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Hey, welcome to this new episode of Commercial Real Estate Talk with Stephen Arne, where we have interesting and informative conversations with iconic figures of the commercial real estate industry, uh, throughout the western regions of the us. And I'm excited about today's guest 'cause we have a, a great leader in the industry whose company is extremely active in developing, buying and selling retail properties throughout the state of California. Irwin Busey, founder and principal of Paragon Commercial Group. But before we get to our guests, let's tell you a little bit about ourselves. Arne Garfinkel All Star Group, my cohost. Arnie, how you doing today? Good. How you doing, Steve? Doing great. Welcome to 2024. Right. Uh, Hoping Better, right. So anyway, Allstar Group is a commercial real estate lending company. We also produce events, uh, in the commercial real estate lending world, in the commercial real estate world. Uh, we do our commercial real estate lending conference events every April This year, it's gonna be April 18th down in Long Beach. We also produce events for others. Uh, the Click conference, which is a hospitality event, is March 6th and seventh in Anaheim at the, uh, Westin Coast of Mesa, uh, west and South Coast Plaza. And we also produce events for Rent tv. So, Steve, tell us about Rent tv. Yeah, thanks, Arnie. Uh, for those who don't know me, I'm Steve Bloom, founder and CEO of Rent tv, our 25-year-old news and media company for the commercial real estate industry with daily news on our website, rent tv.com, our great email newsletter and email blast advertising, as well as our rent TV conference series. We've got Orange County coming up March 21st, and very exciting is the review this video platform where you're watching this video, searchable video platform, lets people put in their video for the real estate industry so they could be easily found by anyone in the industry. Uh, and with that said, we've got a grand show coming up, but before we get to Irwin, let's tell people about our sponsors. And our first one is Paramount Property Tax Appeal, um, with inflation causing cap rates to increase and profit margins to decrease. One way you can fight back is by appealing the property taxes. Even if you have great income, you can still qualify to have your property taxes lower. The deadline to file each year is November 30th, so you've got some time right now, but call 8 5 8 2 2 5 1200. Ask for Wes Nichols with Paramount Property Tax Appeal. Arnie, who's next? Our next sponsor is Fidelity Mortgage Lenders. Fidelity Mortgage Lenders is a private lending company specializing in commercial real estate, founded in 1971 by Chuck Herand. It is known for its unique terms, fast funding, no prepayment penalty, and long-term fixed rates. Call Uncle Chuck or John McLean at 807 5 2 9 5 3 3. That's 807 5 2 9 5 3 3. Who's next? Steve? Excellent. Our last sponsor, but certainly not the least, is commercial real estate inspectors in Southern California. Their skilled inspectors provide critically needed inspection information in easily understood terms, as well as inexpensive, simple solutions. Whenever possible, let commercial real estate inspectors help you protect your deal. Call Tiff Tiffany Simington and ask for your next inspection today. She's at 8 1 8 9 5 7 4 6 5 4. Again, Tiffany at 8 1 8 9 5 7 4 6 5 4. Okay, well, let's welcome our guests. Yeah, with that said, let's bring in IWiN Busey from Paragon Commercial Group. Welcome, IWiN. Hey, welcome, IWiN. Thanks to both of you for having me. I deeply appreciate it. Uh, it's been, uh, I've admired all your hard work and all your efforts and all your different, uh, venues that you provide. So, um, honored to be here and thank you for having me. Well, We're honored to have you and we're honored to of your work, which we're gonna find out a little bit about right now. So, um, We've got a lot to cover. That's, so I say we dive right into it. So, uh, Go ahead. You start, Steve, Why don't you give, give our audience an overview of Paragon Commercial Group, any other businesses you may be involved in too. But, uh, one of the things we like to know is, you know, the portfolio size, number of properties, geographic area, and how'd you come up with Paragon Commercial Group? Where'd the name come from? Well, para, you know, Paragon really means to strive for excellence and we, we, we, we really, uh, we wanted to, um, pick a name that, uh, really represents who we are and what we are in the marketplace. And, you know, just, just history on Paragon. We've been, we were formed in 2009, uh, right during the GFC and we left Regency Centers. I have two other partners, Jim Divo, mark Ian, and we formed Paragon. And it is truly a startup story. And we, uh, we act, our conference room table came from our civil engineer. I actually picked it up with a pickup truck on a, on a weekend to bring it to, to our office. And, uh, you know, our first deal was, uh, a discount tire. And we essentially bought an out parcel from Home Depot. And again, like anything in our business, relationships play a critical role in, um, uh, in success, especially in real estate. From there, um, we grew and started buying different, uh, uh, properties and, um, you know, we, we, we were lucky enough to work on the runway project with Lincoln Property Company. Sure. They were look, looking for a retail operator at that time. And, uh, if you're not familiar with that, that's imply vista. It's Whole Foods Cinema Mark, CBS. I Lived a few blocks from there for a while. Ah, did you? Yeah, it's a great plan right underneath Your LMU sign there. Ah, There you go. Exactly. That's, uh, my, uh, alma mater got my MBA from. So, uh, from there, uh, you know, we, we focus on grocery anchor shopping centers, necessity driven retail. Um, our roots, we started with Regency, and as everybody knows, Regency specializes in grocery anchor shopping centers. And the, the, the, the really, the business plan and strategy is grocery anchored shopping centers attract more visitors per week than any other type of retail. And because of that, 'cause there's more trips, there's, there's more room for, for growth in terms of shop space rents. And as Covid has clearly shown, grocery is a key critical component. Um, um, in, in terms of, uh, retail. Um, so, you know, we own, uh, roughly 17 different properties. We focus in the Western United States. Um, they are ranging from a freestanding target all the way up to larger centers, deal size specifically. We're, we're, and what I like to say is we hunt with a shotgun. Um, and what, what I mean by that is we will do anything from, uh, free, freestanding, single