C (3:17)

Yeah. And it's just the world's so competitive. Right. And I'm not as good at work, I'm not as good an athlete. I don't, I don't eat as well, and I'm not as good at home. So for me, it was pretty easy to prioritize that.

B (3:29)

But in the context of all that you guys are investing in Margaritaville, which as you, as I, as, As I think you, as I think I saw you, you say Margaritaville is like the Baker's Bay for the, For.

C (3:43)

For the average American. The average American, yeah. I mean, it's an incredible business. John Colin, who was Jimmy Buffett's partner in the business, is a branding genius. And he saw this brand that Jimmy had, which is truly a lifestyle brand. And it's not. The brand wasn't about Jimmy. We didn't really know that until Jimmy passed, unfortunately. But the brand wasn't about Jimmy. It's what he sings about. And everyone, no matter where you from, loves the idea of Margaritaville sand, you know, beach sand, you know, waves, fun times with people. And so it's the ultimate lifestyle brand. So John took that and said, I'm going to take that to the consumer world. Started in restaurants, opened his third flagship hotel in 2015. Today we have 30 and another 30 underway. We have two cruise ships up and running. The third cruise ship is coming. We've got. One of the cool things they're doing is these RV parks which are, you know, they're category killers in that space. We've got eight and another eight coming in the RV park space. The restaurant business has continued. And then what was really the secret sauce? And to us, almost the most exciting as we got to know the company was their 55 and older business. And I know you spoke a lot yesterday with Ryan about that. And basically that's the Baker's Bay for the average American. That's what he did. He took the 55 and older business and made it a place that you want to be, that once you get in the gates, you don't want to leave. You can live there your whole life and you're on vacation. And he call it 55 and better. And the velocity has been incredible. Daytona, in seven years they sold out 4,000 homes with a single builder and all pre sold and a lot of it people are waiting overnight for releases of homes. So it's, it's, it's a cult following and it's a huge opportunity and I know Ryan talked about it. I got the webcast in between.

B (5:45)

I, I appreciate that it's a huge.

C (5:47)

Opportunity and to be differentiated like that gives, you know, a different segmentation and it gets rid of the stigma. You mentioned it a little bit yesterday with Ryan gets a. Rid of a bit of the stigma of moving to a 55 and older place. Because this is about this lifestyle and, and 8,000 homes, three and a half billion in seven years in sales is there.

B (6:11)

As you know, Ryan and I talked about the amenities in their Del Webb communities. He said that they're not investing in golf courses anymore, even though location close to a golf course is very, very important to them because that's an amenity that 55+wants. And then he talked a little bit about some of the other amenities in their pickleball courts and things of that nature. When I hear Margaritaville, I wonder, are the amenities a little bit different from golf courses and pickleball courts?

C (6:36)

Very similar. We don't have a golf course. We got a great bar with a great restaurant that rolls up flying 24 7. Exactly. And then we, we do a great programming. So it's what you'd expect. It's a. But it's Baker's Bay, right? There's a lot of golf course communities around the world, but the, the famous stars choose to go to Baker's Bay or Yellowstone Club. Mike Melman at Discovery Land Company really created this experience. This is just a unique experience that John and the team have created.

B (7:06)

That feels like Tom, a really an operating company investment and less of an of a real estate investment. Talk for a moment about what Rockpoint looks for as you put capital to work because I think it's, it's quite unique. Rockpoint, Tom. Tom will tell you that Rockpoint is a middle market private equity firm. And when I hear that, I say no firm that's raised $30 billion of capital to be invested in commercial real estate can call themselves middle market, but you purposefully call yourselves middle market. And you purposely have an investment strategy that is not asset class specific, but really location specific and operating partner specific. Dive into that for a moment.

C (7:48)

Yeah, it's an interesting point. I mean, we have chosen to keep our funds a size that we think we can deliver returns. That has been. That puts us in the middle market today. And we talked a lot about, do.

B (8:01)

You feel any need to, if you will, play with the big boys and raise funds to the size and scale of a Blackstone or an Aries?

C (8:07)

You know, it's interesting. I think we can play where we are today and we have some great partners and we can do big deals. So if we see compelling big deals, we have some great partners that want those deals and they want them more and more. That's a big trend in the industry. So I think where we sit today is we don't have weighted capital. We can follow the macro. We have all the insights of, you know, the big firms are actually 20% owned by Blackstone. So we spend a lot of time and get a lot of insight from them as well, which is a huge advantage for us. But we can take this really micro approach. We look across the entire US we look at various markets, we decide what markets we want to be in, say in New York City. You know, it's a market we've been very, very hot on since post Covid and the recovery there. And then we're asset type agnostic, meaning our team is in New York every day looking for deals. But we don't think that you, if you're a hotel person, you parachute in New York, you don't know the whole picture. Your apartment person, you parachute in for the day, you don't know a picture. So we want to understand the whole picture, where the trends are, where things are coming, have all sorts of unbelievable on the ground data that we can use that never hits this, you know, eventually hit CNBC a month, two months, six months later, but we can use that and trade on that and position ourselves and then decide, do we want to buy apartments, do we want to buy office, do we want to buy a hotel, do we want to buy industrial? And a great example of that is it's something we follow a lot, is we have a lot of our own data and we really are following migration and we're really following jobs, but you do it ourselves. And one of the migration trends that we follow is where College kids are going and New York is a category killer. It's 15% in our data. We've got 300 million data points. It's 15% of the top 100 university graduates matriculate to New York for a job and 25% of the Ivy League. And you saw that a year ago because when Amazon said you had to go back to work five days a week, they were quickly in the market to lease 1 million square feet because so many folks signed up to move to New York saying, hey, am I going to be in five days a week, I'm going to New York. So it just talks to the popularity of that. That's on the ground data that we knew at the beginning of year and you know, was all over CNBC last week. Right. And they come back of New York and you're seeing in those stocks and so it's that type of ground level data and. And then we really go asset by asset and decide where do we want to be, where do we want to be positioned.

