July 7, 2022 • 56 mins
Executive Vice President of Bellwether Enterprise Real Estate Capital, Jim Gillespie, oversees affordable housing finance and started their direct bond purchase program. He and Mordecai discuss what a "no" means in the industry and how to look at it like an opportunity, as well as current trends in sales.
TIMESTAMPS:
1:36 - Early Sales Experience
4:17 - Approach to Retail Sales and Seeing People's Energy
9:51 - Maybe It Will Kill You
14:04 - Asshole or Straight Shooter?
20:09 - That Rolodex!
23:14 - It's a Pretty Small Industry
25:24 - Got My Foot in the Door!
30:21 - Turnover Now vs Then
34:10 - Competition and Performance
36:32 - Experiences Between Companies
41:19 - Selling One or the Other
45:40 - Minimizing Options to Make A Decision
48:20 - The Team Focus
lenders, market, people, loan, client, equity, selling, deals, screen protectors, year, calls, rates, business, borrower, easy, long, sales, chase, interest rates, debt
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mordecai Rosenberg (00:15):
Welcome back to the Origination podcast,
where we speak to the toporiginators and salespeople in
the multifamily industry to tryto understand what separates the
top performers from the rest ofthe pack. On this episode, I'll
be speaking with Jim Gillespie,Executive Vice President of
Bellwether Enterprise RealEstate Capital. Jim oversees
(00:37):
affordable housing finance forBellwether, and also started
their direct bond purchaseprogram. I first met Jim, at
Redstone when I was workingthere at Redstone, Jim was a
founding principal and ManagingDirector of their proprietary
tax exempt bond funds. I thinkyou'll really enjoyed this
(00:57):
conversation. You know, how doyou know when you hear when you
hear a no from a prospect? Ifyou just take it at that, that
no means no. Or whether it'sactually an opportunity. We'll
get into that in this interview,and also talk about the
importance of a strong network,and much more. So without
(01:21):
further ado, let's speak withJim. Jim Gillespie, the legend.
Welcome to the rich nationpodcast.
Jim Gillespie (01:32):
Thank you Mordy.
It is a pleasure to be here.
Mordecai Rosenberg (01:36):
Pleasure.
Well, you know, you should youcan you can you can hold off on
on that judgment. You know,we'll wait till we till the end.
So, Jim, I'm gonna start theconversation the way I I
typically do on the podcast,which is to ask you about your
early sales experience. You'vebeen a phenomenal salesperson in
(01:59):
the multifamily finance for fordecades. As far as like early
sales experience, anything comesto mind as far as like it could
be grade school, high school,you know, maybe out of college
or during college, anything come
Jim Gillespie (02:15):
Yeah, you know, this is the one question Mordy,
to mind.
I know you ask everyone that Iactually gave some thought to.
But when I first graduated fromHanover, undergrad, I knew I
didn't want to move home. I knewI wanted to move to Louisville,
I didn't really know what Iwanted to do with my life. But a
(02:36):
friend of a friend, a mother ofa friend, recommended I call
Stanley bears to work at a storecalled the fashion posts in
loyal to men's clothing store.
And that's what that's where Ilanded. It was going to pay the
rent. And Stanley started thisbusiness himself. I think they
celebrated 50 years when I wasthere. But my priorities were a
(02:56):
little different at the time,but Stanley was kind of a
ballbuster and kept me engagedin showing up on time and, you
know, forced me to sell reallyin an environment where I felt a
little out of my comfort zone.
You know, this is the men'sclothing store hire in you know,
(03:20):
the mayor we come in, they'llSamuels who owns Maker's Mark,
it was kind of a hoo hoo hoo hooof Louisville. But Stanley
number one provided structurefor me at a time when I needed
it, but also was a good kind ofsales coach and kind of with his
foot on my back push me to sellbut not be too hard. And I've
(03:42):
never liked you know, being soldhard. I like to kind of do my
thing when I'm shopping, too. Idon't like people kind of
lurking so yeah, kind of what'swhat's the right balance, but it
you know, he was a he was at theright place at the right time.
Mordecai Rosenberg (03:59):
Yeah. So do you remember any specific advice
that he gave you on selling?
Jim Gillespie (04:04):
I do not, you know, just kind of be yourself.
Don't be overburdened oroverbearing, and then be
competent. Yeah.
Mordecai Rosenberg (04:17):
So walk me through your, your approach, you
know, as you I'm sure there's alot of learning, right? But
retail retail environmentcustomer walks in, right. So the
big question is, alright, do youapproach them? Do you stand
back? Do you? Like how engagedto be like, do you remember how
did you How do you handle thosesituations?
Jim Gillespie (04:37):
Honestly, I think in retail, it's a lot of, I
mean, everybody has energy,right? And you can just pick up
on if somebody's got a, youknow, stiff arm Leave me alone,
don't bother me, kind ofshopping approaches and others
who are more amenable to hey, Ineed something from my husband
sportcoat you know, I couldreally use help here. So You
(05:00):
know, I think a lot of it isjust using your instinct and
reading the other person. And Ithink that's parlays into you
know what we do today?
Mordecai Rosenberg (05:09):
Yeah. So reading other people's energy,
that's like a very interestingway of looking at it. I'm also
wondering if everyone, I don'tknow that that everyone does
that. So naturally, that readstheir energy. So I'm curious,
like, did you find that as a asa as a kid? Like, do you
(05:31):
remember kind of like having anatural feel for people's
energy? And how would youdescribe that? If so?
Jim Gillespie (05:38):
Yeah, I don't I don't know that I really, I
guess he's just, you know, Ithink instinct, you just have
instinct, when you meet someone,for good or for bad. And it's
been proven wrong to whereyou're like, I'm not gonna like
this person, and then you end uploving. But most of the time,
you can even kind of gaugewhere, where someone's coming
(05:59):
from, or at least their mood,right? Yeah, they're open to
engaging or not.
Mordecai Rosenberg (06:05):
Right. So fast forward to today, let's say
you're at a conference, right?
And you're meeting people.
Right? So what's your read on?
How would you describe likedifferent people's energy? Is it
just about like, if they're opento conversation? Or is there
more texture to it? Yeah. Howwould you describe like, what
are you reading?
Jim Gillespie (06:22):
I think is, you know, if they're open to
conversation, you know, I canthink of a couple of meetings
where you're just getting shutdown and left and right. And I
think, whether it's at aconference, whether it's in
someone's office, you know,it's, it's, it's more, I don't
(06:43):
want to say it's about, I don'twant to use an analogy, like
it's dating. But it is, in somerespects, because it's more
about selling who you are as aperson and getting them to trust
you than it is about selling aproduct. You know, I think
that's secondary. But you, youknow, I mean, let's get done
(07:04):
affordable housing for, I guess,close to 30 years now. So, all
these deals are complicated. Andwhen you kind of engage with a
borrower or a client, it's ajourney, it's kind of a
marriage, at least until you getto closing. So you got to trust
(07:26):
the other person.
Mordecai Rosenberg (07:27):
Yeah. Right.
So so let's say you meetsomeone, and they're just
shutting you down at every turn.
You say, all right, forget thisone, like onto the next one? Or
do you say, Oh, this is notalright. This is like an
interesting one. Like, let mesee if I can crack this one. Or
is it? You know, it becomes?
Yeah, there's become achallenge.
Jim Gillespie (07:52):
There. You know, there have been, usually when
I'll go call on a client, I'llpick a colleague, and sometimes,
I may not hit it off with eitherthe individual or individuals,
but my colleague will say like,alright, you all guys like,
well, that's clearly your flightbecause they weren't hitting me
off. And we'll just worktogether on them. So where was I
(08:14):
going with that?
Mordecai Rosenberg (08:17):
Yeah, but whether or not you go, or do you
try to like crack the nut, or,or just say, you know, life's
too short. On to the next one.
Jim Gillespie (08:26):
With some clients, I will be persistent
and try to crack the nut. Right.
But I also think, I mean, thishas happened recently, where,
you know, we spent a tremendousamount of time working with a
developer and structuring adeal. This is a bond purchase
transaction, where we have a lotmore discretion over kind of
(08:48):
terms and what we can negotiate.
We negotiated fees and earn out,and then they just ghost you.
What I'm at that point in mycareer, where if you don't have
the, if you can pick up thephone as a courtesy to at least
respect, if you will, thecommitment of time that we put
(09:11):
in to the transaction, I knowthings aren't going to be good
when we hit bumpy times. Andthis was a new client. So that's
a case where I'm like, Alright,life's too short. So there are
there are occasions where I say,okay, it was fun, but good luck.
But yeah, for most clientsaren't that way. I mean, I think
(09:35):
that's one thing I like aboutI'll say our industry, the
affordable housing industry isfor the most part, I've made
friendships at a lifetime withfolks in this industry. You
know, it's there's some reallygood people out here.
Mordecai Rosenberg (09:51):
Yeah, yeah.
I think there's a differencethey say in sales that a yes is
is the best, right? I know. Ano, it's not as good. but to the
maybes I will kill you. Yeah,yeah. And it's like there are
there people who you meet whoare just kind of quick notes,
right? I'll go into in a minute,but it's the people who don't
(10:12):
have respect for your time andjust kind of keep you hanging,
right? That's where it's like,you could kill yourself waiting
for them, right? So it's maybekind of keep it soft. You try.
But like, if they're not, youhave to make sure that they
respect that they're your time.
One of my best clients ever wassomeone who hung up on me.
Before I got two words out of mymouth. They picked up the phone.
(10:37):
Yeah, it was just me myself. Isthat not interested? Hung up? So
I called back I thought, Ithought maybe we got
disconnected. So I called back.
And he's like, Are you kiddingme? Flam again, right. But in
some ways, like he wasrespecting my time, right? He,
you know, he, he didn't waste alot of a lot of time with me,
right? So, but that I took aslike, Alright, so the other way
(10:58):
to look at it with those kindsof situations is like, Okay,
this guy has a big moat aroundhim, right? This guy is not
accessible. Right? So if youbecause everyone look back back,
then you I mean, when you even Idon't know, 10 years ago, 15
years ago, it was like, it wasdifficult to identify who a
borrower was. And to get theright, you know, the contact
(11:21):
information. Now, it's, it'severything is is open and
available, right? So everyone iscalling this guy? And if this is
someone who picks up the phone,and we'll have a conversation
with anyone who calls? Well,that's not a very large moat,
right? You can, you know, everyou can even if you do a deal
with them, there's, you know,they'll they're always open to
hearing from the next guy,right? But if someone else,
(11:44):
someone that hangs up on you,it's like, okay, no one is going
through to this guy, right? So Iwould try it every few months, I
would reach out, and I would andI would always try, I got his
email address never responded.
Then, finally, I was able to getthem on the phone. And I started
to make a wait, now I havesomething else something
(12:07):
different. And and it's like,no, I write. And I said, No, no,
what's that? Like? It was it wasan a seven on an FHA loan. I
said, No, no, you don't have topay for the prepayment penalty.
We can, like cover it, you know,in in the interest rate. It's
like, Oh, okay. Tell me more.
Right. And then we and and, youknow, ended up doing like, a
couple 100 million dollars withwith that with that guy. Right.
(12:28):
And as long as he was doingdeals with, with me, he was not
taking calls from anybody else.
You know, there was someoneelse, a developer in St. Louis,
who he also he was, this was anice guy. He talked, it was
friendly, but he said, You know,I've had a 30 year relationship
with local with the locallender. I'm sorry, like, it's
(12:50):
just not gonna happen. Right? Sowe were, we went to visit him.
