Bill Chen Returns v3vFINAL

Ladies and gentlemen, how you doing? It's Bill Brewster, your host of The Business Brew. As always. This episode is the third one featuring Bill Chen. He came back for another update on the retrade. I like to kind of do these over time and check in with people and see how their ideas are going. Check out Ryan Dobrats for a different type of real estate podcast that is about the less capital intensive side of real estate.

This one is about the more capital intensive side of real estate, but I generally I like how Bill thinks. So he's back on this week and I'd say that the beginning of the conversation is kind of macrowy, tariffy and the real estate section probably starts, you know, 30 minutes into it or whatever. I mean, the tariff part is kind of weaved in and out. So that's how the conversation structured. I hope you enjoy it as always.

It was recorded on April 16th. Going to try to get it out reasonably quickly and thank you for listening. As always, nothing in this podcast is investment advice. Everything is for entertainment purposes only. Please consult your financial advisor before making investment decisions and do your own due diligence. All right, ladies and gentlemen, Bill Chen back. We're going to check in on the Read Read idea, how it's been going, what's been going on. But Bill was just educating me

on when the VIX hit what, 50? If you had, you could make 5% a month by selling puts if you're willing to own the underlying what at like A7 cap. Yeah. There were companies like Qsmart, Prologis where you were like if you so puts 5% out of the money essentially buying into at apply somewhere in in that mid 6T7 cap range, you can make 5% in approximately 5 weeks. And I haven't checked the pricing today, but it's probably

still a really good pricing. And you try to explain that to a private real estate investor that all you got to do is just commit to buying a diversified portfolio of high quality Class A self storage or warehouses. Yeah, electrologist, you could make, you know, 5% in five weeks and you annualize that number is probably better than any private lending products out there or any sorts of, you know, really like any product out there.

But obviously, like whether you could do that 12 times in a row in a year or, you know, 1011 times in a row, they're right. Like that's up to debate. Yeah, well, do it once, make you 5% a month, and then maybe you can do it again, right? What's going on with Prologis? Why is it so weak? If you look at nationwide when you were seeing so so I want to give people like a little bit of contact so that the listener air

stands. Yeah, give, yeah, give people a background on the company, but it's always been a company that I've heard talked about positively and seems good from the outside. So curious. To your thoughts, I'll give like a little bit of intro of warehouses in general in in the past decade and you know, the kind of valuation that it got to so about call like a decade ago with the rise of e-commerce warehouses, which this was like

a sleepy asset class. It it kind of got hot, got popular with investors and blocks almost kind of go around the country buying up almost like every warehouse. You know, anyone who owns a portfolio that was over 4,000,000 square foot black, someone was knocking on the door. And, and this is what happened was rise of e-commerce meant that there is a much higher

demand for warehouse space. And so it you know, cap rates started out, there was a recall gramacy and gramacy was a very successful read that was buying at a 8% cap rate and then issue an equity at 6% cap rate. And they did really well within the few years of 6 pack year. And then the cap rates for warehouses literally went from roughly 8% coming out of recession. It kept compressing year after

year. And you know, at a certain point, I think most real estate investors started realizing that this, you know, this is a big secular trend. This is a multi year trend. And warehouses kind of lost this, you know, reputation as a cyclical asset that doesn't do well in the recession. And the cap rates kind of, you know, with in a zerk world where your 10 year treasuries 1% and you buy warehouse at a core at a 4% cap rate.

And the rent was also growing something like 10% a year depending on the market that you're in. If you look at a warehouse chart or Prologis, Rexford, Torino, really any of them, first industrials, really any of them, it's just like unbelievable chart from cold like 2020, I started 2014 to 2016 to 2021. It is just like a heck of a chart. And you know they all took advantage of it. They all issue equity to go buy

more assets. And it is one of those rare asset classes where we investors kind of gave management team the discretion to have development pipelines. So they all had development pipelines, which is very rare. And then Fast forward to 2022. So when COVID happened and you know, the supply chain kind of what this is going to sound very similar, right? The supply chain got disrupted and everybody started hoarding inventory. We are all stuck at home all ordering, you know, e-commerce.

If you look at the growth in the e-commerce chart, they e-commerce grew something like five points done COVID, right? Like I don't think second blowing like huge spike and everyone rush to take warehouse space because when you start getting down to that two 3% vacancy rate, people start to panic, right? People start to panic, people lock in, you know, warehouse space and then you just like have a lit like. When you say people, you're

saying. When you say people, you're saying, like the customers that need the warehouse space start to see the supply get tight and they start to worry. Oh, my goodness. If I need more, it's not going to be there. And that's what causes the panic. Yeah. Yes, yes, no, that's exactly correct.

It's like imagining if you are some a customer in Southern California where a lot of logistics, you know, a lot of the freights come into Southern California and you know they were you, you needed to stack the stuff somewhere. There were like ships waiting offshore to offload. And I remember talking to people that worked in the industry and they were sending me pictures of just like full warehouses. Yeah, yeah. That was wild. Yeah, it was. Absolutely.

That makes sense. It was absolutely wild and. That's then you have a natural supply response in something like real estate. So warehouse gets built, right? Yep, Yep. And then you hit a little bit of a bullwhip. Yep. No, that's exactly and and the bullwhip.

I think if you look at the bullwhip, the bullwhip happened a lot quicker to the retailers, right, because the retailers did really well in 21 and then by kind of 2223 that like everyone figure out that was a one time pull forward of the man. And but like if you sign a warehouse lease, you locked in for at least you know, 3-5 years. So now the warehouse is starting to reflect kind of like that

over utilization of warehouse. And so Southern California like like a market like Southern California got down to maybe 1 to 2% vacancy and that that kind of vacancy you kind of charge whatever rent you want, right? That's just the nature of why supply demand. And now the Southern California rent is actually falling because that vacancy just by going from really tight 2% to COAB like 4% today, maybe that tidy little 2%. And then, you know, obviously they built more in the Inland Empire.

And this story kind of I'm in Southern California is a very unique dynamic, but like this dynamic played out everywhere in the US, right? And then there are markets like Chagall and Dallas where there there are less barriers to entry and they could build a lot more just going further out, right? So and then like also think in the zerpero in that sub 1% yield in a 10 year environment, you know what people what kind of

cap rate people willing to pay. If you look at some of the public Reit's like Rexford, I think Rexford literally traded with A2 handle cap rate, right. And I think the market was like kind of justified that well, if you look at the in place leases it, if you fully market to market, there's 5080 even 100% upside sometimes. So, so they think if you're paying too, by the time you fully market, market, you're

really in the fours. I mean, we were kind of getting out, we were getting out of all our warehouse positions at the time. I mean, you know, we had a couple called Induce Realty that got bought out by GSE and that so, so they got bought out and like Prologis and all the other warehouse reeds were going through this long painful process of, you know, adjusting to you a 4.3 percent, 10 year,

you know, treasury yield. So you have cap rate expansion and then I think the moment the Canary in a coal mine was when Amazon on the earnings call said they they took up too much warehouse space and they were not going to take up any warehouse space anymore. And we kind of saw that and that was like one of those rare success in moment of clarity. That was like one of those rare moments where we heard that and we're like, we're going to short Prologis and by puts in it on.

And that was because you kind of have this perfect setup of inflation was high, interest rate was likely going to go up in early 22. You got Amazon, which at what point was absorbing something like 20 to 25% of all the new construction, warehouse construction. So you have one of the biggest, you know, absorber warehouse space coming out and saying that we took too much space, we don't need it anymore and 20% of your absorption kind of just went

away. And then yeah, what Capra expansion from a two to three, you know, to 3% cap rate. It was just so like we could kind of see the writing on the wall. That's got to be painful and that's not going to be pleasant. And then but Fast forward today. So that's kind of like a little bit of a history lesson there, right? So Fast forward today, of course, like like now that, you know, nationwide vacancies in the MIT, you know, single digit number kind of, and those is the

exact number right now. But now we're getting to the point where we're like, OK, you could buy Rex for, you could buy Prologis, you could buy a lot of, you know, a lot of these are high quality diversify warehouse reeds at over a 6% cap rate. And there was a time where it wasn't that long ago, maybe like 3-4 years ago, everyone's like, oh man, you got to get in some of that Southern California warehouses, right?

It just a licensed print money because everyone wants that demand and you can't build anything in Southern California and Rexford is low way down from 80 bucks to low 30s right now and they don't have a lot of leverage, right.

So that's very reflective of a on lever drop in market price and Prologis I think was in the 16170 and the trades below 90 bucks that the whole time, the whole time there's been significant rent increases because remember there were, you know, rent increases from but you know, every time they signed a new lease, they signed new lease were renewal lease.

I mean, they were getting 4050 sixty percent rent increase also that rent increase have come down because now what you have is you have market rent flatten out and in some markets and eighteen of those markets actually trending downward, right? So, so, but like that mark to market is still very, very significant. And for most of these suites, you know, most of these suites, they're still getting a cash uplift of, you know, 2030% when

they mark the market. Now the markets kind of freaking out and saying, well, what is like like could they still get 20 thirty 30%, right. The previous assumption is when you mark to market, you could bring that lease up, you know, 6080%. Now they're worried OK, well, can you like, can you, can you get 20? Like is that got to go to 10? Is that got to go to 0? So you know, that's. Especially looking at a potential recession and a bunch of weak business confidence.

Yeah, sort of survey. Did you maybe think? Yeah, yeah. And a minimum that should be delayed, right? I think that kind of what I've been worried about for 10 years, which is when we do get a recession, what's gonna happen to warehouse utilization, what's gonna happen to warehouse occupancy? And now that risk truly is like being manifested. The market truly actually worry about that because for a good 6-7 years that was never like a concern for the warehouse REIT

investors. Yeah. Yeah. Yeah, I don't know. It's interesting, it's funny, I, I hesitate to say anything about anything anymore because the longer I've talked on podcasts, the longer I've realized, the more I say, the more I'm bound to get wrong because life just doesn't usually work out the way that that it seems. However, I did say on the Evan Tyndale podcast that I've been pinging my friends saying, why

do we own socks? And part of why I said that is I don't think that the administration this time around is really, I mean, look like, you know, when we had that big Ripper of a rally, the administration kind of spiked the football and they were like, look at how great we are. But I don't, I don't think that they're like that into the stock market and the wealthy doing well.

