Episode 30: Jorge Rosa

For the 30th Origination episode, Mordecai interviews Jorge Rosa, Cushman & Wakefield's Executive Managing Director of the Washington Metro Office. They discuss the recent upheaval in the market and how to build a relationship even after losing a deal.

Timestamps:

1:44 - Early Sales Experience

17:14 - We Are Advisors First

24:47 - Timing is Everything

28:08 - Acquisitions vs Broker

30:15 - Transition from Acquisition to Broker

33:22 - Current Market Trends

47:30 - Advice to New Grads on Going Lending or Investment

52:55 - Common Mistakes of Recent Grads

55:44 - Being Present

lenders, market, people, loan, client, equity, selling, deals, screen protectors, year, calls, rates, business, borrower, easy, long, sales, chase, interest rates, debt

Transcript

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Mordecai Rosenberg: 0:15

Welcome back to the Origination Podcast, where we talk to the top originators and salespeople in the commercial real estate industry to try to understand what separates the top performers from the rest of the pack. In this episode, I'll be speaking with Jorge Rosa, who is Executive Managing Director of Cushman and Wakefield's Washington metro area office. This is a really great conversation, and I think you'll you'll like it a lot. At the end of the talk, we discuss the current market environment. As we sit here, this was recorded in May 2022, there's a lot of upheaval in the market after interest rates have just increased by a full point and a half over the last 60 days. So we'll talk about how that's impacting the market. Another thing that worry talks about is that when you lose a deal, that is not the end of the road, relationships are built over time. And it's important for young people to know that people will say no, but how do you capitalize on that, to deepen the relationship and hopefully set you up for success with the client in the future? I hope you enjoy this conversation. I know I certainly did. So without further ado, let's talk to Jorge. Welcome Jorge Rosa, to the Origination Podcast. I'm very excited to have you.

Jorge Rosa: 1:42

Thank you, appreciate you hosting me.

Mordecai Rosenberg: 1:44

All right, well, you can reserve your thanks until we get further in the conversation. You know, just think it's still justified. So I'm going to start with a question that I like to start these conversations with, which is, you know, if you think about your first sales job, it could be when you were a kid, or in high school or college or post college. But if you think about like, earliest sales experience, maybe not a job, but sales experience. Yeah, anything, anything come to mind.

Jorge Rosa: 2:15

You know, it's funny, I didn't appreciate the sell until I was later in life. So, you know, for me, I think this is an interesting story. So I knew I wanted to do real estate. So kind of a little bit of background on me, I grew up outside of New York City. And I used to work in the summer, you know, from college. And I played every sport under the sun. So my summers were always taken up. My parents were actually pretty cool with me. So I didn't I didn't have to do very much in the summer other than train and, you know, camps and that sort of thing. But when I went to college, I started working in the summer. And my brother in law was a foreman of a scenic scenic art studios. And this was in Cornwall in New York. And we basically I used to build a bunch of stuff. And I kind of was a business econ major at Lafayette. And, you know, I just Wall Street never called me I was always in the physical, right. So I'm gonna call it a career interview, so to speak, just kind of figure out which direction I wanted to go. And I was basically given the advice, hey, you know, you may want to get into real estate kind of given your appreciation for, you know, physical and building and so on and so forth. So the recommendation was that I, basically, should get into appraisal. Just do a summer internship as an appraiser. And the salesmanship that I didn't appreciate was the drive. So for me, I called my mom, I was like, Hey, Mom, can you bring me back? Because you know, kids today, they're all you know, Google, you can find anything you want. But I asked my mom to bring me the phonebook. And I called every single appraiser that was on that list back home. Okay. And one guy said, maybe, he literally he said, he's like, I don't know, he's like, you know, by the time you're trained up, you know, you're gonna be able to hear and not only have so much limited time, I'm like, Look, whatever you do, just give me a chance. Just give me a chance. And I kept after him. I called him probably every day or every other day. And he finally said, Alright, fine, I'll interview you and when I went into the office, I actually came home. He said, you know, look, you know, when are you going to be back he scheduled an interview with me. And he I interviewed with him I you know, and appraisers as you as you well know, are very casual. They have you know, polos and slacks. I was in there with a with a suit and tie. I had my resume, which had like two things on it, probably completely irrelevant. And I gave him everything I had. I was like, Look, you don't have to pay me. All I want to do is learn. And I gave him the whole spiel and he said, You know what? He goes, Look, I love your attitude. He goes, I love how persistent you've been, I love how honest you've been and how dedicated you are, he goes, not only am I going to hire you for the summer, because I'm going to pay you, and you're not going to work for anybody else. But me. And he was the president of the company. And I just I just learned, if you want to get someplace, you gotta go to the top. And it was, it was interesting. And it was probably something that was not as appreciated until I do what I do today, where a lot of times, it's a lot of no's, It's a lot of nose. And it's all about, you know, the persistence and really understanding and knowing what you want to get there. So that, you know, it's not the traditional sales job, where it's like, I'm on a car and a car dealership, or I'm selling this or that. It was really selling myself, and that's and what's interesting about that, and the underappreciated piece at the time, is that's what we do for a living, and that and I think that's something that I think is always set with me, that kind of was a little microcosm of maybe what I was meant to be doing later in life.

