WEBVTT - Cathy Marcus on Commercial Real Estate 0:00:02.040 --> 0:00:07.840 This is Master's in Business with Barry Ridholds on Bloomberg Radio. 0:00:09.440 --> 0:00:12.640 This week on the podcast, I have an extra special guest. 0:00:13.080 --> 0:00:18.400 Kathy Marcus is co CEO and Global COO of Pigium 0:00:18.480 --> 0:00:22.239 real Estate, a two hundred and eight billion dollar investor 0:00:22.360 --> 0:00:25.760 in real estate, part of the giant real estate investment 0:00:25.760 --> 0:00:30.520 firm Pigium. She has had a number of different positions 0:00:30.560 --> 0:00:36.000 within Pigium, including managing their flagship Core real Estate fund 0:00:36.320 --> 0:00:40.400 before she moved into management. She has been on all 0:00:40.440 --> 0:00:43.840 of the big lists, Baron's one hundred most Influential Women 0:00:43.880 --> 0:00:47.879 in US finance, lots and lots of others. There are 0:00:47.960 --> 0:00:52.920 few people in the world better situated to discuss commercial 0:00:52.960 --> 0:00:57.279 real estate investing from every perspective. They do debt, they 0:00:57.320 --> 0:01:01.040 do equity, they invest in public real estate, invest in private. 0:01:01.400 --> 0:01:05.160 She has lived and invested through not just a great 0:01:05.160 --> 0:01:09.200 financial crisis, but the SNL crisis and a number of 0:01:09.240 --> 0:01:14.080 other fascinating experiences in real estate. If you're at all 0:01:14.200 --> 0:01:20.399 interested in learning how a large investor in global real 0:01:20.480 --> 0:01:24.240 estate operates, then you're going to really enjoy this conversation. 0:01:24.720 --> 0:01:29.840 With no further ado. My discussion with pgem's Kathy Marcus. 0:01:30.200 --> 0:01:30.600 Thank you. 0:01:31.080 --> 0:01:34.400 It's good to have you here. So let's dive into 0:01:34.480 --> 0:01:40.080 your background, starting with your undergraduate work. You study real 0:01:40.160 --> 0:01:44.600 estate finance and entrepreneurial management at Wharton. As an undergraduate, 0:01:44.640 --> 0:01:47.280 you go to NYU to get a master's in real 0:01:47.360 --> 0:01:50.840 estate investment and development. So you knew from when you 0:01:50.880 --> 0:01:55.040 were essentially a teenager you wanted to be working in. 0:01:54.960 --> 0:01:57.960 Real estate, and I'm very fortunate that it worked out 0:01:58.000 --> 0:02:00.160 because there's no plan B there. You can see. I 0:02:00.160 --> 0:02:03.560 did not study anything else. So people often ask me 0:02:03.640 --> 0:02:06.160 how at the age literally of seventeen, I knew that 0:02:06.240 --> 0:02:09.760 I wanted to be in real estate, and I think 0:02:09.800 --> 0:02:12.920 that I kind of triangulated on it. I have no 0:02:13.520 --> 0:02:16.799 family history, I have no I knew a real estate 0:02:16.800 --> 0:02:19.800 developer I thought was really great. I knew I wanted 0:02:19.840 --> 0:02:23.240 to do something in business. I was always good at math, 0:02:23.680 --> 0:02:27.000 but I really I just didn't relate to things that 0:02:27.040 --> 0:02:31.880 were more esoteric bonds options. It just wasn't doing it 0:02:31.919 --> 0:02:34.880 for me. And I always really loved the built environment. 0:02:35.200 --> 0:02:38.400 I like architecture. I like as a real estate person 0:02:38.440 --> 0:02:41.200 you walk through your assets, you can touch and feel things. 0:02:41.440 --> 0:02:45.120 I love to see things developed. I like the idea 0:02:45.200 --> 0:02:48.000 of kind of urban planning. I always say, if I 0:02:48.040 --> 0:02:50.480 hadn't been a real estate investor, I would have loved 0:02:50.480 --> 0:02:54.000 to have studied more about urban planning. I like placemaking. 0:02:54.080 --> 0:02:56.679 So really, if you combined wanting to be an investor 0:02:57.040 --> 0:03:01.400 with liking architecture design placemaking, it really leads you to 0:03:01.400 --> 0:03:01.880 real estate. 