Laura Rapaport:

Predominantly right now, we are coming in as a form of very accretive credit product. We are highly accretive because our cost of capital is fixed over the 10 year from inception. We can be taken out at any point in time. We will lend on any asset class, including hospitality and office and retail. And we also can be structured in a way with an accrual IO and back-ended amortization to allow the borrower time for stability to lease up the property.

Nancy Lashine:

Hello and thanks for tuning in to Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners. Capital is the lifeblood of the real estate industry, but the decisions on where and how it's allocated are driven by people and personalities. Who are they? What motivates them? What can we learn from their experiences. On this show, we introduce you to some of the real estate industry's most influential thought leaders and decision makers, and we talk about what is important to them, how they make critical decisions, who has influenced them and a lot more.

Our guest on this episode is Laura Rapaport, founder and CEO of North Bridge, a company that sits at the intersection of real estate and sustainability. North Bridge's first product is C-PACE Lending, a financing mechanism that allows real estate owners and developers to access capital, to invest in efficiency and resiliency upgrades. Because you're probably wondering like I did, what C-PACE stands for, it's Commercial Property Assessed Clean Energy. I have to admit, I knew very little about C-PACE going into this conversation, but Laura brings an incredibly knowledgeable and interesting perspective as someone who is actively helping real estate borrowers obtain C-PACE financing for a wide range of projects.

Laura explains the potential use of C-PACE. It can be used for renovations, new development, acquisition, financing, refinancing, and even rescue capital. So if you are a real estate owner or developer, it's very likely that this low-cost, long-term, fixed-rate form of financing is relevant to you. In addition to being an authority on C-PACE, Laura is an accomplished female entrepreneur and leader within the institutional real estate industry. She was previously a senior development manager at L&L, overseeing the construction of 425 Park Avenue in Manhattan. And before that worked at Tishman Speyer and Lehman Brothers. She is actively involved in several industry associations such as WX, ULI, C-PACE Alliance, PACENation, and in 2017 was named one of New York's 40 Under 40 rising stars by Crain's magazine. I've had the privilege of knowing Laura for many years and she is kind and gracious and well, let's just say she's often the smartest person in the room. I hope you enjoy our conversation as much as I did.

Laura, welcome. We're so happy to have you on the show today.

Laura Rapaport:

Thank you so much for having me.

Nancy Lashine:

I'd love to start with hearing about North Bridge and the business that you started. So tell us a little bit about what North Bridge is doing.

Laura Rapaport:

Yeah, so North Bridge is a national C-PACE lender and servicer, and we focus on institutional borrowers and lenders in major markets. North Bridge's first product is C-PACE, and we are a women-owned company that works at the intersection of real estate, sustainability and finance. C-PACE is a newer product, it has been around since 2008, but as of late is taking a lot more interest from the institutional world and is very much a niche product that is gaining a lot of interest and traction from many different types of users. It can be used for renovations and new construction and it can also be used for refinancings, rescue capital, loan modifications and so it can be a lot of different things to a lot of different people.

But in short, C-PACE stands for Commercial Property Assessed Clean Energy, which is a form of long-term, 20- to 30-year fixed-rate financing that is an assessment. It's not a mortgage. It's based on the property and it can be repaid at any point in time, but can never, ever accelerate. The goal is to use it for energy-efficient measures and we can get into all the nuances, but there's a lot of different use cases, some of which are obvious and many of which are not as obvious to those in the market today.

Nancy Lashine:

Right. So for the layperson, because I think even those of us who've heard about C-PACE for a while, it's still a little bit of a... It's new and it's a bit of a head-scratcher. Many of us haven't used it before. You can use this form of financing if you're buying a property, developing a property, renovating a property, or even if you have a portfolio of properties. And the only requirement is that it has to somehow be used to finance something that is sustainable or recognized as green by the... Explain to us when you could use it and when you can't.

