#395 - Scott Arnoldy - Founder & CEO @ Triten RE Partners - Scaling to $1.5B+ Across Multiple Cycles and Asset Classes

Chris Powers: If you want to know about Scott, go read his bio, but I think it's important that we start at Goldman. So, you get out of TCU and you join the frothiest market maybe ever in real estate. 

Scott Arnoldy: Yeah, or at least the very start of it. 

Chris Powers: What year? 

Scott Arnoldy: ’05. So, I graduated TCU in ’05 and had zero real estate experience, zero real estate focus. We just were talking about the real estate scenario. I didn't even take a real estate class. I thought I was going to go to finance, didn't. I knew I didn't want to move home. I moved to Dallas, ended up working for Goldman. That was like I was interviewing at Accenture, I mean, I was interviewing at Lockheed, I was interviewing at investment banking, and then ended up getting a job mid-tier, and the only reason, by the way, was they needed more analysts because of the market starting to ramp up. So, I get the job in December of ’05. I had moved to Dallas blind, and yeah, it was like December of ’05. So, by late ’06, the market is just ripping. And that was the day- So, our group at, it was Archon was what was called, a subsidiary of Goldman Sachs. And we did all of the financings for all of Goldman nationally. And at the time, I don't know if you remember the Whitehall funds, which like was essentially akin to a Blackstone today, which is crazy that it's just not as prevalent as a name in the industry. But remember like GE was big back then. There was a whole slew of names that kind of got washed out in that cycle. But we did all of the financings for all of the Whitehall funds. In ’06, that became all securitization financing. What's the movie with...?

Chris Powers: The Big Short. 

Scott Arnoldy: It was literally that, but not RMBS, it was CMBS. We were working with Lehman and Credit Suisse and Morgan Stanley, and we'd call their securitization desk and say, how much financing can we get on all these different types of properties? Then it was literally like they said, they would take the A note, and then they'd go sell the mezz. And so, I got just this front row seat, but then I remember even as a 20, whatever it is, 23-year-old, we did a financing in April of ’07. It was part of the whole Blackstone EOP spinoff. It was a $1.2 billion acquisition, and we got 900- or no, it was 92% financing. It was $1.07 billion or something like that of financing. Then we put a letter of credit down to buy down our equity. I remember we closed it with like 90 million of equity. I was like, that doesn't seem right. It just seems very risky. But it was a fun period. I mean, an unbelievable training ground. You got to learn a lot about the different components of the business, worked a lot with a great number of talent in New York, who were at the Whitehall Funds in New York. That's where I started my career and cut my teeth and then went to the West Coast. 

Chris Powers: Did you know while- obviously, you're green, you're young. Did you just think like, this is how the world works? Or did you kind of know that you were in a different run-up that's not usually like this? 

Scott Arnoldy: I remember early on it was like, wow, this is the best industry ever. We were going to ICSC in Vegas, and it's a very, I mean, still to this day, I feel like we're the most social relationship oriented industry. And so, I was like, wow, this is just unbelievable. You just meet all these great people. You take great trips. And it was kind of high flying. But then I don't know why, but that one transaction stuck out. I remember when we closed, just that seems like everything I learned in school and the books you read, like be wary of debt and structure finance. And that was April of ’07. So, by- people always talk about Lehman going bankrupt. I remember in like the spring of ’07, the first subprime lenders were going, not under, but... what was it called? It wasn't SunTrust. It was one of the other- 

Chris Powers: Countrywide? 

Scott Arnoldy: No, it was before that. It was literally in May of ’07, I think you had some cracks in the subprime lending. Then we couldn't, by the way, the deal that we had just closed for that 92% financing, we couldn't move the paper or start a date. Credit Suisse or Morgan Stanley, I can't remember which, they couldn't move the paper, so you could see the financing market starting to choke up, if you will. That's when I remember being like- I left for Stockbridge in early ’08. I just remember in ’07, it felt like a little shaky, but it took, I always tell like our younger guys now, like it took a while for it to like hit-hit because I feel like, it was like, it reminded me of oil and gas in like ’16 and ’17 where people were like, ah, no, no, no, no, it'll come back. It'll come back. And there's like this denial period. And then you suddenly see the market accept it or you had, that's when Lehman happened. I think the market just kind of panicked at that point. 

Chris Powers: Any idea whatever happened to that billion dollar deal? 

Scott Arnoldy: Yeah. I mean... a lot of the- it went back to the- there was, let's say of the billion dollars of financing, there was like, I don't know, 400 million of an A note and then a bunch of mezz holders and someone in the mezz stack ended up taking it over. It was a bunch of Seattle office buildings. 

Chris Powers: And basically, the game is like, how can we get the most for the cheapest down and get out of this thing as quickly as possible like is the thesis when you're putting that much leverage on something or recapitalize it at some much larger valuation cheap permanent financing? 

Scott Arnoldy: Yeah. And I remember back then, it reminds me, we had like always like five, remember LIBOR would have been at 5.5. So, debt was 6 or 7%. And so, all of our models had 5, 7, 7% rent growth, something like that. And then we entered that period of like a decade of like 2 to 3% rent growth. And like, if you underwrote anything more than that, you were crazy. I feel like, yeah, the plan was always, it was much more like structured finance. I mean, Blackstone, even then, that was one of their hallmark deals. They flipped out of a bunch of that portfolio on the closing table. Looking back, I'd say there were certainly elements that maybe I said this seems a little off, but I'd say there was probably more [?] to being like, this industry is crazy, this is fun, what have you. 

Chris Powers: So is the lesson learned, as soon as you start thinking this is the greatest industry that ever lived, there's probably something underpinning that? Real estate is awesome though.