0:03:02.160 --> 0:03:05.440 You anticipated one of my questions, which was was anyone 0:03:05.480 --> 0:03:07.440 in the family in real estate? My mom was a 0:03:07.440 --> 0:03:11.040 real estate agent, like home to everything from home designs 0:03:11.080 --> 0:03:16.760 and renovation to pricing and financing. Was dinner table conversation 0:03:16.880 --> 0:03:19.560 in my house. Nothing like that from you. This just 0:03:20.120 --> 0:03:24.280 wholly sprung up out of Nowah pretty much. 0:03:24.360 --> 0:03:29.080 I mean, my dad was a small entrepreneur and did 0:03:29.160 --> 0:03:32.760 invest in some commercial real estate, but really not in 0:03:32.800 --> 0:03:36.040 a primary way. And my mom is a speech pathologist, 0:03:36.080 --> 0:03:40.560 So our dinner table conversation definitely had a business orientation, 0:03:40.760 --> 0:03:44.760 especially a small business owner, and so I definitely learned 0:03:44.800 --> 0:03:47.240 a lot there. And I think it also my dad's 0:03:47.240 --> 0:03:51.040 business was global, and so it pequked an interest in 0:03:51.080 --> 0:03:53.920 me in working internationally. But the real estate thing was 0:03:54.000 --> 0:03:54.880 kind of out of the blue. 0:03:55.160 --> 0:03:59.080 So you graduate both undergrad and graduate with just real 0:03:59.160 --> 0:04:04.240 estate related training. What were your first few jobs after school? 0:04:04.320 --> 0:04:07.080 Like I had a very traditional start, I started off 0:04:07.400 --> 0:04:10.680 as an analyst and I worked initially. My first two 0:04:10.800 --> 0:04:15.640 jobs were with syndicators, essentially in a business that doesn't 0:04:15.680 --> 0:04:18.400 exist anymore as it did. I worked for a very 0:04:18.440 --> 0:04:21.360 large syndicator right out of school, which was right around 0:04:21.400 --> 0:04:23.960 the time the tax laws changed and so that whole 0:04:23.960 --> 0:04:25.279 business was upended. 0:04:25.680 --> 0:04:28.760 And before you go further define what a syndicator is 0:04:28.800 --> 0:04:30.600 for people who may not remember sure. 0:04:30.839 --> 0:04:34.120 Essentially you buy assets. It could be all kinds of assets. 0:04:34.160 --> 0:04:37.640 The company that I worked for was called Integrated Resources, 0:04:37.680 --> 0:04:39.880 and we did a lot of real estate, but also 0:04:39.960 --> 0:04:44.440 things like airplane leasing and movies. In fact, Dirty Dancing 0:04:44.520 --> 0:04:46.880 was one of the big movies that we financed while 0:04:46.920 --> 0:04:49.320 I was there, and so they needed people to help 0:04:49.360 --> 0:04:51.839 acquire the real estate and then also one of my 0:04:51.880 --> 0:04:55.560 primary jobs was to help capitalize it and find financing 0:04:55.640 --> 0:04:58.960 for it, because the idea of syndication is that you 0:04:59.000 --> 0:05:01.480 make a giant purchase and then you sell it off 0:05:01.520 --> 0:05:05.000 in smaller units to really more of a retail investor. 0:05:05.279 --> 0:05:07.840 And in those days, it could be as small as 0:05:07.880 --> 0:05:11.040 like a twenty five to fifty thousand dollars unit that 0:05:11.240 --> 0:05:13.919 would be sold through a broker dealer, a Sharson Lehman. 0:05:14.240 --> 0:05:15.919 Lots of people who are no longer in the game, 0:05:16.440 --> 0:05:19.479 and it was a way for individual investors to a 0:05:20.040 --> 0:05:23.600 own assets in a small slice they could never access themselves. 0:05:23.800 --> 0:05:26.960 But in those days, they were very tax driven, very. 0:05:26.839 --> 0:05:30.359 Favorable treatment of those purchases, not like regular stocks and 0:05:30.400 --> 0:05:32.800 bonds exactly, And all that went away with a couple 0:05:32.880 --> 0:05:35.520 of tax changes. First Reagan and then I think it 0:05:35.560 --> 0:05:37.320 was Clinton did some changes as. 0:05:37.160 --> 0:05:41.960 Well, exactly as did Integrated Resources. Yeah, exactly. 