#73 - From Market Cycles to REITs: What Every Pilot Investor Should Know with Glenn R. Mueller, PhD

[00:00:00] [SPEAKER_02]: Welcome back to Passive Income Pilots. Hello, listeners. Tait Duryea here with Ryan Gibson. What's up, my man?

[00:00:06] [SPEAKER_02]: What's going on? It's fun to be in Seattle with you enjoying the nice beautiful weather.

[00:00:11] [SPEAKER_02]: We just had a nice lunch and planning session about passive income pilots and the future of where we're going.

[00:00:16] [SPEAKER_02]: And we're excited to plan out our show for our listeners and really excited to talk today about the economy, where we're headed, what's going on.

[00:00:25] [SPEAKER_02]: Unemployment seems to be relatively low, but also increasing with the jobs report not being as strong last time.

[00:00:33] [SPEAKER_02]: And but also retail sentiment is kind of strong.

[00:00:35] [SPEAKER_02]: People are out buying and shopping and real estate is headed in the right direction right now with interest rates being reduced potentially at the September Fed meeting.

[00:00:43] [SPEAKER_02]: And so I'm really interested to hear from an economist, somebody who's actually been an analyst in real estate and actually a PhD at University of Denver in the real estate realm and somebody who's been studying markets for over 40 years.

[00:00:58] [SPEAKER_02]: And so what a better person to bring onto the show.

[00:01:02] [SPEAKER_02]: So if you don't know anything about REITs, we're going to give you a crash course on that.

[00:01:05] [SPEAKER_02]: And then and Dr. Miller is.

[00:01:07] [SPEAKER_02]: And also, we're going to talk about the economy at the very end and kind of where we are and what we can expect.

[00:01:12] [SPEAKER_02]: But I think my favorite part about this episode was he actually broke down how to analyze whether or not a REIT stock is a good buy or not.

[00:01:22] [SPEAKER_02]: And I had absolutely no idea how to do that until the show, and he made it so simple to understand.

[00:01:27] [SPEAKER_02]: So I'm excited about what we're talking about.

[00:01:29] [SPEAKER_02]: But Tate, tell us more about Dr.

[00:01:31] [SPEAKER_02]: Glenn Miller and his pedigree and his background.

[00:01:34] [SPEAKER_00]: Yeah, actually, I mentioned on the show, but I saw Dr.

[00:01:38] [SPEAKER_00]: Glenn Miller at a keynote at a conference many years back.

[00:01:41] [SPEAKER_00]: He's absolutely incredible.

[00:01:43] [SPEAKER_00]: Wealth of knowledge is a PhD.

[00:01:45] [SPEAKER_00]: He's got 48 years of real estate industry experience, including 41 years of research,

[00:01:51] [SPEAKER_00]: over 100 published articles in areas of real estate market cycle analysis, real estate securities analysis, REITs public and private market investment strategies,

[00:02:00] [SPEAKER_00]: real estate capital market portfolio investment diversification analysis.

[00:02:04] [SPEAKER_00]: The guy is a wizard and he's a professor at University of Denver.

[00:02:08] [SPEAKER_00]: It was an amazing conversation.

[00:02:09] [SPEAKER_00]: So I'm excited to get into it.

[00:02:11] [SPEAKER_02]: Yeah, I loved at the at the very end of the show, he actually revealed all of the go to sources of information that he reads daily.

[00:02:19] [SPEAKER_02]: So we're going to share that at the end of what is a professional economist in real estate actually reading every day to be informed?

[00:02:25] [SPEAKER_02]: And so he's going to break all that down at the end of the show.

[00:02:27] [SPEAKER_02]: So I hope you stick around and listen to that.

[00:02:29] [SPEAKER_02]: But with that, let's get to the show.

[00:02:33] [SPEAKER_00]: Welcome to Passive Income Pilots, where pilots upgrade their money.

[00:02:38] [SPEAKER_00]: This is the definitive source for personal finance and investment tactics for aviators.

[00:02:44] [SPEAKER_00]: We interview world renowned experts share these lessons with a blind community.

[00:02:49] [SPEAKER_00]: So if you're ready for practical knowledge and insights, let's roll.

[00:02:53] [SPEAKER_00]: Thank you so much for coming on the show.

[00:02:54] [SPEAKER_00]: You are unbelievably astute economist, real estate professor.

[00:03:00] [SPEAKER_00]: We just really want to get your take on the state of the economy, the state of the real estate industry and anything that's on your mind.

[00:03:07] [SPEAKER_00]: Lately, when you're teaching class or out there investing yourself.

[00:03:11] [SPEAKER_01]: Sure. Growing up as a kid in Oshkosh, Wisconsin, being around planes and actually grew up on Lake Winnebago.

[00:03:18] [SPEAKER_01]: We used to go in the boat and watch the air show from there on the water.

[00:03:21] [SPEAKER_01]: I have spent my entire career in real estate and it's done very well for me.

[00:03:27] [SPEAKER_01]: I know that and I have many pilot friends from that standpoint,

[00:03:31] [SPEAKER_01]: that one of the easy things to do is buy houses, fix them up, flip them, that type of thing.

[00:03:39] [SPEAKER_01]: I got into real estate by chance with a degree in finance and then at MBA and worked as a loan analyst at a bank

[00:03:48] [SPEAKER_01]: where I got put into the real estate department.

[00:03:51] [SPEAKER_01]: And then when I was a builder and developer myself, I've now built 58 housing units.

[00:03:57] [SPEAKER_01]: I'm going to call them in my lifetime, mostly custom single family homes, but also some condominiums.

[00:04:03] [SPEAKER_01]: And then went back to school, got my PhD in real estate at Georgia State University,

[00:04:07] [SPEAKER_01]: got a job teaching at the University of Denver.

[00:04:10] [SPEAKER_01]: Four years in, got hired away by Prudential Real Estate Investors to help institutions invest in real estate.

[00:04:17] [SPEAKER_01]: And our biggest client was CalPERS, California Public Employees Retirement System,

[00:04:22] [SPEAKER_01]: which is the largest public pension plan in the United States.

[00:04:26] [SPEAKER_01]: They're I think close to 500 billion now with about a 15% allocation to real estate or $45 billion in real estate.

[00:04:36] [SPEAKER_01]: So they own properties all over the country and all the major property types and stuff like that.

[00:04:42] [SPEAKER_01]: So I look at real estate as two areas.

[00:04:46] [SPEAKER_01]: One is home ownership and the other is, I'm going to use a new term here for you, income producing real estate.

[00:04:53] [SPEAKER_01]: And the reason I do that is, if I say the term residential, everybody goes,

[00:04:56] [SPEAKER_01]: oh, you mean like apartments and houses?

[00:04:58] [SPEAKER_01]: And I go no, apartments are income producing, houses are owned and used.

[00:05:03] [SPEAKER_01]: Yes, you can rent your house out too.

[00:05:04] [SPEAKER_01]: And then it flips over to becoming income producing.

[00:05:07] [SPEAKER_01]: But most people own a home, I'm sure most pilots own a home.

[00:05:11] [SPEAKER_01]: And it's a use asset just like their car.

[00:05:15] [SPEAKER_01]: And it's costly, you typically finance it.

[00:05:18] [SPEAKER_01]: You got to maintain it, you got to feed it with gas or electricity or both.

[00:05:21] [SPEAKER_01]: And that type of thing and you use it.

[00:05:24] [SPEAKER_01]: And if you are to sell it because it went up in value and you want something of equal utility,

[00:05:31] [SPEAKER_01]: say good location, that kind of stuff, it's probably going to cost you the same amount.

[00:05:34] [SPEAKER_01]: So even though a lot of people see a lot of house price appreciation and they're sitting on that,

[00:05:38] [SPEAKER_01]: they can access it by increasing their mortgage.

[00:05:42] [SPEAKER_01]: But if they sell it and want to buy something else,

[00:05:45] [SPEAKER_01]: if it's as nice as what they had, it's going to cost them pretty much the same amount.

[00:05:48] [SPEAKER_01]: So put that off to the side and let's talk about income producing real estate.

[00:05:53] [SPEAKER_01]: The two ways to invest are obviously buying and owning direct real estate yourself,

[00:05:59] [SPEAKER_01]: going into private real estate limited partnerships that are out there

[00:06:05] [SPEAKER_01]: or investing in publicly traded REITs.

[00:06:09] [SPEAKER_01]: And I have worked on both sides of that coin as well.

[00:06:12] [SPEAKER_01]: I worked for a brokerage group called Lake Mason for over a decade.

[00:06:18] [SPEAKER_01]: And helped take 22 real estate companies public as publicly traded REITs.

[00:06:25] [SPEAKER_01]: So the REIT world today, they are over a trillion dollars in value in the US.

[00:06:30] [SPEAKER_01]: And about 30 other countries also have the whole REIT concept in their countries.

[00:06:39] [SPEAKER_01]: So in look at form, obviously you can sell and buy the stocks every day.

[00:06:43] [SPEAKER_01]: So there's big picture.

[00:06:46] [SPEAKER_01]: And what I do is I produce a real estate market cycle report

[00:06:51] [SPEAKER_01]: where I cover the five major property types, office, industrial, retail,

[00:06:55] [SPEAKER_01]: all day family and hotel and where they are in the cycle,

[00:06:58] [SPEAKER_01]: i.e., are their occupancies moving up?

[00:07:01] [SPEAKER_01]: Which means their incomes moving up.

[00:07:03] [SPEAKER_01]: If occupancies move up, rents move up.

[00:07:05] [SPEAKER_01]: If occupancies come down, rents come down.

