The Stoler Report – The Changing Face of Real Estate Over the Past Half Century

The Stoler Report – The Changing Face of Real Estate Over the Past Half Century


♪ [THEME MUSIC] ♪>>SO REAL ESTATE HAS CHANGED. THE WORLD HAS CHANGED OVER THE PAST HALF A CENTURY. SO TODAY I’VE ASSEMBLED THIS GROUP OF REAL ESTATE DEVELOPERS AND A BANKER TO TALK ABOUT WHAT’S HAPPENING. RECOURSE, ASSISTED LIVING, SIZES OF APARTMENTS, INDUSTRIAL BUILDINGS CONVERTED TO OFFICES. WHO KNOWS, NO MORE GARAGE PARKING, GAS STATIONS. SO THE GROUP INCLUDES THE EMINENT JOSEPH MATTONE, CHAIRMAN AND CEO OF THE MATTONE GROUP. ALLAN V. ROSE, THE MOST ESTABLISHED AND EXPERIENCED OF OUR GROUP, WHO’S THE CHAIRMAN AND CEO OF THE AVR REALTY GROUP. VINNIE RISO, WHO IS THE CHAIRMAN AND CEO OF THE BRIERWOOD ORGANIZATION AND LAST BUT NOT LEAST, THE MAN WHO IF HE DOESN’T GIVE AWAY THE MONEY, THEY CAN’T BUILD, JOSEPH FICALORA, PRESIDENT AND CEO OF NEW YORK COMMUNITY BANCORP. SO AS I WAS SAYING PRIOR TO THE SHOW, THE WORLD HAS CHANGED IN THE 71 YEARS THAT YOU’VE BEEN IN BUSINESS, MR. ROSE.>>WELL, I THINK THE WHOLE ANSWER IS PRETTY SIMPLE. TAKE 1965 WHERE I BUILT MY FIRST HOTEL IN WESTCHESTER. WHY DID I BUILD A HOWARD JOHNSON? HOWARD JOHNSON WAS THE ONLY COMPANY ON THE WHOLE HIGHWAY. THERE’S NO MARRIOTT OR HILTON OR McDONALD’S. THERE WAS NOTHING. SO THEY HAD THEIR CHOICE OF LOCATIONS, CHOICE OF BUILDINGS. SO WE WERE THAT. NASSAU COUNTY WAS JUST BECOMING A VIABLE ENTRY.>>A HOME OF NYCB.>>RIGHT.>>LONG ISLAND EXPRESSWAY HADN’T BEEN BUILT. IT JUST JUST STARTING TO COME OUT OF QUEENS AND INTO LONG ISLAND. VALLEY STREAM WAS THE BEGINNING OF LONG ISLAND. WE WENT TO BALDWIN. THEN WE KEPT FOLLOWING THE LIE EAST AND EVERY BUILDER KEPT BUILDING ALONG THE WAY. THERE WAS NO APARTMENT HOUSES. THERE WERE MAYBE SIX SHOPPING CENTERS IN THE ENTIRE LONG ISLAND. FORGET ABOUT THE ASSISTED LIVING. SO ONE OF MY ANSWERS IS PRETTY SIMPLE. WE NEEDED EVERYTHING. WE NEEDED HOTELS. WE NEEDED APARTMENTS. WE NEEDED SUPER MARKETS. WE NEEDED EVERYTHING YOU CAN THINK OF. WE NEEDED DOCTORS. WE NEEDED HOSPITALS. TODAY, I’M SKIPPING BACK, I CAN’T THINK OF ANYTHING WE REALLY NEED. THERE’S ENOUGH APARTMENTS, THERE’S ENOUGH SHOPPING CENTERS, THERE’S TOO MANY HOTELS, THERE’S TOO MUCH OF EVERYTHING. AND THE ONLY REASON THINGS GET BUILT IS WE HAVE EGOMANIAC BUILDERS LIKE US WHO THINK WE CAN DO IT A LITTLE BETTER, A LITTLE SMARTER, AND YOU’RE PUSHING. YOU’RE PUSHING EVERYTHING. YOU CAN’T LOOK AT AN OPEN FIELD AND SAY, WOW THEY NEED SOMETHING. WE DON’T NEED ANYTHING.