WEBVTT - The REIT Stuff 0:00:05.920 --> 0:00:12.360 Well, the trillions. I'm Joel Webber and I'm Eric Beltierness. Eric, 0:00:12.400 --> 0:00:14.080 there's a lot going on in the world, and we're 0:00:14.120 --> 0:00:16.440 gonna talk about reads. Why are we going to talk 0:00:16.440 --> 0:00:19.800 about reads? Yeah, because you know, you can just get 0:00:19.840 --> 0:00:23.439 lost in the news cycle and all the discussions on 0:00:23.480 --> 0:00:25.799 Twitter and just sometimes you just end up in the 0:00:25.840 --> 0:00:30.200 Ivory Tower debating these things that are fun to talk about, 0:00:30.240 --> 0:00:34.080 but I mean maybe aren't practical. And so sometimes you 0:00:34.120 --> 0:00:37.760 have to just cut away, go into an area, a category, 0:00:38.000 --> 0:00:40.479 and just roll up your sleeves and dig around and 0:00:40.520 --> 0:00:44.200 talk about the practicality of a certain area for investors. 0:00:44.280 --> 0:00:47.239 And so UM I thought reats were an interesting one 0:00:47.280 --> 0:00:50.520 because a they're at a cross roads, they're changing dramatically. 0:00:51.000 --> 0:00:52.720 UM And for those who don't know, READS stands for 0:00:52.760 --> 0:00:54.880 real Estate Investment Trust and it's sort of a way 0:00:54.880 --> 0:00:57.880 to buy an et F. And then you know, indirectly 0:00:57.960 --> 0:01:02.080 or directly rather I guess own UM properties and they 0:01:02.080 --> 0:01:10.000 could be anything from like retail properties, malls, storage, industrial infrastructure, hotels, uh, 0:01:10.040 --> 0:01:13.559 stuff you wouldn't buy as a regular person typically. And 0:01:13.720 --> 0:01:16.080 also they yield a lot because they have a certain 0:01:16.120 --> 0:01:17.880 structure where they have to pass on a lot of 0:01:17.880 --> 0:01:21.160 their income, and so we have rates rising, which is 0:01:21.440 --> 0:01:23.600 a threat to them. But then at the same time 0:01:23.800 --> 0:01:25.959 rates are still low. And so I thought there's a 0:01:25.959 --> 0:01:28.760 lot of crossroads going on in the Reek category and 0:01:28.800 --> 0:01:31.399 we could maybe unpack it and talk about, you know, 0:01:31.440 --> 0:01:33.920 the pros and cons of all of the different products. 0:01:33.959 --> 0:01:37.240 You basically get to own real estate without really owning 0:01:37.240 --> 0:01:40.600 real estate. Yeah, I mean, I guess you basically just 0:01:40.640 --> 0:01:43.520 click a button and it's you're pulled in with a 0:01:43.520 --> 0:01:47.520 bunch of investors who are common owners of, you know, 0:01:47.880 --> 0:01:50.040 real estate properties. And one thing I hope to get 0:01:50.040 --> 0:01:52.920 out today is to get some visual on what exactly 0:01:52.960 --> 0:01:54.880 you are owning. I mean, I can see the words, Hey, 0:01:54.920 --> 0:01:58.800 now I own residential and hotel reads, but where are 0:01:58.800 --> 0:02:01.040 these hotels? What do they do? Um? You know, I 0:02:01.080 --> 0:02:03.680 think that sometimes is lost, but yeah, you do end 0:02:03.760 --> 0:02:07.200 up owning these things. And to help us wade through 0:02:07.240 --> 0:02:10.440 the category, we're gonna be joined by Kevin Kelly at 0:02:10.520 --> 0:02:14.560 Benchmark invest and David our back at World at Greek Group, 0:02:20.320 --> 0:02:28.079 this time on Trillians the Red Stuff. David Kevin, welcome 0:02:28.080 --> 0:02:31.720 to Trillions. Thanks for having us, Thank you for having us. David, 0:02:31.760 --> 0:02:35.040 I want to start with you, Um, why why should 0:02:35.080 --> 0:02:37.079 we be talking about reads right now? What are these 0:02:37.080 --> 0:02:40.160 good for? Well? I can tell you right now that 0:02:40.240 --> 0:02:42.600 this is not going to be a sexy conversation like 0:02:42.720 --> 0:02:47.680 tt slaw and bitcoin and buzzy t F. But when 0:02:47.720 --> 0:02:50.920 you talk about reads, they provide one thing that is 0:02:50.960 --> 0:02:57.639 common in times of volatility, and that's safety, dividend income stability, 0:02:58.400 --> 0:03:02.520 high pay at ratio