The Insider's Edge To Real Estate Investing w. Sean Burton

Yeah.

Okay, wonderful. Welcome everyone. With us today we have a very special guest, we have Sean Burton, who is CEO of City View. And this is a very timely interview and discussion right now at the time of the recording. This is January 16th and Sean being based in LA, the first thing, and we were talking a little bit before we went on recording is just again, our thoughts, our prayers go out to everyone in the LA area. And again, it's just so saddening to see the devastation with the fires. And so Sean, just, you know, again our thoughts are with you all. But how do you start to assess the situation and just, you know, I know probably a lot going on, but tell us how you've been dealing with this present.

Sure, sure. First of all, thank you for having me on this morning. It is a kind of a somber time. It's really mind blowing what we've seen. I mean it was just over a week ago you could see I have a view in my office and I came back from a meeting here and I noticed a huge plume of smoke over off the ocean. And you know, we've been in this office for a long time. I've seen a lot of things. I've never seen a plume of smoke that large. And then, then we obviously saw it develop. The scale and scope of devastation is like, you know, nothing we've ever seen. This is the, you know, the worst natural disaster that's hit Los Angeles, much larger than the earthquake or other things that's happened. And just to put it in scope, you know, I have a brother who's a 35 year firefighter at the LAFD and actually based in the Palisades the last five years. And he had always told me about the Bel air fire of 1961, which is the worst natural disaster fire we'd had. And, and you know, a lot of protocols and things changed after that because so many homes were lost, it was so devastating and 486 homes were lost in that fire. So there's been 12,000 lost in this one. Just to put the scope. So it's, the scale of devastation is unbelievable. It's going to take years and years and years to rebuild. And you know, our hearts go out to the families and everybody who's been affected, displaced. It's really a tough time.

So Sean, how do you, I mean the personal side to it and again, having family, friends and you know, so many people affected, I mean that is, could be all consuming. You know, at the same time you're, you're running a very large multifamily business, west coast, but certainly with heavy concentration in la. I mean, how do you balance that? You've got, you know, certainly, you know, the personal side, but, but also from a business side. I mean, how are you beginning to assess and address the impact?

Sure. Well, first of all, you know, the team here has been, you know, has been great at City View. Like they've been working around the clock throughout, throughout this, you know, first, you know, first and foremost, we would think about the safety of our residents. You know, we had a number of buildings last week, they were on evacuation watch. And so we're just staying really close with all of our residents and tenants to make sure they're informed, they have the right apps on their phones.

You.

Know, that they're kind of safe in every way. We also immediately, you know, the fire started kind of Tuesday afternoon. By Thursday we had a program in place where we could take in fire victims in our empty apartments. And we, you know, we waive application fees, waive pet fees, no deposits, let them come in with short term leases. We, our apartments are unfurnished, but we're able to talk to some furniture rental companies and find ways to get just couches and beds for people so they could have a place to stay. We got on a phone call with a bunch of other of the kind of large owners in LA earlier this week and you know, kind of made everybody make a voluntary commitment not to raise prices. Right. Not to take advantage of this. So we did that. And by the way, nobody was going to. I think that the owners here really feel for what's happened and there's a lot of, kind of sense of common purpose there. So that's kind of first and foremost and then, but you know, we have, you know, we have to keep working. You know, we have 55 different projects that we own and manage. We have number of projects from the process of buying and some process of selling. And so the team, despite the fires and everything that's going on, has continued to, you know, kind of move the ball forward on the business and not lose sight of that. And then, you know, also start to think about what's the rebuild going to look like, which I think is a whole separate conversation. How do we get back on our feet as a city?

Yeah, and we'd love to talk about that. And maybe it's too early to tell, but certainly, you know, first of all to get the current fires under control. And you know, then we talk about getting infrastructure, you know, back online and before even starting to think about building but, so, so, but it sounds like none of your properties that present have been affected.

None of our property affected. Very lucky. Now, you know, we have a team members affected. One of our team members lost her home. She lived in Altadena. We moved her into one of our properties and are helping her. We have another senior person there whose mother lived in the Palisades. Her home was burned to the ground. He's taken her in now and trying to get her clothes and all the basics because those kinds of things happen. You literally leave with nothing in a hurry and obviously all the emotional and trauma that comes with that. So our team members have been affected, but our projects are all safe and our residents are safe. Mm.

So thinking about rebuilding back the affected areas and again, a lot of that is focused in residential areas. But just, you know, your experience having built, you know, multiple projects in the LA area, you know, as far as the approach, and I would imagine, you know, you would hope at a time like this, government would be helpful to, you know, fast track, you know, and not to even address, you know, here's some of the criticism and, you know, the challenges and kind of what took place, but just, again, trying to think about moving forward. As far as, you know, I've heard that the approval process can be very lengthy and now you're going to have, you know, tons of requests come in. So how do you, how do you think the, the city navigates that?

