A (3:03)

Well, now there needs to Be an inner Indiana. Game of Notre Dame and Indiana.

B (3:09)

I don't know if I want that. I'm a little nervous.

A (3:13)

Yeah, well, they're losing their quarterback and I'm sure other players. But as you know, I went to Northwestern and every time we had Indiana on our schedule, you could just mark it as a win. And that was even Northwestern marking it. And to see what Indiana has, has accomplished is, is it. Actually, as a Northwestern guy, it gives me hope, like, why not us next year? And with the new rules, it's like, hey, if you've got the money.

B (3:36)

Yeah, it's. Yeah. I think their coach is fantastic. So. And what he's done with the transfer portal. It was interesting in the transfer portal and we may have talked about this, I can't remember, but all four quarterbacks were transfers in the final four.

A (3:54)

Oh, interesting.

B (3:55)

And every team other than Oregon had more than 50% of their starters were transfers. And Oregon had like 45% were transfers. So it's definitely changed. So you know what, Northwestern may get there, who knows? You just gotta, you gotta give them some of that Kirsch money.

A (4:14)

Okay, well, we need to do more deals and then there you go. That's, that's funny. All right, well, let's get into real estate. For my listeners who may not know Ocean west, why don't you talk about what you guys do?

B (4:30)

Yeah, so we're based in El Segundo. You know, we really have kind of two lines of business. One, we invest in core properties, and that can be debt or equity, and that's primarily with foreign Korean capital. And then we do, you know, more value add, core plus, you know, it's office, student housing, apartments and industrial. We found it, we started the company in 2009 and we've done about eight and a half billion dollars worth of deals, around 23 million square feet and about 7,500 units across the country. So we have an office in LA, San Francisco, New York, D.C. and Seoul, Korea. So we're all over.

A (5:25)

That's amazing. There's so many different ways we could take this conversation, I guess, sort of a high level conversation. So many of my clients, people who I've had on the podc, they focus on one asset class, maybe two asset classes. You guys are in debt, in equity, in owning and across different asset classes. How are you able to, I mean, your inbox must be gigantic with all the types of deals that you're getting.

B (5:53)

Yeah, it's. So we have commonality in all of these things where one, we dive deeply into the properties. So in terms of the value add stuff that we do, we're very local. So having an office in New York, San Francisco, D.C. and LA, you can kind of see that there's specific drivers in those markets. And frankly, they've been distressed markets. I think the other thing we have is we've got very strong capital markets capabilities. So, you know, my background was I ran all debt at East IL Secured for a number of years and then I went over and worked at McGuire. So we've brought in kind of experts in all of those areas, both capital markets and operations, and try to integrate those and then kind of go to where we think the opportunities lie. And, you know, it's been very advantageous for us because, you know, when the markets change, us being diversified really helped us. You know, we started off as a value add investor in Southern California, primarily office. And, you know, if we wouldn't have changed who we are and kind of tried to expand, I think it, you know, we'd be in tough position right now.

A (7:23)

I had a client once tell me who, in response to an equity provider who said, look, we strongly prefer their operating partners be the best in class in one asset class. And my client's response is, that's great for you, but what happens if that one asset class is having tough times and now I'm screwed? And so they preferred to have a more diverse portfolio so they can run more like a private equity company. And if office is down, maybe a different asset class is, is humming along.

B (7:59)

And so, yeah, and what we found is our partners typically follow us. So be it geographically as we expanded across the country, or property type, and there are some property types like student housing and even apartments where we'll bring in, we'll bring in partners, so we may outsource the operations. And you know, that happens a lot with deals we do with our Korean partners, our, the pension funds and insurance companies who invest with us. And what they're looking for really is someone they can trust in the US and someone who could act more like a private equity company and bring in the right operating partner. So we were the first group to bring the Koreans into student housing, industrial and apartments. You know, they typically did office. So we have a partner, Landmark Properties, who, you know, manages all of our student housing. We have about 5,000 student housing units across the country. You know, so that's another way that we've been able. Excuse me, to kind of. Because we do believe that you need to have both geographic expertise and property expertise to be best in class. So if it's an asset type where we don't have it, we'll bring in a partner.

A (9:32)

How did you develop the relationship with the Korean investors?

