← The Kirsh Connection
The Kirsh Connection
From Real Estate Private Equity to Debt and Equity Intermediary with Louis Friedel
00:54:07
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- [00:01]
A
Welcome to Real Talk Real Estate discussions with Andrew Kirsch. In each episode, Andrew interviews industry leaders. We'll hear their real time opinions on today's market, their background and unique career highlights and guidance for newcomers into the industry. You can find this show@spelarkirsch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google podcasts and more. Now here's the host of Real Talk, Andrew K.
- [00:32]
B
Episode 81 of Real Talk. First off, I'm loving working on Satel in my new office. People have come over to the office, gotten a tour, seen the podcast studio and then just enjoyed, you know, all of the different restaurants and shops and bars of Sawtel. So I invite everybody to come on over and let's get together. We're also having an open house on October 15th from 5:30 to 7:30. So hope to see you there. On this week's episode of Real Talk, I have my close friend Lou Friedel. From Berkadia on Lou and I have a wide ranging conversation from his days at Luber Adler to Angelo Gordon Berkadia, what he's seen in the marketplace, how deals are getting done today, what it makes to be a good JV partner, what it makes to be a good borrower in challenging times. And I brought back the lightning round, which is probably the longest lightning round I have done with anybody. But it was, it was good to resurface it. So Lou, thanks for encouraging me to bring back the lightning round and I hope everyone enjoys my conversation with Lud Frell. Welcome to another edition of Real Talk. I'm here with my good friend Lewis Perdell. Lou, welcome to scar Kirsch 3.0 and our podcast studio.
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C
Thanks Andrew. This is awesome. Honored to be here. I've listened to every episode of Real Talk.
- [02:05]
B
Come on, we've had 78 or 79.
- [02:08]
C
Everyone test me.
- [02:10]
B
I will. Maybe in the lightning round. No, it's great to have you. And by the way, a little secret. This is the first ones where our, our beautiful mics are. Actually they're on. Matt Ferrari was before you. They were just props. So I don't think you will sound any better than right now on this podcast.
- [02:28]
C
Okay. I've always been very self conscious of my voice.
- [02:30]
B
So just voice for me it's I guess my height but for you it's your, your voice.
- [02:34]
C
That's why you have me as a guest. We're even saying there you go.
- [02:38]
B
We're both six foot two. Yes. At least when we're sitting down. All right, so every I would say Lou that in the LA real estate scene, I don't think anyone would ever say a bad thing about Lou Friedle. What do you think?
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C
I can maybe think of a couple,
- [02:58]
B
but you're like the most popular person in our industry.
- [03:03]
C
Blushing here. Look, I would say the same about you. That's why we've been friends for so long. It's something I work very hard at. It's something I think a lot about comes from my upbringing. I think people would have said the same. Will say the same about my dad, my mom, my grandparents. Just comes natural to me, I guess. I don't know.
- [03:26]
B
Well, it's. It's been great getting to know you. And I know you've been at Mercadia for the last, what, 12, 18 months or so. I want to dive into what you're seeing in the types of deals that you're doing, but let's just take a step back or two because people may not know the Lou Friedel story, and I know there'll be a documentary one day, so why don't you tell us before they can watch it on documentary just where you're from. Yeah.
- [03:51]
C
So I grew up in suburban Fort Lauderdale.
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B
Suburban Fort Lauderdale. Is there a non suburban downtown?
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C
Fort Lauderdale is hustling and bustling. Yeah, yeah, no doubt about it.
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B
You know, people from LA don't go to Florida.
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C
It's going to be bigger than LA soon at this rate. Town called Weston, Florida. My parents, I think, bought the 30th lot in Weston, and now it's a city of about 70,000 people. So grew up there in your prototypical suburban town. Ended up going to college at the University of Pennsylvania in Philly.
- [04:32]
B
It's where my wife went.
- [04:33]
C
Yep. And I've had several guests.
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B
I graduated from Penn.
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C
I could think of a few. Yeah, it's a popular spot in the real estate industry.
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B
Where'd you work after graduation from Penn.
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C
Okay. So went to work for a company called Luber Dadler. It was a great time to work there. They were growing like crazy at the time. I spent two years there, and in those two years, they deployed probably close to $2 billion of capital at a time when, you know, it was just a really interesting time to. To be investing in the real estate space.
- [05:07]
B
Yeah, I've seen l. I've seen Dean Adler speak at, I don't know, many conferences. Some, you know, some intimate gatherings of YPO gathering, some larger conferences. Is he as crazy to work for as he just appears to be? Not crazy in a bad way. Just seems like Just a ball of energy and I don't know what, what. How was it working with Dean?
- [05:27]
C
All true. You know, I was the, the, the junior man on the totem pole, so I didn't get a ton of direct access, but I was certainly a fly on the wall for many meetings. Brilliant, brilliant guy. I mean, truly one of the legends in our industry and, you know, fascinating guy to work for. Fascinating to just see his brain churn and how he processes information. It's not like anybody else. Then after two years there, I woke up one morning and I kind of decided, like, life's too short to be living in Philly. And I turned to my girlfriend at the time, who's now my wife of 18 years, and I said, you know what? Like, let's move to California.