Yeah, so it's, it's, you know, obviously the topic everybody's focused on and we're very focused on the rebuild. I mean, other people talk about who, what happened when and with whom. And I think, I'm sure there'll be some sort of commission that'll look at that. But we're really focused on the rebuilt kind of, you know, how do we, how do we get out of this? And we have built a lot here. You know, we've been the largest developer in LA county for, you know, 10 or 11 years. You know, I think we've done over 50 projects. We're in all the other western states as well, and go as far as Dallas and Denver, but kind of the heaviest concentration is where we're based here in la. So we, you know, think a lot about these issues even before the fires. And the problem and people don't realize is we were already in a housing crisis prior to these fires. You know, the city's required to work with the state and do something called the Regional Housing Needs Assessment, which is how many units of housing you need in order to get its funding from the state and that was completed a couple years ago and the number was over 450,000 new units by the end of the decade in LA City alone, not LA County. So it's over 57,000 a year. This year we were on track even before the fires to only deliver between 5 and 10,000 units. So already we were in crisis mode. Now you have 12,000 structures, right, that have been burned. You got 30,000 people that are displaced. They're all going to need housing. And the Palisades is particularly challenging because that wasn't multifamily housing, that was. I think they think there's about 5,000 residential structures. Those are all individual homes on individual lots with individual owners and kind of unpacking all of that. You know, first of all, how do they, those lots need to be cleaned? There's a lot of hazardous waste, right, because you're not just burning trees, you're burning homes with fiber optic cable and batteries and televisions and all of those things. So that means in the roads need to be cleared, the lots need to be cleaned. You need to now run utilities again in terms of water and gas and electricity back out there so it functions and then start the rebuilding process. So it's a, it's incredibly complicated. But I do think it's something that everybody's focused on here and I know citizens are focused on, the real estate community is focused on it. Clearly the mayor and the county supervisors and the governor are focused on it. I do think there's been some positive signs already over the weekend. You know, Governor Newsom signed to executive orders basically one kind of suspending ceqa, the California Environmental Quality act, which is one of the things that's used to challenge housing being built or at least modifying it for the areas that have been impacted by the fire. And then also kind of removing a lot of the rebuild from the Coastal Commission jurisdiction, which can be an incredibly laborious process. And the mayor a couple of days ago put out an emergency executive order basically saying in the fire affected areas in the Palisades they would stand up this kind of emergency operations center to issue permits in 30 days and same day inspections and waive discretionary approvals and really allow people to go back and rebuild by right very quickly they're going to allow people, if they want to put ADU accessory dwelling unit on the property or mobile home and live there while it's being rebuilt. So lots of kind of forward thinking about how do we do this quickly, how do we cut some of this red tape so we can get it rebuilt. And look, the proof's going to be in the pudding. There's a lot, you know, a thousand decisions that haven't been made yet. But I think there's been good initial recognition that if we're going to build back in any timely way, we can't do things the way we've done them in the past. We have to do them differently. And I think that, you know, the elected officials are saying all the right things on that front, but again, the proof's in the pudding.

That's wonderful to hear. And, you know, before the fires and the housing crisis and shortage that LA was facing, we very much share, you know, the same challenges in New York. Estimates here are that we have, we're in need of over 500,000 housing units. And the unit production is not too dissimilar of what you were talking about in LA, where probably New York City was producing about 15,000 housing units a year. Just not even close to what's needed to fill this need. Now New York State has come in with tax abatements and a whole new program to hopefully incentivize, certainly a lot of talk about office to residential conversions. So. But yes, if any, if any good can come out of this horrific situation, if it is to, you know, fast track and to incentivize this, you know, housing that's now needed more than ever, really hopeful that you all can get back on track very quickly. Sean, and just thinking about, unfortunately, with these natural disasters and thinking about whether it's the hurricanes in Florida and just how as a developer, you now address development in the sense that certainly trying to obtain financing, the insurance. How do you even start to grapple with that? Even before this natural disaster, there, you know, certainly were challenges to build projects again to finance, to ensure. Certainly with this, I would imagine it would make things even more difficult. But how do you navigate that?

Yeah, I think, you know, it was already a challenge to do a lot of these things prior to these fires. I mean, you mentioned insurance, and I think that's one of the things everybody's really watching closely. We have a very difficult insurance kind of regulatory structure in California, which has driven a number of major insurers out of the state. And I think there's going to need to be fundamental change at the state level to make sure we can attract insurers to the state and make sure they can adequately price the risk of being here.

Right.

