Andy Weiner is the President and founder of RockStep Capital, a vertically integrated real estate firm based in Houston that specializes in shopping center revitalization. With over 30 years of experience in the retail industry, Andy holds degrees from Stanford and the University of Texas, along with executive training from Harvard. Driven by a passion for retail and a deep commitment to Hometown America, he and his team focus on breathing new life into small-town communities across the country through strategic real estate investment and community engagement.
Here’s some of the topics we covered:
- The Story Behind How Andy Got Into Retail Real Estate
- You Won’t Believe Where the Name RockStep Came From
- Game-Changing Business Rules That Practically Guarantee Success
- The Toughest Challenge in Retail Real Estate No One Talks About
- How Covid Reshaped the Retail Sector Forever
- The Secret to Getting Local Investors On Board and Winning Big
- Andy’s Genius Strategy for Attracting Superstar Investors
- How to Build Powerful, Profitable Relationships With Retailers
- What Andy Aims For With Every Retail Deal He Touches
- Percentage Lease Explained
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
01:20:09:09 – 01:20:28:01
Rod
Welcome to another edition of Life Time Cash Flow through real estate investing. I’m Rod Khleif, and I’m thrilled you’re here. And you are really going to love this interview. Today we’ve got a rock star in the retail space, and we never really talk about retail on this show. And I’m very excited to talk about retail because I actually know enough about it to be dangerous.
01:20:28:01 – 01:20:51:04
Rod
And, the gentleman here today is Andy Wiener, and he’s a president and founder of Rock Step Capital. Very similar to rock star but rock step. And we’re going to talk about that. And they’re in 22 assets around the country and 11 states from grocery anchored centers to, open air power centers, which I love, like we have here in Sarasota and, and in closed malls as well.
01:20:51:06 – 01:20:52:06
Rod
Andy, welcome to the show.
01:20:52:07 – 01:20:53:22
Andy
Thank you so much. Happy to be here.
01:20:53:22 – 01:21:04:14
Rod
Oh, this is this is going to be a lot of fun. So why don’t we start with having you tell a little bit of your background? Sure. Maybe. Why retail when you got into retail, maybe where you came from to go into retail and. Yeah, give us a little.
01:21:04:16 – 01:21:05:21
Andy
I was born into retail.
01:21:05:22 – 01:21:07:00
Rod
You were born into retail.
01:21:07:00 – 01:21:07:06
Andy
Okay.
01:21:07:07 – 01:21:10:05
Rod
So my gran in a strip center. Yeah.
01:21:10:08 – 01:21:11:26
Andy
I was born into retailing.
01:21:11:26 – 01:21:12:07
Rod
I got a.
01:21:12:07 – 01:21:19:25
Andy
Retail shopping center. So my grandfather started a chain of clothing stores in Houston in the 20s with the name wieners.
01:21:19:26 – 01:21:20:07
Rod
Okay.
01:21:20:07 – 01:21:44:29
Andy
With 159 stores. We ended up being big. We’re like a regional player. I ended up running operations, so I ran all the stores. Wow. Real estate, air logistics systems, finance. So I was a retailer, and I love retail. Okay. And I’m a student of retail. And then 1997 I started my own shopping center investment company. So we’ve been at it 28 years.
01:21:44:29 – 01:21:49:15
Andy
We’ve built or acquired about 10,000,000ft² of shopping centers, as you mentioned.
01:21:49:16 – 01:21:50:19
Rod
Oh, so you’ve built as well?
01:21:50:19 – 01:21:55:28
Andy
Yeah, we build and acquire. I say, and, we’re, 11 states.
01:21:55:28 – 01:21:56:19
Rod
Okay.
01:21:56:22 – 01:22:07:01
Andy
Been doing it for a long time. Vertically integrated team of 75 employees. Right. And just shopping center investing where operators love the business.
01:22:07:03 – 01:22:25:00
Rod
You know, on the vertically integrated piece, where you’re managing them all yourself. It’s a hell of a lot easier, I think, with shopping centers than it is with multifamily. You know, because, you know, the tenants are more sophisticated. You know, you don’t have, the delinquencies as much as you would in multifamily. You don’t have the evictions.
01:22:25:02 – 01:22:26:22
Andy
We have problems too, though. Well.
01:22:26:24 – 01:22:44:28
Rod
We approach of course you do. But but the point is, I, I’ve noticed and learned a lot over the last year or two dealing with a debacle with an ex partner that, the most successful players are the ones that are vertically integrated. But but candidly, in the multifamily space, the most successful players are the ones that are geographically specific.
01:22:45:00 – 01:23:04:24
Rod
And that’s why, you know, you’re an 11 states, but you’re able to do the vertical integration in that many states. And we’re going to talk about what you do locally with investors and things like that too. But it is it is a different animal. So, so let’s start with, with, with rock step, what would the name come from?
01:23:04:24 – 01:23:08:08
Rod
And I know you wanted me to ask that and, thank.
01:23:08:08 – 01:23:08:20
Andy
You for asking.
01:23:08:20 – 01:23:11:01
Rod
Yeah. No. Of course. Yeah. So so let’s talk about that first.
01:23:11:01 – 01:23:16:01
Andy
So rock step is not a word in the dictionary, right. But dancers know what it is.
01:23:16:02 – 01:23:16:17
Rod
Oh.
01:23:16:19 – 01:23:38:26
Andy
So it is a dance move okay. And I like big band music. Okay. Frank Sinatra, Ella Fitzgerald, Peggy Lee, 56th Street, 60s big band swing. Okay. And when you do couples swing dancing, you rock step when you switch direction on counts seven and eight. 123123. Rock step. Ball for change.
01:23:38:26 – 01:23:39:12
Rod
Interesting.
01:23:39:12 – 01:23:53:16
Andy
And so we use the word rock step as a metaphor okay. We want to be light on our feet. You want to be nimble. We want to listen to the music in the industry. So we use it as a verb. Hey guys we have an opportunity. We need a rock step. We have a problem. We need a rock step.
01:23:53:18 – 01:24:14:02
Andy
Everybody in the company knows it or my family knows it. Yeah, we we use it as a verb. Oh, guys, we got a problem. We got a rock step. And then I wrote an owner’s manual for our company. I wrote 25, not 3 or 4, 25 rules of specific behaviors, word by word. And we call these rock steps.
01:24:14:05 – 01:24:23:03
Andy
And we have a rock step of the week. And we are on rock. Step 21. And we’ve been doing this for nine years. Twice a year we go through a rotation.