Mordecai Rosenberg: 6:01

Yeah, it's very interesting, this idea of selling yourself as opposed to selling a product.I think a lot of salespeople think that you're selling a product. It's like you're selling a we do investment sales brokerage, where we do you know, Fannie Mae loans. But the reality is that what you're asking the person to do on the other end of the phone, or the other side of the table, is to trust you, you're really asking for their trust, you know, and it's interesting that your experience with the with that appraiser, you're offering to work for free, So why shouldn't everyone have returned your call? And say, Oh, sure, come come on board. because you were actually actually making an ask you were asking for their time. And that's kind of an unspoken thing that you are asking for them to spend. Whenever you pick up the phone.

Jorge Rosa: 6:55

Yeah, literally on every every call. And look, the value that we bring also often is our expertise more than anything, And the way that I've always viewed, you know, the investment sales side is, you know, number one, we're, we're a resource to our clients. And I don't consider myself, you know, just a broker and a real estate broker, I consider myself an advisor, and in some cases, a friend, where even in most cases, even on deals that I'm not working on, maybe even our competitors are working on, they'll call me, because they know I'm gonna shoot him straight. They know, I'm going to be honest. But you only get that through, you know, years of just persistence and honesty, and just being, you know, there for a lot of these clients. But 100% It's all about selling yourself and building that trust and rapport, where you could guide people to, do the things or, or not do the things that they were intending to do. And I think that's a big part of what we do. As brokers.

Mordecai Rosenberg: 7:59

Yeah. Now, as far as how you get to that point, when to the point where they're calling you, and they trust you as an advisor, and a friend, how does that start? Right? So what's that first call? Like, I would also imagine that it's a little bit cyclical, for the last, you know, we're now sitting in, in May of 2022, where interest rates have just increased by a point, you know, plus or minus, like, over the last 3030 45 days. And that may have an impact on the market where there's been a voracious appetite. Up until now, maybe there's a little bit of a pause. And all of a sudden, you know, the broker with a deal may not be as exciting as it was a month ago, you know, so, you know, what does that first call like? What are you seeing, and how do you in? Is there kind of a cyclical nature to, make make hay while the sun shines, you know, kind of a thing?

Jorge Rosa: 9:08

Look, it's, you know, and I always I always say this, that it's it, you know, when things are going right, it's hard to really understand what you're doing well are doing right, because you just win? And that's when the winds at your back, it's really when you fail, right? So I'm going to focus on some of the failures, you know, for me, it was always about building credibility, And our, our process really starts at, you know, really kind of reaching out on specific deals and talking about other deals that we're doing in the marketplace, but also building a lot of credibility. So, in our BOV process, you know, for broker opinion of values that we provide to clients or folks that are looking at a development deal with, you know, existing deal, what have you. A lot of times, look, it's a competitive landscape. So, all so often, you know, early on in my career, you're going to lose a lot and that's part of it, that's part of the business that we're in that, you know, everybody loves. What's, what's the way to say this? Everybody loves the final result. As little kids we aspire to be, you know, in my day like, like a Michael Jordan, Somebody like that I'm going to use an iconic, figure like that. But when you dig down into the storyline, you're gonna find that, you know, he didn't make his, you know, middle school basketball team.There are failures and trials and tribulations along the way. And I think on my business, you know, those trials and tribulations are failing at winning business, and going back. And, you know, when you pitch business, a lot of times you're gonna have stiff competition, that you're not going to win every deal. It's just the reality of it. But I think what makes it interesting for me was calling an owner back, and almost giving myself a grade, based on where the deal transacted and where I valued, Because for me, it was proving credibility, that of who I was, and I wasn't out to buy your business, I wasn't out to defraud you into business and into a when I was acting as your advisor, I was telling you what I saw in the market, where the market was going, and some of the tea leaves that we were reading, and basically telling you, our view of what we were experiencing in the market, and sometimes it was well received, sometimes it wasn't. But when you call back the owner, and you say, hey, the deal sold at x, our value was right at x, And we were within that range, give us another shot, right? BOV doesn't cost you anything, right? All it does is it allows us to be more credible, and you're gonna use us at some point. And there's, there's countless examples of, you know, owners that we've gone out, and we've provided BOVs for, and they went with another broker, one with another broker, and all of a sudden, it was like our turn, and I think that, you know, what makes this business tough is you've got to be comfortable with failure, you're going to have to, you're going to have to fail, you're going to, you're going to fall down, you're going to scrape your knees, you're going to say why am I doing this, I'm not making any money. And all of a sudden, if you stick to that plan, all of a sudden it turns, so going back to the question about the changing landscape, that was the second part of the question. The Changing Landscape is interesting. And also often, we always want to tell people what they want to hear. And I don't think that's right. We have this habit of of saying, you know, when you talk to a broker, it's always good news. Look, the reality is, is that we have to manage a process when we're out in the market with something and be honest of what we're seeing. But the flip side of that is, is that we also have to advise that you know, what, now may not be the right time to sell now maybe a worse time based on what we're seeing in the marketplace, maybe that answer is interest rates, maybe that answer is it doesn't matter. I mean, it can be it can be anything in a market, an employer up and leaving, or an employer settling down like an Amazon, in the DC area. There's lots of different catalysts that I think we've got to think through. And I think that the more trust that you build, the more you're able to do, the more you're able to provide. And I think the more you'll win.