Otherwise, it all falls on the back of the state. And so I think that's going to be a critical issue I do for the stuff that we develop and build. We don't build kind of in the mountains and in areas next to where there's a lot of wildfires. You know, we tend to build in cities and suburbs and kind of more built out areas. But, but you know, we've always spent a lot of time thinking about how do you make your building safe, you know, from a fire perspective in terms of the materials you use and obviously the quality of construction and type of fire retardant and other things that you use. And then we have to think about earthquakes too in California. So you have to make sure everything you built is really modern seismic standards. So those are things we will continue to do and they apply what we do in California. But as I mentioned, we're in Dallas and Denver and Seattle and these other markets too. And so we're thinking about those things there as well.

So maybe tell our audience a little bit about the City View story. I know now invested in almost 130 projects to date. More than 130 projects to date, you said. 55 currently holdings. But how did. Maybe tell us a little bit about your story and City View's growth story.

Sure, sure. So we started the firm 21 years ago in 2003. And at the time we started here in Los Angeles. And at the time the dominant thinking for housing was if you wanted to build new housing, you would just go to the next freeway off ramp, you would run utilities out, they'd put a billboards and you would kind of, if you build it, they would come right. It was more of a kind of a suburban sprawl. And that's what you'd seen in kind of the 80s and 90s. And our thesis was there was going to be a generation of people who wanted to live closer in cities or kind of inner ring suburbs. They were going to, wanted to be closer to their job, but also be attracted to kind of culture and nightlife and restaurants and that. And so we said let's build housing for those people, which is harder to do. Right. Because when you have a big swath of open land, you can design it exactly how you want it. You don't have to worry about potentially as many environmental issues. You know, it's, it's not as complicated from, you know, what, who are your neighbors and what do they want in the community? So at the time it was called infill housing. That's kind of a term that's fallen out of, fallen out of favor. But that's really what we focused on. And so we started just doing it here in California. We got a. We were allocated some kind of non discretionary capital from a pension system to do that. And so we did two deals and then five deals and then 10 deals. And then we kind of went from California and we kept spreading out to the, the kind of western half of the country where we are today. And so we've done. Yeah, it's, you know, we always say more than a certain amount because we're always in the process of doing new deals. And I think we're probably up to 140 or 150 now, if we count it.

Wow. And your story, I noticed that you graduated from UC Irvine with a social ecology degree. I wasn't even sure what that was, but then you went into the law profession. So maybe a little bit about how you ended up in the, the real estate space and your career growth.

Yeah, I remember explaining to my family that I was going to major in social ecology. And they were like, do you plan parties for trees? Like, what does that mean, social ecology? It was a great interdisciplinary that was kind of economics and environmental justice.

It's probably very relevant to today, right?

It is, it is. I liked it because you took classes in a bunch of different, different schools, right? So you take some science classes and you take some statistics classes and you would take some other classes on kind of environmental impact and that kind of thing. So it was a great degree and kind of a liberal arts focus. And then I actually went to work in politics. I had worked on the Clinton campaign when I was in College in 1992. And when he was elected, they asked me to come back to Washington. I spent a year and a half back there working in the Clinton White House. I had done my honors thesis in college on health care reform because it was about 1/7 of the economy and it was broken. And so there was a. If you remember, Hillary Clinton had a healthcare initiative, healthcare task force. And so I came back to work on that, which was a wonderful experience to kind of be 21 years old and living in Washington. And it was very early in administration. We all thought we were going to change the world. And it was great just to get the kind of east coast experience. But one of the things I realized working there was that the people that were really making an impact and moving the native were people that had been in other careers and that had kind of come into government to lend their service and expertise and whether they were business people or lawyers. And so I decided at that point I would Try to go to law school. Ended up going to nyu, which is another great experience. Getting to live in New York City for three years. And I see it behind you and this morning, and it's obviously, it's a wonderful thing to have early in your career and be exposed to the energy and the intellect and the talent and the pace of New York. And so I really, really like that. I mean, I think the best part about going to NYU is I met my wife in the first week and so we lived there for law school. And then I moved west. I wanted to come back to California. My wife was concerned LA wasn't a real city, so we moved to San Francisco. We thought that was kind of the best of both worlds and lived there for two years and then came down to LA in 1999 and have been here ever since. So. And I look, I liked, I liked practicing law. I was at a big law firm again, working with really smart people. It was long hours. It was really interesting, complicated transactions. Out of that I worked on a acquisition for one of the big movie studios and out of that they asked me to come to work for the studio. So I went five years and worked in the corporate venture capital and business development group at Warner Brothers. That's when I first. That's when I first learned Excel. I didn't know how to use Excel at the time. And when I first learned to kind of do investments and I spent five years there and had a global portfolio. I spent a lot of time in Tokyo and a lot of time in London and, and it was really, really interesting again, working with, working with really, really good people and really complicated things and getting very fast paced. They worked very hard, but I didn't love.

Did you have a part in building out some of the film studios as well?

