Larry Jacobson (Guest) (3:48)

So as you pointed out, I am a lawyer. I graduated in 88 and I started working at a big firm, Buckhalter Neimer Fields and Younger as a real estate lawyer. And, and it's a great time to be a lawyer. If you think about it, there was end of the 80s, so multi state leveraged buyouts is sort of the beginning of my career as a real estate lawyer. And then you get to 19, whatever it is, 90, 91 and now it's the savings and loan crisis and so there's all these workouts. So there were a lot of big sexy deals to do. I just hated it. I thought it was boring. And the other problem with it was that I was bringing in a lot of business because I would write speeches and then I would schlep my wife down to the Palmdale border Realtors Monday night monthly meeting and I would give a speech on Lis Pendens.

Andrew Kirsch (Host) (4:40)

That's a good wife.

Larry Jacobson (Guest) (4:41)

It's a very good wife. I mean it's one of those stories you have that as you become more successful, at least you have a couple of little war stories. So, and then I would repurpose the speech to the Norwalk Board of Realtors Thursday morning breakfast, which is all designed to say to brokers, you can trust me, I'm the lawyer that won't blow your deal. And through that I brought in a lot of business. But what I didn't like about being at a law firm was as a third year lawyer and I was getting whatever the top bonuses and raises. But as a third year lawyer, if you had a killer year next year you couldn't be a seventh year lawyer. You were still going to be a fourth year lawyer. And I thought that was really limiting. So I was unhappy. I thought, well, maybe it's the firm. But the reality of it is a great firm, I like the people. So one day my mother says to me, well, maybe you just need to think of the entire universe. Not just think, oh well, it's about being at a different firm. And it didn't immediately click, but maybe is I Don't know if it's a week, a month, whatever. I'm driving down the 10 freeway and a song by Faith no More, who I Love comes on the radio. And I realized nothing that I was going to do that day was going to make me feel the way that song made me feel. And I had. I've always loved music. I had played trombone, I played guitar since I was 14. I played in bands throughout high school, a little bit in college. So I was. Music was just in my soul. Literally from that moment, something clicked. I drove down the 10, got on the 110, went up to the 25th story of what was then the San Juan bank plaza building on 601 South Fig.

Andrew Kirsch (Host) (6:17)

Yeah.

Larry Jacobson (Guest) (6:18)

And I decided I was no longer a real estate lawyer. I was getting into the music business. So I called my sister who at the time was like a mid level development executive at Universal. She's now, you know, she's a producer. Nina Jacobson produces the Hunger Games, Crazy Rich Asians, bunch of TV shows like the O.J. simpson documentary and so forth. That was time.

Andrew Kirsch (Host) (6:37)

That was good, by the way.

Larry Jacobson (Guest) (6:38)

It was really good. She won an Emmy for that.

Andrew Kirsch (Host) (6:40)

Oh, wow.

Larry Jacobson (Guest) (6:40)

At the time she was like. I say she was just getting started her career. I call her up and I say, I'm getting into the music business. And she says, oh, that's such a scummy business. And I said, well, all right, that'll be my angle. I'll be the person you can trust. But I didn't really know anybody in the music business. So I started making a bunch of different phone calls and so forth. And one day, one of my good friends, Jason Sloan, who was a college buddy or fraternity brother, best man at my wedding, he was in. He is an entertainment lawyer, really prominent entertainment lawyer. He was at a firm, Hanson, Jacobson, Teller Oberman at the time. Now he has his own firm. He said, meet Ken Hertz. Ken is the music department, is one of the two music department lawyers. He took me out, gave me some information on the field and one thing led to another. I started networking, meeting a lot of different people. Long story short, Ken Hertz calls me later. Giant Records is looking for a number two lawyer. And Giant Records had just done the new Jack City soundtrack. It had just signed and broken Color Me bad. This was 1991. So I did an interview and I got the job and I took a 45% pay cut. When I got the job, my mother said, I've never seen so many people ecstatic over a guy that just took a 45% pay cut. But now I was the number two lawyer. And about a year after I got there, I went to Irving Azoff. So the Giant Records was joint venture between Irving Azoff and Warner Brothers Records. And I went to Irving and I said, look, there's a soundtrack album and everybody in the business has passed on it.

Andrew Kirsch (Host) (8:25)

But.

Larry Jacobson (Guest) (8:28)

If you look around, people are wearing bell bottoms and platform shoes. The 70s are hot right now. It's a $300,000 deal, but I can get it for 35 grand because nobody wants it. And he said, great, because he thought it was cool that somebody outside of the A&R department, artist or repertoire was bringing in an album.

Andrew Kirsch (Host) (8:49)

So you were stepping outside of your legal functions and had your business hat on.

Larry Jacobson (Guest) (8:54)

That's right, that's right. Or creative. Right. And again, everybody in the business had passed, including Giant Records A&R department.

Andrew Kirsch (Host) (9:01)

And who was on this soundtrack?

Larry Jacobson (Guest) (9:03)

Well, it was the soundtrack to the movie Dazed and Confused.

Andrew Kirsch (Host) (9:05)

Okay.

Larry Jacobson (Guest) (9:06)

And it ended up going multi platinum. And.

Andrew Kirsch (Host) (9:09)

And you guys did that deal?

