Q3 2021 Capital Markets State of the Market

Well, good. Well, welcome everybody and it's my pleasure also to introduce you all to Scott Singer. Scott and his father Andy came over to join Avis and Young. It's been what, Scott, about a month now?

Yep, yep. A little bit more.

Wonderful. And Scott and I have known each other for years through our connection at rebny. We were on the commercial board of directors together and here at Avis and Young. And I guess I might as well introduce myself. James Nelson, principal and head of Tri State Investment Sales. We're on the investment sales side, but clearly a big part of capital markets is the debt and equity. And what Scott and his father Andy and their team, Jeff and Kathleen did at Singer Basic for many decades was to be the boutique best in class debt and equity provider, focused mostly here in New York for some of the most long standing and reputable clients out there. And I think in the future when I introduce you, Scott, all I have to say is that you're the six time winner of the most ingenious deal of the year award. And then you can just drop the mic and say, enough said. Because if you can even. I've only won one of those in my 23 year career. So the fact that Scott has won six is a testament.

Our team won six, but I appreciate it. We're excited about it. So I've been on two with Kathleen Macheri and Jeff Morrock and then my dad Andy and Kathleen won four together. So yeah, we're super excited about that. But you go out and prove yourself again on every new deal.

Wonderful. Well, I want to thank you all for joining. We've been doing these quarterly and the market is moving very quickly. So, you know, we want to give you the latest and this is our sales report for the third quarter for New York City. Although I'm going to touch a little bit on what's happening nationally as well. And then Scott is going to get into what's happening on the debt equity market. So we want this to be a conversation as well. So if you all have questions that you want to put in the Q and A box, you can do that or we can wait till the end. But we want this to be as helpful as possible for you all. So we'll go ahead and dive in. Okay. So Matt, are you going to advance the slides or do you want me to do that? Okay, great. So to kick things off, I think before we talk about how the sales market is performing, what's happening in the debt equity, the number one trend that is on everyone's mind, is what is happening to return to work. So Scott and I are here at 530 Fifth Avenue. We've been back in the office full time for months. But as many of you probably even joining in probably know that a lot of people are either doing hybrid or still entirely remote. So the good news right off the bat is New York's return to the office was actually pretty delayed. So when we looked end of last year, we, we were really near the bottom because New York took a very aggressive stance, a conservative stance on rather on the return to office and the safety protocols. But you can see now that we are a top three market on the return to office. And this is really cool. Our insight group has actually taken anonymized cell phone data. So we know how many cell phone users there are in New York City office buildings. And we were comparing that to what that cell phone volume was like in 2019, excuse me, March 2nd, to be exact, of 2020 before the pandemic. So a lot of the times when you read the paper, you know, the Wall Street Journal will cite the return to office using Casel with a K, the key swipes the key fobs, you know, who's coming and going. But this actually tells us how many bodies are in the building. So look, we're still 64% off where we were on March 2, 2020. So we're not sitting here popping the champagne yet. But a lot of these growth markets that investors like to talk about, Nashville, Miami, Austin, I mean, you can actually, excuse me, Austin's the exception. They're up here near the top three. But, you know, some of these other markets in the Southeast, even Atlanta, are down at the bottom of the list on the return to office. So even if people are moving down there, they're not showing up to the office yet. So you see that the US average right now is still 72% off. So, but, you know, we'll talk now on the various sectors if you want to advance, Matt, because this will help people understand, you know, who is returning to the office. So life science clearly.

Hey, James, just, just to keep this interactive, I just want to say, you know, looking at that September 20th date, also, I've seen just, even in the parking lot at my train station in Westchester, there's probably been two doublings of the, of the cars in the parking lot since the, since the 20th. We're not anywhere close to 50% yet, but I think the trend has continued even, even beyond the timeframe in here.