Laura Rapaport:

So I think one of the greatest opportunities and by the same token biggest hurdles that we face, is the lack of education in the market, especially the institutional market for what C-PACE is and how it can be used and where it can be used. C-PACE when it first started, was started in 2008 to put on solar on industrial buildings. And the idea behind the product was that to incentivize people to put in more energy-efficient measures, the cost of the financing should be cheaper than the savings that you achieve over time. But as you and I well know, sometimes well-intentioned developers, the cost of these projects are too expensive because the payback period is too long for you to realize that within your initial hold period and the cost is just too cost-prohibitive and frequently gets value engineered out. And so with that, the people who are using these projects were using it for a hundred thousand dollar or million dollar, 2 million dollar renovations.

It was never on your or my radar when it first started. Since then, it's expanded to the majority of the states in terms of being able to be used as a product and the use case has changed and the cost of capital has come down and the size and scale deals has increased. So what does that mean? It means that it doesn't necessarily have to only be for what we traditionally think of as a green measure. If you build to code in some markets such as if you build to the 2018 IECC code in Nevada, which every institutional developer is going to build to, that can be up to 35% of the stabilized LTV of a project. It can be up to 40% of the cost, of every project cost. In other markets it's much more restrictive as to what counts. Like New York City is the most restrictive market as of late, and with that it has to do with anything having to do with energy. But it doesn't necessarily have to be passive house, it doesn't have to be net-zero and it doesn't have to be LEED platinum.

If you think about the idea of if what I'm taking out of my building and what I'm putting on is more energy efficient, then that usually counts. And what that means is any type of windows, your entire building envelope, your curtain wall, windows, doors and roofs to all of your building systems, your electric and your HVAC, elevators, BMS systems, plumbing, low flow fixtures. In the West Coast seismic resiliency that's required by code is PACE eligible. In Florida, hurricane resiliency, which is now a major, major line item for borrowers, is PACE eligible. And so as you know, I have a very long history of being a developer, both of residential and commercial buildings. And so I was able to see, and we are able to see that in many of these markets, what you're building already or what you're using to renovate, actually makes you eligible without having to put on solar or EV charging station. And we're happy to pay for that.

So as a result, if you're going to be spending the work to retrofit or do a gut renovation of a building, we can be your construction loan or part of it. If you have already built a building and it's not yet stabilized, we can come in at TCO or after TCO because the look back is three years in most states from the work that was done. And we can come in and be a meaningful part of the refinancing because you get credit for the work that was spent. Or if you want to buy a building that was recently completed and you didn't do the work, because PACE is fully transferable with the property and not with the borrower, we can come on as acquisition financing.

Nancy Lashine:

And is the cost... If I'm the owner, am I doing it because the interest rate is lower or the terms better or I can get a higher loan amount? Why would I do it?

Laura Rapaport:

All the above. Predominantly right now we are coming in as a form of very accretive credit product. We are highly accretive because our cost of capital is fixed over the 10 year from inception. We can be taken out at any point in time. We will lend on any asset class including hospitality and office and retail. And we also can be structured in a way with an accrual IO and back-ended amortization to allow the borrower time for stability to reset the property.

Nancy Lashine:

Right. So relative to a first mortgage product today, which may be... Let's say on an industrial deal it would price it six and a quarter, where would you price C-PACE financing today?

Laura Rapaport:

Today we're somewhere a little bit wider than that, but an industrial building is probably one of the most sought after types of properties today. We are somewhere between three to four-fifty over the 10 year, so somewhere in the seven and change to eight and a half, nine percent range. But we can be taken out at any point in time. And so when people hear long duration, 20 to 30 years, they say, "Oh gosh, I don't want to lock in a rate for 30 years." And I say, "You don't have to." You have the financing that fully amortizes over the duration.

