Max B Mellman Of Max Benjamin Partners On 5 Things You Need to Create a Highly Successful Career in the Commercial Real Estate Industry Today

The commercial real estate industry is a dynamic and challenging landscape that offers enormous potential for success. However, it requires a unique blend of skills, knowledge, and aptitude to truly excel. How does one establish themselves in such a competitive field? What does it take to consistently rise to the top in commercial real estate? How does one rise above the headwinds that are challenging the commercial real estate industry today? In this interview series, we are talking to commercial real estate professionals, brokers, investors, leaders of Real Estate Firms and Real Estate Investment Trusts (REITs), as well as anyone who’s found significant success in this industry. As part of this series, we had the pleasure of interviewing Max Benjamin Mellman.

Max B. Mellman , a rising investment leader, heads Max Benjamin Partners and Hybridge Capital Management . Established in 2018, both firms have rapidly grown with promising futures. Max Benjamin Partners specializes in commercial real estate and finance. Their innovative solutions and strong industry relationships drive their success. In just five years, they’ve exceeded $600 million in annual originations which defy market challenges. Their strategic real estate transactions attract a range of capital partners, from local to international institutions.

Mr. Mellman also presides over Hybridge Capital Management, serving an exclusive clientele of accredited institutional investors. His entrepreneurial vision solidifies his position in the investment arena.

Thank you so much for joining us in this interview series. Before we dive in, our readers would like to learn a bit about your origin story. Can you share with us the ‘backstory’ of how you got into the real estate business?

Sure thing. I grew up in a real estate family. Through hard work, determination and integrity, my father was able to thrive despite not coming from a privileged background. He raised me in a similar fashion. I’ve worked for almost everything I have — nothing was just given to me. This allowed me to build an exceptional work ethic while taking extreme accountability, which has led to my success.

Can you tell us about your company and what makes it stand out?

I own two companies Max Benjamin Partners (“MBP”) and Hybridge Capital Management (“HCM”). At MBP, we take pride in being among the most creative commercial real estate (CRE) investment bankers in the business. We are known for getting difficult and complex deals capitalized. Given that we place both debt and equity and are direct investors ourselves (HCM), we have a unique perspective on the market and know how to get deals done. And just as important, we also know which deals to avoid. Since I also own quite a bit of real estate and am an experienced developer, I do my best to put myself in my clients’ shoes and hone in on the intricacies of a deal that adds value to their investments.

Can you tell our readers about the most exciting new projects you are working on now?

On the HCM side of things, we’re in the process of establishing a $250 million fund dedicated to capitalizing distressed properties. We are playing it a bit defensively in this market, so some of our development projects are on hold. Despite the current environment, we are having our best year yet on the commercial investment banking side. A lot of that is due to our specialty in designing complex deals. As you can imagine, credit has tightened significantly as it has historically, and we expect the market to maintain this course for quite some time. A soft landing isn’t something we can confidently forecast, despite what you may be seeing in the news.

As with any career path, the commercial real estate industry comes with its own set of challenges. Could you elaborate on some of the significant challenges you faced in your career and how you managed to overcome them?

From the investment banking perspective, it’s especially challenging considering we are competing with behemoths like CBRE and Cushman while relatively new to the industry. That makes it especially tough to compete, especially when it comes to institutional business. My firm has overcome these challenges by going after the tougher, more complex deals, and, in turn, we have become known in the industry as the go-to shop for complex matters that require a very fine touch. We work relentlessly to build relationships with our capital partners and focus on funding niche projects. Instead of following more traditional routes, we are a data-driven firm that specializes in structuring complex deals that satisfy all parties involved. Our ability to do so has given us an edge over our competition.

Ok, let’s now move to the main part of our interview about commercial real estate. What are the three things that most excite you about the industry now? Why?

1. Opportunities Amid Economic Challenges: Though we’re in a rocky economy with high interest rates and inflation, this environment is creating many opportunities in the CRE world. Those who can identify those opportunities will thrive.

2. Non-performing Loans and Distressed Assets: Certain owners and investors across all asset types may be quite vulnerable as their high leverage floating rate loans near maturity forcing sales at a discounted basis for certainty… We believe a meaningful amount of distressed deal flow will take place within the next 24 months.

3. Adaptability and Innovation: Those who chose to invest in CRE during this time will profit if they are successful in reimagining and converting space to other uses.

What are the three things that concern you about it? Why? What should be done to address and alleviate those concerns?

1. High Interest Rates: They just aren’t favorable for CRE. What we’re starting to see is a practice called “extend and pretend,” where loans are extended, and losses are deferred to maintain a fa?ade of stability.

2. Realism in Assessments: We should be asking ourselves what will happen in the event that rates do not come down. How will that affect valuations? There are over $1.2 trillion of loans maturing within the next two years, which is definitely a concern of mine.

3. Timing and Liquidity: The importance of timing is crucial. Imagine large pension funds or large public institutions marketing their real estate holdings to the market due to rates not coming down — the results can be catastrophic as commercial real estate is usually the largest source of liquidity and asset value.

If you had the power to put into place three changes to improve or reform the industry, what would you suggest? Please share stories or examples, if possible.

Great question. I would most likely retain policies similar to what the Fed is doing now. Rates need to be high to cool inflation. Perhaps the government could create a program to stabilize the commercial real estate industry by offering competitive preferred equity/rescue capital for developers and restructuring over-leveraged deals to be paid back within a 10-year period. Instead of bailing out banks, they can be more proactive about bailing out borrowers. We need to be aware that there is $1.2 trillion of debt maturing within the next two years — a potential crisis in the making.