That's kind of, you know, no, because I wasn't on the. It was interesting. I wasn't on the real estate side. I was on that, you know, on this corporate investment side. So we would, you know, we would look at technologies that were going to impact our business and then go buy those companies and try to bring those in house and those kinds of things. So it was a. It was really interesting. I just didn't love entertainment. Just I didn't have a passion for it. And I think to be good at something, you have to have a passion for it. And so, you know, I wanted to get back to something that was more tangible, you know, and I'd done a, you know, I continue to do kind of politics and city stuff throughout My career on the civic side. And I thought real estate, what a great opportunity to take my investment experience, my legal experience, my civic experience, working with cities and pull that together in something that's really tangible. Decided to be part of the founding team of city view in 2003 and I've been here ever since.

Wow. So, Sean, before we go down that path and talk more about the real estate approach, you're being a little humble with your civic engagement here. So you were appointed by President Biden in 22 and the US Senate for the Metropolitan Washington Airports Authority Board. And then also I see that from 2013-21, you served as president of the LA Board of Airport Commissioners. Those sound like pretty big positions. And thank you for your service with that. Interested to hear how did I mean, you've got going from Warner Brothers and then focusing in on airports. I mean, that seems like pretty specialized work. So where did you learn and what did those commissions consist of?

Yeah, so I always had the kind of public service vein, right. Of what I wanted to do. Not full time, but I always kind of lend my expertise. Again, it's part of what I saw when I was in Washington. People who had a private sector job and a career and were adding value there, but also took some of those skills and expertise and resources and applied them to something in the public. And so, you know, I, you know, my first commission, I was actually asked by Governor Davis to serve on a tax policy commission on. I was at Warner Brothers and that was my first experience with that kind of role. And I really liked it because we were able to to do a bunch of hearings and create things like a rainy day fund and recommendations to how to kind of how to make the state more fiscally responsible. And you know, now the governor's calling on the rainy day fund when he is short for money. So, you know, we were able to actually do some good work. And then, and then the mayor at the time appointed me to the one of the area planning commissions because I was working in real estate and that happened to be the one on the west side. It was president of that commission. That's the one that covered the Palisades. That's when I first got to know really that part of the city. And that led to a role in the city planning commission under next mayor, which is citywide. And that was really interesting because I got to understand how land use policy works and I got to see good developers come to the commission and bad developers come to the commission and kind of really worked really kind of Honed my instincts and our instincts as a firm to engage early with the community on these issues. And then when Mayor Garcetti got elected in 2013, he said, you know, we have this real issue with our airports. You know, they haven't been invested in really since the Olympics in 84. They're, they're way behind in terms of technology, in terms of the customer experience, in terms of infrastructure. Like, we need to do a massive overhaul, upgrade, modernization. And I need someone who has real estate experience, but also civic experience, because you can't just go in and run everybody over. There's all these communities that are affected by, you know, 65 million people a year come through, and it's a front door to la. So he said, would you come on and kind of, you know, undertake this task? And so I did. That was a big job. It was. I had to kind of go to all my other civic boards and other things over the years I've been on and kind of use that as a reason to step off and focus on it. And, you know, we put a new master plan in place and really, you know, figured out at lax, which is, you know, at the time was one of the biggest airports in the country and the world, that it was actually not a bad experience. When you got to the curb and you went inside through tsa, it was a terrible experience to get to the airport. And so we worked on kind of a master plan and said, let's run a train system to the airport and connect to public transit so people don't have to get in their car. We're one of the only major airports in the country in the world not to do that. We had 29 different rental car lots spread all over the area, which was, you know, was created terrible traffic and congestion. We said, let's consolidate that. And so we built 6 million square foot rental car facility, which is the largest in the world. It's actually the second largest concrete structure in the country after the Pentagon. So we were able to, you know, we built, we modernized all the terminals. We built new international terminals, and it's not quite done yet. It'll actually delivers December of this year. The train system, it's built, they're testing it now. And so by that time, it'll. It'll kind of be ready for go. It was a $20 billion endeavor. And, you know, I was really, you know, really happy with how it worked, and I had to build a whole new set of skills there. And out of that work, the Biden administration called and said, you Know, we'd like you to come on the national authority and you know, we want to rethink Dulles and some other things. And that was much more political in la. It wasn't as political. That was, you know, I had to go through a senate confirmation for 15 months, which was interesting. And again, these are all volunteer positions. You don't have to pay for these. You gotta like what you're doing. But I did that and was there for two years and that was a great board. And we made major changes at Dulles and got that on the right path again and other things. So anyway, those are, those are all things I've done. I only try to do kind of one major thing at a time because obviously city views, you know, big business and takes a lot of time and effort and focus and we have investors that trust us. So that's got to be kind of my job. 1. But then I try to pick one civic endeavor to focus my, you know, my kind of my public instincts on.

