Latest / Earn Your Leisure / EYL #221 Real Estate Development, Affordable Housing Investing, & The Housing Crisis with Craig Livingston

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EYL #221 Real Estate Development, Affordable Housing Investing, & The Housing Crisis with Craig Livingston · Earn Your Leisure

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Speaker 1: An illegal alien from Guatemala charged with raping a child
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0:55
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0:57
Speaker 2: Sponsored by the United States Department of Homeland Security, started
1:01
Speaker 2: working as a consultant for real estate developers, raising them
1:04
Speaker 2: capital one transaction where I'd raise all the debt and
1:07
Speaker 2: equity capital. I'm looking at the closing statement and there
1:10
Speaker 2: it was just me, and I was a little fee
1:11
Speaker 2: and I said, wait a minute. If I'm bringing all
1:13
Speaker 2: the money, I'm a smart guy. I want to be
1:14
Speaker 2: on that side of the table. That deal closed. And
1:16
Speaker 2: I stuck with that developer for a couple of years
1:19
Speaker 2: for free, just to learn, because I understood that I
1:22
Speaker 2: could acquire a skill set that could make me a
1:25
Speaker 2: tremendous amount of wealth. When I see people today who
1:27
Speaker 2: approach you say, hey, man, I'm going to learn real
1:29
Speaker 2: estate development. Give me a job. That's not the right way, right.
1:31
Speaker 2: You want to acquire that skill set, and if you
1:34
Speaker 2: can offer something, bring something to the table and indoctrinate
1:38
Speaker 2: yourself into the real estate world. You want to do
1:40
Speaker 2: that because with that knowledge you acquires yours forever.
1:44
Speaker 3: My graduates from my school being forced bad drop b drop,
1:50
Speaker 3: Mike drop bad drop drop.
2:03
Speaker 4: All right, guys, welcome back, E y L. Today is
2:07
Speaker 4: going to be a very special episode. We got Craig Livingstone.
2:10
Speaker 4: So if you were at invest Fest Legendary Investment, legendary performance,
2:15
Speaker 4: you saw him on stage with Don Peebles, yes and
2:19
Speaker 4: moderated by a guy MG, the mortgage guy, And that
2:21
Speaker 4: was something that was a really dope highlight of investmentest
2:25
Speaker 4: very educational and he works with Don. We'll talk about
2:29
Speaker 4: that later on, but that's the reason why they were
2:31
Speaker 4: on stage. They were talking about the Affirmation Tower, they
2:33
Speaker 4: were talk about real estate development, they were talking about
2:35
Speaker 4: real estate investing a variety of different things. So this
2:39
Speaker 4: is something that's extremely important because we talk about real
2:42
Speaker 4: estate investing a lot, but it's always good to talk
2:47
Speaker 4: about real estate development and on a larger scale because
2:51
Speaker 4: it's important not only to be motivated, but also to
2:55
Speaker 4: have the education to do with well.
2:57
Speaker 5: I think we only we've had like a handful of
3:00
Speaker 5: developers on Brandon Rul was one.
3:01
Speaker 2: Obviously we had Don.
3:03
Speaker 5: But we always say that thing right or despot to
3:05
Speaker 5: be something, you have to see it. And so having
3:07
Speaker 5: these conversations, especially at this level like this is like,
3:11
Speaker 5: we don't go higher than this, you know what I mean.
3:12
Speaker 5: So it's going to be I feel like it's going
3:14
Speaker 5: to be a master class in a sense.
3:16
Speaker 2: Yeah.
3:16
Speaker 4: Managing partner for Exact Capital and has executed over one
3:21
Speaker 4: point five billion of financing for numerous transactions ranging from
3:25
Speaker 4: market rate to luxuries, building a condominium in Harlem, properties
3:31
Speaker 4: throughout the United States, working with don people who's on
3:34
Speaker 4: the Affirmation Tower, I believe, right right, leave out the
3:40
Speaker 4: Queen if.
3:40
Speaker 2: You're not familiar with the Affirmation Tower.
3:42
Speaker 4: That is a project that, once it's built, will be
3:46
Speaker 4: the tallest building in New York City correct wes Western Hemisphere,
3:51
Speaker 4: and the only skyscraper with a majority black team. That's right, right,
3:56
Speaker 4: and that's intentional. So that's a historic landmark. And I
4:02
Speaker 4: know you guys have had some issues. We'll talk about that,
4:05
Speaker 4: but that's a historic landmark. Very important that we get
4:08
Speaker 4: that pushed through. So this is going to be a
4:10
Speaker 4: very high level conversation to say the least. But first
4:12
Speaker 4: and foremost, thank you for joining us. Appreciate it, my
4:14
Speaker 4: pleasure to be here again. Man, great to see you guys.
4:16
Speaker 4: You guys have been really busy since we saw each
4:18
Speaker 4: other in Atlanta. Yes, yes, I'm extremely proud of everything
4:21
Speaker 4: you guys are doing. Likewise likewise, thank you. So we're
4:24
Speaker 4: going to get into it, but first let's get some background.
4:26
Speaker 4: How did you get your start in real estate, commercial
4:29
Speaker 4: real estate and in real estate developed development.
4:31
Speaker 2: So let me give my background, just do a little
4:34
Speaker 2: comprehensive review. So I am the managing partner at Exact
4:38
Speaker 2: Capitol Group. We are a vertically integrated real estate concern.
4:42
Speaker 2: We own, develop and build for our own account. So
4:46
Speaker 2: I got into this because the last career that I
4:50
Speaker 2: had was actually an investment banking and to be a
4:54
Speaker 2: good real estate developer you need to have great financial acumen,
4:59
Speaker 2: a great communityation skills, and good presentation skills and project
5:04
Speaker 2: management skills. So it was a natural progression out of
5:10
Speaker 2: my last job at Goldman Sachs into becoming an entrepreneur.
5:15
Speaker 2: When I was in business school, everyone that when all
5:20
Speaker 2: the brothers who were my contemporaries read a book called
5:23
Speaker 2: Why Should White Guys Have Autobiography Reginald Lewis, and that
5:27
Speaker 2: was really a roadmap on how to be an entrepreneur
5:30
Speaker 2: successfully at the highest level. And for those who don't know,
5:33
Speaker 2: Regend Lewis topped the book. It's a really good book.
5:36
Speaker 2: But you know, he was to leverage buyouts in the
5:39
Speaker 2: eighties like in the Michael Milken era, and there was
5:42
Speaker 2: practically no other black people doing it. So it stood
5:45
Speaker 2: out to me definitely made an imprint on me, and
5:48
Speaker 2: like you said, seeing it right, I was able to
5:51
Speaker 2: see somebody else doing it encouraged me to take on
5:54
Speaker 2: business in entrepreneurship at the highest level. So when I
5:58
Speaker 2: chose to leave investment banking, I wanted to get into
6:03
Speaker 2: something that was transactional, deal motivated, and it just happened
6:07
Speaker 2: to be real estate. And you know, when I was
6:12
Speaker 2: still working, I bought a property and I used it.
6:16
Speaker 2: I was telling them Matt when I spoke with him
6:18
Speaker 2: through an FAHA loan, and so I put down my
6:22
Speaker 2: five percent I remember, sixty five hundred dollars and we
6:26
Speaker 2: so we owned that property. I bought it just like
6:29
Speaker 2: I said, I used the FAH loan, spend sixty five
6:31
Speaker 2: hundred dollars and it was a three family and every
6:35
Speaker 2: month that I owned the property and made between eight
6:38
Speaker 2: hundred and thousand dollars of income. And so after six
6:43
Speaker 2: seven months, I had my investment back. In eighteen months,
6:45
Speaker 2: the realtor called me and said, there's an offer on
6:49
Speaker 2: your property. And the offer was for one hundred thousand
6:53
Speaker 2: dollars more than when I bought the property for. And
6:55
Speaker 2: that was like when the first light bulb went off
6:57
Speaker 2: and I got really into real estate because I said,
6:59
Speaker 2: if I could do that, why the hell am I
7:01
Speaker 2: coming here every day? So fast forward, I ended up
7:05
Speaker 2: buying three more multi family properties and cycle them outsold them.
7:10
Speaker 2: But when I left banking, I thought, well, how can
7:16
Speaker 2: I do this business at scale? And started working as
7:20
Speaker 2: a consultant for real estate developers, raising them capital. And
7:25
Speaker 2: I was in one transaction where I'd raised all the
7:28
Speaker 2: debt and equity capital and I'm looking at the closing
7:33
Speaker 2: statement and there it was just me and I was
7:34
Speaker 2: a little fee and I said, wait a minute, if
7:36
Speaker 2: I'm bringing all the money, I'm a smart guy. I
7:38
Speaker 2: want to be on that side of the table. So
7:40
Speaker 2: that deal closed and I stuck with that developer for
7:43
Speaker 2: a couple of years for free, just to learn, because
7:45
Speaker 2: I understood that I could acquire a skill set that
7:49
Speaker 2: could make me a tremendous amount of wealth. Right, So
7:52
Speaker 2: when I see people today who approach you say, hey, man,
7:54
Speaker 2: I'm going to learn real estate development, give me a job.
7:56
Speaker 2: That's not the right way, right. You want to acquire
7:59
Speaker 2: that skill set, and if you can offer something, bring
8:01
Speaker 2: something to the table, and indoctrinate yourself into the real
8:05
Speaker 2: estate world. You want to do that because with that knowledge,
8:07
Speaker 2: you acquires yours forever, and you can monetize that for
8:10
Speaker 2: your entire life. So after I closed that transaction, I
8:18
Speaker 2: was talking about and I wanted to be on the
8:19
Speaker 2: other side of the table. About a year later, I
8:21
Speaker 2: locked up my first deal and it was a church deal,
8:24
Speaker 2: a condo development in Harlem where a church owned property.
8:28
Speaker 2: And this is a common scenario in our communities. We
8:31
Speaker 2: have churches that have been in the urban environment for
8:34
Speaker 2: a long time and they've weathered some bad times and
8:39
Speaker 2: now that all this gentrification is happening and the lands
8:41
Speaker 2: that becoming valuable, they want to monetize that land, but
8:46
Speaker 2: they also want to continue to exist there. So what
8:50
Speaker 2: a lot of churches do is they'll do deals with
8:52
Speaker 2: developers and well like the church will say, hey, you know,
8:54
Speaker 2: we need a new church facility, we need some cash,
8:58
Speaker 2: and you know, the developer, you do what you want
8:59
Speaker 2: with the rights. And it was that type of deal.
9:02
Speaker 2: And we brought that project to market in December of
9:07
Speaker 2: two thousand and nine, right during the middle of the
9:11
Speaker 2: financial downturn. So for about a week I thought that
9:14
Speaker 2: the project was going to be a rental. It turns
9:17
Speaker 2: out we hit the curve pretty well. We had a
9:20
Speaker 2: fantastic sellout, about sixty million dollars in sixteen months.
9:24
Speaker 6: And.
9:27
Speaker 2: You know, we were very happy to repay our loan.
9:30
Speaker 2: We made some money and that project went on to
9:33
Speaker 2: be very successful. All the people who bought, you know,
9:37
Speaker 2: units there by twenty fourteen, all their units had doubled
9:41
Speaker 2: in value, so they were very happy with the investment.
9:43
Speaker 2: That's that was my first project, which was a market
9:46
Speaker 2: rate development project. And the other piece of intellectual capital
9:51
Speaker 2: that I garnered through that was having weathered the financial
9:55
Speaker 2: downturn and all that economic turbulence, I thought, well, how
9:58
Speaker 2: could we do real estate development and inoculate ourselves from
10:02
Speaker 2: the economic cycle, right? And the entry to that was
10:05
Speaker 2: affordable housing, and which are public private partnerships where we
10:11
Speaker 2: are building housing for tenants rental housing for tenants who
10:18
Speaker 2: are you know, you take your average school teacher married
10:21
Speaker 2: to ups driver who doesn't have four or five thousand
10:24
Speaker 2: dollars a months to pay for rent out here, and
10:26
Speaker 2: that's our market. That's what we like to build for.
10:29
Speaker 2: And those types of projects require the involvement and participation
10:33
Speaker 2: of governments will provide certain non conventional instruments like tax credits,
10:39
Speaker 2: taxes and bonds, subsidies, etc. That made the capital stack
10:42
Speaker 2: work so you can produce the housing. The dirty little
10:46
Speaker 2: secret about affordable housing is the income you generate from
10:50
Speaker 2: the rents don't pay enough income to subsidize building it.
10:55
Speaker 2: It's because government subsidizes it that it works.
10:59
Speaker 5: There's a there's a lot to unpack, but I want
11:01
Speaker 5: to go back just to begin for it set because
11:03
Speaker 5: you made a very wise decision that most Americans don't make,
11:06
Speaker 5: and you bought multi family right away, because you know,
11:10
Speaker 5: most times, you know, in our communities, it's like we
11:12
Speaker 5: save enough money to buy the home that we can afford,
11:15
Speaker 5: or the dream home that we think we can afford,
11:17
Speaker 5: and re realize later that we can't. But you started
11:20
Speaker 5: with multi family right away. Was that the strategy all along,
11:24
Speaker 5: like you had been seeing people do that and as
11:26
Speaker 5: that as a way of having passive income.