Larry Jacobson (Guest) (9:10)

We, I did the deal, but I, I was the creative executive, so because nobody else wanted it, I became the creative executive. Gave me a point on the record. We did a follow up that went gold. It's one of the most classic soundtracks in, in the music business history. And that was sort of the, the start of my career, you know, broadening from a business, solely business to a business and creative role. And just over time, you know, I rose up to be the head of business and legal affairs while also doing A and R. And then is that common for someone? I mean, it's not like there's no, it's not like there's no lawyers who end up becoming something else within the music business, something more creative. But it's not obviously a common track. And eventually I rose up to run that company and be a partner in it. And I signed a band called Disturbed that I broke that has sold 14 million records, has had five consecutive number one albums on the Billboard charts.

Andrew Kirsch (Host) (10:12)

So were you just like going to the Troubadour and these local clubs to find undiscovered bands or what were you doing?

Larry Jacobson (Guest) (10:21)

To some extent. Meaning. Yes, but I was also a lawyer, so it wasn't like I could be out all night like the ANAR guys were. But because I had this very successful record with Dazed and Confused that made me popular, you know, and helped me, you know, grow within the company. So I was getting things sent to me in a disturb's case. You know, I get this four song cassette sampler this was 1999, I think. And it's got four songs, one of which is Stupefy, which went on to become the first single. The other of which was down with the Sickness, which you know and everybody knows, and that I literally. There were two other songs.

Andrew Kirsch (Host) (11:12)

You're assuming I know this song.

Larry Jacobson (Guest) (11:14)

Trust me, you know it. I'm not going to. I'm not going to make the, the, the vocal sound that he makes, by the way.

Andrew Kirsch (Host) (11:19)

You see who's above my head here? I do, yeah, I do. For those that can't see it or listening U2. My musical knowledge starts and stops with U2. And then anything that my 11 year old daughter Clementine likes, she has wonderful taste.

Larry Jacobson (Guest) (11:36)

You, you will. You'll know the song. Okay. So anyway, I went and I signed them and that band became huge. I did. The Steely Dan record that won all The Grammys in 2001 had nothing to do with it creatively whatsoever. But they basically tell you, here's the masters, go pick them up. Then you had to market it. And so our team did what I think was a fantastic job of marketing the record. And then Irving wanted to sell Giant Records back to Warner Bros. This was when the AOL Time Warner merger was happening and there was an opportunity to sell Giant. So we sold it. I got paid, I left. I went to Capital. I was the number two executive there for a little bit and then I left and I started my own firm. And I stumbled literally across a band that was living with their parents.

Andrew Kirsch (Host) (12:36)

We're talking about, what, early 2000s now?

Larry Jacobson (Guest) (12:37)

This was 2002.

Andrew Kirsch (Host) (12:39)

Okay.

Larry Jacobson (Guest) (12:39)

They were living with their parents. They couldn't sell 200 tickets in their own hometown in Huntington Beach. And I thought they could be the biggest rock band in the world.

Andrew Kirsch (Host) (12:48)

Where did you meet them or how did you hear them?

Larry Jacobson (Guest) (12:51)

It's. You realize you get older, Andrew, how much of your life is luck, Serendipity? Sure. I called my money manager to say I was leaving Capital to start my own company. The guy that picks up the phone is his partner who I'd never spoken to. He says, well, Larry, it's Ben. Jim's traveling today. Can I help you? And I said, well, you know, I just left Capital and I started my own company. I just wanted to chat. And he knew what I had, you know, accomplished in the music business. So he said to me, you know, my brother has an independent label. Would you mind taking him out to lunch and giving him some tips? I said, sure, I'd be happy to do that. I drive out to. Into Van Nuys, the industrial area of Van Nuys, also known as the porn district, I think at the time. And I go out to lunch with his brother and he hands me a stack of CDs that he's put out and I go home that night. I'm in my study, I'm throwing them in and this minute and 26 second song comes on the radio and they're screaming and they're singing on it. And I think this could be the biggest band in the world. So I. I drove down to meet him, I met them. They really weren't interested in meeting me at all. We go out to. I take them out to dinner at the Rainbow and On Sunset. Yep, on Sunset. And they sit down and they go, look, we don't need a manager. We don't want some guy telling us what to do. We started drinking by the end of dinner. I was her manager. And that band is Avenged Sevenfold. So that band has sold 10 or 11 million records, multiple number ones. One of the biggest touring acts in the world, sellout arenas, stadiums, around the world. And I managed them for 20 years, from 2002 until 2022. And there was overlap because over those years I managed to land as Morissette, I managed Michael Bolton, and I managed Slash.

Andrew Kirsch (Host) (15:07)

Slash had a single career.

Larry Jacobson (Guest) (15:08)

Yes, or solo career, I should say. I mean, there's an interesting story. I don't know if the real estate audience is that interesting. I can tell you later, but at.

Andrew Kirsch (Host) (15:14)

Some point we'll pivot over to real estate.

Larry Jacobson (Guest) (15:18)

But I really only loved managing events sevenfold. And as my father got to the end of his life in 2012, I decided to take over the family business. I had managed some of our family's buildings because when I graduated from Berkeley and was about to start law school, he said, I want you to manage some of our buildings in Los Angeles, even though we had a management company, just so you learn the family business. So I did that for a while and then obviously I was not. Obviously I was his lawyer. And then when I was a real estate lawyer and then I became his co general partner in our deals and all of our deals were in California at the time. So he said, you know, he wanted me to learn the business, so I did. But then I got into the music business and my sister's in the film business and they kind of figured, well, that's that right? Who's. But by 2012, the music business had changed a lot. And I looked at it and thought, I really only love managing this one band. The others were not as interesting to me. I'm really what you see here. I'm just a corporate lawyer who knows how to protect artists and make them a lot of money. I'm not a guy with a wallet chain and a hoodie that's out all night at clubs till 3am I think.

