Billion-Dollar Real Estate Broker & Opportunities Post Pandemic - Interview With Gary Stache

This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and interview successful investors. All right, welcome to the Invest Like a Billionaire podcast. I am your co-host Ben Frazier and joined by co-host Jim Maffuccio on the line here. And we're really excited about this episode. We've got a great guest today, Gary Stasch, who is an executive vice president at CBRE and has been in investment sales for over 40 years and represents institutional investors as well as individual individual 1031 buyers. And we're really excited to bring him on to kind of get his background and perspective on what's happening in these different sectors of real estate. And so we're going to dive specifically into the retail sector as well as the office sector, as they've both been very impacted by COVID and want to understand what's going on there, what are opportunities happening, what's really, you know, pull back some layers there. But A little more context on Gary's background. He's a 38-time top 10 producer in the Newport Beach office, which is one of the premier offices at CBRE nationally. Since 2015, his team has been involved in over 270 investment transactions totaling more than almost $4 billion. And Gary has also won the Lifetime Achievement Award. So this is a very prestigious award given to one individual per year that's really considered a true legend in the CBRE world. So, Gary, we're super excited to have you on and really excited to kind of peel back some of the layers here. And before we kind of dive into some of the specific questions around real estate, I'd love to hear more on your background. How did you get into, into this world? And you've been doing it for a while. And so what's, what's it been like and what's it like now?

Well, I started a long time ago.

Obviously, I wasn't planning on doing it.

I was with IBM at the time as a salesman, and from there I decided, you know, I think I can make more money in commercial real estate, and went to work for what was considered the IBM of real estate, which was CBRE, and the rest is history.

I started in leasing, then I worked for an industrial, then I ran the office department, but all through the process I I'm a numbers guy, so I gravitated toward, towards investments. So, I've been doing investments for many, many years. And we ended up, our team started the private client group, which is sort of working with private investors nationally. That sort of took off. I don't know how many teams, there's probably 100 and something teams now within our company. And it's now sort of all over the industry. And more recently, recently in my mind, it's the past 5 years, we've always represented investors, whether it be institutional or private, but we've been working a lot with 1031 exchange buyers. And typically whatever they're selling, they're trying to avoid taxes, and they're looking all over the country for all different product types. So, we exclusively represent them in anything from office, industrial, retail, apartments, storage. So, we're pretty well versed at that. You know, we've, you know, our general investors are got usually $5 million. I mean, we're working with a group now that's got $96 million in cash. So, it goes the whole gamut. You know, I can, you know, if you would like me to talk about, well, I guess what I'll start with is every product has a cycle. So the cycle that we're in now, industrial and apartments are what everybody's looking for. So what that means is if everybody's looking for it, they'll pay more, which means lower returns, lower cap rates.

Yep.

So those two product categories are right on the top. And today, if we're looking at an industrial property, there's 15 or 20 offers and it is a catfight. Right. Same thing with apartments. It's just everybody wants it. The next thing they're looking for, generally speaking, is net lease retail long-term credit, because we've got probably 40% of our buyers today are selling apartments. They're tired of dealing with them. And a lot of the folks are older. They just want long-term stable cash flow. So, the logical thing they gravitate to is investment-grade credit, long 10, 15-year leases. The problem is everybody and their mother, that's the next hot item. So, if you, to give you an idea, there's give or take, 100 to 200 properties a year, excuse me, a day coming on the market across the country for all the different product categories. And if there's a net lease property coming on board, like, you know, if it came on today, we'd have offers in tomorrow and there'd be 5 or 6 offers and it's gone in 3 days, literally. So, the net lease retail space is extremely competitive right now. So that leaves the areas where there's opportunity, which are on the bottom of the cycle, which would be office and retail, which is what you mentioned, which was a good conclusion on your part because that's where the opportunities lie. Not necessarily, you know, you're trying to buy at the bottom of a cycle, not at the top, right? That being said, I'm going to mention one thing on industrial. Is for the first time in history, uh, industrial properties are leasing at higher than asking rates all across the country.

