Transcript

Aaron:

Hello, everyone. I want to welcome Molly Bordonaro, who is our esteemed guest today on the Dealmakers’ Edge podcast. Molly is overseeing investment management and investor relations and asset management at The Green Cities Company. She has over 20 years of experience in commercial real estate, the transactions, the financing, the management, the leasing, and she also serves on the firm’s Investment Committee. She’s had an amazing career and she’s in the middle of it and she’s doing amazing things.

We can’t wait to get your story out today, Molly, so thank you for being here and taking the time.

Molly:

Absolutely. It’s a pleasure to be here.

Aaron:

Well, maybe you could get us started. I mean, when we met, you were talking about how you got started in the business. Maybe you can talk about the earlier part of your career.

Molly:

Well, I initially got started in the business because my father was a commercial real estate broker and owned a local brokerage company, just a local one here in Portland, Oregon. And he put me to work probably at the age of 12 years old doing market research for the firm where I would–this is well before computers–I would actually go and walk the office buildings in downtown Portland and go to each office and ask the receptionist: “Hi, can you help me? When does your lease expire? How many square feet do you think you have in this office?”

I would write it down and then I would fill it in on a little 3×5 card and put it into a file that then they would use to create a database on 3×5 cards. So I was leading the market research and continued to do that every summer. But more than anything during that period, I think I really was exposed to the impact of the built environment and not really in terms of just the buildings themselves, but what it created in terms of a community in a downtown.

And I began to really appreciate the fact that, vis-à-vis the built environment, that is the lifeblood that connects us all in terms of creating space and opportunity for people to live and work, to really drive communities and neighborhoods. And that’s what began to fascinate me and how we make our communities and neighborhoods better. And that led me through various integrations throughout my career, getting involved first on a community level in terms of just wanting to make a difference through policies, and then staying involved, politically running for Congress, and then ultimately serving as U.S. Ambassador. So, pivoting back and forth between a career that was both public service-leaning and also in real estate investment development, but really both coalescing around the idea of how do we make our communities better? How do we make our world better?

Aaron:

Sure, sure. And your story is very compelling. It’s not typical. Maybe you can talk a little bit about the Congress run and what sparked you to, to run for Congress and what was the experience like and how did that feel to take a back seat to commercial real estate during that time? And what was sort of the pivot even a little bit before that, you know, what was the story leading up to that if you will?

Molly:

Well, I think this is one of those kind of instances, Aaron, where you don’t know what you don’t know, and maybe that’s a good thing. And, you know, maybe if I knew about the daunting task at the time of running for Congress and what that meant, I would’ve said, “Jeez, I’m going to pass on that.” But right when I graduated from college, I did take time to work in Washington DC and got a lot of exposure for a few years in terms of the inner workings of Congress and decision-making. That process really led me to think about the type of people that were representing us. And I had some instances where a member of Congress said, this might not be the right thing to do, but it’s the politically expedient thing to do. And that bothered me to the point where I thought, if I’m that bothered by it, then I should do something about it.

And so, I went back and the intention was to go back and, and get my own broker’s license and work in commercial real estate. But instead at the age of 26, I decided I’m going to run for Congress instead. And just was in a period of time where it was really exciting for a young woman to be able to run for Congress and receive a lot of attention and support. And it was an open seat and it became one of the most competitive races in the country. We raised more money than any other congressional race, the leadership from both parties coming into campaign for both me and my opponent, and it ultimately that race, which was so close, it took a week to call after the election, but it ended up flipping Congress also by one seat from Republican to Democrat. So, while I did not win, it was a phenomenal experience in terms of just if you would authentically approach something and really care about doing what’s right, you can generate significant interest and support. I was very grateful.

I just want to point out, you know, it is International Women’s History Month. And I do want to just take a moment just to point out that I was very grateful to be at that period in time. I remember one of the speeches I gave at my debate. My grandmother was sitting in the audience and my mother was sitting in the audience and I started the debate by basically saying when my grandmother was my age, she couldn’t even vote. And when my mother was my age, she would have never even thought about running for Congress. And so, it was really exciting to be at a period of time where we were seeing for the first time. And now it’s very commonplace for women to run for Congress.