Mordecai Rosenberg: 13:27

That's, that's excellent. I love the idea of calling back a client who's still you lost, and saying, Oh, by the way, just to remind you, here's where our estimate of value was. Because the truth is, I'm very familiar with this on the debt side, you know, that we there are certain lenders that just have a reputation of quoting high, and then retrading And on the investment sale side, you know, I know that that happens as well, people will kind of promise the sky, you know, and then not, because they want to get it off the street and then not be able to execute. So now, in the past, like what I've thought about that is, well, yeah, we know that they're probably gonna get retraded. But I'm not necessarily going to call pick up the phone and call them and say, by the way, your loan ended up showing up here, just so you know, like, our loan proceeds were exactly on top of where you ended up. So if you want to talk on the next one, let me know, right, or here's it or here's the sales proceeds. So just because people do it, they hate getting retreated, but they're not necessarily thinking about oh, wow, I should really think about Jorge, because I'm going to dig out. Are they are they digging up the BOV that you came up with, you know, 90, 120 days ago, like no.

Jorge Rosa: 14:54

And we we found that in a lot of instances, because You know, there are there are folks out there that will just try to buy the business. And when I say buy the business, they'll over value it, they'll tell the owner what they want to hear. Or what they want to hear plus is like I like to say, and, you know, look, there was a deal that we that we valued at one point. And we I mean, our competitor, and it was only between us and the other group. And, you know, one group, I mean, I'll just make up a number was, 80 million was the total asset, the deal size. And our value was at 72 million. And I said, Look, here's what we're doing. We're basically repricing your roll, Because your rents are below market, here's how we see it, here's the growth you can achieve. And here's what you can get, and here's the debt that you're going to be able to get, And it was an honest conversation. I said, Look, I'm not I'm not going to tell you, something that I can't deliver on. And needless to say, It traded at 72 million. And that was the first call that I made. And I said, Look, I know you're a developer, I know that you have more product, that's, that's gonna be coming to market continue to give us a shot, We didn't, we didn't, we didn't pull the wool over your eyes. We told you exactly what it was that we saw on the market. And that builds credibility, right. And all of a sudden, you'd find that even in other other questions, maybe not necessarily related to real estate, but trends in the marketplace. Because, to nail the price, you've got to have your finger on the pulse of the market. And all of a sudden, you start having market updates, So going back to that free conversation As we started, all those conversations are free, you can call me up anytime. And we can have a conversation about the market, what we're seeing trends, what have you, and hopefully, and we invest our time, in the hopes that we will, at some point be doing business together, rather, whether that's on the buy side, the sell side, whether that's on the debt side or some other means. So those are the conversations that you have to invest in, sell yourself to really start expanding your platform expanding your business.

Mordecai Rosenberg: 17:14

Yeah, It also it occurs to me that, there are moments that are transitional, where things are very uncertain, we are in one of those moments today. On the one hand, it's a tough time to sell during those moments. But on the other time, you know, I've always had this idea that what people really want is clarity and confidence, so they want to be clear on in terms of what the frustrations are that people have clients have along the way, I don't know what's going on, about being kept informed, or they're not competent, they lose confidence, or they don't have confidence in the execution. It's now's the time when everyone is feeling very uncertain and unconfident, and so that's the time where you can call it and say, you know how easy would it be if you call and tell someone look, I'm just telling you about this asset, you may be thinking about selling it, here's why I don't think you shouldn't be selling it today. And I know you have a lot of other people that are calling you and pitching you to do this, this business, I think you should be waiting another 12 months, 24 months. Here's some of the trends that we're seeing, you should hold off. Whenever you get a cold call, or you know, someone gets a cold call, they're expecting from what to be selling them. And if you're calling and saying like, Look, I'm not trying to sell you anything, I'm just want to share some guidance based on what we're seeing. And our guidance is like, actually don't sign up right now. What do you think about that, the idea of telling someone like you're not to do something at the current moment.