tenant, uh, triple net deals all the way up to larger centers of 50 to $60 million. Okay. And we've got different capital partners. Um, our business is really made up of, you know, one third being, uh, institutional, uh, pension fund and one third being high net worth investors. And then one third our own capital account for, um, deals that we own, um, as, as Paragon. Right. Well, let's go back to the beginning, Arnie, I think you got something teed up in terms of Oh yeah, I do. Yeah. I, I just wanted to know, when you got into real estate, was it retail at the ver even before Regency, what, what started you in the real estate business? Great question, and it's probably one of my favorite stories. And, uh, so my dad was a, uh, professor, aerospace engineering professor, graduate level at USC. I went undergrad to USC, and I was undeclared and I was trying to figure out what I was gonna do with my life. My dad was pushing me towards, uh, um, computers and, and aerospace engineering. And I'm like, I'm, I'm, I'm half as smart as you, and there's no way that that is the right fit for me. Mm-Hmm. So I was working at Bank of America in Manhattan Beach as a teller, and this gentleman walks in and he's wearing flip flop shorts and a T-shirt, and he starts depositing money. And I look at him, I go, what do you do? And he goes, I own real estate. And I'm like, okay, that's it. That's, that's the direction I'm going. And I never looked back. And, uh, you know, it's funny, you look at your, your, your, your lifecycle, and God, I've been doing this, uh, for, you know, over 30 years, uh, in the retail space. Why did I pick retail? Um, I just landed into a retail opportunity. And, um, you know, you, you look, you look back during your career and you go, what am I very thankful for? Well, I'm very thankful, uh, for, um, norm Lakas of Laika Development, who took a chance with me and hired me in 1992, uh, to essentially be a property manager, um, pick up dog food, uh, figure out roof leaks, uh, do do financials, loan packages, Excel, et cetera. I did everything. It's a small shop, and it was a amazing learning experience. And really the benefit, uh, of that, uh, norm was really is, and he's a visionary. He can, he can see value where other people can't. And, um, he's also, um, a bullock. And what I mean by that is he's very persistent. He doesn't take no for an answer. He, he figures out a way to get the water through the crack. And, uh, yeah, that's, yeah. So that, that was a very lucky if you, you, if you talk about like, my formative years, thank God he took a chance on me, thank God. Wow. That is, that is a great story. Well, let's fast, let's fast forward a few years. So you're at Regency. How did you end up conceiving and, and thinking about, and actually then starting Paragon from Regency? How did that happen? Well, I, I, I joined Regency as a project manager. And I, you know, I, I left as a senior vice president of investments. I was there for 11 years. Great company, great assets, great people. Um, and, you know, I was able, that was also another critical step in terms of my, my growth because it allowed me to be exposed to a lot of national retailers like Kroger, Albertson's, whole Foods, save on whole, um, uh, trader Joe's, um, you name it. Um, we, we, we spent time with them, and one of those was, was Target. And, you know, I always wanted to figure out if I can swim in the pool by myself. And, um, um, you know, when we formed Paragon, that was 15 years ago, we're coming on our 15 year anniversary. And, uh, my daughter was seven, and I had another daughter that was one. And, uh, naturally leaving a paycheck and security and different things like that. Right. That's gutsy. Yeah, It's gutsy. And, and, you know, my wife's looking at me going, are you sure you know what you're doing? I mean, um, um, you know, you, you've got, you've got all the benefits of a, of, of, of a great company. Um, you got, you know, longevity at that company if you want it. And quite frankly, I, I always wanted to figure out if I could do it on my own. And, um, it was just, just, just critical. Um, I also have a, a a friend that called me up and when I was at Regency and I, I was actually trying to buy a property from him, and he, he's like, nah, this is for my kids. I'll never sell it. I'll never sell it. Long story short, we became friends and he'd call me up at Regency and he'd say, um, make sure you don't get a gold watch. And I go, what do you mean by that? He goes, well, you want some hard assets. You got you, you need to get some hard assets. You need to get some, some cash flow. Right. Et cetera. So when the great financial crisis happened, um, it, you know, honestly, it was Regency Development, which I was doing was a four letter word at that point. Right. And, uh, they were really focused on, on existing operating assets. And, um, they came to me and said, Hey, you know, I, I'd like you to manage people. And I'm like, my highest and best use putting deals together, it's, that's a hundred percent. I, that's what I do best. I like figuring out how to, uh, uh, solve the puzzle, the various moving pieces. And, um, um, so we, we jumped and we, we joined Paragon and, uh, started Paragon. And, um, um, from there, it's been a, been a great run. Um, and Was it like a, did you find like a deal, like you were just saying a minute ago, a deal, and that kind of was the stimulus to form the group and, and, and make that purchase? Or did you kind of form the entity and then go, start, start searching? Yeah. What came first, we, we formed the entity. Uh, we went and talked to a number of equity partners. The equity partners said, your resumes are great, but show me the deals that actually make economic sense. And then we, we started focusing on, on, um, um, acquisitions and, and finding value add opportunities. When I was at Regency, I specialized in redevelopment projects and, uh, and high barrier entry markets with, you know, best in class retailers. And, um, I like redevelopments, they're complicated, but, um, they're typically in, in trade areas that you wanna own long term. And, uh, there's usually some issue with it, um, whether it's related to, um, mismanagement, you know, we've, we've bought property for, for lenders, you've got a tenant that's going out, different things like that. Tell us about, Um, Some of your major standout projects, some of the ones that really like put you on the map, not you, but the company. And, you know, you feel like that's it, that that's, and then of course, you've had many all throughout the state, but give us a highlight of a few that really, uh, stand out to you. Well, you know, there's, there's a lot of different projects that