But what we're able to do with structuring is create synthetic maturities so you can get a five-year fixed rate IO piece of paper or seven or ten. We structure around lenders, depending on whether we're coming in for acquisition financing or we're coming in for construction loan or a refi, we are able to use a lot of structure to create a product that doesn't exist. So are we cheaper than six and a half percent today? No. However, what we are doing is replacing the A-note market that's very dormant, and able to inject capital passively into a capital stack to allow borrower and lender time to stabilize.

Nancy Lashine:

Yeah, which is almost impossible to get otherwise today. So it's certainly a product who's very, very timely in the market. How do you think about sizing a C-PACE loan relative to say a first mortgage or a total... Let's say it's on an acquisition. Is there a rule of thumb or is it just totally dependent upon what the improvements are?

Laura Rapaport:

It is actually unfortunately a little bit more complicated than that. And that's one of the opportunities, and again, challenges. Every state that has enabled C-PACE has its own program. And so when people here public-private partnership, they think it's government capital and the answer, it's all private capital, but the government part is that each state opts into a program and they allow that PACE to be paid as part of your real estate taxes. So in that case, what counts and qualifies in Florida is different than what counts and qualifies in Nevada or New York City or California. And so the general rule of thumb in most projects is probably 25 to 45, maybe 50 percent in the program of all of your hard and soft costs.

So in a case like somebody has recently built a new construction ground up multifamily asset, we could be a meaningful part of the stack from taking in terms of or replacement for the A-note, potentially dollar-for-dollar replacement for the A-note in terms of the total dollars, whether it's, you know, call it 40% loan to cost and perhaps the borrower is looking for 60, you could have 40% C-PACE and 20% other financing. So that's the sizing. In some markets though, and this is what's very nuanced about it and makes it complicated for groups, it is what the dollars are that you've put into the project. Have you ever done a full window replacement? Have you done the elevators? What doesn't count, for example is FF&E in a hotel. What would count is a tub to shower conversion in a hotel because in that case it's water saving. So it's very nuanced.

Nancy Lashine:

So you pay off the loan, you pay the loan when you're paying your taxes, when you pay real estate taxes, you pay it to not the state, but to a local tax authority, but it's state mandated so every locality within the state then has to make the collection and then pay you your fair share of whatever the pro rata share of the tax payment would be. Then that goes to you as the lender or to your source?

Laura Rapaport:

Yes. I like to think of it like a BID tax in that the tax on your real estate tax bill, you'll have your tax line, which is due to New York City, and then you'll have the below-the-line payments which are a BID tax, the [inaudible 00:15:15] payment, and other types of taxes.

Nancy Lashine:

Just for our listeners, a BID tax is Business Improvement...

Laura Rapaport:

District.

Nancy Lashine:

District. Okay.

Laura Rapaport:

So yes, good point. So that is what's called a non-ad valorem tax. It is a tax that does not impact the value and it can be taken off at any point in time. However, the opportunity is that it is paid through your real estate taxes to the local municipality. And so there is a case that can be made that you could pass through the C-PACE cost to the tenant. I don't think that's the base case. It is case by case. Hotels can charge green fees. A triple net user of space could pass it through to a tenant.

We can get into the nuances of different ways to structure it, but the idea that you pay back the interest or interest and principle, whatever the payment is that period, is paid back in your real estate taxes and it is paid to a local authority. It could be the local taxing authority, it could be, for example in Philadelphia, the Philadelphia Energy Authority. They collect the taxes from the borrower and we as the approved lender and servicer then make sure that the taxes are getting paid, the payment is coming back to us to pay back our loan.

Nancy Lashine:

Who are your lenders? Who's behind... Borrowers working with you and what's your sources of capital?

Laura Rapaport:

We have different capital partners that range from insurance companies to insurance mandates for private equity firms to open-ended vehicles. We have lots of different capital partners depending on the specific deal. We will always stay on as the lender and servicer and we will also sometimes invest in the deal as well. And so from the borrower's perspective, we always like them to know where the capital is coming from. We do not have a dedicated fund purposely. And we also think that in our structure the way we have it set up, we're able to offer the most competitive pricing on our paper to the borrower.