And to the extent that the wealthy drive a lot of consumption, what kind of goods flow do you get through these warehouses if you know there's a negative wealth effect going on, especially at the same time that you've got a tendency to be focused on austerity relative to where we were. And the Fed doesn't seem to be there. So it's kind of, it's kind of an interesting setup. I haven't been rushing out to buy this dip aggressively. I, I think if it's potentially, I don't know, it's always

historically been a great idea. Maybe it's a great idea now, but it ain't what you know that gets you in trouble. It's what you know that just ain't so. Yeah, like it's, it's definitely been very, very difficult trying to anticipate. How do you how to position yourself in this environment? Right. And luckily, we had a member on our team.

We have an analyst on the team who's been pounding the table since late December about, you know, Trump tariff policies and how that may impact the equity market. And we have some really uncomfortable, uncomfortable conversations about is this real? Is this not real? And he kind of insisted that if you read, you know, what Trump was saying 30-40 years ago.

And if you look at JD Vance's background and as the banner's background and you look into kind of like that demographic that Co for of the, you know, the Rust Belt where all these factories kind of got emptied out and a lot of those jobs went over to China. You know, he's basically say they're more serious than the market or pricing in. And we kind of, we had a lot of back and forth and a lot of uncomfortable conversation on this topic.

And I kind of get like, what I jokingly call myself the George Soros backache. Like, like at times, like I would just kind of feel uncomfortable about a certain setup, certain working environment. It's kind of like you walk onto a subway and then there's some guy who's just like talking to himself and he's like having like spasms. Like I'm like, OK, like, I'm

just got to walk the other way. I'm going to get myself out of the situation, but I kind of have these intuitive sense about some sort of risk and then we wind up going out and buying a lot, you know, a bunch of out of money puts. The last time that I felt that way was right before the onset of COVID and I was like tracking what was going on in China.

And we went out and we bought puts in Royal Caribbean on the S&P 500 index on Tesla and Nike. And I really like large liquid names that have really cheap out of money puts. And we kind of did the same thing this time around, right? Like we will puts in the indexes, we will put some Royal Caribbean again, we generally just had a view that the market was not pricing in the tariff risk and how serious and there

was a specific deadline, right. You know there was the liberation day had a specific deadline on when this was going to be announced. Now to be fair, when they announced the tariff rate, I don't think I that exceeded like my concern about what the actual rates are. And then if you pay attention to like what the rates are today, it's kind of nuts. I mean, what where they are.

And I kind of think back to you 20 years ago when I used to Co call a lot of manufacturers on and I was working for a glass importer and I will Co call all these, you know, small amount of power. Like people make picture frames and they buy glass cheaper imported from China or Korean manufacturers. And I'm just kind of thinking,

I'm doing the math in my head. If they place an order for $100,000 of, you know, flak, flak glass now, like I don't even know what that tariff rate would be, but I think it's 140%. So you place an order for 100K for your inventory, you know, like the customs officers, like no, like you got to come down with 245 K. And like what kind of small, like small businesses just don't have that kind of working

capital laying around. And I think that people, I think people really underestimating that dynamic and that what that does to OK, like now you may have to tell what are your employees to let them go. I think we're still in the early stages of that. And depending on how long the tariff lasts, this negotiation lasts, like I think we're going to really start seeing some of those effects. Yeah, well, the interesting thing too is Besson said the other day, the tariffs are the easy part.

It's the non tariff trade barriers that may take a little bit longer to figure out. You know, to the extent that it seems to me, and I think this is becoming fairly consensus. I mean, I just saw it in the journal, so it's probably the the idea. You ever listen to Peter Zihan? I, I myself have not, but my analysts have, yeah. Right. I mean, a lot of people have

like criticisms of him. I think directionally what he's been calling for has been right, which is basically like a bifurcation of the Western and Eastern hemispheres economically. And that does seem to be what they're trying to accomplish here. It's just an interesting proposition because I mean one we'll see if it's successful as a citizen. I hope whatever the definition of success is achieved.

But you know, for a long time this has been a system that's benefited a lot of people and corporate America I consider as one of those parties to the extent that we're reversing it. I don't know if it's quite the Uno reverse card or maybe there's a way to get through it all without, you know, having a lot of slack go through the warehouses and you know, people losing their jobs, which I think would hit multi family Reit's. All those things, though, should in theory reduce new supply.

So there's always that, you know, it's always the and then what question, right? Yeah, yeah, man, this is Bill. You're hitting me with all the really hard stuff up front. Well, I mean, I don't, I don't even, you know, there's no, I don't think that you can come on a podcast and have answers. I mean, you know, I watch some podcasts, they get good ratings when people act like they have the answers. But I just think it's an interesting environment.

I do think that this phrase of the decline of American exceptionalism, like, you know, try not to get too fancy with my terms, like I just like to explain it. The what term? The phrase the decline of American exceptionism, right? Yeah, OK, OK. That's kind of been, I think I, I just kind of viewed as, Hey, if you operate in a market like this is how I would just

explain. I'm like, if you operate a market where there is rule law and the rule doesn't change daily, people are going to pay a higher multiple for that stock, right? And if you operate an environment where people can't trust you and the rules keep getting changed, you know, people are going to get scared and they probably don't want to pay as high of a multiple. The same reason why Costco trades at a very high multiple and then a cyclical company like an airline don't, right?

Because you don't know, it's a very simple concept, right? Like you want like steady recurring cash flow. And it's like the way that we're trying to position portfolio is we, I think initially there was a way to position, identify which companies will get hurt by tariffs. And now the games are changing so fast that it's hard to like

play that game, right? Because like if you were thinking of a company like Apple that, you know, the Worship Journal had an article that says that an iPhone cost $600 to make at 145. Like, like the tariff alone is like 900. And then over the weekend, you hear that, that there's an exemption on, you know, all these electronic products, right? And then like, kind of what like came out and said, well, no, no, no, actually there is no exemption like that. Just like makes my head hurt, right?

You know, you're like, you're like, how do we price a stock like Apple, right? Yeah. Well, yeah, they're messaging has been very mixed depending on who's delivering the message. And I think so, so we've kind of thought through and we kind of decided to position the portfolio in such a way that that I think the odds, you know, we're trying not to be tariff experts, right? We're trying to just kind of think along the line that recession, odds of recession is likely higher, right?

Multiples are likely lower across the board, although you know, if you look at multiples pay for companies like Walmart and Costco and Centas like like I don't know how given everything that we know, you know those couple ways like Costco and Sinto still trade at like 50 times earnings, right? I I want to be a value vessel without complaining about Costco's multiple, right? Love their product but you know

I hate their multiple. If you think everyone's a rational actor, if you actually believe that, and I've complained about Costco's multiple for a long time and been wrong. So take that for what it's worth, But I guess you could say, OK, the probability that they're not, let's say I only get 2% real if I'm already really wealthy, 2% real doesn't kill me. You just gotta be willing to lock in the duration, right?

It doesn't necessarily. To the extent that you've already made your money in Costco, it may not be about optimizing for return at this point. You know what I'm saying I mean. Yeah, yeah, no. Now the market overall should be selling something to optimize for return and I don't actually believe that. I think it's people hiding out in places and I think it's, you know, short term stuff. But if I had to make the argument, that's the argument I'd make.

Yeah. And then and then I think that's where I will make the argument where going back to you some of the Reeds and at multifamily because we had at this point that this will kind of be like a third podcast on Reit's right on multifamily. Oh yeah, that's right, we did the space. I forgot we did. This Yeah, Yeah, we did the space like at the almost like close to the bottom, right. Like that was awesome.

Yeah, that was awesome. And so like, like if you're wealthy already and you could buy Costco at like essentially 2% cap rate, right? If you invert to multiple at 2% cap rate, it grows faster, right. Better company than multifamily, right? But like you don't get a dividend, you get a half a percent dividend. So you're buying something at A2 cap, right? Growing fast, but actually not as fast as like Southern California industrials back in

21, right? So you're starting at 2% cap rate and then versus like you could buy multi family and get almost like, you know, around like a 4% cap rate today. Or you could buy something like AQ smart, which is self storage, which is like a MIT 5 dividend yield, you know, MIT 6 cap rate. Like like if you're wealthy already, now you actually get like a current income. So I don't know.

I mean, like to me, you're not buying, you know, a company like Q Smart or Mid American is not as good a company as Costco, right? But I think that it's not grown as fast, but I think that the current yield and the multiple, like if you invert the multiple, you're probably, you know, you're paying somewhere in the teens multiple for these companies versus you're paying, you know, 50 something.

And then it it it means like years and years have grown into it now, like nothing I'm saying is new, right? But like, you know, if you want to make the argument that like if you're wealthy already, I'm like, I rather own some of the apartment reads and some of the self storage reads. And you know, this isn't this also isn't like some tertiary

market Class C asset, right? Most of these assets, my analysts and I drive around in Queens in Brooklyn that we look at some of the Q smart and you know, this is where like I could kind of get a little weird with like what I think an attractive asset look like. I look at like a six story Q smart self storage in the middle of Brooklyn surrounded by 15

story apartment buildings. And I'm like, that's a beautiful asset because I know from a NIMBY perspective, no one's going to be able to like it's very difficult to develop new storage in Brooklyn, Queens. And I look at that asset and I'm like, that's gorgeous, right? Because like, I know from a new supply perspective, I know that there's very little.

