Importance of innovation! Multifamily experts weigh in on the trends and opportunities in the CRE space


A special Walker Webcast comes your way as big powerhouses share a wealth of experience and industry insights from the National Multifamily Housing Council (NMHC) Conference!

Join this conversation with friends, former chairpersons, and incredibly successful entrepreneurs and leaders in the multifamily industry:

  • Doug Bibby, President of NMHC

  • Daryl J. Carter, Founder, Chairman, and CEO of Avanath Capital Management, LLC, a California-based investment firm that specializes in affordable and workforce communities

  • David Schwartz, CEO, Chairman, and Co-Founder of Waterton, a real estate investment and property management company specializing in multifamily, senior living, and hospitality

  • Susan Ansel, President and CEO of Gables Residential, a private REIT focused on development, acquisition, and management of multifamily communities

In this engaging discussion moderated by Willy, these industry greats share their reflections on NMHC – a national organization with more than 1,700 members promoting and advocating for the multifamily industry since 2001. Doug Bibby shares that his sole cause in his successful run of the NMHC was putting people in homes. "That was always a motivator for me. We're putting a roof over people's heads, we're not polluting the environment, and we're not doing bad things. We're actually helping people achieve their dreams." 

Willy asks Doug to share how he took the rest of his executive team and turned Fannie Mae from being a huge liability to the taxpayers, becoming one of the truly great corporations in America. "We have reinvented what was essentially a government bureaucracy, with 20% of the employees who were civil servants, and there was one product line. It was a 30-year fixed-rate mortgage. There were no arms, no multifamily, no embassy. And we were able to reinvent everything." He brought his 16-year experience and excitement to his role at NMHC.

Daryl Carter acknowledges the values that Doug had that were instrumental in positively shaping the industry, one in which to accommodate more institutional capital. Starting Waterton in 1995 shows a big difference in scale level and the types of funds they're raising with the whole process transforming materially. 

Sue Ansel attributes her involvement with NMHC as very helpful to her growth. As CEO of a major real estate corporation and chairwoman of NHMC, the experience of picking the brains of impactful executives in other large organizations impacts her own leadership. "Those are some of the really unique opportunities that we get in these roles and a huge chance of a lifetime."

David Schwartz enumerates the highlights of being NMHC chairman, growing in servant leadership, emotional intelligence, authenticity, and trust. He covers how being underbuilt as an industry puts us behind for over a decade that we're just not building enough housing, resulting in rent inflation.

Daryl Carter is all praises for the culture that has been built at NMHC. There may have been "a lot of work, but also a lot of joy," says Daryl. As chairman, he cites the advancement in prioritizing inclusion in the industry and seeing talent and opportunity in all shapes and forms. "I think we've made a lot of progress, but we have a long way to go, but we're moving there. You have to be an optimist in this business."

Key Ideas:

[01:31] The secret to Midwesterners’ success in the multifamily industry
[01:55] David Schwartz's loyalty to the Midwest
[03:19] Doug Bibby explains the beauty and deeper purpose of working at Fannie Mae and CEO David Maxwell’s eye for talent and diversity
[06:22]Daryl Carter retells the beginnings of Avanath and Doug Bibby’s influence
[08:14] The progression of Waterton in the last 25 years
[10:19] Sue’s experience at Gables since 1987 leading up to her current CEO position and her dream to be the General Manager of Chicago Cubs 
[12:32] Sue encouraging the youth to “get involved” and the career opportunities for women in the NHMC
[15:22] Doug’s emphasis on gender as a non-factor on NHMC leadership and effortless chairman transitions due to the team’s continuity
[17:41] Daryl describes his work as NHMC chair: a pleasure and a developing closeness
[19:45] The perks of the NHMC chair - Daryl and Doug’s golf game with Bill Clinton
[20:44] David Schwartz’s main takeaways from Bob Iger’s book
[23:18] How Sue established trust as Gables CEO
[26:11] Doug’s advice to his successors: expectation-setting, honesty, and proactivity
[29:59] The scale of NHMC in comparison to 2001
[31:25] Daryl points out the importance of diversity, the long journey ahead, and providing more opportunities for minorities
[35:26] The key to Gables’ positive approach to diversity: meritocracy
[37:12] David dissects how inflation and underbuilding affects the demand to buy assets
[39:16] The challenge of producing adequate affordable housing and gathering allies to convince policymakers
[42:59] Daryl’s suggestion to administer effective and accurate research on evictions
[44:31] Europe’s and Asia’s growing interest in affordable housing investments
[46:35] Fannie Mae’s focus on affordability and the detrimental effect of conservatorship
[49:50] How David utilizes technology to improve lower casualty risk, leak detection, and security at Waterton
[52:53] Final words of gratitude for Doug Bibby’s efforts in the industry


Follow Daryl Cater on LinkedIn.
Learn more about Doug Bibby.
Follow David Schwartz on LinkedIn.
Follow Susan Ansel on LinkedIn.
Check out Walter & Dunlop’s website.

Webcast Transcript:

Willy Walker: So good afternoon, everybody. I am Willy Walker, and I think I came up with this idea to have a look back on Doug Bibby's leadership of NHMC. What's happened in the multifamily industry since 2001, when Doug took over running NMHC and then talk about where the industry is going forward. As Doug and I talked about this, we thought about asking three both friends, former chairmen and women of NMHC, and incredibly successful entrepreneurs and leaders in the multifamily industry to join us to both reflect upon Doug's leadership, as well as give some insights as it relates to their own paths in this industry and what they see as it relates to opportunities going forward. 

