Latest / The Promote Podcast / The Mother of all Tax Loopholes & Zeckendorf Bros. Downtown Funk
Transcript
- Hiten Samtani (00:00) I've been steeped in the world of CRE for over a decade. I've seen loopholes in cheap financing mechanisms of all kinds. EB5 money from China, Tez bond money from Israel, you name it. But I've never seen something quite as gloriously gameable as the traveling HFC. This Texas property tax forgiveness vehicle has been the main character and main villain in the multifamily market for the past 18 months or so. Hundreds of millions of dollars worth of deals have gone through the program. It's been a crazy gold rush for consultants, attorneys, and debt brokers. But the party is now coming to a dramatic end. Will Krasne (00:43) What's up? Hiten Samtani (00:44) Today we talk traveling HFCs, the mother of all property tax loopholes. We have a special guest joining us for that part of the discussion. We also break down the state of play at one of Manhattan's most anticipated condo projects. 80 Clarkson is the heaviest of heavies in the mix and is bringing billionaire's-or-other pricing to downtown. Will Krasne (01:03) I'm old enough to remember when it was 570 Washington. Hiten Samtani (01:06) Red? there was billions of dollars worth of multifamily property trading in Texas, let's call it between 2020 and 2022. Most of it financed with floating rate debt. A lot of new names came into the mix. We've talked about a bunch of them before. Will Krasne (01:26) Texas always is just the land of boom and bust and every single cycle there's like something different that gets it going and this poured Earl on the fire as they might say down in Texas. Hiten Samtani (01:38) So what happened here was the bet was twofold, right? That rates would stay low for a long time and rents would keep going up. And this was true for a while, a couple of years where this was, know, people we talked about this last time, tides equities, they made out like bandits for a long time until they didn't. So rates turn, rents stopped growing at that crazy pace that they were growing. And what you're left with is a shit ton of distress. Will Krasne (02:01) Exactly. so you need to find a way with rents going down, your interest payments going up, you need to make NOI go up. And the only way to do that here was to lower your expenses. And a lot of these people don't really operate the properties super well anyway. And the biggest lie on the cut is taxes. And then did they find a doozy of a loophole? Hiten Samtani (02:24) Especially in Texas, right? Property taxes are a big, big sticking point in Texas. Will Krasne (02:28) Well, Hiten, I'm not sure if you know this, but in the business utopia of Texas, there are no state income taxes. However, shockingly, it does cost money to run a city. the only way that the municipalities can generate revenue like that without the income taxes is through property taxes. And his good friend says there's really one true landlord and it might just be the Travis County Municipal Taxing Authority. Hiten Samtani (02:56) ⁓ So what happened here was they needed to figure out how to bring their property taxes down and they stumbled upon, I don't know how to make, I can't even make this, I can't hype it up enough. Like they found this unbelievable, it's called a traveling HFC. So basically the way it works was you would go to a random authority in the boonie somewhere in Texas, Pecos County, Cameron County, et cetera. Will Krasne (03:12) Yeah. Hiten Samtani (03:23) through them you would form a of a GPJV entity through a ground lease. Okay? And so you had this traveling, you had this HFC entity and then all you had to do was pledge to keep a certain portion of your units affordable in the jurisdiction that you own the property or plan to develop it and in exchange your property taxes were gone forever. Forever! They were just wiped off the roll. Will Krasne (03:45) And bear in mind that affordability is in eye of the beholder and a lot of these markets, what is deemed affordable is higher than what market rents are. So you're really doing nothing. Hiten Samtani (03:55) This is precisely the point. We're gonna talk about this with our guest in a bit, but in some cases, you basically had to agree to keep the rents at a level that were higher than what the market was bearing at the time. Correct. So you had to give away nothing. And in exchange, got property taxes wiped off your tax rolls, which meant that a quote unquote dogshit deal could become an okay deal. A good deal could become a great deal. And then you had a long-term financing exit as well through the agencies, through