INDUSTRY SECTOR EXPERT INTERVIEW WITH KEITH LAMPI, INLAND PRIVATE CAPITAL CORPORATION

[00:00:00] Andreas Senie: Welcome back for another CRECo.ai Sector Expert interview. I’m your host Andreas Senie, Founder of CRE collaborative as well as a brokerage owner and technology growth strategist. 

Joining me today is none other than Keith Lampi, President and COO of inland private capital corporation.

We've got a wealth of topics to discuss, including value and purpose of private real estate, securities, inland private capital's position in the market, their expertise, as well as the outlook for 2023, based on over 11 billion in transactions in 20 years at inland Keith. Welcome. So excited to have you on the 

[00:00:58] Keith Lampi: show.

Thanks for having me great to be here. 

[00:01:01] Andreas Senie: I've gotta ask first and foremost, why real estate securities. Inland real estate securities. 

[00:01:07] Keith Lampi: Yeah. Yeah. I mean, it's obviously a topic that's near and dear to my heart. Um, you know, I think what what's interesting about, you know, real estate is obviously a fundamental, uh, investible sector, um, has been, has been around and, and, and being invested in since the beginning of time, I think we're securities and, and securitizing, the hard asset of real estate comes into.

Is is it provides access to, to, to smaller investors, uh, with smaller investment increments or in some instances, high net worth investors that maybe don't have the desire to, to allocate, um, quite as much capital to, to any one property. So it gives. Gives them, the investing public, an opportunity to, uh, invest in a piece of property, um, you know, with, with other, alongside other investors.

And then it, it also then affords them the opportunity to, to benefit from institutional management and the value creation that comes along with it. So, um, it really has been kind of a, an interesting opportunity for asset allocators to get, get access and exposure to real estate in, in a more user friendly.

Well 

[00:02:11] Andreas Senie: makes sense to me as a broker, I can't tell you how many clients are sick and tired of the headaches of ownership, retail centers, multifamily the like, and they exchange out into these DST products and they're happy headaches are gone. It's better than the stock market. It's real estate, right? real estate securities.

It is that all being said. Uh, you do have to be an accredited investor to get involved. But you do not have to be exchanging into a DST to invest in real estate's career. 

[00:02:42] Keith Lampi: That is correct. Yeah. A private, a private securities transaction does require, uh, a credited investor, meaning million dollar net worth mm-hmm exclusive of primary residents or, uh, $300,000 income for couples filing jointly 200,000 for, for an individual.

So there is a net worth realm that, that, that kind of establishes suitability. Um, but to your point, uh, you know, the, I think the term key opportunity to, you know, have every, have all the day to day the, uh, the terrible tease as there's oftentimes referred to tenants, toilets, trash, all of that is, is taken care of by, uh, by an institutional platform.

Um, A lot of different structures that, that are, you can unpack in the private securities arena. So we specialize in tax oriented investments, meaning DSTs for 10 30, 1 exchangers. Um, we've also structured a handful of qualified opportunity zone products. Um, but you don't have to have a tax driven reason to invest in a private placement of securities.

There's there's a lot of other, uh, cash available options. 

[00:03:44] Andreas Senie: Well, so as an inve as an investor, I mean, why, why go fee simple and hard assets once you've accrued that, that accredited investor status? It seems like going through a, an inland or, or other group is, is an evolutionary point. It's how you get from I'm the investor who's been.

My, my portfolio too. I'm the owner. I'm a, I'm a pass. I'm retiring. Let's say, is, is that what you're seeing? There's those that are 65 and older. What's the average buyer or investor look like? 

[00:04:17] Keith Lampi: Yeah. It's I mean, you hit the nail in the head. It's uh, I mean the, the spectrum of, of. Age kind of varies, but, uh, you know, oftentimes yeah, somebody in their forties, fifties, sixties, um, on up into the spectrum, but I think the real driver is, is what you described, uh, earlier in your remarks.

It's, um, you know, investors initially early in life, get exposure to real estate by. You know, buying a rental property, maybe something local that they then manage and, and, and, and, you know, develop or redevelop. Um, and, and then maybe they graduate to a, a three flat something, something bigger, but not quite institutional.

And by the time they get to us, I think they they've evaluated the, the, uh, the spectrum of opportunities. And, and again, it goes back to that access point. They, they are then afforded the opportunity to consider properties and property. That PRI previously would only be acquired by institutional investors like REITs and pension funds and, and things of that nature.