01:24:23:05 – 01:24:27:07
Rod
Oh you. Yeah, it would have to be that one. It would have to be so rock.
01:24:27:07 – 01:24:47:26
Andy
Step 21 take pride in your appearance. The whole company 10 a.m. gets on a team’s call on Monday. And we talk about what does it mean for that rock to take pride in your appearance personally and professionally? Why is it important? And somebody writes an essay, they lead a discussion and they call it random. Three people sue Racine.
01:24:47:26 – 01:24:57:12
Andy
What does it mean to you? And that’s the conversation. So we learned to use this language and this is how we hire people. So rod, if you are going to come to an interview.
01:24:57:12 – 01:25:03:02
Rod
You know, I mean, look at me screwed because I’m in flip flops and t shirts most of the time. So yeah, that would that one wouldn’t work for.
01:25:03:02 – 01:25:24:10
Andy
What are your favorite three and why. And what are your most challenging three and why. So to come to rock step, you’ve got to be very good at leasing whatever, whatever your profession is to stay at Rock step, you have to live by these rules. And I go to the mat on these rules. Now, we’re not perfect, but we are required to live by these rules between us.
01:25:24:10 – 01:25:39:28
Andy
It’s how we build trust. It’s how we handle conflict. And we’re required to live by these rules with our tenants, our investors, our communities, our professionals. And this is to the mat, serious stuff.
01:25:40:02 – 01:25:40:23
Rod
Got it.
01:25:40:25 – 01:25:41:22
Andy
You know, serious stuff.
01:25:41:22 – 01:25:57:09
Rod
I have run some large companies myself, and we call them a court, you know, a court, a code of conduct or core values, typically, they’re not quite this many. There’s a lot here. Yeah, there’s a lot here. But I want to read them off just because they’re all fantastic. So if you guys bear with me, the first one is do the right thing.
01:25:57:09 – 01:26:03:05
Rod
That’s our number one core value in every company is integrity. Practice aimlessness. So just do the best job.
01:26:03:05 – 01:26:11:21
Andy
My kids joked said, hey dad, you’re practicing anus. And I said, well, there’s a big difference between an anus and an A-plus. Okay? So I love it, I love it.
01:26:11:24 – 01:26:14:12
Rod
Be punctual. That’s one that that I’m that I’m very.
01:26:14:12 – 01:26:16:19
Andy
Five minutes early is on time. That’s right. Time is late.
01:26:16:19 – 01:26:34:21
Rod
That’s right. Bernard, talk about response time. Love that one too. It’s just makes me crazy when you’re out there in la la land. Practice blameless problem solving. Love that one. Be prepared. I’m. I’m. I was a boy scout. That’s a number one motto. There. Listen. Generous. Hard with me. That’s for me. Which one? Be prepared.
01:26:34:23 – 01:26:35:10
Andy
Listen. Generally.
01:26:35:10 – 01:26:45:09
Rod
Oh, listen to. Oh, that’s my tough one too, buddy. I, I have four and a half stars on this podcast because I, I interrupt too much. In fact, my coach has me squeezing my leg to give me to shut up and not interrupt so much.
01:26:45:15 – 01:26:47:13
Andy
Fail, fail. You and I are very similar.
01:26:47:13 – 01:27:07:10
Rod
Yeah, Speak straight. I like that one. Honor your commitments. I like that one. Relentless about improvement. Tony Robbins calls it can I constant and never ending improvement. They don’t have to be big shifts, but little shifts taken out over time become major transitions. Get clear on expectations. Yes. When you outline expectations, people know what they can expect.
01:27:07:10 – 01:27:29:00
Rod
And there’s no miscommunication and no unhappiness because they don’t get what they want. Be easy to work with. I like that one. Bring it every day. Bring it in quotation marks. I love that one. Be transparent I yeah I that’s that goes without saying invest in relationships. This business is a relationship. Business love it provides solutions instead of problems.
01:27:29:00 – 01:27:56:12
Rod
I love that one to be obsessive about organization. Yeah, these are really good. And, show meaningful appreciation. What’s the word I want to look for their sincere, correct, sincere appreciation. Yeah. Be a brand ambassador. Sure. You absolutely be positive. That’s a no brainer. Take pride in your appearance. That’s the one I will fail on. Don’t be a jerk.
01:27:56:12 – 01:28:06:07
Rod
That’s a big one. Be a careful steward of our assets. Like, treat them like you own them. Right. Keep family first on love that. Love that one. I teach that.
01:28:06:08 – 01:28:06:17
Andy
One of my.
01:28:06:17 – 01:28:08:17
Rod
Favorite. My one of my favorite three. Yeah.
01:28:08:17 – 01:28:09:16
Andy
That’s got to keep family first.
01:28:09:16 – 01:28:21:11
Rod
That’s it. They’re the most important. I teach my warriors to to journal and and to block time for their families. I know it sounds silly, but they’re the most important thing to keep things fun. Love it. That’s actually another one of ours. A lot of these.
01:28:21:11 – 01:28:25:10
Andy
It’s one of my several. These ones keep things and my wife says I take the fun out of fun, right?
01:28:25:16 – 01:28:41:21
Rod
Yeah. No, I same here, same here. I know those those are awesome. You call them behaviors, I call em core values, but they’re awesome. They’re fantastic. So, yeah, that’s really cool. And you’ve, you’ve created, certain a fantastic culture with that. When you start with that, it’s phantom.
01:28:41:21 – 01:28:54:17
Andy
Black Stone and Brookfield and CBL who want to be part of a high performance team. Right. That that adheres to those rules. And by the way, when I pray, I get called on a lot. You’re not living up to XYZ. Yeah.
01:28:54:19 – 01:29:16:12
Rod
Oh that’s great. That’s great. When you’ve got when you’ve got 360 reviewing, you know, from it’s not just top down, it’s bottom up, it’s sideways. And everywhere else where people are, where you allow people to, to to point things out. That’s, that’s that’s a great culture. And I really admire that. In a well-run organization, you know, every business is nothing but people in systems.
01:29:16:12 – 01:29:21:26
Rod
And if you get the systems right, and you build a culture of the right people, success is inevitable.
01:29:21:26 – 01:29:23:18
Andy
Yes, yes. Yeah.
01:29:23:21 – 01:29:44:24
Rod
Well, so let’s talk about some things affecting retail because, the first thing let’s talk about is the whole Amazon dynamic. I mean, I literally just spent $3,000 this morning buying some things in about two minutes that I need it for, you know, electronic stuff here. Amazon is so extraordinary. And it’ll be delivered by Friday, some of it today and tomorrow or tomorrow rather.
