Navigating Uncertainty and Allocating Strategically in Volatile Markets: The Importance of Private Credit in Portfolio Optimization
This timely ATLalts podcast episode highlights the multifaceted landscape of private credit and alternative investment solutions, with a particular emphasis on the strategic considerations necessary for optimizing portfolio allocations in an increasingly volatile market environment. Our guest, Brook Scardina, Managing Partner - Capital Markets & Investments at Oak Real Estate Partners, brings a wealth of experience from his extensive tenure in institutional investing, where he adeptly navigated the complexities of asset management for noteable foundations and endowments such as UNC Management Company, UPS Pension Plan, and Georgia Tech Foundation.
In a market characterized by recent stock market volatility, daily headlines of tariffs, uncertain fed policy, and fluctuating economic indicators, Scardina argues for the critical importance of incorporating alternative investments and private credit into investment portfolios as a means of enhancing diversification, mitigating risk, and earning attractive risk-adjusted yields, particularly in light of the diminishing returns expected from traditional equity markets. Furthermore, he articulates the structural advantages inherent in certain areas of the private credit space, such as reduced competition and the ability to capitalize on niche lending opportunities in short-duration real estate bridge lending, that larger institutions and banks overlook or can't pursue, thus providing a compelling rationale for investors to re-evaluate their asset allocation strategies. This discussion not only seeks to educate and inform but also to engage listeners in a deeper understanding of how nuanced approaches to private credit can serve as a cornerstone for achieving robust financial outcomes in a fluctuating and rapidly evolving economic landscape.
The conversation delves into the intricate dynamics of private credit as a pivotal component of alternative investment strategies, and how investors can benefit from the different areas of this rapidly growing market. He emphasizes the necessity for investors to reassess their portfolios, particularly in light of the potential for a more protracted low expected return environment from equities and fixed income, advocating for an incremental allocation to private credit as a means of enhancing risk-adjusted returns.
Scardina’s extensive background in managing large-scale investment portfolios for prestigious institutions at endowments, foundations, and corporate pension plans, equips him with the insights necessary to help educate listeners on the growing field and inherent complexities of private credit. He explores the various iterations within the private credit sector, such as subordinated debt and mezzanine financing, highlighting their distinct risk-return profiles. The episode elaborates on OREP's strategic approach to risk mitigation, underscoring the importance of customized financing solutions that align with the specific objectives of institutional investors.
Moreover, Scardina’s case studies during the episode serve as practical illustrations of how OREP effectively addresses the financing needs of borrowers within the real estate private credit space where OREP competes, particularly in sectors where traditional lenders are typically hesitant to engage. This comprehensive examination of the real estate private credit landscape not only highlights the unique opportunities available to smaller, specialized lenders with institutional investor-grade capabilities but also reinforces the critical role these solutions can play in pursuing overall portfolio efficiency.
Takeaways:
- The fundamental role of private credit as an optimal alternative investment, particularly in mitigating portfolio risk and enhancing diversification amidst prevailing market volatility.
- The discussion highlighted Oak Real Estate Partners' strategic approach to structuring highly customized debt solutions in real estate bridge lending, which are designed to align with the investment objectives of institutional and private wealth clients while maintaining a focus on credit risk mitigation.
- A salient point made was the increasing interest in private credit allocations to smaller, specialized, and niche sponsors among institutional investors, driven by the current restrictive lending environment at banking organizations, the larger firms pursuing similar strategies, and the scarcity of capital available for smaller lending opportunities due to the size of publicly traded alternative asset managers.
- Scardina emphasized the necessity of employing a rigorous underwriting process at OREP that mirrors institutional and securitization standards, ensuring the preservation of capital while generating competitive returns for investors.
- The episode underscored the significance of effective communication and education in bridging the gap between institutional and high-net-worth investors regarding alternative investment strategies.
- Scardina's insights on the evolving landscape of capital markets reinforced the importance of niche private credit managers in capturing unique opportunities that larger institutions may overlook or are unable to pursue due to structural disadvantages.
Companies mentioned in this episode:
- Oak Real Estate Partners
- Georgia Tech Foundation
- UNC Management Company
- UPS
Transcript
Welcome everybody, to another edition of atl.
Speaker A:And I'm excited today to welcome a local Atlantan here in Georgia, Brooks Gardena, who leads the consulting and implementation of an external strategy focused on solving and delivering alternative investment solutions at Oak Real Estate Partners.
Speaker A:So welcome to the ATL Alts and Asset Backed podcast.
Speaker A:Brooke.
Speaker B:Thank you, Andres.
Speaker B:I'm happy to be here and share the time together.
Speaker A:Yeah, I want to read a little bit about your, your background, you know, you, you support the consulting and implementation of the, of the real estate strategy at Oak Real Estate Partners with a real deep institutional background.
Speaker A:So I think our guests are in for a real treat as we talk about private credit, private real estate, asset backed debt.
Speaker A:Today you focus on risk return objectives of foundations, endowments, family offices, corporate and public plans, and also sovereign wealth funds.
Speaker A:So clearly a lot of institutional clients.
Speaker A:And prior to joining your firm, Oak Real Estate Partners, you served and this is what I was excited to hear about you talk about today was you served as the managing director.
Speaker A:Managing director, pardon?
Speaker A:For leading and directing the financial and investment complexities for, for organizations such as the Georgia Tech foundation, which is effectively the endowment at Georgia Tech here in Atlanta, UNC Management Company, which is the endowment for the University of North Carolina system and the UPS retirement pension plan.
Speaker A:So you clearly have a deep institutional background and you've been involved at those organizations in underwriting and deploying billions of dollars of capital.
Speaker A:So with that, I'm super glad to have you.
Speaker A:I know we've had a couple of conversations, had an opportunity to get together in person.
Speaker A:And so I appreciate your time today as we dive into private credit and real estate.
Speaker A:But before we do that and talk about what you guys are doing at Oak Real Estate Partners, which I think our guests and advisors listening to the show will find really fascinating and interesting, tell us a little bit about you and your background and kind of what brought you to where you're at today in, in your career.
Speaker B:Yeah, happy, happy to share, Andres.
Speaker B:And so as you kind of highlighted, I spent principally, you know, most of my professional career at ups, with the latter half managing the pension retirement plan.
Speaker B:And I think what was unique about that is when I started, we had a very small group, so, you know, kind of afforded you the unique opportunity to be involved in all facets of portfolio management, from structuring to underwriting capital deployment to, you know, really strategic and tactical asset allocation modeling.
Speaker B:You know, spent several years there, obviously, then rotated over to the University of North Carolina Management Company, which was a privately held company that was commissioned to manage The Endowment dollars for the University of North Carolina and most of the North Carolina system affiliated schools.
