Ryan-Cotton_Real-Estate-Capital_20260116_R03

Ryan: [00:00:00] Alignment is everything. And I want partners who wanna make money when my limited partners make money, period. It means I want people who want to bet on themselves, who wanna make most of their capital from profit sharing, from some promoted interests, some carry infrastructure, something like that.

That is, highly aligned with the capital that sits behind them. So not deal by deal type promote, not single execution stuff, but let's cross all of our activity in the strategy and if the strategy makes money, we're all going to make money; and if not, we won't. I definitely don't want partners who wanna get rich on fees or salary or anything like that.

It's upside and it's value creation. 

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 [00:01:00] 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. Today's guest is Ryan Cotton, partner and head of Real Estate at Bain Capital, one of the world's largest private investment firms with over 200 billion in AUM and 24 offices worldwide.

Bain launched its real estate business in 2018. Their portfolio includes life sciences, data centers, industrial retail, and several other niche sectors. Ryan also leads Bain Capital's global consumer business and has more than two decades of experience building businesses, platforms, and investment strategies across industries. 

Ryan has an unconventional background for someone in the real estate business. He studied philosophy at Princeton and then spent a year working in baseball operations for the Boston Red Sox. Before joining Bain as a consultant in [00:02:00] 2003, Ryan joined Bain Capital's consumer and retail investments team, where he led major investments in brands like Canada Goose and Varsity Brands.

And after nearly two decades in Bain's private equity group, Ryan was tapped to lead Bain's real estate team, making him one of the rare leaders to cross over from the consumer private equity into private real estate two decades on into his investment career. Ryan brings an outsider's perspective on how the real estate industry works, where it breaks down, and where the real opportunities lie.

In our conversation, we discuss how intellectual curiosity and pattern recognition have shaped his investment philosophy. We also explore how those ideas have impacted Bain Capital's real estate strategy and the evolving role of real estate in institutional portfolios, the power of thematic investing in today's market, and how Bruce Springsteen has impacted his investment philosophy.

So Ryan, I had [00:03:00] the pleasure of hearing you speak for the first time at the PREA conference in Boston this year, and I thought that was awesome. It was great, and I made copious notes to myself after you were talking and promptly lost them. So, I have no idea what you said that was so interesting that I really had to write and talk about. So, I'm sure we'll find important topics here. 

Ryan: Well, thank you for being there. I'm sure we'll touch on some of that ground and happy to hopefully refresh some of those thoughts. It's really a pleasure to be with you and appreciate you making the time to chat. 

Nancy: Well, I'd love to share with our listeners a little bit of your origin story, because it's not the classic real estate investor origin story.

Tell us a little bit about what you studied in school and your first jobs before you came to Bain. 

Ryan: Yeah, sure. As you say, I'm not a traditional real estate investor having come late to that in life, which certainly has some liabilities that come with it, but, hopefully also some assets. And I started a different way, as you mentioned, I went to Princeton as an undergrad and was a philosophy major, much to the chagrin of [00:04:00] my parents who were very confused about what somebody could do with a philosophy degree in their life.

Nancy: Maybe they weren't confused. Maybe they knew exactly what you could or couldn't do. 

Ryan: Being a philosophy professor was not what they hoped for me in life, but was the most obvious career path. But actually it was the best thing I ever did for myself. I think it taught me how to be curious, how to ask questions, how to frame and structure arguments, how to think about weaknesses in what you think, and look for data to buttress those thoughts.

And so it was really just a disciplined way to think that was a great start to being an investor and…

Nancy: Can I, can I stop you about that? 'cause I'm so curious. I, I, one of our children was always asking these questions and we'd look at each other and go, oh, that's a Julia question. Because she would ask these kinds of questions that didn't really have an answer, that the answer was the next question.

And so when you say that, by studying, I dunno, Kant and Kierkegaard and whoever, when you think about the structure of learning how to think, double click on that for me again. 

Ryan: [00:05:00] Yeah. No. Well, I'll confess to you that my childhood nickname amongst my family members, which I think was a loving nickname, was Professor Questions.

So your daughter and I had something in common. I asked a lot of annoying questions too, and I think that the hallmark of a lot of those questions was sort of the why question. Not just the facts, but it was really trying to understand like, why does it work that way and does it need to work that way? How did we get here? And as I approached philosophy, I was not a great philosophy student. 

Let's be clear. None of my professors wanted me to become a philosophy professor, and that was not what I took a shine to. And so I was probably less obsessed with the specific ethic of Kant or the telos of somebody.

I'm not trying to nail their understanding of the world. But really trying to use that process of asking why questions to build some sort of rigid discipline around getting underneath insight and not just accepting things at face value, but really trying to understand the broader why that sits behind them.

And I think the philosophers I gravitated toward in college were much more sort of metaphysicist people who thought about why the world [00:06:00] is and why it is the way it is, and much less sort of the philosophy of science, philosophy of math, how do we know what language is, those sorts of things.

But I think ultimately we're a little more pedantic than the sort of, “why are we all here?” question that the tribute of philosophy in the first place. And, and as you say, I do think it's just a discipline. I think it's a learned process of taking an assumption or taking a fact and then questioning the “why” behind that a lot.

Yes, we all agree that X is good or Y is bad, but like why is it bad? Why is it good? What gives it meaning? What is the standard against which we're judging? How do we derive that standard? How do we know that standard is right? Those are a series of “why” questions that if you really just start to engage those with curiosity, I think you start to open up new and bigger puzzles for yourself and, and ultimately what I found in philosophy is they're not a lot of answers, they're just more questions. 

So a little bit like your daughter, the why question leads to another why question, to another “why” question. But I think that process of curiosity actually, and I've said this many times, [00:07:00] is probably the best virtue you can have as an investor. Our job is not to traffic in conventional wisdom or just sort of say, well, everybody knows X, it's to ask why and it's to ask why until we can't ask why anymore.

I train people that, when you get to some fundamental insight through that interrogation and some belief that sits at the basis of your why, then you know what you're really betting on and you know what you can really diligence like this is a superior piece of real estate. 

Okay, why? Well, it's in a better location. Well, why is it a better location? Because it's in the traffic pattern of the customer. Well will that traffic pattern change? How durable is that traffic? These, you can start to keep asking why and keep asking why until you arrive at some fundamental bet you're ultimately making.

Nancy: Okay. Well, I wanna dig further into how the philosopher became the deal maker, but before we get there, just so everybody gets a little bit more about your background. After school, you went to the next logical place to [00:08:00] go. 

Ryan: Yeah. Obviously, I thought in college I was gonna run a baseball team. That's, it's being a philosophy major, like how do you train to be a general manager and major league baseball?