Aaron:

After that, I knew you had the ambassadorship, but did you all go back to  commercial state prior to…

Molly:

I did, I went back to commercial real estate, and I ended up starting my own fund that utilized new market tax credits. And this was a very important way to address both real estate investment and also making our communities better. So new market tax credits were really driven as a way to create public private capital through tax credits, to be able to drive it into neighborhoods that had been designated as new market tax credit zones that needed additional capital to underwrite real estate deals.

That was very successful. And during that period of time was when I also continued to stay involved in politics to the extent where I got involved in the presidential election, supporting president George W. Bush’s run for office. And after he was elected–I was also having children at the same time–and he called me up and he said, Hey, you know, I think you’re done having babies, done making money, let’s take a pause, and I’d like to have you represent me abroad as an ambassador. So I said, let me call my husband. He happens to be first-generation Sicilian. So he wanted us to be going to Sicily, which I had to remind him is not a sovereign nation, but we ended up being able to meet him halfway by being in the Mediterranean. I was able to serve as U.S. Ambassador to the country of Malta.

Aaron:

And I’d love to hear about that experience. I know we talked briefly about the fact that only sometimes when you’re looking out from another place of origin, back to the U.S. and the values you bring, the American values being the vanguard, if you will, and trailblazer for freedom, and trailblazer for human rights and opportunity and all the wonderful things that the United States of America represents abroad. Maybe you could describe the vantage point you had in that ambassadorship because it’s, it’s a rare situation. Not many people get to do that so I’d love to hear your experience there.

Molly:

Well, I’m very grateful for the experience and it is something that I do wish that everyone would have the opportunity just to experience because then they would truly appreciate the role that the United States of America plays in our global community in terms of its leadership and its voice for democracy, for freedom, for human rights, for the rights of the oppressed.

And especially right now with what we’re seeing going on with Ukraine, I think it’s just important to remember how important the United States is to those values and the value of the idea of freedom and self-governance to democracy. So, every decision that we make internationally as the United States, and we don’t get every decision right, we certainly don’t, but we always fall back on those principles. And it is truly because of our leadership in that direction that, you know, we’ve been able to establish relative peace in the world by creating democracy, freedom, rule of law, governments, that function with those principles. And certainly, we’re being tested right now on that as well.

Aaron:

For sure. It’s a very, very scary time in the world. For many reasons.

Let’s shift gears a little bit. I mean, you obviously shifted very heavily back into commercial real estate and you’ve built an amazing company, which we did talk about offline. And, you know, one of the things that I think you’re incredibly knowledgeable way beyond the ordinary commercial real estate investor is ESG. You know, that’s obviously a buzzword today, but it’s something you’ve been living and breathing for decades at this point. You’re early to the bandwagon. It’s like in your blood at this point, maybe you could talk broadly speaking how you view the world from that perspective. And then we can sort of delve into some more examples and so on.

Molly:

Sure. Well, when my ambassadorship was coming to an end and I was thinking through what the next kind of step personally that I would like to do was definitely along the same veins of utilizing going back to real estate investment development but doing it in a way that continues to impact positively neighborhoods and communities and our planet. I really was very interested in, and gravitated towards, how the built environment is impacting our planet. And I was fortunate when I had started, when I had done my new market tax credit fund, I had financed some local developers in Portland with a company called Gerding Edlen that was on the forefront of development using sustainability. They were one of the first to get LEED certified Gold and Platinum for high rise residential. And so, I basically came to them and said, as local developers, I’d like to extend what you’re doing into real estate investment and partner with you utilizing your development expertise to raise investment capital.

And it was right around 2009 when obviously there was a financial collapse going on, but there was also an opportunistic way to buy broken condo deals from the financial collapse, utilize their development expertise, maintain the entitlements of those that hadn’t been built by them for, you know, heavily discounted distressed, and then repurpose them as apartments, build them, but build them with all the overlays of innovation around sustainability, both utilizing different kind of energy generation, whether it was solar or co-gen, but also looking at ways to build that is very energy efficient on the savings as well.

