Demographics as Destiny: Building a $21B Platform on Mission-Critical Real Estate - Al Rabil - CEO of Kayne Anderson

Find the demand and let it run you over if you have demand and if you're in an environment where you've bought an appropriate cost basis and you have escalating demand you are in a position where your underwriting doesn't have to be perfect and you can still succeed whereas that is not true on the opposite side of the table where if you're setting up you know we talk about it in terms of saying let's always be investing or as much as we can in asymmetric return risk dynamics not asymmetric risk return dynamics we won't we don't want to have to have nine out of ten things to go right for us to win welcome back to the distribution by Juniper Square where I sit down with leaders across private markets I'm your host Brandon Zadlov on today's episode I sit down with Al Rabel CEO of Kane Anderson and co-founder of Kane Anderson real estate Kane Anderson is an alternative investment management platform focused on real estate private credit and energy with approximately 42 billion in assets under management across the platform and 21 billion of that dedicated to real estate on today's episode Alan I discuss building a career without a plan and why listening is the most underrated skill in finance how Kane Anderson identifies mission critical assets with decades of demand in front of them and why they're selling senior housing today and what that tells you about where the cycle is heading if you're interested in alternatives real estate investing building durable GP platforms and disciplined capital allocation across market cycles this episode's for you before we go on if you could do me a huge favor and please stop and click follow on wherever you're listening to this podcast it's the only way that other people will find out about this podcast and if you enjoy these episodes and the work that I do it would mean a lot to me let's get into it Al welcome to the show Brandon thanks for having me I'm excited for today's conversation and as you know I like to start every conversation by asking my guest just to briefly introduce yourself and your company which will help set the context for the balance of today's conversation I'm Al Rabel on the CEO of Kane Anderson and Kane Anderson real estate the latter of which I co-founded in 2007 Kane Anderson is an alternative's investment platform that's focused on real estate private credit and energy the real estate group is about 21 billion of AUM and Kane Anderson as a whole is about 42 billion of AUM on the real estate side specifically we're focused on alternative asset classes which include medical office senior housing student housing and light industrial excellent well I'm excited to get into the real estate and the private market side of the business but before we do I'm always interested in the person behind the organization and so I want to go all the way back in terms of you know how you where do you grow up in what was your journey into finance and private markets I know you have a unique story so maybe kind of take us all the way back to the to the beginning yeah so where I grew up is it that's an interesting question for me because I moved all over the place my father was a professor I was born in New York City moved to Connecticut when I was one year old and he taught at Trinity College I was in Hartford for a few years and then moved to Berkeley California and I was there when I was five and six years old and inadvertently we found ourselves in the middle of some police student standoffs that was the late 60s so it was an interesting time and then from Berkeley California moved to Chicago my dad began a professor at the University of Chicago so we lived on the Southside essentially on campus and I was there for two years and then in the middle of my second grade year we moved to Long Island in New York and I went to and I was in I was on Long Island from second grade through eighth grade and then my dad actually took a sabbatical year and the entire family moved to Italy so I went to Italy and actually attended an Italian Lee chair even though when I went I didn't speak any Italian so my ninth grade year was was an Italian school and then I came back to Long Island and 10th and 11th grade I spent on Long Island and then and then my 12th grade year actually so my senior year of high school I went to Spain and was kind of an exchange program with no exchange so I lived with a Spanish family and attended school in Spain and and then went off to college so over the place Brandon yeah I was gonna say from yeah the only thing that I think Long Island and yeah well I won't even go there so from Long Island to Italy what what was that like in your freshman year was that something that you were excited about because that's a yeah that's an important time in you know the life of an adolescent yeah there well I'll even start I mean Long Island was actually interesting and somewhere people think of Long Island and they probably don't my experience on Long Island was different than most in that when I arrived I went into a school district that had been one of the top school districts on Long Island for many many years but a year before we arrived had actually started busing in a very low-income primarily black community into the school so when I arrived it was 75% white 25% black when I graduated was 99% black 1% white and so you know I I would not trade the you know the I say the social education that I got for any for any formal education but it was it was a very interesting experience you had white flight there was no you know we didn't we didn't leave but you know things like our school budget did not pass we had to raise money for our own after school programs and a bit of other things which were not your so not your typical Long Island experience we can come back to that going to Italy I was very excited about going to Italy I think it's interesting and I'm casting those versions when I say this but there's such a focus in many people's lives on continuity and oh you know my child's in sixth grade we can't move until he or she graduates from high school and I actually think that the one constant in life is change and that the earlier that you really can become accustomed to adapting to your circumstances and being in a lot of different environments it really prepares you for life in a way that sort of having everything tailored to you doesn't and so for me Italy was you know it was a it was a magical experience it certainly wasn't easy it it gave me a lot of perspective because I was it you know a pretty intelligent young person and when you when you cannot communicate or speak the language you you know that is that's lost in translation so to speak and I found my Italian schoolmates incredibly sympathetic and empathetic to me and you know and and it was very different environment and I would say generally speaking ninth grade in Italy sometimes we would have we would go on strike because you know the workers were striking so the students would strike I mean this is completely you know you don't have this in the US that the level of connectivity to the political surroundings is is a completely different dynamic and it was it was there was a lot to take in but I think I I developed a much deeper sense and sympathy and empathy for others who didn't have some of the advantages that I had which I think has stayed with me you know really through through my life so your education in ninth grade was an Italian you arrived not speaking