Um, this is the third time I've spoken at the family office. Thank you, Richard
Wilson. I spoke here last year, Miami and now, um, I want to put a shot out to
Richard for having us all together. And one of the things that impresses me is he
has, uh, it's one thing for us to do well financially, but if you don't have your
health, um, it doesn't mean anything and he emphasizes that. And then third thing,
thank you Richard for bringing. He always has a philanthropist. I got taught at a
very early age that once you were able to do well for your family,
it was my obligation to help others. So anyway,
I'm Grew up. This is my home turf. I went to El Rodeo Beverly Hills High UCLA and
USC I Had a single mom raising me. I'm self -made.
My last name is my mother's maiden name. I'm self -made I worked for a firm called
Raymond James We became the fourth largest firm as far as Wealth management,
we're one and a half trillion dollars, we just surpass UBS. One of my partners is
here, Gallup. You want to stand up and wave? Anyone want to give a card or
anything to Gallup or me? Go through Gallup.
Anyway, Raymond James is just a, we can do anything and everything for you.
We take companies public we raise money I've been doing this for quite a few years.
I served my Bar Mitzvah money many years ago and When I turned 18 my second car
was a Jaguar XKE convertible if I $6 ,000 out the door then 1967 if I kept it and
meant condition. I did not be worth three to four hundred thousand today. But
anyway, every young guy who makes money. Anyway, I can go on and on. I've been so
blessed. I've been so blessed that the stock market's been good to me. I have a
great team. The other thing that anyone who wants to do business,
you can fly to Las Vegas because I live there. My office offices here, so you can
write it off, ask your CPA, come visit your financial advisor in Beverly Hills or
Las Vegas. Anyway. >> Thank you, Ron. So that's it.
You brought up a great point there. When you're investing in things that you want
to have personally, you don't ask your CPA, can I write that off? You ask them how
we write that off. So then we purchase it the right right way. So I'm gonna start
back down there with you, Ron. What are two strategies you're using capital and your
energy? What are you focused on right now?
I'm old school. I have a team that one of my partners who's not with us today,
he handles what most brokers do today. They ask the same 50 questions.
But I'm old school, I buy individual names. I call companies, for example, I said
my middle name is Income, it's really Craig.
So to give you an idea, I started buying UPS recently. They decided to get rid of
one of their biggest customers, a little company called Amazon. They told Amazon in
a year and a half, we're going to cut you back in half. They pay a 5 % dividend,
stock dropped 20 points. If Amazon had gotten rid of them, it would have been one
thing. But they're telling Amazon, we want to go to more profitable business. So
that's just one little idea. But I buy business development companies. I buy reeds.
They're all publicly traded. The elevator space should be, what do I do?
I make rich people So so thank you Alan.
What are areas you're allocating capital in your energy towards these days? Well two
things. I'll tell you one that worries me and then one that I'd like. I think
niche alternative investments are really compelling and because generally they're
uncorrelated to other things. Unfortunately, they take usually a lot more due
diligence. However, they can provide in ongoing very attractive returns.
One area that I worry about having gotten my fanny shot off years ago,
I spent seven years restructuring California's largest insurance company with a $20
billion debt portfolio. Ouch. Ouch. There's been this giant sucking sound of money
going into specialty finance I
Caution everybody to be really careful because the underwriting usually lasts for
about three years and then problems emerge So I think you have to be very very
careful Thank you Mark where are you? Focused on today and allocating your capital?
Two different things actually. I'm very involved in philanthropy. It's a core value
of mine and I've been spending a lot of time recently on various philanthropic
things, especially with the fires and different things. And then with the business,
we've been buying student housing, risk adjusted returns, where we can add value
through operations and capital improvements. And most recently we purchased a value
-add apartment building. It was on an off -market deal from a person that owned it
30 years in Upland and they had low rents and it was positioned to add a lot of
value by upgrading the units, raising their rents eventually and then selling it.
So that's the latest investment we did and we're always out in the market looking
for the deals in the haystack, and we invest with other family offices in our deals
and high net with individuals, and I'm the majority of the capital, and we're always
hunting, but it's been challenging with high interest rates, but I think it's going
to shake out soon. Aria, what is your focus these days? It's a very dynamic
question. I mean, as we sit today, we have geopolitical issues.
We have tariffs that just started. Nobody knows what the impact will look like.
To be frank, it's a very tough question to answer. I live in Orange County in
Newport and on my way here at an hour -long conversation
with another person, another individual that runs a family office, and it was like
an hour -long economic dialogue. And at the end of the day, a lot of people on the
institutional space look at yield, like what is my market cap rate? What is my in
-place, my positive leverage? Sure, that's all important, but if we're to recession,
yields come down, or treasury yields, but in my opinion, cap rate on the real
estate side. So we're real estate focused, focus, right? So, but capric expectations
should go up, right? It's a cap rates risk premium over risk free yield,
which is a treasury. And if we're in a recession on top of that, rents should come
down. So we're basis conscious buyers. And it starts with location. And I think a
lot of people, what caused the GFC and what caused kind of the current issues in
the economic backdrop on the real estate side is was leverage, but also people
chasing yield in some belt markets and tertiary markets. So being local in Southern
California, having to all last the class background on the institutional side, before
kind of forming my own investment firm, which through a father's business sale, it
was a distributor, we became a family office, were very basis conscious buying,
trying to buy industrial in Southern California. However, with immigration issues,
deportations, tariffs, I mean industrial amongst other asset classes could get hurt.
