WEBVTT - Michael Levy on Real Estate Finance 0:00:02.000 --> 0:00:07.160 This is Mesters in Business with Very Results on Bloomberg Radio. 0:00:09.320 --> 0:00:12.600 This week on the podcast Yes Again, I have an 0:00:12.600 --> 0:00:15.880 extra special guest. His name is Michael Levi. He has 0:00:15.960 --> 0:00:20.520 a fascinating background in real estate, both from a finance 0:00:20.600 --> 0:00:25.239 perspective as well as an investing and development perspective. He 0:00:25.440 --> 0:00:31.000 is currently chief executive officer at Croll Holdings, the largest 0:00:31.040 --> 0:00:34.920 builder of apartments in the United States. They've been around 0:00:34.920 --> 0:00:38.800 for seventy five years and they have well over thirty 0:00:38.800 --> 0:00:44.760 billion dollars in investments across twenty one local markets. If 0:00:44.800 --> 0:00:50.960 you're interested in everything from apartment buildings, industrial space, warehouses, 0:00:51.040 --> 0:00:54.040 what's going on in the world of office space, how 0:00:54.040 --> 0:00:58.440 to invest in retail? Right, you would imagine retail is 0:00:58.480 --> 0:01:02.080 a disaster, but it turns out certain types of retail 0:01:02.200 --> 0:01:05.120 is doing really well while other types are lagging. The 0:01:05.160 --> 0:01:08.360 same is true in office buildings. I think you will 0:01:08.400 --> 0:01:12.080 find this to be a fascinating conversation. I know I did, 0:01:12.280 --> 0:01:15.959 and so, with no further ado, my conversation with Crow 0:01:16.040 --> 0:01:25.399 Holdings Michael Levy. I'm Barry Hults. You're listening to Masters 0:01:25.400 --> 0:01:28.480 in Business on Bloomberg Radio. My extra special guest this 0:01:28.520 --> 0:01:31.840 week is Michael Leviy. He is the CEO of Crow 0:01:31.920 --> 0:01:36.440 Holdings and oversees all of their business activities. Crow runs 0:01:36.560 --> 0:01:40.800 about thirty billion dollars in assets, investing in commercial real estate. 0:01:41.160 --> 0:01:43.880 They have been around for more than seventy years and 0:01:43.959 --> 0:01:48.840 operate in over twenty local markets in the United States. Previously, 0:01:48.920 --> 0:01:53.080 Michael was Morgan Stanley's Chief operating officer for investment management 0:01:53.320 --> 0:01:56.480 and a member of the firm's management committee. Comes to 0:01:56.600 --> 0:01:59.560 us with bachelor's from n y U Stern School of 0:01:59.600 --> 0:02:03.880 Business and a j d from Brooklyn Law School. Michael Levie, 0:02:04.080 --> 0:02:06.800 Welcome to Bloomberg. Thanks Barry. It's great to be here. 0:02:07.080 --> 0:02:09.399 It sounds like you are very much a New York kid, 0:02:09.560 --> 0:02:12.920 with U, n y U and Brooklyn on on that resume. 0:02:13.440 --> 0:02:18.320 I am. My grandparents settled from Russian into Brooklyn and 0:02:18.800 --> 0:02:22.840 the nineteenteens, and my dad grew up there, and uh, 0:02:22.960 --> 0:02:25.200 when we were little kids, moved this out to Long Island, 0:02:25.240 --> 0:02:28.720 and and I was raised in Port Washington, and I 0:02:28.760 --> 0:02:30.600 went to n y U. Was the best college I 0:02:30.639 --> 0:02:33.639 got into, and one thing led to another, and I 0:02:33.760 --> 0:02:36.359 spent most of my life here. So so let's talk 0:02:36.400 --> 0:02:40.240 a little bit about your professional career. You started in 0:02:40.320 --> 0:02:44.080 real estate investment banking. Was this mostly M and A 0:02:44.160 --> 0:02:48.440 deals or refinancing or transactional what? What was that like? Sure? Um, 0:02:48.480 --> 0:02:51.359 I came out of law school in n and uh 0:02:51.400 --> 0:02:55.920 in Wall Street was recapitalizing the real estate industry, and 0:02:55.960 --> 0:02:58.480 so I got dropped into the real estate group because 0:02:58.520 --> 0:03:01.200 there was a lot of transact and flow and it 0:03:01.280 --> 0:03:04.400 was equity offerings at that time, primarily I p O 0:03:04.480 --> 0:03:07.280 s and secondary offerings. There was some M and A 0:03:07.280 --> 0:03:10.200 activity that took place, but it was a wave of activity, 0:03:10.919 --> 0:03:14.639 and as a young guy looking for opportunity, there was 0:03:14.680 --> 0:03:17.160 a new deal a week, and so we worked really 0:03:17.200 --> 0:03:20.359 really hard. But you get your chops early on by 0:03:20.360 --> 0:03:22.359 working really really hard. So it was a great time. 0:03:22.639 --> 0:03:24.639 Was there a prior interest in real estate or did 0:03:24.680 --> 0:03:26.799 you just kind of stumble into whatever it was hot 0:03:26.840 --> 0:03:30.320 at the moment? Absolutely not. I UM. When I was 0:03:30.360 --> 0:03:31.800 going to law school, I went at night and I 0:03:31.840 --> 0:03:34.280 worked during the day for the lawyers, and uh, most 0:03:34.280 --> 0:03:35.960 of the lawyers I worked for said, you don't want 0:03:35.960 --> 0:03:37.640 to do this, you know, you want to work on 0:03:37.680 --> 0:03:41.080 the business side. Those guys have more fun and they 0:03:41.120 --> 0:03:44.320 make more money. So UH, I talked my way into 0:03:44.360 --> 0:03:47.600 a job and investment banking. I went into training and 0:03:47.760 --> 0:03:50.760 uh they placed me where they saw fit and dropped 0:03:50.760 --> 0:03:52.960 me into the real estate group and well well as 0:03:53.000 --> 0:03:55.480 a recovering attorney myself. I could tell you those guys 0:03:55.480 --> 0:03:59.200 were telling you that there's there's less tedium and more 0:03:59.280 --> 0:04:03.440 fun on the business side because every deal, every transaction, 0:04:03.960 --> 0:04:06.800 there is a framework that you learn, but each one 0:04:06.880 --> 0:04:09.960 is specific and unique to those circumstances. Yeah, it was. 0:04:10.000 --> 0:04:13.840 It was great fun. I loved and respect the law incredibly, 0:04:13.920 --> 0:04:16.680 but it turned out to be a great decision. Uh, 0:04:16.720 --> 0:04:18.960 I can't can't agree with you. So, so how did 0:04:19.000 --> 0:04:23.080 you end up at Morgan Stanley for almost two decades. Well, 0:04:23.120 --> 0:04:25.440 I started out at Prudential Securities and that's where I 0:04:25.480 --> 0:04:27.240 worked while I went to law school, and they gave 0:04:27.279 --> 0:04:29.680 me a chance in the business. Um, I had an 0:04:29.720 --> 0:04:32.560 opportunity a couple of years in to work for Solomon Brothers, 0:04:33.000 --> 0:04:35.719 and UH. At the time, you know, I knew that 0:04:35.839 --> 0:04:38.760 there was a pecking order and investment banking and Prue 0:04:38.839 --> 0:04:41.039 was great, UH and great people I worked for, but 0:04:41.080 --> 0:04:42.919 I knew that Solomon was to step up, and so 0:04:42.960 --> 0:04:46.159 I took the opportunity with Solomon Brothers. Well, very quickly 0:04:46.279 --> 0:04:49.479 Solomon Brothers got gobbled up by Smith Barney, and very 0:04:49.560 --> 0:04:53.160 quickly Smith Barney got gobbled up by City Bank, and uh. 0:04:53.360 --> 0:04:56.720 I remember going into the headquarters and uh they were 0:04:56.720 --> 0:04:59.080 selling me checking accounts. As I was walking into the 0:04:59.120 --> 0:05:02.040 office one day, I said, I'm not quite sure this 0:05:02.080 --> 0:05:04.839 is what I was hoping for. So uh, I was 0:05:04.880 --> 0:05:06.640 lucky enough at the time to have an opportunity to 0:05:06.680 --> 0:05:08.880 move to Morgan Stanley, and I took it. So Sally 0:05:09.120 --> 0:05:13.320 ends up at City Prudential is now PIJAM, which is 0:05:13.360 --> 0:05:18.440 a giant, giant operation worldwide. UM, and Morgan Stanley is 0:05:18.480 --> 0:05:20.719 still one of the biggest investment banks in the world. 0:05:21.400 --> 0:05:24.479 You were at one time chief operating officer of their 0:05:24.560 --> 0:05:29.160 global Investment Management division. I'm assuming that is real estate focused. 