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B
Where is she from?
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C
She's from New Jersey.
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B
Okay, so she's, you're, you're both going from east coast to west Coast. What was her reaction?
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C
Let's do it. Her reaction was, let's do it. I had spent a summer here in the late 90s taking classes at UCLA and I saw for six, eight weeks, like, exactly zero clouds. And people think like, Florida, California, like warm weather, great weather, like it's night and day, like California. I mean, you can't beat it. The number of days we wake up, look up at the sky and it's just clear blue as far as the eye can see. I mean, that, that hits me.
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B
Yeah.
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C
So we moved out here in 2006 and I took a job working for Angela Gordon, where I spent the next 18 years of my career. In 2020, my partner and boss for a long time, Steve White, decided he was going to take a little bit of a step back. I became the head of the L a office in 2020 and remained that way until I left the firm in the middle of 2024.
- [07:21]
B
Yep. Now Buradia.
- [07:23]
C
Yeah.
- [07:23]
B
So let's just talk a little bit about the, you know, equity side of, of the business just for a few minutes before going into what we're seeing in the market. So you saw what the GFC when you were at, when you were at Angelo Gordon and then sort of the run up post GFC Covid and then the 2021, 22 run up. You know, we represent both capital providers like Angela Gordon, but I would say most of our clients are operator sponsors who are looking to get partnerships with the Angelo Gordons of the world. What would you say to a sponsor? The one or two traits that separates out the sponsors that have successful partnerships with equity Providers and those where the partnerships just didn't go well.
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C
Well, I mean, in terms of once you're in the partnership, I mean, the key is being a partner, treating it like a partnership from both ends. I've seen many partnerships where the sponsor views their equity partner like a lender and, or the equity views the sponsor. Kind of like the help. And my approach when I was on the equity side and still my approach on the advisory side now is treat it like a true partnership. Something goes wrong. There's not immediately finger pointing, it's hey, you're my partner, I trust you, I know you did everything you can, let's huddle up, let's figure out how to solve it. And that attitude of partnership was always paramount for me. I'm only going to get in business with you if I trust you and I know you're doing everything you can. And with that background, how do we use that mutual respect for one another to create a lasting partnership where we're more collaborative than trying to assign blame? Because look, there's going to be challenges. Not every deal is going to be great. Even on the deals that are great, things are going to go wrong. And it's important to put your heads together and solve rather than try to cya.
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B
And one of the biggest issues that I see as a lawyer in advising clients who want to establish a joint venture relationship with a institutional equity partner is when, when to have that first meeting. Because when a sponsor is awarded a deal, you know, they usually need to have the equity called for or to have the equity in a buyer interview. And you know, equity shops aren't going to want to just be utilized for that buyer interview if there's no part. But then oftentimes these capital providers are too busy to speak with operators when there isn't a deal to talk about. You know, you set up these informational meetings just to get to know you meetings. And then that meeting ends with, all right, well, when there's a deal, yeah, give me a call. So when, when someone's trying to have a, a new relationship with an equity partner, what is the best path to, to create one, to create that partnership?
- [10:47]
C
It's a tough circle to square. I had a friend in college who once told me, you know, the key to business is sincerity is the most important thing. Once you learn to fake that, you're golden. But the, the truth is like, you know, you and I have talked about this before. It's like we've been in this business for 20, 25 plus years. Like the lines between your personal life and your professional life blur to the point where they go away. Most of my friends are people that I interact with on a work basis as well. And I think to be great in our field, no matter which side of the field you're on, you have to eventually get to that place. You have to spend a decade plus in a market. You have to go to dinner with people's wives. Yeah, I know you coach little league with. With a lot of your clients, kids. Once you integrate yourself into that community, it becomes a lot less about, when do I call them? And a lot more about, hey, let's get lunch. Let's talk about what you're doing. And the right time will. Will figure itself out if the relationships are sincere and if the meetings are sincere and if they're starting from a place of, you know, friendship rather than just laser vision on the deal. And, you know, that's how I try to approach my role here at Brocadia now. Deepening relationships, really focusing on the client and the relationship rather than the deal. Because the deals will come if the relationships are there.
- [12:29]
B
Yeah, the journey. So you pivoted to the service side, to brokerage. Why Brickadia?
- [12:36]
C
You know, I was just at a coffee meeting with a mutual friend of ours, Zach Stright, and he asked me the exact same question, and I'm going to give the same corny answer I gave him. The first question is, why the brokerage advisory side? Sure. Right. I know that to a lot of people on the outside, it looks like a strange pivot. I was on the principal side for 20 years, moved to the advisory side, which, look, some people do. It happens. But I think the most natural move for me would have been start my own thing or go work for a developer, go to another fund, or do something else on the principal side. And I chose a different path, and I chose Brickadia before I chose advisory brokerage. And the reason is pretty simple. I got an email from the president of the company, Randy Jensen, and he briefly outlined what they were looking for. And I responded to him, and I said, you know, it's just not what I do. I'm not interested. I've never been a lender. I've never been a broker. Like, it just not a great fit. And he responded and he said, I appreciate that, but, like, meet me for lunch, Meet me for a drink. And I met him, and we started talking. And the way the conversation evolved made me feel like he believed in me. He didn't just want a person to fill a seat. He wanted me in that seat.