Andrew Kirsch (Host) (16:36)

You may do that secretly. Yeah.

Larry Jacobson (Guest) (16:40)

So anyway, so I decided at that point I wanted to, to do something and grow something bigger. My dad had a very successful business, but it had been moribund for a decade or more because they hadn't bought buildings, they had just kept the ones that they owned. But he built a incredible platform with hundreds of investors who trusted him. And you know, I had no way of knowing I could be as good as my father would be as a real estate sponsor. But I knew the one thing that he was known for I could do, which was be ethical. So I mean, he was known for obviously having a great track record. But first and foremost, people thought of him as somebody they trusted. Because if you think about syndication, it's a field that has a lot of unsavory characters, meaning people who, in the 70s, there were some fly by night guys. In the 80s, it's the tax motivated deals. Now what you have, you know, are guys who all of a sudden, with low interest rates, know, five, six years ago, were able to throw together deals, raise some money, you know, do it on social media. But they weren't operators, they were over leveraged. They were all with floating, had floating rate debt. And now you see the chickens coming home to roost yet again. So when people trust you, that's really your most valuable currency as a sponsor for sure.

Andrew Kirsch (Host) (18:02)

In any walk of life, your reputation is all you have. Takes a generation to create one. And it could take 10 seconds to ruin it. So when you were, you were making this transition, your dad either passed away or was getting sick and you felt that you wanted to transition into the family business.

Larry Jacobson (Guest) (18:24)

What was.

Andrew Kirsch (Host) (18:27)

What was it like going from the music business and having just that, I don't know, sense of euphoria. You're seeing your bands perform in front of thousands of people, sold out arenas to. Now you're looking at Excel spreadsheets and talking about, I don't know, broken toilets and kitchen countertops. I mean, it's such a different business.

Larry Jacobson (Guest) (18:53)

So it is a different business. I wouldn't say I spent a lot of time talking about broken toilets.

Andrew Kirsch (Host) (18:57)

Fair enough. But you know what I mean, we.

Larry Jacobson (Guest) (18:59)

Certainly talk about countertops and backsplashes. That takes Up a lot of time. The way I would look at it, as you get older, you start seeing things in ways you wouldn't have seen it when you were younger and you didn't have the context of being able to look backwards. So when you think about the music business, it seems, oh, well, it's glamorous or it's, you know, it's wild. It's different. Certainly to some extent, that's true. But in essence, it's about making deals. It's about strategy. It's about what is the right way to roll out this record. How do you get a radio promoter to play your record? How do you finance or get your record label to make an expensive enough video that MTV wants to play it? And then how do you ultimately get MTV to do that? How do you get your record, man, this is a different time. This isn't now. This was years ago when it was. How do you get your record on the Powerwall at Best Buy during the holidays? Because it's discretionary. At Best Buy's parts, also, you have to pay. And ultimately, as a manager, it's, how do you make a great publishing deal? How do you make a great record deal? And ultimately, how to protect your artist against people who would take advantage of them. Well, in real estate, it's obviously about finding a great building, finding a great band that you believe in and you're passionate about. It's about communicating that effectively to prospective investors. It's about the strategy of how do you execute your business plan. It's about how do you protect your investors, meaning how do you put their interests first so the similarities are greater than people might think. And then if we just narrow it down or distill it down even further. I just love making deals. So it's not as profound a difference as it seems on the surface. Some of the hygienic factors, meaning, yeah, I'm not backstage, I'm not sitting at the soundboard at a huge show. And those were fun. But the music business has gone through a lot of changes. And if you sell tickets and you sell black T shirts, you can be very successful making money. But a lot of other artists don't have the means. The drivers that used to help them make money, if they're not really in a genre that tours a lot or can tour and command the ticket prices and the butts in seats. So I'd done it a long time.

Andrew Kirsch (Host) (21:54)

Yeah. And so did you have. I know you were managing the family's real estate while you were managing bands. When you decided to go full time into the real estate business. Was your father still alive? Did you work under your father in terms of sourcing buildings, buying buildings, talking to investors, talking to lenders? I guess. How did you learn about the real estate business? Or did you just dive into the deep end of the pool?

Larry Jacobson (Guest) (22:31)

So I took over the business, if we want to put it this way, June of 2012 and my dad died in August. So as you know, our business has grown dramatically since I took it over. Right. We've expanded nationally. We buy conventional, multifamily as well as student housing. We buy class A as well as garter style value add. And my father hasn't seen any of it. And that's. Thank God. I've had a very blessed life. But one of the sadnesses I have is that he doesn't have a chance to see some of these deals we bought that I know that he would like. And now my son is also in the business as an acquisitions associate for us, Jonah and I hope that he will have the opportunity to at least share. You know, he's the junior man on the team, that's for sure. But he has the opportunity to share ideas and his vision for something. And I'm here and hopefully we'll be here for a long time. But that's one of the dynamics in a family business. So to answer your question, I mean, I'd already made deals. I was a real estate lawyer. I understood sort of the fundamentals, but, you know, I had to learn a lot of it myself. And it didn't happen overnight because we needed to modernize systems, we needed to modernize some of the personnel because they were really just in the property management business at that point. And then we had to go. I had to go to investors who thought my dad walked on water, but hadn't been asked to invest in a long time. And I had to figure out which ones were still, they still wanted to be active and which ones were not. So there was a big printout of all of the names and I was picking up the telephone and calling people and seeing who was in and who was not. And to my father's credit, he'd had such a great track record that people were appreciative that there was another generation that would hopefully carry on the same approach of sort of conservative, judicious acquisition of real estate and competent operation of it.