Speaker B:So I had a team, you know, and worked alongside, you know, a lot of my respective partners and really working to help optimize the performance on run it as a best in class Endowment had an opportunity to come back to Atlanta to help the Georgia Tech foundation kind of further institutionalize and optimize their investment program.
Speaker B:So, you know, been involved in, you know, really all facets of portfolio and asset management, you know, touched a lot of different strategies, you know, from an asset class perspective.
Speaker B:And you know, it kind of brought me fast forward to where I am today.
Speaker B:You know, I really spend, you know, there's time to talk and a time to listen, you know, and just taking the time to better understand what many of these groups are trying to solve for from a portfolio optimization standpoint.
Speaker B:Because private credit has a broad utility and broad application, right.
Speaker B:It can be served as a diversified strategy.
Speaker B:It can be a more optimal alternative to traditional fixed income and we'll take it a little bit of a deeper dive into that and some of the structural advantages down the road.
Speaker B:So, you know, I really enjoy the opportunity to interface, interact because everybody's trying to solve for something a little bit differently, you know, as it relates to their asset allocation mix and where a strategy like this may fall in, you know, as it relates to their investment policy statement or you know, opportunistic investing.
Speaker B:So there's again, there's a broad application and a broad utility.
Speaker B:So I'm excited to be here alongside you.
Speaker B:You know, I really want this to be educational and informative for the benefit of the participants.
Speaker B:You know, there's certainly a lot to delve into.
Speaker A:And this is a dual show today, so it's a little unique because ATL ALTS is really focused on educating advisors and family offices and individuals around private markets and alternatives.
Speaker A:And you talked about portfolios, so integrating and how to integrate alts into their portfolios.
Speaker A:Asset Backed is focused more specifically on credit.
Speaker A:And so I was fortunate to meet somebody and be introduced by our mutual friend Dan Smith at Trident Fund Services to you because I thought this would be a great opportunity to offer content to both audiences because asset backed is focused clearly on the deeper, more technical discussion of credit and private credit and how asset based and asset backed strategies can fit into a portfolio.
Speaker A:So let's talk first, alternatives and the importance of alternatives and then maybe dive into private credit specifically.
Speaker B:Yeah, no, absolutely.
Speaker B:So, you know, I think when we think about an allocation to alternatives, you know, it's always important to put it in context to the broader market.
Speaker B:Right.
Speaker B:And since the vast majority of risk taking is done in the equity market, I thought we might just take and start there first.
Speaker B:And so when you think about it, you know, prior to this recent equity drawdown, right, you know, PE multiples and valuation levels were trading in the top, top decile and well above historical norms.
Speaker B:Okay, so why is that important?
Speaker B:Well, generally speaking, when they've traded at this level, 10 year forward looking returns have been in the low single digits.
Speaker B:Now markets may not repeat, but they often do rhyme.
Speaker B:So you have to bear credence to some of the technical trends.
Speaker B:But I think what's even more important is something that you just accented and highlighted is that there is a tremendous amount of uncertainty embedded in financial markets today.
Speaker B:We've got geopolitical risk, we've got uncertainty regarding the path and the trajectory of inflation and Fed policy stance.
Speaker B:We have no idea the impact of the tariffs on global growth and the implications of that on a go forward basis.
Speaker B:Any one of these things in isolation or in combination can contribute to an accelerated risk off environment.
Speaker B:And so we have to bear mind to certainly a lot of the headline risks that are being introduced.
Speaker B:And I do believe that there's, and most people I think would probably be inclined to agree with this is there's a reasonable expectation that we're going to continue to see elevated levels of volatility embedded in the equity market, just given all the vast uncertainty that we're seeing.
Speaker B:But I think alongside that, one of the other discernible trends that we've observed is you've started to see an uptick in cross asset class correlations between equity and fixed income.
Speaker B:Right.
Speaker B: precisely what we saw during: Speaker B:Right.
Speaker B:There was no benefit to diversification.
Speaker B:Right.
Speaker B:So we saw a pretty, pretty pronounced drawdown in a 70, 30, 60, 40 equity fixed income portfolio construct.
Speaker B:Now if we pivot just for a second and we talk about the fixed income market because we just did some analysis for a fairly significant sizable endowment.
Speaker B:They have a very substantial amount of treasury exposure.
Speaker B:And so what the analysis revealed was very simple boundaries.
Speaker B: times since: Speaker B:So what that tells you is you are getting equity like volatility in the treasury market right now.
Speaker B:And while Treasuries generally serve as a flight to safety during an equity risk off environment.
Speaker B:Given the path and the trajectory of potential tariffs, inflation, you know, we may be entering a changing market regime.
Speaker B:So I enter and introduce all those facets because I think, and we could certainly debate the merits of this if you believe in a lot of groups that we talk to do that we may be entering a changing market regime marked by lower returns across traditional asset classes.
Speaker B:Then having an incremental and strategic allocation to alternatives, specifically private credit, can be extremely accretive in contributing to the performance of a portfolio.
Speaker B:Now let's, let's talk and we'll unpack that a second and discuss a little bit about why private credit and alternatives.
Speaker B:Right.
Speaker B:So private credit as an asset class has been a core allocation for institutional investors for over a decade.
Speaker B:And there was a recent survey that was completed by prequel that showed that many of these institutional groups are incrementally seeking to add to that allocation because of the relative and absolute attractiveness of the asset class itself.
Speaker B:Because if you think about it, exposure to alternatives and specifically private credit can be instrumental in really one of three ways.
Speaker B:It can contribute to enhance the diversification of a portfolio.
Speaker B:It can improve the risk efficiency and it can help drive the optimization within the construct of a total portfolio allocation in many groups.
Speaker B:Look at exposure to private credit as a more optimal alternative to traditional fixed income because you don't have the duration, the interest rate sensitivity, and really the mark to market volatility that you get in the fixed income public debt sector.
Speaker B:Right.
Speaker B:But I think increasingly more important is if you look at the historical performance of private credit.
Speaker B:Over time, an investor can generate and realize 3 to 500 basis points of incremental yield and total return.
Speaker B:But I think also alongside that is if you look at capital market assumptions in most of your financial institutions, JP Morgan, BlackRock, Goldman Sachs, they all publish capital market assumptions and expectations by asset class.
Speaker B:Private credit is widely forecasted to be one of the most attractive producing asset classes over the next 10 years.
Speaker B:And that's very consistent with what we are seeing and experiencing in the market.
Speaker B:And there's a couple of reasons for this.
Speaker B:Okay, let's.
Speaker B:Because I think it's important to understand what the key drivers are.
Speaker B:Okay.
Speaker B:Number one, banking regulations, legislative changes, capital reserve requirements have all created and contributed to a very restrictive lending environment for banks.
Speaker B:And absent there being really broad sweeping banking relief or significant legislative changes, which would be unprecedented by the way, we expect the attractiveness of private credit to continue to persist.