Scott Arnoldy: Yeah. I mean, think about ’22, by the way. I mean, that was the only time it felt similar was to me ’22. And it was interesting being an owner, but it felt so high flying. And I feel like I'm a very like fast paced, urgent person, but that felt almost too frenetic for me to even- You'd try to price a development budget, and then like next month it would go up. And then, you had brokers flipping out of contracts and like all these things where it was, that was the last time, I think, in spring of ’22, when I said, something's got to happen because it's just, it can't go on like this. It just seemed too exuberant. 

Chris Powers: Okay. So, you said you started seeing cracks when some of the subprime lenders were going under. Oh, you also said one thing; you said they can't move paper. If you can't move paper, that just means you end up having to hold it on your balance sheet, right? Or does that mean you just have to sell it for cheaper and you have to find a clearing price? 

Scott Arnoldy: Yeah, either. I mean like... 

Chris Powers: So what were they doing? Do you remember? 

Scott Arnoldy: Yeah. Back then when they were getting aggressive, they would warehouse it. So, Credit Suisse would give a billion dollars, and maybe historically they'd say, look, we'll hold 300 million that we'll warehouse to go securitize. And then the rest of it, we want hedge funds to buy the mezz debt or the B note, the C note, the D note, E note. And when it got frothy, they said, you know what, we'll warehouse the whole thing and then we'll securitize the unit. So, at that point, they were holding a bunch of tranches of mezz and there was no buyers. And so, I remember they called us, you got to help. I was like, what do you want us to do? And so, it became a, yeah, a unique situation, to say the least.

Chris Powers: All right. So GFC hits. Did you get to Stockbridge before the GFC or after the GFC?

Scott Arnoldy: I joined Stockbridge in early ’08. So pre. Yeah. You certainly can't say I knew that much because I wouldn't have just left and gotten a new job on the West Coast if I thought I knew something was coming. But yeah, I remember same deal, I remember our pipeline calls when we first joined was like, or when I first joined, was an opportunity zone or not opportunity zone, an opportunity fund, opportunistic fund. It was still like trying to look at all the things that were popular back then, Vegas [?], we were looking at pet resorts, housing land, and then nothing was kind of really penciling. And then it got bad, and then it was like real bad over the summer. And then Lehman, Lehman was what, September, I think? I think September of ’08. So yeah, then the music stopped hard at that point. 

Chris Powers: What did you do at Stockbridge? Just do workouts? 

Scott Arnoldy: At Stockbridge, we had a series of opportunistic funds. I think they're on fund three when I joined, and it was a small team, but they had a very ambitious growth plan. They'd hired nine senior partners from Deutsche Bank. There was this big growth plan to raise core plus capital and core [?] capital. When the music stopped, we were like, all right, we got to get work. Our opportunistic holdings, there was some workout stuff. We just worked through it, but then I got pulled into a, I think I mentioned on the form, but there was a workout account with a, I'll just say large national pension system, where they had given a whole host of capital to funds and separate accounts. And so, we were asked, because one of our partners had worked with this pension fund before, to come in and advise. Because back then, if you remember, everyone needed to pay down debt. And so, all these funds and advisors were calling capital. It was like, are we throwing good money after bad? And so, one of them culminated in us taking the account on. I mean, imagine this, it's like you have an institutional partner, it would be like if I'm an operator now, you have an institutional partner, and you get a call from someone and say, by the way, that guy that you thought you did the deal with is no longer involved, and I'm now your partner. That's what an MD at Stockbridge and myself had to do. We had to call, and they were some bigger names, Related and Forest City. We'd call and said, by the way, we are your new contact information, we are your new partner. It was post ’08, and there was not a single piece of good news that came in any one of those 22. I think four or five were land, four or five were condos. There were some bigger, sexier assets in there too, but it was maybe one of the most interesting, in a way fun because maybe I didn't have skin in the game. Then it was like a PhD, I tell people, of joint ventures and partners. 

Chris Powers: Is there like a through line through those 22 deals that are like patterns that you kind of saw through each of them, whether it was like obviously bad pricing, bad timing, but like certain incentives that were in play that you didn't think or?

Scott Arnoldy: No, I mean, honestly, the biggest take, it was like fascinating to watch 22 different partners react in every way human nature could conceive. Some were really bad, nefarious. Some were like, doesn't matter what the doc says, let's do the right thing. 

Chris Powers: Does that actually play out in theory, if the doc says something, can you just do the right thing? Not you, but I'm saying like, does the court system let you do the right thing or like...?

Scott Arnoldy: Oh yeah, I mean, I think you could amend the JV to allow whatever you would come up with. But there was, I think of the 22, two maybe ended in lawsuits where we just had to fight it out. A lot of them were kind of ending in some form of you buy our interest back. But there was- it was just a fascinating- I remember the mentor at the time that I was working with on the account, which is now one of our board members, said, you can't do a good deal with a bad partner. I'm sure you've heard this term. But you can't have a good deal with a bad partner, and you can't have a bad deal with a good partner. Because when things go bad, you're just going to dig in and figure it out. And it's like the only thing you know when you do the models that it's wrong. So know that things are going to go different, and you better get in there and figure it out together and do it with the best intent. But yeah, that was a fascinating account to work on. 

Chris Powers: All right. One more story from those days. We bought $120 million worth of air rights. Total loss. What are air rights? 

Scott Arnoldy: Yeah. That same account, we went in and our mandate was to try and mitigate losses, return as much capital as possible, and keep their name out of the press. We had a board that we would keep because we were digging in and figuring it out ourselves, getting accounting books and let's dig in. One of them was an air rights deal, and I believe it was Boston, and it was to go over a freeway. And so they had spent literally $120 million in entitlement in engineering and architectural plans to get the rights to build over a freeway. And essentially, it'd be like kind of imagine creating a tunnel or a Klyde Warren Park type situation. And of course, when ’08 hits, it's like city, like we're done. None of the math works anymore. And you're like, we just... they spent $128 million, I remember. And so that was the- we're like, there's no way you're going to top that. 