B (10:39)

So you, you mentioned New York and you're clearly bullish on office in New York. You sold a portfolio of office buildings in suburban D.C. to JBG. Yeah. You Bullisher out on D.C. is that.

C (10:53)

Is that sale that would unfortunately I. Well, so I actually have to, if I'm going to say any returns, I have to do an SEC disclaimer. So previous returns don't, don't predict the future performance. Exact. So inches f Office for us has been a 20% net IRR business since inception, inclusive of those deals which we it was a deed and lose sale to jbg. I think for how we look about office today is pretty simple. And the question is, is can the asset produce durable, repeatable cash flow that's going to grow? And if you look at D.C. as a market with the demand down, there's no new supply coming. But with demand down and the capital costs of retaining these buildings, you know, these are no cash flow, you know, deals. Right. And there's no pricing power in these deals anytime soon. So as we look at office, what we think is investable in office today would be a building that has supplies down everywhere. Right. So that, that's check the box everywhere strong and diverse demand that's hopefully growing and you have pricing power today. And all of that is producing durable, growing cash flow. And that's where the lenders are going to show up. That's where they're going to want to lend and that's where the equity players are going to want to, you know, want to buy.

B (12:17)

But if you're looking at it from a market standpoint, I was in Austin two days ago. Yeah, Austin's got a lot of vacant office as well as vacant multi right now.

C (12:24)

Huge.

B (12:25)

But it clearly has amazing long term growth drivers. Yeah, I can say the same thing about Dallas, Nashville and Charlotte. Yeah, I can't really say the same thing about New York, Boston and San Francisco or can I?

C (12:37)

Well, so it's good question and I think there's a good chance all this data, BLS data is like wrong and really wrong. And obviously this is super popular. So I think if you look at those markets, it shows a lot of jobs. There's definitely a lot of jobs, but you really got to break down those jobs in those markets. So I think how we take multifamily, how we would look at an Austin and kind of going back to our research, multi family has pricing power. The greatest correlation on every downturn in every market through history. We've got the data and run it. Multifamily has pricing power. When you get to 92 or 94%.

B (13:15)

Occupied, we're 96 nationally right now.

C (13:17)

96 nationally and it's moving along. Right. But a you look through AUSTIN and it's 86, 87. Right. So that what we will do on Austin is we really kind of look, hey, when is this going to get to 92 to 94 and when do we think it will get pricing power again? And so, and then. But will you wait for it to get to 92 or 94? Will you jump in when it's at 88 and buy Depends on pricing because that cap rate's going to move from.

B (13:41)

525 to 425 before you pull the trigger.

C (13:45)

To date, I think and we just sold a deal with y' all in Atlanta. Thank you. To date, if we look at these cap rates, we see them more in the mid to high fours. So on these depressed cash flows. And so for us, if we can buy a deal, we're buying a deal in Jersey City. If we can buy a deal in Jersey City, that's a five and a half cap going in. It wasn't when we put it under contract, but rents are growing so you've got that tailwind. It's a six mark to market. We do value add with our team and I love Ryan Walker. Ryan Marshall was talking about the cold plunges and hot tubs and you know, saunas.

B (14:26)

Well, I know you have those at your house. So we can go into that. We'll do all of that personal stuff.

C (14:29)

We'll do all of that there. And so we, we move rents 10% and it's a six and a half, all untrended. And today that trades for a 5. So what period of time are you.

B (14:39)

Going to move rents 10%?

C (14:41)

Two years.

B (14:42)

Two years?

C (14:43)

Yeah, two years. We will roll the units and, you know, in two years the field will get renovated. We'll move the rents 10%.

B (14:47)

But we've had zero rent growth this year, basically. On a national basis.

C (14:51)

On national basis. But you're 4 or 5% in Jersey today. Also Jersey City, you've got strong growth in Manhattan. You know, we're seeing in some of our deals, we're seeing 7 or 8% rent growth on new deals and renewals. But if you look at the city of New York and this is kind of how we look at cities, and this is where we move within cities. If I live on the island of Manhattan and take home $150,000 and I rent a one bedroom and I pay the city tax after rent, after taxes, I take home $30,000, I get on a PATH train to Jersey City, which has Whole Foods and is booming. And it's also, it's finally getting body heating becoming a place. That same. They same math is 60,000 after. I know, after rent and after tax. So we think that's very compelling. And then we're talking about rent to income ratios. You were talking about rent to income ratios with one of your guests on one of the podcasts I was listening to. We're seeing rent income ratios in the low 20s for an urban environment that's incredibly low. So we kind of sit there and say a lot of demand, not a lot of supply. So we're in check there. Rents are moving today and we have pricing power. So that's for us. But you also have to remember our lens and Michael Levy on your podcast talked a lot about this. Our lens is, we are trying to make higher returns. You know, if you're trying to make 10, 11, 12 over 15 years, you know, buying an Austin, probably a perfectly good place to do it and diversify yourself. You're taking, trying to make mid to high teens. We need more speed, more velocity, and, you know, more value creation.

B (16:32)

That's interesting because that's one of the reasons why people are holding back on Austin right now is that they don't want that drag of a year or two where they're not getting the type of rent growth that you're talking about getting in Jersey City. Yeah, so the. You touched on taxes a little bit and I, I don't like to beat this dead horse, but I live in the state of Colorado and there's a proposition that the residents are going to put on the ballot at our next election which is going to raise income taxes precipitously if it ends up getting through. And a lot of my friends in Colorado are like, this is a recipe for all of us to leave Colorado. Like people have left New York and people have left San Francisco and things of that nature. As I asked you the setup question of Austin, Nashville, Charlotte, I pick those cities purposefully because they've a got great growth, they've got companies relocating to them and they've got good long term growth drivers. A lot of it behind tax policy. Yeah. I picked Boston, New York and San Francisco purposefully because they are high tax cities.