11:28
Speaker 2: Yeah, that was definitely my objective in that we wanted
11:32
Speaker 2: to you know, when you think about it, right the
11:35
Speaker 2: fundamental equation is this, most people buy into that American
11:39
Speaker 2: dream right where you know, if you take a person,
11:42
Speaker 2: they go out and buy home, they save all their money,
11:44
Speaker 2: they buy single family home, they move into it for
11:47
Speaker 2: the next thirty years. Mostly the disposable income is going
11:50
Speaker 2: to pay that mortgage that's it. But if they just
11:53
Speaker 2: did something a little bit differently, buy a couple of
11:56
Speaker 2: income generating assets first, right in the case I was
11:59
Speaker 2: talking about out when I bought my first multi family
12:02
Speaker 2: I mean that was making me between eight hundred and
12:04
Speaker 2: thousand dollars a month, so they'll call it one thousand
12:06
Speaker 2: dollars a month. If you're making sixty grand and you
12:09
Speaker 2: buy a multifamily house and you can make yourself an
12:12
Speaker 2: extra thousand dollars a month, you've given yourself a twenty
12:14
Speaker 2: percent raise, right, And you can do that repeatedly. And
12:18
Speaker 2: the more assets you have that are generating income for you,
12:21
Speaker 2: the easier it is to buy your next one and
12:23
Speaker 2: your next one. Right, It's like getting off of that
12:26
Speaker 2: point of inertia. But if you choose to buy a
12:29
Speaker 2: single family home and move into it, I think you know,
12:33
Speaker 2: it's not as lucrative and it's not the wealth generating
12:37
Speaker 2: instrument that investment properties are.
12:41
Speaker 4: So let's let's get into this realestate development conversation with
12:44
Speaker 4: somebody that's looking to become a real estate developer right now? Right,
12:48
Speaker 4: what advice would you would you give them in order
12:51
Speaker 4: to because I understand that it's not necessarily easy to
12:54
Speaker 4: get into the game, and it's all about relationships a
12:57
Speaker 4: lot of times. So what advice would you get to
12:59
Speaker 4: some it as looking to become a real estate developer.
13:02
Speaker 2: So the first thing is just learn the equation, right,
13:05
Speaker 2: because you could do the equation on a multi family
13:09
Speaker 2: three family, which most people can have a level of
13:13
Speaker 2: access to. But it's that same equation that's saying the
13:16
Speaker 2: same mechanics that going through in a development deal. Granted,
13:19
Speaker 2: the variables change a little bit because if you get
13:22
Speaker 2: into development, you have to take on some different risks,
13:25
Speaker 2: but you're basically buying an asset, you're investing money in it.
13:29
Speaker 2: You're starting with a multi family, like a three family,
13:35
Speaker 2: You're going to learn things like how to do maintenance
13:38
Speaker 2: right when that toilet gets backed up. You're going to
13:41
Speaker 2: learn something about plumbing, you learn something about electrical and
13:44
Speaker 2: folks should not be scared to, you know, take on
13:46
Speaker 2: the challenge because everything you learn increases your knowledge base.
13:51
Speaker 2: The more knowledge you have, the more you're able to
13:53
Speaker 2: monetize your situation. So you know, I would encourage folks
13:58
Speaker 2: to start small. So start with a an operating property first, right,
14:03
Speaker 2: a multifamily, learn the mechanics. Down the road, you may
14:07
Speaker 2: want to say, you know, I'm going to buy a
14:08
Speaker 2: Brownstone or some other home that you can actually renovate
14:12
Speaker 2: and reposition. I mean everyone watches HGTV and those kind
14:16
Speaker 2: of things. You see people doing flips. That's another aspect
14:19
Speaker 2: of you know, uh in real estate investing, in real
14:22
Speaker 2: estate development that is achievable and accessible for most people.
14:26
Speaker 2: But if you do that, you learn how to you know,
14:30
Speaker 2: contract with an electrician, how to get the plumbing redone
14:33
Speaker 2: in the house, how to you know, put get a
14:35
Speaker 2: new roof, put on all the things that you basically
14:38
Speaker 2: do when you develop, but you're learning it in a
14:40
Speaker 2: little bit of a safer scenario. And once you you know,
14:44
Speaker 2: you go from crawling to walking, you can run, so
14:48
Speaker 2: that that crawling process.
14:50
Speaker 5: I imagine now as your internet, well Internet for free.
14:53
Speaker 5: Right You're you're saying, can I help this firm take
14:56
Speaker 5: us through that process.
14:57
Speaker 2: Of what you're learning?
14:58
Speaker 5: What are you seeing the negatives and positives of this
15:00
Speaker 5: space that you're now in, and to that moment where
15:02
Speaker 5: you now see your name at the bottom of the
15:04
Speaker 5: of the bet and you're like, wait, my name needs
15:06
Speaker 5: to be next to be, needs to be next to
15:08
Speaker 5: the bigger figures on this what's that process like for you?
15:10
Speaker 2: You mean going from just like starting to learn, Well,
15:13
Speaker 2: it's really just desire man, like, you know, really wanting
15:16
Speaker 2: to learn it. You think about what this opportunity represented
15:20
Speaker 2: for me was, you know, to actualize a dream and
15:23
Speaker 2: being an entrepreneur. And so I was intent on learning everything. So, uh,
15:28
Speaker 2: you know why I stayed with that developer for free
15:31
Speaker 2: for two years because I wanted to learn and I
15:33
Speaker 2: wanted to soak up everything like a sponge. So my
15:37
Speaker 2: background is in finance. I have two degrees in finance,
15:41
Speaker 2: Bachelors and the Masters, and I worked as an investment banker,
15:44
Speaker 2: so I came to the table with really strong financial acumen.
15:47
Speaker 2: So the you know, the math in real estate is
15:51
Speaker 2: simple math and you don't have to be an investment
15:53
Speaker 2: banker and you don't have to have an MBA to
15:55
Speaker 2: do it. It's simple math because the income is generated
15:58
Speaker 2: from people paying rent of operating expenses and you have
16:01
Speaker 2: cash flow. It's really a simple equation. Development goes a
16:07
Speaker 2: little bit deeper because you have to take something that's
16:10
Speaker 2: not generating any income and put it through a process
16:13
Speaker 2: where you're going to borrow some capital, both debt and equity.
16:17
Speaker 2: You're going to hire an architect, maybe through some entitlement
16:21
Speaker 2: work so that you can have the right zoning or
16:23
Speaker 2: whatever you need to build. Then you're going to go
16:25
Speaker 2: through the process of actually constructing something a little bit
16:29
Speaker 2: more risky, but once you get your wheels under you,
16:32
Speaker 2: you can do this. And so learning all of those
16:34
Speaker 2: different aspects, you know, the financing component, being very focused
16:39
Speaker 2: on project management, so making sure the our plans were
16:44
Speaker 2: getting done on time, and you know, the legal documents
16:47
Speaker 2: that we needed around developments were also moving along and
16:51
Speaker 2: are structured properly. There's a lot of engagement in what
16:55
Speaker 2: I do now with municipalities because when we're developing affordable housing,
16:59
Speaker 2: it can't be done without the participation and the support
17:02
Speaker 2: of government. And so there's a lot of what I
17:06
Speaker 2: think is undue bureaucracy in some markets that you have
17:10
Speaker 2: to contend with. But then there are other markets that
17:12
Speaker 2: are easy to function, and that is why as a company,
17:15
Speaker 2: we chose to expand out of New York City into
17:18
Speaker 2: several other markets where there really is tremendous demand for housing,
17:23
Speaker 2: both you know market rate, moderate income and you know
17:26
Speaker 2: affordable housing as well.
17:28
Speaker 4: So can you walk us through the development of a building.
17:32
Speaker 4: It could be in New York or out of New York.
17:33
Speaker 4: I know this is RFPs right, And then you have
17:36
Speaker 4: to get the financing right, and like you said, you
17:38
Speaker 4: have to get the architect, and you got to go
17:40
Speaker 4: through the permit process.
17:43
Speaker 2: So yeah, can you kind of walk us through stuff?
17:44
Speaker 2: So let's start with a blank piece of dirt. Okay,
17:48
Speaker 2: So you have a piece of dirt. Let's call it
17:51
Speaker 2: in Brooklyn, okay, And it's a new neighborhood that's turning
17:54
Speaker 2: over and is improving. And as an investor, believe you
17:58
Speaker 2: know what, I can put a building on that piece
18:01
Speaker 2: of dirt, call it fifty units and make money. Right,
18:06
Speaker 2: So the processes. First of all, I see that piece
18:08
Speaker 2: of dirt. The first thing I want to do is
18:10
Speaker 2: what's called a zoning analysis. I want to understand what's
18:14
Speaker 2: the size of a building I could put on there?
18:16
Speaker 2: Can I actually put fifty units? Is it fifty five units?
18:18
Speaker 2: Is it sixties and forty five? I don't know. So
18:21
Speaker 2: an architect would be engaged. They'd conduct a zoning analysis.
18:26
Speaker 2: And what it does is reads the zoning code and
18:28
Speaker 2: every municipality in the country has a zoning code, and
18:31
Speaker 2: it interprets the zoning code and it gives you, right
18:33
Speaker 2: there in a two three four page report, exactly what
18:36
Speaker 2: could be built, how high it could be, where the
18:39
Speaker 2: setbacks have to be. You know, how many dwelling units
18:44
Speaker 2: can be in that building, the size of every dwelling unit.
18:46
Speaker 2: So all these very technical features are codified in a document.
18:51
Speaker 2: So you can take that zoning analysis now and now
18:54
Speaker 2: go build a financial model, right and that financial model
18:57
Speaker 2: is going to say, look, I have these fifty units
18:59
Speaker 2: summer studio. Some are one bedrooms, some or two bedrooms,
19:02
Speaker 2: and they generate x amount of income. Right that the
19:08
Speaker 2: amount of income they generate has to also be further
19:13
Speaker 2: reduced by the operating expense. So the superintendent has to
19:17
Speaker 2: clean the building or you know, service the residents. The
19:20
Speaker 2: porters have to take the garbage out and shovel the
19:23
Speaker 2: snow off the off the front steps. You have to
19:25
Speaker 2: pay for electricity in the common areas, you have to
19:28
Speaker 2: pay your real estate taxes or whatever it is. So
19:30
Speaker 2: you do a financial model and you see, you know,
19:33
Speaker 2: the revenue can generate the expenses associated against that project,
19:37
Speaker 2: and then what kicks out of that is what we
19:38
Speaker 2: called net operating income. That net operating income is what
19:44
Speaker 2: is used to service the debt the mortgage on the building. Right,
19:48
Speaker 2: so you can see just from a pro forma what
19:53
Speaker 2: NY the building produces, and that NI will tell you
19:56
Speaker 2: how much debt you can raise. So and you also
20:01
Speaker 2: want to have a project that of course can support
20:04
Speaker 2: the debt, so you know how much debt it can support.
20:06
Speaker 2: Now you look at, well, how much debt do I
20:07
Speaker 2: need to build it? And you're going to say, you know,
20:10
Speaker 2: at fifty unit building. When you become a little bit
20:13
Speaker 2: more seasoned, you kind of know what construction costs are.
20:18
Speaker 2: But for folks who aren't, you can literally take your plans,
20:21
Speaker 2: talk to a builder, say, hey, I'm building this building.
20:23
Speaker 2: It's going to be block and plank, or it's going
20:26
Speaker 2: to be port in place, concrete, steel frame, whatever construction
20:30
Speaker 2: methodology your structural engineer recommends, and you get a cost, right,
20:34
Speaker 2: a cost projection for building the building. So that building,
20:38
Speaker 2: we'll just use some numbers, right that let's say to
20:42
Speaker 2: acquire the land and to build everything's in be ten
20:46
Speaker 2: million dollars and let's say at ten million dollars is
20:50
Speaker 2: at six percent interest rate, so you know, every month,
20:53
Speaker 2: that's how much your mortgage payment has to be on
20:56
Speaker 2: that asset, So that NI has to be an excess
20:59
Speaker 2: of that debt coverage that that debt number. We call
21:02
Speaker 2: that a debt service coverage ratio, So that DSCR probably
21:07
Speaker 2: needs to be minimum about one point twenty five, so
21:11
Speaker 2: meaning you want to have one hundred and twenty five
21:13
Speaker 2: percent of that mortgage number in your NI so you
21:17
Speaker 2: can comfortably cover the debt service and then when you
21:20
Speaker 2: pay the debt service, the rest of it in yours
21:22
Speaker 2: to cash flow.
21:23
Speaker 5: So when you're looking for let's say that plot of dirt,
21:26
Speaker 5: what's are you doing a market analysis to see like,
21:29
Speaker 5: all right, we're actually looking for a place to invest
21:32
Speaker 5: in this borough or in this city prior to it,
21:34
Speaker 5: or are we you know, looking at past investments that
21:37
Speaker 5: are going up in the neighborhood to say, all right,
21:39
Speaker 5: this is an opportunity for us and now create.
