The Signet Podcast – Mark Crawford Transcript

In this episode, Eduardo Signet speaks with Denver commercial real estate broker, landlord, and investor Stuart Zall, founder of The Zall Company.

The conversation explores how relationships, tenant selection, networking, mentorship, long-term ownership, and neighborhood-building shape success in commercial real estate. Stuart shares lessons from his career in retail leasing, property ownership, Denver development, international projects, and the practical realities of working with landlords, tenants, brokers, contractors, and emerging brands.

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Podcast transcript

SIGNET: Stuart, thank you for coming. I have so much to ask you. I want to introduce you as the broker and landlord in the Denver market, although you do brokerage and properties everywhere, including a deal in China. You have quite a lot of experience. Do you want to say a little bit about yourself or introduce yourself?

STUART ZALL:

I am Stuart Zall, founder of The Zall Company, which I founded in 2000.
I did not grow up expecting to go into real estate, and I did not come from a multigenerational real estate family.
I studied accounting at the University of Denver, got my CPA, and started at Arthur Andersen, but I lasted only about a year.
I moved into real estate almost by accident after helping Steve Gettleman with accounting on a strip center, then being asked to help lease it by calling people from the phone book.
I learned by u201cdialing for dollars,u201d got results, and eventually moved through Lakeside Mall, Taubman, and outlet-mall projects around the country.
Taubman taught me the art of leasing, merchandising, and building tenant relationships across multiple markets.
In 2000, when my firm was bought, I chose to start my own business instead of moving, and the business grew from hired-gun leasing work into a brokerage company.
Along the way, I started buying properties when opportunities came up, often through partnerships, because I believe successful brokers should have some investment exposure to commercial real estate.
I eventually bought the Larimer building where we are now, partly because I needed space for my own company and could lease the rest to another tenant.
Having a storefront and a sign on the street has changed the business because people now drive by, see the company, and call.

SIGNET: It is so interesting. I love this area. I have been here a few times and have been to the restaurants. I did not realize everything was right on this block, like Barcelona, Federales, and other places. It is a cool part of town. How did you know this was going to become that?

STUART ZALL:

Sometimes you get lucky.
A friend from New York, Stephanie Rubenstein, was representing a concept connected to the founder of Lululemon, and they wanted a gritty part of town for a millennial worker-focused concept.
At that time, Larimer Street was very rough; Denver Central Market was not open, and there was very little there besides Ratio Brewery.
My friend saw something in the area that reminded her of Brooklyn, and I trusted her perspective even though I did not fully see it myself at first.
I made it a quest to find a building in that area, and we got what I believe is one of the best blocks on Larimer Street in RiNo.
When I bought the building, I was nervous enough that I did not tell my wife exactly where it was at first.
The area still has city challenges, but the building has worked out extremely well.
My advice is not to overanalyze real estate; sometimes you have to find it, take the risk, and let time work for you.
Real estate is scary because you are putting a lot at risk, but time can become your best friend if you take the chance.

SIGNET: You hit on so many points I want to talk about. Mentorship is one. First, can you talk about your mentors and the values you learned in your training with Taubman? You have also been a mentor for me in Denver, and I have met many people you have mentored who became incredibly successful. What qualities do you look for in people that lead them to success?

STUART ZALL:

I think it starts with heart.
If you have passion for what you do, then it does not feel like work.
You need drive, passion, and the ability to dream.
I think younger people are missing face-to-face communication because so much is done through texting, Instagram, and efficient digital communication.
When I started, even sending someone a picture of a space took days, and that slower process created dialogue and relationship-building.
Today, information can be sent instantly, but the relationship process can be lost.
Networking begins with meeting people and building relationships.
I try to create platforms, such as breakfasts, where people can meet others who may help advance their careers.
If you want to make deals, you need to put yourself where decision-makers are, such as shopping-center conventions and industry events.
You should not only spend time with people you already know; you should try to meet as many people as possible and then follow through.
Many deals begin with a cup of coffee, a handshake, or simply bumping into someone.

SIGNET: I love the idea of networking outside your own category. Developers often network with developers, and brokers often network with brokers. I have looked at finance events and capital groups because you get exposure to different people and make different links. One thing I have heard you say is that you never know where a deal is going to come from, and it is about being there. Is that one of the ideas?

STUART ZALL:

I learned something from doing business in China: if you are in a room where everyone speaks English, you are less valuable, but if you are the one person who speaks a language no one else speaks, you become extremely valuable.
I apply that metaphor to real estate networking.
If I am in a room full of brokers, everyone already understands leasing, so I am less differentiated.
If I am in a room where no one understands what I do, then I may be able to provide something valuable.
I like working with contractors, architects, finance people, and others connected to real estate but not doing the exact same thing.
I see networking as collaboration, where different people can benefit from different parts of the same opportunity.
I try to pay it forward by connecting general contractors or other professionals with people who may help them, without keeping a strict scorecard.
Those relationships often come back in useful ways, even if not immediately.
Mentoring people is not just telling them what to do; it is encouraging them to go out, network, socialize, talk to people, and learn from events.
As an example, I paid to meet Danny Meyer at an event, got a signed book, introduced myself, and created a connection that later became useful.
You cannot build those kinds of connections if you only sit in the audience; sometimes you need to go to the front and introduce yourself.

SIGNET: You talked about win-win situations. One thing you have said before, and I have seen you do, is that you want your tenants, your clients, and the people you represent to win. You have said that after the lease is signed and the commission is done, that is when you start to work by helping promote them, because if they expand, they are going to call you. What do you do after the lease is signed, since they still have so much to do?

STUART ZALL:

You can go too far and become your clientu2019s outsourced administrative staff, so you should not go looking for trouble.
It is still important to check in and help when there are problems.
I try to guide clients toward good people, such as reliable liquor-license attorneys, contractors, or other professionals.
I prefer to give clients two or three strong referrals rather than just one, so they can do their own homework and choose.
My role is to point them toward people who are tried and true, not to make every decision for them.
Most of the help is needed between signing the lease and opening the store.
After opening, I cannot solve every operational problem, such as labor or marketing, but I can pick up the phone and be available.
Signing a lease can be a multimillion-dollar commitment, so I want the tenant to succeed.
I once helped a restaurant franchisee renegotiate terms and work through problems even though I technically represented the landlord.
A lot of salespeople disappear after they get paid, but we want continuity, repeat business, and clients who know we tried to help.
At the core, I see our work as solving problems.

SIGNET: I love the way your brain thinks. You are very creative. Taking a wider-angle point of view, why commercial versus residential? I love commercial, but I am curious why you chose that path.

STUART ZALL:

Triple-net leases are a major reason.
I had experience with residential early on, including buying condos during a period when banks wanted properties off their books.
At one point, I had about 50 condos with a partner.
Residential was more management-intensive, especially before todayu2019s technology made banking and administration easier.
I do not have the patience for residential.
Commercial is more interesting to me because I am fascinated by businesses, retail, and how those businesses operate.
I moved most of my residential holdings into commercial projects over time.
In commercial, if a store does not work out for an operator with many stores, it is usually not as emotionally catastrophic as something going wrong with someoneu2019s home.
Residential deals involve peopleu2019s shelter and can be more personal and stressful.

SIGNET: In commercial real estate, what trends are you looking out for? We have tariffs, the internet has been affecting retail for a while, and there are other forces in the market.

STUART ZALL:

People have probably been worrying about the future of retail and commerce since ancient times.
Humans will always need commerce in one form or another.
There will be AI, headwinds, and other changes, and the key is to keep pivoting.
If you sit back and do nothing, you are going to be dead.
COVID was a major test for restaurants, and the smart operators quickly moved into patio seating, takeout, and alcohol-to-go where allowed.
Apparel is changing because so much can be bought online, but people still shop when traveling or looking for experiences.
Food still has to be made somewhere, even if DoorDash or another service delivers it.
I think ghost kitchens have mostly been a bust because people still need to see, experience, and trust a restaurant.
Food, entertainment, and apparel will remain, but models may change, stores may get smaller, and department stores need to reinvent themselves.

SIGNET: I am loving these public markets you see everywhere. I drove up and down the coast, and places like San Luis Obispo and Santa Barbara have public markets. Here there is The Hangar and Edgewater. I love those developments because they have synergy together if they are done well. Colorado Mills may have been an example of that 15 or 20 years ago.

STUART ZALL:

Denver is often a poster child for jumping on trends harder than other cities.
We probably overdid the public market and food hall concept.
Some public markets and food halls are winners, but others do not work.
It is not enough to build a food hall and assume people will show up.
You still have to put real thought into the concept, location, tenant mix, and execution.
Denver Central Market and Edgewater are strong examples.
Some others have gone out of business, which shows the model is not automatically successful.
If the concept is done right, it can work very well.

