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- [00:11]
A
Join Willie Walker, Walker and Dunlop's chairman and CEO, as we bring you fresh perspectives about leadership, business, the economy and commercial real estate. Willie hosts a diverse network of leaders as they share wisdom that cuts across industry lines. His guests are experts in their fields, from leading economists and CEOs to Harvard and Yale professors and everything in between. Our one goal is simple, providing you with unique insights, unparalleled data and real time market analyses. Hi Jeff, how you doing?
- [00:45]
B
I'm great. How are you? Good. This is a lot easier than my presentation, so first of all, thank you for having us.
- [00:52]
A
Thank you. Thanks for having me. Thanks for being here.
- [00:55]
B
You know, as you and I walked around this morning and looked at how vast this is, talk you gave me a stat yesterday as it relates to this versus Hudson Yards. Give people a sense of just the size and scale of Fontainebleau.
- [01:11]
A
Well, this building is 9 million square feet. I think Hudson Yards in total was 9 million square feet. So it's, and it's obviously has so many different components to it because you're operating a resort like this with every kind of amenity you can imagine. As you guys see, it's, it's very complex and it takes a little bit of thought. So I would say it's a. I built a lot of condominiums in my career and I would say it's a lot easier building condos as it's. The repetitiveness of building them over and over is much simpler than designing every little area. So it's definitely takes a lot of thought.
- [01:42]
B
And I'm going to rewind the clock to the beginning of this actual resort and casino. But what was it like two years ago when you opened this on your birthday? Because this project has taken a long time to come to fruition.
- [02:00]
A
This project, I'm sure most of you know or heard it went through the great financial crisis. I was the original developer. Lehman Brothers was the bank, one of the banks. And then when the banking crisis happened, everything kind of stopped. And the place was 70% built. Nothing was finished in here. I could show you a picture of. This was just steel and that's, you know, with a roof on it. And then of course, it sat for eight years. Carl Icahn bought it and then it was sold to another developer. And then we bought it back. The way life comes around, everything comes around. But we bought it back in 2021, in February, and it was just a big empty show. So we had to conceive and it was different. It wasn't exactly the original plan that we, I Mean, the layout, the bones were great, but we had to reconceive a lot of areas and reimagine spaces. And of course, the market changed, and we wanted to go at the luxury side, the high end. So we produced areas. We reduced the amount of rooms, made some bigger rooms, obviously, all the different venues. And we did it all in 30 months from the time we bought it back to opening. And then that was just the construction development side. Then we had to hire 6,500 people.
- [03:11]
B
We.
- [03:12]
A
Which is not easy as well. So I was listening to some of the things you were saying about service and how you get people to work efficiently and effectively. And it's. It. It definitely took a lot of time, but now we're really hitting our stride, so. But it's definitely been a. It's not easy.
- [03:29]
B
When you stepped away from it for the first time, Jeff, did you keep an eye on it or did you just say, nope, that was a chapter. Gave it a try. I'm. I'm off to do other things.
- [03:38]
A
You know, it was. Someone gave me some advice. I just focused because I was doing this hotel and I was building the fountain. I had bought the fountain blue, and I was renovating that. So I separated the two, and I just focused on that and other stuff that we had. You know, of course, we had issues in our portfolio, as everybody did back in those days. So, you know, I really never thought about it. But my president partner that worked for me, that joined me was Vault. And he came to me one day, he said, hey, you want to buy this back? And I said, well, I'll do it. I'm happy to put my money in, but I'm only doing it if I get the right partner. And so we ended up having the right partner that was our partner. Been a great. We have a great partnership. And. And we did it. We actually. But it was. It was definitely. And it was a very short period of time because usually projects like this take six years to develop. And that's why we just got a lot of the retailers open last year on the. On the 1st. This past year, actually, most of them opened, and I'd say in by May, a lot of them were done opening. But, you know, it just takes time to get them going and built. And like Cartier, for instance, we signed the lease before we opened, but they couldn't get the store open till. Till July of this past year.
- [04:46]
B
And do the retailers do. The retailers do?
- [04:48]
A
Well, they do. They do. The ones downstairs are doing very well. I mean, we're not A heavily retail property. We're sort of more service orientated for the retail having just retails for people to shop and go to. I mean obviously we have a lot of luxury brands here. But like, like Crystals is a mall or Wynn has a lot more retail space and tenants than we do. But our, our stores are doing well and you know, we've, we've held a couple spaces back because as we get more mature in our, we get, we grow our business which is growing. And obviously we want to put the right tenants in the place because you have to sign 10 year leases. I don't want the wrong, the wrong tenants. It's all about curating the right, right things in the hotel.