21:41
Speaker 2: Now that's asked you a great question. So what you're
21:43
Speaker 2: really doing is you you know, when you're looking at
21:46
Speaker 2: that particular opportunity, you're doing it. So you're looking at
21:49
Speaker 2: it because there's probably something else ready going on in
21:51
Speaker 2: that neighborhood, right, And what we do is what's called
21:55
Speaker 2: a comp study. So I can call a real estate
21:58
Speaker 2: broker and say, give me a comm study for this
22:01
Speaker 2: zip code. So they're going to say, Craig, I'll email
22:03
Speaker 2: you this report and it'll have you five buildings, ten
22:08
Speaker 2: buildings that are rending up in and around the neighborhood,
22:10
Speaker 2: and it'll show me what the rents are in those buildings,
22:12
Speaker 2: so I can have a reasonable expectation as to what
22:16
Speaker 2: types of income are generated off off that asset. Now,
22:22
Speaker 2: in some markets that we call transitional markets, you know
22:25
Speaker 2: it's not so clear, but you're taking a bet because
22:29
Speaker 2: let's say something fantastic is going on in that market,
22:32
Speaker 2: like they're bringing in a new trains train station, or uh,
22:36
Speaker 2: they're building a new stadium, and there's a reason why
22:38
Speaker 2: I believe there's going to be a lot of demand
22:41
Speaker 2: for real estate in that area. So we will, you know,
22:44
Speaker 2: make an analysis and do an investment based on that.
22:48
Speaker 2: But in my business, since we do affordable housing, here's
22:51
Speaker 2: the thing. Affordable housing is real estate. It's actually it's
22:59
Speaker 2: real but it's really a hybrid. It's really structured finance, right,
23:03
Speaker 2: because we are offering units to rent at below market rate.
23:08
Speaker 2: So it almost doesn't matter what the market is, because
23:11
Speaker 2: the two bedrooms, say three thousand, in that market, I
23:15
Speaker 2: could bring it to I could bring it to market
23:18
Speaker 2: for like, say, sixteen hundred eighteen hundred, tremendous discount to
23:21
Speaker 2: make it much more affordable. And the demand for affordable
23:25
Speaker 2: housing is insatiable. We cannot build enough of it. I
23:29
Speaker 2: have to tell y'all right now, in twenty twenty two,
23:33
Speaker 2: almost twenty twenty three, we have a seven million unit
23:37
Speaker 2: housing deficit in this country. Seven million units. That means
23:40
Speaker 2: we could build for the next ten years. We'd have
23:43
Speaker 2: to build for the next ten years across the country
23:45
Speaker 2: just to satisfy that demand. And guess what, in ten
23:48
Speaker 2: years we're going to find out there's even more demand
23:51
Speaker 2: that occurred. And just to quantify that, seven million units
23:57
Speaker 2: of housing is about two and a half three trillion
24:00
Speaker 2: dollars of an economic opportunity. That's why our community has
24:04
Speaker 2: got to get on real estate, because you know, you
24:06
Speaker 2: can get your feed in. Not all of it's going
24:08
Speaker 2: to be you know, thousand unit portfolios that are built
24:12
Speaker 2: in public private partnerships. A lot of it will be
24:14
Speaker 2: people who choose to you know, buy a plot of
24:18
Speaker 2: land in the city or take a vacant land that
24:21
Speaker 2: the city is rfpeing and you know, build a three
24:24
Speaker 2: family or four family home on it. There's a lot
24:26
Speaker 2: of opportunity there. So all right, let's talk about this.
24:32
Speaker 4: There is a housing shortage in America, right, So what
24:38
Speaker 4: does that mean for the average person and how does
24:42
Speaker 4: that affect the real estate market over the next five years.
24:46
Speaker 2: Well, that means that, you know, it's like anything else,
24:48
Speaker 2: supply and demand. The supply is low, the demand is high.
24:51
Speaker 2: So that's why rents go up. So so why is
24:53
Speaker 2: there a housing shortage? Though? Man, there's been so much
24:57
Speaker 2: politicization of housing and real estate and it's difficult to build.
25:02
Speaker 2: Like you look at some of the markets. Where's the
25:04
Speaker 2: most pronounced New York, California. There's this thing called Nimby.
25:08
Speaker 2: You have heard of Nimby? Not in my backyard. People say, yeah,
25:12
Speaker 2: we need affordable housma, don't build them, don't build them
25:14
Speaker 2: on my street. Right, And so what that does is
25:19
Speaker 2: it disturbs the real estate market for that particular city
25:24
Speaker 2: and we just buy and large have not built enough
25:28
Speaker 2: moderate and middle income or affordable housing so you know,
25:32
Speaker 2: millionaires don't have any problem. They could buy whatever they
25:34
Speaker 2: want to buy right or live wherever they want to live.
25:36
Speaker 2: We're talking about the rank and file public workers, you know, teachers,
25:42
Speaker 2: ambulance drivers, sanitation workers, the rank and file public who
25:47
Speaker 2: have good jobs. They work hard. But there's been such
25:51
Speaker 2: an escalation in the cost of rents because of the
25:54
Speaker 2: supplying demand disruption that these rents are off the table.
25:59
Speaker 2: I mean, if if four million units of housing hit
26:02
Speaker 2: the market tomorrow, all rents would drop, but it takes
26:05
Speaker 2: years and years to build it. That's why you know,
26:09
Speaker 2: we have this condition because it's hard to just increase
26:12
Speaker 2: the supply quickly. You have to have an alignment of politics,
26:17
Speaker 2: of market forces like real estate excuse me, like interest rates.
26:23
Speaker 2: You know, interest rates are out of control right now,
26:24
Speaker 2: so it makes it very hard to build. Sometimes you
26:27
Speaker 2: have construction costs going off the rails, like everyone heard about,
26:31
Speaker 2: you know, what was going on with supply chain disruptions,
26:35
Speaker 2: you know last year. So you have all these things
26:36
Speaker 2: that can throw that equation off and make it hard
26:39
Speaker 2: to produce housing. So you know, right now it's come
26:43
Speaker 2: to a critical point. And you know, particularly elected officials
26:46
Speaker 2: have to get off of the rubric where they want to,
26:51
Speaker 2: you know, almost politicize housing, make all real estate developers evil,
26:56
Speaker 2: all real estate is bad. We have a lot of
26:58
Speaker 2: that narrative coming out to certain communities in certain cities,
27:02
Speaker 2: but it doesn't help to do anything because people still
27:06
Speaker 2: cannot find good housing, and the only way to get
27:08
Speaker 2: it is to build it. Right, we have to ubzone.
27:10
Speaker 2: A lot of communities don't want to go through rezonings
27:14
Speaker 2: and up zone. They say all that, we don't want
27:16
Speaker 2: that high building here. Well, okay, that's your opinion, but
27:20
Speaker 2: we have people sleeping in shelters, right, we have people
27:22
Speaker 2: who really need housing. And I firmly believe that housing
27:27
Speaker 2: security from most families is financial security, because if people
27:31
Speaker 2: have a roof over the head, there's more money they
27:33
Speaker 2: have to dedicate to healthcare, the education, to other well
27:37
Speaker 2: being of the family, taking care of the elderly, everything
27:40
Speaker 2: else the families have to deal with. But if sixty
27:42
Speaker 2: seventy percent of your income is used to pay rent,
27:45
Speaker 2: cuts out a lot of options what you could do otherwise.
27:48
Speaker 5: When you talk about up zone, and I was immediately
27:51
Speaker 5: thinking a city I used to work in, the NEWI
27:53
Speaker 5: sholl We're seeing a lot of towers go up there,
27:55
Speaker 5: and I'm wondering, when when you're building units and you're
27:58
Speaker 5: adding that to the portfolio, what's the allocation that has
28:01
Speaker 5: to be affordable housing? And obviously your expertise in the field,
28:05
Speaker 5: are you seeing people just meaning the minimum or people
28:08
Speaker 5: exceeding the amount if there is a certain allocation you
28:10
Speaker 5: have to have.
28:11
Speaker 2: Well, first of all, let me say this, the mayor
28:12
Speaker 2: of New Rochelle in that administration has done it absolutely correctly.
28:16
Speaker 2: They have embraced real estate development, and they've used market
28:21
Speaker 2: forces and capitalist forces and real estate developers to help
28:25
Speaker 2: bring that city into the modern era. And the wave
28:28
Speaker 2: of development that there is impressive, right. But in other
28:34
Speaker 2: areas it's not so easy because you have a lot
28:36
Speaker 2: of different opinions, a lot of you know, just fights
28:39
Speaker 2: over what should be built, could be built. We don't
28:41
Speaker 2: want that tower here, I think. To answer your second question, generally,
28:48
Speaker 2: depending different municipalities have different requirements about how much affordable
28:52
Speaker 2: housing should be built, and usually what happens is it's
28:55
Speaker 2: tied to some type of tax abatement or some type
28:58
Speaker 2: of government funding that will be provided to the project
29:01
Speaker 2: to build it. We had a scenario recently in Harlem. Right,
29:05
Speaker 2: we're very active, we do a lot, and a city
29:07
Speaker 2: council person turned down a developer on one hundred and
29:11
Speaker 2: forty fifth Street who bought land and only was required
29:15
Speaker 2: to do twenty percent affordable housing, but he wanted to
29:18
Speaker 2: ubzone the project and do nine hundred units. He went
29:23
Speaker 2: as far as fifty percent of affordable housing. She still voted
29:27
Speaker 2: it down. Well, wow, politics, So you think about that's
29:33
Speaker 2: the wrong move, right, I mean that's four hundred and
29:35
Speaker 2: fifty families. We're not going to have clean, decent, energy
29:40
Speaker 2: efficient affordable housing for themselves, right, It's an absolute loss.
29:44
Speaker 2: But we see too much of that these days. So
29:46
Speaker 2: let me ask you this, well, two questions. How did
29:48
Speaker 2: real estate developers get paid? Last answer, well, so what
29:55
Speaker 2: I mean by that? Paid? Like twice? Though? Right? Well,
29:57
Speaker 2: no real estate developers take all the risks, So what
29:59
Speaker 2: we do? What do you mean twice? So you get all?
30:01
Speaker 4: Right, Well you can explain it better than me, obviously,
30:03
Speaker 4: but from my understanding.
30:05
Speaker 2: You you get a.
30:07
Speaker 4: Part of the development fee, yes, right, and then you
30:12
Speaker 4: have if you have equity in it, then you can
30:15
Speaker 4: get that as some level of conversation as well.
30:18
Speaker 2: Right, So the equity, the equity that you invest would
30:20
Speaker 2: just be returned to you. Right. The equity is so
30:22
Speaker 2: when you do a project. Let's say, you know, when
30:25
Speaker 2: you buy a house, right, you know, you go to
30:27
Speaker 2: the bank and the bank says, okay, uh, you know
30:31
Speaker 2: I want to buy this house. I'll say, okay, mister Livingston,
30:34
Speaker 2: you know you have to put down twenty percent. That's
30:36
Speaker 2: your equity. Same thing when you do a development deal.
30:39
Speaker 2: The bank is going to give you one hundred percent
30:40
Speaker 2: of the deal. You have to bring some equity. Usually,
30:43
Speaker 2: depending on how large the project is, you get into
30:47
Speaker 2: a scenario where the equity is coming from a third
30:51
Speaker 2: party investor, a limited partner, which is usually a real
30:55
Speaker 2: estate private equity fund. It could be an insurance company
30:59
Speaker 2: or I'm just an investor that has a lot of
31:01
Speaker 2: capital and they have to invest it because they need
31:04
Speaker 2: to generate returns on their capital to pay pensioneires or
31:08
Speaker 2: to pay out insurance claims or whatever it is. So
31:12
Speaker 2: the equity gets returned. But to answer your question specifically,
31:16
Speaker 2: a real estate developer will get fees, right, So you
31:18
Speaker 2: get a developer fee. You could get distributions based off
31:23
Speaker 2: of refinancing the project. Because let's say you know, like
31:28
Speaker 2: you have a project, you do it after ten years
31:31
Speaker 2: or whatever, rents go up, you have one level of debt,
31:34
Speaker 2: you've been paying down that mortgage. You could refinance, put
31:36
Speaker 2: a new mortgage on, take some capital out. But more regularly,
31:41
Speaker 2: what happens is once you put the building into service,
31:44
Speaker 2: every month is cash flow. Right remember NY, you have
31:47
Speaker 2: your NY, you pay your debt, and what remains is
31:49
Speaker 2: cash flow that can be distributed to partners.
31:52
Speaker 4: So okay, now let me ask you this. When in
31:57
Speaker 4: New York City rent prices have gone up one hundred
32:00
Speaker 4: percent and since COVID, I think it's the most expensive
32:05
Speaker 4: rent right now in the country. How is this sustainable?
32:12
Speaker 4: And what is the solution or is there any solution
32:16
Speaker 4: or will it's just continued just to go.
32:17
Speaker 2: Well, no, that's that's not sustainable. And what you saw happened.
32:20
Speaker 2: There was a situation where there are a couple of
32:25
Speaker 2: things happened. There have been a lot of pressures on
32:28
Speaker 2: operating expenses for years. If you look at the curve
32:32
Speaker 2: of inflation, I mean, and how insurance, how oil, how labor,
32:39
Speaker 2: all the inputs to operate a building have gone up tremendously.
32:42
Speaker 2: So think about this, right, you heard of the fight
32:45
Speaker 2: for fifteen. Okay, so we wanted to pay workers more.
32:48
Speaker 2: So this bill came out of the state legislature to say,
32:52
Speaker 2: you know, we're going to pay everybody fifteen dollars an hour.
32:55
Speaker 2: And I believe it was a needed bill and we
32:56
Speaker 2: should have done it. It was the right thing to do.