0:05:29.480 --> 0:05:33.200 That was not. That was the investment management division. The 0:05:33.520 --> 0:05:35.960 first half of my career at Morgan Stanley was real 0:05:36.080 --> 0:05:39.880 estate investment banking, and the second half of my career 0:05:40.760 --> 0:05:45.720 transitioned into real estate investing, which transitioned into alternatives, which 0:05:45.720 --> 0:05:50.080 transitioned into investment management more broadly. So, so you were 0:05:50.120 --> 0:05:52.839 at Morgan Stanley. If I'm doing the math in my head, 0:05:52.920 --> 0:05:56.240 right two thousand and eight throughout the crisis. So I 0:05:56.279 --> 0:05:59.640 have to assume you eventually became an expert at restructuring 0:05:59.680 --> 0:06:02.320 and all the fund that took place after the Great 0:06:02.320 --> 0:06:05.480 Financial Crisis. Yeah, I I would describe it a little 0:06:05.520 --> 0:06:07.280 as the in the in the land of the Blind, 0:06:07.360 --> 0:06:11.240 the one eyed man is king. It was late two 0:06:11.240 --> 0:06:15.680 thousand seven, and uh, the markets hadn't yet entirely cracked um, 0:06:15.680 --> 0:06:18.760 and I had an assignment as an investment banker to 0:06:18.880 --> 0:06:22.000 work for one of the country's largest pension funds who 0:06:22.040 --> 0:06:25.200 was on the leading edge of bankruptcies and restructurings in 0:06:25.200 --> 0:06:27.760 the real estate portfolio. And so I had a lot 0:06:27.800 --> 0:06:31.800 of advisory work. And then once more once Morgan Stanley 0:06:31.839 --> 0:06:33.839 is a firm in the winter of two thousand eight 0:06:33.920 --> 0:06:37.400 hit the wall. Like many financial institutions, real estate was 0:06:37.440 --> 0:06:39.720 a leading edge of that wall, and so I had 0:06:39.720 --> 0:06:42.040 a chance to work with the firm on restructuring its 0:06:42.080 --> 0:06:44.840 real estate holdings in the real estate business. That two 0:06:44.839 --> 0:06:47.920 thousand and eight experience, How did it impact you and 0:06:48.279 --> 0:06:50.880 what sort of lessons did you take from it going forward? 0:06:51.400 --> 0:06:53.839 The most formative period of my career, without a doubt, 0:06:54.360 --> 0:06:56.440 and I think most people you learn more from the 0:06:57.000 --> 0:07:00.880 difficulties than you do from the success. UM. It was 0:07:01.000 --> 0:07:04.400 a reminder of our inability to see the future. UM 0:07:04.800 --> 0:07:08.320 first point. But within the core business of finance and 0:07:08.360 --> 0:07:11.240 real estate, the first lesson was leverage. You know, it's 0:07:11.320 --> 0:07:13.760 leverage that will kill you, and it will leverage. It's 0:07:13.840 --> 0:07:16.360 leverage that will take you down. UM. There were other 0:07:16.400 --> 0:07:20.640 things that I learned the people I had worked with 0:07:20.680 --> 0:07:22.400 and the groups I had worked for, both as an 0:07:22.400 --> 0:07:26.000 adviser as well as Morgan Stanley sought tremendous growth in 0:07:26.000 --> 0:07:29.400 the early two thousand's growth without necessarily all of the 0:07:29.440 --> 0:07:33.760 guard rails, the systems and the processes, and to manage 0:07:33.840 --> 0:07:37.840 that unparalleled growth, and so between high levels of leverage 0:07:38.320 --> 0:07:41.240 as well as growth for growth sakes without all of 0:07:41.280 --> 0:07:45.280 the constraints around that growth, those two things together kind 0:07:45.280 --> 0:07:49.280 of result in catastrophic events which occurred in two thousand 0:07:49.360 --> 0:07:51.920 eight and two thousand nine. You know, if you're investing 0:07:52.000 --> 0:07:55.040 your own capital with no leverage, the worst that happens 0:07:55.120 --> 0:07:57.320 is the market gets cut in half and it's painful. 0:07:57.760 --> 0:08:00.560 But if you're using leverage, you get margin holes and 0:08:00.640 --> 0:08:02.760 you could be pretty easily wiped out. As we saw 0:08:03.160 --> 0:08:05.320 time and again in oh eight or nine, right and 0:08:05.440 --> 0:08:08.360 beyond sure, And that's where it comes to alignment and 0:08:08.400 --> 0:08:10.400 the people that work you know, if if if they 0:08:10.400 --> 0:08:13.680 have nothing but upside and they're not participating in the downside, 0:08:14.120 --> 0:08:16.200 then the use of leverage. And so, whether you're an 0:08:16.200 --> 0:08:18.679 employee of a large firm or you're managing a fund 0:08:18.800 --> 0:08:21.720 or whatever position that you're in, being fully aligned with 0:08:21.760 --> 0:08:25.000 investors is a great guard rail with respect to these 0:08:25.080 --> 0:08:27.840 questions of the use of leverage, which which leads me 0:08:27.960 --> 0:08:31.040 to the next obvious questions. So, how did you end 0:08:31.120 --> 0:08:35.000 up at Crow Holdings from? Was it directly from Morgan Stanley? 