I guess you're a philosophy major. But I loved baseball and my whole childhood, that was my passion. And what I wanted to do when I grew up was run a major league baseball team. I was not a very good player and so, hitting my way or pitching my way to the major leagues was never really gonna be an option for me.

But I thought the academic side, the sort of managerial side of it would be pretty interesting. And so I pursued that pretty aggressively, and was very lucky. While in college to land a job working for the Boston Red Sox and their baseball operations organization working for then general manager Dan Duquette and a whole bunch of very talented people in the scouting, player development and baseball operations teams.

Really starting to think about how do you build a team? How do you construct a roster? How do you manage talent through an organization? How do you use data? And these were the early days of Moneyball. 

Nancy: Oh, okay. 

Ryan: But how do you use data and data science to evaluate what up to that point had been an inherently subjective discipline. And you had guys who just looked at people and said, oh, that's a talent. 

[00:09:00] Well, what's the pattern? Back to the why questions again, why do you know that person as a talent? What, what is the substance? Buying that argument, how do we get analytical rigor behind those, those sort of embedded beliefs?

And so I spent two years doing that with the Red Sox, which is amazing. It was fulfilling a childhood dream and the stories I have about meeting my heroes and going to the Home Run Derby and the All-Star Game and watching Pedro Martinez pitch the best ending in the history of baseball. It was great.

Nancy: Yeah. 

Ryan: I had an incredible ride, but I also was on a bit of a journey of self-discovery during that period and, and realized for a lot of reasons that wasn't the career path for me. It's a very difficult job. It's a very sort of long hours, hard work, low income…

Nancy: Unlike your current job.

Ryan: Yeah. Fair. I've always been a bit of a glutton. 

Nancy: Yeah. 

Ryan: But there are more ways to succeed in my current job than in that one. There's only 30 something major league baseball teams, and so therefore only 30 something jobs that ultimately you want to have. And there were thousands of people gunning for those jobs.

And just the odds seemed really long and the journey seemed really hard. I started to look around at what else I could do coming outta [00:10:00] college and with a skillset that was really just baseball, and was very fortunate to be hired by Bain Company, the management consulting firm. Who, I think, was looking for intellectual curiosity in many ways.

That's one of the things they screened for in talent was people who like to ask why and people who like to understand how businesses work and be curious about those sorts of things. I was fortunate that they saw some talent in me, even though it wasn't on my resume.

I was more fortunate to have a hiring manager who was a big Rotisserie baseball fan and liked to talk baseball with me and wanted to win his rotisserie baseball league, but the stars aligned and I got a job working for Bain & Company as a management consultant, which was fantastic. And I think in many ways the best first job somebody could have in business.

It's like an accelerated training ground in the principles of business, and in the principles of strategy and how you ask why questions and you take data and you take insight to formulate a strategy. And then define that strategy with clarity and try to lead organizations with clarity and purpose as a result.

So amazing education sparked a fire in me, [00:11:00] honestly, for business and for curiosity in business that to this day has not gone anywhere. But after a couple of years, I realized, and maybe it was the baseball player in me, that I wasn't loving being a consultant. I respected the profession quite a lot, but the words I used at the time were, it sort of felt to me like I was tying every day. My client would win, my client would lose, but we would tie…

Nancy: Right.

Ryan: And on and on you went. Going back to the days of having a win loss record and reflecting the morning after on what could we have done better and what do we do? Well, I wanted to get back into the winning and losing.

And I wanted to feel like I was making bets and making decisions and driving change. 

Nancy: Boy are you in the winning and losing game now. 

Ryan: Yeah, no kidding.

Nancy: Be careful what you wish for. 

Ryan: No kidding. But that's, that's what we were after and I'm really lucky to have found that by moving to Bain Capital from Bain & Company to the private equity business, where we were building a growing franchise at the time and helping partner with great companies to hopefully build winning businesses.

And I had a lovely 20 year run of doing just that, partnering with some of the greatest [00:12:00] founders and entrepreneurs in America to build winning platforms, winning businesses, winning brands. 

Nancy: So you were on the private equity side of the business, just to clarify? Yes. 

Ryan: Yeah, I was. I spent 20 years in our private equity business and ultimately led our global consumer business here at Bain Capital. So retail, restaurants, hospitality brands, anything sort of consumer experience. 

Nancy: Did you get somebody angry that they put you on the real estate side? 

Ryan: No, actually I did sign up for this. I created a space for myself. Maybe it's the curse of being intellectually curious, but when the global financial crisis happened at Bain Capital, the firm looked to me to sort of say, what should we make of this with respect to real estate?

That is the precipitation of this crisis. Most of my partners at the time had lived through the RTC days and I think had made a mental note to themselves, right, that if I see this again in my life, I should probably go buy some real estate. 

And so we saw the GFC and it came to me with the question of should we go buy some real estate?

Was this the moment to do that? 

Nancy: Was Bain not in the real estate business before? 

Ryan: We did not have a real estate business then. And an interesting thing about Bain Capital, we're the largest private [00:13:00] alternative asset manager in the world. We're not a public company. We have incentives only aligned behind driving results for our limited partners and our investors’ enterprise value. 

Nancy: What’s the total AUM of the private?

Ryan: About $210 billion today. 

Nancy: Wow. 

Ryan: Spread across everything from private equity to liquid credit to special situations, real estate, venture capital, and a whole bunch of specialty investment businesses. But we didn't have real estate in the GFC, and so some folks thought maybe this is the time to do that.

Things seem cheap. Should we just start raising Real Estate Capital and buying real estate? They came to me and asked me that question, and I took really a year to sort of think through what we being capital could or should do in real estate really in 2010, 2011. And I came back with two conclusions for the firm, which may have been right or wrong, but there were other conclusions I drove.

One of those was that if what you were looking to do was play sector beta, if it was a belief that just, hey, real estate is cheap and we should just go buy real estate today, that there were probably some more efficient ways to do that. Then building a part of being capital, there were [00:14:00] open-ended funds, there were REITs on the public stock market.

There were baskets of securities you could go buy on a liquid basis. To trade the beta. Which I thought was a pretty interesting idea. 

Nancy: And surely would’ve worked out. 

Ryan: Yeah, it did work out for those who, who did that. But, that was way less friction, way less cost, way less illiquidity than, than building a part of being capital.

But the second thing I said was that, having spent a year of studying the real estate investment ecosystem, and all the businesses that were out there and all the competitors that existed, I saw a bit of a white space that I thought Bain Capital could succeed in that white space. And in particular, what I described as having two features.

The first of those was being rigorously and ruthlessly thematic about how you approach real estate. It is taking those “why” questions that I, and we love to ask and applying them to the sectors and strategies of real estate. It's not enough to say like, well, everybody trades office buildings, so we should buy office buildings.