Andrew Kirsch (Host) (24:46)

So let's dive in with respect to your company and the real estate properties in the portfolio. You said your father focused and bought exclusively in California and over the Last several years as you and I have worked together and gotten to know each other, a lot of your deals now are outside of California. So what made that switch, or maybe I should say addition of looking outside of California to buy real estate.

Larry Jacobson (Guest) (25:19)

So part of my father's feeling was real estate is a local business. You want to be at least no more than an hour away via airplane to be able to go look at a building, which I share. But obviously I'm younger than my father was, so I have more energy to be on. Okay, it's longer plane rides, but I'm able to do that. I also felt like it was. I felt that it was limiting. I felt for us to say we were only going to buy in certain California markets at the time. Right now, California looks fairly priced, but at that time, in the sort of late teens of the 2000s, it was 2014, let's call it middle teens. Cap rates were low in California. I felt there were other places where you could get it. I also ended up getting into student housing. Really, I stumbled into it. I sold a deal in Sacramento. The broker got a listing on a 240 unit student housing property at Cal State Chico. And he says, you should come look at it because it was not purpose built. It was conventionally built, 1980s construction. I didn't really know what I didn't know. I went out there, I looked at this building. I think, hey, it looks like everything else we own. Six tenths of a mile from campus, the university was growing. Everything in the market was full. And I could see they were only getting guaranteed parental guarantee. They were only signing nine month leases. And I thought, we can get 12 month leases, get parental guarantees on them and then improve revenue that way. There were other expenses that I saw we could cut. And I just thought, well, this looks like a good building. And I was fortunate because we inherited this building, had been owned by AIMCO and then by an offshoot of AIMCO called University Communities. This team was so good that the fact that I didn't understand a lot about student housing at the time, including the lease up cadence starting at the year end and then moving into the winter and spring of the following year, the turnover schedule and so forth, this team held my hand, or as I put it, it was like, when you sign a great band, your strategy is duck and get out of the way. Let them be the. Let the band be the band. And this was like, let this amazing team at West Park Plaza be themselves and do what they do. But I was, I think, savvy. Enough to say, all right, well if we're going to do this, then let's learn this business. Let's not be carpet baggers. So we said, well, let's learn from them. And we did. And then we bought a deal at Texas State. We own at the University of Florida in Gainesville and we own at Texas. So we've, we've decided over time, well, all right, let's be good at student housing. Let's not just have stumbled into it and do it, do a one off. So you know, we have a certain type of student housing that we buy proximate to, you know, flagship Power4University Proxim, meaning pedestrian to the school and affordable. Little A affordable meaning we typically are not buying the Class A brand new on the single best street. We may be buying either Class A on the A minus location or, or we're buying. The last deal we bought at Texas A and M was 2009 construction, but walking distance to the biggest university in the country. So we just decided, you know, we'll just grow and we'll find things that we'll just be good at it. And then the first deal I bought out of state was Texas State deal which was student. And then we ended up going into Seattle and I fell in love with Seattle and I thought there's some great opportunities here. I bought a couple deals there and then in 2018 and 19 and I sold them at the peak of the market and made a lot of money doing that. We went to Denver and we started buying deals there. We own in dfw, we own now in Portland. We are now looking to go back into Seattle. At least that's a possibility. But here's the funny part, Andrew. When I look at our portfolio, the best measured by most consistent performing assets, measured by occupancy, measured by rent growth and measured by collections are in California. That seems inconsistent, right? You'd think, well, California, you got regulatory risk. That's true. But the flip side of regulatory risk is it's impossible to build in the state. So if you're not somebody that is so fixated on, oh I have to have vintage 2000 or later, there's fantastic properties in incredible markets like Pleasanton where we own Poway, San Diego county. We're buying now. Yeah.

Andrew Kirsch (Host) (30:17)

So I wanted to lean in on that. So for several years, you know, the vast majority of the transactions that we were working on were in the Sun Belt or Pacific Northwest before COVID I would say Pacific Northwest Post, Covid, Sunbelt. But in the last we'll call it 12 months. There seems to be a resurgence, an appetite for coastal markets, but business friendly locations within those coastal markets. And I know that you have identified some. I don't know if you want to talk about any of the current potential acquisitions that you are identifying or just sort of your thesis as to whether what I said is resonating with you and your company.

Larry Jacobson (Guest) (31:09)