0:08:35.040 --> 0:08:37.600 It was? It was again. I was working from real 0:08:37.720 --> 0:08:42.240 estate into alternatives into investment management broadly um and my 0:08:42.360 --> 0:08:44.679 career was going well and I was doing interesting work. 0:08:44.880 --> 0:08:47.080 But in two thousand and fourteen I met this really 0:08:47.080 --> 0:08:51.080 interesting guy named Harlan Crow who was the patriarch of 0:08:51.120 --> 0:08:54.080 the family and the son of the founder of the company, 0:08:54.679 --> 0:08:57.480 and he was looking for someone to succeed him to 0:08:57.559 --> 0:09:00.040 run the business. And I found him to be a 0:09:00.040 --> 0:09:04.320 fascinating individual and a and a very kind, benevolent, interesting 0:09:04.400 --> 0:09:07.240 human being. And we talked off and on for about 0:09:07.280 --> 0:09:10.800 two years. And then in the summer of two thousand sixteen, 0:09:10.920 --> 0:09:12.680 my wife and I went to spend some time with 0:09:12.720 --> 0:09:15.280 Harlan and his family in the business. And we were 0:09:15.320 --> 0:09:18.240 flying back from Dallas, Texas to New York and my 0:09:18.280 --> 0:09:20.480 wife looks at me and she says, you need to 0:09:20.520 --> 0:09:23.440 go do this, and uh, she knew what I knew, 0:09:23.559 --> 0:09:26.520 which was it. It pulled at my heart. You know, 0:09:26.640 --> 0:09:28.520 when you work at a firm like Morgan Stanley, or 0:09:28.559 --> 0:09:31.520 you work on Wall Street, in any given year, there's 0:09:31.559 --> 0:09:35.160 always someone knocking on your door. There's always an opportunity. 0:09:35.320 --> 0:09:38.560 And I had always analyzed these opportunities. You know, I 0:09:38.600 --> 0:09:40.840 made this much money, or I had this much authority, 0:09:41.080 --> 0:09:43.680 or what would this title mean? And this was the 0:09:43.720 --> 0:09:46.480 first time in my life that none of that mattered. 0:09:46.679 --> 0:09:49.240 All that mattered was my heart pulled at me and said, 0:09:49.280 --> 0:09:51.120 I want to work with these people. You want to 0:09:51.120 --> 0:09:55.240 work do this work with these folks focusing on this topic. Correct, 0:09:55.760 --> 0:09:59.360 That's that's really that's really interesting. Since then, in the 0:09:59.400 --> 0:10:03.880 past day, cade you become very active within the commercial 0:10:03.880 --> 0:10:06.480 real estate industry. You're a member of the Real Estate 0:10:06.600 --> 0:10:09.800 Round Table, You're part of the policy Advisory Board at 0:10:09.800 --> 0:10:12.200 the Fisher Center for Real Estate and Number and Economics 0:10:12.240 --> 0:10:16.360 at Berkeley, which is not in Texas, California. You're on 0:10:16.400 --> 0:10:20.600 the advisory board at the Institute for Real Estate Operating Companies. 0:10:21.280 --> 0:10:24.880 Tell us a little bit about all of this extracurricular activity, 0:10:24.920 --> 0:10:29.720 which I'm sure is intimately connected to your day job. Sure, 0:10:30.000 --> 0:10:32.720 you know, the real estate industry is as large and 0:10:32.760 --> 0:10:35.800 as vast as it is, like many industries, is kind 0:10:35.800 --> 0:10:40.600 of small, and these various organizations are opportunities both to 0:10:40.640 --> 0:10:43.360 network as you get older. They're friends of yours. There 0:10:43.679 --> 0:10:47.160 it's an opportunity for old homecoming to see people, and 0:10:47.200 --> 0:10:50.600 it's an opportunity to learn to compare notes. And sometimes 0:10:50.640 --> 0:10:53.120 it's an opportunity to give back, depending upon the mission 0:10:53.200 --> 0:10:56.160 or objectives of the institution. But most of the time, 0:10:56.160 --> 0:10:59.560 it's ability to gather with peers in the in the industry. 