01:29:44:26 – 01:29:47:05
Rod
So how has that affected your business?
01:29:47:05 – 01:29:48:07
Andy
Who’s Amazon again?
01:29:48:10 – 01:29:49:21
Rod
I’m just getting it. Yeah. Yeah.
01:29:49:24 – 01:29:52:29
Andy
Right. So, Amazon is well.
01:29:53:00 – 01:29:54:12
Rod
Just the whole online shopping.
01:29:54:12 – 01:30:04:00
Andy
Yeah. Yeah. The whole, but let’s use Amazon for e-commerce. For e-commerce. So Amazon has no doubt dramatically affected the retail shopping center sector.
01:30:04:00 – 01:30:04:17
Rod
Right.
01:30:04:20 – 01:30:18:02
Andy
And it’s done so because it’s taken trips away from shopping centers and steals trips. And so what’s happened is, is that Amazon destroyed lots of retailers and they’re out of business.
01:30:18:07 – 01:30:23:09
Rod
Like like could you talk about the specific, sectors that got the hammered the most, if you will, but.
01:30:23:09 – 01:30:25:12
Andy
Certainly like the the bed bath and beyond.
01:30:25:12 – 01:30:26:01
Rod
Right. Oh yeah.
01:30:26:01 – 01:30:38:14
Andy
That just happened initially some of the bookstores, but the bookstores have recovered. Okay. Anything that is easily identifiable by price, right. Apparel is a little harder, and right price is even harder.
01:30:38:16 – 01:30:38:26
Rod
01:30:38:27 – 01:31:04:04
Andy
Okay. Okay. Grocery is hard because of fresh. Right. Okay. Right. So there are some sectors that are more experiential shopping, Hobby Lobby, Michaels kind of fun with your family okay. That are a little more protected okay. Others that are more commodity items that are more exposed. Yeah okay. Okay. So an experiential type of retail or fresh and particularly grocery.
01:31:04:10 – 01:31:11:16
Andy
It’s hard. Many people struggle with getting fresh. Correct. Gotcha. In the grocery world.
01:31:11:16 – 01:31:26:25
Rod
So so which you know, you’ve got you’ve got grocery anchored, you’ve got power centers and you’ve got enclosed malls. Sure. And I and I asked you when you when because I was, I was I before we started recording I said, you know, aren’t enclosed malls dying. You said, no, we’ve got one of them how many of them?
01:31:26:25 – 01:31:39:06
Rod
14. Yeah. And and we’re buying and you’re buying. Absolutely. And you’re buying. So how do you make that experiential? You sure? I’ll throw a carousel in the middle. You put Santa Clause in there. What sorts of things can you do to make that more of a destination?
01:31:39:13 – 01:31:48:12
Andy
Well, the answer is a any retail center, whether it’s enclosed or open air, is a collection of tenants.
01:31:48:12 – 01:31:49:01
Rod
Right.
01:31:49:03 – 01:32:14:06
Andy
And so what’s interesting is that enclosed malls are are capturing the I’m going to call it the off price TJ Max Ross okay. Those type of folks because there’s a lack of retail space in the market. So going back to the to the question about Amazon, Amazon destroyed the white guys. Those that are left have figured out their own way to compete with Amazon.
01:32:14:08 – 01:32:18:19
Andy
And they’re protecting, if not growing their market share. They have their own e-commerce.
01:32:18:26 – 01:32:20:04
Rod
They have their own commerce.
01:32:20:06 – 01:32:42:15
Andy
They have their own distribution centers or their own, distribute from the stores great apps, and they’re holding their market share. If not growing, they figure it out and they are telling Wall Street that they need 50 stores or 150 stores, and their balance sheets are strong. And so they’re growing into an inventory of shopping centers. That’s not growing.
01:32:42:22 – 01:32:43:09
Rod
Interesting.
01:32:43:09 – 01:32:44:05
Andy
Different different than.
01:32:44:05 – 01:32:45:13
Rod
Multifamily. That’s very interesting.
01:32:45:13 – 01:33:08:19
Andy
So you have you have all these companies that are growing and there’s no place to go because new construction has not taken off yet because of the increase in construction costs known. And these interest rates. So, so second generation space owned at dramatically below replacement cost is a very valid strategy.
01:33:08:21 – 01:33:12:29
Rod
Okay. And that’s your strategy. Yes. No. And yeah. No, no. Go ahead. Finish finish your thought.
01:33:12:29 – 01:33:30:02
Andy
And the enclosed mall space is interesting because there’s $50 billion of insolvent debt underlying these malls. And they can be bought at 15 cap 17, cap 13 cap.
01:33:30:04 – 01:33:31:05
Rod
On existing NOI.
01:33:31:05 – 01:33:48:28
Andy
On existing NOI and levered at 50%, at 7% interest rate, let’s say. And so your cash on cash returns are 2,025%. And as long as you have the ability to hold net operating income steady. Yeah.
01:33:48:28 – 01:34:03:21
Rod
Well obviously you got to look at the leases and see who’s who’s been struggling and you know, and and what their financial viability is and so on and so forth. Are they going to stay or are they going to fold? What are they going to do? What have you seen as far as a shift in the tenant demographics?
01:34:03:21 – 01:34:10:15
Rod
Yeah, to talk about that because I mean, Covid, I mean I’m sure was was massively detrimental when that happened.
01:34:10:15 – 01:34:22:24
Andy
So the tenant look the tenants that are struggling are the department stores. The department Sears is gone. Penney’s is weak Kohl’s is being challenged. Macy’s and Dillard’s are okay.
01:34:22:26 – 01:34:25:09
Rod
I don’t know. They’re not packed. When I go in there they’re okay.
01:34:25:09 – 01:34:36:27
Andy
Yeah okay. But a lot of the department stores left. Right. So they’re not driving traffic. The big effect in retail has been off price. This is TJ Max Ross.
01:34:37:00 – 01:34:38:12
Rod
You say off price that’s discounted.
01:34:38:18 – 01:34:42:05
Andy
After off price apparel. With some home goods is off.
01:34:42:05 – 01:34:43:09
Rod
Price me and forgive me.
01:34:43:09 – 01:35:04:04
Andy
So TJ Max says that they buy extras from the department stores that they can’t sell. I gotcha, and they sell them at deep discounts. The reality is 7,080% of the merchandise in a Ross and the off price world is bought directly for those stores, not from other.
01:35:04:04 – 01:35:06:03
Rod
Folks. They claim it’s other. So. But yeah.