Great point. And I think we do have a Slide here on MTA ridership or Metro north ridership, which is now only a third off where it was pre pandemic. But you could see life sciences clearly. If people have to be in the office researching, they're going to be here. Education halfback, obviously, real estate. We've got to be leading the way. If we're sitting here trying to advise companies to get into office space, we can't be doing that from home. So. But then it starts to kind of drop off law firms, and all the way down at the bottom here is tech. And this is really amazing to me because on one hand, you see that Facebook. We're going to talk about that incredibly exciting Google sale. Here's Google buying another office building to further solidify their position here in New York. And yet they're still not requiring their people to be back into the office. So I think when we're talking about tech, media, even banking to some degree, a lot of this is about talent retention. That's what we've been hearing that, you know, the companies don't want to force people to be back full time because then maybe they go across the street and they say, hey, I'm going to go the virtual street, so to speak. I'm going to go to a competitor where I don't have to report in. So that's what we've been noticing. So, Matt, we'll flip to the next slide and we'll look at some of the historical visitor volumes and we can see, you know, comparing to the lockdown and actually looking at the tourism numbers, I mean, we're still half off where we were as well. And that's really a big thing when we start talking about certainly retail, high street, you know, what's happening with Madison, Fifth Avenue, SoHo retail. Well, look, in 2019, there was 70 million tourists who came to New York City, and a lot of them are foreign. And right now they can't get here. So I'm a big believer, and I'm sure Scott would agree that the pendulum has swung too far because of course, some of these retailers have been hit hard because. And certainly the hotels, because you don't have that international tourism. But as soon as things start opening up again, I think we're going to really see this swing back. So, okay, we'll go to the next slide here. This again shows what we're talking about across the board on the office return. Retail actually surprisingly doing a little better. That's really the neighborhoods that I think are filling in the void. Again, Transit only off 31% we talked about that. Healthcare, almost spot on. Education, government, even de Blasio asked for city employees to come back. And then hospitality still almost half off pre Covid level. So we'll go to the next slide and talking about the return to work by industry and again I should have specified before that slide, a couple slides back was talking about what's happening nationally. Now we're talking about what's happening here in New York. So finance, Even though is 50, 60% off nationally here, here in New York is actually doing a lot better because we've got great leaders like Jamie Dimon saying hey, let's get back to work. The city needs us. Also, if you Google for the video from the big hedge funder who made a personal plea the importance for the workforce to come back, I'll think of the name of the the fund they took the top floors at 425 Park Avenue. If someone wants to put in the chat, maybe you can guess who that is. He also paid I believe the highest price ever for a condo on the diamond on Billionaires Row. So again, I'll think of it in a minute.

But Ken, Ken Griffin. You're talking about Ken Griffin.