>>TODAY YOU’RE STILL BUILDING. YOU JUST FINISHED BUILDING AN APARTMENT COMPLEX. YOU’RE BUILDING A HUGE RETAIL COMPLEX OVER THERE HAD. PART OF IT IS ALSO AN ASSISTED LIVING THAT YOU’RE NOT MOVING INTO, BUT IT’S OVER THERE. AND YOU’RE INVOLVED. HERE IS THE QUESTION. WHEN JOE FICALORA STARTED AT QUEENS COUNTY SAVINGS BANK 52 YEARS AGO, THERE WAS NOT SOMETHING CALLED CMBS. OKAY? WHEN A BANKER WOULD MEET WITH SOMEBODY, OKAY, THERE WAS A DEAL. THEY WOULD KNOW THINGS. HOW DO YOU SEE THIS INTERPERSONAL RELATIONSHIP WHICH HAS CHANGED WHEN THE BANKERS RELATING TO DEVELOPERS?>>WELL, IT DEPENDS ON THE DEVELOPER. IT DEPENDS ON THE PRODUCT.>>BUT IN GENERAL, HOW DO YOU SEE THE –>>WELL, IN TERMS, IT IS MORE EFFICIENT, MORE EFFECTIVE FROM THE STANDPOINT OF COMMUNICATING ALL THE THINGS THAT ARE ESSENTIAL TO EFFECTUATE A DEAL. BUT NEGOTIATION IS STILL NEGOTIATION. AND THAT TAKES TIME BECAUSE PEOPLE WANT TO POSITION THEMSELVES.>>WHAT ABOUT COMPETITION?>>JUST MAKES IT EASIER FOR THERE TO BE NONBANK COMPETITION.>>SO THERE’S MORE COMPETITION FOR YOU THAN YEARS AGO. WHEN YOU WENT TO THE FIRST ONE OF YOUR PROJECTS, OKAY, YOU DIDN’T HAVE ALL THESE INSURANCE COMPANIES. YOU DIDN’T HAVE SOMETHING CALLED CMBS, YOU DIDN’T HAVE ALTERNATIVE LENDERS->>WELL, YOU HAVE COMMUNITY BANKS, REALLY, THAT YOU WENT TO IN DOWNTOWN BROOKLYN, FOR INSTANCE. YOU HAD YOUR VARIOUS COMMUNITY BANKS.>>YOU HAD NO COMMUNITY BANKS->>WELL->>SINCE 1852 YOU DON’T WANT TO->>QUEENS WAS A FOREIGN LAND. I WAS A BROOKLYN BASED LAWYER. MY OFFICE WAS IN BROOKLYN. IN THOSE DAYS, WE HAD THE GREEN POINT SAVINGS BANK, FOR INSTANCE, WHICH WAS AN AVAILABLE BANK FOR LOANS AND THINGS OF THAT NATURE. SO YOU WENT TO WHERE YOU WERE KNOWN. I THINK THAT’S ONE OF THE FACTORS THAT JOE EMPHASIZED. WHEN WE GOT BIG, WE WENT TO THE KING’S COUNTY SAVINGS BANK. AND THEN THE LAFAYETTE SAVINGS BANK. AND FINALLY REPUBLIC SAVINGS BANK.>>I DIDN’T HEAR THE COMMERCIAL BANKS. YOU NEVER WENT TO THE CHEMICAL BANKS OR THE — >>WELL, NOT IN THOSE DAYS. IN THOSE DAYS — >>I THINK HE’S RIGHT.>>IN THOSE DAYS — >>WHEN YOU WERE A HOLDER, YOU WENT TO THE DIME SAVINGS BANK, THE WILLIAMSBURG SAVINGS BANK. THEY HAD ALL OF THESE SAVINGS BANKS THAT WEREN’T REALLY OWNED BY ANYBODY.>>WHEN YOUR FATHER STARTED THE BUSINESS, IN 1905, OKAY, GOING BACK, WHEN YOU JOINED THE BUSINESS WITH YOUR BROTHER, WHO DO YOU BANK WITH AND WHAT TYPE OF WORK WERE YOU BUILDING?