Jorge Rosa: 18:56

So look, we do that, I don't want to say often because, you know, very, most of the time, we're having conversations with those owners. well in advance of that point. I'll give you a few examples of some of the things that we've seen in the marketplace. So and I only focus on multifamily, so I'll keep it multifamily heavy, as far as the commentary is concerned. So, one of the things that we've been experiencing in our marketplace is, stays on on evictions where you know, there was an eviction moratoriums, they were very gross moratoriums, those sorts of things, And what happened is, is that in some cases where you had a huge backlog of evictions, and all of a sudden your occupancy went from, call it 95% down into the 80's and you don't want to say okay, I got rid of all the bad apples, okay, or the bad debt in my rent roll. You know, now is the time I'm gonna go and sell, somebody else can lease it. The answer is no, let's let's, let's let the rent roll season, let's show a better trend. Let's see if we can improve the rent roll and show the last call it 20 leases, 10 leases, with a positive trend as we're getting back to closer to stabilization and stabilization in my mind, it's going to be something in the low 90s. And so it's gonna vary submarket to sub market. But that has that has a real twofold effect. Number one, it allows us as brokers to really sell the story that hey, you know, the owner has a very solid rent roll that you're going to be buying. Number two, it's going to help on the debt side, Because at the end of the day, when you look at a rent roll, that's what the lender is going to take, that's the baseline to say, hey, here's how we can maximize proceeds. And then also number three, it's going to give you an opportunity to accelerate if in the current environment we're seeing with inflation as it is, we are seeing these rent escalations pretty meaningfully, So it gives you the opportunity to show my rents were at x, but I'm at x plus 10%. Or I'm at x plus 7%. Of mylast four leases, five leases, 10 leases, 20 leases, that's, that's the advising that we need to do, because for the last 18 months, the market has just been absolutely on fire, as it pertains to trade outs, rent growth, you know, all these different, positive things that have been happening in our market. Now, the one thing I will tell you is, a lot of times and it was funny even how you ask the question about like the negativity in the market, and a lot of times, it's amazing what happens in media, even in Business Media. And I think this is actually really interesting and on how we have a certain perception. Negativity, travels 10 times faster, and spreads 100 times wider than positivity. Right? So so let's talk about for that for a minute. Like, right now the shaky leg of the stool and the uncertainty, right as the interest rate environment, right, we're we're seeing some volatility, we're seeing, you know, the the 10 year go up, you know, over 100 basis points over the last 60 days. And then, you know, it feels like now we're settling, and then it kind of pops a little bit and, and it kind of bumps along and there's just that uncertainty in the market. Well, you know, it's easy to focus on that, and that has real impact on value. Right. And just in general, because in real estate, we're very Debt Debt reliant. What's interesting to me, is that here's what's not discussed, we're seeing record levels of occupancy, okay, across all all sectors, whether it's downtown, a suburban, tertiary, doesn't matter. We're seeing all those markets at record high levels. Number two, we're also seeing rent growth at levels that we've never seen. I've never seen this level of rent growth in my career, over the last 20 years. There are no concessions to really speak of, and there's still a huge favor right now, the market, the investor markets continue to favor multifamily, versus any other asset type, with the exception of maybe industrial. So there, there still are so many positive reasons to really think about, hey, I'm selling, and I'm not selling at the peak. But maybe I'm look just below the peak looking up at the peak and say, you know, what, my valuation is still significantly higher than it was 24 months ago, or 36 months ago, right. And I think that's the perspective that we have to provide, And look, we are off our highs, there's no question about that. It's really debt driven. But it's still worth kind of discussing those things and collaborating, because again, at first, the first thing we are as advisors, to our clients more than anything else.

Mordecai Rosenberg: 24:04

Yeah. I heard about someone who was selling a property, they bought it at the beginning of 2020 for like $50 million. And they were selling it now for 70 million, two years later. Now, is it possible that it could have got for 75 million, a month ago? Alright, maybe you just sold it for 40% more than you paid for it two years later, that is if someone told you that's the returns you were gonna get, you know, two years ago.

Jorge Rosa: 24:47

You would have been tickled pink, you would have done it 100 times out of 100. And you wouldn't have questioned it. But I will say this, the time I'm going to call it reopening, the country reopened at different stages. So that's why I say reopening. So, parts of the Sunbelt, Florida, they opened a lot sooner than, let's say, the Mid Atlantic and the Northeast, and I'm east coast. So I'll just stick to the east coast for a moment. At the point of reopening, I'm going to make up a date, February of 2022, that period of time that reopening, And again, it varies on the front end, is probably going to be one of the highest growth in value we may ever see over that period of time that we ever seen in our in our career. And it was underappreciated at the time, because, no lie, revenue was going up, up, up, up, up, up up. And we were seeing interest rates go down, down, down, down, down, down, down. I don't know that we're going to see that level of growth in the market that we saw during that time. I mean, we were seeing value explode in so many areas, And there were some people that were very early adopters and folks that did deals in 2020, in early 2021. But it's going to be interesting to see what happens when we're talking about some of the floating rate products that people were investing with and buying with call it in early 2022. And even in Late 2021, it's going to be interesting, because If that floating rate debt goes to five, five and a half percent, and you bought this at two and a half to 3%. that math doesn't work. And it's not going to stay at five. The Sofer curve is going significantly higher. So we're in an interesting time in our market that I think there are some some chinks in the armor. But overall, I think from an operations and fundamental standpoint, I still think we're pretty solid.

Mordecai Rosenberg: 27:12

Yeah. I mean, you mentioned the floating rate debt. I mean, the other thing is that costs for escrowing for the caps. I thought one deal that went from something like it was a couple$1,000 a month to $40,000. It's insane. I know that. You did acquisitions at Fairfield for a number of years. I was Curious? But buying lands for new construction? Correct. I'm curious how you would compare the experience because acquisitions, guys are sale sales guys also? You're trying to get people to sell you? So how does that you know, so it's like, kind of like, it's a little bit like buy versus buy side versus sell side? And maybe they'd call it but like, how would you compare the experience of acquisitions, as opposed to invest in sales brokerage?