Italian do you speak did you learn Italian do you speak Italian today I did learn Italian I do not speak Italian today post my ninth grade year actually went to I went to Spain on my own so I was you know I was I spent four months in Spain when I was 14 and turning 15 on my own would and then went back to the following summer I say my parents were like hippies without the drugs they would literally be arrested for what they allowed me to do you know then today but you know but so in any event I learned Spanish and at one point I was just talking a mix of Italian and Spanish so I almost had to push Italian to the back it to the recesses of my mind to prioritize Spanish so yes I did learn Italian during that year it wasn't in time I would say to you know to to truly excel academically and my ninth grade in my ninth grade years so that was kind of that that was kind of a wash but you know it was it was fine the most similar experience I could relate to as I took a year off after university and traveled around the world and the reason I bring that up is I think sometimes the world seems so big and you have such clarity in one of the comment themes or patterns and conversations I have with guests is with the benefit of hindsight kind of the career trajectory seems very straightforward but when you are a freshman in Italy and then subsequently in Spain by yourself what did you think you wanted to do with your life I mean did you think about the rest of your life or were you moment to moment kind of what what was your headspace like back then it's a great question and you know I had I had great parents who who gave me a tremendous amount of freedom they told me you can you can do whatever you want to do there there were some issues that that created as well I mean and you know now being a parent myself you know today you know as you know you know there's no such thing as perfect parents but you know but that went a long way in terms of. You know in terms of shaping who I became and and my experience even though it created some you know It created some issues Later on which which I'm happy to you know, I'm happy to to talk about my parents always said, oh, you know We put no pressure on you But I would say that that wasn't really true. It was it was different my parents Their values were education my dad was a professor and my mom, you know went to went to Duke and graduated in three years and Really supported my father and his career, but you know We'd sit around the table and when I was in fifth grade or sixth grade and talk about college choices And I remember this may be a little bit of a digression but back in the day when you would take your SATs They actually sent you your results in the mail wasn't, you know instantaneous and you know It'll be 501 pm and you look on your phone phones didn't exist back then It's cell phones didn't so I remember my I Think I played in a baseball game I came home my SAT scores had been delivered my dad had gotten them He had an office on the third floor of our house. He called me up and you know, I I think I had 14 20 on my SATs, but it was something like, you know, it was something like 660 English and you know much better in math and you and so he said to me You know, what happened on the English You know, I think it was 98th percentile or something so it was like Okay, you know, I mean, I'm like it would have been nice for me to look at the scores before you looked at the I certainly didn't didn't hold that against that, but so I think there was thought about that There wasn't thought about What am I going to do with my life? What's my career trajectory? There was thought about Knowledge and learning and education and making sure that you know, I had a broad-based liberal arts education and really understood You know, you know, I think really use the opportunity to for school to learn and and so There wasn't a lot of thought at all about what do I do with this or you know when I get through college I'm I you know, so it wasn't I wasn't going like okay business undergrad or accounting or econ 101 I was I was not I went to Yale and I was not thinking about You know investment banking internships or any of that stuff I was a philosophy major undergrad Maybe more relevant to your chosen career after all, but so so at Yale You went in you majored in philosophy. What were your plans at that stage or kind of maybe walk us through what happened next after Yale? So that's that that's a great question and the answer is There was no plan for after Yale. So I had a great time undergrad. I was a philosophy major. I often get the question Yeah, even from younger people today, you know, what do you do with philosophy or what you know, and I say well Here's the thing about what I did as as a philosophy under it taught me to Read right and think and I think those are three pretty important tools regardless of where you're applying them and You know, I actually, you know, I'm a big proponent of liberal arts education and sort of spending your undergraduate years not just taking You know econ and business because you're going to do that for the next 40 years But actually exploring some things about the world and things you may you may come back to or you may never come back to So I didn't have a grand plan and that showed in my you know immediate post Yale life, I got a job as a commercial real estate broker slash associate in New York which meant canvassing office building So as low person on the totem bowl you go through office buildings and you canvass space and say oh, you know Pricewaterhouse Cooper's has you know 82,000 square feet in 1290 Avenue of the Americas and that very quickly became Not to appealing to me so that lasted about six months. I did one transaction I think I made $6,000 or something like that and I went to a marketing job Which wasn't the answer either so I sort of woke up literally like March 1st and I was like Are there any GMats left because I better go back to business school or you know find something that's gonna give me a career path And there happened to be one GMat left which was March 15th. I took it. I Got the scores this time before my dad did I got accepted to Columbia for you know to go for my MBA And so in August/September of that year, you know one year out of Yale. I'm attriculated into into Columbia and went to business school which And people who have gone to business school will know this I thought okay This is the next step in exploration. I'll go to business school and figure out what I want to do You arrive at business school and they're like what do you want to do? You're like well, that's what I'm here to figure out and they're like oh You're gonna fall way behind like you you know Second week there's you know investment banking interview you need to make a decision you need to be on a career path You need to make sure you get your summer job and So I what I did actually at Columbia was I said okay, you know, I have I've Some family connections might my my grandfather was in he was Not a real estate person, but he was in real estate to some extent he he built Essentially the equivalent of workforce housing for you know For people returning from world war two and you know own some multi-family apartments my uncle had gone into real estate So I had no real estate knowledge, but I was like okay, I'll Let me let me pursue this But I didn't go the traditional interview route. I said I'm here in New York City Let me use the Columbia alumni network and just go meet with people To ask them what they do what they like