CNBS and all that. Will Krasne (04:27) That's the most important thing is that the agencies and lending lenders would actually underwrite the no taxes. If you're going through a tax abatement or a phased in abatement, like Philadelphia had one, Baltimore has one, like a lot of these cities have for new development, know, step down. So a hundred percent abatement year one, 90, 80, 70, et cetera, et cetera, et cetera. And a lot of times it's really hard to get a lender to underwrite the abatement. Yeah. Especially if it's being phased out. because they'll just say, you know, when you go to sell this or refire a loan, your taxes are going to be much higher. So we got to just assume it's like that from day one. And they're gone forever. You know, to quote the saying, like, for. Have. then the lenders can underwrite it. Hiten Samtani (05:18) takes off the regulatory uncertainty. Yeah. And so this is persisting for a couple of years. It spawned when this is something we talk about a lot on the Promote Podcast is like this army of middlemen just popped up from everywhere. Debt brokers from New York were making a killing on these traveling HFC deals. You had all these consultants pop up, sponsors who said, this is a marketable product that we have. This might be more lucrative than actually building housing. And they started because they knew the right consultants. They knew which jurisdictions to tie up with in many cases, places like Garland County, Cameron County, Picos, et cetera. And they made this whole industry of traveling HFC deals. Will Krasne (05:58) And all you had to do was, you know, pay a million bucks, half a million bucks, whatever, to a consultant, and they'd go away forever. Hiten Samtani (06:04) It sounds like a lot, compare that to property taxes on a hundred-unit multifamily. Will Krasne (06:09) nothing. mean, and think of the residual value that you create too. again, there's no free lunch. Well, the con was for a while, but it was like a free buffet that closes at like 2 30. Yeah. And a lot of these people got the traveling, you just see done at like 157. Hiten Samtani (06:15) And it was, there was. Well, that's the beauty of it, right? The reason we're talking about the traveling HFC thing right now is because the Texas Senate passed probably the most punitive version of this bill. It was called HB 21. It sailed through the House. And then last week it sailed through the Senate as well. So now it's heading to the desk of Governor Abbott. look, everyone knew this was going away, right? The uncertainty was in the how severe would the HFC killer bill be? It turns out like they went for the most hardcore version of this thing. Will Krasne (06:55) It turns out that stealing a bunch of money from municipalities is something that both parties can get by trying to stop. Hiten Samtani (07:02) The issue here is there is a retroactive component to this bill. And what I wonder about is what that looks like on the capital market side. Like what's a lender going to do with something like that? Will Krasne (07:12) If they don't do anything, every sponsor is going to go into default because you've just nuked NOI by a huge amount. What's really interesting though is that if there is retroactivity and then the sponsors have to come out of pocket for however much they would have owed in property taxes. mean, a lot of these deals run life support anyway, so they barely had enough money to pay the consultants. How are they going to claw that back? mean, and then if you aren't paying property taxes, then you're immediately in default when you're alone as well. So it's a really interesting question. I don't know. ⁓ Hiten Samtani (07:44) I'm talking about Mickey Mouse sponsors here, by the way. should say, look, if you're a fiduciary to your investors, at some point you had to do this. Like, yeah, yeah, you couldn't leave this on the table. Like this is the easiest free money. If you didn't take it, you're an idiot. Will Krasne (07:57) We should have played with that upfront. Like you absolutely should have done this. I wouldn't have done this if the states that I operate in had this. Are you kidding? Hiten Samtani (08:03) The other thing here is there was so much political backlash to this, I mean, you're basically stripping off the tax rolls in all these important cities, Austin, Houston, Dallas, et cetera. So there is a little bit of reputational risk when it came to traveling HF. Will Krasne (08:21) I think that's right. But it's just if you see a scheme like again, I don't blame anyone for doing it. But like it's a scheme like for sure. And anytime you see a scheme like it's going to get