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Hey. Welcome to the next episode of "Commercial Real Estate Talk" with Steve and Arnie, where we strive to have informative, interesting, and very educational conversations with leaders in the commercial real estate space. Founders, CEOs, top executives of companies that own large portfolios of commercial real estate. And I am super excited about today's guest, a repeat guest, Bill Shopoff, CEO of Shopoff Realty Investments, who's going to tell us all about his new projects and things that he's got going on. Very exciting. Lots of different things to touch base on. But before we get to him, we've got a few things, business to take care of. Let me introduce my co-host, Arnie Garfinkel from the Allstar Group. Hey, Arnie, come on in. How you doing, Steve? Doing great. Excited about today's show. How are you? Yeah. We're going to follow up on some of the projects he talked about at the very beginning, so that's kind of exciting. Yeah. Um- And tell people quickly about Allstar Group. Sure. Allstar Group is a commercial real estate lending company. We also do conferences, and well known for our commercial real estate and lending conferences and the Loan Makers Forum, where we have a stage of lenders, and you could submit loans to them live at the conference. We also do online events and anything to do with commercial real estate. So just go to allstargroup.com, and you'll find out more about us. Excellent. And many of you will know REN TV, our 25, 26-year-old media company for the real estate industry. We provide news on a daily basis for the Western US on our website, rentv.com. We also put on five conferences a year, Orange County, Inland Empire, Greater LA, San Diego, and Arizona. Orange County's coming up in a few weeks. Probably get this show before that, June 25th. So we're looking forward to that. We also have this video platform, The Review, where you're watching this show. It's a free searchable video platform. Lets you put in your videos from Vimeo and YouTube and tag them for the real estate industry. And then we have this podcast, "Commercial Real Estate Talk." And that's about it for REN TV. So we look forward to doing some business with you all out there and seeing you at our next conference. But before we bring in our guest, got a few pieces of business to take care of. Right, Arnie? Our sponsors. That's our sponsors. We got to talk about them. Make this show happen. They make the show. And we've got some great sponsors. Listen up. Listen carefully. Contact them. Tell them you heard about them on our show. And our first one is a great longtime advertiser with REN TV, and that is Rockefeller Group. Many of you in our audience and around the country know them for nearly a century. Rockefeller Group has delivered exceptional experiences and value creation through dedication to quality in the built environment. From the iconic Rockefeller Center in New York City and office buildings throughout the country to large-scale industrial facilities and multifamily projects, many throughout the Southwest, Rockefeller Group develops, owns, and operates truly extraordinary properties. Visit rockefellergroup.com for more information on Rockefeller Group and their projects throughout the United States. Who's next, Arnie? Our next sponsor is Provident Savings Bank. Provident Savings Bank is a California-focused portfolio lender with a legacy dating back to 1956. Provident Savings Bank is a trusted resource for brokers and investors seeking 350,000 to 5 million in financing for properties ranging from light industrial to multifamily. Their deep roots in the community and longstanding commitments to responsible commercial real estate lending make them an ideal partner for your commercial real estate needs. Provident Savings Bank is an FDIC-insured and equal housing lender. Learn more about their lending programs at myprovident.com or contact Gina Conant, the Vice President and Sales Manager of Commercial Real Estate Lending, at area code 951-403-0567. Excellent. Next up is Chase Partners, another longtime client of Chase Partners. Many of you out there have done business and spoken with Dave Parker, the head of Chase Partners, one of Southern California's leading investors and developers of industrial properties throughout Southern California for over 30 years. Now they are sponsoring the show to get the word out about the updated strategy for Chase, focusing on underperforming industrial and retail properties and other distressed properties, properties with non-performing debt. If you're an owner, lender, or broker that needs a fast decision and a fast close on your property, contact Chase Partners, david@chasepartners.com. It's up on the screen, david@chasepartners.com. All right, Arnie. And our last sponsor, last but not least, is Fidelity Mortgage Lenders. Fidelity Mortgage is a private lending company specializing in commercial real estate. Founded in 1971 by Chuck Hirshon, it is known for its unique terms, fast funding, no prepayment penalties, and long-term fixed rates. Call Uncle Chuck or John McLean at 800-752-9533. Well, let's bring in our guest, Bill Shopoff. Bill Shopoff, welcome to the show. Great to see you. Good to see you again. Nice. Thank you again, and we appreciate you. Yeah. And let me just introduce a bit about the show. Now, I urge our audience to go watch the first show. We talked a lot about your history and your backstory and how you got in the business and decision-making and really informational stuff, and so I urge people to go watch that. With this show, we got a lot to catch up on. You got a lot of projects going on. So really with this show, we want to talk about current situations, current projects, and how you see things going forward. So with that in mind, again, get ready for the ride. Are you ready? All right, Steve, you're up first. All right. Well, when we last spoke- You would just kind of put a bow on your I-10 project, the industrial project, to start with the industrial sector. I think you sold it to Brookfield. They pre-leased it. It seemed like a nice home run, and you were very bullish on the industrial sector. And now I see you've got the Desert Hot Springs project. Tell us about that project and lace in your thoughts about the industrial sector going forward. Well, look, we sold was probably a high water mark when we sold. The industry's been in a little bit of a oversupply kind of recalibration, and I think it's been a lot of things. A little bit of overexuberance on the development side, coupled with the impacts of tariffs and causing uncertainty in that sector. I think that's largely behind us, seems to be today. Mm-hmm. And people are still not quite pulling the trigger on big leases, but we hear rumor of maybe four or five very large leases that are-- more than rumor. We know papers being passed around on- Right ... several million footers out in the Inland Empire. And I think that over the next three to six months, we're going to see some good new comps into the marketplace. And I'm looking at