84: Finding Your Calling With Greta Guggenheim

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This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program, you'll learn about the world of commercial real estate and find out why it's one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

Welcome to episode number 84 of Real Estate Investing Live from New York. This is your host, James Nelson. I am principal and head of Tri State Investment Sales at Avis and Young. And thank you as always for joining. It means so much to me, your comments, the ratings and sharing this with your friends. So really appreciate that. And this show is all about making you a better investor. So many inspiring stories that we've heard over over the last year and a half and really practical advice and how to get started. And you hear from some of the legends in the business with how they started out and where their career took them. And that's what I love about this business. This guy truly is the limit. So today's show is no exception. We have former CEO Greta Guggenheim joining us. She has such an incredible story. I met her through our time on the Spark Youth Formerly catalog for giving board. She's such an incredible person who gives back. And so this interview is no exception. And I think you all are going to get a lot out of this. Before we break from a word from our sponsors, I want to encourage you all to check out the Evison young site, the aytristateinvestmentsales.com because I have some important white papers on there that I think will be helpful to you. A lot of changes that are happening to the tax code, including the potential elimination of the 1031, the increase of capital gains changes to the estate tax. So I've got a white paper on the topic that you all should check out because you need to keep these kind of things in mind as you go forward and invest. So with that, we're going to have a brief word from our sponsor and we'll get right back to that interview with Greta. Thank you again.

You are listening to Real Estate Investing live from New York. To find out more about James Nelson or avison young, visit avisonyoung.com now back to our show.

And now it's time for our Investor Spotlight. And with us today is Greta Guggenheim. Greta is the former CEO and president of TPG Real Estate Finance Trust and was a firm partner of tpg. TRT is a New York Stock exchange listed commercial mortgage REIT that originates commercial Real estate mortgage loans in major markets throughout the U.S. previously, Greta was co founder and CIO of Ladder Capital. Her prior experience includes positions at Dylan Reed Capital Management, ubs, Bear Stearns and Credit Suisse. Greta serves on the ULI Board of Trustees as well as on CREFC and other charitable foundations, including Where I Met her, which was formerly the Catalog for Giving and now Spark Youth. Greta has an MBA from the Wharton School and a BA from Swarthmore. Greta, welcome and thank you so much for joining us today.

Thank you, James. And I'm honored that you invited me to your podcast.

Wonderful. Congratulations, I guess, on your recent announcement and an incredible career. Usually I start the show from the beginning and work our way from there, but maybe talk about, I mean, this is still very fresh. You just recently retired last month. Has it, has it sunk in yet?

Well, it's. No, I don't think it has. After having worked for so many years basically nonstop. It is a very big change. But I had started talking to the TPG mothership folks in 2019 about a potential retirement departure from TPG. I had helped, I recruited the team there, we grew the platform, took it public, and in 19 things were still going well in the industry and I thought it was time for me to perhaps move on. I had a stable and growing company that I could leave to a successor we started talking about. And then obviously the events of 2020 occurred, the corona crisis, and I needed to stay through that. It was exceedingly disruptive to lending businesses as it was to most all businesses, and really had to, you know, work through asset management issues. And we raised additional capital last year to help us through the crisis and really got, you know, got things back on track by year end, you know, with the assets performing, you know, very well, certainly, you know, within our peer group very well. Our whole loan portfolio was pretty resilient and, you know, started working on this in the first quarter of this year. And my official last day was the end of the first quarter, although I have agreed to stay on as an advisor for a period of time just to help with the transition. They're doing a search for a new CEO and I'm sure they'll. But I left them with a great management team and I know that they'll continue to be hugely successful.

Well, it says so much about your character and dedication that first of all, it seems you really did this in the right way where going back to 2019, you wanted to give them plenty of notice so you can have a very orderly transition. But yeah, then for the pandemic to hit. I mean, by then, I guess you were planning to have already been retired and to, you know, have to go right into the fray for another year. That must have been. Was that kind of tough just personally to grasp where you've already kind of had this plan that you're going to move on and, you know, maybe you had thoughts, look, I'm going out on top. And then to have to deal with this, you know, this challenge head on, was that, you know, mentally, was that that difficult to kind of, you know, be in it? Because I guess the other part is you probably didn't even know, you know, how much longer would it take to get the firm back on firm ground?

