88: Passion With Joe McMillan

Foreign.

This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program, you'll learn about the world of commercial real estate and find out why it's one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

Welcome to episode number 88 of Real Estate Investing Live from New York. This is your host, James Nelson. I am principal and head of Tri State Investment Sales for Avis and Young. Thank you as always for joining the show. It means so much to me and now that I've been getting out and about in New York City, it's coming back to life and back out on the circuit. What's wonderful to hear from all of you who, many of you I've not seen for some time saying how much you've gotten out of this show, the lessons learned and the whole point of the show is to make you the best investor possible. I know you all are going to get a tremendous amount out of the show. We have joining us shortly, Joe McMillan, formerly from DDG, but he is going to be talking about the new investment platform that he has just launched. So you'll be hearing about that shortly. And I got to know Joe at least 10, maybe 15 years ago and what I really love is his passion and his attention to detail and design. He talks about sourcing the product for his buildings and all the incredible architects that he's worked with. And really he takes so much pride in the work that he has done. Also, a really interesting story for those of you who are in finance and looking to make the shift to real estate and really appreciate how he just jumped all in. So I know you're gonna get a lot from this. I also wanna tell you all that I'm now airing some of these shows, recording them on Clubhouse. If you haven't connected with me on Clubhouse, please do that as some of our future shows will be recorded from that app and you'll have a chance to ask your questions on the show. So I think it's a great opportunity to engage with the audience. So and lastly, if you have not already, please make sure and connect with me on social Media, James Nelson, NYC, either on Twitter, Instagram or LinkedIn where you can also send me your questions. So thank you again, as always. We're going to have a quick word from our sponsor and we'll get right back with that interview with Joe McMillan.

Hi, I'm Mark Rose, global CEO of Avis and Young the world's fastest growing real estate services firm. And we are proud supporters of Voice America. With over 5,000 professionals in 120 offices in 20 countries, Avison Young delivers local expertise in partnership with global reach. Because we are principally owned, Avis and Young prioritizes client success over shareholder profits through our open architecture. Our firm's experts provide value added client centric investment, sales, leasing, advisory management and financing services to clients across the office, retail, industrial, multifamily and hospitality sectors. Our culture is the bedrock for collaboration that enables each assignment to benefit from the collective intelligence garnered from a company wide database partnership performance. Learn how we deliver different@avisonyoung.com to learn more.

You are listening to Real Estate Investing live from New York. To find out more about James Nelson or Avis and young, visit avisonyoung.com now back to our show.

And now it's time for our investor spotlight. And I am thrilled to have with us today my good friend Joe McMillan, who I've known for easily over a decade, probably closer to two. And this is, I don't want to say breaking news, but just announced that Joe has launched Azure, an international real estate investment and development company focused on major American and European markets. Joe will serve as the Chairman and CEO and will run the newly established company from offices in New York and Paris. Under his. Joe has united his interest in DDG, which he founded in 2009 with 2 million square feet of real estate developed throughout the US with French real estate investment firm GS Invest, a privately held company with over 40 years of experience in a portfolio in excess of 3 million square feet. The formation of this new company enables Joe to apply his groundbreaking approach to real estate investment on a global scale. Azure's portfolio encompasses dozens of assets throughout the US And France, which include mixed use industrial, office, retail, hospitality and residential. Wow. Okay, we're going to have a lot to talk about today. So, Joe, thank you so much for joining. Looking forward to this discussion with you.

James, thank you very much for the introduction. That was, that was quite an introduction. I'm very thankful for that. And I believe we probably have known each other probably around 15 years. I knew you before I started DDG when I was still, you know, back in my hedge fund days, you know, looking at deals and you showed me various properties, actually ended up ultimately buying a property from you. And you actually introduced me to one of the law firms that we still work with today. You are absolutely one of the first people I met in commercial real estate and you are definitely the first commercial broker I met in the business and so here we are 15, whatever, years later, still doing deals together. So I'm happy to be on today.

Oh, that's awesome to hear. And yeah, I mean, it's just been amazing to see your success and the incredible projects that you've built here in New York. And now seeing this latest announcement going global, it's just really, really exciting. So Joe, I know you got a really interesting story, so maybe tell us a little bit about your background, tell us where you grew up and kind of how you ended up initially into the hedge fund world.