[00:07:08] [SPEAKER_01]: And that is the income side of real estate.

[00:07:11] [SPEAKER_01]: And then the price side is based on capital flows.

[00:07:14] [SPEAKER_01]: If a lot of capital is flowing into real estate,

[00:07:18] [SPEAKER_01]: prices go up just like if more flows into the stock market.

[00:07:22] [SPEAKER_00]: Oh yeah. Yeah, this is incredible.

[00:07:24] [SPEAKER_00]: I love this. Can I zoom out?

[00:07:26] [SPEAKER_00]: And I've got a curious question.

[00:07:28] [SPEAKER_00]: Ryan and I are big real estate guys.

[00:07:29] [SPEAKER_00]: We try not to be too biased on the show.

[00:07:31] [SPEAKER_00]: We try to bring on a wide variety of guests that are in different sectors.

[00:07:35] [SPEAKER_00]: But why real estate?

[00:07:36] [SPEAKER_00]: Why did you get a PhD in real estate?

[00:07:38] [SPEAKER_00]: What's so special about it for you in your own words?

[00:07:41] [SPEAKER_01]: Well, first of all, it's a tangible asset that you can hold and feel.

[00:07:46] [SPEAKER_01]: I'm good with my hands and being a builder was part of that.

[00:07:50] [SPEAKER_01]: The creativity of looking at something and figuring out what it could be is a lot of fun.

[00:07:57] [SPEAKER_01]: Taking as a matter of fact, I've got two houses.

[00:08:00] [SPEAKER_01]: I'm in my summer home right now here in Minnesota near my grandkids on a nice lake.

[00:08:07] [SPEAKER_01]: And bought a house that was built in the 70s.

[00:08:10] [SPEAKER_01]: That was old, heavy, dark wood with small windows.

[00:08:14] [SPEAKER_01]: And I just opened the place up and made it into something that is really nice.

[00:08:20] [SPEAKER_01]: It's a use asset for me.

[00:08:22] [SPEAKER_01]: So that part was good.

[00:08:24] [SPEAKER_01]: And I'm also really good with numbers and the financial side of real estate is

[00:08:29] [SPEAKER_01]: easy to follow and understand.

[00:08:31] [SPEAKER_01]: A lot of times you see the stock market and you go, why did it do that?

[00:08:35] [SPEAKER_01]: And the answer is to me, the stock market is emotional in the short term.

[00:08:39] [SPEAKER_01]: But logical over the long run.

[00:08:41] [SPEAKER_01]: So if you see that I've got a company that has great fundamentals and everything else,

[00:08:45] [SPEAKER_01]: but there's some bad news and eventually that bad news will be gone,

[00:08:51] [SPEAKER_01]: the value will come back.

[00:08:53] [SPEAKER_01]: Just like buying a house and waiting for things to turn around.

[00:08:59] [SPEAKER_01]: Or fix it up to then resell it to somebody else for a higher price.

[00:09:04] [SPEAKER_01]: On the income producing side, those five property types move somewhat differently

[00:09:10] [SPEAKER_01]: in their cycles as we all know.

[00:09:11] [SPEAKER_01]: Office is hurting right now because of the work from home kind of thing.

[00:09:16] [SPEAKER_01]: And therefore occupancies have come down, rents have come down,

[00:09:18] [SPEAKER_01]: values have come down.

[00:09:20] [SPEAKER_01]: But the general media, the news, they always come up with, oh,

[00:09:25] [SPEAKER_01]: Armageddon kind of stuff and they paint, the headline is real estate's crashing.

[00:09:30] [SPEAKER_01]: Then when you read the article, it goes, well, it's really just office.

[00:09:34] [SPEAKER_01]: Industrial has done, warehouse space has done unbelievably well because of the Amazon effect

[00:09:38] [SPEAKER_01]: and more people buying things online.

[00:09:40] [SPEAKER_01]: I just got a package today.

[00:09:43] [SPEAKER_01]: And the demand there has been outstanding for over a decade.

[00:09:46] [SPEAKER_01]: Little bit of overbuilding happened in the last year or so

[00:09:49] [SPEAKER_01]: and things slowed down a little bit for Amazon,

[00:09:51] [SPEAKER_01]: but it's not going away, it's coming back.

[00:09:54] [SPEAKER_01]: Apartments, high demand for apartments.

[00:09:57] [SPEAKER_01]: Matter of fact, a great, great fun factoid here is that we are 6.5 million housing units

[00:10:03] [SPEAKER_01]: short in this country and that's either homeownership or rental.

[00:10:08] [SPEAKER_01]: And you say, but we've got some markets like for instance,

[00:10:11] [SPEAKER_01]: Denver is a little bit overbuilt in the new Class A downtown office space.

[00:10:16] [SPEAKER_01]: But we are sorely lacking affordable housing, less expensive housing,

[00:10:22] [SPEAKER_01]: if I can say B and C class, but lower priced apartments

[00:10:27] [SPEAKER_01]: and that type of thing.

[00:10:28] [SPEAKER_01]: The demand is huge and it's not going away.

[00:10:31] [SPEAKER_01]: Interest rates went up making housing more less affordable,

[00:10:35] [SPEAKER_01]: making building new apartments less profitable.

[00:10:39] [SPEAKER_01]: And so we slowed down supply even though a demand continues to rise.

[00:10:43] [SPEAKER_01]: Go to retail and retail was hurting a decade ago because of the Amazon effect.

[00:10:48] [SPEAKER_01]: That slowed down new supply.

[00:10:49] [SPEAKER_01]: Today, retail is actually doing unbelievably well.

[00:10:53] [SPEAKER_01]: Highest occupancy I've ever seen in the 40 years I've got data on.

[00:10:57] [SPEAKER_01]: And rents moving up, demand there, 80% of all new retail being built is pre-leased.

[00:11:02] [SPEAKER_01]: In other words, someone says, I need this, build it for me.

[00:11:04] [SPEAKER_01]: I'll sign a lease now.

[00:11:06] [SPEAKER_01]: And then hotels, the hardest of them because it's rented on a daily basis.

[00:11:10] [SPEAKER_01]: Obviously huge crash when COVID hit and has bounced back and is very strong.

[00:11:15] [SPEAKER_01]: We have to break that down too into the fact that downtown business hotels where people come in

[00:11:22] [SPEAKER_01]: to stay, to go to your office the next day, that's still not doing well.

[00:11:26] [SPEAKER_01]: But resort off the charts and highway hotels, et cetera, doing extremely well.

[00:11:34] [SPEAKER_01]: So you have to kind of break it down a little bit.

[00:11:37] [SPEAKER_01]: We can't just paint this with one broad brush.

[00:11:40] [SPEAKER_01]: So I like it.

[00:11:41] [SPEAKER_01]: Go ahead.

[00:11:42] [SPEAKER_02]: No, I love that.

[00:11:44] [SPEAKER_02]: I'm fascinated with the urban real estate futures, which there's no more office, right?

[00:11:50] [SPEAKER_02]: Like people aren't going downtown to use the office.

[00:11:51] [SPEAKER_02]: So I'm in Seattle right now, actually Tate's here in Seattle with me today.

[00:11:56] [SPEAKER_02]: And I'm in an office building.

[00:11:58] [SPEAKER_02]: That is, I'm the last tenant in the building.

[00:12:01] [SPEAKER_02]: And I'm moving to a new office space that I've negotiated very well.

[00:12:05] [SPEAKER_02]: Right next door, newer office building, more amenities.

[00:12:08] [SPEAKER_02]: And that office only has one tenant, which is the building owner.

[00:12:12] [SPEAKER_02]: And I see these cities just kind of circling the drain from the standpoint of nobody's going back

[00:12:18] [SPEAKER_02]: to the office.

[00:12:19] [SPEAKER_02]: So if nobody goes back downtown, then they don't go to coffee shops.

[00:12:24] [SPEAKER_02]: They don't go to sandwich shops.

[00:12:25] [SPEAKER_02]: So then they go out of business.

[00:12:26] [SPEAKER_02]: And then you were just mentioning there's no need to rent that hotel downtown.

[00:12:31] [SPEAKER_02]: And how do you feel about the future of that?

[00:12:33] [SPEAKER_02]: Or what are you kind of seeing?

[00:12:34] [SPEAKER_02]: Is that just an endless spiral of death of cities?

[00:12:38] [SPEAKER_02]: Or are you seeing that coming back?

[00:12:39] [SPEAKER_02]: What's your thoughts there?

[00:12:41] [SPEAKER_01]: So believe it or not, in the rest of the world, office has done okay.

[00:12:44] [SPEAKER_01]: And it has come back.

[00:12:45] [SPEAKER_01]: And more and more companies are finding that working at home, some is fine, but working

[00:12:50] [SPEAKER_01]: at home all the time doesn't work.

[00:12:51] [SPEAKER_01]: But what they need is potentially therefore less space.

[00:12:55] [SPEAKER_01]: And right now, again, if we break office down, premium class A brand new stuff built

[00:13:01] [SPEAKER_01]: last five years, et cetera, has over a 95% occupancy level to it.

[00:13:05] [SPEAKER_01]: And they're raising rents.

[00:13:07] [SPEAKER_01]: So companies that want to impress people with office space are doing that.

[00:13:12] [SPEAKER_01]: Also some good quality suburban office space is doing well.

[00:13:17] [SPEAKER_01]: But the B and C class space is what's really, really hurting at this point in time.

[00:13:22] [SPEAKER_01]: Just was at a conference and a national architectural firm that's been helping

[00:13:27] [SPEAKER_01]: a lot of companies look at the potential of converting office into apartments and that

[00:13:32] [SPEAKER_01]: kind of thing came back and said, we've now run an analysis.

