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- [00:03]
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Welcome.
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It's episode number 49 of the rent Roll, your podcast on all things rental housing, apartments, single family rentals, and build to rent. Today we got a special treat for you. We've got Matt Ferrari, fresh off his trip to the peak of Mount Everest, nearly 30,000ft above sea level.
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Matt, of course, is also an executive.
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On the nation's largest apartment owners and still one of the relatively few active buyers in today's market. True America. Matt is the co chief investment officer and head of acquisitions in addition to heading up east coast asset management. So Matt was kind enough to stop by in studio while in Dallas and I'll tell you, you're going to be amazed by his story.
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I didn't know what I was getting into when I first started asking him.
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About his trip and we ended having a lot of fun talking about it. And really, maybe even more than the trip itself is the ridiculous level of training. That part might even be more interesting than the summit itself. But of course, you know, just getting there and summiting it is an incredible accomplishment as well. So I don't want to take away from that. So we'll talk about that with Matt and then spend the second half of the conversation talking about today's market for buying apartments, what he likes, and also how true America is able to keep buying when a lot of others, even on the institutional side, are struggling to stay active or maybe purposely staying sidelined. So we're going to get Matt's take on all that. And then before we get into that, I'm going to share with you what I think might be the most interesting stat in the multifamily market so far in 2025, and it involves Matt's former employer. But first, let's give a shout out to our sponsors. First and foremost to jpi, a leading apartment developer with a state of purpose to transform buildings building, enhance communities and improve lives. And then also to Waymaker Multimillion Investment Group focused on attainable housing and class A market rate apartments, partnering best in class apartment builders across Texas and the Southeast.
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All right, so as always, kick it.
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Off with here's a chart and here's a table. This time we are looking to compare Avalon Bay's recent acquisitions in Texas versus their dispositions in Washington, D.C. now, before I go on, I want to tell you next week I'm going to do a deeper dive on capital markets and we're going to be joined by the great Jim Costello of MSCI Real Capital Analytics. He's one of the best on all things commercial Real Estate capital markets and he's got some cycles under his belt. But for today, I want to tee up our conversation with Matt Ferrari at True America and kind of think about today's acquisitions market. I wanted to take a quick look at some of these deals, these two big deals from Avalon Bay, which as you know, is the nation's largest apartment REIT by market cap and one of the largest apartment owners of of any type by unit count as well. So this is again, I think the most fascinating stat for me in 2025. Avalon Bay back in February they announced this deal. Avalon Bay paid BSR what it said was a high 4% cap rate to buy class A apartments in the suburbs of Dallas and Austin. So again that was announced in February. Then last month in August, Avalon Bay announced a sale of four class A apartment properties in the urban submarkets of our nation's capital, Washington D.C. inside the District. And the buyer, Folger Pratt said that cap rate was 5.94%. So high fours in the Texas suburbs versus high fives in urban DC. So that's 100 basis points discount to be in the nation's capital versus the suburbs of Dallas and Austin. And by the way, these deals were fairly similar in terms of vintage. The DC assets range from 2003 to 2018 builds, three of the four that were built since 2012. The Texas deals range from 1995 to 2021, but six of the eight were built since 2015. So a little newer on average for the Texas assets, but not much. Now before I go on, it's worth noting that these deals are not directly comparable for a variety of reasons, particularly DC's prickly topa laws which can delay transaction months and months. Well, the tenants these buildings can try to raise, you know, 100 plus million dollars to try to buy a property and really just have the effect of just stalling things out a bit. But even with all that, I can't imagine such a spread in the cap rates any time in history. Prior to Covid it typically been reversed a discount to be in Texas. So these deals are interesting and they.
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Reflect that the the bigger low regulation.
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Markets and sub markets are now some of the most liquid in the country. High regulation cities have become less liquid in these last five years. We see this reflected in sales transaction data. I've shared this Previously. Cities like DC, New York, LA now comprise a smaller share of total sales in terms of dollars than they did in the prior decade. And it's not because of demand side issues. I think a lot of Times, you.
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Know, these, you know, there's people who.
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Hate the Sunbelt, people who hate the coast, and they kind of think, oversimplify these things sometimes say, oh, you know, San Francisco's dead, New York City's dead. No, they're not. The, the demand side story is very good in both of these cases. In all of these cases, for the most part, there's maybe a few exceptions, but for the most part it's not a demand side issue.
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You know, in D.C. obviously it's got.
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Some challenges at the moment with Doge and federal layoffs, but you know, D.C. is still an attractive sort of demand side story. The attractive long term, you know, it's the nation's capital, like it's going to be fine long term in terms of demand. And some of the, outside of D.C. though, I mean, new places like New York and San Francisco, these are, some of the, these are, these, these are, these two cities are leading the country or among the leaders in the country for rent growth right now. So again, it's not demand, it's not rent, it's not even, you know, long term about Doge and federal layoffs in the District. It's, it's clearly regulatory related. And Avalon Bay and others have hinted at that publicly. It's policy risk eviction restrictions, rent control, screening limitations, transfer taxes, topa laws, et cetera, et cetera. You know, when you impede the ability to run your business plan and you drive up expenses and drive down revenue potential, that is a challenging environment and not a very, you know, not a very liquid investment. So two quick thoughts. Is 100 bips discount for coastal urban the new normal? I don't think so. So obviously, let's remember cycles happen when the discounts take on. Risk expands. As we see happening now, opportunistic buyers step in and that means it's now an opportunistic bet instead of a core one, even in a core city. But any buyer is banking on these cities adopting some level of regulatory form reform or at least becoming a more predictable playing field. Or they're just being drawn by what's now all of a sudden a very attractive basis, well below replacement costs. And that's basically what Folger Pratt said, what drew them to this deal with Avalon Bay. But don't get me wrong, you know, I'm not one of the people who says that these cities are falling off the map for investors. There's undoubtedly a smaller cool investors today willing to invest in those spots. So those cities are going to settle into a new normal. Somewhere between the pre Covid cap rate premium and this, this deal's 100 basis points discount. And by the way Fernberg, for those of you who saw this, I had a podcast previously with David Schwartz of Waterton and really diving into the deal they did in downtown Los Angeles, which is has been a very challenged, even demand side submarket, but historically a very strong one. And so but he talked a lot about how it was becoming more of an opportunistic bet. It was the discount to replacement cost that became in the basis that became very attractive. And so with a flexible exit and some patience, you know, those deals can be very, very interesting. But again it's a different deal than it was prior to Covid and those cap rates are going to reflect that second thought. So let's talk about these suburbs of places like Dallas and Austin. But it's not just the Sunbelt by the way, it's other, it's even coastal markets. Let me talk about this. I would argue that the prime suburbs of major markets with lower regulatory risk and not the market themselves, but even the suburban areas with low regulatory risk are now arguably the most liquid in the country.
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And I think obviously the data is.
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Going to show that as well. There's a price premium that comes with that, particularly in these suburbs where it's tougher to build. You have a lot of NIMBYism and restrictive zoning in some of these suburban areas more than you do in the cities. And that makes it tougher today, this new capital coming into these submarkets, that makes it tougher for sub institutional opportunistic buyers to still be active buyers in places like Texas and other major markets in the Sunbelt. And again though, don't get me wrong, this is not just the Sunbelt and it's not a red state good, blue state bad thing. It's not that simple. There's also a premium now to be in politically stable core coastal suburbs like Northern Virginia, east side of Seattle, Silicon Valley, etc. And that increased institutional push into those prime suburbs, that's going to have a domino effect. At least I think it's going to have a domino effect down market because smaller investors previously active in those sub markets in past cycles are now having a tougher time competing going forward. And of course that's already happening today. So as we start to see money coming back into the market capital returning the market, where does that push those buyers in the next cycle? Are they moving to lower tier suburban areas, less attractive ones, or is it to nearby tertiary markets? And we're seeing some of that. So I think that's going to be a really interesting subplot to watch is where do those buyers, where do they start to migrate as as it gets too tough maybe to compete in those most attractive suburban areas of major markets. Okay. So much more in capital markets next week with Jim Costello. And we'll also be talking later in today's program with Matt Ferrari about again mentioned this earlier opportunities he's seeing.
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And you know, True America is one.
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Of the buyers that has remained active. In particular, they're still finding ways to get value add deals done. So we're going to talk to Matt about that as well. But next, rental housing trivia. All right, so in honor of today's podcast guest, Matt Ferrari summiting Mount Everest, we're going to ask this, what incorporated town has the highest elevation in North America?
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And I'll give you a hint.
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It's in Colorado and they have apartments there. Okay, so maybe this is the highest elevation high. The apartment's the highest elevation in the in North America. I don't know that particular fact would be true. I assume it is since this incorporated town is the highest EV elevation North America. But I'm not going to ask you for the name of the the apartment building or I'm asking you what is the name of the town or with the highest elevation. And again, hint, it is in Colorado. So we'll get to that answer in a moment. But first in the news.
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All right, so it's been a little.
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Bit of a slow news week, but we did have two headlines I want.
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To touch on this week.