- [05:27]
B
And as you look at a property of this size and scale and there are various revenue sources, there's the rooms that you sell every night. There's food and beverage that you make money off of. There's entertainment like bringing in people to fill this room. There's gambling that I think everyone thinks is like the main economic driver of running something like this. And then am I missing anything as it relates to where the revenue source is?
- [05:54]
A
Business?
- [05:54]
B
What's that?
- [05:55]
A
Groups like.
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B
Yeah, groups like conventions. So what's the, what's that mix?
- [05:59]
A
Vegas traditionally back, you know, years ago was about 60% gaming on average. Today, average hotel here is probably around 25% of the business comes from gaming. The city has transitioned. I mean when I first came here, I built a lot of residential. I built nine residential high rise condos here, the four behind here, two over there, and then the three at MGM that we did. And there was 700,000 people that lived in this town back in the mid-90s. 97 I came here. There's 2.8 million people that live here today. So you know, everything has changed. And so now corporations have taken liking to come to Vegas because like you all, you're sitting in a facilities. They're the finest facilities in the world to handle with ballrooms. I took you through today. You see the size of the scale of the ballrooms. I'm sure you guys are up there upstairs in the convention area. So we have the ability to do things that just other cities can't at a luxury level. And the quality of the product that we're delivering is that, you know, is probably the best that that out there. So that being said, you know, that's part of our business because midweek we want groups, weekends obviously have a lot of leisure business and gamers. A property like this will probably have even higher than 25% gaming because we appeal to the high end and we have a lot of big high end suites and you know, high rollers are coming here. So that plays significant, but it is made up of a bunch of different parts. And obviously the theater is important. It's not a money maker, but it's a driver of people. Because when you do events, you bring 3,000, 4,000 people in the seat. We sit about 3,200 in, seated here and about 4,000 if this, the lower area here is standing room only. So when you drive those people in the building, which usually about 90% come from other properties, they tend to eat here, they spend money, they put money in, they gamble. And that's really the business model behind that. But it's not a moneymaker. The entertainment side of it. And then of course we have the nightlife side of it, which is, has done very well for us. But it's again, that's another driver of people through the building.
- [08:02]
B
And on the gambling side of things, Jeff, is it the person that we'll all see walking out there on the slot machine who's sitting there either making or losing a couple hundred bucks that brings in the revenue? Or is it the big high roller who we actually won't see because they come in through some underground lobby and they come up and they're up in a suite the whole time and they're in a private baccarat table.
- [08:20]
A
You know, I would say that it's obviously the heart of it is the average person. I mean, we're, I mean obviously it's a luxury hotel. We just got the only Michelin key rated hotel in Las Vegas at the big resort. So in our service scores are the best of the market. But I would tell you that in a hotel like this, you're, you need those everyday people in there. So that's the slot player, the guy that gambles and loses 500,000. We are built for the masses, all of these hotels are. So there's definitely, you know, that's the heart of the business. And then if you're built, if you have a product that can demand, that can command getting these high rollers in here. I mean, you know, it's, it's a different business. Then it can be lucrative for you as well. But it's not really the main driver of the business. Although it's important, you know, it's everything.
- [09:11]
B
And how about, how about data on the people who are here? How do you, how do you collect data? How do you do loyalty like that?
- [09:17]
A
The loyalty thing is the biggest, the biggest challenge in it for us. I mean, we're privately held and obviously well capitalized. But I would say, you know, you're not going to see many more of these buildings built, or if any, for that matter. You know, just, I mean, I'm only here because really the wonderful story that happened through the years is they always say, you know, good things come to those who wait. But it took while. But, you know, our, our ability of, our basis of what we have in here because of what was here before, and years went by, it allowed us to finish this at a high level. But to build a building like this today, probably $12 billion, and it's just not economically feasible, so. 12 billion. 12 billion. So, you know, and so that was our, our thesis on doing the deal that we, the structure was. It was a lot of money spent in that we bought for very, very cheap. So. And of course we finished it at a high level. But I would tell you that, you know, the tracking the, the database is, is, is important. So as an independent as we are, I mean, we're, you know, our database is growing. But if you take a company like MGM that has 40 million people in their database, they know, you know, maybe there's 20 million people that are active or whatever, so they'll go out and send offers out during the soft periods. We know, okay, we're slow. This week, you know, December 9th, the week of December 9th, we're going to send 40,000 offers out and we're going to get 5,000 rooms booked, and we're going to give those people free rooms because we know what they're spending because they're in our loyalty program. We know what they want, how much they put in the machines, where they ate at, what they spent. So they're happy to give all that out. And then, of course, that's the business that's really the driver of a lot of these resorts. So the database is key. Our database is growing, but we're obviously new. We're going into our third year, so we're starting to see the significant ramp.
