Yet Another Value Podcast - Rhizome Partner's Bill Chen's post-NAREIT takeaways

Episode Date: June 19, 2025

In this episode of Yet Another Value Podcast, host Andrew Walker welcomes back Bill Chen of Rhizome Partners, one of the platform's most popular and deeply knowledgeable guests in real estate investing. Fresh from attending NAREIT, Bill unpacks trends across the public and private real estate sectors, offering a unique vantage on REIT performance, multifamily fundamentals, and the developing divergence in valuation metrics. The discussion spans topics from rent regulation in New York, to capital allocation discipline among REITs, and dives into lesser-understood niches like grocery-anchored retail and net lease offices. Andrew and Bill blend data with real-time market observations to help listeners better understand value opportunities in today’s real estate landscape.__________________________________________________[00:00:00] Andrew introduces Bill Chen[00:01:38] Bill recaps NAREIT conference takeaways[00:02:11] Public REITs vs private market stress[00:05:26] Construction collapse, capex outlook[00:12:18] Sunbelt rent growth and pipeline[00:21:36] Public REITs IRR and exit caps[00:27:20] NYC resi optimism vs politics[00:29:20] Clipper's challenges and NYC outlook[00:31:01] Sunbelt policy contrasts and rent trends[00:33:56] Postmortem: REIT investment performance[00:36:05] Tech and operational edge in REITs[00:37:11] Resilience, affordability, and dividends[00:44:14] AI impact on operations and leasing[00:48:56] Alexander’s, office market bifurcationLinks:Yet Another Value Blog: https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to the yet another value podcast with your host, me, Andrew Walker. Today's podcast, Bill Chen from Rise Zone Partner Returns. Bill is one of the most popular guests on the platform. He's got a deep expertise in all things real estate publicly and privately traded. He went to Ney-Reat, I believe it's called. I never know what's N-A-Reed or Ney-Reed. You know, I'm not a full-time REAP person. But he went last week and we just dive into all things REIT. We talk, you know, apartment reads, New York reads, San Francisco Reets, the Searrest,

reach, public real estate, private real estate, everything that you can imagine. Bill's got a great source of info. I think you're really going to enjoy it. We dive into everything and go for almost an hour and a half. So we're going to get to that in Bill chat in one second, but first, a word from our sponsors. Today's episode is brought to you by FinTool. Fintoul is the AI junior analyst tailored specifically for individual investors. Everyone in finance is racing to figure out how AI can best be integrated into their investment process. And one of the biggest areas that is catching on with institutional investors is analyzing SEC filings and earnings call transcripts. FinTool takes hours of combing through filings and control-effing transcripts down to seconds.

Whether it's comparing the current call with prior quarters, finding that sneaky change in the footnotes or compiling the key facts into an easy-to-digest one-pageer, FinTool is saving you hours so that you can go deeper and search wider because your time is better spent, turning over more rocks, or researching the things that AI can. Go to fintool.com to transform your research process. That's fintool.com. All right. Hello, and welcome to the yet another value podcast. I'm your host, Andrew Walker with me. I'm happy to have one. Bill, I don't even know what time it is, but one of the people's favorite guests. Every time he comes on, I get lots of emails about people love hearing about the nuanced real estate takes, the overall real estate. Anyway, my friend and the best cricket player I know, Bill Chen for Pryzone Partners. Bill, how's it going? Great, great, man. Andrew, good. Always, you know, great to be on your podcast. Love to connect. And just, just correction. Crocate, not cricket.

No, not about cricket. I remember my hat? Happy Father's Day to you? That's what I was going to say. You know, most people listen on audio, but this might be a YouTube podcast for everyone, not because we're going to have any slides, because I've got my number one dad hat

with Sylvie's handprint right on the side of it here. And Bill's got the elusive yet another value podcast hat on, at least for now. But I'm taking it off. because it's, it's, I have one of the world's largest heads, and it doesn't, it doesn't, it doesn't look right on me. But, you know, yep. We have a ton to talk about. I think the overarching reason that you're coming on is we had you on about a year ago. You went through a ton of stuff in real estate, and I think a lot of it's like kind of played out as you, you kind of thought it would. But the,

the reason we want to have you on today is you went to Neary a week or two ago, and we're just going to do an overall discussion of all sorts of stuff in the real estate sector. So before I, turn the ball over to you. I'll just remind everyone, quick disclaimer. Nothing on this podcast is investing advice. We're going to talk about a host of names today. So keep that in mind. There's a full disclaimer on the website and at the end of this podcast. So with that all the way, Bill, you're just back from Neary. I know you focus, specialize on real estate. I know you think things are really interesting right now. So I'll just kind of pass the ball over to you and then I'll sprinkle on some questions as you go. Sure. So we met with a dozen management teams at Neary this year and there's a huge

contrast. We track both the public market and the private market. And what we're trying to do, like you remember, our core strategy is we want to buy stuff in the public market at a deep discount to private market valuation. And we track, you know, we follow a lot of real estate GPs. We get kind of real-time updates to private deals. And the sentiment is very, very different at at Navy Reid. At Navy, the key takeaway is off all the companies that we met, none of them are are dealing with any sorts of distress. None of them have any issues roaned their dead. All of them are covering their interest expense anywhere from three to eight times,

which is very, very different, right? On the private side, from a new debt underwriting perspective, the death service coverage ratio starts at 1.25. And that's considered, anything above that is considered healthy. We just did the math for mid-America, the interest coverage ratio, 7.2 times for Camden 6.8 times. I mean, there's just like, no, there's no scenario unless they go out and do some big risky deal, which they're not going to. There's no scenario that, that, you know, these companies become trouble, right, based on those coverage ratios.

And a key theme is a lot of the public breeds, especially the bigger blue chip ones, are starting to, they're getting excited because consistently across all themes. And this is something that we were pounding the table in the late 2023 saying, In today's interest rate environment and the appetite and what you would underwrite to a development IOR, it doesn't make any sense to develop new projects. And we kind of predicted in late 23 that construction, what is, you know, plan and budget for will get done. We'll get completed. But, you know, fast forward kind of 1824 a month, that construction is going to fall off a cliff. And you see that. You could see that in particularly multifamily, and we're seeing 70, 80% drop off and market rate starts for multifamily.

There are some affordable, mission-driven projects being greenlit. But aside from that, like the market rate apartment units have fallen off, you know, depending on who you talk to, 70-80%. You're seeing it in self-storage. If you look at a chart in a warehouse starts, across the board, you're just seeing construction activity fall off an absolute cliff, you know, anywhere from minimum. 50% up to like 80% of most asset categories. The only asset class that are still getting the green light to build is data centers. And that's a different thing. You didn't even need to finish the center.

I knew what you were going to say. So, you know, AI data centers, that's a whole different animal. So, but what's really interesting is kind of what we were saying consistently for the past 18 month is that these blue chip reads have to balance sheet. and they have access to the unsecure bond market. And there's been multiple unsecure bond offerings anywhere in that. I think the lowest we saw was 4.9% upwards to like mid-5, you know, some of the lower rated maybe like a little bit in the high five range.