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And the first one's a big one. This one headline from Bloomberg comes from a interview that Secretary Secretary Scott Besant did with Reuters. Reuters and with, I believe the Washington examiner as well. In two different interviews, he said that the secret treasury secretary said that President Trump is weighing a declaration of a national housing emergency. And so Reuters reported that Besson said the Trump administration was also exploring ways to simplify permitting and encourage standardization to boost construction, which would boost housing supply and help bring high costs down. Okay, so we don't have a lot of details right now, but we can surmise any potential declaration of a national housing emergency is going to be focused on supply construction of housing for sale and for rent. How can we spur a lot more construction of new housing? So I'm no policy expert on how executive orders work and what they can and cannot do. But my understanding is that an executive order would empower the White House to circumvent the Long painful legislative process and jumpstart some fast, faster solutions. And again, we don't know exactly what that might include, but hey, we can speculate, right? That's fun. So one big thing I think would be can the federal government finally link the use of federal housing dollars like the lowing housing tax credit to a certain set of rules that would prevent cities like Los Angeles from adding a lot of pork barrel requirements that drive up the cost of affordable housing? And places like la, it could cost a million dollars to build an affordable housing unit. And that might be some take, in some cases twice as much as it costs or more than twice as much as it costs to build a typical market rate apartment unit and thereby making the program very inefficient. And so what can we see? Could we see an executive order that makes this program more efficient by requiring a certain set of standards to be used to access those dollars, which if you make it more efficient, you then could spread those dollars out to build more affordable units than you would otherwise? Okay, so more housing built by using those tax dollars more efficiently or tax credits more efficiently. I don't think we're going to see the federal government override local rules on things like, you know, zoning and permitting, but they certainly could incentivize local governments to play by a more streamlined set of rules. And we'll probably also see a lot of effort to remove, you know, red tape from federal programs to, to expedite project approvals and reduce costs or maybe incentives for local governments to remove red tape as well. More of an outcome based incentive. So I'm guessing we'll see a lot of efforts especially to make homeownership more accessible. It's not obviously just about rentals, about home buyers as well. I think in many cases the. It seems that there's a. I haven't done a study on this, but it seems like there's a relationship between consumer confidence and having a healthy home buyer market. And certainly we see a. I think the overall economy is healthier when there's a healthy home buyer market. We know that's true of rental housing as well. The rental market does better in terms of demand and rent growth when the home sale market is healthy. There's plenty of data to show that contrary to popular opinion. I've talked about that a lot on this podcast. The Treasury Secretary said the timeline for such an executive order would be this fall. Technically I looked this up. The fall starts on September 22nd. So I don't know if bessant meant that to. Meant Fall, like literally. Maybe it could be sooner. I'm sure we could all forgive him if executive order beats the official start of fall by a couple weeks. Hopefully that's the case. We'll see. But I think this will be interesting to watch how this plays out and I also think it's going to be very interesting to see what type of opposition unites around it because it's not going to be your typical party line split. You're going to have NIMBYs, the not in my backyard folks on both the left and the right coming out against it. And on the support side, depending on what the executive order includes, you could have YIMBYs from the progressive side. And really the progressive side has really led the YIMBY movement. And this has the potential to be, you know, the, you know, highest.
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We talk about elevated, you know, elevations.
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With the Mount Everest. I mean, this could be the highest elevated moment for the Y movement, again, depending on what comes out in this executive order. So you could see this kind of awkward alliance between progressive YIMBYs and the MAGA movement all uniting around potentially, again, we don't know the details yet. Potentially uniting around a pro housing, pro housing plan. So we'll see. But this is going to get interesting.
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And it's good to see the White.
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House tackling this issue and I'm very eager to see where this one goes. All right, next headline comes from the Seattle Times. Why thousands of Seattle's affordable housing apartments became vacant. All right, there's a lengthy article written by the homelessness beat reporter for the Seattle Times. And, and it's interesting.
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It was, it was a, it was a thorough story.
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Let me read a little bit from this.
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It says, sure, there were issues at.
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The Tai Bing apartments in Little Saigon. Saigon, sorry pronunciations here. Little Saigon where Laura Freeman and her partner to live through the pandemic. But the rent for their apartment, which is capped to be affordable, was hard to pass up. Only when their landlord raised rent in 2023 did they decide to shop around. And to their surprise, they found market rate options that didn't cost much more. So Freeman and her partner moved out along with many of their neighbors. Publicly funded housing isn't always that good of a deal these days. A studio that was listed in June at the same property was 1546 per month. Quite across the street, a similar sized unit, I'm paraphrasing here, lease for 200 less and didn't require the extra paperwork that subsidized housing does. That'll be like the income verification process. Over the past decade, the publicly funded housing sector turned out apartments that met government definitions of affordability but were getting increasingly expensive. And by the way, quick pause there, that's true, but also very deceptive. The government defined affordability as based on percent of area median income. And, and so it's becoming more expensive because wages are getting going up. Okay, it's not getting more expensive for other reasons. It's strictly due to wages going higher. And so keep reading. People still flock to them through the 2010s because private market rents were skyrocketing, pricing out renters. But the market has let up recent years, surprisingly. Affordable housing sector. What should be cause for celebration is now an awkward problem as cheaper rents undercut the housing taxpayers that, that the housing, that housing, excuse me, undercut the housing that taxpayers helped build. Okay, so articles like this make me nervous and I've seen a few of them now because it's so easy to take a point in time, data point and rush to a very wrong and dangerously wrong conclusion about the need for tax subsidized affordable housing. So here's the thing. In some of these higher supplied markets like Seattle, as I mentioned earlier, wages are outpacing rents. And by the way, this article like most, fails to note that the root, that, that issue, that wage is growing faster than rents is really what's the cause of this math problem here. So market rate rents have fallen to a level that often compete with true affordable housing where the rents are usually capped, you know, somewhere around 60% of the area median income. And so really like this is certainly an issue, but it's also I think somewhat of a, from a public policy standpoint, it's, it's, it should be cause for, for, for celebration. The fact that we've built so much that now even market rate units are available to people who are making 60, 70, 80% of AMI. That's a good thing, right? It should not be used to then say hey, we don't need this, this tax credit. And that's, that's not what this article is directly saying, but it certainly implies that. And I think my concern is people, they see that affordable is competing with market rate and they say hey, we don't need more affordable or these units are not affordable enough. We're seeing that a lot now. There's a paper in Texas that's been on this drum, drum beat and I think really naively missing the point here, but really the supply success story and what's really happening so there in some cases saying hey, these units should be 65 to 30% of AMI instead of 60%. But then you're going to have less built because those projects aren't going to pencil out without substantially more public, public support and public funding. So let's not forget the difference between affordable housing and market rate housing is critical. I mean, first of all, the affordable housing owner could operate at these affordable rent levels because of the subsidy. The market rate owner that now has rents at these levels, they're probably being challenged by today's environment of expensive debt and flat to falling rents and of course their operating expenses as well. So when the market's weak, construction is going to slow down as a response and then when it does slow down, the market rate rents will rebound and the gap to affordable rents will widen. And, but the key thing here is that affordable housing is going to be locked in at that 60% or whatever percent of AMI that it's at. It's not going to, it's not going to outpace wages. So affordable housing will always be rent capped to a certain percent of area median income thanks to the subsidies that fund those caps, whereas market rate rentals will not. So again, a moment in time, a point in time data point, does not tell the whole story. You got to evaluate these rent gaps over cycles, not at any one point in time to measure its impact. Market rate supply, for better or worse, it's always going to be cyclical, which is why it's incredibly important to keep the foot on the pedal for affordable housing production. All right, all right, so next up, new digs. Okay, so speaking of the need for housing, and we've not done this segment in a while, new digs. For those of you who have more recently joined the podcast, this is where we like to highlight a particular apartment project that's interesting. Okay, and so talking about the need for housing, you know, we've been picking on L A earlier in today's program and I've picked on L A a lot for its anti housing policies, but I want to give some credit where credit is due. So a shout out to LA and to the GPI companies for the construction of the Overland and Ayers apartments. What makes this one interesting is that it's built on the site of a former Macy's parking garage at the once famous west side Pavilion Mall. So I'm going to read a snippet of what the LA Times wrote about this because it is pretty interesting. It says, built on the site of California's first drive in movie theater, the center played prominent roles in the 1995 film Clueless and the video for musician Tom Petty's 1989 hit Free Fallen. Okay, so that gets all the. If you're a geriatric millennial like me or, or a Gen Xer and babe boomers as well, you'll certainly appreciate those references. All right, back to the article. It says, but like many other indoor malls, the Westside Pavilion fell out of favor in the 21st century before closing in 2019 to be converted to offices for rent. Now the Formal also has housing on a spot once occupied, what the developer called an absolutely horrible obsolete parking structure. There are now 201 luxury apartments, a six story complex that includes townhouses with front doors open onto a residential street. And by the way, this project's got some incredible amenities. A gym with a resort style pool deck and spa, outdoor lawn, a sauna, a cold plunge tub. There you go. Rooftop space with both indoor and outdoor lounging, dining areas, gas grills, game room, not one, but two event kitchens, dog park and a pet spa. Pets need more than a part now. Need a spa too. And for additional fees, you could also access personal training, private yoga instruction, dry cleaning, pickup, car washing, dog walking, grocery delivery, and housekeeping. Rents range from $300 per month for a studio to 8,500 per month for a townhouse. All right, so that's definitely class A plus stuff. But hey, we need housing of all types. Has a downright impact on rents as we're seeing in places like Seattle. And Mark I mentioned earlier, so congrats to la. Good stuff.
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All right, let's circle back to this.