it from a longer-term perspective, and I'm very bullish on it long term. I don't see that logistics, big box warehousing is going to go away. Right. So I think we're going to find our spot there. We've got our Desert Hot Springs. It's a little over a million square feet. We have another project about a mile down the road, a little bit westerly, at the 10 and the 111, where we have about 2.7 million square feet that we're just wrapping entitlement on. Be done with that by the end of the year and break ground sometime in 2027 there. And then we have another 4.2 million square feet further in that we're entitling. So we're making a big bet. I think it's a good bet. We have a long vision. It's not going to be tomorrow to build all this out. We need to see some legs get back onto the marketplace, but we feel pretty confident about it. Well, let me drill in a little bit. With Desert Hot Springs, where are you in that process? We have permits in hand. We're trying to put the finishing touches on a financing package. It's been a little bit challenging. The common equity markets have been really tight. Yeah. And so we raised equity. We had a preferred equity partner and a construction lender. The preferred equity partner went through a sale and kind of went risk off, and so we have to replace that capital, and we're in the middle of negotiating with a couple groups right now, and hopefully can get that building under construction before the end of the year. So- Is it one building, a million feet? One building, a million sixty thousand square feet. Yeah. Oh, awesome. What does it cost to build something like that these days? All in, that's probably $160, $170 million project all in. Yeah. Okay. Gotcha. Good. Hundred and seventy foot. All right. Yeah. All right. So, Bill, you also discussed the storage tank site, Magnolia Coast. Why don't you tell us a little bit about that project? Because that's got a whole bunch of different components in it. I love that project. Yeah. And probably last time we talked about it, we were actually still calling it the Magnolia Tank Farm. Right. Because it had the storage tanks on it. Because you were growing tanks. Yeah. Really. And once we got it entitled, we rebranded with a softer, gentler brand. Yes, I see. Magnolia Coast sounds a little sexier. We're moving through. We got maps approved recently at Huntington Beach. We're dotting some I's and crossing some T's with the Coastal Commission on some conditions of approval. Right. And our current plan is, around the 1st of October, we would have a transaction to sell the 203 single-family town home sites to one of the home builders. And that's going through diligence today. Hopefully, things stay on track, but we feel pretty confident that we've got the right buyer selected and very excited for us and for them. Okay, and then you got affordable housing as well, correct? In that mix. We have a 51-unit affordable project. Kind of cool thing about that was we've dedicated half of those units as first priority for the hotel workers because we also have a 215-key hotel on the site. Yeah, that's what I wanted to find out. Tell us a little bit more about the hotel. Is it going to be a full service, a partial service? It will be full service. We're trying to find the right developer- Flag ... operator for that. Flag. Ah. Some question whether we would do it or whether we'll partner. Hospitality's not our primary business. Right. We have some exposure there, but it's a tough time to do a hotel deal right now. Yeah. So- It's a tough time to do everything right now. Well, that's true, but- I was talking to somebody this morning. We've been in a real estate recession, doldrums, whatever you want to call it, for three and a half, four years. You're right. Yeah, 100%. Since rates started ticking up, you had a disconnect between cap rates and transaction volume is way down. And every now and then we get a glimmer of hope and there's some green shoots that the next quarter's going to be the quarter to break free. And we just haven't seen it. Yeah. Um- Yeah, no, I've seen some- Between the uptick in interest rates and then the cost of construction materials exploding and the insurance- Well, yeah ... it's been, uh, a lot of- And hospitality is very, it's up and down. People started, right after the pandemic, everybody just wanted to get out and start going on vacation and going all over the place, and then all of a sudden it kind of leveled off with the bus- but it sounds like you're really not keen on hospitality as a general rule, but if the right deal comes along, you'll look at it. I think well-placed, and look, I love the idea of being involved in coastal hospitality because- Right ... it's a limited quantity item. Of course. Right. So we're working through it. We've got a letter of intent. We're negotiating with one group that we would JV with them and go down the road. It's something we really would like to get underway, but we want to find the right product or the right partner. Some people think we want to put all 215 keys. We've looked at some other alternatives at a lower key count, but a- Yeah ... kind of higher value proposition. So we're working through that, and I think we'll get there. All right, good. It's fortunately, it's an important component to the project, but the project can be successful- Without it ... with that trailing. It sounds like you want to be involved in it as opposed to carving it out and selling it or doing a ground lease or something like that. We'll do either. We're open. Yeah. And has the city been really involved and enthused about the project? Yeah. I think we've had really good success with the city of Huntington Beach. You would think. They're not always the easiest organization, and we've had nothing but good things about this. Yeah. Then you got to deal with the Coastal Commission too, which also only makes it- Huntington- You know, we did well at Coastal. We got a unanimous vote at Coastal Commission. Oh, that's good. Yeah. Huntington's a great city. There's not many places like Huntington Beach in the world. Yeah. So I love our site. I'm very enthused about our builder takeout and soon we'll be able to announce who that is. But we're very proud of the selection and glad that we were able to marry up with the right builder. Sounds good. Excellent. All right, Steve, you're next. Well, sticking with the large projects, Mesa Verde. That master planned community, I think something like 1,400 acres. Yes. How's things moving along there? 