They're able to issue seven-year fixed rate unsecure bonds into the market. And then what they could do is they could use that money to go do ground up developments. And from a lender perspective, you know, who are buying these unsecure bond, they're not thinking, oh, I'm lending 100% of this money to do a risky one-of ground-out development deal. The lenders of these non-secure bonds are thinking, well, I'm lending into mostly a 95% occupy,

stabilized portfolio with lots of assets, hundreds of buildings, into a reet, and then they could take, you know, a portion, kind of like a 5% or 6% of that overall capitalization to go do ground-up developments. So it becomes this, you know, cost of capital arbitrage, and Mid-American and Camdenau are both, you know, very, very excited about pushing that. And, you know, we particularly as mid-America, hey, instead of a $1.2 billion development

pipeline, why don't you push it to $2 billion? Now, granted, this is like, you know, a $22 billion enterprise value company, right? So there are limitations, you know, there are kind of like a lot of these streets kind of have to play in a certain box where they can't have too much developments, but all of them are flexing their development muscles, and they are also looking for, you know, acquisitions. So that's a consistent theme where they're saying, hey, if we could buy a brand new multifamily building that we're going to hold for 25 years, even if we buy it at a 5% cap rate, you know, rent growth, you know, in 26, 27, 28. And generally, you know, the assumption is that rank growth, I mean supply is either fully absorbed right now

or in the next three months will be fully absorbed. There's like certain select markets like Nashville and Austin still have some supply issues, but most of the Sunbelt have kind of fully absorbed the supply wave. And most of them are excited about rent growth, like, you know, what could that be? I, you know, I think minimally probably 3% per year going forward in 26, 27, 28, and you're really not going to see a lot of supply come onto the market, probably at least until like the second half, 28, 29. The longer that we're in this higher interest rate environment,

the longer that's going to exist. So a lot of these bigger reads are kind of excited that they're in a pretty good position, you know, they're in a much more advantageous position. We re-ran, you know, I saw that you tweeted out. A few people have asked, you know, what do we think the forward IORs are on some of these names? In our model, if you hold it for three years,

we have a, you know, call it like a roughly 18% IR, if you hold it for four years, like, you know, we're modeling like a 15% IRR. This generally assumes kind of three, four percent rent growth in the next three years, a 5% exit cap rate, and, you know, nothing, nothing like super crazy. And then whatever they do from a capital allocation, from ground at the development and acquisition perspective, kind of becomes like the other variables. But so, like, what do we, where there's just, yeah.

Let me jump in there real quick. So this is the same, every time we come on, we have this discussion, but for people who haven't listened to prior episodes or something, like the big assumption in that 18%, 15% IRA, which, I mean, you're talking liquid large caps with a great dividend yield during mid-teens IRAs. I mean, that's the stuff of, and you were arguing this the last time you're on and they've done great since then. But that's the stuff of, hey, forget everything else and like, plop it, you know, it's not Warren Buffett in the 60s, but it's really good. you know, 15% over five years would make anyone's career very nicely. So the big assumption in there is a 5% exit cap rate. I just want to push at that a little bit. Like, they're going out, what are they buying, when they're looking at acquisitions,

what are they looking at acquisitions? So they're generally, if they're buying something that's brand new, new construction, they want to be able to buy that at a 5% cap rate. Now, Andrew, you may say, you may say, well, Bill, like, they're buying at a 5% for brand new. this is not a brand new portfolio. That's what I was going to say. There you go. I'm anticipating.

Well, I think what's important is that you have to realize that they're willing to go buy that a 5% cap rate because obviously they think that that's a great deal, right? And think about like who has a capital. I mean, maybe aside from like KK or Blackstone, like there's not all the private buyers essentially are out of the market, right? Like if you are forced to sell a brand new ground, that development at a 5% cap rate, you're likely in a position what you have to sell. Most people, you know, most developers, like, if they could, they will continue to hold this

until at a time where they could exit at a better price. So, you know, keep that in mind, right? Like, just simply because you see something transact at a certain price, especially if Mid-American Camden is buying a brand new at a five cap doesn't mean like that's like truly, right, like where the market is. And also, like, just kind of going back to, okay, well, this is not a portfolio, you know, this is not like one or two year old. This is an older portfolio. But I think there is something about, like, you know, the publics have been trading at a discount to private for a really, really long time. But when you, when you, and this is not always a case, right? David Simpson famously coined the term, you know, liquidity premium, like there is, historically

should be a premium. And I think we're about to go into a period where these, and you're not, investors today are not paying anything at all, right? You're not paying anything at all for that optionality. Like, like, I would make the argument that if you got a cost of capital advantage, you're large, you're liquid, you're diversified, you should trade at a premium, especially if all the private players are kind of, you know, got their hands tied behind the back because they can't do anything. And then these guys become, like, the acquires, right? Like, these assets, should trade a premium. And then I think also just from like a capital allocation perspective, both Midwreck and

Campon has been kind of like plotting along for two years where they're either slightly negative, you know, there's a little bit of NOI decline or flat an ally decline. We're about to kind of go through like a three-year period, likely we're modeling kind of like three percent NLI growth. And I think like the algorithm will kind of pick up on that. And also just like it becomes like safe for some of the rededicated firms, you know, funds like your new ving, your coensteer to say, hey, like this is quote unquote investable, right? And that is like that is our strategy. Our strategy is RLPs give us patient three year capital for us to be able to kind of stick, you know, stay with a with a thesis, right? As long as we're right in it. Right. And then like there's all the market participants who's like, oh, we can't, we can't, you know. own this going into if NYU is going to drop even just 1%, right? So I think a lot of that is going to potentially come back.

And it's important to kind of think through on where the new buyers are going to come from. And I think a lot of traditional re-investors are going to start to overweight, you know, these names. Let me ask a weird question. You were at, it's in NYC, you live in NYC, I live in NYC. Yeah. You know, we've got the mayoral race coming up right now. And I know a lot of my friends who are pulling their hair out over the predictive markets and who's, particularly who's running in second place. I mean, obviously there's a huge political factor, but even ignoring that, you know, we've seen, and you and I've discussed, you've seen the issues with rent control.

You've seen issues with huge increases in operating expenses, all this sort of stuff. What were you hearing? And this doesn't just apply to RASI, though, obviously I was talking, they're thinking about RSI, but the overall issues with New York City apply. to all of your big office building companies and lots of people with retail exposure everything what were people here what were you hearing about new york city real estate specifically at nary so so specifically at naird um or just in general i just your general thoughts but yeah so um what's interesting is that new Andrew we did we did podcast um uh i guess like two years ago on clipper, right? And at the time, we still had a lot of that COVID hangover and I remember

like, Vornado was $12 at that time and people still thought that, you know, New York City is like kind of like, it has a fully recover, has it, right? And this is the first time that we heard that, oh my God, like the fundamentals in New York is just, it just, you know, everyone loved New York City exposure from like a health of rent growth, just the fundamentals, et cetera, et cetera. And was that across the board office retail real estate or were people? No, this is particularly like in residential. Now, this says nothing about like the political conversation, right? Like, like I think that what we've been kind of pounding on the table about New York and New York City and why we love New York City so much is that you can't really

built anything here. And then all this crazy rent regulation makes it even harder for a developers to develop because you're developing into this extremely uncertain environment. So, you know, what I, so we did, so what we've been hearing from the conference is like the, the, uh, the equity residential is the center of the world. Like, they're just kind of like, like talking about, you know, how much they like, you know, the New York city or the New York like kind of like the tri-state adjacent, you know, how strong that, that, that, you know, the fundamentals are there. Now, politically, you know, there's a separate conversation about like this, this, you know, the mayor candidates and, and, you know,

some of these, you know, forever freep freeze, you know, the government, government back, you know, supermarkets, et cetera, which like, I don't like to get political, but like, I came from a communist country and, and, and I, I just hate, hate it, like, you know, if we're going back to another, you know, price control environment, right? Like, this is, so. Look, noted, it's not like the New York Times is the Wall Street opinion board, but I did see this morning that the New York Times is like, look, all the candidates, we don't really like any of them. We're not endorsing, and we're not endorsing anyone, but we would specifically say, like, these proposals are crazy, and the background here is not what you'd want in someone who's going to run 300,000 employees. So we would specifically recommend you leave the candidate you're talking about off the ticket. Oh, I did not see that.

But it's a little bit surprising to see the New York Time, you know, come out with something like that. Yeah. You know, because sometimes like, oh, is this just my super right-leaning, like really conservative finance friends who are freaking out about this? And like, am I crazy to be freaking out? And then you see the New York Times like, no, no, this is pretty crazy. Okay, this is, okay. Well, I mean, to kind of give you a little context, like we're very much in the weeds in multifamily and regulation all over the country, right? And if you look at a market like Washington, D.C., where they kind of pass all these regulations where you basically can't evict people.