SIGNET: Your company has come such a long way. I think it is incredible that you started as an accountant, which uses a certain type of brain, and then went into such a relationship-heavy business. What qualities did you bring from accounting into your current work?

STUART ZALL:

I can understand financial statements, accounts receivable, and the basic mechanics of a business.
That is valuable because many brokers do not really understand the business side.
I understand operating properties and mortgages.
At the same time, I outsource almost everything that is not one of my strengths.
I use an outsourced bookkeeper and outsourced graphic arts help.
I know I need to work within my strengths.
Running numbers and detailed accounting work are not where I perform best now, even though the background helps.

SIGNET: I have a personal question that I think applies well to the podcast. Hiring people and managing people is really a talent. There is a reason CEOs sometimes manage managers, and managers manage individuals. How do you develop the skills needed to manage people? If you do not do that right, your business suffers and you reach dead ends.

STUART ZALL:

Managing people is a real challenge.
I believe there may be some force or timing that helps you find what you need when you need it.
About a year ago, I hit a wall because sales were down and I was struggling to motivate the team.
Our leasing meetings were not productive, and people, including me, were distracted.
I realized I needed a coach.
I met Steve Benoit from Crafted Consultants through my son and later sat down with him for coffee.
Steve explained a structured process for working with people, and I decided to try it even though it was not cheap.
He has become a meaningful part of the team.
We now have mandatory Monday meetings, with no cell phones, where each agent reviews what they said they would do and whether they got it done.
We also have one-on-one status updates and KPIs.
One KPI is getting one positive Google review per month from each person, which helps the company cast a wider net.
We now track deals by quarter instead of just doing deals without tracking them.
The coaching and structure have been important to our growth.

SIGNET: I asked that because I am managing a construction project in Pebble Beach right now, and you manage subs and contractors. Many people I have interviewed say their success is due to the people they hire. A lot of it is finding the right people with drive, quality, and pride in workmanship. It is hard to find those people because everyone wants to present themselves that way, but not everyone is that person.

STUART ZALL:

A lot of hiring is trial and error.
We now have an onboarding sheet and an interview sheet that lists what we are looking for.
You can also overanalyze hiring.
Right now, we are at capacity and do not have room for more people unless we build up or expand.
I am willing to take a chance on a lot of people.
Many people in the industry probably got their start with me.
In the past, I may not have had the tools to mentor and coach people properly, so I probably lost some talented people.
If you love what you do, it is not work.
I work in some form seven days a week because I am always available and always thinking about how brokers can be more productive.
I do not only think about their productivity in terms of my own income; I want them to succeed.
People are giving me their time and part of their lives, especially when they are young.
Even if someone only stays with me for a year, two years, or three years, I want them to leave with skills that help them succeed elsewhere.
At Arthur Andersen, many good accountants eventually went to work for clients, and the firm saw that as creating a friend at that company.
I see former employees similarly: if they leave and succeed, the relationship may help both of us later.
I do not expect anyone to give me their entire life, but I want their time with us to be productive.

SIGNET: You said you are at capacity. Where do you want to go from here? What is really good now, and what do you want your legacy to be? That is a two-for-one question, but they are different intentions.

STUART ZALL:

I am having a lot of fun and enjoying what is happening.
We are working on projects with the Orlando Magic, which has been very cool.
I have partners outside my company, including Dan Nelson and Neil Berkowitz, who help expand our bandwidth.
I like the arena and sports district space and see it as an area for future growth.
Many arenas are moving back into central business districts, which creates opportunities around live music, sports, restaurants, retail, and event traffic.
Time is precious for people, so projects that combine sports, entertainment, food, and retail can create strong commercial environments.
We do a lot of leasing downtown, in RiNo, and in Cherry Creek, and I want us to continue being a leader in those markets.
Downtown Denver still has a lot of opportunity, despite lingering perceptions from COVID, crime, and 16th Street Mall disruption.
When you lease space and bring in a store or restaurant, you can change a neighborhood for better or worse.
A lease such as Mendocino Farms in Cherry Creek changes the everyday experience of a neighborhood by adding a useful commerce point.
My legacy is not about ego; it is about improving the city or the commercial playground I work in.
Early in my career, I was focused on getting paid, but over time I came to care more about the type of tenant and whether they improve the neighborhood.
A street full of banks may pay rent, but it does not create the same neighborhood energy as coffee shops, restaurants, and places to shop.
The goal is to help create neighborhoods where people feel commerce, culture, and activity.

SIGNET: The tenants really give a neighborhood its feel u2014 the restaurants, bars, and different spots.

STUART ZALL:

The right tenant mix creates a good environment.
When neighborhoods improve through thoughtful retail and restaurant leasing, everyone benefits.

SIGNET: I was listening to another interview you did, and you said 2010 was a hard year after the Great Recession. How did you survive that, and what advice would you give to other people in future recessions?

STUART ZALL:

Praying is real.
If you have your health, you should not let your stock account or money account consume you.
Do not listen to all the background noise.
I do not watch much news because it can become distracting and negative.
In our business, the recession showed up late because commissions often take six months to a year to come in.
2009 was still fine, but in 2010 nothing was coming in.
I tried to get exposure by writing articles and appearing in trade magazines.
A partner and I wrote an article about repositioning malls, and someone from China called asking whether we could do that work there.
Our default answer was yes, even when we had to figure out how to execute afterward.
We needed demographic and psychographic data in China, which was difficult to get, but a colleague connected us with someone who did data work in Asia and had gone to the University of Denver.
We partnered with him, created a merchandising plan, and the client then asked whether we could lease the project.
The project was in Xiu2019an, which was connected to the Terracotta Warriors and the Silk Road.
I used my U.S. relationships with brands to find the right international contacts and started leasing the project.
I worked between China and Denver, using a Wi-Fi phone line with a Denver number so clients did not know I was overseas.
The project was ultimately scrapped because housing became more lucrative for the developer, but we had been paid in advance.
By the time that project ended, the U.S. economy had improved.
That experience helped us survive and led to work in places such as Puerto Rico and Hawaii.

SIGNET: I do residential in Europe, but it is interesting because that is another market. Even here, RiNo and Cherry Creek feel like different markets because the tenants are different. You deal with a lot of high-end, popular, and trendy tenants.

STUART ZALL:

I would not call most of our work true luxury, like Gucci or Hermu00e8s, because Denver is not a very luxury-heavy market.
We work more with upper-moderate and emerging brands.
That includes brands like Lululemon, North Face, Birkenstock, and other better brands.
I also love working with immigrants because many of them are fearless.
Some people create businesses because they may not have the same access to conventional jobs, and they are willing to take chances.
Those chances sometimes turn into great businesses.
I have worked with clients from one store to very large store counts, and it is rewarding to watch a brand grow.
It is interesting and fun to see a person or brand evolve from one location into something much larger.

SIGNET: That is part of their story. I think you did that with H&M, where you had the first one in Colorado.

STUART ZALL:

We did the first H&M in Colorado.
H&M has withstood the stress of downtown.
We also brought Uniqlo to downtown Denver, although it unfortunately closed during COVID.
Forever 21 was another example.
No brand lasts forever, but if you can get 15 years or more out of a brand, that can still be meaningful.

SIGNET: Thinking about the 16th Street Mall, coming from Los Angeles, what is the secret? In LA, it is very hard to turn around cities, maybe because of bureaucracy or something else. Here, you have the Downtown Denver Partnership and developers working with political bodies. What is the secret to turning around a place like that?

STUART ZALL:

Comparing Los Angeles and Denver is difficult because Los Angeles County is massive and harder to move.
Denver is smaller and more nimble.
Denver has a lot of downtown history.
Union Station was critical to Denveru2019s growth and connects directly to the 16th Street Mall.
The redevelopment of Union Station was a beautiful project.
Historically, the railroad helped Denver grow because the rail route came through Denver instead of elsewhere.
Larimer Street and downtown Denver developed around rail traffic, travelers, and the commerce they needed.
Denver has historic assets, including Larimer Square and older buildings, that give it a character beyond steel, brick, and glass.
The city has serious struggles, including high minimum wages and permitting timelines, but there are good people who believe in downtown.
With the 16th Street Mall work completed or nearing completion, I expect to see more positive activity in the next couple of years.

SIGNET: It is a great area. I lived near Union Station and would jog through 16th Street. That area has completely changed, with Whole Foods, the train, and a safer environment.

STUART ZALL:

During COVID, Denver dropped its guard and got hit on multiple levels.
The trend is now improving.
Some older office buildings may be converted to residential if conversion is feasible.
There is still a need for housing, even if apartment rents are currently soft.
I expect the need for apartments to continue as the city grows.

SIGNET: Prices have come up a lot since then too.

STUART ZALL:

Prices have come up, and interest rates are another obstacle.
Every generation has something that gets in the way.
I often hear people say something is too expensive and that they will wait for prices to come down.
In the long run, saving a relatively small amount on price may matter less when amortized over decades.