Chris Powers: All right. Let's kind of move into when did you decide that you wanted to start your own firm? Was it like you had felt comfortable enough that you had enough experience? Was it an opportunity? Did you want to get back to Houston? Was it all the above? 

Scott Arnoldy: Well, I guess the slightly nuanced answer, because I actually asked myself, I mean, I'd ask you, but you were an entrepreneur from the get-go, right? 

Chris Powers: Yeah, by accident. Honestly, it's kind of weird. I always thought I would go work on Wall Street when I graduated, but I owned houses. I had a management company, a leasing company. I really wasn't thinking too much. I just thought, well, once I leave, I'll sell all the rental houses off and whatever, and I'm just going to go work on Wall Street because they make the most money and it's investment banking. 

Scott Arnoldy: Because you had rental houses in college? 

Chris Powers: Yeah. But then I graduated in December of ’08, so there was no options. I just kept grinding it out and hustling it out, and then just got to a point where it was like this is my career. This is what I do. 

Scott Arnoldy: This is what I do. Did you actually ever go try and interview and get a job? 

Chris Powers: I did. I actually worked for somebody. Let me take a step back. I think people know this about my story. In ’09, I had graduated but still had friends in college. I was flipping houses at the time. So, I had kind of bought rentals throughout college, gotten a line of credit, and by ’09, was buying foreclosures and flipping them in South Fort Worth. But like my capacity was like three homes at a time, and if you're waking up at 8, like by the time you've driven all your houses, you're kind of done by noon. Like I started the story with all my friends were in college still. So, guess what I was doing from noon to like whatever. So, I was like, this is not good for health. I need to build a career. But there was nothing to do. You have like no track record. You're on your own, little pile of money. And Stream Realty was gracious enough, I went and worked as a tenant rep broker. So I went- my buddy had just gotten a job as a tenant rep broker at Stream. This was ’09. Basically, it was I was going to do my little job in the morning, run my business, and then I was going to do commercial real estate in the afternoon. And I figured this will pass the time. I'll learn a lot about commercial real estate and didn't really know what was going to happen. Like four or five months into the job, the Cantey townhomes right there by the business center, those three story townhomes, we built those. I get a call that a piece of land had become available right next to the school and had a partner that was willing to develop them with me, and I had never developed anything. And so, I went and I put my resignation in four months later, moved back... from Stream, moved back to Fort Worth. We developed those townhomes, and then I've never done anything ever since. 

Scott Arnoldy: Yeah. So, I always ask myself, like- I mean, what was your major? 

Chris Powers: Finance and marketing. 

Scott Arnoldy: So I was finance and entrepreneurship. So that would kind of maybe indicate that perhaps I was interested in entrepreneurship. But having said that, and I ask myself now this as an employer, you want to keep those types in your business. Intrepreneurship is kind of the buzzword... I always say like, how would I have kept me? How would I have... 

Chris Powers: I never thought about that.

Scott Arnoldy: How would I have made sure that I didn’t leave? Stockbridge is the firm I ultimately ended up leaving. A little bit was by circumstance. I don't think I ever... I went to San Francisco and then I went to Chicago, both with Stockbridge. 

Chris Powers: How long were you at Stockbridge? 

Scott Arnoldy: I was at Stockbridge from ‘08 to call it through ’14, six or seven years. And they gave me a great opportunity. They made me a vice president when I was younger, and I was kind of a deal guy going into Texas, my old stomping grounds. I joke, I think I was the only Texas degree in the company. So, it was like, well, send him to Texas. That was really when Texas, I think, was starting to have its like we need to be in Texas run, all the jobs. And it was leading the country out of the recession, if you remember that. It's like all the stats. And so a lot of the capital wanted to be there. At that point, I'm like, for one, I'm not moving home. I'm not moving back to Texas, maybe even. I was really loving the urban living, millennial lifestyle, if you will. I certainly had no intention of leaving. I was very happy. When I joined Stockbridge, I thought it was a form of entrepreneurship because it was a small private equity group. I was like, I'm going to be catapulted to the top. Watch this. What ended up happening is I started coming home a lot, and my dad had inherited seven acres of land from my grandfather, told him he should develop it. We ended up developing it together. I actually went to Stockbridge and said, do you mind if I do this? This was while I was at Stockbridge. I developed a little 35,000 square foot building on a seven acre parcel of land my dad had inherited. Ironically enough, by the way, it is technically, if not, maybe not technically, maybe it's within a few percent of the FIR that you would need to be IOS. So maybe it was all calling at the end of the day. But I did that in ’12. And that was kind of the first time I got exposed to development. And I mean, I can't imagine when you're building homes like next to the business, it'd be a totally different contracting base, subcontracting base, so yours is probably even more of a trial by fire than mine was. But I was just young. I remember just trying... these OAC meetings, I’d just effectively yelling at everyone, the architect, the GC. It's like, I don't want change orders because I thought change orders meant I'm over budget. I was like, I didn’t know you can work with them. It's just learning all that stuff. But then when I realized what you can do when you're on the pavement, putting the deal together, and then I love the, and development especially, I just love the fact that you've got all these, it's such a team environment, where like each engineer has got its specialty, and you're the one that's putting the pieces together that has to interpret, but then you got to bring financing to it. So I just, I love the- it almost felt like it's like a little mini company of sorts in and of itself. So I got exposed to it then. And then I was getting probably frustrated for a couple of reasons at Stockbridge and/or I was just starting to get more of my investment gut... I think guys like us, when we think we know, it's hard to shake it and/or when the gray hairs in the room tell you you don't know, it's like, well, I guess I got to go prove it. ...That was late ’14 to early ’15 is when it all went down. 

Chris Powers: Did you have a plan when you got back? Or was it kind of like, I'm going to move back and I'm going to start putting together deals? 

