Devon Olson:

Our staff is very collaborative and, at the same time, respectful of each other. If you've got a better idea on the retail or you read something that causes you concerns about retail, you can bring it up and people aren't offended, they are not protective of their turf. I think it's one of our big positives. It's just really stressing that, that hey, we're a team and we want everybody to have those kinds of things. They have that constant feedback, and that's been real helpful.

Nancy Lashine:

Hello. Thanks for tuning into Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners.

Capital is the lifeblood of the real estate industry, but the decisions on where and how it's allocated are driven by people and personalities. Who are they? What motivates them? What can we learn from their experiences?

On this show, we introduce you to some of the real estate industry's most influential thought leaders and decision makers, and we talk about what is important to them, how they make critical decisions, who has influenced them, and a lot more. Our guest on this episode is Devon Olson, the former director of real estate at the $45 billion Utah Retirement Systems. Devon joined Utah's team in 1985 and remarkably remained with Utah until his retirement early in 2025.

Over his 40-year tenure with the pension, Devon helped to grow the real estate portfolio to over $9 billion in total gross assets. Devon is a leader in the international real estate community with decades of real estate investment experience. He is a wealth of knowledge, having successfully navigated five distinct real estate cycles. We look back on Devon's career; discuss his successes, lessons learned, the evolution of Utah's real estate program, how to build culture, how to invest internationally, and much more.

Devon, this is really fun. I'm really looking forward to this. It's great to see you. I'm super excited for you in your next chapter.

Devon Olson:

Thank you.

Nancy Lashine:

Welcome to the Real Estate Capital Podcast.

Devon Olson:

Thank you. It's a pleasure to be here.

Nancy Lashine:

So during your 40-year career at Utah, you built one of the most unique and successful real estate programs in the industry, and you also built an incredible culture where people stay for decades, including you and Mike. It would be really great to unpack some of the lessons that you learned and understand some of the arc of the growth of what you created there.

I'm going to ask you a bunch of questions and hopefully, we have so much to learn from you, you can share some of the knowledge that you've gained. Why don't we go back to, just to understand the context, when you first joined the Utah Retirement System, what was your first job there?

Devon Olson:

So my first job was just as an investment officer, but it was in real estate. My background was actually in real estate appraising. When I got out of college, I started working for a real estate appraiser and started learning that part of the business. That really served me well in this job that it evolved into, through the retirement fund, because it helped me understand valuation, what created value.

Nancy Lashine:

Right. Did Utah have a real estate program before you joined?

Devon Olson:

Yes. It had started back in the late '70s. At that time there was a lot of tax motivated investment going on.

Nancy Lashine:

Right. The syndication business. Yep.

Devon Olson:

Like syndications. Exactly. As a consequence of that, there was also a lot of inflation. Pension funds wanted to participate in the inflation benefits of real estate, but they said, "Gee, we can't really compete with everybody in the private sector because they're investing for tax benefits." They were tax-exempt. So they thought one area they could was in vacant land because there was no depreciation there. They had a strategy of being able to invest in vacant land in freeway type exits. They bought some really nice property. Then when the S&L crisis came along, the Tax Reform Act of 1986, everything started going down, and they were not patient enough to follow that and hold on. They decided that that was too risky of an investment for them, and so they started making some changes. That was just about the time that I joined, in '85.

Nancy Lashine:

And just order of magnitude, so I think the plan today, last I saw, was 45 billion in AUM, the Utah Retirement Plan?

Devon Olson:

Correct.

Nancy Lashine:

What was the size of the plan way back in '85?

Devon Olson:

Back then it was about 3 billion.

Nancy Lashine:

Okay.

Devon Olson:

Yeah.

Nancy Lashine:

Right. So we're talking about very different [inaudible 00:05:47] sizes.

Devon Olson:

Right. Then the real estate was 300 million. Now, the real estate, if you talk about gross, is about 9 billion.

Nancy Lashine:

That's a pretty big transition. Let's dig in there a little bit. After the S&L crisis, was there more of a focus on the income that you could generate from investment?