So if we're buying deals like our recent one in Irvine, we feel good, but nobody
wants to catch a falling knife. But what you know is location, basis, buying below
replacement costs and having either an all cash purchase or low leverage where you
don't have to feel like you have to sell a deal during a certain timeframe because
what if in three to five years we're in this economic doldrum and you can't
refinance out your debt or your assets not liquid. So we're very, it's a very
dynamic question. I think if anyone knows what's going to happen and then this is
like their theory, they might be in the wrong because the current data that is
reflected in what we have today is not reflective of what Trump just did yesterday,
enacting 25 % tariffs on three important import /export economies.
So that's my take. Thank you for that, Jim. Were you focused with your allocations
today? Sure.
So first thing is, I try to have an incredible deal flow network of early stage
breakthroughs because, you know, it's good to spread your bets around different
industries. If you can get in with somebody super famous, super respected,
Nobel laureates or top venture funds, two areas. One is a very unusual friend of
mine working with a company called olfactive .bio It's looking at how to replace
ozempic type drugs with certain foods that you eat.
So food is medicine, it's an interesting little area. Another area I'm kind of wild
by, there's a great documentary that came out seven months ago called Wild Wild
Space, kind of a take off on Wild Wild West, and it's about The amazing things
we're using every day that are all based on satellite information and how two
companies, Planet Labs and Rocket Labs have become three,
four billion dollar publicly traded companies. There's a lot going on in niches and
satellite, sort of like when it was hardware .com 20 years ago and then it was
hammer .com and then it was nail .com. So the satellite space in the startup world,
I'm working with a couple of those. So those are a couple of examples. Thank you.
Avni, where are you allocating at this time in the market? Well, we represent a
whole group of family offices and the specific types that we represent are usually
less on the market side. A lot of them are generational business owners where the
kids got involved, set their own mandates. So we represent a very specific type,
like a first, second generation usually. And these guys are very real estate heavy.
So I can't stop investing in real estate. But within real estate, we are looking at
infrastructure data centers. We're also looking at conversions for assisted living.
We're We're definitely always looking at good multi -family deals over 100 units.
These are just the basics. We also have very niche investors in the hotel industry,
which is global. And so we're always looking for good deals in real estate,
obviously everybody is. But something that's new is obviously technology. We're pretty
heavy on AI, anything that has an AI component. ESG is huge right now.
We're definitely always investing in good climate clean tech and not greenwashing,
quote unquote, but really, really looking at what's the net carbon emission at the
very ground level, very interesting to us as well. And what's very exciting space
for us is entertainment and tech. So that's one of the new companies. It's all
holograms. And so what you see in the sphere in Vegas. It's, it's very exciting
space to be in. So we're seeing a lot of energy there. Thank you. Since we're down
to about 10 minutes, and I have a handful more questions, I was going to check to
see if we had any from the audience first, before we go back down the panel again,
is any questions under the audience? For those of you that mentioned real estate,
are you referencing value add or development? You want me to start our both for us
value add, because we represent a different variety. Both are very impressive for us,
especially if it's in the assisted living space, value add is very important, and if
it has tech added to it, perfect.
- Aria, do you wanna go ahead and answer that too, and then we'll go to Mark
beside you. - Yeah, existing, I don't think development pencils. I mean, I think some
people on the other side of the spectrum, And what I believe and think,
oh, we're in this multi -family side or industrial side, surprise tapering.
So usually it's like a 24 -month cycle for apartments, 15 -month cycle for industrial.
So some people are like, let me break ground today and 12 to 24 months and we get
time to deliver.
know, being basis conscious, we always want to buy below replacement costs, which
means we don't want to develop, so we buy existing, so that's, yeah. >> I'm a
recovering developer, so I used to do it. So we've actually bought some things from
developers where they weren't doing as well, where we could get a great basis and
have this brand new building, and so that's some of the stuff that we looked at.
We're all about value add, And a lot of times value act can be from the
repositioning of the management. There's a lot of economies of scale. There's a lot.
I mean, one of the great advantages that we've had in buying properties is buying
somebody else's not -so -great operations, and then if you're strategic about your
capital improvements, you know, you really know the market and you know what you can
do to get what rent. We do a lot of that both student housing and multifamily.
Thank you, so we'll start down on the end
My last question for the panelists is what's coming what's next? What new trend are
you thinking about? What are you watching for? And any us comments you want to
share?
Thank you for for an open end the one comment with Raymond James we own the bank
I came from the stagecoach. The Wells Fargo owned the wealth management.
We owned the bank. Big difference. So for all of you out there, we lend, we'll
take you public. Well, but you have to be a client. We don't have to brick and
mortar. But as I said, we're the fourth biggest firm as far as wealth management.
So if you come to us, Be a client and then we'll go to work for you.