[00:13:35] [SPEAKER_01]: And in most cities, about 30% of office space could be converted to that.

[00:13:39] [SPEAKER_01]: The rest of it, for whatever reason, floor plates of the building, location,

[00:13:46] [SPEAKER_01]: other things make that not economically justifiable.

[00:13:50] [SPEAKER_01]: Demand for office is growing.

[00:13:52] [SPEAKER_01]: Office using employment is up 1% last year.

[00:13:55] [SPEAKER_01]: But we are also in the process of just completing a lot of new downtown office space.

[00:14:01] [SPEAKER_01]: To build a new office building downtown, in any city, major city in the country,

[00:14:05] [SPEAKER_01]: is about an eight-year process.

[00:14:06] [SPEAKER_01]: So we've got new space coming online that was started eight years ago.

[00:14:10] [SPEAKER_01]: That dies off about a year from now.

[00:14:14] [SPEAKER_01]: So supply will go to almost nothing and the other stuff will be built back up.

[00:14:19] [SPEAKER_01]: And of course, buildings are selling for 20 to 40 cents on the dollar at some point

[00:14:24] [SPEAKER_01]: because investors will say, hey, it's worth less than my mortgage and hand it back to the bank.

[00:14:30] [SPEAKER_01]: So it's a longer down cycle than you'd normally assume.

[00:14:34] [SPEAKER_01]: And it's not going to be dead.

[00:14:35] [SPEAKER_01]: A lot of millennials still want to live downtown.

[00:14:38] [SPEAKER_01]: And we'll see where that goes.

[00:14:42] [SPEAKER_00]: Do you think there's an opportunity in office?

[00:14:45] [SPEAKER_00]: As real estate investors, you're always trying to stay ahead of the curve.

[00:14:48] [SPEAKER_00]: This seemed to be more of a fundamental shift

[00:14:52] [SPEAKER_00]: in the way that people lived and worked.

[00:14:55] [SPEAKER_00]: What are your thoughts on that?

[00:14:56] [SPEAKER_00]: Do you think that, I know that you have to be very careful with what

[00:15:00] [SPEAKER_00]: sort of office product you get into right now,

[00:15:03] [SPEAKER_00]: but is there an opportunity to go buy something for 20 to 40 cents on dollar

[00:15:06] [SPEAKER_00]: and make a killing inside of five years or is it just too much risk?

[00:15:11] [SPEAKER_01]: Oh no, if you find a building that you could convert to multifamily,

[00:15:16] [SPEAKER_01]: in some cases they're now even doing some conversion to warehouse

[00:15:19] [SPEAKER_01]: and that type of thing, or even convert to something else immediately demand, yes, sure.

[00:15:26] [SPEAKER_01]: But again, as you say, it takes a lot of research and thought

[00:15:31] [SPEAKER_01]: and creativity to make sure you're doing it right.

[00:15:34] [SPEAKER_00]: What are your thoughts on co-working spaces?

[00:15:36] [SPEAKER_00]: I know my wife and I during COVID were,

[00:15:38] [SPEAKER_00]: there was a new co-working space going in across the street.

[00:15:40] [SPEAKER_00]: We were licking the windows as they were building it out

[00:15:43] [SPEAKER_00]: because we're so sick of working from our living room.

[00:15:46] [SPEAKER_00]: Have you seen co-working spaces really flourish or is it just so micro that

[00:15:51] [SPEAKER_00]: it's on a deal by deal basis that you can't really forecast it out on a broad paintbrush?

[00:15:56] [SPEAKER_01]: Yeah, no, it's totally a deal by deal basis and a city by city basis

[00:16:01] [SPEAKER_01]: and a sub market by sub market basis too.

[00:16:04] [SPEAKER_00]: Now that's what we love about real estate is it's so niche,

[00:16:07] [SPEAKER_00]: it's so micro that you can have such an unfair advantage in it.

[00:16:12] [SPEAKER_00]: Insider trading is illegal in the stock market,

[00:16:15] [SPEAKER_00]: but it's completely legal and encouraged in real estate.

[00:16:18] [SPEAKER_02]: You can profit off of things that only you know and other people don't.

[00:16:22] [SPEAKER_02]: I just think this is so fascinating because I've just seen it in Seattle.

[00:16:26] [SPEAKER_02]: The economic vibrance of this city and this region is really strong,

[00:16:30] [SPEAKER_02]: but there's so much office vacancy here and prices like you said have gone down so much.

[00:16:35] [SPEAKER_02]: I'm personally experiencing the negotiating power as I end a lease in the current office space

[00:16:40] [SPEAKER_02]: and I was considered probably a C plus building and go to an A building and I'm experiencing

[00:16:45] [SPEAKER_02]: exactly what you said and which is really just kind of a flight quality.

[00:16:49] [SPEAKER_02]: Dr. Miller, what opportunities do you see that may not be so obvious to everybody else

[00:16:56] [SPEAKER_02]: right now? If you're sitting on cash or on the sidelines,

[00:17:00] [SPEAKER_02]: what would be your bet over the next five years?

[00:17:03] [SPEAKER_01]: Well, believe it or not, I think rental housing is a good place to be while housing

[00:17:22] [SPEAKER_01]: is down. There's a lot of jobs that are in the higher end.

[00:17:24] [SPEAKER_01]: but it's not that high because you can't afford to buy it today.

[00:17:26] [SPEAKER_01]: You can buy it today and when interest rates come down,

[00:17:27] [SPEAKER_01]: refinance at a lower rate and your monthly payment goes down.

[00:17:31] [SPEAKER_01]: And anybody who can pencil out a deal today in apartments or single family for rent,

[00:17:37] [SPEAKER_01]: Those, I think, potentially work very, very well.

[00:17:41] [SPEAKER_01]: If you will, I'll skip over to the other ones for individual investors getting into an industrial

[00:17:47] [SPEAKER_01]: or retail or anything else are somewhat tough.

[00:17:51] [SPEAKER_01]: So let me jump over to the publicly traded world and that of REITs.

[00:17:55] [SPEAKER_01]: And REIT stocks will trade either at – we have something we call NAV or net asset value.

[00:18:00] [SPEAKER_01]: In other words, if I took a company today, took all its real estate, sold it off in

[00:18:05] [SPEAKER_01]: the private market and paid stockholders out, we call that net asset, buy the share.

[00:18:11] [SPEAKER_01]: And the big story back in 2008 was that a guy who had got things going big time in

[00:18:21] [SPEAKER_01]: the publicly traded real estate world started an office REIT and it was trade – his

[00:18:26] [SPEAKER_01]: name is Sam Zell.

[00:18:27] [SPEAKER_01]: Sam Zell had Equity Office and it was trading at $44 a share.

[00:18:32] [SPEAKER_01]: He had BlackRock come in and offer him $52 a share.

[00:18:37] [SPEAKER_01]: Other people are at – it bid up to $59 a share, right?

[00:18:41] [SPEAKER_01]: BlackRock bought it.

[00:18:42] [SPEAKER_01]: They had most of the properties already sold to pension funds and endowments and they

[00:18:47] [SPEAKER_01]: kept the final – it was a $59 billion transaction.

[00:18:51] [SPEAKER_01]: They kept the final $3 billion worth of properties to start their own real estate

[00:18:55] [SPEAKER_01]: fund, right?

[00:18:57] [SPEAKER_01]: So it was trading at $49, but the NAV, the private market sale value was $44 and it

[00:19:05] [SPEAKER_01]: sold at $59.

[00:19:06] [SPEAKER_01]: That's like a 25% difference.

[00:19:08] [SPEAKER_01]: If we go by property type today, offices trading at a discount to NAV, retail is

[00:19:14] [SPEAKER_01]: trading at an equal value, industrial is trading at equal value, apartments are – hotels

[00:19:21] [SPEAKER_01]: are trading a little bit of a premium today.

[00:19:23] [SPEAKER_01]: So they're above or below.

[00:19:24] [SPEAKER_01]: So you can play that game of are we above or below net asset value?

[00:19:29] [SPEAKER_01]: Here's a particular sector I should be in now and move out of down when it moves

[00:19:35] [SPEAKER_01]: up.

[00:19:35] [SPEAKER_01]: Once we're 10% or 20% over NAV, we're out.

[00:19:39] [SPEAKER_01]: When we're 20% below, we're in.

[00:19:42] [SPEAKER_00]: What are some REIT tickers – this is great.

[00:19:45] [SPEAKER_00]: What are some REIT tickers that somebody can go look at or where does somebody go

[00:19:50] [SPEAKER_00]: to find some good REITs in those sectors?

[00:19:53] [SPEAKER_01]: Well, with 182 of them – actually the best thing to do is – little plug here – buy

[00:20:00] [SPEAKER_01]: my textbook, Educated REIT Investing.

[00:20:02] [SPEAKER_01]: It's very short and easy.

[00:20:03] [SPEAKER_01]: It's on Amazon for 29 bucks and it takes you through the steps to how to analyze

[00:20:08] [SPEAKER_01]: a company and make those selections.

[00:20:11] [SPEAKER_01]: Pick a property sector you think is going to do well.

[00:20:13] [SPEAKER_01]: Go ahead and look at all the companies.

[00:20:15] [SPEAKER_01]: Analyze their stock earnings multiple and pick them and go – if you go and

[00:20:20] [SPEAKER_01]: my god, this one really looks like a great deal.

[00:20:24] [SPEAKER_01]: You go and find out, well, they got a problem.