>>MOST OF THE BANKS WERE SAVINGS BANKS. WE DID MOST OF OF OUR FINANCING WITH LONG ISLAND SAVINGS BANK. AND CONTINUED WITH OTHER SAVINGS BANKS ALONG THE WAY. WE DID UTILIZE SOME COMMERCIAL BANKS, EAB WAS ONE OF THEM. BUT MOST OF THEM WERE COMMUNITY-TYPE BANKS.>>BUT WHEN YOU WENT INTO AFFORDABLE, OKAY, YOU WERE ONE OF THE — THE FIRST GUYS IN AFFORDABLE HOUSING.>>YES.>>OKAY. HOW HARD WAS IT TO BECOME IN AFFORDABLE HOUSING? TODAY IN NEW YORK CITY THERE’S AN AFFORDABLE HOUSING COMPONENT. BUT TODAY YOU HAVE TO HAVE AN AFFORDABLE AND THEN THERE’S ALWAYS THE AFFORDABLE HOUSING BEING BUILT.>>AFFORDABLE HOUSING WHEN IT WAS FIRST STARTED WAS A LOT DIFFERENT THAN IT IS TODAY. WE BUILT OVER I’M GUESSING ABOUT 3,500 RESIDENTIAL UNITS OVER THE YEARS. BUT BASICALLY, AFFORDABLE HOUSING WAS SIMPLER BACK THEN BECAUSE THE CITY OWNED SO MUCH LAND AND CONTRIBUTED THAT LAND TO THAT DEVELOPMENT. WHICH LOWERED THE COST OF EVERYTHING AND THE ABILITY OF PEOPLE TO QUALIFY FOR THE LOANS.>>YOU’VE BEEN IN THE BUSINESS OVER 50 YEARS. CLOSE TO 60 YEARS. HOW HARD IS IT TO BE IN BUSINESS TODAY? WAS IT EASIER WHEN YOU WERE STARTING 58 YEARS AGO OR IS IT — DO YOU SEE IT TODAY? THERE’S MORE COMPETITION.>>THERE ARE VARIOUS FACTORS THAT HAD AFFECTED MY PERSONAL CAREER. I SEE IT AS MORE COMPETITIVE BECAUSE I SEE OUTSIDE MONEY FROM FROM FOREIGN COUNTRIES COMING IN TO BE COMPETITIVE IN THE BUYING OF REAL ESTATE. THEY COME TO PARK THEIR MONEY HERE BECAUSE THEY FEEL IT’S MUCH SAFER HERE. I THINK THERE ARE VARIOUS ERRORS OF THAT MONEY COMING IN FROM VARIOUS COUNTRIES WHO HAD A SURPLUS OF DOLLARS. FOR INSTANCE, IT WAS THE JAPANESE AREA — ERA WHERE THEY BROUGHT UP ROCKEFELLER CENTER AND THINGS OF THAT NATURE. I SEE THAT THE EB FIVE PROGRAMS. THEY BUY PROPERTIES THAT I WOULD NEVER BE ABLE TO REACH IN TERMS OF DOLLARS AND THINK THERE WAS AN ECONOMIC RETURN THAT WOULD BE A VALID DEAL. I CAN’T SEE PAYING THE KIND OF PRICING THAT THEY ARE ABLE TO AFFORD.>>FOREIGN MONEY COMING INTO THE WORLD, BOTH A COMBINATION OF FOREIGN INVESTORS AND THE IMMIGRATION PROGRAM WHICH IS GIVING MONEY HERE AND CAN DEFINITELY CHANGE THE WORLD. AS A BANK TODAY, WHEN SOMEBODY SAYS I WAS TRADITIONAL LENDING UP TO A POINT AND THEN I HAVE EB5 MONEY, THIS WAS NEVER AN IDEA. IT’S MEZZANINE.>>IT’S STILL NOT A GOOD IDEA.>>I’M NOT DISAGREEING. YEARS AGO, YOU WOULDN’T DO A DEAL WITH MEZZANINE DEBT.>>NO. WE ALWAYS NEGOTIATE OUR DEAL DIRECT. AND THEN WE’RE THE FINAL FINANCIAL SOURCES. WHAT HAPPENS AFTER WE CLOSE THE DEAL SOMETIMES DIFFERS. BUT WE HAVE RULES IN PLACE THAT ESTABLISH THE GUIDELINES THAT MUST BE FOLLOWED ONCE THEY ESTABLISH THE LOAN WITH US.