Thinking Big with Wendy Berger

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis & Young's Tri State investment Sales Group. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here's your host.

Welcome to show number 158 of the Insider's Edge to Real Estate Investing. This is your host James Nelson, Principal and head of Tri State Investment Sales for Avison Young. Thank you as always for joining. We're going to be having some wonderful female guests joining the show. Thanks to Michelle Klieger who has been kind enough to make some introductions through her incredible girl gang. Thank you network. So really grateful that she was able to connect me with Wendy who I also had a chance to connect with through BizNow. They run an incredible conference down in Miami which is where Michelle and Wendy first met. So today you are going to learn about Incredible insight into getting a feel for a neighborhood and developing expertise in a niche market with Wendy Berger, who is Principal of WBS Equities. She's been there for almost 30 years when she started the company. She has been involved as the developer, lender, property manager, broker and investor in her past career. She began her career at American national bank and Trust Company of Chicago in commercial lending. She also spent several years as a principal with Berger Realty Group, an 80 year old family owned business where she focused on residential industrial property management development where she was responsible for managing 3,000 apartment units, over 200,000 square feet of commercial space and 250,000ft of industrial space. She has paired her decade of experience in technology startups with her real estate knowledge for successful outcomes. Wendy grew up in a family that was involved in real estate business in Chicago and his memories of playing at construction sites. As a child. She vividly recalled riding through the same neighborhoods repeatedly as her relatives, observed trends in the area and looked for indicators that change was coming. This background helped her establish the value of getting on the ground to find opportunities. You cannot buy or build real estate sitting at your desk, she says. I could not agree more with that statement. And after spending time in the technology space, Wendy spotted a real estate investment project and purchased an older hotel in Chicago which she renovated both physically and digitally. Taking advantage of the rising trend in online bookings, she successfully marked, marketed the hotel and increased the number of rooms rented. She went on to sell the property in early 2007 and applied the lessons she learned to her next deal. Through her connections, Wendy was given an opportunity to oversee the construction of a pizza manufacturing facility and after completing the project successfully, she realized a great opportunity in building food manufacturing and food distribution facilities. She has formed a team of experts to help her carry out these projects, which often involve long term commitments. She actively invests alongside with her partners and she has also served on the board of directors for the Green Thumb industries and branched into the cannabis industry. And today Wende regularly mentors young women who are interested in the real estate industry, encourages others to make courageous career moves. Think big and don't worry about whether it's possible or not, she says. And big thinking precedes great accomplishments. This is also, I've got to say, one of my favorite interviews where Wende also gets deeply personal and she shares about an experience that happened to her and she spoke about it on the TEDx stage. So you'll want to definitely listen to the latter part of this interview and turn how she took a very challenging situation and turned it for the positive and to share her story with others. So as always you can go to jamesnelson.com where you can find the show notes for this episode along as how to best connect with Wendy. We're going to have a brief word from our sponsor and I'll get right into that interview with Wendy Berger, Principal of Wilson BS Equities. 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 their 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 and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more. Welcome everyone. Today I am thrilled to have with us Wendy Berger who is Principal and Founder of WBS equities and also the Chair of the Board of Directors for Green Thumb. Wendy, welcome. Thank you so much for joining us.

Delighted to be here with you today. Thanks for having me James.

Great. So Wendy, for our audience, maybe just give a little background on your story and maybe how you ended up finding Your way into real estate?

Sure. Thanks. I grew up in a family that was in the real estate business, so I had a great head start when we were kids. My uncles would throw all the kids in the backseat of the car on the weekends, and we would drive the neighborhoods of Chicago. And for us, you know, we, we had all sorts of games that we created around this, and we would go to construction sites and play on mud mounds. And so I had that foundation into it. But like so many of us, my path into particularly industrial real estate was completely accidental and fortuitous. So I now I specialize in building food manufacturing and food distribution facilities. And that was completely accidental. But the great, one of the great accidents of my life.

Wonderful. And I, I'm, I'm sure we'll get into that, but I, I, I've got to ask because I'm sure there's some stories from your childhood days going around Chicago. And I, I actually, by the way, grew up in Madison, so spent some time in Chicago as well. I don't know if you're a Bears fan. I still have a.

Very hard to be a Bears fan, but. Yes.

But still thinking about, you had some good years with Ditka and the Super Bowl Shuffle and, you know, so you had your time in the limelight. So. But there has to be some early stories about touring around Chicago. I mean, certainly, you know, some tough areas there. And are there any memories that you have kind of with your family or with your father driving around checking out properties?

