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Ladies and gentlemen, how you 
doing? 

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It's Bill Brewster, your host of
The Business Brew. 

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As always. 
This episode is the third one 

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featuring Bill Chen. 
He came back for another update 

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on the retrade. 
I like to kind of do these over 

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time and check in with people 
and see how their ideas are 

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going. 
Check out Ryan Dobrats for a 

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different type of real estate 
podcast that is about the less 

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capital intensive side of real 
estate. 

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This one is about the more 
capital intensive side of real 

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estate, but I generally I like 
how Bill thinks. 

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So he's back on this week and 
I'd say that the beginning of 

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the conversation is kind of 
macrowy, tariffy and the real 

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estate section probably starts, 
you know, 30 minutes into it or 

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whatever. 
I mean, the tariff part is kind 

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of weaved in and out. 
So that's how the conversation 

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structured. 
I hope you enjoy it as always. 

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It was recorded on April 16th. 
Going to try to get it out 

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reasonably quickly and thank you
for listening. 

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As always, nothing in this 
podcast is investment advice. 

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Everything is for entertainment 
purposes only. 

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Please consult your financial 
advisor before making investment

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decisions and do your own due 
diligence. 

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All right, ladies and gentlemen,
Bill Chen back. 

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We're going to check in on the 
Read Read idea, how it's been 

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going, what's been going on. 
But Bill was just educating me 

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on when the VIX hit what, 50? 
If you had, you could make 5% a 

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month by selling puts if you're 
willing to own the underlying 

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what at like A7 cap. 
Yeah. 

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There were companies like 
Qsmart, Prologis where you were 

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like if you so puts 5% out of 
the money essentially buying 

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into at apply somewhere in in 
that mid 6T7 cap range, you can 

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make 5% in approximately 5 
weeks. 

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And I haven't checked the 
pricing today, but it's probably

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still a really good pricing. 
And you try to explain that to a

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private real estate investor 
that all you got to do is just 

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commit to buying a diversified 
portfolio of high quality Class 

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A self storage or warehouses. 
Yeah, electrologist, you could 

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make, you know, 5% in five weeks
and you annualize that number is

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probably better than any private
lending products out there or 

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any sorts of, you know, really 
like any product out there. 

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But obviously, like whether you 
could do that 12 times in a row 

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in a year or, you know, 1011 
times in a row, they're right. 

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Like that's up to debate. 
Yeah, well, do it once, make you

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5% a month, and then maybe you 
can do it again, right? 

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What's going on with Prologis? 
Why is it so weak? 

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If you look at nationwide when 
you were seeing so so I want to 

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give people like a little bit of
contact so that the listener air

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stands. 
Yeah, give, yeah, give people a 

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background on the company, but 
it's always been a company that 

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I've heard talked about 
positively and seems good from 

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the outside. 
So curious. 

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To your thoughts, I'll give like
a little bit of intro of 

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warehouses in general in in the 
past decade and you know, the 

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kind of valuation that it got to
so about call like a decade ago 

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with the rise of e-commerce 
warehouses, which this was like 

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a sleepy asset class. 
It it kind of got hot, got 

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popular with investors and 
blocks almost kind of go around 

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the country buying up almost 
like every warehouse. 

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You know, anyone who owns a 
portfolio that was over 

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4,000,000 square foot black, 
someone was knocking on the 

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door. 
And, and this is what happened 

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was rise of e-commerce meant 
that there is a much higher 

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demand for warehouse space. 
And so it you know, cap rates 

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started out, there was a recall 
gramacy and gramacy was a very 

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successful read that was buying 
at a 8% cap rate and then issue 

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an equity at 6% cap rate. 
And they did really well within 

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the few years of 6 pack year. 
And then the cap rates for 

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warehouses literally went from 
roughly 8% coming out of 

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recession. 
It kept compressing year after 

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year. 
And you know, at a certain 

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point, I think most real estate 
investors started realizing that

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this, you know, this is a big 
secular trend. 

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This is a multi year trend. 
And warehouses kind of lost 

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this, you know, reputation as a 
cyclical asset that doesn't do 

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well in the recession. 
And the cap rates kind of, you 

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know, with in a zerk world where
your 10 year treasuries 1% and 

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you buy warehouse at a core at a
4% cap rate. 

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And the rent was also growing 
something like 10% a year 

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depending on the market that 
you're in. 

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If you look at a warehouse chart
or Prologis, Rexford, Torino, 

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really any of them, first 
industrials, really any of them,

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it's just like unbelievable 
chart from cold like 2020, I 

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started 2014 to 2016 to 2021. 
It is just like a heck of a 

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chart. 
And you know they all took 

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advantage of it. 
They all issue equity to go buy 

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more assets. 
And it is one of those rare 

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asset classes where we investors
kind of gave management team the

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discretion to have development 
pipelines. 

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So they all had development 
pipelines, which is very rare. 

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And then Fast forward to 2022. 
So when COVID happened and you 

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know, the supply chain kind of 
what this is going to sound very

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similar, right? 
The supply chain got disrupted 

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and everybody started hoarding 
inventory. 

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We are all stuck at home all 
ordering, you know, e-commerce. 

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If you look at the growth in the
e-commerce chart, they 

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e-commerce grew something like 
five points done COVID, right? 

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Like I don't think second 
blowing like huge spike and 

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everyone rush to take warehouse 
space because when you start 

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getting down to that two 3% 
vacancy rate, people start to 

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panic, right? 
People start to panic, people 

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lock in, you know, warehouse 
space and then you just like 

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have a lit like. 
When you say people, you're 

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saying. 
When you say people, you're 

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saying, like the customers that 
need the warehouse space start 

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to see the supply get tight and 
they start to worry. 

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Oh, my goodness. 
If I need more, it's not going 

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to be there. 
And that's what causes the 

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panic. 
Yeah. 

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Yes, yes, no, that's exactly 
correct. 

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It's like imagining if you are 
some a customer in Southern 

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California where a lot of 
logistics, you know, a lot of 

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the freights come into Southern 
California and you know they 

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were you, you needed to stack 
the stuff somewhere. 

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There were like ships waiting 
offshore to offload. 

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And I remember talking to people
that worked in the industry and 

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they were sending me pictures of
just like full warehouses. 

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Yeah, yeah. 
That was wild. 

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Yeah, it was. 
Absolutely. 

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That makes sense. 
It was absolutely wild and. 

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That's then you have a natural 
supply response in something 

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like real estate. 
So warehouse gets built, right? 

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Yep, Yep. 
And then you hit a little bit of

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a bullwhip. 
Yep. 

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No, that's exactly and and the 
bullwhip. 

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I think if you look at the 
bullwhip, the bullwhip happened 

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a lot quicker to the retailers, 
right, because the retailers did

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really well in 21 and then by 
kind of 2223 that like everyone 

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figure out that was a one time 
pull forward of the man. 

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And but like if you sign a 
warehouse lease, you locked in 

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for at least you know, 3-5 
years. 

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So now the warehouse is starting
to reflect kind of like that 

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over utilization of warehouse. 
And so Southern California like 

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like a market like Southern 
California got down to maybe 1 

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to 2% vacancy and that that kind
of vacancy you kind of charge 

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whatever rent you want, right? 
That's just the nature of why 

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supply demand. 
And now the Southern California 

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rent is actually falling because
that vacancy just by going from 

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really tight 2% to COAB like 4% 
today, maybe that tidy little 

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2%. 
And then, you know, obviously 

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they built more in the Inland 
Empire. 

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And this story kind of I'm in 
Southern California is a very 

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unique dynamic, but like this 
dynamic played out everywhere in

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the US, right? 
And then there are markets like 

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Chagall and Dallas where there 
there are less barriers to entry

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and they could build a lot more 
just going further out, right? 

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So and then like also think in 
the zerpero in that sub 1% yield

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in a 10 year environment, you 
know what people what kind of 

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cap rate people willing to pay. 
If you look at some of the 

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public Reit's like Rexford, I 
think Rexford literally traded 

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with A2 handle cap rate, right. 
And I think the market was like 

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kind of justified that well, if 
you look at the in place leases 

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it, if you fully market to 
market, there's 5080 even 100% 

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upside sometimes. 
So, so they think if you're 

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paying too, by the time you 
fully market, market, you're 

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really in the fours. 
I mean, we were kind of getting 

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out, we were getting out of all 
our warehouse positions at the 

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time. 
I mean, you know, we had a 

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couple called Induce Realty that
got bought out by GSE and that 

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so, so they got bought out and 
like Prologis and all the other 

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warehouse reeds were going 
through this long painful 

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process of, you know, adjusting 
to you a 4.3 percent, 10 year, 

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you know, treasury yield. 
So you have cap rate expansion 

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and then I think the moment the 
Canary in a coal mine was when 

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Amazon on the earnings call said
they they took up too much 

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warehouse space and they were 
not going to take up any 

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warehouse space anymore. 
And we kind of saw that and that

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was like one of those rare 
success in moment of clarity. 

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That was like one of those rare 
moments where we heard that and 

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we're like, we're going to short
Prologis and by puts in it on. 

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And that was because you kind of
have this perfect setup of 

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inflation was high, interest 
rate was likely going to go up 

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in early 22. 
You got Amazon, which at what 

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point was absorbing something 
like 20 to 25% of all the new 

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construction, warehouse 
construction. 

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So you have one of the biggest, 
you know, absorber warehouse 

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space coming out and saying that
we took too much space, we don't

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need it anymore and 20% of your 
absorption kind of just went 

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away. 
And then yeah, what Capra 

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expansion from a two to three, 
you know, to 3% cap rate. 

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It was just so like we could 
kind of see the writing on the 

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wall. 
That's got to be painful and 

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that's not going to be pleasant.
And then but Fast forward today.

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So that's kind of like a little 
bit of a history lesson there, 

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right? 
So Fast forward today, of 

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course, like like now that, you 
know, nationwide vacancies in 

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the MIT, you know, single digit 
number kind of, and those is the

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exact number right now. 
But now we're getting to the 

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point where we're like, OK, you 
could buy Rex for, you could buy

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Prologis, you could buy a lot 
of, you know, a lot of these are

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high quality diversify warehouse
reeds at over a 6% cap rate. 

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And there was a time where it 
wasn't that long ago, maybe like

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3-4 years ago, everyone's like, 
oh man, you got to get in some 

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of that Southern California 
warehouses, right? 

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It just a licensed print money 
because everyone wants that 

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demand and you can't build 
anything in Southern California 

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and Rexford is low way down from
80 bucks to low 30s right now 

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and they don't have a lot of 
leverage, right. 

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So that's very reflective of a 
on lever drop in market price 

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and Prologis I think was in the 
16170 and the trades below 90 

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bucks that the whole time, the 
whole time there's been 

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significant rent increases 
because remember there were, you

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know, rent increases from but 
you know, every time they signed

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a new lease, they signed new 
lease were renewal lease. 

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I mean, they were getting 4050 
sixty percent rent increase also

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that rent increase have come 
down because now what you have 

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is you have market rent flatten 
out and in some markets and 

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eighteen of those markets 
actually trending downward, 

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right? 
So, so, but like that mark to 

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market is still very, very 
significant. 

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And for most of these suites, 
you know, most of these suites, 

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they're still getting a cash 
uplift of, you know, 2030% when 

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they mark the market. 
Now the markets kind of freaking

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out and saying, well, what is 
like like could they still get 

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20 thirty 30%, right. 
The previous assumption is when 

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you mark to market, you could 
bring that lease up, you know, 

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6080%. 
Now they're worried OK, well, 

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can you like, can you, can you 
get 20? 

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Like is that got to go to 10? 
Is that got to go to 0? 

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So you know, that's. 
Especially looking at a 

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potential recession and a bunch 
of weak business confidence. 

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Yeah, sort of survey. 
Did you maybe think? 

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Yeah, yeah. 
And a minimum that should be 

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00:12:41,280 --> 00:12:44,960
delayed, right? 
I think that kind of what I've 

225
00:12:44,960 --> 00:12:48,160
been worried about for 10 years,
which is when we do get a 

226
00:12:48,160 --> 00:12:51,960
recession, what's gonna happen 
to warehouse utilization, what's

227
00:12:51,960 --> 00:12:53,760
gonna happen to warehouse 
occupancy? 

228
00:12:54,080 --> 00:12:57,520
And now that risk truly is like 
being manifested. 

229
00:12:57,520 --> 00:13:01,560
The market truly actually worry 
about that because for a good 

230
00:13:01,760 --> 00:13:05,760
6-7 years that was never like a 
concern for the warehouse REIT 

231
00:13:05,760 --> 00:13:07,400
investors. 
Yeah. 

232
00:13:07,880 --> 00:13:09,240
Yeah. 
Yeah, I don't know. 

233
00:13:09,240 --> 00:13:13,680
It's interesting, it's funny, I,
I hesitate to say anything about

234
00:13:13,680 --> 00:13:16,720
anything anymore because the 
longer I've talked on podcasts, 

235
00:13:16,720 --> 00:13:19,600
the longer I've realized, the 
more I say, the more I'm bound 

236
00:13:19,600 --> 00:13:22,720
to get wrong because life just 
doesn't usually work out the way

237
00:13:22,720 --> 00:13:26,120
that that it seems. 
However, I did say on the Evan 

238
00:13:26,120 --> 00:13:28,760
Tyndale podcast that I've been 
pinging my friends saying, why 

239
00:13:28,760 --> 00:13:31,600
do we own socks? 
And part of why I said that is I

240
00:13:31,600 --> 00:13:34,960
don't think that the 
administration this time around 

241
00:13:34,960 --> 00:13:38,960
is really, I mean, look like, 
you know, when we had that big 

242
00:13:38,960 --> 00:13:43,120
Ripper of a rally, the 
administration kind of spiked 

243
00:13:43,120 --> 00:13:45,520
the football and they were like,
look at how great we are. 

244
00:13:45,920 --> 00:13:49,240
But I don't, I don't think that 
they're like that into the stock

245
00:13:49,240 --> 00:13:51,480
market and the wealthy doing 
well. 

246
00:13:51,480 --> 00:13:53,600
And to the extent that the 
wealthy drive a lot of 

247
00:13:53,600 --> 00:13:57,160
consumption, what kind of goods 
flow do you get through these 

248
00:13:57,160 --> 00:14:00,520
warehouses if you know there's a
negative wealth effect going on,

249
00:14:01,200 --> 00:14:05,440
especially at the same time that
you've got a tendency to be 

250
00:14:05,440 --> 00:14:08,240
focused on austerity relative to
where we were. 

251
00:14:08,840 --> 00:14:10,640
And the Fed doesn't seem to be 
there. 

252
00:14:10,640 --> 00:14:13,320
So it's kind of, it's kind of an
interesting setup. 

253
00:14:13,320 --> 00:14:16,240
I haven't been rushing out to 
buy this dip aggressively. 

254
00:14:16,640 --> 00:14:20,440
I, I think if it's potentially, 
I don't know, it's always 

255
00:14:20,440 --> 00:14:23,600
historically been a great idea. 
Maybe it's a great idea now, but

256
00:14:24,120 --> 00:14:25,680
it ain't what you know that gets
you in trouble. 

257
00:14:25,680 --> 00:14:27,080
It's what you know that just 
ain't so. 

258
00:14:27,720 --> 00:14:32,000
Yeah, like it's, it's definitely
been very, very difficult trying

259
00:14:32,000 --> 00:14:35,520
to anticipate. 
How do you how to position 

260
00:14:35,520 --> 00:14:37,520
yourself in this environment? 
Right. 

261
00:14:37,520 --> 00:14:40,680
And luckily, we had a member on 
our team. 

262
00:14:40,680 --> 00:14:43,880
We have an analyst on the team 
who's been pounding the table 

263
00:14:43,880 --> 00:14:47,880
since late December about, you 
know, Trump tariff policies and 

264
00:14:47,880 --> 00:14:50,240
how that may impact the equity 
market. 

265
00:14:50,800 --> 00:14:54,200
And we have some really 
uncomfortable, uncomfortable 

266
00:14:54,200 --> 00:14:56,120
conversations about is this 
real? 

267
00:14:56,120 --> 00:14:59,520
Is this not real? 
And he kind of insisted that if 

268
00:14:59,520 --> 00:15:03,280
you read, you know, what Trump 
was saying 30-40 years ago. 

269
00:15:03,280 --> 00:15:07,080
And if you look at JD Vance's 
background and as the banner's 

270
00:15:07,080 --> 00:15:11,560
background and you look into 
kind of like that demographic 

271
00:15:11,560 --> 00:15:14,480
that Co for of the, you know, 
the Rust Belt where all these 

272
00:15:14,480 --> 00:15:17,480
factories kind of got emptied 
out and a lot of those jobs went

273
00:15:17,480 --> 00:15:20,360
over to China. 
You know, he's basically say 

274
00:15:21,080 --> 00:15:25,000
they're more serious than the 
market or pricing in. 

275
00:15:25,200 --> 00:15:29,360
And we kind of, we had a lot of 
back and forth and a lot of 

276
00:15:29,520 --> 00:15:32,160
uncomfortable conversation on 
this topic. 

277
00:15:32,720 --> 00:15:37,000
And I kind of get like, what I 
jokingly call myself the George 

278
00:15:37,000 --> 00:15:39,680
Soros backache. 
Like, like at times, like I 

279
00:15:39,680 --> 00:15:42,760
would just kind of feel 
uncomfortable about a certain 

280
00:15:42,760 --> 00:15:44,400
setup, certain working 
environment. 

281
00:15:44,400 --> 00:15:48,200
It's kind of like you walk onto 
a subway and then there's some 

282
00:15:48,200 --> 00:15:51,680
guy who's just like talking to 
himself and he's like having 

283
00:15:51,680 --> 00:15:53,400
like spasms. 
Like I'm like, OK, like, I'm 

284
00:15:53,400 --> 00:15:56,160
just got to walk the other way. 
I'm going to get myself out of 

285
00:15:56,160 --> 00:16:00,000
the situation, but I kind of 
have these intuitive sense about

286
00:16:00,240 --> 00:16:04,160
some sort of risk and then we 
wind up going out and buying a 

287
00:16:04,160 --> 00:16:06,400
lot, you know, a bunch of out of
money puts. 

288
00:16:06,480 --> 00:16:10,320
The last time that I felt that 
way was right before the onset 

289
00:16:10,320 --> 00:16:13,320
of COVID and I was like tracking
what was going on in China. 

290
00:16:13,680 --> 00:16:17,280
And we went out and we bought 
puts in Royal Caribbean on the 

291
00:16:17,360 --> 00:16:21,320
S&P 500 index on Tesla and Nike.
And I really like large liquid 

292
00:16:21,320 --> 00:16:23,680
names that have really cheap out
of money puts. 

293
00:16:24,080 --> 00:16:26,360
And we kind of did the same 
thing this time around, right? 

294
00:16:26,360 --> 00:16:28,720
Like we will puts in the 
indexes, we will put some Royal 

295
00:16:28,720 --> 00:16:33,200
Caribbean again, we generally 
just had a view that the market 

296
00:16:33,240 --> 00:16:37,320
was not pricing in the tariff 
risk and how serious and there 

297
00:16:37,320 --> 00:16:39,720
was a specific deadline, right. 
You know there was the 

298
00:16:39,800 --> 00:16:43,840
liberation day had a specific 
deadline on when this was going 

299
00:16:43,840 --> 00:16:46,040
to be announced. 
Now to be fair, when they 

300
00:16:46,040 --> 00:16:49,800
announced the tariff rate, I 
don't think I that exceeded like

301
00:16:49,840 --> 00:16:52,560
my concern about what the actual
rates are. 

302
00:16:52,560 --> 00:16:55,160
And then if you pay attention to
like what the rates are today, 

303
00:16:55,560 --> 00:16:58,720
it's kind of nuts. 
I mean, what where they are. 

304
00:16:58,720 --> 00:17:03,280
And I kind of think back to you 
20 years ago when I used to Co 

305
00:17:03,280 --> 00:17:07,040
call a lot of manufacturers on 
and I was working for a glass 

306
00:17:07,040 --> 00:17:10,119
importer and I will Co call all 
these, you know, small amount of

307
00:17:10,119 --> 00:17:11,920
power. 
Like people make picture frames 

308
00:17:11,920 --> 00:17:14,839
and they buy glass cheaper 
imported from China or Korean 

309
00:17:14,839 --> 00:17:16,920
manufacturers. 
And I'm just kind of thinking, 

310
00:17:16,920 --> 00:17:19,880
I'm doing the math in my head. 
If they place an order for 

311
00:17:19,880 --> 00:17:24,560
$100,000 of, you know, flak, 
flak glass now, like I don't 

312
00:17:24,560 --> 00:17:28,440
even know what that tariff rate 
would be, but I think it's 140%.

313
00:17:28,960 --> 00:17:32,640
So you place an order for 100K 
for your inventory, you know, 

314
00:17:32,640 --> 00:17:35,040
like the customs officers, like 
no, like you got to come down 

315
00:17:35,040 --> 00:17:37,640
with 245 K. 
And like what kind of small, 

316
00:17:37,640 --> 00:17:40,000
like small businesses just don't
have that kind of working 

317
00:17:40,000 --> 00:17:43,720
capital laying around. 
And I think that people, I think

318
00:17:43,720 --> 00:17:47,280
people really underestimating 
that dynamic and that what that 

319
00:17:47,280 --> 00:17:50,200
does to OK, like now you may 
have to tell what are your 

320
00:17:50,200 --> 00:17:53,400
employees to let them go. 
I think we're still in the early

321
00:17:53,400 --> 00:17:55,640
stages of that. 
And depending on how long the 

322
00:17:55,640 --> 00:17:59,600
tariff lasts, this negotiation 
lasts, like I think we're going 

323
00:17:59,720 --> 00:18:02,480
to really start seeing some of 
those effects. 

324
00:18:03,560 --> 00:18:06,440
Yeah, well, the interesting 
thing too is Besson said the 

325
00:18:06,440 --> 00:18:09,280
other day, the tariffs are the 
easy part. 

326
00:18:10,000 --> 00:18:13,560
It's the non tariff trade 
barriers that may take a little 

327
00:18:13,560 --> 00:18:18,800
bit longer to figure out. 
You know, to the extent that it 

328
00:18:18,800 --> 00:18:22,320
seems to me, and I think this is
becoming fairly consensus. 

329
00:18:22,320 --> 00:18:25,200
I mean, I just saw it in the 
journal, so it's probably the 

330
00:18:25,400 --> 00:18:28,360
the idea. 
You ever listen to Peter Zihan? 

331
00:18:30,040 --> 00:18:33,440
I, I myself have not, but my 
analysts have, yeah. 

332
00:18:33,880 --> 00:18:35,040
Right. 
I mean, a lot of people have 

333
00:18:35,040 --> 00:18:37,880
like criticisms of him. 
I think directionally what he's 

334
00:18:37,880 --> 00:18:40,040
been calling for has been right,
which is basically like a 

335
00:18:40,040 --> 00:18:44,280
bifurcation of the Western and 
Eastern hemispheres 

336
00:18:44,280 --> 00:18:47,080
economically. 
And that does seem to be what 

337
00:18:47,080 --> 00:18:48,360
they're trying to accomplish 
here. 