0:05:42.040 --> 0:05:46.240 Oh that's very funny. So you end up at PGUM eventually, 0:05:46.480 --> 0:05:50.599 and you start out, did you start out at the 0:05:50.600 --> 0:05:53.680 flagship core equity real estate fund or did you work 0:05:53.720 --> 0:05:56.599 your way towards that, because eventually you were running that 0:05:56.640 --> 0:05:57.280 for a few years. 0:05:57.279 --> 0:05:59.000 I did. I worked my way toward that. I had 0:05:59.000 --> 0:06:01.480 two stops before that. I worked in sort of a 0:06:01.560 --> 0:06:04.719 quasi portfolio management role for like a single client account 0:06:04.720 --> 0:06:08.240 type business. And then I went to be the chief 0:06:08.320 --> 0:06:12.120 under writer for the US investments and really got to 0:06:12.200 --> 0:06:16.159 underwrite all new investments in the US, all across the country, 0:06:16.200 --> 0:06:19.240 all asset classes. It was a tremendous experience for me, 0:06:19.640 --> 0:06:22.760 something that we often have had as a rotational position. 0:06:22.839 --> 0:06:24.440 So I did it for three years and it was 0:06:24.680 --> 0:06:25.800 a really great growth exit. 0:06:25.880 --> 0:06:28.240 Now when you say all asset classes. 0:06:27.960 --> 0:06:29.920 Sorry, all sectors of real estate. 0:06:29.720 --> 0:06:32.119 Oh okay, so not because at one point in time 0:06:32.200 --> 0:06:34.760 you were doing something with equity. 0:06:34.440 --> 0:06:37.240 Is that right, head of head of us equity at 0:06:37.400 --> 0:06:40.839 Pigeon real Estate meeting equity versus debt, not equities versus 0:06:41.360 --> 0:06:41.960 got it all right. 0:06:41.880 --> 0:06:44.120 I want to think you. So it's been real estate 0:06:44.440 --> 0:06:45.160 all the way down. 0:06:45.279 --> 0:06:49.000 That's the real estate through and through equity, debt, private, public, 0:06:49.080 --> 0:06:50.159 but always real estate. 0:06:50.800 --> 0:06:52.919 So tell us a little bit about the experience of 0:06:53.000 --> 0:06:56.600 running the Core Flagship real Estate Fund. What was that Like? 0:06:56.640 --> 0:06:59.080 You did that for like eight years? Is that right? 0:06:59.120 --> 0:07:01.080 I did it for longer. It was over ten, and 0:07:01.560 --> 0:07:04.839 it was a tremendous experience. And actually you had asked, 0:07:05.320 --> 0:07:07.840 you know, whether that was my first stop at pg 0:07:07.880 --> 0:07:11.559 in real estate formally Prudential real Estate Investors, and it wasn't. 0:07:11.600 --> 0:07:14.120 But it was the job that I wanted when I 0:07:14.160 --> 0:07:18.760 took the job. My first job at PGM. Essentially the 0:07:18.840 --> 0:07:22.000 person who was running the Core fund at the time 0:07:22.080 --> 0:07:25.280 was someone who I sought out as a mentor because 0:07:25.320 --> 0:07:27.520 I knew that that was the job that I wanted, 0:07:27.600 --> 0:07:29.880 and I worked toward that. So I was on that 0:07:30.240 --> 0:07:33.320 fun team for over ten years, spanning kind of the 0:07:33.400 --> 0:07:36.280 run up to the GFC, so lots of good times 0:07:36.320 --> 0:07:39.280 for only about two to three years of my first 0:07:39.280 --> 0:07:41.840 couple of years there, and then I worked on it 0:07:41.880 --> 0:07:45.520 throughout the GFC and then became the senior portfolio manager 0:07:45.640 --> 0:07:49.480 during the recovery period. It was quite a time to 0:07:50.240 --> 0:07:52.120 be running that kind of a fund, or even just 0:07:52.160 --> 0:07:55.080 working on that kind of fund. It was a you know, 0:07:55.120 --> 0:07:58.960 I had seen other crises. I mean, the SNL crisis 0:07:59.000 --> 0:08:03.320 in the real estate business was something that was a 0:08:03.440 --> 0:08:07.239 very pivotal learning experience for me, and I came into 0:08:07.280 --> 0:08:10.560 the GFC with some of those skills from working through 0:08:10.560 --> 0:08:14.560 the SNL crisis. But every crisis is different, and you know, 0:08:14.600 --> 0:08:16.920 when I was working through the SNL crisis, I was 0:08:17.000 --> 0:08:20.559 much more junior, so someone else, you know, was worried 0:08:20.600 --> 0:08:22.600 about what would happen. They just told me what to do, 0:08:23.040 --> 0:08:24.520 and now this time I had to worry about what 0:08:24.560 --> 0:08:27.600 would happen, and it was it was a great experience. 