1463 or something crazy like that. Wow. 1460- But those are monstrous projects that take years, and we are kind of on the home stretch of re-entitlement. So when we bought the site, there was a development agreement and a specific plan for 3,650 home sites. We re-entitled it. We are re-entitling it and expect to have approvals before the end of this third quarter for keeping the home count the same, but going to a smaller lot product and adding 4.2 million feet of logistics to the site. Interesting. And we've negotiated most of the business issues with the city. Feel very comfortable where we are and very excited about the project. It's a big project for the city of Calimesa. And I think one that we're very proud to be participating in. We're going to bring some new parkland. We'll bring a lot of jobs with the logistics. We've got a site that we think we can bring a medical office user in, which is something that the city wants and- Right ... we think we've got the right group. We've got a retail pad that we think there's great interest in. So I think overall, and then there's the housing. Right now, that housing market's tough. Its pricing's off just enough to make delivering new lots difficult. Yeah. But I think we're in this for the long range and- They were going to be single family for sale? Yes. Yeah, that's because the interest rates are so high. People are just not buying. Yeah. With high rates and high costs, it just makes qualifying tough. Right. And moving tough, getting rid of a low interest loan in a house you're in. Yeah. People sitting with- I don't see, at least with our current policies of our government, and I'm trying not to be political, but just the reality. And by the way, I don't think it matters which party. You're right. It doesn't. We have two parties who want to spend more money than they earn. And in the long run, I think it's hard to have low interest rates when you're deficit spending every year. Yeah. We had it for a period of time, but that was kind of an abnormal period of time, and we dumped a huge amount of stimulus into the market to drive rates down. Right. And because we were able to drive both long and short rates down because there was so much money dumped into the economy. I think the Fed could take rates back to zero, and in this climate, it won't bring the 10 year down appreciably or at all. Yeah. And so- Valid point ... so I just don't see us back in a 3% interest rate environment, nor do I think we need to be. But I think we need to be in the fives at least. Yeah. Those days are gone, the three, two, three, 4% interest rates. We've never going to see that again. I think if we could get in the Five to five and a half. I think you could move people who have a four- Yeah ... to a five and a half, and you could un-jam the marketplace. Right. But you can't move somebody at a four to a seven. No. No, it's just not going to work. Or it's just going to be- Economically, it's not going to pencil out. The lenders aren't going to do it. So, yeah. Well, there's no advantage to the buyer because you're going to pay more for your product, and then you're going to pay more for your rate. Exactly. Look, I think we have a lot of conversations about affordability, and to me affordability is a three-legged stool. Maybe I'm missing something. Maybe you got some magic that I don't have. No, you're right there. It's price, it's interest rate, and it's income. Yeah. You need all three. So I don't think that price is coming down appreciably, and nor do we really want it to. Yeah. I tell people, I give the example, I said, "What if I came into your community and I said, 'Great." Huntington Beach. Use Huntington Beach for an example. "I got this great piece of land. I figured out how to build houses for 20% less today and undercut your home values." Yeah. That'll go over well. Right. Yeah. So- That's not a selling proposition. No. So cutting prices isn't the answer, because cutting prices hurts everybody that's an existing homeowner. So I think it's got to either be interest rates or incomes and, I guess what I could say is, maybe AI is the answer, and maybe we're all going to get so much more efficient that our incomes are going to grow- Hmm ... and we'll grow our way out of this. Yeah, right. I don't know that I believe it, but it's one of the ways to get there. You got to look positive. All right. There was a follow-up to that, Bill, before we slide into the next question, Arnie. I mean, we were talking about single family rental, but what's your take on the rental market in Southern California and California in general? Is it similar thoughts that you have there? We're active in both the for sale market and the rental market. Right. I think in our coastal stuff, we feel very good about- Okay ... delivering infill coastal product, both for sale and for rent. I think rents have a little more elasticity because the rent purchase differential is so high right now. Right. Right. And there's such a shortage. I mean, all the ebbs and flows, there's a long-term shortage of the last- There's still a general shortage of housing. The rental stock is pretty well-filled. There's some spottiness to it. But generally, you've got rent growth in Orange County, rent growth generally in Southern California. The IE's probably growing even faster than Orange County generally, certainly near term. Close in IE's done very well. Right. The Chino, the Corona markets, those markets have done very well from a rental standpoint. But the differential, the math's always done just on PITI. Yeah. But the reality is, is that that's not the cost of home ownership, because the cost of home ownership just begins from buying the home. Yeah. Now I got to put drapes up, and I got to put a bush in the yard, and I got to do this, and every weekend you're spending money. And God forbid a pipe breaks or- Repairs. Right, the repairs, the taxes. And stuff breaks. Exactly. Yeah. So I think that California's going to be a rental market for a while. Yeah. More renters than homeowners. It's unfortunate, because I do think that home ownership is the long-term pathway to creating wealth for people. Yes. Yeah. Look, you can go back to the World War II era, end of World War II, the GI Bill. Right. And you can look at the wealth that was created in those next couple generations. And for a lot of families, it's housing related. Right. Well, that's how you- And the positive effect on the neighborhood when you have families per house. Real estate investment. And you live in a home, you've got a fixed cost of living, and particularly, I grew up in Texas where you couldn't do, at the time, second mortgages. Mm-hmm. So you couldn't lever up your equity. You could do a second mortgage to do a home improvement, but you couldn't lever out equity at the time. Yeah. Right. So it was a very steady, stable thing, and you knew it was going to cost you your $1,000 or $2,000 a month for your home forever. Yeah. And- Things have changed ... and so that allowed you to kind of build and amass- Right ... and get your children off to college. And you pay off your mortgage with the payments, too. Literally, a friend of mine just posted on Facebook a mortgage burning party. Nice. I didn't even know people knew what that was anymore. Oh, yeah. That was way back when. All right, let's move on. Yeah. Shift sectors. Let's talk about this office condo conversion that you're doing in Newport Beach. I think you call it the Waypoint. Waypoint. Yeah. Yeah. Tell us a little bit about that and what about the pivot? Why do we go there? Well, our pivot there was because we already owned a building, and we didn't