Jorge Rosa: 28:08

It's so interesting, because, you know, I love to meet with some of the next generation and I love having these conversations, because, you know, even though it was the limited time that I was at Fairfield, and I was, I was on the new construction side, I was doing land acquisitions on the development side. And what was interesting about that experience, I came from brokerage. So at the time, I was going to Hopkins for my real estate masters in real estate, and I decided to make the jump to the development side. And what's so interesting about it, and I can appreciate it, you know, after the fact is, the sell part was almost the same. On the development side, you know, the differences, you're buying the land, right, you're going after, and you're finding the land to develop. But then you're, you're basically doing what we do as brokers. On the on the buy side. Because you still have to sell yourself to equity, you still have to sell yourself to debt. Right. So it's also often we're actually creating, offering memorandums and they look a little different, they feel a little different, both for the equity side of the coin, as well as the debt side, to talk about what we're seeing in the trends in the market. What are we seeing as far as construction costs? What are some of the growth trends, all of that stuff is stuff that we do on the brokerage show? Our audience is differen. And that's one of the key distinctions. So and I sell existing products. So on the existing side, my audience is investors. Now it may be institutions, it may be DSTs, it may be funds, it may be, private individuals, wealthy, high professional, you know, professional equity, or individuals that may bid on our deals, but it's all about the audience, right. So you have to tailor the pitch the sell to that audience, but the process itself is very, very similar. So on the acquisition side, you're just looking and trying to find deals and find projects to build or to invest. And that's not very different from what we do on the broker side. It's actually pretty interesting.

Mordecai Rosenberg: 30:16

So the transition from Fairfield to brokerage, I think you're at JLL, how was that transition? Was that a pretty easy transition?

Jorge Rosa: 30:27

It was an it was an easy transition. So I started out actually, on the broker side, I worked for a small boutique company called First Capital Realty. for about four and a half years before I went to Fairfield, and, you know, really, what, what, what brought me back on the on the brokerage side was literally it was plug and play. I mean, you know, look at that time, was very, very dark. And, and I remember the great recession, it was, it was a dark time. And I remember I was laid off from Fairfield, it was about three months. And there was a point where I was like, I may need to, I need to leave real estate, and it's something that I love. And, you know, I strongly consider it and, you know, just based on some of my relationships, a, you know, there weren't very many jobs to be had, and there wasn't much in the way of job postings. It was just a relationship. And I came over as a financial analyst, actually a Transwestern and then our entire team from Transwestern, went over to JLL, as JLL was kind of entering into the multifamily space, but the transition was was very, very easy. I mean, you know, once you know, real estate, and you know, the market, it's easier to figure out how you tailor that to a specific audience rather than, you know, learning a brand new market or something else, so it's there's a lot of similarities in the process of both the acquisition side and in brokerage side.

Mordecai Rosenberg: 31:57

Yeah. Plus, you're trying to get someone to sell an asset, you know, at the beginning, so that's the same. And that's even kind of the same client, maybe not all the same clientele, but some of the same clientele.

Jorge Rosa: 32:16

Yeah, a lot of, you'd be surprised, it's, it's actually kind of interesting. That the look, it's funny how much real estate is as a total industry, and how few people actually do it at, you know, at the institutional. It's actually quite interesting. So, you're gonna keep a lot of those relationships, and even the folks that I worked with, or, whether it was at Fairfield or partners that we had, I still know a lot of those folks today.

Mordecai Rosenberg: 32:46

Yeah, it's definitely a small world. You don't want to burn bridges.

Jorge Rosa: 32:53

No, that's right. And that's why credibility is is very, very important. This is how I always call it hand to hand combat, It is literally person to person, is the way that we do our business. And that credibility, going full circle, selling yourself and having that credibility and that character is really what's gonna allow you to have longevity in this industry.

Mordecai Rosenberg: 33:25

So let's talk about the tape environment a little bit, we're coming off of 18 months of the industry just totally on fire. I mean, just as I've never seen anything like it. Just capital just chasing it. Who would have thought that you would be talking about 4% cap rates in Augusta, Georgia are just crazy things. And it's probably three handle cap rates is the norm, and we're in your market and maybe even below, now all of a sudden, there's a shock to the system, interest rates are up by a point. There's talk about the Fed starting to sell bonds into the market. So what are you seeing, are people pressing our buyers? Are deals still closing? Are they getting retraded? What's kind of the landscape?