Thank you. Citadel. Yes. So if you Google Ken Griffin's Citadel returned to office. He gave a very compelling 34 minute interview on why we all have a duty to come back and you know, certainly to educate, you know, the newer associates and colleagues. So let's, let's go ahead and keep moving here because I want to get into the sales figures. I will just say that we haven't seen companies say we're done with office space forever. We're never returning. They're only 5% whereas only 26% of us are full time back in the office. The overwhelming majority is embracing this hybrid work model. Okay, so we will keep going here. Okay, so what, what is happening here on the national dollar volume side we can see office has rebounded quite nicely since last year with a 29% uptick in dollar volume. Industrial 11%. Retail 60%. Apartments up 191%. Multifamily has been on fire and a lot of that's because of the financing that's available that Scott's going to talk to you about. Industrial. So we'll keep, we'll keep moving here. If you want to look at what's going on by the number of sales and once again, you know, here, double digit growth pretty much across the board. So we'll keep going here. The next thing is interesting is what are the metropolitan areas that are driving the most dollar volume. So here's, here's New York back in 2015. That was double the amount of dollar volume as any of the other markets. You can see LA has been, you know, catching up with us. And for the first time in 10 years, la and again, the metro area has surpassed New York for total dollar volume. We do not expect that's going to last long. But you can see San Francisco in a close third and then Dallas. Look how strong Dallas has been. And if you look at these cities at the bottom of the sheet, D.C. metro, Boston, Atlanta, Chicago, Phoenix, Seattle. If I had a dollar for every time someone mentions Nashville or Austin, it would have been a great year last year. But they're not even on this market on this slide. I mean, these are not big markets that produce a lot of sales. Yes. You know, they're growth markets and they're exciting and this and that, but you go down there and there's not the size. If you really want to go in and have options. Okay, so we'll, we'll keep going here. And yes, David, we're happy to provide a copy of the deck. Happy to. We'll email this out to everybody attended. Thank you for asking. Okay, top 10 by the number of markets here. LA is really picking up here. You know, the New York sales volume has been a little sleepy. We're going to talk about that momentarily. And then we've got the rest of the pack here. But you know, in most of these markets, they're doing 1,000 sales a year. You know, here's New York, a little over 2000, and then LA 3000. But when you're talking about whether it's 1000 sales, 2000, that's why a lot of these big markets, there's still sellers markets. I mean, there's just, you always have more buyers who are looking to get into them, the sellers, because there's just not a lot turning over. So we'll now get into the New York figures and we'll see that dollar volume in every borough has picked up. This is over the trailing fourth quarter, with the exception of Manhattan. Okay. Manhattan has been missing the trophy sales. Okay. But now that we've got these numbers are only reported once they've closed. So Google, which exercised their option for $2.1 billion for St. John's Terminal, that has not closed. What's going to happen is when that hits next quarter, along with Pearl street for 950 million, there was a Marriott hotel in Times Square, the CBS building, the dollar volume in Manhattan for the fourth quarter is going to quadruple. Okay. Now we're still only expecting citywide $8 billion in sales, but the 10 year average is 36 billion. Let's forget about what happened when the moon, the sun, the stars, everything was in alignment. You know, that was not reality. But 35 billion, 36 billion, that's a typical year. We'll probably end the year closer to 10. We're still trying to dig our way out. And just remember, you all might ask, James, why are the annualized sales for 21 looking less than 2020 when we were in the midst and the deepest, darkest days of COVID Well, obviously we at least had one good quarter in 2020 before COVID hit. But then what happened towards the end of last year was sellers said, hey, I see the light at the end of the tunnel. There's a vaccine on the way. Why would I ever sell in the third quarter, fourth quarter last year, Let me wait. So what has now happened is all these sellers who are postponing the decisions are off the sidelines, they're jumping back in. And that's why I'm very excited and very confident that we're going to see a V shaped recovery here. All right, Matt, we'll go ahead and look at the number of sales see here. We did see double digit growth across the board. Even Manhattan almost had double the amount of sales. So again Manhattan is having sales activity now, but just not the big dollar volume increase because the lack of those billion dollar plus sales which are as I mentioned before now in the works. But we're going to end up probably close to 500 sales, still half off the 10 year average. But again, you're going to hear some good reasons why we think this is going to continue to pick up now. So we'll jump into the various asset classes now multifamily, you know, who remembers 2016? This is before the Housing Stabilization Tenant and Protection Act. I got to give them credit, it was a great name. But you know what it basically did was freeze a million housing units in time. And I could spend a whole hour just talking about why that didn't make sense. But a result was investors said, hey, I'm going to need a higher return. If you're not going to let us luxury decontrol units, I'm not going to live with three and a half percent. So the average went up to four and a half. We've even surpassed five when you averaged it all out. But look at the price per foot. 1100 a foot down to now 650 a foot. I mean, we're half price from 2016 when you look at it that way. This, however, has been coming down now. And if you look at the next page, these are some representative sales. Sorry, we'll do one more. This just talks about the historic dollar volume which you can see has dropped off considerably. But let's talk about some of the specific sales. This was the Upper east side portfolio. And many of you are saying, James, I can't believe you all finally sold this. I would blame the market. We brought this portfolio out before HSTPA was passed for $100 million. We couldn't get it done in time. Then Covid hits and we ended up selling it for $61 million. This was a tricky deal because we sold the shares of the corporation as opposed to the fee. Big tax implications there. But you know, was this a 40% drop off in value? I mean, potentially here 5058 East 33rd street, which we also handled. This was a property that sold back in 2016 for almost $10 million more. And this was 90% occupied by, excuse me, 80, 81% fair market. This went off at a 4.7 cap. So you know, we can sell buildings like this all day long. Majority fair market where you're buying kind of some Covid hangover rents where, you know, tenants were giving concessions and now I don't have to tell you all, you probably know how hot the rental market is. We're seeing rents back to pre Covid levels. Concessions have completely burned off, but again dropping considerable value. I would say in large part really to that the regulation as opposed to Covid over here at 660 Columbus, this was actually 111 condo units that sold as a package. But price per pound, $400 a foot, 940 a foot, 484 a foot. So for you value buyers who are looking for cheap bricks, there are opportunities out there generally certainly the ones that have more rent regulation. If you want to take a long term and hopeful view that one day that will reverse. Okay, we'll go to the next page and we will talk about land sales, which is suffered the largest hit. So here it's 680 a foot at the peak, even 650 up here in 2019. This is where we were still selling land for condos. Drops to360. No one was doing condos here in the last year or two. It was finally an opportunity for developers to build some rental, much needed rental here in the city. We had this great affordable New York program where you got a 35 year tax abatement. Now we are hearing that it's unlikely that it will be renewed at its current form. Will probably be greater requirements for affordability. Maybe they'll even require, Albany will require prevailing wage. But what that has done is developers are now on the sidelines saying look, I'm not going to build rental unless if I know I've got a tax abatement in hand because you would need to get in the ground by June of next year to get grandfathered. That being said, I would make a huge case that right now would be the time to buy land at discounted prices to do condos because there's been so little development. Look, in the last quarter there was only six development sites that sold. Right. And so if you buy land today and you're bringing condo product into to market two years from now, who are you competing with? So I think that's a really interesting case to make. We'll look at some of the individual sales that we're seeing out there. You know this 111 Washington sale, this was done in the mid 200, a buildable foot range, clearly rental. This was a, actually an assemblage deal that involved some air rights even under 200 of buildable that XTEL bought. You know, Gary always figures out a way to be creative and get really good value. Here is a condo transaction here, 21st street between 6 and 7 sold for 500 of buildable foot. So we are seeing some condo sales here. But this site here, two, three years ago this probably would have gone for 750 a foot. Today it went for 500. So that, that gives you a sense of the opportunities that are now available. And Scott's going to tell you, you know, can you finance them today? Which is the next big question. So we'll now go to office real quick or I'm sorry, we'll do retail. Retail, no shocker here from 2015, 2016. These were also three and a half caps back in the day. 3500 a foot. Now retail over a 5% cap on average price per foot cut in half. I mean there's only three sales. So look, how much of an average can we really draw from this? But we were sensing it, we're feeling it. It used to be, you know, years ago you'd look for a retail deal with upside where there's only a couple of years left in the lease. The buyers would pay a 3 cap and then they try to triple the rent. Today we're seeing we're doing a 9 cap. 9 cap in Soho. And you don't have upside, you have potential downside if the tenant doesn't renew. So you know those are the kind of opportunities out there. And again I believe we're at a moment of time where the pendulum is swung too far because you know, the tourists aren't back yet. But I don't think these retail rents and pricing are going to stay at this level for, for long. Okay, we'll keep going. We'll look at some of the, some sales here. Here's two properties on Spring street where the LP bought out the sponsor at a discounted price. So that, that is happening. A lot of these retail deals are getting restructured. And here on 21st street we have an end user who bought a vacant space. We're seeing that also a lot of these end users are using small business loans to take advantage of this soft market. Okay, we'll keep moving and then Scott, I'm getting to you. I'm going to hand the mic to you and just, I just need five more minutes. If that the office market then you.

