Tom-Gilbane_Real-Estate_20251007_R03

Tom: [00:00:00] What the institutions are gonna invest in and what lenders wanna lend against it's pretty small and there's a lot of capital for it. So the supply demand of capital for office on the equity side may be a mismatch. There might be more equity for office than there is investible office, which sounds wildly counterintuitive, but if you look at the returns that people are underwriting without real hockey stick growth, you're not getting the IRRs that we all would've hoped for at the end of the day.

Nancy: Hello and thanks for tuning in to Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners. Capital is a 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 [00:01:00] important to them, how they make critical decisions, who has influenced them, and a lot more. Our guest on today's episode is Tom Gilbane, co-president of Rockpoint, a Boston-based real estate private equity firm.

Tom's career traces the trajectory of real estate private equity from the 1990s at Merrill Lynch, working with some of the early REITs and PE firms to Westbrook Partners, and then Rockpoint in 2003. He has a great perspective on how the business has evolved and transformed over the past three decades.

Tom has a family background in real estate and construction and loves a good real estate story. We could have gone on and on about fun deal stories, including his history with purchasing 299 Park Avenue. He also just climbed Kilimanjaro with his 80-year-old father-in-law and three generations of 15 family members.

Pretty impressive stuff. Tom shares some great pearls of wisdom, like you can't market time, but you can get things [00:02:00] wrong. And we talked a lot about home court advantage and the benefit of being handshake people. You'll find a lot of pearls of wisdom in Tom's comments from this conversation. Thanks so much for agreeing to do this. You've had an incredible run in the real estate private equity business, and that's one of the reasons I was really excited to do this podcast together because there aren't too many people who have kind of been in the business since the beginning of your career and you really trace most of the real estate private equity history. Because when you think about it, I guess you started at Morgan Stanley.

Tom: Merrill Lynch. 

Nancy: Oh, you started at Merrill. Okay. Yeah, Merrill Lynch.

Okay. 

Tom: All of the Westbrook folks were Morgan Stanley folks, and I was one of the first Merrill Lynch people they hired 

Nancy: So many people in the private equity business, started in investment banking for a couple years. And then from Westbrook to Rockpoint, really, there were two of the very first real estate opportunity funds.

I'd love to [00:03:00] trace with you a little bit about your path and how the business has evolved and changed. Why don't we start with, your early experiences at Westbrook Partners. 

Tom: My early experiences at Westbrook Partners, I guess I'll start a little bit from the beginning.

I have a family business that's in the construction business. I grew up going to job sites with my dad and wearing hard hats. And so, to me, people say “oh, that's interesting. You chose the real estate business.” I'm not sure I chose the real estate business. I think it was…

Nancy: You were born into it.

Tom: Yeah, just, yeah. And it was just gonna happen. I was an engineer in college because my father said “Hey, if you wanna go to the film business, that's the best way to do it and be prepared for the business.” So, I was an engineer in college. I worked construction every summer. Started as a laborer and worked my way up and eventually as a project engineer and I started asking questions.

IT recruiting was different back then. Kids are after their freshman year in college, now are trying to get internships and investment banks, etc,. [00:04:00] I was trying to figure out what I wanted to do. My junior year in college hadn't even thought about it. I realized that in the construction business, you build the building, I give a cost to the owner of the building and I get a 3% fee. And I realized that the real estate developer got a 3% fee 

Nancy: and then he owns the building ongoing fee and they own 

Tom: 20% of the profits or the building that sells. So I said, “Geez, I think the real estate business is a better business than the construction business.” So I asked my dad and he said, no questions asked “It's a much better business than the construction business”. So, I went on a bit of a journey saying, “Okay, what do I want to do in real estate?” I was at Brown and there was two luminaries of the real estate industry, John Fowler. Who at the time was at Holliday Fenoglio Fowler, precursor to JLL today, right. And Ben Lambert at Eastdale. They were both Brown grads, very active at Brown. So I was calling them, trying to [00:05:00] get him on the phone and ask him questions. 

Nancy: That's when people actually answered the phone. 

Tom: Yes, exactly.   I told my father I was doing this, and he says, “Great.” And he said, “but don't do a phone call with him. Go see him.” My dad's a pretty simple guy, but it was an incredible lesson I would say that I talk about internally at Rockpoint all the time is go see people. Sure. and I think it's something we could talk about, but in the Zoom age, not enough people go see people.

Nancy: One of the best things I heard. I was at the Berkshire Hathaway annual meeting this past year. And Buffett tried to go see the CEOs of these and they would say like, “I have time to see you.” And he'd say, “I promise you.” And he would bring one of those little sand hour sand hourglasses and say, “I won't take more than 15 minutes of your time.”

And he would walk in and he'd take the hourglass and he'd turn it over and he'd start talking. And inevitably, of course, they were felt comforted by the fact that they knew what he was gonna walk out. But, I'm sure it was [00:06:00] engaging and it always went over. But I think that's a great trick sometimes when people don't want to see them in person. 

Tom: Yes. So, I got on their calendars. I befriended their assistants. I got on their calendars. I went and saw 'em, and both of them gave me the same advice that if you wanna do real estate today, go to Wall Street. And this is 95, 96. It was basically the securitization of both equity and debt was occurring on Wall Street. CMBS, Ethan Penner had invented that business. And that was kind of. Up and running. 

Nancy: There's some people at Solomon Brothers who would disagree with you, but okay, there we go. 

Tom: Sure. Maybe he had the best parties and so he got credit for it. 

Nancy: Yeah. Steve Manolas would probably think differently, but okay.

Tom: Then obviously, Merrill Lynch was one of the early groups, taking these overlevered real estate companies, public and de-levering them and taking advantage of the public markets and the REIT business at that point in time. I went and saw them. They said, “Go to Wall Street.” So I went and I applied to Wall Street. I was lucky enough to get [00:07:00] a job at Merrill Lynch, which really had Richard Saltzman it at the time. 

Nancy: It was Richard's group. Yeah, yeah. 

Tom: Mike Profenous, Marty Chico. I mean real like legends of the business at that point in time. Best Rolodex, super smart people, incredibly hardworking. So they had an incredible franchise and interesting. 

Nancy: They did the first read IPO with Kimco.

Tom: Exactly, exactly. And they did all the Zelle IPOs, the sale funds. Boston Properties and Tornado. Anyway, they had an incredible franchise and I went down there and was lucky enough I interviewed with Andy Jonas, who now runs Goldman Sachs' Investment Bank, and Bob Savage, who was Jeff Keller's partner in KTR.

And I got a job at Merrill Lynch and got down to Wall Street, which obviously was incredibly active at that point in time. We worked with the REITs, but also we were incredibly active also with the opportunity funds. 

Spent a lot of time with the Blackstones of the world, the Westbrooks of the world. [00:08:00] John Gray was a vp, Chad Pike was a VP. I think Ken Kaplan was an associate working on deals back then with them. Colony Capital. A lot of those names at the time. And when I got there, I quickly realized I wanted to get to the other side of the table. It was amazing to work with these people and Richard Rainwater at Crescent and all of these folks, but I really wanted to get to that side of the business. The private equity side really seemed like the most interesting to me, because you got the best breadth and depth of looking at different businesses and different opportunities in the world. Best learning opportunity.