Speaker B:Now I think the other dimension in play here is the fact there is a lack of liquidity and a scarcity of capital, particularly in the lower lending sector of the market.
Speaker B:Okay.
Speaker B:And so if you have the cash and liquidity on your balance sheet and you can be a liquidity provider, then you can generate very attractive returns with low levels of risk.
Speaker B:And there's a very pronounced need from these experienced sponsors or borrowers to do one of three things to either rehabilitate, renovate or convert an asset for its highest and best use.
Speaker B:There's generally a value add component to the underlying initiative.
Speaker B:Right.
Speaker B:But at the end of the day they're willing to pay a premium in order to access the capital on your balance sheet.
Speaker B:So it's very simple.
Speaker B:It pays to be a liquidity provider in a market like this.
Speaker B:And that's where we effectively step in and fill the void now kind of leading that into, and transitioning into your, your question about what we do and where we specialize and maybe I'll pause right there in case you have any follow on questions and then I can talk about more specifically where we operate.
Speaker A:Yeah, I mean you did a great job Brooke, of outlining and making a case for alternatives in the portfolio to optimize, to diversify, to pick up incremental yield.
Speaker A:Summarizing, I think what you said, if you look at data historically, the premise of a flight to safety to go to Treasuries, if you look at the 10 year data, it's just been extremely volatile and there's a lot of folks, I'm a believer, right.
Speaker A:I created this content and these platforms to provide education because I think that by and large institutions have been in the alternatives game.
Speaker A:They've been in the alternative space as you know firsthand from, from your prior stops for decades.
Speaker A:Those that are arguably in my case under allocated and as an advisor working with individuals and business owners and families with substantial means, but also those just starting out, they, the data shows are historically and today tremendously under allocated to alternatives, much less exposure to a portion of their portfolio that's not in publicly traded debt like bonds.
Speaker A:So, so that's why I seek out folks like yourself.
Speaker A:So I thought you did a really good job.
Speaker A:I guess a follow up question would.
Speaker B:Be.
Speaker A:When you think about the high net worth family office wealth advisor channel, there's an education gap relative to the institutional community and there's a lot of different reasons.
Speaker A:But, but when you think about your experience relative to that gap, can you talk for a minute about just the benefits and opportunities before we dive into maybe specifically of real estate and what you guys do at Oak Real Estate Partners.
Speaker A:But talk about some of the opportunities that make private credit attractive.
Speaker A:You talked about banking and regulation and some of the, the needs of being a liquidity provider and certain segments of the market.
Speaker A:What are some of the things that our listeners need to understand about why private credit more specifically within the vast sea of options and alternatives today?
Speaker B:Yeah, no, it's a very thoughtful question, Andres, and I guess I would first start out, given that we want this to be kind of an educational format, is that I think it's important that the audience understand that not all private credit is created the same.
Speaker B:Right?
Speaker B:There's different iterations, there's subordinated debt, mezzanine debt, there's VC debt, you know, whereas, you know, you're collateralized by the anticipated and future or expected profitability and cash flows of a company.
Speaker B:All of these things carry a different risk return profile.
Speaker B:Whereas, you know, and we'll talk a little bit more about where we specialize, but you know, we're fully collateralized by an income producing hard asset that carries a significant amount of intrinsic value.
Speaker B:There's tangible value there with the underlying asset.
Speaker B:So it's important to understand where you're playing in the capital stack because, you know, the higher you are in the capital stack, the less risk.
Speaker B:You know, a lot of firms tend to use a lot of leverage.
Speaker B:Leverage carries a form of risk and a higher form of risk.
Speaker B:You know, how is leverage being used?
Speaker B:Is it used at the fund level, is it being used at the transactional level?
Speaker B:These are all fundamental questions that investors need to explore and understand, you know, in terms of a portfolio and the implications of that from a total return and risk standpoint.
Speaker B:So we have found, you know, obviously there's, there are a lot of RIAs and you know, other various groups that are significantly under allocated to alternatives and private credit.
Speaker B:And this has been a very learning experience for them.
Speaker B:But what I have found too is those that have invested, you know, in this space, and this is supported by a study conducted by Preakin, have generally been very satisfied with the performance that they've received.
Speaker B:And we do think and believe that the attractiveness of private credit is going to persist for a variety and a host of reasons, all of which we just formally discussed, you know, banking regulations, the lack of liquidity, because again, you can be compensated to be a liquidity provider in a market like this.
Speaker B:And that's what we're structurally trying to take advantage of.
Speaker B:And so there are a lot of inherent opportunities you know, what we really enjoy and embrace are educational opportunities like this where, you know, I mean, we had an advisor that was the first time investing with us.
Speaker B:And, you know, he had never done private credit.
Speaker B:And, you know, he called me up, you know, this was after about a year of being invested.
Speaker B:He goes, hey, I just want to thank you.
Speaker B:And I'm like, okay, what are you thanking me for?
Speaker B:And he goes, well, this is the first time we've ever invested.
Speaker B:And my, my clients receive their capital account statements and they don't see the volatility they see in my equity growth portfolio.
Speaker B:You know, one of the areas that, you know, we operate and just kind of transition along that front is that we operate in a very kind of niche or specialized sector of the market.
Speaker B:And as a firm, what we're able to take advantage of are the structural inefficiencies that exist in the lower lending sector of the private credit market.
Speaker B:These are very simply transitional bridge lending opportunities that are senior secured in the first lien position.
Speaker B:This lack of liquidity and the scarcity of capital that exists in the market, we continue to take advantage of that in several different ways.
Speaker B:Now, one of the things that I think we're, we're highly focused on as we think about the execution of the strategy is risk mitigation, because risk mitigation and capital preservation can have a fairly significant impact on the optimization of a portfolio.
Speaker B:And so when you look at us, there's really several different layers of risk mitigation that's built in to the execution of the strategy.
Speaker B:The first, as you would naturally imagine, is the deal flow.
Speaker B:Last year, we saw $8.4 billion in top of the funnel deal flow.
Speaker B:Now, why does that even matter?
Speaker B:Well, that just allows us to be very, very selective.
Speaker B:And the types of lending opportunities that we pursue and really the quality of the assets that we bring into our portfolio.
Speaker B:I think the second is the low loan to stabilize value.
Speaker B:Our loan to stabilize value is right around 61%.
Speaker B:Now, why is that important?
Speaker B:Well, that provides a high margin of safety against the permanent impairment of capital.
Speaker B:Our goal and objective is not to take acquisition of these underlying assets, but in the event that you need to in order to protect the interest of the investors, the likelihood you're going to recover your principal is exceptionally high.
Speaker B:Because even under a scenario like the great financial crisis, if you discount the value of these assets by 15, 20, 25%, you know, your likelihood you recover your principal is exceptionally high.
