013 – CRE Capital Markets – What's In Store for 2025? Guests: Ralph Shiley, Chief Investment Officer and Angie Wethington, Senior Director, Capital, Scannell Properties.

[MUSIC] >> Welcome and thanks for listening to Under Development with Schenel Properties, where we examine logistics and industrial real estate trends. We dig into the stories you want to hear with development executives in markets worldwide. Here's your host, Jay Tanwan. >> Welcome to Schenel Properties Under Development podcast. This month's podcast we have a special treat. We have a new guest, Angie Weddington, and also our first returning guest, Ralph Shiley, who's joining us. So just by way of background, if you recall from Ralph's bio, I'll repeat it again just for our listeners who missed the first one with Ralph. Ralph is Schenel's chief investment officer, where he directs the company's capital strategy, including short and long-term investment plans. Ralph oversees underwriting, financing, acquisition, and disposition strategies for Schenel. And he has over 35 years of experience in all aspects of capital markets and has completed over 20 billion, that's B, billion in transaction strut his career. And Angie is joining us as well. She is a senior director at Schenel Properties and manages capital markets, investment sales team, she and her team execute all industrial built suit and speculative development underwriting projects in all dispositions for Schenel's United States industrial platform. So Ralph and Angie, welcome once again and look forward to hearing your thoughts on the market and what we have in store for 2024 and into 2025. So thank you. >> Thanks, Jay. Look forward to speaking with you. >> Thank you, Jay. It's a pleasure to be on again. >> Yes, awesome, awesome. So yeah, I guess we'll jump right into everything and start off with Ralph. Welcome back to the podcast. A lot has changed. I think when we last spoke in March of 23. So just to give the audience some context, I mean, quite a bit of time has passed since March of last year. There's so much has happened. It's like, where do we even begin? So I think the best place to start is probably just the biggest news from last week, which was the Fed cutting the Fed funds rate by 50 basis points and wanted to get your thoughts and see what you think that can mean for our industry and for our company. >> Sure, I think the Fed's signaling that they need to re-excelery growth and show a commitment to not fall behind the curve to increase the likelihood of soft landing. So the Fed's using its tools to act accordingly. They want to reassure the financial markets by showing that the central bank is taking strong steps to stimulate growth. Stay ahead of the economic downturn, reducing the likelihood of a deeper recession. The Fed has, as you know, dual mandate, inflation and max employment, inflation has dropped from 9.1% to 1/2% giving confidence that we're moving sustainably toward the 2% goal. So the unemployment rate, however, is moved from 3.4% to a revised 4.4%. So there's a shift from the Fed's perspective from inflation to employment concerns. >> Right. And sticking with the inflation topic, because it seems like, as you noted, the Fed seems to, I don't know if you say declare victory on inflation, but maybe that's too strong of a word. But I think a lot of prognosticators, experts were saying it would be a 25 basis point rate cut and then it became a 50 basis point rate cut. So just wanted to get your thoughts on that, the 25 versus the 50 rate cut by itself is probably not significant enough. It needs, you know, there has to be a plan here over the next six, 12 months to reduce the rates further, but just wanted to see if you could expand on that. >> Sure. We get economic data out there, but I think primarily the slowing labor market caused the 50 basis point move. And also, I think it was partly a catch-up move. The Fed had, if the Fed had had the jobs report and data in July, they would have done a quarter then and a quarter now, but they didn't. So they did the 50 basis points, which is very rare. When you think about the last three times that it's, they have done a 50 basis point move. One was in the response to the pandemic in early 2020, then prior to that, 2008 global financial crisis and then prior to that, 2001 tech bubble. Those are big events that caused a 50 basis point reduction. So we're not facing anything like those circumstances. So this is because they can, not because they had to. And the larger cut is preventing the slowdown in employment by stimulating borrowing, investment and spending and hopefully preventing, you know, deeper economic issues. I think inflation is one thing. It seems like, you know, as you mentioned, they're shifting more. They're focused from the inflation standpoint and more focusing on the labor aspect. But, you know, there's some things I think that could happen here in the next couple of weeks, even in the coming months, that could really negatively affect inflation. One, being the potential strike on the East and Gulf Coast supports. You know, so that strike on the ports seems like it's likely going to happen. That labor agreement expires on the 30th of September. So that's from now that's, you know, seven days. So that could have some pretty big impacts on inflation. If we're talking, you know, COVID level supply chain crisis in terms