01:35:06:04 – 01:35:11:01
Andy
It’s a little bit of optics right now. What’s very interesting, because we were in the apparel business.
01:35:11:03 – 01:35:13:22
Rod
I understand. No, it yeah.
01:35:13:24 – 01:35:34:19
Andy
They have a very rigid markdown strategy. So on a timeline, 60 days, 90 days, they market down 20%. They keep on marking it down till it’s gone. And so the turn the turnover is six times a year. And so companies like TJ Max 25, $30 billion didn’t have any debt.
01:35:34:26 – 01:35:35:15
Rod
No kidding.
01:35:35:15 – 01:35:50:11
Andy
And a store TJ Max could do 10 million, 15,000,020 million more than a Dillard’s or Macy’s five times the size. And the capital required not only to open a store, but to maintain an off price.
01:35:50:11 – 01:35:53:01
Rod
Yeah, compared to a department store. Yeah, I can imagine.
01:35:53:01 – 01:35:59:27
Andy
And so so the off price, more than anybody has really challenged the department store sector.
01:35:59:29 – 01:36:03:18
Rod
I’ve seen an increase in like health clubs as well.
01:36:03:18 – 01:36:05:11
Andy
Well certainly fitness all.
01:36:05:13 – 01:36:07:20
Rod
The fitness I mean fitness, yeah.
01:36:07:22 – 01:36:15:05
Andy
Planet Fitness, all the different variants of that. Yes. Okay. That’s a big factor.
01:36:15:07 – 01:36:20:03
Rod
Okay. You know, I just for let’s just digress for a minute, what did Covid do to you?
01:36:20:05 – 01:36:23:14
Andy
Covid shut down every single property.
01:36:23:14 – 01:36:24:01
Rod
No kidding.
01:36:24:07 – 01:36:46:09
Andy
And you’re in technical default on every loan, right. And so we had to renegotiate over 600 leases. Well, in a period of 60 days, all hands on. Well, now our structure is that we have community bank lenders as our target loan.
01:36:46:09 – 01:36:48:28
Rod
Oh, interesting. Yeah. So not conforming debt you go directly to.
01:36:48:28 – 01:37:00:08
Andy
So we don’t do CMBS, we don’t do insurance company. Interesting. And the and so we had great flexibility. So it’s a phone call Andy will we’ll amend this lease for I mean amend the.
01:37:00:13 – 01:37:00:26
Rod
The.
01:37:00:28 – 01:37:18:09
Andy
The debt. And every single lender worked out with us you know that’s great. That’s a lot of work. Oh yeah. And then we forget they’ve some of the rent that particularly the mom and pops we forgave. You know, some of the national tenants like to.
01:37:18:14 – 01:37:19:21
Rod
Max so much, right.
01:37:19:24 – 01:37:21:02
Andy
Not so much. Yeah.
01:37:21:04 – 01:37:25:06
Rod
Did you lose a lot of restaurants? Did you have many restaurants?
01:37:25:08 – 01:37:27:15
Andy
We lost, one restaurant, but.
01:37:27:15 – 01:37:45:08
Rod
But one. That’s it. I went down to Lincoln Road on South Beach, and, you know, I live down there 16 years ago and an iconic restaurant shut down. It was such a travesty. Places that had been there forever, that were extraordinary restaurants. And so I just I’m really surprised to hear you only lost one. No, our target.
01:37:45:08 – 01:37:47:05
Andy
Market is secondary tertiary.
01:37:47:05 – 01:37:49:00
Rod
Mark got you. Yeah. And that’s we talked about a.
01:37:49:00 – 01:37:54:17
Andy
Little bit of a difference between the major metros and graduate secondary and tertiary. Yeah. So you.
01:37:54:17 – 01:37:55:26
Rod
May be the only mall in town.
01:37:55:26 – 01:37:59:07
Andy
Right. Or. Yes. Yeah. Well the we are definitely the only mall.
01:37:59:07 – 01:38:11:15
Rod
You’re the only mall in town. And so that, you know, they got to have a mall or some shopping area. Correct. Right. What would you say when you say secondary tertiary from a, from a population standpoint? What does that mean to you?
01:38:11:15 – 01:38:16:23
Andy
So New Orleans is on the large side. So we’re in New Orleans. That’s a secondary market.
01:38:16:26 – 01:38:20:14
Rod
Yes. I wouldn’t call that a second. Well, I guess okay. Fair enough. I mean, fair enough.
01:38:20:15 – 01:38:22:08
Andy
Dallas, Houston, Atlanta cargo, New.
01:38:22:08 – 01:38:23:09
Rod
York those are primaries.
01:38:23:09 – 01:38:31:15
Andy
Right? Definitely primary Tampa. And then on the small side, we’re buying a center right now in Lake Charles, Louisiana. Okay. We own one in Hot Springs, Arkansas.
01:38:31:15 – 01:38:32:26
Rod
Which I told you, I love that town.
01:38:32:26 – 01:38:51:17
Andy
Now we’re doing we’re doing a property in temple, Texas. You know, these are towns at 100, 150,000 market area. Okay? 200. There needs to be something in these markets that drive population growth. There’s got to be a university or a military base or major one fortune 1000.
01:38:51:18 – 01:38:59:09
Rod
You don’t worry about a base. I mean, you know, I teach my students to not go in any one horse towns where it’s like even even a military base.
01:38:59:16 – 01:39:05:01
Andy
Shouldn’t be one horse. Right? Okay. But geopolitically, we’re in an era of rising military. Well, that’s true.
01:39:05:03 – 01:39:06:04
Rod
That just happened. Yes.
01:39:06:04 – 01:39:10:28
Andy
Okay. But that’s going to be that way for another five, ten years. We are in a that that’s the world we’re in.
01:39:10:28 – 01:39:27:18
Rod
Yeah. Yeah I completely agree. That wasn’t the world a few years ago. But it is now. Fair enough. So before we start recording, you mentioned that you like to get local investors in each of your projects. Can you, can you can you speak to why and how.
01:39:27:18 – 01:39:28:26
Andy
Yeah. So let’s talk about why.
01:39:28:28 – 01:39:29:09
Rod
Okay.
01:39:29:09 – 01:39:50:01
Andy
Well let’s talk about what we do okay. So it is our belief that you can reduce risk and therefore increase returns by getting local business leaders to be a part of the equity. And we have done that in all of our properties where we have malls and other properties as well, but particularly from all.
01:39:50:01 – 01:39:51:02
Rod
Why do you believe that?
01:39:51:04 – 01:40:00:22
Andy
Because it helps us with entitlements, incentives, property taxes, relations to the city hall.