I think in this room my guests don't need any introduction but Sue Ansell from Gables, David Schwartz from Waterton, and Daryl Carter from Avanath. As I was doing a little bit of research on my esteemed guests today, one of the things that jumped out at me is that you all went to college in the Midwest. So we have DePauw University, the University of Illinois, Denison University, and the University of Michigan. And I'm just curious, Sue, what is it about all of you Midwesterners that made you so successful in the multifamily industry? 

Sue Ansel: You know, I think Midwesterners grew up knowing that you have to work hard and there are many keys and things that help you be successful, but you can't underestimate hard work. 

Willy Walker: So, David, you're the only one who was educated in the Midwest and stayed in the Midwest. What memo didn't you get as it relates to getting your education there and then move on?

David Schwartz: So, I can't leave Chicago in spite of everything and every reason to leave it. I think it's one of the great cities of the world. It's a real big city, it's really New York and Chicago are the two great cities. True urban lifestyles you can have. And so I love it. But I do get out of there in January. I spend quite a bit of time outside of it in January, and I go cold too cold to ski.

Willy Walker: Doug, you went to Denison University and then got into a career in the PR industry with J. Walter Thompson, the ad industry. And we're in D.C. and we're running their DC office before going to Fannie Mae and being at Fannie Mae during a very important time in Fannie’s tenure under our mutual friend David Maxwell, where with you and the rest of the executive team, you took Fannie Mae from being a huge liability to the American taxpayer and country to being one of the truly great corporations in America. 

Thinking back on that, before we get to your time at NMHC, what did you take away from those sixteen years at Fannie Mae and working with David as far as making Fannie Mae truly one of the “good to great” companies, as Jim Collins talks about in his book? 

Doug Bibby: As I said before, the beauty of working at Fannie was, we were able to reinvent what was essentially a government bureaucracy, and we still had like 20 percent of the employees when I joined were civil servants. There was one product line, it was a 30-year fixed rate mortgage. There were no arms, no multifamily, no Mortgage-Backed Securities (MBS). And we were able to reinvent everything that we did. I had two small kids, I jumped out of bed every day. I was there at 7:45am and I went home, probably at 6:45 at night. I loved it. And part of it was David's leadership. He just picked great people. He had an eye for talent, and it didn't matter if there was a perfect fit or not. He was way ahead of his time in the interest of women and minorities. By the time he left, and you looked at our board table, it was pretty diverse. You know, Daryl and I talked about this in the past. When you have an executive committee that's really diverse, your recruiting gets so much easier. 

But anyway, the opportunity to reinvent a company and to have it recognized. The biggest return that Peter Lynch ever made was the investment in Fannie Mae's stock. 

Willy Walker: And as you think back on your time at Fannie and what you learned in that 16-year period, all the excitement that you brought to your role at NMHC. As you now look back on your 20 years at NMHC, what's the common thread there? Beyond diversity and opportunity for women and minorities?

Doug Bibby: Well, it's the real estate industry, and it's real estate finance, in both cases. I came into this job with a network of people that I knew, and they were in both in single family and multifamily. Most of my time at Fannie was on the single-family side because that was 95% of our business and worked on bringing in the revenue. But the common theme was, while I move from single-family, understanding single-family to understanding multifamily, we were putting people in homes. And that has always been a motivator for me. And it would always help me recruit at Fannie Mae is we're putting a roof over people's heads and we're not polluting the environment. Not doing bad things. We're actually helping people achieve their dream. 

Willy Walker: Daryl, one of the things that I've heard Doug talk about as it relates to the transformation of the multifamily industry from when he joined to now is the institutionalization of the industry and capital formation. You've been incredibly fortunate and successful at Avanath of creating this fantastic institutional money management firm. Would that have been possible in 2000? 

Daryl Carter: In 2000, yes. Well, we started in 1991. One interesting note to just piggyback what Doug said, we were in 1992, when I started my company. There was an article about our company, and I got a phone call from a guy named Larry Dale, and I didn’t know him from Adam. And he said, “I'm Larry Dale. I'm an EVP at Fannie Mae, and we want to talk to you about becoming a lender.” And I'm like, “What's that?” And that led to a journey of building a company that we started and eventually in 1994 that we later sold for over a hundred million dollars. And so that worked. (Everyone laughs.) 

But I didn't know Doug then, but all the values that Doug has and that many of the people at Fannie then had and still have been instrumental in you coming to NMHC shaping the industry in a positive way. One is to accommodate more institutional capital. Because the one thing when I actually started in the early 90s and maybe a decade late, there was a thing with pension funds. If it had a bed in it, they wouldn't invest in it. That was in 1991 and then we're now the favorite asset class. But that's a pretty big step to go in three years. 

Willy Walker: And David on that, I mean, you started Waterton in ‘95. Think about that first when you were a private company, then capital raising versus now Waterton at its scaled level and the types of funds you're raising. I mean, I'm assuming that over the last 25 years, that whole process has just transformed materially. 

