Jeff Holzmann, COO of RREAF Holdings, shares insights on the firm’s unique approach to commercial real estate, its impressive capital stack strategy, and the vision behind its multi-billion-dollar investments in Middle America.
(0:09) How's it going? (0:10) And welcome back to how to invest in commercial real estate. (0:13) What is up? (0:13) We have a super exciting show today. (0:16) That's Joel though.(0:17) Well, I mean, maybe that's why it's so exciting. (0:20) It should be a good one. (0:21) Yeah, it should be.(0:22) It should be a good one. (0:22) Anyway. (0:23) I know Joel is sad to miss out on this one because when we're screening podcast guests, (0:29) some of them are more impressive than others and he's like, Oh man, let's definitely get (0:33) Jeff on.(0:34) And then he had to miss this one. (0:36) Anyway, super excited. (0:38) We will introduce our guests in just one second.(0:40) There's a lot going on in the world. (0:43) I know we just had a big election. (0:44) Yeah.(0:44) Who won? (0:47) I didn't hear about it. (0:48) Yeah. (0:48) Yeah.(0:49) Anyway, everything is kind of surging. (0:52) Stock market seems like it's at an all time high. (0:55) Crypto is running.(0:57) If you're into that, Trump, you know, just got reelected. (1:01) Fed's meeting today. (1:02) Federal Reserve's meeting today.(1:05) Yep. (1:05) Another cut. (1:06) I hear they're going to go ahead and do the cut even though, you know, the election had (1:09) no bearing on that.(1:11) So they're going to, I think they're going to cut again today. (1:13) No bearing. (1:14) Yeah.(1:15) So sitting president never has any bearing on that kind of stuff. (1:20) Anyway, um, let's, Oh, uh, the Petromax Henderson gas stations. (1:27) We successfully closed on those.(1:29) Um, we're, we're, we're done. (1:31) We're done with the gas stations. (1:33) Whoo.(1:33) Yeah. (1:34) I've been working on it all year. (1:34) We just closed the last four.(1:35) So we have five now. (1:37) Um, we are already working a deal on those, on those four. (1:41) So hopefully we can get some finalized here soon.(1:43) Um, ideally we'd like to close before the end of the year. (1:45) So we need to get something finalized ASAP because we're a couple of weeks into November. (1:50) Anyway, uh, without further ado, we're going to get into our guests here.(1:54) Uh, Jeff Holzman, and he is the CEO if I'm not mistaken of reef, which is super impressive (2:03) in my opinion, because they have hundreds of real estate assets all over the country (2:07) over a billion and a half and assets under management, which is impressive. (2:11) That's who we want to be. (2:12) Yeah.(2:13) I, I, I'm just trying to get to a billion. (2:14) I mean a billion and a half that he, Jeff probably stopped at a billion anyway, uh, (2:19) without further ado, Jeff introduce yourself and, uh, tell us a little bit about, uh, (2:23) you and, and reef and kind of everything going on. (2:27) Absolutely.(2:28) So I'm Jeff Holzman and small correction. (2:30) I am the chief operating officer of reef holdings. (2:34) I'm not quite the CEO.(2:35) CEO is a great guy. (2:37) Uh, it's, it's a great leadership team. (2:39) I'll tell you all about him, but I am the chief operating officer of the reef holdings (2:42) group.(2:43) Um, a little bit, uh, a little bit about reef holdings just for context for, for the viewers (2:48) and listeners. (2:49) Uh, reef holdings in one way or another has been around for almost 30 years. (2:53) Uh, this latest iteration as reef holdings, uh, the way it's structured now, and it's (2:58) reef with a double R. So it's R R E A F. And for those, uh, for, uh, for those of your (3:04) viewers who are a little older, like myself, they'll probably remember that there were (3:08) other reefs and other iterations, but this current company reef holdings based in Dallas, (3:13) Texas, uh, was founded about 12 years ago.(3:17) And with the vision of really serving middle America and providing, uh, real estate solutions (3:22) for middle America, middle America is, is a fancy way of saying people call it blue (3:26) collar or the middle income level. (3:29) What it really means is that we don't cater and we don't provide real estate solutions (3:32) for the bottom of the, of the, uh, sort of the income ladder. (3:36) And we're also not at the top, uh, for the very luxurious.(3:39) And it is the largest contingency, the largest group of, uh, in terms of social demographics (3:44) in the U S. So it's, it's a good market to cater to. (3:47) Um, the vision was always to provide real estate solutions. (3:50) We started out with multifamily like many other firms did, but we have since evolved.(3:55) We have five different verticals. (3:56) Multifamily is by far our largest. (3:59) We have more than 50 different communities around the country with about 17,000 different (4:03) units.(4:04) Roughly, you put the numbers together. (4:06) That's about 50,000 people that leave that live, uh, monthly in our communities. (4:12) We also own and operate, uh, 16 different hotels.