Yeah, I mean, I guess in the discussions in 19, I really didn't set out. And a firm timeline, like, it wasn't necessarily something that was going to happen soon. I just wanted them to be aware of my, of my thought process and just make sure that I was completely transparent. And I was concerned. I said, how do I leave? There's not a clear successor. And one of the folks, the main person I spoke to said, don't worry about it. We do it all the time in private equity. We run a search and, and we'll get a new and find a new CEO. So that was my main concern. But I wasn't saying, oh, look, I want to be out by mid 2020. I didn't have that kind of timeline, but it was certainly on my mind and on the horizon. But it was very clear in the crisis that it certainly wasn't going to be 2020, and I was fine with that. And if the crisis had taken longer and I needed to be there longer, I certainly would have stayed.

Now that we know kind of how I guess the story is, at least your real estate career in New York, at least for now, has finished up. Let's talk about where it all began. So by the sound of your voice, I'm assuming you're not a native New Yorker.

That is correct. And it's funny, it comes out at different times. Some people say, I never hear your accent. And others. And now, of course, it's coming out now that I'm focused on it, but. And others say, wow, where are you from? But I grew up in rural Kentucky, a really small farming town in the western part of the state. When I was raised there, it was between 2,000 and 3,000 people. I just looked it up. And as of 2019, it was 2,900 people. So I suspect it was fewer when I was born but it was really an idyllic childhood in terms of locale. It was a small town. I describe it as Mayberry RFD in that I would walk to school, I'd go to the soda shop after school, and my dad would be sitting there with the postmaster general and the dry cleaner guy and some of his buddies and, you know, would buy myself and my friends ice cream. And I mean, it was just a. It was. It really was like my bearing. And I just, you know, I think a lot of my. If I look back on my life and say, what were some of the key factors that affected my development throughout life? And I would say it was growing up in that small town and having a real sense of community and looking after your neighbors and knowing everyone. But even more important, and I think this is a key difference from folks who've had experience like I've had and those who were raised in a city in very defined neighborhoods, in that I went to school with the town's doctor's kids, but I also went to school with the janitors kids because there was one school and we were all good friends. And so I, you know, my. My social network was very varied and very different economic backgrounds, very different education backgrounds. And I think that gave me appreciation for all walks of life and that there are highly, highly intelligent and interesting people who may not have gone to college.

I love that. That's incredible. So what did your parents do? And any. Do you ever work or help out the family or what was that like?

Well, my father was born in this small town and lived there his entire life. My mother met him when she was from Oklahoma and was traveling with an oil exploration company that thought maybe there might be oil in western Kentucky. So they went there to meet local. And then they would go and try to meet local business or town leaders, which. My dad was one. And that's how my mom met my dad. And so they got married and stayed there. But my, My dad was born there.

He.

He in this little town of, you know, whatever, 2,000 people. My dad was, you know, an entrepreneur, if you will. He was a farmer. He had an insurance company. He was president of the bank at one point. He was, you know, early in his career. He was a. Had a floor flour fluor spar mine, which is how they help fluoride is created for toothpaste. That was a big business until the country started importing fluoride from other countries. But. And he also had a finance company, hence my exposure to finance. So he had all these.

He's definitely A jack of all trades. Wow, that's pretty amazing. I've not heard that diverse a resume. So is that where you kind of got that, that gene from? Because certainly, you know, your career, you know, you've had to be entrepreneurial. Did you ever, you know, help out with any of his enterprises or were you working through, through high school? What, what was your, you know, what was your passion?

Yeah, I always had a summer job. But, you know, as I said, I grew up with, you know, the, all the county folks and you know, there's only one bank president and you know, so most, most of my friends, you know, you know, were either farmers or their parents worked in a coal mine or on a river barge or, like I said, it could be a janitor's kid. So most of the kids worked on farms in the summer and there was a, the most. Once you be. I think you had to be 12 to do it. 12 or 13, I can't remember. You could. We de. Tasseled corn. There was a farmer in town that grew corn, hybrid corn for cattle feed. And you had to cut off the tassels at the top of the corn stock. And so he would take a tractor through the fields and we would be on this trailer behind the tractor, each, you know, in front, you know, with one row of corn beside us. And we'd wear gloves and snap off the tassels of the corn. And this was in the summer heat of Kentucky, you know, very hot. But, you know, we had a lot of breaks and gave us water. We made minimum wage. So that was a job for a couple of summers. And then I worked in my friend's uncle's gas station for the summer. And yeah, that was hard work.