Jorge Rosa: 34:37

It's definitely interesting, and there's a lot to cover on on that topic. And I'll do it as best I can, as simply as I can. So right now, it appears as though there's a little bit of a pause on the market and I'm going to quantify what I mean by a little bit of a pause in the market. The market is still incredibly flush with capital. We have more capital allocated to multifamily than at any point in my career. and I think that money needs to be deployed. So let's unpack that for a moment. Office still has, you know, some some trials, let's just put a commercial for a moment, let's just put that in a bucket. Commercial right now still has a lot of figuring out to do who survives on the retail side? How is how are we dining? How are we shopping? You know, two years from now, We don't know office, how are we? How are we right sizing or space? Or not? are we expanding our space? How was the office environment? Look, the flex work, the cat's been let out of the bag that we're finding that, you know, folks are working, sometimes from home, sometimes in the office, maybe it's two days out three days in, or some some hybrid of sorts. And maybe that means that we have shared office space, meaning, you know, an office where, you know, a few people occupy when one's out the others in, so to speak, and how we design that space. So there's a lot of, you know, uncertainty, and I'm not an office expert, or retail expert, but I can just speak to kind of some of the things that we're seeing just coming to the office every day, where multifamily has really just outperformed. And it's been very, very interesting. So there's been a lot more capital allocation to multifamily. So that that that's the positive. Now, the turbulence that we've been seeing, has to do with the leverage point. So not just the interest rate, because the interest rate is the answer. That's kind of the answer that test when you go and you say, you know, I'm applying for a loan, well, here's the interest rate today. Now, how does that size relative to the deal? And what we found is, is that also often, we had lower leverage, buyers have to go even lower, so folks that were looking at maybe 70%, LTV, which is moderate debt, they had to go down to 60, in some cases, 55, to get the deal to work, right to get an interest rate that that was, you know, acceptable to the return. So, right now, it's a leverage problem,When your interest rate is, and again, I'm making up numbers, if you've got like a four and a half, or a four and a quarter type of interest rate buying on an in place three and a half cap, that doesn't work, tthat's negative leverage for the asset type. So that's why right now we're seeing that pricing adjustment. But the nice thing is, and going back to what I said earlier about, you know, we're still seeing incredible health in multifamily. Just overall, the market continues to be very, very healthy, from an investment standpoint, that it's just math, that right now, it's not it's not an issue with vacancy or some other, bigger recession or something like that, maybe we get there get to that point. But right now, it's just the interest rate environment, and the debt environment, right. And that's something that's solvable, that ultimately you have the result, which is the price of the property. And if you just do that math, you're going to see that, you know, pricing, depending on the leverage point, depending on the audience, because a company like EQR doesn't really require debt. But they're still kind of pricing things as though it is they're not going to overpay just because they can you know, they're going to have a different threshold of debt, then call it a syndicator. You know, a family office syndicator. So, I think that's the spectrum. But overall, I mean, we are seeing pricing come in, probably somewhere in that range of, anywhere from five to 12% is likely where that is and the better the quality of the asset, you're going to have, you know, better buyers, and better investors, well capitalized investors there. So that that delta probably is a little bit less than what you would see on the private side, just because someone that was beholden to 80% leverage, you're not getting 80% today, you're lucky to get 65%. So, those are those are kind of the trends that we're seeing. But overall, we're still seeing healthy levels of engagement on anything that we bring to market. We are seeing kind of the CA count reduce a little bit. So it's not 150, 200. So that's, you know, confidentiality agreements for us. When we're in the market. That's when somebody signs a confidentiality agreement. They're looking for the information they want to see. They want to underwrite the deal, so on and so forth. That's down a little bit. Tour activity is also down a little bit. But we're still seeing a lot of the quality, institutional fund capital, you know, types of groups, professional equity groups still very, very active in today's market.

Mordecai Rosenberg: 40:09

You know, it's I was looking at the yield curve. And I guess the positive news is that the yield curve is the way it should be going, you know, it's low at the short end and higher at the at the long end. But then I was looking at inflation protected treasuries, So we think that Treasuries are three and a half. Yeah, that so high, but the yield on inflation protected Treasury, is like zero or negative.So even at I forget the term, but I think even at five or seven years, like it could be that the the inflation protected yield was like negative 15 basis points. That's in trade. So what does that mean? It means that I am willing to pay, in order to be protected from inflation, because if you have inflation at 8%, or 8% a year, that's a lot of money, that value that I'm losing every every year. So now, all that does is that inflation, protected treasury, is protect you against inflation without any upside. But if you think about multifamily is so even at a forecast, let's say on an even unlevered return of 4%, that doesn't sound so attractive as 4%, just to make that, but if you think about the fact that you have this inflationary upside, and this unprecedented rent growth, which may slow, but wages are growing,rents are growing at unprecedented rates. So maybe if you could see your way into an 8%,9% return, or 10% rate over a year hold period. I don't know, that doesn't sound so bad compared to putting it in the stock market today, or crypto or the bonds. So, I think, it does depend on your time horizon, like to your point, so your high level, if you have buyers that are where they make their money on flipping this deal for a lot more money than they pay for it, And that requires you to have 80% leverage and low floating rate debt to support the cash flow can can support. If you have to sell this thing in three years, maybe not for you, but I do I can get you are institutional or family office for a longer time horizons. I agree. It still seems like it's good, great market to be buying into.

