The REIT Stuff

but I mean maybe aren't practical. And so sometimes you have to just cut away, go into an area, a category, and just roll up your sleeves and dig around and talk about the practicality of a certain area for investors. And so UM I thought reats were an interesting one because a they're at a cross roads, they're changing dramatically.

UM And for those who don't know, READS stands for real Estate Investment Trust and it's sort of a way to buy an et F. And then you know, indirectly or directly rather I guess own UM properties and they could be anything from like retail properties, malls, storage, industrial infrastructure, hotels, uh,

stuff you wouldn't buy as a regular person typically. And also they yield a lot because they have a certain structure where they have to pass on a lot of their income, and so we have rates rising, which is a threat to them. But then at the same time rates are still low. And so I thought there's a lot of crossroads going on in the Reek category and we could maybe unpack it and talk about, you know, the pros and cons of all of the different products.

You basically get to own real estate without really owning real estate. Yeah, I mean, I guess you basically just click a button and it's you're pulled in with a bunch of investors who are common owners of, you know, real estate properties. And one thing I hope to get out today is to get some visual on what exactly you are owning. I mean, I can see the words, Hey, now I own residential and hotel reads, but where are

these hotels? What do they do? Um? You know, I think that sometimes is lost, but yeah, you do end up owning these things. And to help us wade through the category, we're gonna be joined by Kevin Kelly at Benchmark invest and David our back at World at Greek Group, this time on Trillians the Red Stuff. David Kevin, welcome to Trillions. Thanks for having us, Thank you for having us. David, I want to start with you, Um, why why should we be talking about reads right now? What are these

good for? Well? I can tell you right now that this is not going to be a sexy conversation like tt slaw and bitcoin and buzzy t F. But when you talk about reads, they provide one thing that is common in times of volatility, and that's safety, dividend income stability, high pay at ratio by these companies. You're you're getting almost like an annuity or like a long term bond

when you're buying some of these companies. And as Kevin can attest to looking at the long term holdings of some of these companies, you're just going along for the ride and letting these companies do what they do best. Let's just take one second, David, to just bring in somebody who knows almost nothing. Explain what a red is and why the income is high like that structure that I alluded to earlier. Just explain that whole concept. Sure, So, as you said to read is a real estate investment trust.

A real estate investment trust is a shell that you would own a property, a portfolio of real estate, and as you mentioned, that's office building's, apartment properties, hotel, self storage.

The list goes on and on with the way that a reat is structured of the net income is paid out to shareholders in the term of dividends or in the form of dividends, and so as a result, off the bat, in fact, many of these guys are paying out monthly dividends, and so right off the bat, you're getting a huge income component because the typical average dividend yield right now, according to a reads around four to four and a half percent, and with the tenure, which

is its closest benchmark, trading around one point six, let's say right now, you know you still have about three hundred basis points in your pocket that you're being paid by these companies to own this high quality real estate. Taking a step further, another really interesting way to play, that's through the preferred stack. And if you played the red preferreds, then you're looking at yields anywhere from where public starch has the lowest let's say a sub three

or excuse me, a sub four. You know, quality names are yielding around five percent and higher yield stuffs going six to seven and higher, so you know it's there's just a huge buffer there for reachs in your favor And David, can you tell us what you do at a world that Grete group? Sure? So I'm lucky. I've extraddle a lot of worlds. I'm an institutional all UH sales trader at World Equity Group. I've been in the

red industry for over twenty years. I got my start at a firm called Green Street Advisors now known as Green Street. So for me now World Equity Group, I am trading reads. I am doing corporate access with a partner, working on management relationships. We're doing new share issuance working with some of these reads. Really it kind of spreads expansive globe. I also work on a red newsletter at