about what they do what they dislike and so I utilized that alumni network And went and spoke and I had access to people I would never have access to of course But I would just reach out and say you know could you spare 45 minutes or an hour and people were very generous with their time And what happened was I would go and introduce myself and listen and As you probably know Brandon the The best interviews are when you say nothing so I would you know, I Almost literally not not quite, but you know, I would walk out and People were like what a what a great young man because they just spent an hour telling me about themselves And so I ended up with a you know a myriad of job offers actually just do not asking for a job just doing this And had a summer internship and you know actually a chemical bank at the time You know for for any of the listeners out there old enough to remember That and you know one thing led to another and ended up at bankers trust post Post business school and was there for about you know for about five years. So There was no grand plan. There wasn't like hey, I had this I painted the dots going forward I knew I was going to be in real estate. This is this is what I've always wanted to do I always say it's easy to paint the dots looking backwards not so much looking looking Forward so you know it That was my entry into into the real estate well I love that and I think for a listener especially Well, I guess younger and older it doesn't really matter where you are in your career But what you said about listening is advice I often give and I think it's probably The best piece of advice anybody can receive because so much of life is about listening and understanding other people And giving them the space to talk so that resonates with me So from chemical bank to bankers trust Walk us through the segue or the transition from those two roles To you know starting your own business and starting on your entrepreneurial journey So I think Going back to my childhood and my mom said when I was two years old You know, I said and I would say it repeatedly nobody's the boss of me and so There was certainly an entrepreneurial streak in me from a very early age as part of my DNA when I went to bankers trust That was May of 1988 I planned on about a two maybe three-year banking career and then thought I would you know So I would build some kind of foundation and then figure something out to sort of go to Called the sponsor side of the business or something more entrepreneurial You know look so a little thing called the RTC crisis which was probably the biggest financial crisis the US had prior to the global financial crisis happened In 1987 with tax law changes that were put through We won't digress into all of that but essentially real estate across the country cratered So I joined bankers trust And about a you know within a year of me being there 50% of the staff was fired. I was fortunately in the 50% that wasn't Of the 50% that wasn't 50% was the 18 and 50% was the B team. I was on the B team And I'm just saying this matter of fact, the A team was, "Okay, you're still doing investment banking and the B team is workouts," and that was the biggest stroke of luck ever. So I guess bankers trust, they put me in the second quartile. So I survived the bank, but I wasn't on the investment bank and said, "But ironically, in 1989, 1990, 1991, everything was workouts. I was talking to major players on a direct basis negotiating with them when I was a first second year associate, 26 years old, and I would never have literally in a position of power the investment banking side, there was no investment banking to do in real estate. So it was a tremendous, tremendous learning experience because at the inception of my career, what I literally got to witness was everything that could go wrong in real estate having gone wrong. And then I was partly because of bankers trust and partly serendipitously and whatever put in a position where I actually was in the middle of this with some decision-making authority, which is kind of crazy. You've heard my background. It's not like I'd been doing this for 10 years or that I was some highly trained astute real estate workout person, but learned a tremendous amount during that time, both in terms of the real estate itself and also dealing with people because these were very stressful situations. These were truly workouts, essentially, equity was wiped out, at least for the time being, and you had people who owned thousands and thousands of apartments in New York City or developments in Florida that needed time to get to where there might be some equity value. But it was a tremendous opportunity and a tremendous experience, which I enjoyed very much. So from the workouts and we've learned about the RTC for listeners who have been through several episodes of the distribution and it seems like it was a really a defining moment for folks like you and others who are at a relatively early stage of their career in a really tough time. What gave you the confidence other than this core value that nobody's your boss to then go out and move away from the bank, from the workouts, from this experience, how did you know the time was right and what were you excited or interested in doing? So it would be a big overstatement to say, you know, I knew the time was right. What I would say is, and I got some of the best at career advice that I ever got from a mentor at Bankers Trust who was outside of the real estate group. So I was at Bankers Trust for five years. Most of that was doing RTC workouts, but at a certain point in time I felt like my career was stagnating there. And I was me with this person and we'd have lunch sort of once a week for about six months and he would listen to my tale of woes or you know why I wasn't satisfied with what I was doing and at about the six month mark, he said, okay, listen, your vice president at Bankers Trust, you're making X, you're white Ivy League educated, making on a relative basis in the world a lot of money. I got to tell you, I have zero sympathy for you. So here's my advice, my advice is do something about it. Go look for another job and there will be there are only two potential outcomes. One is you will find something and you will leave here and hopefully you will be happier or you will not and you will stay here and you will be happier because you explored what was out there and you decided that this was the best place to be so figure it out. And it hit me like, it just hit me like a ton of bricks, not defensively, I just said, he's 100% right within three months I had left Bankers Trust, I went to a company called Federal Realty Investment Trust which is still out there today and you know a major player in high in strip shopping centers and I went to the acquisitions group there and for a myriad of reasons it was a cup of coffee there, I stayed one year. I think my timing was right, I arrived at Federal and had visions that my timing was perfect and that this was really the time to lean in that it was still a somewhat dislocated market and that we could do great things at Federal Realty. My vision was not met with open arms, it was like welcome here Al, we've been doing it this way for 20 years, not sure you understand how we're doing things and I say, well maybe I do, maybe I don't, my perspective is if you want to keep doing things the way you've been doing them the last 20 years, that's a recipe for not really moving forward and maybe that was presumptuous on my part, they were not looking for my strategic advice