Yeah, my uncles were really big fans of driving the same neighborhoods over and over again. And the thinking there was, if that you drove them over and over as change happened, you would learn to feel it. And so there were a couple of neighborhoods, particularly on the west side of Chicago, where I didn't understand at the time why every couple of months we're driving the same places over and over again. But I believe in me that developed a gut instinct for feeling change in a neighborhood. And what they were always looking for was what's next or areas of opportunity. And I think that developed in me a skill that today I'm really proud of. And that's the ability to see and feel change in a neighborhood. Right. You could pick some neighborhoods and say, oh, this one's going to change, and some neighborhoods that you believe there's tremendous opportunity, but for 20 years, nothing has changed. What's the difference? Right. And part of that is gut and where people are willing to make investment and what are the things that drive people to invest in one community versus another. And I think my uncles, by throwing us in the backseat of the cars every weekend, helped me to really develop that skill. And as I said, I'm really proud of that today. And that's part of what makes developing real estate fun and interesting.

He's feeling things, no doubt. And, you know, today it's so easy with technology to do a Google stroll on Google Earth and try to check out a neighborhood, but you miss so much when you're not there in person. And when you actually look and you can feel, as you said, a neighborhood, you just. You gain so much more. So, you know, we've talked about this on the show. I've talked about it. In my book, there is no substitute for pounding the pavement and seeing what's out there.

You cannot. One of my mantras, I have a lot of mantras. You'll hear a bunch of them in this conversation you and I are having. But one of my favorite mantras for this business is you cannot buy or build real estate sitting at your desk. So, like, you know, the pandemic work from home thing, it wasn't that big of a change for us. We all came here and we were together, but I have never valued having my team in the office every day. If we're all here every day, we're not doing a great job for our tenants, for our clients, and we're certainly not prospecting sitting at our desks.

Love that. So did you go directly into real estate after school? I noticed in your bio that you spent 10 years working with tech startups. So be curious when that happened and how that fit into your journey.

I thought in my life that I would have two jobs. My first job and then my second job, which would be working with my family. And that's really kind of how I thought about my life, and quite happily. And then, as we all know, things change fortuitously for whether you think it is fortuitous at the moment or not. And my first job out of college was working at a Middle Market bank here in Chicago, and I loved it. We were basically lending to widget makers and in my case, lending to a lot of McDonald's suppliers, which was my first entree into understanding food manufacturing businesses. And so I went from my first job at the bank to working for my family. And then, like a lot of family businesses, my family's business did not make the shift from the second generation to the third. And for me personally, I loved the real estate business and I hated working with my family. So I left and I ended up Very accidentally. Again, you know, I think about a lot of the great accidents in my life going to work at a tech startup. And we were the first website development company in the country. And from there we built that business very quickly, sold it, and from there the same team that had founded that company went on to start Orbitz. We were not the founders of Orbitz, but we were hired to get the business up and running. And that was really my first experience with what I call explosive growth startups. At Orbitz, we went from zero to a billion in revenues in one year. It's like a rocket ship ride. It was awesomely fun and taught me so many lessons about, you know, explosive growth and what, you know, what's positive in that kind of growth and what's not, and how to, how to try to strap on and, and steer that rocket ship.

Love it.

Great experience.

I want to circle back to that, but I've got to ask you if you don't mind sharing that, you know, when you came to that realization that it was not going to work, being in the family business? Because I'm sure there's going to be people listening to the show right now and maybe they're in a family business or maybe they're thinking, thinking about going into a family business, you know, to what extent you can kind of share pros and cons. And how were you able to kind of remove yourself from that situation while still, you know, being able to, you know, family holidays and being with the family. Were you able to kind of make that clean differential?

Not at the beginning, but thankfully in the long term, people's emotions sort of come back down from being frayed and exposed. But like a lot of families, that there is no separation in many family businesses, particularly I think in real estate families, between family and business, it is what you talk about from the minute you wake up until the minute you go to sleep. And that is the expectation. And there was nothing negative about it. But my belief was that I really wanted to. After getting some experience and after really developing leadership skills, I wanted to lead. And that opportunity wasn't there to lead. And so from my perspective, it was their business, not mine. And if I wanted to lead, I was going to go out and start my own business. And that's what I did. And I found, I remember very clearly thinking, okay, that was a great idea. Now what am I going to do? Like, what does that mean in reality? And the first couple years I was on my own, I really, truly did anything I could to make money in real estate. Business trying to figure out, okay, smarty, you know, you wanted this thing on your own. Now you actually have to figure out what it is. And it took me four or five years and forays into different asset classes like hotels, until I found. Found a niche I really loved in industrial. But my. When I left the tech business and got back into real estate, I bought an old hotel on the east side of a municipal airport outside of Chicago. And the theory was that we would serve the front of the airplane, not the back of the airplane. Right. So we would be a hotel for the pilots, not the people actually riding on the plane. And because I had been at Orbitz, I understood that people were really booking on online. And so this was both a technology play and a real estate play. And while it was an okay experience, I got lucky. I sold the hotel. I. I took, you know, this old DUMBY property, converted it into a Best Western, ran it as the Best Western, got my butt kicked in many ways, learned a lot of really great lessons, and thankfully sold that hotel in early 2007.