I mean, this is. Yeah, I mean that's certainly. You learn that work ethic very early on. That's amazing. I mean, did you. I mean, a small town that there's a big world out there. I mean, I mean, did you even know what, what finance or have. I mean, I guess you got a little exposure from, from your father, but you end up going to a great liberal arts school. I mean, were you thinking about business in high school or. I mean, you must have been a really good student.

Well, I knew I would go into something business wise. And my dad always read the Wall Street Journal. It was mailed to him. He would get it like two or three days after it was printed because it had to be mailed to Kentucky. And so we never got it the same day. And he also. We had a ritual. I would watch this week with Louis Rukeyser. So that's with my dad when that was still on. I don't know if you remember that show, but it was one of the very few business shows. And so that was sort of our ritual together. But I. You know, my dad, like all good Southern fathers, wanted me to go to Vanderbilt really, really badly. And I really wanted to please him, but I wanted to be a bit more adventurous. And I got into Vanderbilt, and Dad was beaming, and, oh, good, you're going to go there. But I had also applied. I didn't know anything about Swarthmore, but that year, Barron's Collegiate Guide had ranked it the number one liberal arts school. And I thought, okay, well, if I can get in there, maybe my dad would be happy. And I applied, and I got in, and he'd never heard of it. And he was really kind of disappointed that I, you know, that I wanted to go there. And he let me, of course. But one day we were in the big town near my hometown, big town of like, maybe, I don't know, 30,000 people. And we were going to the doctor. And this older man was in the parking lot as we were coming in. And my dad introduced him. He's an old revered judge, Kentucky judge, I think he might have been a federal judge. And. And, you know, long retired. And dad introduced me and said, you know, I was going to college this year. And he said, where's she going? And dad said, well, she got into Vanderbilt, but she's going to Swarthmore. And that judge said, sam Vanderbilt can't hold a candle to Swarthmore. And from that moment on, my dad was very happy that I was going to Swarthmore and would announce it, but it really took that one random moment for him to. To appreciate it.

Wow. Well, what was your major there? What'd you study?

Economics and Spanish literature.

Interesting. Okay. And were you very. Both obviously good at math, but also, did you have a skill for foreign languages?

You know, I just happened to like Spanish, and I like Spanish literature. But, yeah, math was. I was always. I've always been good at math. It just. And I didn't even know I was good at math until I got into the business world, and I realized a lot of people aren't good at math, and I'm, you know, so I was. But, you know. But, yeah, nothing. Languages. And I was more mathematical than. I would say literature in college.

Yeah. It seems like two opposite ends of the spectrum. It's amazing, but, you know, both sides of the brain working there, clearly. Yes, so from there, did you go right into the business world or was it an MBA at Wharton next?

Well, I was, you know, Swarthmore's outside of Philadelphia. I got a job in a regional commercial bank. And in those days, maybe they still do, but, you know, all the major banks had credit training programs and credit analyst programs. So, you know, in the big money center banks and in these, you know, larger regional banks, that was where you went. So you took, you trained in credit for a couple of years and then you would be assigned to a group, whether it be national lending, regional lending, asset backed finance, real estate finance. So I went to the bank and as a credit analyst and, you know, I have to say, of all the. Even though banks are bureaucratic and, you know, very institutional, it was probably the. I probably learned more in that job than any job I've had since, which I know a lot of people who've worked in banks and gone into other industries might not agree with me, but I actually felt it was a, a great learning experience.

What specifically were you doing there? So when I guess is came in and wanted a loan, you were, you know, you were looking at their financials. Were you doing any real estate for them?