[00:20:25] [SPEAKER_01]: They got too much debt or they got something going on or the CEO just died and there's

[00:20:30] [SPEAKER_01]: no captain at the head of the ship kind of thing.

[00:20:32] [SPEAKER_01]: So it's a really – and I teach a class too.

[00:20:36] [SPEAKER_00]: Well, link to it in the show notes.

[00:20:39] [SPEAKER_02]: Yeah.

[00:20:39] [SPEAKER_02]: Yeah.

[00:20:40] [SPEAKER_02]: Great value there.

[00:20:41] [SPEAKER_02]: You say discount to the NAV and I'm sure your book has probably multiple chapters

[00:20:45] [SPEAKER_02]: on it.

[00:20:46] [SPEAKER_02]: How do you know that they're discounted to the NAV?

[00:20:47] [SPEAKER_02]: Just maybe like a quick summary.

[00:20:50] [SPEAKER_02]: Sure.

[00:20:51] [SPEAKER_01]: So I take the – we use what's called a cap rate, cash on cash return like a bond

[00:20:56] [SPEAKER_01]: yield.

[00:20:57] [SPEAKER_01]: Right?

[00:20:57] [SPEAKER_01]: So I take and I say, okay, every read has to report it's totally open.

[00:21:01] [SPEAKER_01]: All the income coming off their properties less their expenses.

[00:21:06] [SPEAKER_01]: Not the expenses of being a public company like paying the CEO and 10Ks, 10 – but

[00:21:14] [SPEAKER_01]: You've got the rent coming off the property less the managed – less the property operating

[00:21:20] [SPEAKER_01]: costs.

[00:21:21] [SPEAKER_01]: You take that and that gives you a cash flow.

[00:21:24] [SPEAKER_01]: You divide it by the private market cap rate, okay, which you can find – call any

[00:21:29] [SPEAKER_01]: broker and they'll go to CoStar or somebody and say, hey, the cap rate on suburban

[00:21:33] [SPEAKER_01]: office right now is 6.2%.

[00:21:36] [SPEAKER_01]: You cap that income and it says it's got X in value.

[00:21:40] [SPEAKER_01]: It's got a billion dollars worth of private direct real estate.

[00:21:45] [SPEAKER_01]: Take that, add in any cash it's sitting on, subtract out all its debt.

[00:21:49] [SPEAKER_01]: Say here if we sold it and liquidated today, we'd have X amount of money, $800 million

[00:21:56] [SPEAKER_01]: and there's 80 million shares so it's worth 10 bucks a share and it's trading

[00:22:00] [SPEAKER_01]: at five.

[00:22:01] [SPEAKER_01]: There you go.

[00:22:02] [SPEAKER_01]: It's a fairly simple process.

[00:22:05] [SPEAKER_01]: It's a fairly simple math process.

[00:22:07] [SPEAKER_00]: And I'm going to make a little plug for commercial real estate here because we've

[00:22:09] [SPEAKER_00]: talked about this on the show.

[00:22:10] [SPEAKER_00]: For anybody that's still kind of catching up, what Dr. Miller is talking about is NOI,

[00:22:15] [SPEAKER_00]: net operating income.

[00:22:17] [SPEAKER_00]: And net operating income says the income minus the expenses on the property in cash.

[00:22:21] [SPEAKER_00]: So we don't consider debt service but it's all the expenses except for the

[00:22:24] [SPEAKER_00]: debt service gives you net operating income.

[00:22:26] [SPEAKER_00]: You divide that through cap rate and it gives you valuation.

[00:22:29] [SPEAKER_00]: That's why we love commercial real estate is because it's controllable.

[00:22:31] [SPEAKER_00]: You can't control the cap rate.

[00:22:33] [SPEAKER_00]: That fluctuates with ARCET, but you can control your NOI.

[00:22:37] [SPEAKER_00]: You can increase income, reduce expenses on a property and you tangibly affect the value

[00:22:42] [SPEAKER_00]: of that real estate.

[00:22:43] [SPEAKER_00]: That's why we love it so much.

[00:22:45] [SPEAKER_02]: Dr. Miller, can you take a step back?

[00:22:47] [SPEAKER_02]: I really appreciate your NAV, that asset value description because I don't know if

[00:22:53] [SPEAKER_02]: anybody's ever explained it that clearly to me before but can you kind of just

[00:22:57] [SPEAKER_02]: talk about what makes a REIT and kind of what is a REIT versus just being in

[00:23:01] [SPEAKER_02]: real estate because I think Nate Tate and I get a lot of questions about, oh, is

[00:23:05] [SPEAKER_02]: Barton a REIT, is Turbine a REIT?

[00:23:08] [SPEAKER_02]: Right.

[00:23:08] [SPEAKER_02]: And we're just syndicating equity for a limited partnership and by virtue

[00:23:13] [SPEAKER_02]: getting direct ownership through the LP interest, right?

[00:23:15] [SPEAKER_02]: They're not really on the title but how is that different from a REIT and,

[00:23:19] [SPEAKER_02]: you know, kind of walk us through just a little bit of an overview on that.

[00:23:21] [SPEAKER_01]: Okay, great.

[00:23:22] [SPEAKER_01]: The easiest way to think about a REIT is a REIT is nothing more than a

[00:23:28] [SPEAKER_01]: mutual fund.

[00:23:29] [SPEAKER_01]: Okay.

[00:23:29] [SPEAKER_01]: What is a mutual fund?

[00:23:30] [SPEAKER_01]: A mutual fund takes a bunch of investors, pools their money together under

[00:23:36] [SPEAKER_01]: professional management and that professional management makes investments

[00:23:41] [SPEAKER_01]: and I'm going to use the stock market at the moment with some strategy,

[00:23:46] [SPEAKER_01]: large cap stocks, small cap stocks, value stocks, growth stocks.

[00:23:50] [SPEAKER_01]: Okay.

[00:23:50] [SPEAKER_01]: REITs take a bunch of investors, pool their money together with a strategy

[00:23:54] [SPEAKER_01]: of investing in most often one property type, office industrial retail

[00:23:59] [SPEAKER_01]: and even in many cases like in retail, we only do malls.

[00:24:04] [SPEAKER_01]: We only do grocery-acord shopping centers.

[00:24:06] [SPEAKER_01]: We only do standalone, triple net lease, you know, McDonald's, Burger

[00:24:12] [SPEAKER_01]: Kings, that kind of thing.

[00:24:14] [SPEAKER_01]: Okay.

[00:24:14] [SPEAKER_01]: So what you're getting is a professional management handling that

[00:24:18] [SPEAKER_01]: kind of stuff, right?

[00:24:20] [SPEAKER_01]: And by the way, when I say publicly traded REITs, I'm talking about ones

[00:24:24] [SPEAKER_01]: that are traded on the stock market.

[00:24:26] [SPEAKER_01]: There are many non-traded and I didn't use the word private here.

[00:24:30] [SPEAKER_01]: There are many non-traded REITs where they don't trade on marketplace,

[00:24:35] [SPEAKER_01]: but they still use the REIT structure.

[00:24:38] [SPEAKER_01]: Same kind of thing, right?

[00:24:40] [SPEAKER_01]: And so in other words, you're doing the same thing.

[00:24:43] [SPEAKER_01]: You're taking investors' money, pooling together.

[00:24:46] [SPEAKER_01]: You're just using the limited partnership vehicle versus the REIT vehicle.

[00:24:50] [SPEAKER_01]: The major difference is that the REIT vehicle doesn't pass through

[00:24:55] [SPEAKER_01]: the tax savings of depreciation and all that kind of stuff.

[00:25:01] [SPEAKER_01]: In other words, you're giving your investors income every year

[00:25:03] [SPEAKER_01]: and a lot of that is sheltered by the depreciation because they're

[00:25:08] [SPEAKER_01]: a partner in it as opposed to a shareholder in stock.

[00:25:13] [SPEAKER_01]: That's really the only difference.

[00:25:16] [SPEAKER_01]: And you could take what you're doing and turn it into a REIT.

[00:25:20] [SPEAKER_01]: As a matter of fact, many of the REITs today were small partnership

[00:25:26] [SPEAKER_01]: syndicators like yourselves who got large enough to say,

[00:25:29] [SPEAKER_01]: hey, we want to go public.

[00:25:31] [SPEAKER_01]: Better access to capital.

[00:25:32] [SPEAKER_01]: Think about this.

[00:25:33] [SPEAKER_01]: You have two access to capital.

[00:25:35] [SPEAKER_01]: The private equity you bring in or loans from a bank, right?

[00:25:40] [SPEAKER_01]: And I'm going to call that private debt.

[00:25:43] [SPEAKER_01]: REITs can do that too because they can say,

[00:25:45] [SPEAKER_01]: hey, right now my stock price is low but I got this great buy.

[00:25:48] [SPEAKER_01]: I can go out and sell a participating interest in one of my properties

[00:25:53] [SPEAKER_01]: to a private investor or as a matter of fact, CalPERS might say,

[00:25:57] [SPEAKER_01]: hey, I'll buy half an interest in your $300 million mall for $150 million,

[00:26:04] [SPEAKER_01]: give you the cash.

[00:26:04] [SPEAKER_01]: Now I'm a half owner.

[00:26:05] [SPEAKER_01]: You still operate it for me and that kind of thing.

[00:26:08] [SPEAKER_01]: They just raise money in the private marketplace.

[00:26:10] [SPEAKER_01]: If their stock price is high as above their NAV,

[00:26:14] [SPEAKER_01]: they're going to sell more shares and use that to buy properties.