Yeah, so I'll go from the beginning. So I grew up in a small town called West Grove, Pennsylvania, which is rural Pennsylvania, southwest of Philadelphia. 1800 people, one traffic light, part time police, volunteer, fire department, et cetera. And when I was very young, I enjoyed drawing buildings. And so I used to sit around, I used to draw buildings, draw houses and used to dream of building them. Graduated on the building buildings out of popsicle sticks. When I was old enough to ride a bike, I would ride my bike a couple miles away to where they were building some new stick built subdivisions and kind of walk around the houses and check them out. And so that's really where the bug started. And fast forward from there. Left that small town, spent three years in the army and most of that in Europe, and then came back, went to college, University of Virginia, graduated, came to New York doing mergers and acquisitions, private equity, hedge fund business, did that all for about a dozen years. And I was doing real estate on the side and I was really enjoying, some people call it a side hustle, some call it a passion. I really enjoyed the real estate and I love all the Excel spreadsheets, love Bloomberg terminals. I'm staring at one now, you know, got CNBC up on the screen. But I was excited and passionate about the real estate. And so I thought, okay, what's the right thing to do? I was watching, you know, the cracks in the market. This is kind of, you know, Fast forward to 2007. You know, we had the housing crisis. You know, you saw what happened with aig, what happened with Lehman Brothers, et cetera and all this. 2007, 2008, and left the hedge fund I was with and started, started DG and was kind of off to the races. That kind of gave you, that gave you kind of the quick from zero to say, you know, 10, 12 years ago. And from there, you know, it's, it's been, it's been a fantastic run, fantastic ride and I'm very excited Again, to be here with Elaine, tell you about, you know, what we're doing with the Xor and talk through any of the DDG stuff, and we can go from there.

Well, great. Well, I definitely want to retrace their steps a little bit. I got to ask you about that decision to go into the Army. So did you think early on that, you know, this was going to be. You were going to have a military career? Was this kind of a way to get out of that small town? I mean, what. What prompted you to do that? What were those years like? And tell us about that experience.

You know, like I said, I grew up in a very small town, and probably not unlike a lot of small towns in America. You know, there aren't a lot of paths out. Often, you know, like, you know, you. You kind of stay and, you know, I'd say mainly a handful of us actually, you know, left. And I have most of my family, my friends, et cetera, are still there. And talked to, you know, family last night and talked to, you know, friends as recently FaceTimed them on. On Sunday. So, you know, I just felt like I wanted to go and see new and different things. I mean, it was an amazing place to grow up. I loved it, but I didn't really know how I was going to pay for college, didn't know how I was going to get into college. You know, came from what was not an affluent background. And, you know, my father had gone to eight years in high school, the only one in his family had ever gone to college. And so I was looking around at my options, and I thought, okay, the military, you know, the military had, you know, had a calling. And my father was in, my two brothers had been in, uncle had been in. And I felt like that would give me a chance to see various parts of the world, teach me discipline and enable me to transplant myself to somewhere around the world. And on top of that, at the time, they offered the GI Bill, which afforded me the ability to go to school. And so I took it and spent time in Oklahoma, time in Texas, multiple years in Germany, and got out and got a degree in commerce from the University of Virginia, and all compliments of the US Government. So I said an extreme debt of gratitude to the US army and the US Government for allowing me to get the education I got. And I wouldn't be talking to you here today if it wasn't for that organization.

That's wonderful to hear and you to give them that credit. But I'm sure also, I mean, to get into UVA especially out of state. That's, that's no easy feat. So I'm sure along the way you were probably a good student. Did you excel in any subjects in particular? Ultimately ended up in the hedge fund world. I've got to imagine you're pretty quick with numbers.

I think I'm pretty good with numbers. And I also have a very robust memory. I can see or hear things once and remember most of it. So I'd say my memory has served me well. And I'm pretty adept at math, so those two definitely help.

So after college, you said you went into the finance or. Tell us a little bit about the hedge fund world, what you were doing there.

Yeah, so when I graduated University of Virginia in 1996, I knew I wanted to be in New York. I had visited, I'd only visited New York once prior to moving here. I came up in February of 96 for a job interview in New York and I just loved it. I mean, as crazy as it was, there was a massive snowstorm, roads were blocked. You know, you're trudging through, you know, trudging through, you know, huge piles of snow and dress shoes and a long trench coat, trying to get your job interview. But I just knew I wanted to be here. I could feel the energy of it. Walking through Times Square, Central Park, I just knew it was the place I wanted to be. And I got that job, thankfully, and I been in New York ever since. And I started doing mergers and acquisition as an investment banking analyst. So anyone who's ever done that career knows that it's 100, 120 hours a week, lots of nights, till well past midnight, 4am, all nighters. And you do it and you kind of grind it out and you pay your dues. And I paid my dues as investment banking analyst and I was promoted to associate and then vice president and then principal. And you know, gradually over time, you know, you kind of, you know, the hours subside a little bit and you get a little bit of experience and you, you know, you learn and you keep going. That was my formative investment banking years. When I first moved to the city for like the first, probably the first half, half dozen, six, eight years. I was doing a lot of mergers and acquisitions.