Like, well, why do you want to own an office building? Is that a good idea? Will that [00:15:00] comparatively perform better or worse than an industrial asset or a market rate multi-asset, or a specialty asset? At Bain Capital, we sort of have an axis of the matrix that is verticals, that is, sector specific technology, industrials, healthcare, consumer financial services.

Things like that. And in those verticals we are thematic. First, we really try to understand what's happening in that landscape that changes the way we live, work, shop, play, whatever it may be. And then devising investment strategies to capitalize on those evolutions. How do you position capital ahead of that change?

How do you take advantage of those evolutions?

Nancy: So when you saw the white space in the business in the 2011 timeframe, it's probably true. I mean, when I think about thematic investing, it's Blackstone that popularized the concept and logistics living and just really that became part of everybody's lance.

When I look at what's happening in [00:16:00] 2025 in the business, it's absolutely thematic investing across the board. And so, is that what you saw though? Blackstone really wasn't doing it yet, and so many groups now have kind of followed in your path, if you will? 

Ryan: Well, it's a very good point, Nancy, and I would say at the time, and still today, I have an extraordinary amount of respect for Blackstone.

They're very good at what they do and I do believe they made some differential thematic calls along the way that produced differentially great results. Even in 2010. You could sense what they were doing and it seemed like a better way to do it to us. And I had a lot of respect, as I said, for them then as I do now.

But we didn't find a lot of people doing that. And in fact, what we found was a lot of people who I sort of maybe uncharitably referred to as kind of deal junkies, people who just liked transacting for the sake of transacting, 

Nancy: oh, that's called the real estate business. 

Ryan: Fair enough. Maybe the legacy real estate business. I think the world is changing. 

But I had this great fortune of interviewing a whole bunch of really thoughtful [00:17:00] and successful real estate investors at the time. I tell now the story that the number one question I asked all those people was sort of tell me an investment you think was a great investment.

And what I would hear in exchange was a litany of deal stories. I had a buddy who was a broker who knew this guy who was stuck, and his lenders were closing in on him. And so I was able to swoop it and buy this thing at 72 cents on the dollar, and like, what a great investment. And I'd listen to their war story and say, well, thank you. That's great. Congratulations. But can I just ask one more question? Why did you want to own that asset? Why did you want to own? It was cheap. A hotel was a deal in downtown Dallas and the answer was always like, were, you're not paying attention. I got a great deal. 

Like, that was the why behind it. And, and you know that isn't a good why. Honestly, I was probing for somebody who said, well, I understood the way the world was headed. And it needed more of these and it didn't have them. 

Nancy: You know we could be having a political conversation right now, but I'm going to totally restrain myself from that.

Ryan: Well, I appreciate that. That's a dangerous territory. We're already in dangerous enough waters just talking about real estate, [00:18:00] but there was clearly a gap of that thematic sort of insight based why first kind of investing in real estate at the time. And I thought we can build a product that does that sort of preternaturally.

And the second thing I said at the time was that if you follow that thesis to its logical conclusion, the kinds of things that it leads you to invest in are, by definition, more emerging kinds of real estate. They're more operationally intensive kinds of real estate. They're more difficult assets to manage than commodity assets that can be just traded in sort of a deal making barter system. If you buy an office building, there's lots of great brokers who are happy to lease that building for you. And if you don't like the current one when you just fire 'em and you hire another one. But that's kind of the degree of operational value add you have in that asset.

But truly thematic real estate, things that we don't have enough of and need more of in the world are really about ultimately meeting a customer set of needs in some ways parallel to the consumer business I ran for 10 years that it is about understanding your customer, understanding their needs, [00:19:00] and delivering the very best you can against that set of needs.

And doing that, delivering against that every day requires a level of operating capability and a level of operating intensity that's more than average, because we came from a consulting firm, because we are very hands-on operators of businesses and builders of platforms, that again, struck us as sort of highly aligned with our DNA.

That we could use our thematic expertise to select the right sectors and then we could start approaching those sectors with this bias toward competitive advantage. What does it take to be the best at this, right? How do we win at this? And let's go use our skills in building businesses and platforms to go build a route to market, to go build an operating platform in that sector that is competitively advantaged.

Ryan: And so that sort of became the business plan for Bain Capital Real Estate. All of now, 15 years ago, 

Nancy: You're lifted out of the Harvard team was very unusual. I mean, you don't often see a lift out like that. 

Ryan: Yeah, a unique transaction where we took the direct real estate team of a large scale [00:20:00] LP, in this case Harvard Management Company, who was a fantastic investor in their own right. But a team that had outgrown their endowment, you know? Who delivered pretty exceptional performance for the endowment, who had a strategy that needed to be fed by continual growth of capital. But who were, for a lot of understandable reasons in an endowment model, sort of constrained in the amount of available capital that they had.

And so I think both sides recognized that was a tension in their model, that Harvard wanted to be. Served by that team, but that team needed to serve a deeper capital base. We were able to sort of construct a partnership with Harvard where we could lift that team out of their business, place it onto our platform, keep working for Harvard but at the same time, start working for other people and feeding that with liquidity. Which we did in 2018. It took us a little while because it took a while to find talent that shared that why based, curious, thematic approach to the world. The team at Harvard was led at this time by Dan Cummings, who's got 45 years of experience in the real estate world. They had gone and built the product they couldn't buy. They were sophisticated LPs. They knew all the fund managers in the world, [00:21:00] and they said, we've got a lot of exposure to a lot of things through smart partners, but we can't curate a basket of thematic exposures with advantage in the kind of direct and controlled way we want to.

And so they started building that program themselves. And when we met them and described who we wanted to be, and they described who they were, we realized on both sides kind of quickly we'd come to the same answer in very different journeys. But that alignment of thesis and that shared worldview of what it takes to succeed in real estate really made it a one plus one equals three opportunities where they could help us build scale quickly and we could help them grow capital.

And so we brought them onto the platform and started building our big capital real estate product. 

Nancy: So you came to real estate having all this experience as a private equity investor doing consumer brands. What surprised you about the way real estate investors think that was positive? What do real estate investors do well?

Ryan: Yeah, it's a really good question and there's a lot of [00:22:00] things I think real estate investors do incredibly well. I'll say the first thing, that I've had to spend a lot of time raising my game around, is that I think real estate investors are by instinct and in often cases by training extraordinary macro investors, you know? 

Real estate is a cyclical business. It's subjected to interest rate fluctuations. It's subjected to economic fluctuations. It's got pretty fundamental supply demand forces that play on it. I think if you're going to be good at real estate and the people who are exceptional at real estate are first and foremost fantastic sort of macro-economists.

Not that we should go teach a class at Harvard on macroeconomics and, and not that anyone would read a dissertation.