Yeah. So, you know, there was a pool of, you know, credit analysts. And so when the various divisions of the firm would have a loan request in for it could be a company loan, a corporate loan, or a small business loan, or it could have been a construction loan. If it came in from the real estate group, they would, the. The account officer would get assigned an analyst from the credit department to help them write the investment committee memo. So we would, you know, so we had to learn how to, how to evaluate corporate balance sheets and income statements and evaluate their financial wherewithal, looking at their working capital, et cetera, you know, all the things that you do and, you know, likewise for real estate loans. We worked with those account officers to, to figure out what were the key things we were focusing on. So it was to help the other divisions, but it was really also a learning experience for us. We had supervisors that made sure that there was some experience, judgment, input. It wasn't just some kid out of college evaluating the credit, but it exposed us to a wide range of companies and industries. That, that was really a great experience.

Now, did you learn to, you know, diligence beyond just the paperwork that was submitted? Were you already, you know, kind of looking into, you know, researching the company or if it was real estate, maybe going, taking a look at the property? Were you ever doing, you know, any of that diligence beyond just what was submitted and if so, kind of what was the key to find out if a company was or a borrower was truly credit worthy?

We, yes, we would, you know, for certainly for really. And we were regional, so most of the companies and the assets were in the, you know, immediate vicinity. So we would do site visits and for, for the real estate companies, clearly we would tour the property and do the typical type of due diligence. And for some of the company, like inventory loans and we would also go to their warehouse and see their operations. Now saying I became expert in these companies would be a very big overstatement because we didn't. Because this was just, you know, we were just introduced to that company and you know, learning to evaluate it. But it was very, very useful and educational and clearly we had supervision to help guide us on the key factors and what the main risk factors for whatever industry it was that we were evaluating.

Were any of those supervisors or any of the other employees of the bank women? Or did you kind of look around and kind of see that the industry was male dominated at the time?

Yeah, at that point there were. None of my supervisors were women. But interestingly at that bank, which was Fidelity bank in Philadelphia, there was a. You had the CEO of the business and then you had the head of commercial banking and you had the head of consumer banking. And both those were women, which was very, very rare and unusual. But mid level there were very few women. I guess there were a couple in the national lending group. There were some women vice presidents, but yes, the majority was by far men. Although if I look at my career, that was my first job. There were more senior women in that business and women capital committing and it may be unique to that firm than there were in the private equity businesses that I've been involved in where there was almost no women in held you.

Back or kind of looking and seeing that there was a lack of role models out there. I mean, were you ever questioned at the time can I rise all the way to the top? Or were you even thinking that at the time?

It never occurred to me, honestly. And I think that's another key thing that I would advise all women in business is that for me it was probably just ignorance. I didn't even realize that that could have been issue because in my family there were no. I had no brothers, so it was myself and two sisters and the whole world was possible. Our parents made sure we felt like we could do anything we wanted. And so I never, you know, had that where, oh, no, you do the dishes and you come, you know, help me with this. That was never a dynamic in our. In our house. I mean, yeah, I had to do the dishes for sure, but I wasn't excluded from other things. So it never occurred to me. And I really think that another key factor in my development was that I said the first one was that I grew up and was interacted with people from all walks of life because it was a very small community. And I'd say another is that I never felt disadvantaged because of my gender, and I never acted like I felt disadvantaged. And I think if you play the victim card, it is more damaging than helpful. And, you know, through my career, I've been asked to speak on a lot of. Lot of panels and for women's group, and they always want to talk about me, to talk about, you know, ways that I've been disadvantaged because I was female. And I say, hey, guys. I just. I don't have examples of that. I always felt like I had the same opportunities as everyone else, and I did. I mean, I don't know if I should have the same opportunities, but I felt like I did. And maybe because I felt like I did and I acted like I did, that could be one reason why I did get those opportunities.

Really appreciate you sharing that, as I know that the women who listen to this podcast, too. So that's. That's a really interesting perspective, and your experience certainly proves that out. So talk about the decision to go to Wharton. I mean, this is one of the top business schools in the world. What were you like as an applicant? I mean, it's got to be really tough to get into. How did you know it was time to make that move? Or. Because, I mean, what would have been the other option? Continue to work your way up at the bank?