And what set you apart? Because I'm sure everyone else is working long hours, but that seems like a pretty good career trajectory. So how did you find yourself up in the principal spot?

No, I think oftentimes in life you need to be, you need to be able to show up. And I think That I was very good at showing up, doing what I was asked to do, you know, working really hard. And I had some great mentors along the way. I had people who, you know, took me under their wing, who, who taught me, who, you know, guided me, gave me career advice, you know, told me, you know, things that, you know, I should focus on to improve myself, things that I should probably do a little less of. And I really owe it to this, a series of mentors that I had along the way. I mean, I think, you know, lots of us can work hard, but I think I was afforded some great opportunities by some great people and had they not done that, I could have taken a different career path. But I think mentors pick you and you pick your mentor. And I think those are very important decisions. And I think that I'm sure that you probably had mentors in your career. I know back in the day you worked for Bob Nackle and I'm sure others who you might not be sitting here today if you hadn't been mentored by them.

No doubt. There's so many people that I'm grateful to who gave me the opportunity, the time. But I really like how you, I'm kind of paraphrasing here, but mentorship is really a two way street. You know, I think, you know, it's. Mentorship is not just what you can get from somebody, but it's also what you can give in return. And those incredible relationships that we develop over time. So that's wonderful to hear that you realize that. So making that switch to investment banking and then going over the hedge fund space, what like, I mean, did you ever think at some point, well, hey, I'm ride out the rest of my career here? I mean, at that point it must have been, you must have been in a pretty lucrative situation. So was it risky jumping over to the, you know, the hedge fund world or was that, did you see a lot more upside?

Yeah, you know, I think it was risky. And I also saw upside. I, you know, from the mergers and acquisitions platform I was at. We started a private equity business and I was one of the initial members of that, that team who started that business. And I was there for several years and then I was lured away by a recruiter. I got a call to go work at a firm called Oxif. And I was lured away to go over there and help them build out a private equity business doing a lot of energy investing. If you look at my career, I'd say half my career has energy and half my career has been spent in real estate, you know, and I have, you know, they're very similar aspects to both those businesses. And we had more time. We could go into that, you know, some other time. But I, I took the chance, I took the leap, I went over and I worked for, for Dan Ock for several years. And, you know, it was lucrative. I mean, the M and A was lucrative. The private equity is lucrative, you know, as with, you know, Oxif, you know, that was lucrative. And it was a. To, to kind of step off the cliff. Cliff and start your own business, you know, as I did when I left Oxif, you know, started DG 0809. You know, it's, it's, it's not for the faint of heart. And I will say that, you know, starting a business, you know, you've, you've started, you know, businesses yourself, it's, it's probably 10 times or more work than you think it's going to be. It takes more hours than you think it's, it's going to take. And the best business plan in the world is wrong because, you know, you, you put down what the business plan is, but it never works out exactly like you think. Either goes faster or slower, zigs or zags. And you got to be prepared to deal with the unexpected and you got to kind of roll with the punches. And I did that. And it was scary. The first couple of years, I mean, when you, you know, it took me 21 months from the time I left the hedge fund to the time I closed my first deal. And, you know, that's a long time to be out there pounding the pavement looking, looking for a deal when you're starting a business. But, you know, that was.09 and there were no deals happening. And then when, when I finally closed my first deal, you know, we, we did a deal on Bond street, which was the only condo deal was announced, I think, in all of 2009. So, you know, we timed it right and you know, we assembled the right team and we were able to, to make a go of it and we're very successful.

You know, I knew right away that you meant business, that you were going to do this. And, you know, I don't think you were trying to hide the fact that you were, you know, new to real estate, but I mean, you came in, you know, with a real force and I mean, I could very early on your attention to detail, design, you know, even with the branding and everything that you rolled out right from the start. So, I mean, the perception and I'm sure this was, you know, intangible, but it, but it's, I mean, right from the bat, before you'd even amass the portfolio, you kind of project, you know, this huge, kind of larger than life corporation. So was that intentional or was that, you know, part of.