Nancy: When you say macro, like knowing where interest rates are going?

Ryan: I think it's less about having a deterministic point of view about where those things are going, but having a really finely tuned sense of the fan of the possible really appreciating.

The various factors that influence [00:23:00] rates, GDP, those sorts of things. And, carrying with you an awareness of where we're at in each of those cycles and where we could be going in those cycles actually distrust the person who shows up and says interest rates are going down and here's the call.

It's like they might go down. They might not go down and…

Nancy: Right, right.

And I think being able to probabilistically handicap that fan. Is, is what great investors do first and foremost. And I think in private equity where you've got a lot of levers within a specific company, we can introduce a new product, we can cut costs, we can reposition the business.

A lot of those are sort of intrinsic to the business themselves, and therefore the optionality is much more about this business and what I can do with it. But I think in real estate, there just are fewer levers. The building is where it is. I can't move it. The physical properties are the physical properties.

It's expensive to change those. I think you have to be much more thoughtful about these broader variables that influence investment outcomes, these macro variables, [00:24:00] if you're gonna position capital thoughtfully. And one of the things I've come to really respect about the best of my competitors in the business is that they are macro aware.

To a pretty heightened sense and to a pretty heightened degree, and therefore are making investment decisions, portfolio decisions, with that macro awareness front and foremost in their mind. The second thing I have a lot of respect for in real estate is despite the characterization we shared earlier, there's some exceptional deal makers and some exceptional sort of transaction experts in the world of real estate.

People are creative in real estate. And they find a way to marry different kinds of capital. They find a way to finance a project that other people said no to. They find a way to make the deal happen… 

Nancy: Right. 

Ryan: With a tenacity that I really, really respect. There's a large toolkit you can employ in that.

And the best use of all of those tools I think really, really effectively. And then, third I'd say is at the top and in the best real estate investors in the world, I think there is quite a lot of curiosity. And, and as I said, I [00:25:00] think that's the most important thing you can have as an investor.

But I think as I talk to a lot of the sophisticated capital allocators of the world and I spend time with the competitors in mind that are great at what they do. You do hear people who are just fundamentally intellectually curious, who are trying to figure out why is this interesting?

What's driving this? Is that real data centers today? What, what's really going on with data centers? Why?

Nancy: You’re not gonna tell us in this podcast, Ryan, I'll count on you. 

Ryan: if you want. I think you're gonna find, I don't have all the answers, but just more questions.

I'm teasing you. I do think that curiosity to figure out the next thing to understand what's happening, that is very inherent in great real estate investing. It's been fun to find other curious minds in the world of real estate and have those kinds of conversations where we both admit we don't know the answer, but let's engage the problem.

Let's learn from each other. So I've learned a ton in my entrée into real estate from a lot of really talented people and it's made me respect the industry quite a bit. Even if I come at it with a [00:26:00] slightly different point of view. 

Nancy: No, it's phenomenal. When I think about real estate in the context of a portfolio, and going back to say, post RTC and then again post the great financial crisis, real estate was viewed as an opportunistic return.

I think we've all come to see in the last, certainly in the last five years, but even the last 10, 15 years, that comparing real estate returns with private equity returns is the wrong comparison. So how have you and Bain come to think about the role of real estate in the portfolio and when you think about underwriting deals and what would make sense, how are you comparing that and rationalizing that relative to the other things your clients could be doing?

Ryan: Yeah, it's a really fair question. I think the last 15 years has been sort of a unique period of macroeconomic history, right? A 15 year mega cycle of declining rates and steady, consistent GDP growth. It was sort of beaten for investing. It doesn't get any more [00:27:00] benign. 

Nancy: Well, it stopped. It stopped about four years ago, last I checked. 

Ryan: 46 months ago exactly the music stopped, but for a long period there, it was pretty fantastic. And I'd be careful to draw super long-term conclusions based just on the performance of the last 15 years. 

I think in an environment where you have benign rates, where you have steady growth, where you have a declining cost of capital, right.

By definition, the assets that have the most operating leverage and the most financial leverage will benefit the most risk. Equities being the most levered, extreme version of that had the best performance through that. I think we've forgotten in a lot of ways the risk part of that business.

What goes up can come down and hasn't in a while, but it can, and there is probably more inherent volatility in the underlying results of those operating businesses and capital structures than subconsciously I think many of us may believe. So where do I position real estate in that I'd say two things.

One, it's a risk asset, this isn't credit. The returns need to be better than they are for fixed income [00:28:00] type investing because there is volatility and there is the possibility of equity loss. But there is also some convexity to it. There is the ability to drive income growth. There is the ability to drive above GDP growth in, in your rents and therefore produce superior growth returns through that asset class. Probably less than the growth into the corporate spectrum, but still that ability. And so I think, from a return perspective, targeting it somewhere between credit and private equity feels about right to me.

Kind of call that team sort of returns. I think for, for risk equities for sure there is definitely a pocket of real estate. The core world, the core plus world of fully leased, fully stabilized, assets that if, if you buy at the right moment in the cycle and you think about cap rates thoughtfully, they produce good risk adjusted returns as well.

But the business I'm in is surely further out the risk spectrum than that. And so I think for the value add, opportunistic kind of real estate, those mid-teens returns feel, [00:29:00] right? And so the second thing that I encourage investors to think about is it is not strictly speaking correlated with equities.

And I think having non-correlated assets and your portfolio is a valuable thing to do. Even if you accept some slightly lower return for that correlation disconnect, you're still optimizing the portfolio outcome from a sharp ratio, a consistency of volatility perspective, which a lot of the investors I serve that has real value to them.

Recognizing there is some diversification and there is some non correlation. And then the last thing is, and we surely tested this hypothesis in the last four years, but I'll tell you what I think about it. I do think real estate is a pretty effective inflation hedge over the long run.

Nancy: The age-old debate, right? 

Ryan: Yeah. And it is an age-old debate, but I'll give you a little bit of data that shares where I'm coming from on this, because clearly the last three years we've had some pretty significant inflation and real estate is down. And equities are up. If it's an inflation hedge, where's the edge?

The challenge is real estate is an inflation hedge on a lag. And I think there are [00:30:00] different moments in the cycle where real estate. 

Nancy: Maybe unlevered real estate is an inflation hedge. The impact of the capital structure has been so significant. 

Ryan: There has definitely been some overhang of that 15 year mega cycle of declining rates and benign credit markets, and an approach to leverage that was probably a little cavalier, writ large. But you, I'll share this and, and you, you mentioned our PREA conversation. This was something we shared there, that we've spent a lot of time going back and studying the 1970s as a model for how real estate behaves in rate environments and in inflationary environments that don't look like the last 15 years. In the 1970s, obviously we had pretty runway inflation in America. You had rate hikes of pretty substantial proportions. It's a cartoonish version of what we're living through now.