And he took out his like, siteplan. And he was laying out like
his it was a, an Alzheimer'sfacility, I believe that he was
showing how he had all thisland. That was part of the
collateral, but was undeveloped,but he thought he could develop
something else on it. So hesaid, Oh, that's interesting.
(13:14):
You know, have you ever thoughtof doing a partial release of
collateral, which is a programthat's on the books for FHA? Not
very widely used, but it's like,oh, no, no one ever talks about
that. So we were able to so weended up, we were able to do
that we were able to get hiscollateral released. And he was
able to develop on it, and thenhe gave us a shot at that loan.
(13:36):
And then, you know, again,Greyston has done, you know,
several 100 million dollars ofbusiness with that with those
with him. So there is, yeah, Iwonder if like, they're, like,
light on the one hand, like Lifeis like, too short to like, have
to deal with like assholes,like, on the other hand, like,
if you never dealt with them,then, you know, you may not have
(13:57):
a lot of business. And, youknow, sometimes it's just a
challenge. Yeah, that it's amoat that other people have to
get through. Right.
Jim Gillespie (14:05):
Right. Right. And a lot of times there can be
confusion over someone being anasshole or just being a straight
shooter. And I'd much ratherlike you were saying I'd rather
have a quick No, and I tried todo that with my clients, right?
I'd rather than a long, maybethat's the worst thing you could
do. You know, call them back inthree weeks and like, Well, I'm
not sure we might have this andit's like, really, you know, I'd
(14:26):
rather quickly be like, I don'treally think we have an option
on Mondays.
Mordecai Rosenberg (14:31):
Yeah, that's another trap that you get into
at the VA like when you're whenyou're starting out because like
you're so desperate to get abite on a nibble on the hook.
Where it's like oh, it's a youknow, it's a conversion of of a
McDonald's to a condo you know,with me half condo have Co Op
(14:55):
and like those be two rentalunits on top. And it's like, oh,
yeah, maybe we could You do thatunder agencies and you try to
figure out all kinds of ways tocontort yourself. And, and
meanwhile, it's just like not afit, right? And so you're not
deepening your relationship.
Just taking a swing is notalways the best way to start a
relationship. You know, if evenif it's, if you What do you
(15:18):
think about that? Because I knowalso, like, let's say, a lot of
the business that you've done,let's say at Redstone, for
example, and probably at rightat related when you're doing a
lot of the bond placements,those some of those were hairier
deals that that, you know thatthat they would call you when
they were when another, otherlenders can do them. So like,
(15:40):
what do you think about kind ofreaching for the hairy deals as
opposed for just like waitingfor like just a fat pitch to
smack like because you're, youmay not get that one that's
right down the middle whenyou're when you're trying to
start a relationship.
Jim Gillespie (15:55):
It it's related, those were all hairy deals. They
were all highly structured andhighly negotiated. And it was a
I wasn't frontline sales at thatpoint in my career, but it was a
different type of sales becauseit was a very limited clientele,
(16:16):
including right that was myfirst introduction to your
father to Greyston. And becausewe financed so Grayson was
acquiring a portfolio of bonds,large pieces of Providian
insurance, which at the time waswas in Louisville, we took a
little boondoggle to Kentucky dodue diligence on some bonds, but
(16:39):
it was up we closed with alittle over $160 million
portfolio where we but that's ahere's an example. We there was
a bond in that portfolio. Thisis the kind of deals that we
would do. It was a very valuablebond financed the deal in
Georgia, I think called Chateauforest came Oh, yeah. But the
(17:01):
bond, knees are not realnumbers. But the bond was very
valuable in that, let's say ithad a 14% coupon. And it was $10
million. And what we did, thanksto masterminds, including like
Michael lair, the guru of bondfinancing. We drop the bond into
(17:24):
a trust what we call theleveraged trust. And we issued
variable rate floating ratecertificates in the amount of
$20 million. That could go up toa rate of 7%. So we really, we
took the 10th 10 million ofbonds issued $20 million and
certificates. Nobody, no bank isgoing to do that no GSE Fannie
(17:45):
or Freddie aren't going to touchthat. So it was marketing to
folks like you know, your dadGreystone. We're just doing very
structured deals that we're notcommoditized. From the sales
perspective, since so when weleft related and foreign
(18:05):
Redstone and created not justthe credit, enhanced floating
rate bonds, but the privateplacement, it was a broader
product that we were marketingto a broader clientele, meaning
we went from kind of the moremarket rate developers doing at
20s, and more structured dealsto tax credit developers, and
(18:26):
those were not clients we hadlong standing relationships
with. So when we tackled thatkind of market universe,
thankfully, you have there wasthe internet was around. But as
you know, all of thoseallocations of tax credits or
tax exempt bonds, it's publicinformation, it's published on
(18:49):
the state or the municipalities.
website. So I don't know, it'slike six degrees of separation
to how I've always marketed myattack. We would, let's say one
of the top five issuers ofbonds, what states and then we
would go tackle those states,identify the top developers over
(19:11):
the last five years that hadbeen awarded or allocated or
applied for bonds. We would gointo we do some research, go
into conference room, ever allthe partners analyst team, and
brainstorm on what is the commondenominator? Who do we know that
knows this developer? Client?
(19:31):
Because the best way I mean,look, it's how I got my first
job. It's how every job I'vehad, or every client
relationship, for the most parthas been some either a referral
or there's some sick but I'llsay six degrees of separation on
almost every client I've workedwith. Because it's better to go
(19:52):
in and be like, hey, you know,XYZ and it's kind of a common
denominator. Can I say that? Doyou ever watch that movie? Six
degrees of separation? Oh,probably. Yeah. Great. Yeah.
Mordecai Rosenberg (20:09):
Yeah. That's really interesting. And I
remember I mean, so you I mean,you and I worked together at
Redstone for a couple of yearsright and and Johnson Cole avec
David Levine. Like they, I mean,they did have an incredible
Rolodex like they were one ofthe only two people actually
maybe the only two people whoI've seen still have a role an
(20:31):
actual Rolodex. David always hadthat Rolodex. Yeah, yeah, but
they knew everybody. Right. Butthat idea of like, alright,
well, let's see, here's thedevelopers we want to target.
And, and I feel like theapproach, a common approach
would be alright, let's justcold call them and just pitch
them our product. But the ideaof thinking about who is, you
(20:55):
know, who can introduce us,right, is simple, but so much,
so much more powerful, right?
Even if you have to work alittle longer to find that
person. Today, you have likeLinkedIn. Right? So you can see
your common common connections,although, yeah, I don't know, I
may have like four or 5000.
Like, you know, connections onLinkedIn, like, I don't know,
(21:16):
almost 100. Real, like, yeah,like no idea who most people
are. That being said, it's,it's, it's something and
especially today, I mean, it'snot easier to get someone on the
phone today than it was it'sgood. It's getting gotten more
difficult on the phone. It'sgotten more difficult on emails,
right. So, but one kind of onesilver bullet way in is if you
(21:39):
can find a trusted relationshipin common. Right, they can make
an introduction?
Jim Gillespie (21:45):
Yeah, absolutely.
Yeah. Yep. And a lot of times, Imean, you know, if it's an
attorney a lot of times theywon't, they're like, don't
really, I've got a conflicthere. I'm not going to make a
direct introduction, but atleast it's a name you can draw.
As someone they know that thenthey can call and check out
like, Who's this guy Gillespieis the legit or the is nuts?
Mordecai Rosenberg (22:08):
Yeah, I did that. I did that. The other
week. I was I was I was lookingat the list of Fannie Mae's came
out with a list of like toporiginators in the country
individuals, right. So Ithought, Oh, these are probably
like good people to have on thepodcast. So I like looked up.
One and I realized, like,alright, I can reach out to him
(22:29):
directly. But but, you know, Iwouldn't respond to me
necessarily, if I got to, like,you know, it's like, there's,
you don't know what spam andwhat's not spam, right. But I
had a contact in common. So Ireached out to them and said,
Hey, like, do you know thisperson? So it kind of Yeah, but
uh, you know, make Drummond makean email intro. And they did.
And then I was able to get onthe phone with them, you know,
(22:50):
the next day. So it's, it's,that's probably is really
something that needs to beleveraged. A lot. As far as the
network though, like, how do youbuild that? Like, because at the
beginning, you don't have a lotof common? Like, you don't know
a lot of people. So how do youbuild How did how did you build
(23:11):
your network?
Jim Gillespie (23:14):
It's it's a pretty small industry, right?
Portable housing. Yeah, I mean,maybe I've been in for 30 years,
and it's changed. But it's apretty small it's pretty small
world. And, you know, when weare launching Redstone and its
(23:38):
programs, you know, all aboutgoing to network. Radek
conference, you know, it's anera I've been on their board for
20 something years, it's gettinginvolved in these trade
organizations, speaking atconferences, hitting the road.
And being on the phone, thinkingthe other day, I'm just I'm not
on the phone as much as I was. Iremember reading Rachel, who was
(24:01):
a different that she's like, Youwere on the phone all the time,
like all the time, like, it's myjob. And yeah, I think I think,
you know, I think myself, butperhaps others have become more
reliant on email when I think,especially now. You'd rather
have somebody hear somebody'svoice?
Mordecai Rosenberg (24:22):
Yeah. Not me. I don't rely on email. I
don't do it. I don't do email. Ido it a little bit. drita. But I
do but I couldn't. But I do. Iwill do more like text or teams.
That's like my, yeah, I'll dothat. Yeah, I don't spend a lot
of time on email. So let's talkabout related a little bit.
Yeah, cuz that's, that's whereyou got started. And yeah, I,
(24:45):
you know, related from what thestories that I've heard, I think
it sounds like you have such aunique environment and it's
produced so many industryleaders, you know, that if you
looked at across the, you know,the spectrum in, in affordable
housing I mean, there's so manyfounders came out of related.
Yeah. And I'm curious what itwas like to get started there.
(25:09):
You know, what was it? How, Idon't know if there was
training? Like, how did youlearn the business there? What
was the what was theenvironment? You know, it seemed
like it was very competitive.
But what was it? Can youdescribe like, what it was?
Yeah.
Jim Gillespie (25:24):
So I got my foot in the door. Here's the six
degrees of separation. My thesisadvisor, a guy named Brian
Gallagher introduced me toDenise Kiley, who was the head
of she was treated chief creditofficer for related capital. And
I got an internship for a coupleof months. I was finishing at
(25:44):
Columbia. And I got aninternship for a couple of
months with related capitaldoing tender offers on their old
partnerships, which I had noidea what it was, but was able
to weasel my way, weasel. I gotposition working full time, for
(26:08):
related. What had happened wasRoss is gonna roll up all of his
ad 20 properties at 20properties for those listening
that don't know it's a bondfinanced, affordable housing
property where 80% of the unitsare market rate 20% are
affordable. So related was goingto roll up, I think it was six
of their 8020 properties in NewYork, into a REIT. The week
(26:32):
before the filing, maybe evendays before the filing the REIT
market crashed. Ross pulled theoffering and just shifted gears
very quickly and created a newkind of joint venture that was
going to focus on creditenhancement on 8020 bonds. So I
kudos for their ability to shiftso quickly. And I think a lot of
(26:54):
that comes from Ross'sleadership and leadership being
very focused.
Mordecai Rosenberg (27:00):
That's Stephen Ross.
Jim Gillespie (27:01):
Yeah. Stephen Ross, founder of Related and
owner of the Dolphins.
Mordecai Rosenberg (27:09):
Yeah.
