and back into equilibrium, add Live Science, add a couple of our properties as well. And we've had tremendous success coming out of the pandemic leasing our office space. Again, if you look at the big four properties we're are standing office inventory is 97% leased, and we've done close to 60 deals for nearly 900,000ft² at those properties since the middle of 2020.

Speaker Berkes** (((01:32:37))) - - - And what we've seen happen is, you know, companies that might have been further out in the suburbs or might have been in an older building, say, hey, you know, I want to get my employees back to work. And in order to do that, not only do I need to give them a great building with all the appropriate air handling and touchless elevators and touchless faucets in the bathroom to make them feel safe, but they need to have some place to come to work that they're going to enjoy, where they can walk out the front door and have 15 to 20 places to choose from to go for lunch, where they can show up early in the morning and go to the health club and get a workout in before work, or where they can go to a, you know, bar or restaurant after dinner and, you know, meet their wife, boyfriend, girlfriend, husband, whatever, and have dinner in a couple drinks. And that's that's what employees are demanding of their employers today. The employers recognize that.

Speaker Berkes** (((01:33:36))) - - - And that's why we've seen so much demand for office space and our mixed use properties. Oftentimes the tenants that are coming here are paying much more per square foot in rent, but they're taking less space. So their overall rent bill is lower. But we're really happy with how the demand for our office space has accelerated again, largely as a result of the pandemic and the effort to get everybody back to work. And, you know, hopefully when when the market writes itself a little bit will be in a position to continue to add those types of uses and life sciences uses at peak and rose and assembly row. But it'll take some time.

Speaker Coe** (((01:34:17))) - - - Listening to you talk. Jeff makes me think that if Federal Realty where to assemble. Say 20 acres of downtown Washington. And build Pike and Rose from scratch. They're the land. And the incentives were right. It could be very special. And don't. We don't want to be in an urban core. But I'm telling you, the urban core needs a pick and rose right now.

Speaker Coe** (((01:34:49))) - - - Now we have the wharf, right? And we have, you know, what Edens has done at Union Market is a special experience. So those are two good retail examples of, you know, the ambience. Think that similar to what you have done. But if we could do it closer to the CBD with something like that, that would be extraordinary. It would actually turn the city around. I think if it could be done quickly enough, but don't think it can, unfortunately. It's just it's a dream, that's all. I'll just express it. Uh, I'm trying to convene a group of people, a group, some groups, into downtown Washington. The spring, one of the office buildings to get people to think out of the box to try to recreate downtown. So if federal wants to get involved in that, let me know. I'd be. Love it if you would, to help think this through, because as much as you'd like to be first here and you guys are in most of the places, the urban core still drives the market overall generically.

Speaker Coe** (((01:35:59))) - - - And if it weren't for the federal government, Washington, D.C. wouldn't exist. So here we are. Uh, it's a tough time right now, and we need help. So just. I'll throw it down the gauntlet. You're right.

Speaker Berkes** (((01:36:14))) - - - It is. It is a tough time. And I love what they've done at the wharf and what Edens has done with Union Market. I think they're great.

Speaker Coe** (((01:36:22))) - - - Yep. Um. When you hire people. Jeff. What characteristics do you seek at federal?

Speaker Berkes** (((01:36:32))) - - - Well, again, backing up a bit. Right. So the culture here at federal is very open, very transparent. You know, Don's created a very flat organizational structure. Everybody here works very hard. Everybody here is very direct and very honest. And you know, whether it's something that's gone right or more importantly, something's gone wrong. You know, people here are not afraid to raise their hand and and let people know that. So. So problems can be dealt with quickly. And so if there's something great going on we can take advantage of it.

Speaker Berkes** (((01:37:14))) - - - So, you know, if you want to come work at Federal you got to be that type of person. You know, if you're used to being in a very hierarchical organization where, you know, you got to ask permission from three people to talk to the two people that report up to you, you're not going to make it here. It is. It's open, it's flat, and it's hard working. And those are the characteristics we look for in people. You know, we want you to be very honest, you know, very honest about what you can contribute. And we want you to be curious and we want you to, you know, have a growth mindset. And, you know, there's a statistic here. I don't know it off the top of my head, but our failure rate is within the first three years. Right. And we make a hiring mistake. We generally know. And that hiring mistake reveals itself fairly quickly. If you're at Federal and you're at Federal for more than three years, you're probably here for a very, very long time.

