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Hey everybody,

it’s a way too early edition

of No Vacancy Live today.

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What the heck am I doing?

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I’m Anthony.

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Welcome to No Vacancy Live.

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That’s my friend Glenn.

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You’re watching the number

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one show in hospitality.

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everybody welcome to no

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vacancy live I am glenn

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houseman anthony melchior

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is not here this morning

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because I’m a super dumb

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dumb and I screwed up my

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travel schedule and I still

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wanted to go live today

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with our guest so I’m in my

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travel clothes at any

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minute I might have to bolt

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to la guardia airport

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depending on what uh google

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tells me to do because

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don’t we all live our lives

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um tell living by what

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google says we should do but before

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I just peer going to the

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incredible N E W H conference.

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Of course,

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they’re a great organization for

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networking and empowerment,

0:00:59.307 –> 0:01:00.448
and they do a lot of great

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scholarships for people

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coming up in the hospitality industry,

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particularly around the design community.

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I’m going to be broadcasting

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a Friday night audit from

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down there tomorrow night.

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I’m going to be doing a recording,

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another podcast down there.

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And of course on Saturday,

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what I’m looking forward to most is,

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is being a guest on a panel

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talking all about the kind

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of podcasting you know the

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stuff that we’re doing here

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right now but you’re tuning

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in for uh other information

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you want to know what’s

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going on in uh real estate

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and I’m curious as are we

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buying are we building we

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staying on the sidelines me

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I’m just going to fantasize

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about uh actually owning

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hotels over here but one

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guy that’s helping get

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deals closed is andrew

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broad managing director

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over at robert douglas uh

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Andrew,

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thanks so much for being here today,

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particularly since I

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screwed up my schedule.

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How are you?

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I’m good.

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Good morning, Glenn.

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How are you doing?

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I’m doing great.

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Thank you so much for being here today.

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So I’m excited to talk to

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you all about what’s going

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on in real estate.

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And you’re part of a real

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estate investment company.

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So I’m really curious as to

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what you think is happening today.

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I get a lot of mixed messages,

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and I get that it appears

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it’s important depending on

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whatever sector you’re in,

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whatever your goals are.

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Things are different.

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But let’s start with an umbrella approach.

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What’s the overall vibes

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that you’re getting today, February 15th,

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2024?

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I think that –

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you know,

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maybe the best way to look at

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this is maybe what happened

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in 23 and what we think is

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gonna happen 24.

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We live in the transaction

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world and 23 was pretty skinny.

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We suspected- I understand

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he’s transactions down

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something like 60% in like

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the last part of the year in particular.

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Yeah.

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Right?

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And I think, you know,

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obviously the debt markets

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contributed to that.

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You know, every 60 to 90 days, you know,

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debt got to be more

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expensive and less readily available.

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But I also think as people enter deals,

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you know, things like, you know,

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the PIPs got a little more

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expensive or there was a

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PCR issue or… What does

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that PCR mean for our viewers?

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Property Condition Report.

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You know,

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somebody’s done an under contract

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and they find that the

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chillers are broken or

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something like that.

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Right.

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That’s a shame because over here,

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we’re all about you got to chill, man.

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You don’t want those things broken.

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I think things that may not

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normally derail a deal,

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when you pile that on,

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you get more expensive debt.

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That gets piled on.

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The bridge breaks and deals

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weren’t happening.

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I think moving forward,

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what we’re going to see is

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there’s obviously a lot of

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debt maturity coming down

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the pipe in the next year or two.

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And that event, I think,

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is going to force people to

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make decisions.

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And the decision could be to

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sell because that’s a solution for you.

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You just simply need to refinance.

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I think it’s going to be tied very much to

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where in place cash flows.

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As a side note,

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we just put out our lender

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survey and that was pretty

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critical to most of the

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lenders we interviewed.

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Believe it or not, Andrew,

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we’re gonna talk about that

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in just a couple of minutes.

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So again,

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we do think that cash flow is a

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big driver.

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And again,

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so if you have a property and

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you’ve got substantial cash

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flow and you’ve got very

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conservative debt yield,

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you may elect today to

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simply just refinance that loan.

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You’ll have more options

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than somebody that’s still

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recovering or doesn’t have cash flow.

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So I do think that the

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amount of debt maturities

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are going to bring things to market.

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And we keep hearing

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everybody wants to chase distress.

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And I think there is some

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distress out there.

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But what I think these

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events are going to lead to

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are deals that haven’t been

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on the market.

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We haven’t seen transactions.

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We’re just going to see more.

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And it’s not necessarily

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going to be distressed.

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I think it’s just going to

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create an opportunity for

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people to transact.

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Right.

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Yeah.

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Go on.

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It looks like you’re going to continue.

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All right.

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So, you know,

0:05:13.730 –> 0:05:15.732
that’s a great point of view.

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And I’m not the expert,

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but it sounds like you know

0:05:19.254 –> 0:05:19.995
what I’m talking about.

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And it mirrors a lot of

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comments that I have been

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hearing out there.

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So it’s really interesting

0:05:25.721 –> 0:05:26.543
to me because what we try

0:05:26.562 –> 0:05:27.403
to do is we try to put

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everything into a simple bucket.

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Right.

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Right.

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every single deal is different.

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The goals are different.

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The circumstances of the

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previous deal that got that

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particular owner into the

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situation are different.

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So it creates a lot of

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variety of opportunities

0:05:44.697 –> 0:05:45.399
that are out there.

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And I’ve noticed some very

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distinctive strategies of

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Some companies trying to recycle assets,

0:05:51.983 –> 0:05:53.163
some companies trying to

0:05:53.223 –> 0:05:54.605
buy assets that they think

0:05:54.665 –> 0:05:56.105
are going to be worth more

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in the long term,

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and then other companies saying, hey,

0:06:00.228 –> 0:06:01.309
forget about it, I’m out.

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I think we’re just done over here.

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Does that seem to make sense

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to you from what you’re seeing out there?

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Yeah.

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I mean, look, I think you’re you’re yeah,

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I equate it.

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I’m going to look at the

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residential world for a moment.

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Yeah.

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You know,

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I think if you had kids in your

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empty nesting and maybe it

0:06:21.459 –> 0:06:22.399
was natural for you to

0:06:22.439 –> 0:06:23.600
maybe sell your house.

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Right.

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With where interest rates have gone,

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maybe you’re not selling your house.

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Right.

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Yeah.

0:06:29.581 –> 0:06:30.642
I’m raising my hand because

0:06:30.682 –> 0:06:31.483
I’ve got two kids in

0:06:31.523 –> 0:06:33.084
college and we’ve talked about it,

0:06:33.223 –> 0:06:35.485
but I refinanced at two nine.

0:06:35.605 –> 0:06:36.786
And now if I bought

0:06:36.826 –> 0:06:39.088
something that would kill it, you know,

0:06:39.228 –> 0:06:41.028
I’m getting to I cut off a

0:06:41.069 –> 0:06:42.990
lot of years by doing that refinance.

0:06:43.269 –> 0:06:45.430
So I feel like even if my

0:06:45.471 –> 0:06:46.831
property taxes are going up,

0:06:47.112 –> 0:06:48.612
still better for me to just, you know,

0:06:48.872 –> 0:06:49.192
hang out.

0:06:49.793 –> 0:06:51.033
So I do think there are

0:06:51.074 –> 0:06:52.514
companies out there that may have

0:06:53.490 –> 0:06:54.449
owners that were looking to

0:06:54.490 –> 0:06:56.190
naturally retire or get out

0:06:56.471 –> 0:06:58.232
and they’ve delayed that decision.

0:06:59.132 –> 0:07:01.252
Um, and, uh, yeah,

0:07:01.273 –> 0:07:01.913
they’ve made their money,

0:07:01.934 –> 0:07:04.415
they made their wealth and, you know,

0:07:04.435 –> 0:07:05.014
look, it, it,

0:07:05.214 –> 0:07:07.216
it could be that it’s time for them to,

0:07:07.355 –> 0:07:09.697
to, to move on, uh, and, and enjoy,

0:07:09.716 –> 0:07:11.197
you know, the rest of their life,

0:07:11.216 –> 0:07:11.858
whatever they’re doing.

0:07:12.557 –> 0:07:12.637
Um,

0:07:15.033 –> 0:07:18.394
I do have this small concern we have,

0:07:18.714 –> 0:07:19.735
and I think you have talked

0:07:19.755 –> 0:07:20.396
to other brokers.

0:07:20.875 –> 0:07:21.916
We’ve certainly seen it here.

0:07:22.637 –> 0:07:23.997
We’ve seen a dramatic

0:07:24.098 –> 0:07:27.720
increase in broker opinion of value work.

0:07:27.740 –> 0:07:29.521
People asking us, what is our stuff worth?

0:07:29.560 –> 0:07:30.100
What can we do?

0:07:30.141 –> 0:07:30.822
What’s the strategy?

0:07:31.641 –> 0:07:32.502
And we’re hearing this from

0:07:32.521 –> 0:07:33.023
a lot of people.