(4:16) Um, many of them are currently functioning. (4:18) Some of them are under development. (4:19) We'll talk a little bit about that.(4:21) Uh, we have our own construction company, RCS, Reef Construction Company. (4:25) We do extended stay, which is a sub portion of our, uh, hospitality platform. (4:31) And we do RV parks.(4:33) And we'll talk a little bit more about those and how that's this specific vertical is unique (4:37) because they're more transient luxury kind of stays. (4:40) They're not your mobile home parks, although that's a, that's a phenomenal real estate (4:44) investment category as well. (4:45) That's not what Reef does.(4:46) And the last and probably most exciting thing that Reef does is something called Reef Communities (4:50) where we build master planned cities. (4:55) They're, they tend to be smaller towns and these are multi-billion, multi-decade long (4:59) projects. (5:01) Uh, we buy thousands and thousands of acres.(5:03) We currently own two plots along I-35 in Texas, between, uh, Dallas and Austin, prime, prime (5:09) real estate. (5:10) Uh, we were just talking about the elections recently, uh, earlier on your show. (5:13) Uh, I'm sure you've seen the stats.(5:16) People are moving into Texas by the drones, right? (5:19) It's unstoppable. (5:20) Uh, so these, uh, these two plots of land that we have thousands of acres along I-35, (5:25) very, very popular with net in migration, uh, positive net in migration, uh, really (5:31) for the last couple of years. (5:32) And we build cities, we build it from scratch.(5:35) So everything from, uh, infrastructure roads with the Texas department of transportation, (5:40) we put together interchanges, we build, uh, infrastructure for water and sewage. (5:45) And then of course we build the actual housing solution. (5:48) Some of them are multifamily.(5:49) Some of them are a BTR built to rent or single family, uh, product. (5:53) We also build hotels, extended stays, even municipality buildings. (5:57) So as you can imagine, these are multi-billion, multi-decade long projects.(6:01) And we'll talk a little bit more about them, but yeah, you've, you've hit, uh, you've hit (6:04) the nail on the head. (6:05) It's, uh, about 500 or so employees, uh, just under $5 billion in assets on their management (6:11) with offices and, uh, team members really, uh, across the country. (6:15) We only work in the U S we currently do not do anything international.(6:19) So a very large group, uh, has been around for a long time and, uh, really is doing spectacular. (6:25) Yeah. (6:26) That's really impressive.(6:27) Yeah. (6:28) I like, uh, having you on the show because you're doing a lot of things that we don't (6:32) talk about a lot, but we're really interested in, uh, criteria intends to specialize in, (6:37) in retail. (6:38) And, uh, some of these things that you've talked about, we were, we're, we've, we've (6:41) done multifamily before, but some of these other things we've looked at RV parks, hotels, (6:45) and we just never have dipped our toe into that, but, but would love to get into those (6:50) things and love to discuss those with you.(6:52) So yeah, is reef, uh, is reef a reet? (6:56) Is it? (6:57) It is not. (6:58) And that's a great question. (6:59) And I'm sure your viewers know what that means.(7:01) There's pros and cons to how you choose a structure for operating, uh, reef holdings (7:06) is not, it is a holding company. (7:08) Uh, I'm sure most of your viewers are educated enough in real estate to understand that the (7:13) equity, right? (7:14) The money in, in real estate projects is usually with the title company, which means that every (7:19) single project is kind of a standalone project. (7:22) You could be an investor in a multifamily, you can be an investor in a portfolio of multifamilies, (7:26) or you could be an investor in the holding company level.(7:29) The way reef chooses to operate is, uh, as a standard, it's a privately held company. (7:35) Um, there were other reefs in history, uh, that were publicly traded reef holdings right (7:40) now as where I work, as we know, it is a privately held company and that allows us maximum flexibility (7:47) to structure every single one of these investments differently. (7:51) So unlike a reet, we're not bounded by, uh, by some of these tax exemptions where you have (7:57) to distribute 90 and 95% of your profits.(7:59) Uh, we tend to operate where we structure these offerings. (8:03) It's usually a five Oh six C offering for accredited investors that allows us to bring (8:07) in, uh, institutional funds from, from the one side, uh, we have everything from New York's (8:13) teachers to California teachers, pension funds, the very large institutional players that (8:17) invest with companies like us, uh, and are in fact our partners as we speak in some of (8:22) these projects and some of these portfolios. (8:23) But it also allows us to bring, um, accredited individual investors and we've scaled that (8:29) up.