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Welcome to this inaugural episode of commercial real estate talk with Steven Arnie. I'm Steve Bloom founder and CEO of rent tv.com our 24 year old news and media company for the commercial real estate industry mainly focused on California, but the entire Western new s we also own sublease.com and put on the conferences and we also own this video platform, you're watching this show on probably called the review for the entire industry to load their videos into one searchable platform. And with that let me introduce you to my co-host good friend and the producer of the show Arnie garfinkle with the All-Star group. Are you doing Arnie? How's it going today? Good. Thank you Steve. Yeah, Arnie Garfield All-Star group. I've been in the commercial real estate lending business for 40 years. We all do events in La San Diego and the Bay Area actually conference will be in Orange County, but we do very interactive events, and we also help produce. Rent TV events back to you Steve. Excellent. Well our goal with these shows and you know, Arnie and I were perfect team for this is to create a different style of interview show with leaders and icons of the commercial real estate industry and really try and get under the surface with them. Ask them questions. They're quite frankly. I really haven't seen being asked on shows, you know of this type. And with that I'm super excited about the very first guest for this show Bill shop off major developer of me a different types of properties throughout the country. So it's going to be a really fascinating discussion. But before we bring them in let me Tell you about our sponsors which make this show possible without them. We wouldn't be having this conversation. And the first one is Paramount Property Tax. So with inflation causing cap rates to increase and profit margins to decrease one way you can fight back is by appealing your property taxes. Even if you have great income, you can still qualify to have your property taxes lowered. The deadline of file is November 30th. Call West Nichols Paramount Property Tax appeal. We're gonna put the number on the screen eight five eight two two five 1200 or his email addresses there too. So call Paramount Property Tax. Appeal Arnie. Yeah Redwood mortgage red is where is a direct private money lender with over 44 years of experience. They land on commercial mix use multifamily residential investment properties the loans range from 200,000 to 10 million lending in major metropolitan areas of California and, Arizona. Redwood has long held expertise in commercial real estate loan transactions. You can contact Steve Belleville over at redwood redwood mortgage is a good place to go when Banks say no call Steve Belleville, and his information is right below. Thanks, excellent. And our last sponsor the show is commercial real estate inspectors in Southern California. They're skilled inspectors provide critically needed inspection information an easily understood terms as well as inexpensive Simple Solutions, whenever possible. Let commercial real estate inspectors help you protect your deal call Tiffany simmington her infos on the screen Tiffany simmington and book your next inspection today 818-957-4654. Again call Tiffany at 818-957-4654. And with that, let's start the show Bill shop off founder of shopoff Realty Investments now celebrating their 30th year. They are doing all property types office multifamily industrial even hotel and Retail from ground up development to investing and selling, you know through the whole life of the of the transaction and development. So I won't tell you too much about the company. Let's bring in Bill shop off Bill. Welcome to the show Welcome to commercial real estate talk with Arnie and Steve. Good morning. Let me with you two gentlemen. Most thank you very much, you know given all the projects that you're working on. I mean incredibly busy. So I know taking this time out of your day is a super valuable for us and for our audience so I won't take up too much time with too much fluff. Let's get right into it. Tell us tell the audience, you know a little bit about shopoff Realty Investments. Thank you Steve. I shop off Realty Investments is a as you reference to a 30 year old firm. It's it's owned by my wife and I co-founded with three other partners back in 1992 in Austin, Texas and then along the way our portfolio and ultimately we migrated from Austin, Texas to Irvine California. We've now been here 22 years of the 30 and focused on opportunistic value add Investments and developments in as you also reference across all the food groups. I think it's one of the things makes our firm a little bit unique. We own office industrial. We had a little bit of retail we own a fair amount of multifamily and and a lot of development sites for multifamily and lots for home builders we and and then you we all so I'm not exactly sure what struck me With this stroke of Brilliance, but we are we are doing a hotel on the Las Vegas Strip. Yes all about that. I saw that that's interesting. Tell us a little bit about that project. Well, we've been seeking out an interesting opportunity Zone project and this one came to our attention in 2019. And as we started to vet it looked more and more interesting we were able to structure it in a manner that I thought was very attractive to our partners and we work well for our long-term Partners in in the actual Hotel development. We're in they would would get the great benefits of owning a hotel on the Strip, but then we would layer in some some of the tax benefits of