Daily Newsletter. UM, there's just so much information that's out there, and with you know, a hundred sixty plus publicly traded equity reads, not counting the mortgage side, there's a lot of information to digest on a daily basis and won't get through more than that. As we go through this, and Kevin, I want to bring you into this, UM. You know, I've bumped into you a lot over the past, like I don't know, eight nine years really, especially at

the Bloomberg TV studio. You're always in there doing the options segment and whatnot. Before we get into some of the E t s Just what are you up to these days? So today, but I'm really up to is trying to give investors access to specific property types and

specific exposure, especially in the real estate market. And so if you look at my what I do on a core level, it's actually look at the real estate universe and then delineate which actual companies are are doing on their property type, tenant type, and uh, you know, revenue type. And so what we do is we make indexes off of that, and then we license those indexes to e t F issuers. And so what you'll see is that the top two property type E t F that are

out there were the index provider to those. You have some new um cutting edge kind of indexes that are tracked by E t F s. So but let's do this in order to again keep this high level at least for now. If you look at the re E t F category, which has seventy two billion, by the way, it is, it's one of the bigger sectors. V n Q has half the assets. That's the Vanguard re E t F. It's one of those rare vanguard ETF that's the biggest in the category and the most traded. Um

it's a monster. So, Kevin, why don't you take V n Q explain that one and the general you know, I guess broad re E t F that vn Q kind of represents versus some of the newer stuff. Yeah, So the way you should look at the re D t F market is V and Q is the big behemoth. And what that does is it gives access to investors to own broad based real estate. It owns everything all at once. You're gonna own every publicly traded shopping mall, You're gonna own every publicly traded UH hotel, you're gonna

own every publicly traded apartment company. You're gonna own every publicly traded office building in the problem with that is, in my opinion, is that property types trade differently. So an office is going to perform differently than a retail

shopping center, than a hotel, than a data center. And so what you're getting is you're getting the broad basis like owning the all World Index when it comes to E t S, right, So you're owning every single country and every single company and so that's what V and Q does, and really what it's meant to do is to give broad based exposure to asset allocators. It's also

a passive index. And so if you look at the bigger picture as far as like COVID is an example in the work from home trade versus the return to office trade, Let's say V and Q may even though it's still invested in office and hotels and malls in an active situation, an active red e t F guy would have been out of those sectors in the second quarter of last year and overweight single family rental reads, tower reads, data center reads. The zoom trade basically for

reat land. And so now what we're seeing is the reverse where there's two camps, this zoom trade still being on and then returned off his trade, right some of the more aggressive pms that are putting back on the hotels,

the offices and the retail trade. Just as just as a point of clarification, well, and to that end, David, what kind of innovation are we actually really seeing in the category if if we've got the V n Q and that's like the big umbrella of everything, like, talk to us about what's been changing and what kind of

ETFs are are now at investor's fingertips. Sure absolutely, and frankly, to Kevin's credit, he was one of the first guys that was out there really finding the niche sectors well ahead of the curve of some of the other guys and all let Kevin go more into detail about his two,

but a couple of other unique plays. Um, you can play the net lease read the net lease reads that would be the guys like your quick service restaurants, the Burger King's, McDonald's, Starbucks, Jim's drug stores, gas stations, and that is run by some guys from a company called Fundamental Income. The tick of that e t F is any t L Nancy Edward Tom Larry, the two executives that started that came from a company called store Capital,

which Warren Buffet and Berkshire Hathaways its largest shareholders. So right off the bat, before we even get into net least reads, when Warren Buffett is the largest shareholder of one of these net least reads, if there's kind of

that Berkshire touch to it. Another interesting avenue is a home builder's housing e t F. They housing one hundred the homes h O m Z E t F. This is comprised of residential self storage, lodging, anything home depot lows, anything that has to do with the home owner space. One more I want to touch upon is the newest player and Eric, I think I'd love to get your comments on that as we go through this. But the first, really the one of the first active read e t

s has come to market. UM, there's a couple that are out there, but from the g S excuse me, from alps with G S I capitals, the subdvisors the actual ticker r E I t read like I said, which is the act the opposite act of read ets. So there are several different unique rappers to play the E t F space besides I Y R v n Q,

the big daddies of the sector. One of the reasons we did want to also talk about this was that um my colleague Morgen Varna back last year, UM at the end of the year, she wrote about s r VR and it was interesting. I actually learned a lot from her note and she just really found that these towers and data centers, which again are not tended not to be in the traditional re E t F s,

we're a real source of return at the time. UM and you know sr VR has like thirty in those respectively, whereas v n Q is more like eight and and and again this parallel you see it everywhere. Every category has a couple of ETFs that are just tip of the spear. They're going to these places that you're not getting otherwise. Otherwise, why would the launch an e t F if you can get it in v n Q. So talk about the tower day a center angle here