32:58
Speaker 2: But we pay people fifteen dollars an hour. We took
33:02
Speaker 2: the labor the minimum wage from seven or dollars or
33:05
Speaker 2: whatever was seven, fifteen, eight dollars whatever to fifteen. In
33:09
Speaker 2: two years. You doubled the cost of labor everywhere. Then
33:13
Speaker 2: insurance goes up thirty percent a year. You have, you know,
33:19
Speaker 2: all your supplies, water, gas, everything goes up so much.
33:25
Speaker 2: So what happened with those big rent increases is there
33:29
Speaker 2: was an opportunity again very short, tight supply, and folks
33:33
Speaker 2: were out of the city for a while. Everyone came
33:35
Speaker 2: flooding back at one point in time, and just the
33:37
Speaker 2: market demands caused, you know, just the economic equation to
33:42
Speaker 2: ensue supply and demand. You know, demand was strong, supply
33:46
Speaker 2: was low. Rents went up. That's not sustainable. You'll never
33:49
Speaker 2: see one hundred percent year over year or thirty percent
33:52
Speaker 2: year over year rent increases. What compounded it more in
33:56
Speaker 2: my world is that when you own affordable housing assets
34:02
Speaker 2: like I do, particularly in New York City, those rents
34:05
Speaker 2: are governed by the RGB, the Rent Guidelines Board, so
34:09
Speaker 2: they set the rent increases on rent stabilized units every year.
34:13
Speaker 2: And again the politicization of real estate, those RGB increases
34:17
Speaker 2: had been artificially low for like throughout almost like the
34:21
Speaker 2: whole Deblasio administration, and they were lagging the increase in
34:27
Speaker 2: costs of operating buildings. So you know, there was an
34:31
Speaker 2: RGB increased this past year, I think of earlier this year,
34:34
Speaker 2: like four or six percent, and people were up in arms,
34:37
Speaker 2: but it still didn't even really catch up with what
34:41
Speaker 2: you know, inflation and operating costs had had, you know,
34:46
Speaker 2: demonstrated over the past few years. So you're going to
34:49
Speaker 2: see you know, So what I'm doing is making a
34:51
Speaker 2: differentiation between what happens in the regulated world, like regulated
34:56
Speaker 2: real estate and unregulated real estate. Unregulated real estate is
35:00
Speaker 2: you had those huge dramatic increases. Regulated real estate is
35:03
Speaker 2: not going to You're not going to see those types
35:05
Speaker 2: of rent increases your over year. Yeah.
35:07
Speaker 5: One of the things around real estate is the education
35:10
Speaker 5: around it, and so most people think they can be
35:12
Speaker 5: an agent, or they can be a realtor or obviously
35:15
Speaker 5: in your case, a developer, But just doing the researcher
35:18
Speaker 5: on it, you realize there's so many other things that
35:20
Speaker 5: could be involved. And obviously what you're doing now, I
35:23
Speaker 5: mean I wrote down a list of things and you
35:25
Speaker 5: can enlighten me. I wonder what you see it on
35:27
Speaker 5: the landscape looking forward for the space. Architects, accountants, attorneys, plumbers, electricians, masons, painters, competors,
35:34
Speaker 5: all these opportunities we're missing the opportunity to be involved
35:39
Speaker 5: in the process. What do you think we need to
35:41
Speaker 5: do to enlighten the education around it.
35:44
Speaker 2: No, I mean that's a great point as you're bringing up,
35:46
Speaker 2: because like I just talked about, you know, building seven
35:51
Speaker 2: million units, it's two and a half to three trillion
35:54
Speaker 2: dollar opportunity. And that's not all going to developers, right.
35:58
Speaker 2: You have architects and engineer and masons and plumbers and
36:01
Speaker 2: accountants and attorneys and so many people involved in and
36:05
Speaker 2: around real estate, and so there are a lot of
36:08
Speaker 2: different career paths that are available. We talk about like
36:11
Speaker 2: when we do Affirmation Tower and other projects that we do.
36:15
Speaker 2: You know, this power in ownership. So as a developer,
36:18
Speaker 2: what we do is we are intentional about making sure
36:20
Speaker 2: we're spending money with minority and women own companies. Our
36:24
Speaker 2: Harlem project, the Victoria Tower that is operational now on
36:28
Speaker 2: one twenty fifth Street next to the Apollo, I mean,
36:31
Speaker 2: and that project alone, we spend thirty five million dollars
36:34
Speaker 2: contracts with minority and women owned companies. And in Affirmation Tower,
36:39
Speaker 2: which is going to be a two and a half
36:41
Speaker 2: billion dollar project, we're going to spend over a billion
36:44
Speaker 2: dollars with minority and women owned companies. But again it's
36:49
Speaker 2: because you have ownership that looks like me making damn
36:52
Speaker 2: sure that we're doing it. We're not looking to you know,
36:54
Speaker 2: figure out how to gain the system and not do it,
36:57
Speaker 2: get the credit, give to somebody's wife. We started a
37:00
Speaker 2: company that none of that nonsense. We were very intentional
37:03
Speaker 2: about making sure that the economic multiplier exists in our community.
37:08
Speaker 4: So let's talk about this Harlem hotel. It's going to
37:12
Speaker 4: be the first luxury hotel in Harlem.
37:17
Speaker 2: Yeah, we're really proud of it. Man. So it'll be
37:20
Speaker 2: opening up in February and it'll be a renaissance by Marriott.
37:24
Speaker 2: So this is the first full service hotel in Harlem
37:28
Speaker 2: in eighty years. What is it going to be right
37:30
Speaker 2: on one twenty fifth Street, right the Victorian, The Victorian, Yeah,
37:34
Speaker 2: the Victoria Tower. So what it is is back in
37:38
Speaker 2: the day you had Harlem's Opera Row and there were
37:43
Speaker 2: four performance halls. You had the Apollo, the Victoria, the
37:46
Speaker 2: Alhambra and the Harlem Opera House. Only the Apollo is
37:50
Speaker 2: really functional right now as was originally built. But we
37:55
Speaker 2: got involved in this project years ago and it was
37:59
Speaker 2: an active reuse, so we've kept some of the original
38:03
Speaker 2: historical features like the facade, the Marquee, the Blade. When
38:07
Speaker 2: you go into the development, you know when you walk
38:09
Speaker 2: in off one hundred and twenty fIF Street, you're walking
38:12
Speaker 2: into the original nineteen seventeen lobby. We hired historical preservation
38:18
Speaker 2: architects and we restored it to the te perfectly and
38:22
Speaker 2: then the rest of it is all brand new. So
38:26
Speaker 2: we have two twenty seven story towers. The tower on
38:29
Speaker 2: one twenty sixth Street is a residential rental building that
38:34
Speaker 2: was done in a fifty to thirty twenty configuration. So
38:37
Speaker 2: this fifty percent market rate, thirty percent low income, twenty
38:41
Speaker 2: percent middle income. And we did that intentionally to make
38:43
Speaker 2: sure we could create opportunity for people from all over
38:47
Speaker 2: the income spectrum to live there, right, And so it
38:49
Speaker 2: wasn't just going to be a bunch of you know,
38:52
Speaker 2: folks paying four five thousand dollars six thousand dollars a
38:55
Speaker 2: month for rent, but we have affordable housing tenants paying
38:58
Speaker 2: fraction of that living there and enjoying the same amenities
39:01
Speaker 2: everyone else is enjoying. Then within the hotel there is
39:05
Speaker 2: a two hundred and ten rooms. We have a fantastic lounge, bar, lobby.
39:12
Speaker 2: It's amazing. Definitely, you guys might want to film this.
39:16
Speaker 2: Uh easy, that's too easy. Yeah, we have. We have
39:19
Speaker 2: a ballroom because we want to create an opportunity for
39:22
Speaker 2: you know, institutions from our community to Harlem to be
39:25
Speaker 2: able to have events there. So you know, world class
39:29
Speaker 2: ballroom and then on the persons, well, before I get there,
39:34
Speaker 2: we also created a cultural arts facility with two black
39:36
Speaker 2: box theaters, so there's a ninety nine seat theater and
39:39
Speaker 2: a one hundred and ninety nine seat theater that will
39:42
Speaker 2: be occupied and operated by the Apollo Theater. Well, so
39:45
Speaker 2: they'll be doing programming and creating arts programming from other
39:52
Speaker 2: local groups in the community who can't you know, afford
39:56
Speaker 2: to do it on Broadway because it gets prohibitively expensive.
39:58
Speaker 2: But they could do it here and then and we
40:00
Speaker 2: have you know, a couple of retailers. But you know,
40:02
Speaker 2: it's a long time coming. We're happy to be, you know,
40:05
Speaker 2: at the end and putting it into production. So we
40:08
Speaker 2: got the hotel in Harlem. But there's also affordable housing
40:10
Speaker 2: that's going on in Harlem. I know one hundred and fortieth,
40:13
Speaker 2: there's a project in one hundred and fifteen. Let's talk
40:15
Speaker 2: about the importance of I got almost restoring that that
40:19
Speaker 2: that feeling from the Harlem Renaissance.
40:21
Speaker 5: You talked about the four pillars that were there. But
40:23
Speaker 5: there's like a researchers that it's happening obviously with you guys.
40:26
Speaker 2: I mean there's a lot so limit. So here's the
40:28
Speaker 2: dirt little secret. Harlem is no longer majority black, right,
40:31
Speaker 2: So what is it? It's not majority black? I mean
40:34
Speaker 2: you have some big big Asian population, big Latino population,
40:39
Speaker 2: big white population, but you know the numbers are I
40:42
Speaker 2: don't but we can get them to you. But but
40:45
Speaker 2: you look at what we should be doing is preserving
40:49
Speaker 2: our cultural institutions, and Harlem is a cultural institution. And
40:53
Speaker 2: one of the things we've done you've mentioned on hundred
40:55
Speaker 2: and fortieth Street. So we owned some property on one
40:57
Speaker 2: hundred and fortieth Street and one hundred and fiftieth Street,
41:00
Speaker 2: so we're rebuilding on those two vacant lots. We're putting
41:04
Speaker 2: up two affordable condominiums. So it's home ownership where we
41:10
Speaker 2: want folks from the community to be able to buy
41:13
Speaker 2: units in the community at affordable prices. So you're talking
41:17
Speaker 2: about like a three bedroom condo and Harlem for like
41:21
Speaker 2: three hundred thousand dollars, right, unheard of. But we could
41:24
Speaker 2: do that because of the participation and the support of
41:28
Speaker 2: you know, the Department of Housing, Preservation, Development, you know,
41:31
Speaker 2: New York City's Housing Agency, and some other funding that
41:34
Speaker 2: came from the state. But we need a lot more
41:37
Speaker 2: of that that. We need to have home ownership opportunities
41:40
Speaker 2: in Brooklyn, you know, in the Bronx, and Harlem a
41:44
Speaker 2: lot more of it. And so I think this city
41:47
Speaker 2: Council and this legislature in the Assembly and the Senate
41:50
Speaker 2: has woken up to that and it has created financial
41:54
Speaker 2: resources to go into funding that type of development because
41:57
Speaker 2: we you know, we were asleep for a long time,
42:00
Speaker 2: was changing over. So let me ask you this because
42:03
Speaker 2: but you're still a BIS.
42:05
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43:55
Speaker 1: An illegal alien from Guatemala charged with raping a child
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44:11
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44:14
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44:18
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44:23
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44:27
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44:30
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44:34
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44:38
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44:41
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44:44
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44:50
Speaker 1: America's laws, border and families will be protected.
44:53
Speaker 2: Sponsored by the United States Department of Homeland Security.
44:55
Speaker 4: Business man, and you handed to make money, right, So
44:58
Speaker 4: when you're doing these projects, fifty of the housing is
45:03
Speaker 4: going to low or middle income or you just talked
45:06
Speaker 4: about where you can buy and it is based off
45:09
Speaker 4: of your income.
45:11
Speaker 2: So how are you making money off of this?
45:12
Speaker 4: The city gives you subsidies to subsidize the price of
45:18
Speaker 4: Like if somebody should be paying four thousand but they're
45:20
Speaker 4: only paying one thousand, is the city subsidized three thousand dollars?
45:24
Speaker 2: Absolutely? So what will happened is there's two types of
45:27
Speaker 2: substis capital subsidy, and there's rental subsidy. So so capital
45:31
Speaker 2: subsidy works like this, like, you know, we're doing the
45:34
Speaker 2: development and it costs ten million to do the development, right,
45:40
Speaker 2: but that development can only support six million of debt
45:45
Speaker 2: or six million of capital because of the depressed costs.
45:47
Speaker 2: The city's going to put in the additional subsidy. It's
45:49
Speaker 2: a very simplistic way to look at it, but that's
45:51
Speaker 2: kind of how it works, and how we get paid
45:53
Speaker 2: is when you create that budget, our fee is part
45:57
Speaker 2: of the budget. So it's like it's right, it's baked
45:59
Speaker 2: right in.
46:00
Speaker 4: So it's like a building costs ten million, you have
46:03
Speaker 4: six million, the city will put the other four million
46:05
Speaker 4: in for you. But for them pointing four million in
46:08
Speaker 4: for you, they're gonna say we need thirty percent of
46:10
Speaker 4: the market rate. So then the math it works out.