(8:30) It started with just friends and family. (8:32) And today we actually have thousands of retail investors coming in through that structure, (8:37) some of them to the tunes of millions, maybe even tens of millions of dollars, every single (8:42) one of them. (8:42) So, so as you ramp up throughout the years, these become very big, significant numbers.(8:47) What that allows us in turn to do is that that entity hires reef holdings to act as (8:53) the manager. (8:55) So there is a lot of money. (8:56) There's a lot of equity.(8:57) There's a lot of knowledge built into reef holdings, but reef holdings is not the direct (9:01) owner of all of this real estate, right? (9:04) Right. (9:04) Yeah. (9:05) Some sort of SPE is the owner.(9:07) You guys are the manager and then I'm, I'm sure you guys have some sort of promoted interest (9:11) on the backend. (9:13) Exactly. (9:13) So exactly like you said, so these are special purpose vehicles that we put together every (9:18) single one of them individually.(9:19) In some cases it's a portfolio. (9:21) So when I say SPV, it could be 20, it is in some cases we have a portfolio called a TC21, (9:26) the trans coastal 21 portfolio. (9:28) So these are 21 assets in an SPV, but it's still one portfolio out of many, many assets (9:34) that reef holdings acts as a manager to, but you're right.(9:37) We do have promotes. (9:38) All of that is disclosed in the operating agreement and subscription documents. (9:42) So follow the money, right? (9:43) See kind of how the, how the cash flows through the waterfall and reef is a profitable, super (9:49) successful company.(9:50) But the way we chose to structure it is it does not own all the real estate that reef (9:56) holding managers. (9:57) No, very important distinction. (9:59) Yeah.(10:00) Similar to Criterion. (10:02) Is it the same? (10:03) The exact same. (10:04) Yeah.(10:04) Criterion is a holdings company. (10:05) We set up a specific purpose entity for that deal we're buying. (10:09) Maybe several deals.(10:10) We'll clump them together. (10:11) Go raise the money. (10:12) It's got its own operating agreement.(10:13) Criterion is the manager of that entity or that deal. (10:18) Yeah. (10:18) I mean, we're, we're structuring it literally the exact same way we're using 506E.(10:23) So it's, it's good to see that at scale that still works, right? (10:27) However many billions of dollars it works. (10:30) It does. (10:31) It does.(10:31) It works even better at scale. (10:34) One of the things that we like so much about this structure that we have is that we don't (10:38) have any institutional equity at the holdings level, which means we don't have a board (10:42) of directors that is driven by the needs to show something about a stock price and they're (10:47) going to make us sell assets even if we think it's a dumb move just because they have a (10:52) quarterly goal to meet. (10:53) And again, I'm not putting down the capital markets and the way that, the way that this, (10:57) the way that our country and our economy works, it doesn't work for us.(11:03) We like to have that freedom to make what we think is the best decision for investors (11:06) at a given time. (11:09) And so far it's been tremendously successful. (11:11) You know, our track record speaks for itself.(11:13) We have an average IRR return in the 20s and an equity multiple of above two with an average (11:20) holding period of three and a half years. (11:22) And I'm not going to tell you we've never had any misses. (11:25) We have, but very little.(11:26) And even those, nobody ever lost money investing with Reef. (11:30) And again, knock on wood, past performance is not indicative of future performance, right? (11:34) We have to mention that. (11:36) But the track record speaks for itself and we like having this structure, but you know, (11:40) I wasn't born last night and I'm not going to make any predictions or any guarantees moving (11:45) forward the next five years, the next $5 billion, maybe we'll settle on another structure.(11:50) But right now we'd like being a privately held holding company. (11:52) It's not a reef, it's not a fund, and it's not open-ended in the sense that we have money (11:57) that we have to deploy, whether it's a good deal or not. (11:59) We only look for good deals and I'll tell you what, if the deal is not good, we're not (12:03) transacting.(12:04) And 2024 is a good example. (12:06) It's not a very good year for us in terms of volume, but that's because we couldn't (12:10) find any good deals. (12:11) And if I was a reef, I was almost forced to transact.(12:14) We don't like being in that position. (12:16) Yeah, similar philosophy to us. (12:18) And we slowed down a bit in 2023 and 2024, went to some development projects to try to (12:25) keep the deals flowing.