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B
Right.
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C
And he had done his research, he had done his due diligence. What you said about me to start the podcast, he heard much of the same feedback and he, he said to me in so many words, like, you're the guy for this job.
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B
By the way, just hearing that I, you said that it may seem a little awkward or, or odd. I don't think it seems odd at all that you're on the service side. Others who may have been on the capital side, the deploying equity. Yeah, I would say there's, I don't think that person's going to succeed in brokerage, but you're a people person and
- [14:58]
C
the
- [15:01]
B
how an borrower operator can be successful based on the position that, that you were in.
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C
Look, I agree with that. And, and when I responded to that first email from Randy, I don't think I had that belief in myself. I've. In listening to all your podcast episodes, a common theme for people who have taken a different path has been belief in yourself. And that meeting with Randy unlocked something in me that allowed me to believe in myself to the point where I knew that this was going to be the right fit for me culturally. And what I've learned since is it doesn't really matter that much what side of our business you're on. The day to day workflow, the relationships, the people that you're interacting with are the same. It's just about how you flex and exercise those muscles to add value to a deal, to add value to a client, an investor, whatever it is. And once you become fluent in that language of real estate, deal making and capital markets, you can sit in a whole myriad of different seats.
- [16:22]
B
All right, so let's drill down as to what you're doing specifically for Bradia. The types of deals, I don't know. Why don't you just, yeah, you know, expand.
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C
So Bricadia, at its core is a Fannie Mae, Freddie Mac HUD lender, largest in the country. We are the largest non bank servicer of real estate debt in the country. We service about $440 billion of, of loans. And much of that is in conjunction with Fannie Mae, Freddie Mac and hud. And that is Berkadia's bread and butter. It always will be Brocadia's bread and butter. But part of what they saw in me was an opportunity to expand a little bit beyond that. And what Randy and Justin Wheeler, the CEO and others saw when, when Randy emailed me was we have this universe of potential clients who are not primarily multi Family owners and operators, but they own some multi, they buy some multi, they may develop some multi and by the time a Brickadia banker approaches them about doing a deal, they already have relationships. They may already be doing business with CB or JLL or Newmark. And the way to get them as clients for the core business is to widen that funnel, bring them into the Berkadia network earlier on in the process and cultivate that relationship so that when they're ready to be an agency borrower or a perm loan borrower, we already have that relationship and that continuity. So for example, I'm working a lot with Lincoln Property Company. They've been a partner of mine for 15 plus years. If you look at any list of largest owners of, of multi, you won't find them on it. But through my relationships with the Lincoln team, I know that expansion into the multifamily space is a real initiative of theirs and I speak to dozens of people on their team regularly and there are ways where I can add value to their business and their process. Now, whether it's industrial financings, JV Equity, COGP equity. And the end result is to create a lasting relationship for Berkadia so that we become their go to lender on the agency side, on the permanent side
- [19:05]
B
in the law firm business. You know there are a lot of law firms out in, in la. I was in Century City, probably a thousand law firms in a three block radius. Now I'm on Sawtelle. I had to get rid of, I hate lawyers. I had to get rid, I had to move myself from all the lawyers. You know, Brocadia's main competition, cb, Newmark, jll, maybe some of the boutiques as well. How, how do you distinguish yourself or the company versus the others that do a similar service?
- [19:38]
C
Well, great question. I mean you had mentioned the equity side, my experience on the equity side. When I started this job 16 months ago or so, you know, every meeting I took people would ask so how many deals have you done? And I would have to kind of look down and say well, zero. And no one's going to hire the guy that's done zero deals for the most part, especially for the easy deals. So it becomes a question of well, how do I prove to people that I can add value, where do I try to make myself relevant and how do I distinguish myself? To your point and another long term partner of mine, now client of mine, Parallel Capital Partners, based out of San Diego, I had a call with them and they said hey, we just tied up this industrial deal in San Diego, we need equity. Got any ideas? I looked at the deal, I underwrote it, and I said, I think I could do this. And lo and behold, I was able to source the equity for them. And now we've since closed three deals together this year alone, and we're off to the races, right? And I would tell you, I'm not one of one. There are other people in the market who could have sourced and found the equity for that deal. But it was a very complex deal. It was not the largest deal in the world. It was about an 8 to 9 million dollars equity check. And I was willing to roll up my sleeves and use my expertise as an equity investor to say who would be the right fit for this deal. I didn't send out a package to 100, 200, 300 groups. I made a dozen phone calls to the groups that I thought would be interested in this particular profile, this particular market, this particular size, and voila, it was successful. To expand upon that, I think that approach of, hey, I'm not sending out books. I'm calling my friends.