SIGNET: I once heard that it is not timing the market, it is time in the market. It is the same principle.

STUART ZALL:

Jordan Perlmutter once told me that some real estate projects succeed because of timing.
Even if you do not time it perfectly, real estate is a long game.
It is like golf: people focus on individual shots, but real estate has waves.
There are periods when you can make a lot of money quickly, but overall you need a long-term view.
If you take the long view, you have a better chance of being successful.

SIGNET: It seems like that is also what you do with your investments. Originally, the name of this podcast was u201cThe Long-Term Real Estate Investor,u201d because thinking long term removes some of the pressure around things like IRR calculations. If you have a 100-year business plan, it changes the mentality. I feel that in your investing and leasing, it is always long term, and there are also a lot of transaction costs in trying to flip.

STUART ZALL:

In commercial real estate, long-term thinking is important.
Because I did not come from a real estate family, I had to start by planting seeds myself.
It would have been nice to walk into an existing forest, but I had to begin building it over time.

SIGNET: It is tricky too, because when you are starting out, how are you going to buy something without financing? A lot of times the long-term plan is to get rid of financing so you have more stability and the bumps in the road are not as dramatic. Let me ask you the wrap-up questions. What was the number-one deal that changed your career, taught you the most, or had the most impact on you?

STUART ZALL:

The most important turning point was not really a deal; it was going to work for the Taubman Company.
That job was transformational because it taught me how to lease not just to fill space, but to create neighborhoods.
When I was about 27, I met a friend at a restaurant called Fresh Choice, saw a huge line, and asked about the owner.
I had just taken a job involving two malls, and within about 30 days I made two deals with that restaurant operator.
That happened because I asked a question when the opportunity was right in front of me.
Sometimes you are on the one-yard line and only need to ask the question.
Over my career, I did several deals with that operator, so that became an important relationship and an important early lesson.

SIGNET: What are your three key daily habits that have made you successful? I am always curious what time people wake up, whether they meditate, read a certain newspaper, or spend family time.

STUART ZALL:

I do not read a newspaper.
I get up early, usually around five.
My most productive time is between about five and eight in the morning.
I try to filter out negative noise because there is always a lot of it.
I would tell people not to listen to all the noise that is designed to stop them.
I try to stay positive.
I meditate for about ten minutes almost every day.
I use paper and pencil to write things down, even with all the CRMs and technology available.
I try to be thankful.
I remind myself that there are many opportunities available and that people do not need to stay stuck.
I try to wake up with a smile and a mindset of taking on the world, even if some days are harder by the end.

SIGNET: Final question: what would you say to a young individual who wanted to start in the real estate business? They might not know whether they want to be a broker, investor, or what segment to focus on. How would they find their path?

STUART ZALL:

I would tell them not to be afraid.
If they need to live at their parentsu2019 house or drive Uber while getting started, they should do what they need to do.
They should absorb as much information as possible.
There is so much information available now that they do not even have to subscribe to everything to learn.
They should become an expert at something and become the go-to person in that area.
They should not try to do everything.
They should find one area and try to be the best at it.
They need passion for the business.
If they think of it only as a job, they are in the wrong business.
It is always a good time to get into real estate, and bad times can actually be the best times to start.

SIGNET: Stuart, thank you so much. We could do round two another time. Thank you for joining the podcast, and hopefully we will grab dinner soon.

STUART ZALL:

I hope so.

INTERVIEWER u2014 SPEAKER UNCERTAIN: Bonus question: what are your thoughts about the new Burnham Yard deal and what it is going to do for downtown?

STUART ZALL:

I do not know exactly how it will affect downtown, but I think it will be very positive for Burnham Yard.
Burnham Yard feels like one of the last major pieces of Denver that has not really been developed.
A key question is what happens to the area where the stadium is now if activity shifts.
I think the project will not hurt downtown because people will still come downtown, and the distance may not be dramatically different.
Large investments, such as a multibillion-dollar stadium, create a multiplier effect that benefits many people.
I do worry about displacement, especially for people who currently live nearby and may have cheaper rent.
Growth can be positive, but people still need places to live.
Denver has done some work around affordable housing, but development can still affect neighborhoods.
I think developers and stakeholders need to think carefully about who is affected.
Overall, I think the project is good, but I hope there is thoughtful attention to housing and displacement.