Can take a breath.

I'm trying to pack it all in. Right. Time is money here for us all. So we've got cap rates here that have been pretty steady in the mid 4 cap range in this kind of thousand dollar foot range. There just haven't been enough of these office sales. What I will tell you is right now we are seeing a flight to quality. You have out of the 45 leases of 50,000ft or more last quarter, every single one of those tenants either renewed at the same quality building or better. So what happens to this class B, class C space? We got 18% availability, 100 million square feet of office space in Manhattan unspoken for. We're going to see some challenges there for sure, but it's just not registering yet in the price because we haven't seen enough of these trades come through. Okay, so let's look at some of those trades. 7th Avenue. Okay, so here we've got 345 7th Avenue that sold in midtown South. These garment center. This went off at $537 a foot, but half vacant now you might say, James, great corner building, mid-500 a foot. That sounds like an incredible opportunity. Well, it is very expensive not only to do the base building work, to do the ti. The free rent. One of our leasing brokers said on a call the other day that for some of these 10 year deals the landlord is not even getting rent for three and a half years based on the concessions and free Rent. So but Meanwhile, you know, 576 Fifth Avenue, here's a deal that sold for close to $1,300 a foot. This is on the corner of 47th Street, Diamond District. So you know, again, you're going to see a flight to quality, a flight to location where these types of buildings are still going to produce double the amount of value. This was a user deal over here where a school bought a leasehold. So again, end users also taking advantage of this market. Okay, so the final thing I think I want to talk about is just the trend. So looking at pre Covid to today, dollar volume of sales, look back in 2019, office was over half the dollar volume. This year it's been less than a third. Meanwhile, multifamily, it was only 14% of the dollar volume has now almost tripled and is the overwhelming majority of the transactions that are out there. So if you look at the number of sales, same trend, multifamily going from 42 to 52% and you know, office definitely still a small percentage of the transaction. So again, the takeaway multifamily is where the action is. Office kind of taking this wait and see for the pricing to shake out. You know, retail, you know, has been pretty volatile but certainly seeing some opportunities there and land, you know, probably the biggest discount that we've seen in pricing and still waiting for the demand to pick up there. So that, that is it for the, the sales report. And Scott, I'm going to go ahead and I'm going to turn it over to you.

