Relationship-Driven Real Estate with Michael Seeve, President of Mountain Development Corporation

On this episode, managing partner Aaron Strauss sits down with Michael Seeve to discuss his career, favorite deals, the current market, and his advice for those new to the real estate industry.

Michael serves as President of Mountain Development Corporation (MDC) and guides the firm’s activities in close coordination with its executive team, professionals, and partners. Michael provides strategic leadership for the firm and works actively on many of the firm’s projects.

Michael is a past President of the New Jersey Chapter of NAIOP, the State’s leading advocacy association for the commercial real estate development industry. The organization, which currently has more than 700 members just in New Jersey, focuses on public land use issues, professional advancement, and industry best practices.

Michael serves as Chairman of the Board of William Paterson University, one of the State’s public higher education institutions and is a past Chairman of the University’s Foundation. Michael serves on the State of New Jersey Uniform Construction Code Advisory Board. He is also a past Chairman of the Paterson Special Improvement District, a public private partnership active in the central business district of the State’s third largest City. 

Michael is a past Chairman of the former Barnert Hospital Foundation. He has been recognized as Distinguished Friend in 2015 at William Paterson University’s annual gala, as Barnert Hospital’s “Man of the Year” at their 2006 gala, and included in the “Forty under 40” lists by NJ BIZ and Real Estate New Jersey magazine. 

Michael is a 1992 graduate of the University of Pennsylvania. He lives in Montclair, New Jersey with his wife Veronica and their two sons.

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Transcript

A.Y. Strauss: Hello everyone and welcome to The Dealmakers Edge! Today, we are very happy to be joined by an old friend of mine, Michael Seeve, who's president of Mountain Development Corporation. The company was founded in 1979. It's a full-service real estate company with more than 40 years’ experience in developing, acquiring, building, repositioning, managing, leasing, and financing commercial real estate. As president, Michael provides strategic leadership for the firm and works actively in many of the firm's projects, including industrial, office, retail, and data center assets throughout the greater New York city metro area. And among many other things, he also serves as chairman of the board for William Patterson University, and he's past president of New Jersey's chapter of NAIOP. Michael, it's really, really awesome you're here. I’ve known you for a long time and can't wait to have a conversation with you today. 

Michael Seeve: Thank you. It's awesome to be here—not least of which because I think I invited myself on but thank you. 

A.Y. Strauss: Not at all. You’re somebody I've always admired and respected and you have tremendous insight, and I think people are going to learn a lot from your story, but also just your insights in real-time on what's happening out there. We sort of follow a playbook a little bit with [] these recordings. We try to really, you know, understand where people come from and their background. And maybe you could just share a little bit of your upbringing. I know your partner, Bob, played a pivotal role in your life. Maybe you could talk about your childhood, where you grew up, and how you got into the business? 

Michael Seeve: So I was born in Brooklyn Heights. At the time, my late father and Bob Lieb were practicing law together. So, Bob Lieb loves to tell the story that he was the first person or the person from the firm who came to visit my parents in the hospital. And he says he [] held me in his hands like Simba and said, “someday you'll be a real estate developer”. So Bob and I have had a really great relationship from the get-go. I really grew up in Westchester, New York in Chappaqua—which if you know Chappaqua, that was very dicey living. I was lucky to make it out of there alive, but I did. I went to school in Philadelphia [at] University of Pennsylvania with 10,000 other real estate people. And, you know, I started working at Mountain Development Corp. the day I graduated. That was ‘92. So, work for me…

A.Y. Strauss: You are a very rare breed of individuals. I mean, I talk to a lot of real estate owners [and] investors, and they started here and they were there and this person in the business and it’s a long, winding road. You almost were literally born into the business, I mean, through Bob and everything else. But, the fact that you've had that trajectory and that longevity and that rock solid partnership and mentorship from a young age, it's molded you. It's really molded you and it really, I'm sure, sharpened your thinking in many ways that others wouldn't have had because you had that from that mature growth into the business. You [were] thrown into it right away. Maybe we can talk about… Yes, please go ahead… 

Michael Seeve: I should say the credit probably goes to Bob because for a couple of different reasons. Number one is, he's created—with this company—a place that can be a great platform for lots of people, not just for me. And some of that is because we're active and there's things to work on and they're engaging and as much of it, I think is his personality. You know, there's plenty of people that sort of, I think, take stock of what they're doing. And they think the grass could be greener somewhere else, or they just sort of long for something else. Bob has great charisma and I think infects people with an enthusiasm for real estate and merited or otherwise. And gets people very excited about what we're up to and the prospects of what we could be up to and what's in front of us. So, I'm not the only one that's been here for a long time. And I think he deserves the credit for [] creating such a fun place. 