You know, we had a business plan and we executed on it. And so I, like I said, you know, business plans, they never go, you know, as you expect. But I would say that part of the business plan, the marketing, the branding went extremely well. We had a, you know, a very strong team in place and you executed. We retained a fantastic PR firm. We had great in house marketing, in house design expertise. And I also think it was a time in the market where the market was very choppy and there was a lot of fear in the market. A lot of deals had gone south. And what most people don't know is that when DG was started, our first five or six deals were all distressed. We were great at the marketing and branding and everyone focused on the pretty pictures and the renderings and the beautiful details and the facades and the plantings. But our first property acquisition was a property was in foreclosure. Our second deal was a deed in lieu of foreclosure. Our third deal was REO out of a bank who had taken it back from the prior owner. Our fourth deal was a failed auction. Our fifth deal was out of the Lehman bankruptcy. And so you don't brand that kind of when you're going out, you know, sell and sell in the image. But investors very much knew that. And that really resonated with investors. The fact that, you know, these were really deep value plays and we combined really deep value plays with the marketing and the branding and the aesthetics and it worked exceptionally well.

You know, I never knew that. And yeah, I mean, for sure that success cannot just be, you know, the. Brandon, there's got to be real substance there. And I've got to imagine for your early investors, I mean, they were taking a leap of, I mean, you hadn't executed on a real estate deal before and it was very clear that you had from the hedge fund world very deep capital backers from the start. So how were you able to get them to trust you and to back you when you didn't have that track record yet.

All of our investors to date, actually the majority of our investors to date have been personal relationships. And the very first investor we had was an ultra high net worth family out of the Northeast that I had been associated with prior to starting ddg. It was A family that had done business with one of my prior firms. And so there was a prior relationship there. And so there was a level of knowledge and trust between myself and various of the individuals over there, the principals that they were willing to take a leap of faith. But as I said, we were also buying very deep value. I mean, if you look at the, that deal made north of a 6X, the very first deal we did, and you know, when you're buying, beautiful project too.

I mean, very well designed. I mean, and you picked, I mean, that's one of my favorite streets in the city. So amazing to have a distressed opportunity like that that had amazing potential.

Yeah, I lived in that building for seven years post completion. I mean, it's fantastic building, you know, fantastic street, you know, but you can never pro forma 6x. You go into a deal thinking, okay, it's a, it's a 2.0 or 19 or 2. Two, you know, and your IRR is going to be high teens, you know, 20, you know, and 6x, you know, when the, when the stars align, the winds at your back, you know, those kind of happen. And thankfully, you know, that was a, that was a great, great inaugural deal. And you know, the second deal, you know, was probably like a 4X and yeah, sure was Jones right around the 4X and you know, like, and a lot of it's, you know, timing in the market. And again, we were buying, we were buying assets at very good prices. And you make a lot of your money when you're doing a deal on the buy because you can design the most beautiful building, you can have a fantastic marketing team, but if your basis is off, you're digging yourself out of a hole from the start. So basis is really critical going in any deal.

No doubt. There's only one thing you can't change about a deal, and that's where you bought it. And I've got to give a shout out to my parents, who are my most loyal listeners. They missed an episode yet. But they always say, James, when, when, when you bring up one of these real estate terms, you have to explain to the audience what it is. Yes. For my dad, this one's equity multiple is what Joe is saying is the amount of equity that he had in the deal, not the whole purchase price. When he's a 6x, he made his investors six times their money. That, you know, that that's what we call a grand slam, you know, walk off the field. Home run in our business. So equity multiple for a development that most institutions would be Happy for. What would you say, Joe? Two, two and a half? I mean, you were tripling expectations very early on, so I'm sure that pell you for future deals as well.

Yeah, and I think generally 2.0 is plus or minus where you generally want to be on a development deal. I mean, maybe you creep up to 2.0 if you can get north of that. I think it's very difficult to get north of that in a pro forma if you're using realistic assumptions. And I think oftentimes, if you look where the market is today, I think it's hard to get a lot of deals to even pencil out at that level because we've been in this flux period for the last year or so. But plus or minus, that's generally where the industry's wanted to be over time.

So, Joe, I got to ask you because, I mean, and I don't know if you done any venture capital investing. I've done a little bit funds and it's, you know, my experience is it's kind of, you know, either a huge win or zero, and you hope they kind of even out. But like in the, you know, IPO world, whether it's a, you know, a 20x or whatever, and now you hear people, you know, falling dogecoin or whatever it is where, you know, they're making 10, 20, 100 times, you know, in a matter of weeks just by, you know, kind of, you know, throwing money into this. But, you know, why? Yeah. What would you say to that? I mean, as far as, you know, the real estate returns, the risk returns, you know, do you feel those returns are risk adjusted?