I don't think we have quite that degree of stagflation. We surely don't have that degree of inflation. We surely don't have those interest rates. But in a relative sense, it was a paradigmatic shift from kind of relatively low rates to higher rates from low inflation to higher inflation.

And so [00:31:00] what happened? Well, the answer is a bifurcated answer. For the first four years of the decade, from 1970 to 1974, real estate was the worst performing asset class in America. It had a much bigger value correction than equities because as rates started to go up, cap rates started to blow out, and the mark to market momentary valuation of that stock of real estate was fairly painful.

And I think that is what we've been living through for the last four years. You had a mark to market cap rate expansion, cost of capital expansion, leverage, complexities that come with that, right?

Nancy: Sorry, can I be nerdy for a second? 1970s. Yeah. You didn't have Nare, you didn't have Green Street, you didn't have the public markets.

What index are you using for the measure?

Ryan: You can go back with the CPPI. The Fed produces some data around the value of real estate and the average value of a real estate transaction. And you can start to kind of look underneath this. We've spent quite a lot of time trying to construct our own data set using GDP components for real estate income, looking at trade data in the market to try and figure out cap rates.[00:32:00] 

There's no clean data set as you say, but with enough persistence, enough analytics, you can sort of pull together a data set. 

Nancy: Yeah, no, that's interesting 'cause I've never heard that statistic before, so thanks for that.

Ryan: Yeah. So bad, bad performance heading into the cycle. Same thing, we're living now.

Rates go out, cap rates go out, borrowing cost goes out, asset values go down. And because you've got staggered rent rolls and watts and things like that, I can't just go access the inflation that's driving that rate correction immediately. I can't take rates up 20% in a year in an office building.

It's just not a doable thing. And so it takes longer to get at that inflation than, perhaps, in a company who can just raise prices overnight. 

But what you see from 1974 to 1982 is that real estate is second only to gold in performance, in asset classes through that inflationary period.

And by the way, I'd say this cycle, we've already seen the runup of gold. Hyper liquid markets, hot money, mean trading, gold has experienced the run. And if anything, it's starting to sell off a little bit. But real [00:33:00] estate, I think, is at that 1974ish year where we've absorbed the pain in the market and the valuation paradigm.

But we haven't really been able to get to that inflation yet. There's still some development overhang. There's still some staggered rents. There's supply.

Nancy: Oh boy, is our audience gonna love this is like a Christmas present. 

Ryan: Well, I think it's real, Nancy. I could be wrong. I'm trying to be very humble about how we approach the macro, always.

But I think there's a lot of logic behind that. 

Nancy: So I'm gonna, I'm going to push on this for a second if you don't mind. So when I think about the real estate business in the 1970s, it was almost exclusively big office buildings that commercially held real estate. Maybe there were a few regional malls around that it started, but you certainly didn't have multi-family.

It wasn't considered an institutional asset class and you didn't have, it was 

Ryan: It was a high net worth asset class for sure. 

Nancy: And the industry was largely corporate owned. And yeah, there were a few in investment, but mostly corporate owned. So when you look more broadly at the, at what [00:34:00] we consider institutional real estate today.

Does that calculus hold? How does that change the calculus in the comparison? 

Ryan: Yeah, so I, I'm careful not to paint with a super broad brush. I think part of being thematic is recognizing different sectors behave differently and what I would tell you about the commodity office sector is not what I would tell you about the senior housing sector.

I think those are very different things, but I, if you go back to, as we've done a few times in this conversation, the why of it all, I think the why holds together in a logically coherent way that, where are we at today? Well, we've absorbed rate hikes. Cap rates have expanded to do so.

Certainly public valuations have expanded quite significantly. And if you look at the way public REITs trade today, those cap rates have reflected that that interest rate moves in their value. You still had a bunch of supply coming online the last two or three years. It's a bit of a hangover from money being free in 2021 that every development pencils out when my borrowing cost is like two.

And so you had a lot of supply that got brought onto [00:35:00] the system in the last four years. That alone created a bit of a REIT pressure in a lot of sectors, be it life sciences or multifamily in the Sunbelt or wherever you felt that supply overhang. But where are we today? Well, the economy is still pretty healthy.

We can debate where it goes from here, but the GDP keeps on ticking. You've got effectively no new supply growth, I mean, construction starts on a two year comp or down like 82% in the United States and so the forward pipeline of supply looks very different than the last three years.

You've still got good fundamentals going on underneath that surface. Absorption of multifamily in the Sunbelt has set records four quarters in a row for the number of absorbed units. And so the demand is still there. If you think about seniors, which we referenced, the aging demography of America, the inability to continue to defer care.

It's a very real and present demographic problem that's driving demand in that sector but the supply response is not quite there. And most new supplies don't really pencil right now. Rates are below construction feasible rents with [00:36:00] with higher borrowing costs, higher development costs, higher capitalized development costs.

It takes a lot more than what you have to believe to make development work and so there's a bit of a laggard in the supply response. I, we go back to real estate in the 1970s and yes, it was primarily office buildings, but how many office buildings got built in the 1970s? Not many. That big development of the real estate office boom was in the mid 1980s when money got free again.

And so you had this sort of benign period of, of very limited supply, but underlying demand growth that persisted. And so from 74 to 82, income growth and real estate was pretty significant. And you didn't need a revaluation of the assets. You didn't need cap rate compression to drive growth.

You just took income growth and, and I think we're starting to see that we referenced seniors. I think the consensus expectation for 26 NOI growth in seniors is now somewhere between seven and 10%? That's an enormous number. Enormous text of leveraged real estate.

I think multifamily rents [00:37:00] next year will be up more than 2 to 3% in most markets. And so to me that creates the opportunity for real growth. The ability to go access those income streams at today's reset pricing levels, but then enjoy a period of benign supply and decent fundamentals where you can push in a lie.

That's pretty darn good investing and so I do think that inflation hedge is about to kick in and I think you're about to see a NOI growth that's well above average. That's sort of the hope and the good news for the industry is that so long as the economy stays healthy, we can grow our way out of this and recover a lot of value and create a lot of value in the years to go 

Nancy: Is there any real estate that does well, even if the economy starts to we go into a recession? 

Ryan: Honestly, I haven't found it yet. I don't think anyone's immune is the problem. Yeah. There's a theory about why multifamily in theory should be okay because we all have to have a place to live, but people trade down, that's a very real phenomenon.

[00:38:00] I think everybody feels it. If anything, I think it's market psychology. Like fundamentally what something's worth is what people think it's worth when the economy takes a turn, fear can win out over greed and everybody can overcorrect even if the fundamentals stay okay. 