Jim Gillespie (27:12):
So I find myself I have no, I honestly don't know
what to do. And I don't knowwhat to do to save my life. And
I'm in a cube. So there's,there's Ross and his secretary,
Peggy, Edie Merritt, who ran ourgroup and his assistant whose
name I forget, and then I wasright there. Right. So I was
(27:34):
you're thrown in, right. Andthere were there were some
senior folks who were very goodmentors, but it was also very
cutthroat at the kind of mylevel. And there were days I
went home, you know, it'sworking 12-14 hour days, there
are days I went home in tears intheir old days, I went home, you
know, feeling like, big shit. Itwas a sink or swim environment,
(27:59):
you had to fight. And I hatebeing told what to do. And I
felt many times I was impliedthat I'm not good enough to be
here. And it gave me fight, youknow, and we were, these were
great times, because we were wewere rocking and rolling. And I
(28:22):
just had my head down and wasjust executing on deals and just
learning so much. We kind ofcreated these two funds, and I
was doing everything frommodeling cash flows to closing
deals to sending out servicinginvoices, because we didn't
really have a certain thingdepartment. So it was doing
whatever and whenever needed tobe done. And just making sure it
(28:48):
was it was done. But yeah, theywere those were great times. In
my career. You had to be on yourtoes back in the day because we
were all in the ninth floor 625Madison and no phone system. You
could push a button, sitintercom pick up the phone, and
pays the entire floor. And Iwill never forget the first time
I hear Jim Gillespie or Yeah,Jim Gillespie. See Steve Ross,
(29:11):
and you know, first you crapyour pants, you grab everything
on your desk, and you run to thecorner office. And then happens
over and over again. But yeah,it was great time for us has a
mind of steel. I mean, I thefirst deal I closed was a little
deal called atrium apartments.
We were buying for like3,000,009 50. And I get this
random, you know, Steve Ross.
(29:36):
You know, run through his officeand he just would I'm like, how
do you how do you recall likewith everything the company is
working on how do you recall thedetails of some little $4
million 100 Make unitacquisition in Daytona Beach.
But he's just on his toes. Butyeah, you just you had to be on
your toes.
Mordecai Rosenberg (29:54):
Yeah. So as far as like the leadership and
the vision, I mean, because justseem Ross is clearly a visionary
with what he's done on thedevelopment side. But what was
it like working for him? Likewhat was what was the
interaction that you had withhim? Like, did you Did he set
the pace that he's establishedthe vision? Like, what was the
(30:17):
you? How did he kind of createthat? Dynamic?
Jim Gillespie (30:21):
Yeah, I mean, I think just by his vision, I
mean, Ross always said he wantedto hire the smartest and best
people in the industry andsurround himself by people that
were smarter than he was. And Ithink that's something I tried
to do in my career. But yeah, Imean, he's just by his presence.
He's a respected through theoffice, or at least when I was
there was very well respected.
Yeah, he never took the jacketoff. Somewhat formal. But, you
(30:42):
know, set the tone you eitheryou perform, or you get out--
Mordecai Rosenberg (30:54):
--a lot of turnover.
Jim Gillespie (30:57):
Remarkably, there was some turnover. But I would
point to the fact that seniormanagement at related even
today, bow below some of thefolks in affordable in retail
have been there for decades,people are incredibly loyal to
the man and he is loyal to them.
I mean, that's leaving there waswas not an easy decision. Nor
(31:21):
was it an easy negotiation inthat I did have a contract and
had to negotiate my exitdirectly with Ross, which was
fun.
Mordecai Rosenberg (31:35):
Wow. Yeah.
Yeah. But there is somethingabout you, I don't know that you
have that today. That boilerroom, you know, the mentality.
You know, there were it's, Idon't know, what's the line
from? Maybe it's from GlengarryGlen Ross is like, you know,
first prizes. You know, $1,000,like, second prizes is steak
(31:56):
knives, third prizes, you'reout, you're out, like, there's I
don't know that people feelthere's something to be said for
that. Accountability.
Jim Gillespie (32:08):
I hate to say it in some respects, but we can't
do and say a lot of the thingsthat we would there. I think we
we take a very soft approach.
And say, we are the only we takea very soft approach with our
employees these days, because wedon't want to offend them or
hurt their feelings. Andsometimes we just need to drop
(32:28):
the F bomb. Yeah, because it wasdropped quite frequently there
that was met.
Mordecai Rosenberg (32:37):
Yeah, it's funny. My kids like my my oldest
kids are like 16, 15, 14, and myyoungest is nine. And my older
ones. They lament how that I'm,like, softer with like me other
the youngest that I was, like,he's never had his mouth washed
out with soap. Like, but youknow, it's I don't know if I'm
(33:00):
allowed to admit that. Yeah,that may or may not have
happened. But like, it was theircertain may or may not have has
paddled my child. Yeah. I mean,there's certain certain
pedagogical methodologies thatjust are are not acceptable
anymore. anymore, which look,probably a lot of that for
better it could. I mean, I'msure it was not an easy place to
(33:24):
work. But there's like, thatidea of just look like the fact
that there was very littleturnover is telling, right?
Because the people who showed upwere people who were looking for
that kind of an environment,maybe?
Jim Gillespie (33:36):
Yeah, yeah, I agree. When I not just got my
internship. And certainly when Igot my permanent position, which
just a month or two later, in mymind, I had landed a job with
it. While I was at Columbia, ifthere's one company I would have
picked that I could have workedfor, it was related. And so
(34:00):
there's that there is a cache insaying that I worked at or I
work for related. And for areason.
Mordecai Rosenberg (34:10):
Yeah. Yeah.
I think also that idea ofcompetition. I feel like it's
important to be at a place whereyou can compete, in some ways. I
remember like, when I wasoriginating, you know, my
brother and I were, were, we rana team together. And then there
was there was another team thatwas always it was very high
producing team. And when we,we'd look at the pipeline and
(34:33):
say, like, like, Oh, crap, wesigned up $200 million last
month, like, you know, like,hell with that. And so the next
month, like we'd signed 300,right, and you want like, you
need it's that you'reLouisville. So your, your your
horse racing got down there atthat pace. If you don't have
that pace horse like it's,you're not gonna get the same
(34:53):
performance at all. So look,it's tough because there's
people who are so far outoutperform, write that you don't
consider them as competition.
But I feel like you want to kindof like, create some kind of a
mark and say, Alright, I'm gonnalet's see if I can get, you
know.
Jim Gillespie (35:12):
I'll tell you, I mean, this is jumping to
Redstone. But I look back at itnow. And I just laugh because
when we were building, thecompany kind of production was
all under me. And I was, I don'twant to say solely responsible
because it does take a village.
But John and Dave, especiallyDavid, were just good at
manipulating my psyche. In thatseveral times. I remember there
(35:36):
was one year I think we had fivedeals closing in December was
just it was it. It was it was ait was a good end of the year.
And I remember they all closedthe calls in the office. And it
was, you know, kind of this halfassed, congratulations falling,
but your pipes, your pipelinereally sucks. And I remembered I
would walk. I remember once Iwas so angry, like I left the
(35:59):
office. But what that fueled inme was this, I will show you
right, and before you know it,the pipelines fall again. Yeah.
And I look back at that, likethey totally knew what they were
doing. Yeah. Yeah. Yeah. It's,it's a competition. It's drive.
I mean, I was just driven. Youknow, at the time, I just I love
(36:25):
that company, but done anythingto further its success.
Mordecai Rosenberg (36:32):
Yeah. So I want to talk about about
Redstone a little bit and kindof comparing it. So. So I came
from I was akracing. For acouple years, I was had learned,
you know, Fannie, Freddie, FHA,and then I went over to
Redstone. And it was a verydifferent experience to have a
balance sheet product, you know,where it wasn't, there was a lot
(36:56):
more freedom and autonomy. Andit was also a smaller shop. So
there was, didn't have the samekind of division of labor. Like
I remember, there was a dealthat I'd signed up, where I was
wanting to sign up. And I wentin to talk to John and David
about it. And they said,Alright, why don't you just fly
down to Memphis and go, go seewhat you think. I was like,
(37:16):
What? What do you mean? What doI think like, what's the I don't
know what I'm looking for? Like?
Yeah, that's what theunderwriter does, like, they go
down, look it you know, I haveno idea what to look for. And
it's like, well, just thinklike, would you, you know, would
you be comfortable living there?
You know, and that was a wholedifferent. I was like, Oh,
(37:36):
that's interesting. Like, I canactually look at this as not
just a transaction, but as apiece of real estate as
something that's a home. But youwere in the bond world. And then
you went over to you were atHunt, and now you're a
Bellwether. So you now you'reseeing kind of the Fannie,
Freddie, FHA, right. And you'realso still you started a bond
(37:57):
purchase program there as well.
But what how would you comparethe experience of working
through like agency programscompared to like a balance sheet
program?
Jim Gillespie (38:11):
Quite different, but there are similarities. And
I want to jump back to yourcomment about kind of the
related or the Redstone approachto underwriting right. That all
of us that came out of relatedthat formed Redstone were from
(38:31):
related were within the bowels,I'll say of a real estate
development company, we createda lending platform. And the way
we approached underwriting allof our deals, at related was not
from more or less a lender'sperspective, but from an owners
perspective, especially given alot of the deals that we were
(38:53):
doing, originally were in somecases 100% financing where we
would take a participation. Sowe looked at and our deals
weren't underwritten by propertymanagers and asset managers
within related. So yeah, Iremember the first deal we were
(39:15):
closing at Redstone we had nothired Diana, we didn't have an
underwriter. She was there whenyou were there, right? Yeah. And
we saw capital was fromPrudential. So yeah, I mean, the
early days were interestingbecause I was not an
underwriter, but I was preparingthe underwriters. We've got to
(39:36):
hire maize now. There's a verydifferent underwriting process
and underwriting an agency loanversus how we would do it. But
yeah, so not only have I focusedon affordable housing, but yeah,
kind of specialized within taxexempt bonds. And yes, and left
(39:59):
Redstone have built out orbuilding out the two years in
private placement product atBellwether and the similarities
to agency are that most of ourinvestors are going to
securitize these loans or bonds,much like we did at Red Stone,
(40:23):
they'll build a pool andsecuritize the senior piece to
typically Freddie Mac, right?
Yeah, so the underwritingconforms to Freddie Mac
standard. The beauty of havingmostly, mostly mostly, but
that's you know, and that's kindof a Redstone way to write that
(40:44):
you're going to underwrite toFreddie Mac, because you know,
that's where you're going to layoff your senior piece. But
you're going to retain a 10 or15% bps. And that's where you
can pull different leversthrough longer term amortization
or earnouts. Or that's where youdifferentiate yourself from from
the agencies is underwritingsome overhang on a section eight
(41:06):
deal. Where you you conform tobut you make educated risks?
where appropriate.
Mordecai Rosenberg (41:19):
Hmm. Yeah.
So did you think it's easier tosell one or the other? Or, I
mean, like your own, it's not acommodity, or is it a commodity?
That's bonds.
Jim Gillespie (41:35):
It is. For me, it was a transition right? When I
left Redstone, we were going tobuild our private placement at
centerline now, Hunter Lumen,whatever they are now. And that
never happened. Given the saleto centerline to Hunt. So I went
(41:58):
from selling a product that waspretty highly negotiable to what
was a commodity, so I had tochange my mindset, especially
like I said, Before, I hatebeing told what to do. Now I've
got to get everything to fit inthis box. Right? Right. It's
like, okay, well, how do I it'sgonna take me some time to
figure out what that box is. Buthow do I leverage the resources
(42:20):
who know that box and figure outwhere can we push those levers?