And so that’s what we did. It was very successful, we raised the first institutional capital fund during that financial crisis and were able then to continue. We’re out in the marketplace now with our Fund 5, and we’ve stayed very true to that commitment in terms of what we’re doing with our funds. And we’ve extended it beyond just the environmental footprint, but moved into what we call kind of the five pillars that we look to drive value into every property, and that’s health and wellness for our tenants, creating diverse and equitable communities in the neighborhoods and in the buildings with universal design, with looking at the vendors who service our properties, trying to hire minority and women vendors or in the construction minority and women-owned subcontractors. And then also looking at climate risk mitigation and the emission of greenhouse gases, which is really important because 40% of the built environment is responsible for the world’s CO2 emissions, and then looking at resiliency. So those are the five pillars.

And so obviously we underwrite every deal. We look at every deal in terms of its financial return, but we also look at these other metrics that we do. By the way, Aaron, the marketplace now is demanding it tenants want to rent apartments that speak to their values that are healthier, that embrace sustainability, that incorporate design that is inviting and welcoming to all. So we feel that not only are we doing the right thing right now, but it’s also creative too, in terms of creating value in our properties.

Aaron:

Absolutely. The ultimate win-win, if you will, for the investors for the communities, sponsors everybody, one of the things also that’s unique about your firm and you in particular is the vision you’ve had in your business is I know there are plenty of companies that are now trying their best to measure something like ESG. It’s very hard to quantify, but you’ve really been trailblazing in that regard and then the metrics and the way that you can drill down for your investor base and your communities and your partners is unique and not to get any proprietary information out of you. But how do you think about the data collection and giving people real data? Because there’s a lot of fluff out there.

Molly:

When we bought out our retired partners two years ago, and we rebranded the firm, The Green Cities Company, we redid kind of all of our metrics around these five pillars. And we had always been tracking the KPIs, the key performance indicators, with all these kind of metrics. But we redid our entire platform to be able to say it has to be incredibly clear to our investors, it has to be incredibly clear to our tenants, and it has to be clear across the board what are the actual results of what we’re doing instead of just talking about it. There are things that are really easy in terms of how do we measure energy savings and we can certainly measure it year over year and we can measure it benchmark to, you know, what a typical building of that size does. So those are easier things to measure.

There are harder things to definitely measure, and we are putting a lot of innovation into doing that. For instance, on getting closer to net zero, we have a commitment to a 44% emission reduction. We can capture that into our direct CO2 in the operation of the building. And we can even capture it on the development side in terms of materials that we use, how we use them, for instance, there’s concrete now that you can use that captures CO2 emissions, but to truly get to net zero, you also have to track through the supply chain of your materials. And so we’re starting to look at how do we do that? And those obviously are more complicated, but we’re very committed to making sure that we actually do do that, and spending some thought as well as others in our industry that are putting thought into that, and really looking at how do we always capture and measure everything in a very real understandable, digestible way.

Aaron:

Wonderful. How big is the fund you’re raising now that you’d like, what’s your target? You’d like to raise this Fund 5.

Molly:

We are going to market with a $600 million fund.

Aaron:

Very exciting. You’re certainly going to be attracting a lot of interest with what you’re doing for sure. Maybe we could talk a little bit about your edge. It’s not many people who at a 26 go and run for Congress or who start, you know, massive real estate development companies with sustainability in mind before it’s a buzzword. What’s your driving force in life? You know, how do you deal with adversity and setbacks? And if you’re developing or buying deals every day is a setback at some level or another. So how do you sort of have the conviction you do to do what you do every day? What drives you? How do you overcome that adversity? I’d love to hear.