Really? What's driving that?

Whatever—

what's driving it is e-commerce. So e-commerce, for every— not sure, I just heard this the other day— but for every certain square footage or product that's ordered It's like 4 times the amount of space needed for storage, which is industrial. So, the vacancies across the entire country are under 5%. Wow. Some markets are like 0.2%, not even 1%, it's 0.2%. It's basically nothing's available. So, as a result, the rents on industrial are popping up. Pretty much everywhere.

Right.

Gary, it's probably more, you know, local and granular than this, but regarding that statement of, of the vacancy of, of industrial property, would you say that they're on kind of a regional basis? Are there the regions where it's gonna be more likely to be a little higher vacancy versus the, the regions that are super hot and you can't find anything? Or is it pretty much spread across the board?

Pretty much spread across the board.

That's it.

Most of the institutional players like the big major markets, but they're getting priced out. There's too much competition. So now they're going to second-tier markets. And instead of going to big box industrial, which is 500 million footers, they're paying cap rates in the 3.5 range, which is absurd.

Can you just give some, some context for that number just in the kind of secular cycle here? And, you know, 3, 3.5 cap rate, I mean That's very low, you know, obviously. But even in the context of the broader cycle, I mean, where was industrial at 10 years ago?

5.

Okay.

Wow.

Maybe, maybe it's 6. I mean, I can remember back when I was starting, it was at 10. Wow. 9 or 10. So it is at an all-time low. Right. And debt is also at an all-time low.

Sure.

So I can get industrial debt at 2, in the high 2s, interest only. So, it sort of works. But if inflation takes off, which it's going to, and the, you know, they start raising interest rates to control inflation, that's going to move the cap rates up. Real Estate 101, or excuse me, Real Estate 101 is going to move interest rates up. So, the Fed will move the interest rates to counter inflation. Interest rates go up, cap rates have to follow. So, we don't expect it to be at these cap rates for that long only because if inflation takes off, it can't. It'll pull the cap rates up.

So, are you seeing much opportunity in the industrial space or are you kind of saying, hey, this is yellow flags with the level of competition and cap rates?

No, uh, there's lots of folks like it. They— the reason they like it, you know, I'm giving you investment-grade Amazon cap rates. You're generally at— if you're not at a big box, call it 500 or a million-footer, you're going to be at 4.5 cap rates in California, 5 everywhere else.

Got it.

So I can— if I can buy a deal at a 5 or a 4.5 and borrow on, let's call it a Class B, which is 24-foot clear, not yet so far sprinkler, not 32-foot high, then I can get 4.5, I can get 3.5 interest only debt, I can cash flow 5.5 if I'm putting 50% down.

Okay, got it.

So that's sort of the way industrial works. The— in industrial, the other opportunity is industrial incubator, which are real small tenants, like call it 1,000 to 3,000-foot tenants. So, you can buy those at 5 caps and they've held up really well even during COVID So, a lot of people like that, but not a lot of tenant improvement rollover costs. They're pretty sticky tenants and, you know, people like industrial.

Yeah.

Even though the cap rates are a little bit lower because the vacancy is so low, everybody's expecting the rents to pop. Really quickly. So that'll make up for some of the cap rate compression that we're going through, right?

That's— yeah, that's awesome. I'd love to segue a little bit into kind of what you're saying is maybe the more, you know, opportunistic areas with, with office and retail. And even taking a step back with, um, especially retail, where there's kind of been this, um, understanding that it's been in secular decline, you know, even pre-COVID, you know, just because of e-commerce. And, you know, that's taking a lot of the market share away from the smaller retailers especially. So where do you kind of see, you know, what were the, the trends that we were seeing pre-COVID? And then, you know, what was the impact of COVID Obviously, you know, a lot of the, the retail had to be shut down. You know, now it's starting to kind of come, come back up, and a lot of them didn't make it. But what, what do you kind of see, you know, the, the first part here going into it and then kind of coming out of COVID Where are we seeing the opportunities?