I was lucky enough to get a job at Westbrook and to put that in context, this is, I was 1997 from college, 1999 at Westbrook. So two years at Merrill Lynch, and I think Blackstone's Real Estate Fund three in 1999 was 1,000,000,005. [00:09:00] Mes and Whitehall were the 800 pound gorillas at the time.

At Westbrook, we were like a billion and a quarter fund. So you're right, these were the kind of big funds of the time. Yeah. I was lucky enough to get a job at Westbrook and join them in 1999, which was an interesting time in the business for sure. 

Nancy: But if you think about it, 'cause I remember for some reason I, someone asked me to do a presentation around 2000 of the top real estate funds.

Tom: Yeah. 

Nancy: And the top 10, like if you were over a billion dollars, you were there. 

Tom: Sure. 

Nancy: And, that was big. Then if you got to 5 billion of AUM, you were amongst the biggest in the market. And your break even was sort of nirvana. I remember someone saying to me last year, who's about 30 billion AUM today and their funds range about two to three billion each, that they were too small to be successful. 

Tom: We should talk about that. 

Nancy: Yeah, that they [00:10:00] felt that they were too small to compete and this is true. Well, we should talk about this, that they really needed balance sheet capital, they needed permanent capital and that they couldn't really compete for capital and structure the types of deals they wanted at that size. 

Tom: Yeah. 

Nancy: I was… now, this may have been a very ambitious person, but that's kind of the level of growth that we've seen in the industry. 

Tom: Yeah, it's amazing. Yeah. The growth…

Nancy: You disagree with those numbers, by the way? Do you think you can be… 

Tom: I do disagree with that. I do disagree with that. Well, I think if you look at just the investment business in general, there's a lot of ways to be successful. What you're really trying to do is generate returns for investors over a long period of time.

That's the goal.

Nancy: Right. 

Tom: I do think that size is an advantage. But at a certain [00:11:00] size, the weight of capital gets more and more difficult to generate returns. So, I think there is a sweet spot where you can be big enough to have the resources internally and externally to have a great macro view.

And, Mid-market firms, you can have a great macro view and you can spend a lot of time understanding, getting the macro right. 

Nancy: Well, when you say macro view, are you talking about the… 

Tom: economy interest rates… 

Nancy: But is that gonna impact geographically where you invest or property type or just what the numbers should look like on your deals?

Tom: I think it's more numbers and timing of your deals. 

Nancy: Okay. Yeah. And then you can't market time, can you? 

Tom: I don't think you can market time, but you can definitely get things wrong. I think you, you can't market time. 

Nancy: I think that's the chapter of a book. 

Tom: Well, and that was, that's the interesting thing. 1999, when I joined, going back to that, when I joined Westbrook, that was actually the first [00:12:00] time real estate funds were getting things wrong.

You had the halcyon days when things were running, from 1992 and the RTC to 1999, and you had a big tailwind and everything worked right. In 1999, people started getting things wrong. And if you look at that top 10 fund list, if you moved forward probably seven years, 2006, five or six of those top 10 are gone at that point in time, 'cause they got a, they got a bunch of things wrong. 

Nancy: Right. 

Tom: So you can't market time, but you can get things wrong. And they're definitely red light signals and green light signals on timing on the macro. 

Nancy: So, in 2025… 

Tom: Yeah. 

Nancy: There's a lot of conversation about investors and real estate returns and obviously it's been a very challenging few years.

Tom: Sure. 

Nancy: With interest rates going up, COVID and then interest rates, virtually doubling and then just lack of transaction [00:13:00] volume. What have people broadly gotten wrong?

Tom: in 2025? 

Nancy: In this, in the recent, yeah, in the last year or two. So when you look at the market today and you say who will be the winners and the losers?

Tom: Yeah, it's a good question. I mean, because people haven't transacted that much that probably haven't gotten that much wrong. I think the one place that is potentially quite volatile and you could have gotten things wrong, is if you went and bought a lot of powered land. That's obviously a very hot space today, buying empowered land for data centers, right? 

Nancy: Right, right. 

Tom: So speculating on land that I can get power and I can get a data center user. Obviously the business is booming. There's an enormous amount of people speculating on land that don't know anything about data centers. My guess is if someone got something really, really wrong in the last 24 months, it's chasing that business [00:14:00] where you don't really know what you're doing. There's people who really know what they're doing who are unbelievable at it.

Nancy: Right, right. That's interesting. Yeah.

Tom: And there's a lot of people speculating. Otherwise, without the last few years, people have generally been on the sidelines and I think if you look at the deals that people have done, particularly in the opportunities fund space, I don't know if they'll be good deals or not? That depends on how the cycle plays out and how fast things turn. But they won't be bad deals. I don't think… 

Nancy: We were talking when you came in initially, we're sitting at 299 Park, we're talking about the history of this office building in Park Avenue.

What do you see in the office space in major markets? 

Tom: Yeah. I was talking to Nancy about, this was one of our great deals of all time. Yeah. We bought a 50% interest in this building from UBS and ended up closing in January, 2010. But we did the deal mid [00:15:00] 2009 with Darcy Stache, who she's gonna interview this fall.

She was the broker on the deal. And we bought a 50% interest in this building and it was hugely successful because it turned so fast. We bought it for five $50 a foot. It closed January of 10 and 18 months later in August of 11, we sold it for $1,100 a foot. So 600 million you thought you were 

Nancy: In venture capital, not real estate.

Tom: Exactly. 600 million to 1,000,000,002. Yeah. In 18 months. So you're seeing some of that play out today and actually Park Avenue is the poster child of that. And so the office market in the US it's been our largest asset class at Rockpoint and Westbrook. And interestingly enough, it's been our best net returns.

We've done 20% net realized over our entire history, including with a bunch of bad deals because of COVID. So we've had great success in the business. It's definitely changed dramatically. How we think about everything [00:16:00] at Rockpoint as a mid-market firm is that you have that macro view that we talked about, but we're incredibly micro on everything we do. And the three kind of legs, the stool is really understanding bottoms up supply demand, and pricing power. And we build that bottoms up and that can lead you to very interesting thesis and themes on things that will be… we think will be quite successful.

That'll also lead you to avoiding some things that people think will be quite successful. But we don't think the supply demand pricing power lines up, like life science. We wrote a white paper in fall of 20 on life science that was very negative on it. I can walk you through the reason, but it was pretty simple along those. Supply, demand, pricing, power, and we avoided it. We got a lot of our investors gave us a hard time. You see.

Nancy: Do you see a resurgence though, in life sciences right now? 

Tom: No. 

Nancy: No. Okay. 

Tom: No, no. If anything, Boston's losing life science jobs. Yeah. It's still a trickle effect [00:17:00] down, but back to office, we bottoms up everything.

So we look at new and if New York is rough math, 500 million square foot office market. We think building by building that 200 million feet of that is relevant in the brave new world today. And that can change. That could become less depending, relevant 

Nancy: as office space, 

Tom: relevant as office space has to be 

Nancy: repurposed or renovated.