a qualified opportunity Zone. Tax deferral and no capital gains on the on the you know, whatever we earn from the actual investment. So kind of an interesting opportunity, you know, it's it's the big leagues when you get to the street where exactly on the Strip is it I made approximately we're we're south and east of the of the Mandalay just just Northerly of the welcome to Las Vegas sign good and I think I think the total tab on that's 550 million dollars. Isn't that yeah, 550 maybe even a little more. Oh that's broke ground into just break ground on that. We broke ground in July. We are moving along nicely on the project and we'll we will complete Construction in late 2024 and open for business in January or February of 2025 perfectly exciting. Well, I want to back up a little bit with you Bill. I want I want to get back into because I was reading your history. So you started in in Resident. You were a broker when you were going through college, right? How did you end up getting into the big leagues as you say with the commercial real estate? Well, how do you make that transition? You know, I I never intended to go into real estate. I always was thought I'd be you know going to Investment Banking Corporate Finance was kind of my real desire. What's up? What's I got on the path of business school? So there's a longer story about to take I'll take too long to cover. Haven't I actually have a degree in Marine Biology and went out and got an MBA and this University of Texas right Austin. Yes, sir. Nice. And so I went and went worked on my MBA it at the University of Texas. And while I was there a friend of mine said hey, you should think about getting a real estate license. It's a good gig for part-time while you're in school and be flexible on time and so great. So I went got my real estate license and by the time I graduated, Hi, the job market was pretty pretty soft and in 1981 when I graduated and the only offers I got were for less money than I was making part-time as a realtor and I was like, well do I want to go be an accountant? Because the investment banking jobs didn't show up that I was hoping for so I I did get one interested party, but they wanted me to move it Houston in my my X by then wife did not want to go to Houston. So it was that was off the table. So I I looked at these offers that I got and I was like and I think I could I think I could do this well. You know, just sell it. And and so I continue to do Residential Brokerage for a little while started some small time development projects made made some money, you know, and then then they signed this tax act in the 1985 and and all the sudden the world changed. Yes. And in Austin the world got hit hard and this big Go-Go a lot of people building and all the sudden the market shifted hard the other way and I ended up. You know, I was a millionaire in my 20s. Then I was broke by the time I was late twenties easy go. Yeah, I got divorced and bankrupt and started over with nothing and you know met my now current wife and it's 35 years ago and we were looking for things to do and in the market was extremely difficult. So I was selling some foreclosures. Wow. It was HUD was paying six percent commissions. That's like well I could go solve another house. But if I saw HUD house to get paid twice as much yeah. And then they came out with a program. They had all these foreclosures trying to get rid of so they came out of a program was a hundred dollars down and like $500 of closing costs to buy a house and say the average house was you know, 80 90 thousand dollars in Austin at that time, right? I looked at it. So well, you know if I sell a house I make you know, $5,000 commissions. So I started calling my friends from high school and college and said if you buy a house, I'll give you your down payment and your closing costs. Wow, I make five I give them five or six hundred bucks and I put 4400 bucks in my pocket and you know the next thing I knew I was selling, you know some weekends I'm selling three or four houses. That's your signature moment. Where you realize this this is where I want to go or well there was a moment within this moment. Okay, and we were down you actually sometimes you we'd actually go down and go to the actual physical auction because they'd open they'd open the bids and you could tell whether you won because you didn't win you need to hustle that client back out on the street and and go get because it's all a sealed bid option. Yeah. Yeah put in your best number and send it in every week. And so what we would drive down from Austin to San Antonio go to the auction. Make sure we knew the bids we get all our comp data for all the other sales we go back and get ready to do it again and one week. I was down there Cindy and I were down there and the and the guy reading the auctions there were some duplexes they were auctioning and they and he starts talking about him and I and I'm looking at the address. I'm like, we had brokered the land through my office. And the duplexes were selling for less than we sold the land for Wow, and that was my aha moment. I I looked at Cindy and I said I got a new idea and we started advertising in the the West Coast edition of The Wall Street Journal and the LA Times the Orange County register a little bit. You add, you know low down payment investment real estate cash flowing real estate. And did very well out of that and then started buying along with selling it started buying my own product again and holding his portfolio and that's kind of how we then along that way. We made this segue from being Brokers to being principles