Nancy Lashine:

Are these typically competitively bid? Are you bidding against other C-PACE lenders when you are pricing this?

Laura Rapaport:

Usually not. Sometimes we are, and there are other C-PACE lenders out there. We are not the only one. In the deals that we are working on frequently people are coming to us and saying, "Laura, I've worked with you for twenty-plus years, either on the same side of the table or across the table. I trust you. I know you can execute. I know you have the capital. I've never done this before. Will you hold my hand and get me to close and deal with everything for us?" And we say, "Yes, of course." There are other scenarios where we are not the only C-PACE group, but a lot of the deals that we're working on are the larger, more complicated transactions. So we focus on what I would consider the large-scale C-PACE, north of $10 million and the bigger the better. We have deals ranging from five to over a hundred million in every asset class.

So it is really depending on, and frankly no two deals are alike. We start every deal with a blank sheet of paper and say, "Nancy, what are we trying to solve for you?" We could have three different deals with you and one, we're coming in as a passive liquidity injection to help you with a loan modification. We could talk about that. Two, we're coming in, you've recently completed an asset, it's not quite stabilized. We're trying to help you be part of the refinancing of that. Or three, you're doing a major construction project and we're going to come in with another lender and we're going to give you the financing that you need to get your project completed. And then you can keep us on or take us off as you like. And all three of those deals could be in very different locations, different asset types, and would be structured completely differently but we're trying to solve for what is right for you at that point in time. And what makes PACE interesting, and again it's complicated, is that it doesn't just fit in one box right now.

Nancy Lashine:

Right. So should we think about North Bridge as a business, at least with respect to this first product as a mortgage originator and servicer in terms of how you make money?

Laura Rapaport:

Yeah. But we are not a mortgage, we are an [inaudible 00:19:37].

Nancy Lashine:

Right, right.

Laura Rapaport:

Absolutely. Something different.

Nancy Lashine:

Something different.

Laura Rapaport:

Exactly. But we also invest in the deals as well.

Nancy Lashine:

And you invest in the deals as an equity partner?

Laura Rapaport:

We'll invest in the deal on the loans that we're making alongside with our partners.

Nancy Lashine:

On the equity side or on the lending side?

Laura Rapaport:

On the debt side. On the debt side.

Nancy Lashine:

On the debt side. Okay. So I love the fact that you said that you're really... North Bridge is a business that's in the intersection of real estate and sustainability, and this is your first product. Tell us what's your vision as you grow out this business?

Laura Rapaport:

So our vision right now is to use C-PACE as a solution. I think we're a solution in two ways. One, we are a capital market solution at a time when the capital markets are incredibly constrained, both from liquidity and just in terms of tremendous volatility and uncertainty. So we can really help in a passive way, be a solution to capital stacks on all the things we've talked about. We are also a solution in terms of helping make each building that much more efficient because at the end of the day, the efficiency and sustainability, the items that we're financing, could help you become passive house, don't have to, but can help you achieve some of your sustainability goals that you probably value engineered and didn't know that you had the opportunity to pay for them.

And so right now we're working with a number of different borrowers and we're working with them both on a loan modification as well as, I can't help myself. "I see you have a very white flat roof and a very sunny location. Can I help you be connected with microgrid and solar and EV charging and battery storage in your garage?" And they say, "Yeah, how do I do that?" And I say, "Well, I'll pay for all of that. Let me put you in touch with the groups that do." So we view ourselves as a connector to help make each building that much more efficient and sustainable and like the opportunity to really use our expertise on the sustainability side as well as on the building side from our prior experience to really help make buildings that much better to qualify for laws like Local Law 97 in BERDO and to help with...

Nancy Lashine:

What is BERDO? Local Law 97 for those of us in New York probably know [inaudible 00:22:04].