01:40:00:23 – 01:40:10:07
Rod
Okay, okay. I’m sorry, I’m going to slow you down here. Okay. How would it help you with any one of those? Okay, let’s start with entitlements and then Texans. I’d like to, is it because they have.
01:40:10:13 – 01:40:11:08
Andy
Okay to local.
01:40:11:08 – 01:40:14:11
Rod
Knowledge, or is it because they have connections or it’s to.
01:40:14:11 – 01:40:37:11
Andy
Why both. Okay, so let’s say you want to, take a mall and do some multifamily, okay. Or and that requires a zoning change, right? When you have local investors, it’s non-issue. It’s a non-issue. And one of our properties, we wanted major signage, signage is an act of God. It’s not prohibited, right? It is.
01:40:37:11 – 01:40:39:20
Rod
Prohibited. I mean, it is prohibited. Yeah. So pain in the ass.
01:40:39:20 – 01:40:47:09
Andy
So we send a new signage plan to the city manager. We copy our investors and that’s how it’s done. Okay.
01:40:47:09 – 01:40:48:23
Rod
That’s that I really like that.
01:40:48:23 – 01:40:54:08
Andy
So. And that’s how it’s done. So we don’t have entitlement risk in our property interest.
01:40:54:08 – 01:40:57:03
Rod
And that makes that makes all the difference. Just having some local people.
01:40:57:03 – 01:41:12:06
Andy
That talk about property taxes, property taxes in many markets is a political issue. It’s not I bought it for X. It was, you know, and that’s the new value. But when you’re buying a property, let’s say it had a $100 million note on it. You pay 10 million for it.
01:41:12:08 – 01:41:12:17
Rod
Right.
01:41:12:17 – 01:41:15:09
Andy
And it’s valued on the books in the city at 60 million.
01:41:15:09 – 01:41:15:26
Rod
Right.
01:41:15:29 – 01:41:23:24
Andy
So one of our investors was a local sheriff, the elected official, and he said, and they’ll handle it and handle it. And that’s how it’s done.
01:41:23:24 – 01:41:25:08
Rod
It’s the good old boy thing.
01:41:25:10 – 01:41:29:02
Andy
Well, let’s let’s take a step further, okay? I’m just a good old boy. But.
01:41:29:02 – 01:41:33:01
Rod
Well, certainly in Arkansas and Louisiana and.
01:41:33:03 – 01:41:34:11
Andy
Okay, let’s talk about New Orleans.
01:41:34:11 – 01:41:35:18
Rod
Oh, yeah. Same in.
01:41:35:20 – 01:41:59:21
Andy
New Orleans. We, have probably the best network of local investors that’s been on a project. They’re people who are very involved in the city, part of the black community, part of the white community. Right. And we got a, an incentive from the city. We bought the Riverwalk, which is downtown. Right?
01:41:59:21 – 01:42:01:14
Rod
Yeah, I remember it is beautiful.
01:42:01:14 – 01:42:13:01
Andy
And we bought that from the Howard Hughes Corporation. And we got a, an economic development tax, an annuity of a million and a half dollars per year. Unbudgeted.
01:42:13:01 – 01:42:13:27
Rod
Nice.
01:42:13:29 – 01:42:21:19
Andy
And I didn’t do it. I couldn’t have done it. Our investors, who knew the mayor and the city council. Wow.
01:42:21:19 – 01:42:24:06
Rod
Did it. How how do you find these local investors?
01:42:24:06 – 01:42:46:19
Andy
That’s a that’s hard. So part when we go into a property, part of the due diligence is done by me. Okay. We’ve got a staff of people. But I go in and I meet the mayor, okay? I meet the the lenders, the presidents, the bank. I meet the head of economic development, who are the business leaders in the market who like who likes to invest locally.
01:42:46:21 – 01:43:03:10
Andy
And then I interview the top 10 to 15 business leaders in a market. Tell me about this market. Tell me about that property. What is a reputation? What’s happening to job growth? What’s happening to the apartment world? What are your everything? I interview them and it’s part of my feedback.
01:43:03:10 – 01:43:12:07
Rod
What a fantastic strategy, man. I can tell you that. What a gift you just gave everybody listening. If they’re investing in any asset class, candidly, yes, I love that.
01:43:12:08 – 01:43:34:12
Andy
And then the conversation comes to the deal we got because we’re not going to buy unless we a good deal. Right. You have an interest in joining us. You don’t have to come into our fund. You can come in directly to the asset. And we target market returns, and investors get to invest locally in an institutional asset with a team that’s an institutional that follows the rock steps.
01:43:34:12 – 01:43:45:11
Andy
Yeah. And many of these investors don’t have great opportunities in their hometown. Right okay. And so we do that around the country. And once they invest with us one time.
01:43:45:11 – 01:43:48:06
Rod
Oh that’s all that’s done. They get the returns and they’re and there and.
01:43:48:08 – 01:43:54:10
Andy
Then they can invest geographically. They can get some diversified nation. Because, you know, usually we don’t buy a second property in the market.
01:43:54:10 – 01:43:57:22
Rod
Oh you don’t know because we’ve done we’ve done that.
01:43:57:22 – 01:43:59:20
Andy
Yeah. Where we’ll buy a power center.
01:43:59:20 – 01:44:01:25
Rod
In New Orleans would have more than one possible.
01:44:01:25 – 01:44:04:06
Andy
I mean, we’re actually looking at a second property right now.
01:44:04:06 – 01:44:05:28
Rod
You said you got stuff here in Florida where.
01:44:05:28 – 01:44:06:22
Andy
No, we don’t have stuff.
01:44:06:22 – 01:44:10:26
Rod
Oh, you don’t have stuff. Oh. What state are you in? I mean, if.
01:44:10:29 – 01:44:29:00
Andy
We go from North Minnesota, South Dakota, Kansas, all the way through to Arkansas, Mississippi, Texas. Oh, okay. We go Arizona. Virginia. And where, Wisconsin. Not kind of in the middle. And then we branch out a little bit. We’re generally a red state strategy.
01:44:29:00 – 01:44:29:13
Rod
Right.
01:44:29:15 – 01:44:35:00
Andy
Or a red county. Okay. In a blue state or purple state. Okay. We are
01:44:35:02 – 01:44:36:19
Rod
We’re, we’re I speak to why.
01:44:36:22 – 01:44:41:07
Andy
We find a little too much risk in markets like California.
01:44:41:07 – 01:44:42:13
Rod
Illinois, New York.