Yes. I mean, the reality is I applied out of college to Wharton because I knew my dad really wanted me to go to Wharton or particularly Wharton. He had a friend that went to Wharton when he was a young man, so he really thought that would be great if I went. So I applied after college and because my father was ill and I wanted him to see me go to business school. And they told me to apply again after I had some work experience. I said, you're a good candidate, but we want you to have work experience. So I did. And I. So I applied after. I had been at Fidelity for a couple of years. I probably. I should have applied after two years. I think I applied after three years. And so I went there because it was always inevitable. And I knew after working at Fidelity that I wanted to make my way to New York. And this was the way to do it. It was just sort of a break. And that all the firms recruited at the business schools, the national firms and New York firms. So it was also just a time to move on. I was ready to leave the Commercial Bank.

Did your father get a chance to see you go to.

No, he didn't. But I mean, I'm sure he's. Look, he did up in heaven, but not here.

You were well on your way?

Yes, yes.

I mean, he must have been incredibly proud of everything you accomplished. And so it's great to see that it all played out. But I'm still wondering, I mean, how did you figure you wanted to be in the biggest city in the country and coming from a small town, what was driving you to do that?

I just wanted to see something different. And look, I wasn't hell bent on going to or coming to New York. If there had been good opportunities elsewhere and maybe even in Philadelphia, I would have considered it. But I knew I needed a change. And you know, once I was in business school, that's really where I learned about the investment banking associate programs. I really got a better appreciation of them. And then I, because I was saw, you know, after my first year, I saw who was recruiting and where people went. And that's when I really honed in on New York and the investment banking programs.

So you go from Credit Suisse to Bear Stearns to ubs. I mean, a lot of said that, you know, these investment banks are cutthroat. I mean, were you ever, you know, was there ever fear, uncertainty? You know, that you're kind of the outsider? I mean, did you ever, you know, have any question that you'd be able to succeed in the big city?

Yes, I did. So I joined Investment first Boston in 1986. And that was, as you know, there was a market correction 87. But 86 was still probably a pretty robust in great years for investment banking. So the investment banking staff was bloated and there were people who were senior to me. And I looked at them and I didn't get them at all. And I said, I'm not at all like these people. I don't know if this is for me or not. And then 87 happened and they cut staff. And all the ones that I had questions about were gone. They didn't make it. So that sort of helped me see a little better, that, okay, I wasn't crazy there. They had Just over hired and had a lot of the people that probably didn't belong there in the first place, but there were. So in 87, there were big cuts among the Wall street firms because of the market correction. And I saw people that joined when I joined get cut. So I felt relieved that I made it. I felt terrible for those who didn't. But yeah, it was definitely my second year there. There was a major correction in major cuts. And that was an eye opener for sure.

Why do you think your job was saved?

I don't know. Maybe because I was good at math.

There probably is a little more to it. Maybe you're being humble. Were you a hard worker? I mean, were you the one who was kind of first one in, last one to leave? I mean, how did you.

I know I should say yes to that, but I. But it's not the truth.

Okay, well, sometimes working smarter, not harder applies, right?

Yeah, I would say I worked hard and I played hard. And in the 80s you could play hard at New York City. But yeah, I mean, I think one of my, I don't know, attributes is that I'm an effective, efficient worker. And I focus, I believe I focus on what really matters. And that's an important thing too, to try to figure out what really matters and don't waste your time going down a rabbit hole on something that's just really not important. So I think that's part of it. And also, and I will say understanding capital flows and credit, which I learned in large part from my commercial banking experience and that, that helped me a lot. You know, I just got credit. I don't think you could. It's not. Sometimes you can't. You can't really learn. Learn credit completely. You either have it or you don't. But I think I was always very good at credit. It just came naturally to me.

Yeah, I want to dig into what you had to say about learning how to focus in because I think, and we probably don't talk enough about it on the show, about being able to focus on what's important, you know, kind of. Kind of this, you know, the quickest way from point A to B is straight line. So how do you learn how to focus in on what's important, block out the noise and not go off on a tangent.