Terrific. All right, James, I appreciate it. And if anyone is wondering why did, why did Singer and Bassett come join Avison? One big reason is now I get to sit next to James. So and you know that that's, it's very exciting and having access to this type of information both from people like James and from the AI and the tech tools that, that exist here is very exciting for us and it creates the opportunity both to be in the mix of more deal flow but also within the pitches for how we're pitching our buildings to have that kind of understanding of what's happening on the street. On the finance side, I would say, Matt, if you could move to the next that there is tremendous liquidity. As I've said here, the amount of money that's available in the system to lend to and invest in real estate is, is as high as we've ever seen, but it is intelligent. And I'm not sure if everyone can see the list of attendees here, but there are some Lenders who I've done a lot of business with and who I'm talking to regularly, even this morning. And there is great pressure to put money out because there's a need for yield among investors of all types. So who are lenders and investors looking to go with? Experienced sponsors. And experienced sponsors in this case not only means that you've been at it for a while. But is the project that a developer is working on now something that they've, that they've done before? Is it a product type that they've focused on? How strong is that is the developer and what does the capital stack look like? So it is with all of those. When those boxes check out, then there is tremendous competition for deals. And the loans are being made in many cases at all time, low rates at every length of loan. And from the investment side, there is a belief among, I believe and I see that for anyone, for each person or institution who has given up on New York, there are, there's a multiple of that who see the opportunity to come here and the feeling that New York is on sale and that flight, the quality that James talked about on the leasing side, I believe also that New York was so expensive for so many years before that the groups in every property type have been priced out of New York and are now looking for opportunities to come in. I think we saw that on the multifamily side where rentals obviously suffered early in the pandemic and concessions went up. But then what happened? It snapped back. As soon as people could feel comfortable that they could be in New York, they could be on the streets, buildings filled back up. And I think that much of that comes from people who were priced out before. We've seen it on the condo side as well. So friends of mine who are not wealthy have found opportunities to buy small apartments in New York for the first time. And whether their kids are going to live there or they're going to live there, New York was on sale. I think it's happening. The lease metric that James quotes with every lease being either a new entry or a building of the same or higher quality, points to that as well. And I think that the lending and investing community is looking at that and looking at capital stack. So what's an intelligently constructed capital stack? It's one where the deal has the ability to withstand a bumpy as opposed to linear recovery. And so among the financings that we closed during the shutdown period and the pre vaccine period was an inventory loan on an apartment building with over 1,000 units in Queens. That was at the time we closed, just getting TCO and the lenders lined up to compete to finance that deal because the capital strike was capital stack was constructed in a way where there was a tremendous amount of reserves set up. It was something that the borrower intelligently wanted to be sure that they wouldn't have an issue. And they expected to lease relatively quickly, slower than they expected pre pandemic, but set up so that if leasing went extremely slowly and there were long periods of slowdown, still alone would be fine. And so when these metrics that are on the border here, experienced sponsors doing things that they are good at with strong financial backing, then the offerings that are available, the types of debt, the creativity that's in the market and, and the pricing is extremely, extremely attractive. So that with the next slide, is it easy money? No, this is not a time of easy money. There is a lot of money. There is competition for deals that make sense, but the money is not being thrown out the door. There is a great, I think it's an intelligent market, as we said, where if an experienced New York focused owner operator who thinks long term, sees a transaction and feels that there is value in it, is willing to put a meaningful amount of their own capital into a deal, then there's highly likely to be both debt and equity available to them. And, and so then when the deal beyond the deal, so how's the deal constructed? How did the numbers look? Has the owner done this before? But this last question here is very important. How has the operator acted? What have they done over the last couple years is a great case study for anyone. But beyond that, and we deal with a lot of multi generation operators, how did they work, what did they do? How did they react to the great financial crisis, maybe even the, you know, previous cycles there, lenders, investors are looking at history as a way to predict what will happen going forward. That makes this a very challenging environment for first time borrowers, first time sponsors. And so part of what we are doing there are certainly a, a number of younger, newer companies. Sometimes it's the next generation of a family that's been involved either in the real estate or other businesses. And one of the things we look at is who are they teaming up with, who should they be teaming up with? Whether that's on a third party or an investment basis. And that's something that again, lenders investors want to know that in this challenging environment where there is opportunity, is there a team in place who knows what they're doing and how to deal with Challenges. So James, I don't know if we have the opportunity to open up for questions or how much, exactly how much time we have.