David Schwartz: Yeah. The way we progressed from ‘95 till today, what I call the “food chain of equity capital”. But it's always been larger investors, so that theme has always stayed the same. When I left Equity Residential (EQR) to form Waterton in 1995, the one thing I was missing is I didn't know how to find capital. That was not what I did in any part of my career, and I made a call to a guy named Steve Quazzo. Steve was a former equity person who founded Pearlmark. And he was the capital guy there, and he's like, “I know a person who's really interested in multifamily, Penny Pritzker” and he gave me her number. I cold called her, I told her I had a deal in Austin, Texas, and the next thing you know, they were our partner. And then they did our first fund with the Pritzker family. And that's how we got launched into business off of one cold call. There was a warm call from Steve, but then we progressed to investors like Lehman Brothers and GE Capital, which is how I met Rick Hurd and just kept progressing. Daryl did some stuff with us. We used to talk in the 90s about being struggling young artists and trying to help each other. And, you know, we ultimately progressed into pensions and then commingled funds. 

Willy Walker: Sue, you started at Gable's just about that same time, right around ‘95-’96?

Sue Ansel: 1987. 

Willy Walker: ‘87? Hang on a second. Hang on. It says on your bio on the Gables website, you've been at the company for 25 years.

Sue Ansel: That’s 25 plus. (Everyone laughs.)

Willy Walker: You're eternally at Gables for 25 years. I like that. 

Sue Ansel: So my history is I joined the company when we were Trammell Crow Residential in 1987. And so my career has been as a merchant builder. Then in ‘94 went public as a public company, and that's when Gables was formed. Operated as a public company for eleven years and 2005 taken private in the leveraged buyout as a closed end fund and then morphed in 2015 to an open-end fund. So I've had the advantage of seeing lots of different capital structures. Real estate is a capital-intensive business. There's lots of ways to raise capital and the cycle ebbs and flows, and the company I work for is a great picture of how that happens. 

Willy Walker: How long along that continuum was it when you decided I want to be CEO of this company someday? 

Sue Ansel: So, that was never an aspiration for me. I sit in this seat because I had worked in or with each department in the company, with the exception of accounting, worked for me over my time at Crowe and Gables, my background is a degree in economics. So, you know, a financial thing, you might think it ended up in the accounting or that side of the shop, but never did. But I sit in this seat because I had the most diverse background and the greatest depth of knowledge about the organization when it was time for a new CEO. 

Daryl Carter: Sue’s aspiration is to be the general manager of the Chicago Cubs. (Everyone laughs.)

Sue Ansel: Right, exactly right. 

Willy Walker: GM of the Chicago Cubs. When did you give up on that dream? 

Doug Bibby: She hasn't. 

Daryl Carter: She hasn't. 

David Schwartz: And they could use you. (Everyone laughs.)

Sue Ansel: The Ricketts family is doing OK, but…

Willy Walker: We might have to do a group deal here where George W. Bush finally gets his dream of being commissioner of baseball and you go on to take over the Cubs. 

I guess my question is a little bit along lines of both your career aspirations but also then it was possible for a woman to be CEO of a major real estate corporation. 

Sue Ansel: It's a great company. I ride on the shoulders of all that have come before me. When I think about it, just a half a generation before me, they didn't have the same kinds of opportunities. And I would tell you, I think it was really in the late 70s and early 80s. Fannie was doing things promoting women. It really became an option at that point for women to have a career. You asked if I want to become the CEO, and that I would never say that was an aspiration. What was always an aspiration for me was to be able to learn and to be challenged. And so part of my jumping around in the company taking on different roles was because I had the opportunity to learn more. And I really encourage men, women, any young person, to try to do that. But I was blessed because I worked for men who believed in meritocracy. And if you deliver the goods, you were rewarded for that. That was not true universally early in my career. But you know, when I graduated from college in ‘82, when I came out, I don't think that those same opportunities would have been available. I think in the 90s they started to become available. 

Willy Walker: And was your involvement with NMHC helpful? 

Sue Ansel: Oh, tremendously. Again, I would tell any young person to get involved locally, federally, nationally, whatever you can, you will commit some time, but you will get so much more back from what you contribute by the relationships that you develop, and the knowledge that you develop. 

I became involved with NMHC back in the time when I was working on cable and phone technologies for our communities and trying to figure those out. Jim Marbury asked Laurie and a few of us to come and do a video for NMHC about how to do a cable contract or something. And that was really my first real involvement with NMHC. 

And we created the first Optech before NMHC took it over there, a few of us who started that. So it's a circuitous route. Be involved and you’ll reap far more rewards than time you commit.

Willy Walker: Doug, you've had plenty of chairmen and women that you have worked with. Can you talk about a difference in the leadership style of NMHC when Sue was chairwoman versus David or Daryl was chairman?

David Schwartz: and pick your favorite chair while you're at it. (Everyone laughs.)

Doug Bibby: Which kid is your favorite child?

Willy Walker: But if you would, to whatever degree you want.

Doug Bibby: It's like when people ask me if the administration changes, you know, is it better for you? Is it worse for you? It's just different. You know, one administration is going to come at us this way and the other ones are going to come out another way.

Daryl Carter: I think we're better than that. (Laughs.)