I think, you know, real estate returns over time, you know, they revert to the mean. And I think returns revert to the mean in most industries, you might have a 6x on one deal and end up with a one and a half on another deal or another one and a half on two deals. And so over time, you're going to revert back to market. It's very hard not to. And I think that you can have some deals that do far in excess of that, but most of your portfolio, you're not able to achieve that. I mean, I wish we all could and we all do, but as far as some of the speculation, you know, of making, you know, 10 or, I believe you said 10 or 20 times your money inside of a week or two, that's pure speculation. That's tulips, you know, that's, you know, back, you know, however many hundreds of years ago, you know, the Tulip Market, where people are just speculating. You know, I have done some venture capital investing. I've done venture capital investing back as far as the late 90s, and, you know, it's. It's a very different business. And we've made a recent venture capital investment in a company called Whiterock AI, which is a software company that utilizes various different data to analyze property values and predictive values over time. It's a fantastic tool. We've utilized in some recent acquisitions that we've made, and we've been able to identify alongside Whiterock, some properties that we think we're buying at at caps that you're generally not seeing in the market. And we think we're going to increase rents 15 to 20% over time. And it's an exceptional tool and we're very, very happy. We're very selective about the VC investments we make. But I think that, look, Whiterock, it's a software tool, it's prop tech, it's ancillary to the real estate investing that we do. So there's a lot of overlap there and a lot of benefits.

Yeah. Well, not, not to go too far off topic, but, but I just listened Guy Raz and how I built this, one of my favorite podcasts. And I just listened to Rich Barton's story, who is the founder of Expedia and Zillow. So that's definitely worth a listen for all you out there.

So.

But Joe, let's get back. I want to get back to the, you know, ddg and you're growing that platform. And I got to say, I mean, every single project, I mean, the amount of pride, attention to detail, I mean, I'm thinking about the selection of materials. I remember you told me for your 14th street project that you imported Danish bricks. So, I mean, how did you. Is this something. I know you said at an early age you were drawing buildings, but was design just something that you always had a passion for? Is it something you learn? How do you figure that all out?

You know, I think I do have a passion for design. And back when I told you when I was young, I used to draw buildings, I thought I wanted to be an architect. But having later taken a handful of drafting classes thinking I would become an architect, I realized that it wasn't necessarily for me. And so I continued, continued down different paths of investing. I think I have a good design eye. I think I have a very solid design sense. And design is critical to everything we've done, and it's going to be critical to everything we do. Going forward, better design products are better received by the market. I mean, you can look at any number of different things. I mean, if you look at an iPhone, what premium does an iPhone sell for versus some other phones? Or if you look at a very well tailored suit, you know, what does that sell for versus, you know, something else or, you know, a nice pair of, you know, of shoes? I mean, it's just like we often identify, you know, you know, beautiful things, and beautiful things tend to sell at a premium. And so the thesis was that if we could combine, you know, deep value, good basis plays with intelligent conscious design that's both, you know, environmentally sensitive and friendly, but also beautiful aesthetically and gives people, you know, a sense of place, you know, that's very, you know, tactile, has a. Has a nice feel to it. We could outperform the market. And I think that that's. That's proven to be true. And we've done it very successfully for, you know, for close to a decade. And, you know, that was really, you know, part of the ethos and the thesis behind, you know, ddg. And we built a great team. We had strong designers and strong developers and strong, you know, construction personnel. And, you know, we were able to. To execute that. And I think you see it in the quality of the buildings. You know, you know, you and I, you know, are, you know, most. You're most familiar with the portfolio we have in New York City. We have a beautiful portfolio outside. You know, we've done multiple projects in San Francisco. You know, we have, you know, projects in South Florida. And you'll see threads throughout the portfolio. And I think that you never want two products to be exactly the same, but you want someone who's viewing potential buyer, potential resident, potential partner. You want them to see a consistency there. And I think that there is a thread that goes throughout all of our buildings, referring to the Danish brick. We've utilized that brick on multiple projects. Now here in the city, our design team, they were given the mandate to go find the most beautiful brick in the world. And they searched the world over, and they found the Petersen brick from Denmark. It's an elongated brick, 22 inches long. Each brick is cast by hand in a wooden form, fired in a kiln. And we actually flew to the factory that's been making bricks for five or six centuries now, I think from a mandate from the king of Denmark. And I've made bricks and, you know, so it's. It's an amazing process. And they're incredibly beautiful, and we use them on 14th Street. We use them on a project in Tribeca, and we're using them on Tower that we recently completed up on 88th Street. So they're, They're. They're unlike any other brick in the world. Wow.

Well, my dad's. I can already say this is going to be my dad's favorite episode of all time, because not only did I give him a shout out, but what. We're also Danish. So it's great to know that we make great bricks, but that attention to detail and really going out source the best product in the world just speaks volumes to your success. I would add one more piece, which is really the location. I mean, I've noticed that you really have a knack for finding these places that not just up, but they are the coolest spots people want to live. And because I was going to ask you about your national portfolio, and I don't know how much time you spend in San Francisco or Chicago or in Florida, but when you are new market, how do you decide, you know, if you've lived in New York, you know, at that time for years, knowing that either, you know, Noho or, you know, or Meatpacking was going to really blow up, I think was easy to see. But how do you find, you know, that next neighborhood when you're. You're breaking into a new city?