00:00 we make money in the real estate
00:02

00:02 business you know in a constrained
00:04

00:04 supply environment
00:06

00:06 so
00:07

00:07 uh when you know if you’re on the west
00:10

00:10 side of los angeles that’s a constrained
00:12

00:12 supply environment yes
00:14

00:14 and so the real key to making money in
00:17

00:17 the real estate business is the
00:18

00:18 constrained supply environment and this
00:20

00:20 is what’s going to happen in california
00:23

00:23 um
00:24

00:24 as as we
00:26

00:26 don’t have enough water to water all the
00:28

00:28 farm ground the
00:31

00:31 kind of the thought is is that depends
00:33

00:33 on who you talk to that we’re going to
00:34

00:34 lose between 750 000 acres and a million
00:38

00:38 acres of farm farm ground
00:41

00:42 [Music]
01:01

01:01 uh
01:05

01:05 [Music]
01:23

01:23 hey welcome back to the cygnet podcast
01:25

01:25 this one is a fun one i personally don’t
01:27

01:27 have that much experience with farmland
01:29

01:29 real estate but when mark crawford from
01:32

01:32 land income decided to come on my show i
01:34

01:34 was really excited to hear what he had
01:36

01:36 to say this is really insightful we talk
01:38

01:38 about farmland as an investment as well
01:40

01:40 as a host of other considerations
01:42

01:42 including water shortages and supply
01:44

01:44 chain issues please enjoy the show and
01:47

01:47 please hit the like button it really
01:48

01:48 goes a long way in helping the show mark
01:50

01:50 i really appreciate you taking the time
01:52

01:52 to meet with me and to introduce me to
01:54

01:54 something i’m really not familiar with
01:57

01:57 i do think it’s a big part of the future
01:59

01:59 in real estate investing
02:01

02:01 and given everything that’s going on in
02:03

02:03 the world i think this should be a
02:04

02:04 really fun conversation
02:07

02:07 did you get started in real estate in
02:09

02:09 general what’s your what’s your story
02:11

02:11 your background and
02:13

02:13 well first thanks for having me and
02:14

02:14 coming and schlepping all the way up to
02:16

02:16 the valley
02:17

02:17 uh all the way up to visalia so my
02:20

02:20 pleasure great great great to have you
02:22

02:22 here
02:22

02:22 well i got to
02:24

02:24 start i came out of school in the carter
02:26

02:26 years and there was no job i had no jobs
02:29

02:29 in agriculture i went to school for
02:30

02:30 agriculture
02:32

02:32 so my first job was in century city
02:35

02:35 i went to work back in the day they had
02:38

02:38 sba loan packages
02:40

02:40 and the sba loan packaging business was
02:43

02:43 basically a real estate back deal
02:47

02:47 so i got learned
02:49

02:49 learned my re start about learning my
02:51

02:51 real estate uh there and then if you can
02:53

02:53 remember long enough ago there was used
02:56

02:56 to be a company called the john douglas
02:58

02:58 company yeah okay
02:60

03:00 and i went to work with chris and jack
03:04

03:04 and john jack which is john douglas is
03:06

03:06 jack
03:07

03:07 and uh went to work with them when they
03:10

03:10 started that and that’s kind of how i
03:12

03:12 got into the real estate business was
03:14

03:14 that a specific niche like apartment
03:16

03:16 well we did yeah i did i i worked the
03:19

03:19 palms area right back in the day and uh
03:21

03:21 sold apartments well apartment buildings
03:24

03:24 and duplexes and all that kind of stuff
03:26

03:26 that was that was it so how did you go
03:28

03:28 from that to
03:30

03:30 making your own sort of buying land and
03:34

03:34 and farming how was the transit well i
03:36

03:36 mean there’s a there’s the story in
03:38

03:38 between of how we how we got there is
03:40

03:40 that
03:41

03:41 santa monica passed rent control
03:44

03:44 and i moved to houston okay uh texas no
03:48

03:48 zoning at all right it’s where i met my
03:50

03:50 lovely wife
03:51

03:51 wonderful
03:52

03:52 and uh so i um
03:55

03:55 i i started there and we’ve i you know
03:58

03:58 started just like every kind of you know
03:60

03:60 at the bottom i you know where you
04:02

04:02 renovate a house or two and then we
04:04

04:04 built a duplex or two and then we built
04:06

04:06 uh built a little bit of uh uh built a
04:09

04:09 little bit of uh uh
04:12

04:12 townhouses okay and then the big crash
04:14

04:14 came in houston
04:16

04:16 and then from there we went and we were
04:18

04:18 stayed in the entitlement business for a
04:20

04:20 long time and went across the country uh
04:22

04:22 and did entitle the entitlement business
04:25

04:25 uh and we tried to get in front of back
04:28

04:28 in the day where there used to be tax
04:30

04:30 credit apartments
04:31

04:31 uh we used to
04:33

04:33 try to get ahead of those guys and buy
04:35

04:35 the land and entitle it and then flip it
04:38

04:38 to trammel crow or lincoln properties or
04:40

04:40 someone like that so that was kind of
04:42

04:42 the genesis that got me you know really
04:44

04:44 into
04:45

04:45 into the real estate business
04:48

04:48 um
04:49

04:49 i did those kind of on my own with just
04:51

04:51 some high net worth individuals
04:54

04:54 uh and then um
04:57

04:57 then we ended up back in california
04:60

04:60 started the same thing kind of uh
05:02

05:02 doing uh single-family homes and then
05:06

05:06 um
05:07

05:07 in the right in the crash 2008 2007 got
05:11

05:11 into the hard money business oh okay
05:13

05:13 and that was kind of the thought of
05:15

05:15 their the hard money business is kind of
05:17

05:17 try to get investors uh that would be
05:19

05:19 interested in getting getting into the
05:21

05:21 uh you know investing in part and
05:23

05:23 apartments okay and it took from 2007
05:26

05:26 really to 2011
05:29

05:29 for
05:30

05:30 the
05:31

05:31 properties to
05:33

05:33 as you know to come down far enough you
05:35

05:35 know where the
05:37

05:37 the rents needed to burn off and uh
05:39

05:39 adjust the price so we started
05:41

05:41 um we bought our first property over on
05:44

05:44 carmona off los cienega by the target
05:47

05:47 okay
05:48

05:48 uh and to you know in 2011 and we went
05:51

05:51 from there and we assembled uh
05:53

05:53 400 uh apartment units in the baldwin
05:57

05:57 hills neighborhood okay i did those with
05:60

05:60 steve braham
06:01

06:01 of george smith partners i’m sure yeah
06:03

06:03 many people will know know steve steve
06:05

06:05 was a partner in those we bought 30 some
06:08

06:08 buildings 400 units wow okay 100 000 a
06:12

06:12 door wow oh god that’s
06:15

06:15 you can’t find that these days that’s no
06:18

06:18 yeah no california’s gotten a little
06:20

06:20 crazy with uh prices yes but um
06:23

06:23 okay well
06:25

06:25 so is you do you have a background in
06:27

06:27 farming or what’s well i went to i went
06:29

06:29 to uh i went to to school for for uh for
06:34

06:34 farming but i i through high school
06:37

06:37 um i was in 4-h and ffa which is future
06:40

06:40 farmers of america and i had a i started
06:43

06:43 to get you know had a chicken project
06:44

06:44 and then a
06:46

06:46 lamb project and then i had a b i had a
06:48

06:48 beef project and then i went to cal poly
06:50

06:50 san luis obispo and studied agricultural
06:53

06:53 business management wow okay what
06:56

06:56 brought you to that how it was
06:58

06:58 how did you hear about that what
07:00

07:00 there’s just well
07:02

07:02 they say in the ag business you either
07:04

07:04 you do you have you know it’s one of
07:05

07:05 those things you have it or you don’t
07:07

07:07 right i mean you just right
07:10

07:10 you just
07:11

07:11 you do or you don’t it’s just
07:14

07:14 you just
07:15

07:15 you’re either you know like farming and
07:17

07:17 or you don’t right it’s it’s
07:20

07:20 hard to i don’t know how
07:22

07:22 it’s where your heart is so it’s that’s
07:24

07:24 what makes it interesting i uh
07:27

07:27 that’s why i was wondering what your
07:28

07:28 background was but uh you know compared
07:31

07:31 to a traditional real estate deal
07:33

07:33 because you did apartments
07:34

07:34 what are the similar processes in
07:37

07:37 looking at farmland because i’ve never
07:39

07:39 actually looked at land to do what you
07:41

07:41 do
07:42

07:42 so i’m wondering there’s always
07:44

07:44 parallels you know whether it’s
07:45

07:45 industrial retail
07:47

07:47 similar ingredients what ingredients are
07:49

07:49 there in farmland that you look for well
07:52

07:52 if you looked at the at the offering
07:55

07:55 deal that we do
07:56

07:56 and if you put if you look at the book
07:58

07:58 that we make the syndication book just
08:00

08:00 you know that you would normally see for
08:02

08:02 an apartment building or whatever if you
08:04

08:04 put your hand over where it says
08:07

08:07 you know almond orchard development
08:10

08:10 it’s identical right the deal is really
08:12

08:12 identical we are buying a piece of
08:15

08:15 property in this case in our almond
08:17

08:17 development deals we’re going to develop
08:19

08:19 the property so we’re going to plant uh
08:22

08:22 plant the almond trees
08:24

08:24 but the benefits of uh do we you know we
08:28

08:28 own the pro you know we own the property
08:30

08:30 and it you know it can appreciate uh in
