 Hello and welcome to our panel on development. I'm really blessed to have with me today a really interesting group of investors and developers. And I wanna introduce them to you right now, but first to introduce myself, I'm John Jacobson, otherwise known as Jake. I run the Capital Markets area at related companies here in New York City. I've been on the real estate investment business for about 30 years now, eight of those here at related. And my involvement in development really stretches those entire 30 years. My involvement in development and investment also intersects with many of the panelists on this panel. The first of whom I'd like to introduce is Philip Jezuay. Philip, you wanna introduce yourself? Sure, my name is Philip Jezuay. I'm the Chief Development Officer of Strategic Capital. Strategic Capital is a wholly owned US subsidiary of a firm called CSCEC or the China State Construction and Engineering Corporation. It's a publicly traded company in China and a state-owned company. Our mission is to invest core capital in the United States. We focus primarily in the New York City tri-state area and in other areas where we're in operational businesses. We're a conglomerate that owns construction companies, civil engineering firms, and a whole plethora of real estate and construction-oriented activities. I've been in the business for about 25 years and have been active in development for most of those 25 years. Thanks, Philip. Next, I'd like to introduce everybody to Craig Cogut who I will say I first met back when I first moved back to the East Coast in 1993 and was working at the time for what was then called Apollo Real Estate Advisors. And Craig was a partner at Apollo at the same time. So Craig? Thank you, those. So you've just dated me here, Jake. So thank you. So I've been in business for, I was a little worse, yes. So I've been involved as a private equity investor in various businesses. I was one of the founders of Apollo. I left to found my current firm Pegasus in 1996 and we focused broadly in two areas, sustainability and health and wellness as well as the intersection, often of those two. That leads us, in the case of real estate, to work a lot on the development side with things that relate to energy, energy efficiency on the sustainability side, but also on health and wellness, particularly in the hotel sector where we were the owner of a firm called Six Senses which we recently sold to IHG. So in the context of development of cuts across all sectors, more on the product side, but on the health and wellness side, being a developer of a brand. Thanks, Craig. About 13 years or so, maybe a little later after I met Craig at Apollo, at that time we had changed the name of Apollo real estate advisors to area property partners. And I had the great fortune to work with Andrew Holm. Andrew, you wanna introduce yourself? Memory's pretty good, Jake. It was 2006, so that would have been 13 years later that I joined up. It was still Apollo real estate that we changed it shortly thereafter. I got the offer letter to prove it. 15 years later, I'm still in the same job that the firm's name has changed. So I'm now a partner in the real estate group at Aries Management. Aries is a large diversified investment management firm, publicly traded. I head up our Northeast acquisitions as well as co-head our opportunistic fund and out of those series of funds over the last 10 years or so, we've been an investor in probably $8 or $9 billion of ground up development projects, different asset classes across the country, usually in partnership with local developers. And finally, Kevin Cullen. Now, Kevin obviously is here to provide the lender's perspective on the development business. And to continue the theme a little bit, Kevin works, he's the head of investments at Mac real estate credit strategies, which is part of the Mac real estate group, which was created in 2013 when Aries purchased the old area property partners. I don't know, it gets very complicated after this point, but Kevin and I, for the last seven or eight years, actually office right across the hall from each other because Mac real estate group and related office together at Columbus Circle until November of this past year when related moves down to our new headquarters at Hudson Yards. So Kevin. Thanks, Shay. So Kevin Cullen and as Jake mentioned, I'm a managing director at Mac real estate group, which is a vertically integrated owner, operator, developer and lender. I co-head our credit strategies business where I oversee our originations across North America. We have capital that invest across the stack and oftentimes we find ourselves in development projects with groups like Jake or others on this call. So just to set up the conversation, as I was thinking about our discussion, I was thinking that we really want to touch on what our view is toward committing resources to development over the next one, two or three years. And by resources, I mean equity in the case of equity investors, debt or really human resources. How do you commit your firm to new development deals, especially given that we are presumably coming to the end of the pandemic? Just as an overview, I wanted to make an observation that we've seen here in our business that related. We obviously spent the better part of the last 10 years developing Hudson Yards, which was heavily focused on commercial and also somewhat focused on residential. What surprised us over the prior cycle was how well office buildings performed as we were developing them and how relatively retail, which we thought would be a real bright spot, did not perform as well as the office did on a relative basis. And the residential was somewhere in the middle. Now we're in a market that, to my mind, having been in the business for a long time is a little bit topsy turvy because now what used to be considered specialized property types, like data centers, like single family rental, like life science, like cold storage, those have now become sort of the prime property types that institutional investors around the country and around the world are really interested in investing in. And in order to get many of those product types, they're willing to invest in ground up development of those product types. Here at related, our focus continues to be on residential, commercial mixed use, but we as well are now spending a lot more time, a lot more of our human capital on things like energy and sustainability, close-in logistics in urban areas. Our group in Boston has a very major focus on life science and has for about 40 years. So in my mind, our focus on development as a development company, obviously, we're still gonna focus on development, but the things that we're prioritizing and the things we're deciding to spend time on are different now than they were a year ago or certainly five years ago. And I haven't figured exactly who would go first, but I thought I would tap Andrew first to sort of talk about how priorities may have changed. What are