0:10:59.640 --> 0:11:02.360 It's hawk about what's going on. Some of them are 0:11:02.400 --> 0:11:06.520 are very confidential forums, off the record forums where people 0:11:06.520 --> 0:11:08.440 can speak their minds, where you're not going to read 0:11:08.480 --> 0:11:11.600 about it in the press. And so you learn as 0:11:11.640 --> 0:11:13.880 you get older, you find out most of the time 0:11:13.920 --> 0:11:17.400 that you're not necessarily learning new things, you're confirming what 0:11:17.559 --> 0:11:19.880 you what you either like to believe or what you 0:11:19.920 --> 0:11:23.800 thought you believed, and that confirmation is sometimes helpful that 0:11:24.320 --> 0:11:27.880 perhaps I'm not crazy with respect to these ideas. Really 0:11:27.960 --> 0:11:30.480 very interesting. It's funny you say real estate is a 0:11:30.600 --> 0:11:36.680 small um community. Someone described New York City as vast 0:11:37.360 --> 0:11:40.560 and frenetic, as it is as just a series of 0:11:40.600 --> 0:11:44.280 small industry villages all staffed on top of each other. 0:11:44.640 --> 0:11:46.640 And you know, you know most of the people in 0:11:46.679 --> 0:11:49.120 your business, even if there are thousands of people, you 0:11:49.160 --> 0:11:52.520 know your peers at your level. I'm not surprised to 0:11:52.559 --> 0:11:54.440 hear you say that about commercial real estate. It's true 0:11:54.440 --> 0:11:57.840 in every industry, absolutely. So let's talk a little bit 0:11:57.880 --> 0:12:01.240 about Crow Holdings. It looks like a pretty fascinating place. 0:12:01.720 --> 0:12:05.400 Tell us about that history and the patriarch who uh 0:12:05.840 --> 0:12:09.360 made such a compelling case that you had to switch jobs. Yeah, well, well, 0:12:09.400 --> 0:12:12.800 thank you, Barry In. There was a young man who 0:12:12.840 --> 0:12:16.800 built a speculative industrial building in Dallas, Texas, and his 0:12:16.880 --> 0:12:21.160 name was Trammel Crow and Uh. Trammel went on in 0:12:21.200 --> 0:12:23.920 the nineteen fifties and sixties to become the largest real 0:12:24.000 --> 0:12:27.920 estate developer in the United States. And Trammel had a 0:12:28.080 --> 0:12:32.440 great optimism, great insight, great great foresight. But he also 0:12:32.480 --> 0:12:34.840 had a way of doing business. He didn't have the 0:12:34.920 --> 0:12:38.440 means when he started out to employ people. He partnered 0:12:38.480 --> 0:12:41.600 with people. He had an ability to work with many 0:12:41.640 --> 0:12:44.840 of the local banks and regional banks to get loans 0:12:44.960 --> 0:12:47.760 to build real estate. And he partnered with young people 0:12:47.840 --> 0:12:50.920 all throughout the country and said, look, I'll go into 0:12:50.920 --> 0:12:54.720 business with you all on a handshake, will split the 0:12:54.840 --> 0:12:58.079 ups fifty fifty, and I'll help you get started by 0:12:58.120 --> 0:13:01.160 helping get them financing for these projects. And so, with 0:13:01.200 --> 0:13:03.880 that trust and with that love that he had for people, 0:13:04.480 --> 0:13:07.920 he went on to build partnerships all throughout the United States, 0:13:08.400 --> 0:13:11.800 and that way of doing business was different than others. 0:13:11.880 --> 0:13:14.480 He also took an approach that and I used the 0:13:14.520 --> 0:13:18.160 word speculative, meaning he built the building in the hopes 0:13:18.200 --> 0:13:20.880 that someone would lease it. He didn't build the building 0:13:20.920 --> 0:13:23.800 with a lease in hand. He built the building and 0:13:23.840 --> 0:13:26.319 then it got leased. Now, now this might be my 0:13:26.640 --> 0:13:31.360 post Warward two hindsight bias, but I would imagine the forties, fifties, 0:13:31.360 --> 0:13:34.040 sixties was a great time to be real estate developer 0:13:34.040 --> 0:13:36.000 in the United States. It was a great time to 0:13:36.000 --> 0:13:39.199 be a real estate developer, and there was tremendous growth 0:13:39.200 --> 0:13:42.240 throughout the United States. There was also another dynamic that 0:13:42.320 --> 0:13:45.600 the banks at that time would would lend sometimes more 0:13:45.679 --> 0:13:48.320 than a hundred percent of the cost to build a building. Well, 0:13:48.360 --> 0:13:50.559 you gotta decorate, you have other things you have to 0:13:50.640 --> 0:13:53.360 do once the building is up. A hundred and ten 0:13:53.400 --> 0:13:57.880 a h loan to value that seems kind of aggressive 0:13:57.920 --> 0:14:00.800 these days. These days, that's not