So on retail, it was sort of especially the anchor drug, call it an Albertson or a Publix with a CVS or whatever. You know, we were in the, I guess you could say we're probably in the 5s cap rate range. And, you know, everybody thought, you know, these are safe as can be. And then, you know, you could get a little bit higher yield by going to retail strip centers. So, the big thing I, you know, I was so sold on, I go, you know, I like retail strip at the time because I could get better returns. And I, you know, it's internet resistant. So, you're not fighting the e-commerce and that was the pitch. But nobody figured COVID was gonna happen.

Right.

That came out of nowhere. So, when that happened, the interesting thing is there are certain states that were a little bit more aggressive, California being one.

Sure.

Where they basically closed our entire state and it's just opening up. So what happened with COVID was the retailers got hit pretty hard and the office got hit really hard.

Yeah.

So on retail, uh, what we're finding is that you can buy a retail anchor drug at a 6 cap all day long, 5, maybe it's a 5.75, and you'll find that the best located anchor drug centers that are, you know, they're doing good sales, you know, generally is $25 million or greater. During COVID everywhere but California, Like, if you go to Tennessee, as I was mentioning earlier, they don't even know what COVID is. I mean, there's nobody wearing masks, everything's open. You know, the first question we always ask on a retail investment deal today is, how did all the tenants do during COVID And if it's an A-located property in an A market, they all paid rent. Maybe they lost a month or two, they added it on or something, but they're all doing well. So, what happened was, is retail and office basically got painted with a black brush because of COVID Everybody bailed out, cap rates went up. What I used to buy at a 5%, I'm now buying at a 6%. So, it's a completely inefficient market.

Interesting.

So, you can get really, really good deals. And on an— I buy at a 6%, I can get a 3.5% interest only loan.

Right.

That baby, that baby's cash flowing. And generally, uh, 50— yeah, it depends on the deal— 15 to 50% of your income's coming from the anchor, uh, and then you get— and so you have stability, but it's long and flat. And then the balance of the tenants, the smaller tenants in the center, they sort of keep up with inflation. So you get the best of both worlds. You get credit long term, and you also get the ability to keep up with inflation with the little guys, right?

Right.

So that's retail. Great returns, great debt.

And what, what about retail where there's not a national anchor tenant? Is that something you'd stay away from? Is that, you know—

oh, I love them. Yeah, I love them. We just wrapped— well, we're repping a ton of them right now that, um, they're looking at strips. And as long as it's in an A location Yeah. They're all paying rent. And we just had a group, I think we bought 3 strips and I think the lowest cap was a 6.5, the highest was 7.75. All of them doing, all of them doing well during COVID The guy on the one that was 7.75, it was like, holy smokes, he's cash flowing a ton on tenants that are in a great center with tenants that were all doing great. Nobody missed a payment during COVID it's giant returns. So, I love strips. A lot of people, you know, the problem is everybody's going with the herd and the herd is retail's black brush, I'm out. Institutions have generally been out. So, it's slowly coming back. You're sort of at the bottom of the curve coming up.

How does retail perform in this more secular, longer-term trend of e-commerce taking more market share of consumer shopping? Does that hit a certain point where it slows down and it stops and physical brick-and-mortar retail will always retain a certain portion of that? Are we getting close to that point? Are we still a ways from that point? How do you view that?

Good question, and I don't have an answer. I can tell you that In the markets that are open, the retailers are doing just fine.

Yeah.