>>BUT OVER THE PAST 52 YEARS, HOW HAS BANKING CHANGED WITH, YOU KNOW, THE MEGA BANKS, WITH THE DIFFERENT CHANGES WITH THE CMBS LENDING, WITH THE EB 5 THAT ALLAN BROUGHT UP? HOW MUCH COMPETITION? IS IT TOUGHER TO BE IN THE FINANCING OF DOING FINANCING FOR ANY OF THESE INDIVIDUALS THAN OTHER PEOPLE TODAY?>>THERE’S NO QUESTION THAT THE REGULATORY CHANGES ARE THE MOST PROMINENT REASONS WHY BANKING IS DIFFERENT TODAY THAN IT MUST HAVE BEEN 10 OR 20 OR 30 OR 40 YEARS AGO. THE EXISTENCE OF OTHER LENDERS HAS TAKEN A GREATER SHARE OF THE MARKET BECAUSE THEY DON’T HAVE IS THE SAME REGULATORY CONSTRAINTS AS BANKS. SO THERE ARE MORE LENDERS IN THE MARKET TODAY THAT IN SOME CASES PROVIDE OPTIONS, BETTER CHOICES THAN BANKS CAN PROVIDE.>>YEAH. I’M JUST GOING TO GO BACK 25 OR 30 YEARS AGO WHEN SAVINGS AND LOANS INSTITUTIONS, IF YOU REMEMBER, THEY WERE PARTNERS WITH BUILDERS. RIGHT?>>OH, SURE.>>SO THOSE WERE JOINT VENTURES. I HAD A LOT OF THIS IS THOSE THINGS.>>A NUMBER OF JOINT VENTURES.>>AND HOW DID IT WORK OUT?>>VERY FAVORABLE IN MY CASE.>>HOW DID IT WORK OUT FOR THE BANKS?>>VERY WELL. THE RELATIONSHIP BETWEEN EVERYBODY HERE AND SAVINGS BANKS IS, IN FACT, THE WAY IT WAS DONE.>>YOU WORKED FOR THE SAVINGS BANK, YOU COULD FINANCE AS MANY HOUSES AS YOU COULD POSSIBLY BUILT.>>SAVINGS BANKS DROVE VENTURE PARTNERS.>>SAY, YOU’RE TALKING ABOUT THE SNLs.>>RIGHT.>>I’M TALKING ABOUT THE SAVINGS AND LOAN WERE VERY ACTIVE. I MEAN, THAT TOOK THE MAP BECAUSE AT SOMETIMES, AS ONE WOULD SAY, THERE WAS NO SKIN IN THE GAME. THE PEOPLE REALLY DIDN’T HAVE MUCH, YOU KNOW, THEY WENT OVER TO THE BANK.>>THEY ALSO GOT WIPED OUT BECAUSE THAT’S WHERE — >>WHEN THAT CAME ALONG, EXAMINED THE THESE BANKS THAT HAD NOTHING, THEY HAD A LOT OF PAPERS THEY COULDN’T SELL. THEY SOLD PROPERTIES AT THAT. WE BOUGHT SO MUCH PROPERTY FROM THE RTC IN THOSE DAYS, BUT NOTHING BECAUSE THEY DIDN’T KNOW HOW TO HANDLE THE PROPERTIES.>>LET’S LOOK AT RETAIL. YOU BROUGHT UP, YOU ALLUDED THE SITUATION THAT YEARS AGO, YOU NEEDED APARTMENTS, YOU NEEDED RETAIL. YOU NEEDED INDUSTRIAL. TODAY YOU LOOK AT THE SITUATION, I MEAN, YOU HAVE HEAVY RETAIL. YOU KNOW, YOU HAVE SOME RETAIL OVER THERE AND YOU HAVE SOME RETAIL IN YOUR PORTFOLIO OVERTHERE. THE ECOMMERCE IS HAVING AN EFFECT ON RETAIL. THERE IS NO QUESTION. AND EVEN THE BRICKS AND MORTAR PEOPLE, FOR EXAMPLE, WALMART BOUGHT JET WHICH IS AN E-COMMERCE COMPANY. CABELA’S IS BEING BOUGHT BY BASS AND ALL