I've worked on, uh, during my career. Um, and the ones that I'm most proud of, um, are, uh, one Target and Brea, I did a podium store in Bray, California behind the Bray Mall. And, um, that allowed me to work with the unique store design team at Target, which for me was like talking to the president. It was just absolutely amazing. They are, and, and I have so much respect for Target. They've just got an amazing team. They're great people. Um, they make, they make you better as a professional. Uh, we actually got a 10 out of 10 turnover award, which they give, um, and they rarely give, but we actually got a 10 out of 10 turnover award when we turned it over to their operations people. And that, that's when all the site work's done perfectly. You know, everything is, is, is, is top notch that also got a Golden Nugget Award, um, and, which I'm extremely proud of. Sure. Uh, the next project we did the first Amazon Fresh in the World, and that's at, uh, I I wanted to ask you about that. Yeah, yeah. So that, that one was, you know, toys Rs, um, office Depot project on Topanga and Irwin in the city of Woodland in Woodland Hills. Sure. And, uh, you know, Irwin Erwin, E-R-W-I-N is my name as well. Yeah. Perfect. It was like, meant to be, right. It was a sign. Exactly. It was a sign when we were evaluating the deal, I'm just like, this is, you know, first of all, a lot of people were saying, well, why are you buying a Toys R Us? That's, you know, they're, they're, they're not doing great. Well, the lease was signed in 1978. Yeah. I was 11 years old. Okay. Right. A, a great infill real estate. Um, um, we were approached and, uh, we had to get all the entitlements and the conditioning use permit without disclosing the tenant who the tenant was. And we were the first one on the map, uh, to open Amazon Fresh in, uh, Vogue World, which our little company with nine people. To me, that's a, that's a great thing. So, oh, I remember that location. I remember when that opened and, and how big of a deal that was. Yeah. And, uh, and, and, and I know that's not the only toys us you bought, because I looking at your portfolio of some of the other ones, uh, yeah. That, that you did buy, but, um, yeah. And that, that was a great move and, and what, what a partner to have than, than Amazon. Yeah. I mean, that's, that's, and you know, you bring up partners and I think, you know, I view myself in the customer service business, and, uh, I want to drive value for my partners and my customers and, you know, go above and beyond so that the Paragon brand and the Erwin Busey brand, um, really rises to the top so that if there's an opportunity, uh, where a tenant has a complicated project, hopefully they're thinking of Paragon as, as we all know, there's amazing, uh, developers and owners and operators in our, in our space. Yeah. Um, so it's competitive, but quite frankly, a lot of those competitors are my great friends. And that's what I love about this business. It's, it's, it's relationship based, And it's, and everyone does reputation. It's a better reputation when you solve a problem than just go along with, uh, doing what everybody else expects. So, uh, to be a, to be a maverick in that is, is, is amazing. And that, that definitely, that particular project, without a doubt, being the first one for Amazon was amazing. Well, that is a great story on the success, but we often find in these interviews that a lot of the great stories and, and, uh, and lessons learned are from the ones that you wish you gave back. So, uh, Erwin, are there any, uh, out there that you remember, or maybe you blanked 'em outta your memory that you look back on and say, you know what, I I, we got that one wrong, and we wish we didn't do that for some reason or another? Well, there's always bumps in the road, and Right. You, I, I have a saying, I love projects in the beginning. I hate 'em in the middle, and I love 'em in the end. Yeah. Okay. So it's, it's, it's, it's kinda like a puppy, right? You, you gotta, you gotta, you gotta figure it out. I've, I've got one project that I've been working on since 2014, um, and we've been looking to monetize it. We, um, um, are almost there in terms of, um, monetizing that asset. Uh, but the business plan has been achieved, and that is bringing a grocery into the, uh, the shopping center. It's just taken up a long time. And, and, uh, that's, that's been a lot of my time, you know, construction and, and development is, it's very complicated. And, and, you know, we, no matter what, you're gonna run into issues, um, cost issues, I just ran into a high pressure water line on a project that I'm doing that's, um, um, controlled by the Department of Water Resources, which is a state of California, uh, agency. And to get an encroachment permit to run a conduit for Edison is a nine month process. Well, yeah. They, that didn't come up during what city? Uh, city of San Bernard. Oh. And, uh, that didn't come up during the mitigated egg deck. The city never brought it up, you know, surveys were on our property. Um, long story short, we're pivoting and figuring out where else we can, uh, draw power from. Um, so there's all sorts of things. I mean, we've done build the suits for tenants, um, and then the market turned, and, um, you know, cap rates, uh, have gone up, interest rates have gone up, and you're like, wait a second. I'm, I just did, you know, three years of work for fun. Right. And, uh, those are tough. Those are tough, but every, every transaction is a learning experience. And well, quite, quite frankly, that's what I love about the business. Every deal is different. Every, every, every, um, constraint that you have, every problem that you gotta solve is different. And it, it keeps me invigorated. I'm, I, I love what I do. So now looking at a new project, what do you look for? Do you get 'em from brokers? Do you just do research for the area? Do they fall in your lap? Uh, you know, what do you do? What do you look at when you're looking at a new project? Well, we definitely get a lot of, uh, transactions from brokers. And, uh, you know, I think, I think one of the things is we've got the capital sources. We've had a joint venture with Canyon Catalyst Fund. Mm-Hmm. Uh, as an emerging manager since 2013. I mean, that's quite a long Yeah, right. Tenure. Uh, we just signed another joint venture agreement with Lincoln Property Company. Um, we've got a track record of, of, of closings. Uh, if you've looked since, you know, we probably do three to four deals a year. Um, you may not like our answer, but we're a quick answer. We're either yes, we like it, and these are the economic parameters that, uh, we can make sense on. We're not one of those, um, kick the tires