the loopholes going to get closed. mean, this is like in New York when it's like, if we just treat a tenant like crap, turn off the hot water, get them out and then spend, you know, one hundred thousand dollars renovating it becomes free market. It's the same thing like it's a ski. Hiten Samtani (08:50) I thought about this too. said that the whiplash, how sudden and how dramatic and how violent this is going to be, reminded me a lot of the 2019 rent reforms in New York City. Where all these landlords, there was an unbelievable example. Steve Spinoza, he used to run Redney, which is the big trade group out of New York, once called Charlie Bagley, who is a New York Times real estate reporter, and he calls him from within the Senate chambers while he's writing a pro-industry version of this law. Like the brazenness of this fucking thing was crazy. And that's what kind of rhymes with what's going on with traveling HFCs. Will Krasne (09:24) Well, it's a little bit different, too, because the if you have a building that got under it with no property taxes, you can't ever make that up. Like if your property taxes were half a million dollars. Hiten Samtani (09:36) You can't operate the hell out of it to rescue that. Will Krasne (09:40) no. And like, least on rent stabilized, you know, you have some sort of specter of like the rent loss change. There's something where you can potentially take more units to free market or at the very least, like they're still operable in some cases. Like, this is just done. You're just like, it's just toast. If you had a building with three million of NOI and, you know, the property taxes were 800 grand. And like really your NOI is 2-2. You gotta grow your NOI 30 %? Hiten Samtani (10:13) The sponsors might be shit out of luck, but the consultants, mean, they had a, this was a golden period. Remember we've talked about Nick Mastriani, the EB5, Kingpin, and that three year glory period where he probably made hundreds of millions of dollars in fees raising all these billions of dollars for developers. Will Krasne (10:29) Like in divorce nobody wins except the attorneys. Nobody wins here, the lenders lose, investors lose, the consultants do great. Hiten Samtani (10:43) Well, I'm excited today because we have one of our Texas guys is going to join us. He was my Sherpa on his traveling HFC journey. He was really helpful. We're talking about Barrett Linburg He's a principal at Savoy Equity, which is a Texas based developer and operator. Barrett was instrumental in helping the promote understand what the fuck these are. Will Krasne (11:03) the Tenzing Norgay of traveling UGFCs. Hiten Samtani (11:08) There he is. Yes, we can hear you fine. sound good. Excellent. Barrett, why were you so critical of the program? mean, it's we were, and I were talking about like, if you're a fiduciary to your investors, you kind of had to do this for a while. Like it was a no brainer almost. Sure. Barrett Linburg (11:10) Can you hear me? So the reason I'm critical of it is because my firm uses the PFC program. We use local partners and we believe that PFC and HFC are excellent tools for creating affordable housing throughout the state of Texas. Traveling HFC, we believe does not create affordable housing in many, many cases, 95 % of the cases that it's used, but it does give a tax abatement. So it's a strain on the local municipalities where it's being approved. to your point though, to the people who own the properties, they don't really have another choice. It's either give back the property or kind of hold their nose and do this deal to, and live to fight another day. Will Krasne (12:09) How did this come about? We were talking about this just before he came on. Like it's a scheme. It's just a total scheme. Barrett Linburg (12:16) So PFC has only been around for 10 years. And so the loophole kind of showed up and then it was closed pretty quickly. HFC has been around for 40 years. So this loophole has existed for the entire time. It just took people a long time to figure it out. And now all of sudden people started using it because they figured it out after PFC kind of showed the loophole to everyone. Now people started using it. Despair created the monster. Hiten Samtani (12:50) Where we're at now is that the Senate has passed the most punitive version of this HFC killer, right? Barrett Linburg (12:56) So this is the nuclear bill. And so it has retroactivity and it has retroactivity in two ways. The bill will affect both what I call good actors. So people who have done deals with local municipalities that were approved by city councils where the properties actually live. And it affects