see a pathway out alive. There's a reason, okay? There was a reason. We owned a building, and our basis was too high to get out alive. Okay. So there's not going to be any plans to buy more office and do that? Or is that something- We might. You might? We might. Okay. We might. I think we'd want to do it more- There was part retail in this too, wasn't- No. But we got it approved for medical office. Right. And that's been a big key for us. Right. So we've been able to sell to some docs and some clinics, and that's done well because we're just down the street from the new UCI- Right ... Hospital there on Jamboree, so it's been a good synergy for us. Matter of fact, I signed an LOI yesterday to sell one of the units to a medical group, and I've got a closing at the end of June to another doctor. Okay. So it's become heavy medical, and I think we're getting close to 700 a foot. And- How big are the units? Kind of 3 to 7,000 square feet. Right. So we're going to come out okay on the building. Nice. It's interesting, the building across the parking lot from us, much bigger building, sold for $100 a foot last year. Yeah. Wow. In 1997. So- I'm going to sell my condos, which I think we have like 40,000 feet of condos- Yeah ... for almost what the 300,000 square foot building sold for. Amazing. Well, I mean, this is something- So it's a pivot. Yeah. So I think we're kind of going the same direction here is because of all the office vacancies and all these offices that have just been sitting there, and you can buy it at a good price, that appears to be a good possible next step or next evolution in real estate. Do you see this becoming something going forward? So office condos. I think like residential condos. And I've done another one. I did one- Yeah ... early in my career. Okay. Very successfully. I carved up a campus in Austin, Texas, decades ago. More decades ago than I care to recall. Okay. I was the genius. We bought the note on this deal and foreclosed it, and our basis in the office building was 20 bucks a foot. Wow. And we sold it for $65 a foot and thought we were geniuses. Yeah. And $65 a foot in Austin, Texas, would be a pretty good basis today. Yeah. No, that would be great. Everything about the condos. Well located in Austin, Texas. Yeah. But I think it's something we will look at. Okay. But we will look at it more intentionally. This was kind of an accidental, but I think it's like a residential condo. Okay. It's still a location play. Yeah. Like what works in Newport Beach doesn't necessarily work in Fountain Valley or Fullerton. Right. Yeah. And you got to have the right building structure. There's a brand savvy to Newport Beach. Right. Yes. Oh, without a doubt. And some of the most successful people backed into something by mistake or by out of need, and this is something that you saw no path, and you went this way, and it might turn out to be a blockbuster for you. Something that could be repeated. And it's great because can't the buyers, they get SBA financing? They do. That's all- Right? So that makes it- Almost every one of the deals has been SBA financed. Absolutely. It makes it so much easier. Yeah. That's great. So it's kind of a cool little business. I think we made an interesting pivot there, and it's kind of fun. I mean, I needed to do one more thing like- Because I hadn't tried enough different things in my career. Yeah. Why not? Let's give this a try. Yeah. Well, I want to shift into retail, but do you think the office market in general, Bill, has bottomed out? Yes. What do you think? I think so. Yeah. I think it's two things. I think that it's a combination of return to office, which is every day one more company realizes that they need to have their people back with butts in seats. And there are some exceptions to that. There are businesses that can pull this off, but- Yeah ... I got to tell you, the majority of them work better with people in a chair. So you think there might be opportunities? You're hunting around for some office properties? What do you think? I think there probably is. I don't know that it would be- Yeah, and now they're going to convert it to housing. I got invited to participate in a couple deals last year, in the last year, and I decided not to just because I need to put blinders on- Right ... and get some projects done. And we talked about your investments in some of the office projects around the country last time around, so. Yeah, they weren't that much fun. I'm getting rid of one of them this month, and I will celebrate to write a check and get out of the deal. Well, let's shift to a sector that is more fun, and that's retail. Yeah. A bit more colorful. The tenants are more fun. It's all about experiences. I see you're moving forward with La Mirada and sold Mission Viejo. Yeah. Tell us about La Mirada, and tell us about if you're looking for more, and what your thoughts are on the retail sector. I think we like this kind of pad business, creating a little conglomeration of pad users, of restaurants, and select service. And in my La Mirada deal, I've got one of the fast food franchises. I've got a coffee franchise, not Starbucks, but a more- ... localized. I've got a EV charging, and so I'm kind of building that. And those are things that I'm doing really differently from my core business. Right. Those are really part of my family office that are going to be things that ultimately are long-term check deliverers to my mailbox. Right. And- How much space do you have there at La Mirada? How big is it? I've got eight acres there, and I've got another site out next to my Desert Hot Springs Industrial. I've got a retail pad there that's about six or eight acres there. Okay. And we're padding that out as well. One of the commonalities in both sites, I'm doing digital billboards, not just retail. Hmm. So I got clearance to do digital billboards, so I'm in the advertising business as well with a partner. I mean, I own the billboard, but they're doing the placement. Right. The ad placement. And that's a really nice business model. It's a- It's like an annuity. You generate- Freebie visibility ... you generate a really nice cash on cash- Yeah ... on the actual billboard. Right. And so it helps kind of fund the whole project, and I think ultimately, without a huge amount of capital, I have a nice cash flow for my family. Mm-hmm. And I'm trying to deliver, if I could build one of those kind of deals, a La Mirada, a Desert Hot Springs, and do one every year or two, maybe someday I could retire, although I think that's probably unlikely. Yeah, you know what? It's kind of hard to retire when you- I am well past retirement age. Yeah. Whatever that means. How do you do those triple net deals? Are they for lease? Do you sell them? How are those? I'm going to lease them and keep them. Uh-huh. I'm going to lease them and finance them and stick them in the drawer. And the rents are all over the map in terms of- Yeah ... depending on the specific site? Depending on whether we're just doing ground lease or whether building the building for them, and so it's a little