You know, people like— if you go out today, you'll find that there's a lot of people shopping because there's a lot of money that's been pent up. And yeah, they are doing that. My two cents, for what it's worth, people still like to shop, right? And I— and, you know, you start going to restaurants you know, you're not going to order out on restaurants, for crying out loud. Who wants to do that? I mean, everybody's out and you go into the stores, there's people in there shopping, spending money that they just saved up for the last year and a half. So, if they weren't doing well, I mean, we're coming right out of COVID now, and if they weren't doing well, you might have an argument, but Everybody seems to be doing pretty darn well and the stores are full and they're doing, you know, market, you know, they're doing fine. So, yes. Is it going to impact it? Absolutely. But is it going to take it away? I don't think so.

Right. Yeah. What about office? Talk about that a little bit. You said that was hit even harder than retail. Yeah.

Oh, so office, I'm steering— I'm telling everybody just steer clear for a while because the problem with office is when you look at them at all of the markets, everybody looks at vacancy, right? So the problem that's occurred, which everybody knows is I'm a living example, is we've been working out of home with our own setups for a year and a half. So I like it. And there's a lot of living room.

That's your living room behind you then?

Uh, no, this is actually my in front of my, where our office.

The magic of technology, right?

But like we have 3, 4, 5 designers on our team designing, you know, our, they all wanna work from home. They're more efficient. It's like, I don't care. You get it done, fine. So what's happening is there are people that like going into work. My partner loves going into work 'cause he's got 2 little rugrats at home that drive him crazy. Crazy. And he just, you know, he can't wait to get out of the house. So, he loves being in there. But I can do way more on Zoom calls. I can do twice as, 3 times as many calls without having to drive all over God's green earth. And so, I get more done at home and there's nobody bugging me all day. So, the result is that sort of happening and you're reading about it all over and the tech companies are You know, they're allowing people to work from home and then they're doing satellite offices closer to their homes. So, everything is changing. So, what's happening is when you look at the vacancy numbers, they look fine.

Right.

Everybody's sort of still propping things up. So, the problem is when you look at the availability numbers, that includes sublease space. They're way up. They're almost to 19— not there yet, but they probably will be to the 1990 levels.

Okay.

Wow. So, our vacancy like in Orange County is 12, but the availability rate's closing in on 19. So, the— what's going to happen is it will sort itself out. People are still going to need office. But there's not enough pain in the industry yet. I think rates have got to— what rates are coming down. So as that availability goes up, rates come down. Leasing rates, I mean, lease rates come down. At least—

Gary, let me ask a question that maybe some of our audience would be, you know, just to kind of drill down a little deeper on that availability versus, uh, vacancy. So, uh, there's functional occupancy and then there's actual you know, on-paper occupancy.

Is that what this comes down to?

Something, something doesn't show up on the rate as vacant until they've left the building? I mean, they're not paying on a lease anymore, or how does that happen?

That's exactly what it means.

Okay, so there's all these offices that there's no human beings in, some of those aren't considered vacant because the lease payment is still being made?

Absolutely. Okay. All right, very deceiving. Yeah. Wow, very deceiving. It's the availability rate that you need to be looking at. So I think there's going to be a lot more pain before there's— it sort of sorts itself out and equilibrium happens.

So, you know, maybe it's 6, 8 months or a year.

I don't know when the pain's going to hit, but it's going to hit.

Do you see some repositioning opportunity in, uh, vacant— some of this office space is— it's never coming back. I mean, I, I don't think COVID created this, this quote, new normal, but it exposed an issue that was already there, which you really touched on. I've worked from my home for you know, on and off, mostly on for, you know, over 30 years. So this is not new to me. But I've always wondered why companies want to pay their people to sit in 45 minutes of traffic each way to go sit in an office building, where there's very little, you know, human interaction needed on a daily basis, other than a meeting here and there. So I've kind of thought this was, this was a long time coming. And I think COVID proved that a lot of people can be more productive actually working from home or at least partially working from home. So, you know, I don't think this is something that's going to return to normal like the restaurant business is returning to normal. So, are— do you see any repositioning of some of this office space as a potential investment play for somebody that's a little entrepreneurial?

Very creative thinking.