of getting goods into the country. And then I think the other big thing to watch is just the tariffs, you know, both sides have talked about being stricter on tariffs after the November election. But I think there's also laws that are happening now that are being pushed to potentially restrict the movement of goods from China specifically to the US through restrictive tariffs. So just wanted to get your thoughts on that in terms of the Fed's focus, less on inflation. And there could be things that could be happening that could definitely affect the inflation. I certainly hope there's not a strike by ILA. And if it is, it's not protracted. But those tariffs and a strike of that magnitude definitely can have consequence in the effects on inflation. And the 50 basis point cut is not anticipating. I don't think those circumstances. So it's, to me, the Fed's monetary policy now is geared to employment and under the belief that they do have inflation under control and management and it's moving its way down. So the future events that may occur could change the policy, but the policy now believes that we're expecting more rate cuts. And that means that we're not concerned about inflation and the couple of events you cited. But the market thinks there's another 50 basis points in cuts this year. No, I think you for sharing, I think that's great for the audience to hear your perspective on that. And especially outlining potentially the plan for the Fed for further rate cuts through the end of the year and into next year. So I think that's going to be something that we're all going to be definitely watching. And now shifting gears a little bit about last year, November of 2023, now properties closed on a $1.2 billion recapitalization with manual life spanning 35 industrial properties and 17 markets, totally 10.4 million square feet. Here we are almost one year later, Ralph. So can you give the audience just an update on on how this partnership has gone and what you see moving forward into 2025? The recap with manual life has exceeded our expectations. The liquidity generated from that transaction is fuel considerable new growth for Schennell in both buildings and new speculative developments. All 35 of the properties in that portfolio have completed construction and leasing has increased considerably. So we're very pleased and manual life has been an excellent partner. We've been working well with Schennell very smoothly throughout the country and our expectation is that we'll expand that relationship and new transactions in the future. So we're very pleased. Now that's great to hear. And it's always good to hear that almost a year later things are going as smooth as they can, especially given the current economic environment. And now Angie, I'd like to turn to you. So welcome officially to the Schennell properties under development podcasts. Thanks, Jay. Good to be here. I've enjoyed listening to the series and hearing what a lot of my brother and his dad say on your previous episodes. Appreciate you saying that. And like to have the audience get to know you a little bit, they met Ralph last year. So wanted to find out more about you in terms of where you grew up, where you went to school. And then eventually let's get into how you eventually made your way to Schennell. Because I know that the journey was an exactly linear and I think that's great for people to hear as well. Sure. So I am a Midwestern or through and through. I was born in the northern part of the state in South Bend. My dad was in retail when I was young, so we moved quite a bit, essentially through elementary school, through the end of middle school, we'd moved every one to two years. So I lived in Illinois, I lived in Kentucky, Michigan, Indiana, three separate times. So I guess you could say my loser for sure starts to finish. I went to school, I started at Zade here in Cincinnati, and quickly realized that a small school, small campus was not my thing. Came home and went to IU Indianapolis, which was then IUPUI, Indiana University Purdue University, that had since rebranded and separated the campuses. And then I went to Indiana University Law School here in Indiana. I worked full time during the day and went to a law school at night. I am school, they did practice law briefly, but quickly realized that was not my thing, much to my parent, holler, and dismay. So now I am a recovering attorney. So you practice law, and then you discover, hey, you know, it's not not my thing. And then so how would you transition to real estate? Because what sort of law were you practicing? So I was in a very small law firm. I think there were about four attorneys, and we did some real estate transactional work, but did a lot of anything that walked in the door. So insurance, subjugation, the fourth bankruptcy, custody, you name it, and I did a lot of that work. And I am a pretty chipper person. And when you're talking to somebody about things not going right in their life, you can't be all super positive and chipper about things. So I realized that I needed to transition out. I am the poster child of not what you don't want to do for your career most likely, though I think I've ended up relatively successful. I left the practice of law and went into publishing, computer book publishing, and actually worked my way up, and was a publisher with fascinating, I knew nothing about