by these companies. You're you're getting 0:03:03.000 --> 0:03:06.960 almost like an annuity or like a long term bond 0:03:07.360 --> 0:03:10.280 when you're buying some of these companies. And as Kevin 0:03:10.280 --> 0:03:13.680 can attest to looking at the long term holdings of 0:03:13.760 --> 0:03:16.360 some of these companies, you're just going along for the 0:03:16.440 --> 0:03:18.720 ride and letting these companies do what they do best. 0:03:20.240 --> 0:03:23.080 Let's just take one second, David, to just bring in 0:03:23.120 --> 0:03:27.280 somebody who knows almost nothing. Explain what a red is 0:03:27.400 --> 0:03:30.040 and why the income is high like that structure that 0:03:30.080 --> 0:03:34.160 I alluded to earlier. Just explain that whole concept. Sure, So, 0:03:34.200 --> 0:03:36.720 as you said to read is a real estate investment trust. 0:03:37.040 --> 0:03:41.040 A real estate investment trust is a shell that you 0:03:41.040 --> 0:03:44.720 would own a property, a portfolio of real estate, and 0:03:44.760 --> 0:03:48.680 as you mentioned, that's office building's, apartment properties, hotel, self storage. 0:03:48.960 --> 0:03:51.240 The list goes on and on with the way that 0:03:51.280 --> 0:03:55.160 a reat is structured of the net income is paid 0:03:55.160 --> 0:03:57.320 out to shareholders in the term of dividends or in 0:03:57.360 --> 0:04:00.240 the form of dividends, and so as a result, off 0:04:00.240 --> 0:04:01.920 the bat, in fact, many of these guys are paying 0:04:01.960 --> 0:04:04.640 out monthly dividends, and so right off the bat, you're 0:04:04.720 --> 0:04:08.560 getting a huge income component because the typical average dividend 0:04:08.640 --> 0:04:10.720 yield right now, according to a reads around four to 0:04:10.800 --> 0:04:13.560 four and a half percent, and with the tenure, which 0:04:13.560 --> 0:04:16.760 is its closest benchmark, trading around one point six, let's 0:04:16.800 --> 0:04:19.040 say right now, you know you still have about three 0:04:19.120 --> 0:04:21.520 hundred basis points in your pocket that you're being paid 0:04:21.520 --> 0:04:24.440 by these companies to own this high quality real estate. 0:04:24.720 --> 0:04:27.800 Taking a step further, another really interesting way to play, 0:04:27.800 --> 0:04:30.719 that's through the preferred stack. And if you played the 0:04:30.800 --> 0:04:34.080 red preferreds, then you're looking at yields anywhere from where 0:04:34.080 --> 0:04:36.680 public starch has the lowest let's say a sub three 0:04:36.839 --> 0:04:39.920 or excuse me, a sub four. You know, quality names 0:04:39.960 --> 0:04:43.080 are yielding around five percent and higher yield stuffs going 0:04:43.080 --> 0:04:46.039 six to seven and higher, so you know it's there's 0:04:46.080 --> 0:04:48.400 just a huge buffer there for reachs in your favor 0:04:49.360 --> 0:04:52.039 And David, can you tell us what you do at 0:04:52.440 --> 0:04:56.159 a world that Grete group? Sure? So I'm lucky. I've 0:04:57.000 --> 0:05:00.920 extraddle a lot of worlds. I'm an institutional all UH 0:05:01.040 --> 0:05:04.479 sales trader at World Equity Group. I've been in the 0:05:04.560 --> 0:05:07.280 red industry for over twenty years. I got my start 0:05:07.320 --> 0:05:09.920 at a firm called Green Street Advisors now known as 0:05:09.960 --> 0:05:13.280 Green Street. So for me now World Equity Group, I 0:05:13.440 --> 0:05:18.040 am trading reads. I am doing corporate access with a partner, 0:05:18.080 --> 0:05:22.000 working on management relationships. We're doing new share issuance working 0:05:22.000 --> 0:05:23.840 with some of these reads. Really it kind of spreads 0:05:23.960 --> 0:05:26.600 expansive globe. I also work on a red newsletter at 0:05:26.640 --> 0:05:30.279 Daily Newsletter. UM, there's just so much information that's out there, 0:05:30.320 --> 0:05:33.440 and with you know, a hundred sixty plus publicly traded 0:05:33.480 --> 0:05:35.800 equity reads, not counting the mortgage side, there's a lot 0:05:35.839 --> 0:05:38.080 of