Yeah, what a wonderful thing to take your experience from the private sector and to do service and help the public sector. And you know, airports, I mean, for travelers from all over the world, it's the, you know, the first thing they see when they come to our country. And I know in New York having, you know, just wrapping up LaGuardia and Major, Major, I think another $20 billion project at JFK, you know, fully underway, but, you know, not just what happens within the airport, but again, all the master planning and helping navigate that and also thinking, I mean, I don't know if you got involved in kind of the real estate aspect, if you will, within the walls, but just even thinking about the retail programming, I mean, you go to LaGuardia now and it's, it's as if you're in a, you know, a very high end. I don't want to call it a mall, but it's, you know, you can tell that, you can tell that the, the retailers, the restaurants, it's all very curated and I don't know if you got involved with, with that on the.

That was one of the really fun parts actually. And it's, it's actually a really important part of the revenue stream for an airport is a non aeronautical revenue stuff that's not directly related to kind of landing fees and leasing of your gates, et cetera. And that's where you can really grow your revenue. And airports are nonprofits, but they're protected by the federal government from the city. So for example, LA City could never take our extra Profit every year. So we ran by kind of right before COVID I think we were running 4 to $500 million of kind of free cash flow every year at LAX. And we could take all of that money and roll it back into improving the airport. LA city couldn't take it from us, the FAA wouldn't let them. So we on kind of how to create a better passenger experience, how to drive additional non aeronautical revenue. We changed the way we did concessions while we were there to bring in some, you know, for a number of the number of the terminals, kind of really high end mall owners to come in and partner with them to say, you know, you really know how to create an experience for people, you know how to drive revenue, you know how to manage tis, let's partner with you and bring you in and give you a terminal and really see what you can do. And the airport retained appropriate authority to make sure everything worked. But it was, I think that models really successful one.

Wonderful. Well, I appreciate you letting me ask those questions. You know, 200 plus episodes. We've never had a discussion about airports and sorry, it's non, what's the term for it?

The non aeronautical revenue.

Okay, I got to remember that one.

I could be down at airports all day long, but I won't.

Good. Okay, so back to City Views. So maybe it'd be helpful in your role as CEO. Maybe tell us a little bit about the organization. What, what is, you know, how many people within the organization, how is that divided and how do you spend your day?

Sure, yeah. So yes, we've obviously grown over the years. As of today we have about 200 people within the organization. Maybe 50 of those or so are with the managed investment company. Right. With City View proper. And then we have a captive property management company that we use and we just, that doesn't really do third party work, that just manages City View properties and a handful for some of our investors who've come and asked us to manage for them. But so that's how we're structured and about 50% of what we do is development and about 50% is value add or core plus. So we have kind of different teams that focus on that one acquisitions team that does everything. But we have a full development team who have development expertise and they also have construction managers on that team. You know, when we, when we build a great new project and we have an incredible, you know, superintendent or someone who's built that project for us over two or three years and we're close to often we will bring them into the City View team in a full time role and have them help us manage our other general contractors, et cetera. So we have development team, we have a value add team, obviously robust asset management, finance, you know, capital raising. We actually just made a major hire for the firm that started this month. We're opening a New York office. James. So we'll say hello when we're there. Good. We hired, we hired a guy named Christoph Donner who was CEO of Pimco Real Estate and Allianz Real Estate. Before that ran a, built and ran a $22 billion portfolio. And he's come on to be kind of our global head of capital development and strategy and really help us scale the firm. So I would say I spend most of my time either interfacing with investors, that's a big part of how I spend my days or managing the team here I chair our investment committee. So obviously I'm very involved in that aspect of the business. But it's a lot of management. I remember when Lee Coco overtook the car company to turn it around and somebody asked him what's it like being in a car business? He said, I'm not in the car business. I'm in the people business. Because so much of your time is making sure you have the right people and the right seats on the bus and making sure they have what they need in order to do their job. So that's a big part of how I spend my day.

Yeah, I'm a big. The right seats on the right bus. And I think that was the Jim Collins. So tell us, so how do you find the right people? Is there a culture that's unique to City View? Tell us about that.

Yeah, I think we talk a lot about culture and I think a lot of people do, but I do think we've developed a strong culture over the years and it kind of doesn't happen by accident. We spend a lot of time, you know, focused on bringing people into the team that kind of are team players. That's really, really important. Where we've, where we failed bringing in senior people or mid level people in the team is when they're not team players. They're kind of a, maybe they're really talented and really good at what they do, but they're kind of have that lone wolf mentality. It doesn't work for us, right or wrong. So. So I think that's a big part of it. We're very focused on, you know, working the problem. That's a big, you know, a big kind of, you know, ethic for us. You know, I served in the, in the naval reserve for eight years. I joined after September 11 and I was an intelligence officer and I learned that skill there, which is we were not allowed when there were issues to bring them to senior officers and be like, we have an issue and throw up our hands. Like you had to come in with every issue with three potential solutions that you'd thought through and give the pros and the cons and then they could assess what the right course of action was. But that was a, that's something we employ here in our culture so that we're always kind of focused on problem solving.