B (9:38)

Yeah, it's interesting. You know, we knew that it was a very large pension fund market, and we also knew that geographically, it's very small relative to their gdp. So what that means is they need to invest outside of Korea. We also knew at the time we started going over there, probably in 2011, we knew that they had a lot of problems with institutional investors coming off the gfc. You know, a lot of the institutional investors just stuffed them with bad stuff. So we went in there. My partner, Phil Choi, is Korean. His family owns some real estate in Korea. So we went in there with warm introductions and then probably took us five years to do our first deal.

A (10:35)

Wow.

B (10:35)

Yeah.

A (10:36)

So did you ever feel like, okay, this is just hitting our head against the wall. This is never going to happen? Or did you. Were you prepared that it was going to be a marath?

B (10:45)

No. So many times we wanted to stop and, you know, because that's not a.

A (10:49)

That's not a cheap trip for.

B (10:51)

It's not a cheap trip. And, you know, it's frustrating. Right. But, you know, for a smaller company like us to be able to access that capital is really unique. So that capital is typically going to the biggest, you know, the largest of the large firms out there. So we knew we'd have to put in extra work. And we're, you know, real estate's a relationship game, so we're driven that way. So what our partners in Korea started to do was just ask us the questions they couldn't ask Blackstone or Morgan Stanley, like, stuff like, what's a. You know, what's a ti. Who pays for tis? You know, stuff like that.

A (11:34)

So they needed to get educated.

B (11:35)

They needed to get educated, and they needed trust. And, you know, we knew that it would take a long time to develop trust, and there were a lot of. There are a lot of misses along the way. One of the things we did, though, was if the Mrs. Happen, they missed internally. So we were smart not to tie up deals and then miss with a broker. So we did our work ahead of time, and that engendered a lot of trust, both from the Korean community and also from the brokers, because we didn't miss on deals. So I think we've done 22 deals with the Koreans and with Korean investors, and we only put two under contract that we didn't perform on. So, you know, that's a unique. But it was interesting. So we did our first deal in 2017, and then it just mushroomed. So we've done almost three and a half billion dollars of deals with Korean investors.

A (12:38)

Are they as active today as they were, you know, close to 10 years ago?

B (12:42)

No, not. Not anywhere. I mean, they're really not putting equity out. I mean, I think, you know, from an institutional perspective, very few people are. Are active. It's changing. I think where the Korean investors are more active are with assets that they currently own or lend on. And they're saving their dry power to try to save assets. So we are seeing them put money in. So we. One of the things that we've been doing, which we've been really fortunate to do, is we really only did equity investments with our foreign. With our foreign clients, but they did a lot of debt investing, so they did a lot of mezzanine and preferred equity investing. And they asked us about, I don't know, 18 months ago or so to start helping them with a lot of those investments. So those investments are typically larger investments where there may be a path through foreclosure to the equity. There also may be a payoff. There may be a restructure. So now they've brought us into 14 or 15 of those deals. One of the deals was a building in New York City on 40th and Madison, Tommy Hilfiker's headquarters. We were in a mezzanine position. We were mezzanine A. There was a mezzanine B behind us. And the Koreans brought over, you know, our partners brought over, you know, $340 million from Korea to do that, to buy it out and to put new debt on it. So they are investing in deals like that that they, you know, think will be accretive to them where they already have investors. We do think when they come back, it'll be more buying of the subordinate debt. It was a bad experience, but now we're kind of a what everybody. What we think is, you know, bottom of the market or near the bottom of the market. I think maybe it's trending up, so it's a safer time to buy. And, you know, we'll propose to do it a little differently than they've done in the past.

A (15:00)

Yeah, let's take a few minutes and go back in time, and then we'll get your thoughts on 20, 26. You mentioned McGuire. What years were you at McGuire?

B (15:11)

Oh, man.

A (15:12)

And there's a reason why I'm asking.

B (15:13)

Yeah, yeah, yeah, yeah, I was there. Call it 2005-2009.

A (15:22)

Okay, so that. So I was at Latham Milwaukee. Yeah.

B (15:24)

Okay.