46:13
Speaker 4: It's kind of like an even exchange all lost. That's
46:15
Speaker 4: right right, right right. They subsidized. The city has to subsidize.
46:20
Speaker 2: The building and the operations of affordable housing because otherwise
46:24
Speaker 2: it wouldn't work. What's the what how much do you
46:26
Speaker 2: need to have an affordable housing building? Like a percentage
46:30
Speaker 2: I mean, we do some. We have a building that
46:32
Speaker 2: we're bringing to market right now in the Bronx up
46:34
Speaker 2: on Union Avenue to ninety five unit building. It's one
46:37
Speaker 2: hundred percent affordable. But that was done from the genesis
46:41
Speaker 2: with the city with the intention of doing an affordable
46:44
Speaker 2: housing building. And by the way, that's also a joint
46:47
Speaker 2: venture with the church, where we did a deal with
46:49
Speaker 2: the church. They owned the land and they had aspirations.
46:52
Speaker 2: I mean, it's a really good, really nice church. They
46:54
Speaker 2: had aspirations to stay there. They wanted a new church facility,
47:00
Speaker 2: and you know a lot of their members have passed
47:04
Speaker 2: away or retired, moved away, and the congregation dwindled. So
47:09
Speaker 2: when we were introduced to them, we had an idea, listen,
47:11
Speaker 2: let's work out an affordable housing deal. We brought them
47:13
Speaker 2: into the partnership where they are thirty percent owner as well,
47:17
Speaker 2: and they get a new church facility. But all that
47:20
Speaker 2: was done under one budget, and that includes a developer fee,
47:24
Speaker 2: so we're able to do, you know, do good help
47:26
Speaker 2: this church create affordable housing, but we made money by
47:28
Speaker 2: doing it too. That literally is what's happened to my
47:30
Speaker 2: church in the Michelle.
47:32
Speaker 5: We're going to be on the bottom floor, there'll be
47:34
Speaker 5: retail space, but they you know, there's going to be
47:37
Speaker 5: a tower above it. You said something about, yeah, we
47:40
Speaker 5: will sleep for a while, but now we need to
47:42
Speaker 5: be woken. Part of it is seeing people like you,
47:44
Speaker 5: but we need to see more people like you. And
47:45
Speaker 5: I know you're on the board for the New York
47:49
Speaker 5: Real Estate direct So can you talk about your role
47:53
Speaker 5: and the importance that that organization plays in that process
47:57
Speaker 5: of developing more developers that look like us?
48:00
Speaker 2: Yeah, I mean so, NYREK is the New York Real
48:02
Speaker 2: Estate Chamber. It is the leading advocacy group for all
48:06
Speaker 2: the diverse developers in New York State. So if you're
48:10
Speaker 2: you know, anyone doing any project of scale, and note
48:13
Speaker 2: that's a black or brown developer, female developers is a
48:16
Speaker 2: member of this organization. And you know, thirty years ago
48:21
Speaker 2: you wouldn't see anybody like us doing real estate, right.
48:24
Speaker 2: It has just been a very undiverse industry, no diversity.
48:29
Speaker 2: And so I'm on the board. I'm actually chairman of
48:32
Speaker 2: the board. Cheryl McKissick is a board member with me.
48:35
Speaker 2: Don Peeples is a board member with me. But we
48:37
Speaker 2: have a bunch of other board members and developers that
48:41
Speaker 2: are for profit and not for profits, but we all
48:43
Speaker 2: work towards the same thing, to increase access to economic
48:47
Speaker 2: opportunity and capital for diverse developers. And we've been making
48:52
Speaker 2: a lot of noise, we've been I think, achieving a
48:54
Speaker 2: lot of success. We are looking to recruit and bring
48:58
Speaker 2: as many folks who are interested in real estate development
49:01
Speaker 2: into the fold as possible because of the knowledge that
49:03
Speaker 2: we have has to be shared. It's the only way
49:06
Speaker 2: we're going to grow our ranks right and I like
49:09
Speaker 2: to borrow, you know, rubric from our Jewish brothers and sisters.
49:12
Speaker 2: I see so much collaboration in synagogues. You go to
49:16
Speaker 2: any synegaue unit to see five or ten businessmen who
49:18
Speaker 2: work together. And we try and do the same thing.
49:21
Speaker 2: Don Peebles always says, you know, when he sees another
49:24
Speaker 2: black developer, he doesn't see a competitor, he sees a
49:27
Speaker 2: potential partner. And that's how you know, we look at it.
49:29
Speaker 2: In Iraq, we are doing a lot of deals that
49:33
Speaker 2: are larger because we collaborate with each other, like Affirmation Tower,
49:37
Speaker 2: you know, the People's Organization, my company, the Bolstero in
49:44
Speaker 2: Atlanta and Third and Urban One, an RFP last month
49:48
Speaker 2: to develop a huge site next to Microsoft's ninety acre campus. Right,
49:54
Speaker 2: it's just going to be you know, one point two
49:56
Speaker 2: million square feet that will develop, which will consist of
49:59
Speaker 2: four hundred and ninety FI units of housing, an office building,
50:04
Speaker 2: and a hotel. That's going to be done right at
50:07
Speaker 2: the bank Head train station. We're going to build a
50:09
Speaker 2: platform over trail in Atlanta and go vertical. And we're
50:12
Speaker 2: getting busy in Atlanta anyway. We love that market. We
50:15
Speaker 2: want to do as much as possible so growing markets flourishing.
50:18
Speaker 2: The government is super supportive of these types of public
50:21
Speaker 2: private partnerships. They're aware of developing assets in an economically
50:27
Speaker 2: diverse way, so that we could create some affordable housing
50:30
Speaker 2: in combination with commercial and market rate development just makes
50:34
Speaker 2: a lot of sense. So collaborating together allowed us to
50:38
Speaker 2: win that. And there's we have a lot of instances
50:40
Speaker 2: even amongst other direct members where you know other members
50:44
Speaker 2: have collaborated or winning. There's a there's a you know,
50:47
Speaker 2: a group one a great project up in Boston associated
50:50
Speaker 2: with a train station not not too long ago. They're
50:53
Speaker 2: winning deals with NISCHE, the New York City Housing Authority,
50:56
Speaker 2: where we have our members taken down, you know, five six, seven,
51:00
Speaker 2: eight hundred units that they're going to renovate and put
51:03
Speaker 2: back into service and help improve the overall physical condition
51:09
Speaker 2: of those those buildings that they've been so dilapidated for
51:11
Speaker 2: so long. But again, this is all being done through collaboration.
51:14
Speaker 2: So we want to work with as many folks who
51:18
Speaker 2: are interested in real estate development, and we welcome people
51:21
Speaker 2: into the fold, and we want to grow our ranks.
51:24
Speaker 5: It sounds like you have almost right if you're talking
51:27
Speaker 5: about Iraq that's obviously here in New York, but working
51:30
Speaker 5: in Boston, having development in Atlanta, you're working with other
51:33
Speaker 5: municipalities domestically. Is there one or is there thoughts of
51:36
Speaker 5: this creating one that can create on a national level?
51:40
Speaker 2: We'd love to, man. I mean, I think when you
51:41
Speaker 2: look at what's happening again, that seven million unit housing opportunity, right,
51:46
Speaker 2: I would like to see a lot of minorities and
51:49
Speaker 2: women take advantage of it, right nationally, So I look
51:53
Speaker 2: at direct as being a model what can happen through collaboration.
51:57
Speaker 2: There's also a lot of advocacy that we do with
52:02
Speaker 2: elected officials, right. We have to spend a lot of
52:04
Speaker 2: time with not only elected officials, but government agencies on
52:07
Speaker 2: the state, federal, sometimes in city level, trying to make
52:11
Speaker 2: sure economic opportunity is awarded fairly because for a long time,
52:16
Speaker 2: you know, we were persona non grata, there was nothing
52:19
Speaker 2: coming to us. And it's a shame because you have
52:22
Speaker 2: in most urban environments, in most cities around the country,
52:27
Speaker 2: no mayor gets elected without the black vote. So we're
52:31
Speaker 2: going to put people in office we to make sure
52:33
Speaker 2: we get in a piece of economic pie. So we'd
52:35
Speaker 2: love to take Iraq or an organization like Iraq nationally
52:39
Speaker 2: and have the same type of contract and the same
52:43
Speaker 2: type of mechanisms we use here replicated around the country.
52:47
Speaker 2: So what's the deal with the Affirmation.
52:49
Speaker 4: Tell last time we spoke to Don, I know it
52:53
Speaker 4: was some issues, but I think there's been even more
52:55
Speaker 4: issues right since then. So what's the latest update, Affirmation
53:00
Speaker 4: and explain it to affirmationself anybody that might not be so.
53:02
Speaker 2: Affirmation Tower is a project that was conceived by Don Peebles,
53:08
Speaker 2: probably you know, a year and a half ago, maybe
53:10
Speaker 2: a little bit longer, in response to an RFP issued
53:14
Speaker 2: by New York State's economic development agency called ESD Empire
53:18
Speaker 2: State Development and it leverages site K explain what an
53:23
Speaker 2: RFP is, and RFP is a request for proposals. So
53:26
Speaker 2: when a government wants to do something, they have to
53:30
Speaker 2: spend some money on a project, or they want to
53:33
Speaker 2: develop a site, they will put it out to the
53:35
Speaker 2: public and ask for requests for proposals of like how
53:38
Speaker 2: would you develop it? And so Don came up with
53:42
Speaker 2: an idea leveraging a concept that he thought of a
53:45
Speaker 2: while ago called affirmative development, which is proactively doing development
53:52
Speaker 2: in an inclusive way and affirming that folks like me
53:56
Speaker 2: and him and Cheryl and others can participate in real
53:59
Speaker 2: estate developm at the highest levels. So we put together
54:02
Speaker 2: an RFP to build, you know, one of the tallest
54:05
Speaker 2: buildings in the world, definitely the tallest in the Western
54:07
Speaker 2: Hemisphere by floor height. But our spire is below the
54:12
Speaker 2: spire of the World of will Trade, the Freedom Tower,
54:17
Speaker 2: because you know what it represents. But the idea is,
54:21
Speaker 2: you know, in twenty twenty two, we should not be
54:24
Speaker 2: talking about this as a first right, There's been no
54:28
Speaker 2: skyscraper in New York City built by black folks or
54:32
Speaker 2: owned by black people. We've probably toiled on it and
54:34
Speaker 2: spent a lot of time working, laboring, but not owning
54:38
Speaker 2: and not doing it as a developer. So it's time,
54:40
Speaker 2: you know, to have that barrier broken. And what we're
54:45
Speaker 2: looking to do there is to build, like I said,
54:47
Speaker 2: the tallest tower in the Western hemisphere. We're going to
54:50
Speaker 2: put the offices of the NAACP in there. A civil
54:55
Speaker 2: rights museum as well. There would be all kinds of
54:59
Speaker 2: great features of rink on the on the roof, there'd
55:01
Speaker 2: be a public atriums. And you know, we want young
55:06
Speaker 2: black and brown children to be able to come to
55:08
Speaker 2: New York City and point to that and say, hey,
55:09
Speaker 2: you know, somebody looks like me and my father built
55:11
Speaker 2: that project, right, Because like I started by talking about
55:15
Speaker 2: Reginald Lewis, right and what that inspired in my life.
55:18
Speaker 2: We need to inspire the life of these next generations
55:21
Speaker 2: and need to understand that they could do it too.
55:23
Speaker 2: So what what's the issues right now? But it was
55:25
Speaker 2: political issues? Yeah, political, I mean the governor Hochal rescinded
55:30
Speaker 2: the RFP when I'm not really clear. I think it
55:35
Speaker 2: was a bad move. I don't think it was wise
55:37
Speaker 2: at all, because you know, what's what the reason she
55:40
Speaker 2: said was they wanted to rescind the RFP to uh
55:47
Speaker 2: RE examine it so that it could align closer to
55:49
Speaker 2: her priorities, whatever that means. It was previously approved by
55:52
Speaker 2: Governor Cuomo, was it wasn't approved, it was issued by
55:55
Speaker 2: Governor Cuomo, and we were doing fantastically well. I think
55:58
Speaker 2: the public response to the project was amazing. And you know,
56:03
Speaker 2: I think a lot of times in democratic strategists underestimate
56:10
Speaker 2: how important economic development and economic empowerment and wealth generation
56:15
Speaker 2: is to our community. Right. They tend to want to
56:18
Speaker 2: dangle the same old poverty politics in front of us
56:21
Speaker 2: that we've experienced for the past fifty years that haven't
56:24
Speaker 2: gotten us anywhere, right. I mean, you government programs, government programs,
56:29
Speaker 2: you know, social programs. You look at you know there's
56:32
Speaker 2: been there's tons, and there's billions and billions of dollars
56:35
Speaker 2: spent just in this city, in this state, every single
56:38
Speaker 2: year on social programs, and we're not moving the needle.
56:42
Speaker 2: But if we spend half of that in economic development
56:46
Speaker 2: and investing in black companies, I guarantee the needle will move.
56:51
Speaker 2: Let's talk about the collaboration.
56:53
Speaker 5: Obviously, we spoke about Don working with Cheryl mckisney on
56:57
Speaker 5: this project together.
56:58
Speaker 2: I feel like this is the Avengers of real estate
57:00
Speaker 2: for our community for sure. What's that been like?