01:44:42:13 – 01:44:49:15
Andy
New York. There there is political risk. There’s property tax risk. There is demographic risk.
01:44:49:16 – 01:44:50:28
Rod
Tax risk.
01:44:51:01 – 01:44:58:16
Andy
Yes. Employment risk. There is, and and we’re just a red state or a red County strategy.
01:44:58:16 – 01:45:05:28
Rod
I mean, they’ve heard it for me enough times. I just want to hear it from other people besides me, because I want to nest in a blue state. Life’s too short for that brain damage. So we will.
01:45:05:28 – 01:45:09:20
Andy
Invest in a red county, in a blue state, a blue state. Got it, got it.
01:45:09:20 – 01:45:11:26
Rod
Now that makes sense. That makes sense. And I totally agree with that.
01:45:11:26 – 01:45:30:13
Andy
And again, local investors. Now the other piece to this is local lender. So right. The perfect model is 5 to 7 business people in a market who are in on our deal purposes with myself and other investors. They’re on the board of the regional and community bank.
01:45:30:16 – 01:45:31:17
Rod
01:45:31:19 – 01:45:40:19
Andy
And then we get community bank loan that’s usually fixed for five years. Right. No prepayment penalties.
01:45:40:19 – 01:45:46:09
Rod
Right. Well, that’s no bank loans don’t have prepayment penalties. So and then and then you you can renegotiate in five years.
01:45:46:14 – 01:45:49:03
Andy
You don’t know. Or if interest rates go down right. It’s a phone call.
01:45:49:03 – 01:45:50:07
Rod
Right. Nice.
01:45:50:07 – 01:46:02:10
Andy
Okay. We’re at 7%. Interest rates are at five and three quarters. Will you go ahead and send me an amendment? Sure. I’ll run it by the committee. Done. Yeah. They send the paperwork. Yeah. You can’t do that with CMBS or. Yeah. Or insurance.
01:46:02:12 – 01:46:06:23
Rod
Fannie. Freddie you can’t. Yeah. Yeah. Period. Yeah. Okay.
01:46:06:25 – 01:46:27:08
Andy
Now the other thing I want to mention about our sector, we talked about this, rod before, right before we started, is this concept of positive versus negative leverage. Right. Okay. So the shopping center sector, which is, you know, I recommend that people least think about it and learn about it, but it does have positive leverage.
01:46:27:08 – 01:46:53:13
Andy
And that means that the yield on an acquisition, the cap rate is higher and often dramatically higher than the interest rate on the underlying debt. So, you know, when you’re building new construction and multifamily, you know, it’s built to a seven and they want to exit at a 5 or 5 and a half. What the exit assumptions usually assume that interest rates will be lower than your cap rate.
01:46:53:17 – 01:46:53:27
Rod
Right?
01:46:53:27 – 01:47:13:10
Andy
Okay. But right now many of those properties, the interest rate higher, that’s negative leverage, right? When you’re just rates higher than your underlying yield or or cap rate. So in we’re buying a center right now in Louisiana, grocery anchored at eight and a half cap, brand new center. And we’re borrowing at seven. Nice.
01:47:13:11 – 01:47:14:16
Rod
It’s a brand new wow.
01:47:14:16 – 01:47:16:18
Andy
Brand new. Well, it’s destroyed in a hurricane. Rebuilt.
01:47:16:18 – 01:47:17:02
Rod
Gotcha.
01:47:17:03 – 01:47:29:14
Andy
Just rebuilt to withstand 140 miles. So effectively brand new roof. Yeah, the whole got it. And, and the enclosed mall space. We bought a deal in Kansas at a 17 cap.
01:47:29:14 – 01:47:30:17
Rod
No kidding.
01:47:30:19 – 01:47:32:04
Andy
Borrowed at seven and a half on current.
01:47:32:04 – 01:47:32:28
Rod
Our current front.
01:47:32:28 – 01:47:47:04
Andy
Current income. Yeah. Wow. And then we raised our net operating income. We we pay a profit’s current. And so there and that one we actually were able to pay 20% return of original capital and the profit without a, without a refi.
01:47:47:08 – 01:47:47:25
Rod
01:47:47:27 – 01:47:48:27
Andy
So in other words.
01:47:48:29 – 01:47:51:09
Rod
These cash flow is good enough to be able to do that.
01:47:51:09 – 01:47:56:17
Andy
Yeah. I mean, these are these, particularly the mall space. These are just cash flow machines. Well, I’ve.
01:47:56:17 – 01:48:19:05
Rod
Seen, you know, I, I was a member of a mastermind that, that did a lot of retail. And, you know, I remember hearing stories about how they’d buy a retail center and, you know, there might be a few thousand square foot empty. And just the dramatic, immediate, forced appreciation the minute they rent that space.
01:48:19:05 – 01:48:20:18
Andy
Well, yeah, it goes straight to the I mean.
01:48:20:19 – 01:48:30:14
Rod
Yeah, go straight to the bottom line. And so. So how do you, develop relationships with retailers? I’ve been to iCSC a couple of times, so to speak. I forgot what the acronym was.
01:48:30:15 – 01:48:33:05
Andy
There’s no sense of shopping. The International Council of.
01:48:33:05 – 01:48:36:04
Rod
Shopping, International Council shopping centers, huge event to Vegas.
01:48:36:06 – 01:48:37:11
Andy
By 30 years. I was.
01:48:37:11 – 01:48:41:09
Rod
There. Oh, no kidding this week. No kidding. Oh, I didn’t know it was this week. Oh, wow. Crazy.
01:48:41:09 – 01:49:04:27
Andy
So, I’m a retailer, right? I understand store metrics. Store metrics means what? How do you look at the return on investment for a new store for a retailer? So in other words, what’s inventory, net of payables? What’s the cost of fixtures? What’s the payback period? Can I understand store metrics and how retailers think? How much inventory is the right amount of inventory?
01:49:05:00 – 01:49:08:02
Andy
How do you do planning grams. You know basically how retailers.
01:49:08:02 – 01:49:13:14
Rod
Yeah. What what an incredible, knowledge base to bring to to the iCSC and talk to retailers.
01:49:13:14 – 01:49:33:03
Andy
So I’ve got a very good when we were with target, we were at Dillard’s. And I have, a team of people who are on the leasing side who’ve been doing this for ten, 20, 30 years. Well, and it’s all about relationships, and it’s all about delivering, being honorable. Cutting to the chase. Yeah, I got to speak straight with you.
01:49:33:03 – 01:49:37:19
Andy
We can’t make it work at X. We can make it work here. You know, we can be.