Tom: Exactly. And let me explain relevant, relevant to us in the office business is it will produce repeatable, durable, growing cash flow. So you can buy the asset and over a long period of time, you can expect to have repeatable, durable, and growing cash flow. Right? And so 200 million feet of office space, right?

In New York, we believe we'll do that. Now AI could cut into that, could that could go down, grow, it could go up. But right now we kind of call it 200 million feet. I don't think we can count up other markets in the [00:18:00] country. Right of 200 million feet of space that has supply, demand and pricing power right in line today.

Nancy: But when you think about, I mean, you've been doing this for a long time, durable growing cash flow, and you kind of try to overlay the parlance of private equity to that. 

Tom: Sure. 

Nancy: Is that core, is that value add? Does that mean that you're gonna get in like today's numbers, a 10, 11% steady return, or nine to 11% steady return?

And the reason I'm asking you that is because the birth of the firms that you've worked for really happened in those distressed periods. Where you were getting venture capital style, you're getting 15, 20% returns. But that's not typically what you would see from real estate.

So where do you think real estate, should real estate really be viewed as much more of a core nine to 11% long-term, durable, stable cash flow asset class? 

Tom: That definitely has been the trend. And it goes back to the securitization of the equity and the [00:19:00] debt and liquidity in all channels of the world.

Kind of goes back to the mid nineties and what happened on Wall Street and we get better and more efficient every year. Information gets better and more efficient every year. So for sure that's been the trend. That the cost of capital for real estate's going down. The good news about that is if you can find anomalies and market time and buy things that are mispriced with really good bases.

And I think the other thing that's changed in the industry is we've gotten better operators. Because we've all realized that operating real estate, it can be just as, impactful as your basis at the end of the day. I think we've all gotten better, become better operators in our business.

I think for sure, there is a competitive world. It's a more competitive world than it's ever been. But if you can get in front of trends, people are gonna buy Park Avenue office two years ago and said rents are gonna go at 3%. Well, they're up 10 or 15%. Right? [00:20:00] And by the way, they're probably up more than that real life.

'cause there's no space scarcity available. And the scarcity and people are gonna pay more for it in the future, right? So the models sort of always lie. Meaning at the bottom, nothing works. And at the top everything works. That gets spit off the computer at the end of the day. And so it's sort of understanding that opportunity and where that supply demand and pricing power exists.

Because right when that falls in line, things move, they move faster than you think in a lot of instances. And deals like this 299 Park occur. But it's really understanding. That micro supply demand and the pricing power and the nuances of that, that gives you a competitive advantage in today's market.

Nancy: So when you look at your investors and whether you're thinking about what they look like 25 years ago or today, are they all [00:21:00] looking at real estate in their portfolio for the same purpose? Or does it have different purposes for different investors in their portfolio? 

Tom: That's a great question. It has wild differences with very, very large, sophisticated investors. There's a lot of investors that we talk to who want core and see it as a cornerstone of their portfolio as you're talking about. And they wanna get 10, 11% returns over a long period of time. And they like the non volatility of real estate. 

It might be more volatile than they know. But the marks don't necessarily. The appraisal smooths it. Yeah, the appraisal smooths it. So I guess what you don't know, doesn't hurt you. And so sometimes until…

Nancy: Until you need liquidity.

Tom: Exactly. Exactly. Exactly.

So I think that you have those folks, and then we have a lot of investors that we talked to today who are saying, I can get 11 or 12 in credit. 

Nancy: Right. 

Tom: And so equity [00:22:00] needs to be priced at 15% and they look across their entire investible universe and say, here's what, how risk adjusted returns should be calculated.

And we see both. 

Nancy: Do those investors who are thinking that they want a higher return because of equity and relative to other things in their portfolio, it should generate more, are they generally looking, are they making you mentioned before allocators. And operators. 

Tom: Yeah. 

Nancy: Are they generally thinking that they're gonna make that incremental money from distressed buys IE the right allocation?

Or are they thinking they're gonna make it from better operations and how are your investors seeing that distinction today? 

Tom: Yeah, so Rockpoint, who we are and our niche is we are a market focused firm, meaning our focus is we have New York City, we cover New York City as a market, okay? So our teams are here [00:23:00] and we are trying to create real estate entrepreneurs, a market focus firm with real estate entrepreneurs.

By that I mean our teams buy an asset, run the asset, finance the asset and sell the asset. So if you're working on the New York City team, you're working on acquisitions, you work on asset management, you're working on the business plan and execution of that. You're working on the financing, you're working on the sale, right?

Nancy: So a lot of real estate firms bifurcate, right?

Tom: That we just don't think that's the best way to create real estate entrepreneurs and that creates the best real estate investors. Cradle to grave is cradle to grave, beginning to end. When we look at the market, our teams are property type agnostic, so we're also the opposite of most people in the industry.

Where people have hotel people, apartment people. Yeah. Office people, industrial people. We have specialists where we think we need specialists. 

Nancy: Do you use local operators then? 

Tom: We do. We have a hybrid model. We will, we've built an operating platform called Rockhill where we have [00:24:00] almost a hundred employees in that today.

So we would buy deals on our own. And operate deals on our own. We love to do deals with operating partners. It's probably about 50-50 today in our business. 

Nancy: Okay. 

Tom: And Rockhill will work with our operating partners in scaffolding them sometimes in areas that they aren't strong. They might be great at business plans, they might be great at finding deals, but to the construction side and the execution side, they're not great. They don't want a property manager. We have a great property management group, so we'll scaffold them. We will use both, but when we look at a market, we think to be a great investor in New York City, you need to see the whole package. You can't parachute in and be an investor in hotels or parachute in and be an investor in apartments.

You have to understand where the trends are going, where are things going, right? Where are the hot hotels going? Where are the young kids and where do they wanna be at the end of the day, right? So, our business is back to the location. We call it address level investing.

And so we [00:25:00] create these generalists on property types and we go super deep in our markets. And all we do every day is try to understand supply demand and pricing power. And with that being in the weeds every day, we think it gives you better information. And the great, everyone talks about AI and the ability to see things and analyze things.

AI is really just based on your information. And we believe if you're on the street every day, right. In the weeds every day, you have better information. And 299 Park Avenue is an interesting byproduct of, we bought about 5,000 hotel rooms in 2009 in New York City. 

Nancy: Ooh, that was brave.

Tom: Very brave. But we knew the business really, really well. They were worth seven 50 a key. They went to two 50 a key. We had a great operating partner in Highgate Holdings, who had an incredible management company and a very unique way [00:26:00] of pricing, daily pricing. So really, really maximizing NOI. We had great insight via that. We bought into these hotels and we started to see in oh nine business travel picking up. 

Tom: And it was actually a precursor to kind of just, people were scared to death. They're buying butter and saves and gold. Yeah. In early oh nine it was…

Nancy: Hey, the world's not end moving, moving their bank accounts multiple banks. So you didn't see the IC limits FDIC limits.

Tom:  Right, exactly. All of a, also we saw, so that's a perfect example of this information. And if you had hotel people only, you wouldn't have seen it. Right. But we were on the ground, we started seeing business travel, and we started saying, what, what, if… 

Nancy: Any, early shoots are you seeing, with the mayor election here in New York?