57:02
Speaker 5: How did you all come together to say, all right,
57:05
Speaker 5: this is what I'm bringing, this is what your team's bringing.
57:07
Speaker 5: Here is what we're going to bring. Let's combine efforts
57:09
Speaker 5: and build something that's going to be legendary in the start.
57:12
Speaker 2: Yeah, again, I have to compliment Don for his vision
57:14
Speaker 2: of being inclusive and collaborative and setting a standard of
57:17
Speaker 2: how we should be doing business together. Right. And you know,
57:21
Speaker 2: Don and Cheryl had known each other for a long time,
57:23
Speaker 2: going back to her days I think at Howard when
57:27
Speaker 2: they used to hang out and party and everything. And
57:30
Speaker 2: you know, we knew each other from our work together
57:32
Speaker 2: at IREK and you know I joined the board and
57:36
Speaker 2: we got along very well, and we have our own
57:39
Speaker 2: momentum and what we do. We're you know, very very
57:42
Speaker 2: active and very efficient in the capital markets, and so
57:45
Speaker 2: we're able to bring that acumen too the project in
57:47
Speaker 2: terms of raising capital and project management and the like.
57:51
Speaker 2: But the the the opportunity to collaborate with them. I mean,
57:58
Speaker 2: Don is the most successful America real estate developer in
58:01
Speaker 2: the country, right, so he brings a whole different level
58:05
Speaker 2: of this business and a whole different level of development
58:09
Speaker 2: to us because we would not have been trying to
58:11
Speaker 2: build a skyscrape or absent being invited into this project.
58:14
Speaker 2: And Cheryl is you know, she is the owner of
58:18
Speaker 2: the oldest black construction company in the country, started by
58:23
Speaker 2: her fifth generation grandfathers who were slaves. I mean, you
58:27
Speaker 2: can't have a better story than that. So you have
58:29
Speaker 2: this team to come together and to put together what
58:33
Speaker 2: should be a barrier breaking project, and for us to
58:39
Speaker 2: change the skyline of New York City and to say
58:41
Speaker 2: it was done by a black team is an amazing opportunity.
58:45
Speaker 2: So we remain vigilant. And you know, we talk about
58:48
Speaker 2: Affirmation Tower all the time. I think Don just got
58:50
Speaker 2: a Grill award a couple of days ago, which is,
58:53
Speaker 2: you know, big shout out to Don. And you know,
58:57
Speaker 2: we were looking for the r to be reissued. Now
59:01
Speaker 2: that governor Local has been re elected, that should be
59:04
Speaker 2: happening soon. And when it is reissued, we'll be all
59:06
Speaker 2: over it. You know, We're we are determined to win it.
59:09
Speaker 2: So that's the city owns the land, the state, the
59:14
Speaker 2: state owns the land. Yeah, okay, And it's right, and
59:18
Speaker 2: it's right in you know, Hudson Yards, right, So Javitt
59:23
Speaker 2: the site k is right across the street from Hudson Yards.
59:25
Speaker 2: So you think about it. Right, they gave a tremendous
59:28
Speaker 2: amount of land to relate it and then gave them
59:32
Speaker 2: billions of dollars in subsidy. Now they're talking about, you know,
59:36
Speaker 2: giving eighteen million square feet of land around Penn Station
59:42
Speaker 2: to Fernado. Right, we just want the opportunity to buy
59:47
Speaker 2: site case so we could do Affirmation Tower and we're
59:51
Speaker 2: not even looking for public subsidy.
59:52
Speaker 4: So the since the city owns the land, well they
59:55
Speaker 4: have ownership or the land or will you buy the
59:57
Speaker 4: land from this city?
59:58
Speaker 2: We'll do like a like a one hundred year ground lease,
1:00:00
Speaker 2: which is basically the same as buying it. What does
1:00:02
Speaker 2: that mean? Ground lease? So ground lease is like you know,
1:00:06
Speaker 2: we have the we pay a ground lease rent on
1:00:09
Speaker 2: an annual basis, but we get to own and operate
1:00:14
Speaker 2: the improvements on the land for that hundred years, so
1:00:17
Speaker 2: we'll build you know.
1:00:19
Speaker 4: Uh, so you're leasing the land for one hundred years. Yeah,
1:00:21
Speaker 4: So so the city still owns it, right, the state,
1:00:24
Speaker 4: the state would own you have control. We have control over.
1:00:26
Speaker 4: Just pay the rent. So the thing about this, So
1:00:28
Speaker 4: you guys have spent time down on Wall Street, right,
1:00:31
Speaker 4: So there's a little church down there on Broadway, Trinity Church.
1:00:34
Speaker 4: Trinity Church owns a ton of the land that those
1:00:37
Speaker 4: skyscrapers are built on. They've owned it for hundreds of years.
1:00:39
Speaker 4: They just lease it to different developers and financial institutions
1:00:44
Speaker 4: who build what they build, and they're just collecting ground
1:00:47
Speaker 4: lease rent. It's really good business model.
1:00:48
Speaker 2: So who owns most of the land in New York
1:00:50
Speaker 2: City like the land? No, not, not a lot of
1:00:53
Speaker 2: land is ground leased. Most land is owned fees, simple,
1:00:55
Speaker 2: but sometimes folks who choose to structured ground leases for
1:00:58
Speaker 2: whatever reason. If you're in a really you know, high
1:01:01
Speaker 2: demand area that's super valuable, why sell it. You could
1:01:04
Speaker 2: ground lease it and one hundred years from now your
1:01:07
Speaker 2: errors could still be collecting ground lease rent. Yeah.
1:01:11
Speaker 4: That So most skyscrapers that are being built, the developers
1:01:16
Speaker 4: don't own that.
1:01:17
Speaker 2: No, not most, but there's just that. That's just been
1:01:19
Speaker 2: the model that said Trinity Church there, some some do.
1:01:21
Speaker 2: Some they just buy it.
1:01:22
Speaker 4: Whoever owned it previously, they would sell them the land
1:01:26
Speaker 4: as part of the deal, right, or like if somebody's
1:01:30
Speaker 4: building a skyscraper. Yeah, they're buying the land most of
1:01:34
Speaker 4: the time.
1:01:35
Speaker 2: Most of the time, the more common execution is people
1:01:38
Speaker 2: just buy the dirt right from whoever owns it. From
1:01:41
Speaker 2: whoever owns it in some some instances maybe a family,
1:01:46
Speaker 2: a trust, whatever, they don't want to sell it, so
1:01:47
Speaker 2: let's say we'll lease it just collect income.
1:01:50
Speaker 4: So that church, Trinity Church you said, owns a lot
1:01:52
Speaker 4: of land in Wall Street area.
1:01:54
Speaker 2: Yeah, and how long have they had that land since?
1:01:57
Speaker 2: I mean like when there was no buildings there. Yeah,
1:01:59
Speaker 2: when it was arm was dirt.
1:02:00
Speaker 4: When they just took it from Americans pretty good, basically
1:02:04
Speaker 4: back to New Amsterdam.
1:02:07
Speaker 2: This is what I don't know.
1:02:08
Speaker 4: I don't know the source of how they acquired it.
1:02:10
Speaker 4: I mean, not like the church took it. They might have,
1:02:13
Speaker 4: but I'm just saying eventually that's what happened, right Like,
1:02:17
Speaker 4: it was here the guy control and they got control
1:02:21
Speaker 4: over and then they just kind of ciphered it off
1:02:23
Speaker 4: to whoever the new landowner was. Didn't They didn't own
1:02:27
Speaker 4: it originally.
1:02:27
Speaker 2: No, somebody because back in the you know, when the
1:02:30
Speaker 2: Indians your head, they didn't believe in ownership of land
1:02:33
Speaker 2: is everybody's land.
1:02:34
Speaker 4: Exactly, but now it's worth more money than anything else
1:02:38
Speaker 4: in the world.
1:02:38
Speaker 2: It's worth a lot, a whole lot, a whole lot,
1:02:40
Speaker 2: very part.
1:02:41
Speaker 5: Yeah, I wonder now, like going through this process, obviously
1:02:44
Speaker 5: seeing the politics of of the space, does it discourage
1:02:49
Speaker 5: you or are we looking? Are you now looking as
1:02:51
Speaker 5: a firm right? Where else are we going to make
1:02:55
Speaker 5: a statement?
1:02:56
Speaker 2: Right?
1:02:56
Speaker 5: Like New York City is prime because of what it
1:02:58
Speaker 5: means to the country's financial the world, But are there
1:03:01
Speaker 5: other places where we're looking to make just as much
1:03:04
Speaker 5: of an impact with some of the developments that you
1:03:06
Speaker 5: haven't money?
1:03:06
Speaker 2: So you know, there's only one New York City, right,
1:03:09
Speaker 2: And I've lived through two world coming to an end
1:03:12
Speaker 2: scenario nine to eleven, the financial collapse, Well now three COVID,
1:03:17
Speaker 2: and I'll tell you I think we're still bouncing back
1:03:20
Speaker 2: from COVID. There's been some other issues that are creating
1:03:22
Speaker 2: headwinds for us, like the crime and some other stuff.
1:03:25
Speaker 2: But with nine to eleven and the financial collapse, I mean,
1:03:30
Speaker 2: New York City bounce back. It's super resilient. There's one
1:03:33
Speaker 2: New York City. It's a global city. And I wouldn't
1:03:38
Speaker 2: bet against New York. Ever. However, what we're doing is
1:03:41
Speaker 2: we're diversifying as a company, and we love some markets
1:03:45
Speaker 2: in the southeast and out west and the Midwest. So
1:03:49
Speaker 2: we're really heavy in Atlanta. I mean, Georgia is amazing
1:03:52
Speaker 2: what's going on there. We just know we want to
1:03:55
Speaker 2: continue to invest and help that city transitioning grow. We're
1:04:00
Speaker 2: doing stuff in Columbia, South Carolina. We're in Oklahoma City, Oklahoma.
1:04:07
Speaker 2: We did deals in Indianapolis, Indiana. There's a lot of
1:04:13
Speaker 2: opportunity everywhere. And by the way, not every type of
1:04:18
Speaker 2: deals right for every type of market. You have to
1:04:20
Speaker 2: do the right deal in that market, right. So you know,
1:04:23
Speaker 2: we wouldn't build Affirmation Tower in Indianapolis, Indiana. It's not
1:04:27
Speaker 2: the right market, but it's it's the right project for
1:04:31
Speaker 2: New York City. So we're doing a lot of things.
1:04:34
Speaker 2: And you know, our number one market right now for
1:04:38
Speaker 2: investment going forward is Atlanta. Why are you so bullje
1:04:42
Speaker 2: on Atlanta? It has all the right demographics, so you know,
1:04:46
Speaker 2: population growth, a lot of companies are moving there. When
1:04:50
Speaker 2: you look at the the amount of new job creation,
1:04:57
Speaker 2: a lot of companies want to relocate out of the
1:04:59
Speaker 2: northeast out of foreign of these heavy tax states, Uh,
1:05:03
Speaker 2: these heavy bureaucratic states, it's so much easier to function
1:05:07
Speaker 2: some of these other markets. Like you know, there's a
1:05:09
Speaker 2: reason why Elon Musk moved Tesla to Texas. Right, there's
1:05:12
Speaker 2: a reason why you know, ge left Connecticut went to Boston.
1:05:16
Speaker 2: You know, companies have options they can choose, but the
1:05:19
Speaker 2: Southeast is really just a great markets created the right
1:05:24
Speaker 2: type of atmosphere. You have good educational institutions, you have
1:05:28
Speaker 2: great infrastructure, a government that's supportive of development and understands
1:05:32
Speaker 2: the importance of doing it the right way and is
1:05:34
Speaker 2: working collaboratively with the business community. The for is the
1:05:37
Speaker 2: right type of development. I think, you know, everything that
1:05:41
Speaker 2: Mary Dickens is doing in Atlanta is one percent spot on.
1:05:45
Speaker 2: He's doing the right thing.
1:05:46
Speaker 4: So that information, tew. What's the financing for that? How
1:05:50
Speaker 4: does that look?
1:05:51
Speaker 2: Oh man, that's about Uh I've looked at it in
1:05:55
Speaker 2: a minute. Well, you know, we've I'm sure we have
1:05:57
Speaker 2: to reprice everything at this point because the escalation and
1:06:00
Speaker 2: in construction costs. But that was a project that's going
1:06:03
Speaker 2: to be uh one point six billion dollars.
1:06:08
Speaker 4: So one point six million dollars and who are you
1:06:12
Speaker 4: getting the money from? Private equity firm?
1:06:14
Speaker 2: Right, so we'd have to raise limited partner LP equity
1:06:18
Speaker 2: from investment funds or you know, UH, insurance companies, you
1:06:23
Speaker 2: name it. But this that's an institutional asset where you're
1:06:26
Speaker 2: going to generate you know that. I mean that equity
1:06:29
Speaker 2: check is six hundred million dollars. How much money do
1:06:31
Speaker 2: you need to raise? So we'd have to raise I mean,
1:06:34
Speaker 2: none of us were rolling a wild with one point
1:06:36
Speaker 2: bill in the pocket. So we're gonna raise all of it.