The answer is yes. So, the way it's being repositioned are If generally the office has pretty decent parking, and if you have single-story office, then you've got a lot more, a lot more parking area. So we just had a situation where darn office buildings got torn down, $200 a foot land value, so they can put up an industrial building.

Go figure.

So, uh, the other thing that's been happening is they're converting— they're knocking them down, going residential. So those are the two areas, or they're taking an existing building and putting residential in it if it's a, you know, a 3 to 10, 20-story building.

So the answer is yes, but not quite there yet.

I think what's going to happen— and there is synergy, you know, where you have to have collaboration and, you know, it helps to be together. I heard the other day, a while back, that, you know, for the guys that have been around like us forever, you know, we sort of have our clients. We're just sort of, you know, we're doing our thing and don't need a whole lot of collaboration.

We're just doing our deal. So we don't really need to be in the office, right? So, uh, you know, we're not training anybody up anymore. For the most part, our teams are rolling. Everybody's doing what they're doing. So the— we don't need to be there.

The younger people, they sort of like it sometimes because they like the collaboration and they need to be trained and that.

So there's sort of a different— and like groups that techies that need to, you know, they're collaborating over whatever they're collaborating over, those are the areas that there's, you know, they need to be there.

So it's right, everybody's frankly trying to figure it out.

A lot of the headlines I've been seeing is, is a lot of bigger companies are doing flex, um, work from home and office. And so you kind of have the option, a few days a week to do home, a few days a week come to the office. So Do you see these larger companies using coworking as kind of a way to execute that, or actually they'll just wait for the lease rates to come down and do it themselves? What do you see?

When you say coworking, what are you referring to?

Oh, thinking of like a WeWork or something like that, where it's a third-party company that comes in and leases out on a shorter-term, smaller spaces.

Yeah. They're looking at that and they're— everybody's looking at different things. They're trying to figure out, well, how many people? Because if you think about it, if a 30% is not being used, then I can shrink my space by 30% or whatever the number is. Then you start doing that in your head and doing the math. I'm like, oh my gosh, that's an awful lot of space coming back. Where are the people— where are the tenants coming from for that? Right. That's why I'm saying the availability rate is going to really go up and then the vacancy rate will follow it. That is going to happen. I just don't know how much is going to happen there.

Yeah.

Talking 15 to 30% space giveback. That's, you know, you hear that all over the place. So I don't know.

We don't know the answer because everybody's right in the middle of trying to figure it out.

Right.

Now, you did not mention— you mentioned on the front end that it's part of your wheelhouse. But as far as describing the cyclical nature of these different sectors, I know a lot of our audience is also real interested in, as are we, interested in storage. Where does it fit in the— where is it in the cycle right now?

It's— we've got a guy in our company that just focuses on storage. Cap rates are 5s. People are lined up to buy it. People are getting older, so everybody needs to store things. So the only issue with storage is, you know, it's sort of a business because you have to have a manager on site most of the time. So it's a little bit different product here, product type. You know, all the other ones you can hire a property manager and you're— they sort of do the work. But it's not a business business. Storage is a business. So the cap rate demand is very strong and the cap rates are in the 5 range. And there's— when you put the offers, you're trying to chase them, you know, they have more offers than, you know, they'll have 10 or 50, you know, 5 to 15 offers on a property. So storage is a good product type. It's just a little bit different because you have person that you're— that's an employee.

Gary, I know you also focus on medical office. How do you view that as a different, you know, from standard office, and how is that performing, and where do you see other opportunities there? Where is that in the cycle?