Well, I would say it is. I think all the markets we own in are great, but there's headaches now. This has become a challenging business in the last few years. Obviously it started with COVID and Covid led to a domino effect. It led to all of a sudden rents go up. There's a lot of new construction, interest rates were still low, a lot of stuff. They start swinging hammers and then now interest rates are going up because inflation starts to take, you know, starts to kick in because of COVID you know, a strange sort of demand side inflation, or I guess people would say maybe supply side. You couldn't get the stuff into the country. Either way, it was transient. It should have been transient. It seems like it was transient. Federal Reserve starts raising interest rates. So now you have overbuilding in markets like Dallas, overbuilding in markets like Denver. You have, you know, higher rents sometimes trigger regulatory pushback or regulatory challenges. You've seen that in Denver. So, you know, we have class A assets in Dallas. They're beautiful. They're in incredible, you know, sub markets. They're great. But we've had to lower rents to meet the market. Our buildings are full. It's not as much fun as raising rents. Our buildings in Denver, total headache. Yep, total headache. Too much new construction. You had an influx of immigrants. Some may be coming from Texas when the governor there was sending them out. 43,000 new immigrants. And then you have a government that used to be called, let's call it purple. Governor Jared Polis we thought was very fair towards both renters and landlords during COVID Now it's not that way. Now you look at these laws that have been passed making it very difficult to do business, very difficult to screen tenants. It's become a culture of tenants not paying their rent. Again, our buildings are full, they're doing well, but they're not. We've got a great basis in these assets and they're not, as, you know, we should be selling those deals right now and instead we're refinancing and then hanging onto them for a little while. So those are headaches. California buildings don't have headaches right now. If you know where to Buy. So we own in Los Angeles, but we wouldn't buy there. We would not buy in San Jose or Richmond or Berkeley. Probably avoid Concord, but we own in Pleasanton. Not a lot of building there. We're buying a deal in Poway, San Diego County. I mean, this is the seventh safest city in the country.

Andrew Kirsch (Host) (34:01)

Poway is.

Larry Jacobson (Guest) (34:01)

Yes, in the state. Sorry, in the state. All the schools are rated 9 out of 10. There's one apartment for every 20 residents in Poway. There's one apartment for every 10 residents in San Diego County. Seven residents in Los Angeles. And deals never trade there. There's only been three trades in Poway of over 25 units in the last 20 years. So this is.

Andrew Kirsch (Host) (34:27)

Why do you think that is?

Larry Jacobson (Guest) (34:29)

Because it's under supplied and owners when they own there, they don't sell.

Andrew Kirsch (Host) (34:33)

Now is there a concern that you have or your investors articulate to you about that California, you just don't know what the rules of the game are going to be in terms of rent control and other political decisions and legislation. And therefore is there more risk of owning in California because of that?

Larry Jacobson (Guest) (35:01)

Well, first of all, I think it depends on where you buy. Every city in California, every county in California has its own demographics, has its own composition. So we own an Orange County. And Orange county politically it's not quite what it once was, but it's not the Central Valley. But I think it's lower risk politically in terms of restrictive local legislation. Poway, there is no history of restrictive local legislation. So you're subject to AB 1482, the state rent control, which is you can't raise rents more than inflation plus 5%. But there's also vacancy decontrol, which is the most important thing. It didn't overturn Costa Hawkins. So to us you can do business in a city that's governed by state rent control. You're trying to avoid the ones that have more restrictive local rent control like Los Angeles. But the flip side of it is that. So you're talking about risk. Well, what about the risk that something will change? It is offset. It's not non existent, but it is offset by the fact California makes it so hard to build. You are buying almost by definition in supply constrained markets. And those markets, again, if you've curated them correctly in terms of the potential for additional local regulatory risk, give you the opportunity to enjoy consistent measured rent growth, consistent occupancy and depending upon where, like I wouldn't buy in Hayward, but a place like Pleasanton, which has a household income of $180,000, something like that. Our collections are 100%. So San Diego collections are going to be 100%. So I think there's risks everywhere you go. You would not have identified Denver as a high risk market. You would not have identified Seattle as a high risk market politically, but there you are. And then you look at markets like Dallas, which I would not say are risky politically, but certainly you look at Dallas. Any place in Texas is always going to have an ebb and flow of new supply. So no market is perfect. Essentially all we're doing is trying to underrate the individual risks. And right now, to us, that is screaming California.

Andrew Kirsch (Host) (37:51)

So let's talk about on the investor side and the capital side. You know, your father, before you went with a syndication model, you have raised money through that model as well. You know, I sit here today and a lot of our clients are frustrated by the return expectations of more institutional capital looking for a net 18% to them. And they're just not those type of deals. I don't even know how the institutions are transacting. They're looking for post 2000 construction in supply constrained markets and getting an 18 return. And all my operator sponsor clients say, good luck, you're not going to be able to transact. So as you are, you know, as we approach 2026 and you want to buy more properties, are you looking to your syndication investor base? Are you looking to expand your investor client base? I mean, how are you going to be able to capitalize these deals that you want to buy in the next 12, 18 months?

Larry Jacobson (Guest) (39:01)

Well, it's really dependent on deal size. We have a very strong fundraising capability for our syndication deals. Typically we'll buy up to $100 million. Though at a certain point we'll do that with exchange funds, meaning if it's just fresh capital, we're not going to get all the way up to $100 million. So if we see a deal where we feel that it's appropriate in terms of all the different criteria our syndication clients are looking for, like Haven Poway, which is the deal we're buying now, then we'll buy that and we'll syndicate it. We are also expanding into a more hybrid model where we will look for institutional JV partners. We have a deep Rolodex, not in small part due to you and the introductions that you've made. And so it is true that the general institutional response is what you said, high teens, late 2000 or later vintage. But they're not all that way. And it's challenging because some Institutions are agnostic as to asset type, so they don't have to buy multifamily. They can go out and buy data centers. For us, it's obviously different. We are, we have an asset, this is what we do. But there are some who have lower, you know, return hurdles. And we just brought in Grant Gysen. So Grant headed up Southern California acquisitions for Pacific Urban for 18 years. He is, aside from the fact being wildly well networked, he is just a very intelligent guy who understands the market, has incredible relationships. What he specializes in. We've always had a good history of off market deals. But if you look at his prolific deal acquisitions track record, the majority of it, at least half, but I think more than half was off market opportunities. That obviously is something that is of appeal to institutions. It's syndicated in. Clients care too, but they don't tend to have the same religious fervor about it. So we believe right now we're in a very good place to source off market opportunities through his process and network that will give us opportunities that will be appealing to institutions and everything else. We're going to syndicate, which works. Syndication's got its challenges because you're essentially curating every deal to all of your investors. I've got 650 investors or so and I'm thinking, well, Ms. Smith likes IRR and Mr. Smith to is going a cash flow guy. You have to make each deal sort of check all of their boxes. But when you do and you have a good track record, they're very responsive.