08:32

08:32 value we have the trees you know it
08:35

08:35 we could depreciate the trees oh really
08:37

08:37 wow okay and it cash flows
08:39

08:39 um in our almond development deals that
08:42

08:42 we do
08:43

08:43 very interestingly enough
08:45

08:45 um we’re able to deduct
08:49

08:49 the entire cost
08:50

08:50 of the development of the trees so all
08:53

08:53 the planting of the trees we’ll get to
08:55

08:55 uh
08:56

08:56 uh deduct those over so many years
08:59

08:59 one first year really right so our in
09:03

09:03 the deal we’re doing now was was called
09:05

09:05 woodbridge almonds the the
09:09

09:09 development cost is about eight or nine
09:11

09:11 thousand dollars an acre okay and so if
09:13

09:13 you invested with me i would send you a
09:16

09:16 1099 with a hundred percent of that
09:19

09:19 deduction okay we like we like to say
09:21

09:21 that the original
09:22

09:22 lobbyists for the for agriculture were
09:25

09:25 george washington and thomas jefferson
09:28

09:28 yeah yeah because it’s it’s it is filled
09:31

09:31 with
09:32

09:32 interesting tax interesting tax
09:33

09:33 deductions that’s called rule 179 of the
09:36

09:36 code
09:37

09:37 uh if you build a barn or lots of some
09:40

09:40 stuff like that you can
09:42

09:42 uh deduct that in the year so in this
09:44

09:44 particular case uh for a ten thousand
09:47

09:47 dollar investment you’re going to get a
09:49

09:49 10k with about 2500 of passive loss off
09:52

09:52 the first year
09:55

09:55 very nice wow yeah that is very very you
09:57

09:57 know very nice yeah how come almonds
10:01

10:01 like as opposed to other agriculture
10:03

10:03 well you have to back up a little bit
10:06

10:06 there’s
10:07

10:07 two
10:08

10:08 types of of
10:10

10:10 crops
10:11

10:11 there’s the row crops you know corn and
10:14

10:14 wheat and vegetables and those kind of
10:16

10:16 thing and then there’s permanent crops
10:18

10:18 that’s what we invest in
10:20

10:20 uh the permanent crops are like
10:23

10:23 almonds or walnuts or
10:25

10:25 grapes or
10:27

10:27 pistachios some something like that that
10:29

10:29 have a you know have a longer life
10:32

10:32 the two
10:33

10:33 differences is that the
10:35

10:35 uh the rope the row crops uh have a very
10:38

10:38 low cash return and they
10:41

10:41 sometimes have a higher uh appreciation
10:44

10:44 okay and the permanent crops have a
10:47

10:47 higher cash flow and maybe not as much
10:49

10:49 appreciation what do you mean by
10:52

10:52 appreciation like
10:53

10:53 just the value of the land going up oh
10:55

10:55 okay right now
10:57

10:57 particularly in the last couple of years
10:58

10:58 you know i farm ground you know has gone
11:01

11:01 up 30 or 40 percent okay um now we’ve
11:05

11:05 had really seen the same thing with
11:06

11:06 california agricultural land but
11:09

11:09 that’s kind of how it goes if you have
11:11

11:11 uh invest in
11:12

11:12 uh uh to say the gladstone reit
11:17

11:17 or farm uh
11:19

11:19 uh farmland partners um
11:22

11:22 both those guys do a lease deal and this
11:25

11:25 is the the difference kind of between
11:27

11:27 the two they do they do a lease they go
11:29

11:29 to a farm it’s like a triple net lease
11:32

11:32 so it would be like uh
11:33

11:33 uh realty income
11:35

11:35 you know or any of buying into a triple
11:37

11:37 net lease deal those are triple net
11:39

11:39 leases so they’re getting a five or six
11:41

11:41 percent return from the farmer
11:43

11:43 they’re putting they’re stepping on it
11:44

11:44 with some with some you know debt doing
11:47

11:47 some arbitrage
11:48

11:48 so you’re getting a low cash you know
11:50

11:50 low cash return but it’s a lease deal
11:52

11:52 our deal is not a lease deal our deal is
11:54

11:54 very much similar like uh operating an
11:57

11:57 apartment building right where we you
11:59

11:59 know own the apartment building we hire
12:01

12:01 a local farm manager or a local you know
12:04

12:04 local property manager the same sort of
12:06

12:06 thing and we own and operate uh the uh
12:10

12:10 the business that’s kind of one of the
12:11

12:11 questions that i put on here was
12:15

12:15 so in a way you’re buying you’re the
12:16

12:16 tenant also you’re doing the real estate
12:18

12:18 but you also do the operations of the
12:21

12:21 trees almost like the trees are your
12:23

12:23 your units but you’re involved in a lot
12:25

12:25 of the farming aspects of it that’s part
12:26

12:26 of well we have you know if we hire
12:30

12:30 just like you would if you were buying a
12:32

12:32 property in salt lake right you would
12:34

12:34 hire a local property manager right
12:37

12:37 it’s the same thing that we do with the
12:40

12:40 farming we
12:41

12:41 hire a local farm manager right
12:44

12:44 it’s
12:45

12:45 pretty much the same sort of same sort
12:47

12:47 of thing you know
12:49

12:49 the duties responsibilities kind of you
12:51

12:51 know the farm manager does the
12:53

12:53 day-to-day plowing and irrigating and
12:55

12:55 that kind of thing
12:57

12:57 and you and we help with the decisions
12:59

12:59 and the financing and you know that that
13:01

13:01 kind of thing so so you mentioned
13:03

13:03 something and i think this is super
13:05

13:05 interesting that you were talking about
13:06

13:06 how it’s not correlated to stocks and
13:09

13:09 other equities and uh
13:12

13:12 how does it work with the recession or
13:15

13:15 with anything like that yeah and we
13:16

13:16 should we should note today is may
13:19

13:19 19th 22 the stock market for the last
13:22

13:22 couple of days has been in the you know
13:24

13:24 as as has tanked yes this is uh
13:27

13:27 the agriculture is non-correlated to
13:30

13:30 either the stock
13:31

13:31 or or or real estate and you could look
13:34

13:34 at the sharp index and all that kind of
13:36

13:36 stuff and but it is just not is just not
13:38

13:38 correlated to it um you know people eat
13:42

13:42 yeah
13:42

13:42 so it’s a it’s just it’s just just just
13:45

13:45 a different uh it’s just a different
13:47

13:47 different deal
13:48

13:48 and i think if you go back to the last
13:50

13:50 recession very interestingly enough
13:53

13:53 you’ll see that farmland did a whole lot
13:55

13:55 better than even real estate and the
13:58

13:58 stocks during the during the recession
14:00

14:00 so farm does substantially better during
14:04

14:04 the recession
14:05

14:05 um than um
14:07

14:07 than stocks or bonds or real even real
14:10

14:10 estate which you would think and other
14:12

14:12 other things that you would think would
14:13

14:13 be an inflation hedge
14:15

14:15 farmland’s an excellent inflation hedge
14:18

14:18 interesting and what do you what
14:19

14:19 percentage of investment do you have in
14:22

14:22 agriculture of your own personal are you
14:24

14:24 100
14:25

14:25 agricultural now we have about uh
14:28

14:28 well we have a ranch here we’ve moved
14:30

14:30 we’ve moved from beverly hills in
14:31

14:31 october up here to visalia we have our
14:34

14:34 ranch now where we have a few cows and
14:37

14:37 some citrus yeah we have those little
14:39

14:39 mandarins those are all those cuties
14:41

14:41 yeah we have little cuties yeah yeah we
14:44

14:44 have the cuties
14:45

14:45 and uh so i think if you add it all up i
14:47

14:47 think and now we have about 40 percent
14:49

14:49 of our portfolio in agriculture about 40
14:53

14:53 in stocks and traditional stocks
14:55

14:55 involved
14:56

14:56 and then we have you know about 10 and
14:59

14:59 multi-family 20 left in multifamily
15:02

15:02 that’s a pretty good diversification
15:04

15:04 yeah i think
15:06

15:06 yeah i i think it’s good is there i
15:10

15:10 don’t know much about the water
15:11

15:11 shortages in california um how does that
15:14

15:14 affect your business and disability
15:17

15:17 or long-term prospects
15:19

15:19 yikes it’s a yikes this we’re in the
15:21

15:21 third year of a drought okay um and it’s
15:25

15:25 not good um
15:27

15:27 it’s
15:28

15:28 it’s both the biggest problem eduardo
15:31

15:31 and it’s also the biggest opportunity oh
15:33

15:33 really okay
15:35

15:35 so
15:37

15:37 the short story is is that if you invest
15:39

15:39 in california farmland yeah with very
15:41

15:41 good water right you’re going to do
15:43

15:43 really good okay you know it’s
15:46

15:46 it’s
15:48

15:48 i don’t know if you know if it’s you
15:49

15:49 know
15:50

15:50 buying an apartment but you know
15:51

15:51 building like with a great location
15:53

15:53 right you know right yeah of course it’s
15:56

15:56 like the resources yeah yeah it’s just
15:58

15:58 in when we make money we make money in
16:01

16:01 the real estate business you know in a
16:02

16:02 constrained supply environment
16:05

16:05 so
16:06

16:06 uh when you know if you’re on the west
16:09

16:09 side of los angeles that’s a constrained
16:12

16:12 supply environment yes and so the real
16:15

16:15 key to making money in the real estate
16:17

16:17 business is the constrained supply
16:18

16:18 environment and this is what’s going to
16:20

16:20 happen in california
16:23

16:23 as as we
16:25

16:25 don’t have enough water to water all the
16:28

16:28 farm ground the
16:30

16:30 kind of the thought is is that depends