[00:26:17] [SPEAKER_01]: REITs can do one other thing that is fantastic.

[00:26:19] [SPEAKER_01]: They can issue corporate debt.

[00:26:22] [SPEAKER_01]: So they get a bond rating just like any other publicly-draited company

[00:26:26] [SPEAKER_01]: and they go out and say, hey, we're going to put out a $500 billion bond offering

[00:26:33] [SPEAKER_01]: for people to buy at the rate of X.

[00:26:37] [SPEAKER_01]: And by the way, that rate is typically slightly below

[00:26:39] [SPEAKER_01]: what it might cost you directly for a mortgage.

[00:26:42] [SPEAKER_01]: And I'm going to take a bunch of properties.

[00:26:45] [SPEAKER_01]: I'm going to take a billion dollars worth of properties

[00:26:48] [SPEAKER_01]: and put them up as collateral for that bond pool.

[00:26:53] [SPEAKER_01]: So it's like we're really doing a 50% loan to value loan here, right?

[00:26:57] [SPEAKER_01]: The really cool thing about being a REIT is that they have the right of substitution.

[00:27:03] [SPEAKER_01]: If you own a property that you have a mortgage on in the commercial space,

[00:27:07] [SPEAKER_01]: most of the time you have to pay…

[00:27:10] [SPEAKER_01]: The bank says you can't give a yield maintenance clause.

[00:27:13] [SPEAKER_01]: It says you must…

[00:27:14] [SPEAKER_01]: You got a 10-year mortgage.

[00:27:15] [SPEAKER_01]: You can't pay it off early, right?

[00:27:18] [SPEAKER_01]: Or if you do, you're going to have to pay us an interest rate,

[00:27:22] [SPEAKER_01]: the difference in interest that we would have received, that kind of thing, right?

[00:27:27] [SPEAKER_01]: The REIT can say, I'm taking property 42 out of my pool because I'm selling it

[00:27:32] [SPEAKER_01]: and I'm bringing a brand new property in to substitute it.

[00:27:35] [SPEAKER_01]: So they can move properties easily.

[00:27:38] [SPEAKER_01]: The other thing that publicly traded REITs have is they have a line of credit from a bank.

[00:27:41] [SPEAKER_01]: So a billion-dollar REIT would normally have at least a $100 billion line of credit,

[00:27:46] [SPEAKER_01]: which is honestly just like a credit card, right?

[00:27:49] [SPEAKER_01]: And when they walk in to buy a property, they go, we're a cash buyer.

[00:27:53] [SPEAKER_01]: We can close tomorrow, period, paragraph, no other questions asked.

[00:27:57] [SPEAKER_01]: After they buy it, then they decide, okay, are we going to issue some more shares

[00:28:01] [SPEAKER_01]: of stock to pay for this or are we going to sell some more bonds

[00:28:05] [SPEAKER_01]: or put a mortgage on the property?

[00:28:07] [SPEAKER_01]: They've got four options of getting money versus private only has two.

[00:28:14] [SPEAKER_01]: That's the real value in being a publicly traded REIT.

[00:28:17] [SPEAKER_01]: So, and they're big companies now, there's 50 of them,

[00:28:20] [SPEAKER_01]: they're over a billion dollars in size, okay?

[00:28:23] [SPEAKER_01]: And they are hands down the best property managers on planet Earth.

[00:28:27] [SPEAKER_02]: Totally, yeah.

[00:28:28] [SPEAKER_02]: In our business, we actually have hired REITs to property manage our companies,

[00:28:34] [SPEAKER_02]: some of our storage businesses.

[00:28:35] [SPEAKER_02]: So we do mostly on our own, but we've actually hired publicly traded REITs.

[00:28:40] [SPEAKER_02]: They actually do third party property management for a lot of businesses.

[00:28:43] [SPEAKER_02]: My question, sorry, we're going deep on REITs.

[00:28:45] [SPEAKER_02]: You got so much knowledge in it, it's kind of fun to talk to you about it.

[00:28:48] [SPEAKER_02]: What gives a signaling to the market that a REIT is on a buying spree?

[00:28:54] [SPEAKER_02]: Like right now, I've heard a lot of the self-storage REITs are sort of pencils down

[00:28:59] [SPEAKER_02]: and they're not buying a lot right now because maybe their stock price is down.

[00:29:03] [SPEAKER_02]: How does that interplay?

[00:29:04] [SPEAKER_02]: How do I know that's...

[00:29:06] [SPEAKER_01]: Whenever my stock price is above my NAV, I'm buying,

[00:29:11] [SPEAKER_01]: I'm selling shares and buying more properties.

[00:29:13] [SPEAKER_01]: Anytime my stock price is below NAV, I'm not.

[00:29:17] [SPEAKER_01]: As a matter of fact, I may even buy back shares instead of buying a property, right?

[00:29:21] [SPEAKER_01]: Because that improves my earnings per share.

[00:29:24] [SPEAKER_01]: Decrease the number of shares with the same, because I'm sitting on some cash

[00:29:29] [SPEAKER_01]: and right now the prices are up or whatever.

[00:29:31] [SPEAKER_01]: And the reason for that is that the self-storage REITs were doing unbelievably well

[00:29:37] [SPEAKER_01]: during COVID and after COVID because people needed places to store their stuff

[00:29:41] [SPEAKER_01]: because they were living in more at home, needed more space.

[00:29:43] [SPEAKER_01]: And that leasing trajectory has flattened out.

[00:29:48] [SPEAKER_01]: And therefore, if my occupancy is not going up, I can't raise my rents as fast.

[00:29:53] [SPEAKER_01]: And therefore, my earnings aren't going up.

[00:29:56] [SPEAKER_01]: As soon as your earnings forecast doesn't look good, what do you do?

[00:30:00] [SPEAKER_01]: Your stock price goes up.

[00:30:01] [SPEAKER_01]: People say, I don't want this stock anymore.

[00:30:03] [SPEAKER_01]: I want to find a different stock.

[00:30:04] [SPEAKER_01]: So they have to deal with the emotions of the market

[00:30:07] [SPEAKER_01]: who are looking forward and guessing at what's going on.

[00:30:11] [SPEAKER_01]: If the market is wrong and they come back stronger,

[00:30:14] [SPEAKER_02]: the stock price will bounce back up, right?

[00:30:17] [SPEAKER_02]: Yep.

[00:30:18] [SPEAKER_02]: Yeah, without getting any tax, legal or investment advice,

[00:30:21] [SPEAKER_02]: check out the storage REITs.

[00:30:23] [SPEAKER_02]: It might be a buying opportunity.

[00:30:25] [SPEAKER_02]: Do your own due diligence and make your own decisions.

[00:30:26] [SPEAKER_02]: But no, I think that's really fascinating.

[00:30:30] [SPEAKER_02]: So talk about the speculation.

[00:30:32] [SPEAKER_02]: I mean, so it's just subject to any speculation

[00:30:34] [SPEAKER_02]: that you would otherwise have in a stock.

[00:30:36] [SPEAKER_02]: Maybe that could be a downside to the REIT.

[00:30:38] [SPEAKER_02]: I mean, the REIT may not necessarily, my understanding is it may not perform.

[00:30:44] [SPEAKER_02]: If my property performs in a limited partnership,

[00:30:46] [SPEAKER_02]: it doesn't care what the emotion is.

[00:30:47] [SPEAKER_02]: It cares what the income is.

[00:30:49] [SPEAKER_02]: It sounds like a REIT is a little bit more speculation

[00:30:52] [SPEAKER_02]: of what they think the company might do at some future

[00:30:57] [SPEAKER_02]: point, is that right?

[00:30:59] [SPEAKER_01]: Yes.

[00:31:00] [SPEAKER_01]: In other words, a fun story.

[00:31:04] [SPEAKER_01]: When we would take companies public, what you'd have is

[00:31:08] [SPEAKER_01]: a real estate, a wealthy real estate baron in a city.

[00:31:13] [SPEAKER_01]: And I'll give an example, working with a guy,

[00:31:15] [SPEAKER_01]: $100 million worth of office space in Atlanta back in 1998.

[00:31:21] [SPEAKER_01]: And he said, hey, I'm doing well and everything else,

[00:31:24] [SPEAKER_01]: but I'm thinking about retiring.

[00:31:25] [SPEAKER_01]: And if I become a public company, then my wealth is liquid

[00:31:33] [SPEAKER_01]: and all that kind of stuff.

[00:31:34] [SPEAKER_01]: And so, okay, yeah.

[00:31:36] [SPEAKER_01]: And how much are you making?

[00:31:37] [SPEAKER_01]: Well, I don't want to talk about that.

[00:31:39] [SPEAKER_01]: You're a public company.

[00:31:40] [SPEAKER_01]: That you're going to be paid, right?

[00:31:43] [SPEAKER_01]: And how many shares do you own?

[00:31:44] [SPEAKER_01]: I don't want to tell people that.

[00:31:45] [SPEAKER_01]: Well, that's required in a public thing.

[00:31:49] [SPEAKER_01]: So what we used to say to people is,

[00:31:51] [SPEAKER_01]: are you ready to strip naked, get on a treadmill,

[00:31:54] [SPEAKER_01]: in a fishbowl and run for the rest of your life?

[00:31:57] [SPEAKER_01]: Because anybody, any analyst can ask them a question.

[00:31:59] [SPEAKER_01]: Any investor can ask them a question.

[00:32:01] [SPEAKER_01]: And if they don't answer, you say that I'm selling your stock

[00:32:04] [SPEAKER_01]: and your share price is going to drop.