And then if you go to a market, so like there's certain markets like in in parts of Florida and in the Sunbelt where I'm a part of problem with like a lot of these sell sorts reads why they haven't worked in a while is that they built again, they built a lot of new supply in, in that 2122 vintage and they're all coming online. They're bringing on supply. I mean, real estate is the ultimate capital cycle, you know, industry, right? And I think that that today

we're in a great environment. I was just looking at the construction for warehouses, you know, a chart for construction for warehouses. I mean new construction is probably new starts got to be down like 60, you know, based on chart like 6070% set as soon as its peak in 21. And then we talked a lot about multifamily. This trend of construction starts dropping is like consistent across all, you know, real estate sectors. What is the development math look like with rates where they

are right now? It looks fantastic for them because they could such a borrow, you know, in the low 510 year fix unsecure and then they could go build something, you know, stabilizing that to call it, you know, generally over 6% cap rate in most of the most of the major food groups like multi family social storage and warehouses. And also once you build it that generally you could kind of bake

in rent growth over time, right. So I predict that REITs will become, you know, a lot of the private real estate developers have kind of that they've been on the sideline. They can't really develop new projects. The cost of fact, the cost of capital is just too high.

And then Reeds have this very unique dynamic where they're 20 to 30% loan to value ever that sub six times net debt to EBITDA and the unsecure mark unsecure bond market is very open to you what you're letting them borrow at in the 5% range. You know, we even saw a couple deals done in the high force, right. So, so they have all the cost of capital advantage right now on the that side. That's wild to me that they can borrow there given where treasuries are, but they're a beautiful thing.

Let's think through, right, the implications, right, if you could buy so, so let's look at like the interest rate coverage ratio, right, the fixed cost coverage ratio. I mean, now most of the REITs that we own, the larger blue chip ones, the interest coverage ratios anywhere from like 4 to, you know, sometimes even 10 times, right?

So, so if I'm lending you money, if I'm lending money to anybody and you could cover my interest payment 4 to 10 times, like yes, like, you know, the 10 years at 43, like I want you money, you know, at 5% right now, granted in the next 10 years, like if you do something crazy, if you make a big acquisition, that's

kind of a risk, right? But like a lot of these bigger reads, kind of half mandates, not written mandates, but they kind of have these like, you know, unwritten agreements that they got to keep net that's even up below 6 times. So you're what, picking up that like 7080 a hundred BIP spread over the 10 year treasury actually is a pretty, pretty good risk reward. Yeah, Yeah, I can see that. And the other thing is you're doing it by providing, you know,

shelter, right? So in Maslow's hierarchy, pretty high up there. Yeah, well, shelter as storage of useless stuff that Mercas love the. Border, right. Yeah, Well, it's basically the same thing in America. The massive hierarchy of knees is it's not shelter in the bottom, it's your smartphone nowadays, right? Yeah, you're not wrong.

Which is an issue. It's. Smartphones, shelter, food, like shelter food that that's all in the car and then just like just above, it is like the need to to store like East West stuff, right? Yeah, that's, yeah, that's exactly right. And then stuff like sleep, I guess it'd be below it, right? But yeah, yeah, either way, yeah, that's wild. Yeah. But it's only kind of a joke. It's whoa. I mean, you know. There's a lot more truth to it than I'd like to admit.

A joke is funny because there's some truth in it, right? Yeah, that's correct. Yeah, that's correct. If it's totally outlandish, like it wouldn't be funny. Yeah, that's right. Yeah, that's right. Yeah. So I've seen you on the Twitter machine, you talk about hard assets. Why have you seem to at least be looking at some of these like offshore drilling assets? I know it's not, that's not why you what you came on to talk about.

But just curious, you know, when you think about real estate from a first principles standpoint versus like, you know, you run an investment product that is real estate focused, do you keep coming back to that you like the real estate side? It seems as though your tweets at least would indicate that you prefer real estate the offshore, but that's, you know, those are two totally. Oh, no, I mean, this, this, this is a, this is a great conversation, right?

Let's dig into the first principle of why, why people even make money at real estate, right? Like that's, yeah, you could go through. There's a topic that I find that I did it, I did eye banking for a couple years and I didn't have an answer for that.

And This is why in a place like New York, you wind up with immigrant families who bought real estate 20-30 years ago and they don't speak any English. They don't make a lot of money, but they bought the real estate in the early 2000s, late 90s. And then their tenant is some Ibacker who like pay a good chuckle their rent to like my family's kind of partially like, like we took a lot of risk 20 years ago in the early 2000s and we didn't know what we were doing.

But like my are just like rent typically go up over time, right? Your mortgage rate is fixed. And then we bought a couple and we wind up with, you know, a dozen of properties like call like 6070 units that we own between all the families where, you know, between my siblings and not. And it's like, why do real estate, which is hard asset go up in value? And why is it if you look at the long term chart or the Transocean and you know any of them, they gone bankrupt, right?

But and then like if you look at the wanton shadow Transocean, it is a really ugly chart, right? And then you could look at something like a pipeline, right? A lot of these like offshore drilling that they call like floating pipelines, you know, like the shuttle tankers. So, so, so I've like looked at all of them, right? And my brain initially kind of got excited and I'm like, oh, look at the contracts. Like it looks like it's the same skill set. It's a very long lift asset.

You could kind of like forecast the cash flow because a lot of them have, you know, long term contracts in place. But like, why is it that one hard asset that floats out in the ocean in the long run, like just burns through a ton of shareholder equity And then the stuff that's on land that's like immovable that you can't move, like somehow creates a ton of

shareholder value. And I think like on a first principle basis, if you break down, for example, good example, be like a warehouse in like a decent barrier to entry market, right? Let's say in Brooklyn, right, a warehouse in Brooklyn. And I'm picking a warehouse on purpose because like the maintenance CapEx, it's easy because there's very little maintenance CapEx, right? Like maybe every 5020 years you got to replace the roof, right?

It's just a structure. So over time, what, what really appreciates if you think about like there are four things that consist of real estate, right? There's a land that it sits on, there's a structure above it, there's the interior and then there is like the intangible, right?

What is the intangible? The intangible is that in some, in certain high barrier to entry markets like a Brooklyn or New York City or Southern California, it actually takes a really long time to get the approval to go build it, right. So think about, if you think about like what actually goes up in value over time, I think we could all agree that the land usually go up in value, right? The structure goes up in value because the replacement cost to recreate that same structure.

Yes, that brick may be 30 years old, but it's really like that steel i-beam maybe 40-50 years old, but there's no real depreciation on that 40 year old i-beam, right for that warehouse. Now the interior like the roof that really do depreciate that there's real depreciation with that. And then I would say they had the intangible to get the approval by the government, local government to allow you to build. That actually goes up in value because it just becomes more

difficult. I think as most places in the US densify over time, your lead time to develop, to go build something. Actually, there's just more government red tape, right to build more. Yes, the lead time actually gets increases. So, so if you compare a warehouse to this floating structure out in the ocean, right? So you know, that hunk of steel, which by the way, is an impressive feat of like engineering and human

engineering, right? Like what they're able to do is like absolutely incredible on some of those, you know, offshore rigs. But the reality is that what that salt water is truly destroying that huckle metal out there in the ocean as impressive it is, right, 20-30 years later, like it's worth as much as, you know, scrap metal, right? And that's the ocean. No one's got claims to it. There's no what like those three, what the land value, the structure value and the intangible, none of it is

appreciating. So, so like in my opinion, like I developed this mental model for thinking about what truly in every asset type, right? So you could go from office to warehouses to self storage to multi family. There's a certain intensity, it's a fight between the land and the structure appreciating, right, and the interior and the sub that truly depreciate. This is why each real estate asset class have different cap rates, right?

And a warehouse, you know, could have a lower cap rate than an office because there's very little maintenance CapEx on it, right? And there's even a new real estate asset class called industrial outdoor storage, which is just a giant parking lot that you park like a cable company with a ton of trucks, right? They need a place at the end of the night to come back and park. I love that. I love that because now you don't even have a roof to repair, right?

Like it's just a asphalt, you know, paving that you maybe like every whatever number of years you got to. So that's why I've never really, I guess my brain likes to psych scarcity right now. This doesn't apply to everything I do right there. There are like other businesses that I look at where I do apply an abundance model. But when it comes to real estate, I generally like a scarcity model where you're kind of like the choke point, you're kind of, you know, just like this.

As much as we we say we want to build more housing, as much as we say we want to build more, the reality is that there's an innate cultural, you know, identity where people are like, yeah, we need more of that, but not in my backyard. We need more of this, but not in my backyard. Like, yeah. And that's something that I'm willing to bet on. Yeah.

And, you know, to the extent that you're in a city, obviously you can build new buildings, but it's not so easy I. Mean, you know, we, we get to do some of the details. My, my younger brother has built a couple buildings here in Queens and at times he will complain to me what it takes to build in New York and some of the horror stories.

I mean, it's literally it gets to the point where you know, we have a special fondness for like New York City residential, even with like all the crazy rent regulations, etcetera, etcetera and the tenant rights and whatnot. But if you try to build in New York City, your neighbors sometimes knows that this is an opportunity to shake you down, right? They know they can exert a certain amount of pain, argue where they'll call the building department. They say, oh, like you didn't

implement this right. Building hard comes by like shuts you down for 2-3 days. And then, you know, it's lost time loss of like your GC, like now they got to like redeploy people elsewhere. I mean, we can go through a whole list, right? We go through a whole list, right? And then you run into things like, oh, you know, we actually don't want people to install natural gas, you know, stoves in the city.

So we're not issuing any more natural gas like permits, right, for buildings, like you gotta go all electric. I think people like under appreciate like how much risk a developer has to take in order to get a building, you know, off the ground in New York City. And now I'm starting to see evidence that's kind of starting to happen everywhere, right?