on what to do and so it was a quick round trip to Wall Street and I came back in October of 1994 to UBS where I spent about eight and a half years and that was a magical experience for me, my career trajectory at that point in time took off, I ended up running US and European real estate investment banking for UBS from '98 to '02 so four years after coming back to Wall Street, I was running a pretty big business and a pretty big group and I left there in early '02 so I had a 15 year plus or minus banking career which was about 12 to 13 years longer than I thought it would be but as so often happens in life that was probably fortuitous, I had a much better foundation and I was in a much better place to really go do something on my own at that point in time. Is your team still going through your fund administrators close pack by hand checking every statement, every capital account and every workbook lined by line? Juniper Square just launched Faye, our new admin oversight agent and it can handle all that manual work for you. It runs more than 150 checks across every document in your close pack and flags the errors before they reach your auditors or your investors. It works with any administrator, no setup, no integration, upload your documents and Faye gets to work. Learn more at JuniperSquare.com. What would you say? It's funny just kind of thinking back through some of the past conversations. One of the things that consistently comes up is the power of relationships as well as the influence of everybody's personal origin story I've had. Several guests on the show who you probably overlap both with chemical bang also at bankers trust and and you know and at UBS. So it is truly a small world in private markets, but also in real estate. I guess as you look back on that magical time, you know, what do you kind of, what was your biggest takeaway from the experience at UBS leading the investment banking business for real estate? Wow, there are a lot of things. So when I say it was a magical time, that doesn't mean that every moment was magical. UBS was sort of last in to, you know, in 1998 as a, you know, as an equity participant and, you know, and a lender to, you know, one of the biggest crises at the time. And we also, so, which led to a merger with Swiss bank and effectively, it was UBS in, it was, UBS had the majority of shares. So UBS was buying Swiss bank, but the reality was Swiss bank was buying UBS. So we had 16 corporate finance divisions, 15 of them ended up being led by Swiss bank bankers. The only one that wasn't was real estate, which was led, which ended up being led by me, but that was, that was a 15-month internal food fight to sort of get through that. We then subsequently bought paying Webber, which for most of UBS was a non-event on the real estate side, paying Webber had their own real estate group as well. So what ended up happening, you know, to some extent is that 90% of my time ended up being focused internally versus externally, I ran cover for people to, you know, to do business for the real estate group. I wasn't something that I didn't enjoy every single minute of it. And then, you know, we got to the point where we were doing things that I don't believe were illegal, but I do believe we're unethical. And this is the no-way shape or form picking on UBS because this was across the street. So the practice of buying commercial mortgage-backed securities, CNBS, and then marking those up and then paying yourself bonuses on those marks with really no third-party validation was not something that UBS had a monopoly on, but we were certainly doing it. And I became disenchanted, ultimately, and said, "You know, I made it this decision, I think at the time I was 37 or 38, and I said, you know, this isn't what I want to do with my life. And most people, not those who knew me incredibly well, but most people said, "That's a terrible decision." You know, you're running this group, you're making a lot of money, you know, just do it for five more years or seven more years or 10 more years. And I was like, "You really don't understand me. I don't want to do it for five more minutes. It's not who I am. It's not my DNA." And I would rather be rich in life and poor financially than rich on paper financially. And, you know, I was headed towards, you know, probably also, you know, whatever. Anyway, I decided to leave in February 2002 and start my own venture. It was also important. I was married in '01, and my wife, Tamara, had parents who had been entrepreneurs, and she was 1,000% supportive, but she's like, "Get out. It's not who you are. You need to go do your own thing, and I don't care about our house or our cars or our kids going to private school or anything. I'm all in. If we lose everything, we will figure it out, which gave me the freedom, because I, I, you cannot be half in as an entrepreneur. It doesn't work. It doesn't work that way. The chips all go into the middle of the table, and it's really 10X the chips. You're signing recourse notes for, you know, 10 or 20 times your net worth. There's no like, "Oh, well, I'm fine with it as long as we make $600,000 a year or something, whatever it is." And so that was, and she was seminal in the process of this transition, which probably, you know, not probably, you know, on paper, you know, financially looked like, you know, for eight to 10 years, probably looked like a terrible decision, you know, until it didn't. But I love the decision all along. And actually, when we really started our own real estate business, and was 1200 square feet, and Tamer's voicemail was, you know, she was the recording on the voicemail, and it was three of us, I said, "We're going to make it, and there's going to be a time when we're going to look back nostalgicly on this." You know, and, you know, and I don't know why I had the confidence that that was going to be the case, but it has been the case. And, you know, it's got fun to think about that. Well, I think that's a really interesting segue because you've gone from, you know, working and banking to purely entrepreneurial for it sounds like the better part of a decade, you know, building up your own business to building and starting the real estate business at Cananderson now to the CEO of the platform. So let's kind of talk a little bit about Cananderson. How did you, what would, you know, what did you arrive into building out the real estate business, and then what has it become, you know, over the last, you know, what nearly 20 years that you've, you've been with the platform. It's a great question. And that, and that requires some context. So I left UBS started our own business, Rable Properties. I joined with one partner guy named Mike Somias at a Pittsburgh. And he had an existing real estate platform about 10 million square feet of, of retail, mostly, you know, strip centers and big box retail. He'd been very successful. That had nothing to do with the venture. He, he said, let's, let's do a 50/50 venture will leverage off of my operating platform. You're really the, you're really the boots on the ground. And, you know, will leverage off of what's in place. And he's a very unique individual. Mike and I actually met in 1988 when I was at bankers trust, because I would be the first one into the office. So I would turn the lights on at 6 a.m. And, and bankers trust was kind of a little bit of the Wild West. It was a merchant bank. And so it wasn't it, you know, we were ship on our shoulder, you know, gunslinger sort of, we don't have the panache and the, you know, we're not Morgan