338
00:18:48,360 --> 00:18:52,320
It's just an interesting 
proposition because I mean one 

339
00:18:52,320 --> 00:18:54,640
we'll see if it's successful as 
a citizen. 

340
00:18:54,640 --> 00:18:57,080
I hope whatever the definition 
of success is achieved. 

341
00:18:57,480 --> 00:19:01,560
But you know, for a long time 
this has been a system that's 

342
00:19:01,560 --> 00:19:06,880
benefited a lot of people and 
corporate America I consider as 

343
00:19:06,880 --> 00:19:10,960
one of those parties to the 
extent that we're reversing it. 

344
00:19:11,320 --> 00:19:15,680
I don't know if it's quite the 
Uno reverse card or maybe 

345
00:19:15,680 --> 00:19:18,120
there's a way to get through it 
all without, you know, having a 

346
00:19:18,120 --> 00:19:22,440
lot of slack go through the 
warehouses and you know, people 

347
00:19:22,440 --> 00:19:25,720
losing their jobs, which I think
would hit multi family Reit's. 

348
00:19:25,840 --> 00:19:29,800
All those things, though, should
in theory reduce new supply. 

349
00:19:29,800 --> 00:19:32,640
So there's always that, you 
know, it's always the and then 

350
00:19:32,640 --> 00:19:37,080
what question, right? 
Yeah, yeah, man, this is Bill. 

351
00:19:37,080 --> 00:19:39,320
You're hitting me with all the 
really hard stuff up front. 

352
00:19:39,920 --> 00:19:42,720
Well, I mean, I don't, I don't 
even, you know, there's no, I 

353
00:19:42,720 --> 00:19:45,240
don't think that you can come on
a podcast and have answers. 

354
00:19:45,240 --> 00:19:48,720
I mean, you know, I watch some 
podcasts, they get good ratings 

355
00:19:48,720 --> 00:19:50,520
when people act like they have 
the answers. 

356
00:19:50,520 --> 00:19:52,720
But I just think it's an 
interesting environment. 

357
00:19:53,640 --> 00:19:56,760
I do think that this phrase of 
the decline of American 

358
00:19:56,760 --> 00:20:00,400
exceptionalism, like, you know, 
try not to get too fancy with my

359
00:20:00,400 --> 00:20:02,560
terms, like I just like to 
explain it. 

360
00:20:03,040 --> 00:20:05,560
The what term? 
The phrase the decline of 

361
00:20:05,560 --> 00:20:07,880
American exceptionism, right? 
Yeah, OK, OK. 

362
00:20:08,200 --> 00:20:13,120
That's kind of been, I think I, 
I just kind of viewed as, Hey, 

363
00:20:13,240 --> 00:20:17,040
if you operate in a market like 
this is how I would just 

364
00:20:17,040 --> 00:20:18,440
explain. 
I'm like, if you operate a 

365
00:20:18,440 --> 00:20:22,880
market where there is rule law 
and the rule doesn't change 

366
00:20:22,880 --> 00:20:27,040
daily, people are going to pay a
higher multiple for that stock, 

367
00:20:27,040 --> 00:20:28,360
right? 
And if you operate an 

368
00:20:28,360 --> 00:20:31,000
environment where people can't 
trust you and the rules keep 

369
00:20:31,000 --> 00:20:33,200
getting changed, you know, 
people are going to get scared 

370
00:20:33,200 --> 00:20:36,360
and they probably don't want to 
pay as high of a multiple. 

371
00:20:36,400 --> 00:20:40,560
The same reason why Costco 
trades at a very high multiple 

372
00:20:40,600 --> 00:20:44,000
and then a cyclical company like
an airline don't, right? 

373
00:20:44,000 --> 00:20:47,120
Because you don't know, it's a 
very simple concept, right? 

374
00:20:47,120 --> 00:20:50,280
Like you want like steady 
recurring cash flow. 

375
00:20:50,280 --> 00:20:53,760
And it's like the way that we're
trying to position portfolio is 

376
00:20:54,440 --> 00:20:58,800
we, I think initially there was 
a way to position, identify 

377
00:20:58,800 --> 00:21:01,360
which companies will get hurt by
tariffs. 

378
00:21:01,880 --> 00:21:05,000
And now the games are changing 
so fast that it's hard to like 

379
00:21:05,000 --> 00:21:07,240
play that game, right? 
Because like if you were 

380
00:21:07,240 --> 00:21:10,400
thinking of a company like Apple
that, you know, the Worship 

381
00:21:10,400 --> 00:21:14,560
Journal had an article that says
that an iPhone cost $600 to make

382
00:21:14,560 --> 00:21:17,000
at 145. 
Like, like the tariff alone is 

383
00:21:17,320 --> 00:21:19,720
like 900. 
And then over the weekend, you 

384
00:21:19,720 --> 00:21:23,560
hear that, that there's an 
exemption on, you know, all 

385
00:21:23,560 --> 00:21:25,360
these electronic products, 
right? 

386
00:21:25,680 --> 00:21:29,560
And then like, kind of what like
came out and said, well, no, no,

387
00:21:29,560 --> 00:21:33,080
no, actually there is no 
exemption like that. 

388
00:21:33,080 --> 00:21:34,800
Just like makes my head hurt, 
right? 

389
00:21:35,160 --> 00:21:38,440
You know, you're like, you're 
like, how do we price a stock 

390
00:21:38,440 --> 00:21:40,840
like Apple, right? 
Yeah. 

391
00:21:40,880 --> 00:21:46,760
Well, yeah, they're messaging 
has been very mixed depending on

392
00:21:46,760 --> 00:21:51,680
who's delivering the message. 
And I think so, so we've kind of

393
00:21:52,440 --> 00:21:56,080
thought through and we kind of 
decided to position the 

394
00:21:56,080 --> 00:22:00,960
portfolio in such a way that 
that I think the odds, you know,

395
00:22:01,120 --> 00:22:04,840
we're trying not to be tariff 
experts, right? 

396
00:22:04,840 --> 00:22:07,040
We're trying to just kind of 
think along the line that 

397
00:22:07,840 --> 00:22:10,760
recession, odds of recession is 
likely higher, right? 

398
00:22:10,920 --> 00:22:14,840
Multiples are likely lower 
across the board, although you 

399
00:22:14,840 --> 00:22:17,640
know, if you look at multiples 
pay for companies like Walmart 

400
00:22:17,640 --> 00:22:23,120
and Costco and Centas like like 
I don't know how given 

401
00:22:23,120 --> 00:22:25,280
everything that we know, you 
know those couple ways like 

402
00:22:25,280 --> 00:22:28,400
Costco and Sinto still trade at 
like 50 times earnings, right? 

403
00:22:28,520 --> 00:22:30,640
I I want to be a value vessel 
without complaining about 

404
00:22:30,640 --> 00:22:33,440
Costco's multiple, right? 
Love their product but you know 

405
00:22:33,440 --> 00:22:35,720
I hate their multiple. 
If you think everyone's a 

406
00:22:35,720 --> 00:22:38,960
rational actor, if you actually 
believe that, and I've 

407
00:22:38,960 --> 00:22:41,320
complained about Costco's 
multiple for a long time and 

408
00:22:41,320 --> 00:22:43,480
been wrong. 
So take that for what it's 

409
00:22:43,480 --> 00:22:46,400
worth, But I guess you could 
say, OK, the probability that 

410
00:22:46,400 --> 00:22:52,200
they're not, let's say I only 
get 2% real if I'm already 

411
00:22:52,200 --> 00:22:54,720
really wealthy, 2% real doesn't 
kill me. 

412
00:22:54,720 --> 00:22:59,000
You just gotta be willing to 
lock in the duration, right? 

413
00:22:59,440 --> 00:23:01,400
It doesn't necessarily. 
To the extent that you've 

414
00:23:01,400 --> 00:23:04,320
already made your money in 
Costco, it may not be about 

415
00:23:04,320 --> 00:23:06,480
optimizing for return at this 
point. 

416
00:23:08,760 --> 00:23:10,960
You know what I'm saying I mean.
Yeah, yeah, no. 

417
00:23:11,560 --> 00:23:15,520
Now the market overall should be
selling something to optimize 

418
00:23:15,520 --> 00:23:17,760
for return and I don't actually 
believe that. 

419
00:23:17,760 --> 00:23:20,400
I think it's people hiding out 
in places and I think it's, you 

420
00:23:20,400 --> 00:23:23,640
know, short term stuff. 
But if I had to make the 

421
00:23:23,640 --> 00:23:25,200
argument, that's the argument 
I'd make. 

422
00:23:26,160 --> 00:23:27,840
Yeah. 
And then and then I think that's

423
00:23:27,840 --> 00:23:31,640
where I will make the argument 
where going back to you some of 

424
00:23:31,640 --> 00:23:35,720
the Reeds and at multifamily 
because we had at this point 

425
00:23:35,720 --> 00:23:39,080
that this will kind of be like a
third podcast on Reit's right on

426
00:23:39,080 --> 00:23:40,640
multifamily. 
Oh yeah, that's right, we did 

427
00:23:40,640 --> 00:23:41,960
the space. 
I forgot we did. 

428
00:23:42,000 --> 00:23:45,160
This Yeah, Yeah, we did the 
space like at the almost like 

429
00:23:45,160 --> 00:23:47,280
close to the bottom, right. 
Like that was awesome. 

430
00:23:47,280 --> 00:23:49,600
Yeah, that was awesome. 
And so like, like if you're 

431
00:23:49,600 --> 00:23:54,880
wealthy already and you could 
buy Costco at like essentially 

432
00:23:54,880 --> 00:23:58,200
2% cap rate, right? 
If you invert to multiple at 2% 

433
00:23:58,200 --> 00:24:00,440
cap rate, it grows faster, 
right. 

434
00:24:00,600 --> 00:24:02,480
Better company than multifamily,
right? 

435
00:24:03,000 --> 00:24:05,360
But like you don't get a 
dividend, you get a half a 

436
00:24:05,360 --> 00:24:07,720
percent dividend. 
So you're buying something at A2

437
00:24:07,720 --> 00:24:11,440
cap, right? 
Growing fast, but actually not 

438
00:24:11,440 --> 00:24:14,520
as fast as like Southern 
California industrials back in 

439
00:24:14,520 --> 00:24:16,800
21, right? 
So you're starting at 2% cap 

440
00:24:16,800 --> 00:24:20,240
rate and then versus like you 
could buy multi family and get 

441
00:24:20,240 --> 00:24:23,440
almost like, you know, around 
like a 4% cap rate today. 

442
00:24:23,840 --> 00:24:26,720
Or you could buy something like 
AQ smart, which is self storage,

443
00:24:26,960 --> 00:24:31,560
which is like a MIT 5 dividend 
yield, you know, MIT 6 cap rate.

444
00:24:31,720 --> 00:24:34,600
Like like if you're wealthy 
already, now you actually get 

445
00:24:34,600 --> 00:24:36,480
like a current income. 
So I don't know. 

446
00:24:36,480 --> 00:24:40,200
I mean, like to me, you're not 
buying, you know, a company like

447
00:24:40,200 --> 00:24:43,800
Q Smart or Mid American is not 
as good a company as Costco, 

448
00:24:44,040 --> 00:24:46,600
right? 
But I think that it's not grown 

449
00:24:46,600 --> 00:24:50,520
as fast, but I think that the 
current yield and the multiple, 

450
00:24:50,520 --> 00:24:54,160
like if you invert the multiple,
you're probably, you know, 

451
00:24:54,160 --> 00:24:57,320
you're paying somewhere in the 
teens multiple for these 

452
00:24:57,320 --> 00:25:00,480
companies versus you're paying, 
you know, 50 something. 

453
00:25:00,480 --> 00:25:03,240
And then it it it means like 
years and years have grown into 

454
00:25:03,280 --> 00:25:06,120
it now, like nothing I'm saying 
is new, right? 

455
00:25:06,400 --> 00:25:08,520
But like, you know, if you want 
to make the argument that like 

456
00:25:08,520 --> 00:25:11,600
if you're wealthy already, I'm 
like, I rather own some of the 

457
00:25:11,600 --> 00:25:13,560
apartment reads and some of the 
self storage reads. 

458
00:25:13,600 --> 00:25:17,800
And you know, this isn't this 
also isn't like some tertiary 

459
00:25:17,800 --> 00:25:22,000
market Class C asset, right? 
Most of these assets, my 

460
00:25:22,000 --> 00:25:24,840
analysts and I drive around in 
Queens in Brooklyn that we look 

461
00:25:24,840 --> 00:25:27,800
at some of the Q smart and you 
know, this is where like I could

462
00:25:27,800 --> 00:25:30,960
kind of get a little weird with 
like what I think an attractive 

463
00:25:31,000 --> 00:25:34,280
asset look like. 
I look at like a six story Q 

464
00:25:34,280 --> 00:25:38,040
smart self storage in the middle
of Brooklyn surrounded by 15 

465
00:25:38,040 --> 00:25:40,960
story apartment buildings. 
And I'm like, that's a beautiful

466
00:25:40,960 --> 00:25:44,360
asset because I know from a 
NIMBY perspective, no one's 

467
00:25:44,360 --> 00:25:47,040
going to be able to like it's 
very difficult to develop new 

468
00:25:47,280 --> 00:25:50,240
storage in Brooklyn, Queens. 
And I look at that asset and I'm

469
00:25:50,240 --> 00:25:53,080
like, that's gorgeous, right? 
Because like, I know from a new 

470
00:25:53,080 --> 00:25:55,200
supply perspective, I know that 
there's very little. 

471
00:25:55,520 --> 00:25:58,200
And then if you go to a market, 
so like there's certain markets 

472
00:25:58,200 --> 00:26:01,400
like in in parts of Florida and 
in the Sunbelt where I'm a part 

473
00:26:01,400 --> 00:26:03,840
of problem with like a lot of 
these sell sorts reads why they 

474
00:26:03,840 --> 00:26:06,280
haven't worked in a while is 
that they built again, they 

475
00:26:06,280 --> 00:26:10,240
built a lot of new supply in, in
that 2122 vintage and they're 

476
00:26:10,240 --> 00:26:12,520
all coming online. 
They're bringing on supply. 

477
00:26:12,840 --> 00:26:15,400
I mean, real estate is the 
ultimate capital cycle, you 

478
00:26:15,400 --> 00:26:18,360
know, industry, right? 
And I think that that today 

479
00:26:18,360 --> 00:26:22,320
we're in a great environment. 
I was just looking at the 

480
00:26:22,600 --> 00:26:25,640
construction for warehouses, you
know, a chart for construction 

481
00:26:25,640 --> 00:26:27,320
for warehouses. 
I mean new construction is 

482
00:26:27,320 --> 00:26:30,240
probably new starts got to be 
down like 60, you know, based on

483
00:26:30,240 --> 00:26:33,280
chart like 6070% set as soon as 
its peak in 21. 

484
00:26:33,280 --> 00:26:35,800
And then we talked a lot about 
multifamily. 

485
00:26:36,240 --> 00:26:39,480
This trend of construction 
starts dropping is like 

486
00:26:39,480 --> 00:26:42,160
consistent across all, you know,
real estate sectors. 

487
00:26:42,480 --> 00:26:45,480
What is the development math 
look like with rates where they 

488
00:26:45,480 --> 00:26:48,560
are right now? 
It looks fantastic for them 

489
00:26:48,560 --> 00:26:52,960
because they could such a 
borrow, you know, in the low 510

490
00:26:52,960 --> 00:26:57,280
year fix unsecure and then they 
could go build something, you 

491
00:26:57,280 --> 00:27:01,520
know, stabilizing that to call 
it, you know, generally over 6% 

492
00:27:01,520 --> 00:27:05,160
cap rate in most of the most of 
the major food groups like multi

493
00:27:05,160 --> 00:27:07,280
family social storage and 
warehouses. 

494
00:27:07,680 --> 00:27:10,960
And also once you build it that 
generally you could kind of bake

495
00:27:10,960 --> 00:27:16,920
in rent growth over time, right.
So I predict that REITs will 

496
00:27:16,920 --> 00:27:20,680
become, you know, a lot of the 
private real estate developers 

497
00:27:20,680 --> 00:27:22,800
have kind of that they've been 
on the sideline. 

498
00:27:22,800 --> 00:27:24,600
They can't really develop new 
projects. 

499
00:27:25,040 --> 00:27:27,320
The cost of fact, the cost of 
capital is just too high. 

500
00:27:27,720 --> 00:27:32,080
And then Reeds have this very 
unique dynamic where they're 20 

501
00:27:32,080 --> 00:27:37,040
to 30% loan to value ever that 
sub six times net debt to EBITDA

502
00:27:37,440 --> 00:27:41,240
and the unsecure mark unsecure 
bond market is very open to you 

503
00:27:41,240 --> 00:27:44,360
what you're letting them borrow 
at in the 5% range. 

504
00:27:44,360 --> 00:27:47,240
You know, we even saw a couple 
deals done in the high force, 

505
00:27:47,280 --> 00:27:50,360
right. 
So, so they have all the cost of

506
00:27:50,360 --> 00:27:52,240
capital advantage right now on 
the that side. 

507
00:27:52,640 --> 00:27:55,640
That's wild to me that they can 
borrow there given where 

508
00:27:55,640 --> 00:27:59,200
treasuries are, but they're a 
beautiful thing. 

509
00:28:00,440 --> 00:28:03,400
Let's think through, right, the 
implications, right, if you 

510
00:28:03,400 --> 00:28:08,000
could buy so, so let's look at 
like the interest rate coverage 

511
00:28:08,000 --> 00:28:10,200
ratio, right, the fixed cost 
coverage ratio. 

512
00:28:10,280 --> 00:28:13,480
I mean, now most of the REITs 
that we own, the larger blue 

513
00:28:13,480 --> 00:28:18,560
chip ones, the interest coverage
ratios anywhere from like 4 to, 

514
00:28:19,440 --> 00:28:21,440
you know, sometimes even 10 
times, right? 

515
00:28:21,640 --> 00:28:25,480
So, so if I'm lending you money,
if I'm lending money to anybody 

516
00:28:26,000 --> 00:28:30,320
and you could cover my interest 
payment 4 to 10 times, like yes,

517
00:28:30,320 --> 00:28:33,880
like, you know, the 10 years at 
43, like I want you money, you 

518
00:28:33,880 --> 00:28:37,720
know, at 5% right now, granted 
in the next 10 years, like if 

519
00:28:37,720 --> 00:28:40,640
you do something crazy, if you 
make a big acquisition, that's 

520
00:28:40,640 --> 00:28:43,200
kind of a risk, right? 
But like a lot of these bigger 

521
00:28:43,200 --> 00:28:46,880
reads, kind of half mandates, 
not written mandates, but they 

522
00:28:46,880 --> 00:28:50,080
kind of have these like, you 
know, unwritten agreements that 

523
00:28:50,080 --> 00:28:52,280
they got to keep net that's even
up below 6 times. 

524
00:28:52,840 --> 00:28:57,280
So you're what, picking up that 
like 7080 a hundred BIP spread 

525
00:28:57,280 --> 00:29:00,320
over the 10 year treasury 
actually is a pretty, pretty 

526
00:29:00,320 --> 00:29:04,400
good risk reward. 
Yeah, Yeah, I can see that. 

527
00:29:04,400 --> 00:29:07,400
And the other thing is you're 
doing it by providing, you know,

528
00:29:07,400 --> 00:29:11,000
shelter, right? 
So in Maslow's hierarchy, pretty

529
00:29:11,000 --> 00:29:14,480
high up there. 
Yeah, well, shelter as storage 

530
00:29:14,480 --> 00:29:16,640
of useless stuff that Mercas 
love the. 

531
00:29:16,880 --> 00:29:20,120
Border, right. 
Yeah, Well, it's basically the 

532
00:29:20,120 --> 00:29:24,680
same thing in America. 
The massive hierarchy of knees 

533
00:29:24,680 --> 00:29:28,040
is it's not shelter in the 
bottom, it's your smartphone 

534
00:29:28,160 --> 00:29:31,520
nowadays, right? 
Yeah, you're not wrong. 

535
00:29:31,920 --> 00:29:33,120
Which is an issue. 
It's. 

536
00:29:34,400 --> 00:29:38,600
Smartphones, shelter, food, like
shelter food that that's all in 

537
00:29:38,600 --> 00:29:42,040
the car and then just like just 
above, it is like the need to to

538
00:29:42,040 --> 00:29:43,720
store like East West stuff, 
right? 

539
00:29:44,160 --> 00:29:46,520
Yeah, that's, yeah, that's 
exactly right. 

540
00:29:46,640 --> 00:29:52,880
And then stuff like sleep, I 
guess it'd be below it, right? 

541
00:29:52,880 --> 00:29:56,120
But yeah, yeah, either way, 
yeah, that's wild. 

542
00:29:56,480 --> 00:29:58,680
Yeah. 
But it's only kind of a joke. 

543
00:29:59,320 --> 00:30:00,880
It's whoa. 
I mean, you know. 

544
00:30:01,320 --> 00:30:03,560
There's a lot more truth to it 
than I'd like to admit. 

545
00:30:04,320 --> 00:30:07,520
A joke is funny because there's 
some truth in it, right? 

546
00:30:07,600 --> 00:30:10,160
Yeah, that's correct. 
Yeah, that's correct. 

547
00:30:10,720 --> 00:30:12,840
If it's totally outlandish, like
it wouldn't be funny. 

548
00:30:13,360 --> 00:30:15,600
Yeah, that's right. 
Yeah, that's right. 

549
00:30:15,840 --> 00:30:17,600
Yeah. 
So I've seen you on the Twitter 

550
00:30:17,600 --> 00:30:20,160
machine, you talk about hard 
assets. 

551
00:30:20,160 --> 00:30:24,320
Why have you seem to at least be
looking at some of these like 

552
00:30:24,400 --> 00:30:28,480
offshore drilling assets? 
I know it's not, that's not why 

553
00:30:28,480 --> 00:30:30,240
you what you came on to talk 
about. 

554
00:30:30,240 --> 00:30:34,840
But just curious, you know, when
you think about real estate from

555
00:30:34,840 --> 00:30:39,360
a first principles standpoint 
versus like, you know, you run 

556
00:30:39,360 --> 00:30:43,440
an investment product that is 
real estate focused, do you keep

557
00:30:43,440 --> 00:30:46,920
coming back to that you like the
real estate side? 

558
00:30:46,920 --> 00:30:49,800
It seems as though your tweets 
at least would indicate that you

559
00:30:49,800 --> 00:30:52,520
prefer real estate the offshore,
but that's, you know, those are 

560
00:30:52,520 --> 00:30:54,480
two totally. 
Oh, no, I mean, this, this, this

561
00:30:54,480 --> 00:30:56,480
is a, this is a great 
conversation, right? 