01:49:37:21 – 01:49:39:26
Rod
Honest, you know, that said an honorable like you said.
01:49:40:00 – 01:49:54:04
Andy
And look, you know, and sometimes, you know, people are jerks and sometimes they’re not okay and human. And then sometimes, companies are very, very, very, very difficult.
01:49:54:07 – 01:49:55:07
Rod
But retailers.
01:49:55:07 – 01:50:09:14
Andy
Yes. That are they run a gotcha organization. So you spend $25,000 negotiating a lease that has 100 gotchas in it. And if you’re really good, you get 60 of them out of the lease. Wow. But they’re going to get you. Yeah. Okay.
01:50:09:15 – 01:50:09:27
Rod
Yeah.
01:50:09:27 – 01:50:17:15
Andy
And you know, and we say to ourselves, we will never, ever, ever, ever do another lease with these guys. And until we do the next one.
01:50:17:16 – 01:50:19:21
Rod
Right okay. So you need them. Well yeah.
01:50:19:24 – 01:50:25:02
Andy
But that’s just how this is how it works. So let me, let me, talk a little bit about the mall strategy.
01:50:25:03 – 01:50:25:14
Rod
Okay.
01:50:25:20 – 01:50:31:05
Andy
How do we deal? How do you deal with malls? How does one make a mall? Yeah, a good.
01:50:31:05 – 01:50:45:06
Rod
And I would love to hear that because I was telling you before we started recording, I’ve been in, you know, the local malls here, and you see these blank walls with paintings on and making it look like there’s a space. They pretty? Yeah, they’re pretty, but that means they’re empty. I know, and and and I’m like, you know, they’ve got to be hurting.
01:50:45:06 – 01:51:03:21
Rod
I’ve seen I’ve seen quite a few at the UTC here. Forgot the name of the group that owns that big, big, business. Benderson Benderson. Yeah. I’m sure you’re familiar with that name, but, but, you know, there’s a lot of a lot of blank space. And so, you know, talk about the mall strategy and what they need to do and what you do.
01:51:03:21 – 01:51:04:02
Rod
So there’s.
01:51:04:02 – 01:51:05:15
Andy
Three strategies in a mall.
01:51:05:15 – 01:51:05:27
Rod
Okay?
01:51:06:04 – 01:51:27:07
Andy
One of them is the mall works just fine the way it is. It. In other words, you don’t need to do a lot of tinkering. Gotcha. To make sure that it works. Okay. The mall we bought in Manhattan, Kansas, has 2 million of NOI. We paid 12 million for 17 cap, and we’re NOI now 2.3 million.
01:51:27:09 – 01:51:29:21
Andy
Not much you can do. And you just have fun.
01:51:29:21 – 01:51:32:12
Rod
Not a lot of vacant space there. No. Okay. No. Got it.
01:51:32:16 – 01:51:46:13
Andy
And and vacant space is fine. Certainly if you bought a 17 cap because you can lease the vacant space, make it even better. Sure. And so we’re looking at a couple assets right now that are kind of 7 million of NOI. They can be bought at 15 cap.
01:51:46:16 – 01:51:46:29
Rod
01:51:47:01 – 01:51:50:15
Andy
Been steady for the last 15 years. They’re going to be steady going forward.
01:51:50:15 – 01:51:52:10
Rod
Why are they selling if that’s the case?
01:51:52:13 – 01:52:01:02
Andy
Because there are debts due or in some cases companies are being sold every assets on the on the chopping block, okay. And there’s no.
01:52:01:02 – 01:52:02:10
Rod
Buyers. And why.
01:52:02:16 – 01:52:12:13
Andy
It’s a hard business. It’s hard business. Right. Okay. So that’s one. One is it’s fine the way it is. Number two is you arbitrage the periphery. So let’s say.
01:52:12:13 – 01:52:13:25
Rod
What you you put in out parcels and.
01:52:13:25 – 01:52:33:06
Andy
Things or you sell off the outpost. So we bought a property for 25 cap in Rapid City, South Dakota. And we sold off the front three restaurant and a Hobby Lobby center for 50% more than we paid. And then we’re left with a mall that throws off $2.5 million of cash with no basis.
01:52:33:12 – 01:52:34:00
Rod
Wow.
01:52:34:03 – 01:52:35:27
Andy
Okay. Wow. Just messy.
01:52:35:27 – 01:52:39:11
Rod
Well, that’s a that’s a freaking that’s a that’s a home run.
01:52:39:14 – 01:52:47:01
Andy
That’s that’s that’s called arbitrage in the periphery. Gotcha. And then the third is you shrink retail and you do something different.
01:52:47:02 – 01:52:47:15
Rod
Like.
01:52:47:20 – 01:53:07:10
Andy
So in Hot Springs, Arkansas, we’re demolishing the mall except for Dillard’s and Penney’s. And we’re bringing in a national sexy tenant. You can’t say it here. They shoot me. Okay. And then a grocery store and a sporting goods store just. It’s going to look like a non mall, but we’re demolishing it.
01:53:07:12 – 01:53:09:28
Rod
Is it going to be more like a, like a power center?
01:53:10:00 – 01:53:10:17
Andy
We have powers.
01:53:10:17 – 01:53:14:25
Rod
Yeah. And I’m still kicking myself for not buying that multifamily asset there in that town.
01:53:14:28 – 01:53:18:22
Andy
So if you, you run the numbers let’s say you buy something at a 15 cap.
01:53:18:27 – 01:53:19:19
Rod
01:53:19:21 – 01:53:28:09
Andy
And you convert it to an open air center that would sell at an eight cap. That process now cost money to do.
01:53:28:10 – 01:53:28:24
Rod
Oh yeah. Sure.
01:53:28:24 – 01:53:39:09
Andy
A lot of cost money. So if the cost is less than that value differential then it’s a positive negative. Yeah. Yeah. So.
01:53:39:12 – 01:53:45:03
Rod
Sorry to interrupt but but do you, do you, have you full cycled? Quite a few of these steel wheels.
01:53:45:04 – 01:53:46:10
Andy
For a second. Several.
01:53:46:14 – 01:53:49:24
Rod
Okay. So would you like to hold on to them with that kind of cash flow? I would think, yeah.
01:53:49:24 – 01:53:52:06
Andy
Our target is five, six year hole. Well that’s.
01:53:52:06 – 01:53:52:18
Rod
It.
01:53:52:20 – 01:53:54:22
Andy
Our investors like, to.
01:53:54:22 – 01:53:55:10
Rod
Get their money back.