them by saying, if you're not creating enough affordability and the way that that's defined is, ⁓ so much affordability that it's equal to or greater than 50 % of the property tax abatement that you're creating. If you're not creating that much, then you owe the state of Texas money every year until you start creating that affordability. So that's number one. Hiten Samtani (13:42) The enough part of it is where it's gonna get murky, right? The math is gonna get all messy over how it's calculated, what affordability looks like, did you meet the requirements at the time? Barrett Linburg (13:53) is market rent calculated? So yeah, the math is hard, first of all, and then like, what is enough and why are you paying the state of Texas instead of the market that the property actually lives in? Like all these things. So, but it catches the people who actually were living within the spirit and the letter of the law and it's clawing them back retroactively. Will Krasne (14:17) Yeah, and that's something I just want to mention too and talk about a little bit is that people were using this for good like part of their way you can lower your rents as if you lower your operating expenses and so we're getting a tax abatement and apartments that would otherwise rent for $2,000 or being made available for $800 like that's the spirit of the bill and everybody that's a win-win, know, the developer is able to make their same yield it's just a different way to get there then with a market rate deal and the local municipality gets more affordable housing. And in exchange for that, they give up the property tax revenue. Municipalities are willing to give up that tax revenue for those benefits. But not if you're just bringing this in from somewhere else and your rents are gonna be below. Barrett Linburg (15:04) Yeah. So like in Dallas to get a ⁓ project approved, it has to go through HFC, then the housing and homelessness committee, then city council, and then back to HFC. So you've got like a hundred people touching a deal before it gets approved and they've all decided that the project is worthy of the tax abatement before it gets done. And that's the process that's been followed for decades. And so now all of a sudden the legislature has said, well, we don't like it. It's not creating enough affordability compared to the market rate that we've decided is the appropriate one. And so now potentially these developers and the projects are going to go broke. And like, is that right? I don't know. It scares me very much as a PFC developer with another Texas legislative session coming up, because what if that now applies to all the, all my projects, which I've done with a local partner approved by a city council. Like could that retroactively apply to me? Right. Even though PFC was reformed two years ago and I'm following the spirit in the letter of the law. This bill also retroactively goes after people who were what I think are bad actors doing deals like within the letter of the law, but certainly not within the spirit of the law. Hiten Samtani (16:22) We actually heard about a couple of California guys who went out to one of these jurisdictions, set up shop, and were offering this as a service, right? And we were talking about this cottage industry of lawyers, consultants, debt brokers who all rushed into this over the last call at 18 months and made a lot of money. Barrett Linburg (16:40) guys like you and I, right, who just understood it well enough to kind of be the top of the funnel for some of these HFCs charging hundreds of thousands of dollars per deal and doing dozens of deals. mean, it's pretty easy multiplication to do to realize that the guys who are top of the funnel for the HFC were making millions of dollars. Hiten Samtani (17:03) Can we talk a little bit about that document showing all the entities? Barrett Linburg (17:06) That was shared pretty widely. I don't know. Three, four, five, six months ago. Hiten Samtani (17:10) That was the one where like, if you don't act now, you're fucked. Barrett Linburg (17:13) Basically a warning to all the local municipalities saying, listen, you need to really be talking to the folks in Austin and letting them know how important it is to outlaw this deal because your tax base is going to disappear or shrink by hundreds of millions, if not billions of dollars. And the question is, is it going to continue or is it going to be retroactive and these properties are going to be put back on the tax rolls? And that's where this nuclear option that has retroactivity, like, that last or is it going to be another bill, potentially this competing bill? And is the