available. But in those 0:14:00.880 --> 0:14:03.760 days that was available. And so why the excess? What 0:14:03.840 --> 0:14:07.040 was the above the cost of construction? There they are 0:14:07.120 --> 0:14:09.840 the soft cost, there's the financing cost along the way, 0:14:09.880 --> 0:14:12.480 and as you said, there's engineering and other costs that 0:14:12.559 --> 0:14:14.600 come in. And so you I don't I don't know 0:14:14.640 --> 0:14:18.319 if would have been the norm, but certainly for for 0:14:18.400 --> 0:14:21.400 discussion purposes, you're borrowing a dent of the cost to 0:14:21.440 --> 0:14:23.520 build a building, and so you don't need to come 0:14:23.560 --> 0:14:26.160 out of pocket with any equity. Now, we just talked 0:14:26.160 --> 0:14:29.160 about leverage a minute ago. When times are good and 0:14:29.240 --> 0:14:32.600 times are growing, you know that works out well. And 0:14:32.640 --> 0:14:35.200 as you pointed out, in the nineteen fifties and nineteen 0:14:35.240 --> 0:14:38.120 sixties in America, those were tremendous times for growth and 0:14:38.160 --> 0:14:42.880 opportunity and so the company. So, so let's talk a 0:14:42.880 --> 0:14:47.400 little bit about about the crow family members. You were 0:14:47.440 --> 0:14:51.680 the first person outside of the family to become a 0:14:51.800 --> 0:14:55.000 leader of the firm. What made them decide to not 0:14:55.920 --> 0:14:58.880 stay with the family that they've done for seventy years, 0:14:58.880 --> 0:15:02.880 And what sort of channe leunges does running what's essentially 0:15:02.920 --> 0:15:07.040 a giant family office create for you. Well, Trammel ran 0:15:07.120 --> 0:15:10.000 the business until the very late nineteen eighties, and we 0:15:10.080 --> 0:15:12.760 had a terrible time for real estate in the late eighties, 0:15:13.200 --> 0:15:15.800 and his son Harlan took over in the late nineteen eighties, 0:15:15.920 --> 0:15:19.560 and uh in two thousand fourteen, Harlan began to think 0:15:19.600 --> 0:15:23.080 about his succession and made a decision that he wanted 0:15:23.120 --> 0:15:26.520 to go outside of the company and specifically to bring 0:15:26.520 --> 0:15:30.960 in someone who had more capital markets experience, someone ultimately 0:15:32.080 --> 0:15:36.200 like me, not me in particular, but someone who didn't 0:15:36.240 --> 0:15:38.520 come up the ropes from the real estate side, who 0:15:38.560 --> 0:15:41.400 came up the ropes from the capital market side of things, 0:15:41.720 --> 0:15:45.440 to augment the great skills and capabilities in the company. Now, 0:15:45.960 --> 0:15:48.360 it's not self evident that on a piece of paper, 0:15:48.560 --> 0:15:53.080 this New York guy trained on Wall Street went to 0:15:53.120 --> 0:15:55.560 Brooklyn Law School would be a great fit with a 0:15:55.800 --> 0:15:59.520 Dallas based family owned company called Crow Holdings. But it 0:15:59.640 --> 0:16:02.000 was a right fit and we share very common values. 0:16:02.200 --> 0:16:05.600 And I find Dallas to be a really fun city. 0:16:05.880 --> 0:16:08.080 Is that where you're you're working out of where you 0:16:08.160 --> 0:16:11.160 had correct? So we're headquartered in Dallas, Texas. We have 0:16:11.200 --> 0:16:13.880 about twenty one offices around the country and other cities, 0:16:13.920 --> 0:16:19.160 but we are a Dallas based, Dallas headquartered, Dallas cultured company. 0:16:19.720 --> 0:16:21.800 At our at our core, and at our roots, which 0:16:21.840 --> 0:16:25.600 means big everything right, nothing has done small, nothing is 0:16:25.920 --> 0:16:28.880 you know, nothing is tentative. What I love about Texas 0:16:28.920 --> 0:16:32.120 is when they do something, it's big. Texas think big 0:16:32.240 --> 0:16:34.880 and Dallas sizes think big. Yeah, no, no doubt about that. 0:16:35.000 --> 0:16:39.560 So so let's get specific about Crow focuses on multifamily units, 0:16:39.640 --> 0:16:44.480 office industrial. I would imagine multi family is doing great. 