Well, yeah, I think it's a.

It's.

It's a multifaceted approach. I mean, if you look at San Francisco, we studied San Francisco for almost two years before we went into San Francisco. And we went in deep into one particular neighborhood. We went into Hayes Valley with multiple projects. We ended up doing four projects in the Hayes Valley, and we ended up doing a project in the Mission a couple blocks away. And so we went, you know, we studied. We studied it at length. We went in deep. And we also had, you know, good local relationships that enabled us to have, you know, confidence in our execution. If you look at when we went into Palm beach, same thing. We studied the Florida market for a very long time. We found a fantastic site on the ocean. We built the first oceanfront condominium on Palm beach island in almost a dozen years. And we're selling at prices that, you know, the island hasn't seen. There's no comp on the island on the condominium side selling at this level. And so it's deep study, but it's also making sure we have the correct local resources. And so we tend to hire locally as well as augment supplement our team with great local advisors, local Consultants, local contractors that can really help us because you can't build a building on your own, you can't do a development on your own. You got to have good partners and you have to assemble the right team. And that's critical in every market you go into. And so those are two markets and we've been very successful. And now we're going into Miami, we're going into Chicago. So we're using that same strategy to go into these new markets. But we're also starting to overlay our history of studying markets, really the traditional way where you visit and you meet with individuals and you form the relationships. Overlaying that with the technology that Whiterock has, where Whiterock scrapes data from over 100 different sources and can analyze data and look at trends and look at land value growth, can look at rent growth, can look at what's the proximity to a Starbucks, what's the proximity to ATMs, what do potential crime statistics look like, what are the demographic trends of an area, to really analyze where areas are going directionally. And we can overlay 30 years of historical data with where we think it's going to go over the next five or 10 and make much more informed, thoughtful decisions.

Wow. My mind is in here. I mean, you bring up so many good points. I want to get to that kind of the data driven decision making. But I did want to ask you for a great partner. You said, when you're looking to go into it, do you already have that relationship or are you going out and who's kind of the best in class? And if it's, how do you know if someone is honorable and would make for a good partner? If you don't have that previous work.

Relationship, you have to establish a relationship and that takes time to build trust. And so it's not our business model. Just fly in and very quickly pick a partner. That does take time, that takes a long time to build relationships. That can take months or that could take years. And so we're very judicious and we have a lot of relationships already, both here and in Europe. And one of the best ways to form relationships is through personal introductions, word of mouth. And, you know, that's hard to replace. You know, it's really, really hard to replace. A personal referral or someone you've known for, you know, 2, 5, 10, 20 years says, you know, I have a relationship with X that you should meet and, you know, similar to your business. I imagine that's how a lot of your business comes too. I mean, it's in the end, this is a relationship business. You're in the deal business. And relationships, if you're going to pick a partner are critical.

No doubt. No, that's great advice. And could not agree that this is such a relation business. And yeah, that's why reputation is also so critical. So, yeah, no surprise that you've been able to find so many good partners and have been able to expand by doing the right thing. So talk to me a little bit more about data driven decision making. I mean, what inning do you think we're in here? I mean, we've certainly been hearing about predictive analytics and we're certainly leveraging that data to find out who are the best buyers, who are potential sellers. But talk more about, would you say your peers are fully leveraging this? I mean, are we just scratching the surface? Do you think the future, you know, instead of actually going out and walking the blocks and seeing it for yourself, that you're going to be able to make buying decisions based on, you know, the data that you can source and analyze?