and then do you remember the In the transition towards you know major commercial deals. What was that first? Deal that you did that. Pushed you into the you know, the big leaves on the commercial side that you look back on and say hey that was that deal that got me into that next level there were several but I'd say one in particular. So we started the company 92 started doing small. Most of her buying defaulted notes right from the RTC the resolution trust Corporation. Who is empowered for for the younger viewers they were empowered to clean up the the broke Savings and Loans and sell off their assets. So we would buy these notes or you know, no small no pools and we got qualified to be a bitter on a structured sale was called their S Series and you you actually had a qualified. I wasn't just have the money you had to provide evidence that you had the expertise to do the the back office to handle because the because the government was your partner. All of you have already been my partner. Yeah. Yeah taxpayers. So you're all my partner. Yeah, and I did well for you by the way and it so we got qualified for this we bid on one and then there was one that was Central Texas or Texas, Texas and surrounding states and it was a large pool. I can't remember precisely but it's like a hundred and twenty five loans. We have six people at the time under writing 125 loans. It was it was crazy about building. I'm literally building a spreadsheet as I'm going and you know to do a hundred and twenty seven page spreadsheet then yeah. Oh, yeah, that was a lot different. Then you didn't have building it on the Fly. I'm literally designing it building it rather do it on paper. You finance background so they were probably really end up and and I got it. I got it figured out how to build it. I had teams out in the field doing the physical review and then I had people, you know, reading the loan documents and we would assemble all this information every night. They give me another download and I would love those properties in and then we ultimately had a you know, a portfolio strategy and we're gonna bid X to do the deal. And we in and we won the bid. We had we did not have the capital. Where we had six hundred thousand dollars to make a non-refundable down payment. Hmm, and then we had to start calling for money sure and and we've been calling we're it's kind of was in between. I think we needed about 13 million dollars of equity because there was financing involved, right the 13 million dollars in 1994 was a lot of money. Oh, yeah. It was a huge amount of money. And it was a little too much for my high net worth guys, and we were really hadn't gotten into the institutional business at that point. But we made a cold call to Credit Suisse first, Boston. now Credit Suisse and and they took the call on a Friday afternoon. We walked him through it. You know, there was none of this available. Like I couldn't share a spreadsheet. Yeah, like the spreadsheet what you couldn't even email it because it was too large. No. Yeah, so put it on a floppy. Yes, you put it on a floppy disk and send it to New York for Saturday delivery and the guys got it. They look they went to the office. They looked at it. They went through it. They called us and said If if what's on this this disc is is valid we can substantiate it. We'll back you and they flew in that Monday morning. We sat in the office and by noon. We shook hands on a deal and that went on to be a very long relationship with Credit Suisse our goddess into the into the institutional world, and I'm pleased to say so that was that was you know near that's 28 years ago and I still do business with one of the guys at credit. So you say he personally invested with me to this day. That's right. So I want to ask you Bill. What brought you to California? When did you head West from Texas? So we bought another one of the RTC portfolios in 1995 was primarily a land portfolio. Similar structure deal where RTC was was a part of our Capital stack. We had a we had another group another institutional group joined us. And then we started buying some other Assets in 98. And then in you know along the way in 98, I I had an employee that was managing a lot of these assets. He was based in Texas as we all were but he had a lot of experience in California. So we turned the management of those over to this gentleman and I I tell it I said he liked my business so much. He decided to make it his and he started she started stealing from me, huh? I didn't know obviously he started stealing from me, but I figured it out. I caught him. I called the FBI a suit even got a lot of my money back but not all of it. And then the FBI said him to that the US attorney's office sitting for a short time out in the federal correctional institute and I came out here to kind of manage and clean up and you know sell off the assets and the more time I spent the more I was like, no, right, you know, this needs I got to buy some more to make this better and and the portfolio was growing not shrinking and Ultimately, you know, I was commuting pretty much weekly and and moved here in January 4th of of 2001 so, oh boy. Okay an Orange County's pretty nice. It's not bad. You know, I I had to come up with a reason because people would ask, you know, how did you how did you leave Texas and no taxes and come to California. Yeah, you know my next question relatively High tax state and and I had to come up with something. So my line is I left high humidity for high taxes, and it was a reasonable trade well. Let's jump forward now to current current day, you know, I'm looking at