Like if you could ban them, one trend is that 10 years from now, even places like Dallas and, you know, places that are known for very business friendly, it's got to be harder to build new supply essentially like everywhere in the US. Yeah. And you know, it's good to have that tailwind. It's good to have that tailwind when you invest in the asset class, you know, versus that saltwater continuously slashing on the drill work and just, you know, depreciating it down to nothing.

Yeah. And I mean, look, you got fashion risk with real estate, right? But if you have a building to pull out or re face cabinets or whatever, it's not. We're not talking about the end of the world. Yeah, from a capital perspective, right? Yeah. I mean, it's like you got to do it, but it's not crazy. I think, I think it's really talking about hotels. No, I mean like like condos, they get a little bit tired,

right? Or apartment buildings rather, Like if you're going to lease them up, you do need to have an on trend kitchen that you're selling people. I mean, maybe not New York, but you know, like Denver, you got to have something that people want to live in. Oh, no, I'm in. You're totally right. I think more so I think that on trend intensity is a lot higher depending on like where you sit and the market that you're in.

And sometimes I do need to take myself out of that New York City mentality where we consistently operate under like a 1 to 2%, you know, vacancy. And it's kind of like, hey, you earn the privilege to rent this unit, right? Like once I go out of New York, I'm like, all right, Bill Lloyd,

like, like, like they're. Actually like if you're in Atlanta, right, If you're in Atlanta or Dallas and all this new stuff or Austin and all this new stuff is hitting the market, like you gotta have a facelift in some your units to attract tenants. Well, that's why we pay a lot of

attention. And I remember going on the ground tour with my two of my analysts and I was like explaining to them, I'm like, you want to own things, you want to own real estate that are where the neighborhood is the amenity, right? Like you want to own real estate, what the neighborhood is the amenity, not the actual amenity in your building that actually do experience depreciation over time and do experience obsolescence risk. And, and this is where if you're in certain cool parts of

Brooklyn, right? The neighborhood is what's cool, right? And you could kind of have like some rundown unit and it was still rent for a large premium because people want to be in that neighborhood. And there are certain characteristics where it's not the cool and hipness of that neighborhood, it's the fact that, you know, in the neighborhood in the area like Downtown Brooklyn, there's six subway stations that are all expresses that get you in into the city.

And also what you go east in the further out to Brooklyn. It's just a great transport like logistics hub where someone you know, people may want to live there just some close with the ease of commute. And those are kind of like permanent. Those that kind of vantage don't go away and that's where you don't have to spend this much on

amenity. And you know, you can also like go further down like once you get into kind of like a lot of that Class B asset class where you get into workforce housing, the tenants like are not as discerning when it comes to, hey, you know, what is your kind of kitchen bathroom, kind of a many package, right? Or like, is there a grill in the rooftop? You know he would just want to save clean place to live and that's what they want. So so you got to pick your battle.

But I totally agree with you why on this On the extreme high end for condos you definitely need the best Amelia package to compete. Yeah, and some apartments. But yeah, dude, I was listening to our last podcast and I can't believe. I mean part of the issue with trying to facilitate a conversation while also having one is I try to listen as well as I can, but sometimes stuff slips by me. I didn't realize, and I do not own this so I can say this in an unbiased nature.

I didn't realize the aggregates part of the FRPH pitch. Yeah, OK. And and when you were saying about, I think you were talking about like how blue the water is or something like when they, so basically they can mine the rock, right? And then they sell the aggregates and then they're developing communities in the old like, basically mind. Yeah, that's that is pretty freaking cool. I didn't pick up on how cool

that was. I was trying to like, kind of push back on you about what I thought people might pay and you were well, I mean, this is what they're paying. So it's obviously desirable. It reminds me of you know, about Stream song, the golf course in on the West Coast here in Florida. I don't know why you would, but if but like so mosaic. I think it was mosaic. I'm almost certain it was. Mosaic is a. Potassium. It's it's, I think it's, I think it's potash. It might be phosphate.

That's yeah, it might be phosphate. That's in Florida anyway. So they were mining this area, and in order to show what could be done with an old mine, they said, OK, you know what, we will. We'll develop it into a golf course. And it turned into, like, a very, very cool golf course that they owned. Now, the financials on it, you know, weren't great, but that's completely different. There you go. They just sold it. Yeah, 2023. Let's see what they sold it for.

But yeah, anyway, stream song. Stream song OK. Yeah, and it was super cool like that they did that. So it kind of reminds me a little bit of what you were talking about. And I just, you know, I just couldn't hear it. Yeah, they sold it for 160 million. Probably cost more to do, but I don't know, whatever. Yeah. Yeah, it was neat. I'm. I'm looking at the photos. This looks really awesome.

Do you know what's what's odd about it out there is there's like a ton of, there's a ton of alligators. I don't know how they got out there, but like there's a lot in some of those waters. So if anybody's out there playing and you hit your ball in there between them and the water moccasins, I would not go for your ball.

That's my $0.02. It's not worth I was talking to someone about the that their Fort Myers and I was talking about, you know, the water being blue and whatnot and somewhat gently reminded of me that in Florida, you don't you don't go into the water because you just have to, you have to assume that there are Gators in there. And I'm like. Yeah, though I mean, the freshwater in Florida, there's probably smarter things than to swim in. I did as a kid. In retrospect, I'm not sure that

wasn't smart, but whatever. Some of it was. But yeah, I was on a of course the other day and look down into the water and there was a water moccasin and people always say like if you can see a ball do not reach in and get it cuz they hide like under the wood and under the rocks and you know those things bite you and it's all over but the crying. What is a water moccasin I have to add?

It's like a little, it was like a little black snake with some yellow lines on it. It didn't look like the kind of thing that could kill you, but it 100% can kill you. Yeah, real Florida wildlife shit. You ever think about, I always think about Australia as like the yeah, where it's just like everything there could kind of kill you. I'm sorry for Toby, Right? Like. Yeah, 100%. Yeah and yeah. You don't want anything to do with that. That's a different.

Yeah, no, it's craziness. Yeah, even I think like even the platypus, like if you get bit or sting by them, there's like venom in this platypus. I'm like, OK, like that. I was, you know, you know, about the blue ring octopus, the box jellyfish and all this. And I'm just like, I'm not sure what it looks like. Such a cool place to visit. But then the more I learned about it, I'm like, it's a little scary. It's amazing. I backpacked through it when I was young and and it was truly

an incredible experience. But yes, I figure if the wildlife can survive out there, they can kill me. Yeah. Yeah, by the way, too. It was fun, man. Yeah. I jumped out of a plane at Rainbow Beach, came out and you see, like all this, this, the sand was a bunch of different colors. Byron Bay is like my favorite place on Earth. If I could retire anywhere, it would be Byron Bay. I. See. We have diverted the conversation. Well, I mean, we were still talking about real estate, right?

In a way. We're talking about different geographies. We're talking about second, you know. Location location. Exactly location and useful Second life. You know the thing about Florida that keeps Amaze amazing me is that years ago I was investing in a company that own a good chunk of Daytona right now that really is called CTOCTO Realty. I think Florida is the only market where I am aware of.

But you know up here in the Northeast, particularly in the New York City area like the neighborhood it is really important right like you buy a house in the neighborhood and then you that neighborhood over time how that trends matters a lot. But Florida is like one of those markets where sometimes like, like I remember going out to Daytona and the I-95 kind of like bifurcates, right, The site on you know, E ESO I-95 and the house, you'll get the Daytona

Beach right on the water. And then like a little bit in between that, the ocean and I-95 like is kind of this no man's land where houses were going for fifty $70,000 each, right? And a lot of them have like storm damage at the time, like a lot of Roosters have parks over it. And I'm just kind of thinking I'm like, I thousands was $70,000 a year, like what is going on over here?

So I automatically assume that if you go further inland West of I-95, you know those land, the lots probably are worth 5 to 10 grand each, right? And that's like kind of logical thinking. But guess what? They sold the land to Margaritaville. And then what? Florida's one of those areas where if you could get your hands on a large track away, you could kind of build your own community.

So yeah. So the houses the new builds in Mark Greenville sells for half $1,000,000 like that, that like from someone who learned a lot about real estate in the Northeast, like to see that that that blew my mind. That was. Like, very you also to your point, you also can't just say, OK, well, this is a mile from the water. And therefore it's valuable because mile is like a big difference. Maybe a mile is too short of a difference.

But like, you do really have a no man's land between the intercoastal and I-95 in most spots in Florida. Mm, hmm. Mm, hmm. Mm, hmm, mm, hmm. Yeah. And then and then you got like, you know, there's the like Daytona. Yeah. Unfortunately they built all those high rises on the water, right, like along the ocean. If they didn't. But it does have some I think Daytona offers some value. I mean, you know, South Florida, it's great.

What the thing about that shocks me and I'm sure YouTube would tell me that everything's crashing and I don't necessarily think it's wrong. But dude, the resiliency of people to just absorb insurance costs going up here or they're just saying whatever will go X wind. But you know, the insurance costs a real problem here, which I gather maybe it's starting to get addressed, but.

Yeah. Yeah, it used to be that you could assign your claim to somebody else for up to like five years and then they could sue on your behalf and it just caused the insurance to go way high.

The climate risk change this is a topic where I have my annals and I have a very intense debate on and it gets like, you know you're doing something right when you and your team have a debate on a topic it and it gets like really it it gets a little heated right, because you're like really trying to suss out right like the the. Articulating both view points.

Yeah, your both view points sometimes like I'm like you really got to pay attention to the fact that like people, there's a lot of population growth, while you have a lot of inflation, you have people voluntarily moving to areas with, you know, more that are more prone to climate risk, right. Like up here again, I keep going back to like up here in New York, like, you know, we get a bad winter storm every once in a while. Sandy in 2012 was probably the worst, like hurricane flooding

that we experienced, right. For the most part, we don't get a ton of crazy climate. And then if you look at where all the net migrations, it's to Florida, it's to Texas closer to Gulf that are more subject to you up to hail to hurricanes. So as topic of like climate change there that's, you know, the insurers have like fully priced them in. That's something that my analysts and I will could have like a three out of the you know, argument on.