Tom: That's a really, really interesting, question. And I think you, there's [00:27:00] a lot of concern, in the real estate industry around the election. I would say that 90% of the time these things don't really ever come to pass at the end of the day.

And a lot of elected officials say things to get elected. Yeah. And they can't really effectuate them. So it's definitely something you have to think about. You have to worry about vis-a-vis in York.

Nancy: Are you seeing sales not go through or you seeing more things on the market as a result of people being kind of nervous?

Tom: There's definitely more things on the market, but I don't think it's nervousness. I think it's in response to a strong capital market and actually for different reasons. I think it's a pretty strong capital market. I think you, there is liquidity, here in New York again.

Just New York specifically. And there's other mayor elections in other parts of the country that can affect things. Right. But in New York in particular, sitting here talking about it, and I actually think, if you look at the office trades to date [00:28:00] and we've got a big case study we've done on it, they're not trading it.

Lay down twenties, we all thought they would Post COVID. Right. And interestingly enough, because the investible universe of office is actually pretty small. 

I just got back to what the institutions are gonna invest in and what lenders wanna lend against.

It's pretty small and there's a lot of capital for it. So the supply demand of capital for office. Interestingly enough, not on the equity side, on the equity side, maybe a mismatch. There might be more equity for office than there is investible office, which is not something that you, you would've ever thought about.

Seems counterintuitive. Sounds wildly counterintuitive. But if you look at the returns, that people are underwriting without, real hockey stick growth, you're getting Yeah. You're not getting the IRRs that we all would've hoped for at the end of the day. 

Nancy: You used to invest globally, if I, we did. And then you kind of pulled back and now you're just investing in the US

Tom: Yes. 

Nancy: Tell us how you, [00:29:00] given that you're market focused, how you think about why that happened and how you think about the ability of a firm that's at least born here in the USA to invest globally. 

Tom: Yeah, that's a great question. I'm gonna go back to your Brad Briner podcast, because I thought it was awesome. Brad Briner is unbelievable. Isn't he amazing? 

Nancy: He's such a good guy. 

Tom: I played high school football with Brad Briner

Nancy: Did you? 

Tom: I've known him forever. He's an amazing, amazing human being. And what he's doing in North Carolina is…

Nancy: Yeah. He just, he just actually made the difference. The pension plan is now been changed. So, yeah. 

Tom: No, he's incredible. And he talked about home court advantage, kind of always looking for home court advantage, and I really loved what he said there. And we will never have home court advantage in Tokyo or in London or in Paris.

And when things were inefficient in the late nineties and these US folks all went to these places. You could buy anything and it worked. And you were bringing new [00:30:00] technology around underwriting and buying debt. And so John Gray and these kind of great names of the past secured capital, who we partnered with in, in Japan, now part of East I secured, right? It just got too efficient and you could never really have home court advantage. And I looked at, I looked it up. 'cause I love that term. It's like a 65% win rate. Is home court advantage? In general in sports. And so I think that goes back to our more market focus. We want to have the best information and the best home court advantage. 

Nancy: In the markets that you focused, you actually have teams resident in each of those markets. 

Tom: We don't and… 

Nancy: Sorry, I didn't mean that to be your question.

Tom: No, no, no, we don't. And people think it's crazy 'cause they would say, “Huh? How can you have whole court advantage?” But our folks are in New York three days a week. Our folks are in South Florida three days a week. And so if we're a, if a [00:31:00] market is a green light market, meaning we think it's very interesting, we wanna be doing deals there, we'll be there three days a week. 

Nancy: What are your Greenlight markets today? 

Tom: I mean, we like to say “You can talk about it.” No, no. I mean, we love New York. Obviously there's some questions, but we love New York. New York has come back incredibly strong. We do a lot.

Nancy: You just have to go try to get lunch at, 1215 and you'll be waiting online somewhere. 

Tom: Yeah, exactly. Yeah. And if you look at, we do a ton of proprietary research, and we came to the conclusion in 2014 with investing in South Florida apartments that the BLS data made no sense. And there was a big announcement today, and I know Trump's all about this.

BLS data makes no sense and we could get into it for two minutes if you wanted later, but we, we came to the conclusion that this BBL s data made no sense. We had to come up with our own data basically on the ground. And so one of the data that we really, really love is where are college students in the US matriculating to? 

Nancy: [00:32:00] Yeah. Oh, where are they matriculating to? 

Tom: Okay. When they graduate, where are, where do they go? Are they going for their jobs? 

Nancy: Yeah. 

Tom: And if you look at post COVID, New York City, 15% of the graduates of a top of the top 100 universities in the US are coming to New York City. 

Nancy: Right? And where else, where else are you investing today? Where else do you really like? 

Tom: We like South Florida a lot

Nancy: So that's Miami. 

Tom: Miami to Palm Beach. Okay. Florida in general is quite strong. I mean, you have to pick your pockets. 

Nancy: East Coast, Miami…

Tom: East coast to Miami. We like Tampa a lot. But you have to pick your pockets.

I mean, that's what the multi-asset allows you to do. You can be a hotel buyer in Tampa. You can be an apartment buyer in Orlando and an office and apartment buyer in South Florida. So you can mix and match. But, we like South, we like Florida in general a lot, particularly South Florida, a lot.

We've been very, very active in San Francisco, more down in the [00:33:00] valley in Silicon Valley. Which is obviously, if you wanna talk about supply demand and pricing power. That's one of the great places ever. You can't add new supply. The demand is incredibly strong. You've got these companies that are headquarters there. That's the innovation capital of the world at the end of the day. And the pricing power, the earnings of these folks, if you look at these AI buyouts that they're giving to these scientists, a hundred million dollars, it's ridiculous. The pricing power is incredible.

And so, we like those markets a lot, Boston. Boston is tricky. You gotta be careful in Boston today, the office market really hasn't come back. It has some overhang that's still not felt meaning. There's a lot of space that's leased, but not occupied. And so Boston, we like Boston a lot as a market.

But office, you really gotta buy it. And life sciences, we talked about Boston life science. So the math and life [00:34:00] science is interesting. If you pre-COVID simple math, there was about 25 million square feet of life science in the Boston market. 

Nancy: Yeah. 

Tom: Historic demand was a million million five feet. It jumped up to call it 5 million feet. During COVID because free money, too much biotech money. And it flooded the market. It might have jumped higher than 5 million feet. 

Nancy: We also had some incredible scientific discovers. 

Tom: It's a great scientific innovations, obviously. Yeah.

It might have jumped higher than 5 million feet for a second or so. But the supply response. Which is what really dramatic scared us on the ground was 25 million feet. 

Nancy: Yeah. 

Tom: Yeah. So even if you stayed at 5 million feet Yeah. You were bill five years of supply. So in fall of 20, we put a paper out saying it was gonna go 25, 30% vacant based on our math and we were wrong.

It's gonna go 50, 50% vacant. And you're gonna end up with these ghost cities that people built. And so life science we think could be interesting. It just [00:35:00] really needs to correct. You really, really gotta buy it in the right location. But hospitality in Boston. It's a great city. It's clean. It's safe. 

Nancy: There's no hotels.