And then what they found is that the affordable housing providers, the developers and the mission-driven providers, they got themselves into financial situation where these are people who are building the affordable units. I can't recall any names right now. but, like, if you can't evict people and people just decided not to pay rent and there's more hazards involved and these are the really good Samaritans, the people who are building affordable and they're going to go out of business and they have to file for bankruptcy, I mean, that was, I think that was like a wake-up call for politicians and they say, look, you can't, like, you can't just pause rent, rent growth, et cetera, but like we probably should have made this conversation into like a, you know, like a rent regulation. It's topical and you were there, and I was wondering, like, as you're saying, it seems like New York City fundamentals have really turned around, but I was wondering if the people who are going to be most impacted or the people who own New York City real estate. So I was wondering if they were indicating any hesitation or, hey, you know, we're going to wait to buy new properties until we see what this looks like. Or if they're just like, look, if you think about it, like, from what we heard is that like the big reeds, what the exception of Clipper, Clipper actually has some rent regulated exposure, right? bigger, the bigger boys, the Allen Bay, the equity residential is in the world, they, you know,

their units like, you know, I think, I wouldn't say there's like zero rent regulation because yeah, Alabama's like a very fancy apartment. Yeah, I mean, they're much higher end. So, so, so in a way, they may, they may even be like, you know, doing this and be like, oh, like, you're going to put in rent regulation. Like, our assets got to be worth more because, like, from a long-term development perspective, there's going to be very little being built, right? So, Um, so that that's, you know, we, we, we were a lot more focus on some of our names like the Sun Belt. And then we could take the conversation back to Sunbelt in the Sunbelt markets. I mean, it seems like there's, there's a lot of political well to not impose rent regulation in these markets, in these Sunbelt markets. And I think, you know, population growth continues to be a trend. And, um, so we're, we're kind of, by the way, Andrew, I did, I did a little like, like one thing that we we do sometimes with our investments is that we like to look at what we said like our underwriting and we like to do a little bit of post like compare what has actually happened versus our stated thesis

and and we ran it's a it's a post-mortem it's a good practice I generally don't like to do that because I don't like to see how terribly wrong I was and you know I rub my nose in it already but it is a good practice no it's good process and then it's also like the state of theme versus, like, what's actually happened. So far, it's tracking. Usually when we know we're tracking a thesis, we gain more confidence that, you know, we know the situation.

And, you know, I crunch some numbers, late 23, when we did a podcast, if you were bought between 115 to 130, right? And how they tell today, IRA is between 14, 17 to 24, like, 22. If you, like, were sold it recently from, between, like, 155 to 170, the IRA would have been like 17 to 30s, 38, right? So, like, it's, it's, it's, it's, it's all, like the big gaps in range, but like the

bottom is like, you know, just a hair under 15. And it kind of gives us a little bit of confident that, hey, like, you know, we kind of got the thesis right. I think like on a three year go forward, like we're on the writing to like somewhere between like 15 for four years, 18, for, four, four, for three years. And, and we like stick this. And this is like one of the bigger part of our portfolio. And one of the things I'm trying to do today is just like create like a portfolio

approach because maybe some of the listeners say, well, what's so excited about a 15, 18% IRA? Like that doesn't sound fantastic. I mean, maybe they were like original investors in Fartcoin or something, but 15 to 18% multi-year IRA, you know, that's incredibly tax efficient. That's the stuff investors, you know. And then it's also like the asset quality like, like Andrew, I mean, you and I, have all been in situations, right?

Like one of companies that drove me nuts back in the days was Calumet, right? Like, you know, the stock could be all over the place. And literally, like, a lot of times you're like, this renewable project that they did in Montana, like, kind of like came out of nowhere and, like, became like the bulk of the value versus, like, you know what you're getting. There's like a much tighter range of outcomes. I mean, literally just owning hundreds of apartment buildings in the Sunbelt over a dozen in cities. The range of outcomes is not going to be, you know, like the Calumet and the Montana

Renewable, right? So we like to comment. Let me ask you a question and range of comments. I just look, you know, if we were reround four years ago, all these Sunbelt people will be talking about, hey, work from home is great for us, right? Because you have people in New York City, New York City shut down. They don't want to pay $5,000 a month to live in a shoebox. with everything shut down, high taxes. They're moving out to the sunbelt and working from home. And that kind of reverse, kind of, I don't know. But I'm curious today, AI is coming rapidly, right?

It is here, but it's really starting to impact jobs, I would say. What are you hearing from these people, just particularly on the Resi side, but office side too, if you want, you know, if it's data side, they're just popping in bottles champagne. What are you hearing from them on, like, trends in AI? I'm sure that it's really helpful for the Resi guys in terms of screening and background checks on applicants and stuff. But I'm wondering if they're saying in this about, hey, we're seeing a lot of people

move out here because of AI. Or you could tell me the reverse. Hey, AI, you know, there's five big centers where all the big tech jobs are happening. And it's actually really self-reinforcing the network. What are they kind of saying that? You know, they're not really saying much about like where people are migraine to because of AI. And then like, if you think about what the actual AI jobs, I mean, you know, the actual

numbers of people working, I don't have the exact number, but my gut tells me the actual numbers of jobs working in AI development in New York City and San Francisco probably isn't going to make a dent in the Sun Belt. You are absolutely right, like in terms of like screening tenants, like just like making leasing a lot more seamless, where you don't need a person to kind of give a tour. You know, a lot of these, that's, you know, one thing we haven't talked about, right, is the bigger REITs have to scale and the ability to invest in a lot of technology that allow them to implement all this technology across, you know, 100,000 units, right? As opposed to, like, if I own one building that's 300 unit, like, I can't, you know,

justify spending millions of dollars to come up with, you know, some sort of AI algorithm. So, so these are structural advantages. So unfortunately, I don't have a... Have they quantified how much that advantage is for them? Can they quantify that? I, they have not, but I can give some... I totally... I totally believe it exists.

I'm just interested if they said, if they could quantify and be like, hey, you know, our operating costs, and again, I totally do exist. If they say, hey, our operating costs are $20 per unit below your mom and pop who owns one 300 unit building because we, but I totally believe it exists, yeah. Yeah, no, I mean, there are a lot of antidotes like, you know, like the bigger guys are not doing any paper leases. Like there's like literally people that are just not at these organizations anymore because not setting. out paper leases, waiting for people to get a WEC signature back, you know, from a leasing perspective, you don't need as many people on site to do the leasing, even something like leak detection, right, having that capability. So I don't, they haven't given quantify any figures, but, you know, I think one thing that you could do is kind of look at the EBITA margin and

NOI margin of these poetry reads. And they're, you know, significantly higher than most. most of the private, multifamily deals that we've seen. And just, you know, I think a lot of it's scaled. I mean, they also own better assets in our opinion, right? They own bigger assets. They own more institutional quality assets. So it's hard to pinpoint. I mean, I will love, you know, maybe that's a question for them.

You know, next time I might see these REIT management teams. But definitely at NAEP next year. It's like, you know, love for you guys to quantify how much operating improvements you guys get from that. But I, let me see. just looking at my notes here. Oh, by the way, like, you know, just a few key notes. We went through this time period. The max, like, NOI drop was less than 2% between Mid-American and Camden. They're currently at mid-95, like 95 and a 5% occupancy. So despite all

this worry about big surge and supply, you know, occupancy really did not drop. I think part of is also they're very good at kind of like pricing everything correctly so that they could like target certain amount of occupancy, and they strategically decided to, like, you know, give us some price to be able to, like, keep occupancy at those levels. And really, like, you know, all this hoopla that, oh, the other thing that's, like, real important is that the income to rent ratio is between 21 to 23 percent, very, very affordable. I mean, like, when I think about, like, what people in New York City pay for on an income to rent ratio, like, right?