0:16:45.000 --> 0:16:49.440 Industrial is doing even better. In office not so much? Correct? Um? 0:16:49.760 --> 0:16:53.800 We uh. We both have a real estate development company 0:16:54.320 --> 0:16:56.720 and a real estate investment management company, and there are 0:16:56.760 --> 0:17:00.480 two different businesses with what's the split into arms of 0:17:00.640 --> 0:17:04.960 activity and assets is it's about half, really, it's about half. So, 0:17:04.960 --> 0:17:08.320 so half of Crow's work is actually building developing new assets. 0:17:08.640 --> 0:17:12.800 The other half is investing in existing assets exactly. Exactly 0:17:12.960 --> 0:17:15.960 and UM but both businesses have a high degree of 0:17:16.000 --> 0:17:18.040 overlap in terms of their strategies. So as a real 0:17:18.160 --> 0:17:21.399 estate developer, we have built more apartments in the United 0:17:21.400 --> 0:17:24.400 States than any other firm. Really correct, that's a that's 0:17:24.440 --> 0:17:30.160 an enormous uh undertaking. And the US is still dramatically 0:17:30.560 --> 0:17:33.280 underbuilt when it comes to apartments. Yes, it is, both 0:17:33.280 --> 0:17:35.960 both in cities and suburbia. We have a big problem 0:17:35.960 --> 0:17:39.080 in America. We don't produce enough housing, particularly for working 0:17:39.119 --> 0:17:42.480 class people. And UH, it's a great opportunity from a 0:17:42.560 --> 0:17:45.320 development and an investment perspective, but it's getting harder and 0:17:45.359 --> 0:17:47.399 harder to build. And it's an area we have a 0:17:47.480 --> 0:17:51.359 lot of expertise in. And then and then you guys 0:17:51.400 --> 0:17:58.280 were very early into UM industrial facilities, warehouses, logistic sort 0:17:58.280 --> 0:18:01.160 of facilities in the early days of e commerce. Tell 0:18:01.240 --> 0:18:03.280 us a little bit about that. Well, two things. One, 0:18:03.920 --> 0:18:06.840 we still own the first industrial building the Trammel built 0:18:06.840 --> 0:18:11.320 in and it's on Coal Street in Dallas, Texas. And 0:18:11.359 --> 0:18:14.080 my youngest son is named Cole. So I like incidents 0:18:14.200 --> 0:18:19.119 or I think it's good. Um. Look, you could see 0:18:19.320 --> 0:18:22.680 the e commerce trends coming from a mile away. It 0:18:22.800 --> 0:18:25.280 started in the mid nineties, but it became very clear 0:18:25.320 --> 0:18:28.880 a decade ago that this trend was accelerating. You say that, 0:18:28.960 --> 0:18:33.920 and yet not everybody piled into warehouses, logistic facilities, et cetera. 0:18:34.480 --> 0:18:36.639 Certainly in two thousand to two thousand eleven they did, 0:18:36.720 --> 0:18:40.520 and today it clearly is the most favored asset class um. 0:18:40.560 --> 0:18:44.280 But nonetheless, when you're looking at secular trends, that secular 0:18:44.320 --> 0:18:47.280 trends seemed to us to be very clear, and so 0:18:47.400 --> 0:18:52.520 we amplified our industrial development activities and today we're one 0:18:52.560 --> 0:18:55.119 of the largest developers of industrial real estate in the 0:18:55.200 --> 0:18:59.040 United States. Right, And your structure is you're not to 0:18:59.119 --> 0:19:02.840 read You're you're more or less a private family office. 0:19:02.880 --> 0:19:06.800 How does that operate? Sure, so you're not publicly traded, right, 0:19:06.880 --> 0:19:09.280 We are not publicly traded UM and we have no 0:19:09.400 --> 0:19:12.000 outside shareholders in the company it is. It is owned 0:19:12.040 --> 0:19:16.040 by the Crow family. UM. Our real estate development business 0:19:16.119 --> 0:19:20.280 engages with investors in three ways. We either pursue one 0:19:20.400 --> 0:19:24.160 off development projects in a joint venture with an investor, 0:19:24.600 --> 0:19:28.080 or we have a programmatic relationship with an institutional investor 0:19:28.160 --> 0:19:31.600 where we'll develop many properties over time, or we'll have 0:19:31.680 --> 0:19:35.640 a com mingled fund with a group of investors also 0:19:35.720 --> 0:19:39.119 developing properties over time. Are those one off for specific 0:19:39.359 --> 0:19:43.160 types or specific geographies? Because in my head, I imagine 0:19:43.840 --> 0:19:46.800 there are endowments that want exposure real estate. There are 0:19:46.800 --> 0:19:50.360 other large institutions that want real estate exposure. Are they 0:19:50.400 --> 0:19:54.840 participants in all of crow or is it one off? 0:19:54.960 --> 0:19:57.880 It's always a defined strategy. It's always a defined strategy, 0:19:58.160 --> 0:20:03.120 usually demarcated by geograph, fick objectives, or other property size, 0:20:03.280 --> 0:20:07.160 property configuration objectives. But there is a strategy within industrial. 