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B
Right?
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C
Right. I'm calling people that I've been at golf outings with for the last 20 years. I'm calling people that I have on speed dial if I want to rap about a deal as a principal.
- [21:59]
B
Because on the other side, I assume these people are getting inundated. Their inbox is just inundated daily on requests, whether it's for cap, you know, equity or debt. So distinguishing yourself by literally just picking up the phone and saying, hey, I got this deal that I think you
- [22:14]
C
should be interest question. And, And I use my experience on the other side of the table to color my approach, because I know, right, there are a lot of. A lot of ways to. To skin the cat. And sometimes a. A wide marketing approach is the only way to get a deal done.
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B
So how. It's not a lot of intermediaries. Source equity. It's why.
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C
Right.
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B
I also help source equity, as you know, and we've collaborated together. Why is it so infrequent that intermediaries are not really sourcing equity and they're really just focusing on debt?
- [22:52]
C
It's hard, man. It is hard. As you know, it's been a slow few years for private equity. The sponsors that are, let's just say, best in class typically have their go to equity partners, and by the time you or I get a call, they've exhausted those. Those calls already. And they're looking for, you know, a diamond in the rough, a needle in a haystack whatever idiom you want to use. And, you know, they're relying on us to turn over those rocks. And frankly, like, I know from being on the equity side, if you're an equity group and you know there's been an equity broker hired for a deal, like, you're not starting off on the right foot. Like, your initial reaction is pass. Right. So back to my point.
- [23:47]
B
Because, because those relationships should be handled more organically. Like a broker should not be part of, I shouldn't say should not be, but customarily is not sourcing the equity. Is that why?
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C
And it, like, let's just say, you know, there's a, there's a sponsor that you and I both know whom you know has five or six equity partners that they've done a lot of business with.
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B
So why aren't those five or six?
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C
Right. You know that right from the outset that those five or six have passed, and you're, you're, you're on your back foot and your question is, why did they pass? What is it about this deal that's going to make me look silly for doing it? And a big part of my job when I'm doing equity, which is still a minority piece of my business, is to curate that smaller list to have a conversation with the equity and say, here's why. You really got to take a look at this. And my hope is that I've cultivated and established enough of a reputation in the space that both my clients and the equity partners know that if they're getting a personal email, personal phone call from me that says, you got to take a look at this, it carries a lot more weight than seeing an email blast that just says, I've been engaged to place this equity.
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B
How often do you tell a client there's no equity for this deal?
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C
All the time. I mean, in these times, way more often than not. And there's a key distinction between there's no equity for this deal today and this is not a good deal. Right. Oftentimes I will see deals that I think are phenomenal deals, but it's just not inside the narrow box of what institutional equity, or at least my universe of relationships on the institutional side are looking to do right now.
- [25:50]
B
I know we want to talk about on the debt side, but let's focus on a couple more questions with respect to the equity. I frankly don't know how any equity deals get done today. I mean, we're, we're seeing them get done, and we're also, we're part of it. But here's my sort of perception of where we are with respect to equity. Most of the large cap equity providers are looking for at least an 18 or really a 20% IRR. They're on the multi family side. They all want post 2000 construction and still get those types of returns. They're also afraid of the political climate of California and the Pacific Northwest and a couple other blue states. They're also afraid of the oversupply in some of the red states like Texas and Florida and maybe Nashville and a couple other markets. And so every time I approach them with a particular deal, they give me a litany of reasons of why that deal doesn't work. And then the operators, they're frustrated because they're not seeing the types of returns that the equity is mandating. And so we're in this period of sort of a standstill now. Obviously the market has opened up in the last six months. We've done more deals in the last six months than we have in the last two to three years. But it's not really from the large cap institutional equity providers. It's from these mid markets, family offices, a lot of syndications, funds that have been formed. I guess my question to you is what type of JV equity deals are getting done today?
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C
Well, I think you said one word there that has become the ultimate pet peeve of mine on this side of the business and that is irr.
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B
I think IRR is that technically is that one word. I guess it's an acronym.
- [27:51]
C
Is RBI one word? I don't know what
- [27:55]
B
we'll have to, we'll have to change.
- [27:57]
C
I think it's become one word.