562
00:30:56,640 --> 00:31:00,320
Let's dig into the first 
principle of why, why people 

563
00:31:00,320 --> 00:31:02,000
even make money at real estate, 
right? 

564
00:31:02,000 --> 00:31:04,480
Like that's, yeah, you could go 
through. 

565
00:31:05,000 --> 00:31:10,960
There's a topic that I find that
I did it, I did eye banking for 

566
00:31:10,960 --> 00:31:14,040
a couple years and I didn't have
an answer for that. 

567
00:31:14,040 --> 00:31:17,800
And This is why in a place like 
New York, you wind up with 

568
00:31:17,840 --> 00:31:22,520
immigrant families who bought 
real estate 20-30 years ago and 

569
00:31:22,520 --> 00:31:25,000
they don't speak any English. 
They don't make a lot of money, 

570
00:31:25,000 --> 00:31:28,480
but they bought the real estate 
in the early 2000s, late 90s. 

571
00:31:28,760 --> 00:31:32,280
And then their tenant is some 
Ibacker who like pay a good 

572
00:31:32,280 --> 00:31:36,160
chuckle their rent to like my 
family's kind of partially like,

573
00:31:36,160 --> 00:31:40,400
like we took a lot of risk 20 
years ago in the early 2000s and

574
00:31:40,400 --> 00:31:41,400
we didn't know what we were 
doing. 

575
00:31:41,400 --> 00:31:45,640
But like my are just like rent 
typically go up over time, 

576
00:31:45,760 --> 00:31:47,680
right? 
Your mortgage rate is fixed. 

577
00:31:48,120 --> 00:31:51,120
And then we bought a couple and 
we wind up with, you know, a 

578
00:31:51,120 --> 00:31:56,400
dozen of properties like call 
like 6070 units that we own 

579
00:31:56,400 --> 00:31:59,560
between all the families where, 
you know, between my siblings 

580
00:31:59,560 --> 00:32:01,560
and not. 
And it's like, why do real 

581
00:32:01,560 --> 00:32:03,760
estate, which is hard asset go 
up in value? 

582
00:32:03,760 --> 00:32:07,200
And why is it if you look at the
long term chart or the 

583
00:32:07,200 --> 00:32:10,760
Transocean and you know any of 
them, they gone bankrupt, right?

584
00:32:11,040 --> 00:32:14,360
But and then like if you look at
the wanton shadow Transocean, it

585
00:32:14,360 --> 00:32:17,760
is a really ugly chart, right? 
And then you could look at 

586
00:32:17,760 --> 00:32:19,720
something like a pipeline, 
right? 

587
00:32:20,360 --> 00:32:22,280
A lot of these like offshore 
drilling that they call like 

588
00:32:22,600 --> 00:32:25,160
floating pipelines, you know, 
like the shuttle tankers. 

589
00:32:25,360 --> 00:32:27,520
So, so, so I've like looked at 
all of them, right? 

590
00:32:27,520 --> 00:32:31,400
And my brain initially kind of 
got excited and I'm like, oh, 

591
00:32:31,400 --> 00:32:33,200
look at the contracts. 
Like it looks like it's the same

592
00:32:33,200 --> 00:32:35,040
skill set. 
It's a very long lift asset. 

593
00:32:35,400 --> 00:32:38,880
You could kind of like forecast 
the cash flow because a lot of 

594
00:32:38,880 --> 00:32:40,800
them have, you know, long term 
contracts in place. 

595
00:32:41,040 --> 00:32:45,000
But like, why is it that one 
hard asset that floats out in 

596
00:32:45,000 --> 00:32:48,560
the ocean in the long run, like 
just burns through a ton of 

597
00:32:48,560 --> 00:32:52,680
shareholder equity And then the 
stuff that's on land that's like

598
00:32:52,680 --> 00:32:56,680
immovable that you can't move, 
like somehow creates a ton of 

599
00:32:56,680 --> 00:32:59,960
shareholder value. 
And I think like on a first 

600
00:32:59,960 --> 00:33:04,080
principle basis, if you break 
down, for example, good example,

601
00:33:04,080 --> 00:33:08,480
be like a warehouse in like a 
decent barrier to entry market, 

602
00:33:08,480 --> 00:33:10,880
right? 
Let's say in Brooklyn, right, a 

603
00:33:10,880 --> 00:33:13,880
warehouse in Brooklyn. 
And I'm picking a warehouse on 

604
00:33:13,880 --> 00:33:16,080
purpose because like the 
maintenance CapEx, it's easy 

605
00:33:16,080 --> 00:33:18,120
because there's very little 
maintenance CapEx, right? 

606
00:33:18,120 --> 00:33:21,640
Like maybe every 5020 years you 
got to replace the roof, right? 

607
00:33:21,840 --> 00:33:25,160
It's just a structure. 
So over time, what, what really 

608
00:33:25,160 --> 00:33:27,760
appreciates if you think about 
like there are four things that 

609
00:33:27,760 --> 00:33:30,440
consist of real estate, right? 
There's a land that it sits on, 

610
00:33:30,720 --> 00:33:35,520
there's a structure above it, 
there's the interior and then 

611
00:33:35,520 --> 00:33:37,480
there is like the intangible, 
right? 

612
00:33:37,480 --> 00:33:40,200
What is the intangible? 
The intangible is that in some, 

613
00:33:40,280 --> 00:33:43,720
in certain high barrier to entry
markets like a Brooklyn or New 

614
00:33:43,720 --> 00:33:45,760
York City or Southern 
California, it actually takes a 

615
00:33:45,760 --> 00:33:48,920
really long time to get the 
approval to go build it, right. 

616
00:33:49,200 --> 00:33:52,000
So think about, if you think 
about like what actually goes up

617
00:33:52,000 --> 00:33:55,560
in value over time, I think we 
could all agree that the land 

618
00:33:55,560 --> 00:33:59,120
usually go up in value, right? 
The structure goes up in value 

619
00:33:59,120 --> 00:34:02,120
because the replacement cost to 
recreate that same structure. 

620
00:34:02,320 --> 00:34:05,720
Yes, that brick may be 30 years 
old, but it's really like that 

621
00:34:05,720 --> 00:34:09,120
steel i-beam maybe 40-50 years 
old, but there's no real 

622
00:34:09,120 --> 00:34:12,320
depreciation on that 40 year old
i-beam, right for that 

623
00:34:12,320 --> 00:34:15,120
warehouse. 
Now the interior like the roof 

624
00:34:15,199 --> 00:34:18,400
that really do depreciate that 
there's real depreciation with 

625
00:34:18,400 --> 00:34:19,719
that. 
And then I would say they had 

626
00:34:19,719 --> 00:34:22,840
the intangible to get the 
approval by the government, 

627
00:34:22,840 --> 00:34:24,480
local government to allow you to
build. 

628
00:34:24,480 --> 00:34:27,120
That actually goes up in value 
because it just becomes more 

629
00:34:27,120 --> 00:34:30,440
difficult. 
I think as most places in the US

630
00:34:30,520 --> 00:34:34,880
densify over time, your lead 
time to develop, to go build 

631
00:34:34,880 --> 00:34:37,120
something. 
Actually, there's just more 

632
00:34:37,120 --> 00:34:39,360
government red tape, right to 
build more. 

633
00:34:39,360 --> 00:34:42,360
Yes, the lead time actually gets
increases. 

634
00:34:42,760 --> 00:34:45,719
So, so if you compare a 
warehouse to this floating 

635
00:34:45,719 --> 00:34:47,400
structure out in the ocean, 
right? 

636
00:34:48,320 --> 00:34:53,840
So you know, that hunk of steel,
which by the way, is an 

637
00:34:53,920 --> 00:34:57,080
impressive feat of like 
engineering and human 

638
00:34:57,160 --> 00:34:59,200
engineering, right? 
Like what they're able to do is 

639
00:34:59,200 --> 00:35:01,800
like absolutely incredible on 
some of those, you know, 

640
00:35:02,120 --> 00:35:04,760
offshore rigs. 
But the reality is that what 

641
00:35:04,760 --> 00:35:09,000
that salt water is truly 
destroying that huckle metal out

642
00:35:09,000 --> 00:35:12,520
there in the ocean as impressive
it is, right, 20-30 years later,

643
00:35:12,520 --> 00:35:16,000
like it's worth as much as, you 
know, scrap metal, right? 

644
00:35:16,240 --> 00:35:19,320
And that's the ocean. 
No one's got claims to it. 

645
00:35:19,320 --> 00:35:23,000
There's no what like those 
three, what the land value, the 

646
00:35:23,000 --> 00:35:25,960
structure value and the 
intangible, none of it is 

647
00:35:25,960 --> 00:35:28,520
appreciating. 
So, so like in my opinion, like 

648
00:35:28,520 --> 00:35:31,880
I developed this mental model 
for thinking about what truly in

649
00:35:31,880 --> 00:35:35,400
every asset type, right? 
So you could go from office to 

650
00:35:35,400 --> 00:35:38,160
warehouses to self storage to 
multi family. 

651
00:35:38,440 --> 00:35:43,040
There's a certain intensity, 
it's a fight between the land 

652
00:35:43,040 --> 00:35:47,240
and the structure appreciating, 
right, and the interior and the 

653
00:35:47,240 --> 00:35:50,720
sub that truly depreciate. 
This is why each real estate 

654
00:35:50,720 --> 00:35:52,600
asset class have different cap 
rates, right? 

655
00:35:52,640 --> 00:35:56,240
And a warehouse, you know, could
have a lower cap rate than an 

656
00:35:56,240 --> 00:35:59,040
office because there's very 
little maintenance CapEx on it, 

657
00:35:59,040 --> 00:36:01,280
right? 
And there's even a new real 

658
00:36:01,280 --> 00:36:03,800
estate asset class called 
industrial outdoor storage, 

659
00:36:03,800 --> 00:36:06,760
which is just a giant parking 
lot that you park like a cable 

660
00:36:06,760 --> 00:36:08,200
company with a ton of trucks, 
right? 

661
00:36:08,200 --> 00:36:11,120
They need a place at the end of 
the night to come back and park.

662
00:36:11,120 --> 00:36:13,600
I love that. 
I love that because now you 

663
00:36:13,600 --> 00:36:15,280
don't even have a roof to 
repair, right? 

664
00:36:15,280 --> 00:36:18,520
Like it's just a asphalt, you 
know, paving that you maybe like

665
00:36:18,520 --> 00:36:20,200
every whatever number of years 
you got to. 

666
00:36:20,520 --> 00:36:24,960
So that's why I've never really,
I guess my brain likes to psych 

667
00:36:25,280 --> 00:36:28,600
scarcity right now. 
This doesn't apply to everything

668
00:36:28,600 --> 00:36:31,120
I do right there. 
There are like other businesses 

669
00:36:31,120 --> 00:36:35,000
that I look at where I do apply 
an abundance model. 

670
00:36:35,120 --> 00:36:38,120
But when it comes to real 
estate, I generally like a 

671
00:36:38,280 --> 00:36:41,960
scarcity model where you're kind
of like the choke point, you're 

672
00:36:41,960 --> 00:36:43,640
kind of, you know, just like 
this. 

673
00:36:43,840 --> 00:36:46,840
As much as we we say we want to 
build more housing, as much as 

674
00:36:46,840 --> 00:36:49,840
we say we want to build more, 
the reality is that there's an 

675
00:36:49,920 --> 00:36:54,560
innate cultural, you know, 
identity where people are like, 

676
00:36:54,560 --> 00:36:56,960
yeah, we need more of that, but 
not in my backyard. 

677
00:36:56,960 --> 00:36:59,120
We need more of this, but not in
my backyard. 

678
00:36:59,120 --> 00:37:01,440
Like, yeah. 
And that's something that I'm 

679
00:37:01,440 --> 00:37:02,480
willing to bet on. 
Yeah. 

680
00:37:02,480 --> 00:37:05,400
And, you know, to the extent 
that you're in a city, obviously

681
00:37:05,400 --> 00:37:07,840
you can build new buildings, but
it's not so easy I. 

682
00:37:09,560 --> 00:37:12,000
Mean, you know, we, we get to do
some of the details. 

683
00:37:12,920 --> 00:37:15,600
My, my younger brother has built
a couple buildings here in 

684
00:37:15,600 --> 00:37:20,000
Queens and at times he will 
complain to me what it takes to 

685
00:37:20,000 --> 00:37:22,440
build in New York and some of 
the horror stories. 

686
00:37:22,840 --> 00:37:27,000
I mean, it's literally it gets 
to the point where you know, we 

687
00:37:27,000 --> 00:37:31,320
have a special fondness for like
New York City residential, even 

688
00:37:31,320 --> 00:37:34,960
with like all the crazy rent 
regulations, etcetera, etcetera 

689
00:37:34,960 --> 00:37:36,560
and the tenant rights and 
whatnot. 

690
00:37:36,960 --> 00:37:40,760
But if you try to build in New 
York City, your neighbors 

691
00:37:40,760 --> 00:37:44,560
sometimes knows that this is an 
opportunity to shake you down, 

692
00:37:44,800 --> 00:37:47,480
right? 
They know they can exert a 

693
00:37:47,480 --> 00:37:50,640
certain amount of pain, argue 
where they'll call the building 

694
00:37:50,640 --> 00:37:52,400
department. 
They say, oh, like you didn't 

695
00:37:52,400 --> 00:37:55,400
implement this right. 
Building hard comes by like 

696
00:37:55,400 --> 00:37:59,200
shuts you down for 2-3 days. 
And then, you know, it's lost 

697
00:37:59,200 --> 00:38:02,320
time loss of like your GC, like 
now they got to like redeploy 

698
00:38:02,320 --> 00:38:05,000
people elsewhere. 
I mean, we can go through a 

699
00:38:05,000 --> 00:38:07,160
whole list, right? 
We go through a whole list, 

700
00:38:07,240 --> 00:38:09,000
right? 
And then you run into things 

701
00:38:09,000 --> 00:38:12,960
like, oh, you know, we actually 
don't want people to install 

702
00:38:12,960 --> 00:38:15,080
natural gas, you know, stoves in
the city. 

703
00:38:15,080 --> 00:38:18,240
So we're not issuing any more 
natural gas like permits, right,

704
00:38:18,280 --> 00:38:20,000
for buildings, like you gotta go
all electric. 

705
00:38:20,040 --> 00:38:23,120
I think people like under 
appreciate like how much risk a 

706
00:38:23,120 --> 00:38:27,400
developer has to take in order 
to get a building, you know, off

707
00:38:27,400 --> 00:38:30,120
the ground in New York City. 
And now I'm starting to see 

708
00:38:30,120 --> 00:38:33,320
evidence that's kind of starting
to happen everywhere, right? 

709
00:38:33,320 --> 00:38:36,400
Like if you could ban them, one 
trend is that 10 years from now,

710
00:38:36,440 --> 00:38:39,960
even places like Dallas and, you
know, places that are known for 

711
00:38:40,120 --> 00:38:43,480
very business friendly, it's got
to be harder to build new supply

712
00:38:43,760 --> 00:38:45,280
essentially like everywhere in 
the US. 

713
00:38:45,800 --> 00:38:48,600
Yeah. 
And you know, it's good to have 

714
00:38:48,600 --> 00:38:50,560
that tailwind. 
It's good to have that tailwind 

715
00:38:50,560 --> 00:38:53,360
when you invest in the asset 
class, you know, versus that 

716
00:38:53,360 --> 00:38:57,240
saltwater continuously slashing 
on the drill work and just, you 

717
00:38:57,240 --> 00:38:58,480
know, depreciating it down to 
nothing. 

718
00:38:59,680 --> 00:39:00,800
Yeah. 
And I mean, look, you got 

719
00:39:00,800 --> 00:39:02,840
fashion risk with real estate, 
right? 

720
00:39:02,840 --> 00:39:06,000
But if you have a building to 
pull out or re face cabinets or 

721
00:39:06,000 --> 00:39:08,040
whatever, it's not. 
We're not talking about the end 

722
00:39:08,040 --> 00:39:10,560
of the world. 
Yeah, from a capital 

723
00:39:10,560 --> 00:39:11,720
perspective, right? 
Yeah. 

724
00:39:11,720 --> 00:39:15,800
I mean, it's like you got to do 
it, but it's not crazy. 

725
00:39:16,280 --> 00:39:18,280
I think, I think it's really 
talking about hotels. 

726
00:39:19,320 --> 00:39:22,640
No, I mean like like condos, 
they get a little bit tired, 

727
00:39:22,720 --> 00:39:24,600
right? 
Or apartment buildings rather, 

728
00:39:24,600 --> 00:39:26,960
Like if you're going to lease 
them up, you do need to have an 

729
00:39:26,960 --> 00:39:30,280
on trend kitchen that you're 
selling people. 

730
00:39:30,280 --> 00:39:33,800
I mean, maybe not New York, but 
you know, like Denver, you got 

731
00:39:33,800 --> 00:39:35,640
to have something that people 
want to live in. 

732
00:39:36,560 --> 00:39:38,000
Oh, no, I'm in. 
You're totally right. 

733
00:39:38,000 --> 00:39:42,960
I think more so I think that on 
trend intensity is a lot higher 

734
00:39:42,960 --> 00:39:46,080
depending on like where you sit 
and the market that you're in. 

735
00:39:46,160 --> 00:39:49,280
And sometimes I do need to take 
myself out of that New York City

736
00:39:49,280 --> 00:39:52,800
mentality where we consistently 
operate under like a 1 to 2%, 

737
00:39:52,800 --> 00:39:55,160
you know, vacancy. 
And it's kind of like, hey, you 

738
00:39:55,160 --> 00:39:57,040
earn the privilege to rent this 
unit, right? 

739
00:39:57,080 --> 00:39:59,400
Like once I go out of New York, 
I'm like, all right, Bill Lloyd,

740
00:39:59,400 --> 00:40:01,120
like, like, like they're. 
Actually like if you're in 

741
00:40:01,120 --> 00:40:04,040
Atlanta, right, If you're in 
Atlanta or Dallas and all this 

742
00:40:04,040 --> 00:40:08,120
new stuff or Austin and all this
new stuff is hitting the market,

743
00:40:08,120 --> 00:40:12,160
like you gotta have a facelift 
in some your units to attract 

744
00:40:12,160 --> 00:40:15,080
tenants. 
Well, that's why we pay a lot of

745
00:40:15,320 --> 00:40:17,640
attention. 
And I remember going on the 

746
00:40:17,640 --> 00:40:21,480
ground tour with my two of my 
analysts and I was like 

747
00:40:21,520 --> 00:40:25,400
explaining to them, I'm like, 
you want to own things, you want

748
00:40:25,400 --> 00:40:28,080
to own real estate that are 
where the neighborhood is the 

749
00:40:28,080 --> 00:40:30,160
amenity, right? 
Like you want to own real 

750
00:40:30,160 --> 00:40:32,880
estate, what the neighborhood is
the amenity, not the actual 

751
00:40:33,120 --> 00:40:36,520
amenity in your building that 
actually do experience 

752
00:40:36,520 --> 00:40:39,640
depreciation over time and do 
experience obsolescence risk. 

753
00:40:39,720 --> 00:40:43,720
And, and this is where if you're
in certain cool parts of 

754
00:40:43,720 --> 00:40:47,000
Brooklyn, right? 
The neighborhood is what's cool,

755
00:40:47,160 --> 00:40:49,440
right? 
And you could kind of have like 

756
00:40:49,800 --> 00:40:53,760
some rundown unit and it was 
still rent for a large premium 

757
00:40:53,760 --> 00:40:55,720
because people want to be in 
that neighborhood. 

758
00:40:55,880 --> 00:40:59,040
And there are certain 
characteristics where it's not 

759
00:40:59,040 --> 00:41:02,080
the cool and hipness of that 
neighborhood, it's the fact 

760
00:41:02,080 --> 00:41:04,680
that, you know, in the 
neighborhood in the area like 

761
00:41:04,680 --> 00:41:08,120
Downtown Brooklyn, there's six 
subway stations that are all 

762
00:41:08,120 --> 00:41:10,600
expresses that get you in into 
the city. 

763
00:41:10,600 --> 00:41:13,720
And also what you go east in the
further out to Brooklyn. 

764
00:41:13,880 --> 00:41:18,560
It's just a great transport like
logistics hub where someone you 

765
00:41:18,560 --> 00:41:20,800
know, people may want to live 
there just some close with the 

766
00:41:20,800 --> 00:41:22,800
ease of commute. 
And those are kind of like 

767
00:41:23,200 --> 00:41:26,600
permanent. 
Those that kind of vantage don't

768
00:41:26,600 --> 00:41:29,960
go away and that's where you 
don't have to spend this much on

769
00:41:29,960 --> 00:41:32,200
amenity. 
And you know, you can also like 

770
00:41:32,200 --> 00:41:35,080
go further down like once you 
get into kind of like a lot of 

771
00:41:35,080 --> 00:41:38,960
that Class B asset class where 
you get into workforce housing, 

772
00:41:39,360 --> 00:41:42,800
the tenants like are not as 
discerning when it comes to, 

773
00:41:42,800 --> 00:41:46,880
hey, you know, what is your kind
of kitchen bathroom, kind of a 

774
00:41:46,880 --> 00:41:49,560
many package, right? 
Or like, is there a grill in the

775
00:41:49,560 --> 00:41:51,960
rooftop? 
You know he would just want to 

776
00:41:52,720 --> 00:41:55,840
save clean place to live and 
that's what they want. 

777
00:41:55,840 --> 00:41:57,320
So so you got to pick your 
battle. 

778
00:41:57,320 --> 00:42:00,600
But I totally agree with you why
on this On the extreme high end 

779
00:42:00,640 --> 00:42:05,160
for condos you definitely need 
the best Amelia package to 

780
00:42:05,160 --> 00:42:08,040
compete. 
Yeah, and some apartments. 

781
00:42:08,040 --> 00:42:12,840
But yeah, dude, I was listening 
to our last podcast and I can't 

782
00:42:12,840 --> 00:42:15,760
believe. 
I mean part of the issue with 

783
00:42:15,760 --> 00:42:18,640
trying to facilitate a 
conversation while also having 

784
00:42:18,640 --> 00:42:23,040
one is I try to listen as well 
as I can, but sometimes stuff 

785
00:42:23,040 --> 00:42:27,320
slips by me. 
I didn't realize, and I do not 

786
00:42:27,320 --> 00:42:30,320
own this so I can say this in an
unbiased nature. 

787
00:42:30,320 --> 00:42:34,320
I didn't realize the aggregates 
part of the FRPH pitch. 