Wow, I love that. That is definitely. Yeah. With my first firm around the partners table, we said no hairballs. You can't just throw stuff out on the table. Don't come with a problem without a solution. So I very much love the idea of being solution oriented. And how do you find or know? Because having the right team player, it's so important. So how do you, I don't know if you get involved in the hiring, but how do you know when someone's going to be a team player?

So, you know, look, you don't always know. You try to do your best in the assessment process. I mean, first of all, we had a lot of reform referrals, you know. You know, Blackstone has been one of our biggest investors over the year. We've done over 30 over the years, over 30 projects with them. They've been wonderful investors. Like, we've had a number of people come from Blackstone to work at la, work in our office here. Often they're in New York, they want to come west. So those are people that we know, we understand kind of the work ethic and how they operate. So we get a lot of referrals. We spent a lot of time for the, especially in the, in the key, more senior hires, in the screening process, you know, interviewing multiple people. You know, we have, you know, seven partners here. It's not uncommon for someone to interview with all seven partners. If it's a senior role. You can't do that with every role, obviously, because people are busy and you have to, you have to make progress. But so we screen for that. You know, we're obviously looking at references. We are. And we're very open about what our culture is. And I'd say we get it right two thirds of the time, one third of the time, no matter what we do, it's just not a good fit. And that just, that happens. But I think that the better Our systems are. The better our process, the more open we are, the kind of higher that percentage is of getting it right.

And Sean, how do you manage and prioritize your time? Because you have a lot going on, just not at the company, but on the civic side as well. The management. But also sitting is on the investment, chairing the investment committee. I mean, that is a lot. So how do you manage your time and figure out how to be most efficient?

Yeah, so we're. We're very goal oriented in terms of process that we go through to make sure with the senior management team, we spend six days a year off site with the management team, broken over the quarters and two days in December to really set goals for the firm of what, how we're going to measure success and accomplishments. So we're like laser focused on our objectives. And then every senior person has kind of their three goals that they have to do. And we do them quarterly and we literally review them every Monday. We have a management meeting with about an hour and a half every Monday morning. And we deal all of our operational issues where we put up the goals to do it. And I review those every week for the firm and for me. And then I look at my calendar. Calendar actually do it on Sunday. I actually do it on Sunday nights because it's quiet and I'm at home and I can think about it. And I say, okay, well, you know, here are my goals and here are my calendar. And as the goal serving the calendar is the calendar serving the goals. Like, let's make sure I'm focused on the right things. Then. I just, I try to be disciplined and not get to, you know, not get distracted. I mean, we, we're also in the office five days a week. I know that's not popular with everybody, but we have been since the day the governor let us come back in 2022. And I do think that's a little bit of a key to the success that we've had, is that everybody's here, everybody sees each other. The communication's better when you don't have to track someone down on Zoom to get a question answered. So anyway, that's how I try to kind of keep us moving in the right direction.

Yeah, the management style. And to throw out another book because this sounded like some of this was coming out of Gino Wickman's traction. I don't know if you know that book, but he talks about the 90 day rocks and what are the, you know, what are the three major things that you're going to accomplish over the next 90 days. And if everybody knows what everybody's primary focus is, you know, that then you don't have people trying to double up on things and of course, collaborating where necessary, but then having that. That focus to prioritize, I mean, so important. And I'm sure as much as, you know, things that you need to do, I think also things that you're. You're trying to, you know, scale down or to. To delegate, I'm sure is also really important.

So it's fine. So. So we use the traction system. That's our operating system. Wow. We do rocks. We do the rocks every Monday morning. You know, okay, we've used Rocket Fuel, which is the second, you know, second book.

So I got to get on. On that. That, that I.

Everybody who comes to the company gets a copy of that book and we take them through it. And like, we use. We're very disciplined with that. Yeah, I. A few years ago, a CEO I know recommended that to me and we said, what a wonderful kind of plug and play operating system for a management team. So, yeah, we used a traction system.

Oh, that's great to hear. So what are the goals for City View? I mean, what does the company's future look like? I mean, continuing to grow this incredible portfolio. How many units in total are we talking about now?

About 10,000. Yeah, we have about 10,000 units across the portfolio. And, and look, we're always, you know, we're always buying and we're always selling, you know, we're selling a number of projects this year. But look, our focus really is on continuing to scale, but within multifamily. So we're not looking to go in industrial or retail or office or hotels or something like that. You know, we've really, you know, become comfortable that we're, you know, we're, you know, we think an expert at multifamily. That's what we focus on. And we've been focusing on scaling our geography. You know, we're heaviest, heaviest in California, and a lot of our brand is California, so a lot of people think we're just in LA or we're just in California, which is not true. But, you know, a lot of. We've done so much here that we're kind of known for that, and it's been great. Look, at any given day, California is the fourth or fifth largest economy in the world. And we trade places with Germany. And I remind my German friends that we have half the people, which means we're twice as productive.