Nancy: Right. So the glaring exception to what you're talking about right now within the real estate sector is data centers.

Because they are being built, faster than we can imagine and it's easy to understand the need for them, but it's hard to understand the long-term utility and what the capital cost will be to maintain them and who's gonna buy them in the future. And the dollars are just so large. So how are you investing in the world's most important trend right now? 

Ryan: I'd say data center is by far the most interesting question in real estate today. How to sector most activity and sort of least amount of known information. We've not lived this cycle before. We've not seen these assets for 30 years and so there's just a lot of questions about them.

I've got a few [00:39:00] thoughts on data centers. I'd say first the underlying thematic is pretty obvious and pretty irrefutable, right? Like technology is eating the world and AI is exceptionally powerful and it is coming and it will change nearly everything. And with that, will doubtlessly come the demand for more computational power, more processing power, more storage. 

Nancy: Wait, I just have to stop you for one second. 'cause the minute you say it that way, I know you're making an analogy to software is eating the world and we all know what's happening to software. So what could be wrong with that statement? 

Ryan: That's pretty much the humility I'd say that sits behind this is these things change faster than we can imagine they can change. And today's certainty is tomorrow's like forgotten wisdom. AI is changing the way software works. Am I certain that nothing in my lifetime will change the way AI works? Of course. I'm not certain about that. And I think you, you have to embrace this with that uncertainty, but that thematic is, is pretty real.

The data center demand, I think, is pretty real. I think the challenge is that on [00:40:00] the journey to manifest destiny in, in the way toward inevitable technological evolution, market cycles and the price of risk and income can dislocate from that underlying driver in pretty material ways.

I've used an analogy that was exceptionally dated and I surely didn't live through it, but I think the analog to data centers and AI in particular is sort of like the railroad revolution of the late 19th century in the United States. 

This technology changed everything. It changed the shape of the world. It changed geopolitics, it changed the distance of the world. It changed every industry in America. It was a fundamental unlock of technology that unlocked productivity, the likes of which we had never imagined before. And for 25 years, there was a capital cycle of investing in railroads and the technology of railroads that was unstoppable. It was enormous. But in those 25 years, you also had two massive financial panics and you had huge stock market crashes because [00:41:00] speculation and development can be different things. That's what I try to take as humility into this conversation is recognizing that how we price an asset and whether we need that asset may not always be perfectly correlated.

Nancy: So are you buying data centers now? Are you building them? 

Ryan: We are invested in data centers in Asia and in Europe. Markets that I think have some very different supply barriers than the United States have a different demand profile as well, but really have some supply barriers around regulation borders, energy restrictions, those sort of things that just make it a less frothy and harder to access market.

I think you can invest with a little bit more conviction in the long term supply demand picture, probably with a little bit of a cap rate premium that gives you a little bit more margin of safety. Yeah. We are also investing heavily in the United States in a bank of powered land, securing the energy infrastructure, the powers, and data centers.

If we're not taking the development risk downstream. Why do I say that? Because, look, I don't know where the mispricings in the ecosystem are. I'm sure there are some if this is the [00:42:00] first technology cycle in which no one loses a dollar, it'll be the first technology cycle in which no one loses a dollar.

That just hasn't happened. But I think there are probably some really good bets out there that we're not making, and I think there're some really risky bets that we're not making. But my underlying challenge is twofold. One is, I think the CapEx cycle that you're seeing in data centers today is almost by definition unsustainable.

We are spending as much on data centers as we are on all of the real estate put together right now. We're spending more money to house computers than humans. That's a pretty odd thought. We're doing that because there is an existential war amongst hyperscalers to see who's gonna be the foundational ll m model of the future. And if you're Google, if you're meta, if you're Microsoft, if you're Open AI, like you have to pay to play and you have to play to win. And so they are spending 60 to 75% of their free cash flow right now on CapEx for AI cause they're in this arms race of epic proportions.

But they're not all going to win that arms race. I don't think we need seven foundational LLM models in the future. You [00:43:00] know, we have like one search engine today, we have one email server. People tend to win these technology wars. And I think as it becomes apparent to participants that they are not the winner.

You'll see them necessarily start to take their foot off the gas, right, start to harvest that free cash flow in a different way and reprioritize their corporate spending, and that's gonna create an air pocket in the development boom that we're seeing today. I think that's almost inevitable. The question is, what happens when that happens? Do the leases all stay in place? Does the demand stay there? Does the cap rate stay there? Not entirely sure. Which is sort of my second question as I approach the sector of sort of what is data center income worth? I don't know the answer to that, but I can think about it in a comparative way.

The prevailing wisdom today is that a fully leased credit tenant data center with a hyperscaler, is worth like a six cap. And why is it worth a six cap? What? It's got a premium to multifamily, but a discount to retail. Why does it sit in that space of the market? And I think the people who are bulls would point you to sticky credit tenancy, the high quality of income, the irreplaceable nature of the [00:44:00] asset.

And that all makes sense to me. But I think the bears would point you to ongoing capital drag at the asset. Yeah. How much you need to reinvest in this asset when the lease is up to renew the cooling technology to recondition the power to upgrade the infrastructure. And I don't know the answer to that, but I know that gen-one data centers, the kind of data centers that were built 15 years ago for Yahoo and AOL. If you wanna modernize one of those, it costs about half the amount of the data center to redo it. 50% capital drag every, call it 10 or a few years. 

Nancy: I’m curious why the market is so focused just on hyper scales, whereas there's been a fair amount of research come out about carrier hotels and the networks that are closer to the consumer that are multi-tenant and they're obviously are far less costly and take far less power. I mean, it seems like that just seems like such a safer bit to me. 

Ryan: Yeah, I think the obvious answer is people are flocking to the credit quality, the underlying tendency.

And if I've got a 15 year lease from a hyperscaler, I efficiently have a bond against that hyperscaler [00:45:00] and we know what their credit price is for in the market. And so I can sell on this lease, I can sell on this income stream at some premium to their credit in the market. 

Nancy: Yeah. But if you have the right grocery anchored, retail property that's with all high end houses built around it, and they're gonna shop there because it's in proximity.

You can find the retailers to come in there. 

Ryan: Well, amen. And I surely love that sector of real estate quite a lot and we're quite a lot in that sector for all those reasons. But I also think just discerning the credit quality of tenants in that hoteling model today. When they're largely startup type businesses, when they're largely venture backed type businesses some of which may be the Googles of tomorrow and some of which may be gone tomorrow.

Nancy: I'm talking about the trading companies, the Verizons, the network providers too. 

Ryan: And I, I think that's pretty good business if you can do it and you can do it with edge. I just think it's hard. I think finding the sites is hard. Securing the power is hard. Building the technological infrastructure in an urban environment is a hard superpower to the people who can do that really well.