I would rather not think about it to be honest to do it. So, so I think, you know. know, oh, the other thing is like, you know, you take mid-America, they increase the dividend from, like, 560 per share to 606, right? And this goes to, and I, this goes to, we, we heard a lot of stories of private multifamily investors, you know, investing in a deal as an LP, and then the GP use floating rate death, you know, the debt reset, and guess what, like distribution is suspended. And we have not seen that at all. If anything, they, they continue to, increase rent, and they continue to use all that excess cash flow to either do acquisitions, do ground the developments. And a lot of them, you know, they're kind of in there four times net debt to even though they could probably take that up another turn, which is a billion a half, right, for a company like Metamarka, for them to either do more acquisitions or to do ground that development.

So these are, I mean, you know, these are clearly the more structurally advantageous players. And then you could buy them, you know, in like 25% loan to value, covers the interest seven times, and you could do 15% like owning these. And, you know, we consider, like, we own, these are very large allocation in our portfolio. I mean, they're in that 30, 40%, like, our overall exposure in multifamily REITs is about 50% in one of our hard asset portfolio. and we love the multi-family asset class. And we particularly love the public valuation because of the price that we're able to get. So very large.

And I can do it again, you know, I think they'll continue to, you know, help us, you know, perform. Let me ask you, so every time we talk REITs, I tell you, and I'm not the only investor. And I'm not accusing any of the, especially larger-cup REITs of this, but REITs are a controlled company, right? They are incredibly different.

to go activist on. And for a lot of these, like, again, I'm not accusing the large-cap ones that we could go find some small-cap ones that I would kind of get some drinks in me and I would happily accuse them. Oh, I, we got some. We'll get you some later on today. They, you know, they're more focused on growth for growth sakes, right? Growth is great for management teams. More prestigious, you can pay yourself bigger bonuses. They're not necessarily interested in growth for growth in intrinsic value for share sake. And what I want to ask is this, the last time we did this. And again, a lot of what you said was right. You went through the stats on Avalon. You're pounding the table on this. And I think one of my pushbacks was, hey, I don't see

management teams with a lot of equity ownership. I don't see management teams with, in my opinion, a lot of alignment. Over the past 15 months, you know, these guys were presented with a pretty interesting opportunity to create value in a lot of different ways. Did you see them, in your opinion, operating ways that kind of increased intrinsic value per share? Or have they just kind of written the, hey, our stocks were undervalued. Let's not do anything stupid. The stock go up. And there's nothing wrong with that. But, you know, it's kind of a missed, I'll just point to it. It's a misopportunity, in my opinion, if their stocks were trading for a fraction of NAV, and they didn't buy back shares, right? Yes, the stock worked because it's growing closer to

that. But they really could have accelerated by buying back shares a little bit, particularly when they were trading cheaper than NAF, cheaper than other acquisitions. Did you see any examples of them kind of doing things to increase intrinsic value for share? So I think, Not so much like, I mean, Camden did buy back $40,000 worth of shares, which is, you know, like, in the grand scheme of things, it's not like, you know, if we get to it, like I could talk about Eurofinns later, which is a lab testing business, which kind of has a real estate component to it, right? And Eurofinns recently just bought about 5% of shares, roughly 5% of shares outstanding in five month, but the year to date, right? Like, that's a great use of capital. They were kind of complaining that they're trading a half of private market value. And guess what?

Like, they just went out and they bought back five percent of the shares. They're taking care of it, right? Now, like, Camden went out and bought some shares. Now, in terms of, like, well, so this is a great natural segue into the grocery anchor theme, right? Remember last year, you and I were at a manager's retreat, and I, like, present the idea. I said, RYC, you know, Retail Opportunity Investment Corp was my, you know, best idea. And we thought that it would be sold in within three years when I present the idea. And, of course, you know, like within a couple weeks, Blackstone came in and, you know, bit on the company.

So we met with Retail Opportunity Investment Corp last year, and we thought that it was trading at a huge discount. We kind of felt that the CEO was frustrated that a lot of the buy side were asking Kroger's Albertson, you get A-Centers that if the deal goes through. So this is right in your wheelhouse, right? The deal goes through. They have to divest to CNS. CNS has a history where if you sell these supermarkets, you know, they tend to underperform after that. You have Rite Aid bankruptcy, blah, blah, blah, all these things.

And I think this year was just, like, kind of fed up with, like, all these kind of like par boy style questions that are, like, next quarter modeling. And we kind of, like, saw that. Like, we saw that in the facial expression, the emotions. And this is why we get so much value out of the, the Navy meetings, right? these one-on-one management meetings is that we could like feel the frustration come through and we're like, there's a good chance that like this company gets sold in the next three years and it's going to be worth a lot more than what it's trading at. And that, you know, that did get

sold to Blackstone and there was, you know, a full process. I think like, you know, the price, like I wish like the price was a little higher, but we did, we did it very well. We like, I mean, it was a 15% position for us last year and contributed 4% to the funds, to the portfolio's performance or what you can't complain about anything like that right but i'm i'm also laughing because i pulled up their proxy and anticipation of this and you said we we saw that he was going to the frustration at nairate and i am laughing because if you read the proxy blackstone calls uh calls the ceo on june 19th which i believe is the week after neary right then so blackstone clearly knew and like you you were clearly reading it very well because blackstone calls and within a month they

have a full process getting kicked off so you were uh you clearly reading the He leaves very correctly there. And to anyone who's young and, you know, starting to get into investing, I was, I would say, I would say this. This is my word of advice, right? AI is coming to the investment business, right? And everyone's going to be using AI. We built some in-house AI tools that had made us, like, very, very easy for us to get

up to speed on companies. Like, you know, what does your AI tool do? I mean, I think what it does is that. I don't want to, like, go into too much detail, but I would just say that we custom, like, we're able to custom pull a lot of data and then create, like, very, very systematic outlines of, like, you know, key developments based on earnings calls and whatnot. I don't want to get into, like, a ton of detail because I'm just trying to protect some of that, that, that, you know, I think everyone's going to be doing this within, like, the next 12 to 24 a month, but in that, like, period when we still have some of that structural advantage, like, I just like to maintain it as long. as possible, but we utilize it to get ready for a lot of these meetings, you know, at Na-Reed. But what I'm trying to say is, is we built AI-2s, you know, we have an in-house AI consultant that does a lot of work with us. And to anyone who's young, who's like starting

out, like, get, you know, the management meetings, you know, this is why we consider Neary the Super Bowl for what we do. A dozen meetings face-to-face. We met with them two, three years early and then we can compare notes and then we say do they they make any sense is there any body cues like someone's like super frustrated him and those are like really really important tells right we had another meeting i don't want to name names we we had a meeting with a certain reek when we went in we were we were like super excited and then we asked a couple simple question to management and and and and this year became super defensive and we're like ooh that kind of like quote our enthusiasm a lot, right?

So to anyone starting out new, like going to these management meetings are super critical. And I think that somehow, you know, that is a way for you to AI prove some of this. No, look, I think there, to your point, I think there's a reason that if you listen to pretty much anyone, I'm not saying it's the end-all be-all, but there's a reason like the pod shop people, like, if you listen, a huge piece of the guy, there are, process is going to these meetings and just like they're taking as many meetings as they can and they're inputting it in a big part of the job and like I for me personally I will say like not that I've ever gotten an MNPI but calling a company up and being like hey I can you walk me

through this press release and many sometimes they'll walk you through the press release and you'll be like confused on a verbiage or they'll walk you through your press release and you'll you'll be thinking oh this company's going to sell for a huge premium and you're like oh my god this company wants to like, they want to spend all of their money on like, you know, it's a grocery store and they want to become an AI play. And you'd be like, oh, God, this is terrible. And sometimes you'll call them up and they look, we put it in the press release. We met what we said.

We're going to return all of our capital to shareholders and we're excited to do that. And we think we're going to unlock a ton of value. And our chairman is 85 and he needs to start thinking about a state planning. He'll be like, oh, this is good to go. So it's like so AI, not completely, but it's a big way, I think, whether you're young or old. I think it's one of the big edges still out there. And it's a way it's kind of AI proof your job. Yeah, no. I mean, absolutely.