THE REST. RETAIL TODAY, IT DEPENDS WHERE YOU ARE. IF YOU HAVE A STRIP SUPER MARKET AND SOME STORES AND YOU’RE TRYING TO COMPETE WITH THE DISCOUNTERS OF THE WORLD, YOU’LL BE FINE. WE HAVE A NICE SHOPPING CENTER UP IN PORCHESTER WHERE THE LOCATION IS SO GOOD. IT’S THE INTERSECTION OF 287, ROUTE 1 AND THE NEW ENGLAND THRUWAY THE THE THAT’S GOING TO SURVIVE ANYTHING. YOU ALSO HAVE USES TODAY THAT WE NEVER HAD YEARS AGO. WHOEVER HEARD OF AN OFFICE MAX STORE OR IN SOME CASES WE HAVE URGENT CARE STUFF AND YOU HAVE HOSPITALS AND SHOPPING CENTERS TODAY. SO ALONG WITH THE E-COMMERCE COMPETITION, WHICH IS REALLY DIFFICULT, THINGS ARE COMING TO TAKE THE — >>RIGHT. THERE ARE PEOPLE TAKING DIFFERENT THINGS. WE WERE TALKING ABOUT TODAY PHYSICAL THERAPY CENTERS LIKE — THAT PEOPLE COMING TO YOU. ALL OF THIS WAS SELF-CONTAINED IN THE HOSPITALS, FROM DIFFERENT WORLDS. NOW, YOU HAD A LARGE PORTFOLIO OF GAS STATIONS. I MEAN, WITHOUT LOCATIONS, I MEAN, WE GET A CONSTANT INQUIRY OF ANYBODY THAT WHOSE LEASES ARE UP. THERE ARE FORCES OUT THERE THAT WANT RELOCATIONS. IT’S LOCATION, LOCATION, LOCATION.>>NO QUESTION. BUT THE GAS STATIONS ARE NO LONGER BEING THERE. THEY’RE BEING REPLACED.>>WELL, LOOK, THERE ARE MORE LUCRATIVE DOLLARS TO BE MADE.>>AH, LUCRATIVE DOLLARS.>>YOU KNOW WHAT I’M SAYING. IF YOU CAN GET A DEVELOPER A LOCATION FOR A LOCATION FOR MORE DOLLARS, LIKE I SOLD THE PIECE IN BROOKLYN TO A STORAGE COMPANY.>>IF WE LOOK BACK MANY YEARS AGO, THERE WEREN’T STORAGE WAREHOUSES 40, 50 YEARS AGO.>>BASEMENTS.>>THERE WAS MORE OPPORTUNITY FOR ME TO SELL A PROPERTY THAN TO RENT IT.>>AS THE DEANS OF REAL ESTATE, WHAT ARE THE OPPORTUNITIES TODAY IN THE 21st CENTURY FOR THE DEVELOPERS AND A BANKER.>>I THINK THERE WAS ALWAYS OPPORTUNITIES, BUT TODAY ESPECIALLY, IN THE CITY OF NEW YORK, THE BUILDING HOUSING HAS A LOT OF PROBLEMS CONNECTED WITH IT. THE LOSS OF 421A WAS A RESULT OF EXPANSION IN 2016 AND 2017.>>THAT’S WHAT WE WERE TALKING ABOUT BEFORE. LOOK AT THE NUMBER OF UNITS COMING ON IN DOWNTOWN BROOKLYN. OUT OF NOWHERE, YOU HAD 25,000 IN TOTAL APARTMENTS, SCH A QUESTION OF BEING ABSORBED. WELL, IT WAS OVERBUILT SIMPLY TO MAKE SURE THAT THE PROPERTIES RETAIN THE 421.>>SO WHAT HAPPENED WITH 421As UNDER THE AFFORDABLE ARE BACK.>>WE SHALL SEE. IT LOOKS — >>A LOT OF MARKETING PROBLEMS.>>THERE WAS CONCERN ABOUT IT.>>EVERYTHING COMES AROUND.>>THAT’S TRUE, EVERYTHING DOES COME AROUND. IT WILL TAKE TIME.