Speaker Berkes** (((01:38:28))) - - - It's just a great team of people that have been together for for a long time because, you know, nobody's sensitive about. Constructive criticism. And we're always looking at every situation as you know. Well we did this last time. How can we do it better the next time? Right. What doesn't work with me, and I don't think it works with a lot of other people here as well. Why you do that? Well, that's how we did it last time, right? Or that's how we do it. No, it's, you know, constant, relentless pursuit of doing something better each time you do it.

Speaker Coe** (((01:39:07))) - - - Well, change is a constant thing, right?

Speaker Berkes** (((01:39:09))) - - - That's right. Well, especially in retail.

Speaker Coe** (((01:39:11))) - - - Yeah. Just nonstop.

Speaker Berkes** (((01:39:13))) - - - So yeah, you got to be you got to be a person that can deal with that and not everybody can. And that's fine. That's fine. It's just it's just you're probably stop change. You probably don't fit here long term. Yeah. But it's a it's a great place to work.

Speaker Berkes** (((01:39:26))) - - - Don's created a great culture here. And I think that culture is, you know, permeated itself throughout the organization. And, you know, again, if you fit your you're going to be here for a long time and have a lot of fun and, and learn a lot of new things and constantly be growing. And, you know, honestly, John, that's why I've stayed here for as long as I have. I've had to do a bunch of different things here. I've had the ability to, you know, grow on my own without, you know, necessarily being under anybody's thumb. And we try and give everybody here that same opportunity.

Speaker Coe** (((01:40:02))) - - - I wanted to pivot, pivot back to one question I did not ask and wanted to just on that same theme. And that is the difference in your mind from a cultural standpoint of a private equity investment company and a private enterprise, and being in a public company with its reporting requirements and all the different. I'll just give you my perspective. Mine is you're more like a machine, you know, a factory where you're producing things at a fairly steady pace and you want to keep things within a certain beta.

Speaker Coe** (((01:40:33))) - - - You're not looking at great big wins and, you know, lean years or saving up for things. You're just as kind of a steady stream of revenues that you want to keep going over time with some uptick. Well, steady steady uptick.

Speaker Berkes** (((01:40:48))) - - - Yeah. Keep growing over time.

Speaker Coe** (((01:40:50))) - - - But not just these expansive growth, you know, spikes and then declines based on the economy. Right. Which often happens in private equity firms. So talk about the different cultural values from you've been in both sides. I don't know.

Speaker Berkes** (((01:41:06))) - - - That it's necessarily a cultural difference. I think it's more of a mindset difference. Right. So and to me the mindset difference comes from we're an investor not a trader, right. So the decisions we make are long term decisions to create long term property level income growth. Right. If we buy something or develop it like. As said earlier, we intend to own it indefinitely. So that changes your thinking when you're making those acquisitions or development or reinvestment decisions. We're not short term focused. Sure, we report our results quarterly, but we think very, very long term and we think very long term about creating value, creating value within our communities and figuring out the best way over time to add value to our real estate and creatively grow the income streams from our real estate.

Speaker Berkes** (((01:42:07))) - - - That's different, obviously, than if you're a trader, because if you're a trader, you're looking to take advantage of a not advantage in a bad way by any means. But you're looking to take advantage of a situation and create value and exit in a relatively short period of time. So you do not have that long term investment mindset. So, you know, I'm not sure it's a cultural difference. I think it's more of a mindset difference.

Speaker Coe** (((01:42:36))) - - - What how did you sense that you liked the the more long range investment strategy as opposed to doing the the investment, the Blackstone model of buy, fix and sell type of approach to business?

Speaker Berkes** (((01:42:53))) - - - Yeah, I think it just intellectually made more sense to me because real estate is such a long term asset class. Yeah, I think it it marries the asset class with the investment strategy better. I mean, Blackstone use them as an example. They've obviously been enormously successful, very, very good at what they do. So it's just different. And it fit better for me and the way I think.

Speaker Berkes** (((01:43:20))) - - - So everybody's different in that regard. Well it's the.

Speaker Coe** (((01:43:22))) - - - Roots. Think of of the companies. You know when you think of Blackstone their roots is private equity and that's their thought process. So it's probably it. So ESG is an important today with every real estate. How is Federal implemented its sustainability programs.