I'm kind of like rambling a little bit because I'm just kind of like rehashing, you know, what we talked about internally here at Rizal. And one of the things that like I've been hearing about it is there's this theory that every time like, like you mentioned that like people will say, oh, that house have like another hurricane left in it, right? And then like once that house gets destroyed, it gets rebuilt.

It has to be like rebuilt if you're certain cold and and then like your housing stock is more hurricane resilient right over time. Yeah, quite a bit. So not to water, but to wind for sure. I mean, the thing I learned when I got hit by a tornado is, you know, the issue too is not my house is built in to code that can withstand whatever. The question is, are my neighbors houses? Because a couple of the houses didn't have a storm left in them and their roofs hit our roofs.

And your roof is not impervious from a Truss hitting a roof, right? I mean, the house may not get totaled, but I mean, we absorb some damage. And I mean I know a guy like 7 houses down, brand new house is I mean a roof went through his roof. Wow. So like, he had to replace his whole roof now that his house was OK because it hit the garage and it's not like water came in, but like, makes you think about

some things. That is definitely the first time I've heard the term a roof went through a. Roof. First time I thought I'd say I I didn't even think it was a possibility. The Tornadoes are no joke. Yeah, wow. There was a roof Truss that was, I mean, I don't know, it must have been thrown 400 yards. Wow, it was wild. Like a big ass. Roof Truss. Wow. So that's when. I nature wins. That's what I learned. If you ever like, think you can beat nature, ocean, tornado, any

of that stuff, you can't. No, no, you, you. Best to avoid those situations. Yeah, yeah. You want to talk about Alexander's at all? No is a fine answer. But I think it's kind of one of the more interesting ideas that you and I have talked about over the past year. And I happen to think it's if you're going into a recession, there aren't a whole lot of tenants that are better than Mike Bloomberg.

Yes. So Alexander's is a, well, Alex is a wreath that's that owns a Bloomberg building in New York City and they have a triple net lease that runs to 2040. So that's 15 years. And there are these really nice annual escalators in that lease. It kind of like every five years, what it kind of works out to like 2.8% annual escalation.

And it's a true triple net lease where the expenses, you know, Bloomberg, the tenant absorbs all the expense increases and you're truly getting like inflation kind of protected on Bloomberg as a tenant really. And that runs to 20/20/40. And also owns a multi family out in Queens in a place called Regal Park. It owns a shopping center out in right next to it on the bottom that that has a Costco, which is probably the most intense Costco that I've ever been to.

I'm talking about like, get ready to throw some elbows. That's quite a statement. The most intense Costco is kind of a scary place to think about. Speaking. Which that's not. Speaking with someone. Sounds like you need to take a Valium before you go there. Speaking, which someone did, did challenge me to a fight like and the cashiers flying a few years back and I've kind of like. Doesn't shock me man, people get crazy. Kind of like what are we doing here?

So now the downside of this whole thing is they have a relationship with Vornado that theoretically could be a misallocation of interests, right? Or adverse incentives. Is that fair to say? I think that's what it would appear at first glance. But I think that I think that based on 4 decades of what's important is that Fornado owns 32 or 33% of the shares of Alexander, right? So this should be kind of thought as like a public sub of of Fornado.

But Steven Roth and you know, Interstate and Steven Roth and some of the major shareholders, Alexander, they own a lot more of Alexander then they own for NATO. So I would say that your interests like Stephen Roth, the CEO of Ornado is actually more like you got better protection, get more alignment of interest because he owns more of Alexander than he owns of Ornado.

And there was always like a persistent fear that, you know, for NATO in a market downturn, the moment like COVID will try to do a take under of Alexander's. My argument is kind of, hey, you know, we've experienced the GFC, we've experienced COVID. If there was like a time for Vornado to optimistically take this under and acquire this company, they probably would have done it, you know, a long time ago. And there's actually a really interesting Trump connection to this company.

Back in the 80s, you know, Donald Trump actually owned a good check of a company, I believe 20%. And then, you know, Stephen Roth was the other big shareholder. It was a department store that owned a lot of real estate, including a whole city block where the Bloomer Tower is today. And of course, Donald Trump, you know, famous, we filed for bankruptcy in the early 90s and then and then Stephen Brock took control of this complete.

So Alexander has a very impressive corporate history where if you start kind of like you think about Sears and Macy's and all these department stores that own a lot of real estate, this is an example of a department store asset value

play that actually succeeded. And it's so successful that it's roughly A-47 bagger total return from 1992 when Stephen Roth took control of Alexander. What they've done over time is that it's really important to like understand the corporate history because I think at first glance people could say all this misalignment interest, you run the risk of this being taken

under. If anything, what they've done is that in I think like 2012 or 2013 might have been 2011 sometime there over a decade ago, they sold a shopping center to to one of the more reads for $750 million and paid out a special dividend that was like $122. And the stock today is around 200 bucks, right? So there's a corporate history of Stephen Roth and Copley not abusing this kind of you know, public sub relationship. You know, if you look at the matching fees that they charge

to each other, it's very fair. But I think generally it's been managed very well in my opinion. And there has been a long corporate history of them selling kind of non core assets and we paying out special dividends, returning it to shareholders. So, so you know that there was 122 dollars special dividend in over a decade ago. More recently they sold a development parcel next to that Costco for I believe $73 million.

And then more recently there were two shopping centers in Regal Park. There's Regal 1, which you know is a much older David 70 year old shopping center. And the Regal 2 was built in 2009. And what they've done is that they strategically, they try to make both shopping centers work and Regal 1. Frankly, there's just like too much retail, right? With a trend of like e-commerce and whatnot, there's just like too much retail. They don't need Regal one, just

not competitive enough. They actually got a really good tenant, IKEA in there in their urban concept and that didn't work. So they should teach. We decided to essentially move all the tenant from Regal 1 to Regal 2. Now Regal 2 is 9798%, you know, occupied. It's got a tenner roster of, you know, Burlington and I believe by the Marshalls of TJ Maxx with Costco. Marshalls. Yeah. You got Costco, Kohl's, Best Buy, Marshalls in Burlington is what's listed in the 10K.

And then you got, you know, on the ground floor, your Chipotle, your restaurant concepts. It's got a really nice roster. And it's also very important that this is located all this is located it right, You know, such you right next to the subway station in Regal Park. There's just a ton of density around, you know, both of the shopping centers. And they're one of those few exceptions that have between the two shopping centers. They have 2005, roughly 2500

parking lots and clinks. When you think about this, what has happened is that they have two shopping centers that were kind of competing each other for business and they decide strategic, which is shut down Regal 1 and stop, you know, utilizing it as a retail center. Now you just kind of like combined, they used to be roughly 1,000,000 square foot of space. You essentially move like third, you know, 1/3 of that space and that so, so it's like how much

is Regal 1 worth? Regal 1 is 5 acres that sits on top of a subway station in Queens where they could probably, we don't know the exact zoning, but probably think they could probably built 15 stories on it. And we've estimated by our math a range of 150 million to $200

million of value, right. So this is an asset that is likely losing money, have negative NOI, but actually is worth, you know, somewhere between 150 to $200 million as a residential development 5 acres right above subway station. And a politically we talk about how tough it is to get zoning politically. Like if this one person who could like get the city to kind of zone to kind of their will, it's probably Stephen Rothman tornado New York City.

So this is an asset that's probably losing 5 billion a year because of private taxes and just expenses that's worth like 150 to $200 million that that the markets like totally overlooking. This is what like what kind of bothers me sometime is that like, like it wasn't that long ago when doctors and lawyers were buying triple net lease CD s s and they were buying them for like 4% cap rate, 5% cap

rate. And here you could kind of buy probably one of the best assets with the 15 year, you know, really 14 because there's like one year free rent. You know, like you got Bloomberg as your tenant. It's a true triple net lease, right? One of the best credits. And to kind of what you were saying, if we are going into this recessionary environment, you probably want Bloomberg as your tenant.

And also like people sometimes have, what if I, Bloomberg decide to leave that this is, you know, just so that everybody know, this is the Bloomberg headquarter where they tape some of the Bloomberg TV shows. So this is not some satellite office. This is their global headquarters where it, if they got to cut office space somewhere else, they'll probably cut it elsewhere in satellite. They'll probably consolidate spaces into this global

headquarter. And Bloomberg just came out like whether like you think is office, you know, how office is going to fare. Like at this point, it's really a corporate bond of Bloomberg. And today, you could probably buy this at just under 9% dividend yield. They have $400 million of cash on the balance sheet and which is called like roughly like 40% of the market cap.

Now they do have some mortgages that are coming due that they'll use that cash to pay down some of those mortgages, but just the future Rep payment net of expenses is like 30% higher than like the market cap. And then you make all these adjustments and you're also getting paid 9% to kind of wait, right? And then if they sell Regal one, there could possibly be a, you know, they may pay out a special

dividend. And in a weird, bizarre way, the stock is also like got like 9 days or short interest in it. Like I don't know why anyone will want to short the stock, but I think that, you know, they're paying a 9% annual carry to short the stock and then if they sell Regal 1400 fifty $200 million and payout special dividend because they have to do the re tax laws. Like that's not a pleasant experience for the short sellers.

We certainly like Alexander, you know, for the fundamentals, for the current dividend yield, for the asset quality that they have and also for like this short term dynamic of like, you know, the short sellers like wanting to short this and then the potentially could be, you know, a special dividend from the asset sale where they may realize a decent chuckle capital gain and then they have to pay that out in a special dividend. Does a REIT like this ever partake in its own?

