00:00So let's talk about the office landscape. It sounds like we're telling Lesko stories about, of course, how office stands right now.
00:08For so long, it was, okay, commercial real estate, it looks pretty good, except for office. Has that storyline truly turned a corner?
00:16You know, I think for us, we have avoided what I would say is the early, I'm not going to say demise, but the dislocation in office that goes back to the COVID days.
00:26We looked at this as an opportunity, again, with no legacy, what I would say, office in our company to jump in, take advantage of a situation where we're able to acquire 13 million square feet of office, A-quality, you know, A-type buildings in two of the gateway cities in the U.S., both New York and San Francisco.
00:48I think a lot of this has to do with replacement costs right now.
00:51You know, when you look at this portfolio, we're acquiring assets at, or buildings, I should say, at a basis, a little under $600 a square foot.
01:02When you look at the replacement costs, it's probably $2,500 to $3,000 a square foot for these very same type of buildings.
01:08So, you know, we're super excited.
01:10We like to think of ourselves as more opportunistic investors.
01:14And being able to actually jump in on this portfolio and this company gets us real excited.
01:19So we are talking days ahead of a big mayor's race when it comes to New York City.
01:25And there's wildly different views on what an Andrew Cuomo would mean for the city when it would, as it pertains specifically to real estate, and what a Zoran Mamdani administration would mean.
01:35So Mamdani, the frontrunner as it stands right now, how might that impact this sector in which you operate?
01:42I think, you know, when you think about concerns around Mamdani, I think there's a lot of concerns.
01:48If there are concerns, there's a lot of concerns, I should say, about him and a lot of his policies.
01:54When we look at the commercial real estate space, we feel real good about that.
01:57You're coming off what I think is the best leasing quarter for commercial real estate in New York City in well over 20 years.
02:04When you think about Mamdani, is it a quality of life issue?
02:09Is it around, you know, rent-stabilized housing?
02:11We don't have any rent-stabilized housing.
02:13I do think that's a sector that obviously is going to be under pressure to the extent that he does win the election.
02:19The quality of life stuff is something that continues to resonate with folks.
02:23You know, how do we think about the police force?
02:25He did reaffirm that he's going to keep Jessica Tish as police commissioner to the extent that he gets in.
02:31You know, we look at it, and I live in New York City.
02:34We've had other mayors before.
02:35You know, we had de Blasio.
02:37So, yeah, I mean, it's something to be concerned about.
02:39But I think as it relates to what we're doing here in the office space, I think we feel pretty confident that we'll be okay.
02:45Right.
02:46It's good to contact that, of course.
02:47You've been through political cycles.
02:49You've been through different administrations before.
02:51But just to drill down a little deeper, I mean, I was taking a look at your earnings call.
02:55You mentioned, as it pertains specifically to the Paramount portfolio, some of the things that you want to do is not only grow occupancy,
03:01but you also want to drive rents higher, that you take a look at the average rent.
03:05I think it's about $85 per foot.
03:08So, again, you think about the Mamdani campaign.
03:11You think about some of the things that you're saying in the earnings call about driving rents higher.
03:15You could see how the two might come into conflict.
03:18Yeah.
03:19I think this portfolio, when you think about average rents of $85 a foot, you know, we're in the market as a firm.
03:25We have, you know, the Rhythm brand, and then we have Sculptor as well.
03:29We have a need for about 100,000 square feet in New York City now for a new lease.
03:33You know, when I look at, and we're in the market looking at every day, we're looking to see, you know, where we're going to go.
03:40And the average rent for an A-quality property is, you know, well north of $85 a foot.
03:47Our space that we're in now is, give or take, about $150 a foot.
03:51You go to 9 West 57 where Sculptor is, you know, the new ask there is going to be probably something towards $300 a foot.
03:57So you compare that, there is a lack of office space in New York City, and I just think, you know, $85 a foot versus $300 a foot, there's something in the middle there, and that's going to help us drive rents.
04:09Right.
04:09That gap can narrow there.
04:11For sure.
04:11Another comment that you made in your earnings call that caught my eye is that when it comes to AUM growth, you said something along the lines of, you're not in that business of just trying to increase your AUM.
04:21And I was hoping you could put a little bit more color on that.
04:24We want to grow AUM like every other asset manager, but we have to lead with performance first.
04:30You know, when you sit down with an LP or you sit down with one of the wealth management firms, they don't need any more managers.
04:38You know, there's, I mean, obviously there's Blackstone Apollo.
04:40Everybody has this large suite of products.
04:42When you look at us, you know, we're earning our stripes.
04:45You know, right now we have $55 billion of third-party capital under management.
04:48We're managing over $100 billion of assets.
04:51We have enough, but when I say we have enough, if we can lead with results, results, and dealing with people, it's a people business.
04:58If we drive good results and we have a suite of products that suit the needs of LPs out there, you know, we'll raise plenty of money.
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