for three months and try to figure out if it, if, if there's a transaction there. Um, and the other thing for us is, uh, you know, we're very, um, vertically integrated. And what I mean by that is, um, we do the leasing ourselves. We do the entitlements ourselves. We do outsource property management and, and construction, but, and that's with Athena Property Management. But we are, are very tied to the hip with 'em. And we're specific, so deals that have, um, hair on 'em, um, we have a good success rate in terms of closing difficult sellers as well. Um, we, we are able to, uh, um, uh, you know, basically transact with those sellers. I I, this one, this one, uh, property that I'm currently working on, uh, we got it tied up. And, um, I had a broker called me and said, you don't have it tied up. I go, yeah, I do. And he goes, no, you don't. There's no way you got that seller to agree to sell that. And I go, I do. It's in escrow and we're moving forward. And it was a long process, uh, to get the seller on board, but we were able to, and, um, the funny thing is, I told the seller, uh, when this is all done, you're gonna gimme something. And he looks at me and goes, I'm not giving you anything. And I go, yeah, you are. I go, when, when I get this deal done, you're gonna gimme something. And he goes, what am I gonna give you? And I go, you're gonna give me a letter of recommendation? And he goes, what are you gonna give me? And I go, I'll give you a letter of recommendation, but on one condition, you gotta frame it and you gotta put it in your office, and you gotta stare at it every day. Anyways, we got the deal closed. So, um, yeah. You know, that those, those to me are, are, are, are great. I think the other thing, um, you know, attorneys, brokers, um, cities, I mean, if, if, if, and we try to do, um, um, um, a great job in terms of architecture, placemaking, and really, uh, job creation, the ripple effects of what, of, of what we do. Uh, we really try to do great projects with great tenants that the communities are gonna embrace and support. And that all goes back to reputation, right? I mean, and that's, that's how you get it. Good. So, so deals come to you, like brokers bring you deals, sometimes municipalities or cities might bring you deals. And then do you have like research where you find a property you want and you kind of go after it and research the owner, or most of 'em come through the, the typical source? Y Yeah, I've been working in this market for over 30 years, and I can tell you, um, you know, I, I know intersections, um, very well, and I know properties that I'm like, I really want that property, right? There's, there's, there's been properties that I've chased for over 10 years, and then all of a sudden, you know, there's, there's, there's an event that happens. And, um, um, you know, I I, we get the call and hopefully jump hopeful. We're lucky to be able to, uh, uh, move that to the next step. Uh, but, you know, it's, it's, it's tough right now. And with, as long as you've been doing it, it's, I'm sure it's rare that properties come to you that you could buy that you're not aware of already to some extent. Yeah. I mean, there's, there's, there's, everybody has different relationships and different, uh, expertise. But, but I, you know, I, I do think that when you look at these transactions and, and, and projects they take so long to do, and really the one thing that I truly value is, is, is the relationships that you create during that path to either the acquisition or the completion of the development or the tenant opening. Those relationships are key, and it's, it's not gonna be, uh, just that property. Um, I, I've got an, uh, an owner that we've bought two properties from that are, that are great assets. And the reason being, um, is they, they, you know, we performed during the first acquisition and, you know, he's like, you say what you do, you do what you say, and you get stuff done. And people want that. I mean, there's, our business has a lot of, uh, um, operators that, um, aren't as, uh, concise, let's say. Okay. Right. Right. Now, when you structure a deal, do you structure 'em with, uh, corporate partnerships or is it just under one entity that when you structure a, a transaction LLC, It really depends on the business plan of, of the asset. So, um, under, um, the emerging manager program that's value add, IRR driven. So that is, you know, build, reposition, and sell. Uh, if we've got capital that, uh, wants to place capital that's more of a longer term hold, it's gonna take some time to, uh, reap the rewards of the asset that's more high net worth or for our own balance sheet. So we really approach each deal depending upon the business plan of that asset, if that makes sense. Right. Excellent. And, and Canyon and Lincoln, they're equity source equity sources, right? Yes. So that gives you the flexibility and, uh, you know, the rising interest rates that we've seen to be able to do deals where others can't. Right. Yeah. And I, and, and, you know, one of my favorite tags is there's a market in every market. So you just gotta figure out where that opportunity lies. Right. Um, and, and I mean, think about it. I mean, grocery anchored centers today, I mean, you can pick up, uh, some great grocery anchored assets at some, at, at some great values. There's, there's definitely a lot of competition, but it's, it's, it's great real estate. The other thing that I'm seeing is, is retail. Um, it's the, the fundamentals are fantastic right now. Low vacancy, lack of supply, rent's growing, uh, What a difference a few years makes. Yeah. What a difference. A few years, everybody during the pandemic, everybody thought that was, that was gonna be the first to go, and, and it didn't, you know, it held up. Yeah, I know, I know. All, all you gotta do is travel to Europe, right? Or Yeah, go to go to a great market. Uh, we just, we just did a deal with Byar of supermarkets in Carson, in Carson, California. And, uh, I can tell you what a great operator and it, it is such an experience to go to that store and it, it, it really, you can, you can design you, you can make your own guacamole. They've got all these different fruits. It's, it's like it's entertainment at a grocery store and the volumes that they're doing, uh, they're just an amazing operator. I'm so glad we have 'em in our portfolio and, uh, great talent. Great talent. Excellent. Well, something I wanted to touch on, you, you mentioned the IRRI go, that's always fascinated me. You know, when you get to the point where you're signing the document, putting your name on it, committing to the purchase, you know, you mentioned the IRR, I'm always amazed at how you could project