You know, on a deal, on a transaction, you know, for what I've done the last, you know, decade or so of doing, evaluating loan requests in the commercial real estate space, that to me is. Is that a lot of. That's experience, A lot of it's just gut. But you figure out what are. What is the key factor that's going to make this property succeed or not succeed? And does. Is it. Is it scoring high on those attributes? But in those days where it was all new to me, I was investment banking. We did a lot of advisory work, sales advisory and securitization advisory. And I had to learn all of that, particularly the securitization side. It took me a while to really figure out what was really important. But after a while you learn what's important is getting transactions done and making sure that your client. You're focusing on a client who will transact and you have this in your business. Will my client transact and will they be reasonable about where they'll transact and not wasting your time on those where their expectations are just not real. And the ability to get something done is highly. Is very difficult.

Do you think you're good at reading people? You get a good gut sense that someone's going to perform?

I used to think I was really good, but we all make mistakes there. But in general, I think I have built really great teams. They're always an exception. But I think I've been good in recruiting. Good teams. Yes, but, you know, but I've made mistakes too.

I mean, I'm sure, yeah, a lot of people that you've had the pleasure of working with over the years, so. But yeah, every once in a while, you know, I've certainly been sold a bill of goods and as well, so. But I want to talk about how. So you move from Credit Suisse, Bear Stearns, UBS and then Dylan Reed Capital Management. Was there always just a better opportunity at the next shop? It was quicker to make a leap to another firm than kind of stay at one shop? Or is that just kind of the nature of the beast with how it all works? How would you explain kind of those successions?

Well, First Boston, I was there for, you know, over 10 years, so that was a long, long run. And. But I did, you know, I had three different jobs while I was there. So I, you know, went from division to division. So I really got exposed to a lot, you know, and then, you know, First Boston had its problems and it was really time to move on. That, you know, they, when I left, there was huge, you know, there was changes at the top of the firm. There were changes in the real estate group. It was just time to move on. I went and worked with. I went from there to work with a borrower for a while doing acquisition work, and he was an owner of hotels and did that for really not too long of a while because realized that some of the capital that was funding the acquisitions kind of went away. So then it was time to reevaluate. And by that time I got recruited to go to Bear Stearns. And you had asked earlier had I ever felt like that maybe I didn't belong there. You might have been talking because I was a female. But if there was ever a place where I felt a little off, it was Bear Stearns. Not because I was female, but because they had such a unique culture and so many people there had worked there for so long. It just never felt right for me. I liked the people I worked with directly, but from the top of the organization, it was just very, very homegrown and clubby. I can't really explain it. It was a different culture that I really wasn't a part of. So at that point in time, one of the great professionals that I've worked with in my career, Brian Harris, who I worked with at First Boston, had moved to UBS and he recruited me to come to UBS and work with him. So that's why I left Fair Stearns and went back to ubs. It was really to work with Brian and, and help him do what? You know, build that business up and be a part of it and then go ahead.

Well, I was going to say in just jumping to, you know, because I know there's time spent at Dylan Reed, but then co founding Ladder Capital, I mean, what did that involve? I mean, probably a lot of capital. I mean, how did you get that off the ground? How did that work?

So, you know, Brian and myself and Pamela McCormick, who is still with Brian at Ladder. Well, first of all, so we were at Dillon Reed Capital Management, which was a offshoot of ubs. It was a hedge fund, if you will, sponsored by UBS and run by the former president of UBS and the head of Fixed Income. And we went to Dylan Reed to run the commercial mortgage area. Well, during that period of time is when the subprime crisis occurred. And UBS had the unfortunate luck of losing $55 billion, $55 billion in the subprime mortgage business. And so that whole thing crumbled and fell apart. Right. So at that point in time, so Dylan Reed. And it was really the principals that Dylan Reed that had, you know, were responsible for most of those losses at that point in time. We were.

I got to stop you and ask, I mean, did you see that coming? I mean, was this whole subprime Blow up. Was that a huge surprise to you or.

I wasn't that involved in that in the residential side of the market. But interestingly, there was a fellow who was responsible for subprime mortgages who resigned, who retired, I think to teach about six to eight months, maybe even a year. But I want to say it was a shorter period of time than a year. He retired right before this blow up. I think he must have seen it coming. I suspect he was smart enough to say, this is too frothy, I'm leaving. But I could be wrong. It could have just been timing. He made enough money and it was time to give back. I don't know.

So what was involved in launching Ladder Capital?