Scott Arnoldy: No. I mean, not only did I not have a plan, I didn't even move back. I was like naive enough that I was like in Chicago, I had just met my now wife, Katie. And I literally remember being like, maybe I'll do some stuff in West Loop, Chicago, and like Dallas and Houston. And so, there was plenty of ignorance in terms of what it actually took. But I always joke, that's what you need to start something, otherwise you'd never do it. Oh, what's the saying? I'm going to screw it up. My brother-in-laws were just telling us, I mean, you will absolutely love this quote. I'm going to... I want to text them. It's like if anybody- if you knew how hard it is, you wouldn't do it. I want it to come to me because it's a great quote. I'll ask them later and then tell you. 

Chris Powers: If it pops up, stop the conversation. 

Scott Arnoldy: Yeah, it's a good one. But it's kind of like the, what was the Nvidia guy that was like, if someone ever told me how hard this would be...

Chris Powers: I would never do it. 

Scott Arnoldy: And everyone gave him unmitigating shit for it because they're like, yeah, sure, you're like a gajillionaire now. But there's some truth to that, that when you live the stress of starting a business and having people... And so, I did not have a plan. My plan was I had to get a deal done. That was it. That was the basis of my plan at that point. 

Chris Powers: In any asset class or? 

Scott Arnoldy: I was a generalist at Stockbridge. These were the days of value add office. There's buy an office building, renovate it, raise rents, sell it. I'd say when I first left, it was like my shtick was to try and be where the institutions weren’t, which maybe is candidly some form of kind of what we do now. At least, that's where we try to find value. And there was, yeah, it was an office building in Dallas right next to George Bush Library in SMU. And it was an office building with, I think it was three and a half acres of parking. It was a surface lot. And so it had three and a half million feet of FAR. So, the value add office guys couldn't look at it because they were paying too much for the development rights. The development people, they couldn't, the firms couldn't look at it because they didn't want an office building. And so I was like, this is perfect. And it was, I think it was a $28 million acquisition. And we did that in June of ’15. That was our first deal. And then it was literally like, I'm sitting in the halls, reading leases, abstracting and building my Argus. And it was like, oh wait, I need a management company. I'm not kidding. It was like, I'm doing the math of like, how am I going to make any money on these fees and pay the bills? Then it was like, oh, I need a management- I got to do the property management myself. And then it was always like, well, that makes sense because then I got to get closer to the real estate. And so literally created a management company for that transaction. That was the first time I got exposed to managing property management, built a chart of accounts, and like the whole grassroots bank accounts. And just a lot of- all the stuff you know, starting from scratch. 

Chris Powers: You don't own that deal anymore? 

Scott Arnoldy: No, that was ’15. We sold it in ’18 I think. There is actually, we ended up doing this big master plan and Gensler came in, and there's now- I ended up buying the hotel that was next to it. So, the hair on the deal was, it was part of this REA. 

Chris Powers: What is an REA?

Scott Arnoldy: Like a restricted easement agreement where the hotel that is, I think it's now called the Beeman, and the office building had to kind of be neighborly, for lack of a better word, share parking. And then there was some sort of, I think there was an approval right on development within reason or something. So anyways, we bought the hotel, and then it was like done really well in the office renovation, raised rents. And then our partner wanted to build the multi tower. We weren't as big of a fan of that at that time. And then just decided to sell it. 

Chris Powers: Okay. I kind of want to talk about modern day Triten a bit because we've shared lots of notes and talked a lot about this. When did you- Over the years, you started acquiring more assets, different asset classes. Anybody can go to your website and look, and we'll talk about a few of them. But at what point- And you've done a really good job hiring what I would say probably since the last four or five, six years, seven, maybe, I don't know how long, but it's been a huge focus pulling industry veterans from all across the... When was like the light bulb moment of like, okay, I'm going to build an A plus team?

Scott Arnoldy: I mean, great question. So, as we were just talking, like I'd say the first half of, so it's been 10 years, ’15 to ’25, I should say. First half, I'd say, was very opportunistic, somewhat reactive, but also looking at the data. I was trained as an allocator or a PE deal person, so my mentality and mindset was good investments. But at the end of the day, as you know, like MKT in Houston was an unbelievably complicated project – adaptive reuse, five industrial buildings, that Dallas project I just mentioned was also... And op zones I would include in that camp. Not very scalable. And then I would say, sometime in COVID, probably like ’21, maybe it was somewhat overlapped with IOS, but I remember having a distinct moment of like, me personally, I either need to be a projects guy, like I'm building projects, or I need to be building a business. But like those two are going to be in direct conflict with each other. So, I'd say it was probably like four to five years ago. And that's when I'd say that like this last chapter of like process, structure, vision, plan, like actually have a plan, communicate that plan, regularly. 

Chris Powers: Regularly. Beat the drum. 

Scott Arnoldy: Pivot the plan if need be, but like have a plan, communicate. And that's the whole like, you and I've talked about it, but like leadership, truly in my opinion, like what leadership is and should be. And that's the hardest part is like, when you're an entrepreneur, you come up doing, and then all of a sudden, to turn and lead is such a different muscle to stretch that that's been the hardest challenge for me at least the last few years is just honing that, stretching it. And so, by far, I think what I'm most proud of all of it, of any like track record or... is like when you, to your point, feel that you can recruit talent. And like that to me, just like, it's like reputation, which is everything. It's kind of brand, which is unintentional sometimes. Because I don't think we were that conscious perhaps, but it just permeates when you're doing it right. And then when you can sit face to face or even right now, we're like out talking with some capital markets directors, we just put out an opening for it. And I'm like very humbled with the level of talent that is willing to say, hey, I'm interested in that. And I'm like, you know who we are? 

Chris Powers: You always feel like you have imposter syndrome. 