costs, you could project rents. Do you do like high low scenarios to then figure out what you think that IRR could potentially be? Um, are there other factors return on equity cashflow that are, are as much drivers as a gut feel that you may have from doing it? How do you end up making that, that buy decision when it's time to put the pen there? Well, I'm, I'm a, I'm a big believer on return on cost uhhuh. And the reason being is IRR is all subject to time and exit cap rate. Right? Right. And return on cost is, tell you what, if you're at a good return on cost and you can weather the storm, and there's people weather and, and there's people weathering the storm right now, uh, you know, the debt, just think about, okay, interest rates increase, you know, 300 basis points. What does that do to your exit cap rate? What does that do to your IRR? Well, all of a sudden got a longer term goal. I think the return on cost metric is, is the most important. A pro forma, uh, is only done because you gotta close on the property. Right? You, you, you, you don't know everything about that property. You're not gonna know everything until it's completely built. And that's just, that's just the facts in terms of real estate development. Right. Excellent. Um, when you have to exit a deal, when is the time, why and how? That's a great question. Um, so really the business plan of Paragon is to own assets, own hard assets, long-term, create generational wealth. And, but again, that's, that's difficult with, with, with, with Canyon and CalPERS. That's a build and sell model, right? Right. Um, again, getting back to the shotgun analogy, what we do is, you know, we've done freestanding, uh, single tenant in and outs Chick-fil-A's, uh, raising canes. Yeah. We'll build those, sell 'em, and then we'll trade into assets that are larger that we wanna own long term. Um, so, you know, quite frankly, we're in a supply constrained business. They're not making more land. And what's, what's happening with dirt? I mean, it's, it's, it's, it's getting more valuable and valuable by the day. I mean, think about what industrial's paying for land square foot today, multi is kind of, you know, they're having a, a little bit of a a a a coal right now, but I mean, there's such a housing shortage. Retail coverage is at 25%, uh, typically on retail sites. Think about industrial coverage, think about multi-family coverage. So there's, there's, there's inherently in place there, you know, it, in timing in terms of dispositions is really based upon, okay, well what if we sell this, what can we reinvest in? And does it make sense to sell it at this point? And, and, um, um, you know, there's assets that we're never gonna sell. For example, Topanga Lan, that's a great asset long term. That's right. It's a home. Yeah. And then like, something like that, you know, like your, your baby so to speak. You're not getting rid of that one, you know, that kind of thing. Yeah. That's a long term whole, but some other ones, like the built to suit and so on and so forth, those are just part of the process. Yeah. You're recycling capital to reinvest and hopefully higher returns and, and better real estate and, and in markets that you wanna own. Excellent. Excellent. Um, well let's move to, uh, the current, uh, time. And tell us about, I think you said you're, you're working on a couple deals right now. Tell us about one of your current projects that you're working on, um, that, uh, has you excited. So we we're doing a project on Ventura Boulevard and Eureka in Studio City. That's gonna be a Sprouts Farmer's Market. And we've got a limited shop space there. Um, great infill location, signalize intersection, high barrier entry market, uh, that's under construction. Uh, we just finished a Sprouts in Fountain Valley as well. And we're opening the first Dutch Brothers in Orange County at that location as well. Um, Carson I mentioned, we just did Vallarta, um, took an old Albertsons box, and, um, they're, they're just doing great, great business there. I've got a deal in San Bernardino, which is, um, four tenants, Chick-fil-A Panera, Dutch Brothers, and Mr. Car Wash that's, uh, under construction. We're going to deliver, um, end of, you know, mid-February or so. And then that'll open, uh, this summer, uh, so that, that will be a building and sell, and then we'll reinvest capital. Um, so that gives you kind of a flavor of, of, of what we're doing. And, uh, but it's, it's, it's so, so far so good. I'm excited for 24. I'm excited for, um, you know, the next, next five years. I think it's gonna be good. How involved do you get in architecture and the construction of these projects? Uh, do you, are you hands-on or do you have your people do it, or, or is that something that you enjoy doing and you take on? So, uh, I don't know if you know Greg Pulaski from Nadel, but he, he's, he, he's name an architect. Yeah. And, uh, I've known Greg for years, and I've done a number of projects with him. I sent him site plans all the time, and, uh, for him to take a look at when I'm trying to figure out how to, how to fit a box in or a pad or different things like that. I love architecture. I love landscape architecture. I think architecture really resonates and, and, um, increases the value of the brand. And that's really a lesson from Target, um, during my working with Target. Target does an amazing job with, with their architecture. And, um, I think it, it, it, it's, it's really important as developers and it as Paragon's brand, and my brand makes sure that we develop projects that are, um, um, architecturally significant that have, uh, that are not, um, uh, short term architecture. They're gonna, they're gonna last, they're gonna be inviting for quite some time. There's less CapEx. It makes sense, right? So, uh, construction, uh, I like construction. I don't love construction. And I need experts in construction to, to definitely help and assist. And, you know, being a developer is like being, being, you gotta, you gotta make sure that you've got the right team around you to, uh, execute on schedule and business plan as quickly as possible. Like a head coach. Yeah. Yeah. Uh, yeah. Yeah. I, I I really think it's, it's just part of a team. I mean, you, you're part of the team, so, Excellent. Well, I, I, um, quick question about geography. You know, look, you're all in California for the most part. Ever think about, you know, with all the challenges in California, and we hear so many times about people chasing yields and expand, I, we've had several speakers who a few years ago, were never outside of California, who are now open offices, you know, east coast. Uh, what's your thoughts on that? Well, I think there's definitely