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Week'S rental housing trivia question. Again. It was what incorporated town has the highest elevation in North America? And I told you, it's in Colorado. And they do have apartments. The answer is Alma, Colorado, elevation 10,578ft. And they do have a couple of small apartment buildings out there. And by small, they do mean small. From the street view, these look like a, you know, a triplex or quadplex type properties. The cheapest rent I could find listed was $1300 for a studio apartment. The listing describes it as having a large covered entrance, access to a shared laundry room on site, a wood burning stove. Hey, that LA property that has no wood burning stoves. That's a, that's, that's a real differentiator and efficiency kitchen, inclusive of fridge, toaster oven and a two burner cooktop. So there you go. I like that wood burning stove. That's, that's some charm right there. All right, so as high up as Alma, Colorado is, The peak of Mount Everest is almost three times higher, 2932ft up there to be exact. And that's where Matt Ferrari was not too long ago, on the top of the highest mountain in the world. You know, over the summer, most of us laying on, layering on sunscreen, going to the beach or the pool, Matt Ferrari was layering on snow gear. So we're going to talk to Matt about his trip to Mount Everest. And again, I mentioned this earlier, you're going to be amazed not just by the, by the hike itself, the climb itself, but by the incredibly lengthy training that he did in advance. He's going to be talking about these day long treadmill workouts, sleeping inside some weird chamber to train his breathing for high elevation. And so he's become, I think, one of just the 7,000 or so people in the world to summit Mount Everest. And in addition to that great accomplishment, Matt is also the co chief investment officer, head of acquisitions ahead of east coast operations at True America. But most importantly, which, if you know Matt, you might not know that Matt is also a member of the Skidmore College Athletics hall of Fame. He led the Skidmore Thoroughbreds baseball team to the NCA NCAA Division 3 tournament in 2005 before ultimately hanging up his cleats to make the natural transition into multi family housing. So he's a titles and many accomplishments. But we'll talk to Matt about his trip and then in the latter part of today's conversation, we'll take a hard pivot into Matt's thoughts about the current state of the acquisitions market.
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And by the way, if you are.
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Watching this on YouTube or any video version of the podcast, Matt has been gracious enough to share some pictures, photos of and video of, of his preparation and the climb. And so definitely check those out if you, if, if you're, if you're listening to the podcast, definitely check it out on the, the video version as well because there's some really cool pictures to kind of see what Matt was doing. All right, so let's jump into it. Here's our conversation with Matt Foreign.
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Welcome to the interview portion of today's podcast and I am thrilled to be joined in studio by the pride of.
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The Skidmore College baseball team, Matt Ferrari.
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Also multifamily executive, True America.
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So Matt, thanks for being here.
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Thanks for having me, Jay. It's great to be here in Dallas today.
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All right, so obviously we were joking earlier. A lot of people have bought and sold apartments, but not many hill multifamily have, have, have climbed to the top of Mount Everest. So you just did that in May?
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Yep.
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So first of all, how'd you get into mountaineering?
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So, you know, I actually first kind of got intrigued by mountaineering in it must have been like 2012 or 13. I was on a vacation, and when I was living in D.C. in Bethany beach at one of my buddies places, and on the bookshelf was a book called Into Thin Air by Jon Krakauer. And that book is about the 1996 Everest disaster on the south side, where a whole bunch of people end up not living. And it was really when guiding Everest became like an actual commercialization of it. So I read that book, never thought, oh, I want to climb Everest, because to me it just seemed impossible and nothing that I could ever fathom doing. But I was just intrigued by the idea of being in the mountains. And so in 2014, I went to climb Mount Kilimanjaro, which is one of the Seven Summits, 19,347ft. But it's really just high altitude trucking did that, you know, got to the top of Africa, and from there was traveling with some friends, some other kind of lesser developed countries. We climbed a volcano in Chile. We climbed a tall mountain, Bolivia. But I was really climbing, like in ski clothes and not knowing what I was doing and suffering immense. I went to Russia in 2018 with a buddy and we signed up with a local Russian guy to climb Mount Elbrus, which is another seven summit, the tallest mountain in Europe. Went up in a huge storm. At the time, it felt like a huge storm to me. I think looking back, maybe it wasn't as bad. A bunch of teams turning around. We kept going. We summit. I'm going out there, I'm like, I'm never doing this again. Um, and then on the way down, I'm like, that was amazing, but I really need to like, do this the right and safe way. And the previous year, I had been following a gentleman by the name of Adrian Bollinger and his climbing partner Corey Richards on Snapchat. And they were climbing Everest without oxygen. And they called it Snapchat, no filter. So this is like early social media days in a way where like you get so super slow wi fi or Internet on Everest. And so I had discovered Alpenglow expeditions that Adrian runs. And so I immediately went home and I booked their Mexico climbing school, climbed the first and third tallest mountains in Mexico, Pico de Orizaba and Ixta, in 2018, and kind of learned the right Way to do it. Got some of the right gear. In 2021 I went to Ecuador and climbed Cotopaxi, which is the second tallest mountain in Ecuador. And then early 23 really got into it. Sign up to climb Aconcagua with them, which is the tallest mountain in South America. One of the seven summits. Actually had to turn around 200 meters from the summit due to the storm coming in snow that summer. In 23 this coincides when like deal volume started trending down.
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Yeah.
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So started getting more into the training. Signed up to climb peak Lenin in Kyrgyzstan. Another 7,000 meter peak. Got turned around 50ft from the summit. So two like heartbreakers.
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What?
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That's got to be miserable.
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Horrible.
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Especially like we had a few teammates get get sick on peak Lennon. We tried to go from Camp 3 instead of Camp 4. The wind was crazy. You're on the mountain for two weeks to like not get there. But I think that motivated me more be like, all right, I'm going to come back and like do another mountain and even get better with the training. Professionalize the training. Hired a a virtual coach in Shamani through a company called Uphill Athlete Martin Zor who then became my virtual endurance coach. I had a personal trainer and from there I just started hitting off more mountains. Climbed Cayambe in Ecuador in January of 24, the third tallest mountain. And then from there I signed up actually last year to climb a mountain next to Everest called Lock P. And that mountain is a 7,000 meter peak. I like not reach 7,000 meters. That was like my big goal. And that mountains in Tibet or in China. And Alpenglow offered that as like hey, you come to Everest, you use Everest Advanced Base Camp and you go climb Lockbury. Well at the last minute, first year China's opened up Tibet to climbing since COVID They said all right, we're not giving you permits to climb Lockbury, but you can climb to Camp 1.
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Okay.
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So that was going to be like my 2ish week summit. So I climbed to Camp 1 or what's called the North Coal, which is a really cool kind of glacier climb up a pretty steep snow slope. Finally checked the box of 7,000 meters. Came back down ecstatic. And I just thought like I saw the team going to the summit. I'm like, if they can do it, like why can't I? Like again, it always seemed impossible. But you start hanging around all these people who are like in that world climbing these big mountains and you start to realize like anything else, like you hang out with people Doing that like I could do it too. So signed up to join Alpenglow's open enrollment team last fall. Went back to Ecuador, climbed the fourth tallest mountain there, working with my virtual coach as well as my strength trainer in Miami, and then went and climbed the tallest mountain in Ecuador a week before I left for Everest in the end of April of this year. Then left April 25, reached the summit May 27 at 6:51 in the morning. Catman do time. We got home June 2. So it was unbelievable experience.
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So is that typical? You want to climb another mountain first just to acclimate your body ahead of time?
- [32:05]
C
I don't know if it was typical. So I think one of the things that we do with Alpenglow that not every guide company does. And it's why we're able to Summit Everest in 30, 35 days. A normal Everest. And we were also on the north side into that. A normal Everest trip on the south side would be 60 days because you would hike through the Kumbu Valley, then eventually get to base Camp and you have to acclimatize. So what we actually do with Alpenglow, which has allowed me to climb some of these mountains in 48 or 60 hours going to 20,000ft is we pre at home in what's called a hypoxic tent.
- [32:42]
B
Okay.
- [32:42]
C
So it's actually a machine that connects to a tube and there's a tent that goes over your head. My girlfriend relegates me to the guest room because it's a little noisy. And you can set the amount.
- [32:53]
A
Can't imagine why.
- [32:54]
C
Yeah, you can set the amount of oxygen to a certain level. And so you'll start out sleeping at 5,000ft. And you know, for a 20,018 to 20,000 foot climb, you'll sleep in this for four weeks and by the time you leave you're sleeping at like 16 to 18,000ft. The sleep gets pretty miserable. For Everest, we had to sleep in this for two months. So I actually ratcheted down. I started an extra two weeks early knowing I have to travel a lot for work. And so I would maybe miss one day a week and for call it 10 weeks. Slept in this hypoxic tent which basically got me pumped up with red blood cells which enabled us to, enabled me to go to Ecuador and climb Chimborazo 20,500ft in 60 hours that way. I was also sleeping at like 17 5. Just I wanted to make sure I was ready to go on Everest. Came back that weekend, waited a week and then left. I don't think everyone does that. But for me, with Ecuador being so close to Miami, like, why not? I wanted to make sure I was. Yeah, that, you know, every did everything I could within my control to have a successful Everest trip.
- [34:01]
A
All right, so since most of us will never be able to relate to this, tell us a little more about the prep for this experience. You mentioned the sleeping arrangements, the, the personal trainer, the virtual trainer. Like, when did this. Like what, what? Tell us a little about this whole process of prepping your body.