your portfolio properties, you know, and and you know, we don't want to take too long. So we want I want to discuss some of these different properties to the types. So your office portfolio you got offices Chicago, Dayton, North Carolina a recent transaction. You know what you're thinking on the office sector, you know, and and the different markets the turn around the country. Um some of those that you just listed I wish we didn't own my recent purchases. I'm very happy with we bought them at what we think is good value and Jerry's out. I mean, I think I think Hi Suburban office is going to be in trouble. Mm-hmm. I I just don't know how you take what I would call a commodity office building and you make it work anymore the cost the cost of TI it you know to do tenant improvements and lease and commissions relative to the rent. I just don't think there's any money left like I go through this exercise and even even here in Orange County. I look at some of the B buildings here in Orange County. I just don't think there's an economic viability too well and then with more and more people working out of the house, it's it's getting even tougher to even get them into the Suburban buildings. Yeah. I mean look at if an office building used to be 90% least it's now going to be a year less. Now, the better buildings are gonna do fine. Yeah, but but I because because they serve a purpose but I think it's I think you're gonna see a reimagining of the office space. I think it's I actually thought that we were gonna have a lot more of it in the retail space that we've had but retails kind of just held on enough to where some of the crappy real estate retail centers. I thought should be demoed and and repositioned are just not happening at the pace. I thought they would right. There's just enough credit in the in there to keep them alive, but the office space I was just on on a call right before getting on here. We have a chance to buy the debt on a building at 30% under face on a performing office deal. And I'm not sure that's a good deal. Hmm can't tell from here because I don't you know, my basis will be You know less than half of the of the buyer's basis. But I don't know that I feel good about my basis at that price, you know, a hundred dollars a foot in this particular Market. Well, there's your Finance background you you see where the numbers are and you see where it's gonna make sense and not make sense. Yeah. I I look at let's let's say, you know, you go to a typical, you know, Suburban Market where let's say ramps are three dollars, right? So you got thirty six dollars annually. Operating costs or 12 let's say if the building's full you got 18 bucks and not 18 bucks. You got to do tenant improvements. Yeah, leasing commissions and actually make some money. It just doesn't leave much juice left. So I I think it's gonna be a tough sledding for a while. And I'm not sure I I think you're gonna see a fair amount of build office getting demolished and repurposed is something I don't know what you know, the right building configurations might go might go residential conversion for the physical space, but I think you know Some might be warehousing and some are just going to get demolished. I mean I've we've we've looked at a lot of office in the last year and unless there's reasonable credit with reasonable term we struggle to figure out, you know, our position of years ago would have been. Hey, let's just buy it cheap release it up and we'll make money. I don't know that you can buy these things cheap enough to lease them up anymore. And that's just Chicago right Chicago and you've got Dayton and the North Carolina, right? Yeah, the North Carolina that we're going to buildings in Charlotte. We feel very good about those very good sub Market very in demand High occupancy High rental rate. Date and spine because it's a low basis play. We're fine there Chicago. We're not we're it's tough sledding really those buildings up and stabilized and ready to go to the market just as covid hit and you know, my guess is we're gonna sell them. We're not gonna sell them at a we're gonna make money on those buildings is is my guess and I don't know that I want to prove how smart I am and try to retain them again and put the capital to better use right. Sometimes you just have to realize you you made a mistake. Yeah, I you know, we've we've done over a thousand full cycle transactions a lot of piece of property done our business plan and sold it in the last 3041. I think is my most recent count. I don't have to win on every one of them. I just got to win on the majority and I want to win more on the winners than I lose on the losers. There's there's some friends of mine or like I've never lost money some of that is maybe they're just Good and they're better than me. Some is they just won't sell if they're going to take a loss and they haven't ever recognized losing money, but they've lost money. It's they haven't taken it yet. And there's the time taking it. We have a different philosophy. We think capitals valuable in in repositioning that Capital into a better deal maybe smarter than trying to ride a deal. That's not going to be a winner right? That was your skill set your company skill set of repositioning rezoning, you know having that skill set you're able to do things that you know, perhaps other owners aren't able to do. Hey honey. I'm gonna shift to retail because I want to move forward you've been in and out of several retail projects, Nevada, you know, you've got some retail space at Uptown, you know and different areas, and of course, you know, we heard to