information to digest on a daily basis and won't 0:05:38.120 --> 0:05:39.520 get through more than that. As we go through this, 0:05:40.560 --> 0:05:42.559 and Kevin, I want to bring you into this, UM. 0:05:42.600 --> 0:05:45.960 You know, I've bumped into you a lot over the past, 0:05:46.040 --> 0:05:48.640 like I don't know, eight nine years really, especially at 0:05:48.640 --> 0:05:51.640 the Bloomberg TV studio. You're always in there doing the 0:05:51.680 --> 0:05:55.520 options segment and whatnot. Before we get into some of 0:05:55.520 --> 0:05:57.240 the E t s Just what are you up to 0:05:57.360 --> 0:06:00.440 these days? So today, but I'm really up to is 0:06:00.560 --> 0:06:05.440 trying to give investors access to specific property types and 0:06:05.560 --> 0:06:09.440 specific exposure, especially in the real estate market. And so 0:06:09.560 --> 0:06:12.480 if you look at my what I do on a 0:06:12.520 --> 0:06:16.200 core level, it's actually look at the real estate universe 0:06:16.360 --> 0:06:22.359 and then delineate which actual companies are are doing on 0:06:22.520 --> 0:06:27.560 their property type, tenant type, and uh, you know, revenue type. 0:06:28.279 --> 0:06:33.080 And so what we do is we make indexes off 0:06:33.120 --> 0:06:35.720 of that, and then we license those indexes to e 0:06:35.880 --> 0:06:38.440 t F issuers. And so what you'll see is that 0:06:38.600 --> 0:06:41.040 the top two property type E t F that are 0:06:41.040 --> 0:06:45.000 out there were the index provider to those. You have 0:06:45.360 --> 0:06:48.640 some new um cutting edge kind of indexes that are 0:06:48.640 --> 0:06:51.400 tracked by E t F s. So but let's do 0:06:51.440 --> 0:06:54.880 this in order to again keep this high level at 0:06:54.960 --> 0:06:57.120 least for now. If you look at the re E 0:06:57.200 --> 0:06:59.480 t F category, which has seventy two billion, by the way, 0:06:59.520 --> 0:07:02.080 it is, it's one of the bigger sectors. V n 0:07:02.160 --> 0:07:04.440 Q has half the assets. That's the Vanguard re E 0:07:04.520 --> 0:07:06.920 t F. It's one of those rare vanguard ETF that's 0:07:06.920 --> 0:07:09.640 the biggest in the category and the most traded. Um 0:07:09.640 --> 0:07:12.960 it's a monster. So, Kevin, why don't you take V 0:07:13.120 --> 0:07:17.400 n Q explain that one and the general you know, 0:07:18.320 --> 0:07:20.400 I guess broad re E t F that vn Q 0:07:21.040 --> 0:07:24.520 kind of represents versus some of the newer stuff. Yeah, 0:07:24.560 --> 0:07:26.680 So the way you should look at the re D 0:07:26.760 --> 0:07:29.800 t F market is V and Q is the big behemoth. 0:07:29.840 --> 0:07:32.960 And what that does is it gives access to investors 0:07:33.000 --> 0:07:36.840 to own broad based real estate. It owns everything all 0:07:36.880 --> 0:07:40.160 at once. You're gonna own every publicly traded shopping mall, 0:07:40.200 --> 0:07:43.840 You're gonna own every publicly traded UH hotel, you're gonna 0:07:43.840 --> 0:07:47.640 own every publicly traded apartment company. You're gonna own every 0:07:47.640 --> 0:07:51.040 publicly traded office building in the problem with that is, 0:07:51.320 --> 0:07:55.920 in my opinion, is that property types trade differently. So 0:07:55.960 --> 0:07:58.880 an office is going to perform differently than a retail 0:07:58.920 --> 0:08:02.000 shopping center, than a hotel, than a data center. And 0:08:02.080 --> 0:08:04.360 so what you're getting is you're getting the broad basis 0:08:04.400 --> 0:08:07.920 like owning the all World Index when it comes to 0:08:08.200 --> 0:08:10.680 E t S, right, So you're owning every single country 0:08:10.680 --> 0:08:13.600 and every single company and so that's what V and 0:08:13.720 --> 0:08:16.480 Q does, and really what it's meant to do is 0:08:16.520 --> 0:08:20.080 to give broad based exposure to asset allocators. It's also 0:08:20.120 --> 0:08:23.880 a passive index. And so if you look at the 0:08:23.880 --> 0:08:26.800 bigger picture as far as like COVID is an example 0:08:27.320 --> 0:08:30.400 