Wow.

Great timing.

Timing, yes. So how did you pull together the capital? And this was your first time with your own investment? Sounds like your first time running a hotel. How did you convince investors that you had the. The wherewithal and ability to do this?

Used all my own money. It didn't raise money from investors.

Wow.

Yeah. It was maybe. Maybe super gutsy and maybe really stupid.

What convinced you that this was. Having never purchased a property before, how did you know that this was going to be a success?

What I learned from Orbitz was that this is 2004 when I bought the hotel. And what I. What I knew from what we were doing at Orbitz was the growth in online hotel bookings and how the algorithm on search engines really mattered to the number of bookings a hotel could get. So I both looked for a property where I could renovate it so that I could raise rates. Right. I knew from my experience working with my family in the real estate business, I had. I think I had a great gut instinct into seeing value in properties. And when I married that with the technology opportunity. Right. So this hotel, when I bought the hotel on Orbit search rankings, it was coming up something like 27th in the search rankings. And simply by tweaking the algorithms, I knew what was happening at Orbitz. By tweaking the algorithms and language, I increased us to the number three position in the market. And that translated in the early days to 20 to 40 rooms a day in additional bookings. So it was really I think one thing I am good at is spotting opportunities. I am a serial entrepreneur, so right. I can, I think I can spot opportunities when I believe in myself, act on those opportunities. And this one was both a here's a dumpy property in a great location in desperate need of physical renovation and a dumpy property in great need of online renovation. And that's kind of how that deal came together. What I don't think I knew was how hard it would be to actually run a hotel.

Right. So I love that you looked at the inefficiencies and you saw in one of my favorite quotes is the Wayne Gretzky skate to where the puck is going. You kind of saw this trend and you went for it. So. But the challenges of operating a hotel. So I know most hotels you bring in a flag, a management agreement. So were you actually managing this hotel yourself or were you, you were able to find someone to ultimately flag it?

I, we, you know, we went to Best Western, which is not a franchise, it's more like a co op membership system. They do not deliver the kind of support that a franchise does that, you know, like a Hampton or Holiday Inn, which was fine. And we did hire a management company. But for I think the vast majority of us in real estate, just because you hire a management company does not mean you go away and do other things. You have to be watching it every day. So I would say we were managing the managers and that was still a full time job.

Yes. And we, I talk about that also in my book that yes, having a great managing agent is a very vital part of the team. But do not be, do not mistake that for the role of an asset manager, which is you to oversee that because you know you're going to be the one who cares the most about your asset and the performance. So, so the timing was great. You were able to make this sale right before the market corrected. So now you've recouped your investment and then some. So when did you dive back into your next investment? And was it that point that you had started really focusing in on the industrial space or did that come later?

This is where relationships really come into play. And I think we all talk so much about it and think about it, but this is probably my best example because it truly changed my entire career. One of my friends who I had started the same day with at a, at the bank that I started my first job at out of college, he and I stayed friends when we both, he left banking and went into private equity and I went to Real estate. And he came to me one day in 2000, it's either late 2003 or early 2004. And we sat down and he said, hey, I need you to build a pizza manufacturing facility for me. So I'm laughing and he's not laughing. And I stopped laughing and I looked at him, I said, greg, you know, I've never done anything like that. He said, I know, but I need someone I trust and I need someone who knows how to build teams and is a great learner. And that's you. And we shook hands and I built a hundred and fifty five thousand square foot pizza manufacturing facility in Romeoville, Illinois, which is about 35 miles southwest of Chicago. And that changed the course of my career. Because if you build one food manufacturing facility and you actually get it right, you're now an expert. And at the time, there just weren't a lot of developers who cared about food manufacturing. It was seen as kind of in the industrial world, it was seen as specialty real estate. And certainly most of the institutional players, unless they were building a building for craft or someone of that level of credit thought, oh, you know, the, the math doesn't make sense. These are specialized buildings. There's no users. And what I saw through the process of building this building was the supply of food buildings in the, in the United States was then and still today to a great extent, non existent, massive demand and no supply. But the institutions did not like these because on order of magnitude, if an industrial building was 60 bucks a foot to build at the time, food building started at 120 a foot. And so there was this, you know, and then correspondingly, the rent might be in the teens instead of three or four bucks a foot net. And so all of a sudden I found this niche and thought, you know what, this is really interesting. I'm a foodie. It's so much fun to tour these buildings and to build them because you literally get to see how the sausage is made, quite literally.