A (15:25)

And we were your counsel. And that was my introduction in large commercial real estate portfolio transactions. We did the Commonwealth acquisition. I remember. I mean, we had an entire floor in the library tower, US bank tower of conference rooms. And I would say the floor plates there are at least 25 to 30,000 square feet. Every single inch of that conference room floor was filled with. With documentation that needed to be signed for that Commonwealth portfolio. I think it was about 12 or 13 assets at the time, north of $1 billion transaction. And I originally was a litigator my first couple of years, and then I went into the. As a real estate attorney with Paul Furman and others, and that was me jumping into the deep end on that type of transaction. I assume you worked on.

B (16:21)

On that. Well, I started right after the Commonwealth transaction. Got it so just right out. But I did work on it when I was at East Ill Secured. So I did the financing on it with Friedman was there then. So, yeah, that. I think just about everybody who's been in LA real estate had run across McGuire. Yeah, that was a. I'm sure you learned a lot during that period of time, and I certainly learned a lot. And, you know, the alumni base that kind of work through all that, it's pretty strong from a real estate perspective. So for sure, I was good.

A (17:01)

It's like the coaching tree of Nick Saban or Bill belichick or Sean McVeigh. It's the real estate alumni base of McGuire. From you to God. So Phil Orozco and Mark and to so many.

B (17:16)

Yeah. I mean, and you even go back further than that. You know, Rick Gilchrist or, you know, the Commonwealth guys, you know, Rick and Brad and Mike and, you know, just a ton of them. So, yeah, it was a great. You know, he was a visionary, so. And he had also great instincts. But I think, you know, his. The issue Rob had was, you know, he was all in all the time, so he maybe believed a little too much. But being around his creativity and his tenacity was just an amazing thing to see. And I don't know if there's many more people like that. So it was a great experience for all of us young guys to go through when we were young, back then.

A (18:09)

Yeah, I mean, look, we were in downtown LA and going to Staples center and just a lot of vitality in downtown at that time. It was fun. And could you ever imagine what downtown like if you were back in 2006, 7, 8, even though the GFC was happening downtown LA was still vibrant of what downtown LA would turn into,

B (18:36)

you know. Yeah, I think I could really, I mean, I, you know, the rents are about the same as they were back then. So, you know, I think the vision of downtown was low prices. You could, you'd be an alternate. It could be an alternative to the west side for half the cost. And I think, you know, and I think it was, a lot of it was built based on just a Rob McGuire, you know, pulling it along, you know, prior. I mean, I would say downtown has had more down, you know, downturns than upturns. You know, when the market gets really good, downtown is better. But I think what we find in, in LA real estate is people like to be around where they live and they will pay the premium to be on the west side, you know, or Pasadena or wherever versus downtown. And it's a shame what's happened to downtown. I mean, I think it's just, it's very brutal. But I also remember kind of back in the 90s and early 2000s, it was pretty rough back then too.

A (19:58)

Sure. No, so, but do you think we're at a point where, I mean, I've got several clients who, who have purchased assets in downtown over the last couple of years. What is Ocean West's take on, on downtown LA as an investment thesis?

B (20:14)

I think it's tough. I mean, I don't, you know, we're not actively looking in downtown la. You know, I think in our opinion there's a couple things. One is you don't, you really have not had a lot of new absorption, new tenants going downtown la. It's kind of been a musical chairs for years of tenants. I think, you know, as you see, as we've seen the law firms and professional services firms shrink in their space usage, I think that that completely impacted and to a degree still impacts downtown la. I think where we have tis right now of, you know, 150, 200 bucks a, a foot, you know, and you have $2, $2. 25 cent triple net rents. I think it's kind of hard to justify any.

A (21:13)

Math doesn't work.

B (21:14)

Yeah, the math doesn't work and I don't know where the new absorption comes from. And look, the safety factor of downtown right now is it's not good.

A (21:26)

Yeah.

B (21:26)

So, you know, and you know, we have a big concern of investing in the city of LA as it sits. I think investors can take good or bad legislation. What they can't take is uncertainty. Things like ULA or things like the recent capping of the apartment rents on market units, you know, those things are unpredictable and those things are very meaningful. And what you get to is you get to a place where, well, what's the next shoe to drop? Right, right.

A (22:10)

So you would take oversupply in certain Sunbelt markets over political instability.