Andrew Kirsch (Host) (41:58)

Yeah. All right, last question on real estate. The Fed lowered rates a couple days ago. The ten year Treasury I don't think has moved. It's still what, 415, 418. How do you think. I'm not going to ask you. Where do you think rates are going to go? You're not sure. Even Jerome Powell doesn't know necessarily what the bond market's going to do. Are we in a, in an interest rate environment where you think there will be more deals in 2026? What do you expect to see in terms of deal velocity overall across our industry? Because over the last three years it has been quiet, it's been challenging for people to make it work. There's been a bid ask spread sellers have been, or excuse me, people have been playing more defense than offense. And for three years we've been talking about there's so much capital on the sidelines from the institutions. Put your crystal ball or look at your crystal ball. Where do you see deal velocity over for 2026.

Larry Jacobson (Guest) (43:04)

Well, my understanding is that you have a significant number of funds, older vintage funds that are termed out. They are at a point where they've extended the term of their funds. You know, they had a couple of options to extend. They're at 10 years or whatever. And now they need to start disposing of assets and giving liquidity back to their LPs. So that's going to create deal velocity. Some of them might go through, might do some sort of a, of a secondary fund, but a lot of them aren't going to be able to. You also have older vintage funds, meaning within three to five years, who are at the end of their investment period and they need to start buying. So I think we're going to start seeing more velocity. I also think that it is not believable to me that all the debt out there that is maturing or has matured and been extended is just going to stay on, you know, as a loan on a bank's books without there being at some point the bank says it's just time. And so we think that will create some, some pressure on velocity. But I also think we don't know the deals that, let's say the funds do end up starting to dispose of assets. We don't know are they going to dispose of their crap and figure out ways of hanging on to the other stuff? We don't know if banks will do the same thing. The stuff that makes its way into the market is the stuff they just don't believe in and they'll figure out a way to keep the other loans on their books. I don't think anybody really knows that. I don't know that anybody got paid really well for trying to have a crystal ball. Certainly not in the last few years. So our attitude is you just roll up your sleeves, you just work harder, you work more hours, you uncover more rocks and you kiss more toads.

Andrew Kirsch (Host) (45:01)

Yeah. Do they kiss back the toads?

Larry Jacobson (Guest) (45:04)

Well, Haven Poway, there you go.

Andrew Kirsch (Host) (45:07)

All right, you ready to have some fun with the world renowned Real Talk lightning round set of questions?

Larry Jacobson (Guest) (45:13)

I'm ready.

Andrew Kirsch (Host) (45:14)

All right. This is the hardest part of the podcast here.

Larry Jacobson (Guest) (45:20)

All right.

Andrew Kirsch (Host) (45:20)

I know you're a golfer, We've golfed a lot and I've heard about these epic trips that I was not invited on.

Larry Jacobson (Guest) (45:25)

Maybe I was, but you're welcome anytime.

Andrew Kirsch (Host) (45:29)

How about the best golf course you've ever played on?

Larry Jacobson (Guest) (45:34)

I would say North Berwick.

Andrew Kirsch (Host) (45:35)

And where is that?

Larry Jacobson (Guest) (45:36)

North Berwick is? I think it's Lothian, East Lothian in Scotland. So it's further south. Just super fun, especially the back nine. There's very famous holes there that were influential to golf holes around the world. And you get to play them and there's stories about them. And I also shot a 37 on the back nine, so I have a really positive association.

Andrew Kirsch (Host) (46:01)

I am sure you go to sleep at night and you still remember every single shot you had on that back nine.

Larry Jacobson (Guest) (46:06)

I do, as a matter of fact, because I was also. I remember playing it and going, God, I'm playing out of my mind. And I don't know that I could replicate this. This like it was somebody other than Larry Jacobson hitting those balls.

Andrew Kirsch (Host) (46:17)

What was the weather like?

Larry Jacobson (Guest) (46:19)

Weather was nice. We got lucky on that trip. We only had one. Well, I take it back. There was no rain, except it. It drizzled a little bit on the front nine, but it was just a little bit of drizzle. It was great. And I birdied. I birdied the pit, which is the hole where you have to hit it over the fence.

Andrew Kirsch (Host) (46:34)

Oh, over a fence.

Larry Jacobson (Guest) (46:35)

Yeah. Okay. There's a stone wall.

Andrew Kirsch (Host) (46:37)

Oh, yeah, sure. How about. Best concert you've ever been to.

Larry Jacobson (Guest) (46:50)

Rolling Stones and Guns n roses. Early 80s at the Coliseum.

Andrew Kirsch (Host) (46:54)

Ah. I was too young to go, but I do remember my sister going. She's seven years older than I am.

Larry Jacobson (Guest) (46:59)

I also saw. I would also put in that category. I saw before anybody knew who they were. I saw Nirvana at the palace right when Nevermind had come out, but it wasn't yet popular.