Good question. So I love it and I hate it. So medical office is doing very well. More and more people are getting into it. Institutions love it. Uh, cap rate-wise, a Class A is going to be 4.5, 5 cap, and these are basically 6s. There's been a restructuring within the medical field, and so you'll notice there was a lot of groups formed with the different health groups. So basically what would happen is you get a health system and they go, okay, we want to pull everybody in, let's form a group. It's better for doctors, the doctors come in, they join a group, and then they lease up 10,000, 20,000 feet, whatever the number is. So there's these groups that are formed and filled up these office buildings. So that's all positive. The other positive is doctors generally don't move. I mean, the doctors you've gone to, they've been there forever, and then when they decide they're done, they sell their business to somebody else and it stays there. So they're very sticky tenants, and returns are, you know, you're buying it at 6s and you're, you're assuming it's not single tenant net lease long term, which we can talk about. A little bit on the medical. That's all the good news. The bad news is if you get that 10,000-footer move out, you need to expand 75 or 100 bucks a foot for tenant improvements. That's $750,000 to $1 million in cost to retenant the building.

Wow.

Most people don't have the stomach for it. So frankly, I'm— and the other negative, not that I have anything against them, the doctors tend to be a little difficult to work with sometimes. And, uh, so you sort of have to go through that as well. So overall, I, I mean, I like the space. One of the issues that you face too is if you do lose a doctor, well then you got to find one. They don't tend to like to move, so then you have to find one. So if it's in an A location, if it's near a hospital, I like them. I like retail way better than medical, frankly. I just don't like the tenant improvement risk. I've invested in medical with in different properties and we've done really well. So it's, it's, it's okay.

But for a guy that doesn't want to have to look behind him and coming out of pocket with $75 a foot in tenant improvements, they'll probably tend to like other product types than medical.

Sure, sure. Going back real quick to a standard office and to Jim's point of repositioning, I saw recently where a kind of more vertical, multi-story office building was repositioned into a self-storage facility, which I thought was very interesting 'cause it looked like an office building, but it was, you know, whatever the self-storage brand of the building.

That's actually pretty darn good. That's a good idea.

Yeah, it's a good—

But they've gotta have the load capacity, so I don't really know what the load capacity is for multi-story storage. A lot of the storage, I mean, you'll see them all over the place. You look at a storage building, it looks like an office building from the outside. Sure, sure.

That's a good idea.

I just don't know, I haven't seen it done yet. Maybe it's been a good idea though.

Yeah, interesting. I'd love to kind of get your thoughts. You mentioned inflation earlier in this conversation and just would love to get your perspective on it. You know, you've been in this world for many decades, and you've seen lots of cycles. And like you said, as inflation potentially increases, the Fed may raise interest rates, which can increase cap rates, which would have a negative effect on a lot of real estate asset classes. So can you just talk about what you're seeing? Where are we at? I mean, from a broader perspective, I have a hard time seeing the Fed raising rates substantially for a long period of time, as that's really become their primary tool to you know, keep the economy from imploding. So what do you kind of see there?

I am the farthest thing from an economist as there is. So I don't even know if my input is—

the only thing I'm seeing that's sort of interesting is, you know, obviously construction costs, every other cost imaginable has skyrocketed because of COVID and the supply chain.

Right.

So I just read today, I think it's—

well, had to be the Wall Street Journal. That's all I read.

Lumber prices have dropped back down to pre-COVID levels.

Sure.

So I know it seems like inflation is taking off and it has because of the COVID supply chain issues.

But I'm sort of thinking when I see lumber prices drop all the way back down to pre-COVID levels, that maybe it's a little bit of a blip. I mean, people, I think they're making— they might be overblowing it a little bit.

Yes, it's gone up, but I think it's going to come back down to more manageable levels. I think it seems like it.

Lumber came back down that quick. I was reading the other day something else was coming down.

You know, you're reading about, like, we've got a client that's in the furniture business, they can't get anything because of every And car, I mean, it's just, you can just go through every category.

They can't get supplies, they can't get chips, they can't get, you name it, because everything's backed up. But as soon as that starts leveling back out, seems to me like inflation won't be as bad as everybody is projecting. I might be wrong. I don't know. Yeah.