Scott Arnoldy: Yeah. I'm like, me? And so, you have to kind of, yeah, you just gotta really be grateful for that. Like that's the most- to me, that's like one of the better accomplishments. I think the next and hardest thing, I know you would agree, is that I think one of the hardest things in business is just to build it, a team that can be as good as what you think you can do on your own and that can kind of put forth the vision. So that's like what I spent the last few years doing. It's like sitting down with our team and even like the very first people, like when we were five people, I was like, okay, when we thought we were being so reactive, what were we actually doing in our minds? How do we develop a strategy, or were we that reactive? And so we've spent a lot of time trying to put that on paper and then communicate it out to the team in a more like systematic way. It's hard. 

Chris Powers: It's super hard. Okay. I want to go through a couple things. So, you've built teams in multiple verticals. You've gotten really great at recruiting. I mean, I feel like every time I go on LinkedIn, you've just knocked down another A player. You're not a closed end fund. So, you raise on a deal-by-deal basis. When you have multiple different verticals, everybody's trying to get a deal done in their vertical. So like, how does investment committee work or how...? Obviously there's times when different asset classes are better than others. So there's times when probably- I know we'll talk about IOS. Y'all have just been on fire. Y'all have been probably one of the best in Texas and around the country. But like, how does it work? Because I just did industrial, so I just knew I was showing up each week and I was going to look at the same asset type. But sometimes you're comparing, should we do a multi deal versus an industrial deal versus an IOS deal versus a mixed-use deal versus an office deal? 

Scott Arnoldy: Yeah. So, kind of when the decision was made, let's let's build a business, that's where we... 

Chris Powers: Yeah, I probably skipped over that question. Was it easy for you to come to that conclusion that we're going to build a business, or did you have to think about it for a while? 

Scott Arnoldy: No, it was easy. 

Chris Powers: Okay. It was basically like, I want scale and I want to grow. 

Scott Arnoldy: I mean, it almost seemed like I was doing my business a disservice by being both. Like I was wearing the originator, like opportunistic deal sourcing hat and then also trying to be a CEO. And maybe said differently, I had to pick, am I going to be a CEO or sourcing opportunistic opportunities. And that's when I said, okay, I gotta be a CEO. At that moment, then it's like, okay, how do you do this effectively? And as everyone, it's like anyone will ever tell an entrepreneur is focus. And like, what does an entrepreneur do? They never do that. They never focus. 

Chris Powers: Hardest thing to do. 

Scott Arnoldy: It's the hardest, any entrepreneur, like they just love to chase... Like we call it chasing squirrels. One of, our CEO actually came up with that term, like new idea and then you... Now one of my biggest things like I push myself on is like don't get distracted by that little shiny object over there, that squirrel that's trying to get you to run and chase it. So, with that has become like, okay, we're going to do industrial and multifamily. Our mixed use side of the business...  

Chris Powers: Sheds and beds. 

Scott Arnoldy: Sheds and beds. By the way, real original. I think 90% of operators are probably now all saying sheds and beds, but we at least had the basic business that we were in that forced us there. And so, we were building two multi-projects within our opportunity zone fund. So that's the only fund we have. And so, at that point, it was like, all right, we need to bring in a multifamily expert. And so, Carter on our team is now the multi family, like the head of Triten residential. It's much smaller than the industrial business. And then the industrial business has got what I would call industrial specialist. And I feel like sometimes we're more known for IOS than anything else, which is natural. But at the same time, we found IOS by being really ingrained in industrial. And just, we were doing the same thing we always do, which is just making sure we're buying right. And internally, we call it buying relative value, like where's the relative value in that industrial spectrum. And so, within the team, you've got very much industrial investment team. We call it, not jokingly, the Diva team, because it's development and acquisitions, but I think the rest of operations would just call them Divas. Then we've got multifamily. That's two guys. It's a team of 10 total. And we have an investment committee. Really, at the end of the day, I'm the one that's gatekeeping or being CIO for opportunities that are coming in through pipeline. But to your point, we have a deal-by-deal structure. We do have a programmatic relationship on the IOS side. 

Chris Powers: With Angelo. 

Scott Arnoldy: With Angelo Gordon, I guess TPG Angelo Gordon now, and everything else. My theory when I first left Stockbridge, I remember it was like, everyone that left was like, I'm going to raise a fund. And I remember, maybe it's just the most obvious thing in the world, don't go to the most crowded space. The most crowded room is going to be hard. No different than when you're trying to find good investments. I was listening to some Brookfield podcasts. They’re like, when institutions go out, you should go in. Well, of course, the irony is it's very hard to raise capital when that happens, but you do your best. I mean, we actually did a form of that in ’23 where we bought class A industrial. But investment committee is there, I'd say for sure we want to lean and leverage the talent that you alluded to. So, I want to hear from everybody, what do you think? What are we missing? It's also a great communication tool for like the different divisions within the company to hear about it. It's also, I've learned, a great mentoring tool. Because then the young talent gets to hear about... By the way, it's also a way to focus because otherwise you're all moving so fast, but if you slow down and you actually talk about it, you'll catch things. It has a lot of utility. It's not meant to be just some perfunctory check the box thing. Then on developments, for example, we really will do everything from development to IOS, everything in between you can imagine within industrial. Maybe our favorite is one that has a little bit of everything on it because we think we can price it better. 

Chris Powers: Explain that. What do you mean everything on it? 

Scott Arnoldy: Just like an industrial warehouse building, an IOS building, and then, I don't know, maybe a new freight facility, that you're like, well, I don't- that's kind of like the original Dallas deal. Like, well, that doesn't fit anyone's box. Like, perfect. That’s our strategy. We love that. And so, yeah, I mean, we... That's the, I'd say, the process. It's relatively typical probably in that, from that standpoint. I think what is unique... Do you guys use Monday by the way?

 Chris Powers: No, we use FOS, we had our own software. 