governor going to have to decide which one, which is an extraordinarily strange thing that, that I've never heard of. Hiten Samtani (17:59) How do you live and work in Texas, man? is like, even for New Yorkers, this is like, what is this? I'm just thinking through the capital market side of this. What does this look like for Freddie? What does this look like at the CNBS, on the CNBS desk? How do you underwrite this? How do you talk to your sponsors? I have no idea. Barrett Linburg (18:20) Well, you've just put into context though, the amount of money and the amount of power that's going to be influencing and trying to call the governor's office to say, sign the less restrictive bill. Will Krasne (18:32) Yeah, and then on the other side, this is going to cause real implications across these larger cities if all of a sudden what happens if there's, you know, five hundred million dollars less of property taxes in Antonio? Like what happens to like bus systems, trash pickup? Barrett Linburg (18:47) That's already a known number, right? Yeah. mean, there's already been, you know, billions of dollars of property value taken off the tax rolls. The average mill rate in Texas is 2%. So, so you're talking about $5 billion. It's a hundred million a year. And that's already off the tax rolls for the next hundred years. Hiten Samtani (19:06) And then the other side of it, which is a little more abstract now, but let's say down the road, they want to ⁓ incentivize the creation or preservation of affordable housing. And lawmakers come up with, okay, we need a new mechanism. We need a new carrot for developers. When they put that together, someone's going to look back at like, do you remember the craziness that happened with traveling HFCs? Developers don't deserve any more carrots. Like they've already pillaged the property tax rolls, right? That's the other, the second order consequence of something like this being abused for so long. Will Krasne (19:38) Yes. It's the same thing as before the tax laws got changed in 86 and you were just hugely incentivized to build shopping centers and office buildings that had no reason to exist other than for taxes. And then that rule changed and we had whatever 60 million vacant Scorpio to office just in like New York City alone. Hiten Samtani (19:57) Barrett, since the last question for you, but since the bill passed the Senate, what's the chatter been like? Barrett Linburg (20:02) bit of it is disbelief. ⁓ know, even the biggest lobbyists that are most tuned in down in Austin did not believe that the House bill would even get to a vote. And so then when it actually came up for a vote, that was a huge surprise. And so then it got through to the Senate, you know, one there with a huge majority. I think it's been a lot of disbelief since then, a lot of scrambling. That being said. I think all of these traveling HFCs have been busier than ever over the past 10 days because this Betancourt bill still has legs. the Betancourt bill does not have retroactivity. And so if it were to be the one that passes, then they're all good. Will Krasne (20:37) It's the best part. Hiten Samtani (20:55) Will, do remember the scene in The Saint where Elizabeth's shoe is running towards the American Embassy and the gates are closing? It's kind what I'm thinking about here. ⁓ Barrett Linburg, thank you so much. Will Krasne (21:08) Thanks Barrett, appreciate it. Bye guys. mentioned last week that the podcast was getting little depressing because we were talking about how many people have lost money or are ruined. Frankly, our first story is about that, but I wanted to break the chain. I've been rereading House of Outrageous Fortune about 15 Central Park West. And given that the Zeckendorf brothers are back in the news, having launched sales at their latest creation, 80 Clarkson. Hiten Samtani (21:22) scammed money or yeah Will Krasne (21:42) I wanted to talk about it because these guys, one, do not miss, and two, they're making their first big foray into lower Manhattan, which I think is really interesting. Hiten Samtani (21:53) Yeah, they were always kind of the state around the park. They had 15 Central Park West, is for a long time was the most profitable condo in New York City history. Will Krasne (22:02) And House of Outrageous Fortune, it sounds so quaint because they opened the book talking about how Carl Icahn and Dan Loeb fighting over like a $42 million apartment. I'm like, that barely gets you a townhouse on Bedford right now. Hiten Samtani (22:15) think of Miki Naftali enough to Ali's 11,000 a foot upcoming condo. Yeah. But paint the picture for us on how 80 Clarkson slash five 