Laura Rapaport:

BERDO is in Boston. I believe now the list is up to 40 cities and counting that have very onerous rules that building owners are going to have to adhere to. People are very focused on what is happening in front of them and meeting the covenants of their existing financing more often than not and maybe are not. Some groups are planning for the future, but it's very hard right now to look past the next year or two when we're in this current capital environment.

Nancy Lashine:

So are you working on the next product yet or do you see...?

Laura Rapaport:

We are.

Nancy Lashine:

Okay.

Laura Rapaport:

And I'd love to talk to you about it shortly, but I would say just to that point with where we are, we are not only looking at buildings from the efficiency standpoint, but using that as the nexus for capital and different applications of it. And I think our knowledge in terms of the borrower base, we're able to effectuate change in a positive way for a lot of these projects. And also some of the capital products that we're coming out with are ones that are solution oriented for borrowers and lenders. I think we're a solution for borrowers and lenders today.

Nancy Lashine:

Okay. So we jumped right into the weeds talking about C-PACE because I keep learning more and more about it, so I appreciate that and thank you for helping to educate everybody. But let's back up a little bit and talk about you and your history in real estate and then why you decided to start North Bridge. So you grew up in New York and you ended up in real estate finance right out of school, is that right?

Laura Rapaport:

So I wanted to be a doctor. I wanted to help people and I now feel like I'm helping by creating a better built environment, but I wanted to be a doctor and a wonderful man named Earle Altman had come over for dinner summer before my freshman year of college, and I had given him an idea on a project and he came back another time. I said, "What happened with the project?" And he said, "Well, we actually used your idea. What are you doing this summer?" "I don't know, volunteering at White Plains Hospital again." He said, "Come work for us." And it was an unpaid internship. And I said, "Well, this is fun. I know I'm going to be a doctor so I may as well do something different just because I know my path." And I did two weeks of work in a morning. By lunchtime they said, "Oh goodness, what are we going to do with you? Well, if you get your real estate license and you close a deal, we'll pay you." I said, "What? That sounds pretty good. I'm going to college in September, so that sounds fantastic."

So I got my real estate license and I closed the deal, a small lease in Queens, and I was so proud. I worked with Gregg Schenker on that, and it was really exciting. And then the next summer I also had this medical internship lined up and this incredible woman named Tara Stacom said, "Come work for me for the summer." And the next two summers I sat at her coffee table and shadowed her and had an actual telephone that connected to the wall and a piece of paper, yellow lined, and a pencil, and we shared a computer. I'm really dating myself, aren't I?

Nancy Lashine:

It's all good.

Laura Rapaport:

And I learned all about leasing and brokerage and was an invaluable education to really understand how buildings are leased and what works and doesn't. And then from there I went to Lehman Brothers in their CMBS group and then I had an offer and I asked to go to London. I was their first analyst and I did securitization number two through seven. There's a lot of similarities today with where C-PACE is and where CMBS was in the early 2000s. It was a product that had been around in the U.S. for a while, but was very new to Europe. There was a need for liquidity. People were very wary of something that was new. Real estate is not an early adopter for a lot of things. And from there, once we explained to people how you could use this, it just went vertical and it was an incredible opportunity to, you know, originations through executions of rating agencies and see everything.

From there I went to Tishman Speyer. I worked in their New York development and acquisitions group and I went to business school. I went to Wharton to get my MBA and when I graduated, had the opportunity to work for David and Rob directly at L&L Holding Company and help them grow the business. And that meant everything from residential development to running capital raising, to building 425 Park and multiple other things. And Nancy has been, you've been an unbelievable mentor to me through this whole process and you've been very much aware in helping me construct this next phase in understanding who...

Nancy Lashine:

Wait, I'm still stuck. And when did you decide that you really weren't going to become a doctor?

Laura Rapaport:

I really like making money. My mom said it. She's a doctor and she said, "Follow your passion and be the best at whatever you do. And it's okay if you're not a doctor. If you really like this, one day maybe you'll build a hospital." So that's my goal. Maybe I'll help expand the hospital and make it more efficient so everything can come together.