Andrew Kirsch (Host) (47:12)

So what is like 1990 or 89? 90.

Larry Jacobson (Guest) (47:15)

Yeah. It would have been probably 91. 91, I think. I think it was 91.

Andrew Kirsch (Host) (47:19)

And so when you saw them, you were like this. Kurt, Kobe.

Larry Jacobson (Guest) (47:21)

I mean, it is just incredible.

Andrew Kirsch (Host) (47:23)

This is gonna be the new it band. What about today? Like what. What acts do you like today? Are there any acts that are. That you would go and see? Not someone that's been around for 40 years.

Larry Jacobson (Guest) (47:35)

But no, I mean. And it doesn't. And that's not because they don't exist and they don't. They don't deserve my attention. It's just that I don't generally like or get attracted to a lot of the new music out there, except for in country. So there's an act I definitely love who's not really new called Turnpike Troubadours, who are amazing. I've seen them, but I. You know Chris Stapleton. Yeah, but in terms of what I really. I mean, I love a lot of different types of music. You know, certainly rock or hard. Rock. No, and I don't. I mean, I'm not going to go.

Andrew Kirsch (Host) (48:10)

See Sabrina Carpenter with me and my daughter. Six nights@crypto.com.

Larry Jacobson (Guest) (48:15)

All Souls are just a little older, so they don't call me up and say, let's go to Sabrina Carpenter.

Andrew Kirsch (Host) (48:19)

You and Pav. You don't go see Sabrina.

Larry Jacobson (Guest) (48:20)

No, but we'll go out and we'll see, you know, Queen or we'll see Black Sabbath or we'll see Elton John or the Eagles, that sort of stuff. So it's funny because a guy who sort of created a career out of understanding music that was younger than he was, now I'm just like, right with the rest of guys my age just listening to a bunch of classic rock, which I'm embarrassed about. But it's just. It's just what I've become.

Andrew Kirsch (Host) (48:44)

I assume you've been to Nashville.

Larry Jacobson (Guest) (48:46)

I have many times. We used to have an office there.

Andrew Kirsch (Host) (48:48)

Okay. I mean, what a great music scene, that one Street. It's phenomenal.

Larry Jacobson (Guest) (48:52)

It's incredible. All right.

Andrew Kirsch (Host) (48:54)

Favorite show that you're currently watching or just finished on tv, and you can't say Backstage Dodgers.

Larry Jacobson (Guest) (49:04)

I would say Landman.

Andrew Kirsch (Host) (49:07)

It is a phenomenal show.

Larry Jacobson (Guest) (49:08)

Isn't that great?

Andrew Kirsch (Host) (49:09)

And Ally Larder.

Larry Jacobson (Guest) (49:11)

Yeah.

Andrew Kirsch (Host) (49:11)

Oh, wow.

Larry Jacobson (Guest) (49:12)

This is the whole. Taylor Sheridan sort of understands what that viewer wants. He, you know, I don't mean to be patronizing, but he has, you know, sort of evolved because he's had been such a prolific creator of tv. And to me, Landman is just sort of the culmination of putting it all together and finding just a great formula.

Andrew Kirsch (Host) (49:40)

I think it's. If shows could have children. It's Yellowstone Procreated with Friday Night Lights.

Larry Jacobson (Guest) (49:47)

Well, it's a perfect example. 100%.

Andrew Kirsch (Host) (49:49)

Yeah.

Larry Jacobson (Guest) (49:50)

100%. Even I think the opening title song.

Andrew Kirsch (Host) (49:54)

It sounds like it.

Larry Jacobson (Guest) (49:55)

Yeah, that's right.

Andrew Kirsch (Host) (49:55)

Yeah. All right. We've gone, I don't know how long, 45 minutes. We have not yet talked about sports. We're on a Dodger text chain that gets very active in October. I know you're a big Laker fan and you went to Cal. I'm going to give you probably the most impossible question right now. Okay. For 2026, you can only choose one. A Dodgers 3 peat, a Lakers NBA championship or a Cal national championship in football, which we know will never happen. So how about either Lakers or Dodgers?

Larry Jacobson (Guest) (50:27)

Well, if you're going to force me to pick, I would say Dodgers 3. Pete. I mean, that team is just that good. They have all the right sort of emotional chemistry components to them. Dave Roberts, who, you know, I've certainly had a lot of. I've thrown a lot of things at TVs, you know, you know, back in 2017, 2018, but he, to me, has just proven himself to be just, you know, just an incredible leader of men and, you know, baseball manager and strategist, particularly when it counts. Right? I mean, the decision to bring in pages, I mean, decision to play Rojas, this is what somebody does when they really understand the game at such an intrinsic level. But they also have the sort of the self confidence, the internal fortitude to do those things. And I have a lot of respect. And my son will listen to this and he'll be like, I can't believe my dad's saying that. I want to kill him. Because he's been so critical of Dave Roberts. But look, I believe that early on, he was taking too many cues from the front office, and I believe there's been an evolution and he's allowed to be himself, and he's proven himself to be an incredible manager. I love the Lakers. I love Luka. I think this team is fantastic. We have season tickets. We go. But until you sort of figure out what the LeBron dynamic is going to be in all of that, I think it's just hard. I think they're playing well. I think Luka's amazing. Austin Reeves, incredible. You told me. J.J. redick said he's the single best athlete he's ever seen. But, I mean, I like their chances. By the way, you didn't mention the Rams. Rams. Almost certainly the leading team.