>>WHERE DO YOU SEE THE OPPORTUNITIES FOR BANKS TODAY AND WHERE DO YOU SEE THE OPPORTUNITIES FOR PEOPLE? YOU’RE A MAJOR LENDER TO THE REAL ESTATE COMMUNITY.>>I THINK THERE’S NO QUESTION WHAT WAS AND WHAT IS AND WHAT WILL BE IS VERY FUNDAMENTALLY THE SAME. THERE ARE PEOPLE THAT HAVE THE OPPORTUNITY TO CREATE VALUE — >>WHEN I BROUGHT UP THE SUBJECT OF ASSISTED LIVING, 50 YEARS AGO, WE DIDN’T HAVE ASSISTED LIVING. 50 YEARS AGO, THERE WEREN’T URGENT CARE CENTERS. WHERE DO YOU SEE THE DIFFERENCE OF THE OPPORTUNITIES MAYBE, IN WHAT TYPE OF — >>I THINK WHAT YOU’RE TOUCHING UPON THERE IS THERE ARE LENDERS WHO ARE VERY COMFORTABLE DOING LENDING ON THAT TYPE OF PRODUCT. THAT IS NOT OUR PRODUCT. THERE ARE PLENTY OF ALTERNATIVE LENDERS. AND CERTAINLY THAT PRODUCT HAS A FUTURE. THE EVOLUTION OF HOW PEOPLE CHOOSE TO LIVE AND WHERE THEY CHOOSE TO LIVE IS SOMETHING THAT WE’RE ALL CONSTANTLY BEING REMINDED OF.>>A NICE APARTMENT HOUSE WHERE YOU CAN HAVE A MEAL SENT. YOU’RE TOUCHED ON HOW BANKING HAS CHANGED. I DON’T THINK BANKING HAS CHANGED WHATSOEVER. THE BEST BANK IS — AND I DEALT WITH MANY, MANY BANKERS. GUYS WHO UNDERSTAND THEIR CUSTOMERS. DO YOU REMEMBER CHARLIE, ONE OF THE GUYS FROM THE CHASE? I USED TO HAND HIM DOCUMENTS, PAPERS. HE SAID I DON’T LOOK AT THE PAPERS. I LOOK IN YOUR EYES AND I CAN TELL WHETHER YOU’RE GOING TO PAY THAT LOAN.>>LARRY TELLS THE STORY OF HIS FIRST BUILDING, HIS FATHER SAYS WE COULD HAVE FLIPPED IT AND HE FOUND THIS GUY SO GREEN ON DELANCEY STREET AT PUBLIC NATIONAL BANK. AND HE SAID, KID, I’M GOING TO GIVE YOU THE MONEY. AND IT WORKED OUT. SO THERE’S A QUESTION OF THE KID AND THE MONEY OVER THERE. WHERE DO YOU SEE THE OPPORTUNITIES TODAY? YOU HAVE A HOME DEPOT, YOU HAVE OTHER THINGS. YOU HAVE A BIG FAIRWAY STORE.>>IT’S A VERY SIMILAR STORY TO THAT. JOHNNY PALMER, WHO WAS THE HEAD OF REPUBLIC BANK BEFORE IT BECAME HSBC, HE SAID, JOE, I DON’T LEND THE MONEY SO MUCH ON THE PAPER, I LEND THE MONEY TO YOU.>>AND THAT’S THE WAY IT WAS DONE.>>AND WHEN THEY DEVIATED FROM THAT, I REMEMBER I WAS DEALING WITH THE CHEMICAL BANK. THERE WERE AAA SHOPPING CENTERS, VERY, VERY GOOD COLLATERAL. CAME TO ME ONE DAY AND SAID WE’RE NOT GOING TO DO BUSINESS WITH INDIVIDUAL BUILDERS ANY MORE. WE’RE ONLY GOING TO DO BUSINESS WITH WHOLESALE DEALS.>>AND WHO WERE THEY LENDING MONEY OUT TO? SOME SWINDLERS WHO HAVE NEVER DONE DEALS IN THEIR WHOLE LIFE. WALL STREET PROMOTERS. THEY GOT KILLED DOING THAT. THEY REALLY GOT HURT DOING THAT. AND ONE DAY CAME BACK TO ME AND SAID, YOU KNOW, I WAS WRONG. HE SAID, I WOULD LOVE TO GO BACK TO LENDSING YOU MONEY ON AAA SHOPPING CENTERS. I SAID IF FORGET ABOUT IT.