Should they know that.

And I'LL no, no, I'm just, I'm just joking. But we, but yeah, no, we, you know, so we've done a lot here and in California is a very difficult market to build and difficult, very highly regulated. But if you know how to do it, I believe you have a competitive advantage. And we've done a lot. So we'll never give up on the California market. That said, we are trying to do half of all of our new deals outside of California, whether that's Seattle or Denver, Dallas or other markets like that. And you know, we've stayed kind of west of the Mississippi. We did, we just spent a six month process with a third party market research company really analyzing across, you know, 90 different variables. It's kind of the best 40 real estate markets in the country to invest in. And back and forth process and built a fairly complex model to come up with our own scorecard. And so, you know, we're going to continue to invest in our western markets, but we've identified some markets east of the Mississippi that we're going to start to look into. And now with the New York office, and we opened a Dallas office last year, we have more reach. And so we'll start to scale geographically, but as appropriate, we're going to take our time. We're going to make sure we have local people who understand the markets. We're not going to kind of rush in from California, California to Boston. But we do think that that's kind of the trajectory that we're on as a firm is to truly be national. We're already national in terms of our capital relationships, but we want to be national in terms of our geographic footprint as well.

So your comment about challenges to build and barriers of entry. Right. So there is obviously challenges, but also some positives. And New York in very much the same way. It is very, very difficult to build here. I mean first of all, just the geographic constraints, but also all the approvals and the know how. But what that does is it also, you know, once you have built a project, it makes it that much more valuable. And I guess, and you did mention, I think Texas as well is, or Dallas is maybe part of the focus. And you know, I guess the counter is, I mean you've got these incredible growth markets but then if you have zoning that maybe is not as stringent, you know, is there going to be more competition? I mean we could talk about the vacancy rate in Austin. Is it too much of a good thing? So, you know, any thoughts on kind of barriers of entry as opposed to you know, having, you know, much more flexibility. And you call it a pro business environment.

Sure, sure. And look, that's a major thesis for our firm since we started investing as we want to be in places that we said had strong demand and we saw supply. So where are markets where you have jobs and people and incomes growing much faster than the rest of the country, but where is it also difficult to build? So you have that imbalance which creates attractive kind of, you know, multifamily investment. So that's been our thesis. And if you look at the markets that we're in, most of those markets meet kind of that criteria. And that thesis. Right. And that. That's been our. That being said, you have a place like Dallas where it's not as hard to build, but you have 383 people a day moving there, and they can't. The demand is so overwhelming that that's a market we don't want to ignore. And there's pockets of Dallas where it's harder to build, and there's pockets where it's greenfield and you can build whatever you want. And so we still target submarkets within there that are going to be more difficult to add new supply at a challenge. So it's a big part of it. And look, Austin's a market that we've had investors in. Austin, we know Austin well. That's a market we haven't invested in the last few years because we've been worried about all the supply coming online. Now, that being said, as that absorbs over the next two years, will that be a good opportunity to invest going forward? And maybe that's new development, maybe that's buying existing. The benefits of a firm like City View, and there's not a lot who do this that are half development, half value add, we can really turn the dials of those depending on where the opportunity is. So that's a big part of how we think of things. For example, the last two years we've dialed our new developments way down, and we've been buying a lot more existing because we're buying it at 20, 30, 40% discount of what we can build for. So why would you build. That being said, we have 2,500 units now in entitlement that in the next 6, 12, 18, 24 months, we can throw the switch and go vertical because these are great markets where jobs and people have continued to grow, but nothing new is being built because of interest rates. So you're going to see this impact of supply, demand imbalance. It'll create A good environment to build. So we're always thinking about that balance and where do we want to play today and where do we want to set up for the future? We call it our running game and our passing game.

Love it. And I would love to see that scorecard on the 40 top cities. I'm sure that's part of the secret sauce, but, but it sounds like you're taking a very data driven approach to your decision making process on what cities to, to devote your time to.

We take a very data driven approach and then, you know, we're not going to invest in 40 cities. We're not big enough to be good in 40 cities. But then, you know, then we control for size or anything that's got less than 125,000 or 50,000 units, we may take off the list just because there's not enough. And then look, we, you know, then we apply some other judgments as well. You know, one city that kept coming up a lot in this was Indianapolis. That's probably not a city we're going to invest in the next couple years. It's not one that we know well. It's a capital that isn't rushing to be in Indianapolis. So even though that's high on the data list, we kind of put that in a different category for now. So it's not just data, but we want our decisions to be informed and driven by data and then we're going to apply our judgment and experience from that point.