talk at our Orange County Event about D retailing, you know when it comes to Westminster, so so give us your take on Retail Market. And what you're seeing now look I think. Retail is is becoming more experiential people want to go and they want to have an experience. Not just buy some Goods right one restaurants. They want entertainment. They want things to go do look you there's examples of good retail. You can go to the Spectrum and you can't find a parking space at the Spectrum, right? But you can go to Mission Viejo Mall You can't find another Shopper. Yeah, so I mean so I we look at our Westminster is an opportunity to completely reimagine that piece of land with with very little existing product. That's there intending to stay. Yeah, we mostly will demo and start over and build new product primarily residential City's going through a specific plan that pass it through their Planning Commission a couple weeks ago and you know have you know, 2500 to 3,000 homes and you know, apartments and homes and is it gonna be a rental? We'll do a combination of rental and for sale product. What's the market there? Who are you building for in that market is a families singles or heavy figured it out yet. How far along are you in the plan? I think it's I think it's both. I think you you're you've got some family, you know, you got definitely families that would buy your for sale product which typically be small lot attached and detached maybe how product you know moderate high density, you know, 15 to 25 units to the acre density and then you're gonna have your more typical apartment density. That's maybe 80 to 100 units acre for you know, Podium or a rap building will will have The city would like 600,000 feet of of new retail or retail like being Hospitality counts toward retail. I think we would look at it and say it's half that amount right maybe 350,000. So that'll be a little bit of a negotiation with the city. We've we think there's some other opportunities there. We've definitely do some Hospitality there which gives the city what they want for retail. Which instead of really care whether maybe they care a little bit but really what they want is the revenues right? Right, but we can we can show the very easily that you get better revenues for the hotel room than you do from a thousand square feet of retail. Right, especially it's empty. Look as you get transit oriented tax that the city gets a hundred percent of versus only a small percentage sales tax, which most goes on up to the state. So I I think that yes working through it. It's understanding that that formula though because it's it's what does the market want here? What's the highest and best use and then how do you sell it to a city to provide them the economics of what they want? Are they because they they come in with you know certain ideas and their ideas aren't wrong. But they're but they're thought of from a cities Viewpoint not from a market Viewpoint, right? We we would argue there's not 600,000 feet of users. In that marketplace right that if you look at the competition, you know, Bella Terra just to the south of some other retail. There's just not 600,000 feet of retailers that would come to that Marketplace. And so Why tell me to build something that's going to fail? Yeah, because I might as well stick with the failure that we have is to put fresh Capital fresh capitals only going to go into things. That'll work. So we think this retail like high quality retail good credit restaurants. Entertainment type venues is gonna do very well, but it's got to be well thought I was gonna be well curated. Yes and for us that means we've got a partner of somebody who's going to do that part of it. We can you know, we can do certain amounts but the experiential you know, my friend Shaheen sadeghi talks about, you know, hardware and software of the retail. The hardware is the building and the software is the experiential and I think getting with somebody like that who really understands it she needs it. She needs a genius about that. So, you know, we we would align with people like that to create the best experience for the consumer and we think that that Gets people to your projects. It drives rental value and for sale value for your your residential and it adds vibrancy. And yeah, that lens right in my next question is on the residential side. What what you know for like a one bedroom in that market what's you know, what do you get for a one bedroom in that market and are you you know, we're you looking to move is that I like Actually red, so that submarket are. Upper three dollar range so, you know if you took a 600 square foot one bedroom. Probably 22 2500 dollars. Yeah now is a plateauing. Are you seeing a little softness like well, you know, I'm reading about in the, you know, definitely seems office. I mean you just we had such a run-up You know this happens both both on rental and for sale for sale came to a faster stop. But you just got affordability issue right as great as a landlord to get more rent, but not if it just increases turnover and you just you know, you're putting paint on your customer. So there's this Balancing Act between the landlord who, you know feels like he's got to drive rents and in our you know our Customers where we don't want we don't want to turn those units. We turn them too often. We're not really making any money because we're picking up rent right? We're spending it on unit turn. So I think that you know, I think that the smarter to landlords are figuring out the right Balancing Act of how to deal with that you clearly home prices were not sustainable at the rate that they were appreciating and now With interest rates, you know essentially doubling this year home prices are going to come down a bit. And I I I'm not great. I mean I all I'm gonna do is repeat other people's forecasts, you know, it feels like to feels like gonna come down 10 or 15% at least maybe more that's you know, you know, I would tell people the situation is different than nine and 10 when? prices got devastated because I got borrowers who better qualified. I've got fixed rate money almost entirely. 