Would they ever JV with somebody to keep Rego One and let that person develop it or does it just make more sense to just sell it, get it off the books and distribute the cash? It does make sense to you JV it and then where you know they'll just contribute the land and then they'll contribute the land and they won't put up any more equity capital or they'll just put up a small amount of equity capital and the other JV partner is responsible. So that does make sense.

But on the on the Ernie's call, in the Ernie's call, Stephen Roth, the CEO of NEDO said that he who like to sell off what like you painted it this utopian vision where everything gets sold off leading just behind the Bloomberg building with like a, you know, by the time that done probably a 1213 year, you know, lease term on the Bloomberg building.

And you know, depending on who you ask, I think some of the reach specific investors are, you know, like we like some diverse diversification, but then like there's probably a lot of doctors and lawyers out there who would love to own that, right? Who you're like, oh, you got a single asset and Bloomberg is your tenant and there's like no other headaches like that could be very, very attractive to your retail shareholder base. Yeah. Yeah. Yeah, I don't know.

It was interesting. It was interesting to listen to the earnings call when he was basically like, look, this thing's too cheap and we're going to do something about it. Yeah, yeah. No, I think that's when you pinged me. I think you were like, I know that you I've talked to you about Alexander's before. You should listen to this earnings call. And then I was like, yeah, yeah, he does seem motivated.

Yeah. I mean it is flat out coming out and say this is very cheap and we got to do something about that. Yeah. Yeah. So why is it cheap? Like what's the real bear argument here that what, 53% of the revenues from Bloomberg and it's office and you don't want that? Is that like the most valid

pushback? I think the bears probably looking at it and thinking you, you got this like so they have $400 million of cash and they have I think like roughly 1/2 a billion dollars of maturity this year, right? And I meant there's like that Costco shopping center that's got tremendous amount of value that's worth $400 million. It's got 200 roughly $200 million of mortgages on it,

right. So I think the bear is kind of thinking, OK, you know, the dividends like not sustainable, they're going to have to cut that. And then the mortgages, right, The mortgages that there's like near term, you know, mortgage maturity. And then I'm kind of thinking, well, so one thing that that listeners should know is that they're paying a $18.00 per share dividend, like what they could potentially sustainably pay right now probably is in that $1314.00 range.

But Bill and I have talked in my perception is that, well, they know they got asset sales in the pipeline. So they'll probably keep the payout at that amount. And then they may potentially even pay like the special dividend when they sell Regal. What?

And then I think the bear is kind of thinking like like a lot of times the bit the bears are thinking, OK, if you got near term mortgage maturity and you got like kind of you know, a payout ratios that above 100%, like that's a pretty good setup for short, right? Yeah, your chase goes higher and if it's retail that owns that, your dividend yield goes down. Yeah, I could see that. Yeah.

But then I don't think so. I don't think like they really kind of look at the Regal 1 as an asset and how that's actually from a dividend coverage ratio perspective that it's, it's actually have negative contribution. It's got negative contribution, but it's worth a ton of money, right? And and I don't think like the bear. The other reason why this is kind of unfollow is that it doesn't have its own earnings call. It doesn't have its own earnings call. It doesn't breakout performance

at the asset level. So you kind of have to, I mean that's kind of what our clients pay us to do, right? Our clients pay us because we could kind of scrub it, we could go do that extra work. And to a certain extent like we have the advantage because we're local and we know these assets pretty well, kind of like when we did the Vornado walk in New

York City, right? Like that is like a local advantage to to know these assets, you know, just by me being there and getting challenged to a fight by another customer there, like, like knowing how busy that center is, like, like that's an edge, you know, that's on the edge in investing and. So, yeah, to your point, it's one thing when you hear on the earnings call, these are on the corner of Main and Main. Yeah, that's one thing.

And then you're like, well, of course he's going to say that. Who's going to say I own, you know, a shopping center that's basically like dilapidated at the corner of, you know, AC class, right? So, so yeah, to be able to go there and say no, this is actually true. Is yeah, yeah, it's different. And we know like, like my family on the private side, we looked at a lot of, you know, my younger brother, look at a lot of private deals.

I mean, we don't have the capability to take down something of this size, but we're constantly like my younger brother's constantly getting pen to look at private deals being shop in the market. So we're, you know, we're very conscious of how much, you know, these assets go for and what a developer will pay for on a press square foot basis.

You know, in the even in this environment, I mean, we know that there's an asset across the street from Regal one that they're asking, I believe by 70 or $80 million and it essentially works essentially work out to what two $300.00 per square foot buildable, right? So like we're very like in the weeds in this one. And there's also a trend of on Queens Blvd. where this these assets sit, there's a trend of low rise retail being knocked down to build these high rise

residential. It's like part of the densification, right? It's like, why do I feel comfortable owning that retail there? It's because by by the way, this is the Queens Blvd. like literally about a mile down. Remember coming to America at the movie with Eddie, Eddie Murphy, right, So that McDougal, whatever it was called, right, The burger choke that was filmed in Queens about a mile down, right?

And that burger joint has now has been knocked down and they built like 7 like it's been built like Max to the curb line, right? Like it doesn't have a parking lot anymore. So like like a burger joint with a drive through and everything has been knocked down to be developed into like a seven O 8 story residential. That's like built fully to a lot, right?

Like that's just like something, you know, so that people can understand, like retail spaces keep being convert it into denser high rise residential in that area. So again, one of the best like the scarcity mindset, right? One of the best mindset. They like what are best mental models for investing in real estate is that we see in the asset class where over time there's less and less of it. That's usually like a pretty good asset class to own, right? And this is like the bold pieces for.

Like capital cycle theory. Yeah. What I mean like it could be it's not just capital cycle, right? There's like a secular decline in your supply, right? Like. Well, the reason that I equated it is I attribute the secular decline to money coming out of an industry, right, as opposed to coming in, which would add supply, supply, supply.

Yeah. So overall on Alexander, like you know, roughly high eights, low 9 dividend yield with like possible like an asset sale in the next like year for Regal 1. And then you get to own the Bloomberg building with a 15 year triple net lease on it. If they sell that shopping center, they sell that apartment building, you could potentially get like additional special dividends and like we kind of model it like you could buy for 200 to two O 5 today.

And in our model, like our NAV is like caught like 3:50 and you're collecting this dividend the whole time. And then there's like a bowl case where if they sell all the assets, just leaving the Bloomberg building at some point, like between like special dividends and rent escalation in the Bloomberg book, because that lease is really interesting, right? They agree to that lease in the Bloomberg building last, you know, last year I believe.

And at the time like Class A office rent is uncertain in New York City. So they have a a set of range and the range is between like $87.00 triple net to like one O 4 right. And if you believe what for NATO was saying that Class A office space is actually trending lower in New York City because the Class B and Class C is what

people don't want. But everyone wants Class A if the boomer at least, you know, gets reshark at that $104.00 triple net price like this, you could get to a map of, you know, over 400 to to the mid force. It's just like current dividend, really high quality asset at, you know, a historical 47 bagger. And then like if you own it, you tell your friends that that you know, POTUS, right?

You know, like whether you're like like regardless of like you know, where you fall on the political spectrum. Like, like, it's like interesting cocktail hour conversation, right? Yeah. Yeah. Well, to the extent that there's a lot of turmoil in the Treasury market, I would argue that the underlying cash flows to Bloomberg are more sticky. So that makes them a little bit more likely to pay.

It'll be interesting to watch, but I kind of like that idea, so thank you for introducing it to me. Yeah, no problem. I mean, you know, we're also just finding a probably the busiest in terms of like event driven in the RE space. Like this is probably the busiest I've been. So like last year we had retail opportunity Investment Corp got bought out by Blackstone. That was a meaningful position for us.

And then we have what do you call it, a Playa, which was bought out by Hyatt. And then this year, you know, between ankle, which has been in the orderly liquidation for quite some time, you know, dream residential Elm community and let these office property like you're starting to find, like if you look at the early Buffett partnership, where Buffett used to be a lot of venture event liquidations like this is like, you know, he was doing more merger arms and there was like a

definitive price when merger arm was like a really awesome way to earn 20% a year. Like what we're kind of finding this year is there's a lot of these a lot of these REITs that are smaller and kind of orphan. They're like voluntarily announcing to go, you know, to export strategic alternative, right? So so here's like a perfect example like I don't think. Why is that interest rates going up and you got a compliance costs and they're just kind of sub scale to be public or? Yeah.

I mean, I think for the most part, when they realize that the subscale, there's no real possibility of them becoming like a $3 billion REIT get $200 million market cap today. And to get to 2 three billion where you're truly liquid and really trading like a blue chip beat and just can't see like a line of sight to that. And there's like not a lot that they could do to create a lot of value, right?

Like if you're just sitting there clipping coupons on like a $200 million Reed it it's going to take a lot of years to grow into something that's a $3 billion. So so, you know, dream residential is Canadian Reed, you know, very liquid. They came out at you know, I have a few friends who told me that that's cheap and I didn't pay a lot of attention to it because I'm like, I could buy virus, which is very high quality Jersey City multi family

at around a 6% cap rate. I could buy like the large cap, the mid America and the Camden's. And I'm like, I don't want to get stuck in a tiny $150 million market cap re up in Canada that what barely trades right. But that changed when they came out and they announced Strategic alternative and they said that they're going to explore Strategic Alternative. And then they went out and hired TD Security as a financial advisor.

And so the valuation is, and This is why sometimes I keep getting, I'm just like, this is the private price and then this is a public price. So even after they announce Strategic Alternative, we were still buying in the high 8 cap rate for like a portfolio Class B multifamily in Dallas, Fort Worth, Oklahoma City and Cincinnati.

And by the way, through Twitter, we were able to like reach out to a few people and we haunted down the broker who actually sold the Oklahoma City assets to this reef. So they told us like everything, right? They told us they're like, this is a vintage. This is like, you know how their position in the sub market, This is what I think, you know, the cap rate are for each individual asset. And we looked at it, we're like, how do you lose money buying multi family?