0:07:33.502 –> 0:07:35.064
So the question is,

0:07:35.124 –> 0:07:36.444
if we see a lot of

0:07:36.504 –> 0:07:38.625
inventory hit the market at one time,

0:07:39.305 –> 0:07:40.687
could that have an effect on value?

0:07:41.447 –> 0:07:42.267
I think, I mean,

0:07:42.829 –> 0:07:44.610
as someone who doesn’t know, I mean,

0:07:44.649 –> 0:07:46.031
that’s a lot of supply and demand.

0:07:46.072 –> 0:07:48.173
If there’s a lot more product out there,

0:07:48.252 –> 0:07:50.074
then typically it’ll take a

0:07:50.134 –> 0:07:51.315
hit with how much you can sell it.

0:07:51.716 –> 0:07:52.357
Yeah.

0:07:52.396 –> 0:07:52.576
Again,

0:07:52.617 –> 0:07:53.879
we haven’t we haven’t seen that yet.

0:07:54.598 –> 0:07:55.500
And I do think that there’s

0:07:55.519 –> 0:07:56.360
still a lot of capital

0:07:56.401 –> 0:07:57.322
chasing opportunity.

0:07:58.923 –> 0:08:00.242
The question will be,

0:08:00.302 –> 0:08:02.384
does that have an impact on valuation?

0:08:02.603 –> 0:08:04.404
Maybe.

0:08:04.605 –> 0:08:05.644
I firmly believe that the

0:08:05.685 –> 0:08:06.404
residential market,

0:08:06.464 –> 0:08:07.946
the main reason we haven’t

0:08:07.966 –> 0:08:08.985
seen a decrease in home

0:08:09.026 –> 0:08:09.886
values is the fact there’s

0:08:09.906 –> 0:08:11.146
just no inventory available

0:08:11.166 –> 0:08:12.447
and you’ve got a lot of demand for it.

0:08:12.906 –> 0:08:13.326
Right.

0:08:14.408 –> 0:08:16.348
So again,

0:08:16.367 –> 0:08:21.610
this goes back to our survey again.

0:08:23.569 –> 0:08:24.370
Interestingly enough,

0:08:24.750 –> 0:08:25.891
when we surveyed lenders,

0:08:26.411 –> 0:08:27.651
nobody thought rates were going to go up,

0:08:28.391 –> 0:08:28.552
right?

0:08:29.158 –> 0:08:30.658
know percentage right you

0:08:30.678 –> 0:08:33.519
mean for 2024 24 because

0:08:33.578 –> 0:08:34.440
we’ve heard a lot of

0:08:34.500 –> 0:08:36.080
chatter about rates going

0:08:36.120 –> 0:08:37.020
down periodically

0:08:37.081 –> 0:08:38.201
periodically throughout the

0:08:38.240 –> 0:08:39.541
year based on signals the

0:08:39.581 –> 0:08:41.381
fed has sent out all right

0:08:41.402 –> 0:08:42.582
please continue most of the

0:08:42.623 –> 0:08:43.702
people we surveyed agree

0:08:43.722 –> 0:08:44.503
with that but there was a

0:08:44.543 –> 0:08:45.503
percentage that said hey

0:08:45.524 –> 0:08:46.203
rates are going to stay

0:08:46.224 –> 0:08:48.323
flat and you know the the

0:08:48.364 –> 0:08:49.304
fed and yeah there was some

0:08:49.345 –> 0:08:51.044
indication maybe a a rate

0:08:51.065 –> 0:08:51.865
drop was going to happen

0:08:52.206 –> 0:08:53.145
now that’s been pushed off

0:08:53.385 –> 0:08:54.606
look I think most people

0:08:54.667 –> 0:08:55.386
and I’m one of them

0:08:56.027 –> 0:08:58.068
do agree that over time

0:08:58.089 –> 0:08:59.831
we’re going to see rates come down.

0:09:00.130 –> 0:09:01.712
Yeah.

0:09:01.793 –> 0:09:02.594
The question is when.

0:09:03.254 –> 0:09:04.456
And I think that it’s going

0:09:04.475 –> 0:09:06.518
to happen later than people thought,

0:09:06.677 –> 0:09:07.799
let’s say 30 days ago.

0:09:07.860 –> 0:09:08.780
And that showed up.

0:09:08.841 –> 0:09:09.260
If you look,

0:09:09.301 –> 0:09:10.543
you have five year treasuries drop,

0:09:10.643 –> 0:09:12.784
jump 45, inflationary report.

0:09:12.884 –> 0:09:13.004
So.

0:09:14.099 –> 0:09:14.298
Again,

0:09:15.840 –> 0:09:17.220
everybody we surveyed does not think

0:09:17.259 –> 0:09:19.341
rates are going to go up, which is good.

0:09:19.360 –> 0:09:21.341
And I think what that’s

0:09:21.501 –> 0:09:24.663
doing is we’re kind of in

0:09:24.702 –> 0:09:27.024
this situation where buyers

0:09:27.104 –> 0:09:28.264
are starting to get a

0:09:28.365 –> 0:09:29.365
little bit more bullish.

0:09:29.485 –> 0:09:30.465
And maybe the way they’re

0:09:30.504 –> 0:09:31.586
doing this is they’re

0:09:31.645 –> 0:09:32.865
bringing their exit cap

0:09:32.926 –> 0:09:34.246
rates down in their models.

0:09:34.947 –> 0:09:36.447
And we have sellers that…

0:09:37.207 –> 0:09:38.568
because of, let’s say, maturities,

0:09:39.330 –> 0:09:40.410
are being forced to be a

0:09:40.471 –> 0:09:41.471
little bit more realistic.

0:09:41.631 –> 0:09:43.413
And those two events will

0:09:43.433 –> 0:09:45.515
compress that bid-ask spread,

0:09:45.895 –> 0:09:46.736
in my opinion,

0:09:46.756 –> 0:09:48.418
really the two things that

0:09:48.458 –> 0:09:49.940
are going to help get

0:09:49.980 –> 0:09:50.620
things done this year.

0:09:51.000 –> 0:09:52.162
Yeah, and when they’re compressed,

0:09:52.361 –> 0:09:53.503
that means you’re fostering

0:09:53.543 –> 0:09:54.605
more of an environment for

0:09:54.625 –> 0:09:55.826
deals to potentially get done.

0:09:56.265 –> 0:09:56.586
Correct.

0:09:56.765 –> 0:10:00.009
And look, you always say, oh,

0:10:00.708 –> 0:10:02.130
I want to chase distressed opportunities.

0:10:02.791 –> 0:10:02.951
Right.

0:10:03.211 –> 0:10:05.613
I only look for off-market deals.

0:10:06.254 –> 0:10:06.453
Look,

0:10:06.553 –> 0:10:07.774
and I’m not saying that there aren’t

0:10:08.134 –> 0:10:09.515
good deals for people and

0:10:09.535 –> 0:10:10.937
there aren’t opportunities

0:10:10.956 –> 0:10:12.818
to come into an asset and improve them,

0:10:12.859 –> 0:10:13.879
whether it be a PIP or

0:10:14.320 –> 0:10:15.201
putting in a new revenue

0:10:15.221 –> 0:10:15.880
management strategy,

0:10:15.900 –> 0:10:16.542
whatever it might be.

0:10:18.363 –> 0:10:19.384
But it’s not going to be

0:10:19.484 –> 0:10:21.264
like fire sale situation.

0:10:21.345 –> 0:10:23.147
It’s going to be deals will get done.

0:10:24.124 –> 0:10:25.284
fair and reasonable deals,

0:10:25.706 –> 0:10:26.767
buyers might capture a

0:10:26.807 –> 0:10:28.107
little bit more of the upside.

0:10:29.190 –> 0:10:30.951
I look at this in a very frothy market.

0:10:31.631 –> 0:10:32.994
When a buyer comes into something,

0:10:33.774 –> 0:10:34.816
they might pay the seller

0:10:34.855 –> 0:10:36.076
for some of that upside in the deal.

0:10:37.138 –> 0:10:39.340
In a market that’s truly a buyer’s market,

0:10:39.421 –> 0:10:42.003
the buyers start buying more as is value,

0:10:42.062 –> 0:10:42.984
and they capture more of

0:10:43.024 –> 0:10:44.105
the upside in the deal.

0:10:44.446 –> 0:10:45.746
I think in a balanced market,

0:10:46.816 –> 0:10:47.856
those parties tend to share

0:10:48.457 –> 0:10:49.418
and again it breaks down

0:10:49.457 –> 0:10:50.259
maybe maybe the buyer’s

0:10:50.298 –> 0:10:51.240
getting 80 of the upside

0:10:51.259 –> 0:10:52.059
and sellers getting 20 of

0:10:52.120 –> 0:10:54.081
the upside but but we we

0:10:54.121 –> 0:10:55.263
get into this market where

0:10:55.283 –> 0:10:57.205
I do think that there will

0:10:57.245 –> 0:10:58.385
be an opportunity for

0:10:58.905 –> 0:10:59.687
sellers to sell their

0:10:59.787 –> 0:11:00.908
assets at a fair number and

0:11:00.967 –> 0:11:02.089
buyers to buy at a fair

0:11:02.129 –> 0:11:03.450
number and I think we’re

0:11:03.470 –> 0:11:04.551
kind of we’re starting to

0:11:04.650 –> 0:11:07.113
enter that um you know and

0:11:07.133 –> 0:11:08.192
keep in mind like an

0:11:08.254 –> 0:11:09.495
economic recession wars

0:11:09.534 –> 0:11:10.534
like all these other things

0:11:10.615 –> 0:11:12.256
are concerns I think you know

0:11:13.154 –> 0:11:15.017
But we always have the

0:11:15.057 –> 0:11:16.658
backdrop of concern.