So, um, a little bit of a, a step up in, in the way of, uh, quality and, and, you know, the, the risk spectrum is quite a bit different when you, when you get into that echelon of, of investing. Yep, 

[00:05:25] Andreas Senie: but still, but still enjoying annual returns, leverage returns. I mean the, the beauty of, of real estate, right? Uh, and I hesitate to use apple as an example, it's a blue chips stock.

It's graduating to blue chip real estate investing in these products. So inland private capital's position and expertise, as I understand it, and I know it to be, it is unmatched. You had a record setting year in 2021. 1.5 mil, 1.5 billion in real estate through your 10 31 exchange platform. What, what does that look like?

Competitive landscape wise. 

[00:06:01] Keith Lampi: You know, inland private capital, um, benefits from being, uh, one of the affiliates of the inland group, uh, the inland group's been around for 50 years. So over, you know, several decades, a lot of experience and infrastructure, um, certainly established that, that, that we've been as a, as an organization, the benefactor of, um, so we've not only had the experience of managing assets through a variety of different cycles and, you know, history is, is often.

Something that, uh, we, we across the board are students of, and, and wanna make sure that we factor into our, our, our investment thesis at any given point in time. But then having that, that vertically integrated opportunity to identify and source new op new acquisitions, uh, do our, our, our full blown due diligence process on each acquisition.

We, we, we ultimately tie up, uh, financing capabilities, management capabilities. The, the whole gamut is kind of covered, uh, through our affiliation with the inland group. Uh, in terms of our, our position as market leader. Uh, I think the, one of the bigger, in addition to, to the affiliation with inland the, the big driving force for us has been our ability to stay nimble.

Even though we're a big organization, we, we, we take a very thoughtful, nimble approach to. You know, kind of reading the macroeconomic T leaves, if you will, assessing what makes sense from our perspective on a forward looking basis and, and being in a position to pivot strategy accordingly. So, um, you know, real, estate's broad spanning, there are certain segments within a real estate investment that that might make sense.

That might not make sense five years ago. So we've, uh, we, we've got a fairly broad spanning, uh, platform. Our, our assets under management span pretty much every, every sector within the market and, and our strategy shifts depending on, on what we're seeing within, within the broader marketplace. Well, 

[00:07:56] Andreas Senie: and, and you touched on it, the, the, the education, the historical knowledge, the institutional knowledge vertically integrated, I mean, you were the, the great depression you've been there for 20 years.

You had strategies proven. Market leader today, 10 billion assets under management. What are some of those strategies? Looking down the line down here at the outlook, uh, what asset types of focus? Healthcare, self storage. I mean, what, what are you inland is always buying is what I always see at ICSC recount.

Right? um, what, what is inland doing now? That's that's different from other strategy. 

[00:08:34] Keith Lampi: Our, our focus here, the past handful of years coming out of the pandemic has, has really anchored on operating assets or assets with, with operating characteristics. Uh, many of your, your late cycle strategies, um, demographic driven strategies really, really seem to make a lot of sense to me today, especially given, you know, the inflationary environment.

We're, we're finding ourselves in rising interest rates. You know, some of the, some of the front of mind. Issues that investors are thinking about all the time. Um, so yeah, we've, we've leaned into, uh, residential assets, uh, you know, multi-family as well as, uh, you you're built to rent communities, which is a growing segment within, uh, residential, uh, real estate investing, uh, self storage is another big area focus for us, uh, healthcare related assets, specifically senior living.

Um, and then finally student housing, uh, the, the last three I mentioned, um, and you could probably. Uh, categorize residential into this category tend to be less tied to economic cycles, more tied to demographic trends. Um, so when we look at performance, you know, following the, the two most recent black Swan events that we saw the, the financial crisis of oh 8 0 9 and then the, the pandemic we saw these, these assets perform better.

Then then some of the alternatives, because the demand for, for, uh, rentership, if you will, or, or tendency was more needs based and less. Less economically driven. And, and that's kind of where we, we are focusing on at least, uh, on a near term basis. So, 

[00:10:09] Andreas Senie: so as an example of demographic and life event, self storage, right?

We've got COVID work from home. You had to move your stuff somewhere to make room for that office. Demand goes up healthcare 65. Um, what is it? 10,000 people are turning 65 every day. So those nontraditional hospital uses, uh, senior care. As you mention. Aging population and then student housing, I mean, population is exploding.