computers. It was pretty dangerous thing for that company to have done. And then works my way out. Usually what happened is a former bosser recruited me away. So I ended up in an alcohol.com, which was a pretty interesting gig to have for a short period. And then 9/11 hit. And the dot com was changing and laying off a lot of their work for. So I found myself unemployed. So I set up my own consulting firm to try to bridge the gap. I was in upper management and news or weren't, wouldn't be any job to be found. And ultimately the long-winded way of getting ran to real estate that I promised it for. Is part of my consulting gig. I did business development for an economic development firm here in Indianapolis. The Indian partnership. And three to courts of working with them. They decided they wanted me full time. That's how I got exposed to commercial real estate. One of my board members. Realized that I was probably going to transition out of that nonprofit environment. You probably won't be able to tell it from this conversation, but I'm wired pretty tightly. And being in a nonprofit environment did not work with. How I. And hope fast I talk and that fast I walk in every single day. And I was like, I'm not going to be able to do that. So I left. And I actually went into brokerage and worked with what was then. Cassidy. And through multiple name changes has become. I feel that I was a couple of markets broker. Did that for several years during the fun time. So five to 10. 5 to 2010. And then I had some really large like changing things go on in my world. I was like, I'm going to be able to do that. And I had heard that Ralph was looking to grow his capital team. And Ralph and I had worked together when I was a broker, a handful of years ago, probably more than I am full. And so when I heard that he had an opening and it was a chance to work with Ralph and then get back into industrial which I love. I chased Ralph down and the rest of his history. I just asked you more on the period when you were a broker from you said 2005 to 2010. I mean, what a tumultuous period. I mean, that was 0506, the height of everything and then great financial crisis. You know, then finally coming out of it, then you made a transition. So if you can just touch a little bit more on the brokerage aspect and maybe even add. You know, how that has helped you in other kind of downturns, which is kind of what we're in now to some degree. Sure. So I mean, it was low to fun. 0502, the start of eight, right? I mean, so much fun. In fact, I started as a leasing broker and the broker I was working with realized that my skill set as an attorney went itself well to a capital market. So we couldn't work long enough hours and get enough done because there was so much business. And of course, the wheels came off the wagon at the end of that timeframe. And I had transitioned off of this team that I was on and elected to stay with what was cast. Surely. And it was a challenge. But what I found and I think a lot of other people do in adverse situation or markets. It forces you to be more creative and it forces you to dig a little bit deeper. And I was really excited to get it. So, you know, and actually I was building a new book of business in a really tough market. I'll tell you the little wins that I had along the way were massive because it was such a bad market. But it was, you know, it was a test of tenacity. And I like to think that I'm pretty tenacious person. Great lesson to share as well for others going through kind of similar transition and change in their day to day work. And when you went to Skinell and you found Ralph, what role did you have right when you joined Skinell? Was it the same role that you're in now or was it was a different. So it was on a capital team. So same team still working with Ralph. But we were much much smaller at that time. It was a team of four, including Ralph. And now I think we're a team of 12. And so everybody did everything. So I might do debt as well as underwriting and disposition. The larger we got and as the businesses has just continued to skyrocket Ralph wisely realized that he needed to or wanted to bifurcate the team. And so we have a group of us focusing on all underwriting and disposition and JV. Another group of us focused on debt because there's different contact and there's different resources. And you really need to leverage those different network. And with the volume of the distance we were doing, it just made sense. And then that third leg of the stool that Ralph built. And that was just much larger relationships and opportunities that needed to be sourced. So now I'm a team lead as opposed to an individual working through our and working with a team of guys on all of our underwriting and all of our disposition as well as some JV along the way. That's a good segue into kind of what you're seeing now in the investment sales world in terms of the buyer profile for the assets that we're selling the lease investments that we're selling has changed quite a bit. I'm sure in the last three, four years. So what does that look like today like when we're bringing something out to the market, who are the buyers that are out there? What's their profile typically that you see? Yeah, so I'm going to do a small look back, not three to four years because it's been such a roller coaster right along the way. But certainly within