bit different for everyone. So. Right. Well, sticking with retail, the big one, more de-retailing, but- Yeah ... sliding over to Westminster, which obviously has been- You were all over the news on that one, I saw. Big in the news. Right. The getting into the ground. Bolsa Pacific, I believe is what it is, right? Yes. So, a huge retail mall that got- It was time ... not useful anymore. Yeah. Are you keeping any of the old retail, or is it all going to be new? Yeah. Only people that'll stay are be... Well, I got two banks there. I got Chase and US Bank. US Bank will stay but relocate. Chase will stay in their location. They've got another option remaining, I think. Right. Target will relocate into a new building, is the plan. There are some agreements we still have to finalize, but our site plan has them relocating. And they want to relocate, so I think that'll get done. Right. And then we've got 60 to 80,000 feet of new retail, which is primarily experiential and food and other things of that nature. It won't be strip mall at all. It should be more curated. Mm-hmm. More local, entrepreneurial, trying to play to the Westminster flair and- Right ... and- Have a little more design to it, bit pedestrian-friendly courtyard type of feel. Yeah. Right. It's going to be a heavily residential walkability community. Totaling, we're doing about 2,250 residential units there when it's all said and done, and feel pretty pleased about what we're doing right now. How many different buildings are the residential units? We have four different rental buildings- Uh-huh ... three market rate and one affordable, and then we have about 855 for-sale units. Nice. And a mix of studios to two and three bedrooms on the rentals? Studios, ones, and twos. Uh-huh. Not much of the three. We don't build much three bedroom. We save the three bedroom for our build-for-rent communities. Right. Yeah. Two is usually the- The math works better with a kind of a mix between those three. Yeah. Yeah. And I think the latest news was on groundbreaking and actually getting in the ground. When do you expect people to start, first occupants to move in? In 2028, the- Oh, that's- ... first-sale product will deliver. Model homes will open late '27 or early '28. Okay. And so first residents, we'll call mid to late '28. Good. All right. Such an exciting project. I mean, this is- It's been a bl... It's been- ... painful at times, but it's a pretty exciting project to work on. Yeah. No, it is. There's just so many components to it. And then you get to have a little fun. I got to go drive the excavator and knock down- Oh, yeah ... the buildings. We saw that. I get to do, most of my day is not that exciting, so that's kind of- And it's such a landmark property that's meant so much to the community for so many years, so it's like you're holding this- Well, and it's very visible. It's right off the freeway. I mean, every- Right ... everybody knows where it is. Everybody's seen it. It's- We take our position there as the, very seriously as the stewards of the land to take it to the next generation. Yeah. And I think if you look at particularly large scale development like that You have to feel responsibility about it. And clearly, we're running a pro forma and we want to do the right thing, but it's not all about the pro forma. Yeah. It can't be about the pro forma. Right. The pro forma needs to work, but it's got to be the right thing for the community, and I think we've found that right mix. I don't even know how you project cash flows and costs and stuff like that on a project like that. You almost have to just know based on your knowledge and your experience and your gut feel. But with a project like that where it's infill- I actually think you start there. Yeah. And then you build a spreadsheet that hopefully supports your thesis. Exactly. But I think you build- Or like the developer I worked for, I'd bring him the spreadsheet and he'd say, "Why don't you go make it work?" Yeah. Show me how this can work. I'd have to go back to the computer and play with the numbers so that it actually then made sense. I think in my case, I still start with a pad of paper and my HP 12C. Oh, going back. Well, let's talk about some background from- Oh my God. Yeah. I still have mine. I don't know where I put it, but I still have mine. It is- Now, I have the modern-day version. Yeah, it's on your phone. Because I got it on my phone. Yeah. Wow, Phil, that's unbelievable. Yeah. That brings back my analysis. But I still use it. I didn't have to reach very far. Yeah. I literally have three of them within arm's reach right now. That is great. That's amazing. That's the way we were all taught and all learned from. Right. So I was just going to say with Westminster, being infill, right in the community, compared to your other projects which are on outskirts, this really means so much to that community, compared to- Yeah ... some of your other projects. We've had a- So you've got to feel that responsibility. Yeah. It's a big site, too. We have 83-plus acres there. Right. There's not many people in Orange County that get to build 83 infill acres. Right. Yeah. No, you're right. I mean, look, it's the Irvine Company. Especially if your name's not Disney. You got Disney, you got the Irvine Company. Yeah. Oh, yeah. You got OC Vibe. Right. You got Five Points, and you got Rancho Mission Viejo. Yeah. That's it. That's great. All right, let's talk about a smaller project you have up in Santa Barbara, another retail to multifamily conversion. Tell us a little bit about what's going on with that one. Give us an update. Yeah. We actually got a unanimous approval yesterday to proceed. We'll have a subsequent hearing, but the city's moving forward, I believe, to give us entitlements for residential and agree to sell us the fee under our building, and we will do about 114 multifamily converting out of the retail. Mm. So kind of a exciting outcome there. Rentals? Yeah. It'd be a multifamily rental. Yeah. That's a nice project up there. That- We may have a smaller retail component of the project. We think we'll still have a little bit of retail in the project. But it'll be heavily weighted towards the- Right ... residential component. What's the biggest challenge that you've seen in doing that type of project from retail to office? I think it's the same challenge- Because everybody challenges multifamily. It's the same challenge at Westminster. I literally just got out of a meeting before I got on this call. I got presented another kind of failing shopping center, and it's dealing with the existing tenancy and then the REAs and CCNRs, the reciprocal easement agreements and CCNRs. So that's the hard part of this, is trying to sort through keeping everybody happy and bringing it to a new vibrant deal at the same time. Yeah. It is not easy. No, I'm sure. And then you also have another one out in the desert in La Quinta, the Solterra, is it? Yeah, Solterra built for rental there. Yeah. And that's humming along. Look, we built that at a tough time, but we're 90-plus percent occupied today, and