you looking at now as we are presumably emerging from the pandemic? Sure. So to contextualize that for a second over the last nine or 10 years, probably 60% or so of the equity we invested in development went into multi-family, probably 25% or so went into hospitality thankfully, largely sold in 2018 and 2019. And the balance was probably split between office and mixed views. We definitely had a feeling 18 to 24 months ago that we were deliberately starting to ramp down our development exposure just out of a view of where we might be in a cycle and that valuations might correct. I think one of the surprises over the last nine months in some ways has been how quickly we've been eager to get back into ground-up development in a period of significant dislocation. So we are dedicating a lot of resources to it, a lot of capital to it, even in the immediate post-pandemic period. So between probably July of last year and today we've committed to about a billion dollars of ground-up industrial transactions, about 10 million square feet all over the country, a mix of pre-leased and spec construction. We are cautiously getting back into multi but probably more in the Sunbelt markets rather than say across the street from Hudson Yards where we're under construction with a large multi-family tower. And I wouldn't be shocked if by the end of this year if the sort of pandemic trends continue how they have been, we might actually break ground on our first post-pandemic hotel project. And that may be the biggest surprise of all given where we sat six months or a year ago. So what I hear from a lot of institutions is sometimes a bias, especially in a market like this towards looking for distress deals rather than ground-up. Again, talking our own book, we think a lot of the best development deals we've ever done are deals that we actually initiated during a downturn because they opened up into the upswing. How do you guys have that debate internally about whether to focus on distress deals or plow ahead with development that hopefully at the bottom of the cycle? So I would say a year ago, every conversation was, where can we find distress? How soon will it start coming through? Every hotel in America is gonna be a distressed hotel supply is gonna swamp demand and pricing is gonna crater. And similar for say New York City condominiums. I think one of the unique things about this crisis is first of all, there's been no sense of moral hazard. So lenders generally haven't been punished for kicking the can down the road that in fact they've actually been encouraged to work with borrowers. The federal government reacted much more quickly and with much more liquidity to prop up the system than happened in 2008 or 2009. And liquidity returned both from a debt market and an equity market perspective much sooner than we would have anticipated. And so I agree with you, we are looking for distress but there's much less 12 months after the onset of a major economic dislocation event than I think we or other institutional investors anticipated. Phillip, I wanted to ask you on similar lines. As Andrew said, the investment focus may have shifted more industrial, less multifamily. How has your view shifted maybe in terms of geographically because you've been very focused on the New York City and Jersey City area. Are you looking at different locations now or different sectors? We are, I mean, what we're trying to figure out is what the net net of the stimulus and the COVID is combined. I mean, we're looking for distress deals. We believe long-term in the New York metropolitan market but I also think that we're trying to read through the tea leads of a crisis where the market's gotten better, which is not usual in a crisis due to stimulus which eventually is gonna stop happening. And then there'll be a requirement for the market to support itself and for the performance that we've seen for the last six to 12 months to continue. And I think we're trying to figure out what level of discounting is appropriate today and whether today really reflects the real market. So we see the stimulus as having propped up the market in general. So the prices aren't vastly different than what they were and they may not be reflective of what they should be or will be in a year. So I think that's sort of one area of caution that we have in terms of looking at deals. And I think the other is trying to get a sense of what migration means on a macro and a micro level. And I think within the New York state area or the New York metropolitan region, there's movement from Manhattan to Brooklyn and there's movement from Brooklyn to Jersey City and there's movement from these places to Stanford, Connecticut. And so I think there's opportunities within the markets that we're in. We're trying to figure out now whether those are permanent opportunities or whether they're temporary opportunities. And we're actively in the market on a couple of for sale high rises now. This has been the most active spring selling season in forever in a decade. And it's interesting, we're getting people from Miami who moved to Miami from New York who are coming back to New York to buy a condo. So you see all kinds of interesting trends in the market that give you pause as to how doomed Manhattan really is and how permanent people's decisions that they made during COVID really are. And as someone who's thought about all these things you probably like you guys have wanting to be in Miami six months ago for the winter now that things are getting nicer in New York and things are coming back to life it's you realize why you live here. So I've said nothing in the last five minutes but essentially we are looking at a lot of stuff right now and trying to figure out what the nexus of all those data points is and I'm not sure that we know what it is today but we're going to try to figure it out in the next few months. I'm curious, we've seen the same thing on the condo side where things, I mean first they really started to pick up at the end of 2019, the beginning of 2020 things were actually starting to look better and then this whole thing happened. But similarly starting real almost at the beginning of the year in January, not even the spring we're not even really in the spring things have picked up in a way that I would not have anticipated when we moved into our new office on November 6th. Is part of that the fact that developers and owners have somewhat lowered their pricing expectations or do you think it's more demand-driven? I think it's both. I think that what's happened is that I think in Manhattan for sure had the market not been soft prior to COVID you may not have the reduction in prices that you have today and you may not have the same level of demand but I also think I'm actively involved in all elements of the business including the marketing which when you're a condo developer you get very actively involved in the marketing. The last flyer we sent out is the stock market's at 30,000. Interest rates are at 2%. Where