Devon Olson:

Yes. Yeah, exactly. That's what really happened. I'm sure the people who bought our vacant can land, I know they did very well, but it was a different risk spectrum with vacant land.

Nancy Lashine:

For sure.

Devon Olson:

There's no income production. As a consequence, I really think it was the best thing for the retirement fund to dispose of that. They didn't just take the money and put it in under the mattress, they used that to buy a lot of distressed real estate that was just super high quality, a lot of office buildings in Chicago, downtown, and various trophy type properties that performed really well for them, and yet had a much lower risk type profile.

Nancy Lashine:

Yeah. In the 1980s, the core type real estate was really office and regional malls, and that was pretty much what you invested in, and maybe a small smattering of industrial property, but multifamily wasn't even considered institutional in those days.

Devon Olson:

We did start getting into multifamily. About 1993 is when we really started going in in a pretty big way.

Nancy Lashine:

Were you early days always a direct investor? Did you ever invest in commingled funds, or did you take the direct investment route from the beginning?

Devon Olson:

We were mostly direct, but we did start doing commingled funds and we were in some of the opportunity funds too, like Whitehall and some of those, and JMB. We were at a commingled fund, and so we did a combination.

Nancy Lashine:

How did the strategy evolve? What was working well for you? What wasn't working well for you?

Devon Olson:

What worked the best for us were these more direct relationships.

Nancy Lashine:

Because you felt like you got better deals, because you had more control or just the numbers came back?

Devon Olson:

The numbers really were much better for us and we liked the involvement of staff with these investments, and that we had a lot more input on where the money was going, and also the people that we were working with. It was really a very nice relationship.

Nancy Lashine:

Did the staff have discretion up to a certain dollar amount or did you have to take all of these investments to the board? How did that work?

Devon Olson:

We created a real estate investment committee and the board delegated everything to that committee board.

Nancy Lashine:

Were there board members on the committee?

Devon Olson:

We did not go to board. It was pretty much myself, our deputy CIO, our executive director, and our chief investment officer. Although there were a lot of people that participated, but those were the ones that voted.

Nancy Lashine:

Did you appreciate how unusual that was, in those days, because most boards didn't give their staff that much discretion, and there was a lot of ... People were just much more concerned about being careful about what they invested in, not taking risk, not wanting to make a mistake. There were not a lot of public pension plans that did what you did.

Devon Olson:

Yeah. It has become clear to us that that was a big benefit and had really helped us for a few reasons. One was speed. We had it to where that group, and especially as it evolved to where they meet more often, it's pretty much whenever a meeting's needed, we can put together that group. We met quickly and it just has been a real benefit to us. Our speed is much better, as far as getting a lot of different people involved. We had our compliance people that were legal participated, and so it was a very dynamic group, but I think the speech really helped us a lot.

Nancy Lashine:

Can you think of an example of where you just felt like you got an incredible buy or opportunity because you could move fast?

Devon Olson:

Yeah. A lot of our deals, and this has evolved to where we're at now, they basically are pretty much opportunity driven, so it's kind of hard for me to say, "Oh, this one was unique," because they all were driven by an opportunity. Somebody would come in and say, "Hey. We've got this opportunity where, if you can move fast, you can participate in it, or be the driver on it." What comes to mind is we bought a shopping center in Boise that was kind of a opportunity that was brought by this particular joint venture partner who had been managing it and knew that the current owner was interested in disposing of it, and we were able to get in and start working on it. It wasn't something that went to market. These were one-off opportunities and we were able to get that consummated, and it went very quickly, and we were able to be timely and bought the existing group out.

Nancy Lashine:

Did you have the authority to jump on a plane to go see an asset if it was in a different part of the country before you moved [inaudible 00:13:10].

Devon Olson:

Yeah, we had that ability. Often we wanted to make sure that we really had it under control before we went and saw the property, but we did have a certain amount of opportunity to do that.