- [34:17]
C
So years ago, one of my buddies from college one day just gave me a book called Training for the New Alpinism by two famous, you know, endurance athletes for the mountains. So when I first signed up for Akankaga, I read that book and I was using the stairmat again. I live at sea level in Miami, so I have no mountains. So it's a lot of specific training. Stairmaster, what we call zone two Cardio. So super long duration, high volume to simulate, sim simulate the mountains. Because in the mountains you're never trying to move really, really fast at a high speed. You're trying to go for a really long time at a moderate speed. And that's really staying mostly in your zone 2 heart rate. After I had done a few mounds in 2023, I then got the virtual coach, Martin and Shamani, where all my training data gets loaded through my watch or our armband into a software called Training Peaks. He then would set training blocks based on my goals. Like, are you going to do four hours on the StairMaster on a Saturday with a backpack on? And then two hours. Your strength training would adjust during the based on the time of year. But all my heart rate data would load up to the software. And then he would analyze it and adjust my training based on how close or far from an expedition we were, or if I was sleeping in the hypoxic tent, you kind of have to taper. And there was these different blocks as I'm prepping for Everest to kind of prepare me. So you're at peak conditioning for when you leave. The downside for me is being in Miami. I was doing a lot of gym. StairMaster training versus being in the mountains. The benefit of being in Miami is Ecuador has amazing climbing. So as I mentioned, I went down there, I could do a four hour flight to Ecuador, be on a 19 to 20,000 foot mountain in a weekend and be home. So that was getting me my kind of on mountain training. Plus I spent a week in Chamonix last summer doing Some rock climbing, ridge climbing and you know, all that experience combined prepared me for the big one.
- [36:13]
B
Yeah, yeah.
- [36:14]
A
So, so you just, just to paint this picture for those. We talked with this earlier. You're at the, at the 1 Hotel in Miami Beach. Beautiful location.
- [36:22]
B
Yeah.
- [36:22]
A
People are coming in and out and they just see you trudging away hour after hour. The backpack on the StairMaster, their rails having fun. You're just working.
- [36:32]
C
Yeah. So we, they have a beach club membership that lets you like use the hotel if you live there. And they have like the biggest hotel gym in the country.
- [36:40]
B
Yeah.
- [36:41]
A
So beautiful gym.
- [36:42]
C
Yeah. So I show up in sometimes even in my mountain yearing boots to break the. Break them in with a weighted backpack or ankle weights, a bag of food, a ton of water. The machine stops every hour. So every hour you stop it for like just restart it. And there's times I would, you know, during the week maybe an hour to 90 minutes. But on the weekends leading up big days and big back to back days. So the biggest I did was like a six hour Saturday follow up with a four hour on Sunday, maybe a bike ride or my peloton with my hypoxic mask on. On a Monday, lift legs hard, Tuesday like a easy recovery run. Wednesday intervals on the StairMaster. Thursday, lift upper body Friday and just repeat.
- [37:24]
A
People just look at you like, like who is this guy?
- [37:28]
C
What would be funny is you'd have people walk in at like 10 o' clock to go to the beach and then I'd still be on it at 3 o' clock and they would like look at me and they'd start whispering like to the person they're with and you knew that they were kind of talking about some people like hey, what are you training for? And then I would tell them and then of course they're super intrigued and wishing me luck. Like there's a whole, a little bit of a kind of like cheer club at the gym for me. They all kind of knew I was, that's good. I was doing this. But the interesting thing is traveling for work even before sleeping my poxic 10. I stay at all Marriotts. Just you know, you got to get the points you're going to travel in the business. And I'd be scrolling on all their, you know, websites from the app to see like which hotel gym had a StairMaster.
- [38:10]
A
Yeah.
- [38:11]
C
And like I was trying to pick my hotel based on that. If it didn't, you could do like an incline treadmill and walk on it. But like my whole kind of travel program Would, would work on this or like when I go to LA to see Bob and the team, I'd go to his gym with him and I'd be on the StairMaster with a backpack. And you know, his, you know, people who know at the gym are like, Bob, who are you bringing to this gym here? We. What are you doing? So it was, I mean it really became a process that I fell in love with. Is kind of boring as it sounds. And I think you kind of have to love the process to be successful in anything. And I fell in love with it is kind of monotonous as it could be at times.
- [38:47]
A
Yeah. However you do, you got to love the process. I like that. So, so just to give the people listening and me a sense of this. If you were just doing, if you're just a normal gym rat, just, just working out, doing the normal stuff. Do you have any chance of, of, of summiting Mount Everest?
- [39:02]
C
I think you do. I think some people might just be able like look, the rally for training for anything like this is you can suffer a little bit in increments so you don't suffer as much when you go to do it or you can not train and try to do it and maybe suffer a ton. So I think, look, if you have someone who is in good physical condition with a, a decent amount of endurance, could they do it? Yes. I think the bigger part would be you need the endurance to do it. Then do you have experience at altitude and how your body responds to that? Then can you sleep in a tent for 30 days with a wide variety of temperatures, Wind, you know, base camp and advanced pace camp are pretty comfortable. But going to sleep in freezing cold temperatures and like all these clothes, you at altitude you have to urinate a lot more. So like you always keep a bottle in your tent next to you. The bathroom tent to go back to the bathroom is like in the dark, 30ft away. We're at 21,000ft. It's kind of exhausting just to walk there and then you're moving and then you're resting, then you're thinking about what's going to happen. But I think the most difficult part for people would be, you know, climbing to Camp 1 on a Super steep snow slope, hanging, you know, a 300 foot pitch, pretty straight with your crampons and like being comfortable hanging from the rope, entrusting your equipment or walking across a ladder across a crevasse or on summit night, the first, second and third step, steep rock with boots on, with metal spikes on your crampons. Climbing up the rope, just being comfortable and not panicking, knowing that like you're hanging there and if you unhook from the rope and fell, you're falling 4,000ft. Like I think the experience of the mountains is the biggest thing someone would need to, to get.
- [40:45]
B
Yeah. Not everyone's up for that, but I think so.
- [40:47]
C
I think like, I don't know, maybe I have a rosy R V mirror in the time it was super painful and hard to do. But like I think it's more doable than people think. And it's no different than when I attempted to do it like or first read that book. I thought, oh, this is impossible. I'll never be able to do this. And then like anything else, you start doing it in increments and what seemed impossible becomes possible.
- [41:09]
A
So take us to the mountain. Like what you mentioned was three days in the tent.
- [41:14]
C
Let's say I left April 25th. You got to get across the Tibetan plateau. We meet in China, so it's probably on the mountain for 28 days. One day on our accolonization rest, we went down to town and shot her up in Tashi Zan. Which was like amazing. When you've been on the mountain for a few weeks, but call it 28 days on the mountain and then travel time to and from base camp, which on the north side of Everest, you can drive straight to base camp. It's not like the south side where you either heli in or have to hike truck in.
- [41:43]
A
So those, those, those nights on the mountain, those days, like what, what does a day to day look like when you're up there?
- [41:48]
C
Yeah. So you get to base camp at 17,000ft. You have a pretty nice big box tent with a, like a mattress on a bed frame with a little desk. And you have 5G cell service. A big dining tent gets cold at night. There is a shower. Not running water for a bathroom. First couple days you're just kind of, once you get there, just walking around, like maybe a long walk. Eventually we did some acclimatization hikes to like 19,000ft. You're eating good food, you're hanging out. We have great cooks. I mean, there's an espresso machine in the dining tent. I mean there was a bar with alcohol if you wanted to drink. I chose not to because alcohol at altitude's not too much fun setting you up for success. Exactly. But some people, you know, to each their own. Some people are good at doing that. And you're kind of doing acclimatization hikes we did one day of rope practice on some rocks. So like just using your jumar, which is a thing that goes on the rope and hooking, clipping in and out of the ropes, you can be comfortable doing that tested like using our oxygen systems. We got comfortable with that after maybe five days. We said, okay, we're now going to move to advanced base campers at 21,000ft. We do that in two days. The first time sleep at 19K in a very basic like normal tent. You'd think of with a small dining tent and then get to 21 ABC with a big dining tent. But now you're in kind of a normal, you get a three person tent to yourself. I think there you spend a lot of time in 21,000ft high to just be hanging out at rest up a few days, just chill again. You need to build up red blood cells. That's where it got pretty exhausting and kind of grueling. And then you're waiting to do your accomization rotation to 23k. Everything is just hard there. Like I can remember late afternoon it starts to get cloudy and cold. Mornings were a little sunny where like you maybe are in a fleece and in your soft shell pants, but then you're putting on your big, you know, summit parka and things like that. I just remember like, all right, if I'm going to the dining tent at 5, the guys would do a guys meeting at 5. Most of the clients would get into the dining tent. Didn't be at like 6 or 6:30. Like you brought everything you needed to the tent. So you brought all your water bottles. You want to fill them up with hot water because you're going to put them in your sleeping bag. You're going to bring your toothbrush. You don't have to go walk the 25ft to your tent to get that. You're going to have your headlamp, layers, anything you might want to eat or drink that they don't have. And then you're going to probably be in the dining tent from 5 to 8:30 or 9. We'd play like liars, dice and games. After dinner, brush your teeth up there at the sink and then you want to get in your sleeping bag and like you don't leave your tent till the sun comes out. So if you have to go to the bathroom like you're going in, you know a, a, a pee bottle, everyone has one. You don't want to get out at 2 in the morning. It might be windy, like you're going to totally ruin your sleep. But you have to go to the bathroom a lot. And so, like, everyone ends up, you know, kind of a running joke in camp. Like, you know, I was moving from camp to camp with, like, my pee bottle in my backpack. Like, you got to have a pee bottle.
