So, talk about your most successful product in terms of the real estate environment
for you.
I don't know about specific project, I think it's the way we structure a deal for
our firm and our investors is we like to co -GP and JV with groups,
we don't like, we're in the development game but we're not in the go and title for
two years game. Our success is protecting our clients and investors money and our
own money. I mean we throw a lot of money in as well. Coming in with a group
that maybe needs a co -GP, we bring our balance sheet, we bring our expertise, we
bring our construction, so it mitigates our risk on the equity of coming in later
to close the deal. So let's say we're close to permits or something like that, or
we'll walk along and show them that. So not specific product for us, per se, more
kind of a structure. More the way you put it together. Where geographically do you
guys try to stay?
Oh, tax, high growth states, but everywhere has your specific sub -market.
So it's not, hey, all Phoenix is great. No, there's pockets that are crap. Hey,
all the text is great. No, there's good and bad pockets. It's it's really I mean
I'm not smarter than anyone else in this room. I'll just outwork anyone in this
room. I'll go before doing a multi -family I'll go canvas six blocks. I'm not gonna
rely on a third -party Management company to tell me what the occupancy is. I'll go
out and walk it myself and I'll be an expert in that sub market You know, which
is interesting because you know, we hear a lot of these AI conversations I get it
but I got to tell you what was John's comment earlier where he said we go walk
the property we do the same thing I want to walk the property I want to talk to
the local people all real estate is local anyway doesn't matter what you're buying
it's all local so you physically have to get on site make sure that what they say
is is what works makes sense so Christ In terms of product line,
is there a specific product that y 'all stay with? - In terms of asset class, mainly
multifamily and student, all class A and generally merchant built style investments
where we're building, stabilizing, and looking to monetize assets. And we do that in
a, and not dissimilar, a co -GP structure, which is very advantageous to our
investors, Because they're typically going alongside very institutional and nature
developers who are bringing in single -check institutional LPs, the likes of DWS,
Deutsche Bank, Goldman, and we're coming in alongside the Code GP side, benefiting
from getting a portion of development fees, management fees, part of the promote,
which ends up generally netting about 550 to 650 basis points higher than the
institutional LP that's in the deal. And frankly, it's nice for high net worth
investors, RIAs to get access to these institutional developers and be alongside these
institutional LPs. >> Okay. Do you all normally have a specific hold period or how
do you treat the asset? >> Right. Obviously, our goal is to optimize a monetization
schedule. So it's based very much on timing. It was much easier the past 10 years
when rates were zero and the world was flat. In today's environment, yes,
we are holding things longer. We also have a value add platform as well as a
stabilized light value add platform that I would argue today you could be going out
and in five years see double digit returns without taking development risk. Smart,
smart. - So Matt, how do you look for deal flow when you're a lender like you are?
- You know, it's always with the realtor, right? That's where the rubber meets the
road. And as far as product lines, last couple of years, we picked up a niche
position, which we've done in the past, which is we do a soup to nuts service with
seller financing, particularly on complex or commercial deals, where we get involved,
We're we're approaching the real estate community We're asking them to add the seller
financing component to their farm We're getting deal flow from that and we're talking
to sellers that would have never considered caring back paper But they are now
because rates have normalized and so in this environment whether it's a tax driven
Reason or just revenue or they don't know what to do with the money. They're
considering carrying back paper and so we cover a soup to nuts, we qualify the
buyer borrower, we service the loan, we handle the tax, we track the insurance,
we write the loan docs to address any and all tenant issues and components or if
there's any construction, there's a whole litany of issues that can fall on the
seller borrower or excuse me, seller who's now a principal and that's been a real
strong part of what we're doing these days. Interesting. Curious before I get to the
next question for you, Jack, but how many of you on the stage up here would say
that you've seen a lot of distressed property at this point?
Some. Some. I think a good amount. Cool. Yeah,
I'd say some expecting
>> Because of the future loans that you think are going to default? >> Yep. >>
Interesting. >> I would say not full distress, I'd say semi -distress.
Stuff that's not there. I mean, when I talk to a lot of groups out there that
have a war chest of a billion dollars looking for the multifamily crash that they've
had for a year and a half, you see it a little, but everyone's not jumping in
yet, that price isn't there for that distress they're truly looking distressed they're
truly looking for right yeah, and I'm not sure if the other panelists would agree,
but there there is so much dry powder chasing these distressed opportunities that the
distressed pricing moves up into non -distressed territory and the combination of that
with the You know extend and pretend until infinity is I think why we don't or why
we all think we're not seeing as much distressed as there should be in this
environment. - I also think the banks are still kicking the can down the road. They
don't want to deal with that. They're going to do everything they can, not have to
go take the property back. So, and you probably see that, Matt. - You know, fix and
flip has been tricky in Southern California. I'm helping a family office out,
excuse me, on their defaults and they're all in fix and flip. People making the
wrong assessment going in, not handling or not being able to mitigate changes in
construction costs and that's what I'm seeing.