Speaker B:I think the third part, and this is what kind of inherently makes us different relative to other private credit lenders is the structuring.
Speaker B:So let's take a hypothetical $10 million lending opportunity.
Speaker B:Again, we're senior secured in the first lien position.
Speaker B:Transitional bridge lenders that $10 million, we take the first $5 million.
Speaker B:That simply puts us in the first lien position, top of the capital stack, nobody in front of us, nobody behind us.
Speaker B:The other $5 million we hold, maintain and control on our balance sheet for interest reserves, cash reserves and renovation reserves.
Speaker B:What do we do with that $5 million?
Speaker B:It's very simple.
Speaker B:We merely park it in an overnight money market fund yielding four and three quarters in order to generate some incremental yield of return.
Speaker B:The borrower, day one is paying as if we had fully deployed the $10 million, although they only hold and control 5 million of it until the balance of it is drawn down.
Speaker B:And on average we only deploy about $0.88 on the dollar.
Speaker B:So there's always reserves that we're holding back, which serves as a very significant risk mitigation tool for us.
Speaker B:And I think the other two parts which will probably resonate is, you know, we're going to be diversified across industries and sectors and geographical regions.
Speaker B:So we'll do multifamily housing, light industrial, self storage.
Speaker B:You know, what we don't do, and I think most people would naturally agree with this, is we do not do downtown, central business district office.
Speaker B:You're not being adequately compensated for that risk right now.
Speaker B:And quite honestly, Trans Office is going through a fairly radical, you know, transformation.
Speaker B:And we don't do ground up construction.
Speaker B:There has to be an income component to the asset, you know, in order to mitigate some of the risk.
Speaker B:But I think the last thing which is, is something, and I'm going to expand upon this here in a second, is that, you know, we're very short in duration.
Speaker B:Our weighted average life is, is 14 to 18 months.
Speaker B:So these are winding down very quickly.
Speaker B:And quite honestly, one of the most frequent questions we get is, you know, how interest rate sensitive is the strategy relates to private credit.
Speaker B:And quite honestly, I know the Fed just went on pause, you know, in the prior two meetings.
Speaker B:And there's a Fed meeting today, the prior two meetings, you know, they cut interest rates.
Speaker B:And that was actually a favorable development for us.
Speaker B:And I'll tell you why that is.
Speaker B:Our cost of capital was so expensive that interest rates as they were being cut, it creates a greater incentive for these borrowers or sponsors to get us taken out as quick as commercially reasonably possible.
Speaker B:They don't want to hold the heavy debt burdening cost any longer than they need to.
Speaker B:So we've actually seen our weighted average life turn down from about 21 months down to 16 months.
Speaker B:Now, maybe for the benefit of the audience, Andre, and then I'm going to pause and give you an opportunity to ask any follow up questions.
Speaker B:I'll give just a couple indicative case studies because I think, you know, an example is, you know, worth, you know, probably a thousand words at the end of the day.
Speaker B:Does that sound like a good way to proceed?
Speaker A:Yeah, yeah, let's, let's jump in.
Speaker A:I'd love to, I'd love to hear some examples or case studies of things that have happened, you know, at Oak Real Estate, because I think it helps illuminate for an investor whose background has historically been in the context of, you know, maybe a non institutional investor, when they think about debt and they think about lending, right, they're thinking about in the context of a 30 year bond or they're thinking about a municipal allocation, right.
Speaker A:They're not thinking about lending to businesses or in your case, lending to real estate sponsors who are borrowing from you for that shorter duration bridge debt.
Speaker A:A lot of people would think, well, why aren't they going to a bank?
Speaker A:Or why can't they go to a bank?
Speaker A:Right, because they're inferior.
Speaker A:Because, because they're not able to get lending from a bank or from, from the, the main street, you know, financial institution.
Speaker A:So I'm, I'm throwing a lot at you, but I do think the real, I do think the real life case studies to your point, are really worth more than anything because they, they illuminate what's going on really out there in the marketplace and how investors and people that want to learn about this, about this area of private credit, how they can sort of put what's going on in their community, their economy, their local market in context.
Speaker B:Yeah, no, I think that's a good way to stage it, Andres.
Speaker B:And I think this will give some context and perspective as to kind of how irrational the market currently is.
Speaker B:So there was a transaction that rolled off our balance sheet and matured out of our fund late last year and it was an industrial complex and it's down in Melbourne, Florida.
Speaker B:The sponsor has 20 plus years of experience and what he does is very simple.
Speaker B:He acquires these industrial complexes, he repositions them and then he monetizes the asset over a three to five year time horizon.
Speaker B:He's got a whole business plan of doing this and at the time there was no tenant in the facility so I'm sure you could imagine there's no bank, credit union, financial institution that is going to lend on a non cash flowing asset.
Speaker B:Yeah.
Speaker B:However, he had a 10 year fully executed, fully enforceable lease agreement with Jeff Bezos as Blue Origin and he needed the $10.2 million.
Speaker B:Part of it was for the acquisition of the facility and the balance of it was for some specification required by Blue Origin before they took occupancy of the facility.
Speaker B:So when we look at a transaction like that, number one, you got a 10 year cash flowing asset and we're short duration money.
Speaker B:You know, we got taken out of that and I think nine months may have been 8.2 months.
Speaker B:Number two, you got a high quality tenant in Jeff Bezos and Origin.
Speaker B:I mean those are two good fact patterns that, you know, you're happy to underwrite those transactions and to bring those into the fund for the benefit of the investors.
Speaker B:I think another good classic example is this one actually just rolled off our balance sheet the first quarter of this year.
Speaker B:It was the California Highway Patrol.
Speaker B:And so this particular asset was bought out of bankruptcy.
Speaker B:And as I'm sure you can imagine, there's very few financial institutions that are going to lend on an asset that's coming out of bankruptcy.
Speaker B:But in this particular instance, the sponsor had a 14 year lease agreement with the California Highway Patrol and the asset was being converted to house the SWAT unit which is literally located two or three blocks away from the State Capitol building.
Speaker B:So they were converting it into an armory.
Speaker B:And so we held that exposure on our balance sheet for it may have been a little bit less than nine months.
Speaker B:So you know, it just speaks to how irrational the market is.
Speaker B:And we've had several, several transactions that we've done in the D.C.
Speaker B:area.
Speaker B:And these are kind of unique because you know, you feel like you're having a little bit of a positive societal impact.
Speaker B:That's, you know, we're not ESG related investors.
Speaker B:But in this particular instance, the sponsors are converting one and two bedroom into two to three bedroom in order to make it more accommodative and spacious for families.
Speaker B:Now it's not Section 8 housing, but it is owned as an opportunity zone.
Speaker B:So what they're eligible to participate in is what is referred to as the D.C.
Speaker B:housing voucher program.
Speaker B:It's a program that's completely backstopped by HUD.