788
00:42:35,400 --> 00:42:39,160
Yeah, OK. 
And and when you were saying 

789
00:42:39,840 --> 00:42:45,000
about, I think you were talking 
about like how blue the water is

790
00:42:45,000 --> 00:42:48,040
or something like when they, so 
basically they can mine the 

791
00:42:48,040 --> 00:42:50,720
rock, right? 
And then they sell the 

792
00:42:50,720 --> 00:42:54,760
aggregates and then they're 
developing communities in the 

793
00:42:54,760 --> 00:43:00,320
old like, basically mind. 
Yeah, that's that is pretty 

794
00:43:00,320 --> 00:43:03,120
freaking cool. 
I didn't pick up on how cool 

795
00:43:03,120 --> 00:43:05,120
that was. 
I was trying to like, kind of 

796
00:43:05,120 --> 00:43:09,560
push back on you about what I 
thought people might pay and you

797
00:43:09,560 --> 00:43:11,520
were well, I mean, this is what 
they're paying. 

798
00:43:11,520 --> 00:43:15,400
So it's obviously desirable. 
It reminds me of you know, about

799
00:43:15,400 --> 00:43:18,160
Stream song, the golf course in 
on the West Coast here in 

800
00:43:18,160 --> 00:43:20,640
Florida. 
I don't know why you would, but 

801
00:43:20,640 --> 00:43:24,440
if but like so mosaic. 
I think it was mosaic. 

802
00:43:24,600 --> 00:43:28,720
I'm almost certain it was. 
Mosaic is a. 

803
00:43:29,800 --> 00:43:32,160
Potassium. 
It's it's, I think it's, I think

804
00:43:32,160 --> 00:43:33,840
it's potash. 
It might be phosphate. 

805
00:43:33,840 --> 00:43:35,600
That's yeah, it might be 
phosphate. 

806
00:43:35,600 --> 00:43:41,240
That's in Florida anyway. 
So they were mining this area, 

807
00:43:41,800 --> 00:43:47,840
and in order to show what could 
be done with an old mine, they 

808
00:43:47,840 --> 00:43:49,720
said, OK, you know what, we 
will. 

809
00:43:49,800 --> 00:43:52,160
We'll develop it into a golf 
course. 

810
00:43:53,160 --> 00:43:58,600
And it turned into, like, a 
very, very cool golf course that

811
00:43:58,600 --> 00:44:01,320
they owned. 
Now, the financials on it, you 

812
00:44:01,320 --> 00:44:03,560
know, weren't great, but that's 
completely different. 

813
00:44:04,480 --> 00:44:05,720
There you go. 
They just sold it. 

814
00:44:06,160 --> 00:44:08,280
Yeah, 2023. 
Let's see what they sold it for.

815
00:44:08,280 --> 00:44:12,280
But yeah, anyway, stream song. 
Stream song OK. 

816
00:44:12,640 --> 00:44:16,360
Yeah, and it was super cool like
that they did that. 

817
00:44:16,920 --> 00:44:20,560
So it kind of reminds me a 
little bit of what you were 

818
00:44:20,560 --> 00:44:22,480
talking about. 
And I just, you know, I just 

819
00:44:22,480 --> 00:44:24,760
couldn't hear it. 
Yeah, they sold it for 160 

820
00:44:24,760 --> 00:44:26,800
million. 
Probably cost more to do, but I 

821
00:44:26,800 --> 00:44:28,400
don't know, whatever. 
Yeah. 

822
00:44:28,720 --> 00:44:29,920
Yeah, it was neat. 
I'm. 

823
00:44:30,480 --> 00:44:33,160
I'm looking at the photos. 
This looks really awesome. 

824
00:44:34,400 --> 00:44:36,520
Do you know what's what's odd 
about it out there is there's 

825
00:44:36,520 --> 00:44:40,120
like a ton of, there's a ton of 
alligators. 

826
00:44:42,120 --> 00:44:45,200
I don't know how they got out 
there, but like there's a lot in

827
00:44:45,200 --> 00:44:47,400
some of those waters. 
So if anybody's out there 

828
00:44:47,400 --> 00:44:50,360
playing and you hit your ball in
there between them and the water

829
00:44:50,360 --> 00:44:52,240
moccasins, I would not go for 
your ball. 

830
00:44:52,240 --> 00:44:56,360
That's my $0.02. 
It's not worth I was talking to 

831
00:44:56,360 --> 00:45:00,040
someone about the that their 
Fort Myers and I was talking 

832
00:45:00,040 --> 00:45:02,760
about, you know, the water being
blue and whatnot and somewhat 

833
00:45:02,760 --> 00:45:07,000
gently reminded of me that in 
Florida, you don't you don't go 

834
00:45:07,120 --> 00:45:11,480
into the water because you just 
have to, you have to assume that

835
00:45:11,480 --> 00:45:13,760
there are Gators in there. 
And I'm like. 

836
00:45:13,880 --> 00:45:16,160
Yeah, though I mean, the 
freshwater in Florida, there's 

837
00:45:16,160 --> 00:45:18,160
probably smarter things than to 
swim in. 

838
00:45:18,520 --> 00:45:22,000
I did as a kid. 
In retrospect, I'm not sure that

839
00:45:22,000 --> 00:45:24,720
wasn't smart, but whatever. 
Some of it was. 

840
00:45:24,960 --> 00:45:28,600
But yeah, I was on a of course 
the other day and look down into

841
00:45:28,600 --> 00:45:31,680
the water and there was a water 
moccasin and people always say 

842
00:45:31,680 --> 00:45:34,400
like if you can see a ball do 
not reach in and get it cuz they

843
00:45:34,400 --> 00:45:37,600
hide like under the wood and 
under the rocks and you know 

844
00:45:37,600 --> 00:45:39,720
those things bite you and it's 
all over but the crying. 

845
00:45:40,000 --> 00:45:42,280
What is a water moccasin I have 
to add? 

846
00:45:42,280 --> 00:45:45,240
It's like a little, it was like 
a little black snake with some 

847
00:45:45,240 --> 00:45:47,720
yellow lines on it. 
It didn't look like the kind of 

848
00:45:47,720 --> 00:45:50,200
thing that could kill you, but 
it 100% can kill you. 

849
00:45:53,640 --> 00:45:55,960
Yeah, real Florida wildlife 
shit. 

850
00:45:56,240 --> 00:46:00,520
You ever think about, I always 
think about Australia as like 

851
00:46:00,520 --> 00:46:03,720
the yeah, where it's just like 
everything there could kind of 

852
00:46:03,720 --> 00:46:05,840
kill you. 
I'm sorry for Toby, Right? 

853
00:46:05,840 --> 00:46:09,000
Like. 
Yeah, 100%. 

854
00:46:09,200 --> 00:46:11,720
Yeah and yeah. 
You don't want anything to do 

855
00:46:11,720 --> 00:46:13,000
with that. 
That's a different. 

856
00:46:13,000 --> 00:46:16,680
Yeah, no, it's craziness. 
Yeah, even I think like even the

857
00:46:16,680 --> 00:46:20,400
platypus, like if you get bit or
sting by them, there's like 

858
00:46:20,560 --> 00:46:23,520
venom in this platypus. 
I'm like, OK, like that. 

859
00:46:23,520 --> 00:46:27,640
I was, you know, you know, about
the blue ring octopus, the box 

860
00:46:27,640 --> 00:46:31,200
jellyfish and all this. 
And I'm just like, I'm not sure 

861
00:46:31,200 --> 00:46:33,200
what it looks like. 
Such a cool place to visit. 

862
00:46:33,200 --> 00:46:36,200
But then the more I learned 
about it, I'm like, it's a 

863
00:46:36,320 --> 00:46:38,960
little scary. 
It's amazing. 

864
00:46:38,960 --> 00:46:42,480
I backpacked through it when I 
was young and and it was truly 

865
00:46:42,480 --> 00:46:44,880
an incredible experience. 
But yes, I figure if the 

866
00:46:44,880 --> 00:46:47,160
wildlife can survive out there, 
they can kill me. 

867
00:46:49,520 --> 00:46:51,680
Yeah. 
Yeah, by the way, too. 

868
00:46:51,760 --> 00:46:53,440
It was fun, man. 
Yeah. 

869
00:46:53,440 --> 00:46:56,880
I jumped out of a plane at 
Rainbow Beach, came out and you 

870
00:46:56,880 --> 00:47:00,160
see, like all this, this, the 
sand was a bunch of different 

871
00:47:00,160 --> 00:47:02,120
colors. 
Byron Bay is like my favorite 

872
00:47:02,120 --> 00:47:04,760
place on Earth. 
If I could retire anywhere, it 

873
00:47:04,760 --> 00:47:05,680
would be Byron Bay. 
I. 

874
00:47:06,600 --> 00:47:08,720
See. 
We have diverted the 

875
00:47:08,720 --> 00:47:12,040
conversation. 
Well, I mean, we were still 

876
00:47:12,040 --> 00:47:13,440
talking about real estate, 
right? 

877
00:47:13,440 --> 00:47:14,960
In a way. 
We're talking about different 

878
00:47:14,960 --> 00:47:16,920
geographies. 
We're talking about second, you 

879
00:47:16,920 --> 00:47:18,480
know. 
Location location. 

880
00:47:18,840 --> 00:47:21,200
Exactly location and useful 
Second life. 

881
00:47:21,680 --> 00:47:27,240
You know the thing about Florida
that keeps Amaze amazing me is 

882
00:47:27,240 --> 00:47:32,720
that years ago I was investing 
in a company that own a good 

883
00:47:32,720 --> 00:47:37,640
chunk of Daytona right now that 
really is called CTOCTO Realty. 

884
00:47:39,200 --> 00:47:42,640
I think Florida is the only 
market where I am aware of. 

885
00:47:42,760 --> 00:47:45,680
But you know up here in the 
Northeast, particularly in the 

886
00:47:45,680 --> 00:47:48,920
New York City area like the 
neighborhood it is really 

887
00:47:48,920 --> 00:47:52,120
important right like you buy a 
house in the neighborhood and 

888
00:47:52,120 --> 00:47:56,200
then you that neighborhood over 
time how that trends matters a 

889
00:47:56,200 --> 00:47:58,240
lot. 
But Florida is like one of those

890
00:47:58,240 --> 00:48:01,960
markets where sometimes like, 
like I remember going out to 

891
00:48:01,960 --> 00:48:06,680
Daytona and the I-95 kind of 
like bifurcates, right, The site

892
00:48:06,760 --> 00:48:11,040
on you know, E ESO I-95 and the 
house, you'll get the Daytona 

893
00:48:11,040 --> 00:48:13,880
Beach right on the water. 
And then like a little bit in 

894
00:48:13,880 --> 00:48:18,760
between that, the ocean and I-95
like is kind of this no man's 

895
00:48:18,760 --> 00:48:23,360
land where houses were going for
fifty $70,000 each, right? 

896
00:48:23,400 --> 00:48:26,680
And a lot of them have like 
storm damage at the time, like a

897
00:48:26,680 --> 00:48:28,360
lot of Roosters have parks over 
it. 

898
00:48:28,880 --> 00:48:31,560
And I'm just kind of thinking 
I'm like, I thousands was 

899
00:48:31,560 --> 00:48:34,760
$70,000 a year, like what is 
going on over here? 

900
00:48:34,920 --> 00:48:40,360
So I automatically assume that 
if you go further inland West of

901
00:48:40,400 --> 00:48:45,920
I-95, you know those land, the 
lots probably are worth 5 to 10 

902
00:48:45,920 --> 00:48:48,880
grand each, right? 
And that's like kind of logical 

903
00:48:48,880 --> 00:48:50,360
thinking. 
But guess what? 

904
00:48:50,360 --> 00:48:52,480
They sold the land to 
Margaritaville. 

905
00:48:53,280 --> 00:48:54,880
And then what? 
Florida's one of those areas 

906
00:48:54,880 --> 00:48:58,680
where if you could get your 
hands on a large track away, you

907
00:48:58,680 --> 00:49:01,000
could kind of build your own 
community. 

908
00:49:01,400 --> 00:49:03,800
So yeah. 
So the houses the new builds in 

909
00:49:03,800 --> 00:49:07,160
Mark Greenville sells for half 
$1,000,000 like that, that like 

910
00:49:07,400 --> 00:49:09,960
from someone who learned a lot 
about real estate in the 

911
00:49:09,960 --> 00:49:13,400
Northeast, like to see that that
that blew my mind. 

912
00:49:13,520 --> 00:49:16,280
That was. 
Like, very you also to your 

913
00:49:16,280 --> 00:49:21,840
point, you also can't just say, 
OK, well, this is a mile from 

914
00:49:21,840 --> 00:49:24,000
the water. 
And therefore it's valuable 

915
00:49:25,000 --> 00:49:27,360
because mile is like a big 
difference. 

916
00:49:28,400 --> 00:49:30,640
Maybe a mile is too short of a 
difference. 

917
00:49:30,640 --> 00:49:34,120
But like, you do really have a 
no man's land between the 

918
00:49:34,120 --> 00:49:37,160
intercoastal and I-95 in most 
spots in Florida. 

919
00:49:37,160 --> 00:49:38,720
Mm, hmm. 
Mm, hmm. 

920
00:49:39,160 --> 00:49:41,720
Mm, hmm, mm, hmm. 
Yeah. 

921
00:49:41,720 --> 00:49:44,160
And then and then you got like, 
you know, there's the like 

922
00:49:44,160 --> 00:49:45,800
Daytona. 
Yeah. 

923
00:49:46,000 --> 00:49:48,840
Unfortunately they built all 
those high rises on the water, 

924
00:49:49,080 --> 00:49:50,880
right, like along the ocean. 
If they didn't. 

925
00:49:50,880 --> 00:49:54,240
But it does have some I think 
Daytona offers some value. 

926
00:49:54,400 --> 00:49:56,600
I mean, you know, South Florida,
it's great. 

927
00:49:57,280 --> 00:50:01,240
What the thing about that shocks
me and I'm sure YouTube would 

928
00:50:01,240 --> 00:50:03,400
tell me that everything's 
crashing and I don't necessarily

929
00:50:03,400 --> 00:50:06,800
think it's wrong. 
But dude, the resiliency of 

930
00:50:06,800 --> 00:50:11,480
people to just absorb insurance 
costs going up here or they're 

931
00:50:11,480 --> 00:50:13,760
just saying whatever will go X 
wind. 

932
00:50:14,520 --> 00:50:17,680
But you know, the insurance 
costs a real problem here, which

933
00:50:18,440 --> 00:50:21,240
I gather maybe it's starting to 
get addressed, but. 

934
00:50:21,800 --> 00:50:24,080
Yeah. 
Yeah, it used to be that you 

935
00:50:24,080 --> 00:50:26,840
could assign your claim to 
somebody else for up to like 

936
00:50:26,840 --> 00:50:31,040
five years and then they could 
sue on your behalf and it just 

937
00:50:31,040 --> 00:50:34,040
caused the insurance to go way 
high. 

938
00:50:34,560 --> 00:50:39,040
The climate risk change this is 
a topic where I have my annals 

939
00:50:39,040 --> 00:50:43,760
and I have a very intense debate
on and it gets like, you know 

940
00:50:43,760 --> 00:50:46,480
you're doing something right 
when you and your team have a 

941
00:50:46,480 --> 00:50:50,160
debate on a topic it and it gets
like really it it gets a little 

942
00:50:50,160 --> 00:50:54,360
heated right, because you're 
like really trying to suss out 

943
00:50:54,440 --> 00:50:57,080
right like the the. 
Articulating both view points. 

944
00:50:57,080 --> 00:51:00,840
Yeah, your both view points 
sometimes like I'm like you 

945
00:51:00,840 --> 00:51:03,360
really got to pay attention to 
the fact that like people, 

946
00:51:03,360 --> 00:51:06,720
there's a lot of population 
growth, while you have a lot of 

947
00:51:06,720 --> 00:51:10,280
inflation, you have people 
voluntarily moving to areas 

948
00:51:10,280 --> 00:51:13,360
with, you know, more that are 
more prone to climate risk, 

949
00:51:13,400 --> 00:51:15,800
right. 
Like up here again, I keep going

950
00:51:15,800 --> 00:51:18,960
back to like up here in New 
York, like, you know, we get a 

951
00:51:18,960 --> 00:51:20,960
bad winter storm every once in a
while. 

952
00:51:21,160 --> 00:51:24,680
Sandy in 2012 was probably the 
worst, like hurricane flooding 

953
00:51:24,680 --> 00:51:28,440
that we experienced, right. 
For the most part, we don't get 

954
00:51:28,440 --> 00:51:31,920
a ton of crazy climate. 
And then if you look at where 

955
00:51:31,920 --> 00:51:35,800
all the net migrations, it's to 
Florida, it's to Texas closer to

956
00:51:35,800 --> 00:51:39,240
Gulf that are more subject to 
you up to hail to hurricanes. 

957
00:51:39,640 --> 00:51:45,120
So as topic of like climate 
change there that's, you know, 

958
00:51:45,120 --> 00:51:47,080
the insurers have like fully 
priced them in. 

959
00:51:47,080 --> 00:51:49,400
That's something that my 
analysts and I will could have 

960
00:51:49,400 --> 00:51:51,440
like a three out of the you 
know, argument on. 

961
00:51:51,760 --> 00:51:53,880
I'm kind of like rambling a 
little bit because I'm just kind

962
00:51:53,880 --> 00:51:56,280
of like rehashing, you know, 
what we talked about internally 

963
00:51:56,280 --> 00:51:59,080
here at Rizal. 
And one of the things that like 

964
00:51:59,600 --> 00:52:02,200
I've been hearing about it is 
there's this theory that every 

965
00:52:02,200 --> 00:52:05,400
time like, like you mentioned 
that like people will say, oh, 

966
00:52:05,400 --> 00:52:08,400
that house have like another 
hurricane left in it, right? 

967
00:52:08,760 --> 00:52:11,880
And then like once that house 
gets destroyed, it gets rebuilt.

968
00:52:11,880 --> 00:52:16,000
It has to be like rebuilt if 
you're certain cold and and then

969
00:52:16,000 --> 00:52:19,360
like your housing stock is more 
hurricane resilient right over 

970
00:52:19,360 --> 00:52:20,600
time. 
Yeah, quite a bit. 

971
00:52:20,600 --> 00:52:23,600
So not to water, but to wind for
sure. 

972
00:52:24,400 --> 00:52:27,760
I mean, the thing I learned when
I got hit by a tornado is, you 

973
00:52:27,760 --> 00:52:34,600
know, the issue too is not my 
house is built in to code that 

974
00:52:34,600 --> 00:52:38,480
can withstand whatever. 
The question is, are my 

975
00:52:38,480 --> 00:52:42,480
neighbors houses? 
Because a couple of the houses 

976
00:52:42,480 --> 00:52:46,560
didn't have a storm left in them
and their roofs hit our roofs. 

977
00:52:47,000 --> 00:52:51,280
And your roof is not impervious 
from a Truss hitting a roof, 

978
00:52:51,280 --> 00:52:53,720
right? 
I mean, the house may not get 

979
00:52:53,720 --> 00:52:56,240
totaled, but I mean, we absorb 
some damage. 

980
00:52:56,240 --> 00:53:01,680
And I mean I know a guy like 7 
houses down, brand new house is 

981
00:53:02,040 --> 00:53:04,320
I mean a roof went through his 
roof. 

982
00:53:04,720 --> 00:53:06,560
Wow. 
So like, he had to replace his 

983
00:53:06,560 --> 00:53:09,840
whole roof now that his house 
was OK because it hit the garage

984
00:53:09,880 --> 00:53:13,440
and it's not like water came in,
but like, makes you think about 

985
00:53:13,440 --> 00:53:15,560
some things. 
That is definitely the first 

986
00:53:15,560 --> 00:53:18,720
time I've heard the term a roof 
went through a. 

987
00:53:19,000 --> 00:53:21,160
Roof. 
First time I thought I'd say I I

988
00:53:21,160 --> 00:53:22,920
didn't even think it was a 
possibility. 

989
00:53:23,360 --> 00:53:26,480
The Tornadoes are no joke. 
Yeah, wow. 

990
00:53:27,760 --> 00:53:33,000
There was a roof Truss that was,
I mean, I don't know, it must 

991
00:53:33,000 --> 00:53:37,520
have been thrown 400 yards. 
Wow, it was wild. 

992
00:53:38,040 --> 00:53:39,760
Like a big ass. 
Roof Truss. 

993
00:53:39,920 --> 00:53:41,560
Wow. 
So that's when. 

994
00:53:41,560 --> 00:53:44,080
I nature wins. 
That's what I learned. 

995
00:53:44,160 --> 00:53:48,200
If you ever like, think you can 
beat nature, ocean, tornado, any

996
00:53:48,200 --> 00:53:50,920
of that stuff, you can't. 
No, no, you, you. 

997
00:53:51,080 --> 00:53:54,640
Best to avoid those situations. 
Yeah, yeah. 

998
00:53:54,840 --> 00:53:57,560
You want to talk about 
Alexander's at all? 

999
00:53:57,560 --> 00:54:00,240
No is a fine answer. 
But I think it's kind of one of 

1000
00:54:00,240 --> 00:54:03,520
the more interesting ideas that 
you and I have talked about over

1001
00:54:03,520 --> 00:54:06,600
the past year. 
And I happen to think it's if 

1002
00:54:06,600 --> 00:54:09,560
you're going into a recession, 
there aren't a whole lot of 

1003
00:54:09,560 --> 00:54:11,160
tenants that are better than 
Mike Bloomberg. 

1004
00:54:12,280 --> 00:54:15,640
Yes. 
So Alexander's is a, well, Alex 

1005
00:54:16,240 --> 00:54:21,000
is a wreath that's that owns a 
Bloomberg building in New York 

1006
00:54:21,000 --> 00:54:26,960
City and they have a triple net 
lease that runs to 2040. 

1007
00:54:27,080 --> 00:54:31,280
So that's 15 years. 
And there are these really nice 

1008
00:54:31,360 --> 00:54:35,360
annual escalators in that lease.
It kind of like every five 

1009
00:54:35,360 --> 00:54:40,520
years, what it kind of works out
to like 2.8% annual escalation. 

1010
00:54:41,000 --> 00:54:44,720
And it's a true triple net lease
where the expenses, you know, 

1011
00:54:44,720 --> 00:54:49,080
Bloomberg, the tenant absorbs 
all the expense increases and 

1012
00:54:49,080 --> 00:54:52,520
you're truly getting like 
inflation kind of protected on 

1013
00:54:52,800 --> 00:54:57,160
Bloomberg as a tenant really. 
And that runs to 20/20/40. 

1014
00:54:57,680 --> 00:55:02,000
And also owns a multi family out
in Queens in a place called 

1015
00:55:02,000 --> 00:55:04,400
Regal Park. 
It owns a shopping center out in

1016
00:55:04,440 --> 00:55:08,520
right next to it on the bottom 
that that has a Costco, which is

1017
00:55:08,520 --> 00:55:12,200
probably the most intense Costco
that I've ever been to. 

1018
00:55:12,440 --> 00:55:14,880
I'm talking about like, get 
ready to throw some elbows. 