- [27:58]
B
It's one word. Yeah,
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C
irr. You know, look, every fund, every investor measures themselves on irr. It has a relevant place in the market. It's not the only metric. And I believe IRR functions better as a backwards looking metric than a forward looking metric. Look at all the deals you've underwritten, how you've priced the IRR and how the resulting IRR compared to what was in your underwriting. And I had a professor in college who used to say, you never know what's going to happen on a deal. There's only one scenario you know for sure will not happen and that's the one you underwrote. And that is true with irr. And I think the groups that are getting deals done, the deals that are getting done are deals that are less focused on what is my singular base case, irr. And deals that are focused on what are my possible ranges of outcomes? How much can I make if things go right? How much can I lose or how much less can I make if things go wrong? How much protection do I have through current cash flow, current income? How much binary risk is there, whether it's entitlement or development or a heavy value add? And the deals that are getting done are ones where the investor takes a step back and says, I may not make an 18 or a 20, but I might and I may not. I don't expect the worst is going to happen, otherwise I wouldn't do the deal. But I'm prepared for that scenario and if the worst does happen, I'm okay with the outcome. And you and I worked on a deal just a couple months ago with our great friend and client John Barish, who had a portfolio of three apartment buildings built between 1915 and 1925. And everybody passed on the deal because of vintage and what they, they didn't in my opinion properly take into account is this is in a core section of Seattle. The rents are extremely affordable. The occupancy history is high. All of the difficult capital expenditures have been spent, seismic retrofit and the like. There's highly accretive financing available and you're going in at a six and a half cap. And the ultimate investor that partnered with John on the deal saw the merits in that and said, okay, if the market takes a little bit of a step back, I have fixed rate debt, I'm cash flowing at 8 or 9%, I'm buying it at a 6.5 in a market that if things really turn on, could sell for a 4 cap. So my upside is tremendous. My downside feels very mitigated and my base case irr, which frankly is overrated anyway, like is what it is, you know, 14, 15, 16, I can change that with, with a 25 basis point tweak on my cap rate. That's probably going to be wrong anyway. So it's that perspective and it's that, you know, longer term view of deals that I think is the key under
- [31:32]
B
the radar capital provider, which you found, John, is why people go to you and those large cap I, in my perception, the large cap groups, those that you've worked for, those that we know, they're not actively doing deals still.
- [31:49]
C
Yeah, I mean a lot of them are doing platform, programmatic investments, data centers, you know, a lot of stuff that I'm not particularly working on. But that day will come again. As you know, there's record amounts of dry powder on the sidelines. People are, it's a tough fundraising environment, but people are still out there raising funds. And I suspect that we're on the brink of that table turning. And that will be an exciting time for you and for me to, to get back in that game.
- [32:22]
B
Absolutely. All right, let's. About the type of conversation that I have literally every week, if not multiple times a week. And that's from clients of mine who have, I mean, what client has not had a troubled asset that they bought in 21 or 22, and now they are, you know, facing the reality of either a foreclosure, a deed in lieu, a short sale. So that is how this movie is ending for one or more of their assets. And their question is often, how will this impact me going forward with other lenders? So if you're able to answer that question, if A, if the lender who is either taking back that property or agreeing to a short sale or deed in lieu is a Fannie Freddie lender, or B, if that lender is a debt fund, a bridge lender, and how there are differences for the future credit worthiness of that borrower.
- [33:32]
C
So I will paint that, paint this with a fairly broad brush across all lenders. And I'll say, similar to my point about partnership with your equity partner, how you treat your lenders is the most important thing. I've seen many scenarios on both sides of the table where there's been deeds in lieu or foreclosures or handbacks. And the common theme always is, did the group handle it like a match, Right? Were they actively involved in making sure the transition was smooth, making sure that, you know, all the, the eyes were dotted and T's were crossed as they were transitioning ownership? Or did they just throw you the keys and say, have fun?
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B
And so is that up to the borrower to demonstrate that to a new potential lender for, for new deals or how do you package that?
- [34:34]
C
Well, look, as you know, I mean, reputation goes with you and Len, New lenders will look at your borrowing history and they have, they, they do their kyc and they know, you know, what deals you've handed back. And we live in a very small real estate community. The lenders are friends with each other and the lenders are also friends with the brokers and the lawyers. And, you know, you get calls from lenders, I'm sure, all the time too, that say, hey, I'm about to, I'm to quote a deal for this borrower, like, what do you think? And I'm sure you're going to be quick to say like maybe not the highest on my list.
- [35:20]
B
Now that's in the debt fund world where they can see past, you know, challenges and giving back property. What about Fannie Freddie?
- [35:31]
C
It's tough. I mean it's, it's a little tougher for sure. I mean, look, the blessing of Fannie Freddie is if you did that deal 20, 20, 21, 22, more likely than not you have a fixed rate for a little bit longer. You know, that's, that's 3%. I'm working on a couple deals right now that are HUD loan assumption deals and they have 30 years of remaining term at 2.6%. But that said, I mean Fannie Freddie, it's, it's a government guaranteed product. So that credit worthiness of the borrower as they're passing on bonds or you know, credit to their investors is extremely important. And they can be, I don't want to say harsh, but they can certainly be quite discriminating in terms of whom they lend to and who's on their preferred borrower list. Preferred sponsor list.