I think ultimately you would be able to make buying decisions based upon the data you can analyze and source. I still think where the industry is today, I don't even, I mean, we're in the first inning of using data. I mean, I don't think that real estate really harnesses a lot of the data that is available. I just don't. And I don't think that most owners do. I don't think that most buyers do, most investors, lenders. I think there's a lot of data that's overlooked. And as far as visiting physical inspection of properties, there's a special sense for a property when you go and walk it. But if someone were to walk you through a property, like suppose someone had a really good quality camera and they could walk you through a property, would you necessarily need to go if they walked you through every inch of the property? And I don't know that you would. I mean, you could, if you have a visual inspection, you know, I think that that's going to change over time. If you look at some of the, you know, the AI that's out there, the augmented tools that we have, I think that you're going to have the ability to do less physical inspection. I'm not saying you're going to replace a physical inspection, but I think you can do less of it. And whereas before you might have done multiple, now maybe you do one. And I also think there's going to be a comfort curve too, over time of changing habits and changing how people think, because you're not going to just flip a light switch one day and all of a sudden have everything automated. And I go back to the Whiterock example. For instance, Whiterock can underwrite a property and come up with a high quality valuation in approximately 6 seconds based upon data that's available. And it's all data that an analyst or an associate could go out and gather and they could collate and they could put into a model and do a very similar evaluation, but it's automated. And I think that that's where a lot of these tools are going to take us is initially. I think it'll be a screen and then it would be passed on to an individual who would take a look at it and then maybe go to the next level. I don't think we're just going to go instantly that it's all automated. I don't, I don't think we're there yet. And I don't, I don't necessarily see that in the immediate future. You know, is it possible at some point? I think it is, yes. If you look at the way a lot of stocks trade today, there's a myriad of stocks that are traded based upon analytics, based upon AI, based upon algorithms, where an individual person doesn't necessarily say buy or sell. It's computer driven. And is real estate going to be there tomorrow? No. Is it going to be there at some point? I fundamentally believe it will.

I hope our listeners are taking notes. I mean, this is really. I, I agree with you that we're in such the early innings because there is a lot of data out there, but how is it being leveraged and used to make buying decisions? We're just scratching the surface with it. So that's really exciting to hear that you've been able to marry that with the bricks and mortar. Was that. So talk a little bit about launching Azure. And I was also expanding internationally, but when we spoke about it, it was the idea of bringing everything under one roof. So maybe talk about how that all came.

Yeah. So Azure, if I look back, we had been operating, when I say we, myself and various extended members of the family have been operating as DG for a long time and through other family members that are operating as GS in Europe. And at some point it made sense to have one consolidated brand as opposed to, you know, branding everything different. And so, you know, we, we picked Azure. You know, Azure, you know, as most people know, is blue. It's, it's, you know, Genesis is, you know, French Azure. And it Spans the Atlantic. It's a great blue divide. And given that our portfolio is primarily North America and Europe, we thought that that was an appropriate name to combine the two portfolios under one global brand and continue forward doing any deal. We go forward under that new brand and not have separate coexistences. If you look at the portfolio, the portfolio that we had developed in North America was largely residential, whereas the portfolio that we had developed in Europe was largely industrial. And so they were also a hedge against each other. And if you look at the two asset classes that coincidentally right now are performing the best, I would say industrial and probably multifamily. I think that throughout the last 18 months, those two asset classes have done very, very well, whereas some others have suffered and we have less exposure to various of those asset classes. And so it was a combination of two separately operating businesses under one global platform. To think about it more globally, more strategically, where we're deploying resources, we're deploying time where we wanted to be. That was really the genesis and we're very happy we did it. We have tremendous response to it universally. You know, everyone's been incredibly supportive, you know, very excited. And we're going to continue forward, you know, pushing into, into new deals and you know, even in the last, you know, couple of weeks, we are, we're doing industrial expansions in Europe, we're building a new office building in Europe, we've gone under contract for land in Miami. We're going to do multifamily. You know, we have a whole host of other opportunities where we're pursuing a, a smaller multifamily platform. We're doing a roll up of, you know, similar to what people are doing with single family homes only. We're doing, you know, multifamily home roll up. You know, so there's a lot of other avenues and not a lot of other things, a lot of other things we can do that we're very excited about and we're, we're kind of running on all cylinders and, and pushing forward and coming, you know, coming out of what has been a, a very difficult, call it 12 to 18 months for pretty much everyone globally. And it's like turning a new page in the book, starting a new chapter and continuing forward. Very, very excited with lots of opportunities.

Yeah, no, it's so exciting to hear and love the fact that you've got this diversification, geography, asset classes. But maybe think about is, you know, when I started the business over 20 years ago, it was such a local business. I mean, even within Manhattan, there was people who say, I'm only going to buy in Chelsea, in the Village. That's it. And then it was, okay. I'm a downtown buyer and it says, okay, you know, now the boroughs are becoming a little more mature. You know, I'll buy multifamily anywhere in New York. And then now it's like. And Covid maybe accelerated some of this, and, you know, you got some owners and wow, you know, I've got all my eggs in one basket. So now they're running the, you know, the country. And certainly there's tons of crossover, as you know, between New York, Miami, San Fran, Louisiana. But it doesn't seem to me, I mean, it's. And certainly got to be a certain size for it to make sense to start thinking globally. But it just, you know, to me, if you're buying in the U.S. you still, you know, you understand the principles, the taxation. You start going to different countries and the rules start changing. So, I mean, it definitely sounds like it may, you know, if GS, they've got that, you know, they've got the local boots on the ground. But if you're going to be expanding.