Stanley. We're not Goldman Sachs. We're not, you know, we're these, we're, you know, we're these upstart sort of trying to make a name for ourselves. And it was an entrepreneurial environment. I mean, I was an associate there. And before being allocated to the B team and dealing with some of the Titans in real estate on workouts. Literally, I was, you know, I was, I was, I was can, you know, I was calling on clients and trying to source business. Mike Zamyus was one of those clients that I called on. And, and he was in the middle of his largest retail development at the time, a thing called Robinson Down Center, which is if anyone's been to Pittsburgh, it's right between the airport and downtown, hugely successful. It's something like two and a half million square feet. He got a $24 million interchange. That the state paid for done that other other bigger well-known names, Simon DeBartolo, others had not been able to get done. It became a huge success. But he was building that when I started speaking to him, he would get into the office at 430 in the morning. So Mike and I quite often would spend 30 minutes talking at 6 a.m. Because I was in and he was in, you know, it was like the rest of the world was quite anyway. We joined forces. And it was a fantastic partnership. We literally spent the year driving around the mid-Atlantic looking for any kind of real estate opportunity that we thought was outsized. We ended up in Richmond, Virginia. We saw University of Virginia Commonwealth University, which had been transformed from from a two-year university to a four-year school and had 30,000 students, 15,000 employees. It basically had no student housing and no no retail infrastructure. We're like, what are we missing and we weren't missing anything anyway too late to make a long story short. But we did we did seven deals there at VCU. They were quite successful. Mike and I went different ways. Essentially, I mean, we remained, we actually just sold our last asset. So we remained partners and we've remained close friends. But our, you know, we sort of took different directions after O5 because two alpha males in the room is one too many. And although we loved each other and it was a great partnership, it was like, this has been great. Let's, let's go. So we kind of win our separate ways. And so I had a student housing business. That I essentially lifted into Kane Anderson in 2007 and launched the real estate private equity platform. But how did that come about? That came about because Kane was looking to plan a flag in real estate, and they were looking at alternatives. And through six degrees of separation, they got to meet. They talked to people who I Kelsal Moral, who was a colleague of mine at bankers trust. I hadn't spoken to him in five or seven years. He was like, you have to talk to Al Rable any event. General name Terry Quinn was a vice chairman at Kane today. Set up a meeting with me in March of 2007. And we met in the lobby of the four seasons hotel. And Terry's story is that, you know, I had jeans and a t-shirt on, you know, or, or not a collar shirt. And dress for the moment, clearly, taking it. So I had a Sam Zell outfit on without a Sam Zell bank account, but we met and literally 45 minutes into the conversation. He said, you, you have to, like, you have to come launch a real estate private equity platform. And I said, Terry, you're either an idiot or a genius. I don't know you well enough to discern which of those it is. I'm very flattered by your own. I have no interest in crossing those tracks back to the, you know, I'm happy doing what I'm doing. He said, no, no, no, no. At least just meet with Rick Kane. It's now this isn't, you know, we're not institutional partners. It's not what you think. So I said, OK, I'll meet with Rick. I met with Rick later that month in his apartment in New York. We spent four hours talking business didn't come up once. Tell me about you. Tell me about. Oh, you're, you know, your family. Both sides integrated in the early 1900s. And then your grandparents. And your parents and like what excites you and, and, and sort of back and forth that way. And, you know, I, I said no again. I think I said no four times. And then Rick said, it will be your business. I want you to understand that. It's not, you know, so you will be making all of the decisions. I don't have to agree with all of those. But I'm willing to, I'm willing to make this bet and, and do this that way. And I said, OK, let's give it a shot. I said the first time that's not true. This partnership is going to be over. Obviously, I'm still there. So there was, it, it, it, it, it, it never became untrue. And Rick was a tremendous partner and, and shortly after I joined, I mean, we raised a very small, I mean, although we were happy to have it, 136 million dollar fund, mostly raised during a week, final close with scheduled for December, a week. We were actually over subscribed on 200 million. Of course, all of that money went away. And we even went down September 15th. We did a couple of deals by February, oh, nine. And then there was nothing to do. It was deja vu for the RTC all over again. And Rick said, listen, I don't care if you don't do a deal for five years. I'll fund this thing. Like you're not here. I, you know, I don't want. you worried about paying your mortgage or your people, you know, paying their mortgages, this is going to come back our way whenever it comes back and we'll be ready when that happens. And so that, so we didn't do a deal from Febo 9 until May of 2010 and then we invested the rest of that fund and we raised the second fund and a third fund and, you know, I won't say the rest is history, but, you know, we've gone from, you know, that first $136 million fund to 21 billion of AUM today. Although I always hesitate to talk about AUM because our DNA is really focused on investor returns. We've never had size aspirations. We don't think about it really. So, anyway, I didn't mean I didn't mean I didn't mean at a rip experience. No, nonetheless, that's an incredible story. Yeah, and I think one thing that might be helpful, you know, a lot of our listeners are broadly private markets focused, a lot are focused on real estate. So the firm was founded in 1984, but you joined in, you know, what 2007, 2007, so leading up to that time, what was Cain focused on? So the firm was founded in 1984, but Cain, as you know, it today was really effectively formed in 1999. So Rick Cain had been with Canter Fitzgerald, left Canter, and then a bunch of interesting things, sort of hedge fund like things from '84 to '99, in 1999 Cain saw a huge opportunity in MLP's master limited partnerships, pipeline assets, and became the biggest player in MLP's from 1999 through, you know, plus or minus 2015. And so that's really when the alternatives platform started. And so when I joined, Cain was about 8 billion of AUM, all in energy, and Rick was looking to diversify what Cain did into alternatives and including real estate. So real estate and credit joined private credit, joined in pretty short order '07 and '08. So I was initially $136 million piece of an 8 billion AUM firm kind of a rounding error, which obviously that's changed over time, but Cain had the DNA of wanting to be in highly fragmented, non-commoditized asset classes, whether that's energy, real estate, or credit. And so that was the DNA of the firm, there was also an entrepreneurial DNA, which was very much Cain is essentially an umbrella platform that says, "Let's hire people and teams who are really good at what they