A.Y. Strauss: Absolutely. When I think back to how we met. We actually were introduced by somebody, a developer in New York City many years ago, as I recall now, off the top of my head. It was involving a building in New York, and I think you own the building next door. And I was talking to somebody in New York introducing me to somebody who was local in New Jersey. So it's just a small world, but a lot of New Jersey developers don't really play in New York City. And I know there's a been long history of New York City for you guys. And it's interesting to flow through both of those worlds; the public-private partnerships [like] Bryant Park, the other buildings, et cetera. But, maybe you can talk about your early years? Obviously, you sort of were almost born into it. We're joking, half joking here, right? But, after you graduated, you still had to learn the skills of the trade. So maybe you could talk about your first few years. A lot of people listening—I think, from what I'm understanding from feedback—it’s a lot of people earlier on in their careers [who] are trying to learn from people like you who've been there and done that. So maybe you could describe some of the early years at the company. 

Michael Seeve: I started in May of 1992. And at that time, I graduated with all my friends from college and most of them went to law school because there were just like no conventional jobs to be had. So, I was excited to go to work and, I really didn't know anything about anything. I had worked for Mountain Development Corp. in the summer doing construction work, but I hadn't really worked in the sort of executive environment. And it takes anyone a little bit of time just to understand how the copy machine works or like, who's coffee mug to use or not use, like all the little things that go into sort of acclimating. But I would say once I sort of got my footing a little bit, so I was just sort of grasping what was going on. At that time, I was like, “jeez, this business is really difficult.” (laughs) In 1992, it was like it was today. It was extremely hard to access debt capital. There were [] more buildings than there were users kind of across the board. It was the rest of the economy was sort of, I think, recovering from what had been a bit of a correction, but real estate was really just getting its correction stride. So it was tough work and daunting and it was…you sort of left the comfy nest of college where the problems all had answers and whatever, a world where the problems seem pretty problematic. But, it was a great time to learn for a lot of different reasons. I mean, firstly, I think as an investor, it makes people of that era, I think pretty cautious, which is probably a good thing. And then it really, at least for me, I learned an awful lot about the interpersonal skills that you sort of need to be successful then and now. It's much more than just sort of analyzing where rents need to be or deal terms or whatever. You really needed to be front and center with lenders and with tenants and with all kinds of counterparties to get them comfortable that you acknowledged what was going on in the market and you were doing the right thing. And you were going to sort of bring the asset, bring the deal, bring the transaction, whatever it is to where it needs to be. And Bob's a great leader. There were a bunch of other people here at the time. I have a colleague I worked for who passed away named Tom Kelly. It was so valuable to sort of see them in action and the way they conducted themselves. And you needed it. When there's no confidence in the market, you need to have people who bring confidence to specific transactions. 

A.Y. Strauss: That's amazing. It almost sounds like today in many ways, like people try to compare today to the GFC, but that actually sounds more accurate. Maybe you could describe some of that. I mean, that obviously it's hard to describe charisma, right? Integrity sort of is more of like a constant, but maybe you could try to give sort of an example or two for somebody listening, because I think a lot of younger people coming into the business say, well, "What's the N.O.I.? What's the cap rate? What's the I.R.R." And all of that is critical, mission critical. But if you can't engender that trust in your counterparty—and obviously [you] have to execute—[but if] you can't build that relationship, you're not going to get terribly far. So maybe you can describe a little bit more of that for somebody listening.

Michael Seeve: You know, I think it's human nature that you hear what people say, but you read them, you read their body language the way they sit and conduct themselves and the word choices and a million different things go into it. And I do think, when people are not confident or people are hedging or, you know, whatever…people see it. And in a market—then and now—where there's uncertainty, you don't want your counterparty to hedge, you need to know it's going to happen and it was interesting to see people, whether we were talking to lenders or we were talking to tenants or whatever we were doing, getting them comfortable. “Hey, we're going to get this done. We have the access to capital. We're going to do this. We're going to build this space out on time. We're going to complete this approval process. We're going to do the right thing by this asset.” I think whatever the expression is, “90 percent of life is showing up”. I think that's a part of it. I think when the message comes directly from the people who are sort of taking ownership of a situation and they're putting both feet on the ground and taking ownership to say, "Hey, I'm here. You've got my word. I'm going to get this done." You need that in markets when there's uncertainty. And I think it goes a really long way. And actually, I think in good markets and bad, it's kind of the relationships that let you do what you need to do. And the only way you get those relationships is by putting in the actual time and making the connections and delivering and being consistent.