[00:32:07] [SPEAKER_01]: So it's a different life.

[00:32:10] [SPEAKER_01]: And many of those real estate barons after a while said,

[00:32:13] [SPEAKER_01]: boy, this is not fun.

[00:32:15] [SPEAKER_01]: And therefore they hired someone else to then become the CEO

[00:32:19] [SPEAKER_01]: of their company and just became chairman of the board

[00:32:21] [SPEAKER_01]: because they own so much stock.

[00:32:23] [SPEAKER_02]: Yeah. Epic sense.

[00:32:24] [SPEAKER_02]: Excellent.

[00:32:25] [SPEAKER_01]: What are you buying right now in REITs?

[00:32:28] [SPEAKER_01]: So, you know, REITs have come up in value here

[00:32:34] [SPEAKER_01]: over the last couple of months.

[00:32:36] [SPEAKER_01]: They had a bad time.

[00:32:38] [SPEAKER_01]: As soon as interest rates went up, they go,

[00:32:40] [SPEAKER_01]: oh, real estate can't do well when interest rates are up.

[00:32:42] [SPEAKER_01]: They have bounced down.

[00:32:43] [SPEAKER_01]: They've started to come back.

[00:32:47] [SPEAKER_01]: The projection that interest rates are going to come down

[00:32:49] [SPEAKER_01]: has what's been making them start to move up.

[00:32:52] [SPEAKER_01]: Whereas in the private market, a lot of cases,

[00:32:55] [SPEAKER_01]: the prices haven't started coming back yet

[00:32:57] [SPEAKER_01]: because we actually have to have a transaction

[00:32:59] [SPEAKER_01]: with a lower mortgage rate to make that go.

[00:33:02] [SPEAKER_01]: So the REITs are moving ahead, if you will,

[00:33:05] [SPEAKER_01]: from that standpoint and could they move further ahead?

[00:33:08] [SPEAKER_01]: In my time as an analyst, covering companies

[00:33:14] [SPEAKER_01]: and doing all kinds of stuff,

[00:33:16] [SPEAKER_01]: and I had to request to be able to buy a stock

[00:33:21] [SPEAKER_01]: 30 days before I could buy it,

[00:33:23] [SPEAKER_01]: and then hold it for at least six months,

[00:33:25] [SPEAKER_01]: and then request to sell it, and wait 30 days to sell it.

[00:33:28] [SPEAKER_01]: So doing individual stocks didn't work really well for me,

[00:33:32] [SPEAKER_01]: but I could buy into a mutual fund.

[00:33:35] [SPEAKER_01]: So I use Vanguard's REIT mutual fund,

[00:33:40] [SPEAKER_01]: and it swings up and down.

[00:33:42] [SPEAKER_01]: And I had a year where I literally would watch it

[00:33:45] [SPEAKER_01]: go up and down 10% at a time,

[00:33:47] [SPEAKER_01]: and I would play in and out of that,

[00:33:49] [SPEAKER_01]: and I made $300,000 one.

[00:33:52] [SPEAKER_02]: So it's amazing.

[00:33:54] [SPEAKER_02]: If REITs are subject to speculation

[00:33:57] [SPEAKER_02]: and not tax beneficial,

[00:34:01] [SPEAKER_02]: why would one want to buy a REIT stock

[00:34:04] [SPEAKER_02]: versus just a blue chip stock or a Facebook or something?

[00:34:09] [SPEAKER_01]: Well, historically over the last 30 years,

[00:34:12] [SPEAKER_01]: REITs have averaged over a 12% return

[00:34:15] [SPEAKER_01]: versus the stock market at 8.5%.

[00:34:18] [SPEAKER_01]: Wow.

[00:34:19] [SPEAKER_01]: And REITs have, you know,

[00:34:22] [SPEAKER_01]: REITs about 40% to 50% of their term is income

[00:34:28] [SPEAKER_01]: versus appreciation.

[00:34:29] [SPEAKER_01]: So what I say is,

[00:34:30] [SPEAKER_01]: real estate really has bond like,

[00:34:32] [SPEAKER_01]: REITs have bond like income,

[00:34:34] [SPEAKER_01]: just like direct real estate does,

[00:34:35] [SPEAKER_01]: with not quite stock like appreciation,

[00:34:38] [SPEAKER_01]: but when you combine the two together,

[00:34:39] [SPEAKER_01]: it's as good or better.

[00:34:42] [SPEAKER_01]: So best place to put REITs is in your retirement account

[00:34:44] [SPEAKER_01]: because you're not paying taxes on the income coming in.

[00:34:48] [SPEAKER_01]: And, you know, that's a great place to set it

[00:34:51] [SPEAKER_01]: because it's so hard to take your retirement account

[00:34:53] [SPEAKER_01]: and do direct investments, right?

[00:34:56] [SPEAKER_01]: Right.

[00:34:56] [SPEAKER_01]: Buy properties and do that kind of stuff.

[00:34:57] [SPEAKER_01]: But that's where I have,

[00:35:00] [SPEAKER_01]: that's where I have my big hole in rates

[00:35:02] [SPEAKER_01]: are in my retirement accounts.

[00:35:05] [SPEAKER_00]: What's up?

[00:35:06] [SPEAKER_00]: Go for your 401k.

[00:35:07] [SPEAKER_02]: Yeah, yeah, totally.

[00:35:08] [SPEAKER_02]: You know, get the Roth going in REIT stock.

[00:35:10] [SPEAKER_02]: Yeah, that's great.

[00:35:11] [SPEAKER_02]: Is there like some kind of a blended REIT fund

[00:35:14] [SPEAKER_02]: that kind of maybe aggregates

[00:35:17] [SPEAKER_02]: a multitude of different retail store?

[00:35:20] [SPEAKER_02]: Oh yeah.

[00:35:21] [SPEAKER_02]: What's that?

[00:35:21] [SPEAKER_01]: So again, Vanguard's fund,

[00:35:24] [SPEAKER_01]: and I use an ETF versus the mutual fund.

[00:35:27] [SPEAKER_01]: It's stock symbol is VNQ, okay?

[00:35:30] [SPEAKER_01]: And after COVID hit,

[00:35:33] [SPEAKER_01]: as soon as they started talking about interest rates

[00:35:35] [SPEAKER_01]: going up, I knew REIT stocks were gonna drop.

[00:35:38] [SPEAKER_01]: I sold out a VNQ at 111 at the stock price, okay?

[00:35:42] [SPEAKER_01]: It dropped to 77.

[00:35:46] [SPEAKER_01]: I got it at 76 and at 80.

[00:35:49] [SPEAKER_01]: And today it closed at 90 something.

[00:35:53] [SPEAKER_01]: And the nice thing is you can watch it.

[00:35:55] [SPEAKER_01]: It closed at 91.38.

[00:35:57] [SPEAKER_01]: So there you go, right?

[00:36:01] [SPEAKER_01]: And earning great income,

[00:36:04] [SPEAKER_01]: growing my retirement portfolio.

[00:36:08] [SPEAKER_00]: So I want to ask,

[00:36:10] [SPEAKER_00]: is that a good price for someone to get in

[00:36:12] [SPEAKER_00]: if they're just getting in?

[00:36:13] [SPEAKER_00]: But what I want to contextualize that with

[00:36:15] [SPEAKER_00]: is to shift the conversation to market cycles

[00:36:19] [SPEAKER_00]: and maybe pepper in some broader economics as well.

[00:36:25] [SPEAKER_00]: Because one thing that I've been dying to have

[00:36:28] [SPEAKER_00]: on this show for the last six months

[00:36:29] [SPEAKER_00]: is to have somebody who really is astute in economics

[00:36:33] [SPEAKER_00]: tell us what the heck is going on.

[00:36:35] [SPEAKER_00]: We've had a lot of things sort of come out of left field

[00:36:39] [SPEAKER_00]: and hit us in the last four years.

[00:36:41] [SPEAKER_00]: We had COVID, which nobody saw coming of course.

[00:36:44] [SPEAKER_00]: And then in June of 2021, the Fed said

[00:36:47] [SPEAKER_00]: they will hold interest rates near zero,

[00:36:49] [SPEAKER_00]: sees two rate hikes in 2023.

[00:36:52] [SPEAKER_00]: We all know what happened at the end of that year,

[00:36:55] [SPEAKER_00]: which is they went on the fastest rate hiking cycle

[00:36:58] [SPEAKER_00]: in history.

[00:37:00] [SPEAKER_00]: I don't know if you saw that coming,

[00:37:01] [SPEAKER_00]: but from what I've heard,

[00:37:03] [SPEAKER_00]: even BlackRock and Goldman didn't see that coming

[00:37:05] [SPEAKER_00]: based on what the Fed was saying

[00:37:06] [SPEAKER_00]: and then what happened.

[00:37:08] [SPEAKER_00]: Where are we in this cycle?

[00:37:10] [SPEAKER_00]: There's so many market indicators

[00:37:12] [SPEAKER_00]: that are pointing crisscrossed.

[00:37:13] [SPEAKER_00]: Where do you see us in the general economy

[00:37:16] [SPEAKER_00]: and then maybe niche down

[00:37:18] [SPEAKER_00]: on the different types of real estate asset classes?

[00:37:21] [SPEAKER_00]: Right.

[00:37:22] [SPEAKER_01]: So for me, real estate is totally driven

[00:37:24] [SPEAKER_01]: by employment growth

[00:37:25] [SPEAKER_01]: and employment growth continues to be positive.

[00:37:29] [SPEAKER_01]: Don't see it going negative.