Nancy Lashine:

Can you think of an example of a deal that was brought to you by a trusted venture partner, but you ultimately said no because you just couldn't get comfortable with the risk, in a short period of time?

Devon Olson:

Yeah. We had a lot of opportunities. One was by a group that we had done quite a bit of work with and invested with, but it was a property type that we just couldn't get comfortable with. It was kind of an assisted living, a little bit similar to a timeshare, where we would come in as kind of a development and be able ... Actually, I'm sorry, it was a group of properties that were existing, but it was too convoluted, we never could get really comfortable with it, so we passed on that one.

Nancy Lashine:

Yeah. Yeah. Were there property types that surprised you early on that performed particularly well? Did you do a bunch of, say ... I recall many years ago you said to me you really like grocery-anchored retail and you couldn't believe how high the cap rates were. That was probably in the mid-teens, long before people were really buying them for institutions. Now, they're hot for institutional investors, but at the time they were, you threw out the baby with the bathwater when the regional malls started having issues, but you guys, you were very constructive in the space.

Devon Olson:

We were early on retail. We went in pretty aggressively. Our retail portfolio is around 25% of our portfolio, and we went in with the idea that we were going to do retail, like you were saying, grocer anchors. We even did a few big box type retails. We really were comfortable with the demographics of the area. We had a whole list of things that were requiring things like it had to be a college town, had to have sales on the increase. We had economic indicators, relative to our brands, versus what the retailer was making and making sure that was in line, and a whole group of things. If they checked all those boxes, then we felt pretty comfortable. One other thing that really was a big item for us was flexibility. That being a lot of these had ... Because they had these big parking lots, we saw the opportunity to be able to go in and create a mixed-use type property out of them. We did quite a few with that.

Now have we done a lot of that where we've torn things down and built? We haven't really, but it's always something that we're considering. When we have sold some of those, it's lot of sizzle on the steak that people really get excited about, that there's that opportunity.

Nancy Lashine:

Yeah. Sell the dream.

Devon Olson:

Yeah. Right.

Nancy Lashine:

Have you found that those retail properties have been good long-term holds? Retail's so dynamic and obviously there've been bankruptcies, there've been new types of retailers, there was Covid, there's the online retailing, have those assets held up as assets where you've just had to re-tenant them, or have you pruned and turned that portfolio over time?

Devon Olson:

We've really been holding them. We have a few that we've disposed of, but they were kind of under the old regime of investing where we were. They were a little tired and they were kind of small, and they were taking enough of our staff time that we decided that some of those needed to be moved. They weren't going badly or anything, but we have sold some of those. It's really been a very good success story for us, is retail. The one thing we underwrote them ... We were able to get them very inexpensively on a cap rate basis, and we were able to take those with the attitude that we just need to maintain those cash flows to get high cash returns and yet still be able to do well and have this opportunity of other things with those properties.

Nancy Lashine:

How do you go through a hold-sell decision or did you? I'm assuming you did that every year because now that those assets probably have appreciated enormously, at some point ... How do you decide when, and if, it's time to sell?

Devon Olson:

We do a hold-sell every year on every asset that we have. As part of that, we just basically try to figure out where things are headed with the asset and if we're able to do better than new opportunities by holding it, or is it going to be a drag on us? We do that. It's really worked very well for us. We continue to sell those that don't, and hold on to others. Sometimes it's obvious to buyers that they haven't got a great future. In those cases, it's hard. We kind of need to be a little ahead of the curve and sell things when other people are very high on it. We sold a fair amount of our industrial, and that's when industrial was hot.

Nancy Lashine:

When did you do that?

Devon Olson:

That would've probably been three years ago.

Nancy Lashine:

That peak, yeah.

Devon Olson:

When everybody wanted industrial. We had a few industrial properties that had a ... The situation was that they were properties that were really nice, but they were also kind of locationally challenged. When they did become a property that the lease needed to be renewed, boy, it was always a nail-biter. Are they going to renew or are we going to be having a vacancy problem? What are they going to ask us in the way of concessions? We felt, a lot of the time, like we were being a little bit blackmailed. Those, we kind of said, industrial's hot, everybody wants it, let's sell these. And so we did and we were able to get really good pricing on them. Yet, we kind of got away from some of those potential problems.