So we, so we started launching Ladder and let's see, that would have been two that we started thinking about. We started meeting with investors and really coming up with a plan. And I want to say the late, late 2007, we'd kind of focused on different things throughout. We left UBS, I think in the early summer of 2007. And we spent the summer kind of formulating our ideas. And then we met with some private equity folks at TowerBrook Capital who and sort of pitched the idea of a, of a specialty finance non bank lender. And they did some checking on us very quickly and really, really were enthusiastic about backing us. So that was sort of December when we, I think we had that first meeting, I want to say in December of 07. And then in early 2008 we formulated our plan. We negotiated a term sheet with them and they were going to commit capital, but we needed to raise additional capital around them to launch. So we wanted to open with I think 600 million of equity and the world, if you will recall, in 2008 was crumbling. I think Bear Stearns failed in the spring of that year. Lehman, there was Wachovia. All of this was going on while we were raising capital. And so we circled the capital. We had more than 6. It was more like 700 million. Every investor, and every day the market's getting worse. When it's time to close. Now it's in October and every investor closed except one. And frankly, we wouldn't have blamed any of them if they had said, now's not the time, come back in six months, the world's too uncertain. But all of them close. But they had one condition. It was that we have financing. So myself and my partners, but you know, I know I personally spoke to maybe 50 lenders and I think we contacted 100 or more and we got a Term sheet from Wells Fargo. And when it was, and we knew that no one really, our investors might have closed without that, without them, you know, committing, but we knew they would be happier if they did. And the day that we were closing, I remember it was a Friday, Wells Fargo went silent and we're like, oh my God. Or the person, our main contact, I couldn't get in touch with him. He said, look, I'll call you back, I'll call you back. I remember I went and sat by my phone all day. This needed to get done that day or very soon. I got a bottle of wine, I might have drank the whole thing and I just fell, passed out on Friday night. And I woke up on Saturday morning and there was an email from our contact at Wells Fargo goes, oh, I'm so sorry I couldn't get in touch with you. We were in closed door and I just.

He's probably on a golf course.

No, no. On Monday I read about Wells Fargo buying Wachovia, so.

Oh my gosh. So yeah, he had a couple things going on. Wow. So they extend a credit line then, or how does that work? So you'd raise 600 billion of equity and then how are you? You were able to lever that up, how much?

Well, they, they gave us a credit facility for, you know, loans that we would originate, securities that we might buy or loans that we might buy. You know, it was like a warehouse facility or repo line kind of.

Was there a lot of companies like, who were doing those loans before you got into it?

No one was. At that point in time, the market, you know, pretty much shut down. And remember, every day the stock market's dropping, you know, 300, 500 points at 3:30 in the afternoon. It was a horrible time. You know, Wachovia, Freddie Mac, all the turmoil that was going on in the.

World, Lehman Brothers, Ladder, and then ultimately what brought you to TPG.

So we launched Ladder in October of 2008 with this capital and the financing facility and we really started lending in 2009. And over time the market came back. It was the best lending opportunity I've seen in my career and it lasted for a good long time. Unlike the Corona, the crisis caused by Corona, where the great lending lasted for about five seconds. But in the great financial crisis, the banks really left the market. There weren't a lot of non banks at that time to compete. So it was a great lending period and investing period. We took the company public. I want to say, I should know this, but 12 or 13, because we'd grown to a sufficient size and continued to grow and stabilize. And I wasn't looking to leave. I thought I would just spend out my years at Ladder because I loved my colleagues and we'd really built something special. But I got recruited by TPG that wanted to get into the commercial real estate credit business. While I was president and CIO at Ladder, I was not CEO and I didn't really have great aspiration. I was very happy there. But here was a chance to be CEO, build the business again from scratch with my own team. And TPG was a great sponsor. And so I just thought I would kick myself if I didn't do it. Because if it wasn't, then it was never. If I'd waited five more years, the opportunity might not have been there. And it just felt really good to do was also working with a larger private equity platform that had a real estate equity group, not a big one, but a good sized real estate equity platform and great management at the TPG level and a great culture and history. So I was a little intimidated. So anyway, so I went there and I talked to Brian. I said, Brian, that was the hardest issue. I had nightmares about talking to Brian and telling him I was leaving, but he totally understood. He said, look, I'm sorry you're leaving, but I totally understand it's a great position and we've remained good friends and with Pamela McCormack who's now their president ever since.