C (17:28)

Yeah.

B (17:29)

And you just went to why you're investing in, in Jersey City and potentially not in New York because you can't get on the path.

C (17:34)

Trainers.

B (17:35)

Yeah. So is there a way to play other cities the way that you're playing Manhattan? For sure.

C (17:43)

But I was in San Francisco yesterday, right. And if you look at traffic, office traffic year over year, downtown San Francisco, which is still really beat up, you know, it's 40 or 50% vacant. So supply, demand, pricing power. A couple buildings have pricing power today, but, but it's a very small subset and that's pretty true across the.

B (18:02)

That's on resi or on office.

C (18:03)

Office. Right. But visitation is up. It's the biggest up in the country, up 14% year over year.

B (18:09)

And when you start on as low a basis they have, you get that nice growth.

C (18:12)

Exactly. And the streets look great and you look at what happens happening in Silicon Valley and you look what's happening in open air and this and the boom that's occurring there, you know, is supply, demand, pricing power. There's definitely great deals to be had there. And if you, it's a little bit like a ticket to an event. It's Taylor Swift, you can charge whatever you want to go see her play. And if it's I don't know whom it's, you know, you can't charge at all. Right. And so if you produce a great product and New York City is producing a great product, San Francisco's getting back to producing a great product for their, for their consumer. The people that live there, people will choose to live there and pay more taxes and there are people who won't.

B (18:58)

But our building in New York, we're in one Vanderbilt in New York. We signed our lease in the depths of the pandemic at 110 bucks a foot. The limited space that is still in that building is being signed up for over 200 bucks a foot.

C (19:11)

Yeah. If you look at the top, your guest Scott Rechler talked about Analog Versus.

B (19:17)

You're doing an incredible job of giving me a whole anthology of all my former.

C (19:21)

So what we do, we'll go market by market. We count buildings that we think are investable, office buildings, and if you take the top 50 to 100 million square feet, New York's 500 million feet, we think there's 200 million feet, plus or minus, that's investable. And then again more. If the market keeps going, that may get less because of AI. Who knows? Right? But we kind of constantly look at that. So that's our. If you look at the top buildings, which you're obviously in, rents are up 15, 20% from the peak and vacancy is nil at this point.

B (19:54)

Are you playing that AI calculus into what you're looking at? I mean, I. I don't know whether you've heard the all in podcast that they had with Elon earlier this week, but you just sit there and listen to what Elon is focused on and whether it's with Optimus, their robots, whether it's into their artificial intelligence, with Grok, whether it's into a, as he said, a fully sentient Tesla by the end of the year.

C (20:19)

A fully sentient.

B (20:20)

That was his words. And by the way, Elon did say back in 2015 that we would all be. That autonomous vehicles would have taken over the world by 2020. We're in 2025, and autonomous vehicles are just making their. So he was a little late on that, but I think he was obviously directionally correct.

C (20:35)

But when he said a fully stentient.

B (20:37)

Tesla, I was like, whoa, that's quite something. Are you playing into your calculus on either living or on office, how AI.

C (20:45)

Is going to change the world? I think you got to think about it every day. And I think in it's, it's. It's. There's no easy answers around it. Right. But I think you got to think about it every day and, and see what would a downside be. And for office, one big downside could be you will lose a lot. It's very, very good. How good it can get at certain complex and creative things. Who knows at the end of the day, Right? But we know it's very, very good at taking menial tasks and repeating them. And so you look at some of these consumer companies, T Mobile, where they've gotten rid of entire back of the house and done it with chap and actually have better performance than you used to have when you had a T Mobile problem. Right. And so for sure, it's something we think a lot about and then we try to think about where are we positioning ourselves. But our bet and our guess is the folks that are at one Vanderbilt are going to use it and it's. They're going to be winners. And, you know, there'll be people that are in back offices in suburbia that will be losers and will have to reinvent themselves.

B (21:49)

You started when we were talking about New York City and why you liked it. You said 15% of the top 100 university graduates moved to New York and 25% of Ivy League grads. But this spring, coming out of college, the highest unemployment rate for college grads were with computer science engineers and math majors.

C (22:09)

Yeah.

B (22:10)

So if AI is eliminating those roles, is following where Ivy League grads are going the smart thing to do? Or should you be looking at where, you know, swinging a hammer today isn't going to be disintermediated by AI?

C (22:22)

It's, it's a, it's a great point. And my, if you asked my father, who's a contractor. Yeah. He would say way too many people go to college and don't go into the trades. It's a great lifestyle and you can have a good steady job and you can be an entrepreneur. It's a great launching ground versus if you go and work in the back office somewhere. And you really can't become an entrepreneur out of that. You know, you're a great plumber, you can start your own plumbing business. And there's a big Runway in America for the need for trades on shoring of manufacturing. Advanced manufacturing is going to happen, is happening in a huge way. And so the trades do have a, you know, a good Runway. You mentioned robots then, that the question is, is, you know, does the robot, you know, you know, get it, you know, get in the way of that? I'm hopeful, knock on law, lock on wood, that we've read a lot about this, that there's the Jevons paradox, which is, you know, just the more efficient you get, the more you do, essentially. And so as a society, we, we can just continue to get better and everyone has a role and everyone has a place and quality of life goes up. So that's what I'm betting on.

B (23:34)

Hopefully Elon did say on that podcast that Their robot, at scale of a million units a year, should cost about $20,000. And one of the things that they're focusing tremendous amounts of time on is the hand. And he goes into great detail on how tricky it is to build a robot with a hand that is as textile as the human hand. And that once they crack that code, they're off to the races. But that's what's holding them up right now.

C (23:58)

Yeah, scary.