Doug Bibby: You know, everybody has their own style, you know? Going back to Peter Donovan, he wanted to have weekly calls with me and Rick Campo every quarter would want to talk to me, if then. Rick was like, “we trust you guys.” But all of them, I've just been blessed and we're able to pick, unlike some other organizations where they're elected, we're able to pick our leaders, and that's a big difference. And so I'm not going to pick a winner here. And I love Daryl, David, Sue…

Willy Walker: I’m not looking for a winner at all. I guess the other thing, Doug, is we're talking about leadership and you working with distinct chairmen and chairwomen. It's challenging when you have that constant rotation of your partner, just because you’re kind of going at it every two years of a refresh and obviously you know them before they get into the seat. But how challenging has it been over 20 years? You've had 10 chairmen and women, correct? 

Doug Bibby: I saw Don Brunner, raise your hand if you're still here. There you are. In the National Apartment Association (NAA) organization, it's a much shorter duration. And they are typical of most trade associations, the homebuilders are the same way, the realtors, and so on. We have a team together that stays together. And so, yeah, David goes off, but he stays as a past chair. We worked, Sue’s you know what off this past couple of years, there's a great continuity in the team. And I didn't create the structure. It was created by my predecessor. I love it. But it's also closing the door on some recruits of people who said, oh, I'm not, I'm not doing 10 years. But no, it's wonderful continuity. And we saw how this team worked together this past couple of years. Extraordinary. 

Willy Walker: And Daryl, all of us from outside look at the role of the chairman or chairwoman of NMHC and say, “Wow, that's a lot of work.” How much work actually is it? 

Daryl Carter: Well, first, the staff makes it so easy, they're incredible and they make you look better than you should. But you know, it is a lot of work, but it is a pleasure. And I remember one of the interesting things are the relationships I found between the people. When I was vice chair, I served under Tom Bozzuto and so I spent a lot of time in that transition. And the same thing when I went from myself to Bob DeWitt, and there's a closeness that develops. And I remember Tom Bozzuto, said “Daryl, it's a great feeling serving in the industry that is really special. Cherish every day.” And I remember Tom telling me that. But the one thing that I think Doug does in terms of culture, I mean, David and I have been friends a long time, but David is like a brother now, and that Sue is the same way. They are beyond industry colleagues. It becomes a fraternity or sorority that is so close of everybody I serve with. We have a special relationship. 

Willy Walker: Was there ever a time when you said, “Man, I got to get back to my day job?”

Daryl Carter: Well, you know, this industry is our day job. 

Willy Walker: I was going to say, I thought the exact same thing. That is a good answer. 

Daryl Carter: I mean, we're fighting for affordability. For each one of us to do it, it is far harder than for this collective group. 

Willy Walker: And when you were chairman, the most challenging issue you and Doug had to deal with? Was there legislation?

Daryl Carter: It’s always legislation.

Willy Walker: What was the issue that the two of you said, “we got a real one here.”

Daryl Carter: Some of GSC reform coming, there was some of that. The most challenging moment was dodging Bill Clinton's golf ball. (Everyone laughs.)

Doug Bibby: He almost killed us. 

Willy Walker: You played golf with Bill Clinton. 

Doug Bibby: Yeah, yeah. Well, that's kind of a perk. Bill decided to drop a ball while Daryl and I were driving our carts across the course, and we almost got killed. 

Daryl Carter: That must have been tough to lose an NMHC chair out on the golf course. 

Willy Walker: So David, in thinking about the perks of being a chairman or a past chairman, you got the opportunity to just interview Bob Iger, read his book and look at that from a leadership standpoint and have the in-depth conversation you just had. What did you take away from either Bob's book or the discussion you just had from a leadership standpoint? 

David Schwartz: I don't know how many were there, but that was one of the highlights of my chairmanship. I missed out on a lot of the perks at least the first year of my chairmanship, we didn't have one meeting. It was all virtual. But Bob's book is great. It's a great leadership book. I don't know if you guys have read it. 

I would say some of the things he says about, and we didn't talk about it today, but servant leadership and emotional intelligence, authenticity and trust are probably my biggest takeaways, and he was so good at that he is the real deal. And you know, someone like Steve Jobs, who was basically at war with his predecessor and had no trust in the company and then turns around and sells his business, Pixar. That was Bob. That was all Bob, and he was masterful at that and with his people. And so it was a great book and I'm going to implement a lot of the things I've learned in it.

Willy Walker: Sue, when you and I were at lunch, we were talking about what David just talked about, trust and what David just underscored. I wrote Bob a note and said to him after reading his book that rather than being called Ride of a Lifetime, that it should have been called Keeper of Legacies. Because, as David talked to Iger about during his discussion, he convinced Steve Jobs to sell him his baby. He convinced George Lucas to sell him his baby. I mean, he has four billionaire entrepreneurs who had created these companies, and he convinced them that he was the keeper of their legacies. And there's some kind of quality that Bob Iger has that got those people who are all you can make whatever comments you want about Rupert Murdoch or Steve Jobs, but clearly not easy people to do things with. And he got them to give them his companies. 

Sue, as you think about how you built Gables, one of the things that you and I have talked about is trust and that we are in a people business. How have you built up that trust in your leadership at Gables in the CEO role? 