some o opportunities in other, other markets. I mean, Texas, with our, with our jv with Lincoln Property Company, right? I think there's, there's other markets that'll be opened up. Oregon, Washington, uh, you know, we've looked at some stuff in Arizona. Again, it really falls back into, um, uh, human capital. And we've, we're nine person shops, so we need to be really effective in terms of where we operate in. And, you know, we've got a ton of relationships in this market, and it makes sense to, to really work in markets where you've got relationships in. Um, I think California's got a lot of issues, um, as it relates to, uh, uh, property. And, uh, you know, if they ever repeal Prop 13, that's gonna be a killer. This transfer, transfer tax city of la Oh my God. That's, that's, that's just brutal. Um, so there's, there's, there's a lot of things. I mean, supply chain issues, minimum wage in terms of fast food, right? There's, there's, there's a fair amount of issues here. Well, you look at the revenue and all the different types of, you know, types of people that are, that live in Southern California, there's no place like it, you know? So it's, Yeah. No, it's, it's, it's a challenge. I mean, there, there, I mean, there are other challenges than that. I mean, the current interest rates right now, the cost of materials, labor, et cetera. I mean, uh, you know, how, how are you handling a lot of that stuff right now? And, and, and I think to, to bring up two other ones that are big issues. One is shrinkage for retailers. Yeah. Theft. That, that is, that is huge. That is a, that's something that needs to be solved. 'cause their proformas and their, their ability to make money is, is being sincerely hindered. Insurance, uh, costs have increased, you know, roughly 35%. It's, it's, it's, it's, it's, it's challenging. It's tough. Um, construction costs. We have seen more bidders at the table in terms of, so there's more, more comp, uh, more, you know, GCs that are bidding the projects, uh, costs are really coming in still high. I looked at a building and, uh, 6,000 square foot building to retrofit for a single tenant. Tenant. It's $200 a foot. I mean, we, you know, and you, you start looking at that and you go, well, how do you, how do you make that pencil? And frankly, I think now more than ever, um, I view, um, the, the retailer and developer, uh, relationship as a partnership. And what I mean by that is, uh, you, you just gotta be open and upfront in terms of the costs that you're seeing, the, from additional carry to, uh, I mean, switchgear. I mean, think about what switch gear's taken and even HVAC lead times on both those items. Um, it's, it's difficult out the, out, out there. It really is. And I, I, I know most of your tenants are are, you know, like, um, franchise type restaurants. But I mean, I go, I see a lot of restaurants locally and lately, some of the mom and pops, they're just closing down. They can't make it anymore. And, you know, you can't have the, the tenant, you know, as a landlord, you gotta be, you gotta get market rates, and you can't continue giving these, these concessions away to these restaurants. And it's a shame. And there's really, you know, and again, now you just mentioned with the, with the minimum wage going up, it's getting to a point where you just can't make a dollar anymore. Yeah. And that's, uh, that's challenging. And I, I, I think I look at all our centers. Yeah, I, I, I think the, the best centers and the ones with national tenants, regional tenants and local tenants, that, and the local tenants are so important to the viability of the asset. 'cause it really is community driven, uh, investment. Um, yeah. It, it, it, it's tough out there. And then even, even think, uh, just, just again, taxes, insurance, all these operating costs, security, right? Think about security. Um, I mean, that used to be a cam expense where nobody wanted to reimburse. Well, guess what? It's a new day now. You have to, it's, it's, it's just, it's, it's, well, Yeah, I mean, with all, with all the theft going on, it's just, it's, it's getting to a point where, you know, you're, you're afraid to go shopping anymore sometimes, you know, to, to some of these retailers that are, that are losing their, I mean, it's just getting to, to a point where it's, you're right. Yeah. Let me ask you a quick follow up though, uh, on some of the things you're talking about. When we came out of the coming outta the pandemic, and then with the spike in interest rates, did you make any hard shifts in strategy at that point? You know, we, we actually got a deal approved, uh, at, um, with Canyon, with CalPERS, uh, during Covid. And, uh, uh, when we took it to committee, we were a little concerned because the, the, the, the, the lens was not clear as to what was gonna happen, right. But our belief was, and it was grocery anchored. Again, our belief was grocery was gonna 'cause gonna maintain. And, um, we got through that. I, I do think that, you know, again, I, I, I gotta reiterate, we're gonna have discussions with, with, with our partners as to exactly where things sit so that we can collectively strategize how to, how to make the deal. They wanna open the store. I mean, they're, they, they want get the store, uh, open and developed. It's just a matter of, okay, is your cost of capital cheaper than my development return? Is that a better way to, to, to make this work? Can you start paying rent early? I mean, I, I, I've, I've worked on so many creative deals to, to, to bridge the economics, uh, with retail partners. And it's just, you have to, in this environment, you really have to. Yeah. Yeah. Well, I think you just answered my next question, which is about major leasing challenges. You know, when you have a tenant that wants the space, and you have the economics, really what is like, you know, the, the, usually the major stumbling block a lot in the past, A lot of times it's been the cost. Yeah, it's been the cost. And, and, and, you know, it's been, it, it, it it's been, you know, delivery conditions and, and again, just scope of work and, and it, you know, you get, you gotta weigh all these, these different things in, and entitlements today are very, very challenging. And it's difficult. I mean, I, I, if you look at value creation, entitlements plays such a huge role in terms of, of, of, of value creation. And, um, things take time. And you, you need, um, a, a partner that is side by side with you, um, making sure that when you're presenting a project to the city, um, they're providing all the benefits in terms of community giving, in terms of sustainability, in terms of, uh, policies that they have local hiring. Uh, you need, you need