>>AND WE’RE DOING NOW, WHICH IS THE CONCEPT OF RECYCLING SOME OF OUR OWN PROPERTIES WITHOUT DISCLOSING LOCATION AND HAVE A SHOPPING FACILITY THAT WE ARE CONVERTING NOT ONLY INTO A LARGER SHOPPING FACILITY, WE ARE BUILDING POTENTIAL 600,000 FEET ON IT. IT’S A LOCATION AND PUBLIC TRANSPORTATION. IT’S A POTENTIAL HOSPITAL TYPE OF UTILIZATION. WHAT I’M TRYING TO SAY IS AS JOE SAID, THERE’S LOTS OF OPPORTUNITIES.>>WE CONTROL IT. WE DON’T HAVE TO PAY $60 MILLION FOR A PIECE OF REAL ESTATE.>>ALLAN WAS TALKING THAT 25 YEARS AGO, HE STARTED A DEVELOPMENT WHICH FINALLY CAME TO FRUITIONING 25 YEARS LATER. SO, NO, THE WORLD CHANGES. BUT WHERE ARE THE OPPORTUNITIES? WHERE DO YOU SEE THE OPPORTUNITIES TODAY? YOU BROUGHT UP THE IDEA THAT CHURCHES AND SYNAGOGUES HAVE PROPERTIES THAT CAN BE UTILIZE DOLLARS FOR JOINT VENTURES.>>YOU WERE LOOKING AT THAT AND THE GUY WANTED $60 MILLION.>>WELL, THERE WAS SOME — THERE’S NO QUESTION THAT CHURCHES AND SYNAGOGUES ARE LAND RICH AND DOLLAR POOR. WE HAVE HAD SO MANY OPPORTUNITIES TO LOOK AT, SOME OF WHICH WERE OUTRAGEOUS AND WE SIMPLY WALKED AWAY FROM THEM. ON THE OTHER HAND, RIGHT NOW I THINK WE HAVE FIVE CHURCHES THAT WE’RE WORKING WITH BASICALLY ARE UTILIZING THEIR PROPERTY TO BUILD, EXPAND, OR GIVE THE CHURCH NEW QUARTERS, TO SOME DEGREE, AND EXPAND IT TO USES OF RESIDENTIAL AND RETAIL TO BRING IN INCOME FOR THE CHURCHES.>>SO THEY’RE TAKING VALUE.>>YES.>>AS YOU WERE SAYING, REPOSITIONING.>>ONE OF THE FEW THINGS IT’S WORTH BEING OLD FOR — I CAN’T THINK OF MANY — WE’VE PAID OFF A LOT OF MORTGAGES, AND WE OWN A LOT OF LAND WITHOUT ANY LEVERAGE. I’D SAY MORE THAN ANYTHING WE’RE DOING RIGHT NOW, THE BUILDINGS, MAKING THEM NICER, BIGGER, BETTER, I DON’T KNOW HOW YOUNG PEOPLE TODAY COMPARE IN THIS BUSINESS. THE INSURANCE. REMEMBER INSURANCE ON A HOUSE, IT COST YOU $100 FOR THE HOUSE. NOW INSURANCE, A THOUSAND — >>LOOK AT THE OFFICE BUILDINGS, OKAY? YOU BUILT METRO TECH WITH BRUCE, YOU’VE OWNED OFFICE BUILDINGS. TODAY, THE PEOPLE ARE USING SMALLER SPACE. THEY’RE DOING HOTELING, THEY’RE LOOKING AT DIFFERENT IDEAS. I MEAN, THE BIGGEST USER OF SPACE TWO YEARS AGO WAS 27 MILLION SQUARE FEET OF SPACE. THE COWORKING, IT’S A NICE IDEA, BUT WHO KNOWS WHAT HAPPENS IN THE FUTURE. CROWD FUNDING IS A BIG TOPIC. I SAID CROWD FUNDING? IT’S A SYNDICATION. A DIFFERENT WAY.>>THE PROBLEMS THAT A LOT OF DEVELOPERS ARE NOT CRITICIZED WHO GOT IN TROUBLE WHERE GUYS OVEREXTENDED THEMSELVES IN MORTGAGES. AND WHEN THEY PAID BACK, THEY HAD PROBLEMS.