Sue Ansel: Well, I think one of the benefits I've had is having had the trust of the people that were ahead of me. And so I've always felt that my job was to continue with their legacy and share that same level of trust with their organization. We benefit from the fact that we have a lot of tenure within the organization, so similar to the NMHC chairs who I think of as my brothers and sisters and there is a bond and relationship. I have that same relationship with those people that I work with within Gables. And I encourage them to have that same level of relationship with the people they work with. There's nothing that makes me happier than when someone in Gables has a high degree of success and is recognized for that. That's a win for all. And so when I think every day about what needs to happen at the company, I'm also thinking about what we can do to help the associates within Gables be successful, get the recognition and share in the rewards that we're able to achieve as an organization. 

I'm going to add on to something that these guys didn't say, if I can, about the opportunity to interview different folks and David, God bless him, didn't get a lot of the perks that the chair role typically does, but for me, one of the best things was having the 15, 20, 30 minutes with whomever you're interviewing backstage, not on screen, not on camera to really pick their brain and ask them. As you well know, for things like this, you read a lot and you prepare and you do that for each of these interviews and you have a list of 100 things that you'd like to ask and having that time backstage in the green room to really poke at it, you know? Alan Mulally was somebody who was here years ago, and he was the chairman of Ford or had just come from Ford. He'd been at Boeing before, but just having the opportunity to talk to him and think about the impact that he had on the people he had in those large organizations, the trust that he had to place in the people and that they had to place in him coming from Boeing to Ford. That's a pretty big change. So those are some of the really unique opportunities that we get in these roles, and they are chances of a lifetime. 

Willy Walker: Yeah. When you think back to when you first joined NMHC and now as you think about passing the reins to somebody else, what were the things that you did to establish that trust when you first got here? What were the first things you did to say, I'm the right person for this job? And then what would you consult or advise your successor as it relates to the quickest way for him or her to establish that same kind of trust? 

Doug Bibby: Well, the very first thing I did is I told the staff who I am, what my expectations are. Don't hide bad news for me. You know, let's take action on it as early as we can. Always be honest with me, always be forthright and just sort of set a tone with the staff and then sort of tackle the industry's issues from a strategic point of view. 

Think back to 2001, rental housing was considered either housing for the poor or a way station to homeownership. If you looked at the valuations of multifamily assets, you know, office and retail had probably a 200 to 300 basis point advantage over multifamily. The technology side of the business was moribund. We're beta testing property management software in 2002. And so we had a lot to accomplish. And then investors didn't really understand the stability predictability of returns of the business. So I talked to investors international as well as domestic, and they'd say, “We don't like your business,” and I say, “Well, why not?” At that time, we had 80 percent turnover of residents, which has also gone down significantly. And they would say, “Well, with the office business. We know we got a 10-year lease. We know exactly what we're getting.” I said, “Yeah, but it may have been a lousy lease, you know, from the owner’s perspective. And so when we turn our assets, typically our units, we typically price them up. And so all of a sudden, you know, slowly and Daryl was a great example of this too, you know, on the affordable side of the business, we would say, oh gosh, it was earlier if it had a bed, then it was the housing for the workforce in the affordable stuff. Oh my god, it's risky. And Daryl really convinced, you know, with the numbers, how compelling his story is. His story and others in the business, we began to really convince investors that this is a highly attractive sector. And so it was really just trying to tackle all these different things where the perception was, we were just housing for the poor. It was a cowboy business with no sophistication and so on. And I think we built a story. Where today, we are a highly valued asset. We are respected. We're way up the technology curve. Investors understand our business. They prefer our business. And I feel we're in a lot stronger position than when I took over. But that's the job that the staff of NMHC have done. They're remarkable people. I'm proud of them every single day.

Willy Walker: As we all come to this conference that I think you said to me, has 4,100 people. 

Doug Bibby: Forty-two hundred…

Willy Walker: Clearly, we all look at the growth of the industry, but as it relates to the influence of NMHC, you go back to 2001 when people kind of had the apartment industry in that box you just outlined. Today, fast forward: an institutionalized asset, millions of Americans living in rental housing. Incredible investor returns, but what is that enabled and NMHC to do? You obviously now have a large pack that raises a lot of money on an annual basis to have political influence. But as you sit there and say, OK, I can look from my seat of what we've done at Walker & Dunlop and the influence that we have and say I can do this and this today that we couldn't do then. Give us that parallel of where you were in 2001 and to where you are today. 

Doug Bibby: Well, a couple of things. Number one, when we brought Cindy Chetty in along with Peter Donovan's leadership, we built our PAC up so that we truly have a seat at the table. When you're the number two disperser of PAC funds in all of real estate, you garner attention. We've also been extremely balanced so that when we go up on the hill since we're giving roughly 50-50 to Democrats and Republicans, they know we're being fair. And so, you know, I think those are some of the things that really resonate, I think, with people. The third thing is really, I've always said, go up on Capitol Hill, not with your hat in your hand, go up on Capitol Hill and with the media, with the facts. Don't try to sugarcoat things. Give them the facts. And I think we gained a lot of respect, particularly from the media, but also from the staff who do all the work on Capitol Hill for our integrity and the integrity of our facts and the fact that we don't go up there and say, give us something. So, I think those are the keys for me. 

Willy Walker: Daryl, you had a panel earlier today on diversity and inclusion. And as you think about the industry and where it's come over the last two decades and what you talked about this morning on your panel, how far have we come and how far do we have to go? 