So how did you figure out how to build this specialty industrial? I mean, how did you pull together the team? Where did you even start?

It's a great question. I started at the bottom by looking around and saying, oh my God, how am I going to do this? But no, the trut truth is that I really do believe that I am good at surrounding myself by really smart people and that I know how to pick teams. And so I put together a great team of people and we spent a lot of time sitting in a room together figuring this out. And so I was Hiring great, you know, a great, great general contractor, great refrigeration contactors. You know, at the time I didn't know anything about wastewater treatment plants and I did certainly knew nothing about refrigeration systems or underfloor freezer systems, but I found people that knew each other and were already in this world.

So Wendy, not to. Yeah. Not to press you on this, but how did you know these people were great and trustworthy?

You know, when you, when you start picking up the phone and asking questions and really listening, you start to hear the same names come out over and over again. Right. So in the food world, if you called up some, a bunch of food manufacturers and you spoke to the engineers at those food manufacturing facilities and you asked them who's the best general contractor out there to build food facilities, you start to hear the same two, three names over and over again. And in the world of refrigeration, for food manufacturing facilities, you call up general contractors and you start to say, who's your favorite refrigeration sub? You get two or three names. And so I really spent, you know, a several months on what I would call a listening tour. I just picked up the phone and I said to people, do you have five minutes and ask them a few questions? And from there the picture became very clear. It's like the players elevated themselves.

Love it. That's wonderful and great advice for anyone who's looking to get into a new focus or specialty. So Wendy, fast forward. Tell us a little bit about what your business looks like today. And are these built to suit assignments or do these food processors come to you and they say, wendy, we've got a need. Can you help us find the site and build it or are you building these spec? Talk a little bit about how you've been able to grow your business.

Yeah, so we do not do any food building specific back. There are people who do it in the cold storage, but not really manufacturing the people who do it. And there's some people are doing a great job of it. That's not the risk tolerance that I have. My risk tolerance. I could sleep a lot better at night after. And I think my investors sleep better knowing that we do build to suit only or straight sale leaseback. So we're doing a build to suit or renovate to suit or straight sale leaseback. And we really go out and try to meet food manufacturers. We know the jet. You know, again, it's, it's, it's a smallish ecosystem in this country of the contractors who do this. The subs who have a major piece of it and you start to place yourself in the center of the food world. And you know, I basically, I jokingly say this, but it's not a joke. I hold up a sign on the side of the road that says we'll do real estate for food. That's fantastic.

So, and I guess part of your diligence is to figure out underwrite the companies that you're serving because I imagine these aren't publicly traded. Most of these are private. So you need to get comfort in their financial wherewithal and then making sure that they're going to be there at the end of the day. Because I would imagine you're specking a lot of time and money to deliver. So maybe walk us through how you capitalize these developments.

Yeah, I would say about 30% of what we do is with publicly tradeds. Those are fantastic when they come long. Very hard for us to compete on cost of capital as a smaller business. With those 30% are privately held, generally upper middle market family businesses. And the other 30% are private equity backed companies. And what we really listen for is the story, right? What's the story of the product? So right now we're working on, we're about to start construction of a bacon manufacturing facility, right? So everything is better with bacon. Bacon has become a three meal a day food, right? The change that we've seen in the bacon industry and call it the last 15 or 20 years, was bacon is not just a side with your pancakes or with your eggs for breakfast. Bacon is a side dish at a steakhouse. Bacon is in our Brussels sprouts. The demand, despite all of the trends you can say towards healthier for you, better to eat the use of bacon as an ingredient and then even the byproduct of bacon, the grease, has become something you can sell, not just that you have to dispose of. So we think about the story, right? We could, you and I could sit here and tell the story of where you see bacon and why do people eat bacon on everything from their pizza to their Brussels sprouts. It tastes really good, it's got a rich flavor. So the story really matters. And you know, at the same time, we've done bacon, we've done vegetarian too, right? Why do we like the story of vegetarian? Vegetarian? You know, there is a large segment of consumers who want the better to eat. So we need to, the story has to be a good, compelling story. We then do the research because nothing replaces data. So I am a data junkie, but I still, you Know, my gut has to tell me and then maybe most importantly, the values of the company have to be in line with our values. I don't have to love the food. So my team jokes with me. We built a couple about five years ago. We built a McDonald's hamburger patty manufacturing facility in Opelika, Alabama. And you know, it's just what every nice Jewish, semi kosher, semi vegetarian girl needs to do is build a McDonald's hamburger patty plant. And it's not that I'm anti, I was anti McDonald's or anti hamburger. It's just not, I had never had a Big Mac and, or any kind of McDonald's hamburger. And so at the ribbon cutting of this facility, I ate my first Big Mac. The team was like, okay, you, you know, you can't finish this project and not have one. So while I wasn't a Big Mac eater, the values of that company were values that the leadership and the culture the at the company were such that it made me want to get out of bed every day and work my butt off to build these people a great facility. So I have to really. These projects are so complicated, they can take easily four to five years from start to finish easy. And so you have to really want to be on the same team with everyone. Because we see when we're doing a build to suit and we're going to own this for the long term, we see ourselves sitting on the same side of the table as our tenant, wearing their hat, making decisions together that are the best decisions for the operations of this company. So sometimes those decisions result in spending more money up front. But because we are very, very long term holders, we're more focused on what's the best decision for, for the long term operation of this facility. When we, we are unlike many industrial developers, not one way is not better or the other than the other. It's just different. We model our hold period 15 years minimum and we expect to go into it. Which is part of why our message to a prospective tenant on a build to suit resonates with them. We are, we're truly going to be that part, their partner. And you know, the best example I can give you that one is that pizza manufacturing facility that we talked about that I built in 2004, I still own today.