- [44:45]
A
How many people are in these camps?
- [44:47]
C
So our team was initially, we had five clients in what we called the open enrollment team with two guys. So that was my team. Then there was four private clients with a one to one guide ratio. And then there was probably 15 sherpa setting up all the camps, moving everything up and down the mountain. And then our, like, Tibetan cook staff, wait staff, helping with the camps and cooking and stuff. And then you're using these big, these yaks to take gear from base camp from basic. I mean, thousands of pounds of equipment, oxygen bottles and whatnot. Few clients didn't end up making it. Had to drop out, got ill. One guy had a work thing. So we were down to five clients. Six clients on the summit push of nine.
- [45:37]
B
Wow.
- [45:38]
C
And then five ended up making it. So if it's a big. And then there's four other teams on the north side that had other camps near us.
- [45:46]
B
Yeah. So.
- [45:47]
A
So you're weeding out process along the way.
- [45:50]
B
Yeah.
- [45:50]
A
What was the scariest moment from this, from when you're going up the mountain?
- [45:54]
C
So I was pretty comfortable, like, with all the ropes and the technical climbing at this point, just because I had, you know, had a lot of experience that actually during our summit push, so we get to Camp 3 or Camp 1, we sleep there with no oxygen. Most miserable night. Like, I'm like, why am I doing this? I'm cold. It's hard to breathe, hard to eat. But then the sun comes out. Like, this is amazing. We come back down now. This is like mid May. And at that point, our guides have a Swiss forest cast that says there's going to be a really amazing weather window at the very end of the season. Like May 26th or 27th. So right around Memorial Day. So now we go all the way down to camp. We rest up, and then we're going on the summit push. So the summit push was like, late, you know, early 20s, maybe 24th, we left ABC to go to base to Camp 1. And then 25th, we go C1 to C2. So C1's 23,000ft, C2's 25. So we're me and several clients in a guide are in one tent waiting as the Sherpa pack up some other tents to go get them the C3 before we get there. And it's time to do an oxygen bottle change. So I'd slept on a bottle of oxygen. You sleep on one liter flow. You move on four liter flow. We turn the O's on at when we get to Camp one. The second time to sleep. Best sleep I had on the trip. Once the oxygen went on, it was like a miracle how well it works. And plus we're super acclimatized, so we're moving. I changed my oxygen bottle. Not really thinking anything of it. We're joking around. Super windy day, like 40k kilo kilometer winds, but sunny and we're moving from. It was very windy. Going from C1 to C2. Now we're going C2 to C3. 45 minutes in, my heart starts racing. I get super hot and I'm like, what just happened? I slow down. I think I like bonked. I'm like, what is going on? The team's going ahead of me. One of my guides who I'd climb with like six, seven times, my buddy Tico from Ecuador. He looks down at me, he's like, what's wrong? I'm like, I don't know. He gets down, he's like, dude, what's wrong? He looks at my regulator, says I have 200 bars, but I'm like, wobbly. He's like, why are you so wobbly? I'm like, I don't know, dude, it must be the wind. He's like, what are you talking about? Like you crushed it yesterday in the wind. Like, what's wrong with you? I'm like, I don't know. There's a thing that attaches to your regulator here that it's got like a white dial. And if it's in between the two pieces, it means the air is flowing. So it's. Everything seems like it's fine with my oxygen. I try to move more. I'm like, dude, I got to sit down. I sit down. I was like, dude, you can't sit down. Like, we got to get moving. You can't move this slow. I'm starting to think the trip's over after all this hard work. I'm like, I must have bonked. Like I can't figure out what's happening. This thing tells me my oxygen is running finally after 15 minutes, like it's super. When he's yelling at me, sit down. I sit down again. He looks at my regulator. It says 00 bar. My oxygen is not flowing. So now I've been trying to move. See they Thought it was working because it said 200 bars. Well, when we did the bottle change in the tent, I must have not tightened it all the way. So I was moving from C2 to C3. It must have like still been flowing, but not all the way to my mask. And eventually that it kind of ran down and it said zero. He tightens it up. All of a sudden the air comes through. I'm like, hell yeah. Like I'm back. We're high fiving and I catch up with the team and we get to Camp 3, which is. You're now in the death zone, which is above 8,000 meters where if you're there without oxygen for extended period of time, like humans will eventually die. You just cannot survive there. So that was the scariest point because I thought the trip was over and I didn't know like what the heck happened.
- [49:38]
B
Yeah.
- [49:38]
C
And it was just like me. I must have been joking around with my friends and didn't tighten it enough. And next thing you know I'd almost.
- [49:46]
A
Yeah, that's scary.
- [49:47]
C
You know, ruined the trip. So they figured that out.
- [49:50]
A
I'm glad they figured it out.
- [49:51]
B
Yeah.
- [49:51]
A
Had a buddy who knew to how to help too.
- [49:54]
C
Was my guide. I mean he look, they looked. Eventually went down and I mean it just was weird because it wasn't flowing but it said it was. And then eventually it went to zero and they realized that we just got to tighten it up and I was back.
- [50:07]
B
Yeah.
- [50:07]
A
Well, we're glad you made it there.
- [50:09]
B
So. So.
- [50:10]
A
So you mentioned the death zone. Unfortunately people don't make it always. You was reading the article that you. The commercials I wrote. You're.
- [50:17]
B
You're unfortunately passing deceased bodies.
- [50:20]
A
Yes. What is that experience like? Does that just how much does that mess with your psyche? Yeah.
- [50:25]
C
So other than that oxygen scare that was on, I guess that was Monday. Going from C2 to C3. I felt better on the summit push than I did climbing the Camp one because I had the oxygen. Now you're sleeping better, now you're eating better. It was windy getting to Camp 3, but the guide said our Swiss forecast said the wind is going to die down to 0km, less than 5km an hour and we're going to have zero degree temperatures. Warm front move off the Bay of Bengal, over the summit jet stream pushed up north of Everest. So I'm pretty stoked and feeling really confident. One of the guys I got to Camp 3 told about my scare. One of the other guys is like Ferrari. I'm not saying you have this in the bag. But in my experience, you make it this far, you're making it to the top. So you start out at Camp 3, which is now 27, 000ft, and you're going up a pretty steep slope, but nothing crazy till you get to the top of the northeast ridge. And now you're walking up a ridge with three big steps. The first, second, and third. But before you get to the First Step, you get to a point called Mushroom Rock. And that's where we do our first bottle change. So we all had radios. We're radioing to our base camp manager how much bar we have in our tank, our oxygen bottle before we leave camp. We get there, we say how much we have left, change bottles. My sherpa had three bottles. Young lay, 15th summit. And I also have one of the guys around me. So we're about to get to Mushroom Rock to go around it, and one of our guides turns on and says, hey, just a heads up, don't freak out. We're going to do a bottle exchange. Behind here. There's a dead body. And in that moment, you're feeling. I was feeling very confident, but it was. And everything was going so well. But that was a reminder that, like, this is serious and you do not want to be the person that, like, for the next. How 50 years, like, it's laying there while other people do a bottle exchange. Like, it snapped in this. Like, this is for real. I think that was the first moment where it's like, other than my little oxygen scare, I'm like. Because everything was just going so well. Yeah, you didn't. It almost didn't feel like you were on Everest. You're like, I feel great. We've got great weather that kind of snaps some sense in us. Like, things can go bad and can be really.
- [52:44]
A
Gotta lock in.
- [52:44]
C
Yeah, exactly.
- [52:45]
A
Yeah. All right, then tell us about the final push and what was like to, you know, get to that point you've had a couple times, you've almost gotten to the summit of other mountains.
- [52:52]
B
Yeah.
- [52:53]
A
Didn't make it. So you're getting close. So tell us about the lead up and then getting to that top.
- [52:57]
C
So after that ball exchange, you then do the First Step, which is like a little rock, some rock climbing, and you're in crampons on a fixed rope on the rock. But then you have to do the Second Step. And the Second Step, everyone knows, is the most technical part of the north side of Everest. And this is the part where, to this day, we don't know in 1924, if George Mallory and Sandy Irvine summit it. They were last seen close up there, but no one knows if they ever made it. They've since found some of their bodies, but we don't know if they were the first summit, if really it was Hillary in 54. And so you've read all. We've read all these stories about the Second Step, where back then they're trying to, like, determine were they capable of climbing that. Today there's a ladder for the most technical part that you have to climb up. We get. And you again, you also, at that point, you walk by another body. So you're now on body number two. You get past the Second Step. And everyone had told me, like, the Third Step is not that hard. So at that point, you're like, okay, I've got past the hardest part. I've got this. We get to the Third Step, we do our final bottle exchange at the top of the Third Step, see the third body that we'll see on the summit push. And from there you can, like, really see the summit. So that. That point you're like, I've really got this. And the weather's great. It's a steep snow slope with a little traverse. Once you get above that kind of rocky traverse, it's just a walk up. And where you merge on the summit with the Southeast Ridge, where most of the people from Nepal. Nepal come. At that point, it's getting pretty emotional. One of my guys, Tico, who I climb with a ton, he's already up there with a client. He looks down at me and I, like, put my fist in the air, and he puts his fist in the air. And that's when, like, my. My eyes kind of welled up because I'm like, this is really happening. Yeah, because you're like, for 35 days, you're wondering if, like, will the weather be good? Will I feel well, like, is everything going to come together and then how much work you've put in? So you're taking those final steps, but it's like you're moving fairly slow. But I felt really good, like, you really, like, held those moments, like you didn't want them to end. You get there, I saw him, I gave him a big hug. We're all hanging out up there. There must have been, like 12 of us because there was other clients, other guys, other Sherpa, and a bunch of flags I had to get photos with. You've seen many of them.