0:11:17.057 –> 0:11:17.379
Correct.

0:11:18.019 –> 0:11:19.801
And now you’re going to start to hear,

0:11:19.921 –> 0:11:21.782
Andrew, and this is my new shtick here,

0:11:21.802 –> 0:11:22.342
we’re going to start to

0:11:22.383 –> 0:11:23.923
hear about how we can’t do

0:11:23.984 –> 0:11:24.725
anything because of the

0:11:24.745 –> 0:11:25.706
presidential election.

0:11:25.745 –> 0:11:27.167
We don’t know how policy is going to be,

0:11:27.626 –> 0:11:29.328
even though policy doesn’t

0:11:29.389 –> 0:11:30.068
ever really change that

0:11:30.109 –> 0:11:31.629
much because government is, you know,

0:11:31.671 –> 0:11:31.931
stuck.

0:11:32.892 –> 0:11:34.133
Yeah, I don’t know.

0:11:34.212 –> 0:11:35.052
I don’t know if this,

0:11:35.133 –> 0:11:36.474
every time we had an election year,

0:11:37.034 –> 0:11:38.456
you know, it gets a little weird, but,

0:11:39.317 –> 0:11:39.397
um,

0:11:39.875 –> 0:11:40.676
I don’t know about this one.

0:11:41.316 –> 0:11:43.558
I think I think there’s

0:11:43.698 –> 0:11:44.418
there’s bigger things

0:11:44.479 –> 0:11:45.139
happening in the hotel

0:11:45.179 –> 0:11:46.061
space in the election.

0:11:46.260 –> 0:11:46.601
But yeah.

0:11:47.022 –> 0:11:47.182
Right.

0:11:47.261 –> 0:11:47.422
Yeah.

0:11:47.562 –> 0:11:48.744
I will say this.

0:11:48.764 –> 0:11:50.926
So I’m curious about Andrew

0:11:50.985 –> 0:11:52.427
because you’re such an expert in this.

0:11:52.827 –> 0:11:54.830
So interest rates are at X

0:11:54.870 –> 0:11:56.711
percent and I’m interested

0:11:57.231 –> 0:11:58.413
in getting in a property.

0:11:59.254 –> 0:12:00.914
Do I wait?

0:12:01.576 –> 0:12:05.097
for 60, 90 days for hopefully that to drop,

0:12:05.138 –> 0:12:06.038
assuming the deal is still

0:12:06.057 –> 0:12:07.919
there and I could get money cheaper.

0:12:08.059 –> 0:12:10.201
But at what point to the

0:12:10.260 –> 0:12:12.121
cost of goods and services

0:12:12.201 –> 0:12:14.623
and all of that to put in a

0:12:14.702 –> 0:12:16.024
property improvement plan

0:12:16.063 –> 0:12:17.225
to get the property in the

0:12:17.284 –> 0:12:18.565
condition that I want it to,

0:12:18.625 –> 0:12:21.047
to maximize my investment opportunity.

0:12:22.086 –> 0:12:23.128
Where does that,

0:12:23.148 –> 0:12:24.869
how does all that work in

0:12:24.908 –> 0:12:25.929
people’s brains?

0:12:26.049 –> 0:12:26.470
I don’t know.

0:12:26.549 –> 0:12:27.091
I think I’m,

0:12:27.451 –> 0:12:28.772
I guess maybe it was Warren

0:12:28.792 –> 0:12:29.532
Buffett that said this.

0:12:29.652 –> 0:12:30.633
I think trying to time the

0:12:30.673 –> 0:12:31.813
market is very difficult.

0:12:32.173 –> 0:12:32.433
Right.

0:12:33.073 –> 0:12:33.754
I think you’re,

0:12:34.075 –> 0:12:36.417
you’re better off forming a thesis of,

0:12:37.017 –> 0:12:38.857
you know, what markets do you like?

0:12:39.298 –> 0:12:39.499
Right.

0:12:39.719 –> 0:12:41.700
And over 10, 20 years,

0:12:41.779 –> 0:12:43.360
it’ll do this as opposed to

0:12:43.500 –> 0:12:44.062
the next year.

0:12:44.081 –> 0:12:44.562
Yeah.

0:12:44.682 –> 0:12:46.222
Yeah, I actually, you know,

0:12:46.643 –> 0:12:47.143
it’s interesting.

0:12:47.163 –> 0:12:48.124
I was trying to find this

0:12:48.163 –> 0:12:49.224
data point this morning,

0:12:49.264 –> 0:12:50.504
and so I’m going to throw

0:12:50.524 –> 0:12:52.206
something out that I don’t

0:12:52.245 –> 0:12:53.187
know if it’s accurate,

0:12:53.226 –> 0:12:55.048
but I was trying to figure out, like,

0:12:55.128 –> 0:12:56.187
what’s been the aggregate

0:12:56.227 –> 0:12:57.989
change in CPI from 2019 to today?

0:12:58.009 –> 0:13:00.691
That’s the Consumer Price Index, right?

0:13:01.130 –> 0:13:02.211
Yeah, Consumer Price Index.

0:13:02.672 –> 0:13:06.173
And I Googled, like, multiple sources,

0:13:06.234 –> 0:13:07.234
and I came up with about 22%.

0:13:07.234 –> 0:13:07.714
So a dollar in 2019…

0:13:11.096 –> 0:13:12.937
It’s called $1.22 today,

0:13:13.596 –> 0:13:14.876
which means that if you’re

0:13:14.917 –> 0:13:17.197
renting rooms for $100 in 19,

0:13:17.197 –> 0:13:17.898
if you’re not renting rooms

0:13:17.918 –> 0:13:19.258
for $121 today,

0:13:19.958 –> 0:13:21.759
you’re not back to 19 numbers.

0:13:22.818 –> 0:13:24.320
Inflation adjusted 19 numbers.

0:13:26.299 –> 0:13:30.802
So again, timing the market.

0:13:34.010 –> 0:13:34.510
You can wait.

0:13:34.772 –> 0:13:35.711
I mean, if that’s your thesis,

0:13:35.832 –> 0:13:38.075
but you could miss an opportunity.

0:13:38.715 –> 0:13:40.235
And I always tell these people,

0:13:41.096 –> 0:13:43.778
you don’t own the cash flows from before.

0:13:44.360 –> 0:13:45.980
You own the cash flows moving forward.

0:13:46.942 –> 0:13:49.063
And I think, you know,

0:13:49.553 –> 0:13:50.474
when we came out of COVID,

0:13:50.514 –> 0:13:52.315
leisure looked really, really attractive.

0:13:52.955 –> 0:13:53.595
It did.

0:13:53.715 –> 0:13:55.775
And everybody fleed from

0:13:55.875 –> 0:13:57.816
deals in urban cores.

0:13:58.615 –> 0:13:59.716
There were a few companies

0:13:59.817 –> 0:14:01.356
out there making a lot of, you know,

0:14:01.397 –> 0:14:02.677
doing buying distressed

0:14:02.717 –> 0:14:04.798
properties or just purchasing hotels.

0:14:05.018 –> 0:14:06.918
And they seem to be on the

0:14:06.938 –> 0:14:09.739
winning side today from that decision.

0:14:11.100 –> 0:14:11.480
I agree.

0:14:11.519 –> 0:14:14.900
And I think, you know, you just have to,

0:14:16.344 –> 0:14:17.465
you kind of analyze like

0:14:17.924 –> 0:14:19.265
what’s going to happen moving forward.

0:14:19.666 –> 0:14:20.506
And that’s where it’s gotten

0:14:20.527 –> 0:14:21.248
really difficult.

0:14:21.868 –> 0:14:22.187
You know,

0:14:22.808 –> 0:14:24.009
I don’t like to use the word like

0:14:24.109 –> 0:14:25.951
pendulum swing back, like, you know,

0:14:25.990 –> 0:14:26.431
leisure’s gone.

0:14:26.791 –> 0:14:28.812
I think COVID took this

0:14:28.873 –> 0:14:31.234
industry and it was like a

0:14:31.533 –> 0:14:32.894
jar of like jello or

0:14:32.934 –> 0:14:34.235
something and it got all

0:14:34.275 –> 0:14:36.817
shook up and now it’s starting to settle.

0:14:37.418 –> 0:14:38.278
And it’s cloudy.

0:14:38.298 –> 0:14:39.620
Like we’re starting to see

0:14:40.379 –> 0:14:42.682
like different patterns sort of emerge.

0:14:42.721 –> 0:14:43.842
Like I think we’re going to

0:14:43.923 –> 0:14:45.543
end up with some sort of new norm.