Well, Sean, I could sit here and ask you questions for the next hour. I mean, my next thought is, what are you going to build in each of these markets? And are you thinking high rise, mid rise? Okay, fine, I'll ask one more question and then I want to circle back to what we were talking about at the beginning. But yeah, what are you delivering? There's definitely a really a look and a feel to a city view property. I mean, really, you know, architecturally distinct. You know, so is this something that you then replicate in other markets or are you kind of sizing the project? I mean, if you hopefully New York City's on your list, I'd be again, very curious to see how, how we score on that top 40 list. But, you know, would you go vertical to do a couple hundred units? I mean, what is the kind of the approach in the construction aspect?

Yeah, so, so I would say, you know, generally we like to, we look, we always start with our resident. Right. Who are we going to be renting to? Right. And then we kind of build and design everything around that we like to, to, to focus on people that are somewhere between the median income and kind of 180% of the median income. And that may sound like a lot to some people. People might go, it's like super luxury. But just to give you an example, I mentioned I had a brother who's a firefighter here, married to a school teacher. So they make $140,000 a year between them. That puts them in the 200th percentile of median income in Los Angeles to give you a sense of where it is. So it's very difficult in most of our markets to build for people that make less than 100% AMI because that's truly affordable and it's critical housing that's needed. But you need government subsidy to do that, you need bond and other grants or those kinds of things. We don't play in that area. That's a very specialized area. Everything we do is privately financed from the market. So we really at first start and say, okay, if we're going to focus on this kind of 100, 180%, what should we be building? It's very difficult to build high rises because of the cost to meet that need. So what you'll see with City View is a lot of buildings that are kind of three stories to seven stories, type three and type five construction. What we do do is we highly amenitize them. We have primarily a millennial renter and they don't view their home as simply the four walls of their living room and their kitchen and their bedroom. They want a rooftop deck, they want an Equinox style gym and they want, we have a co working self working space called CV Works. We put in every project of ours and those are like great places. You feel like you're in a kind of a professional place because now we have a lot of people that work hybrid. We have people that consult, we have people that work from home. People just want to hang out. So those are all the kinds of things about like creating just a great environment. We don't have a cookie cutter kind of like here's building A, B and C. And we go to each project, you know, figure out which one fits. Because the communities that we invest in are also unique and interesting that you really want something that, you know, want something that's kind of bespoke to that community. You know, if you're building something in Culver City, it's got a tech focus. You know, here in la that's a very different vibe than a project we built called Deco In Denver that's right near, you know, kind of Cherry Creek and DU which has much more of kind of an outdoor lifestyle, a different flavor. And so every building is unique. It's more fun, probably less expensive if we just had a cookie cutter. But I think we, you know, we're able to attract more tenants. They want to stay longer, they want to, you know, willing to pay higher rents to be in a truly a kind of a unique bespoke building.

Wonderful. Well, Sean, really appreciate everything that you've shared and wow, what an incredible story and what you and City View have been doing, you know, just to end and bring us back to what we were talking about initially. And most important, top of mind, you know, what would you say to our listeners out there about the importance of getting involved? I mean, you get a lot of people across the country, around the world who want to be helpful right now. What would you say to those people?

I would say don't give up on L. A. Don't give up on California. I'm trying to ignore a lot of the politics. Again, there's a lot of finger pointing and who did what when. And again, important questions need to be asked. But it'd be a shame if that distracted us from actually helping people and actually helping these communities get back on their feet. And look, when this is said and done, I think this is going to be the. The second most expensive, impactful natural disaster that's happened in this country after Katrina. And so this really is a national issue, not just a LA or California issue. And I just ask people to stick with us, ask people to donate where they can. We put a couple of nonprofits and charities on our website and our LinkedIn that support the firefighters here at Lafayette, Cal, fire and victims of the wildfire. And we're doing that amongst the company. And, you know, the company is also matching any employee donations and like that. So I would say if people American Red Cross has a fund as well, because, you know, this is. The scope and scale of this rebuild is going to be, you know, incredibly large. And, you know, we just need as much help as we can get. But don't give up on us. We're coming back.

Wow, Sean, this has been amazing. And I love, even with that parting comment, you know, you're so focused on the solution and the problem and that. That's just really so wonderful and needed to, you know, to be heard, especially at a time like, like this. And so just thank you so much for joining us.

We'll.

We'll make sure, as always, in the show notes and@JamesNelson.com that's where you can find the show notes for this. You'll find the City View website and and importantly those charities. And hopefully you feel so inclined after this episode. I know I do. To be giving and helpful where we can. So, Sean, thank you again for taking the time and joining us and wishing you and family, friends all the best during this challenging time and certain with really your approach that you certainly get through this.

Great. James, thank you very much. Thanks for having me on today.

And thank you everyone, as always, for joining. This has been your host, James Nelson, until next week. Thank you again for joining.