Andrew Kirsch (Host) (52:10)

I'm a Rams fan, but you are definitely more of a Rams fan than I am.

Larry Jacobson (Guest) (52:14)

I love the Rams, and I think less seed. My son and I were. And we were talking last night, he is, without a doubt, as good a GM as we've ever seen in any sport. Yeah, he compared him to the OKC gm.

Andrew Kirsch (Host) (52:25)

Oh, wow. I need you to do me a favor because Courtney feels, not feels. Says that I turned into an extremely angry person when I watched the Dodgers in October during the playoffs. And I said, I assure you, Courtney, every single one of my friends are having the same emotions. And she says, no, I don't believe it. You need to leave the house because you're bringing this negative energy in the house.

Larry Jacobson (Guest) (52:51)

And.

Andrew Kirsch (Host) (52:52)

And so I think I need Courtney to go over to your house next October so she can see that it's not. I'm just not the only crazy guy. And I'm like fever pitch, but I still walk around And I wonder why do I still have a smile on my face? And this past World Series has definitely done it. Now once they start playing games in April and. And even though we know it doesn't mean anything because they're still going to get to the playoffs and we're going to be texting. I can't believe Roberts did this and this and this with the relievers. We have to remind ourselves it's April.

Larry Jacobson (Guest) (53:29)

Send her to my house in October and I promise you within minutes she'll be running back to your house going, Andrea, you're such a mensch. Jacobson's impossible.

Andrew Kirsch (Host) (53:41)

I will do that. Alright, a couple final questions and we'll get out of here. How about a market that you haven't yet transacted in that you would like to.

Larry Jacobson (Guest) (53:55)

Well, that's a really, really good question. Nashville, Salt Lake City. I mean there's areas of Nashville I'd like to buy in Salt Lake City and I'd like to buy. I'd like to buy a lot more student at the big schools. I love that asset class at the big schools. So you know, we own a College station. I don't own in Austin. I haven't owned in Austin. I would buy a University of Washington. I mean there's a lot of areas. I buy University of Oregon. So you know, Salt Lake City's overbuilt, Nashville's overbuilt. So you know, right now I feel like I look at our student assets which are just killing it. I mean our Gainesville asset is 65%. 64, 65 pre leased. This year's 98% full. It's 618 beds. It's 65% or 64, whatever it is, pre leased for the following August.

Andrew Kirsch (Host) (54:48)

Wow. And this is early in December.

Larry Jacobson (Guest) (54:51)

Yeah, not every year is like that. The College Station assets doing incredible at the market. 35%. Every market's different. But student has a lot of advantages. And one of the nice things about being able to be. We talked about being agnostic as to asset class. Well, I'm not agnostic fully. I'm not going to go buy industrial because I don't understand it. But we understand student and it gives us the ability to toggle if we think the conventional story is. Is just not as compelling.

Andrew Kirsch (Host) (55:18)

Yeah. All right, final question. I know Jonah's working at your company now and I'm sure other young people ask you for advice. So what would you say to someone who's just graduating college or 22 years old? They to want, want to get into the real estate business. What advice do you give them? What should they do?

Larry Jacobson (Guest) (55:42)

First of all, like anything, it's about who you work for first. You really want to associate yourself with somebody with the gray hair, somebody who's been through the wars. You know, when we're in school, you know, you're told, don't look on your neighbor's blue book to see what their answers are. In real life, you're supposed to.

Andrew Kirsch (Host) (56:08)

That's interesting.

Larry Jacobson (Guest) (56:09)

In real life, you're supposed to be educated by what people who are successful, who've achieved things, have done and learn from them. And it never ends. As you know, I have peers who I ask, how do you do this? How would you approach this problem? So associating yourself with people with experience, ethics, a good track record, you can learn so much from them. And I think that's really, really critical. And I think people, I think some guys are like, well, I got to go out and start raising my own money, doing my own thing. That's not how you start. You might get to that point, but if you think about the guys who've come out of the big shops and then decided to start their own, you know, start their own shop and raise their own money, they've really benefited in a lot of cases, done well, because they, they learned at the foot of some real, real giants in our industry.

Andrew Kirsch (Host) (57:13)

Yeah. Now, that's great advice. And you're one of the first people who sat in this chair who have framed it in that way. Look, Larry, I want to thank you for coming onto the show, but more than that, just our years of friendship, our attorney client relationship. But it's really those days of us just shooting the shit about the Dodgers playing golf together. I really value our relationship, and so thank you for it all.

Larry Jacobson (Guest) (57:41)

It's my pleasure. I feel exactly the same way. And. And for those of you who have not yet had the opportunity to work with Andrew, he's as good a lawyer as there is. And the reason is because he brings the intangibles. Not just the ability to be a smart guy, look at a contract, but the ability to give you advice that you respect and to make introductions to people you don't know. Those are the things that I value and I appreciate it.

Andrew Kirsch (Host) (58:09)

Thank you. And the next time I take Clementine to a concert, I'll make sure to give you an invite.

Larry Jacobson (Guest) (58:14)

That's be great.

Andrew Kirsch (Host) (58:15)

All right.

Larry Jacobson (Guest) (58:15)

Thank you.

Andrew Kirsch (Host) (58:16)

That's another episode of Real Talk.

Andrew Kirsch (Host Intro) (58:20)

You've been listening to Real Talk Real estate discussions with Andrew Kirsch. You can catch prior episodes@skalar kirsch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google Podcasts and more. Thank you for your positive reviews, comments and for sharing the show with others.