- [11:14]
B
How do you vision something like this, Jeff, in the sense that I've watched what you've done in your career and you have an incredible ability to sort of look into the future and say, this is, this is what we ought to develop. This is where the market is moving and it's, it's very, it's very difficult for most of us to sort of look around corners and figure out, okay, here's where we are today. But that's where we need to be tomorrow. I was in a management meeting earlier and I said, you know, one of the things that we missed at W and D was building a data center financing group finance five years ago. We have one today and we're in the market and we're doing stuff. But if, if some of our competitor firms started data center financing groups back in 2019 and 2020 and have been a great beneficiary of seeing where data center financing was going to go. How do you sit there and look at this and have the vision for what this ought to look like?
- [12:02]
A
I mean, I look at it and every. Everything I look at when I've got involved in real estate, I mean, I've built a lot of for sale condominium projects which, you know, you build a great building in a right location, you can command certain prices depending on where the market is. You know, I was the first one to build. How I ended up here was the first one to build really high rise condominiums here in Las Vegas. And I saw a niche in the market that people really wanted to live in Las Vegas but didn't want to live outside in Summerlin or some of the outskirts of town. And they wanted to be in close to town. And we, we hit the market pretty good and we did well. You know, I also look at a project like this and say, okay, or it used to be Miami. The fountain blue is sort of what my father instilled in me. If you build good property, it will always be there. And real estate is a test of time. So if you can build it right and hold onto it, over time, the value is going to be there. Obviously there's a lot of guys that build and sell as merchant builders. I've typically been a guy that's, I always use my example to hold stuff because years ago in 1997, I built a Hilton hotel in downtown Nashville. And for people who've all been there, right across from the arena, I don't know if I built that hotel. And I always tell people, you know, that's the classic real estate story because I built the hotel in 1997. They just finished the arena in Nashville. There was nothing there. Actually. The city had a. We won it. We had to have a minority partner. We did. We got 14 and a half million dollars worth of TIFF money. We built the hotel for 52 million, minus the 14 and a half, built a 600 car garage and I was a Hilton and I put the Palm restaurant in it. It's a premier location in Nashville. Today. So you know what, it opened to 2000, 25 years later, that hotel makes almost $25 million a year and it's stable. So. And I still own it. So those are things that you just can't replace in good, good locations. So I feel like as it relates to a hotel like this, it's an asset that's, you know, it's got a ramp. But you, it, the bones are good. If you build it right, they'll come and they, and they enjoy it and they come back and you build customer loyalty. I mean, that's what Steve Lynn has done through his whole career. And he's built all the best product in this town up until this place. I think this is, you know, but you know, my view is that you will just consistently, you know, people come here and they enjoy themselves and then they just, you just build on that. And you can't replace assets like this. So these would be the same thing in Miami. The fountain blue. It just allows us to do things that others can't. And, and I think those assets are few and you know, far in between to find. So when this investment came up for me, it was like, okay, for capitalized, right? We have the right partnership. You know, it's gonna, it's just gonna take some time. And so, you know, and, and, and you'll also really, as a developer, I would say every developer's been through tough times. You always just really go back to the same things, like you learn from your mistakes, you know. So I think that's a real true thing to say is being through different cycles and seeing what works and what doesn't and not getting yourself too spread too thin and really trying to focus in on what you're good at.
- [15:11]
B
What attracts you so much to hospitality? The origins of your family business were your dad, Don, and starting in Aventura, Florida with the Aventura mall back in 1967 and the. So the foundation was sort of on the retail side and you have very much focused on the hospitality side. What is it about hospitality that you like so much?