I think we'll ultimately see daylight on the building. We love the execution. It's a great building. Mm-hmm. And our rent rates have been pretty close to pro forma. Our problem there is cap rates are not close to pro forma. Right. So, we're just biding our time. Yeah. So that one's- But we own a great asset. We're very happy with what we built. We wish we'd built it to a different yield, but- Right ... that's easy to say in the rear-view mirror. But what we're pleased is we built to a yield that we will not lose money. Right. Okay. And it's fully built out there. There's no more land out there. No, we're done. Yeah, that's it. But I think to be able to do a project like that and be reasonably comfortable that you're kind of, at best, worst case, you're plus or minus break even. And I think if you can build into a 200 basis point cap rate expansion and still manage to hit your numbers- Right ... something worked out okay. Yeah. So. Then you're also partnering with Lenar on a property in Orange County. Yeah, on the Amway building. Right. Which we got unanimous approval from the planning commission a couple of weeks ago. Oh. Fantastic. Now, when do you think that's going to start? I think demo will start in January. Okay, good. What are you going to put there? We've got housing. We've got 200-plus, like 221 condos and small live homes. And then a 50 or 60 unit affordable building. Yeah. You could do worse than to partner with Lennar. I mean, they're- They could do worse than to partner with us. Exactly. There you go. We like those guys a lot. Yeah, no, they're good company. They've been around for a while. They value our ability to get these entitlements, and we appreciate the relationship and look, they're best in class in what they do. Depending on whether you're going by units or volume, they're the one or two home builder in the country, kind of duke it out with Horton. But here in Orange County, they are the top dog. Yeah. And we've done several deals with them, here in Orange County as well as around. I've done a dozen and a half transactions across my portfolio with Lennar. But we just closed a deal with them in October in Fountain Valley. We sold a site to them in Fullerton, and we'll do this deal with them in Buena Park. Okay. So. All right. You're next, Steve. Well, I just got to say, Bill, doing build to rent, doing condos for sale, doing single family rental, doing low income housing, and straight up rental, it's amazing how you have your hands in all these different sectors. I should be bigger or richer. Yeah. You and me both. A two-part question. Are you looking to acquire more properties of any sector, any type right now? And then, of course, I'll get you on the flip side of what you're selling. But, what are you looking to buy? We are in the market to buy always. Mm-hmm. I would say today our bogey to be a buyer is probably bid ask spreads a little wide, so we're not finding sellers at our take price. But they're also not transacting with anybody else. Right. So our price isn't the wrong price, it's just not the price that's appealing yet. I got lectured by a land seller via email the other day about why my offer was so out of the market, and I said, "Look, we didn't intend to insult you. We're just telling you what we can do." "And you told us you didn't want to do it, so I didn't take offense to your response. And I'm not saying you can't do better with somebody else. I'm just telling you what I can do." Yeah. And that's kind of our MO here. Sometimes we're going to lean in a lot and sometimes we're going to barely lean in. Yeah. But sometimes barely leaning in, we're the best buyer out there. We are the buyer who will do the most complicated, most challenging, most opportunistic deals that are hard to understand. And I don't think there's a lot of people who can beat me at that game. I've been doing this for... The company's 34 years old, and I've been doing it for almost 50 years now. Right. So, I don't want to be egotistical, but I have really talented people here. And I have a stomach that allows me to take, understand, and underwrite risk at a level that a lot of people can't do. Yeah. Right. Look, there were other people who tried to buy the mall. Right. Lots of people tried to buy the mall. Including after we bought into the mall, people tried to buy it from us and couldn't figure it out. And so I bought the rest of the mall, and I think I've got it pretty well figured out. Right. And I don't know. I'm probably not going to make as much money as I want to make out of it, but I'll make the right amount. I'll make a fair amount. I always like to make more. Well, sticking on the buy side, is there a particular sector that you're looking to buy more into, or is it more, like you said, the complexity of the projects that kind of attract you, whichever sector they're in? I think we really like the covered land business of whether it's a retail site or a office building that we take to residential, through demo, not a redevelopment. Like that could happen, but that's not really what we're looking. We're really looking for a decent acreage, like maybe a single story business park that's just kind of outlived its usefulness and we can find six, eight, 10 acres or more and re-entitle that. We like that play a lot. Okay. And if I could buy one of those every other month, I'd be a buyer of one of those every other month. And anywhere across the country fair game? Nah, Western US only. All right. Western US. Okay. I found out I didn't get smarter the further from home I was. Yeah. When I really look back on my career, because I've worked in 25 different states. Right. But when I look back on my career, the most money's been made pretty close to home. Right. Where I have best relationships, best knowledge, speed to make decisions, and so today we're in Arizona, we're in Nevada, and we're here in California. Could I be convinced to maybe branch a little further? Maybe, but I don't think I'm going to be in 25 states. You are from Texas, so you know. Yeah. I'm from Texas, so I could go Texas again. But Texas doesn't have the barrier to entry that California does. Right. And so I- I look at things over there periodically just to stay smart, but I think I need a pretty good correction to be a Texas buyer. Right. Okay. What about selling? I got a lot of stuff for sale. Pitch a couple. Maybe there's some buyers watching. You never know. We might have somebody buying something. Well, we're working on a deal to sell some lots at Westminster. I will be coming to the market with a multi-site at Westminster here, probably come out into the market here before the end of the month for a, I can't remember exactly. I think it's about a 500-unit site- Wow ... that we'll deliver next year, and then somebody can go build it. Obviously, our hotel deal in Huntington's available. We're talking to people, but we haven't wrapped up a deal there. Right. I've got some land I'm working on to finish entitlement and sell over in the Arizona market, in Mesa, Arizona. I think we'll have a pretty robust sales year