And so this is, I think this is like a natural segue into the next asset class. You know, sure. One of the things I want to do on the podcast is I kind of want to show people how it's not just a multi-family theme, right? Like, you could, in today's environment, you could build out a portfolio. And I call it, like, you could build out a football team roster of ideas. And, you know, if, like, your most basic, your safest idea is underwent to a 15 to 18 percent IOR, and then you could, you could, you know, throw some running backs and then those are your offensive alignment, right? And your running backs are going to help you score touchdowns and you can underwrite them to like 20 to 35 percent IR, right? And so we're going to be a little coy because there's a couple names that we walked away that we're really, really excited about.

But, like, we haven't totally finished the idea. I fully built our position. But the message I want to get out there is that grocery anchor shopping center, in my opinion, is as a theme, is very undervalue by the REIT world. And why is that? I think that there's a narrative out there that retail, like we're over-indexed retail in the U.S., right? And if you look at there's a great chart where it shows that from 99 to 2008, we built Shrip centers, we built kind of 3% of the existing supply every single year

for that 10-year time period. And then after the GFC, we kind of dropped down to maybe 75 bibs. And then in the last like four or five years, we dropped even further to like below like 50 bips per year in terms of supply addition. So I think that for 15, 16 years now, this is, you know, a industry where they've, I I think they absorb a lot of that grocery anchored shopping center in the strip centers, and they have not built a lot of new supply. Now, I think, like, in the interim, there's also, if you're a value investor,

you probably have looked at Saratj, Sears, and Class B and C Moore, right? And I'm laughing because I looked at Sarataj last week because they paid down some more of the term loan, and you and several others have always been like, ooh, the assets are out there. And I was like, oh, the term loan is starting to get paid down. It's getting to the last assets down here. Well, I, full disclosure. I think we had a 1% exposure to Sears or Sarataja, like, we swing trade it, and then, like, we've just been, like, not been involved in it. The class B and C mall, a regional mall, is just a really tough asset class to be in.

But, you know, this is grocery anchor, shopping center, so imagine 100,000, you know, grocery store and your Chinese state gal, your pizza shop, maybe your Pilates, and the urgent care. and I personally have a ton of experience, right? Because, like, I grew up in a family business where we were the Chinese takeout in the grocery income shopping center. I was a fishmonger in the supermarket. So, like, I know this asset class very well from being a tenant in these spaces. And so there's a historical backdrop where in the last 15, 16 years, annual supply addition is less than 1%.

It's been running at about a half a percent per year. So this narrative, like, over retail has actually, you know, I think that's that that's getting a little long tooth. I think you have the rights of Amazon where everyone thought Amazon is going to kill every single retail concept and then it turns out, hey, you're Chinese taking out your pizza, your Pilates,

you know, if anything, some of the older concepts, your stationary store, like, you know, there used to be like a stationary and lotto store like in a strip center. Those have like kind of come out. You get more boutique fitness. You get more, you know, kind of like, retortification of health care. So your MRI, you know, your radiology, your urgent cares, right,

of these physical therapies. And I think what is like concepts come and go, but what is timeless is it's convenient. You pull up, you park, you go in, instead of going to a big hospital, a big medical complex where you're pulling, you don't know where you're going, right? So we, so what's happened, particularly in Sunbelt, is that there's been a lot of in migration, but they haven't built, because to build one of these, you need 10, 15 acres, minimal. And if you're in an urban infill in Dallas, Fort Worth, like in any of these Sunbelt cities, you know, if there is one, you know, that's existing, it's hard to find another 10, 15 acres that are just sitting there in like a really busy intersection.

And, you know, we talked to some of the grocery income center reads, and they said, that to justify building a competing gross ranger shopping center, rent will have to double what their tenants are paying right now. So you get this, and I think that most of the market participants are like, have not kind of figured this out, right? So what were I sitting there with scratching? Okay, you could buy, like, if you want beta exposure, you could get regency, which like, we don't really, like, you know, I just want to throw that name out there because people really want the exposure. Regency is a strong candidate. Generally considered to have the best assets, the, you know, the best management team in the space, of course, like, you have to

pay up for that, right? And most of the Sunbelt gross anchor shopping centers, they're grown NOI by four, four and a half percent per year. And a lot of them, particularly in the Sunbelt, when they renew the leases, they're able, they usually have like three percent rent escalators. And then when they renew the leases, because a lot of people move through the Sunbelt, right, rents have gone up, but because there's usually, you know, you usually signed seven, eight year leases, a lot of them have not rolled off, right? As opposed to multifamily has reprised on an annual basis.

So a lot of those rent growth have not, so when the leases expire, they could usually increase it anywhere from 10 to 20% for renewals, and on new leases, you're getting 20%. So you naturally have a 3% escalator, plus, you know, these like 10 to 20% on renewals and new leases, it, like that algorithm, that growth algorithm, you know, becomes a really nice four, four and a half percent early growth per year on something where if you're able to buy at a seven, eight, or even nine percent

cap rate, that becomes a really nice little algorithm, right? And the occupancies are on par with a lot of multifamily asset classes. They're in that mid-90s occupancy. And this is different than, you know, regional malls. This is different than like a power center. Because on a power center, if you have some sort of major bankruptcy like a party city or Joanne, you have more exposure to these troubled tenants. But the grocery anchors, like, you know, the Kroger's of the world,

the Trader Joe's of the world, they're not usually going out of business, right? So this as an asset class, there's a couple, there's like two, three names that we're like really excited about, we're not ready to talk about today today's podcast, but like,

I want to like, you know, throw this theme out there that this is a really, really interesting theme that I don't think the market, you know, is really fully pricing it. And there's probably a reason why, if you think about like Blackstone is kind of known for when they see a shift in the market, they tend to be the one who like identifies like a theme early. And they just went out and bought RIC at essentially a six one cap rate, right?

So if you kind of like piece everything together, now granted, like that RYC portfolio, was 97% occupied, like super high barrier to entry, you know, that's a very, very unique asset. Like everyone that we talked to in the private market, they're like, it's almost impossible to get that West Coast exposure and then kind of like in one deal, Blackstone could do that. And I think Blackstone got a really good deal at a 6-1 cap rate. They could like keep growing NOI, call it like 4% per year. Like that math just works really well if you're financing with a 5% in that 5% or even like a low 6% range. So that's, that's a thing. Like, we kind of view that as running back. We've got a couple

names. Not ready to discuss today, but like, you know, we got one name. We're underwriting to, like, the mid-30s, I are in like a three-year hold. I think, you know, either they either get sold in the next three years or they kind of get, kind of just, like, naturally, like, grow into a certain scale and, like, some of the, some overhand gets cleaned up. And then, but, like, there's others that we, like, on the right to, like, you know, the mid-20s, I are over three years. So that's like a theme that we really like. And so we kind of view that as like the running back. Let me ask you just quickly. You mentioned underwrite. Again, if I thought back to our last one or even right now, the big argument is, hey, these guys are trading way cheaper

than their private market values. Now you had something like resale opportunity or I see that got sold. But have you been surprised by the lack of kind of just full company takeouts in the public markets because if I thought back to like the financial crisis what did you always hear hey if you had REITs that were trading below private market values a private equity firm would step in by the whole company and liquidated it real fast and kind of realize that have you been surprised we haven't I mean we had our in the end I can't really think of any have you been so so in this case in the grocery anchor shopping center Kimco did a stock for stock deal you know they put out another one and then there's um I can't it's like

urbiddle, something, I can't pronounce that company's name, but there's been two deals. So there was only been three deals. Like, if you think about, like, how many deals have been happening, you got Blackstone buying now RIC, you got Kim Coe buying the other company, and then there's like a third. And on the stock for stock deal, it doesn't seem like the implied cap rate is, you know. Yeah, it's not really a takeout, though, right? That's more a synergy play to people, if two people merged. Yeah, yeah.