- [15:32]
A
Well, my dad started actually in Pittsburgh, right. He was the mall developer and built some of the largest enclosed mall in 63 in Southwest Village. And then he migrated down to Florida and we, he developed all of Aventura, the mall and I built some buildings there. I just sort of saw an opportunity and I really, really, I mean I owned Marriotts and Hilton's and I, you know, have them. But I really felt like, you know, if you can build a brand and you can Create. And I like the big box space. I call big box hotels that are integrated resorts like this that have meeting space, have restaurants, and that can appeal to just more than just, you know, a place to play your head and check in or go to, you know, a conference or whatever. So I feel like, you know, that's been a, you know, something unique, and I think the F BOO brand is a brand that people know all over the world. And this obviously, is really helping our brand and the different elements that we, you know, we put in here. So it just. It's just very intriguing to me. And I think that if you can build a company like this now, you, you know, and to build something like this is very, very, very complicated and very technical. And. And you got to be able to have the right vision, as you said, right? You got to put the right restaurants in, the right clubs in. You got to be able to get the right entertainment. You know, it's. There's so many pieces that make up the whole here, and it's, you know, and then, of course, you have to operate it right and, you know, getting the right team in place and, you know, it takes, you know, but once you get it, it's. It's. It's pretty good. So, you know, that's. That's what's intriguing to me about it. And, you know, owning a mall, it's great if you have a mall in it like Aventura, but, you know, I mean, okay, there's tenants that want to be there. There's a. The demographics are strong. It just wasn't something that I felt like that really could. You could make and move the needle and build something that's, you know, it's different, you know.
- [17:18]
B
And how do you establish and maintain the sense of excellence in customer service both at the Florida asset as well as here? Well, I think you've got 6,000 employees here that at any given time, 3,500 to 4,000 actually operating.
- [17:32]
A
Yeah, there's 6,000 employees here. There's about 4,000 FTEs full time. And then they fluctuate depending on, like, you know, obviously going from this through before Christmas is slow, then it will get, you know, ramped up. But, you know, it's really just people, your exec team, you know, working with them. And I think one of the things that we pride ourselves are that we are private and we're not, you know, publicly traded, and. And we don't have a lot of corporate bureaucracy, and we can make decisions quickly and. And it's allowed us to do Things and really, you know, touch the customer. So for you guys staying here, you know, you're having a great experience, I hope, I assume you are, I know you are. If you're not, someone's gonna be in trouble. But, you know, it's important for me, so you guys stay here. The level of service, the quality of the food, the experiences you have here. Because everyone in this room's gonna go back and tell people, hey, this place was great. You should go there next time you go to Vegas. And you'd be surprised how hard it is to get people to come away from the gaming side. You know, like you, if you're a $50,000 player and you just come once a year and you go to Vegas, you might have a host at Caesar's palace that you've been dealing with for 20 years. To get that guy to come over here is not easy. It's not easy. Even that mount, they'll come to see the restaurants. That's where I've been able to get a lot of them, where they come because we, we've got the best food and beverage restaurants in town. So that helps, you know, grab them over here. But they are very loyal to their hosts. So, you know, getting the host and building that business and it's coming together, it's taken time, but it's important that everybody, everything works together from the moment they arrive at their, their check in, to their experience, the service in their rooms, to the friendliness at the bars to, it's just you got to touch them in every place you can.
- [19:13]
B
And so you have to go out and not just have a great marketing strategy as it relates to, hey, there's the brand. I want to go stay there. And it looks like a nice place. But actually going and getting people who have the relationships with the gamblers to get them to come across to their host.
- [19:27]
A
At the, at the hosted side, hosts are key. At the general public, people come in on your slot business. The slot business is a commodity business. At the end of the day, I mean, if the slot player knows, hey, how much free play am I going to get? What kind of points am I going to earn? How much, what do I get? What can I do for the room? And can I get a room? How many free meals can I, I mean, depending on your play, they rate everything. So how much you're going to reinvest back in me if I lose a thousand dollars, you're going to reinvest some of that back in me where I get free play to be able to Go back. So they know that that machine that you see down on the floor is in every casino in this whole place. So. And the guy sitting there at the machine pressing the button. So what kind of benefits am I going to get? So that, that's an important factor. But as the host goes, I mean, especially at the high end, the host have a, have a big important, getting those clients here, giving them the service, making sure they're happy, obviously, you know, hosting them all the way through, you know, and that's important.