- [55:11]
A
You got Skidmore, Buffalo Bills, True America.
- [55:14]
B
Yeah.
- [55:14]
C
And I had my buddy who's a Broker Will Matthews at Colliers. He gave me a little flag that said Thrill Matthews. I took a photo with him with that. And then you're hanging out in there, taking the photos. It goes by quick. I mean, we're probably up there 15 minutes a little cloudy, and then we started working way down. Then the clouds cleared like 10 minutes after we left. One of our guys actually flew a drone and got amazing drone footage of us like rappelling down. Because you from the that point, there's a party, you repel down. But when you're up there and you get there, like there's this emotion of it, but then you're like, I got to get down. It's almost. And. And it's five hours and 45 minutes to the summit. But now that's from Camp 3. We're going to go back to Camp 3, pack our stuff up, Camp 2 1, chill there for a little bit, and then get all the way down to advanced base camp. So it's another 12 hours down. And you realize going down, see, when you're going up, you're using a jamar. The jamar clips into the rope and can only go up. So as you're climbing steep part. And then you have a carabiner as well. So when you get to a knot and the rope or an anchor, you unhook the carabiner, put on the other side of the anchor. Now if you fall when you uncle the jamar, you just hang there, then you put the jamar in. The problem is going down. So you could be climbing something super steep and be tired and just literally hang there. If you trust your equipment, you've done this enough, you're like, it's not a big deal. Well, on the way down, you don't use a jamar. You just have two carabiners on it again, one for redundancy when you're going over the knot. So if you're going on a pretty steep spot that's not steep enough to repel, where you're kind of repelling down the mountain, where you're just arm wrapping. If you were to slip and fall, you'd theoretically fall all the way down to the next anchor. Whereas the Jamal, you can't really fall if you're clipped in. And now you're a little more tired and you got 12 hours going down. So going down in a way is more dangerous than going up and you're more tired. So that's where like, wait a minute, I'm on the summit. This is amazing. But like, we still Have a huge day left. We're going to get back to advanced base camp when it's dark out. So then you, like, you enjoy the moment, but, like, you still got to go by the bodies. You just got to do the technical parts. Go down the second step, which was almost more uncomfortable than going up it, because now we're trying to go down a ladder with your crampons on, with all these tangled ropes, so that, like, you had this moments of joy, but you're like, this is not over.
- [57:31]
A
Back to work again.
- [57:32]
C
Exactly. So.
- [57:34]
A
So that. And then I imagine once you finally get down there, it's got to feel pretty good. You made it.
- [57:40]
C
So you. We could. You could stay at Camp 1, but everyone wanted to get to ABC. And then you get down there and, like, that's when you have your first drink. You're like, all right. Like, there were some whiskey and some beers. Like, now I can celebrate because we're gonna rest there for a day, then go down to base camp and head straight to town and work across the pen plateau. So from there, everyone's celebrating. We did a big celebration with our Sherpa the second day, because they were about. They still have to get everything down the mountain. I mean, they're the unsung heroes. Those guys are just machines.
- [58:11]
A
Yeah.
- [58:11]
C
What they can do, I mean, it's remarkable. And my Sherpa did his 15th summit. So I joke in the phone. I'm like, There's 16 summits in this photo. Me and Young LA. Our exhibition leader, Adrian. It was his 10th summit as a guide. Our Sadar, the head Sherpa, I think, was his 21st summit. So we do a big celebration with them. Big tradition then. And then you just like, I want to get home.
- [58:33]
B
Yeah, sure.
- [58:33]
C
Because you're just like, you've been on this mountain for forever. You, like, just get into the comforts of, you know, a hotel room and just, like, savor. Look back at it. Savor the moments.
- [58:44]
A
Yeah. And the. And the air conditioning or heat and food, running water, all the other things.
- [58:49]
C
Warm shower. Like, you learn to really appreciate those things after being in a Mountain for 35 days.
- [58:56]
B
I'd appreciate for one day.
- [58:58]
A
So. So after you've done, you know, the mountain, like, is there anything next for you?
- [59:02]
C
You know, it's so funny. You get back. There's a. There's a blogger for Everest. His name's Alan Arnett. He's like the blogger that tracks everything going on in the Himalayas in the spring. And his final Everest blog post, he's summoned at Everest summed K2. But he's failed on these mountains. And he, this blog post he puts up every year, it's like, okay, you summit and you're successful. You summit and you're not successful, but it's not your fault, like whether whatever you summit is your fault and the emotions that go through it. And there's kind of like this emptiness for a few weeks after. We're like, you've achieved this unbelievable goal. You come back, everyone's like, hey, I'll buy you a beer. And they ask you this question, what's next? And you're like, what's next? Like, I don't even want to think about that. And then a few weeks go by. I remember sitting in my office the Tuesday I got back. So it's June 4th, and I look out my window. I'm like, a week ago I was staying on the tallest mountain in the world. And now I'm like looking at spreadsheets and my, my team in Miami is like, you're super chill and relaxed, Matt. Like, this is not like him. Like, everything will be fine. And then like, things snap back and you're back to reality. But I think from a mountaineering perspective, my girlfriend's like, all right, you slept in this thing for two months. You had a ton of mountains. Like, no more climbing for the rest of the year. I think over the medium term, I would like to finish the seven Summits, so go back to Akankagua, get down to Antarctica and do Vincent. Eventually Denali and the Cartha Pyramid in Papua New Guinea. Probably learn a little more technical rock climbing. Like I've done rock climbing, but I'm not a rock climber. Only in the sense that I would find it fun to like climb Mount Canyon, which has an 1800 foot pitch of tactical climbing, or like the Matterhorn, maybe do things like that. I don't see myself doing another Himalayan expedition in the medium term. Only because it like you need three, four, five weeks. It's just a lot of time. Would I ever go back to an 8,000 meter peak? Maybe someday. But I think more trips where it's like a couple days. I really like the. I was a baseball player. I've never had. I've never been an endurance athlete. Now I've built up this fitness that like, I don't want to lose. I signed up to run a half marathon October. I've never been a runner. Just like maintain the fitness. But that's probably what I'll do over time. We were in Colorado last week. We Hiked the tallest mountain to Colorado. Those half the, half the height of Everest, but Mount Albert.
- [61:16]
A
Yeah.
- [61:16]
C
You know, do things like that.
- [61:17]
A
Yeah, that was probably like nothing.
- [61:19]
C
Yeah, it was a little bit of a walk in the park, but it was still like, by the way, you still get to the stomach like, oh, I accomplished something. Took a photo and waltz down.
- [61:28]
A
All right, so let's transition to your, your day job.
- [61:31]
B
Yeah.
- [61:31]
A
And definitely less exciting, but still. Well, I mean, it's, it is what.
- [61:37]
B
It is right now.
- [61:37]
A
It's slow but true. America. I mean, you guys are one of the few, I would say, active buyers in the market today. You know, obviously we hear, I'm just for the sake of our listeners as context, obviously, you know this. Well, we hear from a lot of groups that they're unable to buy much because they have so many LPs who are tied into existing deals. They want to be able to cycle capital, they want to place new capital. So they're kind of frozen.
- [61:58]
B
How have you guys been able to work around that challenge, just stay active and access new capital?
- [62:03]
C
Yes, I mean, we have a variety of investment vehicles. We have our discretionary fund, so we have money there. We have some separate accounts that is for kind of, you know, core, core plus that doesn't compete with our workforce housing fund. And we have some JV partners for some markets that, you know, we also work with. So I think we have a wide spectrum of capital that is chasing a wide spectrum of returns. I think taking a step back, I think buying and investing in apartments today is like the most exciting time to be an apartment investor since like 2010. And I say that because, look, if you bought coming out of the gfc, like buying early was scary back then, no doubt. But you know, after 2015 when everything seemed pretty normal, like everything you bought, the rent growth was better than you thought it would be and the cap rates went down.
- [62:53]
B
Yeah.
- [62:54]
C
So you. It wasn't really easy to differentiate yourself as an operator, more an investor. Today there's a variety of mismanaged deals over lever deals, syndicators who got in the business that didn't know how to operate, they were better capital raisers than they were operators. If you look at where cap rates are around the country, depending on the submarket, the market, the vintage, the broker, whoever might be, you see cap rates all over the place. So like there's real arbitrage. If you're underwriting and making these markets up. Underwriting a deal in Dallas and Orlando and like, well, the Dallas is trading at a low Five and the Orlando is trading at high five. Like there's a real arbitrage there. If there's a deal that's like the expenses are out of whack or the oxy is really low because maybe the lender owns the deal. So I think in that regard, like it's really exciting to be sifting through all this. Not every cap rate is made equal today. Not every deal is created equal. So I think from there, look, most of what you underwrite is operated pretty well but you actually can find some mismanagement and then you have to have a view on which sub markets and markets will kind of grow first and get back to rent growth first or outgrow others. And then cap rates seem all over the place. Like if you look at the cap rate differential from a core deal, like what we'll say four and a half to five and an 80s value add deal in the Sunbelt, call it five and a half to six and a quarter. Like the six to six and a quarter of 80s value add deal and the four and a half brand new. When was the last time the gap in cap rate was that big on those? And then what are you capping? You know, people's insurance numbers are all over the place. People's controllables are all over the place. Is there a loss to lease? Is there a gain to lease? That means now you have to be like a real investor.