So that, that, that makes sense to me now, just to, to drill down, when you say residential, you mean multi-family not single family homes? I buying you're you're talking multi-family 

[00:10:44] Keith Lampi: car. Yep. Yeah. Uh, three, you know, three story, uh, walk up, uh, garden style, kind of, you know, uh, suburban, suburban type multifamily dwell.

Although we have, uh, starting in 2018, we did expand into, uh, the acronym is SFR or BTR, single family rental, uh, built to rent communities. So unlike what you were just describing with single family homes in inland is not going out and buying, you know, disparate, single family homes in different communities and renting those on a one off basis.

But what we have seen a, a growing demand from, from, uh, the popul. Particularly in the south Southeast and Southwestern segments of the country. Um, there are communities that are being built almost like apartments, where, you know, there's, there's sprawling acreage, individual homes are being built with a backyard, uh, and, and kind of a single story dwelling, but they also benefit from the, the amenity package you might find in a, in an apartment.

So you've got, you've got your clubhouse, your pool, um, your other amenities, but you, but you have four, four walls and a rooftop that make it. You know, a home as opposed to a, uh, a more traditional apartment, um, rentership is, is, uh, continuing to become less of a stigma. And so we're seeing the American public.

Uh, rent, uh, in the, the later stages in life, right? So we're seeing, uh, you know, folks well into their thirties, uh, as they establish, you know, families and, and, and continue to grow, continue to have demand for, for, to, to rent their residences. And, and I think the, uh, the BTR SFR segment of the market is, is really positioned well to, to.

Uh, support that demand 

[00:12:24] Andreas Senie: so well, and that sounds similar to mixed use development and something we didn't mention what's in what's IPC's outlook on mixed use development acquisition and the different projects. So with what's happened COVID and the light here in the Northeast, at least we've talked about this on the round table.

Uh, quite often you've got, uh, double density zoning changes. You've got this, this demand for more housing. But at the same time, uh, higher density and ability to have that, that walkability, right? Uh, where's inland there on I P C wise, I should say 

[00:13:00] Keith Lampi: we, our, our investment activity's mostly been sector specific.

So if we're buying a stabilized cash flowing investment, it's, it's typically gonna be anchored on, on, on one finite strategy. Uh, we have been a part of a, a handful of development transactions where. You know, you've got residential on the top, top three floors and, and some, some retail, um, or, or, you know, entertainment on, on the ground floor, um, which almost serves as a, as an amenity to, to your point to kind of fulfill that walkability need.

Um, that said, I think the, the mixed use broader spanning, you know, urban plans in, in newly, uh, developed areas is certainly something we're looking at. So if we're buying a pure play residential dwelling, you wanna. You know, how far is, how far is retail? How far is grocery? How far is, uh, the entertainment district?

Is it, is it a walkable, uh, demographic population base that you're, you're appealing to? And, and to what extent that kind of fits and checks a lot of those boxes. So even if you are strategy specific, you still kind of have to think about, um, where your demand is gonna be coming from holistically to make sure you, you, you know, drive your, your performance plan.

According. 

[00:14:10] Andreas Senie: Well, and, uh, performance is, you know, unmatched. The there's a funny story in south Florida it's and not a funny story. Jim fried has a show and I I'll never forget it where we were talking about how inland showed up in January. Bought up every shopping center and by December had leased them and sold them through the different vertically integrated groups.

So are used, uh, is inland private capital and, and the vertically integrated inland group of companies still moving and get that speed. I mean, development wise and, and that may be an unfair question for you. But I'm asking it anyways, on the disposition side, you're just as healthy on the acquisition as disposition, if I understand.

[00:14:51] Keith Lampi: Yep. Yeah. I would, from a, from a speed of execution perspective, um, there, there is such a thing as hanging onto an asset too long. Right. Um, so getting, getting in, whether you're buying a stabilized cash flowing property or, or you're getting into a development type project, um, you. We're constantly reading, uh, you know, doing our best, our, our best to read the forward looking, uh, headwinds, uh, and, and determining when that, that appropriate exit point is, um, a majority of what we're, we're targeting for our 10 31 platform, our, our income oriented.