A.Y. Strauss: Really well said. And a lot of business is just how you talk to people and how you make them feel when you speak to them. Right? I mean, that's just a big chunk of it. And well encapsulated. I really appreciate that thought. You've been involved in a ton of deals [and] development. You were early on data centers, too. I mean, I remember 15 years ago, hanging out with you talking about data centers. And now “data centers” is just, it's an absolute monster asset class. And this [was] really early internet days. Hopefully [it doesn’t] take us too far afield of some other topics, but that seems like it's been a passion of yours over the years, and you've capitalized in special ways that maybe others didn't. But, maybe you could talk about how you saw that as an opportunity where other people might have missed it. 

Michael Seeve: Well, it kind of fell into our lap, the first one, and we gave a presentation at an industry group to a group of people that were all kinds of different industries. It was some sort of networking thing. And one of the attendees was the head of a New York State…New York City-based data center group that was kind of small. They were sort of spun off. They've been part of a public company. They were owned by CalPERS or one of the pension funds, and they were looking to grow and they liked our presentation. We kind of hit it off. And what I thought was interesting then we were very well suited to each other. Like they knew everything they wanted to do in the space. They had a really good plan for how they wanted to grow. They didn't have the human resources or the experience to sort of have a site and get it entitled and developed and sort of finance it, which are all things that we do. So we sort of made a deal with them really quickly. I remember we had a meeting with them, the sort of a meeting after we explained pleasantries and we were like, “describe your dream deal.” You know? And they sort of laid it out and we're like, “all right, well, we could do that.” And they were busy. They were like…it was a very tech-oriented place; like they were constantly working on stuff. So, to have guys like us that teed up the real estate, brought in all the right professionals, moved it quickly, did all the things you have to do, got it entitled, and built it. Tech was a little complicated back then. So we didn't pay for the whole project. We paid for the site and we did the core and shell, but it was still like major, major, major investment that wouldn't have sort of been viable for an alternate use. So it was nothing to do all that. And we did that with M&T Bank, whose just been a great relationship of ours. But the punchline is we were just…it was a [] great real estate deal because they had a great business and needed things to happen. And we sort of connected with them and cooperated really well. And the results were great, so I loved it. It was much more than just kind of commodity real estate. I'm going to pick one of these off the shelf and I'll take the less expensive one. 

A.Y. Strauss: No, well said. And what years was… [] what was your first year? Were you first in a data center? I mean, it's like the ‘90's we're talking about? Early 2000s? 

Michael Seeve: I'm bad with…I lose track of those things. It might've been later than that. It might've been early 2000s. 

A.Y. Strauss: But still, that's very, very early compared to where we are today as a country with data versus then. 

Michael Seeve: It's probably why we got it because now the space has gotten crowded and there are a lot of people who do it. So, you're probably less likely to bump into somebody at a cocktail party and have it connect that way. But the concept I think is true, which is: there are plenty of people who have busy day jobs and if we can hook up with them and add value to their lives and vice versa, you know, that stuff is super fun.

A.Y. Strauss: Absolutely. I think a lot of people in the real estate game…they focus on those relationships. Someone once said “buildings actually have no value. It's the people inside those buildings that give them the value.” So you've built great relationships, whether it's a big law firm locally and then finding a property for them and building out for them, or a data center and sort of working backwards. The bricks are almost secondary to the company and the primary business operating within. So that's a great management tool to grow. And you've done office, and you've done industrial, you've done retail, you've done pretty much everything. Maybe you could talk about a deal. 

Michael Seeve: …If only we could go back in time and do more... 

A.Y. Strauss: Yeah, exactly. And look, you have to move forward, never back. But maybe you could talk about like a deal or two that you thought was really special. You know, one or two that were close to your heart and you put your heart and soul into it and you were really satisfied with the results. 