0:14:46.203 –> 0:14:46.744
moving forward.

0:14:46.783 –> 0:14:49.424
And I do think that maybe

0:14:49.504 –> 0:14:51.365
companies will come back to work,

0:14:51.385 –> 0:14:52.446
but you’ll get Fridays at

0:14:52.505 –> 0:14:55.527
home or whatever it is.

0:14:55.668 –> 0:14:56.847
I’m working on a project now

0:14:56.967 –> 0:14:59.828
where they’ve done really,

0:14:59.928 –> 0:15:01.809
really well with a

0:15:01.889 –> 0:15:04.370
corporate client who used to do

0:15:05.171 –> 0:15:06.451
like big meetings,

0:15:06.572 –> 0:15:08.013
like convention size meetings.

0:15:08.493 –> 0:15:08.692
Right.

0:15:08.993 –> 0:15:09.953
Now what they’re doing is a

0:15:09.994 –> 0:15:11.094
lot of smaller meetings in

0:15:11.114 –> 0:15:11.815
their backyard.

0:15:11.855 –> 0:15:13.235
So that that hotel in their

0:15:13.254 –> 0:15:14.076
backyard has been the

0:15:14.135 –> 0:15:16.076
beneficiary of that sort of

0:15:16.236 –> 0:15:17.418
shift in the way that

0:15:17.538 –> 0:15:19.599
company is is training

0:15:19.639 –> 0:15:21.039
their people and conducting

0:15:21.059 –> 0:15:21.539
their business.

0:15:23.000 –> 0:15:23.980
So I think we see sort of

0:15:24.020 –> 0:15:26.602
like new ish patterns out of this.

0:15:26.863 –> 0:15:28.323
And we can’t ignore the fact that,

0:15:28.543 –> 0:15:28.724
you know,

0:15:28.764 –> 0:15:29.884
people have moved to places like

0:15:29.943 –> 0:15:31.404
Nashville and and the

0:15:31.445 –> 0:15:33.206
Mountain West and in Florida.

0:15:33.385 –> 0:15:33.787
Yeah.

0:15:34.767 –> 0:15:34.986
you know,

0:15:35.006 –> 0:15:36.149
I do think there’s some of that’s

0:15:36.188 –> 0:15:38.272
going to play out in the long term.

0:15:38.312 –> 0:15:40.674
But again, in the short term,

0:15:40.715 –> 0:15:42.456
I think we’re all trying to

0:15:42.496 –> 0:15:43.658
figure out like where

0:15:44.692 –> 0:15:45.933
Where is this industry going

0:15:45.974 –> 0:15:47.075
in that particular market?

0:15:47.215 –> 0:15:48.255
And again,

0:15:48.296 –> 0:15:50.256
how you approach a Boise might

0:15:50.297 –> 0:15:51.118
be different than how you

0:15:51.158 –> 0:15:52.437
approach a San Francisco or

0:15:52.477 –> 0:15:53.479
how you approach a New York.

0:15:53.798 –> 0:15:54.120
Agreed.

0:15:54.360 –> 0:15:57.121
And unless you can’t,

0:15:57.261 –> 0:15:59.503
unless you have some sort

0:15:59.562 –> 0:16:01.225
of omniscient understanding,

0:16:01.264 –> 0:16:01.965
you’ve really got to

0:16:02.004 –> 0:16:03.265
understand the dynamics of

0:16:03.485 –> 0:16:04.706
every single market.

0:16:05.167 –> 0:16:06.648
That’s why it frustrates me

0:16:07.028 –> 0:16:08.668
that we don’t have a better

0:16:08.869 –> 0:16:10.089
tool to talk colloquially

0:16:10.129 –> 0:16:10.708
about the state of the

0:16:10.749 –> 0:16:12.090
industry than what the

0:16:12.129 –> 0:16:14.211
entire country seems to be

0:16:14.471 –> 0:16:16.211
doing in any particular

0:16:16.331 –> 0:16:19.033
category because it gives us a sense,

0:16:19.452 –> 0:16:20.393
but it doesn’t really give

0:16:20.432 –> 0:16:22.234
anything specific because

0:16:22.254 –> 0:16:24.514
this is such a street corner operation.

0:16:24.975 –> 0:16:26.375
And I will tell you, Andrew,

0:16:26.395 –> 0:16:28.116
I was in Asheville,

0:16:28.496 –> 0:16:30.378
North Carolina last fall

0:16:30.437 –> 0:16:31.798
with my friends over at a

0:16:31.899 –> 0:16:33.039
rain scope for their annual

0:16:33.100 –> 0:16:34.841
conference and the amount

0:16:34.860 –> 0:16:36.621
of highway construction and

0:16:36.642 –> 0:16:37.962
the amount of the airport

0:16:38.003 –> 0:16:39.083
was under construction.

0:16:39.104 –> 0:16:40.083
They are in the middle of a

0:16:40.203 –> 0:16:42.065
big boom right now.

0:16:42.525 –> 0:16:43.706
And that seems to me, uh,

0:16:44.506 –> 0:16:45.607
an indication of a market

0:16:45.648 –> 0:16:46.668
where you could probably

0:16:46.788 –> 0:16:48.408
build new hotels or

0:16:48.609 –> 0:16:50.571
reinvent existing hotels.

0:16:50.610 –> 0:16:51.370
Good luck at Asheville.

0:16:51.490 –> 0:16:52.010
I know the market.

0:16:52.030 –> 0:16:53.412
Well, I know the road they’re putting in.

0:16:53.432 –> 0:16:53.471
Um,

0:16:55.731 –> 0:16:58.153
And yeah, look,

0:16:58.192 –> 0:16:59.214
I think Gashwell’s a great market.

0:16:59.514 –> 0:16:59.673
Yeah,

0:16:59.714 –> 0:17:01.054
the Rains guys have done some great

0:17:01.095 –> 0:17:02.014
projects down there.

0:17:02.134 –> 0:17:03.176
And I think that because

0:17:03.196 –> 0:17:04.416
they’re in that region,

0:17:04.876 –> 0:17:05.978
they kind of anticipated

0:17:06.018 –> 0:17:07.097
what was coming and got

0:17:07.157 –> 0:17:10.519
some great properties open over there,

0:17:10.880 –> 0:17:11.400
for example.

0:17:12.161 –> 0:17:12.580
Yeah, go on.

0:17:13.320 –> 0:17:14.521
No, and look, we’ve seen…

0:17:17.210 –> 0:17:17.410
You know,

0:17:17.450 –> 0:17:18.750
we’ve seen a number of companies

0:17:18.891 –> 0:17:20.510
where they know what I’ll say.

0:17:20.550 –> 0:17:22.291
They kind of know their backyard, right?

0:17:22.731 –> 0:17:23.573
They know the street corner

0:17:23.593 –> 0:17:24.173
that’s better than the

0:17:24.192 –> 0:17:24.792
other street corner.

0:17:26.134 –> 0:17:27.094
There’s a lot of value in that.

0:17:27.594 –> 0:17:28.934
And you know,

0:17:29.035 –> 0:17:30.015
sometimes people forget that

0:17:30.035 –> 0:17:31.256
this is a location business.

0:17:31.556 –> 0:17:32.316
You’re so right.

0:17:32.395 –> 0:17:33.457
Andrew, before you continue, it’s just,

0:17:33.676 –> 0:17:34.997
it’s something I want to

0:17:35.017 –> 0:17:36.597
just make a connection for, for viewers.

0:17:36.758 –> 0:17:39.378
Everyone has that area in

0:17:39.419 –> 0:17:40.838
your neighborhood where you

0:17:40.878 –> 0:17:43.298
know that that corner doesn’t do well.

0:17:43.419 –> 0:17:44.740
And you see that restaurant

0:17:44.759 –> 0:17:46.019
that’s going in there and you’re like,

0:17:46.039 –> 0:17:49.580
oh no, why did they get that space?

0:17:49.961 –> 0:17:52.480
Because six months later, they’re gone,

0:17:52.801 –> 0:17:53.021
right?

0:17:53.041 –> 0:17:54.821
So it’s the same thing with

0:17:54.922 –> 0:17:55.602
understanding how

0:17:55.981 –> 0:17:56.942
everything works for hotels.

0:17:57.982 –> 0:17:58.843
Yeah, and look,

0:17:58.863 –> 0:17:59.982
we have something on the market now.

0:18:00.002 –> 0:18:00.722
It happened to be a market

0:18:00.742 –> 0:18:01.603
I’ve lived in for a while.

0:18:02.443 –> 0:18:03.804
And just knowing-

0:18:05.086 –> 0:18:07.107
like where the hot little

0:18:07.188 –> 0:18:09.510
area is and why one hotel

0:18:09.550 –> 0:18:10.652
works and one doesn’t

0:18:10.752 –> 0:18:12.434
because there is a pretty

0:18:12.474 –> 0:18:13.556
big disparity between the

0:18:13.596 –> 0:18:14.277
top and the bottom.

0:18:14.517 –> 0:18:16.019
And that doesn’t happen in all markets,

0:18:16.058 –> 0:18:17.359
but it does happen in some.