- [36:30]
B
All right, so let's talk about the lending side on the transactions that you are seeing today. You know, I guess the Fed, I don't know. When are they meeting? This week, next week, Likely to lower rates. Just talk about the lending environment where rates are on the shorter term product, the type of leverage that you're able to get your clients. Obviously every deal speaks for itself, you know, whether it's a lease up play or stabilized play and obviously the geography. So it's a broad picture, but I
- [37:02]
C
mean there's been a record amount of money raised in the, in the credit space. You know, I mean it was the thing for a while to raise money for, for pref. Right to bridge funding gaps on, on these deals that you referenced that are struggling. There's been a lot of new private credit dollars raised to do first mortgage, mez stretch, senior, whatever the buzzword is of the day. So the credit markets are pretty liquid. Office is another story. I'm, I'm not working on any office deal. I haven't sincerely since I started at Brcadia. But I'm working on a lot of industrial, I'm working on a lot of multifamily bridge that's, that's outside of the, the Fannie and Freddie space. And pretty much all of our deals are getting very deep. Lender pools that are interested in lending money. Spreads are coming in through, through competition as there's pressure to get money out and you know, sponsorship truly is more important than ever. I mean if a lender, a debt fund is looking at, you know, a specific deal, the first question is who's my sponsor? How experienced are they? How capable are they of executing the business plan? And if the sponsorship's good, the market's good and the real estate's good, there's a deep pool. If it's, you know, a 70s deal or if it's an office deal or if it's, if it's outside that box certainly can be a little bit tougher. But there's, I mean there's plenty of lenders out there and knock on wood, so far we, we haven't met the deal on the debt side that we haven't found a solution for.
- [38:52]
B
How about construction?
- [38:54]
C
Oh, I mean we just. So we just placed preferred equity on a construction deal in San Diego through a great client, Indev, smaller developer but growing based out of San Diego Place. That preferred equity with Fidelity, with a bank senior. And there, there are plenty of options on the construction side.
- [39:15]
B
Yeah, no question.
- [39:16]
C
Especially for multi.
- [39:17]
B
And so what's, I mean, I don't know. I'm sure borrowers, clients of yours are asking you this unfair question, but what's your crystal ball as to how the market is going to sort of morph in the next 12 to 18 months with respect to rates and, and the capacity for just better loan terms?
- [39:43]
C
Well, I mean, I think one rate cut will go a long way.
- [39:49]
B
You think really just a 25 basis point rate cut will make a difference?
- [39:54]
C
I do, because.
- [39:55]
B
But isn't that already like priced.
- [39:57]
C
It's priced in to an extent, but psychologically it still feels like believing and I'm a believer that in the long run, just like stocks, in the long run, fundamentals determine value. In the short run, capital flows determine value. And we have so much capital, especially through private equity that's been sitting on the sidelines. I think we're in a spot where in the time horizon you mentioned the next 12 to 18 months, there's going to be a lot more capital coming off the sidelines and investing. And on the debt side, I don't see a whole lot changing. I mean that's where the rate cut being priced in is, is probably already baked in. On the equity side, I do think we see markets start to open up in 2026. And on the debt side, you know, the market is pretty efficiently priced right now. There's a lot of capital in the markets and a lot of capital has been raised. I don't see spreads really moving too much from here, but Definitely a decrease in the base rate will help, even just directionally, you know, seeing that, experiencing that inflection point will make a difference
- [41:16]
B
from when you started at Percadia, what, 18 months ago to now from or where you're seeing the level of transactions. What the. Basically we're in the fourth quarter almost of 25. Is this the volume of transactions that you expected or are you doing more or less transactions?
- [41:35]
C
Well, I'm personally doing more because back to our point about believing in yourself, I was unsure how good I'd be at the job or if I could do the job. So I came in with a fairly guarded expectation of how much I'd be doing. I've been flattered and blessed with the deals that have come my way. So I'm doing personally a lot more than I would have expected. Brcadia across the board is up about 30 ish percent year over year on transaction volume, which I think may be slightly ahead of industry norms, but probably fairly in line. And my office, you know, all my bankers, the, the guys that I work with and gals and the people that I partner with on my team. The year started off extremely busy. We hit a little bit of a lull when the treasury got back up to 4. 4 now that we're back at 4.05, like fourth quarter is, I mean it's gonna be roaring. Yeah, it is really, really busy and you know, we're excited about, about prospects for the fourth quarter.
- [42:46]
B
We're seeing the same thing. So I normally don't have any notes when I do a real talk podcasts, but it's back by popular demand and a personal request by Lou Friedel that we do a lightning round. Now. You have not seen these questions, correct?
- [43:05]
C
That is correct. I asked to see them. I was denied.
- [43:08]
B
You were denied. No one is allowed to see the lightning round questions other than me and my assistant who prints them out for me. She doesn't even read them. She doesn't care. So are you ready for the lightning round, Lou? For Dell?
- [43:21]
C
Okay, as long as we can edit and post post production, you're not gonna
- [43:24]
B
need any first one could be the most controversial one of them all because I've asked this question to other to another guest who is the best pickleball player in the real estate industry in Southern California?
- [43:38]
C
Andrew Gindy.
- [43:40]
B
Get out of here.
- [43:41]
C
Look, I don't know. I don't know the answer, but I know it's not me.
- [43:46]
B
There.
- [43:46]
C
There's a lot of great players out
- [43:48]
B
top five in the real estate industry. I'M not talking about some guy who spends 12 hours a day on the pickleball court. Or maybe you guys do, because there were no deals for a few years.