And I think that's what a goodagency originator does is,
here's, here's the little, youknow, your desk guy with Fannie
Mae. But how do I work with thefolks I know at Fannie Mae or
underwriting team to providesome terms, get waivers where
appropriate to provide the bestexecution for them. So it's, you
(42:44):
know, it was, it was definitelya transition for me to go from
the Redstone to an agencyoriginations model. So today,
I'll tell you what we do atBellwether. If we get a new tax
exempt on transaction in thedoor, we typically will size it
up for both Fannie Mae we'll doa side by side comparison of
(43:07):
Fannie Mae, Freddie Mac andprivate placement, including the
costs and come down to a netproceeds level. And then present
that to the client. To talkabout the pros and the cons.
This may be the net bestexecution, but your
construction, you know, you'vegot an equity partner who
requires a construction loan. Soit's got to be a forward which
(43:28):
we can't do through. So it's,it's, that's where I think we
add value is presenting alimited amount of options, being
completely transparent aboutwhat's good about this execution
today, what's not good at thistime? And really time being
their trusted advisor. Yeah, doyou not giving too many options,
(43:50):
right to FHA as well.
Mordecai Rosenberg (43:51):
So do you present that too?
Jim Gillespie (43:53):
Sometimes if they would like to see it will be
like the cashback bondstructure. But yeah. If they
have time, a lot of times withbond deals there is got a gun to
their head as to regards to theexpiration of the bond
allocation.
Mordecai Rosenberg (44:09):
Yeah. Yeah, I guess that's one benefit of
doing tax credit deals is that,you know, that's always like,
one of the questions is how manyoptions to show, right, because
you have, you know, just justFannie Mae alone, you could show
30 Different options betweenYeah, and that leverage levels
and IO and term and, you know,all that. Right. So, but with a
(44:30):
tax credit to like, you know,they need 1517 years financing.
Right, that so there's like oneterm because that has to be has
to go through the length of thetax credit compliance, well, tax
credit or no period, complianceperiod, maybe have longer and
then it's, it's just about fewervariables, maybe in terms of
(44:51):
what their considerations evencould be.
Jim Gillespie (44:56):
Right. I mean, that's, you know, a music
analogy. I don't know if you'veever worked with an interior
designer at like, go to re-doyour bathroom and you go to pick
out tile, or, God forbid,recently go to Duane Reade and
try to pick out water becausethere's like 50 Different waters
now, right? But I can't walkinto a tile store and pick out
(45:17):
tile for that. There's way toomany options. So why what's the
best thing an interior designerdoes is like, here's, I know
your taste, I know your style,like we do, I want to know what
the background on your deal whatyour equity needs. It's my job
to give you four options. Here'syour four best options, the
pros, cons, you don't like anyof them, we'll get back to the
drawing, and I've never used theinterior designer analogy.
Mordecai Rosenberg (45:40):
Like no, it's a good one. It's a good
one. It also makes me think,like, I read so first of all,
you have a lot of options. Thatis difficult, right? But even
worse than that is open ended.
Where it's like, you know, theexample of tomato sauces, right?
Where it's like, you know, thatyou have you had, you know, 50
(46:00):
tomato sauces, then in thesupermarket aisle, someone won't
pick any, if there's three, thenthey'll make a decision. Right?
But if you said someone, like,design your own tomato sauce,
make your own decide theconsistency and what's added to
it right, then it's like, forgetit. Yeah, I'll just get, you
know, I'll just get pizza. Soit's, that's, you know, when
(46:23):
when you are guiding a client ina conversation? There's a
balance between like, alright,well, what would you like, you
know, what, you know, kind of,you know, this, what the sky was
the limit, like, what would youwant, but also really trying to
understand their needs, and thensay, Okay, well, based on what
you're telling me, here are thethree things I would consider.
(46:44):
Right, right. It's much easier.
I mean, like, I can feel myheart rate just slow when I hear
three options, as opposed to 15.
Right. Exactly. Yeah. And haveyou stayed exclusively in
affordable housing, likethroughout your career? Or did
you have you done market rate?
(47:05):
Also?
Jim Gillespie (47:06):
I have done maybe a handful of market rate. But
yeah, it's all been affordable.
From ad 20s, to 100%. Taxcredits to Section Eight
acquisition.
Mordecai Rosenberg (47:23):
I always liked when I was originating, I
liked affordable and bond deals.
Because I felt like it also itwas like a bit of a moat. Right.
Like there. Were there certainthings that if I'm calling you
and saying, Oh, hey, you know, Isee your loan is maturing, you
do want to refinance? Well, nowyou're like one of like, 1000
other people that are callingthem, right. If I said, Oh, I
see you have tax exempt bonds.
(47:47):
Yeah, we have a structure wherewe can, you know, purchase the
bonds. Yeah. And then createsome kind of a synthetic
refinance, where we're going toput them in a trust and issue
certificates out of the trustand you don't have you won't
have to Yeah, just reset yourlockout, like, the things that I
could say that no one else thatI knew that they probably
(48:09):
weren't hearing elsewhere. Youknow, you could in the bond
world, there's an affordablehousing, there's just there's
more. There's fewer people thatspeak the language.
Jim Gillespie (48:21):
Right. It's specialized. I mean, that's we
try to really create a teamapproach at Bellwether. I mean,
because we have I don't know howmany originators non affordable.
I mean, that's the mostly thebiggest part of our, our
business minutes probably adozen affordable, focused
originators but more and moremarket rate originators running
(48:44):
up against or up into a anaffordable opportunity. And so
rather than try to school themon the dozens of acronyms, we
try to team them up with anaffordable originator who can
walk and talk about language.
Mordecai Rosenberg (49:01):
Yeah. Yeah, that makes that makes sense. You
know, I feel like I see with notall originators but a lot. I
think, this is how my brainworks. Also, it's like, it's
usually talked about, like firstlike, first in first out, like,
it's that it seems like you havemore than one product coming in.
But for me, it's like once I hadone product that landed in my
(49:22):
brain, like that's what Iunderstood, and it was hard for
me to like, adapt to sellingthat there's I started an FHA
and it's like, wires your brainfor that for that product. And
then to sell Fannie or Freddiejust was a lot more challenging
for me to wrap my head around,you know, but it's the same when
(49:44):
people start with with Fannie orFreddie or or then go to go to
FHA. But market rate andaffordable like if you're used
to those considerations that amarket rate deal has, I would
imagine that it's it's it'stougher for the My brain to
learn a new language.
Jim Gillespie (50:01):
Right. I mean, FHA, you know, I will sell FHA
and I know enough about FHA tosell it. But I also 100% Bring
in kind of our underwritingteam, we've got a kind of a
structuring person who I'llbring in. But that's one thing I
think in production is to admit,when you don't know the answer.
(50:25):
I've seen it, you know, before,where originator, you know,
walks into an affordabledeveloper experienced affordable
developers and tries to pretendthey know what they're talking
about, and it doesn't sit well.
So yeah, admit when you don'tknow. And that's what FHA, I
mean, I understand the productand some of its nuances, but
(50:46):
there's just like, there's somany nuances that that's why you
have specific map underwriters,right? Yeah. That's not a roll
I'm applying for.
Mordecai Rosenberg (50:59):
No, but you know, one person's confusion is
another is another one's youknow, playgrounds are there.
Thank God, they're there. Yeah,your point about the kind of
coming full circle, I think thatthe fact that I think you came
out of related coming out ofwith the developer mindset, you
know, like, just trying toreally be able to be probably
gives you an ability to putyourself in their shoes, and I
(51:22):
think picking up on people'senergy. I think that's probably
I mean, you and I both know thatprobably a lot more people have
are like, totally blind, likeenergy that someone's get, you
know, giving off, like, youknow, you're seeing a
conversation and you're like,how are they not aware that that
person is totally uninterested?
You know, and you see it inretail? For sure you see it, you
know, that? So? So I thinkthat's, yeah, I guess, you know,
(51:46):
just a couple of minutes, if youhave to say like, if I ask your
clients who has been with youfor all these years, it's like,
why do you do business with JimGillespie? What do you think
they would? What would they say?
Jim Gillespie (51:59):
Like, let's take a poll and see what the survey
results say.
Mordecai Rosenberg (52:04):
I think, you know, by the way, it's a
worthwhile poll to do to reachout to me.
Jim Gillespie (52:08):
I think you're right, I think that's great.
Yeah, we had before thepandemic, I'm gonna get no
rattle, engaged with some of theexecutives doing full 360s
reviews, including from some ofour clients, but then we pulled
the plan during the pandemic,not knowing what was going to
happen. I would love to, I wouldlove to see that picked up
(52:32):
again. Because yeah, I wouldlove to get that feedback. But I
would hope they would say he'sjust he is an honest man of
integrity. Who picks up thephone when we need to talk?
Mordecai Rosenberg (52:45):
Yeah. Yeah.
I think that it's, it'sactually, it could be very
interesting for you to spendsome time going to your clients
and saying, Well, you know, whydo you do business with me?
Right? And, and well, there'stwo ways to approach it first of
all, like, because when they'regiving you the answer, they're
selling themselves. Why they dobusiness with you? Right? Yeah.
Cuz like, well, because like,you're you always come through
(53:07):
and you pick up the phone, andyou're like, oh, okay, that's
great. Oh, by the way, I havethis other deal. I wanted to
like me to talk to you about it,because you're, you're having
them do the selling for you.
Another approach that I've heardis there's certain types of
clientele that that you likedoing business with, right? If
you had to think of this as anexercise that Dan Sullivan, my
(53:27):
executive coach does withpeople. But he says, All right,
think about like that threeclients that if every, everyone
were just like that, it'd begreat, your life would be great,
you know. And now think of threeclients, two or three clients
where like, if you never had totalk to someone else like that
in your life, like that would bealso great. And now say, so now
(53:48):
you have the contrast. I say,Well, what is it about that
first group that makes you wantto do business with them? Yeah,
they are visionary. Yeah, theyhave a long term perspective,
right? They value relationship.
And let's say you try to come upwith like, eight things, right?
That here's what you're thethings. And now you go sit down
with them and say, Alright, Iwas thinking about, like, why I
(54:10):
like doing business with you.
And here are the things that Icame up with, like, this is what
i Does this resonate as far asthings that you relate to,
right? And they'll seethemselves like on the page.
It's like, oh, yeah, no one'sever gotten me. Like that.
Right. And so the next thing is,I'd love to
Jim Gillespie (54:28):
Except to be acknowleged - getting to be
acknowledged.
Mordecai Rosenberg (54:32):
Exactly.
Acknowledging yet. Well you canthen do is to, is to say, you
know, I'd love to expand to dobusiness with other people who
fit these criteria. Have thesesimilar character traits or
features? Is there anyone youthink I should speak to write
because people like spendingtime their networks are
(54:52):
oftentimes similar tothemselves, right? And so you
can use that as like a as far asnetworking, it's another
potential tool. To, to use.
Jim Gillespie (55:02):
Yep, yep. Yep. I like that idea like that.
Mordecai Rosenberg (55:06):
Well, Jim, I really appreciate that your your
time. You know, you've you'vebeen a giant in the affordable
housing space. Everyone is noteveryone is significant. Forget
about six degrees of separation.
Yeah, I think everyone is onedegree suffered in the
affordable housing space. Youknow, there's no one more than
like one degree removed andhearing about your experience
through related and your abilityto read people's energy and just
(55:31):
respond to that is really,really awesome. So I appreciate
the time and the relationship.