0:18:19.667 –> 0:18:20.989
sometimes understanding that

0:18:21.689 –> 0:18:23.608
is really very valuable.

0:18:25.069 –> 0:18:26.871
And so I think the regional

0:18:26.911 –> 0:18:28.510
players that know their backyard,

0:18:28.530 –> 0:18:30.672
know where the growth is going to be,

0:18:31.311 –> 0:18:32.512
know what companies are coming in,

0:18:32.553 –> 0:18:34.053
the demand generators that

0:18:34.093 –> 0:18:35.574
are going to feed their

0:18:35.614 –> 0:18:37.653
hotels in the future is a

0:18:37.773 –> 0:18:38.634
competitive advantage.

0:18:38.654 –> 0:18:41.036
I think the other thing would be,

0:18:42.195 –> 0:18:42.997
you know from a management

0:18:43.017 –> 0:18:45.097
standpoint um you know the

0:18:45.117 –> 0:18:46.419
type of product you’re very

0:18:46.459 –> 0:18:47.420
good at like if you’re a

0:18:47.440 –> 0:18:48.680
good extended stay operator

0:18:48.940 –> 0:18:49.661
you know build extended

0:18:49.681 –> 0:18:50.741
state don’t don’t go build

0:18:50.761 –> 0:18:52.163
for its car if you’re a

0:18:52.202 –> 0:18:53.522
luxury operator and you do

0:18:53.564 –> 0:18:55.244
that well like sometimes

0:18:55.285 –> 0:18:56.565
staying in your lane and

0:18:56.726 –> 0:18:59.007
and and and doing that well

0:18:59.748 –> 0:19:01.167
is is something that gets

0:19:01.328 –> 0:19:02.950
you know you should recognize um

0:19:03.589 –> 0:19:03.869
Yeah.

0:19:04.671 –> 0:19:05.311
I think, and look,

0:19:05.471 –> 0:19:06.972
there’s things we can’t

0:19:07.012 –> 0:19:07.894
control in this business

0:19:07.933 –> 0:19:09.174
and there’s other things we can.

0:19:09.194 –> 0:19:11.538
I think you have to do your

0:19:11.577 –> 0:19:13.199
best to control the things you can.

0:19:13.219 –> 0:19:14.780
This is a service business.

0:19:16.481 –> 0:19:17.682
At the end of the day, like it…

0:19:18.916 –> 0:19:19.076
You know,

0:19:19.096 –> 0:19:20.758
it’s not always about the pip or

0:19:20.798 –> 0:19:21.817
the nicest mirror.

0:19:22.417 –> 0:19:24.638
It’s a combination of a quality product,

0:19:25.078 –> 0:19:27.140
good staff, offering something at a value,

0:19:28.240 –> 0:19:29.401
doing the things you can control.

0:19:29.980 –> 0:19:31.101
And look, there’s a lot of,

0:19:31.121 –> 0:19:33.981
like on the other side, like, you know,

0:19:34.001 –> 0:19:35.442
insurance has become a big problem.

0:19:35.643 –> 0:19:36.323
Not a big problem,

0:19:36.343 –> 0:19:37.903
it’s just becoming less and less.

0:19:37.962 –> 0:19:39.683
Yeah, we haven’t talked enough about this.

0:19:40.003 –> 0:19:41.404
I started hearing about it in Florida,

0:19:41.444 –> 0:19:42.345
but apparently this seems

0:19:42.384 –> 0:19:43.845
to be nationwide.

0:19:44.346 –> 0:19:46.125
What specifically is going

0:19:46.246 –> 0:19:47.166
on here that’s driving

0:19:47.186 –> 0:19:48.426
these insurance rates up so much?

0:19:49.778 –> 0:19:51.099
Well, storms in Florida.

0:19:52.141 –> 0:19:52.320
Yeah.

0:19:52.340 –> 0:19:53.001
The other thing is,

0:19:53.082 –> 0:19:55.905
is that as people sell their properties,

0:19:55.925 –> 0:19:59.150
you know, the the insurance companies,

0:19:59.309 –> 0:20:00.550
really the lenders are

0:20:00.771 –> 0:20:03.595
asking the borrowers to

0:20:03.694 –> 0:20:05.557
reset the replacement costs.

0:20:07.096 –> 0:20:08.477
And so because the cost of

0:20:08.557 –> 0:20:10.159
construction and replacing

0:20:10.199 –> 0:20:12.640
things have gone up so much, you know,

0:20:12.700 –> 0:20:13.601
the owner might have had a

0:20:13.641 –> 0:20:14.582
policy with a replacement

0:20:14.602 –> 0:20:15.521
cost of $20 million.

0:20:15.962 –> 0:20:17.202
You’re buying it for $30.

0:20:17.304 –> 0:20:18.904
You got to put in $40

0:20:18.904 –> 0:20:20.326
million for a replacement cost.

0:20:20.586 –> 0:20:22.646
And, you know,

0:20:23.728 –> 0:20:25.148
the amount of claims in an

0:20:25.429 –> 0:20:26.890
area like Florida has

0:20:26.950 –> 0:20:28.731
resulted in insurance, you know.

0:20:29.612 –> 0:20:31.252
you know, not going up just a little,

0:20:31.333 –> 0:20:32.553
but you know, sometimes 150, 200%.

0:20:32.553 –> 0:20:34.953
And in some cases, you know,

0:20:34.973 –> 0:20:35.554
insurance companies

0:20:35.574 –> 0:20:36.534
completely pulling out.

0:20:37.434 –> 0:20:40.536
Um, so it’s very, it’s, it’s, it is a,

0:20:40.935 –> 0:20:41.496
it’s an issue.

0:20:41.516 –> 0:20:46.017
Um, you know, again, you know, we,

0:20:46.178 –> 0:20:47.698
we always hope that the,

0:20:47.897 –> 0:20:50.138
the rates and revenues will outpace,

0:20:50.699 –> 0:20:52.440
you know, the, the pressures in the PNL.

0:20:53.420 –> 0:20:53.539
Um,

0:20:57.088 –> 0:20:58.470
Costar seems to be

0:20:58.490 –> 0:20:59.569
predicting that we are

0:20:59.711 –> 0:21:01.172
there for that right now.

0:21:01.571 –> 0:21:01.991
But again,

0:21:03.733 –> 0:21:05.255
it’s tough to make those profits

0:21:05.295 –> 0:21:06.336
because the margins have

0:21:06.596 –> 0:21:07.376
gotten a little bit slimmer.

0:21:07.416 –> 0:21:08.156
But I’m curious, man.

0:21:08.217 –> 0:21:09.377
I’m getting ready.

0:21:09.817 –> 0:21:10.419
We’ll be here in a few

0:21:10.459 –> 0:21:11.619
minutes to head over to Nashville.

0:21:11.680 –> 0:21:12.961
Nashville has been a darling

0:21:13.000 –> 0:21:15.123
for so many years for hotel development.

0:21:15.782 –> 0:21:18.404
You’re saying, for example,

0:21:18.444 –> 0:21:19.486
that it’s still going to be

0:21:20.467 –> 0:21:21.387
rocking and rolling.

0:21:21.468 –> 0:21:21.968
What the hell?

0:21:22.228 –> 0:21:22.949
Is it because they’re

0:21:22.969 –> 0:21:24.890
expanding so much in terms of population?

0:21:25.009 –> 0:21:26.330
It’s unbelievable to me.

0:21:26.351 –> 0:21:28.352
I think it’s an extremely

0:21:28.392 –> 0:21:30.933
attractive city for so many reasons.

0:21:32.115 –> 0:21:35.036
And one of our partners, Evan,

0:21:35.277 –> 0:21:35.977
lives down there,

0:21:36.037 –> 0:21:37.657
and we’re working on a couple things.

0:21:38.578 –> 0:21:41.901
And certainly downtown has

0:21:42.881 –> 0:21:44.382
clearly shown it can handle

0:21:44.422 –> 0:21:47.984
the supply for demand downtown.

0:21:48.005 –> 0:21:49.306
We have seen a little

0:21:49.346 –> 0:21:51.247
weakening sort of on the fringes

0:21:52.041 –> 0:21:53.182
But, you know,

0:21:53.221 –> 0:21:54.762
if you look at the airport market,

0:21:54.782 –> 0:21:56.903
for example, all right, it’s softened,

0:21:56.962 –> 0:21:57.863
but now they’re doing a

0:21:58.063 –> 0:21:59.383
multi-billion dollar expansion.

0:21:59.703 –> 0:22:00.044
Right.

0:22:00.223 –> 0:22:01.544
So, you know,

0:22:01.743 –> 0:22:03.304
you might look at X amount

0:22:03.344 –> 0:22:04.365
more planes coming in.

0:22:04.404 –> 0:22:04.964
Inevitably,

0:22:05.005 –> 0:22:06.345
you’re going to sell X amount of rooms.

0:22:06.724 –> 0:22:07.065
Correct.

0:22:07.144 –> 0:22:09.065
And look, you know, you could say, hey,

0:22:09.204 –> 0:22:10.526
it’s a little weak now, but, you know,

0:22:10.546 –> 0:22:11.826
over the next five years is

0:22:11.865 –> 0:22:12.945
this thing comes online.