0:08:27.840 --> 0:08:33.440 So when I hear GFC and SNL crisis, I think workouts, reorgs, 0:08:33.480 --> 0:08:36.959 and distressed investing. Did you do all of that? What 0:08:37.320 --> 0:08:41.079 did you actually do in the eighth nine era, maybe 0:08:41.080 --> 0:08:43.480 even a little before when Short said rolled over. 0:08:43.360 --> 0:08:46.160 Well, in the SNL crisis, I was doing primarily workouts, 0:08:46.200 --> 0:08:50.040 both debt and equity workouts, and I learned so much 0:08:50.480 --> 0:08:55.320 doing that, and was also in a big dispositions role 0:08:55.440 --> 0:08:59.000 in terms of real estate owned that have been foreclosed upon, 0:08:59.360 --> 0:09:04.040 but also performing and unperforming loans, commercial mortgage securitization, and 0:09:04.080 --> 0:09:08.880 even residential mortgage securitization. So I was very, very distressed 0:09:08.960 --> 0:09:13.600 oriented during the SNL crisis, and I would recommend to 0:09:13.760 --> 0:09:17.160 anyone who wants to learn about a business, work through 0:09:17.160 --> 0:09:19.400 a major crisis, and you're going to get fifteen years 0:09:19.440 --> 0:09:22.199 of experience in three years. That was my experience. 0:09:22.440 --> 0:09:27.280 To be fair, the SNL crisis, I don't want to 0:09:27.320 --> 0:09:30.520 downplay it too much, but it almost seems quaint, yes, 0:09:30.679 --> 0:09:35.040 compared to the GFC. It was. You didn't get that 0:09:35.200 --> 0:09:38.200 sense of free fall. It was clearly a mess, but 0:09:38.280 --> 0:09:40.440 it was like, all right, we'll figure this out. The 0:09:40.520 --> 0:09:43.360 GFC in real time was like holy cow, this thing 0:09:43.480 --> 0:09:44.840 is we're off the rails here. 0:09:45.280 --> 0:09:47.960 Very different, right, and in particular in real estate because 0:09:48.000 --> 0:09:50.440 the SNL crisis. You could certainly make an argument that 0:09:50.480 --> 0:09:53.720 we shot ourselves in the foot in the SNL crisis. 0:09:53.920 --> 0:09:56.120 Yeah, but that was really all the banks that were 0:09:56.160 --> 0:09:56.600 doing it. 0:09:56.600 --> 0:09:57.880 It was the banks, But there were a lot of 0:09:57.880 --> 0:10:00.760 empty buildings. I mean, we were building and building building. 0:10:00.679 --> 0:10:02.720 Texas notorious for see through. 0:10:02.480 --> 0:10:06.120 Building building things exactly, so, so that was very different. 0:10:06.160 --> 0:10:08.640 And you're right, it felt like real estate was in 0:10:08.720 --> 0:10:11.280 free fall, and clearly the banking system was in free fall, 0:10:11.559 --> 0:10:13.640 but the government was there with you know, the big 0:10:13.720 --> 0:10:17.080 RTC bailout, and it didn't feel like the world was 0:10:17.120 --> 0:10:19.760 falling apart, right. The GFC felt like the world was 0:10:19.800 --> 0:10:22.760 falling apart, and it was very difficult to understand. I 0:10:22.800 --> 0:10:26.119 think that the S and L crisis, you could understand 0:10:26.160 --> 0:10:30.400 that the banks were just lending, lending, lending and building building, 0:10:30.440 --> 0:10:32.439 and we had empty buildings, and even if you're not 0:10:32.480 --> 0:10:34.920 in real estate, you understood what that was about. The 0:10:35.000 --> 0:10:39.319 GFC was really a lot of esoteric financial products that 0:10:39.679 --> 0:10:41.920 you know, the average person didn't understand. It actually ended 0:10:42.000 --> 0:10:44.720 up that a lot of financial professionals didn't understand them either. 0:10:44.880 --> 0:10:47.040 We didn't know that at the time, but it really 0:10:47.040 --> 0:10:49.720 felt so much more systemic, and it felt like this 0:10:49.800 --> 0:10:53.480 you know, giant thing that was almost not understandable to 0:10:53.559 --> 0:10:56.760 many people had gone awry, good good times. 