I have a lot of respect for that. Back to the other thing we said was sort of foundational [00:46:00] is being obsessed with competitive advantage. I'm not the best in the world at doing that, and so we should leave it to the people who are, and there's plenty of places where we can go build a competitive edge that's a little less volatile and a little less sort of tip of the spear.

Nancy: So when you talk, think about competitive advantage for what you're doing. Is finding the right partner or building the right platform a key part of that, and how do you decide when to build a platform versus, do a joint venture with an existing operating partner? And how do you think about the longevity of those relationships?

Ryan: Yeah, I think again, it's all rooted in the thematic, the ask why until you can't ask why anymore. If we really get our heads behind what's changing, why it's changing, how likely it is to keep changing, well then two things I think become apparent. One is what it takes to win with those changes. One of the things I say is sort of the process of asking why is a little bit like shrinking the buy box to its tightest possible expression.

I love when you talked about grocery anchored retail, you [00:47:00] inherently shrunk the buy box to sort of high net worth neighborhoods of infill locations with credit quality tenants, like you described a buy box for me that's fairly precise. That, by the way, happens to be our buy box in the grocery. So I think it's a good one.

Nancy: I didn't know that, but good for you. 

Ryan: Points to you. But I think when you can express it that tightly, well then you can understand what you need to win. Who are the tenants that need to go into those ecosystems? 'cause I need relationships with those tenants?

What's the activation required for that center? Because it's not just a dumb center, it's one that I've gotta bring life to and I've gotta energize and I've gotta bring events to it. And you can start to describe with that tight definition, what competitive edge looks like in that ecosystem. If we do the hoteling for trading firms in New York City data centers, well I know what customers I need relationships with.

I know what kind of technology I've gotta provide those customers. I can start to describe the things I'm gonna need to be really good at, to be really good at that kind of real estate. 

Nancy: And then will you find one partner and just try to roll out a program with them? [00:48:00] 

Ryan: Yeah. And so I think once we can describe that we want to control that axis of competitive edge, I wanna really work to build it, refine it, and perfect it. I, then, don't want that competitive edge serving other people's capital. That sort of is the secret sauce of, of building platforms. Platforms have different shapes, different sizes, different scales, different time horizons based on the thematic, but, whether you are a small joint venture partner for us, or a fund owned operating platform, we still wanna partner in the same way. 

We want to come in and think creatively about how we make competitive edge happen together. We want to make one and one equal three.

And so take those Bain Capital business building skills that, 42 years in the making, and apply them with and to our partners. How do you build the right talent? Do you have the right organizational structure? We have the right systems and processes and data to make good decisions together and let's build that together so that we can refine that competitive edge in the strategy.

Nancy: So let's talk [00:49:00] about that 'cause you talked a little bit about how you hire, like when you got hired and when you hire people or or hire this team, how do you incent them? I mean, we know real estate people tend to be inherently entrepreneurial and deal driven and incentive driven. So does it make sense to have them be on the payroll of Bain and get some kind of incentive?

Or do you want them to be outside and just, fully aligned so that they're captive too? How do you think about it? 

Ryan: Well, there's a lot of nuance to the answer to that question, but I'll give you the simplest version of it, which is alignment is everything. And I want partners who wanna make money when my limited partners make money, period.

Nancy: Right. 

Ryan: It means I want people who want to bet on themselves, who wanna make most of their capital from profit sharing, from some promoted interests, some carry infrastructure or something like that, that is highly aligned with the capital that sits behind them. So not deal by deal type promotes not single execution stuff, but let's cross all of our activity in the strategy, and if the [00:50:00] strategy makes money, we're all going to make money, and if not, we won't.

I definitely don't want partners who want to get rich on fees or salary or anything like that. It's upside and it's value creation. Having done this for a while, there's really impressive overlap between the entrepreneurial, competitively minded, hard driving, thoughtful investment partner that you want and somebody who values the incentives that we value.

And the partner shows up and says, look, I just want to do deals. And like if your investment committee stops me, that's a problem. Well, that's not a very aligned partner. 

Nancy: Right. 

Ryan: You'd be amazed how many of those exist, but that's not a very aligned partner. 

Nancy: So you talked about being the largest alternative manager in the world, your funds are now multiple billions of dollars.

Ryan: Largest private alternative. 

Nancy: Largest private. Sorry. Sorry, caveat accepted, but your funds are large and what we're seeing now and the, not necessarily, not specific to Bain at all, but we're seeing even in very large managers that in this last [00:51:00] 15 years where you've had disappointing returns largely as a result of the spike in interest rates and  people not being able to sell or refinance at the kind of pricing they had anticipated.

So the people who were counting on their promotes are at a promote. There is no promote. How do you maintain and incentive a team when the market, the cyclical market, throws you a curve ball like that? 

Ryan: Yeah, it's a great question. Well, first I think it's an advantage to not be the 800 pound incumbent at the moment because we're growing, we're attracting capital.

We've got a positive vision for what we're trying to do that we can share with others. And I think people are excited about that and wanna be a part of that, which gives me some unique advantage to cut through this market. 

I think the second answer is it's really about where you invest and what you own.

If you go back to that thematic why-based style of investing, we don't own office buildings, we don't own malls. The [00:52:00] spaces where the world has gotten the most difficult. They’re just not spaces we play in by design, because we could never come up with a good “why” reason to be in those spaces.

And instead, I think the kinds of spaces that we've made ourselves experts in, be that life sciences or senior housing or self storage, or hyper infill industrial or whatever it may be, those are sectors that have enduring thematic tailwinds to them. You can write out a valuation cycle.

You can sort of say, well, to paraphrase Warren Buffet, Mr. Market's having a bad day of schizophrenia, so we're just gonna kick him out of our office today and keep building our business. And I think that belief that the long-term forces at work are tailwinds for you, and that demand will continue and you will be able to continue to create value through a cycle.

I think that's fundamental to sort of selecting the right sectors and selecting the right assets and if you get that part right, I think there's a lot more durability to what you're doing than just trading the beta cycle evaluations. 

Nancy: How is this growing scale impacting your investment strategy? [00:53:00] 

Ryan: Yeah. One of the things by design, I think is different about our product is that we have a heavy exposure to alternative real estate. If you're not buying office buildings and malls, you gotta buy something that's not a four food group kind of item. And so that's also where thematics lead you.

What do we need more of and don't have enough of its emerging alternative niche, your more complicated product by and large. What I think we've been successful in doing is building a nimble and dynamic platform that's got enough depth and enough scale to look across tons of alternative segments of real estate, to be curious about all those segments, to figure out which have enduring tailwinds, what competitive advantage looks like, and then be thoughtful and dynamic capital allocators into those segments. 