(12:28) Are most of your deals cash flowing deals where you're sending out distributions to your investors (12:32) or? (12:33) Yeah. (12:34) So historically in the multifamily vertical, that is one of our criteria, right? (12:38) It's something that we look forward to and that's how we structured the deal. (12:42) We were very, very fortunate.(12:45) There's some wisdom that goes into that, but I prefer to thank our lucky stars rather than (12:49) pat myself on the shoulder. (12:52) And I will tell you that most of the deals that we structured, 99% of the deals that (12:56) we structured in the multifamily vertical were with fixed long-term debt when the interest (13:01) rate was low. (13:03) I'm talking low.(13:04) I'm talking to between two and 3%. (13:08) That's low. (13:08) Wow.(13:09) Bingo. (13:10) So we are still, and I'm not going to tell you that interest rate don't affect us. (13:14) They do because they affect everything from your resident's ability to pay the rent and (13:20) perform and execute on leases to the cost of labor, to the sometimes the cost of capital (13:26) expenditure, the capex work that we do.(13:28) But for the most part, they affect us indirectly. (13:32) The more direct relationship we're hedged against it, right? (13:36) Because we have a fixed long-term debt at a low interest rate. (13:39) And that means the debt actually became an asset because this debt is assumable.(13:44) So I can tell you that I filter calls from very well-known groups, mostly in places like (13:50) New York and California that call me almost every week saying, will I sell my portfolio (13:55) with the debt? (13:56) Because it is cash flowing and it's assumable and it's going to continue to cash flow regardless (14:01) of interest rate for quite a while. (14:04) So we're in a very, very good position with those portfolios. (14:07) Yeah.(14:08) Nice. (14:08) So you said you have a wide range of investors from, you know, massive teacher pension funds (14:15) to retail investors that may give you hundreds of thousands or a hundred thousand. (14:19) Are they treated the same? (14:21) Are they going in the same deals? (14:23) Do they have the same return structure? (14:26) Do they have the same waterfall? (14:27) I guess walk me through that if you don't mind.(14:32) Yeah. (14:32) The answer is no. (14:34) And of course, we treat everybody equally.(14:37) But the leveraging power, the negotiation power that larger funds have usually results (14:44) in them being located differently in the capital stack. (14:47) So we would use some of these funds that we talked about in a PREF equity position. (14:53) So let me back up for a minute and give you kind of the basic capital structure of how (14:57) a deal looks like.(14:58) And I'm not talking about one specific deal, but just in general. (15:02) So if we're buying a multifamily portfolio, this would probably range in the hundreds (15:06) of millions of dollars for a single transaction, maybe up to a billion dollars. (15:12) And about 60 to 70% of that will be debt.(15:16) And that we will source from one of the large agencies, right? (15:20) So Fannie, Freddie, we're an Optigo-level sponsor with Freddie Mac. (15:26) For your viewers that don't know what that is, you can Google that. (15:29) It's Optigo.(15:30) And it's a status that you get with Freddie Mac that gives you certain benefits. (15:35) And you can only really acquire that status through years of volume, successful work with (15:41) those lenders. (15:42) These are government-sponsored enterprise GSEs.(15:44) So you cannot buy your way into an Optigo. (15:47) You have to successfully execute and borrow and pay it back. (15:51) So we are an Optigo-level developer, a borrower.(15:55) So maybe roughly 60%, depending, plus, minus 5% will be debt. (16:03) And again, that usually we would take a long-term fixed rate. (16:08) These days, of course, can be a little different.(16:10) We were talking earlier on your show about the Fed meeting today and about lowering interest (16:15) rates. (16:16) We'll see where that goes. (16:18) On top of that, they get us higher in the capital stack towards the 80, 90% range, depending (16:23) on the deal.(16:24) We would usually layer in some kind of PREF position. (16:27) Preferred equity is treated differently than senior debt, obviously, and it's treated differently (16:31) for tax purposes. (16:32) But it still needs to be big numbers, right? (16:35) We're talking in the tens, maybe hundreds of millions of dollars.(16:37) So that's where these larger groups, institutional type of capital would usually come in. (16:44) Usually, there are exceptions. (16:45) We do have very big partners in the common equity as well.(16:47) We'll talk about that in a minute. (16:49) So those groups would usually come in and they would have a substantial amount of investment. (16:55) And that's going to matter because if you're investing $100,000 in a deal, you can't afford (17:00) to pay a lawyer $20,000 for due diligence.