in the work from home trade versus the return to 0:08:30.480 --> 0:08:34.880 office trade, Let's say V and Q may even though 0:08:34.880 --> 0:08:38.800 it's still invested in office and hotels and malls in 0:08:38.840 --> 0:08:42.400 an active situation, an active red e t F guy 0:08:42.480 --> 0:08:45.720 would have been out of those sectors in the second 0:08:45.800 --> 0:08:49.880 quarter of last year and overweight single family rental reads, 0:08:49.960 --> 0:08:54.160 tower reads, data center reads. The zoom trade basically for 0:08:54.280 --> 0:08:57.440 reat land. And so now what we're seeing is the 0:08:57.520 --> 0:09:01.080 reverse where there's two camps, this zoom trade still being 0:09:01.160 --> 0:09:03.679 on and then returned off his trade, right some of 0:09:03.679 --> 0:09:06.800 the more aggressive pms that are putting back on the hotels, 0:09:06.880 --> 0:09:09.760 the offices and the retail trade. Just as just as 0:09:10.080 --> 0:09:13.320 a point of clarification, well, and to that end, David, 0:09:13.760 --> 0:09:15.840 what kind of innovation are we actually really seeing in 0:09:15.880 --> 0:09:17.760 the category if if we've got the V n Q 0:09:17.960 --> 0:09:20.600 and that's like the big umbrella of everything, like, talk 0:09:20.640 --> 0:09:23.520 to us about what's been changing and what kind of 0:09:23.520 --> 0:09:28.280 ETFs are are now at investor's fingertips. Sure absolutely, and frankly, 0:09:28.280 --> 0:09:30.680 to Kevin's credit, he was one of the first guys 0:09:30.720 --> 0:09:35.440 that was out there really finding the niche sectors well 0:09:35.480 --> 0:09:37.080 ahead of the curve of some of the other guys 0:09:37.120 --> 0:09:40.320 and all let Kevin go more into detail about his two, 0:09:40.320 --> 0:09:43.320 but a couple of other unique plays. Um, you can 0:09:43.360 --> 0:09:47.160 play the net lease read the net lease reads that 0:09:47.200 --> 0:09:49.720 would be the guys like your quick service restaurants, the 0:09:49.760 --> 0:09:55.440 Burger King's, McDonald's, Starbucks, Jim's drug stores, gas stations, and 0:09:55.840 --> 0:09:58.600 that is run by some guys from a company called 0:09:58.600 --> 0:10:00.920 Fundamental Income. The tick of that e t F is 0:10:00.960 --> 0:10:05.880 any t L Nancy Edward Tom Larry, the two executives 0:10:05.880 --> 0:10:08.600 that started that came from a company called store Capital, 0:10:09.120 --> 0:10:12.880 which Warren Buffet and Berkshire Hathaways its largest shareholders. So 0:10:13.280 --> 0:10:15.079 right off the bat, before we even get into net 0:10:15.160 --> 0:10:18.160 least reads, when Warren Buffett is the largest shareholder of 0:10:18.200 --> 0:10:20.040 one of these net least reads, if there's kind of 0:10:20.080 --> 0:10:23.439 that Berkshire touch to it. Another interesting avenue is a 0:10:24.320 --> 0:10:27.640 home builder's housing e t F. They housing one hundred 0:10:28.120 --> 0:10:31.680 the homes h O m Z E t F. This 0:10:31.840 --> 0:10:38.040 is comprised of residential self storage, lodging, anything home depot lows, 0:10:38.040 --> 0:10:40.120 anything that has to do with the home owner space. 0:10:40.400 --> 0:10:42.240 One more I want to touch upon is the newest 0:10:42.240 --> 0:10:43.880 player and Eric, I think I'd love to get your 0:10:43.920 --> 0:10:46.800 comments on that as we go through this. But the first, 0:10:46.800 --> 0:10:49.520 really the one of the first active read e t 0:10:49.720 --> 0:10:52.160 s has come to market. UM, there's a couple that 0:10:52.200 --> 0:10:54.560 are out there, but from the g S excuse me, 0:10:54.600 --> 0:10:57.800 from alps with G S I capitals, the subdvisors the 0:10:57.840 --> 0:11:00.839 actual ticker r E I t read like I said, 0:11:00.880 --> 0:11:03.160 which is the act the opposite act of read ets. 0:11:03.200 --> 0:11:06.440 So there are several different unique rappers to play the 0:11:06.480 --> 0:11:09.280 E t F space besides I Y R v n Q, 0:11:09.520 --> 0:11:12.120 the big daddies of the sector. One of the reasons 0:11:12.120 --> 0:11:13.719 we did want to also talk about this was that 0:11:14.160 --> 0:11:19.320 um my colleague Morgen Varna back last year, UM at 0:11:19.320 --> 0:11:20.920 the end of the year, she wrote about s r 0:11:21.000 --> 0:11:23.000 VR and it was interesting. I actually learned a lot 0:11:23.040 --> 0:11:26.160 from her note and she just really found that these 0:11:26.280 --> 0:11:30.240 towers and data centers, which again are not tended not 0:11:30.320 --> 0:11:32.640 to be in the traditional re E t F s, 0:11:33.080 --> 0:11:36.760 we're a real source of return at the time. UM 0:11:36.760 --> 0:11:42.679 and you know sr VR has like thirty in those respectively, 0:11:43.240 --> 0:11:46.840 whereas v n Q is more like eight and and 0:11:46.840 --> 0:11:49.640 and again this parallel you see it everywhere. Every category 0:11:49.679 --> 0:11:51.800 has a couple of ETFs that are just tip of 0:11:51.840 --> 0:11:53.720 the spear. They're going to these places that you're not 0:11:54.120 --> 0:11:56.400 getting otherwise. Otherwise, why would the launch an e t 0:11:56.520 --> 0:11:57.599 F if you can get it in v n Q. 0:11:57.840 --> 0:12:01.000 So talk about the tower day a center angle here 0:12:01.080 --> 0:12:03.800 and what that's what's going on. Yeah, So I think 0:12:03.800 --> 0:12:07.559 it's really important to note that as you know the 0:12:07.600 --> 0:12:11.360 overall read market has evolved, you've seen new property types. 0:12:11.400 --> 0:12:13.760 And two of those new property types are data centers 0:12:13.800 --> 0:12:17.040 and cell phone towers, and so they're non traditional and 0:12:17.360 --> 0:12:21.560 they're actually growing pretty significantly because, as you see, we're 0:12:21.600 --> 0:12:25.680 digitizing our daily lives. And so when the pandemic happened, 0:12:26.040 --> 0:12:29.280 you actually saw two big beneficiaries in the real estate 0:12:29.320 --> 0:12:33.440 market where you actually had visibility of cash flows, and 0:12:33.480 --> 0:12:36.439 that was the data centers and cell phone towers. Why 0:12:36.480 --> 0:12:40.000 because everyone was working from home, everyone was doing school 0:12:40.080 --> 0:12:44.880 from home, and so these two property types were really, uh, 0:12:45.000 --> 0:12:50.079 the the frontline defense for everybody in their daily lives. Right, 0:12:50.120 --> 0:12:53.160 It's like everyone was using the internet more and more 0:12:53.160 --> 0:12:57.040 and more for personal and professional use. And so when 0:12:57.080 --> 0:12:59.480 you look at what s r V, the s r 0:12:59.559 --> 0:13:03.240 VR in DEX does because it gives you pure play 0:13:03.320 --> 0:13:07.960 access to those property types. And so what we're seeing 0:13:08.120 --> 0:13:12.120 is a lot of technology investors are using s r 0:13:12.200 --> 0:13:15.800 VR to complement it with their cybersecurity exposure, with their 0:13:15.840 --> 0:13:19.880 cloud exposure, with their semiconductors, because it does have the 0:13:19.960 --> 0:13:23.880 growth of technology, but with the safety and security of 0:13:24.040 --> 0:13:27.480 real estate. And so that's why you're seeing a lot 0:13:27.559 --> 0:13:31.480 of adoption with the s r VR index constituents and 0:13:31.520 --> 0:13:37.480 advisors and investors portfolios. So this brings up an interesting point, 0:13:37.480 --> 0:13:39.440 which is because I'm looking at s r VR and 0:13:40.720 --> 0:13:43.160 that's a great pitch for it, and I think, you know, 0:13:43.400 --> 0:13:47.240 the returns UM show that, but the yield is really 0:13:47.480 --> 0:13:49.880 small relative to other re et F s. I have 0:13:49.960 --> 0:13:53.000 one point six percent for a twelve month yield, whereas 0:13:53.040 --> 0:13:55.960 v n Q is about double that um. Can you 0:13:56.040 --> 0:13:59.840 talk a little bit about that trade off? And you 0:14:00.480 --> 0:14:02.360 a lot of free e t P E t F 0:14:02.440 --> 0:14:06.439 s are used for income you're making. You're like, you're 0:14:06.440 --> 0:14:10.240 basically trying to make a whole different case, is that right? Yeah, 0:14:10.280 --> 0:14:13.560 So the reason why you'll see a lower yield on 0:14:13.600 --> 0:14:16.680 that is because the and it's called s r VR 0:14:16.720 --> 0:14:19.440 because it's it stands for server because computer servers are 0:14:19.440 --> 0:14:23.960 rendered useless without the mission critical assets that server index provides. 