0:10:57.040 --> 0:10:59.360 You know, those of us who were working in the 0:10:59.400 --> 0:11:03.040 world defying then if you were not on the wrong 0:11:03.120 --> 0:11:07.440 side of what was going on, it was endlessly fascinating 0:11:07.480 --> 0:11:10.600 and just you know, a graduates degree and if you 0:11:10.720 --> 0:11:14.640 were in charge of assets that were collapsing, it had 0:11:14.679 --> 0:11:18.400 to be just nightmarish every day. It was relentless and 0:11:18.559 --> 0:11:21.599 just never seemed to end. So that was you know, 0:11:21.800 --> 0:11:23.640 all the people I know who started working in the 0:11:23.640 --> 0:11:26.400 industry after that, it's like, oh, you guys missed the 0:11:26.400 --> 0:11:27.000 big party. 0:11:27.000 --> 0:11:30.240 It's amazing exactly well, you see that now you can 0:11:30.280 --> 0:11:34.280 tell who missed the party, because it took a lot 0:11:34.320 --> 0:11:36.840 of people who had you know, ten or twelve experience 0:11:36.920 --> 0:11:39.520 years of experience in our business. It took them way 0:11:39.600 --> 0:11:42.720 too long to figure out that the world had changed 0:11:42.960 --> 0:11:46.080 because they hadn't experienced the world changing. And you know, 0:11:46.120 --> 0:11:47.960 those of you, those of us who've been through it 0:11:48.000 --> 0:11:50.440 a few times, you start to get that spidey sense 0:11:50.480 --> 0:11:52.640 that things are not as they should be, and you 0:11:52.760 --> 0:11:55.160 kind of go right into that mode of like, okay, 0:11:55.160 --> 0:11:58.720 stop spending money, shut down all the deals. And that's 0:11:58.800 --> 0:12:01.760 much more difficult for some one who hasn't experienced. 0:12:01.640 --> 0:12:05.120 Immediate sur violence things exactly. And you know, the ironic 0:12:05.160 --> 0:12:09.840 thing is there's a generation who only last year discovered, hey, 0:12:09.880 --> 0:12:12.280 you know the rates can go up also, right, That 0:12:12.440 --> 0:12:16.600 was like an you know, an epiphany for a subgroup 0:12:16.600 --> 0:12:18.120 of people who it's like, oh, I didn't know they 0:12:18.120 --> 0:12:20.719 could raise rates. I thought they can only cut. So 0:12:21.320 --> 0:12:26.319 now you're really in a management position. What was that 0:12:26.440 --> 0:12:31.400 transition like from being a real estate investor to managing 0:12:31.679 --> 0:12:35.480 a very large real estate group of professionals. 0:12:35.800 --> 0:12:39.400 It was a much more complicated transition than I had 0:12:39.559 --> 0:12:42.880 expected it to be. You know, it's an interesting story 0:12:42.920 --> 0:12:45.440 that I tell, which is that our CEO at the 0:12:45.480 --> 0:12:48.280 time came to me, this is when I was running 0:12:48.320 --> 0:12:50.840 our largest fund. I had only been an investor in 0:12:50.880 --> 0:12:53.440 my entire career, and he said, I'd really like for 0:12:53.480 --> 0:12:56.880 you to be my chief operating officer. And I actually said, 0:12:56.880 --> 0:12:59.840 which is, you know, embarrassing, but it is unfortunately some 0:13:00.200 --> 0:13:03.079 that women, especially if my age, do I said, oh, actually, 0:13:03.160 --> 0:13:05.880 I'm not qualified for that job. I only took, you know, 0:13:05.880 --> 0:13:08.959 three accounting classes, and I'm you know, I don't think 0:13:09.000 --> 0:13:11.439 i'm your person. And he said, if I wanted an accountant, 0:13:11.480 --> 0:13:14.000 I wouldn't have come to you. I'm looking for a partner. 0:13:14.000 --> 0:13:16.120 I'm looking for someone who wants to learn how to 0:13:16.200 --> 0:13:18.560 run a global business. And I said, well, you know, 0:13:18.600 --> 0:13:19.920 I feel like I kind of know how to run 0:13:19.920 --> 0:13:22.440 a business. I'm running the largest fund. You know, there's 0:13:22.480 --> 0:13:25.240 lots of people working on this fund, huge revenues. I 0:13:25.960 --> 0:13:27.640 know what I'm doing. And he said, you know what, 0:13:27.880 --> 0:13:30.000 I tried for three years, and I bet you're going 0:13:30.040 --> 0:13:32.200 to learn a lot. And he was one hundred percent right, 0:13:32.559 --> 0:13:35.040 you know, learning how to keep the trains on the 0:13:35.120 --> 0:13:39.559 tracks when you're an investment professional. And I was the worst. 