B (23:59)

You called your data contractor, and I did give a little bit away on this in the intro to you, but, you know, to call your data contractor is sort of like calling Scott Besant a banker in the sense that they do a whole lot more than just be a banker. You get a really interesting view of the construction world by sitting on the board of Gilbane. First of all, how come you or your brother aren't running Gilbane today? Why is it that a family company is run by an outsider, not by one of you two, who, by the way, are both wildly successful businessmen?

C (24:29)

Yeah, it's a good question. We, I think our family business said you had to get two jobs before you could go work there. And so I think certain people, you know, my brother and I got out and did things and we loved what we did and it just worked. And my family business has outside leadership today. And I think the position we take is the best way to celebrate the legacy of the family business, which is 150 years old, is continue to grow and continue to be one of the best business in the country. And the fact that we had family members run it for 150 years is like a six standard deviation from, you know, what the probability. We should have goofed this thing up and it should have gone away. You know, I always say the years.

B (25:18)

Ago, I always say the first generation builds it, the second generation typically kills. And if the second doesn't, the third always does.

C (25:24)

Exactly.

B (25:25)

And as the third generation in my family company, I hope so far I can avoid that. But you all have done it for six, which is quite something.

C (25:30)

Exactly. So we, we made the decision. It's not easy for some family members. Right. We made a decision. We're going to hire the best people to run it and we want to hold it forever. And the best way to do that is to have the best athletes run it and, and have the family support it and hold the legacy up, which is the idea. There is being a handshake, do the right thing contractor, which is a, you know, that's a bit of an outlier in that business. But it Helped you, you know, helps you stay in business for 150 years.

B (26:03)

And you've kept it private. And if you look at the big firms that you compete against, many of those like Bechtel are these massive, massive global organizations. From a capital standpoint, can you remain private?

C (26:15)

You can, yeah. I mean the beauty of the construction business is it's really a people business. And so it's actually pretty capital light. It's very volatile business because you're contract to contract, but it's pretty capital light and you know, you can size up and size down at the end of the day. So it's not a heavy, heavy capital business.

B (26:38)

And so I was very surprised when I was talking to Ryan on Monday or Tuesday about I asked him directly how much tariffs have impacted Pulte's cost to build. And he and I had spoken back in May or June and his projection at that time was that the tariffs would impact the an average home cost by about $5,000 and Poulte year to date, average home price has been 570,000 bucks. And so I said to him, has that played out? And he said to me, our calculation right now is that tariffs have had zero impact on our cost to build year to date. As you look at what Gilbane is doing as it relates to your cost of build.

C (27:21)

Yeah.

B (27:22)

Is similar story to what Pulte is seeing on the single family side. Are you seeing tariffs and inflation hit you a little bit harder.

C (27:29)

Early on? Thought the tariffs, inflation was going to hit us. We buy 8 billion, we put in place 8 billion of construction a year. So we've got great trillion 8 billion of construction a year and we'll put in dollars in dollars in any given year. So we buy in large scale. And so the teams are very, very good on our procurement side and kind of figured out how we can work around get discounts. And so it hasn't been a big issue. The business, the biggest issue in that business today is what why Oracle's doing so well is the data center. Right. And the data center, the amount of construction that's going into this is enormous. So if you are in the way of goods that are needed for these data centers and these data centers, they don't really care what they pay. It's more speed to market. So it's a great opportunity if you're selling to them, so switch gear and all these things that are getting consumed, they, they eat a lot of concrete, you know, that goes into these things. So that what's getting consumed there is where you're seeing the biggest price pressure and the biggest lead time on, you know, almost Covid like lead times on certain items.

B (28:39)

And if you think about where Gilbane has, has built in the past, one of the areas where you all did a lot of development or construction was in life sciences and particularly in the Boston area. Life sciences was one of those office products or whatever you want to call it. Had a lot of momentum to it. Not so great right now.

C (29:00)

Yeah, I mean this is, this is a, this is a space. We were pretty controversial in the life science space because we're Boston based. It was boomtown. But we kind of do our math and our bottoms up as we do market by market. We thought we had a big supply problem and we didn't really understand demand. So if you looked at life science before, just put in context before COVID it was about 25 million feet. You absorbed about a million square feet per year. Booms. Tons of money goes into life science MRNA and all the excitement around it, the potential for net absorption went to 5 million feet. And what do we do as real estate developers? We put 25 billion square feet up. And so we, we wrote a paper in the fall of 20 that was unpopular with a lot of our investors that said, hey, we think this thing goes to 25 or 30% vacant. And it gets really tricky because of that. I would say we were wrong. It was gone to 50% vacant. And if you went to Somerville just over here, it's like a ghost city like on TikTok, you know, these big buildings of beautiful glass and no one's in them and no one's around them. So we're about 40, 50% vacant. And the life science business continues to get worse in Massachusetts because funding's going down and it's risk off. Market rates are higher. So it has been for us at Rockpoint. We were lucky to kind of have this process of how we look at everything, really understand supply, really understand demand and then really understand your pricing power. And it was very similar to, you know, what Ryan talked about Yesterday and his 14 different products in the market and where he wants to be. And when we go back to Austin, that's how we'll go back. We may go back and say, hey, we really want to be, you know, in Kyle Buddha because at a mid market price point, because we think that from a supply demand standpoint that's the best and we'll have the best pricing power because of what Tesla's doing, you know, or whatever. Right. So we'll really position ourselves in all of these markets to, to find that sweet spot has.

B (31:16)

So as it relates to the vacancy here on life sciences side, I mean, Boston was known as, I mean, if you look at Michael Porter's competitive advantage of various cities analysis, he'd sit there and say Boston has, you know, real scale in mutual funds and money management. Yeah. And has real scale in life sciences. Has life sciences just as an industry come down that much or have the jobs and the investment gone to other cities?