Speaker Berkes** (((01:43:41))) - - - Well so yeah ESG you're right is hugely important these days and has become a big focus, you know, in a lot of different levels within the business world, right. And you know, Richard return no exception. I guess the way we view it is, you know, ESG for us is not a report you need to do or a form you need to fill out or a box you need to check. It's the way you run your business. And before ESG became something that everybody was focused on, we ran our business in a very sustainable way. You know, we were one of the first to start putting solar panels on our roofs to reduce our energy consumption. We started doing that many, many years ago.

Speaker Berkes** (((01:44:32))) - - - And I think we have. The largest amount of solar power generated in our properties of any of our public peers, even though our footprint is much smaller than there is, we, generally speaking, on much less square footage than our publicly publicly traded peers. Excuse me, excuse me. We for a long time. We for a long time have had a green box initiative that we we employ with our tenants, where we're building out their box or their space in the most environmentally conscious and sustainable way. We've had that program for a long time. That's been a part of our lease document for a long time. You know, before before it became a thing to do, you know, the the nature of our properties being in closer in locations in a metropolitan area, many with public transportation, many with mixed uses, where people live, work and play at the same property. You know, just the nature of our business has been much more aligned with ESG principles. And, you know, it's kind of how we've always how we how we've always operated in the last few years, obviously, it's it's become a reporting requirement and something that's very focused on.

Speaker Berkes** (((01:46:09))) - - - But us, it's more of a way we conduct our business and something we've been doing for for a very long time.

Speaker Coe** (((01:46:15))) - - - So it's ingrained. Part of your culture is what you're saying.

Speaker Berkes** (((01:46:18))) - - - Absolutely, absolutely. And, you know, if you look at our development programs, you know, we've been developing Leed designated buildings for quite a while now. Pike and Rose, I think is the first I'm not sure if it's still the only, but the first Leed gold neighborhood in the country.

Speaker Coe** (((01:46:36))) - - - Wow.

Speaker Berkes** (((01:46:37))) - - - Not, you know, the the seeds for that had to be planted a long time before. Yeah. But ESG became a thing. So, you know, it's kind of how it's kind of how we've lived and operated for a long time, John. And you know, now it's now it's important and it's important to report upon. And we're doing that mean I would encourage you or anybody that's listening in the podcast to go to our website and, and read our most ESG, most recent ESG report. It's it's fascinating.

Speaker Berkes** (((01:47:04))) - - - That's great. Done a really good job of reducing our electrical and other energy consumption. We've done a great job of acquiring that electricity from sustainable sources. I think 55% of our electricity is from zero carbon sources.

Speaker Coe** (((01:47:27))) - - - So that's great.

Speaker Berkes** (((01:47:29))) - - - Yeah. Yeah, it's really good. Yeah. And it's again, it's part of the, the, the thinking and the business philosophy here and has been for a long time before that.

Speaker Coe** (((01:47:40))) - - - Helps save your tenants money as well as you.

Speaker Berkes** (((01:47:42))) - - - Yeah absolutely and absolutely. And that's you know again we're, we're trying and always have been running the business in the most efficient way possible, a lot of which lines up directly with what people are required to do under ESG.

Speaker Coe** (((01:47:59))) - - - That's great. So let's shift to personal things. What are your life priorities on family work and giving back? Jeff.

Speaker Berkes** (((01:48:08))) - - - You know, it's it's funny. Given, given what we do right? And given what I do at the company. It almost all melds together, right? Because what we're trying to do is we're trying to create places that are part of your community, part of your daily life.

Speaker Coe** (((01:48:32))) - - - Right.

Speaker Berkes** (((01:48:33))) - - - So if I've got a couple kids in the car and, you know, we're on their way to a lacrosse game or something like that when they were younger, you know, we check out 3 or 4 restaurants on the way. We would find the best donut place to buy donuts to take for the team or not at.

Speaker Coe** (((01:48:53))) - - - Your property, but other people's pride. Yeah, yeah, yeah.

Speaker Berkes** (((01:48:55))) - - - No, we're we're out in the world looking for stuff, so, you know, and gee, it's time to go out to eat at night. Well, you know, let's check out this place, because maybe they'd be good in a federal realty property. You know, it kind of becomes your whole.

Speaker Coe** (((01:49:11))) - - - Life is integrated. Yeah, yeah.