16:32

16:32 on who you talk to that we’re going to
16:34

16:34 lose between 750 000 acres and a million
16:37

16:37 acres of farm farm ground because of the
16:40

16:40 loss of water because the loss of water
16:42

16:42 that’s going to have to be that’s going
16:43

16:43 to have to be followed so where’s the
16:45

16:45 opportunity what you buy you buy land
16:48

16:48 that’s going to have great water okay
16:50

16:50 wow okay do you have to be further north
16:53

16:53 because that’s
16:54

16:54 that’s that’s exactly right that’s
16:56

16:56 exactly right okay yes yes so people ask
16:59

16:59 me you know where do we you know you
17:01

17:01 know what’s our thesis of
17:04

17:04 or east this is north it’s closer to the
17:06

17:06 origins of the water so that makes
17:08

17:08 perfect sense okay
17:10

17:10 you’re just using a little common sense
17:11

17:11 there yeah so it’s our are we’re doing
17:14

17:14 our third almond orchard development in
17:16

17:16 the delta okay so we’re right there
17:19

17:19 we’re right there with the water with
17:21

17:21 pre-1914 water rights and oh okay what’s
17:24

17:24 that meat what is that well there’s you
17:26

17:26 know the
17:27

17:27 you know water law is you know they’re
17:30

17:30 saying you know whiskey’s for drinking
17:31

17:31 waters for fighting
17:33

17:33 and uh water law is a long thing but
17:36

17:36 you try to find uh not only where they
17:40

17:40 have good water but you have good water
17:42

17:42 rights right and
17:44

17:44 you know
17:45

17:45 the gold standard of water rights are
17:47

17:47 called pre-1914 rights okay then that’s
17:51

17:51 it’d be a you know i’m not a you need a
17:54

17:54 water attorney to go past it i’ve never
17:56

17:56 heard of that i mean i’ve heard of
17:57

17:57 mineral rights and i’ve heard of water
17:58

17:58 rights but that sounds that does sound
18:01

18:01 interesting i mean that’s your business
18:02

18:02 you you know yeah i think yeah i think
18:04

18:04 if you
18:05

18:05 if you you know in the long term i think
18:08

18:08 if you were going to invest with me
18:10

18:10 says you said well okay i’ll do
18:12

18:12 i’ll we’ll invest and we’re gonna invest
18:14

18:14 you know many times and i would tell you
18:17

18:17 probably
18:18

18:18 we might make more money off the water
18:21

18:21 than we make off the ground
18:24

18:24 sometime
18:25

18:25 in our you know in this cycle right well
18:29

18:29 and that is really a supply constraint
18:31

18:31 if it’s uh
18:32

18:32 there’s certain parcels that are
18:33

18:33 designated pre-1914
18:36

18:36 that’s
18:37

18:37 that’s going to be forever so the supply
18:39

18:39 and the demand is going up supply is
18:41

18:41 going to stay the same that’s a huge
18:43

18:43 economics 101 supply demand valuations
18:47

18:47 yes so we pay we paid i mean just to
18:49

18:49 give you some numbers though what
18:51

18:51 they’re paying for water
18:54

18:54 if you
18:55

18:55 looked at the newspaper today
18:58

18:58 water might be two thousand dollars an
19:01

19:01 acre foot okay we sold some water on a
19:04

19:04 ranch that we have
19:05

19:05 in this neighborhood last year for last
19:08

19:08 fall for thirteen hundred dollars and uh
19:11

19:11 an acre foot
19:12

19:12 our cost on woodbridge
19:15

19:15 is twenty six dollars an acre foot
19:19

19:19 so for twenty six dollars we’re buying
19:23

19:23 326 thousand gallons of water wow twenty
19:26

19:26 six dollars so that’s a that’s a
19:28

19:28 tremendous advantage
19:30

19:30 for being to the north to the north to
19:33

19:33 the south you along with that we haven’t
19:36

19:36 putting in a new orchard that we’re
19:38

19:38 putting in the state of the art
19:39

19:39 irrigation and all that kind of thing so
19:42

19:42 it really goes to re you know not only
19:44

19:44 do we have great water rights but we
19:46

19:46 have a
19:47

19:47 tremendous cost savings um
19:50

19:50 low-cost producer kind of thing yeah
19:52

19:52 being north to south low-cost do you
19:56

19:56 do you do drip irrigation or yes okay
19:58

19:58 because that i hear is like very
19:60

19:60 efficient use of water yes yes and
20:02

20:02 israelis
20:03

20:03 most people use
20:05

20:05 the
20:06

20:06 net whatever it is
20:09

20:09 uh yeah yeah yeah yeah he just actually
20:11

20:11 spoke the guy who created that in uh
20:14

20:14 colorado at uh a non-profit thing yeah
20:17

20:17 yeah no that’s that’s they they they
20:19

20:19 started that that that is a uh yeah i
20:22

20:22 mean most
20:24

20:24 i don’t know what we’re buying for this
20:25

20:25 one is uh
20:27

20:27 that’s we use all drip irrigation double
20:29

20:29 line drip irrigation okay interesting
20:32

20:32 that makes sense so just what’s the
20:34

20:34 process of buying like if you syndicate
20:37

20:37 a deal you bring a deal to the market i
20:39

20:39 know you have one that you’re
20:40

20:40 syndicating right now i don’t know if
20:42

20:42 it’s fully subscribed but
20:44

20:44 i think it was a 10-year hold period how
20:46

20:46 does it work over the the 10 years
20:50

20:50 well
20:51

20:51 the um
20:53

20:53 the property that we have now is to be
20:54

20:54 our third almond orchard development in
20:56

20:56 the delta
20:57

20:57 uh
20:58

20:58 we are starting in the next couple of
21:00

21:00 weeks we’ll start to prepare the
21:02

21:02 the the soil
21:04

21:04 uh and then one day this fall we’ll
21:07

21:07 plant it
21:08

21:08 uh we plant about uh
21:10

21:10 that we’ll put by
21:12

21:12 18 000 trees on 115 acres okay um
21:18

21:18 and just as a side note a almond an
21:20

21:20 almond tree is it has uh has a root
21:23

21:23 stock and then it has a variety on top
21:26

21:26 of it there’ll be two different two two
21:28

21:28 different varieties two or three
21:30

21:30 different varieties
21:31

21:31 uh so we’ll plant those uh plant those
21:33

21:33 in the fall
21:34

21:34 and uh it takes about to the third year
21:38

21:38 called the third leaf okay and it kind
21:40

21:40 of breaks even
21:42

21:42 okay yeah there’s kind of break even ish
21:45

21:45 yeah and then in the fourth year you
21:47

21:47 kind of go and then the fifth year where
21:48

21:48 you’re rolling you’re cash flowing
21:50

21:50 you’re really cash flow so
21:52

21:52 uh and the financing is very similar to
21:55

21:55 getting a an apartment deal you know
21:56

21:56 apartment loan you put your your money
21:58

21:58 up on day one and you build the
21:60

22:00 apartment building and then you go
22:01

22:01 through the lease up period
22:03

22:03 and then sometime during you know at the
22:05

22:05 end of the lease up period 36 months
22:07

22:07 typically you know your your loan kicks
22:10

22:10 in and you start to amortize so yes the
22:13

22:13 the loan is pre-loaded with uh interest
22:17

22:17 carry and the construction costs for
22:19

22:19 that three years almost again almost
22:21

22:21 identical to a commercial real estate
22:24

22:24 deal how dependable is uh you know
22:27

22:27 a future income you know if there’s we
22:29

22:29 were talking about macadamia nuts before
22:31

22:31 and how if you have a a dry year it
22:33

22:33 could kill the tree because they’re very
22:35

22:35 delicate
22:36

22:36 how for almond trees
22:38

22:38 can you be certain that they’re gonna
22:40

22:40 grow like is there ever
22:41

22:41 a bad year that could kill the trees
22:44

22:44 well there’s there’s two there i think
22:46

22:46 there’s there’s two parts of your in
22:47

22:47 your question there one was about water
22:49

22:49 and the other one was about diseases
22:51

22:51 okay yeah so
22:53

22:53 there’s
22:55

22:55 huge multinational companies that are
22:58

22:58 going to sell you stuff that’s going to
23:00

23:00 prevent you from
23:02

23:02 killing your getting your trees killed
23:04

23:04 by disease
23:05

23:05 you’re more likely to lose the trees
23:07

23:07 from some sort of genetic
23:10

23:10 thing in the breeding of that particular
23:12

23:12 variety okay that
23:15

23:15 that that’s then then having some pests
23:17

23:17 come in and wipe you out right it’s
23:19

23:19 probably not going to happen because you
23:20

23:20 have bayer and bsf and all those all
23:24

23:24 those people the other part of your
23:25

23:25 question was water well yeah water’s a
23:27

23:27 big yeah it’s a it’s a problem uh you
23:30

23:30 you know almond trees you know almond
23:32

23:32 trees need water they use about three
23:34

23:34 acre feet of water which is kind of in
23:36

23:36 the middle of the whole cycle of things
23:39

23:39 if you hay and
23:41

23:41 vegetables and that kind of thing you
23:43

23:43 use four or five or six acre feet and
23:46

23:46 some other things use less
23:48

23:48 so almonds are kind of in the middle
23:50

23:50 interesting one thing i’m curious about
23:53

23:53 just to give i guess the audience and
23:54

23:54 everybody a idea of returns on this kind
23:58

23:58 of thing
23:59

23:59 today apartment building returns or
24:01

24:01 commercial
24:02

24:02 returns can be anywhere between
24:05

24:05 i guess three and a half percent to
24:08

24:08 seven or eight percent uh yield on the
24:11

24:11 purchase of that kind of asset how does
24:14

24:14 almond
24:15

24:15 for farming in general in our almond
24:17

24:17 trees how does that compare
24:19