Michael Seeve: I guess we've had a bunch that have been fun. We did one that was particularly meaningful for Bob. In Roseland, we bought a building that had been…it was a Merck building, but it had really been a predecessor entity, Organon [& Co.], which through mergers and acquisitions became Merck. We bought it vacant. And it's a big building. It's probably 400,000 square feet. And normally, we wouldn't do that. And I think normally most people wouldn't do that. It was just…even when we did it—I guess this was 2012—it was a lot of empty office space to take on. But Bob was really struck by the quality of the building and he was right. I mean, it was really a special asset. And, so we took it on with an institutional partner and right out of the gate, we thought we had landed a tenant for half the building. After we bought it, but well before whatever—and we probably worked on that deal for eight or nine months. And for seven and a half of them, we were certain we were doing [it]. You know, it was “rah, rah, rah, get it done”. And the deal fell apart at the end for just like reasons we still probably can't answer. But it didn't happen. The real estate gods took us out of the sunlight. And we all had to [] dust ourselves off and whatever, but we ended up landing a couple of replacement tenants, who today I wouldn't describe as replacement tenants. I would really say they're better tenants. Lowenstein Sandler, who was around the corner from us, chose to focus on the building. And so we worked on a transaction with them. And then shortly after we completed Lowenstein Sandler, we completed a deal with Connell Foley. So kind of the net result of it is Bob's original impression, which was like a really high quality building would attract tenants was born out. And today, those are like the kind of tenants we're so delighted to have in the portfolio. Obviously, they're doing well. They're busy. They utilize the space. They've got great energy. They lend to the building just the kind of vibe you want. So, that was kind of a really fun deal. I have a colleague, Bill Martini, who he’s my partner, he’s my colleague. And he's got a gift for finding real estate. He found a building, a multi-tenanted office building that had a lot of vacancy. Also, it was about half occupied, maybe a little bit less. We knew the seller who was sort of getting out from a deal with a lender when it was financed at the wrong time and was looking to sell. We sort of did the same thing. We made a deal. We bought it and a leasing broker, a guy named Dennis Grala, who's a really good friend of ours—you know, someone we've done a lot of stuff with us—ended up calling like a week later with a prospect for the building and we just sort of dropped everything and [] threw ourselves into it and we ended up sort of signing a great lease for the company for the building. It was a ton of fun. That's the best real estate when it's kind of like relationships and there's something to do. I mean, there was a lot of work to do, but it was fun work doing it. The one you mentioned in Manhattan, some of the assets we buy are kind of what I described like value kind of plays where we're going to run around and do stuff. Years ago, we bought this asset in Manhattan on Bryant Park, and it's not a huge building, but it's really a beautiful building. And we've turned it just about exclusively into fashion showrooms, which is, you know, this like funny little niche use, but it's the best. It's so interesting. We've got all these great tenants. And not even when we're over, they sort of, like…we're in their world as their guests to sort of understand what's important to them and why they need this or why they need that and how they use the space. And they're super networked amongst each other. They all know everything about who they're selling to and where the buyers are going and where they're going next and what's selling, what's not selling. It's a great sort of fun lifestyle to be a part of those kinds of industry buildings. That one is really fun. That's a great asset. 

A.Y. Strauss: Absolutely. And I know Bryant Park is near and dear to Bob's heart too with the public-private partnership and everything else [] he managed to pull off there. Incredible. Maybe we fast-forward to today a little bit. You've seen a couple of cycles. There's a lot of interesting things happening in real-time today. You've sort of touched on some of them. You speak to a lot of people, you get a sometimes [] different read, different vibe. Some people are optimistic, some people are pessimistic. Obviously certain things are factual and certain things are emotional. Maybe you can give us a view of sort of how are you looking into this market. Obviously markets come and go, but the relationships never change and deals can come at any time. But are you bullish over the next year or two? Are you squeamish? Are you bearish? What are you thinking as far as just growth opportunities today, or is it more of a time to just maybe pull back and wait for some trouble? 

Michael Seeve: I think we're kind of net bullish. Like everybody else, we kind of preferred paying half of what we're paying in interest a year ago to what we're paying today. We're not going crazy. I mean, if you came here from Mars and someone told you your cost of debt capital was five and a half percent or six percent, I think you'd be like, “Oh, that sounds reasonable”. You know, I should be able to build a business, those kinds of rates. And when I started in the business, it was if your rate was under 10, you were doing a good job. But obviously that affects everybody's cash-on-cash returns. And so, it affects values. And I do think the banks have to do a lot to assure people that they can manage their portfolios. So, you know, lending is just off in a lot of places and it's an awfully good time to have some relationship lenders. And I think at least for us, it's also…life is easier in our deal size world than it is in like the monster deals. Almost all of our deals are sub-$25 million, which I think makes everything so much more manageable. It would be very difficult if we had a billion dollar mortgage to roll over or something. And then in terms of just demand for space and what works and what doesn't work, I think we're seeing what everybody else is seeing, which is interesting assets that are sort of located in or around like really dynamic 24/7 kind of communities are doing better than kind of isolated assets for sure. In our portfolio, generally speaking, smaller users size-wise are using their space more robustly than larger ones. We've got different kinds of space. So things are different. I think we felt it earlier in retail where there were some users that just, their businesses weren't going to be there. But today we feel really bullish on retail. We don't have enough retail space to lease. The demand is great. And the people who are in those spaces, I think are doing really well. And we think there's room to grow over there. I think in industrial, even if it's not as good as it was [] three years ago, it's still great across the board. And office, I think it's very asset specific—the nature of the space, the nature of the users. But ultimately I think these things find their footing. If you've got vacancy, you lease it and you sort of meet the market for what the market needs. So our hope is that we find over the next 18 months some interesting projects we can take down and work on. 