B (22:21)

Well, look, I'd like to take neither. Right.

A (22:24)

Are there markets like that? I guess.

B (22:26)

Let me ask. We like New York, believe it or not. We like San Francisco a lot. The AI growth in San Francisco and it's not just the AI companies, it's any company that wants to do AI needs to be in San Francisco because of the brain.

A (22:42)

And new government.

B (22:44)

And new government. Right. And so we like that. Where we're at in the cycle for us is we're actually looking at kind of your more needle and haystack deals.

A (22:56)

What does that mean?

B (22:57)

Well, I think they have to have a story and it's asset by asset, so it's very hard to say, look, I'm going to buy, you know, 10 assets in the San Francisco area or the LA area or the New York. It's. It's more about finding the right story. So one of the assets that we're pretty involved with is Playa District, which is old Howard Hughes. And we were chosen by Deutsche bank to be their partner on it. And what we like about that is it's a big campus where we came in with the idea of there was some credit tenancy in there, which we're selling. Right. To reduce the basis. There's really two distinct campus there that were put together. We think you should separate them out and market them differently. There's owner user building that we think it should be sold off to an owner user, especially with the signage that they have. There's another building that we think should be medical. So that type of at. Now if you. I just said we don't really love la. Well, that's in la, not the city of la, but that's in la. Yeah, but it's a good story. Yeah, right.

A (24:16)

Well, it's in la, but not downtown la.

B (24:17)

Not downtown la, but it is in

A (24:19)

the city of la.

B (24:20)

Yes, yes, yes.

A (24:21)

Yeah. And so Deutsch was the lender and took it back or how did.

B (24:27)

Deutsche is a lender. Blackstone bought it and they're giving it back through Deeden Liu. So again, we get in at a lower basis.

A (24:37)

Does it also have residential in that campus or residential?

B (24:40)

It's separate.

A (24:41)

Separate.

B (24:42)

It's separate. So, you know, it's getting in the capital structure, it's getting into you know, an asset that you can have a different business plan on. Another good one is the building we took in New York. That one there was originally, I think there was $240 million of CMBS debt that had matured. We were behind it with another 80 million of mezzanine A. And then behind us was another like 100 million of mezzanine. So the borrower was in it. Their basis was way out of the money, but our basis was in the money, but the mezzanine behind us was out of the money. So we were right in that right part of the capital stack where we could go in and basically buy a well occupied property in New York for a 7 cap, which we think is a great deal. You know, there's other deals that we're working on that may not be in great markets, but you know, our Korean lender is a first mortgage. So we're from $0. So we'll go in those deals and we'll actually put a new first mortgage on so that we'll take them over in foreclosure, we'll put a new first mortgage on and then we will operate those properties. But our basis obviously is very, very low because we're basically negotiating a new basis and our partner in it is in it from $0. So those are interesting deals. I think when the market comes back, those deals probably go away. But then you could do more thematic investing where you're like, look, yeah, I do like San Francisco and I want to buy a bunch of properties in San Francisco. Or I do like multi in the Inland Empire and I want to buy that. Or I do like the Sunbelt at, I don't like it at a four cap, but I like it a six cap. You know, so that stuff hasn't happened yet, but I think it will.

A (26:59)

And what's the appetite of, of capital today? I mean, as we're recording, it's early

B (27:04)

February,

A (27:06)

even last year. Whether I'm, you know, if I'm representing an operator client of mine and I'm helping them raise capital, the capital would listen, but then they would have 42 different excuses as to why not to do the deal. Has it changed going into 2026? Are we still in this era where yeah, capital says they're interested, but when you really peel back the onion, they're still not ready?