0:13:39.920 --> 0:13:42.960 I was a massive prima donna. I had no appreciation 0:13:43.200 --> 0:13:45.559 for went on behind the scenes. If there was an 0:13:45.679 --> 0:13:48.800 error in a report or a number, I went ballistic. 0:13:48.920 --> 0:13:54.719 I had no understanding of what it takes to deliver operationally. 0:13:55.200 --> 0:13:58.800 And I learned quite a bit about that and it's 0:13:58.840 --> 0:14:04.360 really been terrific, and I recommend it to all investors 0:14:04.559 --> 0:14:07.439 who want to ultimately run a business. Take on an 0:14:07.440 --> 0:14:10.439 operational role, because you will be shocked by how much 0:14:10.440 --> 0:14:10.800 you learn. 0:14:11.160 --> 0:14:14.520 So there's so much stuff to unpack there. I have 0:14:14.600 --> 0:14:18.600 to work my way back to your initial response when 0:14:18.720 --> 0:14:23.440 offered the operating position. It's kind of funny because you're 0:14:23.480 --> 0:14:28.080 pointing out like this inherent difference between men and women. 0:14:28.920 --> 0:14:31.960 Men are just clueless as to her own lack of skills, 0:14:32.360 --> 0:14:34.480 but oh sure, what the hell, how hard can it be? 0:14:34.560 --> 0:14:37.680 Let's rush in. Whereas and I don't want to man 0:14:37.680 --> 0:14:41.280 explain sexism to you, but it seems that women are 0:14:41.280 --> 0:14:43.120 more thoughtful and saying, hey, I don't know if I'm 0:14:43.280 --> 0:14:47.120 qualified for this, whereas a dude is just like, sure, 0:14:47.240 --> 0:14:49.760 well i'll give that a wait, fight a bear with 0:14:49.840 --> 0:14:54.400 my bear. Okay, where do I go? Men? Men are 0:14:54.440 --> 0:14:59.440 just the sort of self confidence, unjustified. I wonder how 0:14:59.520 --> 0:15:04.640 much that explains what we've seen, especially in finance, in 0:15:05.040 --> 0:15:09.080 the gender gap at senior levels, which is certainly getting better. 0:15:09.440 --> 0:15:14.640 It is point at present. But I'm just curious if 0:15:14.680 --> 0:15:20.200 that philosophical difference is why men rush in and women 0:15:20.760 --> 0:15:23.520 sort of think about and say, well, that's really weigh the. 0:15:23.480 --> 0:15:26.920 Pros and cons one hundred percent, and you know Interestingly, 0:15:27.360 --> 0:15:29.200 you would certainly not be the first man to man 0:15:29.240 --> 0:15:31.800 explain sexism to me. It happens all the time, which 0:15:31.960 --> 0:15:34.360 just kind of goes back to the self awareness. It 0:15:34.360 --> 0:15:37.480 happens constantly. But I will say things have gotten a 0:15:37.520 --> 0:15:40.120 lot better, but you know, somewhere in the middle is 0:15:40.200 --> 0:15:43.040 probably you know, a much better place to be, because 0:15:43.360 --> 0:15:46.200 I will say that, you know, women have a tendency 0:15:46.520 --> 0:15:48.240 if there are a hundred things that you need to 0:15:48.280 --> 0:15:50.360 have for a job, if they have ninety nine, you 0:15:50.400 --> 0:15:52.920 think they're not qualified, myself included. Right, I think I've 0:15:52.960 --> 0:15:55.920 gotten better. But you know, if there are a hundred 0:15:55.920 --> 0:15:58.280 things and a man might say, you know what I 0:15:58.280 --> 0:16:01.240 could do sixty or seventy percent of that, that's probably 0:16:01.280 --> 0:16:01.760 good enough. 0:16:01.880 --> 0:16:05.080 Right, I think you're being generous. I think, like, you know, 0:16:05.440 --> 0:16:08.000 I know a dude who's in that space. I could 0:16:08.040 --> 0:16:10.120 do what he does. I think it's like that sort 0:16:10.120 --> 0:16:14.680 of you know, not to overstate mail arrogance and recklessness, 0:16:15.400 --> 0:16:18.080 but there is certainly a degree of Hey, worse comes 0:16:18.080 --> 0:16:20.880 to worse, I land on my face, and I think 0:16:21.120 --> 0:16:25.400 to some degree that's positive but often leads to the 0:16:25.440 --> 0:16:26.200 Peter principle. 