should you be putting your money? And I think that's what happened in January. I think that people woke up after the election and they realized that the stock market wasn't gonna go up forever that real estate is probably a good play that interest rates aren't gonna be low forever. And if you have any kind of basic financial sensibility those data points lead to making maybe making a good real estate investment now if you can buy right. And I think that's the challenge is buying right. But yeah, I think people decided because I think people sort of decided that now's a good time to get back and I'll tell you something else interesting. A lot of the buyers that we see in addition to the people coming from Miami they're hedge fund guys. They're very, very successful stock market guys who are buying for their kids and themselves. And these are guys who know the long life long New Yorkers who know the market and they're out in the market buying right now. And that's great. I like seeing that. Now, one of the things I wanted to do on behalf of this entire panel is like once everybody's up and traveling again and everything is to invite ourselves to the hotel that you guys own in Nassau. So we can actually go on a vacation and get some warm weather. But I'm wondering that's kind of a segue into what's your perspective on markets other markets in which you operate in particular, Texas where I think you have some investments. We have an investment in Texas. So we have not been, we acquired an asset in Texas with an intention of expanding in that market. And it was sort of a while ago and we never really and that was in Houston. I think that was done during the last oil boom and the real estate boom in Texas and Houston in particular wound up being significantly bigger than the oil boom as was the bust. So Houston has been pretty weak subsequent to that and we have not expanded as much as we would have otherwise in that market. So timing wise, we just, we didn't do well in the Houston market. We continue to like Texas long-term but we've just been more actively focused in the New York region now. So I have not been active there. So Craig, you know, one of the things that we've been talking about it related for a long time and in particular in our relationship with Equinox is focusing on wellness. And as I mentioned early on, we've also Steve Ross is very, very committed to sustainability right up from sustainability but right up from individual buildings to entire cities to global sustainability. So I'm curious, your perspective, both from the standpoint of being a private equity investor but also investing in real estate and development, how that plays out over the coming years as you pick things to focus on. Well, I think we obviously as a firm focus in those two categories generally and because we thought they would be attractive in the market and pre-pandemic that was happening. I think certainly on the health and wellness side, the pandemic has given this a huge shot in the arm. I should mention I'm happen to be Steve's investor with one of our companies creating healthy spacing. Actually, we're based on pioneering technology from Columbia Medical School but I think it's imperative now that all buildings make people feel safe but more importantly, they feel healthy whether it's a hotel or an office building, the quality of space and attracting people and attracting customers is I think gonna be a growing trend, certainly in hospitality business. So they're in terms of we have the luxury of being more focused than not being general real estate investors. Wellness real estate is I think gonna be a tremendous growth area and sustainability, I think has well benefit from the pandemic, it was happening anyway but there's so much going on the corporate side driving consciousness and particularly on the higher end I think tenants care about it and I think in the lodging space it's a very important thing to particularly younger travelers and really I think people are gonna begin to ask questions about certification. You know, it's fine to say you're doing carbon stuff but people are gonna wanna know how and transparency I think will be a major brand advantage for those who do it right. So as you think about investment, does it make sense more in environment like today to try to acquire existing and improve and make it more sustainable and more focused on wellness or is it better to start from scratch and ground up? It's case by case, I mean it's a matter I think that there's some amazing development opportunities particularly outside urban areas but close to them for some of what we're focused on but more generally the way we look at if we're looking to buy a hotel or build a hotel we'll look at what's the upside or not like I think you suggested there's real opportunity I think in working during this period some of the development deals we're working on have been slowed down but we're not unhappy about that but the timing's actually working out so it really is just a risk return time to develop and if we can get a cheap price, great and rebrand but there aren't so many of those. You know, we talked about we've talked about distress a little bit already you've seen more than your fair share of distressed deals over the years starting when I first met you and everything was distressed both on the corporate side and the real estate side in the early 1990s. Do you see this as a period in which there's kind of a lot of long-hanging food in the distressed area or is all of this stimulus sort of making that kind of a non-issue? I think it's, there is an issue but it's nowhere near like the 90s were the golden I mean, it was hard not to make money as some of the founders of Aries know too who were with us at Apollo. You know, now I think it's much more selective you have to work the properties there's so much more money too. I mean, forget stimulus I mean, there's so much more money sitting around there's much more efficiency in the markets. So I think the best types of distress deals are ones where you've followed them you'll work them and normally there's gonna be a little more of an edge to them. It's not just gonna be simple financial distress where you work walked in and say you've got an amazing deal. I mean, it's gonna have to be you have an idea to make the property better you're gonna bring in a tenant a huge tenant who can do it. It's definitely not easy. So I think we, I do think we will see some more distress as people have stretched and stretched and we are talking about a recovery but there's a real possibility we see another surge here what that's gonna do no one knows particularly in some foreign countries. So I don't think we're out of the wood yet in terms of particularly getting people back just one little plan I think cities are gonna come back though much as Phillips said he's seeing with people I mean, you know, we need to be in and obviously related beliefs that we need to be in cities and on the corporate side, we're seeing