And you did get to ring the bell together, I'm sure. So I mean I got to that personally for you, that was a nice capital event to go to, bring Ladder, you know, public. I mean was that, I mean, how much had Ladder grown at that point? I mean that probably.

Yeah, I mean we grew from, from nothing and you know, and when we went public, I think the market cap was around, you know, close to a billion. Not, not quite, but. And then continued growing it, you know, I think it. The market cap got to 2 billion. I think they're all. The market caps are kind of down now in the post Covid valuations. But yeah, so I rang the bell twice.

So all your years at tpg, what would you say is the one thing that you're most proud of as far as your contribution there?

I think really getting the. They had got into the credit business by buying a mortgage portfolio from Deutsche Bank. And when I got there, their goal was ultimately to take this business public. That portfolio was not a public company portfolio and it wasn't large enough either. And they needed a more robust team. They needed more team members and more senior originators. So I think I built a great management team and origination team and asset management team. But the, and helped get the portfolio, you know, steer it in. When I was there, like 50% of their originations were construction loans. Well, I didn't think it was appropriate to go public, you know, in this institutional market with that high of a percentage of construction loans, they, they were all great loans and good credit, but it just wasn't the right profile. And same thing with hotels. There is a much larger hotel exposure than the market wants. So yeah, I guess that's probably it.

Love that. That's incredible. So this show we've had a lot of incredible people speak, a lot of developers, a lot of investors. On the equity side, what would you say to aspiring investors out there, our listeners, about getting into finance? Why, why would they think about taking your path?

They should. If they have the, if they have the inclination and the skill set, they should go on the equity side. On the debt side. On the debt side, if everything goes well, you get back par. On the equity side, you're going to have some losers. But if you have more winners than losers, you'll get more than what you invested back.

We only have a minute or two left. I want to talk about the importance of giving back again. Then it was the catalog for giving. We honored you. It was an incredible event. You brought out a lot of supporters to help these local organizations that benefit our kids in the city. Talk about why it's important to give back.

You know, I was very fortunate in that, you know, I had parents that were not only loving and supportive but were in a position to help me. Even though I grew up in a rural area with the worst school. I think Kentucky ranks 49th in public education, but maybe not anymore, but it used to. But you know, having. I had advantages that so many kids don't have. And I think that, you know, giving back and help children who might have the best well intentioned parents but don't have the means to provide the support they do because they're working four jobs or three jobs. And I think the Spark Youth is a great charity. It helps fund organizations in and around the New York area to promote the welfare and development of kids in need. The need could be from a variety of sources, but the creativity of the Spark youth team and finding organizations to sponsor from skateboarders to children of incarcerated parents, to aspiring soccer players or basketball players, but making them study after school to get this extra coaching that the Spark Youth organizations promote, I just think it's a wonderful organization and I think it is. Duty is the wrong word. It's just something I want to do. I think it's important for me personally to and it's very gratifying to, you know, see these organizations thrive.

That's a wonderful way to end. And I'm going to make a big plug for Spark Youth as well. I've been a part of the organization for 20 years and couldn't agree with you you more the importance to give back, especially to our youth. So for our listeners, check out sparkyouthnyc.com you can see all the incredible organizations that we support. But Greta, thank you so much for joining us. You've got an unbelievable story. I know that our listeners are going to just take so much away from this. So thank you so much for joining us today.

Thank you, James. It was a real pleasure.

Wonderful. This is your host, James Nelson, Real Estate Investing live from New York. Thank you so much again for joining us today. Thank you for sharing this episode with your friends and leaving your comments, your ratings. Please subscribe if you haven't already at itunes, Spotify or wherever you get your podcast. And if you haven't connected with me yet, please do so at James Nelson NYC, at LinkedIn, Instagram or on Twitter until next week. Thank you again.

Thank you for tuning in this week to Real Estate Investing live from New York. Please join your host, James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America Business Channel. All shows are rebroadcast on Wednesday mornings at 7:00am Eastern Time and 4:00am Pacific Time, as well as always on Demand. We'll take talk again next week.