0:22:12.965 –> 0:22:14.006
That could be a great bet.

0:22:14.326 –> 0:22:15.247
It sounds like a good time

0:22:15.287 –> 0:22:16.326
to start early planning.

0:22:16.747 –> 0:22:19.529
then on a property look or

0:22:19.730 –> 0:22:20.391
or maybe there’s an

0:22:20.411 –> 0:22:21.112
opportunity to buy

0:22:21.172 –> 0:22:23.295
something there today at a

0:22:23.375 –> 0:22:24.777
basis that’s super

0:22:24.797 –> 0:22:26.137
attractive versus you know

0:22:26.538 –> 0:22:27.279
building new um

0:22:29.192 –> 0:22:31.213
And it may not look great today,

0:22:31.334 –> 0:22:33.034
but in five years you look like a genius.

0:22:36.515 –> 0:22:38.836
I really think at some point in time,

0:22:39.236 –> 0:22:40.596
betting on San Francisco is

0:22:40.616 –> 0:22:42.037
gonna be a smart thing to do.

0:22:42.317 –> 0:22:44.157
Right, just not necessarily today.

0:22:44.817 –> 0:22:45.817
You might look very foolish

0:22:45.857 –> 0:22:47.638
today because of where the market is,

0:22:47.719 –> 0:22:49.038
but if you think San

0:22:49.058 –> 0:22:50.799
Francisco as a market’s going away,

0:22:51.619 –> 0:22:53.181
I’d argue pretty

0:22:53.201 –> 0:22:54.181
emphatically against that.

0:22:55.020 –> 0:22:58.202
I think if you, again,

0:22:58.242 –> 0:22:59.742
New York’s got things going on.

0:22:59.762 –> 0:23:00.423
I’m just going to try to

0:23:00.463 –> 0:23:01.364
segue into New York,

0:23:01.403 –> 0:23:03.384
because let me just set the

0:23:03.404 –> 0:23:04.345
stage for this question

0:23:04.365 –> 0:23:05.266
that I have for you.

0:23:05.306 –> 0:23:08.346
Because New York City, pre-pandemic,

0:23:08.866 –> 0:23:10.387
it was all about expansion.

0:23:10.407 –> 0:23:11.768
There were so many rooms

0:23:11.788 –> 0:23:14.509
that were added that in 2019,

0:23:14.509 –> 0:23:15.289
when everyone was making

0:23:15.349 –> 0:23:16.210
boats loads of money,

0:23:16.569 –> 0:23:17.891
New York City was already

0:23:17.971 –> 0:23:19.933
having trouble pushing its rates.

0:23:20.294 –> 0:23:21.295
And at the expense toward

0:23:21.335 –> 0:23:23.738
hotels was so much that it

0:23:23.778 –> 0:23:25.618
was getting more difficult for hoteliers.

0:23:25.680 –> 0:23:27.040
Well, there’s been a reset.

0:23:27.101 –> 0:23:28.061
Hotels have closed.

0:23:28.281 –> 0:23:30.964
The migrant situation has

0:23:31.486 –> 0:23:32.747
impacted New York City’s

0:23:32.807 –> 0:23:33.587
hotel system in a

0:23:33.907 –> 0:23:35.749
very serious way, taking many,

0:23:35.788 –> 0:23:38.730
many hotels out of renting

0:23:38.769 –> 0:23:39.849
every night and providing

0:23:40.470 –> 0:23:42.550
homes and services for these people.

0:23:42.611 –> 0:23:44.551
So now it seems like it’s a toss up.

0:23:44.711 –> 0:23:45.692
All the dynamics of the New

0:23:45.711 –> 0:23:47.393
York City market have changed.

0:23:47.833 –> 0:23:48.613
It’s one of the reasons why

0:23:48.633 –> 0:23:49.432
I’m thinking some of those

0:23:49.512 –> 0:23:51.794
people like MCR that bought

0:23:51.814 –> 0:23:53.515
the Sheraton in Midtown

0:23:53.595 –> 0:23:55.414
probably made a really good decision.

0:23:55.515 –> 0:23:56.596
How are you seeing New York City?

0:23:57.895 –> 0:23:58.076
Well,

0:23:58.096 –> 0:23:59.517
you also had the change with like

0:23:59.576 –> 0:24:00.637
Airbnb rules.

0:24:01.137 –> 0:24:01.657
Correct.

0:24:02.218 –> 0:24:03.798
And to let people know,

0:24:04.940 –> 0:24:06.680
you cannot do regular

0:24:06.839 –> 0:24:10.162
Airbnbs anymore in New York City.

0:24:10.662 –> 0:24:13.242
So that is a massive,

0:24:13.742 –> 0:24:15.304
massive change that is that

0:24:15.423 –> 0:24:16.984
under even if the migrant

0:24:17.005 –> 0:24:17.765
situation wasn’t there,

0:24:17.785 –> 0:24:19.425
I think would still buoy

0:24:19.826 –> 0:24:21.426
the hotel development sector.

0:24:22.030 –> 0:24:23.653
Yeah, look, Airbnb, I think,

0:24:23.833 –> 0:24:24.752
unless they change the law,

0:24:24.773 –> 0:24:25.693
which I don’t think they will do,

0:24:25.713 –> 0:24:28.896
that’s a big change for the

0:24:28.916 –> 0:24:31.740
city that will have long-term impact.

0:24:32.500 –> 0:24:33.842
The migrant situation is

0:24:33.922 –> 0:24:36.743
interesting because this is

0:24:37.224 –> 0:24:38.726
clearly a national issue

0:24:38.766 –> 0:24:41.307
that people have a lot of opinions on.

0:24:43.210 –> 0:24:44.590
The question becomes…

0:24:45.551 –> 0:24:48.356
you know, will this issue be solved?

0:24:48.376 –> 0:24:50.359
I think that’s a that’s a big, big,

0:24:50.580 –> 0:24:52.042
big load to carry and figure out

0:24:54.269 –> 0:24:55.670
I think the bigger question

0:24:55.710 –> 0:24:56.630
for New York is,

0:24:57.490 –> 0:24:59.391
will the New York taxpayers

0:25:00.271 –> 0:25:02.333
be okay with spending this

0:25:02.512 –> 0:25:04.093
money indefinitely?

0:25:04.113 –> 0:25:07.115
And is this solution of

0:25:07.255 –> 0:25:10.355
using hotel rooms a permanent solution?

0:25:10.796 –> 0:25:11.096
By the way,

0:25:11.135 –> 0:25:11.777
I think it’s going to be here

0:25:11.797 –> 0:25:12.277
for a while.

0:25:12.676 –> 0:25:13.678
It is.

0:25:13.877 –> 0:25:15.198
Even if New York City woke

0:25:15.278 –> 0:25:16.459
up this morning and said,

0:25:16.519 –> 0:25:18.299
we’re going to build 10,000

0:25:18.299 –> 0:25:19.819
units for these people,

0:25:20.299 –> 0:25:21.161
that’s still years away.

0:25:21.800 –> 0:25:23.643
years away or if the federal

0:25:23.663 –> 0:25:24.824
government does again,

0:25:25.003 –> 0:25:26.125
it’s a very big issue.

0:25:27.346 –> 0:25:29.248
So I would argue that you

0:25:29.307 –> 0:25:32.990
have this demand right from

0:25:33.050 –> 0:25:35.093
the city of New York who

0:25:35.153 –> 0:25:36.314
are renting rooms and

0:25:36.375 –> 0:25:37.596
taking up inventory.

0:25:38.395 –> 0:25:42.119
And, you know, it’s it’s it’s really,

0:25:42.200 –> 0:25:44.362
really sort of reduced the

0:25:44.402 –> 0:25:46.243
supply of rooms in New York City.

0:25:47.380 –> 0:25:49.082
a market that’s got a

0:25:49.122 –> 0:25:50.962
variety of demand generators,

0:25:51.523 –> 0:25:52.344
and there are going to be

0:25:52.403 –> 0:25:53.505
pockets in New York that do

0:25:53.525 –> 0:25:54.105
better than others.

0:25:55.366 –> 0:25:56.647
Again, going back to the comment,

0:25:56.667 –> 0:25:57.188
the street corner.

0:25:57.448 –> 0:25:58.568
Yep, exactly.

0:25:58.828 –> 0:25:59.390
Maybe you don’t want to be

0:25:59.430 –> 0:26:00.109
on Lexington 3rd.

0:26:00.130 –> 0:26:01.471
You want to be over here.

0:26:01.791 –> 0:26:02.873
Well, yeah,

0:26:03.133 –> 0:26:04.913
it’s definitely better to be on

0:26:05.954 –> 0:26:07.496
Lexington than like 2nd Avenue,

0:26:07.876 –> 0:26:08.797
for example,

0:26:08.836 –> 0:26:10.278
unless you’re by the UN in September.

0:26:10.298 –> 0:26:10.398
Right.

0:26:11.419 –> 0:26:13.160
And look, you know, I think, guys,

0:26:13.579 –> 0:26:14.460
and I’m not faulting him

0:26:14.480 –> 0:26:15.720
because I think he was a

0:26:15.799 –> 0:26:17.601
very smart developer.