Daryl Carter: We've still got a long way to go number one, but we've made progress. And I think that part of it is, you know, I think Doug has been instrumental relative to any other trade association. I mean, you know, Peter Donovan and Rick Campo really were the start at this initiative. And I just remember Rick who just embraced that, and he came to me, and he said, “I need to find black and Latino board members.” There was leadership and way before George Floyd. And we've had a very direct approach in terms of making sure we put the issues out there, which is what we talked about today. But more importantly, in my panel today, I tried to say here are three incredibly successful entrepreneurs who are building businesses and aren't they amazing in what they've created? That is something that the industry should see that talent and opportunity comes in a lot of shapes and forms. And I think we've made a lot of progress. I think we still have a long way to go, but we're moving there. I'm an optimist. You have to be an optimist in this business.

Willy Walker: And if you had a magic wand to wave Daryl as it relates to the one or two things that need to be changed to provide minorities with more opportunity, what is it? 

Daryl Carter: Oh, it's number one, which is the game changer, is capital flows. I listened to David, and he was blessed that he had one cold call, well a warm call. You know, when we started my company in 1991, Capri Capital, I mentioned today it was my 57th meeting that I got a yes. With all due respect, my first 20, my pitch sucked, right? And you know, one of the things that you learn is, the first NO that I got, I was pissed and then you start listening to the no's, you start processing, you start getting better at it, you start listening and say, okay, note to self, don't say this, say that. 

I think the game changer with any company and emerging companies is access to capital. That's the number one thing, and we really have to create some opportunities. Ninety percent of the capital flows are going to big institutional players. And just as we have innovation, when you look at the tech business, you know, I look at, for instance, General Motors, why don't they dominate the electric car business? They should. They had a head start. But who does it? It's Tesla, someone that's new. And so that's the thing that I think about when you look at diverse firms and you look at innovation, that's the next Tesla because it's never going to be the large incumbent company that makes the breakthrough because they have that sense of incumbency. Hey, we're, you know, we have gasoline cars and that's our business. So we have to start looking at the industry and innovation in the same way. 

Willy Walker: Sue, Gables is very diverse. What was the key to getting diversity in the sense… obviously it's been something that has been top of mind for you? But was there anything that Gables did to make it so that as I scan through your website, the number of women and minorities that show up is fantastic in comparison to many, many other competitive firms that I would look at. 

Sue Ansel: I attribute it back to what I spoke to before, which was I worked for the leadership in our organization that believed in meritocracy, and we were successful in finding diverse associates throughout the organization who were creative, were thoughtful, smart, and they brought the goods in so that they were promoted. We continue to focus on it and continue to be a focus for us. It is an industry imperative. We have to look like the people that we are serving, and my organization does it as much as we'd like to. It's not an initiative. It has to be part of your core. 

Willy Walker: So David, I want to shift a little bit to looking forward. Your friend and my friend Peter Linneman was on the Walker Webcast two weeks ago and basically said, buy every asset you possibly can buy, cap rates are going down from here. And if there was one message Peter wanted everyone on the Webcast to hear was he made a mistake 10 years ago thinking that cap rates were so tight they would go tighter. And he missed the opportunity of that whole run up in asset pricing and basically said, everyone don't make the same mistake I made. So if we look right now and what Waterton is doing, are you on the Peter Linneman bandwagon of buying every asset you can find? Or are you saying man, 3.2 cap rate in Tampa Bay seems a little tight to me? 

David Schwartz: Yeah. Well, I would say we would like to buy as many assets as we can, and that's very challenging. Peter's right, and he's always said this that even with rising interest rates, which we've been seeing, cap rates are holding firm or perhaps trending down a little bit and it's because of all the equity capital in the marketplace. But it's also because we have the highest level of rent inflation we've ever seen in our careers. And when I interviewed Sam Zell at ULI, I asked him about the rent inflation in the ‘70s. That was the last time we really had significant inflation. He said there was no rent inflation. Everything else went up in price except apartments because we overbuilt apartments. So this is truly a once in a lifetime period where we're going to see rent growth like this. So, we do want to buy assets; it's just so competitive and we're stretching and pulling every trick in the book and competing with people like Daryl. But we'll get our share. So, I agree with them. And you know, the other thing I just would add is we're just so under-built as an industry that we're behind, we're way behind in catching up. And Doug and NMHC has been talking about this for well over a decade that we're just not building enough housing. And that's what has resulted in this rent inflation. 

Willy Walker: Doug, it's interesting that David brings up Sam Zell because Sam Zell was one of the founders of NMHC to push back on rent control measures that were coming out of Washington. So, if you go back to 1978, right after that period, David said, we weren't seeing inflationary pressures in housing. That's the founding of NMHC. As you think forward Doug, your successor, what's the big issue that he or she is going to face? 

Doug Bibby: Those rent control is a symptom of the affordability challenge, and so is an eviction moratorium. The biggest challenge that we face is that, you know, we need to build more housing and we need to find ways structurally, financially, and otherwise to produce more affordable housing. And so that ought to be and I'm going to make sure that I communicate that to Ken and the search team that's got to be the overarching concern is there are just too many people who've been left behind. And we've got to figure out better ways of doing it. 