01:53:55:15 – 01:54:19:19
Andy
Some of them have gone longer than 5 or 6 years because Covid as Covid really slows down. Sure. Yeah. And, and so, 3D malls demolished means get rid of the middle, okay. Get rid of the inside are led by TJ, Max and Ross and five below. Gotcha. One is led by Hockey Arena. So in Janesville, Wisconsin, the city is opening in August.
01:54:19:19 – 01:54:21:16
Andy
A $50 million hockey arena.
01:54:21:22 – 01:54:22:07
Rod
City.
01:54:22:11 – 01:54:22:27
Andy
The city.
01:54:22:27 – 01:54:24:26
Rod
Oh, interesting. In your on your local.
01:54:24:26 – 01:54:45:17
Andy
Yeah. They took down this year okay. And it’s 125,000ft hockey. Two sheets of ice for the semiprofessional Janesville Jets hockey team and a 40,000 square foot arena for a conventions. And then as a result of that, retail was shrunk by 60%. And we’re going to do multifamily townhome.
01:54:45:17 – 01:54:47:06
Rod
Oh, you actually can build some multi as well.
01:54:47:08 – 01:54:48:13
Andy
We’re not going to build we’re going to partner.
01:54:48:13 – 01:54:49:17
Rod
We got you get your cash.
01:54:49:19 – 01:54:50:11
Andy
And and a.
01:54:50:11 – 01:54:54:15
Rod
Hotel. So talk about you said three strategies I think you did you do two.
01:54:54:16 – 01:55:21:14
Andy
Or just I. The third one was shrink retail and do something different. Redeem it. So in in Texas we’re doing a center where we’re taking out the middle. We are the city, is going to grant us between 7 and 10 million of equity now, and give us incentives, and they’ll subordinate the return to the return to it.
01:55:21:17 – 01:55:24:19
Andy
Our investors have to get a 20% return first.
01:55:24:19 – 01:55:25:06
Rod
Wow.
01:55:25:07 – 01:55:58:01
Andy
Before the city gets a reimbursement on their equity because they want the city wants us developed, and then our investors locally have worked with the local hospital district, and the hospital is going to open up between 50 and 100,000ft² of administrative offices in the rear of the demand mall. So we’re gonna have grocery, we’re going to have office, office, off price sporting goods and, restaurant and, and hospital use.
01:55:58:04 – 01:56:02:09
Rod
Do you, do you do a lot of percentage leases or are they you don’t want.
01:56:02:09 – 01:56:06:15
Andy
To do percentage leases, but if you’re in a poor leverage situation.
01:56:06:17 – 01:56:07:23
Rod
Okay, okay, I’m.
01:56:07:23 – 01:56:08:00
Andy
Going to.
01:56:08:02 – 01:56:10:15
Rod
Explain what a percentage leases okay. For me because it’s never.
01:56:10:15 – 01:56:13:14
Andy
So let’s say somebody is paying $100,000 a year in rent.
01:56:13:14 – 01:56:14:21
Rod
Right?
01:56:14:24 – 01:56:31:24
Andy
I’m going to leave if, I’m going to leave unless you put us on 6% of sales. Therefore, they know that that 6% means they’re going to be profitable. Okay, okay, okay. But you don’t have a fixed rent. It’s variable. It’s sales go up, you make more money. If they go down, you make less money.
01:56:31:25 – 01:56:37:21
Rod
Gotcha. Gotcha. Interesting. Okay. So you just do straight leasing of flat mount and that’s.
01:56:37:22 – 01:56:44:28
Andy
One of every leases. Negotiate it. Sometimes you get a base with above a certain you get a percentage of that.
01:56:44:29 – 01:56:47:16
Rod
Okay. So you do it. So you just do some percentage in that.
01:56:47:17 – 01:56:53:03
Andy
Some are pure percent, some are base with a percent. Okay. If they hit it out of the park, we get a piece of the action.
01:56:53:03 – 01:57:07:00
Rod
Gotcha. Yeah. Okay. Okay. What are some of the problems you encounter? Owning retail centers? It will give me you some doozies. You know, some some. I call them seminars. You know, where you get your butt kicked? Or some things you’ve encountered.
01:57:07:00 – 01:57:12:29
Andy
Yeah. I think you have to be very careful about the physical part of a shopping center. Okay. Particularly the roof.
01:57:13:01 – 01:57:15:06
Rod
Yeah. The roof? Yeah, with the roof. Because.
01:57:15:09 – 01:57:37:13
Andy
Yeah. You want to make sure that the roof is viable. Gotcha. Okay. And, number two, you want to make sure that the market is not too small. Yeah. So that there’s not enough absorption if you have vacant space. Gotcha. So there are some markets that simply don’t have an A central driver. They don’t have a major hospital.
01:57:37:13 – 01:57:49:22
Andy
They don’t have, fortune 1000. They don’t have a university. They don’t. Yeah. We’ve got tourism to some something like New Orleans has got a lot of that right. Tourism, it’s got major companies. Yes. Okay. It’s got all that.
01:57:49:26 – 01:58:08:16
Rod
Okay. Okay. So I know you like to educate investors and I you know, we talked about before we started recording that, you know, you want investors to think about other asset classes besides multifamily or some of the other asset classes. We’re doing senior housing now. We’re doing self-storage. And some other things, mobile home parks.
01:58:08:16 – 01:58:13:23
Rod
But talk talk about why, you know, well, how investors should look at retail as well.
01:58:14:00 – 01:58:40:02
Andy
Look, I believe, rod, that investors should be in residential in some form or in multiple forms. Okay. It’s logical when they’re ready to diversify into something else. They should look at retail for the reasons that I talked about. Yeah. There’s positive supply, demand supply dynamics. And there’s no new no new product. And all these companies are wanting to grow.
01:58:40:09 – 01:58:42:11
Andy
And you’ve got this issue of positive leverage.
01:58:42:11 – 01:58:47:07
Rod
You know, it’s not an issue. It’s a you’ve got this exciting yeah, component of positive leverage.
01:58:47:07 – 01:58:52:05
Andy
Right. You know, on whether whether it’s an open air center or whether it’s an enclosed mall.
01:58:52:07 – 01:59:03:17
Rod
Now I love it, I love it. Well, Andy, it’s been a real pleasure. I’ve I’ve really enjoyed this a ton because we’ve never talked about it on the show. And, it really looks like you’re doing some amazing things. And I appreciate you coming down here for this.
01:59:03:17 – 01:59:04:11
Andy
It’s been a pleasure.
01:59:04:13 – 01:59:05:00
Rod
Oh. Thank you.