Oh, that's fantastic. And I, I love the alignment of core values and that's not something that we hear or talk a lot about on the show and certainly maybe not something that someone would think about doing business with big corporate America. But clearly the importance of what you all were doing. Really incredible to be a part of. So with that all in mind and taking that long term view, maybe tell us a little bit about how your investor base and how you're financing these projects. I would imagine there's probably a difference if you have McDonald's on a lease as opposed to a mom and pop. But are you getting your construction financing, which is the majority of the sources, or is you finding that you have to, you have a stable base of investors that you have to tap into at least to get the project moving?

We are, we've been really fortunate. You know, it took a long time in the early years, but we've been really fortunate to have built up a really great group of investors. They are all generally individuals or family offices, you know, high net worth individuals. We have not raised institutional capital. We have never raised a fund, personal preference. I just don't want the pressure of a fund. The deals that we choose to work on or go after, I don't want the pressure to do too many of those. I want to go after the right kind of deal for us. So we've been really fortunate to have a great group of investors who follow us. Many of our investors came from either the construction business or the food business. And that's, that's been really important to us because again, with food buildings, the cost per square foot, unless you understand it right, if I said to you today an industrial building is going to cost you $600 per square foot, most people would look at me and say, are you nuts like that? You know, that's a residential building or that's super high end retail or you know, data center kind of dollars. And I say, nope, that's what the food business looks like, right? If you think about a food building, it's a lot of boxes inside of a box. So we're raising the equity generally from people we know and it's from us, you know, having great networks of people being active in our communities. So we've been very fortunate there. And the debt is, the debt's always challenging. You know, you can say in every market that, oh, the debt's gotten really tough and now is a tough time. It's never easy. And anybody who says it's really easy, I don't believe ever. It's always based on continuously working your relationships, having a great track record. And in the food world, food building world, there are a small number of lenders and we generally know who they are. So when we're dialing for dollars, it actually, in Many ways helps that the world of lenders open to us isn't the whole world of lenders. It's a, it's a smaller number of lenders, but they understand the story and they understand the cost per square foot. And then it's always ultimately, as you said, comes down to the credit of the tenant. You know, people want to know that we can build things and I think our track record speaks for itself. But ultimately it's the tenant's credit. And we really try to do one stop shopping. So I want a construction to perm loan. I don't want to have to go get a construction loan and then a permanent loan. I've done that. And that's, it's a much harder path.

That all makes a ton of sense. So, Wendy, where do you see this portfolio? And I know you just said that we're here for the long term and one of your first investments, you still own it 15 years later. But then, you know, every day I'm reading about these massive portfolio sales. In fact, just this week, Prologis just agreed to buy $3 billion worth of Blackstone's portfolio. And I was thinking, wow, that sounds like a lot of industrial. And, and then you hear, oh, and Blackstone has another $127 billion of industrial holdings. So I've got to imagine that the big institutions are knocking at your door to buy your portfolio, to get into this space. Do you ever think about exiting along those lines or what does the future hold for you with this business?

That's such a great question. And sometimes I think that for my investors I actually should be thinking about it, but I really don't. We structure these deals when we go into it as cash flow deals. And our investors get used to having checks coming every single quarter, same day of the month, every quarter, like clockwork. So they don't call me and say, you know, when are you going to sell this? When are you going to flip this? They're very happy with those checks. And I think we don't get a lot of those calls because we are smaller and we're under the radar. And maybe if I got a lot more of those calls, I'd feel a lot more pressure, but I don't feel pressure at all. Where I do feel it, and we haven't talked about this really yet, is on the cannabis real estate side of things that we're big enough on that side of it now we've got six buildings leased to cannabis cultivators or, and, or dispensaries. And there, because It's a smaller total market. Our phone does ring on those. And, and I said to one of my investors a week or two ago, just had this conversation, said, yeah, I guess at some point we will have to really start thinking about that. And I think the time is soon and it's a change.