70 Washington comes about. Will Krasne (22:25) Well, you can really thank ⁓ Google for this thing existing. So it's right south of the St. John's terminal, which, you know, is a humongous project that Google ended up buying. So this is you can tell that this has been gestating for a long time because when was the last time that Google was buying an office building for $2 billion? So I think it was part of like the same assemblage. So Westbrook had owned it for a million years, I think with Atlas, and they'd gone through the Euler process, the rezoning process, and this site, which was just like a vacant lot, it was an acre and a quarter right on the West Side Highway, and incredibly prime. had 160 Leroy just up the street, which Ian Trager likes. Billiton was successful. Hiten Samtani (23:18) and trigger like. Will Krasne (23:22) Westbrook put the site up for sale. Atlas had been looking for a JV partner to help them build it and you had sort of a who's who of folks in New York looking at the site because you know very rarely do you get clean sites like this. Hiten Samtani (23:36) Silverstein, Mickey Naftali, so many other big players. Will Krasne (23:39) Verneita, exactly. But Zeckendorf won out. And these guys are the kings of Uptown as we talked about. mean, 15th Central Park West, 520 Park. This is a big venture downtown for them. And to make the numbers work, they paid $350 million for the site. You had to ask $5k a unit, which was seems pretty high. Hiten Samtani (24:02) It's at that time, Even now, mean, it's a lot for downtown. Will Krasne (24:06) Totally, and you have real comps. Hiten Samtani (24:08) I guess one of the more successful ones would be like 443 Greenwich. Yeah. The celebrity hub, the bunker entrance and whatnot. I don't track that. Will Krasne (24:15) Taylor Swift out of unit there, think. No, no, she didn't choose up street. Jennifer Lawrence had a year at 443 grand. Sorry, my bad. Yeah. So this also is interesting because it's I think it's emblematic of the change in capital markets over the last three years. So they buy this site in 2022 and March of 22, think. Hiten Samtani (24:38) Who gets them the acquisition one? BX. BX, blackstone. Will Krasne (24:42) Yeah, Blackstone gives him a three hundred and twenty odd million dollar acquisition pre-dev loan and Newmark I think also raised like four hundred million of equity for them too. So bow post is now I think in the. Hiten Samtani (24:51) Is that Seth Klarman? feel like there's a legend from another... Yeah, it's Seth Klarman. You can cook on Boutblast for a minute. I mean, they're popping up quite a bit. Will Krasne (24:56) at South Carmen. Balboa has done a lot of condo, mostly on the credit side. So they've been up and down 57th street with ⁓ some pretty high octane Mez lending. They have done a lot of real estate. They famously have an evergreen fund. And so they've done a lot of land, a lot of sort of esoteric real estate. I'm not sure they've done anything on the equity side as developers. More on the credit side. So that was very interesting. ⁓ but it took them two years to land the construction financing and so they got it from kale street and Farallon. So I know you've talked about kale street. Hiten Samtani (25:37) Yeah, they were on the promotes quiet kings of capitalist. What do we know about Kale Street? Will Krasne (25:42) I don't know, Tom. You're the king of kale. Hiten Samtani (25:45) So, Kale Street's super interesting. They're backed by the Kuwaitis, all right? So, there's a Kuwaiti sovereign wealth fund, which has a $250 billion London arm, and that's what Kale Street gets their money from. They don't do too many deals, but the ones they do, they count. You know, make it simple but significant, as Don Draper used to say. In April, they let a construction loan for a Century City office tower, JMB. That was a $575 million debt package. Here they're the co-lead on a nearly billion dollar financing. So they're coming in and then Farallon is the other one. I think they were founded, yeah, Tom Starr, for merger arbitrage purposes. Correct. They were big in the LBO crisis, coming out of the LBO crisis. Will Krasne (26:21) Tom Steyer. Some famous merger orb guy said in a book one time, give a man a fish, eats for a day, teach a man to merger orb, he eats for his life. Hiten Samtani (26:36) Well, at least in this case, it's pretty true. So they've been in real estate, I want to say, since the mid 90s. Will Krasne (26:42) This is par for the course for them. Zeckendorf had been using the Blackstone loan, obviously to acquire the site and then do pre-construction. So it's now going vertical and they