And like, we wouldn't mind, like, like, you know, the, the, the, the, the, you know, the, the companies that we have in mind, like, we would not mind it if it, like, if we get, say, a 50% premium and it, most of it is in stock from someone that we think is also cheap, right? Because then we get to roll that into the acquire and a stock deal. I love just the casual, hey, look, 50% premium, all stock in a company that's cheap. We'll roll it. Yeah, I love that for all of my companies too. No, no, because, because, Andrew, here's the thing.

like you get you get two sets of SG&A and then like again like you think about like where we exist in the ecosystem versus like the bigger the bigger guys right the bigger guys want to buy five billion dollar reeds so if you take like two two you know two of these smaller ones and and ones you know two i'm just like you know doing some arbitrary math hypothetical math right one's a two billion one's a three billion you know stock for stock merger we get a 40 50% premium we get stock in the bigger one now all of a sudden all of a sudden all sudden actually is a $5 billion. Now, like, the bigger, the bigger, you know,

refunds can say, hey, you know, this is liquid enough, this, like, we can own this, et cetera, et cetera. So, like, I think there's just, like, a lot of ways. And then we've seen three MNA in the last, like, two, three years. Like, I think that's, like, you know, fairly active for the reed space. Let me, just while I tell of mine, I want to hear,

so you've walked through kind of, like, your offensive line and your running backs, and I want to hear about your wide receivers a second, But let me just, before I forget, ask this question, office space in general, and maybe San Francisco in particular, but office in general, I have been surprised by how positive I've heard people overall on offices over the past year. I'd love to just ask you, like, kind of what are you hearing about office space in general? And what are you thinking about kind of office reits in general? Yeah, I mean, I think, I think that you got to, you got to like barricade into class A versus, like, class B and C, right? And Class A, and our next idea is an office idea, Alexander's, which owns a Bloomberg global headquarters.

I think we're definitely like, by the way, kudos to your guest who called Vornado, right? Like absolute bottom, yeah, absolute bottom ticket, bottom tick that idea, like great call on it. We, you know, we bought some Vornado preferred at that time with like 11.5% EO, like 45 cents an dollar. We made Alexander's, which is Bloomberg headquarters, a 12% allocation earlier this year because we had a, like, we had a view that, like, we're past the, the office's debt narrative. Okay. What, like, we, we do believe now, like, the Bloomberg, Global Headquarters has some very, very unique characteristic. It has a lease that runs out to 2040. And you got Bloomberg as a tenant, right?

Like, from a credit perspective and the fact that it's global headquarters, it's not some, like, satellite office. So that's a very, very unique asset on its own, right? So we need to mention that. But I do think that, like, if you own Class A office building in New York City, I think we're past the narrative that office is dead, like, for the Class A off, for the Class A well-located office buildings, right? The Class B and C, I think, are still very trouble. But what I do see is outside of New York City, the class. B and C. Now, of course, like, you know, you and I talk about net lease office properties and our friend David Bashian, like, you know, there's a few people who like absolutely nail that

trade, right? And you could very easily say to see that at the right cap rate, these class B and C offices transact. There's a market for it. I think what's changed is pricing. And then I think that anyone could kind of like run a DCF on, hey, if you got 12 years, left with a good credit tenant, right? You could kind of like run that DCF and you're getting at a cap or you get all your money back and then like what's a residual value of that of that office at year 12, right? Like it becomes easier and it's actually one of the less interest rate sensitive asset classes out there right now. Yeah, it's funny when you and I'll disclose I'm position in lot. It's funny. When you buy something at a 20% cap rate, it doesn't particularly matter if

interest rates go from five to six or five to four. You're kind of just hoping that. that those assets don't get crazy, crazy worse. Last quick question, and then I'd love to focus. We can talk more, Alexander's or if you talk about HPP. You and I are talking, it is June 16th. Last week, Cohen and Sear, who you mentioned, it backstopped a deal. HPP at the time.

Now, people can go look the whole thing up, but this was a company that has lots of office exposure, particularly San Francisco. Stocks when hammered, tons of leverage. Last week, the stocks trading at roughly $2.50, $300 million market cap. they announced a deal to raise $600 million in equity. And I was just curious, did you have any thoughts, any reads on kind of what happened at HPP

to bleed into the sector? Any HPP specific thoughts? Not a ton of, I mean, we kind of had a tiny, tiny amount of, like, I think at the time we bought it was elite, like it was just like a little co-option on it, just like to kind of see, like, if fundamental was improving in San Francisco, that it's like a way for us to get some exposure. We've seen when SL Green, this goes back like to 2009, right? SL Green at the time was down from like 130 all the way to like 10 bucks, right?

And they did a tiny little bit of equity offer, maybe like increased share counts by 10, 15%. Now, depending on who you ask, right, that's either a lot or very little, right? Obviously in this case, you know, if you've got to increase your share count by more than 150 I don't know what the exact number is. I think it was literally doubling the share count. It was the triple. It was almost two X as many shares. So I think it was tripling the share count.

I mean, obviously that that stays off like any sorts of like near term bankruptcy. But like at the same time, like when you triple the share count, you kind of pulled like an AIG or Citig or Citigroup, right? Like you you massively like dilute the future upside. My friends who I talk to, that's what's interesting. So I was like, hey, it's kind of interesting because if you look at it. as a call option, you've really extended the call option by raising that much cash. But at the same time, all my friends were saying, like, hey, they've got a lot of San Francisco. San Francisco's kind of turning. If you do a nav, because it's so levered, like, yeah, there's huge ranges,

but I kind of think the nav is $10. When you dilute yourself by triple, well, now goes from 10 to 450. So like, there's all these pulls. And then it's kind of like, hey, yeah, maybe it's better buy on an EV today. But I was kind of playing for, if I'm right, I'm getting a triple. So it was just weird, but yeah, it was a crazy situation all around. And also, like, keep in mind, I mean, this is a read that was by match years at like 21 and decided to like invest in a studio business. And, and I don't know, I mean, like, if you look at some of the mid journey videos out there, like, it's really making me think like, like, man, like studios or like mid journey. Like, like, you look at what the AI, the general of AI

can do with video today. Like, I'm like, I don't even realize we're not even taking this podcast. This whole thing was AI. We just had to make a. podcast with Andrew and Bill, and, and so, so like, you know, when you, when you get, again, like, like, we don't know HPP, it's a name that's been, we've had a lot of people ask us for opinion. We never really had a ton of exposure to it. It never felt comfortable with the, with, like, the balance sheet, et cetera, et cetera. And I'm glad, like, you know, we got like a tiny, maybe like, 10 basis point in, and leaps in it. Like, like, nothing that, like, kind of, like, like moves the needle too much, right?

If we're wrong on it. But, you know, to kind of what you were saying about, like, management and incentives, right? And again, I don't know this management team that well. I think that when you buy back shares at 20 and the issue shares in the mid-toos, and then you're kind of doing it and not giving people that $10 upside, you're doing it kind of like to, let's just call it what it is, like likely to just preserve your job like you're like you kind of doing everything wrong right and this is where why um like if you look at clipper which is like has been like this like frustrating ownership

experience for us uh because of so many things that's happened with like red stabilization in new city yeah to that team's credit like they continue to pay out the dividend and some people may argue that hey like you know why don't you cut the dividend and just retain it rebuild your balance and she, they can continue to just so I kind of execute, and look, trust me, that's, that's like, that's a frustrating company for us to own, but like, this management team has actually, like, managed to, like, not really dilute, right, much. And it, like, has kind of retained where if people started believing in the story and, you know, the cut rates a little bit, like, you know, Clipper could potentially be a $10 stock, right?

And, you know, we put that in the wide receiver bucket. So that's kind of a long way to say, like, we don't have strong opinions on HVP. It's always been one of those names that people have reached out to us and told us, like, you know, we even got like a short pitch from it, you know. Just shout out to Waterboy on Twitter out there, you know. I kind of thought like it was neither great long and great short, you know. But, you know, everyone follow like Waterboy Capital. I think it's Waterboy Capital, but it's Waterboy. You know, he sent me a short piece on Huston Pacific, and he's been right.