Nancy Lashine:

Another, what sounds in retrospect, like a really smart decision. The state has 9 billion in assets today. I recall, maybe it was a dozen years ago or so, when you had 4 billion in assets, you had four people. How did you organize yourself so that you could do the asset management, and the acquisition, and disposition, to the extent you needed to, and still be able to go home for dinner at night?

Devon Olson:

Yeah. When I started, we had about four individuals that are executives, investment officers, and then we had about four administrative assistants. Now we're at 15 investment officers and we're at one administrative assistant.

Nancy Lashine:

Right. That sounds about right.

Devon Olson:

So things really flipped. During my career we've had four CIOs that I've worked with, four executive directors. I think the turning point was the financial crisis. In the financial crisis it was really a hard time, and we felt like we need to reevaluate how we've been doing things, if there's a better way. What we did is started back testing everything and saying, okay, what has worked for us and what hasn't? The things that had worked for us were these direct, and we call them kind of eternally managed investments. They were things where we had joint venture partners and worked with them and our fingerprints were all over the transactions. We went and decided to go that direction. Then we also looked at things like core versus encore, and we saw that our core had actually survived a lot better than our encore, which is kind of obvious.

Nancy Lashine:

No, it wasn't obvious at the time. I mean, everybody was running after opportunistic during the nineties and early aughts. Yeah.

Devon Olson:

Then we looked at our leverage and we had kind of bought into the idea that leverage is a little bit like a partnership, but it really wasn't very helpful. We decided to bring our leverage down. We also brought development down. We also became very aware of our long maturities and so we wanted to make sure that that was really well organized and that we didn't have any years that were heavy, on our long maturities so that we can deal with them better. Those were kind of the big things that the financial crisis told us. Right now, we still have some funds and we kind of stayed with a few of our funds that had really performed well for us, but most of them, we've really flipped to doing this internally managed with joint venture partners.

Nancy Lashine:

How do you pick joint venture partners? So often they're emerging, they don't have a lot of track record. It's not like you can say, "Well, gee, they're managing for all these other folks, so they've got to be well vetted." What process did you go through to get comfortable that they were going to be good partners for you?

Devon Olson:

Yeah. It sounds a little naive, but we've kind of taken the approach of a very open door approach where we've gone and we make ourselves available to anybody. We do a lot of work with IREI and their IREOC to meet ...

Nancy Lashine:

Real estate operating companies.

Devon Olson:

[inaudible 00:26:02]. Exactly.

Then we've kind of given them a list of criteria that we are willing to work with them on and the kind of fees that we think are appropriate, and our process of going through our investment committee and try to make sure they're really well-informed as to how we operate. Then what will happen is we will have them call us and say, "Hey, we've got a great opportunity," a little bit similar to that property in Boise where they have an insight position, or they are partners, and they have somebody who wants liquidity.

We will hear them out as far as what the opportunity is. Then we'll go and take that to our staff meeting where we have a staff meeting each week, where we take all these various things. We work with our staff, our staff is able to bring up questions and they have concerns and things. Then what we do is decide, as the staff, especially of certain subgroups that are maybe focused on retail, and that retail group will present it and then you stay. If the staff and them want to pursue, then what we'll do is then take it to our investment committee meeting. It really is very open. These joint venture partners are able to bring them to us. We're not pre-selecting them, it's really bottom-up driven. If they've got something that we like, then that is the impetus for us to start looking at their deals.

Nancy Lashine:

Right. One of the things we ...

Devon Olson:

Then we work with them and that working side-by-side is part of our due diligence also. The more that we have concerns about their ability to manage the properties, or something like that, the less discretion we give them and the more we keep internally. That approach has worked pretty well. We can have all the controls. If they're not able to do the management appropriately, then we're able to bring in somebody that can.