Speaker B:And these sponsors, what they get is like a 30% premium for every unit they turn over.
Speaker B:There are some 20,000 families on the waiting list for these units.
Speaker B:So the Demand and supply is completely out of balance, right?
Speaker B:So we look at this, they're happy to pay us a mid teen interest rate because there's a value arbitrage opportunity because of what they're making and converting each of these respective units.
Speaker B:They just need accessibility to the capital in order to go through kind of that transformational rehabilitation process.
Speaker B:And so again, I think that just speaks and really highlights just how irrational, you know, the market is right now.
Speaker B:Because again, it's all predicated on the fact that, you know, Jamie Dimon was on Bloomberg right before the holidays and he gave a very simple illustration, Andres.
Speaker B:He said for every hundred dollars we have on deposit, only $60 goes out in lending activity.
Speaker B:He goes, that ratio used to be one to one where we had $100 on deposit and $100 going out and lending.
Speaker B:And he goes, but a lot of that is a byproduct of the regulatory environment that has been created by virtue of Dodd Frank, Sarbanes, Oxley Basel iii.
Speaker B:The names are long and distinguished.
Speaker A:Yeah, yeah.
Speaker A:So it's created a, it's created an opportunity in the market for non bank lenders, also known as private credit managers or sponsors, to look for alternative sources of financing.
Speaker A:And having worked in the private credit space myself in this specific area, I can speak to firsthand.
Speaker A:The experience is real.
Speaker A:There is substantial amount of deal flow.
Speaker A:You spoke about the eight plus billion dollars in top of the funnel deal flow opportunity that your firm saw last year.
Speaker A:So let's speak to that for a minute because you gave three very distinct examples.
Speaker A:You talked about Sacramento, California, you talked, talked about Melbourne, Florida and you talked about, you know, D.C.
Speaker A:right.
Speaker A:So you're like coast to coast, various idiosyncratic, unique, opportunistic type of things that are coming in.
Speaker A:One of the things that I always ask private credit sponsors or managers is to talk about origination and talk about what is a deal that fits, you know, your criteria at Oak Real Estate Partners, because you said this earlier in the conversation, Brooke, that a lot of maybe less experienced investors may just paint private credit with a broad brush and everybody is senior secured, top of the capital stack trying to generate a risk adjusted return in the 9 to 11% yield.
Speaker A:How you generate that, obviously when you get into the nuances, is why we do these conversations talk about origination because I think it really does distinguish one firm from the next.
Speaker A:Like a deal you all would do that fits.
Speaker A:That is a good Oak real Estate deal may not be a really great deal down the street at another firm that does short Term short duration bridge lending.
Speaker A:So what are some of the characteristics that your investment team and committee and origination professionals get real excited about when thinking about that top of the funnel sort of approach?
Speaker B:Yeah, no that's a, there's a lot packed into that question Andre.
Speaker B:So I want to try to decompose it in a couple of different ways.
Speaker B:But first of all, you know we are a vertically integrated firm.
Speaker B:So our origination team is all in house and we think that's important from an execution perspective and a quality control perspective.
Speaker B:So most of our originators, all of our originators have 25 plus years in the business.
Speaker B:They've worked at ex insurance companies, you know, MetLife, Nationwide, whatever the case may be.
Speaker B:You know, they've got a significant amount of experience and they developed a very strong industry reputation.
Speaker B:You know, having been in the industry for this long.
Speaker B:Our CEO has been around for 37 years, you know, he's got a very significant amount of experience having run syndicated portfolios again for large sophisticated insurance companies.
Speaker B:So you know, we've got, we've cultivated a fairly significant network of relationships with your tier one, some select tier two commercial real estate brokers.
Speaker B:So your, you know, your CBRE's of the world, JLLs, Cushman, Wakefield, etc.
Speaker B:Etc.
Speaker B:We tend to be a first call simply because the industry reputation and the certainty of closure because again people come to you because they need the speed of the execution.
Speaker B:Because a bank is going to take 90 to 120 days to underwrite any loan and they're certainly not going to underwrite a six and a half million dollar loan because it's not sizable enough to go through an institutional underwriting.
Speaker B:That's one of the voids that exists in the market.
Speaker B:So I would say and these are just directional numbers, you know, maybe 15% of our sponsors are repeat sponsors, you know, that come back because you know, of our ability to, we want to be perceived as a lender of choice, you know, in a partner choice and really providing that speed of execution.
Speaker B:One of the things that we do is, you know, we go through a completely institutionalized underwriting so we could securitize our loan docs.
Speaker B:We don't.
Speaker B:And despite the fact that these are small lending opportunities, I mean sometimes we end right a two and a half million dollar loan, but you could effectively securitize it.
Speaker B:I mean these are, you know, industry standards that are being employed by large and sophisticated insurance companies.
Speaker B:So you know, I know we talk about the 8.4 billion on top of the Funnel deal flow.
Speaker B:That's great.
Speaker B:But realistically, there's probably 60% if not 70% of that that would never satisfy our investment underwriting criteria.
Speaker B:You know, we track it, we monitor that deal flow because we want to get a pulse of the industry and what's kind of currently out in the market.
Speaker B:But a lot of these, either the sponsor doesn't have sufficient, you know, track record or business experience, or there can be a variety and host of reasons.
Speaker B:I mean, we have a very substantial comprehensive checklist as we go through kind of an institutional underwriting.
Speaker B:So it's great to see that level and volume and velocity of deal flow.
Speaker B:But in many instances, you know, some of these opportunities that come across, you know, aren't things that we would ever contemplate funding because it's just not of institutional quality.
Speaker B:But we do want to continue to see and track and monitor the volume and the velocity of the deal flow because it gives.
Speaker B:Again, it's important to get a pulse of the market.
Speaker B:I think one of the advantages.
Speaker B:Go.
Speaker B:Please, please.
Speaker A:No, I was going to say, I mean, you mentioned securitizing your documents, and I think that's important to highlight for folks that are listening and what that really means.
Speaker A:Because ultimately, when you're a borrower, you're trying to drive down your cost of capital, right?
Speaker A:So if I'm a real estate sponsor or I'm a company and I need to go borrow money, right?
Speaker A:I want to get the cheapest money.
Speaker A:It's just like buying a house, right?
Speaker A:You're going to shop for the best mortgage, lowest terms, you know, best rate, you know, lowest amount of points to originate that loan, etc.
Speaker A:Right?
Speaker A:So it's no different.
Speaker A:But I think what you're saying is important to highlight, and that's that the institutional approach to underwriting, whether it's a 5 or $10 million loan or it's a $50 million loan that is going through the same underwriting process.
Speaker A:And you employ extremely experienced originations folks and executive folks like yourself, who can bring decades of experience to bear, albeit in a end of the market that is arguably more inefficient because banks just simply won't get excited and won't do the work on a 10 million or a sub $5 million loan that you guys might be willing to do because it's a repeat borrower that just has a smaller deal.