Jim Gillespie (55:40):
Always a pleasure. Always a pleasure,
Mordecai. You're one of myfavorites.
Mordecai Rosenberg (55:45):
Thank you.
Thank you, Jimbo. All right.
Until next time,
Jim Gillespi (55:49):
All right, thanks.
Mordecai Rosenberg (55:50):
I'll talk to you later.
Jim Gillespie (55:51):
See you later.
Mordecai Rosenberg (55:52):
Bye.
Welcome back to the Origination podcast,
where we speak to the toporiginators and salespeople in
the multifamily industry to tryto understand what separates the
top performers from the rest ofthe pack. On this episode, I'll
be speaking with Jim Gillespie,Executive Vice President of
Bellwether Enterprise RealEstate Capital. Jim oversees
(00:37):
affordable housing finance forBellwether, and also started
their direct bond purchaseprogram. I first met Jim, at
Redstone when I was workingthere at Redstone, Jim was a
founding principal and ManagingDirector of their proprietary
tax exempt bond funds. I thinkyou'll really enjoyed this
(00:57):
conversation. You know, how doyou know when you hear when you
hear a no from a prospect? Ifyou just take it at that, that
no means no. Or whether it'sactually an opportunity. We'll
get into that in this interview,and also talk about the
importance of a strong network,and much more. So without
(01:21):
further ado, let's speak withJim. Jim Gillespie, the legend.
Welcome to the rich nationpodcast.
Jim Gillespie (01:32):
Thank you Mordy.
It is a pleasure to be here.
Mordecai Rosenberg (01:36):
Pleasure.
Well, you know, you should youcan you can you can hold off on
on that judgment. You know,we'll wait till we till the end.
So, Jim, I'm gonna start theconversation the way I I
typically do on the podcast,which is to ask you about your
early sales experience. You'vebeen a phenomenal salesperson in
(01:59):
the multifamily finance for fordecades. As far as like early
sales experience, anything comesto mind as far as like it could
be grade school, high school,you know, maybe out of college
or during college, anything come
Jim Gillespie (02:15):
Yeah, you know, this is the one question Mordy,
to mind.
I know you ask everyone that Iactually gave some thought to.
But when I first graduated fromHanover, undergrad, I knew I
didn't want to move home. I knewI wanted to move to Louisville,
I didn't really know what Iwanted to do with my life. But a
(02:36):
friend of a friend, a mother ofa friend, recommended I call
Stanley bears to work at a storecalled the fashion posts in
loyal to men's clothing store.
And that's what that's where Ilanded. It was going to pay the
rent. And Stanley started thisbusiness himself. I think they
celebrated 50 years when I wasthere. But my priorities were a
(02:56):
little different at the time,but Stanley was kind of a
ballbuster and kept me engagedin showing up on time and, you
know, forced me to sell reallyin an environment where I felt a
little out of my comfort zone.
You know, this is the men'sclothing store hire in you know,
(03:20):
the mayor we come in, they'llSamuels who owns Maker's Mark,
it was kind of a hoo hoo hoo hooof Louisville. But Stanley
number one provided structurefor me at a time when I needed
it, but also was a good kind ofsales coach and kind of with his
foot on my back push me to sellbut not be too hard. And I've
(03:42):
never liked you know, being soldhard. I like to kind of do my
thing when I'm shopping, too. Idon't like people kind of
lurking so yeah, kind of what'swhat's the right balance, but it
you know, he was a he was at theright place at the right time.
Mordecai Rosenberg (03:59):
Yeah. So do you remember any specific advice
that he gave you on selling?
Jim Gillespie (04:04):
I do not, you know, just kind of be yourself.
Don't be overburdened oroverbearing, and then be
competent. Yeah.
Mordecai Rosenberg (04:17):
So walk me through your, your approach, you
know, as you I'm sure there's alot of learning, right? But
retail retail environmentcustomer walks in, right. So the
big question is, alright, do youapproach them? Do you stand
back? Do you? Like how engagedto be like, do you remember how
did you How do you handle thosesituations?
Jim Gillespie (04:37):
Honestly, I think in retail, it's a lot of, I
mean, everybody has energy,right? And you can just pick up
on if somebody's got a, youknow, stiff arm Leave me alone,
don't bother me, kind ofshopping approaches and others
who are more amenable to hey, Ineed something from my husband
sportcoat you know, I couldreally use help here. So You
(05:00):
know, I think a lot of it isjust using your instinct and
reading the other person. And Ithink that's parlays into you
know what we do today?
Mordecai Rosenberg (05:09):
Yeah. So reading other people's energy,
that's like a very interestingway of looking at it. I'm also
wondering if everyone, I don'tknow that that everyone does
that. So naturally, that readstheir energy. So I'm curious,
like, did you find that as a asa as a kid? Like, do you
(05:31):
remember kind of like having anatural feel for people's
energy? And how would youdescribe that? If so?
Jim Gillespie (05:38):
Yeah, I don't I don't know that I really, I
guess he's just, you know, Ithink instinct, you just have
instinct, when you meet someone,for good or for bad. And it's
been proven wrong to whereyou're like, I'm not gonna like
this person, and then you end uploving. But most of the time,
you can even kind of gaugewhere, where someone's coming
(05:59):
from, or at least their mood,right? Yeah, they're open to
engaging or not.
Mordecai Rosenberg (06:05):
Right. So fast forward to today, let's say
you're at a conference, right?
And you're meeting people.
Right? So what's your read on?
How would you describe likedifferent people's energy? Is it
just about like, if they're opento conversation? Or is there
more texture to it? Yeah. Howwould you describe like, what
are you reading?
Jim Gillespie (06:22):
I think is, you know, if they're open to
conversation, you know, I canthink of a couple of meetings
where you're just getting shutdown and left and right. And I
think, whether it's at aconference, whether it's in
someone's office, you know,it's, it's, it's more, I don't
(06:43):
want to say it's about, I don'twant to use an analogy, like
it's dating. But it is, in somerespects, because it's more
about selling who you are as aperson and getting them to trust
you than it is about selling aproduct. You know, I think
that's secondary. But you, youknow, I mean, let's get done
(07:04):
affordable housing for, I guess,close to 30 years now. So, all
these deals are complicated. Andwhen you kind of engage with a
borrower or a client, it's ajourney, it's kind of a
marriage, at least until you getto closing. So you got to trust
(07:26):
the other person.
Mordecai Rosenberg (07:27):
Yeah. Right.
So so let's say you meetsomeone, and they're just
shutting you down at every turn.
You say, all right, forget thisone, like onto the next one? Or
do you say, Oh, this is notalright. This is like an
interesting one. Like, let mesee if I can crack this one. Or
is it? You know, it becomes?
Yeah, there's become achallenge.
Jim Gillespie (07:52):
There. You know, there have been, usually when
I'll go call on a client, I'llpick a colleague, and sometimes,
I may not hit it off with eitherthe individual or individuals,
but my colleague will say like,alright, you all guys like,
well, that's clearly your flightbecause they weren't hitting me
off. And we'll just worktogether on them. So where was I
(08:14):
going with that?
Mordecai Rosenberg (08:17):
Yeah, but whether or not you go, or do you
try to like crack the nut, or,or just say, you know, life's
too short. On to the next one.
Jim Gillespie (08:26):
With some clients, I will be persistent
and try to crack the nut. Right.
But I also think, I mean, thishas happened recently, where,
you know, we spent a tremendousamount of time working with a
developer and structuring adeal. This is a bond purchase
transaction, where we have a lotmore discretion over kind of
(08:48):
terms and what we can negotiate.
We negotiated fees and earn out,and then they just ghost you.
What I'm at that point in mycareer, where if you don't have
the, if you can pick up thephone as a courtesy to at least
respect, if you will, thecommitment of time that we put
(09:11):
in to the transaction, I knowthings aren't going to be good
when we hit bumpy times. Andthis was a new client. So that's
a case where I'm like, Alright,life's too short. So there are
there are occasions where I say,okay, it was fun, but good luck.
But yeah, for most clientsaren't that way. I mean, I think
(09:35):
that's one thing I like aboutI'll say our industry, the
affordable housing industry isfor the most part, I've made
friendships at a lifetime withfolks in this industry. You
know, it's there's some reallygood people out here.
Mordecai Rosenberg (09:51):
Yeah, yeah.
I think there's a differencethey say in sales that a yes is
is the best, right? I know. Ano, it's not as good. but to the
maybes I will kill you. Yeah,yeah. And it's like there are
there people who you meet whoare just kind of quick notes,
right? I'll go into in a minute,but it's the people who don't
(10:12):
have respect for your time andjust kind of keep you hanging,
right? That's where it's like,you could kill yourself waiting
for them, right? So it's maybekind of keep it soft. You try.
But like, if they're not, youhave to make sure that they
respect that they're your time.
One of my best clients ever wassomeone who hung up on me.
Before I got two words out of mymouth. They picked up the phone.
(10:37):
Yeah, it was just me myself. Isthat not interested? Hung up? So
I called back I thought, Ithought maybe we got
disconnected. So I called back.
And he's like, Are you kiddingme? Flam again, right. But in
some ways, like he wasrespecting my time, right? He,
you know, he, he didn't waste alot of a lot of time with me,
right? So, but that I took aslike, Alright, so the other way
(10:58):
to look at it with those kindsof situations is like, Okay,
this guy has a big moat aroundhim, right? This guy is not
accessible. Right? So if youbecause everyone look back back,
then you I mean, when you even Idon't know, 10 years ago, 15
years ago, it was like, it wasdifficult to identify who a
borrower was. And to get theright, you know, the contact
(11:21):
information. Now, it's, it'severything is is open and
available, right? So everyone iscalling this guy? And if this is
someone who picks up the phone,and we'll have a conversation
with anyone who calls? Well,that's not a very large moat,
right? You can, you know, everyou can even if you do a deal
with them, there's, you know,they'll they're always open to
hearing from the next guy,right? But if someone else,
(11:44):
someone that hangs up on you,it's like, okay, no one is going
through to this guy, right? So Iwould try it every few months, I
would reach out, and I would andI would always try, I got his
email address never responded.
Then, finally, I was able to getthem on the phone. And I started
to make a wait, now I havesomething else something
(12:07):
different. And and it's like,no, I write. And I said, No, no,
what's that? Like? It was it wasan a seven on an FHA loan. I
said, No, no, you don't have topay for the prepayment penalty.
We can, like cover it, you know,in in the interest rate. It's
like, Oh, okay. Tell me more.
Right. And then we and and, youknow, ended up doing like, a
couple 100 million dollars withwith that with that guy. Right.
(12:28):
And as long as he was doingdeals with, with me, he was not
taking calls from anybody else.
You know, there was someoneelse, a developer in St. Louis,
who he also he was, this was anice guy. He talked, it was
friendly, but he said, You know,I've had a 30 year relationship
with local with the locallender. I'm sorry, like, it's
(12:50):
just not gonna happen. Right? Sowe were, we went to visit him.
And he took out his like, siteplan. And he was laying out like
his it was a, an Alzheimer'sfacility, I believe that he was
showing how he had all thisland. That was part of the
collateral, but was undeveloped,but he thought he could develop
something else on it. So hesaid, Oh, that's interesting.
(13:14):
You know, have you ever thoughtof doing a partial release of
collateral, which is a programthat's on the books for FHA? Not
very widely used, but it's like,oh, no, no one ever talks about
that. So we were able to so weended up, we were able to do
that we were able to get hiscollateral released. And he was
able to develop on it, and thenhe gave us a shot at that loan.