Nancy Lashine:

One of the things that we really like at Park Madison is emerging managers. The reason that we're often very positive is these are folks who have a great background, but they've never had institutional capital before, and everything's on the line, so they have no choice, but to be successful. They're going to do everything possible in their power to make sure that your deal works. I don't know if you found that with some of the younger folks that came to you.

Devon Olson:

Yeah. They're very appreciative of the opportunity to work together. As you mentioned, they have funds that they've created, but they're usually friends and family, small groups, maybe a few little endowments that they know personally, and things like that, but they really are interested in getting into the institutional side. They take a lot more handholding. We have a joint venture relationship with one of the major insurance companies. With those guys, they're great. We just allow them to take charge. They've got all their processes set up. We don't have any sort of problems, but it takes more work, but we've also found that it's a good source to find opportunities.

Nancy Lashine:

When you kind of look back over a long horizon, what are some of the best investment decisions you've made?

Devon Olson:

Yeah. I think our best ones, and some of these are that we decided not to do things. One of them was after the GFC, the great financial crisis, and that looking back at things, what we felt worked and didn't work. We really took a hard look at office. With office, I mean, we couldn't foresee the pandemic, and problems with work at home, but we felt like it was very hard to underwrite, and that was because CapEx was constantly an issue. Whether somebody was going to renew or not had a big impact on that. Even figuring out what market rent was, it was one thing for a renewal, there was another thing for a law firms, it was another thing for these other tenant types. We just felt like it wasn't ... Concessions could be all over the place. Commissions and tenant rep brokers, and now insurance, and financing ability. They're so hard to underwrite that we decided that we didn't want to participate in the office anymore.

Nancy Lashine:

That was a good decision.

Devon Olson:

Like I say, it was not because we foresaw any sort of pandemic or these things, but it was just fundamentals of how hard office. We actually have taken our office, and when I talked about this, it's a multi-tenant type office, down to 3% of our portfolio.

Nancy Lashine:

Amazing.

Devon Olson:

Office was kind of the major property type for most people, and we've taken it down to 3%. When I say that we do have some single tenent build to suits that we've done for some of the biggest corporations in the world, but that is the anomaly, and we really took office way down. This was prior to the pandemic.

Nancy Lashine:

Yep. That's amazing. Great. Great timing, great investment decision.

Devon Olson:

I think our retail, that we talked about, has been a big item. I guess one other thing is at that time, and as we added staff and our staff had new ideas and things, we decided to not just focus on the four main property types and we were going to do a lot more hybrid type work. When I say hybrid, instead of office, medical office and data centers.

Nancy Lashine:

You did manufactured housing very early on?

Devon Olson:

Right. Instead of just apartments, manufactured housing.

Nancy Lashine:

What did you like about manufactured housing, because that was very unusual.

Devon Olson:

Yeah. That's a little bit getting to the point of why we did these things. We subscribed to the attitude that the public markets can be a pretty big help in seeing the future, and so we noticed that the public markets had a lot of exposure and some of their best performers were manufactured housing, so we wanted to replicate that with our private portfolio. We did manufactured housing and we've gotten a pretty big exposure there, and so that was kind of it. We looked at the public markets, where they were having the most success, and we replicated it on the private side, through these joint venture partners that would come in.

Nancy Lashine:

Yeah. Wow. I want to shift gears for a moment because I think one of the things that is so extraordinary about your career, Devon, is that you built a culture where the team stays for decades, if not a whole career. What can you share with us about what you've learned about how to hire people and how to manage them once they're on your team.

Devon Olson:

Yeah. We really subscribed to the idea that the people are what is the future for the Utah Retirement System. What we started doing is we started ... One area that we were able to be competitive was to take college graduates, people that had just gotten their MBA and go after them, and then we could get them involved and give them a path to where they could see that hey, if they liked retail, that they could become the retail guy and create a retail portfolio, maybe billion or something dollars. Our retail is a little bit of an example.