How has technology changed the commercial real estate industry, and how do you foresee it shaping the future of the sector?”

With technology, the sky’s the limit. It can be an effective tool as far as analytics, acquiring data, evaluating any particular market, etc. As for the future, it will be interesting to see what role AI will play in our field.

I am hearing the phrase “stay alive until 2025” a lot. What is your plan to survive in the current market?

A majority of our portfolio is luckily locked into long-term fixed-rate debt. The assets that are maturing within the next 18 months are not over-levered, and we keep decent reserves to ensure capital calls are not necessary. Staying liquid is important. We believe we may have a recession during ’25, so I would not necessarily agree with the “stay alive till ‘25’” notion. We are preparing to stay vigilant until 2027 — this can be seen as conservative, but I’d much rather be safe than sorry.

For a young person who would like to eventually make a career in commercial real estate, which skills and subjects do they need to learn?

Curiosity, awareness, and a strong work ethic are the top three most important traits. It’s important to be aware of what you know and what you don’t know and to take the steps to continually educate yourself. I find that some of today’s younger generation are more focused on near-term results, rather than long term results. Those contemplating a career in this field must understand that it is a “long-game industry,” and that success comes to those who operate with integrity, work hard, and are brutally honest. Since trust is the key factor, guard your reputation like your life depends on it.

When evaluating deals or opportunities in real estate, what are the most important factors you look for and why? Can you provide some examples?

We really like to take a deep dive into the data, i.e., rent comps, median household income, sale comps, business plan, macro environment with asset class as a whole, etc. If we believe there is a very strong case to not lose money, we will dig deeper. We like as much time as possible to assess a deal and are usually not the fastest nor the highest offer, but we do give sellers a high degree of certainty that we will perform well.

Can you share a story with us about the most difficult deal you made, that ended successfully for you?

We signed a purchase-sale-agreement to acquire a large hotel portfolio in February of ’22, which was before the Ukraine/Russia conflict and interest rates going up 400 basis points. We were really under the gun and had to roll up our sleeves to perform. We ended up having to get very creative to be able to perform by splitting the acquisition in two. So, despite the economic and geopolitical challenges we faced, we kept our word, which is very important to us, and still managed to close on time in September of ‘22.

Ok, here is the main question of our interview. Based on your personal experience and success, can you please share “Five Things You Need To Create A Highly Successful Career In The Commercial Real Estate Industry”?

1 . Consistency and Discipline: Half of the battle is showing up day in day out. CRE is a “long game” industry, and many do not have the skin for it. There will be times when you want to give up as a deal you are working on doesn’t go your way. The key is consistency and striving to create and add as much value as possible.

2 . Integrity: Doing what you say is essential. Some are short-sighted and willing to sacrifice their reputation for short-term capital gain. It is one of the worst things you can do in our space. It may be the largest industry in the world, but it is a small one when it comes to reputation. Planning ahead and doing the right thing will pay tenfold in a 50+ year career.

3 . Avoid Wishful Thinking and Measure Twice Before You Cut: This is a big one. Many of the largest losses in business are due to wishful thinking. One must be incredibly honest with deals, clients, and oneself. Are the assumptions in the deal you are underwriting really achievable? Do you know your deal inside and out? People in general tend to be lazy and aren’t willing to put in proper due diligence to ensure the time you are spending on a deal is worth it. Take the initial time to really understand what you are working on and have the awareness to acknowledge what you know and what you do not know.

4 . Build Meaningful Relationships and Guard Your Reputation: At the end of the day, CRE is a game of relationships. You are only as strong and effective as your network. Get out in the field, take meetings, make those cold calls that you so much dread to do, follow up, write that handwritten note, meet as many people as you can, and build as many meaningful relationships as possible. Over the course of your career, the people with whom you worked with may end up being the same people running banks, CEOs of companies, etc.

5 . Mastery: Focus on being an absolute master in your space. Do not focus on the money. In order to do this you have to get comfortable with being uncomfortable. Complacency is a dream killer. Many striving for capital gain will achieve subpar results, but if you strive to be the best broker, the savviest buyer or developer, and maintain the discipline to educate yourself and have the awareness to acknowledge the information you do not know (and take the necessary steps to learn it), you will achieve a much higher level of success.

Do you have three things you would advise a new real estate professional to avoid?

Do not chase too many rabbits, you can do anything, but you cannot do everything. Focus on the most important matters at hand, learn how to prioritize, and do not get distracted by shiny objects. Learn the power of saying no. This is very hard to do early in your career, but the sooner you learn it, the better.

What advice would you give to another real estate professional about improving the work culture, building team morale, and helping each employee thrive?

I love the quote from Maya Angelou “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Being right and doing the right thing are two very different things, and people who are happy and stress-free will do much more for you than might be expected in a high-pressure environment.

What is your favorite “Life Lesson Quote”? Can you share a story of how that had relevance to your own life?

“Patience is bitter, but the fruit is sweet.” I love to move at a rapid pace — even my audiobooks are at a 1.5x+ speed — but I’ve found that the more I slow down, the more effective I am. This is still very much a work in progress and working on my patience is a daily task.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

With the mental health crisis so ubiquitous, and it having so much impact on our society, I have been working on a passion project in the mental health space with the goal of allowing people to feel more supported, connected, and happy.

How can our readers further follow your work online?

I just started a twitter/X @maxbenjofficial. MBP’s latest projects, insights, and closings can be found on Instagram @maxbenjaminpartners.

This was very inspiring. Thank you so much for joining us!