Speaker Berkes** (((01:49:13))) - - - You know, it's kind of a joke around our house, but somebody asked. Somebody asked my son when he was young, 6 or 7 years old. What's your dad do for a living? Oh, he shops and eats out. So it really is.

Speaker Berkes** (((01:49:28))) - - - It really is a continuum to me. It doesn't matter what time of day it is or what day of the week it is.

Speaker Coe** (((01:49:35))) - - - That's funny.

Speaker Berkes** (((01:49:36))) - - - If you're if you're if you do what we do, the way you do it best is by getting out there and, you know, traveling, going to different cities, going to different parts of the city you live in, trying new things and, you know, seeing what others are doing. And you bring that back to to work. And, you know, obviously being engaged and giving back as is a big part of that as well. And, you know, I got a lot of help when, when I got into this business from people like Susan Carras. Right. And many others. And, you know, one of the ways I give back is if anybody ever wants to talk to me about our business broadly or talk to me about Federal Realty, or they need help on an assignment, one of their real estate classes at school, I never say no.

Speaker Coe** (((01:50:28))) - - - That's great to hear. Yeah.

Speaker Berkes** (((01:50:29))) - - - Yeah. Think it's important? It's important. I, you know, look at my. I grew up in a family that was in a business oriented family, not a real estate oriented family by any means. I've never had really one mentor my whole career. I've had probably a bunch of different mentors along the way. And I think, you know, when especially when you're young and especially when you're trying to figure out, you know, what to do when it seems like there's many, many things that you could do. Getting a little advice and input along the way is a good thing, and I'm happy to be able to to do that. So.

Speaker Coe** (((01:51:07))) - - - So what advice would you give your 25 year old self today?

Speaker Berkes** (((01:51:11))) - - - All right. Yeah. Boy, that was a long time ago. Let me think about that. Um, you know, this is a people business, right? And one of the reasons I like real estate so much is it's very much about the other people in the business.

Speaker Berkes** (((01:51:29))) - - - And, you know, I think what I would tell myself is just figure out a way to meet and know as many people as you can, even if they don't do exactly what you think you want to do, or even if they don't do anything that's directly related to what you're doing today.

Speaker Coe** (((01:51:53))) - - - Right?

Speaker Berkes** (((01:51:54))) - - - Especially think as you advance in your career having having a broad network of people in the business that do different things is important. So making every effort to do that and, you know, do it outside of real estate too, right?

Speaker Coe** (((01:52:13))) - - - That's great.

Speaker Berkes** (((01:52:14))) - - - Yeah. You got to you. Because everything that goes on in the world, one way or the other impacts what's happening in real estate, right?

Speaker Coe** (((01:52:23))) - - - Yeah, I have a community of young people that I've built and that that has been my major, major message is just the networking piece and understanding what it is to get to know relationships in our business, basically. Yep. So that's my major thing. Yeah. That's great.

Speaker Berkes** (((01:52:40))) - - - I agree.

Speaker Coe** (((01:52:43))) - - - Um, so if you could post a billboard on the Capitol Beltway for millions to see, what would it say?

Speaker Berkes** (((01:52:49))) - - - Shop at Bethesda Row, Conroe.

Speaker Berkes** (((01:52:53))) - - - How about that?

Speaker Coe** (((01:52:56))) - - - All right.

Speaker Berkes** (((01:52:57))) - - - Visit a federal property.

Speaker Coe** (((01:53:00))) - - - Okay, well, you've got some in Northern Virginia, too. Sure. That's right. Guess the capital, the Capital.

Speaker Berkes** (((01:53:05))) - - - Beltway, goes all the way around.

Speaker Coe** (((01:53:06))) - - - It does? Yes. Yeah. It does. Yeah.

Speaker Berkes** (((01:53:09))) - - - Come see. Come see the new Chester Brooke. How about that?

Speaker Coe** (((01:53:12))) - - - There you go. So. Well, Jeff, thank you very much for your time and for sitting for a couple hours and talking about you and your business. We appreciate it very much.

Speaker Berkes** (((01:53:24))) - - - Yeah. Thanks a lot, John. Enjoy.

Speaker Coe** (((01:53:26))) - - - Thanks for joining me very much.

Speaker Berkes** (((01:53:29))) - - - Have a great day.

Speaker Coe** (((01:53:30))) - - - Take care.

Speaker Berkes** (((01:53:31))) - - - Bye bye.

Speaker 3** (((01:53:32))) - - - Bye.