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By Jason Segal ’20
This interview was conducted in early March 2020.
Meredith Marshall is Managing Partner and Co-Founder of BRP Companies, a New York–based real estate firm focused on affordable, mixed-income, and market-rate housing and commercial developments. The vertically integrated organization offers a full complement of development, construction, property management, and financial services. As Managing Partner, Mr. Marshall is responsible for executing BRP’s investment strategy including deal origination, acquisition, finance, and development. Today, the firm has over 1.6 million SF in construction, and over 7 million SF currently in the pipeline, in locations spanning New York’s five boroughs, Westchester County, Long Island, New Jersey, and Maryland.
Can you tell me a bit about your background? How did you first get interested in the real estate industry?
I got into real estate early. My current business partner, Geoff Flournoy, and I were roommates in college. He went to Northeastern University and I attended Boston University. When we graduated, Geoff, another friend, and I bought a three-family rowhouse in Roxbury, Massachusetts and converted it into three condos. We then rented the bedrooms in the house—there were about eight in total—to our fraternity brothers to help pay the note.
That is quite an initiative for recent college graduates to undertake, what drove that effort?
You think so? Some people form companies like Apple in college!
Jokes aside, our fraternity did not have a house—at the time African American fraternities typically did not have fraternity houses in Boston. I was an engineer and I think that gave me an advantage for understanding buildings and construction in general. Geoff and I always liked brownstones, and so we suggested to our fraternity brothers that we should get a house. They said, “Oh no, that’s not necessary,” so we said “Fine, we’ll get our own.”
We developed a relationship with an adjunct professor at Harvard. He really showed us the ropes. In fact, he actually sold the row house in Roxbury. He’d tell us about various topics, things like how the agencies such as Fannie Mae and Freddie Mac operate, and this got us very interested in both the finance and the delivery of homeownership product. We knew at that point that we wanted to own a portfolio of real estate early on. In those early days we all wound up going our separate directions professionally, but we continued investing in real estate on the side.
What prompted your decision to go to business school?
After college I had jobs working directly as an engineer. For three years I was a research engineer with Digital Equipment Corporation, and then I worked at AT&T Bell Labs, which at the time was the hot bed for research and development in telecom. Back then, in the early 90s, we saw the worlds of technology and finance merging. As an engineer, you typically go back to graduate school for a Master’s degree. Most of my friends were either going back to engineering school or business school. Seeing the opportunities that were evolving in the cross-section of engineering and finance, I chose to go to business school.
What did you do after you graduated business school?
After business school I worked at Wasserstein Perella for three years, focusing on telecom banking. I worked on AT&T’s acquisition of McCaw Cellular and the merger between Bell Atlantic and NYNEX, which ultimately became Verizon. Those were some incredible deals that I was exposed to, and they really helped me refine my ability to analyze big financial transactions.
But I developed the desire to start something on my own. So, a few buddies and I got together, and we formed an entity, Musa Capital Advisors, that managed money for Prince Al-Waleed of Saudi Arabia and his foray into Africa. We were really the first guys in the late 90s to set up a private equity firm that focused on African continent-wide investment. We were based in South Africa, but we were investing in places like Zimbabwe, Uganda, Nigeria, and Ghana. Our group was the precursor to today’s Blackstones and Carlyle Groups in terms of investing in Africa. We put to work roughly $50M dollars in three years, and we had a true triple bottom line motivation. We wanted to change the world through investment.
Ultimately, it did not work out for us as quickly as we had hoped. Africa needs investment, but you need a conducive environment to allow for successful investment, and the structures just weren’t there. Sometimes, an investment strategy doesn’t work out not because you were wrong, but because you were early. In that case, I think we were without a doubt a bit too early.
Do you see any parallels between that emerging market work in Africa and the work you do today in emerging neighborhoods in the US?
Yes, there are definitely similarities. A lot of firms think of emerging markets as Africa, Latin America, and Asia, but there are plenty of emerging markets right here in the US, and it is a lot easier to do business here.
We’re seeking new opportunities in Newark, Baltimore, and Miami. We love underinvested markets, because that’s where the upside is and that’s where the opportunity for impact exists.
Can you tell me about how you founded BRP?
Geoff and I continued investing in real estate on a part time basis after college. We were doing this throughout my time at Wasserstein Perrella and Musa Capital Advisors. When I ultimately left Musa Capital Advisors, it was my wife who turned to me and said, “You really like doing this real estate stuff, why don’t you do it full time?”
Geoff and I had recently purchased a brownstone in Fort Greene, it was a four-family property that we bought in a distressed situation for about $400,000. Three years later is was worth roughly $1M. We took out a mortgage on that property and used into to invest in another project, and we just kept rolling our profits from one property to another.
Eventually, we came across a 25-unit property in Clinton Hill, the former “Graham Home for Old Ladies.” It was a $10M project, so we had to raise roughly $3M in equity. We contributed $1M of our own money and sourced the rest from friends and family. That project was a home run, it was a 2x equity multiple in 18 months.
The success of the “Graham Home for Old Ladies” solidified in our minds that we could do this well. So, we went out and raised $10M from a family office and used the money to purchase more land. But we made those acquisitions right around the downturn in 2007 and our initial partner decided to exit. He was a client at Goldman Sachs, and he introduced us to Goldman Sachs’ Urban Investment Group, which bought out the family office in 2007.
BRP has grown considerably over the years, from executing individual brownstone conversions to developing large-scale mixed-use projects with more than 250 units each. What do you feel has been key to your success?