B (27:35)

It's starting, it's changing in that it's starting to be ready and it's in certain markets and it's situational. So nobody wants to say, yeah, I was. No institutional wants to say, yeah, I was the highest bidder for this building in downtown LA or this building wherever. Right. I outbid everybody. Everybody wants the off market, the story, the right asset, and it's got to be in the right market. So we're in the process of trying to partner on a deal in San Francisco. And this was a loan sale, it was marketed, but it was a unique situation on a really good building, good location. It's call it 25% occupied. And we've got institutional capital that will go in there that would not have happened a year ago and that would not happen in most markets. But it's a change we're seeing in select markets with, you know, unique opportunities. So those are green shoots. And I think, you know, the problem with a lot of, at least before talking office markets are the institutional guys are going to have a hard time getting in there until you have visibility on leasing, you know, if leasing's not happening at a big clip. All of these investors, including us, are IRR based. And the difference between a three year hold and a five year hold, regardless of what your basis is, is huge for your promote. So if you don't have leasing, I could buy in, you know, say I could buy in Santa Monica for $200 a foot. I'm not saying you can, but I, I can if I'm going to tell

A (29:40)

my landlord who may want to sell me my, this building.

B (29:44)

Owner users, right?

A (29:45)

There you go.

B (29:45)

I mean, that's what we're seeing. We're seeing private capital and owner users where they can buy in at a low price per foot because they have an indefinite time horizon, right? So Andrew, you're, you're a young guy, man. You're a young handsome guy. So like, you know, 20 years from now, right? You could sell 20 years from now, you know, to your kids and say, look, I bought this thing for 200 bucks a foot. And you know, we're putting in the Kirsch family trust, you know, we're donating that all to charity. You know, the billions of dollars, you know, it's worth 550 a foot. You know, we made a bunch of money. Whereas me as the lowly investor that does it professionally is I can buy it for 250 a foot, but in three years, if it's not worth, you know, 400 a foot, you know, I got a bad investment.

A (30:34)

Yeah, I thought all my money's going into nil for Northwestern.

B (30:38)

You got a lot of that money, so it doesn't matter.

A (30:41)

So where do you, I mean, I feel from an office perspective that the velocity of new lease transactions are there.

B (30:55)

Right.

A (30:55)

I see. Look, we do leasing for multiple several years. My leasing lawyers were not busy and now they're getting busier. We're seeing it.

B (31:08)

Are you seeing it selectively? And you know, I think you have to look at new versus renewal and we're still not seeing a lot of movement of tenants. I think what we're seeing more is renewals. You, you do see some. You know, we signed a big lease in El Segundo about a year ago. It was all new absorption which, which was good, you know. And I think in the new stuff that's leasing, it's going to the capitalized owners versus the non capitalized owners. So one of the big things that people are looking at is you know, does the owner have money to pay TIs and LC's? So I would not say that we've seen the big companies actually start to move much. You know, I think we've seen some renewals, maybe some expansions in buildings. But when you talk about the big technology companies or entertainment companies or people that have primarily been the growth engines of you know, Los Angeles, we have not seen them going to new buildings and taking new space. Now maybe you have, you know, but we, we have not.

A (32:25)

No. Sure. Look, it's, it's a, it's a big problem with you know, entertainment industry looking to other places to, to film, Louisiana, California in generals trying to rev back that. That industry. Is it too late? Hopefully not. But so many different markets have been offering such compelling tax credits for studios to or for production to film elsewhere. And we're seeing obviously in. In the news. I'm sure you're much closer than to it than I of. Of large studio campuses having significant challenges and that's you know, if not the primary industry in la, I mean it's top two.

B (33:11)

Yeah, for sure.

A (33:13)

I guess remaining moments, you know, we, we do a lot of industrial. You said you do industrial and for a long period of time it was certainly the darling child of many of my clients portfolios. The last year or two it's you know, had headwinds whether it's tariffs or, or other issues. So many. I was down at the Laguna IMN Private Equity conference. Real estate Private equity conference. Everyone wanted to talk about small bay industrial. It's like, it's like it's now the. Yeah, the in vogue sub asset class.

B (33:51)

Yeah.

A (33:51)

So what types of industrial are you guys focusing on?