It's anyway Thank you Alan a Couple of things One of the things we do out of the
family office that Shinnecock partners is we are and I know you have another panel
on it later today We have over a hundred million dollars lent against fine art
think Picasso's Jeff Koons people like that It's been a very interesting business.
That's something worth considering. Be careful, it takes endless due diligence.
Another thing that I think is a trend.
You have Reg D offerings, particularly used in real estate. I'm a little skeptical
about it. I don't have time to go into it totally. Then there's Reg CF crowdfunding
be careful there that the loads of crowdfunding the costs involved are very high Now
I think there are better solutions to Reg D Clearly I'm prejudiced in hrx.
We figured out a way to give Control to the investors. How many times does anybody
in this room invested in invested in a REGD offering. And the manager says,
"Alan, you're too dumb to know when to sell it, so we're going to charge you 2, 1
.5 % per year until we decide to sell it." And shockingly, there's an extension risk
there. I think you have to give investors the control of the underlying asset.
And I think there's some very innovative ways to do that we're pursuing those
through AcerX. - So with interest rates being high, we think there's this location in
the market. There's a lot of people that got variable rate loans and those are
gonna sell and probably for undervalue. And then also like I said, the new product
that we're a developer merchant builder needs to get rid of it. And through better
management and a strategic buy, you could make a lot of money. - I think that's
happening a lot out there. There's some folks that are upside down on their variable
rate debt. I just seen a deal come across my desk. These folks bought it two years
ago for almost $40 million and they're buying it for 30 and the actual debt on it
was 29. So they're buying it for a million dollars over what the actual debt is.
So we're starting that out there in the market, go ahead. - It hasn't happened yet,
people keep on waiting, when is it gonna happen, when is it gonna happen? It'll
happen soon. - Yeah, it's all supply. - TBD. - I carry off of what they just
indicated.
That story of buying below the debt value hasn't occurred yet.
And in real estate, it's all supply to man, not only on existing supply, but also
available deals on the market. And we haven't really seen that storm and what's
happened the last month in the economy on top of the higher rate environment,
even if we get into lower yields, because if we're in a recession, treasure yields
drop, capital expectations go up like I just indicated. We haven't seen that storm.
So imagine we have the storm on top of like people's weariness and if rents drop
across apartments or industrial sector student housing. I think by September of this
year through 2026, we're going to start seeing a lot of deal flow on the real
estate side. Thank you. Mark, what are you thinking of the new investment transient?
I know you were talking about some space stuff just a few minutes ago. Are you
looking at anything else other than just space? Yeah, The area I think we're seeing
heat up and as the AI boom quiets down a little in my opinion over the next year,
year and a half. The area of electric vertical takeoff and landing,
evitols, which there's two segments in there, people don't understand,
they kind of lump 'em all together. One are called air taxis. And two companies
worth $3 billion each are Joby and Archer that are going to be picking you up.
They've already been doing demonstration flights in New York City and California,
they're going to pick you up at an airport, drop you downtown in 10 minutes for
$80. So the electric vertical takeoff is going to change things.
I'm a early investor four and a half years ago in a personal flying car company
that was featured on national NBC News five days ago called Aleph aeronautics where
you're going to put it in your garage, you're going to buy it at retail at a
profit for $35 ,000. This is when it's in volume manufacturing nine years from Now,
the first ones are going to cost $300 ,000, and they've got 3 ,300 orders for a
billion dollars worth of sales, but flying cars and evitols,
air taxis, and then the precursor of all of that are the drone deliveries that
you're seeing, Amazon and zipline drones, starting to do hundreds of millions of
drone deliveries of a little bit of medicine or a pizza or a salad to your front
lawn, you're going to see that coming up quicker than you'd realize maybe in the
next six months. Thank you. Just before the Miami show, I was at a car show
downtown Miami just off of Lincoln, and there was a single passenger droney looking
helicopter thing that they had on display there. But I think you get in and I'm
not sure if you actually fly it or if somebody actually delivers you some place
where it's going to land. The FAA doesn't want, they want to pilot in there right
now. So it will be autonomous, but right now it has to be piloted. And two leaders
in the personal space, but they're not cars, are Pivotal funded by Larry Page and
Jetson One, Nice play on words there for George Jetson Swedish company,
but they're they keep saying oh, we're gonna deliver in three months So the
ultralight evitols are right about to be delivered in the next couple of months All
right last but not least I'll be if you could say where you're heading the with
your investments these days Yeah, actually the most exciting part of it. I think is
definitely drones. We are looking at those as well, especially when it comes to the
play with DOD. We're also looking at humanoids. And I think it was very interesting
to talk about the hologram that we were talking about in the entertainment tech
space. Those are like the exciting, of course, high risk. And of course, real estate
doesn't die off for us. We're very focused on assisted living and senior facilities.
So that's the long -term play. Thank you. So interesting thing this year for New
Year's Eve at our country club where we were, there was an actual 500 drone New
Year's ring -in show. And I think the drones and what the colors and the way they
can control those from one spot may actually take over for fireworks down the road.
- Yeah, really cool. - And I wanna thank everybody.