(13:36):
And then, you know, again,Greyston has done, you know,
several 100 million dollars ofbusiness with that with those
with him. So there is, yeah, Iwonder if like, they're, like,
light on the one hand, like Lifeis like, too short to like, have
to deal with like assholes,like, on the other hand, like,
if you never dealt with them,then, you know, you may not have
(13:57):
a lot of business. And, youknow, sometimes it's just a
challenge. Yeah, that it's amoat that other people have to
get through. Right.
Jim Gillespie (14:05):
Right. Right. And a lot of times there can be
confusion over someone being anasshole or just being a straight
shooter. And I'd much ratherlike you were saying I'd rather
have a quick No, and I tried todo that with my clients, right?
I'd rather than a long, maybethat's the worst thing you could
do. You know, call them back inthree weeks and like, Well, I'm
not sure we might have this andit's like, really, you know, I'd
(14:26):
rather quickly be like, I don'treally think we have an option
on Mondays.
Mordecai Rosenberg (14:31):
Yeah, that's another trap that you get into
at the VA like when you're whenyou're starting out because like
you're so desperate to get abite on a nibble on the hook.
Where it's like oh, it's a youknow, it's a conversion of of a
McDonald's to a condo you know,with me half condo have Co Op
(14:55):
and like those be two rentalunits on top. And it's like, oh,
yeah, maybe we could You do thatunder agencies and you try to
figure out all kinds of ways tocontort yourself. And, and
meanwhile, it's just like not afit, right? And so you're not
deepening your relationship.
Just taking a swing is notalways the best way to start a
relationship. You know, if evenif it's, if you What do you
(15:18):
think about that? Because I knowalso, like, let's say, a lot of
the business that you've done,let's say at Redstone, for
example, and probably at rightat related when you're doing a
lot of the bond placements,those some of those were hairier
deals that that, you know thatthat they would call you when
they were when another, otherlenders can do them. So like,
(15:40):
what do you think about kind ofreaching for the hairy deals as
opposed for just like waitingfor like just a fat pitch to
smack like because you're, youmay not get that one that's
right down the middle whenyou're when you're trying to
start a relationship.
Jim Gillespie (15:55):
It it's related, those were all hairy deals. They
were all highly structured andhighly negotiated. And it was a
I wasn't frontline sales at thatpoint in my career, but it was a
different type of sales becauseit was a very limited clientele,
(16:16):
including right that was myfirst introduction to your
father to Greyston. And becausewe financed so Grayson was
acquiring a portfolio of bonds,large pieces of Providian
insurance, which at the time waswas in Louisville, we took a
little boondoggle to Kentucky dodue diligence on some bonds, but
(16:39):
it was up we closed with alittle over $160 million
portfolio where we but that's ahere's an example. We there was
a bond in that portfolio. Thisis the kind of deals that we
would do. It was a very valuablebond financed the deal in
Georgia, I think called Chateauforest came Oh, yeah. But the
(17:01):
bond, knees are not realnumbers. But the bond was very
valuable in that, let's say ithad a 14% coupon. And it was $10
million. And what we did, thanksto masterminds, including like
Michael lair, the guru of bondfinancing. We drop the bond into
(17:24):
a trust what we call theleveraged trust. And we issued
variable rate floating ratecertificates in the amount of
$20 million. That could go up toa rate of 7%. So we really, we
took the 10th 10 million ofbonds issued $20 million and
certificates. Nobody, no bank isgoing to do that no GSE Fannie
(17:45):
or Freddie aren't going to touchthat. So it was marketing to
folks like you know, your dadGreystone. We're just doing very
structured deals that we're notcommoditized. From the sales
perspective, since so when weleft related and foreign
(18:05):
Redstone and created not justthe credit, enhanced floating
rate bonds, but the privateplacement, it was a broader
product that we were marketingto a broader clientele, meaning
we went from kind of the moremarket rate developers doing at
20s, and more structured dealsto tax credit developers, and
(18:26):
those were not clients we hadlong standing relationships
with. So when we tackled thatkind of market universe,
thankfully, you have there wasthe internet was around. But as
you know, all of thoseallocations of tax credits or
tax exempt bonds, it's publicinformation, it's published on
(18:49):
the state or the municipalities.
website. So I don't know, it'slike six degrees of separation
to how I've always marketed myattack. We would, let's say one
of the top five issuers ofbonds, what states and then we
would go tackle those states,identify the top developers over
(19:11):
the last five years that hadbeen awarded or allocated or
applied for bonds. We would gointo we do some research, go
into conference room, ever allthe partners analyst team, and
brainstorm on what is the commondenominator? Who do we know that
knows this developer? Client?
(19:31):
Because the best way I mean,look, it's how I got my first
job. It's how every job I'vehad, or every client
relationship, for the most parthas been some either a referral
or there's some sick but I'llsay six degrees of separation on
almost every client I've workedwith. Because it's better to go
(19:52):
in and be like, hey, you know,XYZ and it's kind of a common
denominator. Can I say that? Doyou ever watch that movie? Six
degrees of separation? Oh,probably. Yeah. Great. Yeah.
Mordecai Rosenberg (20:09):
Yeah. That's really interesting. And I
remember I mean, so you I mean,you and I worked together at
Redstone for a couple of yearsright and and Johnson Cole avec
David Levine. Like they, I mean,they did have an incredible
Rolodex like they were one ofthe only two people actually
maybe the only two people whoI've seen still have a role an
(20:31):
actual Rolodex. David always hadthat Rolodex. Yeah, yeah, but
they knew everybody. Right. Butthat idea of like, alright,
well, let's see, here's thedevelopers we want to target.
And, and I feel like theapproach, a common approach
would be alright, let's justcold call them and just pitch
them our product. But the ideaof thinking about who is, you
(20:55):
know, who can introduce us,right, is simple, but so much,
so much more powerful, right?
Even if you have to work alittle longer to find that
person. Today, you have likeLinkedIn. Right? So you can see
your common common connections,although, yeah, I don't know, I
may have like four or 5000.
Like, you know, connections onLinkedIn, like, I don't know,
(21:16):
almost 100. Real, like, yeah,like no idea who most people
are. That being said, it's,it's, it's something and
especially today, I mean, it'snot easier to get someone on the
phone today than it was it'sgood. It's getting gotten more
difficult on the phone. It'sgotten more difficult on emails,
right. So, but one kind of onesilver bullet way in is if you
(21:39):
can find a trusted relationshipin common. Right, they can make
an introduction?
Jim Gillespie (21:45):
Yeah, absolutely.
Yeah. Yep. And a lot of times, Imean, you know, if it's an
attorney a lot of times theywon't, they're like, don't
really, I've got a conflicthere. I'm not going to make a
direct introduction, but atleast it's a name you can draw.
As someone they know that thenthey can call and check out
like, Who's this guy Gillespieis the legit or the is nuts?
Mordecai Rosenberg (22:08):
Yeah, I did that. I did that. The other
week. I was I was I was lookingat the list of Fannie Mae's came
out with a list of like toporiginators in the country
individuals, right. So Ithought, Oh, these are probably
like good people to have on thepodcast. So I like looked up.
One and I realized, like,alright, I can reach out to him
(22:29):
directly. But but, you know, Iwouldn't respond to me
necessarily, if I got to, like,you know, it's like, there's,
you don't know what spam andwhat's not spam, right. But I
had a contact in common. So Ireached out to them and said,
Hey, like, do you know thisperson? So it kind of Yeah, but
uh, you know, make Drummond makean email intro. And they did.
And then I was able to get onthe phone with them, you know,
(22:50):
the next day. So it's, it's,that's probably is really
something that needs to beleveraged. A lot. As far as the
network though, like, how do youbuild that? Like, because at the
beginning, you don't have a lotof common? Like, you don't know
a lot of people. So how do youbuild How did how did you build
(23:11):
your network?
Jim Gillespie (23:14):
It's it's a pretty small industry, right?
Portable housing. Yeah, I mean,maybe I've been in for 30 years,
and it's changed. But it's apretty small it's pretty small
world. And, you know, when weare launching Redstone and its
(23:38):
programs, you know, all aboutgoing to network. Radek
conference, you know, it's anera I've been on their board for
20 something years, it's gettinginvolved in these trade
organizations, speaking atconferences, hitting the road.
And being on the phone, thinkingthe other day, I'm just I'm not
on the phone as much as I was. Iremember reading Rachel, who was
(24:01):
a different that she's like, Youwere on the phone all the time,
like all the time, like, it's myjob. And yeah, I think I think,
you know, I think myself, butperhaps others have become more
reliant on email when I think,especially now. You'd rather
have somebody hear somebody'svoice?
Mordecai Rosenberg (24:22):
Yeah. Not me. I don't rely on email. I
don't do it. I don't do email. Ido it a little bit. drita. But I
do but I couldn't. But I do. Iwill do more like text or teams.
That's like my, yeah, I'll dothat. Yeah, I don't spend a lot
of time on email. So let's talkabout related a little bit.
Yeah, cuz that's, that's whereyou got started. And yeah, I,
(24:45):
you know, related from what thestories that I've heard, I think
it sounds like you have such aunique environment and it's
produced so many industryleaders, you know, that if you
looked at across the, you know,the spectrum in, in affordable
housing I mean, there's so manyfounders came out of related.
Yeah. And I'm curious what itwas like to get started there.
(25:09):
You know, what was it? How, Idon't know if there was
training? Like, how did youlearn the business there? What
was the what was theenvironment? You know, it seemed
like it was very competitive.
But what was it? Can youdescribe like, what it was?
Yeah.
Jim Gillespie (25:24):
So I got my foot in the door. Here's the six
degrees of separation. My thesisadvisor, a guy named Brian
Gallagher introduced me toDenise Kiley, who was the head
of she was treated chief creditofficer for related capital. And
I got an internship for a coupleof months. I was finishing at
(25:44):
Columbia. And I got aninternship for a couple of
months with related capitaldoing tender offers on their old
partnerships, which I had noidea what it was, but was able
to weasel my way, weasel. I gotposition working full time, for
(26:08):
related. What had happened wasRoss is gonna roll up all of his
ad 20 properties at 20properties for those listening
that don't know it's a bondfinanced, affordable housing
property where 80% of the unitsare market rate 20% are
affordable. So related was goingto roll up, I think it was six
of their 8020 properties in NewYork, into a REIT. The week
(26:32):
before the filing, maybe evendays before the filing the REIT
market crashed. Ross pulled theoffering and just shifted gears
very quickly and created a newkind of joint venture that was
going to focus on creditenhancement on 8020 bonds. So I
kudos for their ability to shiftso quickly. And I think a lot of
(26:54):
that comes from Ross'sleadership and leadership being
very focused.
Mordecai Rosenberg (27:00):
That's Stephen Ross.
Jim Gillespie (27:01):
Yeah. Stephen Ross, founder of Related and
owner of the Dolphins.
Mordecai Rosenberg (27:09):
Yeah.