Yeah, no, I'm getting some now we have a question on rates. So for good sponsorship, what type of debt is available out there? And I'll just add on to that, I mean because obviously it depends on what. But let's maybe you could go through the asset classes multifamily. Yeah. Who are the lenders, what kind of debts available and then maybe we could talk about construction.

Sure. Well, I think in the to start with permanent financing. So there is money available for every asset class and really every location. It is very project specific. The on the permanent lending side, lenders are looking hard at the actual collections during the pandemic. And in the trailing certainly we'll look at trailing twelve, but more important in this market is trailing three, trailing one, what is actually being collected. So obviously there are many, many retail tenants and office tenants who have received some form of either deferral or forbearance. That creates challenges. And lenders look to what were the deals that were structured? Did the tenant live up to their obligations under that? What is actually being paid now and what and what are the obligations going forward? And so the when the income that's being paid so rent roll with adjustments for what's actually being paid, when the debt yield on that basis is at a level that is say 9% or higher. And I think I'm talking to a group who understands what that is. But put a question in it if you want me to go into that in more detail. But if it's a deal that it is moderate leverage then pricing for 10 year financing can be in the low threes and potentially under 3% for a 10 year fixed rate for an experienced borrower with a strong rent roll and a debt yield at that, at that level that's as low as it's ever been. There are for deals that are challenged in these ways then beyond these super cheap financing vehicles there is probably even more liquidity in the market in from bridge lenders and from lending sources who are trying to capture more yield. So from the fund vehicles let's say to non bank sources and others there is the opportunity to borrow on deals that are more challenged at spreads that can be as low as the three hundreds over Libor with some Libor floor so say still under potentially under 4% for deals with some challenge. And then there are other sources who are lending in the 500-600-00 and then a next set of Sources for even more challenged deals at the 800900 over level. On the construction lending side, we are about to close a large construction loan for ground up multifamily in Manhattan. It's a deal that was negotiated pre vaccine or certainly before the vaccines were widely available. So even in that much more challenged time there was the ability to borrow construction financing in this case it's a very well known developer with a long track record in New York, highly regarded, been through various cycles. They have a major equity investor as well. So both the this institutional equity investor and this strong developer have a very sizable amount of cash invested and construction financing was available straight through the pandemic and is now depending on the again depending on all those metrics that we talked about and setting up reserves to handle the possibility that recovery will not be linear.

Okay, we got, we've got another. Okay, we got a question. Assuming quality sponsor and deal size is 50 million, what are you seeing? Is the blended cost of senior debt mes separate or is a blend for 75% leverage by asset class?

I think the 50. The 50 million is a good. Dave is a good way to put it because there is probably the greatest amount of liquidity at that of liquidity at that size level and more and more creativity. So the question just disappeared on me at 75% the if you need me.

To pull it up again he says what are you seeing as the blended cost of senior debt mes separate or is a blend for 75% leverage by asset class?

So one of the things that we're seeing is a significant amount of arbitrage in the offers that we receive. So I think for the deal that you're David that you're laying out there, which for anyone doesn't see it is 75% leverage on a $50 million value add deal I'm assuming would be we would certainly get quotes in the 500 spread, we'd get them in the 400 spread and we'd be looking to push them down into the three hundreds. And depending on the strength of the everything that goes into the real estate, the strength of the sponsor, the cushion that you can create through reserves, the location, the property type, that is the likely range, if that was hotel which to be frank we do less of, then it won't be in the three hundreds. And the range there probably I would guess would be in the 500 to 700 zone spread, maybe higher.