Speaker A:So I'd love for you to talk about that.
Speaker A:I assume that that didn't develop overnight and not every borrower has the wherewithal to Build the team you have.
Speaker A:But the ability to securitize your docs and really take that institutional approach, I think bears a comment.
Speaker A:And I'd also love for you to talk about what you said earlier is vertical integration.
Speaker A:Because the game of lending is about getting repaid.
Speaker A:Right.
Speaker A:And not having those losses like you see in the growth portion of the portfolio and the volatility.
Speaker A:Right.
Speaker A:The most you're going to get back is your principal, plus maybe some interest and, you know, maybe some points in fees.
Speaker A:But talk about those two dynamics, if you will, the vertical integration and then, you know, the, the securities, the securitization of the, of the underwriting.
Speaker B:Yeah.
Speaker B:So the vertical integration has been key to us because, you know, none of the employees are, you know, outsource employees.
Speaker B:You know, we maintain control, have quality control and really very seasoned, experienced, you know, leadership executives that have, you know, a great pedigree at the end of the day.
Speaker B:And we think that's important to execute on the investment thesis.
Speaker B:And I think, you know, one of the things that we just touched on lightly is the fact that, you know, playing in this lower lending sector of the market has several structural advantages to it because we are not competing with the likes of Blackstone, kkr, Apollo, et cetera, et cetera, et cetera.
Speaker B:And you can harvest 2 to 300 basis points of incremental yield because there's a lack of national competition in this space.
Speaker B:Now, as you move up and you take down larger capital tranches, 50, 100, 250 million, increasingly you see more competition.
Speaker B:So what does that mean?
Speaker B:It just means there's pricing compression, there's more people operating in that space.
Speaker B:We don't see and experience that same level of pricing compression, depression.
Speaker B:So it actually pays to be down in this lower lending sector of the market.
Speaker B:And I like to use a very simple analogy, Andres, because it's like an equity strategy.
Speaker B:You got large cap, mid cap, small cap.
Speaker B:Right.
Speaker B:Like we're down here in the small cap space in the private credit sector of the market.
Speaker B:What.
Speaker B:There's an extreme and high level of inefficiency, and that's where we're going to continue to play.
Speaker B:I mean, one of the things, and you know, we actually did an empirical study on this, you know, when I was back at unc, and, and we kind of looked at some academic studies around this and, you know, as a lot of these mega managers continue to grow in AUM and aggregate assets, there's actually a point where they start to experience an erosion of return.
Speaker B:Right.
Speaker B:Because what Happens is they now have so much in committed capital that they have to effectively deploy that sometimes you run the risk of certain circumstances where you're deploying capital into a sub investment opportunity.
Speaker B:Whereas, you know, we may be seeing the volume and the velocity of the deal flow that we're seeing, but we've created a hard cap limit of $600 million for our fund simply because we want to remain very disciplined in that high selectivity position.
Speaker B:Now, you never want to run the risk where you could be deploying capital into a sole lending opportunity because we could probably very easily be running 2 to 3 billion dollars out of the strategy.
Speaker B:So it's philosophically one of the things that I really embrace is the fact that we're never going to be perceived as an asset aggregator.
Speaker B:You know, it's really about doing things and structuring things that are truly and inherently in the best interest of our investors and being very judicious in the risk taking that, that we do at the end of the day.
Speaker B:But I think, you know, to your point, you know, it is going to continue to be our abstract market environment.
Speaker B:I mean, we're target, we're very conservative with our target expectations.
Speaker B:You know, we think low to mid teens is, you know, a very reasonable expectation and very consistent with what we've been able to deliver thus far.
Speaker B:And, you know, we think, you know, given the current market environment, now is a very optimal time.
Speaker B:If you haven't thought about strategically exposure to alternatives, then introducing the small sleeve of that, you know, as a part of your asset allocation mix.
Speaker B:Because again, I can think, I think it's going to be very instrumental in dampening the volatility and really improving the risk efficiency, you know, for all the various reasons that we discussed.
Speaker A:Yeah.
Speaker B:And so let me just pause right there because I recognize, yeah, we've got.
Speaker A:You know, we've got, say, 15 minutes and I want to talk about, you know, what your firm's expectations are of the environment.
Speaker A:You sort of teased it out in terms of these larger global asset managers which get, you know, the vast majority of the coverage and have, you know, if you will, the largest pools of capital.
Speaker A:For better or for worse, it's the dynamic that we see play out across all asset classes.
Speaker A:And it has for, you know, sort of forever.
Speaker A:Right.
Speaker A:And what's ironic is I started in the emerging manager space and have spent my whole career working in what I guess folks would call the emerging manager, niche manager, specialist manager area.
Speaker A:I find it endlessly fascinating and for all the reasons that you have illuminated Today to listeners, there are just pockets of inefficiency where large pools of capital just simply cannot play.
Speaker A:Whether those banks or those are now publicly traded asset managers.
Speaker A:And so if you as an advisor, as a specialist can find those managers that can unlock that alpha, do it on an institutional level, with institutional controls, etc.
Speaker A:You've created value for your clients.
Speaker A:Now let's talk about the expectations for returns.
Speaker A:With more and more private capital and more and more private credit managers looking for increasingly, you know, whether it's bigger and bigger numbers of opportunities or just more folks looking to be the lender of choice, as you use that term earlier, what are your expectations at Oak Real Estate for yields and for private credit returns, let's say over the next one to five years as we see these dynamics in the industry play out?
Speaker B:No, it's a good question and I kind of point to a couple things.
Speaker B:Again, I think it goes back to the capital market assumptions and expectations highlighted by BlackRock, JP Morgan and others that, you know, private credit is widely anticipated to be one of the best performing asset classes over the next 10 years.
Speaker B:And that's very consistent with what we're seeing and experience.
Speaker B:I mean, we're targeting kind of low to mid teen returns and we think that's a very conservative estimate.
Speaker B: aybe the closer to the end of: Speaker B:So if rates go down and the Fed gets into a rate cutting regime, right, we lock in and we're hedging the interest rate risk.
Speaker B:However, if SOFA rates move higher, then we've got the ability to dynamically adjust our rate on a 30 day basis, capturing that incremental return.
Speaker B:So while it's not a perfect inflationary hedge, it does help to mitigate the interest rate risk that other firms would otherwise experience.
Speaker B:So that's been very advantageous for us.
Speaker B:We continue to execute on that investment thesis and you know, as rates have come down and we've seen that, you know, particularly over the last several months now, SOFR tends to exhibit a lot less volatility than the treasury market.
Speaker B:You know, if you were to look at 30 day SOFR.