1:06:38
Speaker 2: So you need to raise all of it. We're gonna
1:06:40
Speaker 2: raise all of it. So I mean there's a there's
1:06:41
Speaker 2: an amount of GP capital that has to go into
1:06:43
Speaker 2: So like Fidelia writes you a check for five hundred
1:06:45
Speaker 2: million dollars. Yeah, you know somebody Fidelity. I'm just saying hypothetical. Yeah, hypothetically, right,
1:06:50
Speaker 2: that's how So so we'd have so you have the
1:06:53
Speaker 2: capital stack will be like a billion in debt and
1:06:55
Speaker 2: that could come from and we've had I don't want
1:06:56
Speaker 2: to say it here, but we've had interest from some
1:06:59
Speaker 2: of the largest lenders in the world and some of
1:07:02
Speaker 2: the largest investors in the world.
1:07:05
Speaker 4: Too, and then for them, obviously like a bank, they
1:07:08
Speaker 4: get a return on their investment.
1:07:09
Speaker 2: Right to check. So the debt is, you know, you
1:07:12
Speaker 2: just pay interest on the debt, right, So we get
1:07:14
Speaker 2: a billion dollars in debt. You you're paying your six
1:07:18
Speaker 2: percent interest rate on that, okay, until it's repaid. And
1:07:22
Speaker 2: it gets repaid. The construction loan gets taken out with
1:07:25
Speaker 2: PERM financing when the when the project is done. But
1:07:29
Speaker 2: so you have construction financings, which is where we used
1:07:31
Speaker 2: to build it. Right, it's just a construction loan. So
1:07:34
Speaker 2: it's here's you know, a billion dollars six percent, So
1:07:37
Speaker 2: we're paying them sixty million dollars a year on the capitol.
1:07:40
Speaker 2: When you get the project finished, we put permanent financing
1:07:45
Speaker 2: on it. So like a ten year PERM loan, that
1:07:47
Speaker 2: amortis has some amortization features and we're just you know,
1:07:52
Speaker 2: we're still making monthly payments, but those payments really coming
1:07:56
Speaker 2: out of the operations of the building versus being finance
1:08:00
Speaker 2: is part of the construction loan.
1:08:02
Speaker 5: So even from the construction standpoint, I'm looking at at
1:08:05
Speaker 5: the trio of you guys, obviously you Cheryl and Don.
1:08:10
Speaker 5: The construction pieces is that where you lean on her
1:08:13
Speaker 5: for the expertise. Absolutely, all right, yeah, because I'm like
1:08:15
Speaker 5: we're combined the forces. That's her expertise. So mckisnick will
1:08:18
Speaker 5: be in charge of the construction. As far as all
1:08:20
Speaker 5: those loans, they'll be knocking that out. But as far
1:08:23
Speaker 5: as all the other opportunities inside there where we talked
1:08:25
Speaker 5: about are we looking to hire people that look like
1:08:29
Speaker 5: us to fulfill those roles.
1:08:31
Speaker 2: So our commitment is to spend a billion dollars with
1:08:35
Speaker 2: minority and women own companies. So okay, now this is
1:08:44
Speaker 2: going to be office space. It will be office and
1:08:48
Speaker 2: hotel a hotel. So office like we probably have a
1:08:52
Speaker 2: life science chooser which is a big growing area, and
1:08:57
Speaker 2: some two hotels actually well hotels, we have chosen them yet,
1:09:00
Speaker 2: but we have you know, so we have a idea
1:09:03
Speaker 2: of the type of hotels. So we do like a
1:09:05
Speaker 2: full service hotel and then maybe by h a what
1:09:11
Speaker 2: we call like a value hotel. What is a full
1:09:14
Speaker 2: service hotel? Something like you know the four seasons or
1:09:18
Speaker 2: you know where you have all of the you know,
1:09:20
Speaker 2: you have all the amenities, you have a certain level
1:09:25
Speaker 2: of operation and just you know, standard in terms of
1:09:31
Speaker 2: you know, concierge and spas and other.
1:09:35
Speaker 5: Things that are available. Who would fit in the category
1:09:37
Speaker 5: of value hotels.
1:09:39
Speaker 2: Something like a like a I'm not saying we're going
1:09:42
Speaker 2: to do this suld be at the hotel we do,
1:09:43
Speaker 2: but something like a like a pod hotel or something
1:09:46
Speaker 2: like the smaller hotels have some smaller rooms like boutique hotels. Well,
1:09:51
Speaker 2: smaller rooms, but just not as many amenity amenities. Okay,
1:09:56
Speaker 2: smaller rooms, less amenities, but also lower cost.
1:09:59
Speaker 4: So like no restaurant. You don't have a restaurant right right,
1:10:01
Speaker 4: there's no like twenty file room service, right.
1:10:04
Speaker 2: So that's what we call full service hotel. You have restaurants,
1:10:06
Speaker 2: room service, concierge, service spots those times.
1:10:11
Speaker 4: So for office space, are you concerned that the office
1:10:16
Speaker 4: space might be an issue going forward into the future
1:10:19
Speaker 4: when people might not be working from offices.
1:10:21
Speaker 2: No, because so I think you know what happens is
1:10:25
Speaker 2: there's always a new user one two. When you look
1:10:31
Speaker 2: at offices, they're not all the same. It's like, you know,
1:10:34
Speaker 2: they're not monolithic. You have buildings like one Vanderbilt that's
1:10:37
Speaker 2: leasing up at an incredible record setting numbers. But there's
1:10:41
Speaker 2: buildings you know, twenty blocks away. They can't get leased
1:10:44
Speaker 2: stuff that have vacant and if you're building, you know,
1:10:47
Speaker 2: the whole movement with ESG right now is that companies
1:10:51
Speaker 2: really want to be in buildings that are green, that
1:10:53
Speaker 2: have the right type of environmental footprint, that have been
1:10:56
Speaker 2: built a certain way, and are responsive to what share
1:11:00
Speaker 2: holders and their customers are demanding. That they'd be responsible
1:11:03
Speaker 2: corporate citizens. So to be able to offer you fortune
1:11:06
Speaker 2: five hundred companies the opportunity to you know, take space
1:11:11
Speaker 2: and a remarkable new tower like Affirmation Tower that has
1:11:15
Speaker 2: those types of features. You know, we've seen it work repeatedly.
1:11:19
Speaker 2: But it's because you're building the right type of building,
1:11:23
Speaker 2: not just you know, the old, you know, stale type
1:11:26
Speaker 2: of skyscrapers that have been built or office buildings that
1:11:29
Speaker 2: have been sitting there that you know just aren't interesting
1:11:33
Speaker 2: to you know, the architecture choices.
1:11:35
Speaker 5: The architecture looks incredible, and you said that, you know,
1:11:38
Speaker 5: you have to reassess obviously with supply chain issues and
1:11:41
Speaker 5: construction costs changing. Imagine now, like what would be the
1:11:45
Speaker 5: timeline to complete a project by estimate?
1:11:48
Speaker 2: What do you what do you think we would spend
1:11:50
Speaker 2: once awarded. We're going to spend about a year maybe
1:11:54
Speaker 2: fifteen eighteen months in pre development, and then we're going
1:11:56
Speaker 2: to take you know, three years to build it with Yeah, are.
1:12:01
Speaker 5: You finding a new affinity for the skyscrapers? Obviously you're
1:12:03
Speaker 5: doing for affordable housing. This is obviously something that you
1:12:05
Speaker 5: said don had a vision for. Is that something now
1:12:08
Speaker 5: that you're looking like, you know, I could do more
1:12:09
Speaker 5: of this?
1:12:10
Speaker 2: Well, you know what our firm is really multi strategy.
1:12:12
Speaker 2: So we have our business models where we do probably
1:12:17
Speaker 2: seventy percent of what we do is affordable housing, but
1:12:19
Speaker 2: we do other things. We do hotels, we do market
1:12:25
Speaker 2: rate projects, we do condos. Right, So how our business
1:12:29
Speaker 2: model is morphed is we're doing a lot more placemaking now,
1:12:33
Speaker 2: so less individual buildings. We still have a pipeline of
1:12:36
Speaker 2: buildings that we're completing, but we're doing less of that
1:12:39
Speaker 2: and more place making like what you see in Marta
1:12:42
Speaker 2: in Atlanta, where you know, there's a whole opportunity to
1:12:46
Speaker 2: develop a large tract of land, but to do it
1:12:50
Speaker 2: where there's office, there's hospitality, there's housing, mixed income housing,
1:12:55
Speaker 2: and it's also adjacent to public transportation, so it's like
1:12:59
Speaker 2: a destined and it's like a live work, play type community.
1:13:04
Speaker 2: We really like that model a lot more. And ahead
1:13:09
Speaker 2: of us, you know, we're going to be doing deals
1:13:12
Speaker 2: that look like that, which are much larger in size.
1:13:14
Speaker 2: I have the luxury were doing fewer of them and
1:13:17
Speaker 2: still putting a lot of capital to work.
1:13:20
Speaker 4: So just came back from Dubai and Abu Dhabi and
1:13:25
Speaker 4: the architecture out there is amazing, all modern buildings, but
1:13:30
Speaker 4: they're very it's like art as well. Right in New York,
1:13:35
Speaker 4: I don't really see that level of inspiration. It's not
1:13:37
Speaker 4: as inspirational with the architectural design of the landscape where
1:13:42
Speaker 4: they have like the sailboat building, even the berge of Khalifa,
1:13:45
Speaker 4: like how it's designed, the colors on it is. So
1:13:47
Speaker 4: I say, I have to say, just like when I
1:13:50
Speaker 4: look at the architecture, it's art as well, right, what
1:13:53
Speaker 4: that would make sense because the architecture some level of
1:13:55
Speaker 4: art in there, but I don't see that here. So
1:13:59
Speaker 4: when you're developing your buildings, do you have that level
1:14:02
Speaker 4: of art or is that something that you can't do
1:14:05
Speaker 4: because of the city puts limitations on it. Why don't
1:14:07
Speaker 4: we see that same level of creativity here one weird
1:14:10
Speaker 4: building and we and what we see over there.
1:14:12
Speaker 2: Yeah. Well, you know, historically architecture has been very artistic.
1:14:17
Speaker 2: If you look at some of those older buildings, like
1:14:19
Speaker 2: the Baroque style or Renaissance revival or some of the
1:14:23
Speaker 2: you know, French colonials, you have all this, you know,
1:14:26
Speaker 2: ornate features that are in buildings. You know a lot
1:14:30
Speaker 2: of sculpting, Gorgyle's all those kinds of things. It used
1:14:33
Speaker 2: to be very artistic. I just think from a design
1:14:36
Speaker 2: aesthetic we've gone away from it unfortunately just as a culture.
1:14:39
Speaker 2: As a culture. Yeah, And and the other thing about
1:14:42
Speaker 2: when you're talking about the Middle East and some of
1:14:43
Speaker 2: those other areas, I mean they can you have those times.
1:14:47
Speaker 2: I mean like Dubai, right, that's a city that came
1:14:49
Speaker 2: about of the sand because they had a vision and
1:14:52
Speaker 2: they were like, listen, we have a blank canvas. We
1:14:54
Speaker 2: want to be world renowned and they intentionally aims really high.
1:14:59
Speaker 2: Here it's a little bit more difficult because if I
1:15:01
Speaker 2: want to build, you know, a building the size of
1:15:03
Speaker 2: the birds Kalifa, there's going to be protests, There's gonna
1:15:06
Speaker 2: be politicians, there's gonna be a lot of opposition to it.
1:15:09
Speaker 2: We just have a freer society where people have the
1:15:12
Speaker 2: opportunity to you know, have their voices heard, and you know,
1:15:16
Speaker 2: whether they have a dollar in it or not, they
1:15:19
Speaker 2: still have the opportunity to you know, opine on it.
1:15:21
Speaker 2: And sometimes consensus or opposition is built around a project
1:15:26
Speaker 2: and just creates a lot more difficulty. So are you
1:15:28
Speaker 2: looking to develop anything overseas? Yes, we are. That was
1:15:31
Speaker 2: going to be my next point, right, Like you're bringing
1:15:33
Speaker 2: that up, like we're actually, uh, we're actually I can't
1:15:37
Speaker 2: get too much into it, but we're actually negotiating with
1:15:40
Speaker 2: the government to start building some transformative real estate in
1:15:44
Speaker 2: a Caribbean country. Ah makes sense, Yeah, a lot of sense.
1:15:49
Speaker 5: So we got over three thousand units of housing in
1:15:53
Speaker 5: New York City. I wonder if there's a goal or
1:15:55
Speaker 5: if there's a number of housing opportunities that you want
1:15:59
Speaker 5: to create a firm you know.
1:16:01
Speaker 2: See that's the thing, right, the beautiful thing about See,
1:16:04
Speaker 2: I'm I love sports and I love competition, right, and
1:16:09
Speaker 2: what goes with that is a scoreboard. For me, the
1:16:11
Speaker 2: scoreboard is how many units we own. So we'd like
1:16:14
Speaker 2: to have fifty thousand, but little over five, right, So
1:16:20
Speaker 2: we have some in other areas of the country, but
1:16:21
Speaker 2: you know, we want to have fifty thousand units and
1:16:24
Speaker 2: so a lot of work to do.
1:16:25
Speaker 5: So when you watch the scoreboard, is obviously somebody else
1:16:28
Speaker 5: that's off there on the board.
1:16:29
Speaker 2: That's just you, That's right.