1019
00:55:17,400 --> 00:55:21,920
That's quite a statement. 
The most intense Costco is kind 

1020
00:55:21,920 --> 00:55:25,080
of a scary place to think about.
Speaking. 

1021
00:55:25,240 --> 00:55:27,600
Which that's not. 
Speaking with someone. 

1022
00:55:27,600 --> 00:55:30,280
Sounds like you need to take a 
Valium before you go there. 

1023
00:55:33,640 --> 00:55:37,280
Speaking, which someone did, did
challenge me to a fight like and

1024
00:55:37,280 --> 00:55:40,480
the cashiers flying a few years 
back and I've kind of like. 

1025
00:55:40,480 --> 00:55:42,880
Doesn't shock me man, people get
crazy. 

1026
00:55:44,400 --> 00:55:45,880
Kind of like what are we doing 
here? 

1027
00:55:47,640 --> 00:55:50,880
So now the downside of this 
whole thing is they have a 

1028
00:55:50,880 --> 00:55:54,640
relationship with Vornado that 
theoretically could be a 

1029
00:55:54,640 --> 00:55:56,400
misallocation of interests, 
right? 

1030
00:55:56,400 --> 00:56:00,320
Or adverse incentives. 
Is that fair to say? 

1031
00:56:01,080 --> 00:56:04,640
I think that's what it would 
appear at first glance. 

1032
00:56:05,080 --> 00:56:11,000
But I think that I think that 
based on 4 decades of what's 

1033
00:56:11,000 --> 00:56:15,200
important is that Fornado owns 
32 or 33% of the shares of 

1034
00:56:15,240 --> 00:56:17,520
Alexander, right? 
So this should be kind of 

1035
00:56:17,520 --> 00:56:20,560
thought as like a public sub of 
of Fornado. 

1036
00:56:21,040 --> 00:56:25,440
But Steven Roth and you know, 
Interstate and Steven Roth and 

1037
00:56:25,440 --> 00:56:30,320
some of the major shareholders, 
Alexander, they own a lot more 

1038
00:56:30,760 --> 00:56:33,520
of Alexander then they own for 
NATO. 

1039
00:56:33,720 --> 00:56:37,400
So I would say that your 
interests like Stephen Roth, the

1040
00:56:37,400 --> 00:56:41,800
CEO of Ornado is actually more 
like you got better protection, 

1041
00:56:41,800 --> 00:56:44,000
get more alignment of interest 
because he owns more of 

1042
00:56:44,040 --> 00:56:46,400
Alexander than he owns of 
Ornado. 

1043
00:56:46,600 --> 00:56:50,000
And there was always like a 
persistent fear that, you know, 

1044
00:56:50,000 --> 00:56:54,040
for NATO in a market downturn, 
the moment like COVID will try 

1045
00:56:54,040 --> 00:56:57,280
to do a take under of 
Alexander's. 

1046
00:56:57,600 --> 00:57:02,480
My argument is kind of, hey, you
know, we've experienced the GFC,

1047
00:57:02,760 --> 00:57:06,040
we've experienced COVID. 
If there was like a time for 

1048
00:57:06,040 --> 00:57:09,840
Vornado to optimistically take 
this under and acquire this 

1049
00:57:09,840 --> 00:57:12,880
company, they probably would 
have done it, you know, a long 

1050
00:57:12,880 --> 00:57:16,040
time ago. 
And there's actually a really 

1051
00:57:16,040 --> 00:57:18,120
interesting Trump connection to 
this company. 

1052
00:57:18,280 --> 00:57:21,560
Back in the 80s, you know, 
Donald Trump actually owned a 

1053
00:57:21,560 --> 00:57:23,440
good check of a company, I 
believe 20%. 

1054
00:57:23,840 --> 00:57:26,320
And then, you know, Stephen Roth
was the other big shareholder. 

1055
00:57:26,320 --> 00:57:29,240
It was a department store that 
owned a lot of real estate, 

1056
00:57:29,680 --> 00:57:32,600
including a whole city block 
where the Bloomer Tower is 

1057
00:57:32,600 --> 00:57:34,280
today. 
And of course, Donald Trump, you

1058
00:57:34,280 --> 00:57:37,760
know, famous, we filed for 
bankruptcy in the early 90s and 

1059
00:57:37,760 --> 00:57:40,680
then and then Stephen Brock took
control of this complete. 

1060
00:57:40,960 --> 00:57:44,200
So Alexander has a very 
impressive corporate history 

1061
00:57:44,200 --> 00:57:47,720
where if you start kind of like 
you think about Sears and Macy's

1062
00:57:47,720 --> 00:57:49,720
and all these department stores 
that own a lot of real estate, 

1063
00:57:49,960 --> 00:57:53,640
this is an example of a 
department store asset value 

1064
00:57:53,640 --> 00:57:57,040
play that actually succeeded. 
And it's so successful that it's

1065
00:57:57,040 --> 00:58:02,520
roughly A-47 bagger total return
from 1992 when Stephen Roth took

1066
00:58:02,560 --> 00:58:05,920
control of Alexander. 
What they've done over time is 

1067
00:58:05,920 --> 00:58:08,680
that it's really important to 
like understand the corporate 

1068
00:58:08,680 --> 00:58:11,560
history because I think at first
glance people could say all this

1069
00:58:11,560 --> 00:58:14,240
misalignment interest, you run 
the risk of this being taken 

1070
00:58:14,240 --> 00:58:16,960
under. 
If anything, what they've done 

1071
00:58:17,000 --> 00:58:22,960
is that in I think like 2012 or 
2013 might have been 2011 

1072
00:58:22,960 --> 00:58:27,120
sometime there over a decade 
ago, they sold a shopping center

1073
00:58:27,120 --> 00:58:31,200
to to one of the more reads for 
$750 million and paid out a 

1074
00:58:31,200 --> 00:58:33,520
special dividend that was like 
$122. 

1075
00:58:33,760 --> 00:58:36,240
And the stock today is around 
200 bucks, right? 

1076
00:58:36,400 --> 00:58:41,080
So there's a corporate history 
of Stephen Roth and Copley not 

1077
00:58:41,160 --> 00:58:45,480
abusing this kind of you know, 
public sub relationship. 

1078
00:58:45,680 --> 00:58:47,720
You know, if you look at the 
matching fees that they charge 

1079
00:58:47,720 --> 00:58:50,960
to each other, it's very fair. 
But I think generally it's been 

1080
00:58:50,960 --> 00:58:54,480
managed very well in my opinion.
And there has been a long 

1081
00:58:54,480 --> 00:58:58,640
corporate history of them 
selling kind of non core assets 

1082
00:58:59,000 --> 00:59:01,760
and we paying out special 
dividends, returning it to 

1083
00:59:01,760 --> 00:59:04,800
shareholders. 
So, so you know that there was 

1084
00:59:04,800 --> 00:59:08,520
122 dollars special dividend in 
over a decade ago. 

1085
00:59:08,760 --> 00:59:12,000
More recently they sold a 
development parcel next to that 

1086
00:59:12,000 --> 00:59:15,200
Costco for I believe $73 
million. 

1087
00:59:15,520 --> 00:59:18,520
And then more recently there 
were two shopping centers in 

1088
00:59:18,520 --> 00:59:21,600
Regal Park. 
There's Regal 1, which you know 

1089
00:59:21,880 --> 00:59:25,560
is a much older David 70 year 
old shopping center. 

1090
00:59:25,560 --> 00:59:28,040
And the Regal 2 was built in 
2009. 

1091
00:59:28,400 --> 00:59:31,080
And what they've done is that 
they strategically, they try to 

1092
00:59:31,080 --> 00:59:34,120
make both shopping centers work 
and Regal 1. 

1093
00:59:34,160 --> 00:59:36,760
Frankly, there's just like too 
much retail, right? 

1094
00:59:36,760 --> 00:59:39,400
With a trend of like e-commerce 
and whatnot, there's just like 

1095
00:59:39,400 --> 00:59:41,360
too much retail. 
They don't need Regal one, just 

1096
00:59:41,360 --> 00:59:43,800
not competitive enough. 
They actually got a really good 

1097
00:59:43,800 --> 00:59:47,880
tenant, IKEA in there in their 
urban concept and that didn't 

1098
00:59:47,880 --> 00:59:49,160
work. 
So they should teach. 

1099
00:59:49,160 --> 00:59:53,320
We decided to essentially move 
all the tenant from Regal 1 to 

1100
00:59:53,320 --> 00:59:57,280
Regal 2. 
Now Regal 2 is 9798%, you know, 

1101
00:59:57,320 --> 01:00:00,880
occupied. 
It's got a tenner roster of, you

1102
01:00:01,120 --> 01:00:05,160
know, Burlington and I believe 
by the Marshalls of TJ Maxx with

1103
01:00:05,160 --> 01:00:06,200
Costco. 
Marshalls. 

1104
01:00:06,800 --> 01:00:09,520
Yeah. 
You got Costco, Kohl's, Best 

1105
01:00:09,520 --> 01:00:12,920
Buy, Marshalls in Burlington is 
what's listed in the 10K. 

1106
01:00:13,320 --> 01:00:16,760
And then you got, you know, on 
the ground floor, your Chipotle,

1107
01:00:16,800 --> 01:00:19,440
your restaurant concepts. 
It's got a really nice roster. 

1108
01:00:19,760 --> 01:00:24,080
And it's also very important 
that this is located all this is

1109
01:00:24,080 --> 01:00:27,920
located it right, You know, such
you right next to the subway 

1110
01:00:27,920 --> 01:00:31,920
station in Regal Park. 
There's just a ton of density 

1111
01:00:32,200 --> 01:00:34,640
around, you know, both of the 
shopping centers. 

1112
01:00:34,680 --> 01:00:37,560
And they're one of those few 
exceptions that have between the

1113
01:00:37,560 --> 01:00:40,920
two shopping centers. 
They have 2005, roughly 2500 

1114
01:00:40,920 --> 01:00:43,680
parking lots and clinks. 
When you think about this, what 

1115
01:00:43,680 --> 01:00:46,120
has happened is that they have 
two shopping centers that were 

1116
01:00:46,120 --> 01:00:49,000
kind of competing each other for
business and they decide 

1117
01:00:49,000 --> 01:00:52,480
strategic, which is shut down 
Regal 1 and stop, you know, 

1118
01:00:52,480 --> 01:00:55,920
utilizing it as a retail center.
Now you just kind of like 

1119
01:00:55,920 --> 01:00:58,760
combined, they used to be 
roughly 1,000,000 square foot of

1120
01:00:58,760 --> 01:01:01,320
space. 
You essentially move like third,

1121
01:01:01,360 --> 01:01:05,360
you know, 1/3 of that space and 
that so, so it's like how much 

1122
01:01:05,360 --> 01:01:11,200
is Regal 1 worth? 
Regal 1 is 5 acres that sits on 

1123
01:01:11,200 --> 01:01:15,440
top of a subway station in 
Queens where they could 

1124
01:01:15,440 --> 01:01:18,200
probably, we don't know the 
exact zoning, but probably think

1125
01:01:18,200 --> 01:01:20,480
they could probably built 15 
stories on it. 

1126
01:01:20,480 --> 01:01:24,880
And we've estimated by our math 
a range of 150 million to $200 

1127
01:01:24,880 --> 01:01:28,920
million of value, right. 
So this is an asset that is 

1128
01:01:28,920 --> 01:01:33,440
likely losing money, have 
negative NOI, but actually is 

1129
01:01:33,440 --> 01:01:37,040
worth, you know, somewhere 
between 150 to $200 million as a

1130
01:01:37,720 --> 01:01:41,000
residential development 5 acres 
right above subway station. 

1131
01:01:41,320 --> 01:01:44,520
And a politically we talk about 
how tough it is to get zoning 

1132
01:01:44,720 --> 01:01:46,760
politically. 
Like if this one person who 

1133
01:01:46,760 --> 01:01:51,280
could like get the city to kind 
of zone to kind of their will, 

1134
01:01:51,280 --> 01:01:53,720
it's probably Stephen Rothman 
tornado New York City. 

1135
01:01:54,000 --> 01:01:57,680
So this is an asset that's 
probably losing 5 billion a year

1136
01:01:57,840 --> 01:02:00,480
because of private taxes and 
just expenses that's worth like 

1137
01:02:00,480 --> 01:02:03,360
150 to $200 million that that 
the markets like totally 

1138
01:02:03,360 --> 01:02:05,920
overlooking. 
This is what like what kind of 

1139
01:02:05,920 --> 01:02:08,560
bothers me sometime is that 
like, like it wasn't that long 

1140
01:02:08,560 --> 01:02:12,880
ago when doctors and lawyers 
were buying triple net lease CD 

1141
01:02:12,880 --> 01:02:16,240
s s and they were buying them 
for like 4% cap rate, 5% cap 

1142
01:02:16,240 --> 01:02:18,920
rate. 
And here you could kind of buy 

1143
01:02:18,920 --> 01:02:22,120
probably one of the best assets 
with the 15 year, you know, 

1144
01:02:23,520 --> 01:02:25,640
really 14 because there's like 
one year free rent. 

1145
01:02:25,920 --> 01:02:28,760
You know, like you got Bloomberg
as your tenant. 

1146
01:02:28,760 --> 01:02:30,520
It's a true triple net lease, 
right? 

1147
01:02:30,520 --> 01:02:32,600
One of the best credits. 
And to kind of what you were 

1148
01:02:32,600 --> 01:02:36,640
saying, if we are going into 
this recessionary environment, 

1149
01:02:36,800 --> 01:02:39,120
you probably want Bloomberg as 
your tenant. 

1150
01:02:39,120 --> 01:02:42,080
And also like people sometimes 
have, what if I, Bloomberg 

1151
01:02:42,080 --> 01:02:44,920
decide to leave that this is, 
you know, just so that everybody

1152
01:02:44,920 --> 01:02:48,520
know, this is the Bloomberg 
headquarter where they tape some

1153
01:02:48,520 --> 01:02:52,320
of the Bloomberg TV shows. 
So this is not some satellite 

1154
01:02:52,320 --> 01:02:54,560
office. 
This is their global 

1155
01:02:54,600 --> 01:02:57,400
headquarters where it, if they 
got to cut office space 

1156
01:02:57,400 --> 01:03:00,200
somewhere else, they'll probably
cut it elsewhere in satellite. 

1157
01:03:00,360 --> 01:03:03,320
They'll probably consolidate 
spaces into this global 

1158
01:03:03,320 --> 01:03:05,320
headquarter. 
And Bloomberg just came out like

1159
01:03:05,320 --> 01:03:08,280
whether like you think is 
office, you know, how office is 

1160
01:03:08,280 --> 01:03:10,760
going to fare. 
Like at this point, it's really 

1161
01:03:10,760 --> 01:03:15,160
a corporate bond of Bloomberg. 
And today, you could probably 

1162
01:03:15,160 --> 01:03:19,160
buy this at just under 9% 
dividend yield. 

1163
01:03:19,160 --> 01:03:22,880
They have $400 million of cash 
on the balance sheet and which 

1164
01:03:22,880 --> 01:03:26,480
is called like roughly like 40% 
of the market cap. 

1165
01:03:26,480 --> 01:03:29,360
Now they do have some mortgages 
that are coming due that they'll

1166
01:03:29,360 --> 01:03:33,200
use that cash to pay down some 
of those mortgages, but just the

1167
01:03:33,960 --> 01:03:39,360
future Rep payment net of 
expenses is like 30% higher than

1168
01:03:39,360 --> 01:03:41,800
like the market cap. 
And then you make all these 

1169
01:03:41,800 --> 01:03:45,120
adjustments and you're also 
getting paid 9% to kind of wait,

1170
01:03:45,360 --> 01:03:47,520
right? 
And then if they sell Regal one,

1171
01:03:47,760 --> 01:03:51,640
there could possibly be a, you 
know, they may pay out a special

1172
01:03:51,640 --> 01:03:54,160
dividend. 
And in a weird, bizarre way, the

1173
01:03:54,160 --> 01:03:58,400
stock is also like got like 9 
days or short interest in it. 

1174
01:03:58,400 --> 01:04:01,240
Like I don't know why anyone 
will want to short the stock, 

1175
01:04:01,600 --> 01:04:05,440
but I think that, you know, 
they're paying a 9% annual carry

1176
01:04:05,440 --> 01:04:09,920
to short the stock and then if 
they sell Regal 1400 fifty $200 

1177
01:04:09,920 --> 01:04:12,880
million and payout special 
dividend because they have to do

1178
01:04:12,880 --> 01:04:16,640
the re tax laws. 
Like that's not a pleasant 

1179
01:04:16,640 --> 01:04:18,120
experience for the short 
sellers. 

1180
01:04:18,160 --> 01:04:21,960
We certainly like Alexander, you
know, for the fundamentals, for 

1181
01:04:21,960 --> 01:04:26,320
the current dividend yield, for 
the asset quality that they have

1182
01:04:26,680 --> 01:04:29,720
and also for like this short 
term dynamic of like, you know, 

1183
01:04:29,720 --> 01:04:31,880
the short sellers like wanting 
to short this and then the 

1184
01:04:31,960 --> 01:04:34,600
potentially could be, you know, 
a special dividend from the 

1185
01:04:34,600 --> 01:04:38,200
asset sale where they may 
realize a decent chuckle capital

1186
01:04:38,200 --> 01:04:40,880
gain and then they have to pay 
that out in a special dividend. 

1187
01:04:41,200 --> 01:04:45,640
Does a REIT like this ever 
partake in its own? 

1188
01:04:45,640 --> 01:04:50,360
Would they ever JV with somebody
to keep Rego One and let that 

1189
01:04:50,360 --> 01:04:54,200
person develop it or does it 
just make more sense to just 

1190
01:04:54,200 --> 01:04:56,760
sell it, get it off the books 
and distribute the cash? 

1191
01:04:57,520 --> 01:05:01,040
It does make sense to you JV it 
and then where you know they'll 

1192
01:05:01,040 --> 01:05:04,200
just contribute the land and 
then they'll contribute the land

1193
01:05:04,200 --> 01:05:07,320
and they won't put up any more 
equity capital or they'll just 

1194
01:05:07,320 --> 01:05:10,720
put up a small amount of equity 
capital and the other JV partner

1195
01:05:10,720 --> 01:05:12,760
is responsible. 
So that does make sense. 

1196
01:05:13,040 --> 01:05:16,840
But on the on the Ernie's call, 
in the Ernie's call, Stephen 

1197
01:05:16,840 --> 01:05:20,560
Roth, the CEO of NEDO said that 
he who like to sell off what 

1198
01:05:20,560 --> 01:05:23,880
like you painted it this utopian
vision where everything gets 

1199
01:05:23,880 --> 01:05:28,080
sold off leading just behind the
Bloomberg building with like a, 

1200
01:05:28,720 --> 01:05:32,160
you know, by the time that done 
probably a 1213 year, you know, 

1201
01:05:32,160 --> 01:05:34,040
lease term on the Bloomberg 
building. 

1202
01:05:34,400 --> 01:05:37,720
And you know, depending on who 
you ask, I think some of the 

1203
01:05:37,720 --> 01:05:41,080
reach specific investors are, 
you know, like we like some 

1204
01:05:41,080 --> 01:05:44,480
diverse diversification, but 
then like there's probably a lot

1205
01:05:44,480 --> 01:05:47,200
of doctors and lawyers out there
who would love to own that, 

1206
01:05:47,280 --> 01:05:48,800
right? 
Who you're like, oh, you got a 

1207
01:05:48,800 --> 01:05:51,680
single asset and Bloomberg is 
your tenant and there's like no 

1208
01:05:51,680 --> 01:05:54,960
other headaches like that could 
be very, very attractive to your

1209
01:05:54,960 --> 01:05:58,840
retail shareholder base. 
Yeah. 

1210
01:05:59,440 --> 01:06:00,560
Yeah. 
Yeah, I don't know. 

1211
01:06:00,560 --> 01:06:02,360
It was interesting. 
It was interesting to listen to 

1212
01:06:02,360 --> 01:06:05,000
the earnings call when he was 
basically like, look, this 

1213
01:06:05,000 --> 01:06:07,320
thing's too cheap and we're 
going to do something about it. 

1214
01:06:07,320 --> 01:06:09,280
Yeah, yeah. 
No, I think that's when you 

1215
01:06:09,280 --> 01:06:10,760
pinged me. 
I think you were like, I know 

1216
01:06:10,760 --> 01:06:12,920
that you I've talked to you 
about Alexander's before. 

1217
01:06:12,920 --> 01:06:14,440
You should listen to this 
earnings call. 

1218
01:06:14,440 --> 01:06:17,800
And then I was like, yeah, yeah,
he does seem motivated. 

1219
01:06:18,200 --> 01:06:21,200
Yeah. 
I mean it is flat out coming out

1220
01:06:21,200 --> 01:06:23,840
and say this is very cheap and 
we got to do something about 

1221
01:06:23,840 --> 01:06:25,560
that. 
Yeah. 

1222
01:06:25,960 --> 01:06:27,520
Yeah. 
So why is it cheap? 

1223
01:06:27,760 --> 01:06:31,960
Like what's the real bear 
argument here that what, 53% of 

1224
01:06:31,960 --> 01:06:35,680
the revenues from Bloomberg and 
it's office and you don't want 

1225
01:06:35,680 --> 01:06:38,080
that? 
Is that like the most valid 

1226
01:06:38,080 --> 01:06:40,280
pushback? 
I think the bears probably 

1227
01:06:40,280 --> 01:06:44,480
looking at it and thinking you, 
you got this like so they have 

1228
01:06:44,480 --> 01:06:48,560
$400 million of cash and they 
have I think like roughly 1/2 a 

1229
01:06:48,560 --> 01:06:51,240
billion dollars of maturity this
year, right? 

1230
01:06:51,640 --> 01:06:55,400
And I meant there's like that 
Costco shopping center that's 

1231
01:06:55,400 --> 01:06:58,280
got tremendous amount of value 
that's worth $400 million. 

1232
01:06:58,280 --> 01:07:01,240
It's got 200 roughly $200 
million of mortgages on it, 

1233
01:07:01,280 --> 01:07:02,880
right. 
So I think the bear is kind of 

1234
01:07:02,880 --> 01:07:07,280
thinking, OK, you know, the 
dividends like not sustainable, 

1235
01:07:07,280 --> 01:07:08,480
they're going to have to cut 
that. 

1236
01:07:08,480 --> 01:07:12,080
And then the mortgages, right, 
The mortgages that there's like 

1237
01:07:12,280 --> 01:07:14,800
near term, you know, mortgage 
maturity. 

1238
01:07:15,800 --> 01:07:18,760
And then I'm kind of thinking, 
well, so one thing that that 

1239
01:07:18,760 --> 01:07:22,000
listeners should know is that 
they're paying a $18.00 per 

1240
01:07:22,000 --> 01:07:25,280
share dividend, like what they 
could potentially sustainably 

1241
01:07:25,280 --> 01:07:29,320
pay right now probably is in 
that $1314.00 range. 