Scott Arnoldy: You had your own software. We've got Monday, but it was highly customizable. And so, we've built up our whole system through Monday. I should show it to you at one point, but it's essentially become a way to do live analytics, deal tracking, deal sourcing. It's like our scorecard. How much are we looking at? I looked at it on the way over. This year, I think we'll look at probably around 1,000 opportunities. That's across both. I think we'll end up doing 20, 15 to 20, depending on when we get closed... The cool part is where we're using, you're probably like 6,000 times smarter than me on AI, but we're using it to try and really replace and supplement the front end of the process. Because we want the analytics that we're seeing to be based on our data. That means you got to free up a lot of bandwidth for plugging in models, you got to also have the principal and partner's jobs, they got to know rents, they got to know their market, and they got to be deep. We want to be able to underwrite stuff so that when we look at it, we say, this is our assessment of the value, and this is what the market's telling us we do. Then we try to get together quarterly as a team and talk about that. What is it saying, is it doing, what is it showing us, et cetera? 

Chris Powers: You mentioned you're going to hire a capital markets guy, and I think probably for other industries, but I know in real estate, I'm going to ask this question because I think everybody, if I'm thinking what you're going to tell me is true, this is almost not a unicorn, but it's like I'm assuming this person's helping source equity, source debt. Is that correct? 

Scott Arnoldy: Yeah. 

Chris Powers: So how will they, will they work on the front end of the deal – hey, deal is starting to emerge as something we want to do – and they're immediately hitting the tables and figuring out if there's equity and debt for it? 

Scott Arnoldy: Yeah... I mean, it's close to a unicorn for sure. It's certainly... 

Chris Powers: I say unicorn, not to say they won't be able to do the job because they're going to come with lots of relationships. But there's one thing that I learned along the way, and maybe you feel this. Nobody can ever replace Scott. You are going to be at that table... No matter how much I tried to be like, the company is worthy of the equity or the debt, most big partners are still like, well, tell me what you think. 

Scott Arnoldy: I think you can find examples of that not being the case. 

Chris Powers: As you get bigger? 

Scott Arnoldy: As you get bigger. I think that is certainly an inflection point. You have to prove that you've built it well enough to, I think, be able to source and execute through that. My number one motto, though, from the get-go has been, if you focus on finding good opportunities, the capital shouldn't be that difficult. I think what our biggest problem now is doing it efficiently. And that's a me problem, by the way, because if I'm the hold-up, that's a big problem. And so that, to me, is the more important part. It's like, can you show essentially the capital why it's good? And so that has come back to like the system we're building, the process we're focused on, being very diligent about what exactly the expectation is that I would do in the market, how I would show it, the story you're trying to tell, how you tell it. And so that's, what you're saying is like the crux of it by far. But that is the challenge at the same time is like, I for sure think we can be doing it in a way that when the capital is called, for one, we want our reputation to be like we're not going to call five times a month. We're going to call like twice a quarter. Because if we're filtering that on that level, at that level of discipline, inherently it shouldn't be like that frequent because you're trying to outperform the market. You can't then go buy the market. And so, we are very disciplined on how we're trying to define what is a good opportunity. If you define it in a way that is clear, then the capital should understand it because you've laid it out for them. That's always been how I've done it. Then it comes down to how well can you tell the story and show that. I don't know that- I think you're right, and it's sometimes, I mean, you'll probably realize this, each time you're growing, you're doing a little bit less of what you used to do. You give up some piece of the things that you used to do. And so right now, I'm at the mode of like, which piece am I going to give up? And it's kind of like, well, I enjoy all of it, but how can I make sure we can not make me the bottleneck of the problem? And so that'll be the challenge. 

Chris Powers: It doesn't have to be a long answer unless you want it to be. How important is storytelling? So, if I have the same model and the same deal and you have the model and the same deal, and we're both going to the same group, how much would you weigh the ability to articulate that? Because I think that's something a lot of people miss. They think, well, the numbers are the numbers, it's great. And it's like yeah, that might just be half of the mountain you're about to climb. You now have to convince people of those. 

Scott Arnoldy: Yeah, I mean, what threw me off on your question is if we both, if you presume there's like one person that isn't good at articulating it but has a good deal, and then the next person has a very good articulation of the same deal, in that scenario, you'd have to think the guy with the good articulations going to win out. 

Chris Powers: Do you think you could even have a marginally worse deal, still a good deal, but marginally worse and exceptional storytelling skills and get it done? 

Scott Arnoldy: Maybe, probably. I mean, I think there's a lot of examples and history of that being the case. 

Chris Powers: WeWork. 

Scott Arnoldy: WeWork. I mean, there's too many – Theranos, WeWork. I mean, any kind of super charismatic storyteller has proven their ability to use that in not so productive ways. And so, I do think at the end of the day, it's marketing. By the way, the biggest capital sources, maybe not, I shouldn't go like, maybe not the sources, but like, if you think of, I don't care if it's Brookfield or Blackstone, they're all marketing. They have to tell a story to their capital. 

Chris Powers: Sometimes they're telling a story amongst their teams. Hey team, you should buy this deal from our other team. 

Scott Arnoldy: Yeah, exactly. Which- is this a infrastructure deal or a logistics deal? We're not sure. Yeah, that's a good point. But yeah, I think marketing is a big, big piece of everything. 

Chris Powers: You're not going to go to close funds or is that still a, we're never going to be that, or is that just not now, or have you put thought into it? 

Scott Arnoldy: No immediate plan to do that. I think it's going to be a direct output of whether or not, like the problem I was just describing. I think it'll be, like if we can continue to do it the way we've always done it, that we would like to do. 

Chris Powers: Well, because on most of your development deals, you have the time to go source the equity and the debt. 

Scott Arnoldy: Yeah, you’ve got more time. 

Chris Powers: If you're in a bidded process, it's tough, and especially in a market like right now. Okay. I do want to talk about IOS for a little bit because you already said it. You're like most people know us for IOS, but that's because every time you open LinkedIn, Triten's bought another IOS property. 