Granted it's Class B. These are older garden style apartment buildings at 8 1/2 percent cap rate and they're running a real process. I mean this, you know, running a real process. And the company probably states that the NAV is $13 using like a 5859 cap rate. That's kind of like a bowl case. You know, that's like a boat like Uber Bowl case for us. Like if they could get back on pricing, we got to be really happy, right?

So we were behind like in the look like high sevens, low $8 range, which corresponds to like a mid 8 to high 8 cap rate. And we're going to see what they'll do the next year in terms of like running the process, but like we kind of like on the road to somewhere between like a 40 to 60% total return on, you know, buy multifamily, you know, in the

mid to high 8% cap rate. That's an example of like what's available in a market like today where you talk to any of your private guys and they're like, wait, like you tell me, I could like buy a portfolio at a A5 cap rate and I could flip it for somewhere between like a six and a 6 1/2 percent, like within a year, every single one of would do that trade, right?

So I think that's like gone really interesting and you know a company like Aimco which we did a lot of work on that's probably going to get sold for like with the full liquidations probably somewhere between 11 to $12.00 range and that's traded below $8 today, right. So, so kind of like when you think through back to like Buffett's early partnership where he was doing a lot of vet driven and workouts, we're seeing, we're seeing a lot of that right now.

Our own community, which used to be known as Washington Reed. They owe mostly multi family and I think, you know, it's kind of run its course. They try to be a public Reed for years and it really create a lot of shareholder value. And they've come out and probably announced that exploring should teach you alternative. And this is a heck of environment.

This is a heck of environment for kind of our active strategy because we could do these event trivia, we do these workouts, we could we could buy large cap blue chips, Class A self storage and warehouses in that mid 6 to 7% range we want by extremely high quality Jersey City multifamily, which are all high

rises, high barrier to entry. At almost a 6% cap rate, keep underwriting a lot of these names and especially after all the Trump terror drama, like like we're just we're just seeing like what we've been underwriting a lot to over 20% IR and that's usually a sign telling us that I'm not saying like that's exactly what we're going to earn on them. There's no guarantees investing. I really want to watch put that

out there. But when you do your research and underwriting, like there has to be a certain return level where you say this is a very at Target rich environment. I think the last time was this target rich was probably in late 23 when we did our first podcast together, right? And yeah, and I've been something even like a Seaport entertainment, which, you know. Yeah, that I don't know, I don't understand that one that well, but it's that has not traded

well since the spin. Yeah, yeah, that is I'm. Not saying any partners with your boy. What's that? Then your partners with your boy. Who? Who you referring to? Well, I don't, I don't really want to name him on the pod, but didn't he backstop the rights offering? Oh, well, I mean, yeah, OK, yes, he did. He he he did, he did backstop the rights offering. I mean, heck, like if you I'll, I'll, I'll stay out of the, you know, the Jaro, right? You know, he's got a new political career, but.

Well, you've been right to to question whether or not minority shareholders and Howard Hughes were going to see the benefits of the asset value there, right. I mean that that is a transaction that I don't think made a lot of people or a proposed transaction that I don't think made a lot of people happy. Yeah, yeah. No, it's unfortunate. You're back in a similar saddle. Yeah, no, I mean, there's definitely yes.

And he's got equal amount of ownership in Seaport as Howard Hughes. You know what I don't understand about that transaction? I do understand wanting to have like a clean asset story to tell. But, and this is maybe just me not understanding what's going on, but the minor league stadium that was in, you know, I feel like that should have stayed part of Howard Hughes.

Yeah. Because I think that the incentives, like having a reasonably priced entertainment option for the community that you live in, yeah, is a nice thing. And maybe, you know, having the incentives to have that thing run for profit, I think it actually detract from the asset value that you're providing to the community around you. No, I I agree and I. Not everything has to be optimized for the most profit possible. Yes, yes. No, totally. It is and.

Sometimes I think full blown optimization can end up actually taking value away from the aggregate. No, you're totally right, right? And I thought a lot about this, right? Like how much value does it add? Like in Brooklyn when you get a really nice coffee shop that makes great artisanal coffee, right? Like you as a landlord, it's always busy. It's always a very reasonable price.

And just like the five, like this is where if you have control over a whole entire area, like your incentive is not to maximize rent that you could charge on any specific retail tenant, right? It's like curating curating the best tenant that experience is. Yeah, the living experience. Yes, the living experience, the live work play experience of like a certain massive point community. I would say that you don't. I totally agree with you.

It's like don't make money. You don't have to make money on the minor league, you know, team. It's like making that a cheap option, right? So that the families want to live there. It becomes like a entertainment option, like like there's tremendous. Amount then you get to bump the value of your lot because all of a sudden it's like actually a really family friendly place and like the value of the lots, I think is where a lot of the value is here.

It's not like I don't know, that's my opinion. Well, I would argue that the value of the lot, right? And then in the long run, as the lot sells off, what it does is that now you got more density. So I put 30 days, like I put boots on the ground over 30 days on Howard Hughes, right?

Like, like it is one of the most exhausting company for me to own in My Portfolio. Like over the course of my four or five years, like we've been out to Honolulu, we've been out to Summerland Vegas like 3 times I think. Sounds awful. What's that? It sounds awful. I had to go to Hawaii and Texas and Vegas. It was. I can see why it's been exhausting. Well, I wasn't talking about the trip. I was talking about the exhausting in terms of in the.

Course of no, the amount of work you've done I. Mean don't give me like, I love those boots on the ground trips, experiences. What was exhausting was the ownership experience where, you know, we own it over like a full five year holding period and you have COVID in the middle. You have the Oh yeah, you know, the equity offering, right? You think that you were investing with somebody who's aligning with you. You're like, I'm going to be patient. This is a long term compounder.

And then at a certain point you realize that it it's kind of like I'm in I'm married. I've been married for a long time now. It's kind of like when you're younger, you're dating and you're like, oh, this is a girl that are going to marry and at some point you're like, oh, I can't trust her, right. Yeah. And that kind of like shatters. Yeah. And that kind of shatters your world. Luckily, that's not a problem we're going to deal with anymore. That was a long time ago.

But that's a kind of like when you give a company your trust and you say, I'm going to be patient. I'm going to be patient with an Amazon like and you go in with that mentality and then you realize that, hey, they that is not how they view you. He who shall not be named, you know, is going to like take advantage of you right at every

turn. And you know what, like, I am very glad look like I, I'm very proud of what my team and I have done because that is like the first instance of like Twitter activism that we ever engage in. Like I, I don't know if you remember this, but like there was a, there was a tendering for, you know, shares at 60 and then we said like it was cheap. And then, you know, very few people tender. And then there was a tendering at 70.

Like I did the math like like we course, you know, he who shall not be named, you know, 60 with $65 billion, like to bring his ownership from from 30% to 38%. And we defended our position. So, so like I've never gone activists on any company, but like that was probably like the first instance of us like using, you know, Twitter activism to like defend our position. So, given all that, what's so intriguing about Seaport? There's a couple things that make it super interesting.

It truly has a potential to have a lot of upside, but I'm not willing to like size it big. OK, and because like if you think about like if they are successful in repositioning this company, it has like the potential to be a multi bagger, right? So that in how we makes it interesting. Now I think a lot of patient is needed. I think I I track that the seaport and the historic area and how they manage.

I think that behaviorally there was a time period when what you had was there was a lot of like internal fighting between Howard Hughes and some of the board members, unlike how they want to position the seaport and the historic area. I think there was a vision to turn it into this like super high end glitzy area like tank Korsukuomo, which is this like really cool club in Milan, right? And I think they went with like a luxury premium, you know, strategy that clearly did not work right.

But they spent a billion dollars on that asset. So mentally there's this suck cost fallacy that the management

team have. And then also I think like there it also suffer from the fact that most of the business, I have this theory that when you own a MPC and you have incredible control in markets like The Woodlands in, in, in some way where in, in Hawaii and Waikiki in the Hawaii war Village where you're the zoning board, you're the developer and you are like, you know, kind of like the monopoly owner like of

that area. I think that management team, they kind of were used to operate in a certain way and then they try to develop and built in a market where it is the complete opposite, right? Like where the neighbors, the residents will try to fight you every term, right? So what culturally, I just think that they have the one type of mentality of people trying to make that asset work, right? And so I think that was a challenge, right? I think they positioned it to high end to luxury.

And then there's a suck cost fallacy of we spend a billion dollars in it, right? Like we can't bring a Dave and Buster or a a Meow Wolf, right? So think about this way, right? Mentally, if you spend a billion dollars, you like the only tenant that we could put in these offices has to be at ESPN when Nike has got to pay us over $100 a square foot, right? And I mean, to a certain extent, like they get they got unlucky, right? Like COVID was not their fault,

right? But they got deeply impacted it. And then like what happened with office would work from home. Like they built that pure 17 structure to have a lot of creative office, right? So it's a lot of factor. Now a lot of that is behind us. By the way, I am not, you know, saying people should go out and buy this like, like, like. Well, no one should buy anything that they hear on a podcast, period. So yes.

Yes, no, I mean, I mean there there's a very big difference between like, I think this could have multi bagger upside, but we need to like take a wait and see approach, right and it's like it's like stalking, right, like you're like a big cat, you're hunting game and you're just watching.

I'm just watching like we got a small starter position, but you know, we don't have like a you know, we don't have like a double digit position in this company, but I think that what's important is now they're free, right. So if you look at the announcement, if you look at the announcement, they announced male wolf, which is like an escape room, like a really cool, as my young analyst says, you know, that's like a really cool escape room experience to take

like your hot date to right. I'm always interested in like what my, you know, 2324 year old analyst has to say it about a certain place or certain concept because because I admit like I'm a, you know, I'm in my 40s. I got kids like like, I don't know what's cool, what's hip anymore, right So. You're hip, but not that hip. I'm like the use of the word hip is not hip, by the way. OK, I'm like Costco leg day guy, hip with like a Kirkland T-shirt and like shorts, right?