- [64:43]
B
Yeah.
- [64:43]
C
To figure out what's going to make money and what's not. Like that's exciting. You can differentiate yourself for better or worse and whether.
- [64:50]
A
So one of the, as you know, a lot of capital has been, you.
- [64:53]
B
Know, this flight to quality.
- [64:54]
A
Sure. Pushing those cap rates down for the class A well located stuff. So because for a while as you know we had pretty tight spreads.
- [65:01]
B
So.
- [65:01]
A
So how much?
- [65:02]
C
No spread.
- [65:02]
A
Yeah, no spread. So that that drove a lot of money into new development, whatnot. So how much of a spread do.
- [65:07]
B
You do you need to justify that.
- [65:09]
A
80S stuff that a lot of buyers.
- [65:11]
B
Just don't want right now.
- [65:12]
C
I think it's funny, I was just at an event and people, we were debating this. I think number one, when you're honoring the cap rate on the very ide deal you got to look at like what's your cap rate net of capex? And you have to have a strong capital capex team to figure out that and do that at the right, right number and then which of those 80s deals need a lot versus a little or medium amount because not a little. So in that sense not the cap rate is not created equal. But I don't know, I think it's very doable these days to be finding. You know, the brokers won't say this because they always tell you when they sold a deal that the cap rate's really low. But when you're trying to buy the deal, the cap rates, that's high. Yeah, I know. It's just interesting how that all works out. But I think you could see 80s deals in the Sunbelt in some markets that can be a high five. I've seen some in the sixes. I don't know. That feels pretty good if it's not falling apart. Right. Versus a four and a half brand new deal that like has a great basis but the rents are going down. But I think. And then it just really comes down to the deal itself. Then is there some value you can create? So maybe there's a deal where the market thinks it's a 57 cap, but like we can do a little bit better on insurance, controllable, etc. Etc. And it's a six to me. Right. I mean there's, there are, you know, you can probably manufacture some cap rate on some deals, you know, depending on how you are as an operator. So we're looking for number one, do we just feel like there's good value on the buy? If that feels good, okay, that could be a reason to buy. And then can we implement, you know, renovations, institutional property management or technology or all of the above to then add additional value? So it's, you know, do you just feel like you're making a good cheap buy that could be a reason to buy? Or can we do some things to kind of manufacture yield?
- [67:04]
A
And so what is a, what is the profile of value add that works today relative to one at the peak in terms of, is it higher quality submarkets? Is it something that you're looking for in the rent roll, the amount of capex needed? I mean, is there any difference, I.
- [67:19]
C
Think on a value? I do, I think, you know, I think there was a period of time in 2120, early 22, where everyone was just like quartz countertops, stainless steel appliances, cabinet fronts, paint, and everyone's just blowing out every unit. Yeah, because everyone felt like they were getting paid in hindsight maybe like you're just getting great rent growth regardless. I. So I do think there's, you know, maybe some better ways to value engineer your renovations back to like this submarket maybe just needs a spray countertop. Right. Like, you know, it doesn't Need a quartz countertop or maybe the black appliances already there are fine here. We're going to do like. So I think there's more modest renovation plays that might make more sense today in a market where you don't know if your rents are going up as much. So whereas like there was that period of time where you just everyone spent, you know, five figures a door and put the nicest finishes in. Maybe we're back to how it was pre 2020where you need the right, you know, finish level for the asset in that submarket.
- [68:16]
A
But still, but, but similar your, your profile in terms of types of assets and locations. Some markets that hasn't changed really just the execution plan.
- [68:24]
B
Is that fair?
- [68:25]
C
I think so. And then again the deal itself, like is, is there some management story there? Because again like how often do you come across a property that was 85% occupied like before 2023?
- [68:37]
A
Yeah.
- [68:38]
C
I mean you see them now. Yeah, it's like, well, but the submarket's 94. Like what's going on? Well, it's a tougher operating environment. Maybe the manager, company managing ideals can't figure out staffing. You know, there's, there's so many reasons. Maybe they just don't have the right playbook. Right. So again I think it's like where can you manufacture value is what you want to be targeting?
- [69:00]
A
Is there a typical profile these deals that do pencil out? Is it, is it the operational issues as a distress among the current owner? What's the common threads that you see among deals that work?
- [69:13]
C
I don't think it's like look, if you look at the deals we've bought, we've bought 85 deals and seven 8 year old deals. And I've seen mismanagement across the spectrum of those where like, I mean we're buying a couple deals right now where the occupancy is in the low 80% and then the wholesale market is 90 something. Well there's nothing wrong with that real estate, there's something wrong with the operator or maybe it's someone who didn't intend to operate it because it's a lender. Right. So I think it's more of again everything. It really gets down to the specific asset, it's all about the specific property. And then ideally you're buying in markets and submarkets with tailwinds on the rent growth side and not headwinds. Doesn't mean you can't make money if there are, you know, headwinds. But you probably need more yield to do that. I think the other unique thing in today's market, you know, there's a gain to lease on some assets. And this is why it feels like cap rates can tighten up. If you don't have to underwrite a gain to lease on some deals that theoretically you should be able to pay a lower cap rate. So if we can get back to a point where we have new lease trade out being stronger in some of these markets, some markets are still very good. I think that will definitely create some value for current owners. That will then make them willing to sell and buyers will be willing to pay a little bit less tighter cap rate. Plus hey, some interest rate reductions would help too.
- [70:35]
B
Yeah.
- [70:36]
A
And so for those listening from the terms of gain to lease, that's your new leases are now below what your current renters are paying. So in that situation, that's probably a.
- [70:44]
B
Longer term operational return recovery period.
- [70:46]
A
Yeah.
- [70:47]
B
If you're buying the new leases. Yeah.
- [70:49]
C
And now look, you've talked about this. Retention is, tends is higher than typical. So maybe two thirds of your leases are renewing and one third are new. But it's the renewals are kind of maintaining where they are at least or maybe up a little bit and the new leases are down and you net out maybe a flat to slightly positive or slightly negative rent roll depending on the market and the asset.
- [71:11]
A
Now let's go back to the, on the capital side for a moment. When you're talking to your investors, how much, how much of a challenge is it to convince them? You know, hey, there's still some challenges in the short term, but the long term makes maybe a year one softness worth the worth worth the opportunity here is that, is that how do you overcome that challenge with investors?
- [71:31]
C
I think, you know, when you're, when it's a specific, you know, deal that you're raising capital on versus you know, a fund, I think with the specific deal it's getting them, you focus on that specific real estate and then, you know, maybe look, theoretically, if there are what we'll call softness in the rent roll at that asset, you're getting paid for that with a higher cap rate. And you might be wondering that your cap rate actually goes down before it goes up. So if someone's saying, well I want that deal, but I don't want the cap rate to go down, well, once that's not happening, the cap rate is going to theoretically be lower. So like which do you want? The question is, are you picking it off at the right time? Is the pain more than you underwater less right So I think it's talking through that.
- [72:14]
A
I think everyone's trying to tell that story. This is a hard time getting for.
- [72:17]
B
Sure LPs to buy into it and.
- [72:19]
C
There'S a herd mentality. Right. But I don't know, no one was having a difficult time buying into in 21 and 22 and yeah, I don't know, like when would it kind of, it's kind of like the fearful and greed, like maybe, maybe that pertains to our business right now.
- [72:39]
A
Yeah. Have the sources of capital changed much in terms of who's still willing to invest? The profile of your typical lp?
- [72:49]
C
I think it's generally the same. I think on the JV equity side, I think it's certainly the same. But there is definitely everyone's more picky and then they may just have less capital. Maybe they haven't had as many sales to your point earlier. So they just have less to put out. Which means because they have less to put out, they're naturally pickier because they can only do a certain amount of deals. So I think, you know, a lot of the groups, you know, it's still a lot of the same players, they may just have less capital play with and they're just pickier about what they're willing to do.
- [73:24]
A
Which means that you guys, you work 10 times as hard for the same. Exactly.
- [73:28]
C
Which I think is no different. That is no part of the reason why transaction volume is kind of flat year over year and pretty low historically. But everyone's I think, waiting for that to change.
- [73:39]
B
Yeah.
- [73:39]
A
So back to that moment, the transaction markets shifting back over there, the sellers that you're seeing, obviously a lot of folks, if you, I mean we've talked, everyone knows this at this point, like if you don't. For a lot of groups, a lot of the buyers also would be sellers.
- [73:52]
B
But they believe in a long term outlook.
- [73:54]
A
So therefore they may want to wait this out.
- [73:56]
B
Who is actually selling right now?
- [73:57]
A
What's the profile of the people who are, who are selling assets?
- [74:01]
C
Just thinking about who we've been buying from. Public reach, private seller, lender, private developer that never sells, but like sells every 30 years. Private REIT with everybody, Fund manager. I'm just thinking of like the deals in the last 12 months. So like it's everybody, but I think they're all selling less.
- [74:27]
B
Yeah.
- [74:27]
C
All right, so it doesn't, it doesn't. I mean, I guess the one difference today is there are some lender sales.
- [74:33]
B
Yes.
- [74:34]
C
We didn't have before. They're not that frequent, but they're there. There's an occasional one, so I guess we didn't see that before.
- [74:41]
A
Are these predominantly busted value add deals?
- [74:44]
C
Yeah, yeah.