do, and then let them do what they do. We're not trying to micromanage them. So we're going to provide capital, we're going to provide back office support, we're going to provide fundraising support, but we're going to let people do, we're going to hire town to people and let them do what they want to do. So when I joined, we were exclusively focused on off-campus student housing, and that was the case for about four years. And then we morphed into medical office and senior housing for two primary reasons. The first reason is that we saw huge opportunity in medical office and senior housing in 2012 2013, highly fragmented, non-commoditized asset classes very under-invested from an institutional perspective globally with literally decades of demand escalation in front of it. So demographics as destiny has always been one of our key themes. And so we look for asset classes that have very long duration demand trends are not highly commoditized or under-invested, highly fragmented, not highly correlated to the macro economy. So that's kind of the starting point. There were other things that go into it, but that's kind of the starting point. And at that time, we also saw a tremendous amount of capital relative to the size of the space coming into student housing. So what I had seen and we had seen in student housing for the past decade was changing a bit. And so we branched out to include medical office and senior housing and grow the platform from that point forward and part of what we did from day one. And I think this really comes from me having been on the sponsor side of the business. So when I was with Mike, we said, okay, we're going to do off-campus student housing. One thing we're not going to do is ground up development. So the first deal we did was ground up development. And then, not only that, we had a master lease with Virginia Commonwealth University and six months into an expedited building, the building burned to the ground and hit 18 other buildings. So I say, trial by fire, pun intended, it was an incredible experience. We got the building built. The story ended well. I won't digress into that whole story. But let's say, I truly understand the risks inherent in development in a way that many others don't. But more importantly than that, than that specific instance, I think being on the sponsor side of the business gave me insight into the importance of operational expertise and knowledge and sort of how to create outsized returns in operation intensive real estate asset classes. And so we set the platform up in a very different way than most other real estate private equity platforms. So we have a vertically integrated team in-house. So we have experts in-house. I say we've always been vertically integrated, but initially that was just me wearing seven different hats. We're far deeper than that today, thankfully. But we have vertically integrated team in-house. We, instead of using the traditional private equity model in real estate race capital, field inbound inquiry, allocate capital deals, we thought made sense. We actually said, let's identify who we think the best operator or operators in each of the asset classes we're investing in is because there aren't a lot of them. They're very few best in class scalable operators in these alternative verticals. And let's proactively align ourselves with those players. And so our model is more, we're going to source. We're going to be, you know, all strategic decisions are going to rest with us, but we're going to have the best operator or operators in each of these asset classes really as part of our platform, but not sitting on our balance sheet. And, you know, I say it may not be a requirement in these verticals to have operational expertise to produce, you know, outsized returns. I do think that the asset classes in which we're investing are have out, I don't think I know they've outperformed traditional real estate asset classes for the last 20 years. And I think they will continue. So just beta to beta, they're better. Then we're not satisfied with just, okay, let's be an investor in these verticals. We want to create alpha. And that alpha is really created through outsized operational expertise, which leads to a lot of other collateral strategic advantages. So, so I think that's a key to who we are is the way that we set ourselves up and the way that the platform functions. So I'm going to come right back to real estate, but before I do, if you zoom all the way out the whole platform today, just give us the quick lay of the land. You know, I know you don't like to talk about things in terms of AUM. You mentioned a number before. I'm not sure if that's real estate or broad platform, but what other verticals besides real estate are your teams focused on? So specifically on the real estate group, that's 21 billion of AUM and the verticals within real estate on which we're focused are medical office, senior housing, student housing and light industrial, and then I would secondarily throw multi-family in there. And what we have is an ability to play any part of the capital stack because that 21 billion of AUM is split between equity and debt. So we have opportunistic equity, core equity, and for simplification, I'll say we have opportunistic debt and core debt. This is all real estate. So we have an integrated platform that says we're category killers in these asset classes. We have very outsized knowledge, we have outsized operating capabilities, we see everything. And we have the ability to play at any part of the capital stack that makes sense. So we don't have to say, well, this doesn't, you know, this isn't a 17% return deal, we can't do it. Well, it may fit here, it may fit there, and so we run the platform as an integrated platform. So our debt side, while we have a dedicated debt team, leverages off of the teams that we have in medical office and senior sales. So if they're looking at a medical office deal, they are working with the medical office team to evaluate that particular portfolio or asset. And do you still have energy and non real estate private credit as part of the broader platform as well? As part of broader keen, we have a private credit platform, which is about nine billion of AUM that has been very successful. very disciplined under rise of the team that's been together for a long period of time based out of Chicago. And then on the energy side, we really have two parts. We have, you know, we have any MP business that has been hugely successful, particularly over the last 10 years as many players exited that business. We've been able to lean into that dislocation and produce very, very outsized returns. So that's, that's really backing specific teams in different basins. And then we have a, you know, a midstream business, so a publicly traded company under the ticker symbol KYN that's primarily, you know, pipeline related and is a, you know, it's a publicly traded company. Both of those businesses are based out of Houston. And in your role, do you oversee all of the different entities? So the answer is, I'm the CEO, but CEO isn't like being a corporate CEO, remember Keynes and umbrella. So we have very capable people running the businesses. My role as CEO is really provides strategic direction, help with fundraising, opine on any potential conflicts of interest. Where should, you know, you know, I'm in the conversation of where we should be taking these businesses. But I'm not in the trenches on a day-to-day basis or, you know, trying to micromanage any way, shape or form what the leaders