over the next year. Good. I'm selling a 23-unit townhome site to one of the home builders here in Newport Beach, and that deal should close early July. Do you use brokers? Do you go off-market? How do you play the sell? Mostly use brokers. Yeah. It's safe. I mostly use brokers to buy, too. Right. I buy things. Most of what I buy may have been listed and there's been a failed sale, and then they bring me the deal to figure out that it couldn't sell the way they thought it could sell. Then you get creative. I get creative to fix the problem and- Yeah ... come to a solution. It's pretty rare that the broadly marketed deal is going to be my deal. Yeah. Right. But I have a lot of guys who call us with one-off deals. We've got a good, robust group of brokers who call us with an idea, and they know we're at least open to having the conversation. But I have no problem. I still have my broker's license in Texas. Great. I never moved it to California. I've been in California for 25 years. Yeah. And I still keep my Texas broker's license. I think in two years, I'll have it for 50 years. Wow. Then I give it back. That's pretty good. Nostalgia, maybe at 50 may be a good year to retire it. Billy, you touched on it earlier. Tell us a little bit more about AI. As a matter of fact, I understand you wrote an article about that as well. Yeah. Look, we're starting to pay attention to it. We think it's got some place to make us smarter. Mm-hmm. I don't think it's replacing anybody here, but it's definitely something that I think my analysts are finding is a useful tool. My accounting team's using it now for report writing. I'm using it. I use it for communications, and I don't do as much Excel writing, but my analysts are starting to use it to help them write Excel models, and look, there's no question that it can do it faster, better. Then you got to test it. You got to be smart enough to know whether the output's any good. Right. So, I mean- I think that was a good part of your article on LinkedIn there about at the end, you really need the personal intuition. It's going to make people better, but it ain't going to replace them. Well, I'm fortunate. I have a really obtuse skill. Right. Somebody will bring me a spreadsheet, and they'll put it up on the big screen in the conference room, and I can find the error almost instantaneously. Yeah. I don't know what the solution is to the error, but I can tell if there's bad output. And I will make people test the spreadsheet in front of me to see if I could bust their model. Yeah. Well, that goes back to your 12C. You know- Because if I- ... the technology before it happened ... because if I can't trust the output- Mm-hmm ... it doesn't really work for me. And I've had analysts kind of crumble under the pressure and quit because of that test. Right. I got great people today. I love my- Besides AI, are there any other tech tools, tech products that you've found that are really useful and you're fond of? Well, we're looking at the other side of AI, which is the data center side. Uh-huh. So we're active in the space, and we're not quite ready to announce when and where, but we have four different projects that we're working on, and we think it's going to be a big piece of our business. Now, do you have somebody in the organization that is head of tech for you? Not on that side of the business, but yes, I've got a full IT team and- Okay ... then my chief operating officer is probably my-- Jo Merriman's probably the, she's kind of taking the lead on making sure that AI gets incorporated into the firm. And I've looked at AI just like, how can it help me with land selection and- Mm-hmm ... site selection and underwriting and- Right ... working through the land use bills. And we don't have it fully figured out yet, but we're working on it. And the services CREXi and CoStar- ... as they ramp up and start integrating AI, I keep seeing more and more about the services. I don't know how much you get into it yourself with those- Yeah ... tools, but certainly they're getting more useful in that regard. Well, I think they are. I was talking to the technical team over at CBRE, and they started out writing their own stuff and trying to be AI wizards writing from scratch. And they figured out that as much money as Anthropic and these other people are spending, just go buy a copy of Claude or whatever you're using- Yeah ... or all of the above, because I think that's really the best way, probably, is to use two or three different- Right ... platforms to test against. And you get different answers. You get different answers, and you can find out how to ask. Because look, I think the issue is AI is about how to ask a better question. Interesting. Because if you don't ask the right question, you're not going to get the right answer. Right. Yeah. So if you just have somebody who's a drone and they're just asking stupid questions- Random questions, yeah ... you're going to get stupid answers. Yeah. But if you have people who are highly skilled at asking deep analytical questions, then you got a better chance of getting a pretty good answer. We own a big ground lease portfolio, and we're looking at dealing with a renewal on it and extending the ground lease and renewing the subleases and I got 2,000 people. Mm-hmm. That's an AI project. Yeah. But I got to ask the right questions. Okay, let me feed the lease documents in. Let me give you the rent roll. Let me give you all of this. Now let me start asking the questions of how do we optimize, for all parties, the extension of this lease? Yeah. And is it more upfront? Is it more along the way? How do I share with the sublease? There's 100 variables. Right. And I think that's an AI project. Did you run it? Did it help? We're running it right now. Excellent. And I think we'll figure out how to optimize the value- Oh, that's a great example ... for next level. We're going to understand how to optimize value for the next 99 years. Okay. And I think that's where you can do it. Look, heavy analytics. Look, I started before there were computers. Huh. I mean, there were computers, but not computers that a small business had. I was probably 30-ish years old when I got my first Apple IIe with a floppy disk using VisiCalc. Right. Yeah. And you could literally see it ripple through the screen when you made a numeric change. And the stuff that I could do on that, I do way more than that on my phone today. Yeah. Right. Yeah. Phones are just... I can do pretty high level. And I was talking to one of my niece's kids, and he was struggling with algebra and I wanted to explain to him, and I said, "Algebra is one of those things that I use every day of my life." I use, actually, geometry and trig quite a bit, but I use algebra every day because algebra teaches you how to think and problem solve. And for people who can't do that, they're never going to catch somebody like me, because I can ask much deeper questions. Yeah. Right. And if you can't ask a good question, I don't care what computer you're using, you're not going to get a very good answer. That's