that every day. I mean, people, companies don't function and this is all great but by Zoom, but you need to be together and we all want to be in cities. So Craig, you rightly mentioned there's a lot of capital out there that's not just government stimulus obviously, which made me think of Kevin because I keep seeing statistics in which there's something like $60 billion of capital sitting in credit-focused real estate funds that may be a high number, it may be a low number. Where are you seeing opportunity today and on a relative basis, how interested are you in looking at ground up development versus, you know, sort of investments in existing stuff or stuff that needs shoring up post-pandemic? Sure, I think there's a tail of a couple different a couple of different ways to slice that pie. Where we're seeing opportunities today versus prior to the pandemic mostly on the new origination front is in what we refer to as emerging primary markets. So think of places like Nashville and Austin and Denver and Raleigh that were important markets and important places of commerce prior to the pandemic but we've certainly seen an acceleration of whether it's migration into these cities or job growth within these cities. So we have been a lot more active in markets like that versus prior to the pandemic where we spent a lot more of our time in your traditional major gateway markets or major city gateway markets like New York and Los Angeles and San Francisco and so forth. Although I do think and how we think about it is we'll continue to be very active on that front in these newer markets or emerging primary markets but if there is meaningful distress that come into the system which I think we're all circling around the idea that it will be a little bit less exacerbated than we were anticipating we think it happens in the major markets we think it happens in New York we think it happens in San Francisco we think it happens in Chicago and maybe a few others out there. So as we're looking at what we're doing on the investment front or on the origination front where we're sort of bifurcating whereas we think new business and normal way growth and originations in new markets and focusing our distressed investing on the major markets if and when those opportunities present themselves. In terms of development we remain active in that space lending into that space for us we have the benefit while we may not have all the upside of the other folks on the phone we have the benefit of margin of error. So we can lend or we think about it as though if we can lend at 65 or 70% of replacement costs for what will ultimately be a best in class asset in one of these markets that is perhaps even implementing today's newest technology in terms of HVAC to attract tendency post pandemic or you name it or open spaces we like the opportunity to be able to lend that a meaningful discount to 2019 valuations and a meaningful discount to replacement value in 2021 and ultimately have exposure to what we think will be the best assets in their respective markets or asset classes when they deliver 2022, 2023, 2024. We were talking a week or so ago about a deal which was fascinating to me because it's the kind of thing that is on our minds all the time where you've got an office deal I think in Nashville. So for a New York-centric crowd you say, well, why would we wanna do that? So can you just shed some light on that kind of as a case study? Sure thing, yeah. So look, we've, and I mentioned some of the markets that we've been more active in Nashville being one of them and one of the groups that was behind the development of a spec office building in Nashville had approached us about providing them financing that was during the pandemic. So we actually started talking to them prior to the onset of the pandemic and we wound up closing on an office construction loan with them in the middle of 2020. I think they really appreciated that. We, I can say on this call, we probably did it because of the strength of our relationship with them and not necessarily because we wanted a spec construction loan in the middle of 2020. But we do like the growth story there, right? We've seen corporate relocations, we've seen other companies that don't have, that haven't traditionally had a presence there, relocating jobs there. And we like, and this isn't specific to Nashville or Tennessee but we also like these favorable tax jurisdictions whether it's income tax or business tax or corporate tax. We think that trend is here to stay and people are gonna vote with their wallets and wanna live, especially if they think they can work remotely or not necessarily be tied to these historical major urban areas, they're gonna wanna live in these friendlier tax jurisdictions and we're making a bet on Nashville to be one of the beneficiaries of that. So I wanna go down the path a little bit to talk about hotels and I'm gonna circle back to Andrew and Craig on this. But my understanding is you would actually look at a hotel deal in this market as well. And as we all know, along with retail, hospitality is the other asset class that has been significantly impacted, although perhaps really just a short-term blip as opposed to retail, which may be exacerbating more of a seminal progression. What are your thoughts on hospitality, General? So interestingly enough, and it might be a little counterintuitive from the lender's seat, we actually like the story of a hospitality opportunity or investment where you're not worried about cash flow impairment for the next 12, 18, 24, 36 months. So we might even look a little bit more favorably upon a hospitality development opportunity that's delivering or set to deliver into 2023 or 2024, which is hopefully there to capture more normal operating environment for these hospitality investments, whereby if we're looking at something today that's an existing asset or an operating asset, there's a high likelihood or a higher likelihood that there's some sort of story to it or some sort of distress to it. But we're certainly making sure if we're looking at an existing asset today in the hospitality space that there's a lot of cash or a lot of equity set aside to make sure that ownership or austerity in some combination of the two is prepared to carry this for a long period of time. Andrew, you mentioned that you guys are contemplating a hotel development deal, which I do find quite interesting. What, do you think the dynamics are similar? I mean, is your recent move similar to what Kevin just described? Yeah, to a certain extent. So we do think of hospitality as heavily cyclical. And we probably the last hotel investment we made prior to the onset of COVID was in late 2016. And as the cycle lengthened, but certainly couldn't have predicted the pandemic or anything like it, but the downturn here over the last 12 months has been wildly worse than anything in prior cycles. But there is something to the idea of starting at the depths and delivering into what is hopefully the middle of a