And I would say more, more long term, uh, Holt, uh, you know, apartment complex. We might, uh, purchase put long term financing on and, and, and hold for a period of five to seven years. That's that's how we think about it going in, but when we acquire it and we begin managing it, you don't, we don't sit back and, and just assume, okay, this is gonna be a five to seven year hold period.

And don't do anything you're constantly active. You're constantly monitoring market conditions to determine when, when the right, uh, exit point in time is which, which has pretty meaningful impact on, on your ROI and on your, your value proposition to investors. 

[00:16:02] Andreas Senie: Absolutely. I mean, it's, it's. TSTs are night and day better than ticks.

Right? You can actually get things done when you need to and adjust, uh, bar none. So you're maximizing your returns for your investors. You're doing these large scale purchases, uh, as far as investment, is it, is it us firms, institutional public rates, foreign investment. What is, what is the shift? What do you expect going into the next year?

Uh, coming in. 

[00:16:32] Keith Lampi: You know, in, in terms of market demand, we have, you know, this year, you know, when the calendar turned January 1st, uh, it feels like there was a, there was a shift, uh, pretty, pretty immediately into here, 2022. Um, so I think what we observed is your institutional demand is still very much there.

Um, I think though the, the buyer pool for certain segments of the market, Thinned out a bit, particularly on the, you know, as you get lower in the spectrum of, of net worth. Um, so transaction volume is, is waned a bit, but it's still, I would still say healthy. Uh, when compared to, you know, most, you know, Mo most historic trends.

Um, and, and I think that's something we just continue to observe. I mean, we're nine months into the year. Um, we've seen dramatic changes in the capital markets environment. Uh, you know, the, the feds moves to, to, to combat inflation and to, you know, the rising interest rate environment we face is something that, that we're very focused on.

I think all investors are very focused on, but. The, the interesting phenomenon that I think surprises a lot of folks is real estate from a textbook perspective. Should. Shift in value in accordance with, with interest rates. But what we've seen here, at least the first nine months is institutional demand continues to pile into a lot of the sectors that we discussed because they are focused on the growth trajectory, uh, the rent growth, the potential rent growth, which is very critical.

If you're in a hyper inflationary environment and a lot of these, the further upstream you get with institutional investors. A lot of these are all cash buyers or these are buyers with, uh, very low cost to capital Alliance of credit. So even though your, your first mortgage rates may, may be ticking upward, that's not necessarily negatively or adversely impacting their, their appetite.

So that's a snapshot of what we've seen the first nine months. There's definitely beginning to, uh, a shift is beginning to occur. And I think that's something we, we just continue to monitor incredibly closely in a large way. That's, what's driven our, our, our really kind of. Tight narrow focus on some of the investment categories I mentioned earlier because we believe these are gonna be good long term, uh, buys when factoring in the nuances of inflation, rising interest rates, things of that 

[00:18:52] Andreas Senie: nature, right?

Healthcare, self storage, student housing, all, all asset classes where you can more closely control that rent that rent roll. You can squeeze out more income and, and adjust as needed. Uh, excuse. Leasing structures, uh, improvements inland, as far as speaking on lending loans and cost of capital, um, obviously the bigger you are, the cheaper your capital, but you've also got IP, uh, IPC as well as, um, inland green capital CPAC programs leader there as well.

So as a vertically integrated company, Is it fair to say your costs for development are less you're you're, you're just executing at a time. And in a way, how, let me rephrase that. How can a smaller practitioner others in the market looking to grow, look to operate more like you do. 

[00:19:52] Keith Lampi: It, it, it takes time, right?

I mean, I think, uh, you know, the, the founders of inland 50 plus years ago, I think worked through a lot of the same, the same nuances and you establish relationships with, uh, with, with certain financial institutions, banks, and, and, and other types of lenders. You establish scale, you, you, you build up your own balance sheet and that, that does give you an edge, right?

Not, I guess, it's football season. So it's appropriate to use the analogy game of inches. Uh, but in, in this environment, Um, you know, the, the details, those, those really minutia specifics can make an impact can, can affect, uh, and take a marginal deal and make it, make it successful, or make a challenge deal successful as a result.

And, you know, I, I've been very fortunate to be part of an organization that continues to invest in the business, continues to, you know, allow, uh, its balance sheet to be a resource. And, and, and so to your point, that does allow us. To bring transactions to market at a lower cost of capital. Um, you know, with, with less, less in the way of, uh, you know, extra expenses that a, a newer company kind of getting started might, uh, might, might experience 

[00:21:03] Andreas Senie: well.