the last 12, maybe 18 months that buyer profile had to be a buyer that was a cash buyer or a buyer that needed very low leverage. So we transacted a lot with 1031 buyers that maybe we're only putting 50% debt on and could bake the current environment work. So we had a lot of cash buyers, so private reats high net worth individuals or even some family opposite that was the past 12 to 18 months today. We are seeing a lot more capital enter back in to the marketplace and we're starting to see institutional capital show up. A lot of these institutions are clearing their redemption cues and they're finding that they have money is available and need to start putting it to work in the marketplace. So the big list, you know, it's turning into a who who's showing up for the various opportunities. Of course, market dependent. It's not all across the country and every single market. And I guess going along those lines, I so where are the markets that are these some of these buyers kind of focus more on if there is a focus. Yeah, I mean, I think there's two buckets of opportunities or two buckets of interest by these the various investors that are out there. There's a value ad, which has been the hottest. Certainly over the last 12 to 18 months. That's where all the bidding words has been where to market market, you know, very good base. just play. Now we're starting to see I would say within the last four weeks more interest in those core opportunities. Markets in submarkets make it different. So you're going to see lots of activity in the Atlanta, in Savannah, certainly in Dallas, heading out your direction out west. But, you know, I'm happy to say having said that, that we are selling assets in the Midwest as well. So Cleveland, Northwest or Northeast Indianapolis, Kansas City, on Minneapolis. So I feel like, you know, if you're looking for a sentiment in the marketplace, that the investor community is starting to recognize the ability. And that's what also really impacted who was jumping in the pool last year and who wasn't. In terms of that, if these investors have in the need now, I think to start deploying capital, like you kind of mentioned a little bit about that in terms of having to clean out the redemption cues. And what else is, you know, spurring some of these groups to enter back into the market at this moment in time? I mean, these investors, they need to put money to work. They've got a large staff. They've got their investors that they're beholden to, as well as Wall Street, you know, some of the public institutions. So there are a lot of boxes that they have to check. I do think that where we sit today and maybe a little bit of where we were within the last 60 days, maybe a little bit more, there were great opportunities for those investors that could lean in because pricing was certainly lower. And as the market continues to improve with the said cutting rate and anticipated more rates coming, I think that there's going to be more investors that are jumping into the pool. And that's going to create a very competitive environment which we develop with love because that means pricing is going to go out. Right. Yeah. The fear of missing out kind of a fact will start to play into things more. I'm curious. What happens to those groups that are very cautious and they don't lean in, as you say. They come in second or third or fourth in some of these bidding wars, which generally happens with that. I mean, are those the groups you kind of target for the next time where, you know, they have to at some point get aggressive to jump in? Sure. I mean, we're always mindful of a bridesmaid. I hate using that analogy, but I will. So we're always mindful of our bridesmaid and we always try to go back to them and talk to them on various opportunities. Makes sense, right. They know it's going to now and whatever deal that I'm taking to them should check the various boxes. They were trying to check on the previous transaction that they may not have been the winning bidder. Those groups are going to have to get more addresses at some point or they're going to have to change the product. You know, maybe, maybe they pivot and say, I'm going to go back to value add or I'm going away from value add and I'm going into core asset. I mean, a lot to depend upon their fund structure and what their restrictions are, et cetera. But when you can't compete, then you got to figure out a way to win. Now that makes sense. Going into 2020, you know, end of 2024 and now into 2025, I mean, just curious to see where you think we stand in all of this. There's some positive news and then there's some negative news and you know, it's really hard to to make sense of everything right now. I think the audience would just like to hear from your experience and your expertise and having more of a national perspective as well. You know, where you see things overall for industrial real estate, kind of where we stand today. Yeah, I mean, I think we're in a real state of transition. There's a lot going on, right? We suffered supply chain issues that we never thought we would treat the pandemic. And as a result, developers couldn't build enough product, couldn't get it up quickly enough, right? I mean, we had to build more warehouses as fast as humanely possible. And then, you know, we've got to set in realizing, oh my gosh, we've got this inflationary marketplace. We've