Well, I definitely want to get to that. But maybe after this podcast your phone will ring with maybe some interest in your portfolio. It sounds like a really attractive one. So just last question before we hop over to what you've been doing in the cannabis space and just the idea of having these investors who are willing to stay with you for the long term because I would imagine a lot of our listeners who are out there syndicating, raising capital, a lot of these are always done on these three to five year time frames, maybe seven years. But the promote usually doesn't happen until a capital event. Right. So you have clearly been able to figure out a way to cultivate these investors and be able to hold for the long term. So not that you have to give us your waterfall and your preferred return, but just, you know, how do you structure, just generally speaking, this kind of investment or bring on investors where the whole period might be forever?

Yeah. So we, and there's nothing magical or secretive about what we do. And that is we in I would say almost every one of our deals, we have a preferred return. And today those preferred returns based on credit profile the tenant, let's call it an 8 or 9% preferred return. But they also know that because these are true triple net industrial deals, the rents are going up every year. All of our leases are a minimum of 15 years. Right. We've got some leases that are 20 years. So they know their returns are going to not just be at that preferred number, but inch up every year throughout the term. And what I hope they're doing is allocating whatever their real estate allocation is to I'm a portion of it, I'm not 100% of it. So there are other real estate allocation for a typical investor, maybe with some more, you know, develop and flip kind of investments. So they're not looking at that for me. And so depending on the deal to finish, answering the question, you know, some kind of preferred return, 8 or 9% preferred return, and then generally the same split on the cash flow as with the, the exit. So whether it's, you know, a sale or refinance or on the cash flow, we're somewhere between 80, 20, 70, 30, 60, 40. It really depends on the deal. So soup, we do not have in general, tiered waterfalls. I don't like tiered waterfalls. That just like creates continuous business for an accounting department. My accounting department's fine with just doing more deals, not spending a ton of time on the existing deals. So we try to keep it really simple. And I think ultimately why it's, you know, why I'm okay with the not flipping and selling is because I'm on the equity side of every one of my deals, Perry pursue with my investors as well as being on the promote. So we've never done a deal, I think I'm going to say this correct. We've never done a deal where we were less than 5% of the equity personally. So my investors know I'm shoulder to shoulder with them, which is why when I come to them with a deal that instead of being a 70, 30 split is 60, 40, and I say to them what I, you know, I'm going to have a ton more work on this one. I know it's different than the others, but you know, if you like the story with the rest of them, here's what the returns look like.

Wow, that says a lot. And really appreciate your sharing with the audience how you cultivate that long term investor base. It's definitely something that I think people should be thinking about. As great as it is to hit double, triple or a home run on a three to five year hold, then you get the money back and you have to figure out how to redeploy it. And I would imagine after 15 years and with rent growth, those have worked out very well for you. So let's switch over to cannabis because certainly another, I don't know if we called it a niche or I guess yes, at this point, you know, to me and just, you know, the work that we've done in this space, I know that it varies state by state. So how did you approach the opportunity here? How did you figure out how to align yourself and maybe give a sense of, you know, your role on the board of directors for Green Thumb?

Sure. So I have always been a casual consumer. I like my marijuana the same way I like my wine and my martinis. But I'm also a big believer in plant based medicine. And this is a, a plant with a 5,000 year documented history of helping people. And when I really started to realize this is about 15 years ago, how critical the plant was for so many people and how people were using it and, and this particularly, I saw it in California, I own a home in California, so I was able to legally get a quote Unquote, recommendation or prescription is, you know, how they were known. And I started going to dispensaries and I remember very, very clearly my first dispensary experience. So I, as I tell the story, I'm not sure what was worse, walking in with cash, walking out with product, or the five awful minutes I spent inside the dispensary with what I used to refer to as a high functioning stoner. Well in high sight. It was not a high functioning stoner, it was a low functioning stoner. And the entire retail experience was terrible. It was like walking into worse than kind of what we think about these head shops. Like it was dirty, it was not well lit. And I remember standing in the store thinking, it does not have to be horrible. And then I started going back to dispensaries and going everywhere I was traveling, I'd go to a dispensary. It started really looking at who was shopping in these dispensaries. And sure, there was some of the stereotype, you know, early 20s, young kind of stereotype, stoner looking people. The vast majority of people shopping in these stores were people in their 60s and 70s who were experiencing anxiety, pain and sleeplessness. Right? The three most common things that so many of us have issues with. And so I started looking for ways to invest in the industry because one of my favorite mantras in life is, from chaos comes opportunity. And every time I stood in the dispensary, it was like a different kind of chaos, but it was truly chaotic. And I could not find a way to invest in California where I could get comfortable. You know, I have one of my other favorite mantras. You can't do a good deal with a bad partner. And California was like the Wild West 15 years ago. But when it became clear that it was going to become legal in Illinois, my home state, I thought, okay, this is my opportunity. And as I really started diligencing the industry and all the people who were forming companies to apply for a license, and I started learning about cultivation, it quickly became clear that building a cultivation facility looked almost exactly like building a food manufacturing facility. All the same issues with water and wastewater and mechanical systems and the need for a tightly sealed building envelope. And I thought, wow, I actually could be not just an investor, but a strategic investor. And maybe to the people that I invest in, I can actually help. And I met with 35 different groups pursuing licenses in Illinois and very quickly whittled it down to Ben Kovler and what was going to become Green Thumb Industries. And I made a large personal Bet. And outside of Ben, I think I was the largest individual investor in Green Thumb. And from day one, I said, I want to help, I want to be a part of it. And so I learned about the industry and I really did see that these cultivation facilities, it was the same exercise as building a food facility, nearly the same safe thing. And so I jumped in. And so I've been a part of Green Thumb industries from day zero and continue in my role today as more of a traditional board director. But there's nothing traditional about being on a publicly traded com. The board of a publicly traded company in a federally illegal business.