So, but, you know, not a ton of, like, generally great insights on HPP. But, like, I think the corporate government does think, yeah. It was, A, it was so interesting because, again, they tripled their market guy, and, yeah, I was just looking. What about, what are some other wide receivers you're interested in right now? I mean, I think the two right wide receivers is, you know, I think Clippers are. wide receiver and we own a little bit of Seaport. You know, I think Seaport is right. You may think it's a running back, you know, like...

I'll disclose I have a position in Seaport as well. I did the podcast with Chris Waller, maybe three months ago. So people can list that, but I love Seaport. Yeah. I mean, I think Seaport has a ton of upside. I think it is, you know, look, I'll put it this way. I've been in enough of these, like, land-rich ideas, right? like these like asset rich ideas and where I just kind of learn that like there's a certain

volatility, there's a certain way that they trade. And when you don't have this like nice, steady dividend with like, you know, kind of like what I've been consistently saying about Mid-American Camden where they kind of like super anti-fragile, cover the interest payment seven times. And and there isn't like a story on like, like, can they, you know, stabilize the 10 building when I turn around and my family and not going to spend a ton of time in the seaport this summer right like we're going to like what we're tracking you know I'm going to come down with you you let me know when you want to go I've gone to the my wife we did her birthday party at the lawn club so I I know I know the area yeah I mean hey croquet game in a long club hey do they

have croquet there too yeah I'm a long club I'm pretty sure it's got they got like indoor croquet okay I don't remember them cooking but we did uh we did the giant beer pong obviously and then we did uh can jam i was having so much fun with that we did a ton of stuff it was a blast man yeah yeah i will say you go to lawn club so we went on a friday night and i'm sure people want to hear uh people want me to regale them with the stories of my wife's birthday but we had a ton of fun and it was reasonably crowded but i will say we were like friday night and i was kind of i was talking to some friends who were there who some of them are public with our investors. And we were like, hey, I don't know if this is the bull case or the bear case for

Seaport where it's like, this is a ton of fun. There are people here. But, you know, if we were Midtown, this place, if we were at a swingers and Midtown Swingers is a put-pop place in Midtown for me, just who don't live there. One time I put a charge for, my wife was away and I put a charge for swingers on her credit card. And she called me up and was like, hey, I'm out of town for a week and you're spending $200 at Swingers. And I was like, no, it's put, but for me and five guys. It's not, we're not going to this. We're so, unrelated. We were saying this. This place would be out of this world pact and it's kind of it's like a bull case that we were having fun and it was really nice a bear case it wasn't completely full of a bull case that hey if they could fill

up the rest and all of this like really got the thing going but yeah i don't know what i'm saying on sleep where at all i know i mean i think the um like i follow that story for a really long time right and uh you know i got kind of antidotes going back to um 2017 2018 and uh you know i think i think a lot is going to really depending on the new CEO, how he's going to reposition, like how he's going to drive traffic to these assets. And, you know, like, there's a case where, and I mentioned some of this, like on Bill Brewster's podcast, I think, I think how they drive engagement and traffic, because with more traffic, that's how you're able to get the operating leverage in the restaurants and all these. And there's, you know, like, I mean, you know, that,

could be a two-hour conversation or a podcast on its own between why you, me and Chris Waller and talk about what we, you know, what we're looking for, so to serve. The asset values are totally there, right? Look, I do like what you said, though. You were like, hey, I've done a lot of these land rich ones and the volatility is there. And you're 100% correct. Like with Seaport, I kept being like, hey, there's, you know, $18 for share of cash. It can't trade for too far below 25 just because you start getting to the cash covers it. But you're right. Like, people don't care. small cap basically controlled company people don't give they don't give one fudge what what how much cash on the balance sheet they care about they're seeing articles on 10 building is burning a hundred

thousand dollars a day in cash flow and yeah there's not a lot and you know i think you and i both had the same thing yeah you haven't seen a crazy amount of room but that's because it's it's real estate in new york city like it takes time to lease these things up and i think to get the meow wolf leased on and to yeah get to 50 ready like i i actually think they're moving pretty darned quickly No, I agree with you. I do agree with it. I think I have, one thing I have noticed is that I think when they decided they were going to do the spin, you know, give like our listeners a little context. Like I used to run into the former combined company CEO and he would tell me like all the weekly operating stats and whatnot.

And I'm kind of like, you're probably like to engage, you know, like, because he's running a huge organization with like all the NPCs. he's, et cetera, et cetera. And then he's telling me about, like, weekly restaurant sales, like, at the seaport, right? And I'm kind of like, you probably like, hold the chest every time he saw the reports. No, no, he was actually like really bullish, right? Because, like, you know, it was one point, like, it was like trending in right direction. And then I think like once they decided that they're going to spin that off, right? Like you see like a lot less involvement that's kind of like, that's probably someone else got to come

and then fix that, right? And I think, like, I think that what they've done here is right, like the MPC assets, the War Village, the Woodlands, like the Summerland assets, that fits in well in a different box, right? And then the Seaport is like a whole different, you know, I actually think that given all the press releases, and I also actively follow them on Instagram on their, on the concert series, like they're trying to do more with the concert,

They're trying to host more consular events, which would drive more foot traffic there and, you know, we need people there. You need people to spend money there. And I think, like, you know, it also kind of builds a better brand, right? And so we're, you know, tracking it very, very closely. Again, you know, we view that from like a portfolio allocation perspective. Again, going back to the Mid-America Camden, F-R-PH, those are offensive linemen. They're like a big part of our portfolio. We have, like, other, you know, multifamily names that in aggregate makes up 50% of portfolio.

The wide receiver clipper and ZPort are kind of like two to three percent allocations each. They're more smaller. They have more torque, right? You know, they have more torque, more volatility in the names. And then, you know, like the grocery anchor shopping center is probably going to be a big part of the portfolio as well. You know, we have, you know, other. another unnamed multifamily because we're trying to build a position where we think that's probably going to get taken out and where the IR is going to be higher than the MA-C-P-T, it's a slightly

smaller company. It shall remain unnamed right now, but, you know, it's like, like, you know, what would do more on the writing on it. So, like, we kind of look at everything from a portfolio perspective. And Andrew, this is not the case before 2022. Before 2022, like, like, we may be able to find one or two really, really good, high conviction ideas. And in today's environment, we could build a whole team. We can build the whole roster. And maybe, like, you know, one thing I promise is, uh, Andrew, I talk about this. I'm like, hey, like, you know, it'd be really fun to see if I could, like, build the roster, right?

Like, built the whole full team roster of names, like, on this. Who's the quarterback? Who's the quarterback? I guess, like, you call me the quarterback because I'm calling the plays. I'm making more like, I'm the head coach, you know? You and the head coach, yeah. Yeah, I'm like the head coach. I'm like flexing the exposure up and down, right?

But want to talk about some special teams? Yeah, let's see some special teams. That's some special teams. I think like, you know, I think Dream Residential is really, like, this is really simple, right? You know, early this year, there's a tiny little Canadian read that came out with the press release that said, we're exploring strategic alternative, which everybody in this business knows that, you know, they're looking to sell themselves. So dream residential.

At the time, I think, you know, it had a nice run from, like, high six to high sevens. And we're looking at it. They have a published nav of like 1330. And we're like, we're able to buy this at like 770, 780. It's very illiquid. These names are very low, like a phone disclosure, okay? And I'm like, you got a $13 nav and we're able to buy it at 7.7.

And we like got on the phone. We called all the brokers that. And we even tracked down a broker who sold these assets to the read before they went public. And they knew everything about all these properties. So there's 15 properties, three different markets, class B assets. And we were buying at like an A7 cap rate. Today there's 7-8, right? Today, like the U.S. dollar denominator units is 915.

The nav is 13. I think there's going to be slippage from liquidation costs, et cetera, et cetera. Maybe you get $11.50, 12 bucks, right? From an event-driven perspective, that's still like a pretty good. nice upside from like 915 that you're buying today. And again, like you're buying multifamily in a 7-8 cap rate. Now, granted, this is not Middurg and Camden's quality, right? But there's always a buyer out there.