Jorge Rosa: 43:03

Yeah, it's actually it's very interesting, because there's no better inflation hedge than real estate right now. Right in multifamily. You're trading out leases on a monthly basis, daily basis, that when a lease rolls, you're getting another bite at the apple. And I think that's the attractiveness of multifamily. But what you're saying is spot on, the rental rise is going to slow. And we don't know at what point I think a lot of people or a lot of third party sources are saying sometime in 2023, we're going to start seeing the slowdown. But let's also think about this on the multifamily space. And I think this is an interesting topic. I don't know if anybody's really run the numbers, and maybe it's worth running the numbers, when you look at affordability of buying a home today compared to what it was six months, eight months ago, I believe that this generation is going to be leasing for longer. For a long time, we had homeownership that was bordering on 70%. And, right now, we're going below that. And we still have a housing shortage. And that's that's the interesting piece of this is that we still have a housing shortage in spite of all the cranes that you see in the sky. And it's going to be very interesting to see what happens as we start leasing for longer. You have a generation that's aging and is becoming that renter by choice, so you're getting on the bottom end, so the the 20 something that's moving into the 30 something as well as the the empty nester that saying, Look, I don't want to mow my lawn. I don't want to fix broken things. I don't want to deal with all of this. That person is going to say, You know what, I'll live in a luxury high rise maybe downtown, an area like Tyson's right, where you may have a 60 something that just wants to have a nice unit that something breaks, they can fix it. So I think we're in a very interesting time, the way that we think about housing and I think that rent growth is still going to be, I don't want to say outsize, but I think we're going to probably outperform in certain markets than we have. And I think that's going to be an interesting trend, I think, to monitor for many, many years to come. But I want to go back to the point you made about, flipping that is very much a region by region phenomenon. Typically, when we talk to our folks in the Sunbelt, those are all high growth markets. So a lot of those markets are seeing unprecedented amount of population growth, employment growth, as you're seeing a lot of the corporate relocations happening into the Sunbelt, that's kind of bringing more folks from the broader Northeast, and other other, call it gateway cities down into I'm gonna call them more livable secondary cities in the Sunbelt. And what's happening is we're talking about that shortage of housing, they're seeing unbelievable levels of rent growth, And they're seeing historic levels of occupancy over and above what we've been experiencing, for instance, here in the mid Atlantic. So a lot of times that rent roll, and that operating statement moves a heck of a lot faster than it may in a gateway city, that may be beholden to one or two industries, or just well established So you're not going to that corporate relocation of 50,000 jobs doesn't have the same impact that it would in your like an Augusta, Georgia or some of these other secondary precedes secondary markets in the Sunbelt. So those are some of the trends that we're seeing as almost a catalyst where you're starting to see kind of that growth in those marketplaces. But we're still seeing a significant amount of rent growth, obviously, the employment growth here in the DC area, it's actually the highest that it's been year over year. But, while it's the number is significant as a percentage of our whole economy, it's not as significant if those jobs were to relocate into a secondary market, it has a much broader impact, when you consider how that affects housing, and that relocation, or population growth that that's bringing.

Mordecai Rosenberg: 47:30

Yeah. So taking kind of a step, a few kind of closing questions, let's say, if someone approached you, who is graduating college, let's say, are coming out of school, and they want to get into the industry, they were thinking they could go into, onto the lending side, or they could go into an investment sales. What advice would you give them on how they should evaluate that opportunity? What do you think kind of the pluses or minuses like consideration, going to the debt Avenue compared to invest in yourself?

Jorge Rosa: 48:17

That's a great question. I would phrase it this way. You know, when, on the debt side, there's certain limitations of what you can and cannot do. YIt's, you're playing within a box, and let's just use bank financing, or actually better yet, maybe Fannie or Freddie. They're gonna have certain checks and balances, that kind of will keep you within a given box. On the investment sales side, there's so many different levels that you can be and you can be in the class A luxury where you're dealing with all cash buyers, you're gonna be feeling in the value - add space, where you're actually creating value, whether that's through amenity creation, whether that's renovation of existing units. And then, on the bottom side of that you're looking and again, I'm simplifying this, but on the bottom side, maybe it's opportunistic, where you may be dealing with some down units, you may be dealing with a tenant issue, maybe it requires retesting, or even maybe even redevelopment, and there's kind of all those different trenches. I wear many hats. It's just the reality of it. Now, the debt side also wears many hats because you guys don't just quote widgets. But if we're keeping it simple, there's a lot of variability so often on what we do as there is on the debt side. But I would say that, a lot of times it's harder to play matchmaker on our end, and we're the first ones. You cannot have the debt if you don't have the deal, And the deal is required before you have the debt. So, from my perspective, I've never been On the debt side, so I'm not trying to belittle debt side, I actually have have a lot of great interaction on kind of what we're seeing, and we work hand in hand so often. But my biggest advice for a lot of those folks is that on my end of the business, you cannot be afraid to fail. It's just the reality of it. You have to really kind of be mirrors of the market, understand what's going on. Trusting your process, trusting yourself. And really, that's what's going to catapult you to the next level. It's not as simple as, you know, hey, one day, I'm just going to be the next title up and then the next title up, no, it doesn't really work that way. On the investment sales side, you're always paid exactly what you're worth. And at the beginning, you're not worth very much, and that's okay. It's completely okay, I was in those shoes. And it takes some time to get there. But believe in that process, believe in yourself and be trustworthy and kind of stick within that realm. And don't be afraid to take risks. I mean, it's a hard business, it's really, really is.

Mordecai Rosenberg: 51:09

I've never really thought about that question of debt versus investment sales, I think I'd like to work for a lender. There are people who might say that you don't want to be just like an intermediary, they want to be a principal, that kind of a principal provider of of capital. Similar to me, you could also say the same thing about acquisitions. If you're acquisitions for a big company, you're coming with a checkbook. Like that's pretty powerful to come with a checkbook. On the other hand, I do like the creativity that everything is possible. It's just about finding the right audience, like you said. It's the market is gonna be the market. But how familiar are you with the market? If you know, your market? Well, you know, who's transacting, you can provide great advice. You're not, you don't have to worry about, Sure, you've seen with some of the lending products, especially like regimen? Well, its really any lending product, you get caught on some thing. It's like commercial space is more than 20%, it's 22%. And so all of a sudden, we can't do the deal, or if you have to cut.So I can see being frustrated. Sometimes having that box, the best salespeople are the ones who are able to take the box and be creative within it.