All over Europe, I don't, I don't see. I don't see. Right now we are in France and the United States. And for the foreseeable future, I see us, you know, in those two countries. We've looked at opportunities selectively. In the UK We've had a handful of opportunities presented to us in the UK as recently as the last six months, which we are analyzing. But our current depth is in France and the United States. And we looked at deals in the uk We've looked at some stuff in Mexico. We've looked at various stuff in the Caribbean, but I'd say we're roughly split between those two locales at this point.

Well, let me just ask you that then. Your track record's been here and experience has been in the U.S. i mean, when you're looking at a deal in France, is all the underwriting, same the assumptions? I mean, there are different customs. How steep is the learning curve to go invest in another country?

We have in house expertise that's very adept at that, knows all the customs, knows all the laws, you know, native French speakers. So it's, it's not a heavy lift. You know, it's like it's already there. I mean, the expertise exists. We're just utilizing knowledge base that's already here. But yeah, when you're going into, when you're going into a new country, that there's a lot of everything you just mentioned. And you got to be very judicious. That's why, you know, would we expand to others? Yes. Would we expand to 10 others? No. And so you just gotta, you gotta pick your shots because as you say, you know, when you first started out 20 years ago, everybody was local. They were the West Village or they were Chelsea or they were off the west side. You know, you don't necessarily want to be all things to all people, and I don't envision us doing that. I think, you know, if you look at, you know, the. Where we are now, we're comfortable with where we are now, and we will selectively look for expansion opportunities and we're comfortable with the asset classes we have now. We'll selectively expand those as well. But it's not, it's not going to be a shotgun approach where you try and do everything at all times. It'll be much more of what someone would call a rifle shot, you know, much more selective and much more focused.

That makes a lot of sense. So, Joe, we only have a couple minutes left and this has been such an amazing discussion, but I mean, to summarize, what would you say your keys to success have been throughout your career?

I would say one of the critical components to success is tenacity, you know, not giving up and, you know, also having good mentors and good teams around you. I mean, you gotta. None of us, I can't speak for everybody, but I don't think many of us can be successful on our own. You have to have someone who kind of brings you up along the way. You have to have a good team around you and you have to keep going. You just have to keep going because it's you, you, you, you. You can't stop, you can't get bogged down. You know, you can't get too sidetracked. You always have to be trying to make forward momentum because that's where I think you can, you can sputter, you know, if you're not always looking out on the horizon like, okay, what are we doing? What are we doing? Then you're going to get stuck. And I think that if you can combine those handful of things, I think it's a good recipe for success.

Wow, that's fantastic. That makes a lot of sense. Great advice. And what would you say to someone who's aspiring investor, someone looking to break in, maybe they haven't made their first purchase? What would you tell them to do?

I think if somebody is looking to, you know, make their first deal, you got to kick a lot of tires and you got to talk to, you know, you got to talk to people. You got to do a lot of analytics, whether it's a tool, you know, an analytical tool like, you know, we have invested in or, you know, it's doing traditional Excel, you know, make sure the numbers are tight. You know, there's a handful of, you know, numbers you got to make sure are airtight. And you got to have the right basis and pick the right partners. And I think if you get the basis and the partners right, you got a good recipe for a good deal.

Well, this has been tremendous. Joe, thank you so much for joining us today. You've got such an incredible story, so inspiring for our listeners. So can't thank you enough for joining us today.

James, you're very welcome. Again, as I said at the beginning, you are one of my very first relationships in the business and I will always be very grateful for that because you, you know, you, you gave me a shot at deals when, you know, nobody, nobody else knew my name. So I appreciate that.

That's wonderful to hear. Well, thank you again. This is your host, James Nelson of Real Estate Investing live from New York. Thank you once again for tuning in and telling your friends. Please, if you haven't already, subscribe. I love your ratings and your comments. It's so helpful to get the word out and your questions. If you haven't connected with me already, please go to James Nelson NYC. Whether it's on LinkedIn, Twitter or Instagram, send me your questions. I'm happy to answer them on the show and wish you all nothing but the best of success. Until next week. Thank you.

A Different Approach to Putting our clients first Avis and Young's Tri State Investment Sales Group sells multifamily office, retail, development and specialty sales throughout the New York metro area. As experienced thought leaders in our industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more. Foreign.

Thank you for tuning in this week to Real Estate Investing Live from New York. Please join your host James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America Business Channel. All shows are rebroadcast on Wednesday mornings at 7:00am Eastern Time and 4:00am Pacific Time, as well as always on demand. We'll talk again next week.