Nancy Lashine:

But you had so many interesting jobs and you were working with really fun and interesting people on massive projects. Why leave that to start your own business?

Laura Rapaport:

I always had this burning desire to do something on my own, and I've always been a little bit outside the box thinker and I've always taken risks like go to London not knowing anyone and be the first analyst in London and build the first building on Park Avenue in 50 years. And at Tishman Speyer, we built the first office building, fully-leased the city in Long Island City. So for me, an open runway with lack of precedent has never been scary, but rather has been exciting and a fuel for me and a challenge that I want to take on. And I have come from a long line of women who have always done things differently and been the first for many things.

So that was a lot of confidence from my family and support from my family and husband and friends and say, and people like you, go do it. I had an opportunity to partner with a classmate from business school and to help him grow a multifamily company. And I said... Well, we talked about it, let's try this. It seems exciting and I felt like I was really proud of the work I had done at L&L, but I was ready. I mean, I don't think you're ever ready to start a company, but I felt like I was ready to take the risk.

Nancy Lashine:

So you tried something and it was okay, but then you went on a different path. And that's hard too.

Laura Rapaport:

Yeah, it was funny. I was telling someone today when giving them some advice, that getting to this point is a journey. And I think anybody who starts a company, it's a journey where I didn't grow up saying, "Oh my goodness, I want to be a C-PACE lender", but I didn't...

Nancy Lashine:

How did you think about finding a partner? I mean, for a while you seemed to be gravitating towards having a partner in what you were doing and then you went through that experience and that's very hard to have a partner and then say, "Gee, maybe I'm better off going at this alone."

Laura Rapaport:

Yeah, I think some partnerships are fantastic and other times people go in different directions. For example, Nick, I really think the world of him, he's great. He wanted to do more multifamily in secondary and tertiary markets. And I came across the C-PACE opportunity and it really felt like everything I had done to date, which was not necessarily a straight line path, was really kind of all in the C-PACE. It was acquisitions and financing and sustainability and development. And because of my path to date, and I come across this when looking at financing for portfolios is really kind of how I came across the C-PACE. It's very obvious to me now that if I had to put together all the skills of what I would want to do when running a C-PACE company, I've now checked all the boxes, but it clearly wasn't a prescribed path.

I kind of took things on as they were interesting to me and exciting and tried to ask as many questions and do as much as possible. But I think having that development background and the financing background and the capital background, understanding what people are looking for, understanding and being able to wear all the different hats, allowed me to be able to be a better professional and craft a better product for North Bridge and then grow the team looking for people that have differing skills but all come from the institutional world. So I think that finding a partner can be really hard and it depends on where people's interests are at that point in time and having open communication. I've seen great partnerships work. I've seen great partnerships fall apart. Running a company as you know, is not easy. Having people like you that you can talk to and have candid conversations with makes it better because there's so many different paths that companies can take and they don't go in straight lines.

Nancy Lashine:

So give us an example that you'd like to share for people who are listening and thinking about maybe starting a business, of a really hard decision point, a crossroads, where you had to say, if I go this direction, I'll go down that road. If I go a different direction, it'll be a different road. Whether it's somebody who wanted to finance the entire business and own a piece of the company or whether it was being captive with a particular group. Give us an example on how you thought it through.

Laura Rapaport:

Fortunately I've had some very good partners throughout my career and in particular also at North Bridge, and we've had a number of inbounds of people who said, "We want to work with you in this capacity." But I think at the end of the day, having a candid conversation and finding out who somebody is as a partner, how they act when things are good and how they act when things are not good can be two very different things. And it's very eye-opening.

Nancy Lashine:

Have you set up a formal advisory board for North Bridge?

Laura Rapaport:

Yes, I have.

Nancy Lashine:

And how have you thought about that?