and what that's what's going on. Yeah, So I think it's really important to note that as you know the overall read market has evolved, you've seen new property types. And two of those new property types are data centers and cell phone towers, and so they're non traditional and they're actually growing pretty significantly because, as you see, we're

digitizing our daily lives. And so when the pandemic happened, you actually saw two big beneficiaries in the real estate market where you actually had visibility of cash flows, and that was the data centers and cell phone towers. Why because everyone was working from home, everyone was doing school from home, and so these two property types were really, uh, the the frontline defense for everybody in their daily lives. Right, It's like everyone was using the internet more and more

and more for personal and professional use. And so when you look at what s r V, the s r VR in DEX does because it gives you pure play access to those property types. And so what we're seeing is a lot of technology investors are using s r VR to complement it with their cybersecurity exposure, with their cloud exposure, with their semiconductors, because it does have the growth of technology, but with the safety and security of

real estate. And so that's why you're seeing a lot of adoption with the s r VR index constituents and advisors and investors portfolios. So this brings up an interesting point, which is because I'm looking at s r VR and that's a great pitch for it, and I think, you know, the returns UM show that, but the yield is really small relative to other re et F s. I have one point six percent for a twelve month yield, whereas v n Q is about double that um. Can you

talk a little bit about that trade off? And you a lot of free e t P E t F s are used for income you're making. You're like, you're basically trying to make a whole different case, is that right? Yeah, So the reason why you'll see a lower yield on that is because the and it's called s r VR because it's it stands for server because computer servers are rendered useless without the mission critical assets that server index provides. So the whole idea here is when you look at this,

what are you trying to gain from this exposure? And that's growth. You're not trying to get income. And so that's what really differentiates it from a V and Q because if you look at what the actual management teams are doing on the data center and cell phone tower side, they're developing right so they're building as much as they can right now, and so they're using a lot of their cash and assets to develop and build. So you're going to get a lower yield, but you're going to

get higher growth. And that's the nice aspect. If you want income, go get income else where. If you want growth, your your you you you've got it. You've got a perfect portfolio here where you can get that aspect. So David as a watch of this space, and you know someone who gives Kevin a lot of credit for what he's done, and especially with s r VR. What perspective do you have on on what what he's been sort of accomplishing there and and the stuff to watch in

that space. Kevin mentioned about the tower reachs and data center reaches a growth play, and a couple of my favorite statistics goes back to a conference from a couple of years ago. The former CEO of American Tower, his name was Jim Tassel, he left to go to the CEO of Lockheed Martin. He made a great data point and it's really resonated with me. Knowing that the state of points about two years old, just in the back

of your mind, know that it's gone up. And the point was, did you know, wait for the dramatic plause, that there's only four hours of video posted to YouTube every minute. That's as of a couple of years ago. So think about how that number has only increased. As Kevinist stated, we're digesting this content on our phones, are tablets, every single way that we can more and more. We're doing this conversation by way of a zoom. There's that demand for bandwidth. If you go read the Tower and

Data Center transcripts. One more thing to add is their growth is not here domestically, Their growth is overseas. These guys are making a huge push in the Indias and Africa's and Europe's that some of these countries aren't even on three G technology yet in the same breath, these companies are working on the next six G evolution. What does that mean? As far as does that mean it's gonna be real time while I'm watching this movie, it's

almost like I'm watching a live event. I don't know, but our content is only going up and up that we're using this and so again, the datas and towers is an income play. Necessarily, it is a growing sector. And you know, you ask anybody in the industry, I

don't know the answer to this. But if you say, what what ending of development are we in and the towers and datas, my gut tells me a lot of God, I'm gonna tell you we're still in the early ending stages of the tower and data center, please not the not the later innings. Yeah, And I think that case is made pretty effectively. Um and that that would be It's almost like Kevin, You're you're almost making a pitch

for a theme etf for a new industry. Whereas I want to bring it back real quick to just general read E t f s that are a little more traditional, like van Q and the Schwab and I shares um read E t f s David, How sensitive are they too? Rates? The tenure is rising? Um? Is this? What about timing wise? Would you wait for the rates to rise a little