0:26:17.641 –> 0:26:18.080
But, you know,

0:26:18.580 –> 0:26:20.280
Sam Chang figured out a way

0:26:20.320 –> 0:26:22.321
to build mid-block select service hotels.

0:26:22.662 –> 0:26:22.882
Correct.

0:26:22.942 –> 0:26:23.821
Now, Sam Chang,

0:26:23.842 –> 0:26:24.682
because people don’t know

0:26:24.721 –> 0:26:26.222
who Sam Chang is,

0:26:26.403 –> 0:26:28.063
is probably New York City’s

0:26:28.103 –> 0:26:30.483
most preeminent hotel developer.

0:26:31.064 –> 0:26:32.663
He manages to find spaces,

0:26:32.784 –> 0:26:33.865
comes up with properties

0:26:33.884 –> 0:26:35.404
that others don’t, builds them,

0:26:35.565 –> 0:26:36.845
and typically sells them

0:26:36.884 –> 0:26:38.066
either when they open or

0:26:38.105 –> 0:26:39.185
before they’re open.

0:26:39.625 –> 0:26:40.286
Sam is actually,

0:26:40.326 –> 0:26:42.846
I believe he’s retired and

0:26:42.906 –> 0:26:46.428
I think a very smart guy and, you know,

0:26:46.587 –> 0:26:47.969
and and definitely took

0:26:48.048 –> 0:26:49.169
risks and has been on the

0:26:49.189 –> 0:26:50.209
brink a couple of times.

0:26:50.328 –> 0:26:51.609
I would say that he’s

0:26:51.650 –> 0:26:53.569
probably correct me if I’m wrong,

0:26:53.589 –> 0:26:54.911
because this goes back to the 90s.

0:26:54.931 –> 0:26:56.010
But when there was the

0:26:56.090 –> 0:26:57.371
initial surge of select

0:26:57.431 –> 0:26:59.751
service hotels in New York City,

0:27:00.211 –> 0:27:01.333
I think that he probably

0:27:01.373 –> 0:27:03.752
had a demonstrable role behind creating.

0:27:03.833 –> 0:27:04.614
I think he did them all.

0:27:05.114 –> 0:27:05.673
Yeah, right.

0:27:06.892 –> 0:27:07.291
Yeah.

0:27:08.894 –> 0:27:11.415
And, and look, he was very, very smart.

0:27:11.596 –> 0:27:12.837
And, and he, you know,

0:27:12.857 –> 0:27:13.837
he took a city where people

0:27:13.857 –> 0:27:14.679
thought there was a lot of

0:27:14.898 –> 0:27:17.622
bears to entry and said, Hey, you know, I,

0:27:17.882 –> 0:27:19.123
I can build a mid block

0:27:19.202 –> 0:27:20.765
Fairfield in and do well.

0:27:21.164 –> 0:27:21.546
And he did.

0:27:21.566 –> 0:27:23.146
And there was either like

0:27:23.207 –> 0:27:26.289
flop houses or like real high end hotels.

0:27:27.451 –> 0:27:28.511
So, so, so again,

0:27:28.551 –> 0:27:30.253
I give him a lot of credit and he,

0:27:32.368 –> 0:27:34.369
And again, New York’s got a lot to offer.

0:27:34.630 –> 0:27:38.032
It’s truly, I think,

0:27:38.093 –> 0:27:39.693
one of the United States’ global markets.

0:27:39.713 –> 0:27:40.334
I don’t know if we have

0:27:40.374 –> 0:27:42.296
any… I would have said San Francisco,

0:27:42.316 –> 0:27:44.936
but New York is clearly a global city.

0:27:46.057 –> 0:27:48.059
And we still haven’t seen a

0:27:48.220 –> 0:27:50.381
full recovery of European

0:27:50.401 –> 0:27:52.982
and Asian travelers to the United States.

0:27:53.462 –> 0:27:56.105
So I think New York is a

0:27:56.204 –> 0:27:58.267
very hot market right now.

0:27:58.747 –> 0:27:58.886
And…

0:28:01.001 –> 0:28:02.403
could be a really good bet I

0:28:02.443 –> 0:28:03.585
think I i think if you had

0:28:03.605 –> 0:28:04.807
made the bet 18 months ago

0:28:04.866 –> 0:28:05.867
you’re you’re you’re pretty

0:28:05.907 –> 0:28:09.092
happy today um yeah and

0:28:09.132 –> 0:28:10.032
that’s kind of why I say

0:28:10.053 –> 0:28:11.173
san francisco because like

0:28:11.273 –> 0:28:13.156
okay like where is this

0:28:13.217 –> 0:28:14.758
city that hasn’t quite

0:28:14.858 –> 0:28:16.480
recovered that you know has

0:28:16.560 –> 0:28:19.104
the right recipe for you

0:28:19.144 –> 0:28:20.905
know coming back um

0:28:22.221 –> 0:28:23.843
and, and so, you know, people wouldn’t,

0:28:23.942 –> 0:28:25.503
when I talked to, I want to be in Florida,

0:28:25.523 –> 0:28:26.223
I want to be in Texas,

0:28:26.243 –> 0:28:27.045
I want to be in Arizona,

0:28:27.105 –> 0:28:28.605
kind of the usual suspects.

0:28:29.226 –> 0:28:29.767
But is there,

0:28:30.007 –> 0:28:30.707
is there something that’s

0:28:30.727 –> 0:28:31.428
flying under the radar?

0:28:31.468 –> 0:28:32.607
Like somebody had mentioned

0:28:32.627 –> 0:28:34.950
to me the other day, Detroit,

0:28:36.109 –> 0:28:38.031
Detroit and how well Detroit’s doing.

0:28:38.751 –> 0:28:40.512
Um, really interesting.

0:28:40.573 –> 0:28:40.752
Right.

0:28:41.433 –> 0:28:44.476
Um, so, so again, you know,

0:28:45.655 –> 0:28:46.957
there’s like this macro

0:28:46.997 –> 0:28:48.278
level stuff that’s happening.

0:28:49.317 –> 0:28:49.858
And, um,

0:28:50.575 –> 0:28:51.796
Then you have this kind of

0:28:51.816 –> 0:28:53.017
like local market stuff.

0:28:54.637 –> 0:28:56.098
I’m going to give him credit

0:28:56.159 –> 0:28:58.000
because I think he’s another smart guy.

0:28:58.101 –> 0:29:00.001
But Russ Urban had spoken to

0:29:00.021 –> 0:29:01.262
me when he was at HEI.

0:29:02.463 –> 0:29:07.007
He kind of said, hey, I can’t fix a market,

0:29:07.708 –> 0:29:09.388
but I can fix a building.

0:29:10.048 –> 0:29:12.250
So he was making bets on markets.

0:29:12.351 –> 0:29:13.612
He figured out markets he liked.

0:29:14.491 –> 0:29:15.692
felt like it was the right

0:29:15.732 –> 0:29:17.295
place to do a deal whether

0:29:17.315 –> 0:29:18.375
it’s build one or buy one

0:29:19.195 –> 0:29:20.037
in his case he was buying

0:29:20.057 –> 0:29:21.798
them and I’m I’m gonna bet

0:29:21.837 –> 0:29:24.000
on the market um and I

0:29:24.039 –> 0:29:25.300
really like that strategy

0:29:25.361 –> 0:29:27.423
because you know I I’m a

0:29:27.462 –> 0:29:28.624
big believer in basis like

0:29:28.663 –> 0:29:29.664
if I can go to a market

0:29:29.765 –> 0:29:31.226
that I like and it’s a

0:29:31.246 –> 0:29:32.866
market I like going three

0:29:32.926 –> 0:29:33.887
four five maybe even longer

0:29:34.067 –> 0:29:35.910
years out and I can find a

0:29:35.970 –> 0:29:37.611
building for a fraction of

0:29:37.631 –> 0:29:39.251
what I can build it for and

0:29:39.271 –> 0:29:41.094
it’s got good bones and I can’t fix it

0:29:43.398 –> 0:29:44.999
I’ve always sort of been a

0:29:45.038 –> 0:29:46.660
big believer in basis and I

0:29:46.720 –> 0:29:47.660
know the market likes to

0:29:47.700 –> 0:29:48.641
look at cash flow and our

0:29:48.701 –> 0:29:49.401
lenders like to look at

0:29:49.441 –> 0:29:50.141
cash flow and you get

0:29:50.181 –> 0:29:51.382
better debt when you have cash flow.

0:29:52.021 –> 0:29:54.462
But if you can go into a

0:29:54.542 –> 0:29:56.403
Nashville that’s trading at

0:29:56.503 –> 0:29:57.304
X amount of dollars per

0:29:57.344 –> 0:29:58.644
door and find something for

0:29:58.663 –> 0:30:00.125
a fraction of that,

0:30:00.505 –> 0:30:03.486
that could be a good bet, right?

0:30:03.566 –> 0:30:05.166
The only issue today is that

0:30:05.186 –> 0:30:06.307
if it doesn’t have cash flow,

0:30:06.707 –> 0:30:07.788
you’re paying a lot of money.