24:19 well if you look at the
24:21

24:21 uh same you know if you look at a
24:23

24:23 20-year track record you know
24:26

24:26 the crep index or any of those index
24:28

24:28 when you look at farmland farmland has
24:30

24:30 about 11
24:31

24:31 return whoa okay which is just as good
24:34

24:34 as stocks and bonds and you know
24:37

24:37 whatever yeah is it just is right there
24:40

24:40 the great thing about that is back to
24:41

24:41 the non-correlated is is that as those
24:44

24:44 the other thing you know you’d be able
24:46

24:46 to get something that has that good or
24:47

24:47 return is not correlated for your
24:50

24:50 portfolio
24:52

24:52 it’s a it’s really it’s really a good
24:54

24:54 it’s really a good good thing
24:57

24:57 um
24:59

24:59 the returns on uh the returns on our
25:02

25:02 deals today we do the same as as many
25:06

25:06 well we try to be very um
25:10

25:10 conservative as our you know with it
25:12

25:12 with the numbers as the we go we have
25:14

25:14 about a ten percent irr on them today
25:17

25:17 okay and uh we have
25:20

25:20 in the
25:22

25:22 low single digits
25:24

25:24 kind of kind of average return
25:27

25:27 uh six seven eight percent return you
25:30

25:30 know depending upon the almond price
25:32

25:32 right we particularly use a particularly
25:34

25:34 low almond low almond price
25:37

25:37 we think with the constrained supply
25:39

25:39 environment that we’re going into
25:42

25:42 with two-thirds of all the almonds grown
25:45

25:45 today
25:46

25:46 eduardo that are south where all this
25:49

25:49 water issue is
25:51

25:51 yes it’s well we think there could be a
25:54

25:54 dramatic difference in what we what the
25:57

25:57 almonds are worth
25:59

25:59 we think the our price that we use in in
26:02

26:02 our you know eighth ninth and tenth year
26:05

26:05 we think those prices are just really
26:08

26:08 are right around the corner and that
26:10

26:10 makes this
26:11

26:11 the these deals subs you know
26:13

26:13 substantially
26:15

26:15 uh substantially better but we have to
26:17

26:17 take the price that we are today we put
26:18

26:18 a nice low inflator on them and you know
26:21

26:21 you know run them you know you know run
26:22

26:22 them through but we really do have a
26:25

26:25 very you know constrained environment
26:27

26:27 right and you know this constrained
26:28

26:28 environment is i i have to mention you
26:30

26:30 know is is is really has to do with the
26:33

26:33 whole global situation right you know
26:37

26:37 in 2050 we’re supposed to have 10
26:39

26:39 billion people on the planet
26:41

26:41 and what we don’t understand is that
26:43

26:43 between
26:45

26:45 now and then
26:46

26:46 depending on
26:48

26:48 who you want to look at but we need like
26:51

26:51 50 or 60 percent more food production
26:54

26:54 but each
26:56

26:56 i don’t even quote the quote how much
26:58

26:58 land we’re losing every
26:59

26:59 day or hour or whatever because it’s
27:02

27:02 just it’s just phenomenal but we’re
27:05

27:05 losing land uh you know we we’re losing
27:08

27:08 farmland uh we’re losing the water you
27:10

27:10 know we don’t have the water to water it
27:13

27:13 so
27:14

27:14 the interesting statistic is is that the
27:16

27:16 amount of farmland per person right is
27:20

27:20 going down dramatically
27:22

27:22 and
27:23

27:23 the yields over time are not going to
27:26

27:26 make it you know are not the the
27:28

27:28 increased yield is not going to
27:31

27:31 not going to
27:33

27:33 compensate for that right so we’re
27:35

27:35 having this huge amount of people you
27:37

27:37 know
27:38

27:38 people that that need food
27:40

27:40 and then from
27:42

27:42 the developed world
27:44

27:44 we have all these people coming into the
27:46

27:46 middle class right well all these people
27:49

27:49 in the middle class this is
27:52

27:52 this is what’s really driving food
27:54

27:54 prices right yeah
27:56

27:56 so this era of low food prices that
27:60

27:60 we’ve that we’ve had for
28:01

28:01 wherever you know forever is is rapidly
28:04

28:04 coming to an end because there’s
28:06

28:06 millions and millions of people in china
28:09

28:09 and there’s millions and millions of
28:10

28:10 people in india and around the world
28:12

28:12 that are coming into the middle class
28:14

28:14 that have more disposable income they’re
28:16

28:16 going to bid up the bid up the bid up
28:19

28:19 the cost bit up the bid up the cost of
28:22

28:22 food right
28:23

28:23 so
28:24

28:24 just what’s happened in the last year or
28:26

28:26 two
28:27

28:27 and it’s just not having to do with
28:29

28:29 supply issues the cost of food is is is
28:33

28:33 is hat is going up and has been going up
28:36

28:36 all you need to do is talk to the person
28:38

28:38 in your family
28:40

28:40 that buys food and ask them do they
28:42

28:42 think food is you know is going to get
28:44

28:44 any cheaper yeah and
28:47

28:47 to i’ve never talked to anyone that
28:48

28:48 doesn’t say well oh my god no it’s
28:51

28:51 getting more expensive you know every
28:52

28:52 day and has you know for a long time
28:55

28:55 right you know as i asked my wife the
28:57

28:57 other day you know
28:58

28:58 the old trader joe’s bag
28:60

29:00 you know yeah
29:02

29:02 our back in the day the trader joe’s bag
29:04

29:04 was you know 10 or 15 dollars then it
29:06

29:06 was 25 and i asked her she’d get a
29:09

29:09 trader joe’s bag for 50 dollars and she
29:11

29:11 looked like you know like well you’re
29:13

29:13 just stupid
29:15

29:15 you know you just don’t know what you’re
29:17

29:17 talking about you know well it’s just
29:18

29:18 there’s nothing in the bag yeah
29:20

29:20 so i think the context really has to be
29:23

29:23 is is that this
29:25

29:25 exactly what this happening in
29:27

29:27 california the constrained supply losing
29:30

29:30 for you know losing far you know losing
29:32

29:32 farmland you know losing water is
29:34

29:34 exactly what’s happening across the
29:36

29:36 globe and we have more people with more
29:38

29:38 money bidding up the price of food
29:41

29:41 so that’s the the that’s the environment
29:44

29:44 that that that we’re finding farmland
29:46

29:46 and that’s why you know we have like the
29:49

29:49 largest farmland owner the just strictly
29:51

29:51 farmland is bill gates he owns 245
29:55

29:55 000 acres of farmland jeff bezos who’s
29:59

29:59 just
29:60

29:60 you know
30:01

30:01 really ramping up his money his money
30:03

30:03 has
30:04

30:04 420 000 acres
30:07

30:07 of
30:08

30:08 of of land yeah um
30:11

30:11 this is you know this is what’s this is
30:12

30:12 what’s happening you know bill gates
30:14

30:14 looks all around the world and and
30:16

30:16 understands that the the farmland is and
30:20

30:20 food is going to be an important thing
30:21

30:21 this is what
30:22

30:22 this is this is going to be an important
30:24

30:24 issue as we go forward okay that’s very
30:27

30:27 interesting i mean that’s kind of one of
30:28

30:28 the reasons i thought it would be really
30:30

30:30 interesting to chat with you just
30:32

30:32 because
30:33

30:33 you know i listen to other podcasts i
30:35

30:35 drive a lot and
30:37

30:37 when i’m in the car that’s what i do and
30:38

30:38 i want to learn about what other people
30:40

30:40 are doing you know real estate in a way
30:42

30:42 i feel like has gotten very
30:43

30:43 oversaturated with investors and you
30:46

30:46 really have to be creative in your
30:48

30:48 approach to investing and finding where
30:50

30:50 to
30:51

30:51 where to do deals where to put your
30:52

30:52 money and it’s important to diversify
30:55

30:55 and you have to have an edge and so this
30:57

30:57 is something that i started seeing and
30:59

30:59 it’s interesting that there are a lot of
31:01

31:01 trends going in its favor
31:03

31:03 um
31:04

31:04 so yeah i think it’s interesting do you
31:06

31:06 have a uh
31:08

31:08 do you have an investor profile of
31:10

31:10 somebody that you like to work with that
31:12

31:12 you bring as an investor
31:14

31:14 is there somebody who shouldn’t be
31:16

31:16 investing in
31:17

31:17 farmland well i
31:20

31:20 i think the investor i don’t know who
31:22

31:22 shouldn’t be investing in farmland i
31:24

31:24 think you know everybody needs probably
31:27

31:27 a little you know it’s good to have a
31:28

31:28 little but i think the people who are
31:30

31:30 interested in it as we were talking
31:32

31:32 before
31:33

31:33 is this whole group of people who are
31:35

31:35 interested in food who unders you know
31:37

31:37 understand food
31:39

31:39 i don’t know if there’s a a profile
31:42

31:42 maybe i think the people who invest with
31:44

31:44 me are the ones that are are the ones
31:46

31:46 that shop at the grocery store yeah i
31:48

31:48 have an investor who gives me every time
31:50

31:50 i call him up he tells me what he is a
31:53

31:53 one of those guys who can photographic
31:55

31:55 mind or whatever he tells you what the
31:57

31:57 price of a bag of almonds is at costco
32:01

32:01 yeah
32:02

32:02 so i think a lot of people understand
32:04

32:04 you know that you know understand the
32:06

32:06 the price of food but i think if you
32:08

32:08 have you know especially today i mean