more um as an entry point? How do you work in rates to your decision on investing in reads traditional ones traditionally, I honestly don't know if it's that much of an event against some of these reads, the big the big cap guys, the SMP five names, They've been around for so long and have dealt with so much volatility and interest rates, and I don't think it impacts them so much. Eric, to be quite honest, you know

one point six tenuere environment. You know, if they went to three percent, yeah we got some problems and we're gonna be freaking out. But if you remember back last year when everybody was talking about the tend to yield curve and version and everybody was all freaking out about that. Obviously again with COVID all the other hiccups that are in the market, but you know, really what happens is reads bounced back pretty quickly. That trade, the COVID trade

for the reach sector disappeared in about a month. Looking at the prefers and everything that that windows shrunk in about a month. So really, I think in the grand scheme of things right now, I think the reads are shaking off the interest rate concerns in the grand scheme of things. I have a couple of thoughts on that, and I think there's there's stats that people should really

be aware of. And the first one comes from nay Read and they've actually looked at a rising interest rate environment and how did broad based reats perform And according to the research, fifty four percent of the time when rates are rising, reats outperformed the SMP five hundred and

so I think that's pretty significant. And the question you need to ask is why, And it's because rents rose faster than rates, and so you want to focus on rising rents, not rising rates, and that's the most important thing. So if the economy is getting better, you're gonna see rents go up faster than rates do and that is a huge tail win for for reats in general. Okay, so let's keep talking about that. Because here we are, vaccination is happening, at least in the US at a

pretty rapid clip. We could we could actually be uh in a version of of normal again before long. So what does the read industry look like post COVID, especially like in regards to things like malls, now that we've we've all transitioned to this this world where everything can kind of go remote, Like, what roll could the read industry kind of look like post COVID? I think the read industry is going to do exceptionally well post COVID for several reasons. One is their actual structure. So we

taught touch base on it before. But what they're gonna do is come out of this pandemic leaner and meaner. Right, So they're gonna have stronger balance sheets. Uh they've done, They've basically right sized uh their entire portfolios. There's been a lot of asset dispositions. They can work with state,

local municipalities to do some redevelopment. And so what I think is going to happen is post pandemic, what you will see is you will see a lot of reads be opportunistic because they have most of them are investment grade. They've got great balance sheets, so they're gonna be able to buy a lot of the distressed assets. Why, because of their financial flexibility, they can issue read preferred airs, they can actually issue shares into the secondary market and

raise money. And so what's nice about it is they are known entities. The management teams are are very well known. They've been around for a long time, so they have a huge advantage to take uh to to to be opportunistic going forward. And same question to you, David, like, what what do you think post COVID reats are gonna look like? Yeah, I echo a lot of what Kevin said, you know, going back to the housing crisis or the financial crisis wo nine, twelve thirteen. For some of these guys,

reachs traditionally learn from historical events. So from the O Way oh nine financial crisis, a lot of the reds decided to go less leverage equals the better position. They diversified their tenant base, they just became stronger and stronger to combat the you know, financial pitfalls that were thrown at them. So to answer your question post COVID, I think a lot of folks are going to continue to leaner. Meter if you were having troubles before COVID, You're probably

not going to survive after COVID. A lot of these guys could go back and read their transcripts. They had said, we've spent this period developing, improving, managing our relationships, growing our tenant base. They're trying to get, you know, stronger relationships with their existing tenants. You know, traditionally you think about, let's use a net least read as an example. If they do a deal with the Dollar general, it's not just one property that they're talking about. You're talking net

least properties so that they're dealing with. So I think it's just going to improve relationships across the specter um. But then you're also going to see newer plays come out, like as we're seeing with the growth of cannabis as an example, there's several cannabis replays that are out there. Um are ready to see a whole slew of new red et s come to market. I don't know. I leave that to my my friendly Bloomberg read e t

F analysts, My Bloomberg ETF analysts answer that question. But I think that the reefs, you know, there's an expression and trading volatility equals opportunity. And I think that really holds true for the read guys right now that they're you know, look at Simon Property Group is a prime example.