- [44:01]
C
Yeah, I'm up there. Okay. I'm up there.
- [44:03]
B
All right.
- [44:03]
C
I. You know, I. I listened to the Jeff Karsh episode.
- [44:06]
B
That's what I'm getting to. There's a little rivalry.
- [44:08]
C
He's a great player. I will say this. I've pro. Probably logged about a thousand hours of pickleball in the past five years. Jeff has probably logged about 100 hours of pickleball in the last five years. And to say we're neck and neck with that kind of time commitment disparity is a compliment to Jeff.
- [44:26]
B
And I've logged maybe 10 hours. So there you go.
- [44:29]
C
But one thing, by the way. So we never got into this. The. My first introduction to Bercadia was I. I met my current partner, Keith Rosso, at a pickleball tournament where Jeff Karsh was my partner.
- [44:42]
B
Oh, was this up in Santa Barbara?
- [44:44]
C
This was in Santa Barbara right before.
- [44:45]
B
I think we met each other. Not met, but we then were hanging out in Vegas at icsc.
- [44:51]
C
Correct. I came off the plane all sweaty and. And met you for dinner, and Jeff and I won gold. Won the gold medal in that tournament. Keith and his partner, Eric Mori, who's also in the real estate industry, won gold in that tournament at a higher level. Oh. Than Jeff and I played. So I'm gonna give. I'm gonna give the crown to Keith, and on this question, I love it.
- [45:11]
B
Okay, you're a big memorabilia guy. You collect a lot of memorabilia. What's your favorite piece of memorabilia that you currently own?
- [45:21]
C
This is a great question. So, longer story, but it's the Lightning round, Lou.
- [45:27]
B
I mean, we're already 47 minutes in.
- [45:28]
C
God. Okay, so my. My grandpa owned a gas station across the street from Ebbetsfield in Brooklyn. Oh, okay. Have I ever told you the story?
- [45:36]
B
No.
- [45:36]
C
Oh, my God. So the players used to park their cars at his gas station, because after the games, there would be a line at the player lot, and the players would all sneak out the back, go to the gas station, get in their cars, and drive away. So my grandpa became friendly with the mid-50s Brooklyn Dodgers, and I guess as a thank you over the years, they gave him a lot of. Of Brooklyn Dodgers memorabilia. All that was passed to my. To my dad, which has since been passed to me. So just to name a few names, Jackie Robinson, Duke Snyder, Sandy Koufax, and to me, the Holy Grail Roy Campanella pre accident.
- [46:23]
B
Wow.
- [46:23]
C
Which is one of the toughest autographs to find on a baseball or. Oh, maybe I. Probably 50 different media.
- [46:32]
B
I don't, you know that I did not have a collection like yours, but one of the casualties of the fire was my memorabilia collection. And so the baseballs, the jerseys, the cards.
- [46:45]
C
We'll figure out how to get you a little something.
- [46:47]
B
That's. How about one piece of memorabilia that you don't have that you've been looking for.
- [46:52]
C
So the. Back to that collection for a second. So the Dodger collection. My grandpa originated the. My dad started Miami Dolphins memorabilia collection. You know, as I grew up in the same neighborhood that. That the Marino family lived in, and we were adjacent to a lot of his events and has a collection in that respect. And then as a third generation, I thought, well, how can I add value to this? So I took up card collecting. And the card that I really want, that I don't have is the 1948 Leaf Jackie Robinson rookie card. It's gettable, but like you said, you know, you got to enjoy the process. I'm waiting for the perfect deal to come along.
- [47:39]
B
I love it. I love it. You've been known to make a wager or two. What is the most unique bet that you have made?
- [47:51]
A
God.
- [47:52]
C
So when I was in 10th grade, four or five friends and I wagered on who would get the best grade and who would get the worst grade on a paper about World War II. And we still talk about it almost every single day because the outcome was so tremendous. Let's put it this way. I didn't get the best. I didn't get the worst. Okay? But the guy who got the worst is still the subject of ridicule on nearly a daily basis because he was the one who. Who originated the bet because he thought he was clearly going to get the best. And not only did he get the worst.
- [48:33]
B
Now, did you tell the teacher that there was this bad after
- [48:38]
C
and she actually called us all up to the front of the room and said, this particular guy wrote the worst paper oh, my God. I've ever read in 20 plus years of teaching history and pointed right at him.
- [48:53]
B
Is that in the teaching manual? Is that what you're supposed to do in Fort Lauderdale?
- [48:56]
C
She was a great teacher.
- [48:59]
B
All right. We haven't gotten into this. We. We could do a whole separate episode on your love of escape rooms and how you own what, one or more escape room properties?
- [49:10]
C
One property. We have three separate rooms, and we're. Ben, I'm in the process of buying a second one and then licensing out our games to a third one in Orlando.
- [49:20]
B
All right, so this. Remember this? Lightning.
- [49:22]
C
Yeah, Lightning. Lightning.