I'm hip in that way. I'm like post ironic hip, right? And trust me, trust me, that's not a term that I came up with. My analysts taught me that, right? Like I'm by beyond, I'm by the most like boring generic, like, you know, like Costco dad you can find. But you know, I put my year on the ground that try to like, you know, like try to stay up with what the young kids are doing.

So, so I think that what they did, one of the skills that I think the previous management team didn't have is they come from a real estate background, right? This repositioning really needed like a food and beverage person needed like someone who knows how to curate and put together and they move quick. You know, they, they agree that there's a new restaurant that, you know, that's up and running in one of the spaces called Quitado. I guess it's like a Tulu, Mexico concept.

They signed me a wolf that put in 250 Water St., which is A1 acre development site that they bought $480 million and put 10s of $1,000,000 of what additional intangible cost in there. So so that's out in the market that's being shop. And then they own all these other assets such as the baseball team, the stadium that it sits on air rights in Vegas.

And you know, I think that it's worth a starter position for me to keep tracking to see what I will be watching for would be how are they doing with the food and beverage offering? Are they how are they are foot traffic improving? And this is going to take time, right? This is going to take time. And then one of the big factor whether it's going to be successful or not would be when male wolf gets billed out, which would take two years.

Is that actually successful? Does that actually succeed in terms of right foot traffic? But I think by this summer, like you know where we are, like I take my kids there a lot, take the ferry, we go there, it's a nice way to spend a day there.

I did by this summer we kind of track like the concert lineup, the programming and say a little bit about the new CEO, like the former CEO is or the CEO of the parent, you know, Howard Hughes company, he's a kind of like us. He was CFO, got promoted the CEO, he has a lot of real estate experience, but you know, the new CEO was managing, you know, VOI background tracks.

I think people were saying that he was responsible for like 1/4 billion of EBITDA in one of the Vegas, you know, casinos where he was responsible for a lot of food and beverage like curation and so like. Entertainment guy. Yeah, he's a food and beverage entertainment guy, right?

And I think that if they make the seaport work, I don't know if people know this, but like if you look at what retail rent, what people could charge for retail rent in New York City, some of those numbers will like absolutely blow people away right now. That's a big if, right? You kind of have to make the place cool. You got to make the place, you know, you got to drive foot traffic. I mean, at one point, Times Square in New York City, and I'm not saying this is going to be a

Times Square, right? But at one point, Times Square is a city. You know the Times Square was an area full of prostitutes, pimps. And vagrants. Yeah. Vagabonds. Yes, and now they charge $2000 a square foot in rent. Like, I must say the sequel is ever going to be able to charge $2000 a square foot. But I'm saying that you're starting with a really low basis. And even though like everything that I've said, I'm still like, I'm in stalking mode. And this is a really important

concept, right? Like Blackstone, a $4 billion deal that was a company that I knew about and I was tracking for 10 years. We never owned a position in that company and then we made a 15% position last year. What we try to do is that at times like we'll try to company and then it will hit a certain price and we're like, OK, that's you know, and we do like put the capital to work. You got to go big, right, You got to go big and and you don't like what it's kind of getting there.

It's kind of getting there for a lot of these names, right, like pull out of these. I mean, like in when we had the first podcast in late 23, some people to family as a fiend, you know, it wasn't just one comfy, but you know, it's anywhere from my kind of mid teens allocation to like up to 40% allocation in different portfolios. So I I think that like if you're a patient, you know what to be looking for. And then like like Bunker said, you know, at times like what is

that phrase when it rains? Like, you know, like bring out the bucket outside with a bucket. Not a thimble. Yeah, not a thimble exactly. But seaport is nowhere near there. Right now, right. But like yeah, but I get it. It's a transition property that you're watching makes. Sense, Yeah, yeah, cool. And well, thank you for coming on. Man, I know that we were going to do it. What, 2 weeks ago?

But then the market exploded, so it required some more active management than recording a podcast on that day. Just a slight bit, you know it's a slight bit, but. It it, you know, you know what I have to say it, this really, this experience has really reaffirm like some, some of the like conscious intentional decision that that I've made, right, which is like kind of have to keep like like have a tail risk hedging program, right? Sometimes like I'll talk to other managers and they're like,

oh, like tail risk hedging. That's like negative EV, right? And we're like, we're always like putting a kind of like a 50, you know, 50 bits to 1% per year and tail risk hedging. And then I think like what it does is like, like you, you have this muscle memory, you have this muscle memory, you know how to do it. We could dial that up, dial that down. And at a certain point before the boration day, I got uncomfortable where I'm like, I

have to, right? I have to go, I have to go by, put more hedges on and we did that. What it does is that, you know, an event like that is kind of like getting punched in the face by Mike Tyson in a way, right? Well, you know, talking to some of my peers, like, like, you know, if you run like concentrated small cap, like you could be down like 20%, dude, right? Small cap guys are not. Loving life on average, Yeah. Yeah, Yeah. No, it's, it's been cheap for a

while, right. It's. Always cheap, but it just keeps getting cheaper. Yeah, it's cheap. It keep just keeps getting cheaper. Now imagine like. There are like real consequences of these tariffs, right? Like depending on, you know, what you own, if you're like an importer, right, If your business depends on a lot of imports, like that really hits you. And, you know, I think the tower is hedging.

What it does is that it just allows me to stay very calm and very what like, I mean, don't get me wrong, like the first like week, like like the first like 10 days. It's like an insurance policy, man. It helps you sleep. A bit, yes, exactly. It's like the hurricane insurance, right? Like a. Hurricane. Yeah, you hope you don't have to cash it in. If you do, it's nice to have. Exactly. Exactly. And you know one thing that's.

Like really cool is my analyst and I, we're what we're literally thinking well, like how do we take advantage of this, right? This is a super target rich environment right now and all this is cheap. That's cheap or you can make 5% by some, you know, puts like not that we've done that, you know, that's something that we may

think about. But there's all this opportunity and you know, if our towers hedges, like what's really nice about towers hedging is the COVID when by the time we were done, by the time we sold our puts, we winded up with like a 15% position in what just the proceeds from the towers hedging. But my long book was down 35%, right? So we wanted it like being down about 20 at that time. But like all of a sudden like I have 20%, that 15% actually becomes 20 because the law book

has shrunk so much. So we wind up with like 40% cash like in early April where and then like you kind of think about your relationship with your investors. Like it's very different when you have an event like this and your LP's are calling you and they're like, oh, what's going on? Like what's And you could tell them like what we hedge ahead of time. We know how to navigate environment like this.

It's kind of crazy. This is really like the first time in five years because you have COVID and then you have the 22 shock, right? Like 22 shock wasn't like as big of a draw down, but and then you got the tariff drawdown. So but it's like having like know how to do that, like leaning into this hunch about risk that's about to emerge and just acting on it. And then like having the calmless as you know yourself and as an organization, right?

Because like, you know, my analyst and I all we're talking about today, like we're not talking about, Oh my God, we're down. 2530% like how do we get out of this? Like, no, we own like liquid positions. We have these puts. And if anything, like there's like companies out there where I think they're still pretty good, like, you know, both on the law side and short side that are

really interesting. And then you don't start by investing in companies where you're like, Oh, we, you know, you start with, oh, something like Alexander, you could buy at a high 8-9 percent dividend yield with like train way below like NAV, right, or even like the Vornado prefer. Or you could go do the dream residential, you know, buying multi family at 8 1/2 percent cap rate. They're about to be taken out, right. And then there's like other names that we're looking at.

They're just like so much for us to do right now and that organizationally, like we're not placing blames. We're not like, you know what, we're just like having these like really awesome conversations on, hey, have you look at this name? Have you look at that name? And this time around, it's not just me.

One of the things that was difficult about COVID was, you know, at that point was just me. And then, you know, thanks to something that you said a few years ago where you said, hey, you know, what's great about Twitter is that you put a tweet out and it's like 10 people could talk to you about a topic. We kind of like leverage that and we build out a team in 22. I have to credit a lot of what I do.

I'm building out that, you know, the Twitter channel on that one quote that you said on value after hours like like that, you know, I take, I, I take compliments. You're free to you're free to send them. Here. No, I'm glad, man. I'm glad it helped. Yeah. Yeah. And tell me too. I've kind of. Kind of taken a step back. From everything recently, but I I think it's been an invaluable source to me and more than anything the relationships that I've made from it and manual of ideas.

I can't talk about, you know, my network without talking about John. It would be disingenuous to do so. Yeah. So and the Toby for, you know, help me get it started. So yeah, it worked out. Love, Toby.

Love, Jake, Love. You know, John, I would say the one thing I'm the proudest is as I've gotten older, in my 40s, I become less ignorant and you know, instead of just like holding on to that really old school value investor mantra, I'm like, I want to be a little open minded and you know, pay a little bit of attention to whether it's like passive flow, pop positioning, like technicals, what not so much technicals, like everything that we do is still very DCF driven,

but like technicals. In terms of why your entry point into a stock, right, You're not looking, you're kind of ignoring something that a decent part of the market looks. At like yes, yes, makes it to look at yes, yeah, and I'm I'm a lot. Less like this is the only way to invest. I'm a lot more open to Yeah, the only way is a young thought or maybe a very old thought. We'll see how I. Evolved, but I think there are

many ways. So I appreciate you coming on and sharing your knowledge, man Thank you. Oh man. So it's always a pleasure to come on the pod and. You know, I feel very privileged. Well, we'll see you again soon, maybe in a year or so, who knows. Hopefully before then and hopefully, hopefully we'll get Korean BBQ. Before then. Oh yeah, that'll happen for sure. All right. Talk soon.