and, and the teams in those businesses are trying to, are trying to do. That makes a lot of sense. So I guess to follow up questions, just from a macro perspective, you know, one of the trends that we're seeing and kind of alt is that, you know, as one sector vertical, you know, call it real assets is more challenges. Others rise up portfolios and allocations with institutional investor shift from your seat given the breadth of what Keynes does, the size of the platform. How are you kind of seeing structural shifts from a LP in portfolio allocation, either two real assets away from real assets. Kind of what is the role of real assets with respect to kind of the broader alt space, at least that you have purview into right now. Yes, so speaking to real estate specifically, and I'm going to bear with me a little, but I'm going to try to answer your question. It's to state the obvious it's been a challenging fundraising environment, the overlay of the things we've been talking about, so, you know, how we run our business, what we do. The overlay, and it's a critical overlay in my view to produce consistent outsized risk adjusted returns is being a disciplined investor, and I say you can't be a disciplined investor without having a view of where we are today and where we're going. And it's more important to be correct directly than in terms of specifics as an example, interest rates, are we going to a higher or lower interest rate environment. It's less important whether the Fed is going to cut in Q3, Q4, they don't cut in Q3 or Q4, but where are we going generally. That holds true for our real estate asset classes. You look at 11,000 Americans turning 65 every day, 5,000 Americans turning 80 every day. That's that today tomorrow for the next two years. That's the next 20 years. Health care is 18% of US GDP, it's going to be 20% by 2030, whether it should be or shouldn't be, that's a separate conversation, but it's not going away. These are, I say, the assets in which we invest are mission critical real estate assets and really mission critical infrastructure, if you will. The Venn diagrams between infrastructure and real estate get clouded a little bit at times. But what we've seen and what we try to do is we're very judicious with our capital in times where there is a tremendous amount of liquidity and where you have, either peak pricing or close to peak pricing, and then we endeavor to lean into dislocations, such as the one that we've had over the last three years, which hasn't been a GFC type dislocation, but is a dislocation in that you had 525 basis points of Fed rate hikes between March of 2022 and May of 2023. And that caught putting it nicely, a fair number of players flat footed. And we've been able to lean into that. So I don't, the last thing I want to do is turn this into a commercial for ourselves. But I think that for anybody, that's an important dynamic. It's not just like, oh, well, you know, we have a series of funds and some funds are going to be better ventages than others like, no, this isn't a passive activity. You decide when you're investing the money or if you're investing the money. And that's probably as if not more important than the other things that we're talking about because one of my sayings is find the demand and let it run you over. If you have demand and if you're in an environment where you've bought an appropriate cost basis and you have escalating demand, you are in a position where your underwriting doesn't have to be perfect and you can still succeed. Whereas that is not true on the opposite side of the table where if you're setting up, you know, we talk about it in terms of saying, let's always be investing or as much as we can in asymmetric return risk. We don't want to have to have nine out of 10 things to go right for us to win. So any event, I think all of that is critical to the investment process. Part of what I see broadly speaking, not picking on anyone specifically, it's just the reality in the world of private equity is that in many cases you have a misalignment of interest between GP and LP. And what we try to do is be as close to full alignment as we can with everyone in our ecosystem with our LPs, with our joint venture operating partners, with our service providers, with our finance partners. And so we don't sit around thinking about this gets to the AUM comment. We don't have AUM objectives or targets. We're not saying let's take it from 20 billion to 40 billion and that will be, you know, this much FRE. We just think let's look at the landscape, identify outsized opportunities and lean into those opportunities. And if we do our jobs well, then the platform will grow organically and that's that's really what's happened. So based on where you see the opportunity, I love what you said, find demand and let it run you over. Where are you seeing the greatest demand right now and just for our listeners context, we're recording this in May of 2026. So, you know, kind of where, what's the path to progress? So, for today in terms of the asset classes in which we invest and we see this, we see a pretty big runway in both medical office and light industrial. Very little new development, very few players without outsized operating expertise, very few players actually with operating skills, expertise and knowledge in those asset classes. And one of the things that I say, so as you said, this is May of 2026, I say, listen, there are a lot of investors and there is a lot of, there's a lot of capital out there. And that capital could decide tomorrow to invest in medical office, could decide tomorrow to invest in light industrial or any of our asset classes. And what that capital can't do is quickly and efficiently create a denoval operating platform and have 20 years of operating expertise and knowledge, have made mistakes, have learned from those mistakes, have seen what's worked, what hasn't worked, what are the nuts and bolts of the business. And so, today specifically, those are where we're seeing the biggest opportunities, that will change and part of the reason we like having four verticals in which we invest as we say our funds will be diversified, but that diversification will change fund to fund depending on where the opportunities are. And what we're seeing today, senior 1000s takes senior housing as an example, obviously went through a very difficult time during the pandemic. I won't recount all that that's intuitively obvious to everyone and very specifically, you know, and very painful for many who were in senior housing, you know, before 24 to 36 months during the pandemic. Senior housing had become a darling of the investment world, you know, in our world, it's sort of like everyone wants senior housing, and this is almost deja vu because we had this with with student housing, we're student housing. We were very active in off campus student housing as I've detailed and I was for more than a decade, but then you saw a lot of capital come in pricing dynamics changed and we literally literally didn't buy a single existing student housing property for almost eight years 2015 until q4 2022 and then interest rate hikes happened. And then we've invested over five billion dollars in off campus student housing over the last three years, so it was like a lot very little a lot. And these things can take time to work through we see a similar dynamic evolving in seniors housing not going to predict time frames, but there is a love affair with seniors housing with people saying all the things we've been saying the last decade plus, which is