You know, Jim Schlemmer firm building, you know, a product, you know that that really makes it. And you know, Daryl's business concentrates on this. And so the more people we have working in this and the problem that we face Willy is we don't have big issues that we can fix at the federal level. And you can't wave a magic wand through federal legislation to do anything about this. Yeah, you can reform HUD's Section eight program and then you can double the number of vouchers, you can triple the number of vouchers and that will make a difference. But at the end of the day, it's exclusionary zoning. It is NIMBYism that runs rampant, that restricts our ability to produce affordable housing. So, I think that's going to be the big challenge going forward. 

Willy Walker: And so with that, how do you solve that? Because at its core, it is a local issue. It's a local jurisdiction yet we're all investing quite honestly in a national organization. So there's somewhat of a mismatch between where the dollars are flowing to have an impact on this. So, how does NMHC think about that as it relates to you all or for all practical purposes, centralized and it needs to be more of a decentralized process? 

Doug Bibby: Well, we have to have allies. We have our allies in NAA and other trade associations to help us. But it's got to be a full multi-pronged attack at the federal level, at the state level, and the local level. And I also think we've got to build some compelling cases that can be used across different sectors and in different localities. We have to build our case to show that and there are some things happening out there that we can just show a light on, and we can do that through our resources of shining a light on best practices out there. I can't go fight at City Hall. I don't have the resources to do that. The folks at NAA can do that. And so there are others out there who can help us as well. But I think we do what we can at the federal level and then we use our allies and best practices to try to convince policymakers. But it's hard. 

David Schwartz: Willy, I would just add because NMHC is involved in all these local regional battles. Prop 21. I mean, Jim Lupita's, he's at the frontline of the battles. We went into Minneapolis/St. Paul with the St. Paul rent control. We didn't win that battle. We tried hard. And there's a lot of these local apartment associations just aren't set up to do these major fights. And so we helped mobilize. We helped raise money. We do on the ground work with public relations. And we're here to assist. 

Daryl Carter: You know, I would add one other point that I would advise your successor. We have to get a better national commentary on the industry on evictions. The eviction lab at Princeton has hijacked this issue, and they've created a commentary that is certainly not representative of what happens on the ground, and we as an industry need to create our own data to talk about this. 

Sue Ansel: Well, I think you need to go back and look at what Sam Zell did in ‘78. I mean, it was really the industry that was facing the same set of circumstances. They were rent control, eviction, moratoriums popping up differently in different states. And so that's the importance of having a national conversation about it. What happens in one state will spread with its own viruses, right its own variants. And so we need to be thoughtful about trying to make it a unified discussion. And so people across the United States can understand really the misnomer about these ideas that are media darlings but are just incorrect.

Willy Walker: Daryl, you previously talked about 58 meetings before you got your first yes. Now you're known as one of the truly preeminent developers, owners of affordable housing, as well as market rate. And you also happen to be a minority owned firm. Now I'm assuming dollars are coming at you faster than you can... 

Daryl Carter: Never, never. You still have to go out there and knock lots of doors and, you know, it certainly helps that we're doing something that people have a better sense of mission about. And candidly, as I follow David as he's raised money outside the US, we've raised money outside the US. And one of the things that's fascinating, there is much more of a focus on affordable housing investment in European and Asian countries, and they view it as an appropriate asset class with appropriate risk adjusted returns. 

Willy Walker: So as you said, you can never, never have too much, but if you look at the business model that you built and your ability to deploy capital, Avanath can only do so much to move the needle as it relates to affordable housing and the supply of affordable housing in America. 

Daryl Carter: The need is incredibly great. We can try to move the needle, but it's very, very difficult. 

Willy Walker: So what's the model to create more Daryl Carters? 

Daryl Carter: Give us more money. 

Willy Walker: Thinking to some degree, that's what I'm going after.

Daryl Carter: You know, I believe that there are other companies that do what we do, that there's incredible amounts of capital that can be deployed in our space to develop and to preserve affordable housing. There's still public housing that should be converted to rental housing that's not operated by a public entity. But, you know, it's ultimately capital and it is the appropriate ability to reduce the cost of building. I mean, I'm on the board of one of the largest housing non-profits in the country, and our average cost to build a unit is over $750K a door.

Willy Walker: Doug, does Fannie and Freddie's focus on affordability right now concern you?

Doug Bibby: No, it doesn't concern me. I think from a policy perspective, that's the only thing they can do right now because you're going to have such scrutiny. You may disagree with me, probably do, but they've got so much scrutiny on them right now. I think focusing on where the need is seen to be the most is probably appropriate. 

Willy Walker: If you tell me your favorite chairman and a woman was, I'll tell you whether I agree. (laughter) But think about this. We're now, what are we, 12, 13 years since they went into conservatorship? No betting man or woman would have said 2022 arrives and they're still in conservatorship. Put a bet on in conservatorship or outside of conservatorship in 2030. 

Doug Bibby: Well, we heard yesterday that it's highly likely that the Republicans are going to take the House. And if we have a change in administration where they see regulation stifling the market's ability to do what's right. You could conceivably see that happen if, for example, Biden is reelected. You know, right now there's a regulatory regime that we're facing. It's probably going to get more onerous. And so if there's a change in the administration and in the houses of Congress, and it could be with either party, frankly, that's more conciliatory. I think it's possible that they're going to finally say, all right, but you know, what Willy, they pocket a lot of money in the Treasury every year from Fannie and Freddie, right? 