>>THE ONE I ALWAYS MADE WAS DON’T OVERLEVERAGE. I MEAN THAT VERY SINCERELY. I HAVE BY THE GRACE OF GOD NEVER DEFAULTED IN ANY SITUATION. WITH A REPAYMENT. THAT’S WHAT I TELL ALL THE BANKERS.>>AND THEY THINK — I DON’T WANT TO SPEAK FOR MR. FICALORA. SOMETIMES YOU HAVE TO GIVE BACK PROPERTY. IT HAPPENS.>>IT HAPPENS.>>IT’S THE QUESTION OF THE WAY YOU DEAL WITH THE BANK, RIGHT, JOE?>>ABSOLUTELY, THERE’S NO QUESTION. IF YOU LAND RIGHT, YOU NEVER LOSE BECAUSE THE PROPERTY COVERS WHAT YOU LAND. SO IT DOESN’T MATTER WHAT CIRCUMSTANCES MAY ARISE DURING THE COURSE OF THE PERIOD THAT YOU’RE TOGETHER. IF THE PROPERTY WAS PROPERLY VALUED AT THE TIME YOU DID THE DEAL — >>1990, I LIED TO GOD. I SAID GOD, GET ME OUT OF THIS, I’LL NEVER SIGN MY NAME AGAIN. I LIED. THE NEXT GOOD DEAL THAT CAME ALONG, BOY, WE SIGNED IT IN A MINUTE.>>WELL, THE GOOD NEWS IS THAT THERE ARE LENDERS WHO LENT MONEY THROUGH THE DECADES WHICH HAVE HAD MANY, MANY SERIOUS CHALLENGES. THERE ARE PEOPLE THAT HAVE DEVELOPED THROUGH THE DECADES AND HAVE DONE EXTRAORDINARILY WELL. THE PEOPLE WHO DO BEST ARE THE PEOPLE WHO BUY LOW AND SELL HIGH. BUY IN THE DEPTHS OF A CYCLE AND CERTAINLY SUITED TO — >>SO I’M GOING TO ASK A QUICK QUESTION BECAUSE WE HAVE LIKE A MINUTE LEFT. IS IT A TIME TO BUY TODAY OR IS IT A TIME TO SELL TODAY? MR. ROSE.>>I DON’T THINK IT’S TIME TO BUY, THAT’S FOR SURE. AND I DON’T THINK IT’S A TIME TO SELL, EITHER, BECAUSE THE VALUES ARE NOT THERE ANY MORE. YOU KNOW, WHEN WE USED TO BUY MULTI-FAMILY JOBS, WE HAD 20,000 APARTMENTS AT ONE POINT. YOU BOUGHT FOR 5%, MORTGAGE IT FOR 3.5% TO 4% AND YOU HAD A MORTGAGE. NOW, WHAT HAPPENS WITH OWNERS, EVEN THOUGH THE INTEREST RATES HAVE GONE UP, IN THEIR MIND, THE VALUE OF THE PROPERTY HASN’T GONE DOWN. SO EVERYBODY IS AT AN IMPASSE. YOU CAN’T BUY, YOU CAN’T SELL. I THINK THE BEST THING TO DO TODAY IS JUST SIT IT OUT, BE VERY CONSERVATIVE.>>I AGREE. IT’S A WAITING POSITION TODAY.>>IF THERE IS A DECENT TENANT WITH THE LEASE AND THERE IS A BOTTOM LINE, DECENT CREDIT, I’D GO WITH THE DEAL.>>AND FINALLY, MY COMMENT IS IF WE DON’T HAVE 1031s, WHAT HAPPENED TO OUR WORLD?>>IT GETS VERY BAD.>>YEAH.>>IF IT HAPPENS ABRUPTLY, IT CAUSES MARKET DISLOCATION.>>SO I’D LIKE TO THANK MY DEANS OF DEVELOPMENT AND BANKING FOR BEING HERE TODAY, MY FRIEND JOE, ALLAN, VINNIE, AND JOE. I’LL SEE YOU NEXT WEEK. ♪ [THEME MUSIC] ♪

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