got to put the brakes on, right? We've got to slow things down, which caused challenges for us. You know, we think still going on. And I think Ralph reference that as it relates to our manual life portfolio, and we've seen it in the rest of our portfolio. It's just not going at the clip that everyone would like, right? And that in turn impacts investors looking at markets. So I can point to as a good example, Indianapolis, Indianapolis is a phenomenal industrial market. It has shown up over the last probably 10 years in the top 25 of industrial markets all across the country. Well, recently Indianapolis has gotten a black eye because we have a big handful of big bulk space. But it's all concentrated in one sub market on the East side of Indianapolis. When you look at the rest of the fundamentals for the market, it's a solid market. I will say, you know, and this is probably me being a little bit of a glass half full type person. But Indianapolis has proven out if you build it, they will come. What we have to get through with corporate America, you know, those tenants that are going to lease that buildings is any uncertainty they have as it relates to the marketplace. And whether or not we're full on in a recession, I mean, obviously those are the surreal estate believe in how we are that, you know, corporate America's opinion to that. And, you know, what their top practices going to be for taking on new space. So, you know, I think that it's going to be slow from a leasing perspective to absorb up a lot of that vacancy throughout the country. That I do think that it's worth focusing on markets where activity is happening and realizing it will come on the investment sales side of the business. We just talked about, you know, some of those institutions who've been sitting on the sidelines, their money's been on ice. They got to do something. So I think that there's an opportunity, I'm kind of an upswing for those investors to start meaning in with the availability of debt and the rates coming down, essentially, that will translate into them being able to put together their capital stack and a much more efficient both economically and time-lapse. Yeah, great. Thank you, Angie. And I think that's a good follow-up for you, Ralph, in terms of the LP capital. You know, what's their sentiment? It sounds like they also have capital that's ready to deploy, but have been gun shy. You know, they put pencils down and was at third quarter, fourth quarter in 2022 and really haven't picked the pencil back up in a more meaningful way for new acquisitions, especially, you know, for speculative development versus a built-asuit. So what's your thoughts on what's it going to take to get LP capital excited once again to start jumping in on some of these new opportunities? Oh, correct. LP capital is there. They have money, but they have been and continue to be cautious. So that means focusing on the very strong markets with solid supply demand, balanced smaller buildings and kind of besting class developers, the strategy that they've been using for the last two years. Well, that strategy doesn't result in very many transactions happening, you know, for Scanal. We've done transactions with LP capital in Texas and a few selects out these markets. And that's where they want to do business. And when are they going to start and be willing to change strategy and stretch the secondary markets? That's probably still going to be a while, I think, till leasing feels stronger and there's more consistent data on the books that get them comfortable that they can take the risk to do new construction and lesser known markets. So I think we're going to continue on as they're doing for a bit anyway. Very unique time because if you look at it as, you know, when things are uncertain, you know, and there's not a lot of players, maybe that is the time to lean in on some situations, but that's interesting for you to say, you know, in terms of timing, it could be a while before they get some comfort once again. And then switching gears to more of the debt side, Ralph, I've read a Trepp report, you know, I think it's projecting about 600 and 2 billion in commercial loans that will come due in 2024. A lot of these have been pushed at 2025. And I think that number is something like close to 600 billion as well, expected to mature in 2025. So what are borrowers doing here? I mean, in terms of, you know, just kicking the can down the road and continuing to push out these maturities. And at one point, will they have to face the music and face the reality here, especially, I think, on the office sector? Sure. I mean, they're definitely kicking the can because the timing for selling or exiting or or Asian dancing has not been optimal. And the theory is that rates will decline, which we are all expecting in the underwriting for recent dancing or selling is more feasible. You know, delay refinancing and to interest rates are lower and values are correspondingly higher, giving borrowers time to developers to achieve their business plan. I mean, that's a tale as old as time. And for well-capitalized borrowers, which, skin out, is fortunate to be in that category. We can post that service and care shortfall reserves or make nominal curtailments to postpone or kick the can and exit at a better time. For less well-capitalized borrowers, there's plenty of liquidity out there. I