We have a son of [inaudible 00:36:41] we found, and he was kind of given the task to explore retail, because he knew it really well from his dad. He took that and created a subgroup that really focused on retail. We have somebody in multifamily and we call it housing, and that's where you have various housing types, manufactured housing, they focus on that. We also have an industrial group. They do things like self storage, which you could argue that it should be in industrial or another area, but nonetheless, we put it there so they were able to really pursue that.

Nancy Lashine:

How did you train these people? I mean, a lot of people talk about building a culture of yes, where you allow people to make mistakes and you support them through it and you have their back. Other people have more formal training programs. I mean, when you're hiring people, young folks, they're going to make mistakes. How do you train them, manage them, get them to feel like they are really part of your team and invested in the success of what you're doing?

Devon Olson:

Yeah. We really encourage them to get involved in all sorts of organizations like ULI. I don't see a lot of other pension funds that go to ULI. They're going to ULI. They're really getting to know people in these various sectors, NACREs. We are a big proponent of NACRE, PREA and all those. They're constantly out there getting to know these groups and their peers and understand those kind of groups. I think their education's always going on. The other thing is our staff is very collaborative and, at the same time, respectful of each other. If you've got a better idea on the retailer, or you read something that causes you concerns about retail, you can bring it up and people aren't offended, they are not protective of their turfs. I think it's one of our big positives is just really stressing that, that, "Hey. We're a team," and we want everybody to have those kind of things. They have that constant feedback and that that's been real helpful.

Nancy Lashine:

Could you think of an example of a time when there was a lot of dissonance or disagreement about what to do on a particular asset and how you managed the situation? In particular, to the extent that you had to manage up to people you reported to, whether it was a CIO or ultimately a board. What did you learn about managing up the chain?

Devon Olson:

One of them was our manufactured housings in that we were very aggressive in getting that out. One of our guys said, "Hey. I think we're moving too fast," blah, blah, blah. We were always constantly aware of that and to his credit, he was right and we needed to step back and slow down on some of these things. The one thing that I kind of think about on those kind of issues is just how much of our staff has a team-type attitude. When somebody makes a mistake, it's not like, "Oh, he made a mistake." It's kind of like, "Oh, we did this together." Everybody is aware and everybody's not casting dispersion on one person. It's very much a team thing. Our young guys are part of that team and all that collaboration really helps keep everybody.

Nancy Lashine:

Obviously we're all in a performance game. In a year where maybe you didn't make your benchmark, how did the soul-searching go? How did the defense of the portfolio go, and what did you learn from that process?

Devon Olson:

Yeah. We have had a great result from our approach, that has been, we kind of look at it from multiple angles. We try to look at how are we doing relative to [inaudible 00:42:14]. Would we have been better off to have money in the public markets? You hear a lot of reports lately about really you'd be better off in [inaudible 00:42:27]. As we've looked at some of those, I think that's a legitimate argument. We look at [inaudible 00:42:36], see how we're doing relative to [inaudible 00:42:39]. We look at [inaudible 00:42:40] at MPI Odyssey, we also ... We have our own benchmark which is CPI plus 500. Sometimes that's hard to beat.

Nancy Lashine:

Yeah. For sure. In real estate, yeah.

Devon Olson:

Recently.

Nancy Lashine:

Yeah. I mean equities can sometimes not beat it.

Devon Olson:

Right. We look at the S&P 500, not because competing with the S&P 500, we just want to see how we're doing relative to some of these other ... The nice things for us, hopefully this will continue on, is that in all those various we've significantly outperformed all of them

Nancy Lashine:

That is amazing.

Devon Olson:

This is over time. This is a cumulative. We've kind of cumulatively said, okay, if we'd put a dollar in, back after the financial crisis, where are we today and how does that compare to if we put that same dollar into the S&P 500 and all those things? We've also tried to figure out how we're doing relative to our peers, and that's a little harder. There are some groups that are trying to compile those kind of things. As a consequence, we try to compare ourselves to those too. With those we're typically in the upper quartile, which is kind of easy to say, but hard to prove. We feel pretty comfortable that we're that way. The reason I bring it up is just, you know us, we're not a bunch of [inaudible 00:44:31], we're just guys trying to figure out a better way to do things that work well for us. It's something that others could duplicate.