70% of the people who have home mortgages have a mortgage rate under 4% So they they can afford to stay even if their house is a little upside down. They're better off staying than selling and trying to buy again. In 20% less, but at 50% more interest rate their payments going to go up and so if they're long term players, which is what housing should be about if your homeowner you should be thinking long-term and long term. You're going to be fine. It's it's you know, fortunately the last you know run up here in covid and we got all this stuff. Look all asset classes. We're moving and oh, yeah, you know, everybody was like crypto this and right now I'm and and you know, this gentleman last week who lost 15 billion in a day. Yeah in a day. That's okay. That's but you know, I have you might have to go home and have a cocktail. It's a close out our about with the run up, you know with with everything was going up and and prices were getting out of control and people buying things for higher than they should have it was all because the interest rates were so low. It was so easy and so much better and you can get qualified whether it be a residential home or a commercial office building you were able to get something because rates were so low you were able to buy above your means now things are settling down. It's getting tougher. It's gonna it's gonna get tougher and I think I think they'll be more pain on the commercial side than the residential side, right? I think you you have people who have commercial real estate jury of commercial real estate. Move aside multifamily where you have a great debt opportunities from Fannie and Freddie and odd but but the other commercial real estate a lot of it is floating rate debt, you know other than other than cmps. So a lot of a lot of people including us use floating rate debt, you know, thankfully all of our debt has caps on it sure. So we negotiated, you know some interest rate protection. but look that those caps are going to expire and we're gonna we're gonna have to we have to pay the pikers they say, yeah, and and so I I think that you know, it's it has this thinking about every single asset we own we feel good about the majority of them. But as I shared, you know got a couple that you know, I don't feel good about I got a couple where I'm like man, I just don't know what my Pathway to success is on these buildings. Well, yeah, and and you look the darling of real estate right now is industrial that that's the area where everybody is doing and that's where I want to shift the discussion or any perfect segment. There you go. Let me let me close out on West Mister Bill. What do you think? The timing is? I know it's cut up in there. But what do you think the timing is on delivering? Product there. Oh to two to four years from now got it. Thanks. Now. I want to I gotta get us I gotta get a I gotta get my City Zoning. I gotta get a Project Specific. I got to go through my site planning. I mean, I think if I could get a if I could get a resident in there in four years. I'm probably moving to light speed. All right? Okay. Well, let's just industrial. Go ahead. Yeah. So, you know, you're you're project on the on the I-10, you know to launch that how do you see the industrial space? What's your you know inspiration to get into there and and you're finally looks like things are happening on that site. Um, look, we were very bullish on Industrial even though I think like everything else it's gonna it's gonna get temporarily oversupplied because yields start to look so attractive and everybody got in. Now you've got some issue we're rents have driven ridiculously if you thought rents went up and in in the residential space that that particular building, you know, when we we launched two years ago rents were 50 cents. And in the market today those rents are probably. High 90s to over a buck in two years. Wow, so essentially a doubling into surpassed office when you talk about the net right? Yeah, you start talking about, you know a dollar triple net. You're making more money than you're making on an office building. And it costs you less to build it right? It's easier, you know, if you can get it Zone those. That's the pitfall. It's getting very difficult Zone. large Industrial in California because there's a big pushback from this. When did you buy the I-10 Logistics Center site? I've owned that land forever. I the original partnership sold to the current partnership at the end of 2020. But we've been interested 2004. It was originally a residential site. And we ultimately got industrial zoning on it got it entitled. And you know, my original Partners had been in way too long and wanted out so we moved it forward and took it into a development deal. We're under contract while the closing next month on it at a very attractive price for ourselves to sell to sell the project what state what stage is it in? Is it built completes? It's nearly complete. Excellent least still it is actually fully leased now. Excellent. Congratulations. We we sold it. We actually sold it empty in our buyer pro