Hey, taking a little bit different, uh, approach on this, I'd like to ask, okay, so let's say What is the effect? For instance, with apartments, what would the effect of going into some level of inflation be? Obviously, in general, because what you already described, cap rates are gonna, are gonna have to increase. But wouldn't net operating income also increase because rents are inflationary? So I'm just wondering, if I'm, if I'm looking into apartments, or I already own a building, I know a lot of our audience is probably probably multifamily is kind of a big deal. So what would the effect be on that asset class if we, if we hit some inflation?

I love apartments because I own a bunch of them, and, uh, I love them because they keep up with inflation, as do any, any product you're buying that has smaller tenants, that the, the rents are rolling, you know, within every 5 years they're sort of rolling up as inflation takes off. The answer to your question is absolutely anything that's got small tenants, apartment being one, they're, they're inflationary proof. I mean, yes, the cap rates will go up, but also the rents go up. That's why you're buying them.

You're buying them. The issue that you have is if you buy a Walgreens, for instance, as a 15 or 20-year lease with 2% bumps a year kicking in every 5 years, So every 5 years it goes up 10%.

And then after the 20 years, they've got 5, 4 or 5, 5-year options to renew at set rates. You do the math, things get a little dicey if you're getting out because you're—

the value of those properties per your thought right here is that they're sort of stuck. They've got long-term flat leases.

And if interest rates go up, they're sort of stuck and you got to cap the whatever the rate, the rental rate is, and it's sort of flat forever.

So if rates go up, you're going to start losing money over time where you're not going to have that with apartments or anything with a retail strip or anything with shorter-term tenants. Or term. Yeah.

Gary, what are you seeing? I know you represent a lot of 1031 buyers in just some of the rumblings of that exchange potentially being removed or at least limited, right?

Why are we all laughing?

I hear it every day.

So what's your perspective on that? One, do you think it's a reality that could happen? And two, if it is, how does that impact the market?

Well, we're hoping it doesn't go. We're hearing that it probably won't, but that doesn't mean anything. Obviously, CBRE is the gorilla in the industry. So sure, we're waiting for white papers or somebody to tell us because they got lobbyists and people everywhere trying to figure out what's going on, right?

So, you know, the last I heard, it was a 30% chance it might happen.

I've talked to other guys that with a lot of money— I thought we would know— the guy's got $900 million in cash in a trade.

Wow. And he, and he was saying that he had inside track and he didn't think it was going to happen. And you talk to somebody else and they go, well, I've heard that it is going to happen. So all I can tell you is if it passes, it will be so devastating to commercial real estate, it will be mind-boggling. Yeah, I don't even know what's going to happen to the investment. It's going to just put—

I don't know, it's just going to crush it. Yeah. So if it happens, well, I don't know what we're going to do because nobody's going to be selling anymore. Everybody's going to be holding.

Interesting.

So all that, all that value creation and wealth and everything that goes with buying and selling will just stop.

Yeah, just that simple.

Yeah.

Hopefully somebody in Washington wakes up and realizes what will happen to the economy if they do it, but who knows.

Awesome. Well, Gary, thank you so much for your time today. This has been very insightful, a lot of good nuggets to pull from here for our audience and for us, and I just really appreciate it. Any kind of final parting thoughts for our audience on, as they're maybe evaluating potential opportunities in retail specifically? Is this something you're very bullish on? What would you say to look for and maybe to be wary of? Just as kind of a final, final thought here.

It's the old adage in retail: location, location, location. So it's a little bit different with other product types, but in retail, if you're going to buy retail, just make darn sure that it's the best located property in the market and you will do fine.

Yeah, it's when you get into second-tier markets sort of off the beaten path, then you could get hurt.

You're going to get higher returns, but there's a lot more risk. I'd rather be in an A location than maybe pay a little bit more for a lot less risk and safety of cash flow down the line.

Yeah, awesome. Well, thank you again so much. This has been, been awesome, and I hope to have you back on maybe down the road and see what's happening in the future. So thanks so much.

My pleasure.