1242
01:07:29,880 --> 01:07:33,000
But Bill and I have talked in my
perception is that, well, they 

1243
01:07:33,000 --> 01:07:35,440
know they got asset sales in the
pipeline. 

1244
01:07:35,440 --> 01:07:37,760
So they'll probably keep the 
payout at that amount. 

1245
01:07:38,040 --> 01:07:40,120
And then they may potentially 
even pay like the special 

1246
01:07:40,120 --> 01:07:42,120
dividend when they sell Regal. 
What? 

1247
01:07:42,480 --> 01:07:45,080
And then I think the bear is 
kind of thinking like like a lot

1248
01:07:45,080 --> 01:07:48,320
of times the bit the bears are 
thinking, OK, if you got near 

1249
01:07:48,320 --> 01:07:53,240
term mortgage maturity and you 
got like kind of you know, a 

1250
01:07:53,240 --> 01:07:56,440
payout ratios that above 100%, 
like that's a pretty good setup 

1251
01:07:56,440 --> 01:07:59,640
for short, right? 
Yeah, your chase goes higher and

1252
01:07:59,640 --> 01:08:02,360
if it's retail that owns that, 
your dividend yield goes down. 

1253
01:08:03,160 --> 01:08:04,760
Yeah, I could see that. 
Yeah. 

1254
01:08:05,040 --> 01:08:08,000
But then I don't think so. 
I don't think like they really 

1255
01:08:08,000 --> 01:08:14,760
kind of look at the Regal 1 as 
an asset and how that's actually

1256
01:08:14,760 --> 01:08:19,439
from a dividend coverage ratio 
perspective that it's, it's 

1257
01:08:19,439 --> 01:08:22,240
actually have negative 
contribution. 

1258
01:08:22,319 --> 01:08:24,920
It's got negative contribution, 
but it's worth a ton of money, 

1259
01:08:25,040 --> 01:08:26,640
right? 
And and I don't think like the 

1260
01:08:26,640 --> 01:08:28,399
bear. 
The other reason why this is 

1261
01:08:28,399 --> 01:08:30,520
kind of unfollow is that it 
doesn't have its own earnings 

1262
01:08:30,520 --> 01:08:32,720
call. 
It doesn't have its own earnings

1263
01:08:32,720 --> 01:08:35,680
call. 
It doesn't breakout performance 

1264
01:08:35,760 --> 01:08:38,720
at the asset level. 
So you kind of have to, I mean 

1265
01:08:38,720 --> 01:08:40,880
that's kind of what our clients 
pay us to do, right? 

1266
01:08:40,880 --> 01:08:44,720
Our clients pay us because we 
could kind of scrub it, we could

1267
01:08:44,720 --> 01:08:47,720
go do that extra work. 
And to a certain extent like we 

1268
01:08:47,720 --> 01:08:49,960
have the advantage because we're
local and we know these assets 

1269
01:08:49,960 --> 01:08:53,000
pretty well, kind of like when 
we did the Vornado walk in New 

1270
01:08:53,000 --> 01:08:56,279
York City, right? 
Like that is like a local 

1271
01:08:56,319 --> 01:08:59,399
advantage to to know these 
assets, you know, just by me 

1272
01:08:59,399 --> 01:09:02,840
being there and getting 
challenged to a fight by another

1273
01:09:02,840 --> 01:09:07,760
customer there, like, like 
knowing how busy that center is,

1274
01:09:07,760 --> 01:09:10,040
like, like that's an edge, you 
know, that's on the edge in 

1275
01:09:10,040 --> 01:09:13,880
investing and. 
So, yeah, to your point, it's 

1276
01:09:13,880 --> 01:09:15,880
one thing when you hear on the 
earnings call, these are on the 

1277
01:09:15,880 --> 01:09:18,560
corner of Main and Main. 
Yeah, that's one thing. 

1278
01:09:18,560 --> 01:09:20,439
And then you're like, well, of 
course he's going to say that. 

1279
01:09:20,439 --> 01:09:23,359
Who's going to say I own, you 
know, a shopping center that's 

1280
01:09:23,359 --> 01:09:27,960
basically like dilapidated at 
the corner of, you know, AC 

1281
01:09:28,120 --> 01:09:31,760
class, right? 
So, so yeah, to be able to go 

1282
01:09:31,760 --> 01:09:34,240
there and say no, this is 
actually true. 

1283
01:09:34,399 --> 01:09:39,240
Is yeah, yeah, it's different. 
And we know like, like my family

1284
01:09:39,240 --> 01:09:41,359
on the private side, we looked 
at a lot of, you know, my 

1285
01:09:41,359 --> 01:09:43,319
younger brother, look at a lot 
of private deals. 

1286
01:09:43,319 --> 01:09:45,479
I mean, we don't have the 
capability to take down 

1287
01:09:45,479 --> 01:09:48,560
something of this size, but 
we're constantly like my younger

1288
01:09:48,560 --> 01:09:52,680
brother's constantly getting pen
to look at private deals being 

1289
01:09:52,680 --> 01:09:55,920
shop in the market. 
So we're, you know, we're very 

1290
01:09:55,920 --> 01:10:00,400
conscious of how much, you know,
these assets go for and what a 

1291
01:10:00,400 --> 01:10:03,240
developer will pay for on a 
press square foot basis. 

1292
01:10:03,480 --> 01:10:05,720
You know, in the even in this 
environment, I mean, we know 

1293
01:10:05,720 --> 01:10:09,720
that there's an asset across the
street from Regal one that 

1294
01:10:09,720 --> 01:10:13,720
they're asking, I believe by 70 
or $80 million and it 

1295
01:10:13,720 --> 01:10:16,280
essentially works essentially 
work out to what two $300.00 per

1296
01:10:16,280 --> 01:10:19,640
square foot buildable, right? 
So like we're very like in the 

1297
01:10:19,640 --> 01:10:24,160
weeds in this one. 
And there's also a trend of on 

1298
01:10:24,240 --> 01:10:28,600
Queens Blvd. where this these 
assets sit, there's a trend of 

1299
01:10:28,680 --> 01:10:32,480
low rise retail being knocked 
down to build these high rise 

1300
01:10:32,480 --> 01:10:33,720
residential. 
It's like part of the 

1301
01:10:33,720 --> 01:10:35,760
densification, right? 
It's like, why do I feel 

1302
01:10:35,760 --> 01:10:37,800
comfortable owning that retail 
there? 

1303
01:10:38,080 --> 01:10:42,280
It's because by by the way, this
is the Queens Blvd. like 

1304
01:10:42,280 --> 01:10:45,240
literally about a mile down. 
Remember coming to America at 

1305
01:10:45,240 --> 01:10:50,760
the movie with Eddie, Eddie 
Murphy, right, So that McDougal,

1306
01:10:50,760 --> 01:10:54,520
whatever it was called, right, 
The burger choke that was filmed

1307
01:10:54,520 --> 01:10:56,760
in Queens about a mile down, 
right? 

1308
01:10:56,800 --> 01:11:01,200
And that burger joint has now 
has been knocked down and they 

1309
01:11:01,200 --> 01:11:05,720
built like 7 like it's been 
built like Max to the curb line,

1310
01:11:05,800 --> 01:11:08,080
right? 
Like it doesn't have a parking 

1311
01:11:08,080 --> 01:11:10,440
lot anymore. 
So like like a burger joint with

1312
01:11:10,440 --> 01:11:13,120
a drive through and everything 
has been knocked down to be 

1313
01:11:13,120 --> 01:11:16,520
developed into like a seven O 8 
story residential. 

1314
01:11:16,520 --> 01:11:18,560
That's like built fully to a 
lot, right? 

1315
01:11:18,560 --> 01:11:21,360
Like that's just like something,
you know, so that people can 

1316
01:11:21,360 --> 01:11:26,000
understand, like retail spaces 
keep being convert it into 

1317
01:11:26,480 --> 01:11:29,280
denser high rise residential in 
that area. 

1318
01:11:29,280 --> 01:11:32,640
So again, one of the best like 
the scarcity mindset, right? 

1319
01:11:32,640 --> 01:11:35,080
One of the best mindset. 
They like what are best mental 

1320
01:11:35,080 --> 01:11:38,480
models for investing in real 
estate is that we see in the 

1321
01:11:38,480 --> 01:11:42,360
asset class where over time 
there's less and less of it. 

1322
01:11:42,920 --> 01:11:45,600
That's usually like a pretty 
good asset class to own, right? 

1323
01:11:45,600 --> 01:11:47,400
And this is like the bold pieces
for. 

1324
01:11:47,400 --> 01:11:49,440
Like capital cycle theory. 
Yeah. 

1325
01:11:49,560 --> 01:11:52,720
What I mean like it could be 
it's not just capital cycle, 

1326
01:11:52,720 --> 01:11:55,120
right? 
There's like a secular decline 

1327
01:11:55,120 --> 01:11:57,400
in your supply, right? 
Like. 

1328
01:11:57,440 --> 01:12:01,000
Well, the reason that I equated 
it is I attribute the secular 

1329
01:12:01,000 --> 01:12:04,800
decline to money coming out of 
an industry, right, as opposed 

1330
01:12:04,800 --> 01:12:08,400
to coming in, which would add 
supply, supply, supply. 

1331
01:12:10,560 --> 01:12:14,960
Yeah. 
So overall on Alexander, like 

1332
01:12:15,000 --> 01:12:20,680
you know, roughly high eights, 
low 9 dividend yield with like 

1333
01:12:20,680 --> 01:12:25,880
possible like an asset sale in 
the next like year for Regal 1. 

1334
01:12:25,880 --> 01:12:28,720
And then you get to own the 
Bloomberg building with a 15 

1335
01:12:28,720 --> 01:12:32,080
year triple net lease on it. 
If they sell that shopping 

1336
01:12:32,080 --> 01:12:34,880
center, they sell that apartment
building, you could potentially 

1337
01:12:34,880 --> 01:12:37,800
get like additional special 
dividends and like we kind of 

1338
01:12:37,800 --> 01:12:41,680
model it like you could buy for 
200 to two O 5 today. 

1339
01:12:42,040 --> 01:12:46,640
And in our model, like our NAV 
is like caught like 3:50 and 

1340
01:12:46,800 --> 01:12:48,520
you're collecting this dividend 
the whole time. 

1341
01:12:49,160 --> 01:12:52,280
And then there's like a bowl 
case where if they sell all the 

1342
01:12:52,280 --> 01:12:54,560
assets, just leaving the 
Bloomberg building at some 

1343
01:12:54,560 --> 01:12:58,720
point, like between like special
dividends and rent escalation in

1344
01:12:58,720 --> 01:13:01,080
the Bloomberg book, because that
lease is really interesting, 

1345
01:13:01,120 --> 01:13:03,080
right? 
They agree to that lease in the 

1346
01:13:03,080 --> 01:13:06,400
Bloomberg building last, you 
know, last year I believe. 

1347
01:13:06,920 --> 01:13:11,000
And at the time like Class A 
office rent is uncertain in New 

1348
01:13:11,000 --> 01:13:14,440
York City. 
So they have a a set of range 

1349
01:13:14,480 --> 01:13:17,600
and the range is between like 
$87.00 triple net to like one O 

1350
01:13:17,600 --> 01:13:20,160
4 right. 
And if you believe what for NATO

1351
01:13:20,160 --> 01:13:24,240
was saying that Class A office 
space is actually trending lower

1352
01:13:24,240 --> 01:13:26,640
in New York City because the 
Class B and Class C is what 

1353
01:13:26,640 --> 01:13:29,920
people don't want. 
But everyone wants Class A if 

1354
01:13:29,920 --> 01:13:33,800
the boomer at least, you know, 
gets reshark at that $104.00 

1355
01:13:33,800 --> 01:13:38,800
triple net price like this, you 
could get to a map of, you know,

1356
01:13:39,080 --> 01:13:43,400
over 400 to to the mid force. 
It's just like current dividend,

1357
01:13:43,840 --> 01:13:47,360
really high quality asset at, 
you know, a historical 47 

1358
01:13:47,360 --> 01:13:49,720
bagger. 
And then like if you own it, you

1359
01:13:49,760 --> 01:13:52,280
tell your friends that that you 
know, POTUS, right? 

1360
01:13:52,280 --> 01:13:57,760
You know, like whether you're 
like like regardless of like you

1361
01:13:57,760 --> 01:13:59,720
know, where you fall on the 
political spectrum. 

1362
01:13:59,720 --> 01:14:02,520
Like, like, it's like 
interesting cocktail hour 

1363
01:14:02,520 --> 01:14:04,600
conversation, right? 
Yeah. 

1364
01:14:05,280 --> 01:14:07,000
Yeah. 
Well, to the extent that there's

1365
01:14:07,000 --> 01:14:12,040
a lot of turmoil in the Treasury
market, I would argue that the 

1366
01:14:12,560 --> 01:14:15,560
underlying cash flows to 
Bloomberg are more sticky. 

1367
01:14:16,400 --> 01:14:19,600
So that makes them a little bit 
more likely to pay. 

1368
01:14:20,760 --> 01:14:24,640
It'll be interesting to watch, 
but I kind of like that idea, so

1369
01:14:24,640 --> 01:14:26,640
thank you for introducing it to 
me. 

1370
01:14:26,960 --> 01:14:30,480
Yeah, no problem. 
I mean, you know, we're also 

1371
01:14:30,520 --> 01:14:36,520
just finding a probably the 
busiest in terms of like event 

1372
01:14:36,520 --> 01:14:39,000
driven in the RE space. 
Like this is probably the 

1373
01:14:39,000 --> 01:14:43,400
busiest I've been. 
So like last year we had retail 

1374
01:14:43,400 --> 01:14:46,440
opportunity Investment Corp got 
bought out by Blackstone. 

1375
01:14:47,160 --> 01:14:48,840
That was a meaningful position 
for us. 

1376
01:14:48,840 --> 01:14:51,440
And then we have what do you 
call it, a Playa, which was 

1377
01:14:51,440 --> 01:14:54,440
bought out by Hyatt. 
And then this year, you know, 

1378
01:14:54,440 --> 01:14:58,240
between ankle, which has been in
the orderly liquidation for 

1379
01:14:58,240 --> 01:15:02,280
quite some time, you know, dream
residential Elm community and 

1380
01:15:02,280 --> 01:15:06,960
let these office property like 
you're starting to find, like if

1381
01:15:06,960 --> 01:15:09,840
you look at the early Buffett 
partnership, where Buffett used 

1382
01:15:09,840 --> 01:15:12,880
to be a lot of venture event 
liquidations like this is like, 

1383
01:15:13,320 --> 01:15:15,760
you know, he was doing more 
merger arms and there was like a

1384
01:15:15,760 --> 01:15:19,000
definitive price when merger arm
was like a really awesome way to

1385
01:15:19,000 --> 01:15:22,160
earn 20% a year. 
Like what we're kind of finding 

1386
01:15:22,160 --> 01:15:25,480
this year is there's a lot of 
these a lot of these REITs that 

1387
01:15:25,480 --> 01:15:30,840
are smaller and kind of orphan. 
They're like voluntarily 

1388
01:15:30,920 --> 01:15:34,800
announcing to go, you know, to 
export strategic alternative, 

1389
01:15:35,120 --> 01:15:37,120
right? 
So so here's like a perfect 

1390
01:15:37,120 --> 01:15:39,560
example like I don't think. 
Why is that interest rates going

1391
01:15:39,560 --> 01:15:42,600
up and you got a compliance 
costs and they're just kind of 

1392
01:15:42,600 --> 01:15:45,240
sub scale to be public or? 
Yeah. 

1393
01:15:45,280 --> 01:15:47,920
I mean, I think for the most 
part, when they realize that the

1394
01:15:47,920 --> 01:15:52,920
subscale, there's no real 
possibility of them becoming 

1395
01:15:52,920 --> 01:15:57,240
like a $3 billion REIT get $200 
million market cap today. 

1396
01:15:57,640 --> 01:16:01,240
And to get to 2 three billion 
where you're truly liquid and 

1397
01:16:01,240 --> 01:16:04,840
really trading like a blue chip 
beat and just can't see like a 

1398
01:16:04,840 --> 01:16:07,920
line of sight to that. 
And there's like not a lot that 

1399
01:16:07,920 --> 01:16:10,320
they could do to create a lot of
value, right? 

1400
01:16:10,320 --> 01:16:13,440
Like if you're just sitting 
there clipping coupons on like a

1401
01:16:13,440 --> 01:16:17,240
$200 million Reed it it's going 
to take a lot of years to grow 

1402
01:16:17,240 --> 01:16:19,320
into something that's a $3 
billion. 

1403
01:16:19,320 --> 01:16:22,960
So so, you know, dream 
residential is Canadian Reed, 

1404
01:16:23,360 --> 01:16:26,680
you know, very liquid. 
They came out at you know, I 

1405
01:16:26,680 --> 01:16:30,200
have a few friends who told me 
that that's cheap and I didn't 

1406
01:16:30,200 --> 01:16:32,320
pay a lot of attention to it 
because I'm like, I could buy 

1407
01:16:32,400 --> 01:16:36,600
virus, which is very high 
quality Jersey City multi family

1408
01:16:36,880 --> 01:16:39,760
at around a 6% cap rate. 
I could buy like the large cap, 

1409
01:16:39,760 --> 01:16:41,040
the mid America and the 
Camden's. 

1410
01:16:41,320 --> 01:16:46,280
And I'm like, I don't want to 
get stuck in a tiny $150 million

1411
01:16:46,280 --> 01:16:49,440
market cap re up in Canada that 
what barely trades right. 

1412
01:16:50,080 --> 01:16:53,320
But that changed when they came 
out and they announced Strategic

1413
01:16:53,320 --> 01:16:56,560
alternative and they said that 
they're going to explore 

1414
01:16:56,800 --> 01:16:59,720
Strategic Alternative. 
And then they went out and hired

1415
01:16:59,720 --> 01:17:01,800
TD Security as a financial 
advisor. 

1416
01:17:02,280 --> 01:17:05,840
And so the valuation is, and 
This is why sometimes I keep 

1417
01:17:05,840 --> 01:17:09,880
getting, I'm just like, this is 
the private price and then this 

1418
01:17:09,880 --> 01:17:12,560
is a public price. 
So even after they announce 

1419
01:17:12,720 --> 01:17:17,080
Strategic Alternative, we were 
still buying in the high 8 cap 

1420
01:17:17,080 --> 01:17:21,720
rate for like a portfolio Class 
B multifamily in Dallas, Fort 

1421
01:17:21,720 --> 01:17:24,080
Worth, Oklahoma City and 
Cincinnati. 

1422
01:17:24,720 --> 01:17:28,240
And by the way, through Twitter,
we were able to like reach out 

1423
01:17:28,240 --> 01:17:31,560
to a few people and we haunted 
down the broker who actually 

1424
01:17:31,560 --> 01:17:34,680
sold the Oklahoma City assets to
this reef. 

1425
01:17:34,800 --> 01:17:36,440
So they told us like everything,
right? 

1426
01:17:36,440 --> 01:17:38,280
They told us they're like, this 
is a vintage. 

1427
01:17:38,280 --> 01:17:41,200
This is like, you know how their
position in the sub market, This

1428
01:17:41,200 --> 01:17:44,120
is what I think, you know, the 
cap rate are for each individual

1429
01:17:44,200 --> 01:17:46,400
asset. 
And we looked at it, we're like,

1430
01:17:46,800 --> 01:17:49,680
how do you lose money buying 
multi family? 

1431
01:17:49,680 --> 01:17:52,320
Granted it's Class B. 
These are older garden style 

1432
01:17:52,480 --> 01:17:55,840
apartment buildings at 8 1/2 
percent cap rate and they're 

1433
01:17:55,840 --> 01:17:59,400
running a real process. 
I mean this, you know, running a

1434
01:17:59,400 --> 01:18:02,600
real process. 
And the company probably states 

1435
01:18:02,600 --> 01:18:07,440
that the NAV is $13 using like a
5859 cap rate. 

1436
01:18:07,880 --> 01:18:11,440
That's kind of like a bowl case.
You know, that's like a boat 

1437
01:18:11,440 --> 01:18:13,680
like Uber Bowl case for us. 
Like if they could get back on 

1438
01:18:13,680 --> 01:18:15,640
pricing, we got to be really 
happy, right? 

1439
01:18:15,920 --> 01:18:20,160
So we were behind like in the 
look like high sevens, low $8 

1440
01:18:20,160 --> 01:18:24,200
range, which corresponds to like
a mid 8 to high 8 cap rate. 

1441
01:18:24,760 --> 01:18:27,440
And we're going to see what 
they'll do the next year in 

1442
01:18:27,440 --> 01:18:29,840
terms of like running the 
process, but like we kind of 

1443
01:18:29,840 --> 01:18:35,080
like on the road to somewhere 
between like a 40 to 60% total 

1444
01:18:35,080 --> 01:18:39,840
return on, you know, buy 
multifamily, you know, in the 

1445
01:18:40,000 --> 01:18:43,600
mid to high 8% cap rate. 
That's an example of like what's

1446
01:18:43,600 --> 01:18:48,720
available in a market like today
where you talk to any of your 

1447
01:18:48,720 --> 01:18:53,040
private guys and they're like, 
wait, like you tell me, I could 

1448
01:18:53,160 --> 01:18:57,160
like buy a portfolio at a A5 cap
rate and I could flip it for 

1449
01:18:57,160 --> 01:19:00,840
somewhere between like a six and
a 6 1/2 percent, like within a 

1450
01:19:00,840 --> 01:19:03,240
year, every single one of would 
do that trade, right? 

1451
01:19:03,560 --> 01:19:08,200
So I think that's like gone 
really interesting and you know 

1452
01:19:08,320 --> 01:19:11,720
a company like Aimco which we 
did a lot of work on that's 

1453
01:19:11,720 --> 01:19:16,120
probably going to get sold for 
like with the full liquidations 

1454
01:19:16,120 --> 01:19:20,360
probably somewhere between 11 to
$12.00 range and that's traded 

1455
01:19:20,360 --> 01:19:22,920
below $8 today, right. 
So, so kind of like when you 

1456
01:19:22,920 --> 01:19:25,760
think through back to like 
Buffett's early partnership 

1457
01:19:25,760 --> 01:19:28,800
where he was doing a lot of vet 
driven and workouts, we're 

1458
01:19:28,800 --> 01:19:31,080
seeing, we're seeing a lot of 
that right now. 

1459
01:19:31,600 --> 01:19:35,080
Our own community, which used to
be known as Washington Reed. 

1460
01:19:35,200 --> 01:19:39,480
They owe mostly multi family and
I think, you know, it's kind of 

1461
01:19:39,480 --> 01:19:42,400
run its course. 
They try to be a public Reed for

1462
01:19:42,400 --> 01:19:45,560
years and it really create a lot
of shareholder value. 

