00:00Taking a look at the notes you sent over to our producers and you point out that you're favoring short
00:05duration CRE credit here but this isn't a buy CRE beta sort of market.
00:10It's not a blanket buy. Talk to us about you know just how selective you have to be right now.
00:17Yeah I mean we've got a pretty fairly bifurcated recovery over the last three years so selectivity is very important.
00:24I like to say that we have a lot of elbow grease as we do our analysis from a team
00:29perspective.
00:29So you know different property types different markets have different risks and so as we put our dollars to work
00:37within the fund or investor dollars to work you know we're very very careful in terms of thinking about what's
00:43going to happen in the next two or three years and then ultimately speaking how does that translate to on
00:48time payoffs in terms of low maturities and how does that translate to return right.
00:52Ultimately you know for us you know we're trying to do our best here to manage the fund in that
00:57under that light.
00:59No conversation about commercial real estate is complete without mentioning data centers.
01:03They seem to be the hot topic anyway but especially in commercial real estate and I know about a year
01:08and a half ago you were on Bloomer Television voicing some skepticism about investing in data centers.
01:14Back in February of 2025 you said we're on the sidelines at this point.
01:18What happens for instance if an asset actually goes into default what do you actually own other than to you
01:24a shell space with a lot of energy tied to the underlying property.
01:28Have you changed your mind on that.
01:30Have you how's your thinking involved.
01:32Yeah I think the market has evolved.
01:34The underlying financing market has evolved where such that the bulk of the financing is happening in the corporate space.
01:40So coming back to commercial mortgages there are issuance in CMBS underlying that our data center is centric for us.
01:48We are not active in that specific to our fund.
01:53It's more so a question of what's the relative value.
01:56What can I get.
01:57And so as you think about the double line sort of commercial real estate investment philosophy for us it's really
02:04back to basics.
02:05Right there are data centers bonds available there are also office bonds available there are also you know retail centric
02:13back bonds available.
02:15If the spreads are the same or spreads are similar that is a big question mark.
02:20Why buy something that you know with so much uncertainty.
02:23And so for us you know it's better suited in my view it's better suited to be a risk to
02:30be had on the equity side as opposed to the debt side.
02:33So coming back to the fold here if spreads move and reset there could be a potential opportunity for us
02:41to play.
02:42But at this juncture we have a lot of options.
02:45So we're still not playing in that space.
02:48And I think you know the our performance kind of shows.
02:52That's really interesting.
02:53And you know it's it's similar to what you were saying back in February 2025.
02:58And you think about you know how much the market has moved since then still super hot as Scarlett says.
03:04But you know there are the concerns out there too about you know whether we're over building.
03:09And you know it's to hear you say that you know maybe that's a better suited investment for the equity
03:15side rather than on the debt side on the CRE side.
03:19I mean what would potentially change your mind when we have this conversation in 18 months from now.
03:25I mean what's in the realm of possibility that might make you more interested in this space.
03:30I think you know it comes down to level right.
03:35It also comes down to just you know additional you know additional knowledge as we learn more about this asset
03:43class.
03:44Things are evolving and things are going really really quickly.
03:46And coming from the commercial real estate side you know I would just kind of point out that you know
03:50from a risk standpoint itself there are a lot of commercial real estate deals to be done away from data
03:56centers.
03:56And so I keep coming back to you know for us the menu of options the back to basics sort
04:02of viewpoint in terms of brick and mortar real estate.
04:05A lot of you know history behind you know us picking and choosing underlying property types.
04:10So that is you know what we're focused on at this at this point.
04:13I mean things can change.
04:15I think it's level dependent and also you know as developments come along.
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