true. Right. Well, hopefully you thought our questions were good over the last- I thought they were great. I appreciate- I was blown by. Yeah. This was a great dialogue. It's really great talking about all this. But one last, we do want to get, just to wrap up a little bit, we could go on and talk to you about these projects and ask you follow-ups, but we want to get a lot in in an hour. But one of the things we do want to hear about is hiring needs. People are watching the show, they're learning, they're young, they are interested. What are you looking for? We're always looking for good talent. I don't know that we have any current jobs posted today. Uh-huh. But we're always looking for good talent, and somebody in the organization will always take a call with somebody because we don't know what day we might be hiring somebody. Right. And we don't know what day somebody leaves us. So I would say, we're a little bit of an out-of-the-box place. Like you said, there's very few shops like ours that I'm expecting somebody to be skilled at all these different things. I don't know if that makes us good or bad. It's just who we are. Yeah. It's just our DNA. Seems like from the interviews Arnie and I have done, though, that in general it seems like there's always a need for in the property management level- Yeah ... in that role. I think- But the right person. Good entry point into the business. Yeah. Look, I think asset management, analysts- Right ... project management roles, those are the roles that we would typically be looking for here. Right. We're not really on the property management side of the business because we hire that out. So, I think it's I think when we are looking, what we're looking for is some people with some skill and some experience. We're probably not the best shop for somebody to come right out of college and come here. Right. We just don't have a great training program today. But I think somebody who says, "I've done two or three or four years someplace, and I'm ready to do something really challenging and hard, and I want to get a really good experience and skill set," those are the people who should be calling us. All right. One last question that I always ask. Tell us a little bit more about what you're doing in your free time, and have you gone back to Texas to see a Longhorns game yet since we spoke? Uh- They're doing a little better now than when we spoke last time. Yeah, they're much better. The last game I saw actually was a year ago January. At Jerry's world- Uh-huh ... when Texas lost to Ohio State in the semifinal game. Yeah. But they made it to there. I mean- They made it. I think we will be a contender in football again this year. Right now, I'm rooting for my Lady Longhorns right now. That's right. They're in the World Series. Softball College World Series. Yep. Thank God. I thought you were going to say the other part of Texas and talk about the Spurs because I'm from New York and I'm- No. I will. I'm a Spurs fan too because the Spurs started in Dallas. They were the Dallas Fort Worth Spurs- Right ... initially, and then they migrated- Well, you know- ... to San Antonio ... Steve owes me 20 bucks because he thought OKC was going to beat the Spurs. But I'm a kid from New York City, so I'm all in on the Knicks, man. Well, it should be a good series. Yeah. Should be. I'm on the Spurs. I'm definitely on my- Longhorns ... Longhorn softball to win. Of course. The men got a good shot. They got a good team, and I think their pathway looks doable. Yeah. Um- Well, especially with the big guys out. Big boys are out. They got UCLA out. That's- Yeah ... good. We're at the top of the ranking of people who remain. Yeah. And then, because I got Las Vegas business, I got to go Golden Knights- Yeah, they- They did last night ... they did pretty good last night. Yeah. They were down, what, three-nothing at some point or something? It was two-nothing, then four, three to two. It went back and forth. I don't know anymore- No, they were down. Yeah ... who went up. They were down, and they came back. For me personally, I'm an avid bicyclist, and I have been helping a friend of mine. I'll give a plug for my friend. Sure. Mark Strauss from Walker Dunlap. We know Mark. Mark is riding across the country to raise $1 million for children's hunger for a program called No Kid Hungry. Wow. And I have accompanied him on two different three-day legs, and I'm doing the last three days of the ride here coming up on the 21st of June. I'll ride the 21st, 22nd, and 23rd of June. Excellent. And ride from our nation's capital to the Delaware Shore and put my toe in the Atlantic Ocean. Very good. So I started with him- I'll look for those clips because I follow you on LinkedIn, so I'm sure I'll see those clips. I started with him in Newport Beach, and he's raised about 600 grand and but raised a lot of awareness and- Good ... and it's been quite an endeavor. And I'm a golfer. And then the other thing, I've been an avid scuba diver since I've been a- Right. I was going to be Jacques Cousteau. I actually have a marine biology degree, and then I pivoted to the business world. And I like to get out, and I'm actually really upping my game and my diving because I figure I got a limited time left. Maybe I got 10 or 15 years. Do it while you can and enjoy it. You're right. So my wife and I will be doing a big trip. We're going to dive with the schooling hammerhead sharks in October. Oh. I think they'll leave me alone for professional courtesy. Yeah. Be careful. Well, you're not a lender, so they don't... I got my real estate lawyers going to be with me, so- There you go ... I think I'll be in good shape. I think- Last question, though. Or- Oh, no. We did our last question. No, I just want to hear a plug on a major charity that you want to give a plug for that you're involved in. You mentioned one. Well, I'm going to say it's the No Kids Hungry that I'm- Yeah, that's what you just did. I committed. I'm sponsoring- Yeah ... and committed to raise money for No Kids Hungry. So- No Kids Hungry. It's No Kids Hungry. You can go online, and it's No Kids Hungry Ride is what you would look for. I love it. And that'll connect you with Mark's website, and you can donate, and maybe somebody will get him over the last 400 grand he needs. Well, hopefully we'll get this thing up. Hopefully, we'll get this online- I'll hope some developers watch this ... before the ride. So- So the rides... Look, we'll take the money all year. Exactly. Yeah. Okay, good. All right. Great. Thanks, gentlemen. Well, Bill, thank you very much. Yeah, Bill. We appreciate everything you do. Appreciate your time, and we'll see you maybe for the third one. Best of luck with all those projects. We'll look forward to the news, and we'll get you back on in a year or so to update us. Yeah. We'll see you at a live event, too, for sure. All right. Take care. Bye now. Bye-bye. You've been watching "Commercial Real Estate Talk" with Steve and Arnie, sponsored by Rockefeller Group, Providence Savings Bank, Fidelity Mortgage lenders, and Chase Partners. Start to ignite