And so as our funds have grown, the diversification of those sectors have grown as well. But I think one of the biggest lessons I've learned is how critical it is to be dynamic in those sectors. I hear investors tell me quite often, well, we [00:54:00] like student housing right now, and so we're looking for a partner we can go allocate to for student housing.

 I think inherently one of the challenges of that model is that it is sometimes a good idea and sometimes not a good idea, and the student housing market is volatile. You're living it right now with immigration changes and foreign student changes and a whole bunch of other volatility around demand there that while it was a great idea two years ago, it may not be a great idea right now. But 12 months from now, if you have a value correction with bad demand, it might be a great idea. That need to stay dynamic and nimble and switch it on, switch it off.

Stay engaged in the market, but don't trade every day in the market. That's kind of crucial to playing these alternative sectors. Back to your data center question, I think the market is just all on, on data centers right now. 

Nancy: Right, right. 

Ryan: I don't know that that's always the right answer.

And I think part of what we get paid by our investors to do is be experts in each one of those asset classes and exercise judgment on their [00:55:00] behalf around when you turn it on and when you turn it off and what's in a good attachment and good detachment point to that market at a speed and a dynamism that most institutions just aren't set up to achieve.

Nancy: Right. So at year end, 2025, what are you leaning most, what sectors are you leaning most heavily into? 

Ryan: Yeah. So we're careful across the board. I would say it's clearly a market that is still dislocated. 46 months into the cycle, transaction volumes down 70% from its peaks. I think the bid ask spread is incredibly wide in the marketplace today.

Nancy: All these things are hurting my heart. Please don't continue.

Ryan: But they're, they're sadly true. We'll work our way out of all of them, but they are sadly true. Any trade you've gotta be a little bit suspicious of, because nobody wants to sell at the market clearing price today, and everybody wants to buy at depressed values.

Why am I so lucky is a pretty important question when you're doing Gils today. But what do we love? Well, we like grocery anchored retail a lot, you know? You mentioned that one. I'll pick on that one for a second. The fundamentals are [00:56:00] incredible. You've got basically no supply growth.

You've got 97% occupancy across the asset class. You've had consistent and steady rent growth, and I think it's gone through a technological revolution where you've retained all of those centers. And gotten rid of the stationary store and the tax prep guy and replaced them with a laser skincare spa and a Lululemon store that have much brighter prospects and so higher quality tenancy, higher quality income, and I can access that income at a premium cap rate relative to other kinds of income in the market if the market rate, multi trade is going off at a four or five cap, well, grocery or retail is at like a 5, 5, 6.

 And so I think I'm getting better income at a better price there. Right. Continue to love hyper infill industrial assets. So not chasing the Amazon logistics e-commerce boom that a lot of folks chased, but really going into supply constrained slash supply, shrinking markets for hyper infill assets and serving a highly diversified tenancy of service providers everywhere from the air conditioning repair guy to [00:57:00] the robotics laboratory of MIT. These people need infill industrial space to make their businesses work. 

Nancy: Are these small bay deals?

Ryan: Small bay, small coverage, yeah.

Hyper infill assets in the ring road of some very specific cities like Miami or Boston where we're actually shrinking the supply of this over time. Right. As we redevelop it for mixed use or multifamily or things like that. And so you've got real scarcity of assets and kind of a diversified and steady growth of demand.

Not high growth, but steady growth. And that's a really repeatable formula for NOI growth in those assets. And so we like those quite a lot. We surely like some more esoteric sectors. The seniors we mentioned, I think, are an amazing space. Although valuations are pretty peaky right now. People are paying up for that growth.

But the theme makes sense. We like a few very off the run kinds of real estate at the moment. Marina's has been one of them, self storage for boats on the water, it's not been a real estate asset class historically. I think it's rapidly becoming one because people [00:58:00] realize it is just storage on the water.

It is supply constrained in some pretty fundamental ways.

Nancy: I remember when in Boston, the Winthrop family bought the marina in Nantucket. It was like, that was a long time ago. They did very well and that was 

Ryan: And that was a pretty darn good buy. I can promise you. So Marinas, we like a lot.

I think along that line, we just bought a platform portfolio of high-end golf courses, membership golf courses that are a little bit steady recurring membership revenue and surely mispriced relative to real estate income in a pretty significant way. So attractive yields and, and good growth profile and that asset.

We like luxury boutique hospitality, so going to leisure markets for the wealthy and buying up aged hotel stock there and revitalizing it, that's proven to be a repetitive value creation engine for us.

Nancy: All very operationally intensive, which, yes. I guess given your background doesn't scare you as much as it scares some others.

Ryan: I think it's good that it scares others. 

Nancy: [00:59:00] Who's had the greatest influence on you in your life? 

Ryan: Well, I'll give you an odd answer. I, first of all, I've been incredibly lucky to just have exceptional mentors in my life from a baseball coach when I was 14 years old, who helped me figure out what I wanted to do or thought I wanted to do through to some professors in college who helped me find that curiosity. And really importantly, a lot of my partners here at Bain Capital, I'm incredibly fortunate to have remarkable investors for partners.

I'm incredibly fortunate to have people who are mentors by nature and think it's their job to teach, not just to do. And so have had a lot of patient partners who've helped me really grow personally in life. But that's not the answer to your question. I'll give you the honest answer to your question: Bruce Springsteen.

Nancy: I would've failed that test. 

Ryan: It's not something I talk about a lot. I first saw Bruce Springsteen when I was eight years old. My mother took me to a concert on the Born in the USA tour. 

Nancy: Wow. 

Ryan: And then found him again when [01:00:00] I was working for the Red Sox, my boss was an enormous fan and took me to go see him when I was 19 years old. It made an everlasting impression on my list. I saw somebody who gave everything they possibly could to being the best at what they did. It made me curious. I wanted to learn more about him. I wanted to learn more about how he does it.

For the last 25 years I've followed with exceptional passion. Everything he said, written, done. I've seen the guy more times than I would care to admit, but it's become a role model and a mentor for me. He’s the guy who is just all in at being the very best at what he does.

I have learned innumerable, innumerable life lessons [01:02:00] from just watching how he does his craft. Never met him, probably never will. But, he has had an overwhelming influence in my life. 

Nancy: Well, if anybody listening can make that happen, a case of your favorite to, to make this happen, I will send it to you.

That's great. Do your thing. That's great. I think we should end there. Ryan, it's such a pleasure. It's so refreshing to talk to you and fun [01:01:00] and we could keep going, but I really appreciate your time and thank you very much for doing this. 

Ryan: Nancy, this was a huge pleasure. Thank you for taking the time and for investing so much of yourself in this.

I've enjoyed the conversation and hope your listeners do too. 

Nancy: Great. Take care. 

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.

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