career attendant. So excellent. Congratulations on that. Nice. Yeah. Nice deal for us would be a very nice deal for them as well. So win-win yeah tenants happy they got a place to do their business. We're thrilled and I think our buyer is equally happy. So excellent. Well, the one last property type I want to get in the hotel project. I know we've got a few minutes left. We want to keep it moving along, but I'm really curious. How do you how do these deals come to you? You know, I think one of the things is we've rightly or wrongly wish some days. I wish I could change this but I don't think I can we've we've got a reputation for tackling things that are challenging. Mmm. The my group is is pretty intellectual here and and they tend to do things that are not replicated or replicatable. But but we get paid hopefully well for solving unique problems, right? I don't know that that's probably I had to do over again. I might do it differently, but that's the DNA of the firm. Yeah. So we're gonna continue with that and somebody brought this site to us on the Strip. It looked interesting. It had some challenges he challenges that showed up after we acquire the site that we actually completely did not think about one with the FAA where we actually had an FAA clearance before we closed. It was one of our conditions clothes and then the FAA started. New conditions on us even though we had an approval from them. We ended up getting involved with Homeland Security FBI, Las Vegas Metro Clark County Aviation. Wow Esa. It was a it was a learning experience because everybody was very concerned we have about the airport. They're very concerned particularly the the shooting a few years ago. The Harvest Festival I could see that yeah a lot of anxiety about another building close to the airport shutting traffic down causing a lot of dilemma for the whole strip the whole city. So we work diligently with them ultimately got their their confidence in us and we brought in, you know, one of the top airport security firms in the world normally represents airports to represent us and come up with the security plan for our building to make it. Comfortable for all of those parties to join with us in in approving a hotel project. Well, the design looks great the Dream Hotel. I love the names what's really good and you're probably not too far from the football stadium too. So that's walking distance. Yeah for the ball stadium. We think MBA is coming and there's a new arena being built to the south of us that is vying for that MBA franchise about a mile and a half to the south of us. I'm still awaiting an announcement for the A's because I'm assuming they're going to move to Las Vegas and one of the sites there been focused on is just the north of us. So I'm all right. We think that although we were kind of at the South End of the strip and and maybe kind of a newcomer down there. It feels like there's a lot going on around us high speed rail within a mile and a half of us from Los Angeles to to Las Vegas the fourth of affiliate a fortress's building and they closed on the land for the for the Terminus and in Las Vegas. So we're very excited about the project. It's a it's a lot going on with it. Oh, you're gonna have conference facilities in there too or just rooms Casino. We will have conference facilities. We have eight or nine food and beverage venues Casino. It's pretty cool pretty cool layout and I think it's gonna be an exciting kind of Boutique experience. It's it's 531 rooms, which You know by any other Market standards would be a big property but by Las Vegas a bit of a boutique, right and we're very excited about it. That's good. That's great. Well, I have two quick questions aren't there now we're pressed. But so so Bill, I know you've got the finance background and and the analytical background. But you know when it comes to that. Green light decision, you know where you're deciding, you know is is it gut is it irr return on Equity? I mean some of your projects I don't even know how you make projections with all the potential changes that may occur over the lifetime of that development, but when it comes to like yes or no Is it gut is it Financial? How do you how do you do that? Well, it's all Financial but I think it's it's you know, we do elaborate spreadsheets to try to understand what's going to happen. But really for me is it's can I put it on a piece of paper and understand it kind of in a static model of this is what it's going to cost me to get here and this is what it's going to be worth. you know, is there enough spread here then we put time value of money and other things on it, but Look if I'm going to build something that is a very simplified example I gave on the office. Look if I can't figure out on a piece of paper how I'm gonna make money the spreadsheet doesn't make it better. Right? So I gotta figure out I can you know, I can I can I can rent an apartment for x and it cost me why to build it. Financial cost of X. You know, I can make a real return on my capital. And then, you know, then we put it in the spreadsheet but it's it's got to be understandable from a just a basic Nuance of doing it. Look I've been doing it for you know the company for 30, but I've been in the business for like 43 years, right? I have some sense. I've got some smart people here a number of smart people here and I think you know there is definitely Some some intuitive idea about value. that I have an underlying idea about value you go out and you look at the concept look we just bought a piece of land in Mesa, Arizona and you know, we looked at we we looked at