32:11

32:11 today stock market and you know today
32:13

32:13 and the high asset prices today
32:16

32:16 i think
32:18

32:18 my my i think
32:20

32:20 uh
32:21

32:21 having something in your portfolio that
32:23

32:23 is not correlated to the real estate or
32:27

32:27 not correlated the stocks and bonds
32:29

32:29 um
32:31

32:31 might you know might might be a good you
32:33

32:33 know might be a good thing no i think
32:34

32:34 it’s interesting what you’re talking
32:36

32:36 about also with food prices
32:38

32:38 is the whole supply chain problems we’re
32:40

32:40 having does that affect your business
32:41

32:41 because oh yeah our elements are being
32:44

32:44 the almond business right now is being
32:45

32:45 crushed by the supply chain issue
32:49

32:49 um
32:51

32:51 it’s they call it uh uh they call
32:53

32:53 containergeddon or whatever they’re
32:55

32:55 calling it yeah with the containers yeah
32:57

32:57 so container to
32:60

32:60 india or china was 3 500 now it’s 15 000
33:04

33:04 if you could get a container yeah so
33:06

33:06 we’re having a heck of a time selling
33:08

33:08 almonds getting you know we can sell the
33:10

33:10 almonds we just can’t get them to
33:13

33:13 uh china or okay or india or we can’t we
33:16

33:16 can’t export them so that’s having a
33:18

33:18 we’re having a big problem with the
33:19

33:19 almond diamond business interesting yeah
33:22

33:22 okay do you
33:23

33:23 ever look at land to warehouse for
33:26

33:26 future
33:27

33:27 development for other purposes well
33:30

33:30 20 years in the in the in the entire you
33:33

33:33 know 20 years in the entitlement in
33:35

33:35 business you know it’s and i’ve been
33:37

33:37 titled
33:39

33:39 many a 250 or 300 unit subdivision and
33:43

33:43 entitled numerous apartment deals
33:47

33:47 clearly know how to do it but that’s
33:49

33:49 just not that’s just not our not our
33:51

33:51 business uh today if it
33:55

33:55 if it ever
33:56

33:56 gets you know if we ever see one that
33:58

33:58 will work
33:59

33:59 um
34:00

34:00 it will work now having said that the
34:03

34:03 woodbridge deal that we’re just
34:04

34:04 finishing up the raison has 300 3 000
34:08

34:08 linear feet of frontage on i-5 just
34:12

34:12 north of stockton right off the exit
34:15

34:15 i don’t have any children but if i did i
34:18

34:18 would say that my children would sell it
34:20

34:20 to a housing development right right
34:22

34:22 so that deal will that deal will not i
34:25

34:25 don’t know that we’ll sell it to a
34:26

34:26 housing developer but we’ll sell it to
34:28

34:28 someone who thinks they can sell it to a
34:29

34:29 housing developer right that’s what
34:31

34:31 that’s what that deal that deal will go
34:34

34:34 i would imagine someday someplace we
34:36

34:36 will
34:37

34:37 we’ll find one that works but i really
34:39

34:39 have to we’re really concerned about you
34:41

34:41 know the farming economics right of
34:43

34:43 course you know if if the premium was
34:48

34:48 just a touch
34:49

34:49 we might do it right but
34:51

34:51 generally the premium for
34:53

34:53 pre-development land and today is now
34:55

34:55 now if we go into recession
34:57

34:57 and
34:58

34:58 you know things are go maybe we’ll maybe
35:01

35:01 we’ll find that we can we can we can
35:03

35:03 certainly do that does your cash flow
35:05

35:05 depend on you know on your deals it
35:08

35:08 depends on the price of almonds correct
35:10

35:10 yeah okay does that is that very
35:12

35:12 volatile
35:15

35:15 uh yes and no i mean it has been because
35:19

35:19 with the with the container issue you
35:21

35:21 know you know the container issues
35:23

35:23 uh it has been but it’s it’s
35:27

35:27 almond consumption
35:29

35:29 it’s going up
35:31

35:31 six to eight percent a year
35:34

35:34 oh wow okay
35:35

35:35 so we know
35:37

35:37 from our
35:38

35:38 late nights our xl
35:41

35:41 with the apartment building or whatever
35:43

35:43 if we put into the top of that deal that
35:46

35:46 if the rents would go what five or six
35:48

35:48 or seven
35:49

35:49 five or six percent per year yeah
35:52

35:52 that deals golden oh yeah whatever we
35:54

35:54 paid for it it’s just like it’s going to
35:56

35:56 work like a champ you put a little put
35:58

35:58 five or six on the top line yeah you put
36:01

36:01 some leverage on that deal
36:03

36:03 that deal’s going to work that’s kind of
36:05

36:05 where we’re at with with almonds and
36:08

36:08 almonds have really flipped over now
36:10

36:10 from being not a snack food
36:13

36:13 to being a ingredient oh yeah this is
36:16

36:16 very different
36:17

36:17 you know we um
36:19

36:19 one of my favorite things is is you know
36:21

36:21 is almond ice cream oh i just love um
36:24

36:24 you know almond ice cream and anyway so
36:27

36:27 uh and then this whole plant-based
36:31

36:31 stuff
36:32

36:32 we have a processor a tree house
36:36

36:36 the
36:36

36:36 that processor
36:39

36:39 doesn’t sell
36:41

36:41 sells less
36:43

36:43 brown skin which they call an raw almond
36:46

36:46 brown skin when they sell them
36:49

36:49 they say they sell most of it as a value
36:52

36:52 add stuff so it goes out so maybe half
36:55

36:55 out goes out the door is brown skins
36:58

36:58 the other half goes out the door as
37:01

37:01 something else
37:02

37:02 in some other product right the sir as a
37:05

37:05 syrup is
37:07

37:07 you know whatever and of course this
37:09

37:09 whole plant-based thing is is is is is
37:12

37:12 very good another just a fun fact about
37:15

37:15 almonds is is there people are generally
37:18

37:18 not allergic to almonds yeah
37:21

37:21 it’s just kind of
37:22

37:22 one of those things
37:24

37:24 so it’s really a great thing to put in
37:28

37:28 to a product if you’re looking for um
37:31

37:31 you know like you’re doing a that’s a
37:33

37:33 bad example but an aspirin so it’s got
37:35

37:35 how much aspirin in it and then it’s got
37:37

37:37 whatever the filler is to make it so you
37:39

37:39 can have
37:40

37:40 a lot of they’re finding a lot of uses
37:43

37:43 for almonds as that filler because
37:45

37:45 people are not allergic to it just one
37:48

37:48 of the many things and we have the
37:50

37:50 california almond board
37:52

37:52 it’s a fabulous
37:54

37:54 fabulous advocate for the sale of
37:56

37:56 almonds okay yeah i i mean personally i
37:59

37:59 love almonds and i think they’re
38:01

38:01 they are super resourceful for so many
38:04

38:04 different
38:05

38:05 and i do i do have to mention though if
38:07

38:07 you do invest with us
38:09

38:09 every christmas
38:10

38:10 you’ll get a huge almond box
38:13

38:13 of the best almonds that you’ve ever
38:15

38:15 eaten in your entire life and then you
38:18

38:18 do have
38:19

38:19 as your gift for coming up with us we we
38:22

38:22 have we have some chocolate covered
38:24

38:24 almonds for you that are pretty special
38:26

38:26 i’m super excited about that yeah so
38:28

38:28 yeah thank you well uh to wrap it up i
38:32

38:32 think
38:33

38:33 what are your daily habits for
38:36

38:36 you know that keep you
38:38

38:38 succeeding and keep you focused in your
38:40

38:40 life
38:42

38:42 well um i uh i meditate
38:46

38:46 it’s hard
38:47

38:47 but i see it’s hard sometimes uh but i
38:50

38:50 meditate
38:51

38:51 uh i take a uh i take a walk
38:54

38:54 uh every i take a walk every day at
38:57

38:57 lunch i call it i call it my metal
38:58

38:58 mental health walk um and i try to do at
39:02

39:02 least two miles a day wow that’s a nice
39:05

39:05 walk it’s a nice walk yeah and then
39:07

39:07 since we live in the country i feed my
39:09

39:09 cows
39:10

39:10 in the evening that’s gotta be cool it’s
39:12

39:12 so interesting
39:14

39:14 i want a ranch one day i think it would
39:15

39:15 be really great it’s fun
39:18

39:18 yeah do you have any advice for you know
39:20

39:20 upcoming uh
39:22

39:22 investors that want people that want to
39:23

39:23 get into real estate or investing in
39:27

39:27 in general what advice would you give
39:28

39:28 them
39:29

39:29 well i think
39:31

39:31 you can’t start at the top you have to
39:33

39:33 start at the you have to start at the
39:35

39:35 bot you know you have to start with the
39:36

39:36 house
39:39

39:39 you know so if you want to be a real
39:40

39:40 estate investor
39:41

39:41 you have to go out and you know you have
39:43

39:43 to buy a house and
39:45

39:45 you have to get it renovated and
39:47

39:47 sell it and
39:48

39:48 you know and work your work you know you
39:50

39:50 have to you have to work your work your
39:52

39:52 way and work your way up
39:54

39:54 so i don’t think there’s any
39:56

39:56 there’s any shortcuts yeah and i think
39:59

39:59 you uh have to have some comments you
40:01

40:01 know just
40:03

40:03 you know hard work
40:05

40:05 common sense right it was just just just
40:09

40:09 a long way okay well mark i really
40:12

40:12 appreciate coming up here giving us some
40:14

40:14 time letting us beat your office
40:16

40:16 and uh
40:17

40:17 yeah we’ll be in touch all right well
40:19

40:19 thank you for coming by appreciate it
40:20

40:20 talk to you later thanks
40:22

40:22 that’s great
40:24

40:24 [Music]

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