Jim Gillespie (27:12):
So I find myself I have no, I honestly don't know
what to do. And I don't knowwhat to do to save my life. And
I'm in a cube. So there's,there's Ross and his secretary,
Peggy, Edie Merritt, who ran ourgroup and his assistant whose
name I forget, and then I wasright there. Right. So I was
(27:34):
you're thrown in, right. Andthere were there were some
senior folks who were very goodmentors, but it was also very
cutthroat at the kind of mylevel. And there were days I
went home, you know, it'sworking 12-14 hour days, there
are days I went home in tears intheir old days, I went home, you
know, feeling like, big shit. Itwas a sink or swim environment,
(27:59):
you had to fight. And I hatebeing told what to do. And I
felt many times I was impliedthat I'm not good enough to be
here. And it gave me fight, youknow, and we were, these were
great times, because we were wewere rocking and rolling. And I
(28:22):
just had my head down and wasjust executing on deals and just
learning so much. We kind ofcreated these two funds, and I
was doing everything frommodeling cash flows to closing
deals to sending out servicinginvoices, because we didn't
really have a certain thingdepartment. So it was doing
whatever and whenever needed tobe done. And just making sure it
(28:48):
was it was done. But yeah, theywere those were great times. In
my career. You had to be on yourtoes back in the day because we
were all in the ninth floor 625Madison and no phone system. You
could push a button, sitintercom pick up the phone, and
pays the entire floor. And Iwill never forget the first time
I hear Jim Gillespie or Yeah,Jim Gillespie. See Steve Ross,
(29:11):
and you know, first you crapyour pants, you grab everything
on your desk, and you run to thecorner office. And then happens
over and over again. But yeah,it was great time for us has a
mind of steel. I mean, I thefirst deal I closed was a little
deal called atrium apartments.
We were buying for like3,000,009 50. And I get this
random, you know, Steve Ross.
(29:36):
You know, run through his officeand he just would I'm like, how
do you how do you recall likewith everything the company is
working on how do you recall thedetails of some little $4
million 100 Make unitacquisition in Daytona Beach.
But he's just on his toes. Butyeah, you just you had to be on
your toes.
Mordecai Rosenberg (29:54):
Yeah. So as far as like the leadership and
the vision, I mean, because justseem Ross is clearly a visionary
with what he's done on thedevelopment side. But what was
it like working for him? Likewhat was what was the
interaction that you had withhim? Like, did you Did he set
the pace that he's establishedthe vision? Like, what was the
(30:17):
you? How did he kind of createthat? Dynamic?
Jim Gillespie (30:21):
Yeah, I mean, I think just by his vision, I
mean, Ross always said he wantedto hire the smartest and best
people in the industry andsurround himself by people that
were smarter than he was. And Ithink that's something I tried
to do in my career. But yeah, Imean, he's just by his presence.
He's a respected through theoffice, or at least when I was
there was very well respected.
Yeah, he never took the jacketoff. Somewhat formal. But, you
(30:42):
know, set the tone you eitheryou perform, or you get out--
Mordecai Rosenberg (30:54):
--a lot of turnover.
Jim Gillespie (30:57):
Remarkably, there was some turnover. But I would
point to the fact that seniormanagement at related even
today, bow below some of thefolks in affordable in retail
have been there for decades,people are incredibly loyal to
the man and he is loyal to them.
I mean, that's leaving there waswas not an easy decision. Nor
(31:21):
was it an easy negotiation inthat I did have a contract and
had to negotiate my exitdirectly with Ross, which was
fun.
Mordecai Rosenberg (31:35):
Wow. Yeah.
Yeah. But there is somethingabout you, I don't know that you
have that today. That boilerroom, you know, the mentality.
You know, there were it's, Idon't know, what's the line
from? Maybe it's from GlengarryGlen Ross is like, you know,
first prizes. You know, $1,000,like, second prizes is steak
(31:56):
knives, third prizes, you'reout, you're out, like, there's I
don't know that people feelthere's something to be said for
that. Accountability.
Jim Gillespie (32:08):
I hate to say it in some respects, but we can't
do and say a lot of the thingsthat we would there. I think we
we take a very soft approach.
And say, we are the only we takea very soft approach with our
employees these days, because wedon't want to offend them or
hurt their feelings. Andsometimes we just need to drop
(32:28):
the F bomb. Yeah, because it wasdropped quite frequently there
that was met.
Mordecai Rosenberg (32:37):
Yeah, it's funny. My kids like my my oldest
kids are like 16, 15, 14, and myyoungest is nine. And my older
ones. They lament how that I'm,like, softer with like me other
the youngest that I was, like,he's never had his mouth washed
out with soap. Like, but youknow, it's I don't know if I'm
(33:00):
allowed to admit that. Yeah,that may or may not have
happened. But like, it was theircertain may or may not have has
paddled my child. Yeah. I mean,there's certain certain
pedagogical methodologies thatjust are are not acceptable
anymore. anymore, which look,probably a lot of that for
better it could. I mean, I'msure it was not an easy place to
(33:24):
work. But there's like, thatidea of just look like the fact
that there was very littleturnover is telling, right?
Because the people who showed upwere people who were looking for
that kind of an environment,maybe?
Jim Gillespie (33:36):
Yeah, yeah, I agree. When I not just got my
internship. And certainly when Igot my permanent position, which
just a month or two later, in mymind, I had landed a job with
it. While I was at Columbia, ifthere's one company I would have
picked that I could have workedfor, it was related. And so
(34:00):
there's that there is a cache insaying that I worked at or I
work for related. And for areason.
Mordecai Rosenberg (34:10):
Yeah. Yeah.
I think also that idea ofcompetition. I feel like it's
important to be at a place whereyou can compete, in some ways. I
remember like, when I wasoriginating, you know, my
brother and I were, were, we rana team together. And then there
was there was another team thatwas always it was very high
producing team. And when we,we'd look at the pipeline and
(34:33):
say, like, like, Oh, crap, wesigned up $200 million last
month, like, you know, like,hell with that. And so the next
month, like we'd signed 300,right, and you want like, you
need it's that you'reLouisville. So your, your your
horse racing got down there atthat pace. If you don't have
that pace horse like it's,you're not gonna get the same
(34:53):
performance at all. So look,it's tough because there's
people who are so far outoutperform, write that you don't
consider them as competition.
But I feel like you want to kindof like, create some kind of a
mark and say, Alright, I'm gonnalet's see if I can get, you
know.
Jim Gillespie (35:12):
I'll tell you, I mean, this is jumping to
Redstone. But I look back at itnow. And I just laugh because
when we were building, thecompany kind of production was
all under me. And I was, I don'twant to say solely responsible
because it does take a village.
But John and Dave, especiallyDavid, were just good at
manipulating my psyche. In thatseveral times. I remember there
(35:36):
was one year I think we had fivedeals closing in December was
just it was it. It was it was ait was a good end of the year.
And I remember they all closedthe calls in the office. And it
was, you know, kind of this halfassed, congratulations falling,
but your pipes, your pipelinereally sucks. And I remembered I
would walk. I remember once Iwas so angry, like I left the
(35:59):
office. But what that fueled inme was this, I will show you
right, and before you know it,the pipelines fall again. Yeah.
And I look back at that, likethey totally knew what they were
doing. Yeah. Yeah. Yeah. It's,it's a competition. It's drive.
I mean, I was just driven. Youknow, at the time, I just I love
(36:25):
that company, but done anythingto further its success.
Mordecai Rosenberg (36:32):
Yeah. So I want to talk about about
Redstone a little bit and kindof comparing it. So. So I came
from I was akracing. For acouple years, I was had learned,
you know, Fannie, Freddie, FHA,and then I went over to
Redstone. And it was a verydifferent experience to have a
balance sheet product, you know,where it wasn't, there was a lot
(36:56):
more freedom and autonomy. Andit was also a smaller shop. So
there was, didn't have the samekind of division of labor. Like
I remember, there was a dealthat I'd signed up, where I was
wanting to sign up. And I wentin to talk to John and David
about it. And they said,Alright, why don't you just fly
down to Memphis and go, go seewhat you think. I was like,
(37:16):
What? What do you mean? What doI think like, what's the I don't
know what I'm looking for? Like?
Yeah, that's what theunderwriter does, like, they go
down, look it you know, I haveno idea what to look for. And
it's like, well, just thinklike, would you, you know, would
you be comfortable living there?
You know, and that was a wholedifferent. I was like, Oh,
(37:36):
that's interesting. Like, I canactually look at this as not
just a transaction, but as apiece of real estate as
something that's a home. But youwere in the bond world. And then
you went over to you were atHunt, and now you're a
Bellwether. So you now you'reseeing kind of the Fannie,
Freddie, FHA, right. And you'realso still you started a bond
(37:57):
purchase program there as well.
But what how would you comparethe experience of working
through like agency programscompared to like a balance sheet
program?
Jim Gillespie (38:11):
Quite different, but there are similarities. And
I want to jump back to yourcomment about kind of the
related or the Redstone approachto underwriting right. That all
of us that came out of relatedthat formed Redstone were from
(38:31):
related were within the bowels,I'll say of a real estate
development company, we createda lending platform. And the way
we approached underwriting allof our deals, at related was not
from more or less a lender'sperspective, but from an owners
perspective, especially given alot of the deals that we were
(38:53):
doing, originally were in somecases 100% financing where we
would take a participation. Sowe looked at and our deals
weren't underwritten by propertymanagers and asset managers
within related. So yeah, Iremember the first deal we were
(39:15):
closing at Redstone we had nothired Diana, we didn't have an
underwriter. She was there whenyou were there, right? Yeah. And
we saw capital was fromPrudential. So yeah, I mean, the
early days were interestingbecause I was not an
underwriter, but I was preparingthe underwriters. We've got to
(39:36):
hire maize now. There's a verydifferent underwriting process
and underwriting an agency loanversus how we would do it. But
yeah, so not only have I focusedon affordable housing, but yeah,
kind of specialized within taxexempt bonds. And yes, and left
(39:59):
Redstone have built out orbuilding out the two years in
private placement product atBellwether and the similarities
to agency are that most of ourinvestors are going to
securitize these loans or bonds,much like we did at Red Stone,
(40:23):
they'll build a pool andsecuritize the senior piece to
typically Freddie Mac, right?
Yeah, so the underwritingconforms to Freddie Mac
standard. The beauty of havingmostly, mostly mostly, but
that's you know, and that's kindof a Redstone way to write that
(40:44):
you're going to underwrite toFreddie Mac, because you know,
that's where you're going to layoff your senior piece. But
you're going to retain a 10 or15% bps. And that's where you
can pull different leversthrough longer term amortization
or earnouts. Or that's where youdifferentiate yourself from from
the agencies is underwritingsome overhang on a section eight
(41:06):
deal. Where you you conform tobut you make educated risks?
where appropriate.
Mordecai Rosenberg (41:19):
Hmm. Yeah.
So did you think it's easier tosell one or the other? Or, I
mean, like your own, it's not acommodity, or is it a commodity?
That's bonds.
Jim Gillespie (41:35):
It is. For me, it was a transition right? When I
left Redstone, we were going tobuild our private placement at
centerline now, Hunter Lumen,whatever they are now. And that
never happened. Given the saleto centerline to Hunt. So I went
(41:58):
from selling a product that waspretty highly negotiable to what
was a commodity, so I had tochange my mindset, especially
like I said, Before, I hatebeing told what to do. Now I've
got to get everything to fit inthis box. Right? Right. It's
like, okay, well, how do I it'sgonna take me some time to
figure out what that box is. Buthow do I leverage the resources
(42:20):
who know that box and figure outwhere can we push those levers?
And I think that's what a goodagency originator does is,
here's, here's the little, youknow, your desk guy with Fannie
Mae. But how do I work with thefolks I know at Fannie Mae or
underwriting team to providesome terms, get waivers where
appropriate to provide the bestexecution for them. So it's, you
(42:44):
know, it was, it was definitelya transition for me to go from
the Redstone to an agencyoriginations model. So today,
I'll tell you what we do atBellwether. If we get a new tax
exempt on transaction in thedoor, we typically will size it
up for both Fannie Mae we'll doa side by side comparison of
(43:07):
Fannie Mae, Freddie Mac andprivate placement, including the
costs and come down to a netproceeds level. And then present
that to the client. To talkabout the pros and the cons.
