00:00I do want to first start off about your reaction yesterday when you heard this proposal and it is just that by President Trump to limit the ability of investors like yourselves to buy into the single family housing market here in the United States.
00:14Yeah, I think that the headlines from yesterday were definitely eye catching for us.
00:20The big point is that there is an affordability crisis within the housing sector within the U.S.
00:25And it's not just the U.S. phenomenon. This is a global phenomenon.
00:28The headlines from yesterday were particularly going after a group of investors, institutional investors, call that any investor that owns more than 100 units.
00:40That group is very small in the grand scheme of the ownership.
00:43They own less than 1 percent of the total housing stock.
00:46And so when you take a step back, the issue related to affordability is not about that 1 percent group.
00:52It's really a scale issue. And how do we solve the supply side?
00:55And so for us, we're very focused on making sure that there's new supply coming online because that's the only way you're going to solve some affordability crisis.
01:03I am curious, though. I mean, at the end of the day, and I don't mean to be pedantic, but it's not your job to solve the affordability crisis.
01:09It's your job to find investments and make money for your clients.
01:12And so I am curious as to whether these types of proposals would lead you and your team to adjust your investment strategy.
01:22You know, for us, we're very bullish on the residential sector in general, and there's many different ways you can access residential.
01:28We are focused on multifamily for rent side. We are looking to develop.
01:35We're looking at market rate. We're looking at affordable housing.
01:38And we can also look to bring new supply online, get a great return because there's just not enough supply and there's so much demand.
01:45So for us, bringing new stock online, whether it's in the equity position, funding a new development, or even on the construction financing side where there's very tight lending standards today,
01:56if we can step in there to get more money into the system to build new homes, that's a win-win.
02:01We can achieve great returns as investors and also help address this issue.
02:05Well, Elizabeth, to ask a little bit more directly on that question, you're, you know, feeling good about residential overall,
02:13but you think about some of these policy proposals, some of the cross-currents here, would that maybe keep you a little bit away from single-family homes?
02:23There's many different ways you can play the single-family home sector.
02:26I mean, I think where we stand today, there was a headline yesterday.
02:29We're not really sure where the outcome will be.
02:31I think for us, we really like the idea of building for rent, which is a different type of product that you are building specific housing units for people to rent.
02:42And given the fact that, you know, post-GFC, mortgage standards became so much more stringent,
02:48it has become a very difficult proposition for many families to own a home.
02:52And so they are forced renters.
02:54By going into some of these build-to-rent type of investments, you really have a large demand pool that wants access to housing in safe, affordable, desirable neighborhoods.
03:06And through this build-to-rent strategy, you can achieve that.
03:09And so I do want to ask a little bit about multifamily homes, because talking about residential overall, clearly, of course, the focus right now is single-family homes.
03:17But you think about multifamily developments, I'm taking a look at some of your notes, it's an area where you remain bullish.
03:24So compare and contrast what you're seeing in multifamily right now versus maybe single-family.
03:30Yeah, I think with multifamily, it is a much more established asset class.
03:34So from our perspective, investing in this asset class, you're very certain on the exits.
03:39It's a very liquid market.
03:41And, you know, you can be in much more urban settings where the population is denser.
03:45And from a real estate perspective, we like that.
03:47We like the population density.
03:49We like population coming into locations for job growth, places that are desirable for people to live.
03:56So we really like multifamily.
03:58I think we also find that there is a place in the market for the single-family ownership and rental type of environment.
04:06But those tend to be more in the suburbs, and they may be in a plot of land, which is all together, or they might be scattered sites.
04:15And so the exit on that is not as robust and proven as it has been on the traditional multifamily side.
04:22So we lean a little bit more towards traditional multifamily, but we like both sectors.
04:26Before we let you go, Elizabeth, I do want to get your thoughts on what's going on outside of housing, real estate, and particularly when it comes to the data center space.
04:34We've heard from so many investors saying that they're looking at data centers, and they think the prices are just too high.
04:39Maybe they're willing to sort of buy up land and do a lease back or something like that, but they don't want to do a real carry of any real properties in that space longer term.
04:47Are you finding similar issues with pricing?
04:50It's interesting.
04:51I think a lot of the talk as it relates to data centers is around the hyperscaler market.
04:56These are massive facilities, and they're typically rented to a single tenant.
05:01And the ones we would go after are your likely suspects that have high credit quality tech-oriented companies.
05:08There is a whole different level of data center requirements and almost a supply chain, a logistics supply chain to get data from those hyperscalers to the end user.
05:20And similar to last-mile logistics, we see you've got the hyperscalers on the outer ring road, but then you have to go through co-location facilities, co-location data centers that ultimately end up at hotel carriers, which are usually in urban settings.
05:35And so, yes, we like the data center play on the outskirts with these hyperscalers.
05:39Development yields have compressed, and I think it is expensive to buy on a stabilized basis.
05:43However, there's a profile of capital that fits that very nicely, insurance capital, for example.
05:48But we're also now looking at those other two layers that get closer to the urban core and that are required from a supply chain perspective to get that data from hyperscaler to co-location through their carrier to the end user.
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