- [20:29]
B
And many of your other projects, Jeff, are more focused on the, on the high end. In other words, like your Ocean Club development right now is, is a very high end resort. This, this kind of goes up and down the economic strata given the size and scale here. Are you, are you more bullish on the, on the general play or on the very, very high end of the kind of old one?
- [20:49]
A
This sits in the high end luxury section of this town, which is. You read all the stuff about Las Vegas. I mean, you say, oh, it's down, it's down, it's down, but it's down on the, on the, on the low end. The upper end resorts are, I mean, our business is growing, obviously. Wynn is, if you've seen his record numbers, and Venetian is doing great. You know, Bellagio and Aria, those, those assets are doing well, I think as far as high end projects, look, I mean, you know, I build anything that's right for the market, you know, but obviously I've always done well at the high end, so that's why I didn't work.
- [21:22]
B
And you, when you bought the asset in Florida, Fontainebleau, in 2005, right, 2005, you put about $1 billion into it. How long does $1 billion renovation on an asset of that size last for? In other words, when's the next billion dollar renovation have to happen?
- [21:37]
A
Well, that's a, that's a. I spent about 800 million on it, but I retooled it. But I took, I mean, I added to it. I built stuff that you wouldn't add. So I mean, I built more meeting space. I built more spa buildings, restaurants, different pools. I mean, I mean, look, I've just put in the last. I mean, I'll done with them. We're doing a, hopefully get, we're redoing our pool deck. We're adding some more, you know, amenities to it. I mean, I've spent in the last two years there. In the last two and a half years, they're probably $200 million at the end of next year, over $200 million between building a new conference center and doing that. But it's really just keeping. Upkeeping them, just keeping them clean. Obviously you got to redo the rooms and the meaty space or renovate, you know, different areas and restaurants. It's just a constant every day. You're just going to stick as a percentage of, you know, we usually about three, three and a half percent of our in gross revenue just dumping it back in. Into the asset. I mean, Fountain Boy done all the rooms now. I mean it's. But it doesn't stop, you know, especially down in South Florida with the salt air and everything. It's not, it's not the best environment for, you know, keep. It's tough on.
- [22:50]
B
And you just had Art Basel in Miami. How's the, how's the South Florida market from your perspective these days?
- [22:56]
A
I think the South Florida market is. Is good. It's steady. I mean, the leisure business in South Miami. In South Miami. In Miami. Miami beach was off. This year is off. You know, it's down about 14%. The bed tax in the whole city. You know, the summer wasn't that strong. I think next summer's gonna be much better because of the World Cup. We have a World cup game and I think, you know, the economy is a little. Is a little sluggish. I'm sure you've talked about that in your. These. Hopefully we see some uplift in that. But the group bookings continue to grow, which is important for us. It's 50% of our business down there, so.
- [23:29]
B
And is. Is the moving of firms like Starwood Capital and Citadel a huge boon to the Florida market? And do you think there's going to be further relocations of financial services firms or you think that's somewhat, somewhat contained, if you will, to a group like Star wars or Citadel, where they just say, you know, Barry wants to be there and off they go.
- [23:49]
A
I think that, I mean, look, obviously, I mean, living in Florida my whole life pretty much, it's definitely a special place. I think there are more. I mean, it depends obviously what happens in cities like New York where there's new political. You know, there's a different mayor and you know, what he does and what he doesn't do, obviously he's going to determine that. I do think like they've helped. They've definitely helped for South Florida, you know, bringing more jobs, better jobs, bigger earners. You know, there's a shortage of luxury housing like in Miami Beach. I tell people, you know, they say, well, it's so crazy, these house on the water. But the problem is there's like 1800 homes on the water in Miami beach. And if you really look at that, how many are renovated, how many need to be torn down, how many. Listen, when you see these crazy sales, it's just, there's just no, there's no supply. And so, and that's, you know, that's happened significantly in Dade county, like where, and as you see it in Palm beach as well. But you know, especially in the, in an upper end neighborhoods. But it's, it's a good thing, you know, so. And I do think the high end condo market in South Florida is doing well. The mid price stuff. Upper mid is probably, it depends on where it is. But I think some of the areas that are, I would call secondary areas where they're building a building and they're trying to sell it for 1500 or 2000 a foot, that market is probably a little more sluggish in my mind. But right now I don't have any condominiums under construction in South Florida.