Willy Walker: You and I have talked about that a lot as it relates to at some point the federal government looks at this and they say, Man, we make a lot of money. I've yet to meet with a congressman or woman, senator or senator, female or male who said to me, oh yeah, and we got to think about how much money we make off the GSEs. It's always politics. It’s never money.

Doug Bibby: But they don't mind getting the money in the till. Let me tell you, at the end of the day, think about the billions, tens of billions of dollars that have come in from them. And you can say, well, why should we upset the apple cart? 

Willy Walker: Yeah. And then at the same time, we're also talking about a Congress that's looking at trillion one, trillion two stimulus bills that continue to come at a rate. So it's hard to think that they're thinking about tens of billions of dollars when they're talking about trillions of dollars in stimulus bills. 

David, you talked a bunch with Bob Iger about technology. I just want to look ahead, and I want to ask you and Sue to think a little bit about your businesses ten years from now and how much is what you do today going to change? Are we going to be buying assets with bitcoin? Are we going to have title insurance go away because it's all in a blockchain? What are the things that you're focused on at Waterton and Sue, to you at Gables that you're really thinking 10 years from now, this industry is materially different from where it is today?

David Schwartz: The pandemic really started to accelerate some of the technology in the works: the virtual tour technology, self-touring technology, smart apartments. And I think that continues to get better and better and ultimately reducing people on site may allow you to centralize people, automate call centers, chat bots, and virtual leasing assistance. Technology is getting good and it's getting better and ultimately saves on people. 

I think one thing we're focused on is using technology to lower casualty risk, leak detection, or better security and camera technology. Because one liability insurance is a huge issue and owners of property are liable for any crimes that happen on your property potentially. Any way we can lower the risk of casualty. And I think, getting to that one click to rent an apartment, you know, you can one click an Airbnb or someone else's apartment, but you can't do it on your own. So we're going to get there, and I think there's going to be technology with it, with all the shared apartments and the sonders of the world where people can move around subscription services and things like that. 

I know my kids who are all forced to work at home right now. They want to move around and work from home somewhere else. So creating more flexibility in leases. So there's a lot out there that's going to change. 

Willy Walker: Sue, anything to add to what David said?

Sue Ansel: Everything will change as a result of technology, everything that he said. And I think one of the solutions to help us build more affordable housing will be technology on the construction side. I think we will have tried to figure out modular, we haven't figured it out yet, but 3D printing. I think there will be technological advances that allow us to build differently, and I think that will create a meaningful change in how we do business. 

David Schwartz: A new and improved Kattera.

Willy Walker: New and improved Kattera. Exactly. 

Doug Bibby: Not costing $2B.

Willy Walker: Remember when we sat around in our conference and everyone's jaws on the floor as Michael Marks talked about what Katerra was going to do to revolutionize the construction industry. Not so much. 
So, I want to thank the four of you for joining me. And in closing, what I'd love to do is give each of you the opportunity to thank Doug for all he's done for this industry. 
And so, Sue, let me start by saying thank you for joining me up here and doing this and then let me let you say thank you to Doug. 

Sue Ansel: Well, thank you for the opportunity. It's an honor and a pleasure to celebrate all the accomplishments of Doug Bibby. I couldn't have thought of a nicer opportunity or something that would have been better for me than having the opportunity to work with you and your staff and the rest of the NMHC leaders. And I'm so proud of all that we have accomplished under your leadership. I know you will continue to be involved in our industry, even if it's not here at NMHC and I'm thankful for those opportunities. 

David Schwartz: Willy, well, first, thank you for having me and I know I've been getting emotional today a few times because Doug and I have worked so closely together for the past two years in particular, but really eight years now. And I'm going to miss it, but I have a feeling I'm going to let you keep me involved, but I'm looking forward to celebrating with you in Las Vegas at your retirement party. But this is for me, been the ride of a lifetime. 

Doug Bibby: Thank you. You didn't ask me to thank me?

Willy Walker: I'm not going to ask.

Doug Bibby: I want to thank the staff of NMHC who have made me look great so many different times. Just giving you one example is when the pandemic really started to show itself. The staff didn't come to me and say, Doug, can we do this? Can we send out advisories to the members and can we start a rent tracker? You know, they did it on their own. And they felt empowered to do it. And so I'm so proud of them every day. So, thank you. 

Daryl Carter: First thank you, Willy, for organizing and hosting this. And you know, the one thing I would say, Doug, thank you. You've really empowered us to go out and make changes. And you know, you and Cindy took us up on the hill. We didn't know what the hell to say, and you taught us how to say it. And you know, we can kind of do that on our own now. You trained us and you've kind of marshaled us. And so, thank you for that because you've expanded what this industry does. So, thank you. 

Willy Walker: So, Daryl, as you said previously, all of us are the beneficiaries of all the work that NMHC does every day. And the three of you who acted as chair men and women and Doug as the president for 20 years. We are all the beneficiaries of this industry growing and all the work you have done to make it so. So, thank you all and thank you, Doug, for everything. 

Doug Bibby: Thanks, Willy. 

Willy Walker: Appreciate it. 

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