cycle rather than at the end of a cycle. I think when we look out on the hospitality landscape, what we've seen is tremendous demand to get back out and go on vacation and sort of the, whether it's health and wellness or resort, that end of the spectrum, we see really strong demand for buttress by all the liquidity that people have benefited from in high valuations. And at the other end of the spectrum, we see strong demand for large groups to get together and meet in person again. And Jake, as you know, that's an area of hospitality. We've spent a lot of time in and worked on a couple of deals together. And I think the part we worry the most about in some ways is more of the business transient driven, more urban type locations and where maybe we're flying for a couple of meetings in a city for an overnight trip. And suddenly now you can do those two meetings over Zoom rather than having to go figure out the cost of the travel, but just the loss of the day involved in that and the efficiency gains that come from being able to do some of it. Virtually, we think that's a longer term impact on that segment of demand. And so if we're gonna do something, it would probably be either on the leisure and resort side or the large group side. Yeah, I mean, my own observation on what you just said is that, you know, I used to travel a lot in what I do at related. Sometimes because it was to go to one of our projects we operate around the country as well as in the UK, but a lot of the time to go and meet with institutional investors. And I do think there's a huge benefit lifestyle wise and personally to the fact that Zoom or WebEx or Microsoft Teams has become a socially acceptable or a business acceptable way to meet with people no matter how important to meet them. And that's something that for whatever reason needed the pandemic to catalyze it. And I do think it does have an impact on what there'll be, presumably there'll be winners and losers in that hospitality segment. And I think, Craig, you alluded to some of those factors that will create the winners of tomorrow. I think you mentioned more drive to locations obviously focuses on health and wellness as part of the offering. Could you sort of describe like if you were starting from scratch, what is the hotel that the world needs or even the country needs coming out of this period? So hopefully we're figuring that out with what we're investing in. But I think, or at least part of it, and I do think on the higher end whether the world needs it or not, that's what people want. There's a tremendous desire to go someplace. There is this pent up demand that Andrew talked about. And I would worry about middle range business hotel. I think those are that, if you don't have to go and corporations even maybe saving money, but I think having a place you can go alone with your wife, with your family, maybe it's a second home as well, which has residential, but you can drive from the city and you can have a full suite of recreational amenities as well as real health and wellness which six senses which we work with is really pioneered. And you can, there's so much more coming out one thing for example, is longevity. I mean, there are gonna be longevity centers springing up which you can do and particularly again with the demographic that wants to be close to a city but wants to be able to get away and then again highlighted by COVID. I think that's the type of hotel in a pretty setting. I mean, we can think of areas like in New York when area we've talked about the Hudson Valley, the Berkshires, I think those sorts of areas are gonna and every city has them. But to me, it would be a real sort of rejuvenation retreat where again, you don't have it. It's not a spot where you're forced to not have wine. You don't have to, if you want to eat cake, you can eat cake but where there are a whole set of facilities and options for the family as well as probably some educational offerings. As Jeff Lau always describes the culinary offerings at the Equinox hotels, which is a brand that we started with partners at Equinox. It's definitely not two B's on a plate. Nobody actually, you want healthy, good food. You want the healthy lifestyle, the fitness, the activities that you wish you engaged in in your everyday life. And some people actually do manage that but it's aspirational and it's fun and it's enjoyable. It's not ascetic. I think the fun portions that and in some way the way I sort of look at it in part is what's the ideal place. If we had to, we had another pandemic in three, four years where could I go even as a hotel guest, feel safe and actually feel good being there with my family and learning and doing all these things. So some incorporating some of the safety is also part of it because I think in anything we're all doing that's crucial. I mean, this is gonna happen again in some fashion. And so in the real estate business, I mean, we're looking at any property we do about again, putting in the right things. But I do think there's a huge market and this thematic and experiential differentiates you. So whether it's on wellness, it can be another, it can be an amazing golf resort but something that gets people. Philip, I don't wanna spend too much time on hotels because I know that you have a lot of experience on the residential side and in the New York metro area. So we talked about condos a little bit. We didn't really talk at all about the rental side of the equation. So when I think about it, I have questions about how you sell all these condos in the New York region and some other places, but mostly in New York. And then how do you fill up all the rental units that people somewhat depopulated during the pandemic because they went somewhere else at least for a short period of time. And what about this whole single family for rent market which has really captured a lot of people's interest, just interested in your perspective on some or all of those things. Sure. So, I think for the first part, the oversupply of condos in New York is not really a pandemic issue that existed before the pandemic. That's a very simple situation of oversupply and lack of affordability. So I think in Manhattan, if condos were $1,400 a square foot they'd all sell out today. As ridiculous of a price as that is, they would all sell out. And I think the problem is that at 2,000 a foot or 2,500 a foot, it's a big difference in affordability. And I think a young investment banker can swing a few hundred grand in savings, but not a million in savings. And so it's a different price point. So I think that the market lost touch with who the real buyers were. And I think the entire market was going after the tip of the iceberg, the 0.001%. And that's obviously a bad strategy. And I think it just kept on going in land prices and everybody had a stretch on every deal. And so we've dug our own grave. So I think that we're fortunate in that we bought a really great site in the West Village. It's a big deal. And the West Village doesn't have