Laura Rapaport:

So on our board is Ron Kravit, who is former head of real estate at Cerberus. Nina Matis, who is former CIO of Istar, Marty Berger, who is CEO of Saber and Anand Gajjar, who's been in so many interesting roles at Credit Suisse and Guggenheim and S&P. So really each of those, I share their backgrounds because they all come from a very different perspective. And whether it's talking about employee issues, compensation, structure, what do we want in a partner? What is the right thing? Also, going through an investment committee on a deal. Everyone brings very different perspectives of their own experience and they were all in real estate, but different areas, whether it was structured finance, legal acquisitions, private equity development.

I believe that no one person, myself included, has the answers. And having a group of people who attack a problem or think about a problem from different aspects and different experience, it is very valuable. And I'm somebody who I say to my team all the time, I will always listen. I welcome thoughts. I welcome disagreement. I welcome a healthy conversation. And I always listen. I may not take the answer, but I'm somebody who knows that keeping your ears open versus closed, creates more opportunities in the long run, and I certainly don't have all the answers.

Nancy Lashine:

And what advice would you give to people who want to start a business about how to capitalize it initially?

Laura Rapaport:

That is something that I think a lot about because I was very fortunate to do a round of people most of who knew me, not all who did in terms of high net worth and friends and family, but people in the real estate, sustainability and tech worlds, areas that were all complementary to the work we were doing. But it's very hard to get there. And I was very fortunate to have that group. I think to make the decision to start your own company, there's never a good time, you're never perfectly ready. And I am somebody who I want to dot the I's and cross the T's always, and that's not what you're going to get. So you have to take a bit of a risk and a belief in yourself and be a little bit crazy at times and really frankly, have conviction in what it is that you are doing.

But with that, I think understanding that it's the person who gets you... I like to use the example of going into outer space. The rocket boosters that get you through the atmosphere are not the ones that may take you to the moon, and you need different things and different cost of capital and different types of partners at different points in your journey depending on what you're doing. You might go down the VC route, which is a whole different type of funding and structure and return metrics than somebody who's trying to set up an asset management platform like [inaudible 00:36:35].

Nancy Lashine:

So how did you decide, Laura, which route to go down for North Bridge?

Laura Rapaport:

Oh, I talked to a lot of people. I got a lot of no's. I got tons of no's. I was actually telling my son this morning.

Nancy Lashine:

But did you start with a lead investor so you knew at least you had a proof statement that this was going to work?

Laura Rapaport:

Yes. I had somebody who I'd invested with before who was becoming a lead investor in this round. And again, Ron Kravit started as my first advisor and was incredibly helpful in thinking through how to structure this and what to do. And it was not being afraid to say, "I don't know, and can I get some help?" And sometimes it's really hard. I think the one thing I've learned over time is admitting when I don't know something actually creates an even better conversation because this was new. And yes, I had raised capital and raised hundreds of millions if not billions of dollars of capital from different groups, but raising a couple million dollars is way harder in some ways because each of those incremental dollars, it's very hard and it's not something that I know comes naturally to a lot of people, especially women, candidly.

But I think it's having a lead investor and not being deterred by a no. In fact, as I said to my son this morning, sometimes I learn more from when I didn't get something from when I did because it then forced me to think about what it was that I was offering that wasn't interesting. What was the feedback I was getting as to why it was a no?

Nancy Lashine:

Oh, I totally agree with that. You learn so much more from the things that go wrong than the things that go well. In retrospect, looking back and looking back over many years, I learned a lot more from that. You mentioned being a woman. Has being a woman-owned business helped you in either finding financing or in generating deals?

Laura Rapaport:

Perhaps. I think that being a woman-owned business has been a benefit because of the support that I've gotten from both men and women who want to help me and help us and to do things differently and pay it forward and give me opportunity. And so that was not lost on me and is not lost on me in the introductions and support that we have gotten to date from, again, women and men who say, "Wow, this is so great. We need more women in finance and in lending and in sustainability." And yes, North Bridge, we are women-owned, ESG company. We check lots of boxes. So for some of our borrowers, yes, it does help, but that's not... I joke and I say this is nice to have. It's not why people are doing business with us, but it certainly helps with some of the checklists that people get.