0:16:26.320 --> 0:16:28.600 So exactly, and I do hope that you know, younger 0:16:28.640 --> 0:16:33.320 women in business broadly and in finance, you know, can 0:16:33.560 --> 0:16:36.640 can learn from those lessons. That's why I is embarrassing 0:16:36.760 --> 0:16:38.760 of a story as it is. I always tell it, 0:16:38.880 --> 0:16:41.720 especially to younger women, because I don't want them to 0:16:41.760 --> 0:16:45.480 make that same mistake. I was very fortunate that, you know, 0:16:45.600 --> 0:16:48.520 I had a boss who really pushed me, because that 0:16:48.840 --> 0:16:51.360 I wouldn't have taken it necessarily my own volition. 0:16:51.680 --> 0:16:54.960 Huh. Really really interesting. So let's talk a little bit 0:16:55.000 --> 0:16:59.040 about that giant portfolio of investments. What type of real 0:16:59.120 --> 0:17:04.440 estate does PGIUM invest in? Do you have specific geography 0:17:04.680 --> 0:17:06.080 sized types, what. 0:17:06.000 --> 0:17:09.240 Do you think of We have a very very broad 0:17:09.320 --> 0:17:14.320 investing mandate. We invest in in the US, in Latin America, 0:17:14.320 --> 0:17:17.720 which is really primarily Mexico at this point, across Europe, 0:17:17.760 --> 0:17:21.399 the UK, and across Asia, so we really hit all 0:17:21.440 --> 0:17:24.560 the major markets and all the major geographies. And also 0:17:24.680 --> 0:17:27.240 we invest in pretty much all the major food groups 0:17:27.520 --> 0:17:30.359 and even some of the alternative food groups. In real estate, 0:17:30.480 --> 0:17:34.160 so everything from very traditional office which I'm sure we'll 0:17:34.160 --> 0:17:38.800 talk more about, all kinds of residential retail, data centers, 0:17:39.160 --> 0:17:43.720 industrial manufactured housing, seniors housing, you name it, and we 0:17:44.240 --> 0:17:46.280 probably have a bucket of capital for it. 0:17:46.440 --> 0:17:49.879 So let's dive into those sectors. I didn't hear you 0:17:49.960 --> 0:17:53.199 mention laboratory or medical, which I know is an up 0:17:53.200 --> 0:17:55.720 and coming area. Is that a space you guys are 0:17:55.760 --> 0:17:59.560 in as well? Warehouses is another definitely fast growing space. 0:18:00.359 --> 0:18:04.680 Let's break those down. Let's start with office. What's going 0:18:04.680 --> 0:18:08.520 on in the world of office investing. Are there certain 0:18:08.600 --> 0:18:11.640 things you guys like to invest office wide? Are there 0:18:11.640 --> 0:18:14.560 areas you stay away from what's happening in that space? 0:18:15.000 --> 0:18:17.320 So right now I'm going to talk about traditional office, 0:18:17.320 --> 0:18:22.439 not about medical office or lap science, but in the 0:18:22.480 --> 0:18:26.000 traditional office space. We're not investing in a tremendous amount 0:18:26.040 --> 0:18:28.600 of office right now like everyone else. We're in a 0:18:28.600 --> 0:18:30.359 little bit of a wait and see. We have an 0:18:30.400 --> 0:18:33.560 existing office portfolio that we're dealing with, and you know, 0:18:33.600 --> 0:18:36.480 I'm sitting here in your Bloomberg office and it's a 0:18:36.520 --> 0:18:39.240 buzzing hive of lots of people. There are many office 0:18:39.240 --> 0:18:42.200 buildings you could walk into in any city around the 0:18:42.200 --> 0:18:43.520 world where that would not be the case. 0:18:43.680 --> 0:18:46.120 So this is clearly a Class A building. And when 0:18:46.160 --> 0:18:49.240 we look at other Class A buildings on Park Avenue, 0:18:49.359 --> 0:18:52.800 they seem to be fairly you know, seventy five to 0:18:52.840 --> 0:18:56.359 eighty percent buzzing. I don't even want to say occupied. 