Tom: There's hotels pricing power. There's real scarcity of hotels. 

Nancy: What do you think about the Texas markets? I mean, it feels like everybody's been moving to Dallas. They're more real estate firms in Dallas today. I, it's always, I always feel like that's the great arbiter of knowing where the next growth is.

Because where, where are most of our, where's our client demand coming from? It's Dallas today. What do you think? 

Tom: Dallas is amazing. And if you look at Michael Levy, who you did a great podcast with, if you look, go to Old Parkland and see what's happening there and go to Uptown and Knox Henderson, these areas where it's incredible. And if you look at the house prices in the park cities and what's happened and the movement there. So it is amazing. And if you look at that 200 million feet, there's 200 million feet. In New York of investible [00:36:00] office space. Dallas, interestingly enough, which is crazy to say, has probably 10 million feet of investible office space in our mind.

That's really targeting that those high end tenants that will pay very high rents who want people back in the office. And so, no, it's an incredible town. It it's, 

Nancy: Do you like Austin? 

Tom: We love Austin. Austin is going through a transition today. And so I think Austin, going back to the supply demand, pricing power, there's way too much supply. So you gotta figure out where that's gonna settle the demand.

Nancy: Are you talking about mostly multifamily? Or Multifamily, but office. Office too. 

Tom: Yeah. I mean, downtown offices, they're gonna triple the base of downtown. During this downturn there's a big, big pullback. So if you kind of break that down and pricing power, right.

If we break that down. A lot of the big growth that's been announced in Austin in the last two years is really on the [00:37:00] perimeter. 

I think how we are looking at it today, if you could buy an asset, the right price that's taken advantage of that perimeter growth that could be interesting. But for us, where we like to invest is we're not trying to see around corners. We want supply, demand and pricing power to be in concert today. And Austin has more to go on a downtrend in both offices. 

Nancy: I'm gonna, and department rents take us around the corner on this when you say buy it at the right price.

One of the things that we have found so challenging in the last couple of years is interest rates have been so volatile. Sure. And cap rates went from, depending upon your asset class, in the threes or fours or maybe five to not too much higher than that. And you had negative leverage everywhere.

Yeah. How do you start to think about, 'cause you're a long term, I'm not [00:38:00] I mean, you're gonna hold for five years or 25 years, depending upon which product it goes in. How do you think about price and, and long-term returns? How do you get comfortable with the equity level of return that you're looking for?

Tom: We're greedy. And so…

Nancy: So does that mean you don't do as many transactions as money? 

Tom: We don't do as many transactions and we want, we, we want it today. Meaning, so how we look at everything. 

Nancy: So you're not willing to buy it on the come 

Tom: Yeah. And we want it today. So how, how we look at everything is we're buying a deal in Jersey City right now, we're about to close the next couple weeks.

And so that is a mark to market if we were buying an apartment building. It's a mark to market, 6% cap rate. It's five and a half going in. There's lost to lease. It's a mark to market six, right? 

Nancy: So you can have positive leverage. 

Tom: We have a value add business plan. It's a 2016 built building. We can modernize it, we can move rents 10% and it goes to a six and a half cap. 

Nancy: So what happens with all these funds that have been raised with a three year investment period, [00:39:00] a one and a half percent fee on committed capital, and investors like you who are rightfully greedy. And can't put the money out, and so you have a gross to net spread that's way bigger than you would've otherwise had. How does, how's the market seeing that today? 

Tom: Yeah, I think transactions are starting again. So I think that's a cyclical event as well. I mean, you catch these downturns and you're gonna have, if you are disciplined. Managers, they're gonna have periods of time where that, there's gonna be that phenomenon that you talk about, right?

Nancy: Yeah.

Tom: But there's also periods of time that there'll be great vintages and the money will go out quickly. And so I think you're starting to see today it's just the end of the rope, right? People are gonna, they're selling office buildings. They're selling apartment buildings, right? They're selling hotels, right.

And so I think we're set, we're heading into, and we've been in a market that for the last nine months or so, that there are opportunities. They're not large scale. There's no great macro dislocation theme that [00:40:00] occurred. So, our analogy is your truffle hounds. You're kind of out, looking for truffles every day, and they don't find them every day.

And so you're out trying to find these one-off deals. That, I guess would go back to the middle market manager advantage in that you can do deal by deal. And you don't have a huge amount of capital that you have to put out. You can be patient and you can play in multiple markets.

You can play in multiple asset classes and find deals and, and, and do reasonable buyer. 

Nancy: Do you see more of your clients, your investor clients wanting separate accounts so they can control the flow of capital a little bit better? 

Tom: That is, that has become an enormous trend. In the core plus and core area where folks end up in these Odyssey funds. And they get in 'em. And when, they want liquidity, it gets hard to get right at some points in time and they [00:41:00] want different strategies. And so that has become, I don't think that they're not gonna do the Odyssey funds. We don't have one, so it's not our dialogue day in and day out, but for sure they're looking for new money to augment. And then also the rise of the consultants is also really helps that SMA business because the consultants can help them on, Hey, what asset allocation do you do you really wanna do? Right? The kind of Billy Bean baseball approach where the consultants can sit there and say “Hey, the Odyssey is this composition.”

We really think you should be at this composition, and we can do that through SMAs versus just going to work in the Odyssey. And also the Odyssey, you have to be comfortable today buying in at I think the Odyssey overall is marked at a four six cap rate. As the last quarter, industrials at a three nine.

Apartments that are a four five office is at a six. [00:42:00] You have to be comfortable allocating into those valuations, which you could…

Nancy: Clearly are too high. 

Tom: I mean, let's just, let's just say it. Okay. The public markets will tell you Yes. That the… 

Nancy: Well, I mean, not just the public markets.

If you try to sell those private markets at those prices, they wouldn't, they don't line up that up. They, we are in that business. 

Tom: We, so I think that's also those prices that's also driving that business is the consultants are really that. Great businesses, they do a lot of proprietary market research and they can reconstitute the Odyssey in a more liquid way that they think can generate more alpha. 

Nancy: Let's, that's a good sort of segue to thinking about, I mean, you have done an amazing job of adjusting your capital base as the markets have evolved. Whereas I assume you started with largely with US pension funds, endowments, and foundations, and you now have a global client base.

And I dunno if you've focused this, but I know you've [00:43:00] talked about permanent capital and maybe it'd be helpful to explain to people what that means for you and why that's important and where you find it. So, let's talk a little bit about how you've evolved your own capital base.

Tom: Yeah, as our business matured, you saw a lot of investors from all over the world, who wanted to invest in real estate, opportunity funds, and we were lucky enough to be a leader. We were lucky enough to be a first mover in the industry and have had great returns.

And so we've been lucky to have these people as clients. And it's definitely, we're starting to see a resurgence in the US I would say. There were a lot of folks who had bad experiences pre the GFC. Who sort of went away from opportunistic in their allocations and said, “Hey, core and Core plus actually performed better.”

Nancy: Yeah. 

Tom: And now they're [00:44:00] looking back and saying, “Geez, maybe I missed some opportunistic returns.” So things ebb and flow, and I think the key is to sort of have a global perspective on where you can raise capital, where capital wants to come from and wants to be. That's the benefit of our size. Meaning we're big enough that these people can invest and after a certain, you get too small, they just can't invest with you. They're all, it's interesting that the international money also really wants to be a partner. And so they love…

Nancy: what does, what does that mean? 