Nancy Lashine:

Oh, absolutely. Yeah.

Devon Olson:

I mean, when we compare ourselves against Odyssey and things, we're 500 basis points above, so it's not even close. We've never had that issue, but lately we've had negative returns, but we've been much higher than, say, Odyssey.

Nancy Lashine:

Well, I'd heard you say ...

Devon Olson:

We'd never really had to deal with that part and our administration source support in how we're doing things.

Nancy Lashine:

Right. Right. I think you once said to me, some time ago, that your core investors plus a little juice, but thinking about how all these different indexes, that you do compare the fund performance to, has the growth of ... Well, first it was real assets, oil and gas and timber and now more infrastructure. Has that started to cause maybe the CIO and the folks who do allocation to rethink the role of real estate in the overall portfolio?

Devon Olson:

Not really. They've been very supportive. We do have what's called real assets and real assets includes ... The portion under real estate was where timber and agriculture fell into that area. Then the other portion was engineering or, I'm sorry, mining, energy and infrastructure was over on the other side. The big difference was, on our side, it was much more of these joint ventures and internally managed direct investments on the energy and mining. Those are funds. They're frankly a little bit more private equity like over there too. There's been quite a bit of support for all of real assets and it hasn't really diminished. I think our CIO always tells us, if it was my way, we'd have probably doubled in real estate. He's just very comfortable with real estate approach that we're taking and the diversification.

Nancy Lashine:

Is the retirement system fully funded?

Devon Olson:

It is. The last report, it was about 98% or 96, somewhere in there, funded. It's really very conservatively managed by our legislature and they don't over promise benefits they haven't made allocations to fund. Then our actuarial assumption is like 6.85, which is frankly on the low side, I guess, of most pension funds, which makes it harder to be funded fully.

Nancy Lashine:

To be fully funded?

Devon Olson:

In other words, the money we have, actuary's are assuming that you're not going to make as much money on it. If it was 10%, then that'd be a lot easier to hit your [inaudible 00:48:38].

Nancy Lashine:

Understood. Yeah. Yeah, it's amazing. Devon, what you helped create at Utah is just so exemplary for the real estate business and it's so fun to talk with you. As we think about wrapping up, I'd love to ask you some broad questions. What do you wish you knew then that you know now

Devon Olson:

One thing that gives me a lot of pauses is investment in international. We went through this learning phase too. We started doing quite a bit of international before the financial crisis, maybe four years before, with the idea that with international, it'd be a good diversifier, we'd be able to cap rates [inaudible 00:49:38] with Europe and those kind of things. You had the BRIC countries, we wanted to be able to participate in that.

Nancy Lashine:

The BRIC countries, meaning the emerging markets; Brazil, Russia, India, China.

Devon Olson:

Exactly. Russia, India, China.

Nancy Lashine:

Those were the days, weren't they, Devon?

Devon Olson:

Yeah. Right. We looked at investing in Ukraine and Russia, agriculturally, on our side.

Nancy Lashine:

Yeah. Yeah. There was a lot of activity there. Yeah.

Devon Olson:

Yeah. As a consequence, we put some money there and also in South America and in Chile, but the thing that became very apparent is we are tax-exempt public pension fund, so we don't have to pay any federal taxes. We talked a little bit about the S&L crisis, Tax Reform Act of 86, and what an impact that had, and that was just taking a little bit of what had been tax exemption away. Here, maybe 30% would be a tax load if you go to a foreign country. That is just super hard to make up in over performance. Then that doesn't even take into account things like FX, foreign exchange.

Nancy Lashine:

Okay. I'm with you. I hear you. It's painful. We've lived in that movie too. I understand. I mean, it feels like if you're going to be a pension plan and you're going to invest, internationally, doing it in a liquid exchange certainly makes more sense, because you can hedge the [inaudible 00:51:43].

Devon Olson:

Maybe there REITs really are better.