any other developments and it's a very popular place to live. So that project has been performing well, but it's still a discount. So we're gonna get out of a condo deal with a rental rate of return. And we're happy that it's a rate of return, right? So that's sort of my feeling about the condo market today. I think you do the best that you can. And if you think you're gonna get out with a 30% IRR like you did four years ago, that's probably not in the cards. I think with respect to multifamily rentals, that's a little bit different. I do think that there are people who are moving from place to place. And I think that the real, for us, the real opportunity is looking at the mass migration of people and then seeing what isn't supplied where they're going. So I actually was in the hotel business. I used to work for a firm called Belmont, DeWarian Express, which was an amazing. I did development and hotel acquisitions for them. And I've been in the hotel business in other realms and I'm also from Western Pennsylvania, right? A place that has been overlooked by population migration for a hundred years. But Pittsburgh is now growing. People are trickling back into Cleveland. Some people are going to Buffalo. And if you go within a big radius of all those places, there is no hotel to go to. There's nothing nice. There's no place to go on a weekend. And there's plenty of people with money or who want to get away with their wife for the weekend and in all those places. So I think, and that speaks to Nashville, there are a lot of places in the country that have real demand. So, I was in Asheville last weekend. Tons of people are moving to Asheville. The problem with some of these markets is that they don't have scalability. So for you guys who are looking to place 60 billion, what are you gonna do in Asheville? If you build a 300-room hotel in Asheville, it'll take you three years to fill it. So the same thing with residential. So, the great, why we're all probably in New York is a lot of, and why a lot of investment happens here is the scale. You can put a lot of money into a single project and it has a shot at performing. And I think there are still some markets left that we'd like to look at where there's a migration of people now for sure. We suspect a good portion of them are gonna stay and not return here to other big cities, but we don't know how many. And we think that those markets are underserved because they just have not, they've had population out migration for so long. And capital sources and development sources like yourselves haven't really targeted them. So, I think there's a lot of amazing opportunities for residential in those places. And I think that there's a lot of great opportunities for hotels, the only question I have is how big and how deep those markets are because you just don't know what a 500,000-person city can absorb. I was also curious, I mean, you're affiliated with a big construction company and a question that I hear asked a fair amount is during a downturn, a lot of the time, construction prices drop, whether it's commodity prices or whether labor is more available, have you seen evidence of that? I think that's a pain. No, no, man, that's very well known. We're in an inflationary time right now for construction. So, all of the stimulus, I mean, this is a real, for construction, it's a terrible combination, right? You have lack of productivity. So people can't work because they're either sick or not permitted to go into work. And you have a huge financial stimulus and everybody wanting to renovate their homes or buy a new home or do something else. So that causes real dislocation and inflation in the construction market. So, I'm in the market on a few different deals right now, getting ready to develop pricing at development and prices are up on development just generally across the board. And there's a lot of development happening. There's a lot of people who are building smaller projects. There's a lot of people who are taking advantage of low interest rates. There are a lot of single family home buyers who are building new homes now. It's a very active construction market, not necessarily from big investors, but from small investors and from mom and pops who are looking to build a home for themselves. And that spirals through the market. And then the reality is, your construction costs are relatively larger than your land cost and any transaction. So if you look for distress, you might get a 25% discount on your land, which is 20 or 25% of your capital stack or your costs. And your construction, which is 50 or 75% is up 10 or 20%. It outweighs that in a significant way. So that's what we're seeing in that regard right now. I mean, Kevin, you know, Phillips says, and I agree with him, you know, there's a lot of activity out there. Are you surprised by the level of, you know, inquiries that you're getting for people who want to finance new deals, even given the pandemic? No, we're not surprised there is a lot of activity. I would actually go so far as to say that for you guys as the beneficiaries during this conference, it's a better time to be a borrower today if you own high quality multi-family or high quality industrial or high quality life sciences than it was prior to the pandemic. Index rates have fallen meaningfully and spreads haven't really gapped out to match that. And I think in this interest rate environment and in the markets that we've become a lot more active in, developers or investors are trying to keep up with that growth. So they're trying to build projects to meet the demand for the, you know, the 50,000 people that moved into Nashville over the past 12 or 18 months. And for the five years leading up to that, they weren't keeping pace and now they're trying to catch up. And I think there's still a lot of room for new development to come on in a lot of these cities. And there's a lot of them that makes sense and we're trying to be a part of them. So I'm curious if the panelists having heard each other talking, usually we'd be sitting on a stage together and we'd be interacting a little bit more nationally. Is anybody dying to ask somebody else a question based on something they heard along the way? I'll go. Kevin, if you had to do the same office construction loan in Nashville a year before COVID when you did it and today, how much tighter would pricing have been pre-COVID and today relative to when you did it? It's a great question. I would say pre-COVID it probably would have been, call it 100 basis points tighter. And today it's probably 200 basis points wide of where it would have been in 2019. And I'll say that in 2020 it got done somewhere in the middle but that was mostly a relationship reason. I have a question for Craig. So I'm really interested in the sustainability things that you've talked about. And I look at sort of nascent trends and they're like bankruptcy, right? They like take forever and then they happen all at once. And I look at sort of what the pandemic has done