think on the sidelines that can come in as a pressed equity position or a mezzanine position and assist, if you will, with the extension and the modification and wait till 25 gets here and expect values to be better and with the lower interest rates and then hit their exit and/or refinance. Regarding the office building issues, I mean, they're on the debt side, it's having consequence to the market. Banks, I have begun writing down the values of these office buildings and on their books and how deep that is, the market will figure that out. But banks do want to get these off their mallet sheets as soon as possible because the carrying costs for holding a criticized or not accruing asset is extremely punitive to a bank's capital cost. I know in our group, we've observed the larger banks in some of our markets being incredibly aggressive about trying to work with their borrowers to sell office assets and those values are pretty alarming. We've seen transactions at 40 or 50 cents on the dollar with regard to the loan amount selling. So taking those losses to clear the troubled loan has been a priority for some of the larger banks. But with that affecting our business, banks, I think focus today on borrowers, they know with strong financials. And that includes Schnell. And so in industrial product, they pivot to what we're developing. And I think we've been the beneficiary of that and have not struggled with the office market affecting our ability to borrow. So what does that look like today in terms of sourcing and construction loans for our industrial projects, namely, you know, built-to-suits versus spec? So what does that look like for us today? Well, for build-to-suits, for credit tenants, we're using similar underwriting that the industry has used the past 10 years, if you will, sizing the loans from stabilized cash flow, using a 30-year AM, the greater of actual interest rate or seven to seven and a half percent underwriting rate at a 110-that service coverage. That formula for sizing our construction loans for credit kind of build-to-suits results in greater than 80% loan to cost on several transactions that we've been working on. And lending spreads have compressed to sub 225 basis points for these type of deals compared to maybe highest 300 basis points 15 months ago. So the banks are hungry for strong credit deals and need to replenish their loan books with regard to specative. Yeah, it's all again about cash flow. So whatever rent return-out costs that we're looking at, it needs to cover at a 125 or better using 30-year AM and actual or seven to seven and a half percent underwriting rate. So difference between build-to-suits, 110 cover tests and 125 cover should for spec. I think a lot of folks kind of forgot about how important cash flow was. And for a couple of years, their lenders were looking at up five to five and a half percent underwriting rate as opposed to seven to seven to half percent, which is much more normal. So the banks that are looking at all these deals are picking ours because I think our expertise and strength of sponsorship and often the basis that we have in our lane positions have made deals underwrite a little bit better. Yeah, great. Thanks for sharing that, Ralph. Now, we want to go back to Angie on this question in terms of, you know, Skinell's strategy because historically, you know, we've done really well in acquiring site building it, leasing it and then selling it to an investor. But now that the market has slowed or in a period of transition, how is that affecting our exit strategy in terms of selling immediately or holding long-term or what's your viewpoint on that? Sure. So, I mean, Skinell historically has been a developer that builds buildings and sells buildings. That's still our primary objective. Having said that, we look at an asset and we identify an opportunity to perhaps hold it and roll it into our portfolio. We will do that on limited specific instances that are accretive to our needs. But usually, the goal is to exit the asset because we need to keep our capital in circulation at all times. We found with the changing marketplace, we certainly did this when the market was on fire during the pandemic. But even with the changing marketplace, there were opportunities to do fully-funded forward. And what that did for Skinell was allow us to take risk off the table to reduce our equity spend and use those dollars towards another project and work with investor partners in the marketplace knowing they have this asset at arguably a discount to what market is, but along the ride for the ride with us. And we've got a couple different structures that we worked with on fully-funded forward. It's not for everyone because they may not have the capacity or be willing to stomach the potential risk. But we've got a good handful of groups that do it and that's been a big part of what I would say has been our disposition strategy in the recent path. Do you see those types of groups? Are they still active today or those a little bit harder to find the forward-funded type deals? No, they're still active today. And I would say there are more groups trying to figure it out because they recognize that there's likely less competition. What we have to figure out, Jay, with a changing marketplace is what is going on in the market and what other kinds of deals are being done. So our team, and