it. You know, we we think it's intrinsically worth. You know, 10 15 18 dollars a foot and we could buy it for six. Can probably make money at that? You know, it's it's it feels okay directionally now, you know the market shifts in the middle. You got to be prepared because you know selling is I want to buy with wide enough margins to be able to overcome these shifts and then take advantage of you know we look at what's going on right now and you know, we're we've got a few things we you know have some anxiety about stuff we bought in the last year. We feel great about we bought it with this in mind and then we'll you know, we'll take advantage. I I expect that. You know, we we typically will buy during a correction. Right. We don't try to buy the bottom. We buy the bottoms impossible like one guy gets the bottom and everybody else is either on the way up or on the way down and I find you can do more volume of transactions on the way down. It's gonna be careful not to catch you falling knife. but you know, I think that I you just understand intrinsic it comes to that intrinsic value if I think that you know, something is worth the hundred bucks and I can buy it for 50. I'm a buyer. If I buy it for a hundred and it was 200 last year and I buy it for a hundred this year. That doesn't make it a good deal. It just means you're gonna lose less money than the last guy right so you got to understand what's the value proposition of that asset? So I think that's you know, right now we're in that, you know, interesting Market where I think you know, we're gonna we're gonna be in new price Discovery for the next few quarters. And I think it's gonna create great opportunity for those that are flexible Brothers. It's going to be terrified. I got one last question for you Bill before we go. What are your personal interests what gets you excited when you're not sitting behind the desk and looking at projects? I mean, obviously you're a Texas Fan. I assume you call it five follow college football but charity. It's you have Charities following. My football team is a heartbreaker this year. It can be we want to do better lost four games by one score or less seven points. We've lost four games. Um, so now that's a little bit of a challenge for me today. But but I still love I love my Longhorns but then I love college football. I'm a huge college football thing and I watch watch a lot of different teams. But like I play golf I'm a pretty avid cyclist. Although not getting as much in this year's is normal. I scuba dive when I get a chance and I and I and I collected drink wine and then the Charities, you know, where we're we're involved in a couple Friendship Shelter in in Laguna Beach. That's all right advocating solving homelessness one person at a time and and doing it a remarkable job of getting people housed. I think they're you're over your Stat or for the last year as Housing in South Orange County homelessness is down 23 percent. Excellent. That's not by moving in someplace else. That's by putting humans in homes that they should be and then we also are involved in some lgbtq Charities. My children are like my children are are in those groups and I think Society You know has moved a law along way in the right direction the last bit. It's got a little concerning to me that that some of their freedoms are being infringed upon and so, you know, I intend to make sure that I protect, you know, their freedoms and their friends freedoms and and and those people we don't know but you know our view is very clear that this should be a place. You know, I thought I thought this was a place where everybody should be able to come and be welcome. All of us are our offspring of immigrants or immigrants and I really I don't understand kind of today's view of anti-immigration and candidly from the maturity of our country if we don't get into, you know legal immigration. our demographics are going to shift in a place that's gonna We won't have growth you simple. That's back. Yeah, you're right. We will we will have a flat economy for you know to a declining economy. If we do not allow legal immigration. And and I think that's it both ends of the spectrum. I think it's the intellectual end where where there are very very bright people that we need and want to be employed and then there's people that are just you know, those people who want to do certain labor jobs that candidly a lot of people don't want to do and but but it's but it's understanding who's in the country and you know, I'm taking a radical position there, but I think you know, I'm taking my position both is both because I think it's humanitarian but also because I think we absolutely needed to drive our economy if I want to sell more houses and rent more Apartments we need immigrants exactly. Yeah. I think it's a logical it's Physical Viewpoint actually, by the way, I feel your pain with college football. I went to Florida State. So we had a lot of years of down now we're coming back up, but I definitely feel it. I think we're close. But you know, I I said our fight song right now is wait till next year. I I hear you. It's a thank you. Yeah. Thank you gentlemen for the opportunity. Yeah, Bill. Thank you great conversation, you know some I you know, I could ask you so many more questions, so I'll have to get on another episode. So thank you very much have a thank you great productive day and go make those deals. Thank you everybody. Thank you. Thank you. And watching commercial real estate talk with Stephen Arney sponsored by commercial real estate inspectors Redwood mortgage and Paramount Property Tax appeal.