1463
01:19:45,600 --> 01:19:48,000
And they've come out and 
probably announced that 

1464
01:19:48,000 --> 01:19:49,320
exploring should teach you 
alternative. 

1465
01:19:49,840 --> 01:19:52,000
And this is a heck of 
environment. 

1466
01:19:52,000 --> 01:19:55,280
This is a heck of environment 
for kind of our active strategy 

1467
01:19:55,280 --> 01:19:58,400
because we could do these event 
trivia, we do these workouts, we

1468
01:19:58,400 --> 01:20:03,240
could we could buy large cap 
blue chips, Class A self storage

1469
01:20:03,240 --> 01:20:10,440
and warehouses in that mid 6 to 
7% range we want by extremely 

1470
01:20:10,440 --> 01:20:14,200
high quality Jersey City 
multifamily, which are all high 

1471
01:20:14,200 --> 01:20:18,280
rises, high barrier to entry. 
At almost a 6% cap rate, keep 

1472
01:20:18,280 --> 01:20:21,840
underwriting a lot of these 
names and especially after all 

1473
01:20:21,840 --> 01:20:24,200
the Trump terror drama, like 
like we're just we're just 

1474
01:20:24,400 --> 01:20:28,840
seeing like what we've been 
underwriting a lot to over 20% 

1475
01:20:28,840 --> 01:20:32,240
IR and that's usually a sign 
telling us that I'm not saying 

1476
01:20:32,240 --> 01:20:34,360
like that's exactly what we're 
going to earn on them. 

1477
01:20:34,360 --> 01:20:37,240
There's no guarantees investing.
I really want to watch put that 

1478
01:20:37,240 --> 01:20:38,920
out there. 
But when you do your research 

1479
01:20:38,920 --> 01:20:42,680
and underwriting, like there has
to be a certain return level 

1480
01:20:42,680 --> 01:20:45,920
where you say this is a very at 
Target rich environment. 

1481
01:20:45,920 --> 01:20:48,880
I think the last time was this 
target rich was probably in late

1482
01:20:48,880 --> 01:20:52,320
23 when we did our first podcast
together, right? 

1483
01:20:52,680 --> 01:20:56,720
And yeah, and I've been 
something even like a Seaport 

1484
01:20:56,720 --> 01:20:59,760
entertainment, which, you know. 
Yeah, that I don't know, I don't

1485
01:20:59,760 --> 01:21:03,080
understand that one that well, 
but it's that has not traded 

1486
01:21:03,080 --> 01:21:07,800
well since the spin. 
Yeah, yeah, that is I'm. 

1487
01:21:08,560 --> 01:21:10,320
Not saying any partners with 
your boy. 

1488
01:21:10,720 --> 01:21:13,000
What's that? 
Then your partners with your 

1489
01:21:13,000 --> 01:21:14,480
boy. 
Who? 

1490
01:21:14,480 --> 01:21:17,400
Who you referring to? 
Well, I don't, I don't really 

1491
01:21:17,400 --> 01:21:21,400
want to name him on the pod, but
didn't he backstop the rights 

1492
01:21:21,400 --> 01:21:30,760
offering? 
Oh, well, I mean, yeah, OK, yes,

1493
01:21:30,760 --> 01:21:32,600
he did. 
He he he did, he did backstop 

1494
01:21:32,600 --> 01:21:35,520
the rights offering. 
I mean, heck, like if you I'll, 

1495
01:21:36,080 --> 01:21:39,440
I'll, I'll stay out of the, you 
know, the Jaro, right? 

1496
01:21:39,440 --> 01:21:42,320
You know, he's got a new 
political career, but. 

1497
01:21:42,920 --> 01:21:46,560
Well, you've been right to to 
question whether or not minority

1498
01:21:46,560 --> 01:21:49,240
shareholders and Howard Hughes 
were going to see the benefits 

1499
01:21:49,280 --> 01:21:55,520
of the asset value there, right.
I mean that that is a 

1500
01:21:55,520 --> 01:21:58,080
transaction that I don't think 
made a lot of people or a 

1501
01:21:58,080 --> 01:22:00,600
proposed transaction that I 
don't think made a lot of people

1502
01:22:00,600 --> 01:22:02,400
happy. 
Yeah, yeah. 

1503
01:22:02,480 --> 01:22:04,600
No, it's unfortunate. 
You're back in a similar saddle.

1504
01:22:06,440 --> 01:22:10,440
Yeah, no, I mean, there's 
definitely yes. 

1505
01:22:10,480 --> 01:22:14,840
And he's got equal amount of 
ownership in Seaport as Howard 

1506
01:22:14,840 --> 01:22:17,560
Hughes. 
You know what I don't understand

1507
01:22:17,560 --> 01:22:21,880
about that transaction? 
I do understand wanting to have 

1508
01:22:21,880 --> 01:22:23,840
like a clean asset story to 
tell. 

1509
01:22:23,840 --> 01:22:28,000
But, and this is maybe just me 
not understanding what's going 

1510
01:22:28,000 --> 01:22:32,960
on, but the minor league stadium
that was in, you know, I feel 

1511
01:22:32,960 --> 01:22:35,400
like that should have stayed 
part of Howard Hughes. 

1512
01:22:35,800 --> 01:22:36,960
Yeah. 
Because I think that the 

1513
01:22:36,960 --> 01:22:43,040
incentives, like having a 
reasonably priced entertainment 

1514
01:22:43,040 --> 01:22:47,360
option for the community that 
you live in, yeah, is a nice 

1515
01:22:47,360 --> 01:22:50,800
thing. 
And maybe, you know, having the 

1516
01:22:50,800 --> 01:22:53,400
incentives to have that thing 
run for profit, I think it 

1517
01:22:53,400 --> 01:22:56,040
actually detract from the asset 
value that you're providing to 

1518
01:22:56,040 --> 01:23:00,840
the community around you. 
No, I I agree and I. 

1519
01:23:02,240 --> 01:23:04,880
Not everything has to be 
optimized for the most profit 

1520
01:23:04,880 --> 01:23:06,720
possible. 
Yes, yes. 

1521
01:23:06,800 --> 01:23:07,760
No, totally. 
It is and. 

1522
01:23:07,760 --> 01:23:11,720
Sometimes I think full blown 
optimization can end up actually

1523
01:23:11,720 --> 01:23:13,600
taking value away from the 
aggregate. 

1524
01:23:14,040 --> 01:23:17,240
No, you're totally right, right?
And I thought a lot about this, 

1525
01:23:17,240 --> 01:23:21,360
right? 
Like how much value does it add?

1526
01:23:21,360 --> 01:23:25,760
Like in Brooklyn when you get a 
really nice coffee shop that 

1527
01:23:25,840 --> 01:23:28,120
makes great artisanal coffee, 
right? 

1528
01:23:28,120 --> 01:23:30,520
Like you as a landlord, it's 
always busy. 

1529
01:23:30,520 --> 01:23:32,240
It's always a very reasonable 
price. 

1530
01:23:32,880 --> 01:23:36,560
And just like the five, like 
this is where if you have 

1531
01:23:36,560 --> 01:23:40,960
control over a whole entire 
area, like your incentive is not

1532
01:23:40,960 --> 01:23:46,000
to maximize rent that you could 
charge on any specific retail 

1533
01:23:46,000 --> 01:23:50,080
tenant, right? 
It's like curating curating the 

1534
01:23:50,080 --> 01:23:55,400
best tenant that experience is. 
Yeah, the living experience. 

1535
01:23:55,400 --> 01:23:59,400
Yes, the living experience, the 
live work play experience of 

1536
01:23:59,400 --> 01:24:01,440
like a certain massive point 
community. 

1537
01:24:01,760 --> 01:24:04,320
I would say that you don't. 
I totally agree with you. 

1538
01:24:04,320 --> 01:24:07,280
It's like don't make money. 
You don't have to make money on 

1539
01:24:07,280 --> 01:24:08,800
the minor league, you know, 
team. 

1540
01:24:08,800 --> 01:24:11,040
It's like making that a cheap 
option, right? 

1541
01:24:11,280 --> 01:24:13,280
So that the families want to 
live there. 

1542
01:24:13,280 --> 01:24:15,800
It becomes like a entertainment 
option, like like there's 

1543
01:24:16,040 --> 01:24:17,600
tremendous. 
Amount then you get to bump the 

1544
01:24:17,600 --> 01:24:20,480
value of your lot because all of
a sudden it's like actually a 

1545
01:24:20,480 --> 01:24:23,360
really family friendly place and
like the value of the lots, I 

1546
01:24:23,360 --> 01:24:25,040
think is where a lot of the 
value is here. 

1547
01:24:25,040 --> 01:24:27,560
It's not like I don't know, 
that's my opinion. 

1548
01:24:28,280 --> 01:24:30,480
Well, I would argue that the 
value of the lot, right? 

1549
01:24:30,520 --> 01:24:35,440
And then in the long run, as the
lot sells off, what it does is 

1550
01:24:35,440 --> 01:24:39,360
that now you got more density. 
So I put 30 days, like I put 

1551
01:24:39,360 --> 01:24:42,520
boots on the ground over 30 days
on Howard Hughes, right? 

1552
01:24:42,520 --> 01:24:45,960
Like, like it is one of the most
exhausting company for me to own

1553
01:24:45,960 --> 01:24:47,840
in My Portfolio. 
Like over the course of my four 

1554
01:24:47,840 --> 01:24:51,560
or five years, like we've been 
out to Honolulu, we've been out 

1555
01:24:51,560 --> 01:24:54,440
to Summerland Vegas like 3 times
I think. 

1556
01:24:54,920 --> 01:24:56,480
Sounds awful. 
What's that? 

1557
01:24:57,360 --> 01:25:01,080
It sounds awful. 
I had to go to Hawaii and Texas 

1558
01:25:01,080 --> 01:25:02,640
and Vegas. 
It was. 

1559
01:25:03,000 --> 01:25:04,800
I can see why it's been 
exhausting. 

1560
01:25:06,400 --> 01:25:08,800
Well, I wasn't talking about the
trip. 

1561
01:25:08,800 --> 01:25:12,480
I was talking about the 
exhausting in terms of in the. 

1562
01:25:12,480 --> 01:25:13,880
Course of no, the amount of work
you've done I. 

1563
01:25:14,680 --> 01:25:18,280
Mean don't give me like, I love 
those boots on the ground trips,

1564
01:25:18,320 --> 01:25:21,160
experiences. 
What was exhausting was the 

1565
01:25:21,760 --> 01:25:26,640
ownership experience where, you 
know, we own it over like a full

1566
01:25:26,640 --> 01:25:29,920
five year holding period and you
have COVID in the middle. 

1567
01:25:29,920 --> 01:25:33,720
You have the Oh yeah, you know, 
the equity offering, right? 

1568
01:25:33,720 --> 01:25:36,680
You think that you were 
investing with somebody who's 

1569
01:25:36,680 --> 01:25:38,720
aligning with you. 
You're like, I'm going to be 

1570
01:25:38,720 --> 01:25:41,240
patient. 
This is a long term compounder. 

1571
01:25:41,680 --> 01:25:45,040
And then at a certain point you 
realize that it it's kind of 

1572
01:25:45,040 --> 01:25:47,200
like I'm in I'm married. 
I've been married for a long 

1573
01:25:47,200 --> 01:25:48,520
time now. 
It's kind of like when you're 

1574
01:25:48,520 --> 01:25:51,680
younger, you're dating and 
you're like, oh, this is a girl 

1575
01:25:51,680 --> 01:25:55,320
that are going to marry and at 
some point you're like, oh, I 

1576
01:25:55,320 --> 01:25:57,600
can't trust her, right. 
Yeah. 

1577
01:25:57,920 --> 01:25:59,880
And that kind of like shatters. 
Yeah. 

1578
01:26:00,120 --> 01:26:01,880
And that kind of shatters your 
world. 

1579
01:26:02,120 --> 01:26:04,000
Luckily, that's not a problem 
we're going to deal with 

1580
01:26:04,000 --> 01:26:05,520
anymore. 
That was a long time ago. 

1581
01:26:05,520 --> 01:26:09,240
But that's a kind of like when 
you give a company your trust 

1582
01:26:09,240 --> 01:26:11,800
and you say, I'm going to be 
patient. 

1583
01:26:11,800 --> 01:26:15,600
I'm going to be patient with an 
Amazon like and you go in with 

1584
01:26:15,600 --> 01:26:19,440
that mentality and then you 
realize that, hey, they that is 

1585
01:26:19,440 --> 01:26:23,000
not how they view you. 
He who shall not be named, you 

1586
01:26:23,000 --> 01:26:27,120
know, is going to like take 
advantage of you right at every 

1587
01:26:27,120 --> 01:26:29,760
turn. 
And you know what, like, I am 

1588
01:26:29,760 --> 01:26:33,680
very glad look like I, I'm very 
proud of what my team and I have

1589
01:26:33,680 --> 01:26:36,880
done because that is like the 
first instance of like Twitter 

1590
01:26:36,880 --> 01:26:39,640
activism that we ever engage in.
Like I, I don't know if you 

1591
01:26:39,640 --> 01:26:43,320
remember this, but like there 
was a, there was a tendering 

1592
01:26:43,320 --> 01:26:47,000
for, you know, shares at 60 and 
then we said like it was cheap. 

1593
01:26:47,040 --> 01:26:48,960
And then, you know, very few 
people tender. 

1594
01:26:48,960 --> 01:26:50,800
And then there was a tendering 
at 70. 

1595
01:26:51,200 --> 01:26:57,040
Like I did the math like like we
course, you know, he who shall 

1596
01:26:57,040 --> 01:27:01,160
not be named, you know, 60 with 
$65 billion, like to bring his 

1597
01:27:01,160 --> 01:27:06,280
ownership from from 30% to 38%. 
And we defended our position. 

1598
01:27:06,280 --> 01:27:09,760
So, so like I've never gone 
activists on any company, but 

1599
01:27:09,760 --> 01:27:13,640
like that was probably like the 
first instance of us like using,

1600
01:27:13,920 --> 01:27:16,360
you know, Twitter activism to 
like defend our position. 

1601
01:27:17,760 --> 01:27:20,960
So, given all that, what's so 
intriguing about Seaport? 

1602
01:27:21,560 --> 01:27:23,280
There's a couple things that 
make it super interesting. 

1603
01:27:23,280 --> 01:27:28,360
It truly has a potential to have
a lot of upside, but I'm not 

1604
01:27:28,360 --> 01:27:33,880
willing to like size it big. 
OK, and because like if you 

1605
01:27:33,880 --> 01:27:37,680
think about like if they are 
successful in repositioning this

1606
01:27:37,680 --> 01:27:43,400
company, it has like the 
potential to be a multi bagger, 

1607
01:27:43,520 --> 01:27:45,520
right? 
So that in how we makes it 

1608
01:27:45,600 --> 01:27:48,440
interesting. 
Now I think a lot of patient is 

1609
01:27:48,440 --> 01:27:51,440
needed. 
I think I I track that the 

1610
01:27:51,440 --> 01:27:55,160
seaport and the historic area 
and how they manage. 

1611
01:27:55,720 --> 01:27:59,240
I think that behaviorally there 
was a time period when what you 

1612
01:27:59,240 --> 01:28:02,880
had was there was a lot of like 
internal fighting between Howard

1613
01:28:02,880 --> 01:28:06,120
Hughes and some of the board 
members, unlike how they want to

1614
01:28:06,120 --> 01:28:09,080
position the seaport and the 
historic area. 

1615
01:28:09,320 --> 01:28:12,720
I think there was a vision to 
turn it into this like super 

1616
01:28:12,720 --> 01:28:16,640
high end glitzy area like tank 
Korsukuomo, which is this like 

1617
01:28:16,720 --> 01:28:19,080
really cool club in Milan, 
right? 

1618
01:28:19,640 --> 01:28:23,360
And I think they went with like 
a luxury premium, you know, 

1619
01:28:23,400 --> 01:28:26,600
strategy that clearly did not 
work right. 

1620
01:28:26,960 --> 01:28:29,840
But they spent a billion dollars
on that asset. 

1621
01:28:29,840 --> 01:28:33,480
So mentally there's this suck 
cost fallacy that the management

1622
01:28:33,480 --> 01:28:35,920
team have. 
And then also I think like there

1623
01:28:36,080 --> 01:28:40,200
it also suffer from the fact 
that most of the business, I 

1624
01:28:40,200 --> 01:28:43,920
have this theory that when you 
own a MPC and you have 

1625
01:28:43,960 --> 01:28:48,080
incredible control in markets 
like The Woodlands in, in, in 

1626
01:28:48,080 --> 01:28:51,680
some way where in, in Hawaii and
Waikiki in the Hawaii war 

1627
01:28:51,680 --> 01:28:56,080
Village where you're the zoning 
board, you're the developer and 

1628
01:28:56,080 --> 01:29:00,840
you are like, you know, kind of 
like the monopoly owner like of 

1629
01:29:00,840 --> 01:29:04,760
that area. 
I think that management team, 

1630
01:29:05,520 --> 01:29:07,880
they kind of were used to 
operate in a certain way and 

1631
01:29:07,880 --> 01:29:11,600
then they try to develop and 
built in a market where it is 

1632
01:29:11,600 --> 01:29:15,040
the complete opposite, right? 
Like where the neighbors, the 

1633
01:29:15,040 --> 01:29:17,480
residents will try to fight you 
every term, right? 

1634
01:29:17,480 --> 01:29:21,080
So what culturally, I just think
that they have the one type of 

1635
01:29:21,400 --> 01:29:25,400
mentality of people trying to 
make that asset work, right? 

1636
01:29:25,760 --> 01:29:28,120
And so I think that was a 
challenge, right? 

1637
01:29:28,440 --> 01:29:32,120
I think they positioned it to 
high end to luxury. 

1638
01:29:32,800 --> 01:29:35,320
And then there's a suck cost 
fallacy of we spend a billion 

1639
01:29:35,320 --> 01:29:38,680
dollars in it, right? 
Like we can't bring a Dave and 

1640
01:29:38,680 --> 01:29:43,000
Buster or a a Meow Wolf, right? 
So think about this way, right? 

1641
01:29:43,440 --> 01:29:46,280
Mentally, if you spend a billion
dollars, you like the only 

1642
01:29:46,280 --> 01:29:50,040
tenant that we could put in 
these offices has to be at ESPN 

1643
01:29:50,040 --> 01:29:53,520
when Nike has got to pay us over
$100 a square foot, right? 

1644
01:29:54,000 --> 01:29:57,360
And I mean, to a certain extent,
like they get they got unlucky, 

1645
01:29:57,360 --> 01:29:59,040
right? 
Like COVID was not their fault, 

1646
01:29:59,160 --> 01:30:01,080
right? 
But they got deeply impacted it.

1647
01:30:01,400 --> 01:30:04,080
And then like what happened with
office would work from home. 

1648
01:30:04,080 --> 01:30:07,800
Like they built that pure 17 
structure to have a lot of 

1649
01:30:07,800 --> 01:30:11,000
creative office, right? 
So it's a lot of factor. 

1650
01:30:11,120 --> 01:30:15,760
Now a lot of that is behind us. 
By the way, I am not, you know, 

1651
01:30:16,160 --> 01:30:18,800
saying people should go out and 
buy this like, like, like. 

1652
01:30:18,920 --> 01:30:21,320
Well, no one should buy anything
that they hear on a podcast, 

1653
01:30:21,320 --> 01:30:22,640
period. 
So yes. 

1654
01:30:23,080 --> 01:30:26,160
Yes, no, I mean, I mean there 
there's a very big difference 

1655
01:30:26,160 --> 01:30:31,720
between like, I think this could
have multi bagger upside, but we

1656
01:30:31,720 --> 01:30:35,840
need to like take a wait and see
approach, right and it's like 

1657
01:30:36,080 --> 01:30:38,920
it's like stalking, right, like 
you're like a big cat, you're 

1658
01:30:38,920 --> 01:30:41,480
hunting game and you're just 
watching. 

1659
01:30:41,480 --> 01:30:45,040
I'm just watching like we got a 
small starter position, but you 

1660
01:30:45,040 --> 01:30:48,520
know, we don't have like a you 
know, we don't have like a 

1661
01:30:48,520 --> 01:30:53,000
double digit position in this 
company, but I think that what's

1662
01:30:53,000 --> 01:30:54,920
important is now they're free, 
right. 

1663
01:30:54,920 --> 01:30:56,920
So if you look at the 
announcement, if you look at the

1664
01:30:56,920 --> 01:30:59,680
announcement, they announced 
male wolf, which is like an 

1665
01:30:59,720 --> 01:31:03,720
escape room, like a really cool,
as my young analyst says, you 

1666
01:31:03,720 --> 01:31:07,840
know, that's like a really cool 
escape room experience to take 

1667
01:31:07,840 --> 01:31:11,280
like your hot date to right. 
I'm always interested in like 

1668
01:31:11,280 --> 01:31:15,560
what my, you know, 2324 year old
analyst has to say it about a 

1669
01:31:15,560 --> 01:31:18,880
certain place or certain concept
because because I admit like I'm

1670
01:31:18,920 --> 01:31:21,400
a, you know, I'm in my 40s. 
I got kids like like, I don't 

1671
01:31:21,400 --> 01:31:24,120
know what's cool, what's hip 
anymore, right So. 

1672
01:31:24,600 --> 01:31:28,200
You're hip, but not that hip. 
I'm like the use of the word hip

1673
01:31:28,200 --> 01:31:33,600
is not hip, by the way. 
OK, I'm like Costco leg day guy,

1674
01:31:33,600 --> 01:31:36,720
hip with like a Kirkland T-shirt
and like shorts, right? 

1675
01:31:36,720 --> 01:31:40,320
I'm hip in that way. 
I'm like post ironic hip, right?

1676
01:31:40,760 --> 01:31:44,040
And trust me, trust me, that's 
not a term that I came up with. 

1677
01:31:44,040 --> 01:31:45,440
My analysts taught me that, 
right? 

1678
01:31:45,440 --> 01:31:49,000
Like I'm by beyond, I'm by the 
most like boring generic, like, 

1679
01:31:49,000 --> 01:31:51,400
you know, like Costco dad you 
can find. 

1680
01:31:51,720 --> 01:31:54,480
But you know, I put my year on 
the ground that try to like, you

1681
01:31:54,480 --> 01:31:57,960
know, like try to stay up with 
what the young kids are doing. 

1682
01:31:58,280 --> 01:32:04,080
So, so I think that what they 
did, one of the skills that I 

1683
01:32:04,080 --> 01:32:07,360
think the previous management 
team didn't have is they come 

1684
01:32:07,360 --> 01:32:09,000
from a real estate background, 
right? 

1685
01:32:09,600 --> 01:32:13,000
This repositioning really needed
like a food and beverage person 

1686
01:32:13,440 --> 01:32:17,680
needed like someone who knows 
how to curate and put together 

1687
01:32:18,040 --> 01:32:21,240
and they move quick. 
You know, they, they agree that 

1688
01:32:21,240 --> 01:32:23,560
there's a new restaurant that, 
you know, that's up and running 

1689
01:32:23,560 --> 01:32:25,320
in one of the spaces called 
Quitado. 