(17:03) That's going to eat up all of your return. (17:05) So these groups can do that, right? (17:06) So they'll come in. (17:07) They have their lawyers.(17:08) They have their due diligence. (17:09) They have their asset managers. (17:11) They will certainly tour the assets with us.(17:14) They will visit our corporate headquarters in Dallas. (17:16) And the reason I'm telling you all this detail is because all of that forms a partnership. (17:21) At this point, we get to know them personally.(17:23) We get to know their analysts. (17:25) We get to know their asset managers. (17:27) We get to know their reporting systems.(17:29) They have a say when it comes to how we audit our financial statements. (17:32) So this is a really, it's a partnership. (17:35) And Reef Holdings also operates a property management firm.(17:39) That's one of the reasons our headcount is so massive. (17:42) The actual leasing agents and property managers and maintenance workers, they all work for (17:47) the same company I work for, Reef Holdings. (17:49) So everybody kind of gets to know everybody and that builds that confidence.(17:53) And again, we're talking hundreds of millions of dollars that are then layered in. (17:56) That leaves you with the last 5%, 10%, 12% of the capital stack, which is in the form (18:02) of common equity. (18:03) And that's where Reef Holdings itself will come in.(18:06) That's where some of the principals in the company will bring their own money occasionally. (18:10) That's where other retail investors would come in. (18:13) And that's also a part of the capital stack where we've seen large institutional players (18:19) join us in what's known as the JV common equity piece.(18:23) Obviously, there's pros and cons to everything in the capital stack. (18:28) The cons, if you will, for being a JV equity partner is that you're the last one to get (18:33) your money, right? (18:34) The senior debt will get it first, the pref will be paid later, and then whatever is left (18:38) will be paid to the common. (18:40) The pro side is that if this is a good deal, and again, our deals historically have been (18:44) very successful, then those are the people that will make the most amount of return.(18:50) So if a senior lender is making 3%, 4% on their money, but it's mostly guaranteed, (18:54) again, guaranteed is not the word that we use, but it's more secure in the form of (18:58) first lien and being lower in the capital stack, the common equity guys would usually (19:02) make 20 or 25%, but they would get their money less. (19:07) So pros and cons, depending on where you want to be. (19:10) Yeah.(19:12) Impressive. (19:12) Well, Jeff, that's really impressive. (19:14) I got to think our listeners are thinking, man, this is really impressive.(19:18) Jeff, man, he's really made it. (19:21) So they're going to think, well, how did Jeff get involved in real estate? (19:24) How did he get to where he's at? (19:26) So could you give us a little bit of your story? (19:28) Yeah, happy to do that. (19:29) So I'm 50 years old and I wish I could tell you that this is all part of a great plan (19:35) and I knew exactly where I'm going to end up, straight going into college.(19:39) That my friends is not how it works. (19:42) It's not. (19:43) And you're right, I've been very, very fortunate to end up in the chief operating officer of (19:49) Rafe Holdings.(19:49) It really is a very, very high level position in corporate America and not everybody gets (19:56) to do that. (19:56) And I'm grateful every day to have had the opportunity. (20:00) And this is not my family.(20:02) These are not my friends. (20:03) I didn't know anybody at Rafe Holdings. (20:05) I started working, and I'll tell you all about it.(20:07) I started working there and kind of rose through the ranks. (20:10) So to put it into perspective for your listeners, this was not handed to me in any way. (20:15) I never met these people.(20:17) They're not relatives of mine, nothing like that. (20:21) My case is classic of one thing led to another. (20:25) And yes, I'm going to say that I did make some good choices along the way.(20:28) But without a doubt, some of that was, let's call it luck, right? (20:33) Being at the right place at the right time. (20:34) I ended up with Rafe Holdings because previously I had worked for another company. (20:41) It was a crowdfunding platform for commercial real estate.(20:45) I'm skipping 30 years of experience, but I'm skipping you right there. (20:48) I could be here forever. (20:51) But I had worked for another company that decided to form a joint venture with Rafe.(20:58) And it was a 50-50 joint venture. (20:59) I'm still actually holding that position. (21:02) It was a company called IRM, and it is the company that was put together, and this might (21:08) be interesting for your viewers, it's the company that was put together to buy the operation (21:14) from Realty Shares.