And, and, and certain lenders really they're, they're looking for that longer track record, right. Especially. Given the problems in the market, labor shortages development, uh, supply shortages, we've had so much happen the last two years. And now as we head into this, this down shift, this shift, uh, we still need those new assets to be delivered.

Those mixed use projects here in the Northeast specifically. Uh, there's a lot of demand, new construction demand. That's just not being filled. As far as outside of healthcare, self storage. Multi-family. Student housing. Uh, what, what is your advice for the investors out there looking to transition currently, if they own it, do they sell it?

Do they hold it? If you, if you're sitting, if you're in their shoes going well, I should sell, go invested inland or get a security, or should I hold? 

[00:21:59] Keith Lampi: I think the buy, the buy hold sell analysis is a very, you know, it's, it's very, very tough. It is very personal and, and, and individual and project. um, you know, that's, that's the, the very interesting nuance of doing a 10 31 exchange you're selling and buying.

So you're transacting kind of in a very similar set of, of macroeconomic conditions. So if you feel like your assets achieved max pricing, and you think it's a great time to sell, you have to realize you're also IRS. You're demanding. You have to identify a replacement property in 45 days and close on it within six.

So, yeah, while you're selling in, in a environment you, you see upside in, you're also buying it in that same environment. So a lot of, I think, what, what should drive the, the buy whole sell analysis is, you know, the specifics that are on the asset, what sector, where is it located? You know, some of the more, uh, uh, you know, nuanced, uh, Analyses that you might do on a, on a localized level.

And then there's also the personal, uh, shift in, do I, am I managing the property? Is my ROI adequately compensating me for all the, the time and energy I'm putting into the sweat equity I'm putting into, uh, Managing my own asset. And that's where I think inland is really, uh, benefited in, in our growth is we're seeing, you know, as, as, as folks get further and further in that cycle, they determine at that point in life where they wanna relinquish management, uh, responsibilities, they, they, they run numbers.

They see what their tax burden looks like, and they say, well, I want to liquidate. I want get out of active manage. But I, I want stay with real estate. I wanna continue to defer my capital gains tax through a, a section 10 31 exchange, what are my options? And that's when you look at the, the institutional pedigree of, of a firm like inland or, or some others out there and determine that that transition makes a ton of sense from a, from a structural and, and lifestyle perspective.

[00:23:55] Andreas Senie: Absolutely. At the end of the day, it's it's what are my cash on cash returns? How do I live every, every day. All day. Yep. So. Selling assets. I, I mean, it's pretty clear. It's a case by case basis. Local markets are obviously a factor macro. Trend's a big factor. Uh, how do people get introduced or where should they go to, to first get introduced to real estate securities, as opposed to, you know, buying a re.

Straight out of their stock for volume. 

[00:24:25] Keith Lampi: So private, private securities. I, I mentioned access. It is a, there, there are some steps that, that an investor should take there. There are certain platforms out there that, that sell direct. Um, inland is established. We, you know, we raise all of our capital through third party intermediaries.

So, uh, wealth planners, financial advisors, um, registered investment advisors. Um, these are, these are typically the conduit. That that introduce inland as a potential option. Um, so I would, I would get in contact with your, with, with your financial planner, um, since the, it is real estate, but it falls into that securities realm.

Um, it does require securities licensing to, to make sure that you're, uh, you you're educated and experienced to, to distribute a product like this. So there are some steps to be taken, but the first step. You know, contacting your, your financial advisor, uh, Mo most financial advisors are gonna be familiar with your, your bigger picture financial plan, your liquidity needs, and they're gonna be able to do that full blown assessment on to what extent, uh, a private securities transaction makes sense for you on, on a personal basis.

[00:25:29] Andreas Senie: Well, and, and so, so on a personal basis, and, and this is probably an unfair question. What are your thoughts on these, on this fractional interest? These, these apps where it's buy into X, Y, Z, I. I, I may think I'm buying into a DST secure, secure, secure, ah, excuse me, a DST like product, but really I'm not, I'm just, I'm buying into a, a re well disguised or one of these others, these, these trading platforms.

[00:25:58] Keith Lampi: Well, you know, in the spirit of access, I think it's, you know, the, there's some, there's some merit to the, to the concept. I mean, it's, it's a way to really, you know, cast a wide net. Provide broad spanning investors access to, to real estate investments. I think the challenge is, you know, private placements, uh, the, the level of disclosure and scrutiny is sometimes at a different level.