all the demographic dynamic. makes et cetera. All of which are true. Silver tsunami, baby boom generation is aging into its seniors housing, living years. It's the wealthiest portion of the US population. All of that's true. The issue is you cannot pay a 24 times multiple in seniors housing and easily come out with a 20% gross return. So those things are true, but your most important determinant of return is still your cross basis. And there's nothing that's going to, you know, there's no world in which, and that's true for all assets. There's no world in which that's not going to be true. And so at the moment, we're actually leaning into selling seniors housing, not buying seniors housing. What I think will happen is what we've seen with student housing, and that is that at some point in time, and maybe if someone's listening to this six or seven years from now, maybe that point in time has happened, I'm not going to predict them in exact point of time. But that love affair with an asset class, and to put it nicely, the efficient pricing that's happening today will lead to some level of dislocation and dissatisfaction with returns over time, which will then create the next opportunity. And so if you, you know, you can tell, I'm 62, I've very little hair, we've recanted, I've been in this business for 40 years. I'm still learning every day. But when you, when you say history may not repeat itself, but it certainly rhymes, you know, when you get old enough, if you've been paying attention, you sort of broadly speaking know how the movie ends. You don't know when that's going to happen, but that's why I say it's important to understand directly, not necessarily say, hey, March of 2030, you know, that's when we expect this to all happen. I wish we were that good. I think, I think there's a lot of people that wish they could predict with that degree of precedence. We're almost out of time, but I just want to wrap up on, I think, a really important point earlier, you mentioned this idea of, you know, outside operational expertise. You also, we're very clear in terms of your model, which is how you partner with operators and give them the autonomy to do what they're great at. A lot of our listeners are those operators who are looking for capital partners and looking to figure out how they can scale their business. We could talk for hours about this and maybe it'll be a follow up conversation. But generally speaking, what advice do you give to operators or those who might want to be a partner of yours or somebody who invests in a similar way that you do firms that are small by design, but have deep expertise in sectors where there's kind of an asymmetry of information? Well, I don't have the ego or hubris to give advice to those out there listening on the operator side. I'm sure there are a significant number of very capable operators out there. The investment world, as we all know, ebbs and flows in terms of where capital goes. It is an interesting dynamic that we've been going sort of bigger, bigger, bigger, let's rationalize the number of GPs that we have and capital is going to fewer and fewer players. That's what's happening today and that's been happening for years. So it is harder and harder. I say, if we were starting our organization now, you know, $136 million fund, I mean, I don't know if we would get off the ground. I mean, it's just not relevant. So what we're cognizant of is they're very outsized return dynamics within a smaller scale. And so what we would like to do going forward is partner with some of these operators, whether that's for an operator and then other operators, whether that's a roll-up strategy, where we can differentiate ourselves by doing what Ken Anderson has done broadly as a business, which is saying, let's buy into and provide capital, equity and debt capital and capital markets capabilities for some of these highly capable operators out there. Let them do what they're doing, but do it under our umbrella. So we're investing in their business and giving them an avenue to say, hey, we'll take the capital needs off the table for you. What you do is, you understand this, but you've forgotten more about this business than we know. Let's make one plus one equal three and move forward. Unfortunately, for many of your listeners out there, there aren't, they're not a multitude of Ken Anderson's out there sort of saying, well, let me pick from a menu of 12 different great potential strategic joint venture partners. Because a lot of the operators out there and the people that you're mentioning are, in my view, entrepreneur really oriented, and they don't necessarily want to be quote-unquote an employee of, and I won't mention any names, but whatever it is, a trillion dollar platform, and you're, it's like, okay, that's not exciting. And so, part of what, again, not trying to turn this into a commercial, a part of what we bring to the table is that we have enough size and scale to be relevant, but, but an orientation that, you know, that we're still small enough that you matter and that your business matters and that you can build a business and that you can, you can get me anytime that you want. You can get David Solznik or CIO anytime that you want. We're not going to micro-manage you, but we're going to know who you are. We're going to know who your team is. So, it doesn't need to be us. And I say it, unfortunately, though, that it's a tough needle to, you know, thread because it, you know, finding that right joint venture partner is not an easy equation. And maybe the pendulum swings back the other way at some point. I do think we'll see roll ups. I think, you know, I think, you know, I think that as we get bigger and bigger, what you're going to see is you're going to see more beta type return dynamics because just stating the obvious, the larger you get, the harder it is to outperform. You have to, you have to be in certain size deals. You have to put dollars out in a certain timeframe. You know, probably one of the greatest investors of our time, Seth Klorman, you know, obviously hugely successful, but, you know, found out that, you know, going from three billion or four billion to 24 billion, you know, wasn't the same investment dynamic. And Olacudos to Seth, obviously, Balfost's fantastic firm. So, nothing I'm saying is a negative. It's just I think there's a role in this world for those people listening. It's just harder than it should be to find the right partner. Well, I think that's as good of any of a place to wrap up. And I know that that's very relevant advice for people listening. And that's one of the reasons why conversations like this are so important because it helps to bring some transparency in terms of who's out there, how you're investing, what you're looking for, where your focus is, and ultimately what your DNA is. And I think, yeah, today's conversation highlighted all of that. So, I'll thank you so much for joining me. I really appreciate it. Really appreciate you having me. This was a lot of fun for me, Brandon. Thank you. Thanks for listening to the latest episode of the distribution by Juniper Square. If you liked today's podcast, please share it with a colleague or a friend. And don't forget to subscribe and rate the distribution on Apple podcasts, Spotify, or wherever you listen to podcasts. You can connect with me on LinkedIn by going to www.linkedin.com/in/bcedloff or you can find me on Twitter @bcedloff. You can also find a video recording of this conversation on demand at JuniperSquare.com/the-distribution. Until next time.