1:16:30
Speaker 5: So who the people that you're looking at, not as competitors,
1:16:33
Speaker 5: but as inspiration to say we can just further to go.
1:16:36
Speaker 2: I mean, like the company that we When I formed
1:16:38
Speaker 2: this company, I always thought about Related right, Related as
1:16:43
Speaker 2: a company owned by Steven Ross who owns the Miami Dolphins, right,
1:16:48
Speaker 2: but they were primarily an affordable housing developer for decades,
1:16:52
Speaker 2: and the AOL Time Warnings Center is kind of like
1:16:57
Speaker 2: you know, they when they did that, they flipped the
1:16:59
Speaker 2: switch and start doing these you know, mega huge projects
1:17:03
Speaker 2: that are more like that place making idea I talked about.
1:17:06
Speaker 2: You you know, they have Hudson Yards, have other projects
1:17:08
Speaker 2: around you know, other areas of the country, but they
1:17:11
Speaker 2: still do affordable housing too, right, So you can have
1:17:14
Speaker 2: a model where you can do projects like you know,
1:17:18
Speaker 2: Time Warner Center or Hudson Yards, but still do affordable housing.
1:17:22
Speaker 2: That's what we're going to continue to do. But we're
1:17:23
Speaker 2: going to try to do it in more scalable projects
1:17:26
Speaker 2: where we could deploy more capital and create larger assets
1:17:30
Speaker 2: with the same effort.
1:17:32
Speaker 4: Well, Craig, it's been an honor very educational episode. Anything
1:17:37
Speaker 4: that you want to leave the people or let them
1:17:39
Speaker 4: know before we were out.
1:17:40
Speaker 2: I mean, what I'd say is, listen, get involved in
1:17:42
Speaker 2: real estate. There's a three trillion dollar economic opportunity for
1:17:46
Speaker 2: young people, for for minorities and women owned companies. Whether
1:17:51
Speaker 2: you're developing, doing property management, you're an electrician and carpenter,
1:17:56
Speaker 2: an accountant, an architect, you name it. It's a great
1:18:00
Speaker 2: industry and once you're involved, it leads to more and
1:18:04
Speaker 2: more opportunities. So let's not miss out on this, this
1:18:06
Speaker 2: three trillion dollar win fall. It's about to happen.
1:18:11
Speaker 4: Yeah, that's something that people said an MSG where he
1:18:13
Speaker 4: said that you know, there's a lot of opportunity for
1:18:17
Speaker 4: investment into black business like real estate development stuff like that,
1:18:21
Speaker 4: because I get like less than one point three percent
1:18:27
Speaker 4: of funding and that's like all minorities and women combined.
1:18:32
Speaker 2: Yeah, it's crazy. It's so imbalanced in balanced that it
1:18:37
Speaker 2: needs to be addressed. Yeah, well that's the luck for you.
1:18:41
Speaker 4: If you guys need anything from us, you need us
1:18:44
Speaker 4: to put EYO headquarters in the affirmation, just.
1:18:47
Speaker 5: Let us knows, let us know. That's easy. You know,
1:18:50
Speaker 5: we can feel the theater's up at home if you
1:18:53
Speaker 5: need whatever.
1:18:54
Speaker 2: Whatever. Listen when we open up and want you guys
1:18:56
Speaker 2: to come up there and see the place, and you know,
1:18:58
Speaker 2: for sure all the access you want to it for sure,
1:19:01
Speaker 2: for sure we'll see you in Atlanta again too. That's
1:19:04
Speaker 2: like our second home.
1:19:05
Speaker 5: So that's what I said when you were saying you're
1:19:06
Speaker 5: pretty big in Atlanta. We know we're pretty big out
1:19:09
Speaker 5: there too. Yeah, yeah, so we know exactly what you're
1:19:11
Speaker 5: talking about. The Microsoft Center that's right by ote, right
1:19:15
Speaker 5: where we actually sat down to enview it. So a
1:19:17
Speaker 5: lot of development is happening out there, so that's encouraging.
1:19:19
Speaker 5: I'm sure people that are there hearing this are like,
1:19:21
Speaker 5: all right, we need to stay here and make sure
1:19:24
Speaker 5: that we planning our cz now.
1:19:25
Speaker 4: Absolutely, is Atlanta a place where you think black people
1:19:30
Speaker 4: should focus all of the energy on. Not like every
1:19:32
Speaker 4: single person should come to Lanta, but it's like, all right,
1:19:34
Speaker 4: it's beneficial to have a central hub, and Atlanta obviously
1:19:38
Speaker 4: has stood out as the mecca for Black culture in
1:19:44
Speaker 4: business and music and a variety of different things for
1:19:47
Speaker 4: the last twenty years. So, like when we're doing vest
1:19:52
Speaker 4: Fest is in Atlanta. You guys are building in Atlanta.
1:19:55
Speaker 4: Do you think that there's something where it's like, all right,
1:19:59
Speaker 4: we should really focus on Atlanta.
1:20:02
Speaker 2: Yes, But Atlanta's not the only market, right, So, I
1:20:04
Speaker 2: mean DC is a great market. The fundamental principle for
1:20:09
Speaker 2: real estate is by low sell high. Atlanta is like
1:20:13
Speaker 2: in motion, bro. I mean, it's like it's ascending quickly.
1:20:16
Speaker 2: But there's other markets where Charlotte, Yes, absolutely, Charlotte. You know,
1:20:23
Speaker 2: uh stuff in the in the Midwest. I mean, like
1:20:25
Speaker 2: look at areas in and around Phoenix, and you just
1:20:28
Speaker 2: have the equation works in almost every municipality you shut.
1:20:34
Speaker 2: Let me ask you a question, right, Here's how I
1:20:36
Speaker 2: answer that question. If you could buy real estate and
1:20:39
Speaker 2: anywhere in the country at what it costs fifteen years ago,
1:20:44
Speaker 2: you could do that today, would you do it? Yeah?
1:20:46
Speaker 2: Then why wouldn't you do it now? So fifteen years
1:20:48
Speaker 2: from now you can say, look what I did?
1:20:49
Speaker 4: Well, Yeah, the real estate I'm just saying because you
1:20:51
Speaker 4: always hear about Black Wall Street, right, but blackwashe was
1:20:53
Speaker 4: more than just Tosa, Oklahoma's a right different places. So
1:20:56
Speaker 4: when I look at Atlanta, I look at it from
1:20:58
Speaker 4: a from an opportunity of investing, but then entrepreneurship as well.
1:21:02
Speaker 4: It's the only place in America that I've ever seen
1:21:06
Speaker 4: where when we most of the businesses that we patronize,
1:21:09
Speaker 4: or at least half of them are owned by black people.
1:21:12
Speaker 4: I've never seen that any whales.
1:21:14
Speaker 2: Well you have, I mean right for Maryland, maybe some
1:21:18
Speaker 2: areas in Maryland, but there's been a historical lack of
1:21:25
Speaker 2: access to capital and economic opportunity for us for sure,
1:21:28
Speaker 2: our community, and that's why that happens. But the entrepreneurial
1:21:31
Speaker 2: spirit is strong. And look, you know, it's not like
1:21:35
Speaker 2: what we do in our culture is invaluable because everybody's
1:21:38
Speaker 2: monetizing it, right. So, but if we have access to
1:21:41
Speaker 2: the capital, we can monetize it for ourselves. I mean,
1:21:43
Speaker 2: like hip hop is a perfect example. We have a
1:21:46
Speaker 2: lot of artists and a lot of black folks doing well.
1:21:48
Speaker 2: There's a lot of people who aren't black who did
1:21:50
Speaker 2: really well in hip hop because they had capital to
1:21:53
Speaker 2: begin with.
1:21:54
Speaker 4: So you're saying, just build other Atlantas, Yeah, don't just
1:21:57
Speaker 4: depend on one city make other cities.
1:22:00
Speaker 2: The equation works, and it works, you know, like there's
1:22:03
Speaker 2: a thing about it place like over Town in Miami, Miami.
1:22:07
Speaker 2: I mean like look at that. I mean like it's
1:22:08
Speaker 2: that's that's fire. Ten years from now, you got y'all
1:22:11
Speaker 2: be our basil, right, so you know, just ten years
1:22:15
Speaker 2: from now, look over times will look completely different. Troy
1:22:17
Speaker 2: has some of those characteristics to Detroit to another same
1:22:20
Speaker 2: thing exactly. But you know it comes. You know, we
1:22:24
Speaker 2: focus on it, and you know, we are in the
1:22:29
Speaker 2: urban environment, like we we kind of shape the urban
1:22:31
Speaker 2: environment our culture, right, and there's a reason why, folks.
1:22:35
Speaker 2: You know, you know when I was growing up, there
1:22:39
Speaker 2: was music that people listen to is all different. There
1:22:44
Speaker 2: was a C d C. There was you know, Guns
1:22:47
Speaker 2: and Roses, there was run DMC. But now everybody is
1:22:51
Speaker 2: on that urban hip hop stuff. Dress of the same,
1:22:54
Speaker 2: the same language, it's the same music. We can continue
1:22:58
Speaker 2: to evolve this culture, but put ourselves in a position
1:23:01
Speaker 2: where we have access to capital so we can monetize
1:23:05
Speaker 2: what's being involved. That's the rule, brick Man, That's what
1:23:07
Speaker 2: we want to do, not only with and particularly when
1:23:10
Speaker 2: you're talking about developing new hot spots in the real
1:23:13
Speaker 2: state that functions around that m eighties. You congrat Yeah, okay,
1:23:19
Speaker 2: I don't know if you watch that game the other night, Yo,
1:23:22
Speaker 2: they play we handled live with State, Like.
1:23:24
Speaker 5: Yeah, you know, but their top ten now back in
1:23:28
Speaker 5: the country and it fell off for a while.
1:23:30
Speaker 2: Yeah, I feel I feel a national championship coming right now.
1:23:32
Speaker 4: You No, they had a rough period for yeah.
1:23:36
Speaker 2: I mean so, I mean we didn't win. Were like
1:23:39
Speaker 2: the last championship was in twenty thirteen, you know, Yeah,
1:23:42
Speaker 2: but that's a that's pretty good. Yeah, twenty thirteen.
1:23:44
Speaker 4: I'm just saying you com was always you know, top
1:23:47
Speaker 4: fifteen at least. Yeah, Kevin Ali he won i think
1:23:50
Speaker 4: his first year and then they he won his his
1:23:53
Speaker 4: first year.
1:23:54
Speaker 2: He was first year. He won his first year. Yeah, yeah,
1:23:56
Speaker 2: that was what beat.
1:23:57
Speaker 5: Yeah, I mean even like if you look at these
1:24:00
Speaker 5: obviously at that time, Yukon wasn't.
1:24:02
Speaker 2: Like Yukon was amazing. Man. It was a great, great
1:24:04
Speaker 2: when gen Hole got there. Prior to that, well, Calhoun
1:24:08
Speaker 2: took the program to heights and then you know, they
1:24:11
Speaker 2: just were phenomenal for a long time. They rip rip
1:24:14
Speaker 2: on the national championship. Who's the who's the greatest player
1:24:18
Speaker 2: from Yukon history, Ray Allen. That's easy. It's not easy
1:24:21
Speaker 2: Ray Allen. It's Ray Allen because he played. We played
1:24:24
Speaker 2: four years, right, three three years, but lookally did in
1:24:27
Speaker 2: the n b A. I mean, well, I'm talking about
1:24:28
Speaker 2: just you're talking about Ukon playing. Kim Milwalk is the greatest. Oh, okay,
1:24:33
Speaker 2: he's the.
1:24:33
Speaker 4: Greatest player because he had the greatest performance. Ben Gordon
1:24:38
Speaker 4: was nasty too.
1:24:40
Speaker 5: I would if we're going to talk about basketball player,
1:24:44
Speaker 5: is Diana Tarassi not the best player from you come?
1:24:47
Speaker 2: Okay? Point all right? Men's men's point okay, men's player.
1:24:52
Speaker 4: He's had his run, that run in the n C
1:24:57
Speaker 4: Double A tournament that was the greatest, the year best.
1:25:01
Speaker 2: That backcourt was phenomenoush If you.
1:25:03
Speaker 5: Take Kimber's freshman year, sophomore year, you might not say
1:25:07
Speaker 5: the same. But if you take that third that junior
1:25:09
Speaker 5: year when he won a chip. Yeah, but Ray Allen
1:25:11
Speaker 5: consistently even even rip like his career was ridiculous and
1:25:16
Speaker 5: he wanted what he ended it with a chip.
1:25:18
Speaker 2: That's right. Yeah, y'all got four chips like most schools
1:25:20
Speaker 2: don't have four chips. I'm very, very proudly proud Columbia
1:25:24
Speaker 2: grad as well. That's right, but you know I bleed
1:25:27
Speaker 2: blue either. Well.
1:25:29
Speaker 4: It was a pleasure to having you, gentlemen. Thank you
1:25:32
Speaker 4: for joining us, and I look forward to connecting more
1:25:34
Speaker 4: in the future.
1:25:34
Speaker 2: All right, love it. Thank you so much. Thank you
1:25:37
Speaker 2: guys for rocking with us. We see you next week. Peace. Peace.
1:25:41
Speaker 3: My graduates from my school being forced back drop b Drop,
1:25:47
Speaker 3: Mike drop drop.
1:26:00
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