0:20:07.600 --> 0:20:09.640 We use the word industrial, that can mean a lot 0:20:09.640 --> 0:20:11.960 of things. Are a lot of different things to different people. 0:20:13.000 --> 0:20:16.920 Our real estate investment company invest in real estate across 0:20:16.920 --> 0:20:20.840 the United States primarily and co mingled funds, occasionally in 0:20:21.000 --> 0:20:24.240 joint ventures with investors, but primarily and co mingled funds. 0:20:24.280 --> 0:20:27.000 So so let's talk about that investment process a little bit. 0:20:27.480 --> 0:20:30.240 What are you looking at? Is it you mentioned geography? 0:20:30.280 --> 0:20:33.879 Isn't any of the specific sectors? Is evaluation? How do 0:20:34.000 --> 0:20:38.920 you make the decision? This development, building, whatever is a 0:20:39.040 --> 0:20:41.880 go And we're gonna pass on that one. Sure well, 0:20:42.200 --> 0:20:46.080 stepping back, Barry, we've learned over the years that it's very, 0:20:46.160 --> 0:20:50.680 very difficult to predict the economic cycles, the capital market cycles, 0:20:50.760 --> 0:20:52.359 and trying to hang your hat on that as an 0:20:52.400 --> 0:20:57.000 investment strategy is often hollow. And so we're pursuing secular 0:20:57.040 --> 0:21:00.600 trends and they're in decades long, decades long, and there 0:21:00.640 --> 0:21:03.480 are several things that to us seem fairly self evident. 0:21:03.520 --> 0:21:06.479 One of them I highlighted, which was e commerce. And 0:21:06.520 --> 0:21:09.280 if you believe that e commerce will continue to gain share, 0:21:09.400 --> 0:21:12.560 then you know that's a positive for industrial and that's 0:21:12.560 --> 0:21:16.639 a negative for retail. You're also looking at demographics, the 0:21:16.760 --> 0:21:20.560 age of people. You know, things about young people, things 0:21:20.560 --> 0:21:23.280 about the trailing ends of the millennials are the leading 0:21:23.359 --> 0:21:27.400 edge of the Gen Z. Young people rent, they don't buy, 0:21:27.640 --> 0:21:29.960 and so we have the largest group of young people 0:21:30.280 --> 0:21:33.520 in history going through in their mid twenties now going 0:21:33.600 --> 0:21:37.360 through the U S demographic chain and so being long 0:21:37.440 --> 0:21:40.399 the apartment sector or the multi family sector. And the 0:21:40.520 --> 0:21:43.280 third main trend that we're looking at is Americans are 0:21:43.280 --> 0:21:46.159 moving to the southeast and the southwest, the moving a 0:21:46.240 --> 0:21:50.919 lower tax, better weather, and just generally where there's a 0:21:50.920 --> 0:21:54.960 little cheaper standard of living and and as well as 0:21:55.040 --> 0:21:58.160 just overall quality of life. And this is not just COVID. 0:21:58.320 --> 0:22:00.920 You know, we've seen the impact of COVID, but long 0:22:00.960 --> 0:22:04.000 before COVID, it became very clear people are leaving the 0:22:04.040 --> 0:22:06.840 Midwest and the northeast and the west and they're moving 0:22:06.880 --> 0:22:10.119 into the southeast and the southwest. And so that defines 0:22:10.680 --> 0:22:13.879 not everything we do, but that drives a lot of 0:22:13.880 --> 0:22:17.440 our decision making within multi family. So now to take 0:22:17.480 --> 0:22:21.520 the next layer down, we're pursuing two areas within multi family. 0:22:21.800 --> 0:22:25.960 One would be Class A beautiful new properties that professionals 0:22:25.960 --> 0:22:30.000 are renting because they want experiences in life to rent 0:22:30.040 --> 0:22:33.639 and not own, as well as everything from student loans 0:22:33.680 --> 0:22:37.560 to other costs are making rentals more attractive to them. 0:22:37.600 --> 0:22:40.920 But the area we've been particularly focused on is workforce housing. 0:22:41.440 --> 0:22:46.280