that voice with you to maximize your success for entitlements. And I'm sure there's a wide range between cities that are really welcoming and easy to work with and have a lot of staff versus some cities that, you know, aren't quite there. A Absolutely, absolutely. Absolutely. Where do you see, uh, the trends in retail going right now with, uh, new tenant uses? Like will theaters revive? Uh, do you think that's a dead issue? And I, I know Mo most, I don't think you have any theaters in, in your centers, uh, but, um, you know, what do you think, where do you see retail going right now? Um, I, you know, Any hot new tenant concepts out there. Also, what, I mean, that's the great thing about retail is, is there's always hot new tenant concepts. It's constantly evolving. I mean, I, I, I think when I, I entered the business, uh, penguins was a, you know, a dominant yogurt player, then yogurt disappeared, then, you know, bunch of different, uh, yogurt operators reappear. It's constantly evolving. And, and I think that bricks and mortar is, is, is such important component of, of sales growth, not only online, but also at the store. Um, and that's gonna continue. And, and if you think about like what target's done with buy online, pick up in store or delivery, they're really looking at, uh, making sure that they, um, have that guest throughout the entire sales cycle, uh, whether it's online or it's brick and mortar. Yeah. And how do you create that, that brand loyalty? So, um, data, uh, technology, oh my God, that's gonna, that's gonna play a huge role in terms of our business and, uh, you know, know mitigating risk in terms of analyzing acquisitions. It's gonna, it, it, uh, from a, from a tenant standpoint, they're, they have the ability to figure out, okay, what's my competitor doing in the trade area? Does this make sense for us to make this investment at this location? Um, just, just, just just tracking of the consumer. Think, think about returns too. Like the amount of returns. Returns are, you lose money on returns, right? Yeah. And, and artificial intelligence, all, all, all this data is gonna allow retailers to better serve their, their end consumer. So there's less returns and there's more profitability. So I think, I think the, the future's bright for retail. Um, there's, there's less per capita today than there was, you know, um, number of years ago. So it's, that means there should be rent growth. And again, if you own retail, um, there's other uses that want that retail and Yeah. Whether it's housing or industrial or different uses like that. So I love the retail space. Yeah. Retail centers are usually right in the heart of this, you, of, of the community. So you're always gonna have, you know, it's a gathering place. Oh, yeah. And there's always gonna be people that are gonna go there. So there's di different uses for that. I mean, heck, I saw one place, they, they made it into a pickleball court out of a, an old, um, uh, I don't know if it was a Mervin's or one of the old, an old, you know, um, department store, you know, um, whatever it was. But, uh, you know, the, it's amazing how things are going that way. And, and you're right with, with retail, most of 'em are in the city set. Right. And, and certainly, you know, you're getting a lot of the, the, uh, thoughts about creating the mixed use projects, adding multifamily to certain retail sites. Also, you know, a lot of the medical uses, obviously physical therapy, a lot of the medical office seemed to be doing quite well in the, uh, what had been traditional retail spaces beforehand. Right, right. Absolutely. As well. And, and, you know, our joint venture with Lincoln allows us to really bring in another, uh, uh, skillset, which is multi-family, right. Into retail projects. And as, as we're all seeing a lot of cities want a, a, a, a destination with mixed use retail and housing and housing and retail actually drives the housing value. So it's, it's, it's a, it's a great mix if you can bring it all together. Right. And now with the city's, you know, having to come up with some affordable housing because of the state mandates. Right. You know, there's the extra impetus there. So it's great to mark you as a bull for the, for the retail sector. So, we'll, we'll knock that. Exactly. Hey, I, I have no choice. I've been in this 30 years. Anything I can say, I'm, I'm not bullish. I'm always bullish. I mean, it Irwin, when, when you telling the story about when you were a bank teller? 'cause that that's, I I was a bank teller when I started, um, you know, working. And I, I can relate to the guy coming in with the flip flops because I remember when I was a loan officer at a bank, and I would go out in my suit and tie Yep. And then the most successful people were the guys that walked around in a T-shirt and jeans. And I'm going, how could that possibly be? You know what I mean? Yeah. But that being said, what advice would you give to somebody just starting out, uh, right now? Like if you started today, what advice would you give to somebody starting in the real estate business right now? Well, my, uh, my 22-year-old daughter is getting in the business, so I, I, I probably give her more advice than she wants to hear. But, you know, I think it's, it make long-term decisions and do the right thing. Say what you do, do what you say, um, make sure you add value beyond everybody, everybody else go the extra mile. Uh, read. I mean, one of the, one of the things that I do a ton of is read leases. It sounds like boring, but I love it. Okay. 'cause it's, it, it just allows me to understand different viewpoints, whether it's from the tenant or, or the landlord, um, and create relationships that are, that are meaningful. And also make sure that you surround yourself with the right group and the right people. I mean, and that's from an ethical, from a, a standpoint, from a brand standpoint. And, you know, the most important brand in your life is your personal brand. It's period, end of story. I don't, you know, all these other brands are great, but at the end of the day when, you know, when, uh, when God calls, you gotta look at your own personal, personal brand. So, and great thing about the industry too. You know, there's construction, there's architecture, there's finance, there's property management, there's just tenant relationships. You know, you could find a something for your skillset. And I think all, I mean, correct me if I'm wrong, but I still see brokerage continuing. Oh, yeah. You know, I still see property management, you know, even with all the techno technological changes, it's still the business. It's still the business. Oh, There's always gonna be the personal contact with it. I