C (31:40)

We just overbuilt. I mean, it's still a great business. It will be a great business. We have a stranglehold on the business. Obviously things are a little tricky in ED's and meds today in Boston, given the political backdrop, but we have a stranglehold. And so the best of the best is still here. The best innovation is still here. The one thing, as you think about AI, the one thing you got to really think about these life science buildings, going back to your question before, is they're half lab, half office. Yeah. And you paid the same rent on the whole thing. Do you really need the office going forward? Because that, you know, that's not, you know, these scientists don't love to go upstairs and.

B (32:20)

Well, you love the lab. I mean, what's AI going to be able to do as it relates to, I mean, the, the, the ability for AI to go and do what lab testing has done and run these massive iterations on it will also, I would assume, bring down the investment in lab.

C (32:35)

It should. But definitely the people sitting upstairs running the computers, doing the iterations can go away. So the office portion of that is a kind of an unanswered question going forward.

B (32:46)

So when I was just talking to Diana Olik before coming in here, she asked me a lot about the environmental challenges and with the federal government pulling back on environmental standards, what that means for development places like Florida and Texas and California. At Gilbane, are you seeing developers still look for green buildings and investing in the things that had made that a huge push in the US or have you seen people peel back and say, ah, those low flush toilets that I was spending a premium for aren't quite as important today as they were five years ago?

C (33:21)

Yeah. From their perspective, they have these big institutions that are still in, that they're still investing. They're big infinite institutions. They still invest in colleges, universities. So it's still part of their ETH ethos. You know, if I can build and have less of an impact on the environment, and that's probably a pretty good thing, I would say in our business at Rockpoint, it's definitely something that, you know, as it gets harder, development's a great way to make money, particularly in multifamily. And so as it gets harder to build, there are markets that we want to be building in today that we actually think that supply, demand, pricing, power works. And so the question is, is getting it to the right price. And so for sure, some of that stuff in our business is getting the EID out today. You'd like to do it if you can do it, but you know, we're trying to build and dummy things down and get things as cost effective as possible.

B (34:16)

You mentioned that the big firms are still focused on those environmental standards in the data center space, which you mentioned tomorrow. The large procurers of data center space are also very focused on what kind of energy those data centers are using. And they're still locating them where they're getting renewable energy, even though right now the policy is you don't have to worry about renewables. You don't have to worry about that. We're not going to invest in it. The apples and the Googles and the very large hyperscalers are all sitting there saying, we want environmentally friendly centers that are getting environmentally friendly energy. And I think that that's still driving the location of them even though the politics have changed dramatically on those issues.

C (34:55)

Absolutely. Yeah. I mean, it's, it's, it's good business and it's long term. Right. Because it's the globe. At the end of the day, we have a, we have a, we have a heat problem for now. Right. Maybe it is cyclical, who knows? But we have a heat problem. So if you can have greener energy, why not?

B (35:14)

So do you ever come out of a Gilbane board meeting looking at the order book at Gilbane, saying, we're at the tip of the spear. I'm seeing where people are building capacity, if you will, and then take that back across the street to your seat at Rockpoint and say, okay, this is where we then get to play. Because I can see before other people where people are building their order book.

C (35:37)

The answer is I learn a lot from them. Our teams, I learned the tip of the spear for when we're a market coverage group. Right. So our teams are in New York, they're in the Carolinas today, and they're in South Florida. So they know who's out looking for sites to build factories. They know, they know it way before Gilbane ever knows it. So our information, and that's really kind of how we Set our firm up is to be a real time information machine and allow us to front run what we're seeing on the ground and then also take information, you know, like what we saw. We started investing in a Huge Way in 2014 in South Florida and we were doing a ton of multi, and someone's research report came out and said, can't be in South Florida multi anymore. If you look at area median income to average rent, it's 30%, it's unaffordable. And so we got it sent to us a million times and we were seeing 18% at that point in time. We were seeing very, very low rent to income ratios and even. And this is garden. This is like, this is meat of the market housing. People who work at grocery stores and, you know, this is meat and market housing that we're building. And we were seeing incomes that were like 50% above AMI. And so for us, we, we kind of like, this doesn't make a lot of sense. So we really dug in then into this BLS data. And you read the American Community Survey, which I know Ivy's an expert on, but if you think about these questions, they call your house. Oh, yeah, okay. They call your house. Right. So they don't get me going on owner equivalent rent. Exactly. They are in Larry Ellison's house and they say, hey, Larry, quick question for you. Oh, sure. How much you make? Well, I made 110 billion yesterday, so this year is probably 150 billion, I guess. And your house? Oh, yeah, yeah. You know, if I live in it, I was going to rent it, probably get a million a month. And is that up from last year? I think so. Ken Griffin's building next door, and they were getting better, so probably 800 grand a month last year. Like the people who actually give them this data, I guess it's good for someone. But at that point in time, when we read that and we thought about it and then we did a big, we did a survey monkey. We sent to a thousand people, probably a bunch of brokers, and said, hey, have you ever responded to one of these things? And nobody ever had.

B (38:05)

Right.

C (38:05)

And so we, we kind of threw that data out the window at that point in time. So that, that's, that's what we see, you know, in the market. And so it's, we're, we're, we're. We're a private equity fund, but we, we're trying to create real estate entrepreneurs. And you're in your market every day and you're thinking, our joke on AI is Like, what we're really working on is actual intelligence. Like we want to have, we want to get better at actual intelligence every day because that gives you a competitive advantage. And so we're in the market every day. So we use these factories coming to Raleigh or, you know, something's coming to South Florida, or the incomes don't make sense, or this gap in income, you know, take home income from Jersey City to downtown. And so that really, for us, that's the tip of the spear.

B (38:48)

And do you set AI to that data lake? Are you guys building your own artificial intelligence data lake?