Right. I was just going to say, I mean the, the challenges of getting financing and these projects off the ground, I'm sure that was quite a learning curve to figure out how to do these. And just like you had specialty lenders for the food processing, I'm sure you've had to forge new relationships to get these projects developed.

Oh, yeah. And in the year for the first couple years, there were no lenders. All the first three deals we did first real estate deals in cannabis were 100% equity.

Wow, wow, wow.

They're just.

That's amazing. I'm. And I'm sure we'll be hearing a lot in the future about that growing portfolio, certainly as we see legalization now across the country. So, Wendy, I'd like to change gears here for a minute and if you feel comfortable sharing, I know deeply personal to you, but I had the chance to see your TED Talk and I just think it would help a lot of people. People. So maybe you could share a little bit about your, your story and, and what you put forth with your TED Talk and then what's come out of it.

Thank you. And, and thanks for taking the time to watch it. Oh, I'm a big believer in if you can't see it, you can't be it. Right. So there are not a lot of women in industrial real estate. There's probably, there's very few of us. There's not enough women in real estate in general. And I think it's important for women leaders to get up and tell their stories. And mine is a story, unfortunately, of, you know, courage and resilience. And while I hate that I have those things, I hope that when I share the story that it will help people to say, you know, a. When we look at other people and you think, oh, their life is so easy, it's not right. Try to be more empathetic. And when you have self doubt that you can hear stories and Something in my story will resonate with you. And this really began about 12 years ago. And in the space of three years, I had two really terrible tragedies in my life. Twelve years ago, my brother, who was my big brother, my sister, my brother and I considered each other, considered ourselves triplets. And he was the man in my life and he was my business partner. And he was tragically killed in a plane crash. It was, you know, we, we started our real estate development business together. And those 40 seconds from takeoff to crash changed the entire course of my life. And three years later, my husband of 24 years committed suicide. And I was broken. It's as simple as that. My life was shattered. You really. First, I didn't want to continue living. And then when you try to figure out the reasons to continue living and you get past sort of the learning how to breathe again and learning how to get out of bed, it caused me to really look at my life and say, what are the things that are holding me back from living fully? Right. I am now truly personally experienced twice the fragility and the preciousness of life. What am I going to do with this gift of my life that I've been given? And I really came up with my sister and I together. But I came up with three things to help drive how I see the world and how I behave every day. And that is, I am determined to live a joyful life, a meaningful life, and a purposeful life. And as I thought about how to do that, what I really recognized was that fear was holding me back. And so I think now a lot about how can we shed those fears that don't serve us? How do we get rid of the fears that cause so many of us, and women in particular, to, to have self doubt, to not make those courageous career moves, to not say, stand up and say, I see this opportunity, I believe in it, and give me the chance to execute. And so I think if we, if we try to believe more in ourselves and shed those fears that don't serve us, the confidence that comes with that, right? So over time, I was able to build back a beautiful life today that I have. You never want to say that good things come out of tragedy, but I recognize that the person I am today, I would not be living this beautiful life today had I not had these horrible, terrible lessons and had I not in particular shed so many fears that were really holding me back. So as hard as it is to, to talk about and to think about, I hope that when other people hear this, something in what I'm saying resonates with them and gives them some motivation or some, something that helps them with courage.