We came into this business with substantial experience. Our model presented as sophisticated. I had carried experience from working in M&A with Wasserstein Perella and Private Equity with Musa Capital. Geoff had worked at Goldman Sachs, Credit Suisse, and AIG Real Estate Group. When you’re used to working on billion-dollar financings, putting together a package to get $10M of financing is not a big deal. I think the quality of our fundraising packages, our ability to speak the financial language, really stood out to investors.
Then, I had my prior experience as an engineer. I might not be executing the design engineering of each project, but I was able to hire architects and engineers and speak their language. I could understand what we needed to manage.
When you combined that experience with the capital investment, we received from Goldman Sachs’ Urban Investment Group, we were really enabled to scale up. Since initially buying out the family office in 2007, Goldman Sachs UIG has committed over $800M to our firm.
How do you feel your business has evolved from an internal standpoint over the years from a $10M family office commitment to an $800M private equity commitment?
We’ve had to do bigger deals. We’ve had to hire to our needs. It is key to bring in the right expertise when you don’t have the bandwidth or experience for something. We have about 60 employees now, and we’re fully integrated as a firm. We have architects, engineers, construction managers all on staff.
We’ve also focused on staying in the cutting edge of trends. Financial, design, consumer trends, everything. It’s hard to do that when you’re an insider focused on the daily execution. I try very hard to get access to the outside world—the non-real estate industry—to stay abreast of everything that’s going on.
Finally, I would say the key to our success through all this growth is that we’ve stuck to what we know and found partners for what we don’t know. We are working on a large, complex mixed-use transaction, the National Urban League Headquarters in Harlem, in which we’re partners with Taconic, they’re great at retail and office, and L+M Development, they’re probably the best in the affordable business. When you create a partnership like that, you all learn a lot, and you all benefit from each other’s expertise. Those sorts of partnerships have played a key role as we’ve grown in scale.
Affordable housing is a critical component of BRP’s work. Do you feel affordable development differs from traditional market-rate development, and if so, how?
No, I would not say there is a difference. There is certainly a much more complicated regulatory framework that we need to navigate in the affordable housing world, but at the end of the day we see ourselves as a service organization that is providing quality housing for people of all income levels. To us that means no matter the income level of our tenants, we’re going to develop the best quality product we can. In some of our projects, the focus is on a larger portion of the units being dedicated to lower levels of Area Median Income (“AMI”), while in other projects, a larger portion of the units are dedicated to upper levels of AMI. We care greatly about the accessibility of housing, and what it can mean for people’s outcomes in life. To me, the overall housing challenge is predicated on a fundamental supply and demand imbalance. To solve that problem, you need to deliver more supply at all levels.
That’s interesting to hear. I’d like to ask you more about that. When thinking about the affordable housing crisis, it is often people’s first reaction to turn to government for a solution. But you most notably lead a private real estate firm. What role do you think the private sector plays in our ability to deliver affordable housing, and what actions, if any, do you think the private sector should be taking to help solve this crisis?
The private sector has the ability to provide focus and capital in a much more effective manner than government. The private sector is needed to deliver housing at an efficient pace. But the government will always have a major role, because the regulatory regimes that allow housing to exist always require government approval. I think the private sector can play a big role in advocating government to make the necessary regulatory change, and in serving as a partner that brings non-profits, government, the people, and private capital together to execute on investment.
I see three pillars that are needed to enable affordable housing to be delivered. The first two are zoning relief and tax relief, both of which are regulatory functions, so the government needs to be involved. The best way to build a city is not on green space, but on the existing built environment. That requires zoning relief to allow for greater density. The same goes for tax relief. If a landlord is willing to forgo higher rents to ensure that people of all incomes in our communities have proper housing, the government can incentivize and compensate those efforts with tax assistance. Those two pillars are well known.
To me, the third pillar for growth is city-owned land. What we call public housing, should in fact be housing for the full public, which would mean all levels of income, not just low-income. Our cities are far better served when they are inclusive across the board. If you develop a mixed-income product on public land, the low-income people would have the access and mechanism to transition to middle-income. That is far less likely if they’re isolated in a vacuum.
The big challenge is that in low-income communities, there is no trust of the system. I grew up in a low-income community, so I’ve seen it. You have to change people’s minds to show that making strictly low-income product mixed income in fact benefits everyone. It introduces more supply, it provides a product for our middle-income families that are not served, and it creates a better means of social mobility. I think the private sector can play a big role in helping for that advocacy.
What is the accomplishment you are most proud of?
From a business perspective, the accomplishment I’m most proud of is building a company from scratch. It started from my second bedroom, and today we have a $1B portfolio and an additional $1B pipeline. The fact that we’ve done it by bringing people together, non-profits, local government, and private capital, makes it feel all the more rewarding.
If you were to give the commencement speech to this year’s class of CBS students, what would you want to tell them?
Your goal is to change the world. Change the structures. Disrupt everything and do it quickly. Your survival depends upon change and transformation.
… and go have a drink!
Jason Segal ’20 is the co-President of the Real Estate Association. Prior to joining Columbia Business School, Jason held various roles over a 6+ year tenure at the KRE Group, a full service real estate development and management company. Most recently he was the Director of Residential Leasing where he led an in-house leasing team focused on the branding, advertising, and pricing strategies for a portfolio of 9,000 apartments. Jason graduated with a BBA from The University of Wisconsin-Madison where he focused on business and earned a certificate in environment and social responsibility.