C (38:54)

We are. We're trying and we're trying to take that and get better at communicating amongst us, kind of the trends that we're seeing. And then where it's really great is the big data stuff, right. We have over 300 million data points that we're using to study this college migration. And we can use it for different ways. Right. And that took us two years to figure out how to even think about that data. Right. We don't use BLS data from moves. We use postal. We have 200 million postal service moves in a database that we're constantly calculating, tabulating and looking at things. And it was interesting because your talk yesterday, like, if you think about moves and you think about this business here, if you can find these triple threat markets by triple threat would say is that their jobs are taking you there, so you're moving there for jobs, work from anywhere. People are moving there like a Charleston. We've got a deal with Freehold here in, in Charleston. It's been a great seller, hasn't really slowed down at all because work from anywhere, people just decide, hey, what a great place to move and raise kids, right? And then boomers will retire there. You know, like the, the, if you look at the math on Myrtle Beach, I mean, it's just constantly filled with people. And that's why that 55 and over for sale business is so strong. But that if we look at the migration, these markets, if you get those three chains of people kind of moving there, it's, it's really extraordinarily powerful.

B (40:25)

I was really surprised that Ryan talked to me about their 55+ active adult that they're actually building. They've had some very successful communities in sort of the upper Midwest places that you wouldn't think would be typical retirement communities, but that people are staying there. And I asked him in the interview whether that has something to do with the eldest daughter staying around to take care of her parents. And he said that may have something to do with it, but we've just found that these communities are extremely attractive for people and that they're not moving south. They're sticking around in those communities where they built their homes and lives. Talk about industrial for a moment because I know you raised a $2 billion fund with ADIA to focus on industrial. And industrial has been one of those asset classes, I would argue, like multi. I mean, really the commercial world has been multi and industrial and sort of everything else. Talk about what you all are seeing on the industrial space. I know you did a big development with graystar. Talking about Charleston, South Carolina, did a big development with graystar. What's your take on industrial right now and the their growth? Because we've seen vacancy and industrial go up quite significantly from nothing. Yeah, it's sort of like your comment about California and occupancy. You go off the bottom. Any movement up seems to be a big number. But from an industrial standpoint, we have seen vacancy get up to north of 4%, which is a lot in given where we've been. You're still bullish on industrial or pulling back on industrial a little bit.

C (41:45)

So again, like we do anything, I would say we don't buy the market. Right. We're not very, very. We're very, very focused. So I would say today there's still pockets of strength. The, the overall overlay is tariffs need to get figured out because most of these buildings are moving goods and they don't know what the tariffs are going to do and where they're coming from, etc. So I think you'll see a big relief demand. There's a lot of people who want to get going, who want to build new projects, who need new projects, but they're waiting to see how this all plays out. Right. So I think on a macro basis, once that is just known, you can reset your business. And if you're a football manufacturer, a wine importer, whatever it is, it hits so many different people. You know, you can just get back to business. So on a macro basis, that's probably what's going to happen. We've been in South Florida, we're in Tampa. These are places that are growing today that are undersupplied and, you know, developing there and had great success with that and building, you know, buying land at good prices. It's a little bit sort of what the housing business needs to do. Land is reset, construction's reset, and you could build to a seven, seven and a half. So you could build to a really Good level and everyone can make money at that level. And then we also really like this advanced manufacturing thing is real, it's huge in the Southeast and there's a lot of downstream derivative plays of that. And so we really like some of these southeast regional players. Raleigh, Richmond. Richmond's doing amazing because you really think about it, Northern Virginia just became a data center and all the, all the industrial there went away. Right. So that's boom. And where's the next place you go? You go down 95 to Richmond. It's cheap, it's a good place to live. And also we're seeing all these data center suppliers switch guys and they come to Richmond to go service those data centers. Right. So there's a lot of second derivative plays that you can make. And with this advantage manufacturing these trends and then some of these markets like Florida that are continue to grow, they're triple threat markets as we said, and they're under warehoused and you gotta, you gotta build the one thing you have to do and we've got a great team on this. You just gotta really make sure you've got the right product. Because apartments is pretty generic. Our single family housing's pretty generic. You know, in South Florida you don't want to put up a million and a half footer. You know, you want to put up 150,000 square footer because that's the meat of the market.

B (44:21)

Yeah.

C (44:22)

And so how in industrial people will make that mistake? Housing people don't generally make that mistake. You know, in suburban Fort Worth, people aren't building 10,000 foot homes. Right. They're building, you know, as cheapo entry level home as they can for the consumer. So that's the one thing. But yes, we continue to see opportunities. It's not as broad as it used to be, but if you really, really are rifle shot, there's some great opportunities with some big taillights.

B (44:48)

If anybody is down in Richmond, if you go to Richmond next, I'd strongly suggest you go see the new COSTAR headquarters that's being built in Richmond. Their, their headquarters in conference facility is costing them over a billion dollars. And it is, it is to spin your eyes, it's really quite something. And I know many, many people in the room take COSTAR data and ingest it. I'm assuming you all use Oyster did in a pretty big way. But what Andy's building down there is really quite something. I am just as an aside on that, and I'm a huge fan of COSTAR and a huge fan. Andy's one of My really close friends, I do. Your comment as it relates to the BLS survey and asking people, when was the last time you picked up the phone and answered that question? Crazy. CoStar relies for most of their data on surveying. There are people down in Richmond who call out to people and ask brokers, ask owners like you, hey, give me that data. If that source of data, for whatever reason, doesn't answer their request, the request that they have, it's a pretty significant shake to their data feeds that COSTAR has. That's somewhat distinct from Bloomberg. And I only say that for my total outsider observers. But when I was talking about this with someone the other day, I just. It sort of made me think about survey data versus actual data feeds. And the other thing that hearing you and how Rock Point uses your data to create this great data lake and looking at it, one of the biggest things that we've been challenged with at W and D, and as you can imagine, with a $135 billion servicing portfolio and 50 plus billion dollars of annual originations, we get a tremendous amount of data. And all the data that Zelman has, we get a tremendous amount of data. And the hardest thing for us as it relates to using that data is what data we actually own and what we don't own.