Molly:

Well, I think you almost said it best in your own question is that we all have adversity every single day, and you must approach everything with the idea that you’re doing it for the right reasons. And I think you always have to have the “why.” Like, why am I doing this? Why am I getting up? Why do I want to do this? And if you’re, if you have a lot of conviction around the why that gives you the motivation. And so I always encourage, you know, people who work for me, make sure, you know, why you want to do this, explore that. And then the second thing is always learn. Always, always be open to being curious, learning, being better, because you are going to face adversity, you are going to fail, you are going to find obstacles, you are going to have no be told you more than yes. So, if you’re just willing to approach every single one of those setbacks or disappointments as an opportunity to learn, that’s kind of exciting in itself.

So, you know, I think it’s really know your why, and then approach it as an opportunity to learn. And so, you don’t get caught up in success or failure or setback or not, or challenge or disappointment. You know, that’s just really is what has worked for me. And then maybe just being really stupid and naive about the fact that, you know, people would say, you can’t do that. Because I definitely heard like you can’t run for Congress at that age. You can’t raise a fund during the financial recession and maybe it’s just being, you know, having a tinge of being naive as well.

Aaron:

Well, it seems like you love a good challenge, and it seems like a good way to motivate you is telling you you can’t. So I definitely don’t want to bet against you. That’s for sure.

Say somebody manages to squeeze on your calendar for coffee or breakfast. Somebody just graduating, they want to get into development. They want to get into institutional grade investing for all the right reasons. What are you telling that person today? I mean, what are some sort of words of encouragement or, or best way to start in the business, if you would suggest to a person seeking advice?

Molly:

Well, I mean, I would go back to asking, you know, why they want to do this and making sure that they have a clear and compelling reason. And then I always try to ask, you know, and what facet do you want to participate in this industry? Because there’s so many different directions to go in. And it’s not just, you know, certainly I grew up on the brokerage side and I knew pretty quickly that as I grew up in that, I wanted to be more on the ownership management side, because I really cared about the neighborhood. And there are those who might want to go into it just on the analytical side, or the data side, or the underwriting side, because they love math. They love making numbers work, but I think understanding the different facets of it, because this industry is so amazing and there’s so many different ways you can access it and participate in it.

And I love kind of walking through all the different ways with young people and really finding out both their why, why they want to be in it, what they feel passionate about within the industry itself. And then does that match their skillset and interests? I mean, just within our own company, we obviously have people that think a lot, spend a lot of time just thinking about ESG. We have on the property marketing side, people thinking about how do we communicate this to tenants and other tenants. On the property management side, really curating and taking care of people. So, it just really encompasses everything. And I think that’s what is so exciting about our industry, because it’s not just a spreadsheet. At the end of the day, it’s real people and real buildings whose lives you’re impacting. It’s real investors whose money you’re managing. I mean, that’s super exciting.

Aaron:

Amazing, well said.

Molly:

You know, I think the future is really exciting in terms of the real estate industry. I threw out the quote earlier around CO2 emissions, which 40% of global CO2 emissions is tied to the built environment. And I think there’s a real opportunity in terms of all of us when we look at our neighborhoods and communities and we look at how they interface and, and, you know, certainly I mentioned CO2 emissions, but just, just take the issue of diversity, which has been so top of mind, the last 24 months and, and equity. And if you think about the built environment for so many years buildings and the built environment were used as a means to discriminate or to keep people out. And how do we create buildings that really embrace universal design, which create more equity, which really interface better with our neighborhood to be more inviting to the public or more pleasing to the public, or to make people feel more welcome? And I just think it’s very exciting in terms of what we can do in this industry with forethought and commitment in terms of really understanding the stewardship that we have on the impact on just where we live, where we invest, where we want to live, where we, where people live. And I, you know, my hope is that we all just think about that every time we make decisions on how we invest, manage, and own properties.

Aaron:

Perfect. And a wonderful wrap to the conversation. I know our listeners will be thrilled to listen to this, and your insight is invaluable. Really, really appreciate the time, and thank you for joining us on this podcast today.

Molly:

Thanks Aaron. It was such a pleasure and it’s good to see you again.