Tom: They love we, we will do calls with them. Our  big clients, we will do calls with 'em as much as they want it. And if you wanna talk about life science in Boston and our view. You wanna talk about New York City? And the 200 million feet. And why would…

Nancy: So a thought partner. 

Tom: Yeah. 

Nancy: What's going on? Yeah. 

Tom: They want to use it because they have big direct businesses as well.

Nancy: Yeah. Yeah. 

Tom: They have big co-invest [00:45:00] businesses as well. And so they want people that they can sit across the table from and say, “Hey, what else are you adding to my business besides this investment.” Because for them, investment overall is pretty small in the grand scheme of things.

That's where we can provide a unique perspective, is this super micro on the ground. You wanna talk about New York hotels, we can get your team, on the phone and walk you through it, kind of bottoms up risks opportunities, what we're thinking about. Our concerns, the bulk case, the bear case that we see that a lot more from our international clients than the domestic clients, interestingly enough. 

Nancy: Interesting. Yeah. Yeah. Well, obviously, they're not on the ground, so they need you more. 

Tom: Yeah. Yeah. 

Nancy: What are you, conversely, are you accessing retail or high net worth capital?

Tom: We've always had a very strong ultra high net worth base that has invested with us, and these are brand [00:46:00] name families that have invested with us, we have spent more and more time on the more everyday high net worth and retail capital. It's obviously a huge trend of the future.

Nancy: Yeah. 

Tom: With what's happened in Washington and 401Ks it’s gonna be a big trend of the future, and so it's something we're spending more and more time on. It's not something we've been, we've done yet. 

Nancy: Right. And you've gone after permanent capital as well. Tell us a little bit about that.

Tom: We recapped one deal in a continuation vehicle and it's as close to permanent capital as we can get, which was a 15 year term for us. And I guess that that's probably two downturns, maybe three depending on depending on life.

Nancy: I have two less. Let's pray. It's only two.

Tom: Yeah. So, so that's pretty permanent capital. Then our growth and income funds, which was a core plus. It was urban [00:47:00] focused. Core plus strategy, that was also 15 year capital.

Nancy:  That for us is permanent because of what do you think about the trend of a lot of your peers of finding insurance companies to invest in them, with them to provide a more long-term capital?

Tom: Yeah. It has been a huge trend. Obviously, it's coming through the annuity business at the end of the day. It's a wealth management product product really at the end of the day. And so we've seen the biggest effect of that, for sure. You're seeing it a little bit in equity because it's not true general account money, it doesn't really work for real estate equity. It doesn't have the duration and the timeframe. It's more been a driver of credit. I think it's been a big driver of why cap rates have remained pretty steady here [00:48:00] because you've had the debt markets didn't close for that long and when they've come back, they've come back quite aggressively.

And this insurance capital,if you have a stabilized asset that is in a good market, there's a tremendous amount of debt available for you. And so recaps when when we all did the math in COV and said, Hey, there's this gap of LTV and there's gonna be this huge gap equity necessity. Well, it turns out that what a seven debt yield on apartment debt is okay.

And you can finance it out at 200 over. And you can cover that if it's a floater, one, two coverage and that debt is readily, readily available. So where we thought you were gonna have to Dever to a nine cap, I know it says 15% gap really never, ever occurred. And so I think that's been the interesting, that's been for us, that's the, how we see it on the [00:49:00] ground.

That's been the biggest effect. You've definitely seen some, some of that money buy some equity. But it's been been much more focused on the debt side of the business. And you, I see the other place we're see where you are seeing inequities. Not, we're not in the business per se, but in the data center business there is a lot of insurance.

That capital going in there, it's more thinking about it as a credit play. And a triple net play. I think, which sets up better than an office building or a hotel. Or even an apartment building, 

Nancy: Does having access to that insurance capital, if you're an equity player, give you a big advantage?

Tom: I think I, i if you, if you have it that wants to do equity, it probably does, you there probably, there's, there's, if there are, there'll be some great broken opportunistic deals. There's probably, and we think there is a lot of unbelievable core plus deals out there today. 

[00:50:00] That will be broken as well. And so that, that's, that that core, core plus area, which is kind of where that insurance company money could fill that void. That's the hardest money to raise 

Nancy: Yeah. 

Tom: Today. Yeah. So, yes. That, if you had that, that would give you an advantage in that market space.

Yeah. No questions asked. We haven't seen a lot of it yet. 

Nancy: Right. 

Tom: But right, right. It would give you a big advantage for sure. 

Nancy: It's such a substantial trend and I dunno, I'm, I'm all alone in this I think, but sometimes I think I worry about all the insurance money being used as leveraged by private equity groups.

It just reminds me a little bit of what happened with derivatives in the GFC. 

Tom: I will. I understand that and I hear that. I will say they've been extraordinarily disciplined like if you look at Well, that's comforting. They've been like if you, Apollo Yeah. KKR. Blackstone, Aries, those four have been the big players that we've seen in real estate.

You've seen [00:51:00] Blackstone do a little bit of equity, I think, in those insurance buckets. You've seen KKR do a little bit equity in those insurance buckets. But it's mainly lending and they, they don't, they, they don't get that spicy at the end of the day. I mean, if you do a 7% debt yield, is that a low debt yield?

Maybe for a first mortgage Yeah. But you're not gonna lose money. You're not gonna lose money. Right. And you're gonna get your 200 over and you're 1, 2, 5 and, and what the vehicles, these. Deals sit in are these big vehicles that just don't want losses. Right. And the people that realize and run them, they understand that.

So they're not really interested in, sneaking up the capital stack to steal in those buckets. For sure. In other places, in the insurance, insurance industry and other players, they're going way up the capital stack and taking a lot of risk in insurance buckets. But in the real estate base space with the big players, we don't see it.

Nancy: It's safe. Okay. [00:52:00] That's good. That's comforting. Te talk to us a little bit about, what you chose to do. I think it was in 2018. With a sale of a minority stake in the firm. 

Tom: Sure. 

Nancy: Why, why did you sell a minority stake and how has that, I guess it's been seven years now, how has that evolved? How has that changed the firm, if at all?

Tom: Yeah, I, it was a natural evolution. It was, I guess a bit on the early side for real estate. 

Nancy: I think you were one of the first, first you were Blackstone Strategics first deal, as I recall. Exactly. 

Tom: Yeah. Yeah. Real estate deal, for sure. Yeah. And so it was early on the real estate side, but it had been a common tool for institutionalization. And succession in private equity. 

Nancy: Right. 

Tom: And so, and I think that's the good thing about a mid-size firm is you have that perspective. We have those relationships. We understand what's happening in private. We're not a small firm that doesn't have big [00:53:00] relationships, and so we have these big relationships.

We had a good view. We're constantly talking to the investment bankers of the world and understanding where things are going and trends are going. And so we saw this trend, and I give Bill Walton and Keith Gelb, a lot of credit Our co-founders at the time, their whole idea all along was to create an evergreen company.