overnight. And I look at in a way at sustainability it's something that we've been talking about in the real estate business for 10 years or more, 15 years really actively. Like it's something everybody wanted to pursue and they thought it was gonna happen tomorrow. When do you think everybody's gonna wake up, take it seriously and do what they're doing in like the electric car industry which is like really making a commitment and actually changing the industry? That's a good question. As someone who's been trying to sell the industry various products for those 10 or 20 years. And then there are leaders. I think one of the things which will drive it is resilience. I mean, there are certain sectors where again if you're a real estate owner, I think having given that we are gonna have storms climate's gonna drive things. And I think that one or two more natural disasters I think will lead people to focus on whether it's fuel cells, energy storage separately, certain areas I think will come faster. It's interesting, we just are selling a food waste company which is the biggest collection food waste company mainly working with folks like Walmart and the like but we've seen some major hotel companies for no apparent reason that we can see all of a sudden get very interested in doing that. And the economics are not there but I think as people are reading ESG reports certain companies, if there's pressure from stockholders I think we'll look for easy wins. That's an easy win. I mean, you may not have an ROI but it's not costing you anything to just switch your collections. So I think it's gonna be a combination in certain sectors of really worrying about sort of pandemic mentality, what can go wrong and how can I effectively, as Kevin said if you're a lender, what do I want you to put in so you don't have a problem. That will drive certain sectors. And the second thing I do think is either shareholders, customers particularly in easier things. It's easy to stick if you're a resort to stick a Tesla charge, an EB charging station and we all know that's not hard but there are certain things where there really are no costs at the end of the day. Now really spending money, that's obviously a harder thing. So I think you're gonna start seeing some segmentation and one of the interesting things we see is continued push on the major corporate side obviously with the Googles of the world and the apples but even Walmart and companies like that have really been driving a sustainability agenda. How that felt and they're often sort of schizophrenic about it. I mean, you'll say, why are they doing this but not doing these 10 more obvious things. But so I think we're on the verge but I sort of been thinking that for five years, six years. Do you think that the middle of the market will pay a premium? Like in other words, you really need to rely on the middle of that bell curve population wise. Do you think that those people will the same way that the people who are buying electric cars are paying more money for it? Do you think those people will generally in their lives pay more for sustainability today or you know? No, I don't think so but if you can tie it to something that's good like health. So if I can put it in their system that's actually healthier and I know I'm safer to go to work or I know I have asthma and I'm not getting pollen. I think for the middle market, my assumption has been you need to pair it with some other way to deliver a benefit. Yeah. So does that mean that the costs of implementing these sustainability initiatives needs to come down? I think some of them are there are not so expensive and some of them with scale will come. You know, it's sort of just like some of them with scale are really not so far away. You know, it's one's as you're full upset when do people, when does the flood come? And it sort of is getting people to do it together. So I don't, there are solutions where, you know, part of the problem which you guys will all appreciate in the development side is often the people making decisions are facilities, people, particularly retrofets, but even a new development construction companies where, you know, the people fill up, I don't know like a dear company within the construction side, but they're not the most forward thinking. And so I think it maybe top down will start driving that. I mean, most sustainability officers, you know, have no real power in companies, but I think, you know, there could be, there are cost effective solutions in many things. And particularly when you get to resilience, I think, you know, backup and the like is just good business. Philip, it's a much longer discussion, but I'd love to have it with all of you afterwards. So Jake, I'm curious, Hudson Yards has been described as the largest private real estate investment in US history. And obviously it was intended to go on for a long period of time and will go across a cycle. How does the pandemic impact the longterm future of Hudson Yards as you see it? I think, one thing we already know is that there'll be less retail at Hudson Yards. Name and Marcus, which was at the top of our shops and restaurants at Hudson Yards rejected their lease in their bankruptcy. And, you know, there's a, you know, potentially a better long-term outcome from that event having happened because as has been reported in the press, we think that there's a very viable solution for that space which turns it into office space. Office, you know, intermediate to longterm being more in demand than department store retail, that's a good thing. When you compare rental rates and you think about New York City, gross rents with a loss factor versus net rents, you know, office versus retail. So there's a lot of, you know, if we are fortunate enough to land one or more tenants for that space in the near term, I think we end up with a better outcome for that space potentially in the long run than we had before. And this is another thing where the pandemic sort of catalyzed something that may have been sort of a long running question and just sort of brought it to, you know, brought it very quickly to front and center. It reminds me just on that point when you and I worked together in the financial crisis and borders went bankrupt and they were in a pretty big space on the second floor of Columbus Circle. And suddenly H&M came through and the series of other pieces fell into place and what could have been viewed as a negative outcome suddenly became a positive. And I think that speaks to the strength of location. In that case, we ended up with retailers that were more appealing to the shoppers than what had become a little bit of a dead space. Like who wants to go and buy a book or a CD at a physical store. Now, ironically at Columbus Circle, we also now have up and running a very, very successful Amazon physical store. So that's the, you know, that's the 21st century incarnation of what borders was. The story in the near term, to really watch it, but it's in yarns, is, you know, the offices