B (33:56)

We still like the big bot look. We like the long term. We like the long Term dynamics. I know, you know, Inland Empire has been hit hard. Yeah, you know, we own some in the Inland Empire. Leasing hasn't been great, but when you look at, you know, just online retail, you know, it needs three times more warehouse space than, than brick and mortar retail. You look at onshoring, hopefully there'll be more clarity on the tariffs and the international issues that we have over years. Real estate's a five, ten year or longer investment horizon. So we still like it. You know, where we think that there's some meat on the bones are, you know, longer term leased, big box industrial that have low coverage ratios. So we like the play of buying the asset, especially kind of mid sized stuff. So anything, call it 35 to 100 million bucks where you've got primarily these credit buyers that are buying it. We like to play where you buy the credit. But you're on a big plot of land, you scrape off a piece of the land and sell it, you know, and then you're increasing your, you're decreasing your basis. Or we like, you know, whenever we buy one of these things we'll do a ESG audit where we'll go through and we'll try to figure out how do we pass more capital through to the tenants. Because what you typically find in industrial is the rents are below market. So if I can put some capital into the building and then amortize that over the lease term, you know, you'll get credit for rent rather than, you know, capital being passed through. And that's a way to really increase value. So we do look at it even on our credit stuff on a more opportunistic basis. What we find though the hard part is industrial apartments, even offices. The lenders aren't requiring the borrowers to pay off. The money center banks were and are. So if you have a loan with Wells Fargo or JP Morgan or someone, they're basically not having REO groups anymore. They're saying, look, just sell your property and we'll take a short pay. Right, Right. But CMBS is not doing that and the regional banks are not doing that. So there's so much product that is caught up with the lenders that, you know, it's, it's hard to find these opportunities.

A (36:56)

How do you shake those trees loose?

B (36:59)

Again, it's needle and haystack. Right?

A (37:02)

The relationships, Right.

B (37:03)

And relationships and exactly like, I mean it's, you know, they're hard to find. That's why it's hard to say, well look, we're going to buy, you know, a billion dollars of industrial. You're not going to, it's going to be hard to find. You can do it if you're a core buyer, if you're an insurance company or what have you, or if you've got a, I mean, you couldn't even do it if you were a long term holder because cap rates still aren't great.

A (37:27)

But like you were saying like that you, you are going asset by asset. So you mentioned the Howard Hughes center here in la, the Tommy Hilfiger headquarters in New York. These are really a plus type of assets that anyone would love to have at the right basis in our remaining moments. You've been on the service side at Eastill. You've worked for a large public company, McGuire, and now have your own company. Put yourself back 22, 23 years old, you know, graduating from Notre Dame, upset that you're fighting Irish, lost to Northwestern in 1995 when I was a junior. That was the start of a magical season. Were you in college, by the way? Where were you following?

B (38:18)

No, I graduated in 92.

A (38:20)

So you were an alum that was pissed off, but. So you talk to a 22 year old coming out of college.

B (38:27)

Yeah.

A (38:28)

What advice do you give them other

B (38:31)

than go into technology, don't do real estate. Yeah. No, no, no, no, I'm kidding. What I always tell the kids are follow the demographics, right? So real estate's all about demographics. So right now what are the demographics? It's power, right? Understanding that, it's AI understanding that or proptech understanding that it's social. Things like where are people migrating to? What are the big problems? For example, I tell the kids, look, I think there's going to be a big problem in elderly housing for poor people, right? Because I think there's going to be a lot more of them. Because I think a lot of people, our population's aging and I think a lot of people don't have pension funds. A lot of people don't have good 401ks. And I think that they're going to need places to live and they're going to have to be specialized places. So I say, look, think about large demographics. You're going to be in a career for a long time, so that may not be here yet, but what's going to be here in 10 years or what's going to be here in, you know, 15 years? If I told you five years ago to focus on data centers, right? And you were the only guy, you're the young guy who knew data centers, you'd be doing great Right. So you know that that's what I always tell the people. Yeah.

A (40:02)

I think that's great advice. And I look and see how your company has really become, you know, just has such a great reputation. Thank you. Across all these asset classes. And so I want to thank you for coming onto the show and just best of success 2026 and beyond for. For you and your colleagues at Ocean West.

B (40:25)

I appreciate it. And go Wildcats.

A (40:27)

And yes, I think we should restart the Northwestern Notre Dame rivalry. We had. We had.

B (40:36)

We'll take the USC place, since.

A (40:38)

That's right. I think SC fans would say it was the opposite that Notre Dame dropped sc, but who knows?

B (40:44)

Whatever.

A (40:45)

I'm not in that fight. Fight.

B (40:46)

Potato, potato.

A (40:47)

I know. Thanks for coming in. And that's another episode of the Kirsch Connection.