Scott Arnoldy: Although maybe not anymore. I think there's a... early days. There's a lot of new entrants. 

Chris Powers: I wouldn't say it was my biggest regret, but like you, we saw it so early. When we were first starting, it was called Yard. It was not called IOS yet. 

Scott Arnoldy: Yeah, it was just Yard, after Yard. 

Chris Powers: Yeah. And then we started hearing about it. And I don't think we dismissed it. I think we were just so busy doing what we were doing. We just were like, let's just stick to what we know. 

Scott Arnoldy: Which, by the way, is a direct like contrary to focus. You know what I mean? Like, you were focused. And you would allege, well, I missed something. And so that's the hardest part about my earlier comments about focus, is like, well, when do you open your eyes? 

Chris Powers: Because the answer is there is a time, but then there's also the flip side of that. Like when I have hear a lot of my friends business problems, I immediately am like, yeah, it's just a lack of focus. Like so many business problems are tied back to you're just not focused enough. And it's the hardest thing for entrepreneurs to do. And it gets harder the more successful you are. More just like an update on IOS. So, the cat's out of the bag. Everybody wants it. Thesis is like, you can't make more of it. Nobody's zoning IOS sites anymore. Is there like a ton of runway left? Is there tons of these sites still out there? 

Scott Arnoldy: I mean, did you see that, I think New York Times, it was a New York Times article. They just put out an article on IOS. Now, oddly it was entitled like, data, it was like a tie to data centers and that creates IOS demand, which I can on the surface of it get, but I don't think that's the macro thesis of IOS. 

Chris Powers: That sounds like a New York times article. 

Scott Arnoldy: Yeah. And it had a stat of, I think it was 5, 4.8 billion of capital has gone into IOS in the last, I think it was like five years. And on one hand, I'm like, God, that's a staggering amount. On the other hand, you could probably be like, if you compare that to like industrial, it's a tiny amount. And so I still think it's a much smaller piece of the ecosystem because the asset purchases are just small. It's like 8 to 10 million bucks. Every year, we've done it, we look at total volume divided by number of transactions, and it's somewhere between 8 to 10 million. 

Chris Powers: I'm not saying you have to give up your secret sauce on the podcast, but like, what do you know that others don't? Like what makes a good- like when I look at them, like pictures on a screen, it's like, oh, look, it's more land with a tiny little building in the corner. Maybe it could be paved, got some fence, seems like it's close to some stuff. Like what are the- what makes a great site versus a good site maybe? 

Scott Arnoldy: I mean, let me flip it on you. How would you answer that for a traditional industrial building that you were buying? 

Chris Powers: Functional suite sizes, in good locations, good locations being around highway systems, rail systems, in our case, close to rooftops, better just for what we were buying. 

Scott Arnoldy: For smaller, shallow. 

Chris Powers: Yeah. Larger pieces of land and access better. Good parts of town. And then all the normal things, like again, depending on the deal, functionality of building, how much deferred capex and maintenance. 

Scott Arnoldy: Yeah. So I'd say it's like almost every word you used would be the same. Now, maybe with the exception of close to rooftops, that's probably one you don't want in IOS because it's like a bit of an oxymoron. You don't want it in a neighborhood. You may want it near a neighborhood, and depending on what type of IOS you're buying. 

Chris Powers: So it's the same thing. 

Scott Arnoldy: It's essentially going to be all around function. And the secret sauce of like understanding it, I'd say like it's certainly not like that complicated. 

Chris Powers: Does it lease quick? Like is it the same leasing brokers as a shallow bay is leasing an IOS or there are now like IOS leasing brokers that have been trained just to do that? 

Scott Arnoldy: No, no. I mean, historically, I think it was that. But I'd say it was just like a little bit more of your scrappier street brokers. And then in time, as it's become so institutional, just at this real estate event, a guy that's a CB broker, tenant rep, he also is now doing IOS. And so I think it's just like another way for them to throttle into a... it's not that... Do you remember like when you first started in real estate or like when I first started at Archon, like all these terms and things that are thrown around, and you're like, oh my God, like, how am I ever-? This is like all these acronyms. And I feel like that's how I honestly felt early on. You're like, I don't know, how do we measure it? Is it usable? Do they need that? Do they not need that? And then over time, you just like, oh yeah, I know a duck when I see it. And so, it's the exact same stuff, function and layout, dimensions, does it work for the tenant base. And so it's like those commonalities are across probably all industrial. Zoning is certainly where you spend a good chunk of time. 

Chris Powers: Okay, let me ask this then. When you buy a site, do you know if it's going to be like somebody storing supply on site versus somebody storing trucks? Like, could it be multidimensional or do you have a pretty good idea? Because when I think like those are two totally different types of tenants, somebody storing their... 

Scott Arnoldy: No, I'd say it's most of the time, it could be either. 

Chris Powers: It can always be either. Not always, but... 

Scott Arnoldy: Not always, but most of the time. Yeah. Most of the time, it can be either. I mean, like every type of real estate, you want to cater to the widest pool of renters possible. And so, our favorite IOS is going to be the ones that we think work for almost anyone. So, that's- but like, I don't think there's... anyone that tells you like there's some secret sauce to IOS, it's like, it's a pretty... If there's anything secret, it's just that you're trying to get your hands on better data, better comps, better leasing information. That in time, as it continues to mature, will be no different than some class B building. Then it probably comes around sourcing channels and understanding it and kicking it up and/or maybe just trying to lean into why it's good, which is, in our opinion, almost always replacement cost is going to dictate that answer. And I don't like the what inning are we in question, because I'm always wrong. 

Chris Powers: What inning? 