And so that was part of the evolution of institutionalizing the business. We're bringing a partner, it helps us balance sheet capital on the balance sheet. And raise these big funds. The co-investments get big and it's hard to bring young people up into the business because their pro ratta Right.

They can't afford it at the end of the day. Right? Right. So you put that in the balance sheet, it helps bring young folks up and give 'em opportunities in the business. It also helps institutionalize the business. We have a really institutional partner. You spend a lot of time talking to them, what they're doing, what they're seeing.

They try to help you grow your business.They tell you their best practices. So [00:54:00] all of a sudden you can scale your business and information, well beyond you could do in your own Right. And also you get the good housekeeping seal of approval. 

Nancy: Yeah. 

Tom: when we go internationally and say, Blackstone owns a piece of us, I mean, there, there's probably no better stamp than having that for an investor who's giving money to a mid-size US private equity firm.

Maybe for the first time. Hopefully for the first time. And so I think it was a, a lot of foresight for setting the business up to be permanent. And succession, 

Nancy: Is that, is that stake then in perpetuity? Or how, how do you think about it? 

Tom: Yeah. These stakes are in perpetuity. And so those are evergreen funds that came in.

We looked at it previously and if you looked at a MG group in Boston and some of the folks that do this business, they weren't true partners. They came in, they took a preferred return or a piece of revenue, right? So it wasn't really [00:55:00] a partner, right? So the business evolved and we could get a real true partner.

They were buying into the business. They were sitting side by side. They had economic interest side by side with the partner, and they wanted the firm to succeed just as much as you did. And so that's when it became interesting to us to help institutionalize and evergreen the business. And I give Keith and Bill a lot of credit to have that foresight to sit down and do that then, and.

And it's been a huge, huge advantage for us. Hmm. Just having Blackstone as a partner through all this and through the craziness of these times as a thought partner. Now understanding what they're doing in their business, using ai, et cetera, how we can use AI. Obviously they have a very different business than we do, so the use cases are different.

Nancy: Have they actually helped you evolve an AI program? 

Tom: We're spending a bunch of time with them understanding how they're doing AI. What we're using AI for right now is, kind of organizing our information and, and using our data. [00:56:00] And trying to get insights into our data. So for instance, that 15% of the college kids in the top 100 universities in the US matriculating to New York.

That's like 300 million data points that we pulled together through a couple of different data sources. 

Nancy: Did you hire a bunch of computer scientists, or how have you done that? 

Tom: Well, we have a great in-house computer team. That helps us on that front. A data team. And then, with AI, the good news is you don't have to hire a ton of computer.

You don't have to. The question is, is being creative. And finding the data because we always thought that was a bit of a holy grail was this college data. And it's really, really hard to find. And anecdotally, I would say on the ground this cycle where we saw New York City really growing was we kept hearing college kids wanna come to New York.

Yeah. From all of these schools everywhere. Yeah. And then we started hearing that Amazon, which got announced last week Right. [00:57:00] Was when they went back to five days Oh yeah. In the office. Yeah. They had so many people sign up for New York City. 

Nancy: Right, right. 

Tom: They had to take a million square feet. Of net absorption in New York City.

Nancy: Yeah. Where did they take the space? Do you know? 

Tom: They have space on Fifth Avenue. They have space. They took 

Nancy: They have the Lord and Taylor building. 

Tom: The Lord and Taylor Building. And they're outta that. They, they've, before they even finished it, they grew outta, they took 5 22 fifth, they're over in Hudson Yards.

They took some WeWork space and so

Nancy: Poor Long Island City. 

Tom: Yeah. That, that was, yeah. That was a bit of a tragedy. Yeah. 

Nancy: Yeah. Opportunity lost. You are co-president, is that correct? Yes. So we had Diane Hoskins from Gensler on recently, and she is, she was, she's now co-chair. She was co-president.

They have a culture of co-leadership. Sure. How did you, how did Rockpoint evolve to have co-presidents and is that part of the culture as well, or is that just a moment in time? 

Tom: Yeah, I think it's a, it's ing it's just kind of the culture. It's a [00:58:00] team culture and Yeah.

When you started it at Westbrook, that the big, going all the way back. Bill Walton and Pal Paul Casoni started that business and they were co-managing partners. Right, right. I what their title was. Keith Gelb and Bill Walton are co CEOs of our business. I think is a Schev who runs our West Coast business is a great teammate and partner.

As we went to titles trying to institutionalize in Evergreen, it was a natural evolution, but probably, probably part of, just part of the original way it was set up with, with Bill and Paul 

Nancy: Yeah, no, it's interesting. It's quite unusual actually. We always worry about when we raise a fund for a group, we just don't like to raise a fund where, for a group where there's just the guy in the corner office.

Tom: Sure. 

Nancy: And so it's a great culture when you can really institutionalize the [00:59:00] team playing. Yeah. 

Tom: Yeah. 

Nancy: So tell us what. What's gonna change in the real estate, private equity business over the next few years? What are, what's gonna surprise us? 

Tom: That's a good question. I guess evolution, you had these opportunity funds. Now you have the mega funds. You had the operators and when, when we were at Westbrook, there were no operator funds. Right. They all came to you, diviv Co. Or Mike Melman, a Discovery Land company who's built his own business and…

Nancy: Unbelievable success. Right. 

Tom: Unbelievable. So these are, these are all the people that came to US related companies.

Nancy: Yeah. 

Tom: Both Florida, George and Bruce and Jeff here in New York, US for capital. And so at the end of the day, they've all raised their own vehicles.I think, my guess is you'll see further evolution in that some folks are gonna realize that if you're in these single asset operator funds, [01:00:00] that you better market time 'em, right?

Because going back to life science, right? If you get a…

Nancy: Yeah.

Tom: 2018 Life Science Fund, it probably looked great…

Nancy: Yeah. 

Tom: Until 2022, and now it doesn't look so great. If you allocate there, you better market time or you better make it small because it, it's gonna be volatile, right?

You're gonna get what the market gives you. And I think you're gonna see a little bit of a return to normalcy on deal flow, meaning there doesn't seem to be any great tailwind here, whether it was industrial and e-commerce or just buy anything and lever it up, right?

You're gonna have to make money the old fashioned way. 

Nancy: Yeah. 

Tom: And so I think it's gonna be back to deal by deal. Yeah. Which really was how the business was in the nineties and two thousands. So back to deal by deal and that's gonna get back to buying the right, and we call it address level investing. Buy the right building.

In the right location and business plan is more important than ever [01:01:00] and the execution of the business plan. Because the market's not gonna give you, to your point, right. The market's not gonna give you great returns. It may if you get a great tailwind, but if we don't get a great tailwind, it's not gonna give you great returns.

You're gonna 

Nancy: have to earn it. 

Tom: So if you earn it and you really have great teams 

Nancy: Yeah. 

Tom: And you look at a building and say, Hey, we can transform this building and we can raise rents. And we can actually also make it more liquid on the back end. Meaning it will be more appealing trade at a lower cap rate.

Because you've shown the value of it, the uniqueness of it. So I think it will go back to that. It's gonna go back to basis and operations and you'll have people that are really good at it and they'll continue to be good at it. And you'll have people that can't do it.