Simon Property Group has been extremely active during COVID. They acquired authentic brands, Lucky Jeans, Brooke Brothers, Oh, and they bought another mall, Rate and Tommins Centers and so where people said, oh, the mall is dead, the mall is dead. David Simon and the team are like, no, it's not. Look what we're doing here. Let me come in here with this idea and bring it back to the beginning.

We talked about everybody likes investing in real estate. I think you know, they got their house, they like to see it go up minus like the late two thousand's which I bought a condo in two thousand six. Remember the mortgage agent was like, oh, yeah, this will double, like it was that normal that your property would double in every year. Um, and it's I sold it for the same price like fifteen years later because I bought it right anyway, that win, didn't you. Yeah, I mean

my wife just wanted to get rid of it. I was like, it's it might still go up, and we just we cut the dead weight. But anyway, my story aside, I do like real estate, like owning something physical. This just trying to explain to me, you know, and institutions are known for implying the Yale model, which is about buying less liquid assets, which could be actual real estate where they go in on a land deal or farmland

or something. These are equities. How much of that thing where you own physical property is water water down as you go through the equity, the public equity system, and now I own it through a reat. Just can you explain that difference between owning it in a public equity versus like the real deal. Sure, I'm going to push back at you a little bit because to use the

single family rentals as an example. You know, several of the big saw side firms, the JP Morgan's of the world, the Goldman Sachses of the World, Bank of America all last year announcing single family rental um partner ships that they're launching their own single family rental platforms to compete against the invitation homes in the American homes for rent, the public and trade of reads that are out there. So there are guys that are sinking direct money into

real estate away from the reach structure. But when I buy a share of Boston properties, you're buying a share of high quality real estate across New York, San Francisco, across the country. Do I necessarily can I walk into the GM building and say, I'm a shareholder, let me up to this top four? No, But in the same breath, you know your own. There's only one New York City, there's only one, you know, GM building. They're not going

to tear it down anytime soon. The last time I recall, that building is worth a couple billion with a B dollars. And so therefore I can say I have a tangible stake. Granted's one share of the GM building. Um so I think that they're you know, there's that name association. A great other examples the Empire State Building, Empire State Realty Trust. If I own Empire State Realty Trust, I own the Empire State Building. That's a historical landmark. There's only one

Empire State Building. You're not going to tear it down and rebuild it. And they always say they're not growing more land. One other interesting play eric one other name to mention too is a company called Safehold and the

ticker of that is s a FE. The only reason why I mentioned that is they are a ground lease rate that they're selling points a little bit about what you're talking about, that you're owning a ninety nine year ground lease of let's say the GM building as an example, they're just going to go in and buy the underlying land of the property and let the building owner focus on owning the building. So there's a couple of unique

ways to actually play the actual property structure. Eric, if I could, I want to answer your question you were taught. I think at the core of your question was how much dilution is there from actually owning a property versus owning a reet and so where's the dilution in that? And the answer is reates are exactly what they sound like. It's a real estate investment trust. So it's an accumulation

of properties. It's just like an e t F so E t F S is an accumulation of securities and then it trades sort of at its net asset value. The same thing holds true for real estate investment trust.

It's just an accumulation of properties and then what those properties are valued at on the exchange and so you know, obviously they do have some debt that's associated with it on their balance sheets, but you're an actual shareholder in every single one of those properties that they own, So you're owning equity in those actual buildings that they own. So it is a portfolio of real estate that you own,

and so there really isn't much dilution. UH. You just have hired these management teams to run, own and operate these buildings or properties that that that are in the reade. One thing that I find really interesting here is like because of what you've been able to do and others in this space, it's like you can be you know, we talked about thematic ETFs a lot, Like basically it sounds like there's like hyper focus focused UH strategies that

you can basically get into as an investor. So so because the space has not only that, but then you know the V and Q s that have a little bit of everything in it. Like as like a as an investor who does might not know this space, Like what are the questions that you need to be asking

when you when you get into this stuff. Yeah, so I think the most important thing to know is what is what are the drivers of the Z T F S right, and so we talked about s R v R. That's a play on you know, every device being connected to the internet. When I look at the other uh, the other one, which is I N D S, it's industrial real estate. Well, well, what is the driver of that? It's e commerce? Right. The Amazon CFO said himself he needs fifty percent more real estate than he has today