a lot of time on the phone, not necessarily just absolutely selling an asset, but it may be underwriting an asset. And we're talking to our breaker partners all across the country, trying to stay in front of them. We have regular calls with a lot of the shop just to hear what's going on. And then we do the same with our buyer. And what that's proven to be additionally beneficial is not only is it trying to connect that to the specific asset, but we've also found opportunities where that buyer has realized, okay, I'm not able to acquire what I want. I think I'd like to see about being LP equity. And so we spend a lot of time and have, especially if the market was changing on us, on the phone, trying to hear what's being done in the marketplace and get ahead of Trent, as best as possible. - Yeah, and speaking of the buyers, so how are they putting together their capital stacks when they're chasing these deals that we're selling? How does that typically look like today? - I think it depends on the buyer, right? At the risk of sending like a politician, but it is the season, so I might as well. You know, it's meant on the balance sheet, you know, new funds that they're raising, what lines of credit they may have available to them. That certainly was a successful component for some of the investors who were able to get in on the bottom of the pricing, if you will, even though permanent debt may not have worked for them. And then, you know, they I'm sure leveraging their lending partnership as well. - Got it, got it. Yeah, this is all great. And I think we're running out of time here, but I want to make sure I ask both of you, if you can just provide one bold prediction for the rest of 2024. Maybe it's not that bold, but just one prediction that you think for the market, Angie, I'll stay with you then go back to Ralph. - For the remainder of 24, I think that I'm going to stay focused on investment sales. I think activity will pick up. I think we're going to see more of these institutions stepping to the table and really being much more competitive and they have been in the past, certainly the Fed and cuts that we all anticipate will help with that as well. - Great. And now Ralph, put you on the spot here. - I'll say that banks will be very aggressive with terms and spreads for construction loans, which is bold, considering what we've been through for the last two years, including non-recourse construction lending. And I think competition for new deals with banks is going to heat up and pressure will be on the banks to make money lending. So I think that's going to be very positive for the market. - No, it's good, good. And I think the last question I'll ask both to you, I think was it third quarter, fourth quarter, 2022, we heard the phrase stay alive till 25. And maybe that was just because it rhymed and it worked out well, but here we are. with three months together. go till 2025, is that the right phrase we should be looking at? Or do we need to come up with some other phrase for 2026 or 2027? What do you think, Ralph? - I do like where we're heading and how 25 looks. Even though we're dealing with a slower economy, I like the lack of new supply starts that occurred in 24 with regard to the slogan of stay alive till 25. - Cheaper debt, decrease in construction costs, which I think we're seeing a little bit up, that it should put markets in a better position for new development next year. So I think that still works. - Still works. How about you Angie? - Yeah, I think so too. One of the things that I am keeping an eye on, I guess, through the end of this year and into next year. I think there's a couple potential disruptors for us. We all know that the whole geopolitical thing that's going on out there, but it's heating up, right? And we look at various different parts of the globe and there could be some pretty significant escalations of those various conflicts that could have great impacts on us and could impact our supply chain. So I said something that may cause us to come up with a new slogan or catchphrase. Additionally, I think through the end of this year, whatever happens with the election, there will be an impact in that long term, some sort of policy changes, tax implications, et cetera. But more immediately is if, whatever the, again, election results are, but if it's contested, it could cause some uncertainty or could cause the Fed to pause potentially. That's kind of out there for me to throw, but I just think it's something we need to be mindful of. - Yeah, this has been fantastic and I really appreciate both your time, Ralph and Angie, for joining Ralph. This is your second go round and love to have you back for a third and Angie would love to have you back for a second. So I think this wraps it up. So thank you again, Ralph and Angie. This is great. - Thanks, Jay. I can say it's always a pleasure to be on the show with you as a repeater. So thank you. - Thanks, Jay. I look forward to coming back on again. - Yeah, this is great. So thank you again. And that concludes our episodes, "Scanel Properties Under Development Podcast." We'll continue this again like we have in the past next month and all previous episodes can be accessed on all the major podcasts, listening platforms. They're all available for you. So if you need to catch up, please do so and look forward to chat next month. Thank you. (upbeat music)