- [25:13]
B
So this building is extremely environmentally friendly. You've won all sorts of different awards for this being environmentally friendly. Does the environment in South Florida concern you as it relates to flooding, hurricanes?
- [25:26]
A
I mean, they've done where they lifted the seawall. They're, they're, they're doing what they're supposed to be doing. I mean, you can never really, you know, every time we get a hurricane or a hurricane warning, cost me a million dollars because people were coming, they're going, they're canceling, you know, this year, thank God we didn't have anything, which was nice for a change. You know, I think that people are aware of it and I think you just have to deal with it. I don't think, you know, they're, that they're doing everything they can do to combat it as far as raising the seawalls, pumps in there. You know, Miami beach did a lot of stuff to stop the flooding when the high tides would come in. And it's working. So it's, I think they'll, my gut tells me that they'll keep mitigating it and it's fine. I can't, you know, I can't tell you what happens with a storm, you know, hurricane. But traditionally it's been, you know, they come in and they go. The ones that come and move quickly are probably, are okay. The ones that really come in and is sort of slow moving and they have a lot of tornadoes, they do a lot of damage. So and it's, it's been tough for people because, you know, a lot of, you know, hurricane is. Windstorm insurance has gone crazy. It's gone back down. The last few years has actually gone down. But it's, it's, you know, you know, companies that have a lot of exposure down, they usually have their own, you know, captive where they self insure at the bottom end. Detroit, because it's just the most efficient way to do it. We do that. But it's, it's definitely. That's the pros and cons of being in South Florida.
- [26:51]
B
Do you think you end up building a seawall down in, at the, at the front of Miami at some point? I mean you get to work really.
- [27:00]
A
No. And we're at the Fontainebleau.
- [27:02]
B
No, not at the Fontainebleau, but down where the ships all come into Miami port where they would.
- [27:07]
A
I think that's all their. I think they look at different areas and they raise the sea walls and I mean you can surely see. I mean my house, I live on the watering movement, the tide and this on the high tides, you can see it coming up. My neighbor built his house and it's, you know, he had to build. He has a higher seawall than me, so I eventually have to raise my seawall. But it's not, it's not, it's not. I think it's, it's just a matter of time before that happens.
- [27:29]
B
You know, you talked about your house. You have two interesting neighbors. One who you throw footballs with and the other one who you threw packages over the wall. Talk for a moment what it's like to have Tom Brady and Jeff Bezos as your neighbors.
- [27:43]
A
Well, I don't know Jeff Bezos. I mean, I actually met his wife a few times. My sister is friends with him. Brooke. You know, he seems like a very nice man. You know, he lives right next door to me. And then Tom I know very well because the reason why he's there, he bought my lot. He's my friend, so. But he's a great guy. You got to get him to come speak for you. But he's not the cheapest. You guys better. You guys better sell some more deals and make some more money.
- [28:06]
B
I will tell you the trade for you of speaking for free and putting everyone in your hotel is a trade I can make with you.
- [28:10]
A
I'm not sure. No, I wrist his arm, but you know. Yeah, no, it's great. But no, he's, he's quite.
- [28:19]
B
Has he done anything for you at Fontainebleau?
- [28:21]
A
Well, you should go see here. We have Hall Excellence here, which is a museum. It's got probably some of the most, it's probably got the most, you know, real collectible. It's here down the hall if you get a break. It's got all Tom's rings in it. It has, from the, the most highest, every major athlete, I mean, that you can think of in every sport, like the most iconic things, whether you have Babe Ruth's bat where he called the shot, or you have, you know, Will Chamberlain scorecard where he scored a hundred signed by him. This is pretty interesting, Muhammad Ali's stuff. I mean, it's some real interesting stuff. And it's all narrated, different. You get a phone, you can click on stuff and it shows you a video. And narrated by Jim Gray, Jim Nance, Tom, Tom Brady, Oprah Winfrey, Morgan Freeman and Bob Costas. So. But it's, it's, I mean, they have the Masters trophies in there. I mean it's got, it's, it's, there's a lot of stuff in there. You should go look at it. It's something to see.
- [29:18]
B
What gave you the idea to do that?