1690
01:32:25,320 --> 01:32:27,600
I guess it's like a Tulu, Mexico
concept. 

1691
01:32:27,840 --> 01:32:31,680
They signed me a wolf that put 
in 250 Water St., which is A1 

1692
01:32:31,680 --> 01:32:35,880
acre development site that they 
bought $480 million and put 10s 

1693
01:32:35,880 --> 01:32:39,280
of $1,000,000 of what additional
intangible cost in there. 

1694
01:32:39,720 --> 01:32:42,400
So so that's out in the market 
that's being shop. 

1695
01:32:42,600 --> 01:32:45,240
And then they own all these 
other assets such as the 

1696
01:32:45,240 --> 01:32:49,160
baseball team, the stadium that 
it sits on air rights in Vegas. 

1697
01:32:49,720 --> 01:32:53,480
And you know, I think that it's 
worth a starter position for me 

1698
01:32:53,480 --> 01:32:57,040
to keep tracking to see what I 
will be watching for would be 

1699
01:32:57,040 --> 01:32:59,600
how are they doing with the food
and beverage offering? 

1700
01:32:59,600 --> 01:33:02,880
Are they how are they are foot 
traffic improving? 

1701
01:33:02,880 --> 01:33:04,600
And this is going to take time, 
right? 

1702
01:33:04,600 --> 01:33:07,800
This is going to take time. 
And then one of the big factor 

1703
01:33:07,800 --> 01:33:10,680
whether it's going to be 
successful or not would be when 

1704
01:33:10,680 --> 01:33:13,640
male wolf gets billed out, which
would take two years. 

1705
01:33:13,680 --> 01:33:16,000
Is that actually successful? 
Does that actually succeed in 

1706
01:33:16,000 --> 01:33:19,960
terms of right foot traffic? 
But I think by this summer, like

1707
01:33:20,000 --> 01:33:23,280
you know where we are, like I 
take my kids there a lot, take 

1708
01:33:23,280 --> 01:33:26,080
the ferry, we go there, it's a 
nice way to spend a day there. 

1709
01:33:26,480 --> 01:33:30,200
I did by this summer we kind of 
track like the concert lineup, 

1710
01:33:30,200 --> 01:33:33,840
the programming and say a little
bit about the new CEO, like the 

1711
01:33:33,840 --> 01:33:37,200
former CEO is or the CEO of the 
parent, you know, Howard Hughes 

1712
01:33:37,200 --> 01:33:41,520
company, he's a kind of like us.
He was CFO, got promoted the 

1713
01:33:41,520 --> 01:33:46,360
CEO, he has a lot of real estate
experience, but you know, the 

1714
01:33:46,360 --> 01:33:50,360
new CEO was managing, you know, 
VOI background tracks. 

1715
01:33:50,360 --> 01:33:53,160
I think people were saying that 
he was responsible for like 1/4 

1716
01:33:53,160 --> 01:33:57,680
billion of EBITDA in one of the 
Vegas, you know, casinos where 

1717
01:33:57,680 --> 01:34:00,600
he was responsible for a lot of 
food and beverage like curation 

1718
01:34:00,760 --> 01:34:02,760
and so like. 
Entertainment guy. 

1719
01:34:03,160 --> 01:34:05,280
Yeah, he's a food and beverage 
entertainment guy, right? 

1720
01:34:05,320 --> 01:34:09,440
And I think that if they make 
the seaport work, I don't know 

1721
01:34:09,440 --> 01:34:13,520
if people know this, but like if
you look at what retail rent, 

1722
01:34:13,520 --> 01:34:15,840
what people could charge for 
retail rent in New York City, 

1723
01:34:16,000 --> 01:34:18,640
some of those numbers will like 
absolutely blow people away 

1724
01:34:18,760 --> 01:34:20,520
right now. 
That's a big if, right? 

1725
01:34:20,760 --> 01:34:22,480
You kind of have to make the 
place cool. 

1726
01:34:22,480 --> 01:34:24,720
You got to make the place, you 
know, you got to drive foot 

1727
01:34:24,720 --> 01:34:26,800
traffic. 
I mean, at one point, Times 

1728
01:34:26,800 --> 01:34:28,680
Square in New York City, and I'm
not saying this is going to be a

1729
01:34:28,680 --> 01:34:30,960
Times Square, right? 
But at one point, Times Square 

1730
01:34:30,960 --> 01:34:32,760
is a city. 
You know the Times Square was an

1731
01:34:32,760 --> 01:34:35,960
area full of prostitutes, pimps.
And vagrants. 

1732
01:34:36,160 --> 01:34:37,640
Yeah. 
Vagabonds. 

1733
01:34:37,640 --> 01:34:40,640
Yes, and now they charge $2000 a
square foot in rent. 

1734
01:34:40,640 --> 01:34:43,040
Like, I must say the sequel is 
ever going to be able to charge 

1735
01:34:43,040 --> 01:34:45,120
$2000 a square foot. 
But I'm saying that you're 

1736
01:34:45,120 --> 01:34:46,640
starting with a really low 
basis. 

1737
01:34:47,120 --> 01:34:49,680
And even though like everything 
that I've said, I'm still like, 

1738
01:34:49,800 --> 01:34:53,600
I'm in stalking mode. 
And this is a really important 

1739
01:34:53,760 --> 01:34:56,760
concept, right? 
Like Blackstone, a $4 billion 

1740
01:34:56,760 --> 01:35:00,880
deal that was a company that I 
knew about and I was tracking 

1741
01:35:00,880 --> 01:35:03,480
for 10 years. 
We never owned a position in 

1742
01:35:03,480 --> 01:35:07,920
that company and then we made a 
15% position last year. 

1743
01:35:08,320 --> 01:35:11,440
What we try to do is that at 
times like we'll try to company 

1744
01:35:11,440 --> 01:35:14,600
and then it will hit a certain 
price and we're like, OK, that's

1745
01:35:14,640 --> 01:35:17,520
you know, and we do like put the
capital to work. 

1746
01:35:17,520 --> 01:35:21,160
You got to go big, right, You 
got to go big and and you don't 

1747
01:35:21,240 --> 01:35:23,320
like what it's kind of getting 
there. 

1748
01:35:23,600 --> 01:35:27,160
It's kind of getting there for a
lot of these names, right, like 

1749
01:35:27,200 --> 01:35:29,320
pull out of these. 
I mean, like in when we had the 

1750
01:35:29,320 --> 01:35:35,080
first podcast in late 23, some 
people to family as a fiend, you

1751
01:35:35,080 --> 01:35:37,520
know, it wasn't just one comfy, 
but you know, it's anywhere from

1752
01:35:37,520 --> 01:35:41,400
my kind of mid teens allocation 
to like up to 40% allocation in 

1753
01:35:41,400 --> 01:35:45,160
different portfolios. 
So I I think that like if you're

1754
01:35:45,160 --> 01:35:47,280
a patient, you know what to be 
looking for. 

1755
01:35:47,520 --> 01:35:50,840
And then like like Bunker said, 
you know, at times like what is 

1756
01:35:50,840 --> 01:35:53,560
that phrase when it rains? 
Like, you know, like bring out 

1757
01:35:53,560 --> 01:35:55,080
the bucket outside with a 
bucket. 

1758
01:35:55,080 --> 01:35:57,160
Not a thimble. 
Yeah, not a thimble exactly. 

1759
01:35:57,480 --> 01:35:59,280
But seaport is nowhere near 
there. 

1760
01:35:59,720 --> 01:36:01,960
Right now, right. 
But like yeah, but I get it. 

1761
01:36:02,160 --> 01:36:04,840
It's a transition property that 
you're watching makes. 

1762
01:36:04,840 --> 01:36:08,920
Sense, Yeah, yeah, cool. 
And well, thank you for coming 

1763
01:36:08,920 --> 01:36:10,440
on. 
Man, I know that we were going 

1764
01:36:10,440 --> 01:36:12,040
to do it. 
What, 2 weeks ago? 

1765
01:36:12,040 --> 01:36:15,560
But then the market exploded, so
it required some more active 

1766
01:36:15,560 --> 01:36:18,960
management than recording a 
podcast on that day. 

1767
01:36:19,480 --> 01:36:22,200
Just a slight bit, you know it's
a slight bit, but. 

1768
01:36:23,240 --> 01:36:29,280
It it, you know, you know what I
have to say it, this really, 

1769
01:36:29,480 --> 01:36:34,160
this experience has really 
reaffirm like some, some of the 

1770
01:36:34,360 --> 01:36:37,560
like conscious intentional 
decision that that I've made, 

1771
01:36:37,560 --> 01:36:41,960
right, which is like kind of 
have to keep like like have a 

1772
01:36:42,160 --> 01:36:44,160
tail risk hedging program, 
right? 

1773
01:36:44,200 --> 01:36:46,240
Sometimes like I'll talk to 
other managers and they're like,

1774
01:36:46,760 --> 01:36:49,720
oh, like tail risk hedging. 
That's like negative EV, right? 

1775
01:36:50,040 --> 01:36:53,720
And we're like, we're always 
like putting a kind of like a 

1776
01:36:54,080 --> 01:36:57,360
50, you know, 50 bits to 1% per 
year and tail risk hedging. 

1777
01:36:57,920 --> 01:37:01,200
And then I think like what it 
does is like, like you, you have

1778
01:37:01,200 --> 01:37:03,400
this muscle memory, you have 
this muscle memory, you know how

1779
01:37:03,400 --> 01:37:05,520
to do it. 
We could dial that up, dial that

1780
01:37:05,520 --> 01:37:07,680
down. 
And at a certain point before 

1781
01:37:07,680 --> 01:37:10,640
the boration day, I got 
uncomfortable where I'm like, I 

1782
01:37:10,640 --> 01:37:13,640
have to, right? 
I have to go, I have to go by, 

1783
01:37:13,640 --> 01:37:15,880
put more hedges on and we did 
that. 

1784
01:37:15,920 --> 01:37:19,000
What it does is that, you know, 
an event like that is kind of 

1785
01:37:19,000 --> 01:37:22,200
like getting punched in the face
by Mike Tyson in a way, right? 

1786
01:37:22,200 --> 01:37:24,880
Well, you know, talking to some 
of my peers, like, like, you 

1787
01:37:24,880 --> 01:37:27,200
know, if you run like 
concentrated small cap, like you

1788
01:37:27,200 --> 01:37:29,960
could be down like 20%, dude, 
right? 

1789
01:37:29,960 --> 01:37:34,400
Small cap guys are not. 
Loving life on average, Yeah. 

1790
01:37:34,560 --> 01:37:36,840
Yeah, Yeah. 
No, it's, it's been cheap for a 

1791
01:37:36,840 --> 01:37:37,600
while, right. 
It's. 

1792
01:37:37,640 --> 01:37:39,520
Always cheap, but it just keeps 
getting cheaper. 

1793
01:37:39,800 --> 01:37:41,400
Yeah, it's cheap. 
It keep just keeps getting 

1794
01:37:41,400 --> 01:37:43,240
cheaper. 
Now imagine like. 

1795
01:37:43,480 --> 01:37:46,840
There are like real consequences
of these tariffs, right? 

1796
01:37:46,840 --> 01:37:49,720
Like depending on, you know, 
what you own, if you're like an 

1797
01:37:49,720 --> 01:37:53,000
importer, right, If your 
business depends on a lot of 

1798
01:37:53,200 --> 01:37:55,080
imports, like that really hits 
you. 

1799
01:37:55,680 --> 01:37:58,080
And, you know, I think the tower
is hedging. 

1800
01:37:58,080 --> 01:38:02,600
What it does is that it just 
allows me to stay very calm and 

1801
01:38:02,600 --> 01:38:05,760
very what like, I mean, don't 
get me wrong, like the first 

1802
01:38:05,760 --> 01:38:07,760
like week, like like the first 
like 10 days. 

1803
01:38:07,760 --> 01:38:09,760
It's like an insurance policy, 
man. 

1804
01:38:09,760 --> 01:38:12,360
It helps you sleep. 
A bit, yes, exactly. 

1805
01:38:12,360 --> 01:38:14,280
It's like the hurricane 
insurance, right? 

1806
01:38:14,280 --> 01:38:15,120
Like a. 
Hurricane. 

1807
01:38:15,120 --> 01:38:16,800
Yeah, you hope you don't have to
cash it in. 

1808
01:38:16,800 --> 01:38:20,200
If you do, it's nice to have. 
Exactly. 

1809
01:38:20,200 --> 01:38:22,800
Exactly. 
And you know one thing that's. 

1810
01:38:22,800 --> 01:38:26,720
Like really cool is my analyst 
and I, we're what we're 

1811
01:38:26,720 --> 01:38:28,680
literally thinking well, like 
how do we take advantage of 

1812
01:38:28,680 --> 01:38:31,080
this, right? 
This is a super target rich 

1813
01:38:31,080 --> 01:38:33,760
environment right now and all 
this is cheap. 

1814
01:38:33,760 --> 01:38:37,680
That's cheap or you can make 5% 
by some, you know, puts like not

1815
01:38:37,680 --> 01:38:39,640
that we've done that, you know, 
that's something that we may 

1816
01:38:39,640 --> 01:38:42,640
think about. 
But there's all this opportunity

1817
01:38:43,120 --> 01:38:46,160
and you know, if our towers 
hedges, like what's really nice 

1818
01:38:46,160 --> 01:38:50,680
about towers hedging is the 
COVID when by the time we were 

1819
01:38:50,680 --> 01:38:54,400
done, by the time we sold our 
puts, we winded up with like a 

1820
01:38:54,400 --> 01:38:58,680
15% position in what just the 
proceeds from the towers 

1821
01:38:58,680 --> 01:39:02,360
hedging. 
But my long book was down 35%, 

1822
01:39:02,440 --> 01:39:04,680
right? 
So we wanted it like being down 

1823
01:39:04,680 --> 01:39:08,480
about 20 at that time. 
But like all of a sudden like I 

1824
01:39:08,480 --> 01:39:11,760
have 20%, that 15% actually 
becomes 20 because the law book 

1825
01:39:11,760 --> 01:39:14,960
has shrunk so much. 
So we wind up with like 40% cash

1826
01:39:15,320 --> 01:39:18,600
like in early April where and 
then like you kind of think 

1827
01:39:18,600 --> 01:39:20,760
about your relationship with 
your investors. 

1828
01:39:20,760 --> 01:39:24,040
Like it's very different when 
you have an event like this and 

1829
01:39:24,040 --> 01:39:27,160
your LP's are calling you and 
they're like, oh, what's going 

1830
01:39:27,160 --> 01:39:28,720
on? 
Like what's And you could tell 

1831
01:39:28,720 --> 01:39:30,360
them like what we hedge ahead of
time. 

1832
01:39:30,360 --> 01:39:32,240
We know how to navigate 
environment like this. 

1833
01:39:32,240 --> 01:39:34,120
It's kind of crazy. 
This is really like the first 

1834
01:39:34,120 --> 01:39:37,120
time in five years because you 
have COVID and then you have the

1835
01:39:37,120 --> 01:39:40,360
22 shock, right? 
Like 22 shock wasn't like as big

1836
01:39:40,360 --> 01:39:44,000
of a draw down, but and then you
got the tariff drawdown. 

1837
01:39:44,440 --> 01:39:48,080
So but it's like having like 
know how to do that, like 

1838
01:39:48,080 --> 01:39:53,120
leaning into this hunch about 
risk that's about to emerge and 

1839
01:39:53,120 --> 01:39:55,560
just acting on it. 
And then like having the 

1840
01:39:55,560 --> 01:39:59,240
calmless as you know yourself 
and as an organization, right? 

1841
01:39:59,360 --> 01:40:01,320
Because like, you know, my 
analyst and I all we're talking 

1842
01:40:01,320 --> 01:40:03,880
about today, like we're not 
talking about, Oh my God, we're 

1843
01:40:03,880 --> 01:40:06,880
down. 2530% like how do we get 
out of this? 

1844
01:40:06,880 --> 01:40:09,120
Like, no, we own like liquid 
positions. 

1845
01:40:09,120 --> 01:40:11,760
We have these puts. 
And if anything, like there's 

1846
01:40:11,760 --> 01:40:15,320
like companies out there where I
think they're still pretty good,

1847
01:40:15,560 --> 01:40:18,560
like, you know, both on the law 
side and short side that are 

1848
01:40:18,560 --> 01:40:21,440
really interesting. 
And then you don't start by 

1849
01:40:22,320 --> 01:40:24,960
investing in companies where 
you're like, Oh, we, you know, 

1850
01:40:25,160 --> 01:40:28,560
you start with, oh, something 
like Alexander, you could buy at

1851
01:40:28,560 --> 01:40:32,480
a high 8-9 percent dividend 
yield with like train way below 

1852
01:40:32,480 --> 01:40:35,960
like NAV, right, or even like 
the Vornado prefer. 

1853
01:40:35,960 --> 01:40:39,720
Or you could go do the dream 
residential, you know, buying 

1854
01:40:39,720 --> 01:40:41,440
multi family at 8 1/2 percent 
cap rate. 

1855
01:40:41,440 --> 01:40:43,000
They're about to be taken out, 
right. 

1856
01:40:43,520 --> 01:40:45,640
And then there's like other 
names that we're looking at. 

1857
01:40:46,000 --> 01:40:48,880
They're just like so much for us
to do right now and that 

1858
01:40:48,880 --> 01:40:52,640
organizationally, like we're not
placing blames. 

1859
01:40:52,680 --> 01:40:55,240
We're not like, you know what, 
we're just like having these 

1860
01:40:55,240 --> 01:40:58,320
like really awesome 
conversations on, hey, have you 

1861
01:40:58,320 --> 01:40:59,960
look at this name? 
Have you look at that name? 

1862
01:41:00,280 --> 01:41:02,080
And this time around, it's not 
just me. 

1863
01:41:02,080 --> 01:41:04,920
One of the things that was 
difficult about COVID was, you 

1864
01:41:04,920 --> 01:41:07,880
know, at that point was just me.
And then, you know, thanks to 

1865
01:41:07,880 --> 01:41:10,680
something that you said a few 
years ago where you said, hey, 

1866
01:41:10,680 --> 01:41:12,760
you know, what's great about 
Twitter is that you put a tweet 

1867
01:41:12,760 --> 01:41:15,680
out and it's like 10 people 
could talk to you about a topic.

1868
01:41:16,120 --> 01:41:19,360
We kind of like leverage that 
and we build out a team in 22. 

1869
01:41:19,360 --> 01:41:22,240
I have to credit a lot of what I
do. 

1870
01:41:22,320 --> 01:41:26,040
I'm building out that, you know,
the Twitter channel on that one 

1871
01:41:26,040 --> 01:41:29,480
quote that you said on value 
after hours like like that, you 

1872
01:41:29,480 --> 01:41:32,080
know, I take, I, I take 
compliments. 

1873
01:41:32,160 --> 01:41:33,600
You're free to you're free to 
send them. 

1874
01:41:33,600 --> 01:41:35,480
Here. 
No, I'm glad, man. 

1875
01:41:35,480 --> 01:41:37,080
I'm glad it helped. 
Yeah. 

1876
01:41:37,160 --> 01:41:39,160
Yeah. 
And tell me too. 

1877
01:41:39,160 --> 01:41:42,120
I've kind of. 
Kind of taken a step back. 

1878
01:41:42,120 --> 01:41:45,440
From everything recently, but I 
I think it's been an invaluable 

1879
01:41:45,440 --> 01:41:48,440
source to me and more than 
anything the relationships that 

1880
01:41:48,440 --> 01:41:50,880
I've made from it and manual of 
ideas. 

1881
01:41:50,880 --> 01:41:53,960
I can't talk about, you know, my
network without talking about 

1882
01:41:53,960 --> 01:41:56,440
John. 
It would be disingenuous to do 

1883
01:41:56,440 --> 01:41:57,600
so. 
Yeah. 

1884
01:41:57,600 --> 01:42:00,640
So and the Toby for, you know, 
help me get it started. 

1885
01:42:00,640 --> 01:42:03,240
So yeah, it worked out. 
Love, Toby. 

1886
01:42:03,240 --> 01:42:07,800
Love, Jake, Love. 
You know, John, I would say the 

1887
01:42:07,800 --> 01:42:13,320
one thing I'm the proudest is as
I've gotten older, in my 40s, I 

1888
01:42:13,320 --> 01:42:17,080
become less ignorant and you 
know, instead of just like 

1889
01:42:17,360 --> 01:42:20,880
holding on to that really old 
school value investor mantra, 

1890
01:42:21,360 --> 01:42:24,640
I'm like, I want to be a little 
open minded and you know, pay a 

1891
01:42:24,640 --> 01:42:29,400
little bit of attention to 
whether it's like passive flow, 

1892
01:42:29,400 --> 01:42:33,200
pop positioning, like 
technicals, what not so much 

1893
01:42:33,200 --> 01:42:36,720
technicals, like everything that
we do is still very DCF driven, 

1894
01:42:37,280 --> 01:42:40,360
but like technicals. 
In terms of why your entry point

1895
01:42:40,360 --> 01:42:43,520
into a stock, right, You're not 
looking, you're kind of ignoring

1896
01:42:43,520 --> 01:42:45,480
something that a decent part of 
the market looks. 

1897
01:42:45,480 --> 01:42:51,880
At like yes, yes, makes it to 
look at yes, yeah, and I'm I'm a

1898
01:42:51,880 --> 01:42:54,880
lot. 
Less like this is the only way 

1899
01:42:55,640 --> 01:42:58,840
to invest. 
I'm a lot more open to Yeah, the

1900
01:42:58,840 --> 01:43:01,680
only way is a young thought or 
maybe a very old thought. 

1901
01:43:01,680 --> 01:43:03,440
We'll see how I. 
Evolved, but I think there are 

1902
01:43:03,440 --> 01:43:05,760
many ways. 
So I appreciate you coming on 

1903
01:43:05,760 --> 01:43:07,440
and sharing your knowledge, man 
Thank you. 

1904
01:43:07,800 --> 01:43:09,960
Oh man. 
So it's always a pleasure to 

1905
01:43:09,960 --> 01:43:13,520
come on the pod and. 
You know, I feel very 

1906
01:43:13,560 --> 01:43:16,720
privileged. 
Well, we'll see you again soon, 

1907
01:43:16,840 --> 01:43:18,360
maybe in a year or so, who 
knows. 

1908
01:43:19,080 --> 01:43:21,760
Hopefully before then and 
hopefully, hopefully we'll get 

1909
01:43:21,760 --> 01:43:22,800
Korean BBQ. 
Before then. 

1910
01:43:23,640 --> 01:43:25,680
Oh yeah, that'll happen for 
sure. 

1911
01:43:26,640 --> 01:43:27,800
All right. 
Talk soon.