- [74:45]
A
And what's, what do you think, what do you think is the future that more y'. All. We've talked about a little bit of these, you know, kind of 80s vintage deals, but there, there was obviously a lot at the, at the peak of apartments, apartment sales volumes, a lot of, you know, newer groups, newer syndication groups. And we see this, you know, we're.
- [74:59]
B
Here in Dallas right now.
- [75:00]
A
We had a lot of groups come from out of state. They just wanted to be in Dallas.
- [75:03]
B
They bought in the wrong submarket. Yeah.
- [75:05]
A
On a property need a lot of work.
- [75:07]
B
The rent roll.
- [75:08]
A
I mean the area probably didn't support the rents. They wanted to see. Like there's, there's a fair amount of that. That doesn't speak to Dallas being weak. It's just the nature of how these deals are structured.
- [75:16]
B
Like what's the future of that stuff?
- [75:18]
A
How do, how do we work? How does it, how does that get sorted through in your mind?
- [75:22]
C
Well, look, I think what will naturally happen is depending on how they capitalize the deal, eventually they'll have times up on the debt. They'll either need to refinance with some type of cash in or they'll sell it and try to recoup whatever equity they can or it won't be worth the loan amount and I guess their lender will take it and eventually there will be a reset in value. There will be the market clearing cap rates for those deals and someone will probably make a whole bunch of money on them at some point someday. I mean that's just the nature of investing. But again, I think it's very specific. Not like you mentioned the submarket, but also the assets. Yeah, right. And so some, some of those might need a much higher cap rate because they need a lot more capital. And it's just gonna, again, it's gonna be very asset specific. But at some point those will have to clear the market at some price and someone may make a bunch of money or maybe not.
- [76:18]
B
No, I think, I think someone's going.
- [76:20]
A
To do really well off of. It's just, it seems like everybody's, at least in the institutional space is running away from that segment of the market. So who becomes the, the, the, the rescue capital is going to be interesting.
- [76:30]
C
What, what do you think those in Dallas? What do you think the cap rates.
- [76:33]
B
Are on those for those?
- [76:34]
A
I mean it's got to be above if like that.
- [76:36]
C
What do you think the seller wants that? They can't get, oh, five and a half.
- [76:39]
A
Yeah, they want to be probably low fives and they probably thought they'd be in the fours.
- [76:43]
C
Do you think the institutions would buy Those for a 7 cap?
- [76:46]
A
At a 7 cap, I think you'd get a lot more of them lining up.
- [76:49]
C
So I think there's either going to be, you know, at some, you know, I guess if interest rates go down or there's really good rent grill some values created there, will someone eventually meet them or they're going to be waiting and waiting and waiting and they'll have to kind of do what I just described. But I think all these institutions would buy those. I guarantee if I had a portfolio of 80s vintage deals right now and they were, and I was trying to capitalize them in a 7 cap, I could go find a lot of money to do it. Yeah, the seller is not willing to sell to me at a seven. They're not really. Well, sometimes they're willing to sell with a six. So at some point on the 80s, that bid ask spread will move in one direction or the other and narrow and it'll just be a matter of what is the catalyst to. Catalyst to that.
- [77:30]
A
Yeah, like all of a sudden if.
- [77:32]
C
There'S a whole bunch of rent growth and interest rates dropped 150 basis points, so might pay low 5 for those again. Yeah, well, alternatively, if the sellers want to take a 7 cap, everyone would capitalize them. So just who knows which will happen.
- [77:45]
A
And a lot of sellers are probably.
- [77:46]
B
Out of the money at a 7.
- [77:48]
A
So they're lender too.
- [77:50]
C
Yeah, but, so, but that's the. I think at some point, like, you know, and I do think the brighter days continue to get. The days get to get brighter and there's brighter days ahead in the sense that like, yeah, we're getting closer to better fundamentals and some help maybe on interest rates. So like, you know, people will hang on long enough till kind of it makes sense of transaction again. There are still groups when we've sold some 80 deal 80s deals that I thought the cap rate was, you know, maybe higher than I would have liked, but we were able to make money and return capital to investors and we were very happy with the outcome. So, you know, maybe it was a high five and instead of a low five, but right there's. It was still a winner.
- [78:30]
B
Yeah.
- [78:31]
C
And so I think there's still some of that too that's out there.
- [78:34]
A
Yeah, I learned this by. I feel like we're going to Be entering more or seeing. There's been so much kind of, we've heard about patient lenders and you know, pent up distress. It almost seems like there are going.
- [78:45]
B
To be two markets to sort of.
- [78:46]
A
Sort through which is there's, there's going to be more noise. It's not a big part of the market overall, but there's going to be some mess to work through. And what I think was maybe a.
- [78:55]
B
Little bit unique and from folks on.
- [78:57]
A
The outside, maybe some LPs who don't watch the market day to day, don't really understand is like all that stuff that's going to get worked through is probably not really, I mean that's what.
- [79:05]
B
I want to get your opinion on.
- [79:06]
A
I don't think it's really going to move the needle on in terms of like the cap rates for your typical A B product.
- [79:12]
B
Right.
- [79:12]
A
It's going to be somewhat insulated from all that noise.
- [79:15]
C
Yeah. Because it's, I mean it's only a subset of the market. And how does that impact the core? Core plus deal going for a 4 1/3 cap or a 5 cap or 4, whatever it might be. Right.
- [79:25]
A
So it's not a computer, so.
- [79:27]
B
Right.
- [79:27]
C
It's, look, it'll be out there. There's going to be people who eventually want to buy it or forced to sell or you know, and it'll price where it prices. And again I think someone could make a lot of money on it potentially.
- [79:39]
B
Yeah.
- [79:39]
C
It all depends where prices.
- [79:40]
A
Yeah. All right, the other end of this.
- [79:42]
B
What do you think? What do you see in the new construction market?
- [79:44]
A
We have, you know, a lot of deals, active lease up, deep concessions, taking longer to lease up. You have some merchant builders who need to get out of some of these deals but they're still below pro forma but a lot of capital chasing newer construction in the right spot. So where does that end up?
- [80:00]
B
I don't know.
- [80:01]
C
I'm not coming across like a lot of desperate developers that are just like I need to sell, take any number. I think maybe some of them have said like look, the profit's not gonna be where we thought it would be. But I'd rather kind of get, I'd rather recycle my capital. So I, because I think it's gonna be a great building opportunity a few years and yeah, you know, start deploying that money there. Maybe, maybe their LP was a partner who's okay holding long term so they buy them out. Like I'm not, I'm just not seeing a whole bunch a Lot of development like brokers coming with development deals are like the bank's about to take this one back.
- [80:35]
A
Right.
- [80:36]
C
So I think there's still because again I think the pricing on that stuff, there's more capital for that. There's investors that maybe were not a core buyer but they feel like they think they can get a core plus or value add return buying a new deal or they're you hear about like the basis buyers. Although I still think, you know if you have typical capital you need an irr you can't like make money off just the basis. Like is the IR there or not that you're underwriting?
- [81:03]
B
Yeah.
- [81:05]
C
So I don't know just but I think there's something like yeah, it wasn't as good as a deal we thought but we're still be okay or get out at par and go make, make a great development deal now that in four years I think they're going to.
- [81:18]
A
Crush it on Yeah, I, I, it does feel like, like you're right. There's not urgency but maybe by next year there's free leases in the market. We get the spring leasing season. These unit, these properties stabilize, they get rents close where they want them to be. And we should, you know, theoretically see.
- [81:31]
B
A good bit of volume trading at.
- [81:32]
A
That point among some of these recent construction deals.
- [81:35]
B
Right.
- [81:35]
C
I guess the dollars too, I mean look they're, they're playing for the promote but there's a lot of fees in development too that you know, people are like look, if we didn't hit our exact number but it's still a win and we can recycle capital like we'll do it. You I hear about a lot of developers all being like amped up for a few years from now.
- [81:55]
A
Well yeah, every developer in America is trying to raise capital off what's happening a couple of years with less supply.
- [81:59]
C
So I don't know like if everyone's.
- [82:01]
A
Doing it is that everyone's trying to do it.
- [82:03]
C
Yeah, I mean it just, it obviously does feel like a much better like you can still you can buy discounts to replacement costs in a lot of these markets. Huge discounts if you're only go older. So the buy story seems to be and you get current cash flow a better story today. But I think developers are trying to kind of plan forward and you know.
- [82:23]
A
Well but I mean I think handily the one of the problems is unless you're true America or one of your peers, it's actually really hard to buy a comparable a property comparable to new construction because you're going to lose those the, the you're going to lose that that, that deal. And so in some cases I think you're going to see groups that ultimately this is my theory at least are going to see a better opportunity to pursue new construction because they can't buy, they can't deploy enough capital to buy a comparable existing deals.
- [82:48]
B
Right.
- [82:49]
A
Right.
- [82:50]
C
No very variable could be but we'll see. Yeah.
- [82:54]
A
Well, Matt, I feel like this conversation started on much higher note with the summit and it feels like almost deflating talking about our bread and butter. Appreciate you let me pick your brain and yeah.
- [83:03]
C
And it's always fun to talk about Everest and apartments in the same podcast.
- [83:07]
B
It really is.
- [83:07]
C
Thanks for having me. It's always good to to join you for these. Yeah.
- [83:10]
A
And best of luck going forward.
- [83:12]
B
All right. Thank you. And that's a wrap on the podcast and our guest. So thank you to all of you for spending part of your day with us. We'll see you next week.