0:14:24.000 --> 0:14:28.160 So the whole idea here is when you look at this, 0:14:28.520 --> 0:14:31.600 what are you trying to gain from this exposure? And 0:14:31.640 --> 0:14:34.480 that's growth. You're not trying to get income. And so 0:14:34.560 --> 0:14:37.120 that's what really differentiates it from a V and Q 0:14:37.400 --> 0:14:41.040 because if you look at what the actual management teams 0:14:41.080 --> 0:14:43.800 are doing on the data center and cell phone tower side, 0:14:43.840 --> 0:14:47.000 they're developing right so they're building as much as they 0:14:47.040 --> 0:14:49.680 can right now, and so they're using a lot of 0:14:49.720 --> 0:14:53.720 their cash and assets to develop and build. So you're 0:14:53.720 --> 0:14:55.760 going to get a lower yield, but you're going to 0:14:55.880 --> 0:14:58.160 get higher growth. And that's the nice aspect. If you 0:14:58.160 --> 0:15:01.320 want income, go get income else where. If you want growth, 0:15:01.560 --> 0:15:04.200 your your you you you've got it. You've got a 0:15:04.400 --> 0:15:14.680 perfect portfolio here where you can get that aspect. So 0:15:14.800 --> 0:15:17.320 David as a watch of this space, and you know 0:15:17.400 --> 0:15:19.920 someone who gives Kevin a lot of credit for what 0:15:19.960 --> 0:15:23.239 he's done, and especially with s r VR. What perspective 0:15:23.240 --> 0:15:25.480 do you have on on what what he's been sort 0:15:25.480 --> 0:15:27.720 of accomplishing there and and the stuff to watch in 0:15:27.760 --> 0:15:32.840 that space. Kevin mentioned about the tower reachs and data 0:15:32.880 --> 0:15:35.920 center reaches a growth play, and a couple of my 0:15:35.960 --> 0:15:38.600 favorite statistics goes back to a conference from a couple 0:15:38.600 --> 0:15:41.240 of years ago. The former CEO of American Tower, his 0:15:41.320 --> 0:15:43.160 name was Jim Tassel, he left to go to the 0:15:43.200 --> 0:15:47.200 CEO of Lockheed Martin. He made a great data point 0:15:47.480 --> 0:15:50.480 and it's really resonated with me. Knowing that the state 0:15:50.520 --> 0:15:52.720 of points about two years old, just in the back 0:15:52.720 --> 0:15:55.200 of your mind, know that it's gone up. And the 0:15:55.280 --> 0:15:58.920 point was, did you know, wait for the dramatic plause, 0:15:59.480 --> 0:16:02.520 that there's only four hours of video posted to YouTube 0:16:02.680 --> 0:16:06.600 every minute. That's as of a couple of years ago. 0:16:06.720 --> 0:16:09.720 So think about how that number has only increased. As 0:16:09.760 --> 0:16:13.520 Kevinist stated, we're digesting this content on our phones, are tablets, 0:16:14.480 --> 0:16:17.840 every single way that we can more and more. We're 0:16:17.880 --> 0:16:20.400 doing this conversation by way of a zoom. There's that 0:16:20.440 --> 0:16:23.160 demand for bandwidth. If you go read the Tower and 0:16:23.240 --> 0:16:26.000 Data Center transcripts. One more thing to add is their 0:16:26.000 --> 0:16:30.320 growth is not here domestically, Their growth is overseas. These 0:16:30.320 --> 0:16:33.280 guys are making a huge push in the Indias and 0:16:33.400 --> 0:16:37.320 Africa's and Europe's that some of these countries aren't even 0:16:37.320 --> 0:16:41.120 on three G technology yet in the same breath, these 0:16:41.120 --> 0:16:44.920 companies are working on the next six G evolution. What 0:16:44.960 --> 0:16:47.360 does that mean? As far as does that mean it's 0:16:47.360 --> 0:16:49.480 gonna be real time while I'm watching this movie, it's 0:16:49.520 --> 0:16:52.680 almost like I'm watching a live event. I don't know, 0:16:53.280 --> 0:16:55.720 but our content is only going up and up that 0:16:55.800 --> 0:16:59.640 we're using this and so again, the datas and towers 0:16:59.760 --> 0:17:03.680 is an income play. Necessarily, it is a growing sector. 