Jorge Rosa: 52:42

And that's the risk that I'm talking about. That's 100%. You have to continue to evolve, it's not always just about being safe. It's about taking some of those risks. And that's exactly the risk I'm talking about.

Mordecai Rosenberg: 52:55

Yeah. Any any mistakes that you see salespeople making? Commonly that you see, you might be in a pitch meeting, or you see younger entrants into the market, or older entrants into the market, that you just like, man, that they're doing this, and they're just missing the mark on what they're doing.

Jorge Rosa: 53:18

I was in those shoes, And it's interesting, because the way that I came up, I came up as a financial analyst, so I'm really good with numbers and, kind of learned the market. And all too often, a broker without that kind of the knowledge of the market and kind of what's moving and shaking in the marketplace, often leads to disaster. It's just the reality of it. And sometimes I find that the failure comes when you kind of go a little bit too soon. I think you need to, because a lot of times, look, a lot of times it looks easy. We have all these relationships that we've cultivated over years and years and years. And as I mentioned about Michael Jordan, maybe people relate more today to LeBron James, or, you know, Steph Curry or somebody like that, that you're just enamored with the end result. And there's a lot of failure. And there's a lot that kind of goes into that too, to get that end result. It's not overnight success. It unfortunately doesn't work that way. And I think that the mistake that also often happens is that this immediate expectation that I should be making x where I really am should be making y, and the advice that I give everybody that gets younger that I meet with on these career interviews and so forth, is I never once in my career, never moved for money ever. I moved for opportunity, because I knew I was talented enough to make money. And if I have the right opportunity, and I have the right platform, and I have the right people around me, that comes, it's literally that simple. You could be the most talented person in the world, but you're in the right situation, or you timed it wrong. There's so many examples of that. Think of the behemoths that were so successful, some of the smartest people in the industry saw the world crumble around them. And it's not because of what they did. It could have been timing, it could have been a lot of different things. I don't know the answer. But if it's the right opportunity that you're putting yourself into, and you have the right partners in the industry, you could grow so much faster in that situation than just saying, Hey, I'm getting a bigger salary here, I'm getting more benefits there. It's really about the opportunity to be confident in what you do, be confident in what you provide. And everything else follows.

Mordecai Rosenberg: 55:45

Yeah, I like that. I would also compliment you and say that there's some of the softer sides to selling that people don't really talk about as much, but are incredibly impactful. And some of the things I noticed that you do, you're always totally focused on on me. When we're having a conversation. And everyone has add these days, right, So they're on yesterday, maybe they're also like checking their email or social media or whatever. But with you, every time I've talked to you, I feel like I'm the only person in your world for that period of time, which is great. and related to that progress are very, very busy, very hectic days, And yet, whenever I've talked to you, it feels like you have all the time in the world for me, like I never feel like you're rushing to get off the phone, or I think that probably, it must have served you well. And it's serving you well. And probably if you talk to your clients, if you drew their attention to it, they would feel like oh, yeah, he's always, whenever we talk totally available to me. I want to compliment you and encourage our listeners to emulate because it's a great, great characteristic.

Jorge Rosa: 57:04

You know, in today's world, there's, there's way too many distractions in life. And the reality is that all too often because of the distraction on something that we perceive to be very important, that's external, your cell phone, I literally have my cell phone, right in front of me, but it's often silenced. We have that capability today. Yeah, the reality is that nobody likes to feel that they're not being listened to just the reality of it. And if you're with a client or a colleague, But, you know, the truth of the matter is that, focus is is really key, and the only way that you can really serve as somebody's, whatever that need is, whether that's valuation value creation, mirror of the market, whatever it is, the only way that you can do that is literally being all in that. And it's hard I will tell you, there's way too many distractions, and so many parts of our world. And it's a major issue. But the reality is, is that people appreciate when you're engaged with them. And the first thing I always say, actually, this is an interesting thing. I don't have any paper anymore. I've tried to eliminate paper from my life. And even when I'm on property tours, I take notes on my phone. And the first thing I do I show them I say, Look, I'm taking notes on what you're doing. I'm not texting, I'm listening , but I'm taking notes on my phone. But no, it's a lost trait. And I was always taught that you have to be present. If you're not present, you're going to miss something. And the thing that was probably the most important piece of that conversation or of that interaction, it happens all the time. it's vital to really have that focus, to sit here and have these conversations. And trust me, people notice that. And it's funny. I've never brought it up to you. But it's funny that you pointed out.

Mordecai Rosenberg: 59:07

You know, I feel like if all people got I think this is this has been a great conversation. But I feel like if all people get is these last two minutes, I think the advice of just being present and focused is not just the best sales advice, but really life advice. You know, as far as it's how to go through life is just being present with where you are, be where you are. Jorge, thank you so much. This was really delightful. A lot of fun. I appreciate your time and a ton of insight and a lot to digest. I'm sure everyone, all the listeners will get will get a lot from it, as well. So thank you.

Jorge Rosa: 59:46

Thank you. I really appreciate it. It's a lot of fun.

Mordecai Rosenberg: 59:49

Awesome. All right. Thanks Jorge, and talk soon. Take care.