0:30:08.647 –> 0:30:10.009
You’re paying a pretty heavy

0:30:10.048 –> 0:30:10.888
load on the interest rate.

0:30:11.519 –> 0:30:12.779
And so it’s made those deals

0:30:12.799 –> 0:30:13.921
a little bit more difficult.

0:30:14.602 –> 0:30:16.242
And I think, you know, for sellers,

0:30:16.262 –> 0:30:17.864
they need to understand that, you know,

0:30:17.983 –> 0:30:18.865
the discount might have to

0:30:18.904 –> 0:30:21.507
be a little bit more than they, you know,

0:30:21.666 –> 0:30:23.008
hey, I’m selling this at a five cap,

0:30:23.028 –> 0:30:23.909
but it’s, you know,

0:30:23.909 –> 0:30:24.910
40% of where the market is.

0:30:25.150 –> 0:30:25.309
Right.

0:30:25.671 –> 0:30:27.132
Might need to be deeper than that because,

0:30:27.192 –> 0:30:27.491
you know,

0:30:27.551 –> 0:30:28.532
that buyer is going to have to

0:30:29.053 –> 0:30:30.253
incur a pretty heavy cost

0:30:30.314 –> 0:30:31.174
of capital for the next

0:30:31.214 –> 0:30:33.497
year or two until SOFR and

0:30:33.517 –> 0:30:34.377
some of these rates come down.

0:30:35.083 –> 0:30:35.323
Yeah.

0:30:35.363 –> 0:30:36.284
So I think it made those deals.

0:30:36.564 –> 0:30:38.526
You know, people want to chase distress,

0:30:38.566 –> 0:30:39.306
but like, what’s better?

0:30:39.726 –> 0:30:40.967
I buy distressed itself for

0:30:40.987 –> 0:30:43.068
plus 600 or I buy cashflow at, you know,

0:30:43.108 –> 0:30:47.030
treasuries plus, you know, 275 to 300.

0:30:47.030 –> 0:30:47.270
Yeah.

0:30:47.672 –> 0:30:47.872
Yeah.

0:30:49.073 –> 0:30:50.094
One’s vanilla, one’s chocolate.

0:30:51.755 –> 0:30:53.576
Hey, both equally delicious,

0:30:53.856 –> 0:30:55.337
particularly if you can

0:30:55.478 –> 0:30:56.638
really understand the

0:30:56.679 –> 0:30:58.961
differences between the flavors.

0:30:59.421 –> 0:31:00.701
Andrew, so great to see you.

0:31:01.323 –> 0:31:03.044
Give us a good plug for

0:31:03.064 –> 0:31:04.325
yourself and Robert Douglas

0:31:04.365 –> 0:31:05.145
before we wrap up today.

0:31:05.968 –> 0:31:06.909
Um, sure.

0:31:06.969 –> 0:31:08.049
So, you know, if, for,

0:31:08.130 –> 0:31:08.910
for those that don’t know,

0:31:08.970 –> 0:31:10.330
Robert Douglas is, is, uh,

0:31:10.632 –> 0:31:11.251
through a boutique

0:31:11.271 –> 0:31:12.752
investment banking shop.

0:31:12.772 –> 0:31:14.114
We only deal in hospitality

0:31:15.115 –> 0:31:16.296
and hospitality related things.

0:31:17.156 –> 0:31:17.517
Uh, you know,

0:31:17.537 –> 0:31:18.837
a couple of my partners got involved in,

0:31:18.998 –> 0:31:19.357
in, in,

0:31:19.518 –> 0:31:20.898
in a lot of outdoor hospitality

0:31:20.919 –> 0:31:22.580
sort of experienced hospital years ago.

0:31:23.260 –> 0:31:24.942
Uh, so we, we tend to get a lot of,

0:31:24.961 –> 0:31:26.182
a lot of phone calls on that, but,

0:31:26.442 –> 0:31:28.585
but we do a debt equity investment sales,

0:31:29.405 –> 0:31:30.727
uh, in any given year, you know,

0:31:30.866 –> 0:31:32.788
we might do more of one than the other,

0:31:32.847 –> 0:31:34.348
but it kind of shakes out that it’s,

0:31:34.449 –> 0:31:35.049
it’s pretty even.

0:31:35.509 –> 0:31:37.930
you know, over the course of history, um,

0:31:39.029 –> 0:31:40.730
you know, we, we sort of work as a team.

0:31:40.750 –> 0:31:42.471
You hire one of us, you hire all right.

0:31:43.152 –> 0:31:44.152
We’re not commissioned guys.

0:31:44.811 –> 0:31:45.353
And, uh,

0:31:45.673 –> 0:31:46.772
and I think what makes us a little

0:31:46.792 –> 0:31:48.854
bit different is that, you know,

0:31:48.913 –> 0:31:50.734
we will get involved in strategy.

0:31:50.755 –> 0:31:52.035
You know, you might come to us and say,

0:31:52.055 –> 0:31:53.055
Hey, we might want to sell this.

0:31:53.115 –> 0:31:54.395
And if we see a,

0:31:55.296 –> 0:31:56.257
what might be a better path,

0:31:56.297 –> 0:31:57.876
we’ll open our mouth and say, Hey,

0:31:57.896 –> 0:31:58.597
you might be better off

0:31:58.617 –> 0:32:00.238
refinancing this or, you know,

0:32:00.258 –> 0:32:00.857
paying down the debt and

0:32:00.877 –> 0:32:01.558
bringing a partner.

0:32:01.578 –> 0:32:01.618
Um,

0:32:03.674 –> 0:32:05.516
So we tend to be a little

0:32:05.536 –> 0:32:07.297
more client centric than, let’s say,

0:32:07.317 –> 0:32:07.757
other brokers.

0:32:07.777 –> 0:32:08.657
And I’m not saying other

0:32:08.678 –> 0:32:09.218
people aren’t good,

0:32:09.258 –> 0:32:10.338
because there’s plenty of

0:32:10.358 –> 0:32:12.880
people that are probably better than me.

0:32:12.920 –> 0:32:13.941
But I think we’re very good

0:32:14.000 –> 0:32:15.041
at sort of looking at a

0:32:15.082 –> 0:32:17.663
situation and figuring out strategy.

0:32:19.950 –> 0:32:20.711
It’s definitely what makes

0:32:20.790 –> 0:32:21.491
us a little bit different.

0:32:21.751 –> 0:32:23.814
And we did just do this

0:32:23.874 –> 0:32:25.494
lender survey that just went out.

0:32:25.915 –> 0:32:27.297
We’ve been doing that for 10

0:32:27.297 –> 0:32:29.318
years just to kind of give

0:32:29.338 –> 0:32:30.640
people a sense of what what

0:32:30.660 –> 0:32:31.740
the debt markets are thinking.

0:32:33.001 –> 0:32:33.502
So that’s out.

0:32:35.438 –> 0:32:36.219
You know,

0:32:36.558 –> 0:32:37.680
we’ve just rolled out a number of

0:32:37.720 –> 0:32:38.601
hotels for sale.

0:32:39.161 –> 0:32:42.044
We are very busy, which is, you know,

0:32:43.085 –> 0:32:43.805
we’re happy to say that

0:32:43.884 –> 0:32:46.748
because a year ago we weren’t.

0:32:47.607 –> 0:32:51.010
So, you know, again, and, you know, look,

0:32:51.111 –> 0:32:52.332
we’re certainly seeing

0:32:52.393 –> 0:32:53.653
things hit the market from

0:32:53.753 –> 0:32:56.276
our friendly competitors and, you know,

0:32:57.737 –> 0:32:58.136
Like I said,

0:32:58.156 –> 0:33:00.239
I think transaction folk are

0:33:00.259 –> 0:33:01.339
going to have a pretty good year.

0:33:02.761 –> 0:33:03.021
Awesome.

0:33:03.482 –> 0:33:04.103
Well, thanks, Andrew.

0:33:04.304 –> 0:33:06.326
Really appreciate you being here.

0:33:06.346 –> 0:33:07.446
We’ll see you soon.

0:33:07.467 –> 0:33:08.827
I want to thank all of you

0:33:08.867 –> 0:33:09.528
guys for being here.

0:33:09.588 –> 0:33:10.891
Make sure that you follow us.

0:33:10.971 –> 0:33:11.991
If you’re watching the show,

0:33:12.011 –> 0:33:13.373
why not download the audio

0:33:13.393 –> 0:33:14.394
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0:33:14.674 –> 0:33:15.796
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0:33:15.955 –> 0:33:16.957
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0:33:16.997 –> 0:33:17.518
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Text the word HOTEL to 66866.

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That’s HOTEL to 66866.

0:33:29.124 –> 0:33:29.805
Now remember, everybody,

0:33:29.825 –> 0:33:31.965
I want you to have, you only got one life,

0:33:31.986 –> 0:33:34.428
so blaze on and be kind to yourselves,

0:33:34.468 –> 0:33:35.188
as Anthony would say.

0:33:35.228 –> 0:33:36.189
See you guys next week.

0:33:36.288 –> 0:33:36.828
Bye-bye.