- [29:19]
A
Well, Tom and Jim Gray has, has collected a lot of stuff. JIM GRAY SPORTS Sportscaster, you know, sports announcer, did a lot of fights, had all this stuff. And then we decided, you know, Tom's like, look, I got all these rings and all this stuff. I'm never going to get rid of this stuff, but I'm never gonna, I don't leave it in my closet. I'm never gonna wear these rings. So we have all his rings and I mean, there's all kinds of stuff. So we just thought it'd be a cool attraction for people to see while they're here. You know, especially everybody loves sports. So it's, it's really. And it's done very well. It's not like it's like a high end museum. So I would say if you got 20 minutes or 30 minutes, you should go over there, take a peek. It's worth it.
- [29:56]
B
And what's the part of this that you sort of had a vision for, that you might have gotten pushback from your team on doing that. Now that it's there, you're like, I was really happy I did this. Or maybe the flip side of it, if you want to talk about it.
- [30:08]
A
This and where this whole project, this.
- [30:10]
B
Whole project of like, I want to have something that's truly unique. The, the lobby's going to be 50ft tall. I'm going to have A big sculpture here. What. What was something that you sat there.
- [30:19]
A
A lot of the bones were designed. The, the floor was designed, the tower was built. There was nothing in it. There was nothing but raw steel. Downstairs in the casino, there was some studs put up in one end over there by Saint Laurent. So, you know, it was just, you know, I had to re. Envision it. And originally, the second floor was. There was where the Food hall is, Promenade is, and down was more shopping. And I reduced the amount of shopping because back, you know, then people were selling malls at higher cap, low cap rates. And, you know, that was the game in Las Vegas. And we figured we'd do that. And I scaled that back and then added, you know, move the gym, move the spa, did everything, you know, reconfigured stuff. And then, of course, we ended up building, you know, the top five fours here, which is Florida Lee, and then, of course, the Poodle Room, which is that whole club on the top, which is, you know, I showed you today. You know, I think it's just challenging. I like challenges. And I think it's, you know, from being a developer my whole life and, you know, where I started my career and where I'm at today, you know, I mean, did I need to do this? I'd probably tell you, you know, moment. Some people would say, hey, why you want to do that? What's it. That. What's it matter? I. I felt it was just a real pride of accomplishment and something that, you know, not many. Well, to be honest with you, you know, I mean, the guys that did it before me, you know, in this town are pretty. Pretty successful, the most successful ever. And, you know, as far as Sheldon Allison, Steve Wynn, I mean, Kirk Kakorian, so, I mean, that's who really built these towns. I think, you know, doing something that's right is, Is a. Is a real art. And, you know, it's a. It's an accomplishment that, you know, we're very proud of. So.
- [31:57]
B
And F1 came here before this was opened, but you had the McLaren team stay here this year. The Red Bull team stayed here this year. How important is F1 to the future of.
- [32:07]
A
Yeah, well, we had. We had Last and Martin here this year. Next year we have some more staying here, but we're growing our business every day. F1's a great event for this town. It's done before Thanksgiving, and there's nobody here, you know, for Thanksgiving traveling. So I went to the. Stefano Domenicali, the president of F1. I said, listen, you can't have this race at 11 o', clock, at 10 o' clock at night. If you're coming here from New York, it's one o' clock in the morning, time is over, it's 3:30, four in the morning. Who's coming back to a hotel to do anything? They're going to bed. I said if the hotels can't make any money, you're never going to, it's never going to last here. So he's, you're right. He said, well I didn't want to do that. The hotel said they wanted that. I think they were afraid because of the traffic. But then they lowered the race date time to 8 o'clock. This year they had different tiers of pricing, much more attendance. I mean we, I think everybody did much better and it was a great event for the city. So I mean next year we're building on that. You know, obviously, you know, again you got to showcase your property. You got to get people here, you got to, they have to see it, you know and it just, it's a.
- [33:05]
B
Time game and you have a, you have a partnership with Discovery Land in Florida, right, that you're building there. How, how. What kind of legs do you think that high end market that Discovery is focused on has? I mean is there any point where Discovery runs out of properties to be able to create communities like they're creating?
- [33:24]
A
I mean Mike seems to, Mike seems to be doing pretty well. I mean, you know it's, he's a group of high net worth people. I mean a lot of people buy from a Discovery property, go the next.
- [33:36]
B
One like your friend Tom Brady. I think he owns eight of them.