Speaker B:But you know, we do have that layer and level of protection in place so that, you know, if rates become increasingly more volatile, you know, we've kind of immunized that interest rate risk, you know, for the benefit of our investors.
Speaker B:But you know, where we're currently pricing, the market is holding up.
Speaker B: ou know, there was a point in: Speaker B:And what I mean by the spread is, you know, kind of the bid ask what we were willing to lend at versus what borrowers are willing to accept.
Speaker B:And I think as the year increasingly moved on, borrowers came to the realization the actualization that if they wanted to get access to the capital, they were going to have to pay the premium.
Speaker B:So that that bid ask spread then began to compress and now it's virtually non existent.
Speaker B:I mean, you know, we're out there in the market and you know, we're pricing things and you know, we're pretty competitive.
Speaker B:But again, I think that the lack of national competition and the fact that you're not competing against some of these larger mega institutions is inherently a structural advantage for us.
Speaker B:Not to mention when we talk about the total return, there's really several components of that.
Speaker B:You know, the first is, you know, there's generally a couple of points of origination.
Speaker B:There's interest rates, there's back end exit fees, but also is the time value of money.
Speaker B:Remember, if we're only holding this exposure on our balance sheet for eight or nine months, it's very short duration money.
Speaker B:Remember, we're only deploying on average about $0.88 on the dollar and yet you're being paid interest as if the full dollar had been deployed.
Speaker B:So it's extremely, extremely accretive in the total yields and the types of returns we're able to generate for the benefit of the investors.
Speaker B:And the structuring, I think is one of the things that inherently and uniquely makes us different from a lot of other private credit lenders.
Speaker B:So, you know, we're going to continue to capitalize.
Speaker B:You know, our goal and aim is just to continue to educate firms that are interested in just learning more about the space and understanding where the opportunity set resides and just being a resource.
Speaker B:You know, I mean, many of the RIAs we work with, you know, we work alongside them because they're not comfortable necessarily trying to articulate where we specialize in this space.
Speaker B:So we come in and we just merely present to their clients and say, hey.
Speaker B:And we try to do it in a very simplistic way.
Speaker B:You know, think about it like a first mortgage.
Speaker B:First mortgage on a house, right?
Speaker B:This is just the first mortgage on a piece of income producing commercial real estate assets.
Speaker B:And you know, we do it in partnership with a lot of ours, just as an educational resource.
Speaker B:And, you know, we.
Speaker B:We did an education on.
Speaker B:And I'll leave the name anonymous, you know, with a.
Speaker B:With a county public pension plan here in Atlanta.
Speaker B:Not too long ago, who was interested in learning a little more about this space, we came in and presented a whole case study on private credit and how it can be accretive in contributing to a portfolio.
Speaker B:So we love the educational piece more than anything else, you know, because if you're effective at educating people into the opportunity set and how to think about risk mitigation and downside protection, you know, increasingly they become more comfortable with the investment thesis, and that's what I enjoy.
Speaker B:You know, everybody, again, is trying to solve for something a little bit different from an optimization standpoint, because regardless of the group that we talk to, you know, I talk to some groups and they look at this as, again, a substitution, a more optimal substitution for fixed income.
Speaker B:Other groups say, well, we'd put you guys in our diversified strategies portfolio because your return streams are broadly uncorrelated to broader markets.
Speaker B:You know, whereas some groups are like, well, we'd put you guys in our opportunistic or value add credit portfolio.
Speaker B:So everybody's got a different lens that they typically look through.
Speaker B:It just depends on how their investment policy is kind of constructed in their asset.
Speaker B:A little frame asset allocation framework is built out.
Speaker A:Yeah, it's a really valuable point.
Speaker A:And I think one of the things that I've learned now, having moved from the asset manager side of the business to the wealth management side, is I'm able to really draw upon that network.
Speaker A:And I want to spend the last five minutes really talking about the importance of two things.
Speaker A:The first one I want to talk about is.
Speaker A:Is identifying niche and specialty managers and how the allocation to alternatives and specifically maybe private credit doesn't necessarily only have to be with those giant, large, publicly traded asset managers.
Speaker A:And the importance of identifying and utilizing advisors to identify managers out there that are.
Speaker A:That are specialists or that are niche.
Speaker A:You talked about this, the strategy of being a $600 million sort of targeted fund size for a variety of different reasons.
Speaker A:And that's different than what you often see making headlines.
Speaker A:You know, that somebody just raised a $10 billion fund or a $20 billion fund, or they've got permanent capital and all the benefits that that brings.
Speaker A:So that's a setup for a question of, you know, what do you think from your experience, institutional couple of big endowments, you know, pension plan, You've got that background, you know, and all these small managers and emerging managers are trying to raise money from those firms.
Speaker A:Right.
Speaker A:Because they can write a big check.
Speaker A:But from your experience and now working at a specialist firm that's focused on the lower end or the, the smaller end of the, of the real estate debt market, what are your experiences and, and what do you think are some of the benefits of, of niche and specialist managers?
Speaker B:Yeah, and Andres, I think, you know, philosophically, that was kind of at the core of our approach at unc.
Speaker B:You know, we tended to shy away or tilt away from some of the larger mega managers and really focus more on bespoke or esoteric managers that had the ability to generate outsized and very attractive returns.
Speaker B:You know, proven track records, experience, pedigree experience, leadership teams playing in unique, specialized sectors of the market.
Speaker B:Because again, you know, when we were in the endowment space, you know, absolute returns are important, but also relative, you know, to your peers and how you're generating performance is also an important component of how you're evaluated now, you know, I think for us, that's one of the inherent advantages.
Speaker B:As a smaller manager, you could be nimble and flexible and taking advantage of sectors of the market that these larger players can't take advantage of because of the mere size of their balance sheet and how much capital they have to effectively deploy.
Speaker B:And, you know, we're fine with going through an institutional underwriting for a six and a half, seven million dollar loan because again, there's a tremendous amount of value to be harvested for the benefit of the investors, you know, as opposed to, you know, Blackstone, who just recently announced that, you know, they're acquiring Jersey.
Speaker B:You know, I mean, they've got to put capital somewhere to work, right?
Speaker B:So I think for us, you know, we're pretty excited about the space that we operate in, you know, and kind of having a national footprint and a reputation within the industry that, you know, tends to be a first call due to the certainty of closure and the speed of the execution, we think is vitally important and kind of further differentiating the firm relative to some others.
Speaker B:I mean, we just.
Speaker B:One of the exciting things that just at a firm level that just transpired is we just completed a majority acquisition of an FHA lender.
Speaker B:Okay, so why does that matter?
Speaker B:How's that important?
Speaker B:Well, that actually now provides certainty of exit, like we can be our own takeout.
Speaker B:And so that provides a tremendous amount of positive value and traction for us because while we close on it, you know, an FHA loan typically takes Nine months to underwrite.