0:18:57.160 --> 0:18:59.400 But once you drop to the class B buildings, it's 0:18:59.400 --> 0:19:02.520 a whole different story. How do you think about the 0:19:02.680 --> 0:19:07.040 different quality of real estate investing and is that reflected 0:19:07.200 --> 0:19:08.160 in their prices? 0:19:08.240 --> 0:19:11.399 Yet so in particular in office, you know there are 0:19:11.440 --> 0:19:14.160 going to be winners and losers, and the winners are 0:19:14.200 --> 0:19:16.720 going to be I wouldn't even say just A not 0:19:16.840 --> 0:19:19.160 all the A inventory is really going to be a winner. 0:19:19.200 --> 0:19:21.960 You have to be kind of a high A. You 0:19:22.040 --> 0:19:24.240 have to be an A that isn't just an A 0:19:24.359 --> 0:19:27.200 because of its location. It's an A because it also 0:19:27.240 --> 0:19:31.359 has esg attributes. It has wellness attributes, It has things 0:19:31.400 --> 0:19:34.720 that draw employees back to the office and make them 0:19:34.760 --> 0:19:37.480 want to be there. And you have to in these days. 0:19:37.880 --> 0:19:40.879 When I was young, the office was shelter and a 0:19:40.920 --> 0:19:43.040 place where people could make sure you worked all day. 0:19:43.640 --> 0:19:46.239 Now the office is it has to be better than 0:19:46.280 --> 0:19:49.199 your home or people are not going to come. So 0:19:49.320 --> 0:19:51.240 here in your office there's lots of free food and 0:19:51.280 --> 0:19:53.880 free snacks, and it's nice and bright, and there's lots 0:19:53.920 --> 0:19:56.960 of vibrant and smart people walking around, that's a draw. 0:19:57.359 --> 0:20:00.400 But if you're in an old office building without light, 0:20:00.880 --> 0:20:04.240 you have low ceilings, you have no amenities, you don't 0:20:04.240 --> 0:20:07.560 have a lot of wellness attributes to your building. You're 0:20:07.600 --> 0:20:10.040 not in your public transportation, You're going to have a 0:20:10.040 --> 0:20:14.240 hard time attracting people to come to your office, particularly 0:20:14.280 --> 0:20:17.520 younger people. And if you don't have the ESG qualifications, 0:20:17.880 --> 0:20:18.679 it's even worse. 0:20:18.800 --> 0:20:23.119 So we'll talk more about ESG later. Tell us about wellness. 0:20:23.119 --> 0:20:26.359 How does a building contribute to overall wellness? 0:20:26.720 --> 0:20:29.120 Many ways, but I would say that the primary way 0:20:29.160 --> 0:20:33.080 that really has been underscored, even more so since COVID 0:20:33.520 --> 0:20:36.600 is in air quality. And air quality is huge, and 0:20:37.080 --> 0:20:41.840 there is a lot of data around employees feeling better, 0:20:42.240 --> 0:20:46.399 not getting sick, as often having more energy, not being exhausted. 0:20:46.840 --> 0:20:50.560 That's around air quality and fresh air in particular is 0:20:50.680 --> 0:20:51.480 very very important. 0:20:51.560 --> 0:20:54.439 And that's not an expensive or difficult retrofit, is it. 0:20:54.480 --> 0:20:57.280 That's something that could be done fairly easily. If I 0:20:57.320 --> 0:20:59.480 think it was sixty minutes or somebody talked about that 0:20:59.560 --> 0:21:00.440 not too long long ago. 0:21:00.720 --> 0:21:04.200 That assumes you have modern systems, So that's a big assumption. 0:21:04.400 --> 0:21:07.359 Not all buildings have the systems that would make that 0:21:07.480 --> 0:21:10.440 an easy conversion. But there's lots of other things you 0:21:10.480 --> 0:21:12.879 could do. You could have a gym, you could you know, 0:21:13.000 --> 0:21:15.720 encourage your employees to get outside, you know, not in 0:21:15.760 --> 0:21:20.160 the city as much, but other places, and increasingly in Manhattan, 0:21:20.520 --> 0:21:23.560 people have outdoor spaces for their employees so they can 0:21:23.600 --> 0:21:26.280 get out and get some fresh air, get some sunshine. 0:21:26.600 --> 0:21:28.920 You know, instead of drinking coffee in a cold dark room, 0:21:28.960 --> 0:21:31.800 you could sit on a patio. It's those types of 0:21:31.800 --> 0:21:34.400