that we've built as well as the office at Manhattan West, that Brookfield has the buildings that are very substantially pre-release that are under construction hours between 33rd and 34th and then the Tishman's buyer building between 34th and 35th. You know, the office story has been phenomenal at Hudson Yards. And largely big corporate users in a variety of industries, everything from fashion to tech have recognized the value of modern office space. And I think the pandemic makes it even more noticeable because you can actually have proper air ventilation. You can actually distance people on the elevators. And I think about an old office building where the problem was already with vertical transportation as you densified offices in New York. You know, you couldn't get people up and down the elevators at high traffic times. Now you don't want as many people in the elevators so it only exacerbates that problem. You know, I think that, you know, we, I'll give you a small example, but here at 30 Hudson Yards, when the pandemic hit, people back then were really concerned about touching things. I think people are less concerned about touch, but still now aware of it in a way they weren't before. So we worked with our elevator manufacturer and implemented an app where now when I walk into the building, I never touch a button. I walk into the building, I swipe on my phone, I wave my hand on the turnstile, which gives me access to the building. And then the elevators know I'm coming and know that we have a transfer for a sky lobby. An elevator takes care of all the rest. I never touch a button. Those types of things, those types of innovations come out of, in some instances, necessity and adversity. So anyway, the story of having modern office that can provide the types of amenities, provide the conditions that even in a non-pandemic period can make people feel happy and well and healthy in their offices. I think that's a very good story. And I think that's why it was already working and that's why I'll take it to continue to work. And Hudson Yard is not just the Eastern Rail Yards development that related started with. It's also this broader area that includes your multifamily development and a bunch of other development, the new generation of development in New York City. So I'm actually still pretty bullish, I must say. So one thing I was curious about is whether panelists have any words for the students. I would love to start with Phillip who himself is an MS Red graduate. So being a person who's from Western Pennsylvania and has the fortune of living in New York and but loves where they're from, I would say that I went into the program over 20 years ago, 25 years ago. And I was really interested in real estate development and sort of improving the built environment and I didn't know anything about it. And I came to New York to learn about how cities are built and how construction and design happens and what architects do. And I've stayed here for a lot but I've also now more recently spent some time investing in my home markets. And I think that for young people to learn how to do something here from the best people in the world and getting contacts with the best financial sources in the world but bringing it back home and investing in your home communities and trying to do something that's interesting in a secondary city is something that can really help a lot of people, both people who are in need and also just to create a more interesting built environment. And I think post COVID those opportunities are gonna exist more than they ever have at least in the last 20 years that I've been in the business. Everybody's been moving from smaller towns to bigger cities and there may actually be an opportunity to develop something and make some money in a smaller town. So I encourage people to learn where you learn but bring your expertise home. Jake, I'll jump in there if no one else. I would just say that the real estate industry is a big and vast place and there's a lot of different ways to make money in it or make an impact on the industry. So find your niche and find something you're passionate about may take some time or may take some iterations early on in your career but find it and chase it hard and ultimately you'll be successful and hopefully make a change to the industry. I'd echo that. I think probably 75% of the people we interview when you ask them why they wanna get involved in real estate and we're on the finance side and the investor side, they'll say I love the tangibility of it or something to that effect. And it's really easy when you're on the side of the business to lose your connection to that and to sit behind the desk and get buried in a model or documents or aspects of the business that take you away from actually experiencing the real estate. And so I strongly encourage people wherever they wind up in the industry to get out, actually touch property, go through a development process from whatever seat you're in and see how it happens because there are parts of it and certainly you'll learn things, there are parts of it that are magical and hopefully it'll help remind you why you wanted to get into the business in the first place. So I would just say give two pieces of advice. One is general advice, there will be cycles. We're talking about cycles now, there are gonna be great cycles, bad cycles and if you have vision and staying power, you'll be fine. Timing's always a good thing but expect that to happen. We may not have COVID like this but you'll experience some downturns, there'll be some tremendous upturns. I do think one of the wonderful things COVID has shown, this is the second bit of advice where I, as someone who comes later to real estate but loves the development side and the involvement, the tangibility, the fact COVID has shown how important where we live, how much time we spend indoors, quality of being with people. You have such an ability to influence people and projects like Hudson Yards obviously have touched so many people but it can be small scale, it's very upset. Community can be community development. Real estate is, nothing technology is gonna replace the need for us to have great spaces to work in and live in. And Craig, I agree with you on that word people. Real estate, there's a lot of different facets of real estate. We run internship programs at related in the summer and we have interns in construction, in development, in marketing, in sales, leasing, HR. What's great about those opportunities is the people at my company, the people on this panel, if you're looking for sort of the next step as you go into your next job, really ask yourself, are these people I'm gonna be, wanna be on a Zoom call with or sitting in the office with many, many hours a day? That makes a huge amount of difference within this vast, complicated industry vertical we're in. Just your own personal happiness will have to do with the people that you're going into that business with. So that's my little bit of advice.