Um, and there is a difference between when you compare real estate and securities real estate's buyer, beware securities, you know, is, is a different animal. So. I, you know, I would say, I, I, I don't wanna say I'd be weary, but I think you have to be very cautious in, in pursuing a platform like that. Make sure you understand, um, all the ins and outs of what, what it is you're looking at, not just from, from a, a real estate evaluation perspective, but also, you know, who, who the sponsor behind the real estate is, what their track record is, um, of, of performance.

Um, and, and, and you. Uh, sometimes that's, that's equally, if not more important than the real estate itself. I mean, I mentioned earlier, we, you know, as an organization, we've, we've seen two really major black Swan events that, that just had a ripple effect and dislocated our industry. And we saw some firms that were in the business that are no longer in the business.

And, you know, at the moment there's a lot of capital chasing real estate for all the reasons we we described earlier. Um, so there's a lot of firms that, that, you know, may take an opportunistic approach and say, well, I can syndicate a piece of real estate and I can, I can raise money in real estate and it it's a, it's a good, uh, it's a good opportunity to, to scale my AUM and, and, and make a, make a good living, but commitment long term commitment to the, to the underlying investment to the industry is important because you, you need good strong sponsorship regardless, but when the tide goes out and a, and a challenge occurs, you really, really need, um, you know, a captain at the, at the, at the wheel or at the helm.

Kind of steering your way through, uh, through whatever, whatever challenge you have. And if, if you are anchoring on a opportunistic type sponsorship that that maybe isn't going to be around during that period of time, that can be very problematic. So I, I would just be very cautious in making sure you get all your questions answered and you, you kind of, you kind of do a deep dive in that.

[00:28:21] Andreas Senie: Absolutely making, uh, you know, it's, uh, making sure they're not a bad actor or not that they're a bad actor, but they're a well experienced actor they've performed. They'll continue to perform, um, economies of scale in industry knowledge, stability, look, um, Inland vertically integrated makes it easy to, to understand the left right center of it all.

And some of these, there are a few platforms I've seen where it's like, invest here X, Y, Z, uh, Bitcoin, and such. And I just go, whoa. Nope. You know, there's a reason you stick with blue chip companies and big names when you're putting money somewhere. So, no, I couldn't appreciate that more. Uh, and I'm sure our audience appreciates.

As far as 2023, we're coming up on the half hour here. What is the one thing you would say to the development world, the broker world, what should we be doing? Uh, to support securities, to support what inland private capital is doing and otherwise. 

[00:29:27] Keith Lampi: Yeah. Yeah, I would, I would, uh, yeah, I would say, keep, keep asking, asking the tough questions.

I mean, we covered, we covered a lot, uh, today, but, um, you know, going into the, the end of this year and into next, um, you know, I think there's certainly gonna be additional turbulence to, I mean, rising interest rates are kind of a foregone conclusion that, that trend line's going to continue. Um, at, you know, most, most folks are aware of, you know, the hyperinflationary environment we find ourselves in.

So we have to be, we have to be, uh, fairly scrupulous students of our market. Uh, we, you know, we certainly, um, will, will continue to kind of evaluate that and have a pulse on, on the marketplace. Um, but, but, you know, kind of, kind of assessing that on a forward looking basis, asking, asking, you know, your financial advisor, Or, or, you know, a firm like inland the, the appropriate questions.

I mean, all of that, all of that plays in, um, you know, I think a turbulent time presents a great deal of opportunity as well. I mean, we've seen that every single time. Uh, the market started to, to turn in a different direction and, uh, you know, we're not always right, but we, we, we believe we have a, a, a strong investment thesis.

Uh, we have a strong read on, on, on the bigger picture market. And then the, and the good thing about real estate investing is it is generally long term, right? So, so having a. A a solid thesis with a long term outlook is, is, has always served us well. Um, big picture and, and, and should continue to, but, but our interaction with our marketplace and kind of understanding, you know, the, the needs of, of that marketplace help us do a better job in the interim.

[00:31:06] Andreas Senie: So, so in the, in this late cycle phase, for those developers, those brokers advising their own clients and, and looking at their markets, turbulence is on the way. Our op our opportunities coming. Should, should you be hoarding your cash reserves at this point and getting ready to, to hold, to sit there or, uh, make your moves now while you can we rephrase that question?