[00:37:30] [SPEAKER_01]: We've got too low an unemployment rate

[00:37:32] [SPEAKER_01]: to make that happen.

[00:37:34] [SPEAKER_01]: So I think the economy continues to chug along.

[00:37:37] [SPEAKER_01]: I'm sort of in favor of the Austrian economics approach,

[00:37:42] [SPEAKER_01]: which is government leave things alone

[00:37:44] [SPEAKER_01]: and they'll work out.

[00:37:47] [SPEAKER_01]: When the Fed tampers,

[00:37:48] [SPEAKER_01]: it just amplifies the ups and downs.

[00:37:52] [SPEAKER_01]: So with that in mind,

[00:37:54] [SPEAKER_01]: in many cases,

[00:37:56] [SPEAKER_01]: to me it's like the Fed putting on the brakes,

[00:37:58] [SPEAKER_01]: putting on the brakes,

[00:37:59] [SPEAKER_01]: putting on the brakes,

[00:37:59] [SPEAKER_01]: and we're slowing down,

[00:38:00] [SPEAKER_01]: we're slowing down,

[00:38:00] [SPEAKER_01]: we're slowing down.

[00:38:01] [SPEAKER_01]: We haven't come to a complete stop,

[00:38:05] [SPEAKER_01]: but so they should start letting off

[00:38:07] [SPEAKER_01]: and let the economy roll along.

[00:38:08] [SPEAKER_01]: Instead, they keep pushing

[00:38:09] [SPEAKER_01]: until we actually come to a stop

[00:38:11] [SPEAKER_01]: and have a recession before letting off.

[00:38:13] [SPEAKER_01]: It appears that this time

[00:38:15] [SPEAKER_01]: they're probably going to start letting off

[00:38:16] [SPEAKER_01]: before we actually go into a recession.

[00:38:19] [SPEAKER_01]: So I'm positive on that,

[00:38:22] [SPEAKER_01]: that that's going to look okay

[00:38:24] [SPEAKER_01]: and pick up and move forward.

[00:38:29] [SPEAKER_01]: Slow economic growth is for me

[00:38:33] [SPEAKER_01]: a good thing in real estate

[00:38:34] [SPEAKER_01]: because demand continues to grow

[00:38:38] [SPEAKER_01]: with these higher interest rates.

[00:38:39] [SPEAKER_01]: We have slowed the supply

[00:38:42] [SPEAKER_01]: of all new property types

[00:38:43] [SPEAKER_01]: because it's more expensive now,

[00:38:45] [SPEAKER_01]: even though we need it,

[00:38:47] [SPEAKER_01]: which will I think force housing prices,

[00:38:50] [SPEAKER_01]: both rental and ownership higher over time

[00:38:54] [SPEAKER_01]: because of the demands there,

[00:38:56] [SPEAKER_01]: period, period, period.

[00:38:57] [SPEAKER_01]: Okay.

[00:38:59] [SPEAKER_01]: And what happens with the rest of the world

[00:39:01] [SPEAKER_01]: affects us as well.

[00:39:03] [SPEAKER_01]: China, I think, has a real problem.

[00:39:06] [SPEAKER_01]: Their one child over the last few decades

[00:39:08] [SPEAKER_01]: is not coming back to bite them.

[00:39:10] [SPEAKER_01]: Kind of like they're going to be like Japan,

[00:39:12] [SPEAKER_01]: you know, has been.

[00:39:15] [SPEAKER_01]: And that they're slowing,

[00:39:19] [SPEAKER_01]: therefore affects us that are slowing as well.

[00:39:22] [SPEAKER_01]: So I don't know any economist

[00:39:24] [SPEAKER_01]: that ever gets it right, right?

[00:39:27] [SPEAKER_01]: Of course.

[00:39:30] [SPEAKER_01]: And the majority,

[00:39:33] [SPEAKER_01]: what I guess I care about is the direction.

[00:39:35] [SPEAKER_01]: Is the direction up or down?

[00:39:37] [SPEAKER_01]: How fast or how slow is impossible to know?

[00:39:40] [SPEAKER_01]: So I think the direction is up and a very slow up.

[00:39:47] [SPEAKER_00]: Yeah. Absolutely.

[00:39:47] [SPEAKER_00]: I concur with your crystal ball.

[00:39:51] [SPEAKER_00]: Mine's broken as well.

[00:39:52] [SPEAKER_00]: I think everyone's is.

[00:39:53] [SPEAKER_00]: But I think sometimes people look at the stock market.

[00:39:56] [SPEAKER_00]: They look at the S&P and they say,

[00:39:58] [SPEAKER_00]: you know, when's the crash coming?

[00:40:00] [SPEAKER_00]: Because it's just gone up and to the right for so long.

[00:40:03] [SPEAKER_00]: I think you also have to look at currency devaluation, right?

[00:40:05] [SPEAKER_00]: That some of those gains are just a natural function

[00:40:08] [SPEAKER_00]: of inflation that occurred.

[00:40:09] [SPEAKER_00]: So we're almost crashing up rather than crashing down,

[00:40:13] [SPEAKER_00]: if that makes sense.

[00:40:15] [SPEAKER_00]: What are your thoughts on new supply?

[00:40:18] [SPEAKER_00]: I mean, we've talked about demand

[00:40:19] [SPEAKER_00]: and the band continuing to increase in the housing market

[00:40:22] [SPEAKER_00]: and other real estate asset classes

[00:40:25] [SPEAKER_00]: multifamily starts are down 70% from their peak in 2022.

[00:40:29] [SPEAKER_00]: You mentioned the same thing with office

[00:40:32] [SPEAKER_00]: where right now we're seeing a bunch of supply coming online

[00:40:35] [SPEAKER_00]: because all this construction started pre-COVID

[00:40:38] [SPEAKER_00]: and during COVID when debt was cheap

[00:40:40] [SPEAKER_00]: and made sense to build.

[00:40:42] [SPEAKER_00]: Now all of that, all those permitting

[00:40:44] [SPEAKER_00]: and construction starts has come down.

[00:40:47] [SPEAKER_00]: So to me, I'm looking down into 2026 and 27

[00:40:52] [SPEAKER_00]: where there's just gonna be this drought of new supply,

[00:40:54] [SPEAKER_00]: right as demand is really accelerating.

[00:40:57] [SPEAKER_00]: Do you see those same dynamics?

[00:40:58] [SPEAKER_01]: Yep, yep.

[00:40:59] [SPEAKER_01]: And that's what creates a cycle, right?

[00:41:03] [SPEAKER_01]: You know, the little, you know, so yeah, so office,

[00:41:06] [SPEAKER_01]: you know, I would expect with bottom in 2025, 2026

[00:41:11] [SPEAKER_01]: industrials got into a little bit of oversupply

[00:41:14] [SPEAKER_01]: because of the frenzy of, and I'll tell a fun story here.

[00:41:18] [SPEAKER_01]: So online sales went from eight to nine to 10

[00:41:21] [SPEAKER_01]: to 11 to 12%, right?

[00:41:23] [SPEAKER_01]: COVID hits and it jumps to 18 and Amazon goes,

[00:41:26] [SPEAKER_01]: oh my God, we just got a 50% increase in demand.

[00:41:28] [SPEAKER_01]: So they started signing leases

[00:41:31] [SPEAKER_01]: and getting properties built for them, et cetera.

[00:41:34] [SPEAKER_01]: COVID's finally over, you know, within a year

[00:41:38] [SPEAKER_01]: and online sales bounce back down

[00:41:40] [SPEAKER_01]: to their original trajectory and they're at 12 and a half

[00:41:43] [SPEAKER_01]: going to 13.

[00:41:45] [SPEAKER_01]: And so Amazon walks away from some leases

[00:41:48] [SPEAKER_01]: and things like that and everybody goes,

[00:41:49] [SPEAKER_01]: oh my God, terrible, terrible, right?

[00:41:51] [SPEAKER_01]: But a lot of other people that couldn't lease property

[00:41:55] [SPEAKER_01]: because Amazon was, in 2019 Amazon leased 25%

[00:41:59] [SPEAKER_01]: of all space leased in the country.

[00:42:01] [SPEAKER_01]: My God.

[00:42:02] [SPEAKER_01]: And so other people needed it

[00:42:04] [SPEAKER_01]: and because that demand was so high,

[00:42:07] [SPEAKER_01]: we took rental rates and like doubled them, right?

[00:42:11] [SPEAKER_01]: We were at six bucks a square foot

[00:42:13] [SPEAKER_01]: and went to 10 or 11

[00:42:15] [SPEAKER_01]: and now that's come down a little bit.

[00:42:17] [SPEAKER_01]: But, you know, the demand's still there.

[00:42:20] [SPEAKER_01]: There are more people, we're buying more stuff.

[00:42:22] [SPEAKER_01]: We're still, you know, things are happening.

[00:42:24] [SPEAKER_01]: One of the cool things there is that

[00:42:27] [SPEAKER_01]: all of the new electric cars that are being built,

[00:42:32] [SPEAKER_01]: they need battery,

[00:42:34] [SPEAKER_01]: they need batteries and all kind of stuff

[00:42:36] [SPEAKER_01]: that there's like, can't remember the number,

[00:42:39] [SPEAKER_01]: 40 million square feet of warehouse space needed

[00:42:42] [SPEAKER_01]: just to help in the manufacturing

[00:42:44] [SPEAKER_01]: of all that stuff in the U.S.

[00:42:46] [SPEAKER_01]: in the U.S. alone, right?

[00:42:49] [SPEAKER_01]: So that's huge, right?

[00:42:50] [SPEAKER_01]: Again, retail, people are back in spending.