C (46:34)

Yeah.

B (46:35)

In other words, the data writes behind the data.

C (46:37)

Yeah.

B (46:37)

And so when we get a feed that comes in from our partnership with Fannie Mae, we can't commercialize that data. But can we take that data, put it into a larger data lake, have it inform the larger data lake, and then pull out of that broader understanding of the markets, broader ability to say, we like that market, we don't like that market. But it's those data rights that sit behind all the variable data feeds that is really challenging, particularly if you think about trying to commercialize it. Because as we make these investments, we're trying to make it so I can sit down with you and say, hey, Tom, you guys have your great data insight on markets, but W and D might have a little bit further into it. But the problem is that if I wanted to turn around and commercialize that, the rights to how we pulled that data are anything but clear. And right now, our CTO and our general counsel spend a tremendous amount of time trying to figure out what is sort of own data and what is leased data and what data rights we have to work with the data and then turn around and either give it to you or sell it to you. And it's a super big both opportunity as well as Challenge over the next five to 10 years.

C (47:46)

You know, it's, well, one, we're data junkies and we love your, you know, capital markets report. So insightful. And Chris Mickelson, if he's here, probably will complain about how much we call him and ask questions on it. But you guys do an amazing job on that. But for sure, I mean we, we, we started looking at the costar data and some other data and if you ask them to peg rents on an apartment complex, it's probably 15% off is our guess. So if people are just doing stuff with big data and using AI saying what's that apartment complex worth? It's probably 15% off on average. So we have to, it'd be great if it was right, but we have to do the old fashioned that's in the back, looks at a train track that's up front and that's a 2:1 and go through it and price it by hand to really get the numbers right. So I think that's a huge point. I think also just understanding the data and a lot of people just take data and Ivy's the best at this and done a ton of this. Right. People take data and just take it for gospel but you know, you don't really know how they thought about it. And a lot of it is pretty crazy when you really dig into it.

B (49:00)

Yeah, it's, it is one of those things that makes me feel somewhat secure. Yeah. At least AI isn't going to completely disintermediate our business that you all are going to sit there and say just what are the terms and what are the, you know, how do I finance this building? And AI comes back and says this is how you do it, these are the terms and let's go, just get it done.

C (49:17)

Yeah.

B (49:17)

But it clearly presents some challenges as it relates to staying ahead of the curve on our end.

C (49:21)

Yeah. And that's, that's how our, that's our business and how it's built. And that's why mid market works because, because you can't be huge and do what we do.

B (49:31)

So in, in, as we wind this down, I want to just talk close out on, on housing and as you look at the continuum from single family to sfr, BFR to multi, and you sit there and say, okay, right now. And one of the things you said previously, Tom, which I thought was interesting, was wait till tariffs kind of get worked out and then things are going to kind of go. And I sit there and say to my head, the, the markets look forward and we have an S and P and a Dow both at all time highs. We have the 10 year at 4%. We have the expectation that we get rate cuts coming. We've got oil at 62 bucks a barrel and from just a macro look. Yeah, it's freaking Goldilocks.

C (50:09)

Yes. Pretty good.

B (50:09)

I mean it's, it's really good.

C (50:11)

Yeah.

B (50:11)

I mean, so like hearing that. Well, once we get that figured out, it feels like the market already says that's already been figured out.

C (50:17)

Yeah.

B (50:17)

But as you look at housing and you think about the single family home unaffordability crisis we have, which the Trump administration I believe is going to address in the next couple weeks and they're going to do something pretty significant as it relates to trying to change land entitlement across the country at the local level by using carrots and sticks on federal funding to force municipalities to change the way they do it. If you do it, they'll give you the money. If you don't do it, they won't give you the money. And they're working very hard on that. I know from some conversations I had yesterday. So we're going to see something as it relates to the administration trying to change the entitlement process at the local level to try and bring the cost of single family housing down. And in the process of that. Oh, by the way, they're also focused on multifamily and want to see the development of more multi. Yeah. But as you look across that continuum, where is Rock Point focused as it relates to. We really like single because it's unaffordable if it's going to become affordable as rates come down. And let's put some bets there. Sfr, bfr, they can't buy the home, but they still want the detached single family home. We like that. Or you know what we're really good at? Multi. We built multi. Density is where it is. And let's go, let's go on the multi side.

C (51:26)

Yeah, it's a good question. So I'll run through them in order quickly. Single family for us means land. Really. We're an equity player, we're not a home builder. We're trying to make opportunistic returns. Right. So it really means land. So it has to be tactical because land is so levered. If home prices go down 10% and you have a longer carry and Your lot residuals 25%, the lot's worth half overnight. Right. And so you really have to feel like you're in the early mid innings and you've got A Runway on land. And so that's generally when we'll play land. And you're going to see that opportunity here shortly. And what the administration does, if they free up a lot more land, it's great for home builders, it's great for volume, it's bad for existing landowners, it devalues land. And so that's a tactical play for us. And we do, you know, we've done it with Patrick's Luftski at Dream Finders, Casey, the Lennar folks. So that's a. That's a business we like. We've done probably 100,000 housing units in land. So we've done a lot of it. It's a. It's a sector we like. And we will play just today with where we are. It's tricky. And Ivy and the team has wrote about that a lot. It's very, very tricky. Time for land, prices have to go down. And so. And I think the builders all agree. So the next is single family rental. Single family rental. Scattered is really hard today because home prices are high and you can kind of buy for a five. And rents aren't really going anywhere. I think we have a theory on why scattered rents aren't going anywhere. Because it should be better. It's 96% occupied. The rent income ratios are 20% or less. I mean, very, very low. You rent that home for 2,500amonth, three bed apartments, 2200amonth, and it's 4,000amonth to own that home. Right. And so the rent should be growing more. Our theory there is that the penetration of institutions is too low. And so it's so much mom and pop in the market, and they don't raise rents. Right. They just want steady cash flow. And that's who you're competing against. So it's like apartments. And in the 70s, you go tell.