quietly tiptoed around, pink panthered it. Hiten Samtani (27:01) This is kind of the opposite of what HFZ did with the 11, which was the most ridiculous, ostentatious sales launch I've ever seen in my life. Macallan 25 on tap, by the way. Will Krasne (27:11) I don't have anything to say that that's incredible. Yeah, but I will tell you they will. You will not see this on season two of owning Manhattan in all likelihood, but they released 22 units in March at a $430 million sellout. The asking prices per foot were in the mid fives and then this month they just released 16 more units for $360 million price per foot. now north of 6K. Hiten Samtani (27:35) again, no fanfare, right? They're just kind of dropping these on the market. We talked last time about this kind of media blitz when a project of a certain stature comes up. This was the opposite of that. They didn't talk about it at Will Krasne (27:48) Exactly, and I don't think they needed to. Hiten Samtani (27:52) to that, right? It's like the door in the speake... There's something quite sexy about that too. Will Krasne (27:54) ⁓ totally. Yeah, it's the bathtub gin of condo projects. And John Landau was at a conference recently and said that he heard of a condo project that sold half a billion dollars worth of condos in 30 days. And people think this is what he was referring to. A bunch of brokers have been commenting on having deals done there without a ton of specifics. You we've liked projects that really go for it. And the second doors frickin go for it. Hiten Samtani (28:22) They always go for it. know, this is not just so they obviously had the limestone Jesus 15 CP Delta U, but prior to that as well, I think their project was called 1010 Park Avenue. Yep. That was kind of the test case for 15 CP Delta U. And there was an amazing article in the New York Times. It said something like, you know, living on Fifth Avenue with room for the servants. 15 CPW was kind of the maximal vision of this second dwarf type of living. 520 Park is a continuation. and now they're trying the same thing downtown. Will Krasne (28:53) modern and it looks not dissimilar to 160 Leroy and then there's also this large affordable senior component on it because I think that was what allowed you to get the additional FAR to build more condos and get the density. You have two towers which is that is a Zeckendorf thing. They did it at 15th Central Park West again to get more FAR. This is just a big swing so we talked about when we talked about making off tally on at 800 Fifth this is that for downtown. I would say the locations I mean, you're on the West Side Highway. The views are incredible. It's not like prime Tribeca, like 70 vestries, like the mint. Like, yeah, it's a better location. This is a little bit in what the men in blazers would call like the crap part of Soho. You know, it's not too far from the methadone clinic, I don't think that they used to mention all the time. Hiten Samtani (29:39) This is a good point, I think is really, if the product is good enough, can it kind of override the location handicap, right? We think about this quite a bit. In some cases, Avenue's Fifth Avenue, you can't really mess with that, but 57th Street is kind of proof that you can do that. Will Krasne (29:58) great point because 57th street by itself there's not a lot there. Hiten Samtani (30:01) She'd be a part of Manhattan, in my opinion, for a long time. Will Krasne (30:04) It's all about the view. so the views here are going to be spectacular. And these guys don't do a ton of projects. They've done what? Three in the last 15 years. Yeah. Yeah. So they take their time. They when they find a site that they like that works, they pay up for it. Hiten Samtani (30:20) There's a great anecdote in the New Kings of New York to that point where they bought 15 CPW from them, some shipping, Greek shipping family. And then I think Arthur or Will, one of the brothers says, we went in with our best number from day one. Like we went back to our board, we pushed our performers as far as we could, and then we went even higher when we wrote that figure. And then they beat, I think the competing bidders by just that much. And it made all the difference. Will Krasne (30:45) take the road less traveled to 5,000 a foot and it made all the difference. Hiten Samtani (30:55) That's it for the pod this week. Thanks again to Barrett Lindberg from Savoy Equity for joining us. Will Krasne (30:59) That was great Barrett, really appreciate it. Hiten Samtani (31:02) Thank you to our listeners. Will Krasne (31:04) Share, like, subscribe. Thank you. Hiten Samtani (31:07) And well, thank you. Ciao.