[00:31:32] Keith Lampi: I would say, make your moves judiciously. Um, the hoarding, the, I mean, the it's a well worn soundbite, but there's, there's a tremendous amount of capital that's been side. Or an extended period of time through a majority of this year. So there's a lot of capital that's already starting to come off the sidelines, um, kind of assessing this post COVID environment, uh, the, the, kind of the, some of the new norms, although we're still kind of navigating that, uh, looking for opportunity.

But when you, when you think about some of the underlying sectors, we. Demand for housing is, is on the up trend, right? Particularly for rental housing, uh, for, for multifamily, for BTR SFR, uh, demand the demand drivers for storage or student housing. And in, in certain, uh, select markets, I mean, demand, presents opportunity.

Obviously all of this is very sector specific. Uh, but these are all, these are all kind of the factors we have to, we have to keep in mind as we determine where to. Move forward and, and, and place long term, long term bets. 

[00:32:36] Andreas Senie: Right. And that goes back to the, the four DS, right. Death, divorce, dislocation, and downsizing, the demand will be there.

So, so focus on it. Um, you, you spoke before about asking the right questions. Can I put you, uh, can I page you into the corner and say what's, what are some of the right questions to be asking your sponsor coming in the gate? Uh, looking to. 

[00:32:57] Keith Lampi: I would start with the sponsor, the sponsor checklist or, or due diligence.

Uh, you know, what what's, what's your experience, uh, how have you done in, in past, you know, in, in, in past, uh, investment strategies that you brought to market, uh, where, you know, no sponsors a perfect track record. So where did you go wrong? Would you learn from it? How'd you how'd you respond ultimately to the, to the bump in the road or the wrinkle, uh, right.

That, that you had to kind of undertake because. You know, everybody likes to talk about their, their home run, big IRR deal. And, and, and those are, those are fun transactions to, to, uh, to highlight. But, you know, we, we preach this with, with our asset management team. We shouldn't really judge ourselves on how we did our best deal, but rather how, how we've, how we did when we hit a fork in the road or, or, or kind of got, got a curve ball thrown at us and how we responded and how we, how we, uh, led.

Led that transaction to a positive outcome. That's, that's what we ultimately pride ourselves on. So, you know, sponsored due diligence is incredibly important. Um, specific to the real estate transaction, what assumptions are being made, right? I mean, you can make any real estate investment look good on paper by making rosy assumptions.

So, you know, if, if we're talking about a multi-family transaction, for example, What rent growth assumptions are you making? Uh, what are, are you as, are you factoring in inflation onto your expense growth? Because we're seeing wages increase, right? So late your labor line item, your, your management cost line item should generally be trending upward real estate taxes.

Haven't been going down, you know, anytime in, in recent years, uh, insurance costs are going up. So, so on the income side, what assumptions are you making on rents? Are they supported by market research? Are they supported by what you've seen in the past and are they sustainable? Uh, but then on the expense side of the ledger, you are, are you being, are you being conservative in that regard as well?

Um, and, and I mean, I, I kind of just used multifamily as a, as a, as a picture. You could apply that throughout a lot of the other segments of the market, but, but generally though that two pronged approach to really diving in deep on sponsorship, as well as the real estate, um, I think I, I think is where I I'd start in terms of asking the tough.

I love 

[00:35:15] Andreas Senie: it. I love it. Tough questions. It during tough times, but it's, these are all times we've been through and they've been tougher times, right? So this is, as you pointed out, this is an opportunity to create wealth, to generate wealth because of these shifts, because of the demands, uh, going on in the market.

As far as our audience, we have a few people checking in. One of the questions that did come in, uh, was regarding sec and transparency. We talked about sponsors. Is there a place to, to check your sponsors to look at these deals such, uh, is the concern is how many restrictions are being put on syndicators?

If. In new regulations and how will that affect the outcome? And that might be a, we might have to pin that for the next show. Uh, what do you 

[00:36:09] Keith Lampi: no, well, here, here's what I'd say about that. I mean, when I think about the way we distribute our product and it's, it, there's a very thoughtful reason behind it, but we, we sell through financial intermediaries that have very strong historic knowledge, as well as the ability to do that deep dive.