(21:16) Realty Shares was a very big deal at some point. (21:19) I'm talking about 10 years ago. (21:21) It was one of the largest crowdfunding platforms in the planet, one of the first and most successful (21:27) ones to do that.(21:27) They raised hundreds of millions of dollars from investors to invest in real estate, and (21:31) they flopped. (21:32) They went out of business. (21:33) The company went bust and has since went bankrupt.(21:37) And the company I was working for partnered with Rafe in order to put together an operation (21:41) that would salvage what is left of that and at least serve the existing investors so they're (21:47) not left with nothing. (21:50) And one thing led to another. (21:52) That partnership gave me, personally, the opportunity to interact with Rafe more, and (21:58) the principals at Rafe, the CEO, the president, the CFO, I think they liked what I'm doing (22:06) and how I do it.(22:07) And the way I approach operations is I bring a lot of methodologies from other segments (22:12) of the industry and other industries altogether. (22:16) So things like aviation, medicine, military, the use of checklists, the use of procedures, (22:22) data analytics. (22:23) So the reason I'm telling you all this is because a lot of the reason that I got to where (22:27) I got today in corporate America, in real estate, in commercial real estate, is because of (22:32) tools that I brought that are not from real estate.(22:35) And I saw this beautiful chart. (22:37) I'll try to share it with you guys after the show. (22:40) It's sort of this Venn diagram, you know, with the circles that overlap.(22:44) And they talk about how the greatest value in business is usually, right, there's always (22:51) exceptions, but it's usually created when people and companies bring in different (22:57) disciplines and not just specialize in one. (23:00) So, you know, the inner exchange, if you will, of mathematics and biology, all kinds of stuff (23:08) like that is that's kind of usually what the magic happens. (23:11) So for me, it was a lot of the disciplines and tools that I brought from my experience (23:15) in other industries, venture capital, aviation, military.(23:20) And that's what the principals at Reef, I think, liked so much. (23:24) And they literally, when they hired me, they said, hey, we want you to come over. (23:27) And the words that they use were, we want you to do that thing that you do over there.(23:31) We want you to do it for us. (23:33) And that was your first introduction to real estate, was it, Riff? (23:37) No, no. So, I mean, I had worked in commercial real estate even in the previous company before.(23:41) But again, being 50 years old, I've only been in commercial real estate for sort of the (23:45) last 12. (23:46) I spent decades in aviation and time in the military and time in venture capital. (23:52) And I still use those tools every single day.(23:56) Now, don't get me wrong, you cannot walk into commercial real estate, certainly not at this (23:59) level with a company like Reef Holdings, that transacts into billions of dollars and not (24:04) know what you're talking about. (24:05) You can't just show up knowing nothing. (24:07) And it took me years to kind of learn the ropes, everything from how a capital stack works (24:11) to how to negotiate with a vendor.(24:14) But you do not need, in my opinion, take it for what it's worth, you do not need to be (24:20) a 40-year veteran of one industry in order to gain success. (24:26) I think it's perfectly valuable to bring experience and disciplines and tools from other (24:32) industries as long as you apply them correctly. (24:37) And again, I've been very fortunate to be so successful in this industry with such a (24:41) brilliant, large company.(24:43) But a lot of it has to do, much of it has to do with bringing in disciplines from other (24:48) industries. And we've implemented that in operation. (24:51) So, Reef today has a set of checklists that everybody from our asset managers to our (24:56) property managers, to our lawyers, to our accountants and our marketing teams, everybody (24:59) uses.We brought that on from aviation. (25:03) We started using tools like Footprint for training, which is something that I've learned (25:08) in the military. So, we were able to hire people and literally give them a form that (25:11) says, hey, you need to go train on these things, go meet this guy in this room number.(25:15) But we've implemented so many tools into some of the data analytics tools that I have (25:21) seen in my other work. (25:24) We've implemented that in Reef. (25:25) We have a whole set of dashboards on Power BI.(25:27) We can drill down to every single one of our assets and see if it's one of our hotels. (25:32) I can tell you what the daily rate was last night in any one of our hotels. (25:36) And I can do all that from my iPad being anywhere in the world.