mean, it's, it's never gonna be totally tech as much as the redfins and that came out. You still have to have that personal, um, right. Communication. Yeah. And I think it's, it. I think the other thing is, is is like you, like we've said, I mean, to create a relationship over, uh, a phone call is far different than creating a relationship in person. And, uh, you know, and, and the great thing about retail is you're really impacting the built environment with community. And, and what I mean by that is, you know, I'm working on a, a, a project right now and it's a Starbucks drive through. And, uh, I was meeting, um, a community member and I just, he said, well, why do you want to do this? And I go, look, right there, there's a fireplace with 10 people drinking coffee that are communicating and really enjoying, uh, the, the environment. And that's, that's really what we need more of, is more community and more, more discussion, uh, and more and more, um, the ability to talk to people and, and interact with people. I think it's, you know, clearly important. You know, that that's the one thing that worries me about, um, you know, the, the children is just, they're dependent on their phones. And I'm guilty too. I can tell you that right now. Well, As a parent, you're always gonna take care of your, your kids to some extent, but you gotta let them go on their own and you gotta guide 'em in the right direction. And, and yeah. I I, Yeah. But the personal skills, like you said, with the Yeah. With the phone, it's certainly, you know, not all of 'em are, are, are as good as the personal relationship as we were forced to be Yeah. Back in the day. Yeah. You know, we're picking up the phone and calling, you know, a hundred people a day. 'cause I was at Cushman and Wakefield, and that's what they made us do. Yeah, Exactly. Um, but how about outside of the real estate, or what are, what are some of your personal interests or involved in any charities that we could, uh, highlight from the co company point of view, from your own personal interests? You know, we've done some stuff with, with Salvation Army, with Habitat for Humanity. Um, I, I also come from a family of educators. So my wife was a teacher, my dad was a professor, my brother was a teacher. I'm the only one that went into real estate. So I truly believe it's inherent and important for all of us to really pass it on to the next generation. Um, you know, my daughter's getting involved in ICSE. I think that's absolutely fantastic. Right. Great. Uh, I, I, I'm also involved with, uh, Loyola Marymount University, uh, real Estate Advisory Committee. They just launched a certificate program. And, and that is really allowing students to really get interactions with, uh, various commercial real estate and, um, um, multifamily professionals. Um, I think that's, that's very, very important. I mean, frankly, we live in one of the best real estate environments in the country. I mean, it's, it's amazing. I mean, how, how did I get lucky enough to be born here? I have no idea, but I'm glad I am here. So yeah, We, we moved here. Now. Lucky you also went to USC. Are you a football fan, a basketball fan? Uh, you know, what, what are you a fan of? You know, I'm a, I'm, I'm a, to be honest, I'm a Fairweather fan, so I've got a brother, he is, got a whole room dedicated to USC, and that's filled with football me memorabilia and all this different stuff. I, uh, I, I, I, I, I love to surf. I like playing pickleball. I love playing pal tennis. I love just interacting with friends. A lot of my great friends are friends in the business that I've known for years. I've been going fishing with one group for over 20 years, and they're all in the business. And it's just, it's a ton of fun. So. Excellent. Um, you know, I'm, I'm, I'm lucky enough that my family supports me in what I do, and, um, um, it's just, it's a great business. I just love it. I love it. Great people too. Excellent. Well, to, to close this out, what, how, how about your personal goals? A, anything you're looking to do outside of the real estate, uh, world? On the personal side, you know, always, always looking for people to vote for in politics besides the current crop that we've got. So, Oh, No, I'm always pushing, pushing f***s from real estate, enter that, but any steady as she goes. Uh, no politics for me. No, I'm, I, I'm a soldier, so I, I, I, uh, I think my goal, my goals are, uh, one, be, you know, be a, a better person and a, and be, you know, have a positive impact on people's lives, uh, from now until, you know, whenever. But when I'm, when, when it's over, surf more. There you go. Push More. Yeah. And enjoy life and, and work on, on, on transactions that, you know, I can drive by and go, you know what? I, I had a little thing to do with that, that piece of property. I, I, I really enjoy that part. Yeah. No, that's what it's all about. And, you know, I mean, I, I know in years when I drive by a property that I did a fi a loan for, it's like I got a personal interest in it. You know what I mean? And, and, uh, so, uh, yeah. No, I, I hear you. And that, and that's good. And that's, that's a good legacy to have and, and it's a good part of your brand to, to know that these are, these are what I've accomplished. So, uh, I I, I think it's been enlightening. It was really great to get to know you, Irwin, and likewise, to get to know more about the company and Right. Uh, that's what we love doing these things. Yeah. You know, thank you very much for the time and, and sharing the information and, uh, and your insight. I think, uh, our audience will find this, uh, very educational and, uh, inspiring as well. So, uh, you know, awesome. Wish you the best with Paragon and, you know, whatever the exit strategy is for the company as a whole, we hope you achieve it. And, uh, we look forward to having, uh, you and your, uh, your partners on, uh, on our retail panels, uh, as you have in the past. So thank you very much for that as well. We'll, We'll, well, thanks for all the great work and again, it's been an honor to be here and I thank you. And, uh, we'll, We'll call on you to, to pay it back. So Yeah. There You go. To, to speak at one of our events, I'm sure. Exactly. Perfect. Uh, well thanks Irwin. Tremendous. Uh, thank you for the time. Thank you. No problem. You guys have a great afternoon. Good luck on closing that deal next week. That's right. Uh, tomorrow. Tomorrow. There you go. News on ran tv after we, after you guys close it. cia. Good. Take care. There you go. Thank you. Bye. You've been watching Commercial Real Estate Talk with Steven Arne, sponsored by commercial real estate inspectors, Fidelity Mortgage Lenders, And Paramount Property Tax Appeal.