0:17:03.720 --> 0:17:06.080 And you know, you ask anybody in the industry, I 0:17:06.119 --> 0:17:07.720 don't know the answer to this. But if you say, 0:17:07.760 --> 0:17:10.240 what what ending of development are we in and the 0:17:10.280 --> 0:17:13.000 towers and datas, my gut tells me a lot of God, 0:17:13.040 --> 0:17:14.760 I'm gonna tell you we're still in the early ending 0:17:14.800 --> 0:17:16.879 stages of the tower and data center, please not the 0:17:17.119 --> 0:17:20.200 not the later innings. Yeah, And I think that case 0:17:20.320 --> 0:17:23.960 is made pretty effectively. Um and that that would be 0:17:24.320 --> 0:17:27.439 It's almost like Kevin, You're you're almost making a pitch 0:17:27.560 --> 0:17:31.720 for a theme etf for a new industry. Whereas I 0:17:31.720 --> 0:17:33.720 want to bring it back real quick to just general 0:17:33.880 --> 0:17:36.240 read E t f s that are a little more traditional, 0:17:36.320 --> 0:17:39.760 like van Q and the Schwab and I shares um 0:17:39.920 --> 0:17:44.560 read E t f s David, How sensitive are they too? Rates? 0:17:44.920 --> 0:17:49.760 The tenure is rising? Um? Is this? What about timing wise? 0:17:50.160 --> 0:17:52.840 Would you wait for the rates to rise a little 0:17:52.880 --> 0:17:57.000 more um as an entry point? How do you work 0:17:57.119 --> 0:18:00.359 in rates to your decision on investing in reads traditional 0:18:00.440 --> 0:18:05.360 ones traditionally, I honestly don't know if it's that much 0:18:05.400 --> 0:18:08.159 of an event against some of these reads, the big 0:18:08.200 --> 0:18:11.719 the big cap guys, the SMP five names, They've been 0:18:11.760 --> 0:18:13.640 around for so long and have dealt with so much 0:18:13.720 --> 0:18:16.240 volatility and interest rates, and I don't think it impacts 0:18:16.320 --> 0:18:18.240 them so much. Eric, to be quite honest, you know 0:18:18.359 --> 0:18:21.880 one point six tenuere environment. You know, if they went 0:18:22.000 --> 0:18:25.560 to three percent, yeah we got some problems and we're 0:18:25.560 --> 0:18:28.680 gonna be freaking out. But if you remember back last 0:18:28.760 --> 0:18:30.879 year when everybody was talking about the tend to yield 0:18:30.880 --> 0:18:34.080 curve and version and everybody was all freaking out about that. 0:18:34.119 --> 0:18:36.679 Obviously again with COVID all the other hiccups that are 0:18:36.720 --> 0:18:39.399 in the market, but you know, really what happens is 0:18:39.480 --> 0:18:43.719 reads bounced back pretty quickly. That trade, the COVID trade 0:18:43.800 --> 0:18:47.760 for the reach sector disappeared in about a month. Looking 0:18:47.760 --> 0:18:50.680 at the prefers and everything that that windows shrunk in 0:18:50.720 --> 0:18:52.800 about a month. So really, I think in the grand 0:18:52.840 --> 0:18:55.199 scheme of things right now, I think the reads are 0:18:55.240 --> 0:18:57.960 shaking off the interest rate concerns in the grand scheme 0:18:58.000 --> 0:18:59.679 of things. I have a couple of thoughts on that, 0:18:59.760 --> 0:19:02.400 and I think there's there's stats that people should really 0:19:02.440 --> 0:19:05.400 be aware of. And the first one comes from nay 0:19:05.440 --> 0:19:08.120 Read and they've actually looked at a rising interest rate 0:19:08.200 --> 0:19:11.880 environment and how did broad based reats perform And according 0:19:11.960 --> 0:19:15.280 to the research, fifty four percent of the time when 0:19:15.400 --> 0:19:20.879 rates are rising, reats outperformed the SMP five hundred and 0:19:20.920 --> 0:19:23.399 so I think that's pretty significant. And the question you 0:19:23.440 --> 0:19:28.600 need to ask is why, And it's because rents rose 0:19:28.800 --> 0:19:31.479 faster than rates, and so you want to focus on 0:19:31.600 --> 0:19:35.399 rising rents, not rising rates, and that's the most important thing. 