So these firms are effectively serve as gatekeeper. Right. If there's a sponsor with, with, uh, lacking experience, there's a sponsor with a series of negative outcomes. A lot of these broker dealer, uh, financial intermediary firms won't won't allow the product to be distributed on their platform. So, so going through that vetting process before.

Uh, you know, an investor even has access to the product is in and of itself a big kind of check and balance that I think our, our industry has, has benefited from. And, and a lot of the, you know, the market cycles and historic performance trends that we discuss, you know, financial intermediaries, broker dealers, RAs they've, they've seen a lot of the same things.

So, um, you know, a real estate investor may come to the table and, and, you know, spend a few months or a year looking at looking at the. but that pales in comparison to, you know, what, what a, a due diligence officer at a broker dealer has, you know, two decades of experience kind of reviewing and assessing and seeing how, how a sponsor has performed.

So a lot of that is, is, is very much factored in if you are, if you're, if you're working through a financial advisor, um, to determine what the best product is for you. And then there, there are standards, there are industry standards that have been created. So every private placement that inland provide.

Uh, it's investment market has a track record of performance. So we delineate every, every transaction that we have under management and we showcase kind of how it is performing, but we also show, uh, properties or transactions that have gone full cycle and how those perform. And as I said earlier, I, I mean, I don't think any sponsor in the, in the world has a perfect track record.

We certainly don't, but it's, you know, it's one I'd put up against any, anyone in our peer group. Um, and we're very transparent about that. And, uh, you know, we don't mind talking about the deal that, that didn't go according to plan and, and how we responded accordingly, because that's, that's a big part of, of, of real estate investing at the end of the day.

It's not a common for things not to go exactly. As you thought they might, when you acquired the proper. Real estate investing is dynamic, but it's it. It's how you responded and how you how'd you ma major way through the other to the other side. So, um, there, there's, there's kind of a lot of that in, in the background.

That's that should be just sort of occurring organically. 

[00:38:41] Andreas Senie: Well, and, and that that's well, well said, it's, doesn't go as planned. Despite what zoning says, how many times have the projects, do projects get changed? Midway because of zoning approvals and the like speaking of multifamily and, uh, senior care. Uh, we've got one in Massachusetts that.

Anyways, the, the hotel's great, but it's not a senior care living facility. Like it was planned. So due diligence, what are the bumps in the road? How did they handle them? Transparency, all things in lend example is a huge beacon for, um, and education. I mean, you guys are out there promoting content and teaching the academy and so forth as I understand it.

So that's my big questions. You on this sector interview. Is there anything else you'd wanna say out to the industry? Any advice you have? 

[00:39:36] Keith Lampi: No, I think we covered a lot of ground. I mean, I, I guess just to carry your last, your, your last thought or, or point forward education is something we're, we're extremely, uh, supportive of.

It's, you know, we don't, we don't believe we're in kind of a point click, uh, buy model, right? Uh, we're. We, we want our investors to understand all, all the nuances, all the ins and outs of, of the underlying structure and, and strategy before they make a decision to invest. Because at the end of the day, a lot of times these are, this is a significant portion of an investor's net worth and a big, a big decision for them.

So, um, we do our best to get as much in the way of educational content out as possible throughout the market, educate the financial advisors that distribute our. And, uh, that's, that's the big push that we, we continue to, to attempt to support in some respects that that's, that's a big part of what, what this, uh, this discussion was about.

So really appreciate you kind of being a conduit in that regard and, and, and helping us, uh, continue to, to, to make that push. 

[00:40:39] Andreas Senie: Yeah, happy to be a podium and a, and a platform to help inland spread its message in its multiple facets, uh, between CPAC and securities and, and the like, uh, especially regulation.

I mean, without you guys, we wouldn't have the 10 31 DST, right? That's what you're out there fighting for Dan Wagner relations. I want to thank our audience, everyone who chimed in for questions. I want to thank you, Keith, for tuning in joining us for the show. Best place for people to reach you, uh, or inland private capital.

Uh, we'll show him the outtake here in a moment. It's down on the bottom left inland private capital.com to everyone else tuning in. Thank you for tuning in. Don't forget to tune into the correct way round table every month, first Thursday of the month at 6:00 PM Eastern. You'll see more of Inlanders more Inlanders excuse me on that show.

And he hopefully he'll come back for another segment. Teach us a little more about what's happening, uh, in the private placement world. So thank. With that Mr. Mendoza, will you bounce us out, please?