I'm truly speechless. And just the, I mean, I could only imagine. And then to have the courage to, you know, to share that experience, to be helpful to others. And I'm sure you've had countless people who've, maybe they've been in your same shoes, but just as a power of example on how to get through that. So you know, how do you find yourself working with others and you know, again to overcome fear? I mean, what are some of the, you know, the practical steps that help you get back on your feet?

So as a developer, somehow I came up with a metaphor that really resonated for me and that was having tools in my tool belt. Right. So for so many of us, when you're struggling with something or when you run into an obstacle, there isn't one go to all the time. But if you have a number of tools in your tool belt that you say, okay, today I'm not feeling so great about myself. Today I'm going to go out for a run. Today I'm struggling with picking up the phone to make that next phone call or asking for something that I want. I'm going to meditate for first. I'm going to do yoga. I'm going to go have a couple of drinks, you know, whatever it is. But having a number of tools in your tool belt to draw from because I think too so often we say this, the self doubt is what holds us back. And if you can begin to be courageous, and it's even for me lifting weights, right when you begin to make that mind, body connection and you can, can see your physical strength, you begin to feel the mental strength. So it, it's really having different things to draw from because the same thing doesn't work for every mood or for every day or for every challenge. And I think so often people try to draw from the same source of strength and if it doesn't work that particular day, they say, ah, it didn't, it didn't work. I don't have the courage. I'm still, still gonna, I'm, I'm gonna be held back. But if you find a few different things, one may work one day and the next something else works the next day.

So, and that makes a, a ton of sense and you know, to have to share those tools that you have found useful. So I read that you mentor anywhere, you know, four to five, generally women at a time. And, and also I don't Know how you find the additional time to do all the volunteering work that you do in the charitable world? I know with a lot of the Jewish charities, so I guess how do you find the time and, you know, what have you gotten out of the experience of both being a mentor and also giving back?

Yeah. So I am really fortunate. I have an enormous amount of energy. One of my nicknames is Tigger. I wake up in the morning and I am bouncing off the walls in the morning. There is no caffeine needed for me. So that's, you know, that's genetic, and I'm grateful for that. But I really think that as a woman, it is, it is my obligation and one I take on joyfully and gratefully on my shoulders to say if I. I am not listening to other women and helping them solve problems in advance, you know, then I'm not showing any gratitude to the women who came before me. So I love mentoring particularly youngish women. I don't really care what the age is. To help them be courageous and to help them understand their worth. And really, I think for a lot of women, there is this fear of showing vulnerability. And I think so many of us, men and women, have realized there's. There's vulnerability is not weakness. Right. We've all, so many of us have watched Brene Brown's tag talk. But when I show my vulnerability in a business setting, my prospective tenants, existing tenants, any relationships, it's a nice. Another way that we connect. So I love doing it. And it goes back to those three things. Trying to live a joyful life, a meaningful life, and a purposeful life. I almost can't think of any better way than listening to young women who need someone to talk to. And notice I say the word listening. Right. You know, I give them advice, but often all of us just need someone to listen and to be empathetic.

I'm smiling. So wonderful and so true. So, Wendy, this has been incredible. So appreciate your sharing and just so deeply and to share your experience. I know this is really going to have such an incredible impact on the listener. So, you know, to take us out. Wendy, you know, when you are mentoring someone or maybe for someone listening now who's thinking about getting into the business, you know, what, what would you say to that person? And I know we've had, and I don't know if you know Beth Azor, but I've had her on the show and she has this statistic, and one of her goals is to have more women who own real estate in her statistics she thinks it's only a couple percent. So what, what advice and I'm sure it's tough when, when women are taking a look at this industry and they're not seeing a lot of examples like your yourself, what would you tell them to inspire them to get into this and to rise to the top?

Two things. One, this industry is so interesting and so much fun and the opportunities are unlimited. And number two is big thinking, unbounded thinking. Don't worry about whether it's possible or not. Just think big. And again, you know, mantra, last mantra for today is big thinking precedes great accomplishments.

Love it. Well, that is a fantastic way to go out. Thank you again, Wendy. Thank you to Michelle Klieger who made this introduction. Introduction. I know she's doing incredible things with Girl Gang in New York and across the country and giving women a network in this business. So fantastic. So Wendy, what is the best way for our listeners to connect with you or to find out more about what you're doing?

They can connect with me on LinkedIn. It's probably the easiest way. And you can check out WBS Equities.com or shop at Rise Cannabis, any of our 82 dispensaries across the United States.

Love it. Thank you so much, Wendy. This has been such an incredible conversation. Like I said, I know our listeners are going to get so much out of it. So until next week, this is your your host, James Nelson. If you have not already, please connect with me at James Nelson nyc and as always, you can find the show notes and helpful information help you gain the insider's edge to Real Estate Investing@James Nelson.com until next week. Thank you again again for joining.

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