0:19:35.440 --> 0:19:37.880 So if the economy is getting better, you're gonna see 0:19:37.880 --> 0:19:41.119 rents go up faster than rates do and that is 0:19:41.160 --> 0:19:44.919 a huge tail win for for reats in general. Okay, 0:19:44.920 --> 0:19:47.400 so let's keep talking about that. Because here we are, 0:19:48.160 --> 0:19:50.760 vaccination is happening, at least in the US at a 0:19:50.760 --> 0:19:53.880 pretty rapid clip. We could we could actually be uh 0:19:53.960 --> 0:19:58.119 in a version of of normal again before long. So 0:19:58.160 --> 0:20:01.160 what does the read industry look like post COVID, especially 0:20:01.200 --> 0:20:03.600 like in regards to things like malls, now that we've 0:20:03.760 --> 0:20:06.840 we've all transitioned to this this world where everything can 0:20:06.920 --> 0:20:10.080 kind of go remote, Like, what roll could the read 0:20:10.119 --> 0:20:12.919 industry kind of look like post COVID? I think the 0:20:12.960 --> 0:20:16.120 read industry is going to do exceptionally well post COVID 0:20:16.119 --> 0:20:19.080 for several reasons. One is their actual structure. So we 0:20:19.160 --> 0:20:22.200 taught touch base on it before. But what they're gonna 0:20:22.200 --> 0:20:26.240 do is come out of this pandemic leaner and meaner. Right, 0:20:26.280 --> 0:20:29.480 So they're gonna have stronger balance sheets. Uh they've done, 0:20:29.720 --> 0:20:34.000 They've basically right sized uh their entire portfolios. There's been 0:20:34.040 --> 0:20:37.000 a lot of asset dispositions. They can work with state, 0:20:37.119 --> 0:20:41.080 local municipalities to do some redevelopment. And so what I 0:20:41.119 --> 0:20:44.919 think is going to happen is post pandemic, what you 0:20:44.960 --> 0:20:47.840 will see is you will see a lot of reads 0:20:47.920 --> 0:20:51.480 be opportunistic because they have most of them are investment grade. 0:20:51.520 --> 0:20:53.640 They've got great balance sheets, so they're gonna be able 0:20:53.680 --> 0:20:56.639 to buy a lot of the distressed assets. Why, because 0:20:56.640 --> 0:21:00.359 of their financial flexibility, they can issue read preferred airs, 0:21:00.560 --> 0:21:04.119 they can actually issue shares into the secondary market and 0:21:04.240 --> 0:21:07.800 raise money. And so what's nice about it is they 0:21:07.840 --> 0:21:11.880 are known entities. The management teams are are very well known. 0:21:11.880 --> 0:21:13.960 They've been around for a long time, so they have 0:21:14.080 --> 0:21:17.439 a huge advantage to take uh to to to be 0:21:17.600 --> 0:21:23.439 opportunistic going forward. And same question to you, David, like, 0:21:23.520 --> 0:21:25.600 what what do you think post COVID reats are gonna 0:21:25.640 --> 0:21:28.480 look like? Yeah, I echo a lot of what Kevin said, 0:21:28.600 --> 0:21:30.840 you know, going back to the housing crisis or the 0:21:30.920 --> 0:21:34.399 financial crisis wo nine, twelve thirteen. For some of these guys, 0:21:35.040 --> 0:21:40.440 reachs traditionally learn from historical events. So from the O 0:21:40.560 --> 0:21:42.960 Way oh nine financial crisis, a lot of the reds 0:21:43.000 --> 0:21:46.199 decided to go less leverage equals the better position. They 0:21:46.640 --> 0:21:50.440 diversified their tenant base, they just became stronger and stronger 0:21:50.920 --> 0:21:54.920 to combat the you know, financial pitfalls that were thrown 0:21:54.960 --> 0:21:57.760 at them. So to answer your question post COVID, I 0:21:57.800 --> 0:22:00.440 think a lot of folks are going to continue to leaner. 0:22:00.600 --> 0:22:04.439 Meter if you were having troubles before COVID, You're probably 0:22:04.480 --> 0:22:07.160 not going to survive after COVID. A lot of these 0:22:07.160 --> 0:22:09.560 guys could go back and read their transcripts. They had said, 0:22:09.800 --> 0:22:15.240 we've spent this period developing, improving, managing our relationships, growing 0:22:15.240 --> 0:22:18.360 our tenant base. They're trying to get, you know, stronger 0:22:18.440 --> 0:22:21.800