[00:42:54] [SPEAKER_01]: Spending has slowed a little bit

[00:42:56] [SPEAKER_01]: but, you know, the right type of retail

[00:42:59] [SPEAKER_01]: is doing unbelievably well.

[00:43:01] [SPEAKER_01]: And again, that's where people think

[00:43:03] [SPEAKER_01]: they can go out and do themselves.

[00:43:05] [SPEAKER_01]: You've got to have a real estate expert

[00:43:07] [SPEAKER_01]: who knows what's going on in the marketplace

[00:43:09] [SPEAKER_01]: to understand it, right?

[00:43:11] [SPEAKER_01]: And that's really key.

[00:43:13] [SPEAKER_01]: And then hotel, again, there are some hotels,

[00:43:16] [SPEAKER_01]: like there's some San Francisco hotels that are closing

[00:43:19] [SPEAKER_01]: because business people aren't going there, right?

[00:43:21] [SPEAKER_01]: But there's other, you know, resort hotels

[00:43:25] [SPEAKER_01]: in California that are just killing it.

[00:43:27] [SPEAKER_02]: Right. You have over 40 years of experience

[00:43:30] [SPEAKER_02]: analyzing real estate trends, economics.

[00:43:33] [SPEAKER_02]: What are your go-to sources today?

[00:43:35] [SPEAKER_02]: Like what do you look at every day

[00:43:37] [SPEAKER_02]: to kind of collect the information

[00:43:38] [SPEAKER_02]: to stay in tune with the economy and the market?

[00:43:42] [SPEAKER_01]: Sure. Well, with the publicly traded REITs,

[00:43:47] [SPEAKER_01]: Nareit has a daily email that comes out

[00:43:50] [SPEAKER_01]: and the thing that I like is it just, you know,

[00:43:53] [SPEAKER_01]: it'll highlight, you know,

[00:43:55] [SPEAKER_01]: and give you two sentences

[00:43:56] [SPEAKER_01]: on the key things that were happening.

[00:43:58] [SPEAKER_01]: So I get six of those.

[00:43:59] [SPEAKER_01]: I can read that in about a minute and a half.

[00:44:01] [SPEAKER_01]: And then if I want depths,

[00:44:02] [SPEAKER_01]: I go right in and look at that.

[00:44:05] [SPEAKER_01]: The major brokerage firms,

[00:44:07] [SPEAKER_01]: Calwell Banker, CBRE,

[00:44:09] [SPEAKER_01]: and Jones Lang LaSalle, JLL,

[00:44:11] [SPEAKER_01]: they put out either daily or weekly,

[00:44:13] [SPEAKER_01]: you know, emails that are, you know,

[00:44:16] [SPEAKER_01]: are free because they're trying to get your business.

[00:44:18] [SPEAKER_01]: I work in the institution world.

[00:44:20] [SPEAKER_01]: So the Pension Real Estate Association

[00:44:22] [SPEAKER_01]: has a daily email with stuff

[00:44:23] [SPEAKER_01]: about what institutions are doing,

[00:44:25] [SPEAKER_01]: which kind of, you know,

[00:44:26] [SPEAKER_01]: they're obviously heavily,

[00:44:28] [SPEAKER_01]: they're highly educated

[00:44:31] [SPEAKER_01]: and kind of know what's going on.

[00:44:33] [SPEAKER_01]: So those trends as well.

[00:44:35] [SPEAKER_01]: So any of the major national associations

[00:44:39] [SPEAKER_01]: have these, NYOP,

[00:44:41] [SPEAKER_01]: For Office and Industrial.

[00:44:44] [SPEAKER_01]: There's all good things to watch.

[00:44:46] [SPEAKER_01]: I don't deal with the

[00:44:47] [SPEAKER_01]: home ownership side of the world at all.

[00:44:50] [SPEAKER_01]: So I don't do anything there,

[00:44:51] [SPEAKER_01]: but if you wanted to,

[00:44:52] [SPEAKER_01]: you could probably get

[00:44:53] [SPEAKER_01]: the National Association of Realtors.

[00:44:56] [SPEAKER_00]: Those are great resources.

[00:44:58] [SPEAKER_00]: Well, with that,

[00:44:58] [SPEAKER_00]: we want to be respectful of your time.

[00:45:00] [SPEAKER_00]: Dr. Miller, thank you so much.

[00:45:02] [SPEAKER_00]: Hopefully we can,

[00:45:03] [SPEAKER_00]: I don't know, maybe we can get you to,

[00:45:05] [SPEAKER_00]: we can convince you

[00:45:06] [SPEAKER_00]: to come to our conference and do a keynote.

[00:45:08] [SPEAKER_00]: But we'll talk about that later.

[00:45:10] [SPEAKER_00]: Thank you so much for coming.

[00:45:11] [SPEAKER_01]: Actually, I think it was

[00:45:13] [SPEAKER_00]: well over a decade ago.

[00:45:15] [SPEAKER_00]: I did one for you guys way back when.

[00:45:16] [SPEAKER_00]: That was for the best ever conference.

[00:45:19] Yeah.

[00:45:19] [SPEAKER_01]: Oh yes, yes, yes.

[00:45:20] [SPEAKER_00]: I saw you there.

[00:45:21] [SPEAKER_00]: It was fantastic.

[00:45:22] [SPEAKER_00]: So it's an honor to interview today.

[00:45:24] [SPEAKER_00]: And I hope that wasn't a decade ago.

[00:45:25] [SPEAKER_02]: Geez, that was a long time.

[00:45:28] [SPEAKER_00]: How can people find out more about you?

[00:45:30] [SPEAKER_00]: Do you have any other resources

[00:45:31] [SPEAKER_00]: that you'd like to share with people

[00:45:33] [SPEAKER_00]: or connect, you know,

[00:45:34] [SPEAKER_00]: on LinkedIn or something like that?

[00:45:35] [SPEAKER_00]: How can people find out more about you

[00:45:37] [SPEAKER_00]: or buy your textbook?

[00:45:40] [SPEAKER_01]: Well, I'm on LinkedIn.

[00:45:42] [SPEAKER_01]: My textbook is,

[00:45:44] [SPEAKER_01]: you know, you get it on Amazon,

[00:45:45] [SPEAKER_01]: Educated Reinvesting.

[00:45:48] [SPEAKER_01]: My market cycle reports are available

[00:45:49] [SPEAKER_01]: from the University of Denver,

[00:45:53] [SPEAKER_01]: du.edu

[00:45:56] [SPEAKER_01]: burns, B-U-R-N-S minus sign school,

[00:46:00] [SPEAKER_01]: burn school,

[00:46:00] [SPEAKER_01]: and all my historic ones for the last,

[00:46:03] [SPEAKER_01]: I don't know,

[00:46:03] [SPEAKER_01]: eight years or so are there.

[00:46:05] [SPEAKER_01]: Fantastic.

[00:46:05] [SPEAKER_01]: To look at.

[00:46:07] [SPEAKER_01]: And then one short plug,

[00:46:08] [SPEAKER_01]: I am also now on the board of a charity

[00:46:13] [SPEAKER_01]: called Sharing Connection,

[00:46:14] [SPEAKER_01]: and that's with an X that's located in Denver,

[00:46:17] [SPEAKER_01]: and we help with affordable housing.

[00:46:20] [SPEAKER_01]: We help developers get things done.

[00:46:23] [SPEAKER_01]: Anytime you build affordable housing,

[00:46:25] [SPEAKER_01]: getting the permit loan,

[00:46:26] [SPEAKER_01]: government's going to take care of that no problem.

[00:46:28] [SPEAKER_01]: Getting the construction loan,

[00:46:29] [SPEAKER_01]: the development loan is a hard part.

[00:46:31] [SPEAKER_01]: And so we're raising a $20 million fund

[00:46:35] [SPEAKER_01]: to do that where people,

[00:46:37] [SPEAKER_01]: the idea is lend us money

[00:46:38] [SPEAKER_01]: at a low interest rate

[00:46:41] [SPEAKER_01]: with a high impact where you're going to help.

[00:46:42] [SPEAKER_01]: Because right now when interest rates went up,

[00:46:45] [SPEAKER_01]: all of a sudden the development side

[00:46:47] [SPEAKER_01]: of affordable housing became,

[00:46:49] [SPEAKER_01]: you know, not financially feasible.

[00:46:52] [SPEAKER_00]: It's a great idea.

[00:46:53] [SPEAKER_00]: That's fantastic.

[00:46:53] [SPEAKER_01]: So we're trying to offer loans

[00:46:56] [SPEAKER_01]: to affordable housing developers.

[00:46:59] [SPEAKER_01]: Basically, you know, the 10-year treasury rate

[00:47:04] [SPEAKER_01]: or that type of thing.

[00:47:05] [SPEAKER_01]: So much lower than they could get from a bank

[00:47:07] [SPEAKER_01]: so that they can actually get their project done.

[00:47:11] [SPEAKER_01]: So that's what's taking up my time.

[00:47:14] [SPEAKER_00]: Fantastic.

[00:47:14] [SPEAKER_01]: Awesome.

[00:47:15] [SPEAKER_00]: And busy.

[00:47:16] [SPEAKER_00]: Gwen Miller, thank you so much

[00:47:17] [SPEAKER_00]: for gracing us with your presence.

[00:47:19] [SPEAKER_00]: We hope to see you again sometime soon.

[00:47:20] [SPEAKER_00]: Thank you, Joe Bob.

[00:47:22] [SPEAKER_00]: Okay. Thank you.

[00:47:23] [SPEAKER_00]: Take care.