They'll be, we'll go back to that list of the 1990s opportunity funds, half will go away and half will survive. And, there'll be a new crop and there'll be a new crop. And you're starting to see [01:02:00] that today, right? With Tyler Henri and these various folks.

Right. There'll be a new crop. 

Nancy: But it's interesting because of the new crop that we're seeing, really less than a handful that can really raise substantial funds on their own. It's hard to do. It's really, really hard. It's way harder than it used to be. So the other trends that we're seeing are a lot more co-investment, a lot more JV work.

It's not, it's not allocators with operators, it's just JVs, with more control on the part of the, the capital side now. Secondaries. More secondaries, but, and also platform investing. Yeah. Where more of those groups are gonna have to sell a piece of themselves up front or make a deal with a big firm.

So that they become the operating platform for them. So those are just trends that we're seeing today. You, I have read somewhere. Have a special secret skill. 

Tom: Yeah. Right. 

Nancy: And which I was dying to figure out how to have you demonstrate for our podcast audience here. I've [01:03:00] heard you're, you like to lead auctions?

Tom: Well, I don't, I, okay. I do an auction once a year. Okay, for Children's Hospital in Boston. I don't know if I like it. To lead auctions or not, but our mutual great friend Rob Griffin, 

Nancy: that's me in 

Tom: to being the auctioneer at Children's, at Children's Hospital. Bostons is one of the great hospitals in the world and do an incredible thing.

So I, I couldn't be more happy to help if I, if I really do help, but my, so I'm not an auctioneer. 

Nancy: How did you, how did you learn how to do it? I've always been so fascinated when I hear people who are friends who are just, then I get up there and I'm like, who are you? Yeah. Like, is that, did you dream it up or, no, it's 

Tom: a special skill.

I went to a lot of auctions. It started a nursery school auction for my kids' nursery school. And I went to a lot of auctions and they're so darn boring. 

Nancy: Yeah. 

Tom: And so I, I just got up there and I tried to make it funny. I tried to make it interesting. And the thing that's [01:04:00] Darwinian, I guess is the more people are laughing and interested, the more they'll bid.

And so I try to get up there. And make things funny and get people engaged. Yeah. Because what happens, the auction starts, everyone just starts talking at their table and stops paying attention. 'cause you're not gonna pay a hundred thousand dollars for a Taylor Swift box. Because that's what it's gonna to be honest

Nancy: I think you could make me laugh for a long time.

I'm still not sure I would do that, but Exactly. There you go. So, 

Tom: so, but, so what I started was just trying to make it funny. Yeah. So if you're sitting there saying, Hey, it's Taylor Swift box once a lifetime, think about it, you, your, this is an established person who's gonna buy it. So you gotta know who your customer is, right?

Yeah. So you, your family, your grandkids get to enjoy this box. And let's be honest, you're on the older side and a private bathroom. It was worth its weight in gold. And so you laughed, right? So everyone laughs. Right, right, right. There you go. And so now all of a sudden people are paying attention.

You're laughing. Yeah. You've got endorphins [01:05:00] running thing. You feel better. You're paying attention. Oh 

Nancy: Man, I just went up at least five bucks. Exactly. So you paying attention. Yeah. So 

Tom: I kind of just came up with a strategy, sort of like we've evolved our strategy at Rockpoint over time. Just came up with a strategy, trying to make people laugh and interested.

And so, and then it's “Hey, so here we go.” That's it. Taylor Swift box, amazing seats, family memories forever. 'cause that's what everyone wants. And private bathroom, right? And, and people giggle and so then you start selling it and you try to pit people against each other and remind them it's for the kids, right?

And you get a hundred thousand dollars and if you're lucky enough, the Kraft family doubles the box and there you go. You get the underbidder and it's $200,000. That is how it's evolved. I'm not sure I'm good at it. I know that Children's Hospital sometimes I'm a little on the edge on my joke, so I know Children's Hospital gets very nervous, when I hope the media [01:06:00] is not 

Nancy: up there.

But any event, 

Tom: it's, it's been a fun thing and for a great cause. Right. 

Nancy: What, Tom, share with us any principles that have guided you through your career? 

Tom: That's a good question. I think how I try to be as a teammate is in the trenches with the team. So kind of there, day in and day out, I think you wanna model the behavior that you want your team to follow.

And so you wanna be the hardest worker on the team. So I'm trying, I don't do it, but I, I try to be the hardest worker every day. And I think going back to that. Original advice my dad gave me, which is don't call 'em, go see 'em. 

Nancy: Yeah. 

Tom: Yeah. Real estate, there's such a competitive advantage if you get out on the road.

Nancy: Yeah. 

Tom: We're constantly harping on that with our teams. The more we're on the road, the more information we have, the better information we [01:07:00] have, and the more competitive advantage we have. Right. The home court advantage. Right. Yeah. And so, so those are the things that I'm, I really kind of think about is sort of how, how do you help the team get better and how do you help the business get better?

And sometimes that's a bit of a, it's not ideal for family life and, and regular life. Right. Travel and, and yeah. And, and trying to be as work as hard as anyone. But those have been kind of great cornerstones. And I think the one thing, if you, if you asked anyone about Rockpoint and our reputation.

And the firm's, Bill and Keith. Co-founded the firm, we're handshake people. And so real estate, unfortunately, I guess, or fortunately for us, it's, it's not the most common thing in our business, being handshake people. But I think they've really, those ethos of character honesty and being handshake people.

[01:08:00] We spend a lot of money on joint venture documents and partnership documents. Right, right. But you never have to look at 'em with us. What we talk about is what we do if we say we're gonna do a deal, we're gonna do it. And so I think those are my ethos are the hard work teammate side of things.

And I would say the Rockpoint ethos is that handshake culture above board deal with everyone with high character. 

Nancy: Amazing. And then if you just want a little family trip, go climb Kilimanjaro with your 80-year-old father-in-law. That is spectacular. What a great story.

Really heartwarming. Well, thank you so much for sharing all that with us and an incredible career so far. And yeah, we'll keep going. You're still a young guy. Keep going. So we'll keep going. Good for…

Tom: We have another cycle here in front of us.

Nancy: Yeah. At least one. Yeah. So, looking forward to more.

Thanks for doing this. Appreciate it. Thanks. 

I hope you enjoyed this [01:09:00] 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.

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John: Hey everyone, this is John Sweeney. I’m the COO at Park Madison Partners and I work closely with Nancy on the production of this podcast. I’m stepping out from behind the curtain for a minute to read a disclaimer from the good compliance professionals at Rockpoint. As many of you are aware, the investment management business is highly regulated, and public appearances can be somewhat sensitive. But, nothing that a good disclaimer can’t fix. So, here it is:

This podcast is not an offer to sell or solicitation for the sale of any interests in any [01:10:00] funds or businesses sponsored or to be sponsored by Rockpoint. Statements contained in this podcast that are not facts are based on current estimates, projections, and/or beliefs, and on information that Rockpoint believes to be reliable. However, due to various risks and uncertainties, results and/or the actual performance may differ materially from those reflected or contemplated in such statements. Past performance is not indicative of future results.

Thanks for listening.