Andrew, what I learned about multifamily, why I was so bullish on it, is that you could be class A, class B, you could even be like Class C, all right, C plus. Like, we don't really like to go into Class C. There's like a buyer in every local submarket for like every spectrum of age because the older assets, you know, the, the buyers could say, oh, we're going to do some sort of value ad. There's like a value creation story that they could tell, right? So very simple, Dream Residential, they hire TD securities, they're paying a monthly

dividend and annualized rate of roughly 5%. So you could buy this and, you know, probably gets done in like 12 months because of portfolio like this should be able to move very, very quickly. And I think at the cost that we were buying it, we were modeling to like a 40 to. 60% call like one year total return inclusive or like a 5% annualized dividend right like like we would have never found like an opportunity like that a few years ago remember remember there was that New York City read um New York re liquidation a few years ago and everybody was like I think it was like literally got 5% cap rate for Class B New York City office and and everyone like

every hedge fund was like in on it and and then like fast forward to today you can get like a 8-7 cap rate on, you know, multifamily liquidation, right? And frankly, like, maybe some of the long-term listeners have asked, hey, like, what about ANCO? Like, frankly, like, we kind of show some of ANCO to, like, redeploy into this name because, again, like, one of your podcast, you talk a lot about, hey, like, in a market, it's all about if you got something that is a 20% IR and you find something that's a 40 to 60% IR, you should get out of one to go by the other. And that's kind of like what we did here, right? And now that like, you know, this has traded up from like, call it like eight, low eights,

eight 10 was like kind of our average. Like it's gone up to like 915. There's still like decent upside. Like, if the spark gets a little tighter, like, you know. And then like if ANCO like trades down, like, like we may, we may swap back and forth, right? Like, it's all, like, just like, you're just running like four IORs on a lot of these because. Yeah, and exactly, forward IRAs and then like likelihood of the deal going, because it's like if it's at 12 and you're like, hey, it's 50, 50, they sell for 13, then you don't want to be there.

But, you know, if it's at 12, you're like 100%, like the LOIs are in, it's a different story. Yeah. I have a quick last question because we've almost gone for an hour and a half. And I'm going to have one last video. Somebody asked this on Twitter and it kind of struck me, why do the real estate, ETFs suck so much. Like XRE, which is the biggest one. Yeah. American Towers, which is a, you know, historic multi-bagger, fine company, American Towers and ProLogis, both great companies, great historical. They're 10% positions. And like, if I wanted a like, you know, when I think of

real estate, I think of stuff you were talking about, right? I think of self-storage. I think of office towers. I think of multifamily. And I think of, like, they're actually not that big in the real estate REITs that I'm really familiar with. So why if the real estate REIT sucks so much? Are there any that are good? You know, I mean, we really have not found. Like, you know, the one that we track a lot is the Vanguard, ETF, the tickers VNQ.

Yeah, I've looked at that one too. Yeah, I think it's very similar to XLR. Yeah. If you look at that weighting, multifamily's 8.8% waiting in that one. And, and, you know, like if you look at our portfolio, our portfolio is 50% multifamily. Yeah, and multi-families, like, one of the ones, if you were like, hey, what do you want to read?

It'd be like 40% multifamily would be fantastic, thank you, you know? Yeah, yeah, what, or even more? And if you also think about, like, when people, when a high-net worth individual or family office, want exposure to multifamily, what, like, what, like, what exposure to real estate? Like, what are the asset class that the most likely to invest in? Multi-family.

It's not like, most, most, you know, family offices will high-endent with individuals are not going to be, oh, get me into that data senator, you will get me into that tower, you know, get me some power exposure, right? These are remnants of, like, the public re-market where I think, you know, their market, actually, I'm not 100%, you know, sure what exactly, I think it's like market cap-rated. So some of these, like your prologes, your cell tower, your data centers, they're market, I think that market cap-rated. It's definitely market-cap-weighted, which is why it's happening. But it's just, like, funny to me, because to me, like, maybe it's just a sign that the market's

underserved and we need to go launch the Bill and Andrews excellent adventure, uh, multifamily REITF, but, you know, I just like, I was like, I'm just so surprised because that's what I would think people would really want to invest in. They want to invest in like, hey, I get a monthly dividend from a multifamily and triple net lease, uh, power centers or whatever. And you just don't get that. You get them, you basically get American Tower pro largest and equinex is what you get when you buy one. Yeah, no, exactly. You get Equinix and exactly, you get like Equinix, the, uh, the, the, the South Tower Reed and, and, you know, like Simon is a big component of it. Like retail somehow is like 12 or 13% of it. And a lot of it is Simon properties, which is,

you know, regional, which is fine. Class A malls, like malls, it makes sense. That's the type of thing. But, you know, in your head, when you think real estate, you think local multifamily is a big one you think up and you, as you said, grocery stores are shot. Those are the two big ones you think of because that's what like the rich dentist family is probably buying and you don't get that in public markets and there aren't really reads it just feels yeah no and i think i think like the um the the the re-etf has like a lot of a lot of like issue you know uh one of my friends um you know hopcraft have like you know talk a lot about that right which is uh like well you know when you and i first did the podcast in the late 23 we were piling table on multifamily and we made that i think

at that point, something like 60, 70% of the, you know, the portfolio was, was in multifamily. And, and that's like, you know, worked out well for us. And, and, and, and, you know, like, my understanding is that, like, you, like, the ETF kind of have an issue, but then, like, I think some of the bigger colon steers and Nouveen, like, like, they're kind of, you know, very closely track a lot of the, the ETF and, like, kind of the overall, like, copyrighted index. So, like, you're not going to find. you know, those mutual funds, re-mutual funds, like having a 34, like a 20,

like, you know, we're at 50% residential exposure in the portfolio, but like, they're got to be, you know, probably below 10, right? And you're just like not going to get, not going to get that kind of exposure. But we love, like, we love what we're seeing in a lot of these, like, simple, easy, like, for us to understand,

well, like, this makes a ton of sense. Like, every doctor, every family office would love to get exposure to some of these grocery anchor shopping centers and multifamily. You know, it's one thing that jumped out from our first conversation, and Hawkins and I talked about this too. Like, look, I would always say, hey, you know, public markets, it's a discount private markets.

That's not always been the case. If you fast forward, if you rewound 20 years ago, private public markets, traded at a premium to private markets. And that was because you had this liquidity. You weren't at risk of the B-Reed. Hey, I want to redeem and I can get 2% of my money out every quarter for the next 20 years.

you you simple taxes you could sell buy liquid like that that theoretically should trade for a premium so it's crazy going to discount bill it has been an hour and a half i have one last question i have to wrap this up because i got the number one dad had i got to go take up one last question before we wrap up you this is definitely past podcast number five you've got to get another value podcast t-shirt right uh i'm not sure if i got a t-shirt again oh okay well we'll correct that real quickly. But that's the most important question of this, Scott, I guess. But Bill Chen, Rizzoan Partners.

And, Andrew, if you don't mind, if people want to reach out to me, you know, Bill, Bill at rhizomepartners.com. And then we also write a... I like these ones, yeah. Yeah, you know, we write memos. You know, we write kind of like our thoughts. You know, we have a distribution list.

So if you email Hardasset, 2023 at gmail.com, you know, we share our thoughts, we write memos, some of it are even done on a typewriter. You know, we love to get a little more followers. And then what's great is the due diligence that we did on Dream Residential actually came from one of our followers. And we were able, so that's something that we love to build on, right? Like if you are a private GP and you want to, you know, that we can connect with and get some on the ground like local knowledge, we will love to connect with that. and, you know, full-spection mode,

people who are interested in following their content. Perfect. Perfect. Well, a hard asset, 223 at gmail.com, I get those. They're infrequent, but I really enjoyed them.

So Bill Chan, I'll follow up over email on the shirt situation and looking forward to having you back on in the near future. Awesome. Thank you, Andrew. Good, buddy.

A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work

and consult a financial advisor. Thanks.