Okay, we're now getting the crystal ball question asking when do you think rates are going to go up?

You can Take that one.

Hopefully not soon. We're finally moving product again. So I mean again, when you talk about 3% money for 10 year debt and you're buying multi at 4 and a half, I mean the cash on cash returns are in the double digits. Like we just sold $50 million of property in upstate New York. I didn't think we could do it or I didn't say, not that I didn't think we could do it. I didn't know who was going to end up being the buyers for this. But those deals went down. This is new construction at 6 caps. And yeah, I mean upstate New York isn't exactly the sexiest real estate, but you know, 14, 15% cash on cash return, I mean that definitely gets me excited. So it's definitely fueling the sales activity. So I don't know. Scott, what do you, what do you think? I mean, probably wait to see what happens in Washington, right?

Look, I think yes, we've tried to stay out of the prognostication business and the focus that we have generally had is if the rate looks attractive, then match the maturity and the structure of the debt to the expected hold period. And I have never counseled our clients who are long term holders of real estate to try to play the market by using floating rate debt. On the other side of the equation, if you need the flexibility because there's either going to be a need or a possible desire to sell, then maybe it does make sense to take advantage of that. I think the biggest, one of the biggest risks to the real estate market is that possibility of rising rates. We have the strongest financial engines in the history of the world working to keep interest rates down. But if they lose control of it, then there are obviously very compelling arguments why each dollar is actually worth less than it used to be and that that could result in dramatic rise in rates as has been seen in markets before. On the other hand, there are very, very big forces trying to keep those rates down. So it just makes it very hard to prognosticate.

Awesome. All right. And we want to keep this tight the 45 minutes. So I think I'll answer the last question, which is have you been seeing foreign capital? And what's interesting is the answer was yes. Amazingly, last year a lot of these acquisitions were coming from foreign investors who couldn't even come to the country. We were seeing a lot of sight unseen acquisitions. There was an Argentinian family office who bought the deal from Related down on Union Square. There was a European group that bought on Christopher street in the Village, a Swiss retailer, bought those three buildings on Madison Avenue at a steep discount. You know, it's always interesting to me that when the market takes a big dip, the foreign investors are sometimes the first people to jump in because they say, hey, wait, you know, And I speak to my friend who lives in Dubai, he says, you know, James, everybody knows New York, right? And so when they see an opportunity to finally buy in, we see it. Same holds true with the Rubin brothers, the billionaires from, from England who just, you know, they bought the Puma space on Fifth Avenue. They just bought, I think five properties from Vornada. So we were absolutely seeing foreign capital, but we are also seeing a lot of first time domestic capital. I call them the young guns. Especially now that I'm becoming the older guy in the office. A lot of the long term owners, especially the operators, are kind of on the sidelines saying, you know, I don't know where this movie's going. You know, I think I'm going to diversify, I'm going to go buy stuff outside of New York. But we're seeing some of these younger operators, maybe they were working for a big shop, who are now going out doing these deals on their own. I see some of them, you know, who are listening to this webinar right now and you know, there's capital out there to deploy and they're finding opportunities, saying, hey, these are huge discounts relative to where prices were and they're jumping in. So we're seeing a lot of new domestic money as well. The appetite is incredible. Now the last thing I would leave you all with is I think a lot of you as buyers have become conditioned that in a typical sales process, there's six to eight weeks of marketing, there's a call for bids, everyone's kind of waiting for that bid deadline, multiple rounds of contracts. We're moving fast. Now we have a lot of, in fact, I've gotten a couple, you know, complaint calls from some long term investor clients saying, James, I was waiting. How did I miss this? And we're bringing some stuff online and we get a couple offers right off the bat and we get a contract out and we are definitely looking, we're seeing a huge pickup. We're fortunate. We've already closed 22 deals this year, but we have 15 in contract and we have over 20 contracts out. So, you know, things are moving now. You know, those of you who are looking to transact, this is a very healthy time to do it because there's demand both on both sides of the equation. And as Scott just spoke to, certainly plenty of capital for the right sponsorship. So we'll make sure for those of you who are looking, you know, getting into the business, partnering with a more experienced operator can be a great way to go. So with that, we want to thank you all for joining. We will send out a copy of this report. We appreciate your taking the time and we love your feedback. So any follow up questions, feel free to email Scott or myself or give us a call. Thank you again.

Thank you.