(25:40) Those are things that are not really customary in real estate, but they are very customary (25:44) when you run a multi-billion dollar transportation business. (25:48) So, our ability to kind of borrow disciplines and tools and procedures and quite frankly, (25:53) ideas and people from other industries is one of the things that made Reef very, very (25:57) successful. (25:59) Really impressive.(26:02) Well, I could honestly talk to you forever and kind of ask (26:06) questions about this and swap notes. (26:09) It's very inspiring and aspiring to try to achieve (26:13) that level of trust with institutional investors, that level of assets under management. (26:18) I mean, you don't achieve five billion in assets under management with an average IRR (26:24) that starts with a two, you know, 20s.(26:27) That's insane. (26:28) And it's something we preach all the time on the podcast is that you (26:33) need to do a retirement calculator at 15 and 20 percent and really get (26:38) motivated and inspired to invest in and build wealth. (26:42) So, to hear how somebody based in Dallas and we're so close to where we are (26:47) with very normal people, Jeff, you seem like a normal guy, you know.(26:53) So, it'd be above average intelligence, but. (26:56) Yeah, absolutely. (26:58) Through decades of experience and going through life with purpose, (27:03) you know, going through life with your list and doing things how they're supposed to be (27:07) done, not subpar.So, anyway, it's inspiring. (27:09) I think hopefully it's inspiring for the people listening to this, that billions (27:14) and billions of dollars is on track to have an average IRR of above 20 percent. (27:20) You've done it for so long.(27:22) And again, don't get me wrong, this does not happen overnight. (27:25) And I don't want your listeners to kind of take away. (27:27) This is not a lottery, right? (27:28) You don't start doing something and get to billions of dollars overnight.(27:31) And this is not I'm happy to be the focus of this podcast, but it's hardly just me. (27:35) There's 500 people that work for this firm. (27:38) A hundred of them work with me on the same floor in our corporate headquarters.(27:41) It's a team effort. (27:43) Unless you surround yourself with very good people of all different types and sizes (27:47) and disciplines and skill sets, that it's going to be virtually impossible to achieve. (27:52) Right.So we have everything from acquisition people that know brokers to phenomenal (27:57) marketing people, to phenomenal lawyers. (27:59) And it's not like we don't make mistakes. (28:01) We do.But when we do make a mistake, in fact, when we accomplish any transaction, we (28:06) always debrief it, right? (28:07) Which is another concept that we brought from military and aviation, where we kind of (28:12) get together in a room and what we call a safe environment, like nobody's being (28:15) penalized, nobody's getting fired. (28:16) We just want to debrief what just happened, what we did well, what we didn't do so (28:21) well. What can we do better next time? (28:24) And I'm talking about a negotiation.(28:26) We will debrief that about a transaction, about a capital raise, about a CapEx (28:30) expenditure. We'll debrief it. (28:32) We'll say, hey, guys, what have we learned from this? (28:34) And we'll put that in writing and disseminate it to the team.(28:37) So the reason I'm saying all that is because when you do that, when you when you (28:40) adopt that kind of approach, then over time, right, over 10 years of working together (28:45) with good team members and some people come and go, but there's very little attrition (28:49) debrief. It's you know, 99 percent of us are the same guys that were there 10 years (28:52) ago. Then you really start to kind of work together as a team and you really start to (28:57) kind of quadruple, right, the effort, right, because everything that you do is in the (29:02) magnitude.And that is really the key to how we got here. (29:06) It did not happen overnight. (29:08) Nice.I would agree completely, actually, hearing that you do have such a low (29:13) attrition rate. You know, 99 percent of the team is the same team that was there a (29:16) decade ago that that I would say, if you have that going for you at your company, (29:21) you're bound to achieve some sort of success, you know, working together as a team (29:25) for a decade. That's that's powerful.(29:27) Yeah. I've been in corporate America and I typically there's a lot of turnover. (29:31) So that's really impressive.(29:34) Yeah. And a lot of it is about managing egos, right, because there's always people (29:37) who think that they should do more or they should be getting more. (29:40) And, you know, obviously it's easy for me to lecture when when when I happen to work (29:45) at a very successful company, not not everybody is that fortunate.(29:47) And I'm not saying there's not good people in companies that are not successful. (29:51) Of course, there are. (29:52) But grit is a big part of it.(29:54) Right. So, I mean, once you quit, it's over. (29:57) The stats are broken.(29:58) But it's.