Speaker B:Well, that lines up perfectly with our weighted average life and duration.
Speaker B:You know, we can work with our fha, you know, lender and kind of going through that, that underwriting from that more permanent take your uncertainty of exit.
Speaker B:So there's a lot of things that, you know, from a structuring standpoint that, you know, we're constantly looking at.
Speaker B:And, you know, I'm not saying anything that's revolutionary here, but it's a very dynamic business environment.
Speaker B:You got to continue to adapt with the times.
Speaker B:And I think if we look at the market environment and what's naturally transpiring and the opportunity set, you know, again, I think part of the investment thesis is just anchored on the fact that if you have the cash and the liquidity and you can be a provider, you can capture some very attractive returns.
Speaker B:And we think that type of opportunity is going to continue to persist for all the apparent reasons that, you know, we previously discussed.
Speaker A:Well, we, you know, we're about out of time, but I have one, one question and one bonus question.
Speaker A:You know, so much of finding your way through challenging market environments, whether you're an investor or you're allocating capital or lending capital, like you guys is a network, right?
Speaker A:Is what are your peers hearing and how are you building?
Speaker A:How are you referencing sponsors and deal flows?
Speaker A:So my question is, and then my bonus is an easy one.
Speaker A:When you're talking to your investor peers, when you're talking to the folks in your network, what are they saying about what's going on in the market?
Speaker A:Are they concerned?
Speaker A:Are they fearful?
Speaker A:Are they optimistic still?
Speaker A:Etc?
Speaker A:So I'd love to hear, you know, perspective.
Speaker A:And number two, who's your pick for the NCAA tournament since March Madness is, is underway, and who's the, what's the consensus from the, from the smart money out there?
Speaker B:All right, good questions, good questions.
Speaker B:Well, well, I'll, I'll start with the first one.
Speaker B:And, you know, I can share with you a couple of anecdotes that I think is very consistent.
Speaker B:You know, obviously we speak with, you know, dozens and dozens of, whether it's foundations, endowments, corporate public pension plans and the like, family offices.
Speaker B:And I think there's been one consistent theme that's kind of emerged to the forefront, and it's that, you know, I can't say this universally, but the vast majority of groups are concerned about a lower return environment given the market environment that we've come out of.
Speaker B:And so I think everybody's thinking about, you know, portfolio positioning and kind of their strategic and tactical asset allocation and you know, where can they take advantages of opportunities that may offset underperforming parts of their portfolio?
Speaker B:And so that's where we enjoy talking because this can really be a ballast within the construct of a portfolio and you can generate an equity like return with very low levels of risk because you're in the senior debt position.
Speaker B:I mean the fact that we're generating mid teen returns and look, I think the reality is this, you know, we're coming off two consecutive years where the S and P has returned in excess of 20%.
Speaker B:That's not sustainable, that's not a market environment that we customarily see.
Speaker B:And so I think at some point, you know, given PE multiples, valuations, uncertainty, you can point to a host in a variety of reasons.
Speaker B:I think people, you know, are coping with the reality that this could be a changing market regime and how do they need to think about kind of portfolio positioning.
Speaker B:So you know, we enjoy just being the resource and just educating people into the space.
Speaker B:You know, it's not about walking in and pitching a strategy, it's about understanding the implications of private credit, how it can be accretive, you know, within a portfolio construct.
Speaker B:That's what we enjoy is the consultative aspect of it.
Speaker B:Now I'm going to transition to your latter question is that I did go to graduate school at Auburn.
Speaker B:So I've got to say worry.
Speaker A:Yeah, yeah, War Eagle.
Speaker A:Well, they came in as the number one overall seed and I'm, I'm a Kansas native.
Speaker A:As you can see, I'm, I'm wearing my Jayhawks.
Speaker A:You know, we have had an up and down year.
Speaker A:But yeah, there's, there's a lot of folks that think Bruce Pearl will get the Tigers back rolling.
Speaker A:They lost three or four going into the, to the dance and sometimes that's, that's a way for a team to look inward and, and get the ship right.
Speaker A:You know, so it all kicks off tomorrow.
Speaker A:I know there's will be a lot of people in our industry playing hooky and, or having the TV on.
Speaker A:So we, you know, I can't thank you enough again, you said this multiple times, Brooke.
Speaker A:You know, education, being a consultative resource, helping bring, you know, just clarity and helping people think through a lot of the questions.
Speaker A:And I think that's what boards and investment committees and individuals and advisors out there are looking for is they're looking for a calm or a calming presence and voice to sort of help think through a lot of noise and a lot of headline risk and a lot of just uncertainty that's, that's pervasive in the markets today.
Speaker A:So that's what we were trying to do today with a conversation, and I hope we were able to do that.
Speaker A:I will definitely put your contact information out there in the show notes, but I want to give you the final word.
Speaker A:How can people learn more about.
Speaker A:About Oak Real Estate Partners if they're interested?
Speaker B:Yeah, no, just, you know, happy to reach out.
Speaker B:And again, you know, it's more about being a resource to people internally.
Speaker B:You know, we like to share our case studies and just kind of talk more strategically about the asset class and how it may fit in within the construct of a portfolio, how to think about, you know, risk mitigation and downside protection, how we generally look at that and view that and how we manage through that.
Speaker B:Again, I'm happy to field any calls.
Speaker B:You know, we've got a whole sales team that, you know, obviously is on the road.
Speaker B:I don't travel typically with the sales team, but at the end of the day, you know, I'm here in Atlanta.
Speaker B:For those of you that are here in Atlanta like to get together more in person, I tend to be more of a personable person, you know, kind of spending time one on one, you know, happy to allocate the time.
Speaker B:I've always looked at it from the standpoint there's never downside to a conversation.
Speaker B:You know, you tend to learn something new from the people that you interact with all the time.
Speaker B:And I've always kind of embraced that philosophy.
Speaker B:So if you have any questions, again, I'm happy to be a resource.
Speaker B:I really appreciated the opportunity to share the time with you, Andres, today.
Speaker B:And hopefully, you know, the market, color, context was insightful for the benefit of the participants.
Speaker A:I think it was most, most definitely.
Speaker A:So I want to thank you Brooks Gardena, managing partner from Oak Real Estate Partners.
Speaker A:I'll put your information to contact the firm and get in touch with you in the show notes.
Speaker A:Today's conversation.
Speaker A:I want to thank our listeners.
Speaker A:I will post this show and this conversation to both ATL alts and asset backed.
Speaker A:I think it offered a tremendous amount of insight and wisdom and perspective on opportunities and alternatives, private credit and also in this area of real estate lending and real estate, of debt that I think people would be wise to learn more about.
Speaker A:So with that, we'll wrap it up and look forward to you joining us next time on ATL Alts and asset back.
Speaker A:Thank you.
Speaker B:Thank you.