A.Y. Strauss: That's awesome. And I appreciate that. It was an amorphous question and you navigated it beautifully. You mentioned a couple of deals that you thought were going to go one way and then radically shifted to the other way. And I guess when you buy some of these buildings, you're very opportunistic. You bought big vacant buildings and so on and so forth. You've gone through some real stress. I mean, just managing through cycles, managing through deals, going for seven months and then dying on the vine. A lot of this business is mental, like all business. It's just showing up, getting through that day, rinse and repeat. So we call this podcast "The Dealmakers Edge”. We really try to get into the mind of people who are managing through these stressful, dynamic, fluid situations. So, you've had adversity. And the question I have is [] how do you manage it so that you can keep showing up for your team and your investors and partners and so on and for yourself? It’s sort of like a macro mental health management question for you. 

Michael Seeve: We have a partner that we own a bunch of assets with, Andy Gottesman and his family. And Andy and I talk a couple times a day. And we oftentimes see the same things very differently—like, “this is great, this is terrible”. I think the act of having people you respect that you can talk to and sort of not bottle it up inside, but sort of lean into the things that you have to deal with. I think it makes problems vastly more manageable. Invariably the things that we think are going to be great are never quite as great as they are and the things that we think are going to be horrific are not quite as horrific as we think they're going to be. And I think most of it is, you sort of tackle it with people around you that sort of help you navigate it and make the best of it. I think the people who get lonely because they're keeping it all on their shoulders and they don't have people they can assimilate all this stuff with, you know, it gets to be very taxing. 

A.Y. Strauss: Absolutely. You bottle it up. You need partners. You need team members that care [and] that have your back through thick and thin. And I couldn't agree with you more. 

Michael Seeve: We joke around a lot. (laughs)

A.Y. Strauss: Yeah. And yeah, I mean, you have to laugh. If you're not laughing, you're not doing it right, no matter what you're doing. Right? But the other question I have is, [for] somebody right out of college, a junior version of yourself from when you graduated meets you. They're looking for a mentor and they sit with you for a half hour, 45 minutes. What are the nuggets, a lesson or two or moral or two other than we've described? What do you talk to them about as you help them project out and sort of map out their possible future?

Michael Seeve: I think for me, it's a people business and something that's always worked is just like disciplining myself to really listen. The obvious one is you sort of you know, you compete for tenants, particularly in the suburbs that have choices. And you network your way to get a chance to have coffee with someone on the tenant side. And invariably, if you're patient and you listen and they tell you what they're up to with their business, you can get some nugget of information that wasn't part of the deal before. But if you can find a way to work it in there, it could be the distinguishing thing. I think it's—on the entitlement side—it’s the same thing. The temptation is you assemble a great team of professionals and you want to let them guide it because they do it all the time. But if you can get in front of the mayor or you can get in front of the people on the council and hear their sort of stories about whatever, invariably you find something useful that can sort of help shape and move things on. So, I think listening is a great skill. And listening to people on the other side of the table, not just the people on your side of the table is an awfully good way to get stuff done. And I do think if I was just starting to sort of really observe the people that you admire around you and not just their intellect, but the way they conduct themselves—how they negotiate, how they deliver good news and bad news and how they treat their team members. And what do they do to get people motivated and excited? Those are skills you only sort of learn by observation. I think they're awfully useful. 

A.Y. Strauss: Really well said. Great lessons on the lesson of listening and how you treat people and projecting confidence and navigating the partnerships. I've taken away a lot of the conversation. I'm sure our listeners will as well. Last question is, is there anything else I should have asked you that I didn't? You know, anything else you would have liked to have answered that I just would not have thought of to even ask you? 

Michael Seeve: I don't know. It's fun to talk. 

A.Y. Strauss: Well, Michael, I got to tell you, it's always fun hanging out with you. Besides for the great talent, besides for the articulate nature of which you express yourself, you have a great energy to you. And I think that energy attracts people to want to deal with you when people can deal with a lot of others. So I really appreciate the time and our friendship. Great hanging out. And we're looking forward to watching more and more of your continued success every single day. And again, just want to thank you for being on today with us.

Michael Seeve: The feeling is mutual. Thank you for including me. 

A.Y. Strauss: Awesome.