just to meet current demand. So it owns all the distribution centers that get you your package in a day or less. So say David was to buy something from Lows and it gets delivered to him in two hours, right, it's coming from the distribution center. So so so e commerce is driving that. If you look at another one, homes we mentioned earlier, it's the consumer that's driving it because it's based off of you know, um, the consumer owning homes. So it's home builders and owns some some

residential reads. And so you have to look at the drivers behind it. Right, So broad based real estate will be sort of a play on the economy. That's why when you saw in the first quarter of you know, broad based real estate I think was down some twenty one cent right, So it's sold often sentiment with the market because it was a reflection of the economy. So that's what you really need to look at. Where are

the drivers of this going forward? So you know, I anice to pay, there's gonna be a hotel et F coming out within the next month. What it's going to be the drivers of that. It's gonna be the reopening. That's that's really what's gonna drive it, right, It's not gonna it's you know, initially it's going to be that, but then it's also going to be focused on businesses going back to conventions and consumers actually going out and

do doing leisure vacations. So it's it's the fundamental underpinnings of that that you need to look at the drivers. And that's how you play these quote unquote themes within real estate. Um, real quick, you know, you just sort of hinted at a at a new filing and I think in generally you have a lot of liberty and being able to talk about the e t f s

that your index is track. Um, you're kind of like Dave Portnoy of the Reeds, and you bring up a good point because Portnoy is the from the index company of the new buzzy TF and there was a lot of people questioning how he could be so dramatically bold with marketing the E T s because all either other E T fishers were like, I could never say that, compliance would hammer me. And he found this kind of not a loophole, but it's just the way it is. The index maker can say a lot more. And that's

what you are. You just talked about that difference between the index maker and the e T f person. Yeah, I think it's a great point to bring up, because the important thing to note is you cannot directly invest in an index. And so that's that's the caveat that every index maker comes out there with and saying, hey, this is a this is a portfolio. You actually can invest in this. You would need to invest in a product that seeks to track the performance of this index.

And so that's what he's really, uh, you know, hinging his hat on is is saying, hey, listen, I'm talking about this portfolio. You can invest in it. There is a product that does track it, but you know, it's up to those guys. And so the important thing to note is that there are hundreds of thousands of millions of billions of indexes out there. Bloomberg's got tons of them.

They don't have products that track them. You can go out there, Eric and talk your heart's content and hype up, but no one can invest in him because the product doesn't track it. So I kind of laid the groundwork for Dave Portoy, which is great because now he's testing the thesis of of sort of what we can and cannot say, and so I'll let him be the trail blazer on that front. But you know, my my position is I'm trying to provide investment intelligence to people out there.

I'm trying to get let them know about, you know, different ways to think about investing and and and how they can do it. A lot of times they talk about the constituents within the portfolios. So hey, I say, hey, here's here's the difference between American Tower and Crown Castle and Server. Here's the difference between pro Logists and Duke Realty.

And so I can go out there and talk about individual constituents and how they how they how how they actually differentiate from each other, and why they serve a purpose within the overall index itself. So, you know, I think eventually the sec will come around and come up with rules due to the fact that I think people

are going it's all. It always just takes a couple of people to ruin it for everybody else, uh, in certain things, so well, you know, to be honest, I think the e t F fishers aren't allowed to like they should be allowed to say more. I think somehow there's a happy medium there. I hope it doesn't get overly ruined. I do think though, you're going to see more job postings from index issues or index companies for

communications people. Well, you know, the important thing is that index providers are kind it's kind of you kind of have these reverse roles in that E t f issuers tend to be the ones at the forefront, forward thinking and they've got they they they are the ones that that would be able to push and say great things and and do a lot of quote unquote hype as Portnoy does. But the index providers are kind of slow and steady. They're kind of archaic people, right, They're coming

up with no they're like the lab. Yeah, they're coming up with classifics like the science lab. Yeah. Absolutely, that's what I'm saying. I could see them hiring even see the E t F fishure. We're saying, hey, let's take this person here, like our Kevin Kelly, and we'll just send them over to sele Active. Yeah yeah, and they'll just and they'll just be able to say everything we can't there you go. Yeah, I've had I've had other issuers come to me and say, hey, can we hire you?