Nancy Lashine:

If you can find REIT's worth investing in. Yeah. Yeah.

Devon Olson:

Yeah,

Nancy Lashine:

What advice do you have for young people who are listening?

Devon Olson:

What I would say to young people is kind figure out what direction you want to go and then figure out how to get there and what you think ... One thing I did early on was, when I started the retirement fund, I didn't have a graduate degree and I decided, "Hey. I think if I'm going to make myself really competitive, I better get a graduate degree." I went out and got a graduate degree. When there's opportunities to do things like a CFA or Kaya or something like that, I would just really go after those kind of things, designations so that it sets you apart from everybody else. That has really worked for me, and I've seen that work for a lot of people that they all of a sudden jump ahead because they have those characteristics on their resume. I would really encourage people to differentiate themselves from the crowd.

Nancy Lashine:

I love that. I think that's so true, it really is. It shows a level of ambition and a level of self-discipline as well.

So speaking of ambition and self-discipline, Devon, what are you most looking forward to in retirement now? You finally have a little time.

Devon Olson:

Yeah. I'm still trying to figure that out.

Nancy Lashine:

Sure.

Devon Olson:

What I am trying to do is find some projects and kind of things that I can participate in, as far as philanthropic type things and try to help out. I'm finding some opportunities. I'm looking forward to run with those.

Nancy Lashine:

That's awesome. I mean, from what I hear, you have to give yourself a year to figure it out. One of the questions that we like to ask everybody comes on the show, it's a hard one. If you could have dinner with anybody, dead or alive, tomorrow night, who might that be?

Devon Olson:

Well, yeah, that one is a tough one. I think that the person that kind of ... I look back on history and I look at all the military people that became the winners, like Mao, like Lenin, Hitler, they all became intoxicated with power and they could not give it up, and they took it in really bad directions. Yet, George Washington, he could have been the king, I guess, of the US or he could have gone down that path.

Nancy Lashine:

That's such an interesting observation. Yeah, I've never thought about it that way. Yeah.

Devon Olson:

He chose to serve and then get out. It's been a little bit of the proxy for how to deal with power in the United States. Now we even have a term limit on the presidency. I read the book about him and just how I think admirable he was dealing with [inaudible 00:55:58] the way it is. I put him on my top list, which is kind of audacious on my part.

Nancy Lashine:

Why not? I asked the question, go for it. That's very cool. Well, I should give you the last word, Devon. Anything else you'd like to share with our listeners?

Devon Olson:

Oh, I do want to just say that the things that I think we've been able to accomplish at Utah Retirement Systems, there's so many people that have been helpful and especially our staff that have come up with great ideas. It's kind of just sifting through those ideas has been my job, implementing them. I give a lot of the credit to our staff, give a lot of the credit to our CIOs, our executive directors, and our board. They've kind of taken a very responsible look at what we do and making sure that we are overseen, but that we're not squashed and that these ideas can be pursued and that we can try to do the best for the citizens of Utah and taxpayers, as well as the public employees. They've just been great to work with. We're so lucky to have the governance that we do at Utah and the people involved.

Nancy Lashine:

Oh, well, that's fabulous. Well, Devon, you are so well respected in our industry and have made so many friends over the years. I think people flew in from all around the country for your retirement party to wish you well. I am very grateful that you've taken the time to share your thoughts with our audience. We're excited to see what your next chapter will be as well.

Devon Olson:

Great. Well, thank you, Nancy. Thanks to everybody at your group there at Park Madison.

Nancy Lashine:

Thanks, Devon.

I hope you enjoyed this episode of Real Estate Capital. Before you go, I have a quick favor to ask. We put a lot of thought and effort into this show, and making sure we bring you insights from real estate leaders that you don't normally find in the mainstream media. If you're enjoying this show, please remember to follow it on your favorite podcasting app so you never miss an episode. We'd also love for you to share it with others or give us a review on Apple Podcasts so others can find us. Thanks again for tuning in. For more information about our firm, please visit our website at parkmadisonpartners.com.