Nancy Lashine:

Right. So looking back on just the last few years, anything you might've done differently?

Laura Rapaport:

Focused more sooner on where things were working and where things were not, in that I think we now have a very good understanding of our ability to differentiate ourselves and where we can be most effective in the market from the use case of C-PACE as well as a partner to lenders and to borrowers. Some of that does come from going down the wrong path and continuing to iterate. I think an understanding that things are going to take longer. I know they say it takes longer, it costs more, but it takes longer and it costs more when building a building or building a company and having a more realistic expectation.

I'm somebody that can move a hundred miles an hour, and sometimes if you slow down a little bit, the silence, the pause is when you can get a better sense of what the right next step is. I've definitely made a lot of mistakes. I will continue to make mistakes. I learned from those mistakes. I will continue to learn from mistakes. And I think that understanding that not everything is going to be right all the time, it will be hard. There will be great wins and some great losses, and having a more realistic understanding of that is probably what I would say, surround yourself.

Nancy Lashine:

What does North Bridge look like in five or 10 years?

Laura Rapaport:

We're going to take over the wo.... No, I'm kidding. I think that we will be larger, we will have done and continue to do some very transformative transactions, ones that will have, and we're working on one now. We've come up with a structure no one's thought of before, which is exciting because we were able to say, "Well, why can't you do this?" And no in my mind sometimes is where the conversation begins. And so why not is something I like to ask a lot and no one told me I couldn't. And so the answer is I could and we can and it was a solution for someone, which is exciting. We came together as a team and came up with something that was really innovative. So I think continuing to create innovative solutions have done some marquee transactions, affected, positively changed the built environment and have multiple products in addition to just the C-PACE.

Nancy Lashine:

Awesome. Can I ask you some rapid fire questions to close?

Laura Rapaport:

Sure.

Nancy Lashine:

What's the kindest thing anyone's ever done for you?

Laura Rapaport:

The kindest thing anyone's ever done for me is, God, there's people have been so kind. I can't say the kindest, but I mean, just to the earlier point of fought for me on a deal. I mean, there's a lot of things, but as of late, somebody actually went to bat and said, "You've got to work with North Bridge. If I were you, I would pick North Bridge." And that vote of confidence made all the difference between us getting the deal and not.

Nancy Lashine:

That's great. What's the best advice you've ever received?

Laura Rapaport:

It's whatever you're doing, be the best of whatever you're doing. Find something, enjoy it, but be the best at that.

Nancy Lashine:

I believe you've definitely taken that advice to heart.

Laura Rapaport:

Yes. Probably add one more thing on that. Free is too expensive.

Nancy Lashine:

Free is too expensive. Yeah. Yeah. You get what you pay for. What's your favorite city?

Laura Rapaport:

New York.

Nancy Lashine:

Yeah. I would've been shocked if you said anything else. If you could have dinner with anyone tomorrow night, dead or alive, who would it be?

Laura Rapaport:

My children.

Nancy Lashine:

Aw, there you go. Well, it's hard to top that, isn't it? Thank you so much for your thoughts, your time, for being you. Really excited to see the growth of North Bridge and everything that you all accomplish going forward. Thanks for joining us today.

Laura Rapaport:

Thanks for having me.

Nancy Lashine:

I hope you enjoyed this episode of Real Estate Capital. Before you go, I have a quick favor to ask. We put a lot of thought and effort into this show and making sure we bring you insights from real estate leaders that you don't normally find in the mainstream media. So if you're enjoying the show, please remember to follow it on your favorite podcasting app so you never miss an episode. We'd also love for you to share it with others or give us a review on Apple Podcasts so others can find us. Thanks again for tuning in. For more information about our firm, please visit our website at parkmadisonpartners.com.