B (53:36)

Elizabeth Warren next time she's here, what you just said.

C (53:38)

Yeah, for sure.

B (53:38)

Because she would tell you that the reason that housing is unaffordable is because big institutions have stepped into the SFR and single family space.

C (53:45)

When it's less than 2%, it's totally agreed. Totally agreed. Totally agreed.

B (53:50)

She's in your state.

C (53:50)

Next time, would you? The owners, our joke is like, the owners want to go to Disney, and if the tenant moves out, we don't go to Disney because I got to pay a commission, I got to paint the home or it's 10 grand. And so I just don't want them to move out. I want to go to Disney as a family. This year and you know, maybe we can get a rent next year. We're good. Right. So that's, that's a bit of a ballast on that market because it's, it is mispriced. It should be priced higher from a supply, demand and pricing power standpoint. So we like that space a lot. Build to rent has been particularly strong for us in that space. We can build to six and a half, seven with, with, with partners of ours who have done a great job. And so that, and that works. People will buy it and, and, and buy it at a low cap rate. You can sell it for a five and a quarter and we can, we can make good money and with pretty fast duration. The last one is apartments we'd love to be buying existing. You guys have done a great job and kept cap rates much lower than you know, all would have thought math would have said. Um, the capital markets have done a great job too. Right. The, the debt markets got really strong. This insurance money stepped in. The gap we all thought was going to occur. Didn't really occur. You know, insurance market stretched a little bit. Maybe there's a little prep but refunds debt funds, the captive insurers that some.

B (55:10)

Of these big private equity funds.

C (55:11)

Yeah, exactly.

B (55:12)

Are taking and they're taking capital off their balance sheet and putting it out as loans. That, that's been a huge source of.

C (55:17)

Capital in the market and it filled that gap. Right. That gap we all thought two years ago was going to happen with rising rates. You know the refis kind of allowed people to hold. So the multifamily market has been tough to buy. We are finding deals but it's kind of rifle shot and it's definitely you got to have a tailwind if you want to make our returns. You've got to have a tailwind and you got to have a value add business plan. So we're really, that's, that's the focus. But it's a space we like a lot. It's a space. We've had 18% net IRRs and that's both in existing and in development and we love the development space there. But we're pretty nichy. We're not going to go evergreen to the next layer out. We're going to try to find the last site in Broward county and build a garden. That's what we're looking for. So we're a little greedy honestly on that. But we've had great returns in it.

B (56:12)

What was your number as it relates to what Austin needs to get to as it relates to occupancy for you to buy 92%.

C (56:17)

Yeah. I mean, if you look at. Yeah. All markets in the history is 92 to 94% is when they inflect and start, you know, growing again. The question here is there's one potential. There's probably a lot of potential, but there's two potential things that could be different this time. One is rates. People are diving maybe harder than they need to because they want to get to break even because you kind of got to get to like 85% occupied to cover your debt, of your construction debt.

B (56:50)

That's the reason we're 96% occupancy. We haven't seen rent growth yet. Everyone's been playing for the occupancy play before they're going to the rent growth.

C (56:57)

Exactly. You would assume that we're going to.

B (56:59)

See that rent growth play in 26 for sure.

C (57:01)

In certain places, no questions asked. And you're seeing it today in certain places. It used to be 60% occupied with low rates, you were break even. So then you could, you know, you could tear up as you leased up and be patient. So I think capital calls are forcing people to kind of say, hey, if the winter's coming, capital calls, I gotta be at 85 with people paying rent, not, you know, free rent and to cover. So I think that's a big thing. And then two, with the big investors in the hospitality space and in the hospitality space, we got very, very good right after the GFC of computer pricing. And in New York City for Fashion Week this week, you know, typically you would have sold out half the hotel for 200 bucks to airline crews and you lose all this opportunity. Nobody had the guts to hold a hotel vacant and sell it for a thousand the day before. Right. So the computer said, hey, here's the optimum time to start selling rooms. We all went to the computer here in apartments and that actually got this rent growth we never would have gotten. Right. You never would have had a general manager who is set to get 5% rent growth, get 25 in any given year. It just would never happen. Right. They would have gotten seven and gone golfing with their buddies and, you know, come to the, you know, the meeting at the end of the year, say, hey, we kicked butt on budget and. Right. The computer also dives harder on the other side. And we saw that in hotels when the GFC occurred. And so I think that the question is, is, you know, because it's saying, fill, sell, sell, sell, sell, sell. And so the question will be is this. And I know people aren't using the computer as much anymore, but the data.

B (58:39)

Well, you also have the real page lawsuit. And, and that, that clearly is making it so that, that go to the computer. Go to the computer is being a little less used for sure. And that goes back to my comment. As it relates to survey data, as it relates to right now, if one of our bankers or brokers calls up someone and says, where are you on rents? Where's the operating on XYZ asset? People are being very, very close, closely held with their data today, whereas before they'd be like, oh, I'll tell you all the fundamentals and what the far play down the street is charging. You talk to any of these major operators who are in any way named in that lawsuit, they are not talking, they're not sharing data. They're not, they're not talking to anyone about it. And it's, and it's gone from a world of kind of free access to data to almost no data as it relates to those broker calls. So it's just kind of an interesting data. It's an interesting point.

C (59:26)

So when that. So maybe we've overshot is another question, right? You just, you went too hard. You gave a ton away. It is really affordable. And so maybe you get to 88, 89, 90 and you start feeling good again and you can really, really move rate pretty quickly because you overshot on the downs to get full, you know.

B (59:46)

So I'm out of time. I could keep going with you for a long time. Tom, thank you so much for joining us. Thank you IB for having the two of us and thank you everyone for being here. It.