- [49:23]
B
Best escape room you've ever participated in.
- [49:26]
C
Palace Games in San Francisco, hands down. Really?
- [49:29]
B
What makes a great escape room? I think we should do a. An event.
- [49:38]
C
Done. Let's do it. Done. It has to be just challenging enough so that you feel really smart.
- [49:44]
B
Yeah.
- [49:46]
C
And you don't walk away thinking like, that was dumb. That was too hard. And then set design story. Moving from room to room. Change.
- [49:56]
B
Moving room to room. I haven't done one where you move room to room.
- [49:59]
C
You and I have to do.
- [50:00]
B
Well, I'm going to San Francisco tomorrow. Maybe I should check this.
- [50:03]
C
Palace games in San Francisco. If you do their.
- [50:08]
B
What's it called?
- [50:09]
C
The Edison Room. Or. I forget what. There's another one that.
- [50:13]
B
By the way, I have 16 of these.
- [50:15]
C
Let's go. Okay.
- [50:16]
B
Okay.
- [50:17]
C
Before.
- [50:17]
B
Before we started the podcast, we talked about boondoggles. You used to get invited to the most elaborate boondoggles. It's the greatest or best boondoggle you've ever been on.
- [50:26]
C
Havana, Cuba.
- [50:28]
B
Who took you?
- [50:29]
C
Ani and Mark Renard. Wow.
- [50:33]
B
I want to know what kind of.
- [50:34]
C
It was the best, but also the worst.
- [50:37]
B
Why the worst?
- [50:37]
C
Well, so David Binswanger from Lincoln, of course, was urinated on in the middle of the street of a. Of, like, a Main Street.
- [50:46]
B
I don't even know how, like, geometrically that works.
- [50:50]
C
Go to Havana.
- [50:50]
B
You'll.
- [50:51]
C
You'll see.
- [50:53]
B
Let's move on.
- [50:54]
C
Yes.
- [50:56]
B
Here's an oddball one. Childhood celebrity crush.
- [51:06]
C
I mean, they're all obvious. Kelly Kapowski, Winnie Cooper, and Joey from Dawson's Creek.
- [51:14]
B
Okay, those are good. I'm not gonna fault you for that. Favorite vacation spot. We're gonna go quick now.
- [51:21]
C
Cabo.
- [51:22]
B
Cabo. Okay. Favorite podcast besides Real Talk,
- [51:29]
C
Making Sense with Sam Harris.
- [51:31]
B
Oh, I need to listen to that. Best television show you're watching right now. Binge watching.
- [51:40]
C
Great British Bake Off.
- [51:42]
B
All right.
- [51:42]
C
I'm in a fantasy league that.
- [51:44]
B
That I'm gonna. I don't know about that.
- [51:47]
C
Don't knock it till you try it.
- [51:48]
B
Okay. If you weren't in the real estate business, what would you be doing Teaching?
- [51:57]
C
I still would love to be a teacher, like, in some phase of my life and career, and I. I just. It scratches me where I itch in a lot of ways. Yeah.
- [52:09]
B
Should a college grad who wants to be in the real estate business enter it as a broker, principal equity, or lender?
- [52:18]
C
I have a quote that I say oftentimes where that I. That I used to say, which is, if I didn't have such a good job, I'd be rich by now. And I think to unpack what that means, it's bet on yourself any way where you can bet on yourself, where you can invest in yourself, and you can find a way to work for yourself as quickly as possible is the path to gratification and happiness in this space.
- [52:45]
B
I love it. I'm gonna end it on that. But I'm not, because I have to ask you one last question.
- [52:50]
C
Yeah.
- [52:50]
B
We're both big doctor fans. Who's going to win the World Series this year?
- [52:54]
C
What kind of. I mean, that's. Talk about a leading question.
- [52:57]
B
I mean, I don't know. I'm not feeling confident.
- [53:00]
C
Well, you told me that in 2020. You told me that last year. I know. We were both at the Freddie Freeman game. Okay. It's happening again.
- [53:09]
B
Okay. From your mouth to the Dodgers playing.
- [53:15]
C
By the way, Mookie Betts, great pickleball player.
- [53:18]
B
You told me that.
- [53:19]
C
Yeah.
- [53:20]
B
Lou, I just want to thank you for coming in, making a trek to Sawtelle, coming into the podcast studio. I can't believe we've done it for just under an hour. We could have gone for hours and hours. I'm glad you're crushing it at Bricadia. No doubt. And I really appreciate you coming on.
- [53:36]
C
It's been a pleasure. And thank you for the friendship over the years. You know how much you mean to me, and. Anytime now.
- [53:42]
B
Let's go grab some great food on Tatel.
- [53:44]
C
Let's hit it. All right.
- [53:45]
B
That's another episode of Real Talk you've
- [53:49]
A
been listening to Real Talk, real estate discussions with Andrew Kirsch. You can catch prior episodes@schoolkirch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google podcasts, and more. Thank you for your positive reviews, comments, and for sharing this show with others.