And you know, we'll do this index together. And but you can go around with our wholesalers and talk about it and do the whole thing. And so you talk about the index, our wholesaler talks about this and and and it'll be great. So you're actually kind of seeing seeing requests from issuers to have an index sales person with So I think that's that's where you're going. And you're absolutely right. But but the but the big you have to think about it. I am the drop in

an ocean. Where are all the indexes at there at you know smp M, s c I and you know NASDAC and all the big ones. So they don't really specialize in that, so they may they may move towards that, or what I think you will see happen is the big E T F companies will actually move away from those guys and come up with their their own index

provider or use different providers like myself. Hey David, as we start to wrap here, I want to bring it back to you and investors, um, since you know you're talking to institutional investors a lot, how are we supposed to think about how reats fit into the portfolio of the future. You know, there's a ton of talk about sixty forty and sort of the forty not being what

it used to be. Like, talk to us about how institutional investors and maybe what retail investors can learn from them in terms of how we should think about how reats fit into portfolios going forward. Certainly, and and so obviously you know there's the rededicated community to dedicated institutional re investors, the Cone and Steers as of the world Brookfield. You know, they have obviously huge, huge stakes their portfolios

tied up in real estate. From an average retail investor, let's say the typical advisors recommend anywhere from five to fifteen percent of your portfolio should be involved in reach real estate. And that's for that did and income and safety. It's the you know, call it the counter hedge and the tech and volatility. Traditionally, reads are a safe haven

during times of volatility. So really it's anywhere from I would say five or fiftcent from an institutional perspective, again because of a hedge from the law of the other crazy volatility names. You know, it's definitely it definitely needs to have a presence that's there. But think about it. Obviously, you know, Reads faced a real tough time during COVID. A lot of the guys did cut their dividends. They have come back, a lot of the guys are trying

to get back to higher dividend structure. Remember, they have to pay out their net income in the form of dividends.

So think about it. Most of these management teams, if not all, these management teams have executives that own huge steaks directly in their companies because they're getting paid so much dividend income on the backside of it that they have what they call skin in the game, and so they want to make sure that as a company continues to perform, they continue to perform and play along with those returns as well. So I feel like it's just

going to continue to grow and grow. Um, you know, it's it's again, a momentum player is it's not necessarily geared towards a momentum guy. It's where a long term holding type of growth play. Okay, come to that point in the program where I have to ask you both for your favorite ticker. And it can't be one that you have yourself. Can't be s r VR so Kevin favorite.

I know you're in you're an index marketing mode, but let's just take that hat off and just be an E t F industry favorite TAT guy favorite et F ticker that is not your own, you know what, so and and this is outside of of reeds obviously, so, uh my favorite, I actually hate to say it. It's got to be Hack. I love that ticker. I just love It's just it's so raw, like if you think about it like hack, like it's got like a negative connotation,

but it crushed it when it launched. So you've got to you've got to you've got a word that you know exactly what that means, right, and you tell anybody it's also it's a verb and it now and the E t F is trying to stop what the word is. The whole thing is, it's just it's very multidimensional. I agree, amazing ticker. It's my favorite one of Let me preface

that for those that don't know. One of my favorite pastimes and I can't wait to get back out there is going to see the rock band Fish and so to med favor, I'm gonna go Toke is probably my favorite E T F ticker that's out there. That's also a good one. Also a verb. I'm telling you verbs are the way to go and and and out on that one. So we got a two for both. Yeah, to be selfish, I do want to say the fact that the R E I T ticker was available and yeah,

that's weird. That's amazing to me. That is amazing because it's probably what the launched or et F launched. What were people thinking? Why were they? Was it too obvious? I've gotten more foam various folks asking me how did how did they get this ticker? How is that possible? And my answers, I don't know. But it's the steel of the century that they finally release the REET ticker. All right, Kevin David, thank you so so much for joining us on Trillions. Thanks, thank you, thanks for listening

to Trillions. Until next time, You can find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcast, Spotify, and wherever else you like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Webber Show, He's at Eric Faltunas, and you can find David at Daily Beat, and you can find Kevin at Kevin R. Kelly Underscore. This episode of Trillions was produced by Magnus Hendrickson. Francesca Levy is the head of Bloomberg Podcast. Bye