This may be the net bestexecution, but your
construction, you know, you'vegot an equity partner who
requires a construction loan. Soit's got to be a forward which
(43:28):
we can't do through. So it's,it's, that's where I think we
add value is presenting alimited amount of options, being
completely transparent aboutwhat's good about this execution
today, what's not good at thistime? And really time being
their trusted advisor. Yeah, doyou not giving too many options,
(43:50):
right to FHA as well.
Mordecai Rosenberg (43:51):
So do you present that too?
Jim Gillespie (43:53):
Sometimes if they would like to see it will be
like the cashback bondstructure. But yeah. If they
have time, a lot of times withbond deals there is got a gun to
their head as to regards to theexpiration of the bond
allocation.
Mordecai Rosenberg (44:09):
Yeah. Yeah, I guess that's one benefit of
doing tax credit deals is that,you know, that's always like,
one of the questions is how manyoptions to show, right, because
you have, you know, just justFannie Mae alone, you could show
30 Different options betweenYeah, and that leverage levels
and IO and term and, you know,all that. Right. So, but with a
(44:30):
tax credit to like, you know,they need 1517 years financing.
Right, that so there's like oneterm because that has to be has
to go through the length of thetax credit compliance, well, tax
credit or no period, complianceperiod, maybe have longer and
then it's, it's just about fewervariables, maybe in terms of
(44:51):
what their considerations evencould be.
Jim Gillespie (44:56):
Right. I mean, that's, you know, a music
analogy. I don't know if you'veever worked with an interior
designer at like, go to re-doyour bathroom and you go to pick
out tile, or, God forbid,recently go to Duane Reade and
try to pick out water becausethere's like 50 Different waters
now, right? But I can't walkinto a tile store and pick out
(45:17):
tile for that. There's way toomany options. So why what's the
best thing an interior designerdoes is like, here's, I know
your taste, I know your style,like we do, I want to know what
the background on your deal whatyour equity needs. It's my job
to give you four options. Here'syour four best options, the
pros, cons, you don't like anyof them, we'll get back to the
drawing, and I've never used theinterior designer analogy.
Mordecai Rosenberg (45:40):
Like no, it's a good one. It's a good
one. It also makes me think,like, I read so first of all,
you have a lot of options. Thatis difficult, right? But even
worse than that is open ended.
Where it's like, you know, theexample of tomato sauces, right?
Where it's like, you know, thatyou have you had, you know, 50
(46:00):
tomato sauces, then in thesupermarket aisle, someone won't
pick any, if there's three, thenthey'll make a decision. Right?
But if you said someone, like,design your own tomato sauce,
make your own decide theconsistency and what's added to
it right, then it's like, forgetit. Yeah, I'll just get, you
know, I'll just get pizza. Soit's, that's, you know, when
(46:23):
when you are guiding a client ina conversation? There's a
balance between like, alright,well, what would you like, you
know, what, you know, kind of,you know, this, what the sky was
the limit, like, what would youwant, but also really trying to
understand their needs, and thensay, Okay, well, based on what
you're telling me, here are thethree things I would consider.
(46:44):
Right, right. It's much easier.
I mean, like, I can feel myheart rate just slow when I hear
three options, as opposed to 15.
Right. Exactly. Yeah. And haveyou stayed exclusively in
affordable housing, likethroughout your career? Or did
you have you done market rate?
(47:05):
Also?
Jim Gillespie (47:06):
I have done maybe a handful of market rate. But
yeah, it's all been affordable.
From ad 20s, to 100%. Taxcredits to Section Eight
acquisition.
Mordecai Rosenberg (47:23):
I always liked when I was originating, I
liked affordable and bond deals.
Because I felt like it also itwas like a bit of a moat. Right.
Like there. Were there certainthings that if I'm calling you
and saying, Oh, hey, you know, Isee your loan is maturing, you
do want to refinance? Well, nowyou're like one of like, 1000
other people that are callingthem, right. If I said, Oh, I
see you have tax exempt bonds.
(47:47):
Yeah, we have a structure wherewe can, you know, purchase the
bonds. Yeah. And then createsome kind of a synthetic
refinance, where we're going toput them in a trust and issue
certificates out of the trustand you don't have you won't
have to Yeah, just reset yourlockout, like, the things that I
could say that no one else thatI knew that they probably
(48:09):
weren't hearing elsewhere. Youknow, you could in the bond
world, there's an affordablehousing, there's just there's
more. There's fewer people thatspeak the language.
Jim Gillespie (48:21):
Right. It's specialized. I mean, that's we
try to really create a teamapproach at Bellwether. I mean,
because we have I don't know howmany originators non affordable.
I mean, that's the mostly thebiggest part of our, our
business minutes probably adozen affordable, focused
originators but more and moremarket rate originators running
(48:44):
up against or up into a anaffordable opportunity. And so
rather than try to school themon the dozens of acronyms, we
try to team them up with anaffordable originator who can
walk and talk about language.
Mordecai Rosenberg (49:01):
Yeah. Yeah, that makes that makes sense. You
know, I feel like I see with notall originators but a lot. I
think, this is how my brainworks. Also, it's like, it's
usually talked about, like firstlike, first in first out, like,
it's that it seems like you havemore than one product coming in.
But for me, it's like once I hadone product that landed in my
(49:22):
brain, like that's what Iunderstood, and it was hard for
me to like, adapt to sellingthat there's I started an FHA
and it's like, wires your brainfor that for that product. And
then to sell Fannie or Freddiejust was a lot more challenging
for me to wrap my head around,you know, but it's the same when
(49:44):
people start with with Fannie orFreddie or or then go to go to
FHA. But market rate andaffordable like if you're used
to those considerations that amarket rate deal has, I would
imagine that it's it's it'stougher for the My brain to
learn a new language.
Jim Gillespie (50:01):
Right. I mean, FHA, you know, I will sell FHA
and I know enough about FHA tosell it. But I also 100% Bring
in kind of our underwritingteam, we've got a kind of a
structuring person who I'llbring in. But that's one thing I
think in production is to admit,when you don't know the answer.
(50:25):
I've seen it, you know, before,where originator, you know,
walks into an affordabledeveloper experienced affordable
developers and tries to pretendthey know what they're talking
about, and it doesn't sit well.
So yeah, admit when you don'tknow. And that's what FHA, I
mean, I understand the productand some of its nuances, but
(50:46):
there's just like, there's somany nuances that that's why you
have specific map underwriters,right? Yeah. That's not a roll
I'm applying for.
Mordecai Rosenberg (50:59):
No, but you know, one person's confusion is
another is another one's youknow, playgrounds are there.
Thank God, they're there. Yeah,your point about the kind of
coming full circle, I think thatthe fact that I think you came
out of related coming out ofwith the developer mindset, you
know, like, just trying toreally be able to be probably
gives you an ability to putyourself in their shoes, and I
(51:22):
think picking up on people'senergy. I think that's probably
I mean, you and I both know thatprobably a lot more people have
are like, totally blind, likeenergy that someone's get, you
know, giving off, like, youknow, you're seeing a
conversation and you're like,how are they not aware that that
person is totally uninterested?
You know, and you see it inretail? For sure you see it, you
know, that? So? So I thinkthat's, yeah, I guess, you know,
(51:46):
just a couple of minutes, if youhave to say like, if I ask your
clients who has been with youfor all these years, it's like,
why do you do business with JimGillespie? What do you think
they would? What would they say?
Jim Gillespie (51:59):
Like, let's take a poll and see what the survey
results say.
Mordecai Rosenberg (52:04):
I think, you know, by the way, it's a
worthwhile poll to do to reachout to me.
Jim Gillespie (52:08):
I think you're right, I think that's great.
Yeah, we had before thepandemic, I'm gonna get no
rattle, engaged with some of theexecutives doing full 360s
reviews, including from some ofour clients, but then we pulled
the plan during the pandemic,not knowing what was going to
happen. I would love to, I wouldlove to see that picked up
(52:32):
again. Because yeah, I wouldlove to get that feedback. But I
would hope they would say he'sjust he is an honest man of
integrity. Who picks up thephone when we need to talk?
Mordecai Rosenberg (52:45):
Yeah. Yeah.
I think that it's, it'sactually, it could be very
interesting for you to spendsome time going to your clients
and saying, Well, you know, whydo you do business with me?
Right? And, and well, there'stwo ways to approach it first of
all, like, because when they'regiving you the answer, they're
selling themselves. Why they dobusiness with you? Right? Yeah.
Cuz like, well, because like,you're you always come through
(53:07):
and you pick up the phone, andyou're like, oh, okay, that's
great. Oh, by the way, I havethis other deal. I wanted to
like me to talk to you about it,because you're, you're having
them do the selling for you.
Another approach that I've heardis there's certain types of
clientele that that you likedoing business with, right? If
you had to think of this as anexercise that Dan Sullivan, my
(53:27):
executive coach does withpeople. But he says, All right,
think about like that threeclients that if every, everyone
were just like that, it'd begreat, your life would be great,
you know. And now think of threeclients, two or three clients
where like, if you never had totalk to someone else like that
in your life, like that would bealso great. And now say, so now
(53:48):
you have the contrast. I say,Well, what is it about that
first group that makes you wantto do business with them? Yeah,
they are visionary. Yeah, theyhave a long term perspective,
right? They value relationship.
And let's say you try to come upwith like, eight things, right?
That here's what you're thethings. And now you go sit down
with them and say, Alright, Iwas thinking about, like, why I
(54:10):
like doing business with you.
And here are the things that Icame up with, like, this is what
i Does this resonate as far asthings that you relate to,
right? And they'll seethemselves like on the page.
It's like, oh, yeah, no one'sever gotten me. Like that.
Right. And so the next thing is,I'd love to
Jim Gillespie (54:28):
Except to be acknowleged - getting to be
acknowledged.
Mordecai Rosenberg (54:32):
Exactly.
Acknowledging yet. Well you canthen do is to, is to say, you
know, I'd love to expand to dobusiness with other people who
fit these criteria. Have thesesimilar character traits or
features? Is there anyone youthink I should speak to write
because people like spendingtime their networks are
(54:52):
oftentimes similar tothemselves, right? And so you
can use that as like a as far asnetworking, it's another
potential tool. To, to use.
Jim Gillespie (55:02):
Yep, yep. Yep. I like that idea like that.
Mordecai Rosenberg (55:06):
Well, Jim, I really appreciate that your your
time. You know, you've you'vebeen a giant in the affordable
housing space. Everyone is noteveryone is significant. Forget
about six degrees of separation.
Yeah, I think everyone is onedegree suffered in the
affordable housing space. Youknow, there's no one more than
like one degree removed andhearing about your experience
through related and your abilityto read people's energy and just
(55:31):
respond to that is really,really awesome. So I appreciate
the time and the relationship.
Jim Gillespie (55:40):
Always a pleasure. Always a pleasure,
Mordecai. You're one of myfavorites.
Mordecai Rosenberg (55:45):
Thank you.
Thank you, Jimbo. All right.
Until next time,
Jim Gillespi (55:49):
All right, thanks.
Mordecai Rosenberg (55:50):
I'll talk to you later.
Jim Gillespie (55:51):
See you later.
Mordecai Rosenberg (55:52):
Bye.
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