- [33:39]
A
No he doesn't. Some of them, you know, people like, some of them, you know, are tougher. So you know, but they've seen to take their crew and move them around. You know how much appetite owners have to keep doing that? I don't, I don't know. Some, they like, some guys like to buy and they made money and done well as long as they're making money I guess they're fine. But I think some of them are good. Some of them are, are know a little harder than others. But you know, I think it's, you know our, our deal there in Jupiter is we're on the ocean and they have their Discovery Atlantic fields. So this is a condominium on the ocean and you buy there, you're on the ocean. In Jupiter island which there's no properties for sale really between Palm beach county and on the Ocean condominium is all luxury and then you buy there. And then of course, part of Discovery Atlantic fields, you drive 15 minutes, 20 minutes. Excuse me, to there. And you can use all their amenities and facilities. And I believe that people want to, they like going to play golf, but they don't want to live out in the, in the cow pastures and near the other, you know, in the woods, you know, in, in Hope Sound. They'd rather be on the ocean, I think. But they've had tremendous success selling, you know, where they're at. And they've sold like a billion dollars of the property out there. So it's pretty strong. So I. But I do think there's a clientele that does. And a lot of people don't want a house, so there is that factor.
- [34:55]
B
Our colleague Dustin Stolle worked with you in bringing your equity partner into this deal. Susan Mello, who used to be at Pru before coming to Walker Dunlop, invested with you a bunch. You work with lots of services firms, financing firms, law firms in running your enterprise. What do you, what do you look for when you're selecting who Fontainebleau is going to work with either on a. Financing a sale or whatever.
- [35:25]
A
I mean, you know, typically years ago we would just deal with the banks directly. I did have experiences with eastil back in mid mid 2000, 20, 1013. Susan obviously did a great job. We had some issues with Prudential and we work with Prudential. Well, she was great. Did a great job. Susan, if you're here, hello.
- [35:45]
B
She is. I know you're out with her backstage after.
- [35:48]
A
Okay, we're okay. And Dustin, you know, started doing business with me probably around 17, 18. He's just a very good job, you know, for me. I'm very loyal to the people that are good to me. So you guys have my business. You know, I don't, I don't. I won't. I will. I certainly won't do any more. I won't give my business to Newmark. I was giving it to Dustin. So Dustin's great. He's great. You guys are lucky to have him. So he's done a great job.
- [36:15]
B
But is there anything amazing as you think about the services firms that you work with, Is there anything that differentiates one for the other or what you and your team are really looking for? Because we're here as an all company to try and kind of talk about what the future is bringing and what we're seeing.
- [36:27]
A
I think it's just a matter of the execution and really just, you know, trying to get. Deliver what, what's what they're saying they can deliver. Because I think what bothers me the most is when they say, hey, I can do this loan at 2:50 over. This is this, you know, this is what it is. This is the amount, the proceeds and then they come back and they, they give you the flex thing that just. And they do that. Oh yeah, it's, you know, I think, you know, the guys that are in there fighting for it is the most important thing, you know, that they're keeping people honest. So it's, it's important. Obviously they say you can only, you can only jump out the window when it's open. So got to make sure the window's open to do that. But, you know, so.
- [37:05]
B
And as you look out five years from now, we're launching our five year journey to 30 at Walker Nullop here at this all company meeting. And it has component parts of things that we're doing today and things that we aren't doing today that we need to be doing. As you think about your business and how it will evolve over the next five years, given technological innovation, the growth of this market, the growth of the Miami market, what are you and your team looking at as it relates to significant changes that might happen in the next five years?
- [37:32]
A
I think just efficiencies. I think AI going to change a lot of the, you know, just how you operate these hotels. Our biggest expense is labor. Obviously it's going to be there, but you know, how do we get more efficient with services? People going on vacation, they're always going to go on vacation, they're always going to want to go to resort. You know, I think as far as resorts and hotels that are in the right areas are going to continue to be there and you know, they're just going to get better.
- [37:55]
B
People may not need a place to work if AI starts to intermediate too much work, people clearly will need a place to live. They may not need to go out and shop as much as they have, but they clearly will hopefully have more time to go vacation. And that plays right into many of the assets that you have, right?
- [38:10]
A
Correct.
- [38:11]
B
Well, it is a real pleasure to sit down with you and talk about this building, the building of this building and to have everyone here at Walker and Dunlop at your incredible hotel and resort and casino. Jeff, thanks very much. It's just a real pleasure having you here with us.
- [38:27]
A
Thank you for having me and enjoy yourselves.