Scott Arnoldy: Yeah, exactly. I think it seems like it certainly has staying power. Sometimes I feel like the old guy that's like, oh, I remember when we used to buy these things. And then you're just like, oh, okay. The new entrants will just run by me. I'm trying to get more grounded to like, what do we really like? What is our long-term belief? What are our tenants saying? We have a good enough portfolio where we can talk to the tenants and really understand where we're seeing leasing velocity. Then yeah, making sure that what you're buying is good, high-quality IOS. 

Chris Powers: Okay, so what's bad quality IOS then?

Scott Arnoldy: Just what you would say in... I mean, I'm not, I'm certainly not, but like you don't want a building in some weird shape, same as industrial. 

Chris Powers: But I thought the buildings like don't even really matter. 

Scott Arnoldy: No, they do. 

Chris Powers: Cause it's just like a little office. 

Scott Arnoldy: Yeah, it's a tiny- but again, like in industrial... But a lot of the times, think about it, they're trying to service and maintain equipment, trucks, construction equipment. They want one little area to do that. That's pretty much the premise of it. And then beyond that, it's shape, shape of site, configurations, mere easements. So, none of that, it's like enough people are in the space that everyone's asking those same questions. I think we're starting to see people make bets on like what I would say are like manufacturing facilities. What's that? 

Chris Powers: I'm starting to hear that too. We want to buy manufactured... 

Scott Arnoldy: Houston has gotten big. We saw a purchase in Norfolk. And that, that I'm like a little... I don't know about that.

Chris Powers: The thesis being the tenant’s sticky? 

Scott Arnoldy: I guess, or I think it's probably that/onshoring of manufacturing, the whole tariff, like everything's going to come back and we're going to start building. I will say there was a purchase done in Houston. I think they pre-leased like 70 or 80% of it in contract period. So I'm like, what... I could be dead wrong, but it seems like those improvements are a little bit more bespoke and purpose-built. And so, we haven't done that. If anything, we would probably try to play into it in a more IOS fashion, like the data center analogy, we'll be the yards next to the construction to play into it. 

Chris Powers: All right, maybe we'll just bring it home on, I'll just lob a general question. How are you feeling about the real estate market right now? 

Scott Arnoldy: Yeah, great question. There's no doubt... We're in a down cycle. There's just no other way to say it. Prices have been correcting. It doesn't feel like the GFC did, but the GFC felt quicker. It felt like we came out of it faster. This has just felt more uncertain for longer. I never would have thought you could have an inverted yield curve for, what was that, two years plus? My big thing I tell everyone is this is probably what it felt like for decades to some people when capital wasn't just a wash in the system and interest rates were zero. It's like you had to go work for it and it was a little harder and you had to really find something interesting and you couldn't just rely on the come on interest rates or rent growth. And so, my big thing is you're going to always... When I left Stockbridge, on the face of it, it was the worst timing ever because Houston was literally the PWC’s top market to invest in. Then the next year, oil went to 30 and all the capital flooded out of Houston. Will Hedges and I were... He had just left DCT. He was one of the- he was employee number three. We're like, what are we going to do? I was like, this is terrible. And I was like, there's always opportunity in any market, especially if you're able to play the spectrum. Now, if you're maybe just a merchant builder, that might get tough for a bit and you got to wait for it to come back. But that's kind of why we're trying to build it that way is like, find the opportunity. And so that's just the big thing I like harp on. I was like, there's always something interesting to look at, to do. It just might be a little harder to get it done. So yeah, capital is harder. Deal flow is harder. I mean, especially industrial, things are more, like almost everything seems marketed these days. There's less off market. And so, you just have to constantly be pivoting. 

Chris Powers: Why have you never done land? 

Scott Arnoldy: I've just always viewed land as the tip of the spear of the repricing. If you have land unlevered and you have time, that might be different. But if you're trying to transact on land in some reasonable time period, the second there's a repricing, the only thing that in theory can move in your pro forma is land price. Costs are pretty fixed. By the way, you get the other side of that when times are good. Your land can double, triple in price quickly, but it's just always felt like risk adjusted. Then probably there's some level of like, I am not that well trained in land investments. Some guys that do it, I feel like they do very well. Maybe that's probably the better answer, that I didn’t come up in that world, so it probably seemed riskier than it is. 

Chris Powers: If we were sitting here 12 months from now, and you're not a fortune teller, have we bottomed and come out? Or were you going to keep trading sideways? 

Scott Arnoldy: Yeah. I mean, obviously, I think about this like all the time, but... 

Chris Powers: Multiple times a day. 

Scott Arnoldy: Yeah. If anything, I think we're trying to be agnostic. My general sense is like it kind of feels soft, labor market, consumer spending. But every time you say that, there's some other stat that like tells you why things are so healthy. And then it's like, well, things got soft, but interest rates do come down and the yield curve kind of calms down and you get short, some real... kind of tight on the short end of the curve or relief, I guess, on the short end of the curve, then I'd say, well, that would help quite a bit. Then you'd get some, I think, more certainty. I think the hardest thing is, for Q1, if you remember, it felt, all right, all right... It was like liberation day. Here comes uncertainty. It was like, we're off for 90 days. Then today I hear, I read on the airplane, China's not buying soybeans anymore, which is like our number one agriculture export. Like, that'll be okay. We’ll just- And so, there's just a lot of like- I think every business I talk to, like all of my friends back home, it's like it's hard to make long term investment decisions in an environment of uncertainty. But at the same time, we all have to make some investment decisions because you know it's going to be like this for a bit. So I don't have a crystal ball. I'd say like, we try to say, let's pick pockets that we think are really healthy in this environment. Let's buy basis that we think is well-protected or maybe like walt or lease term that can weather a downturn. But there's like, I could probably make a case for either. A bold case for a year from now, interest rates are lower, AI has produced massive GDP growth, or it's like the consumer is hurting and then we got stagflation because there's tariffs and inflation. I don't know. What would you say, by the way? 

Chris Powers: I think I echo a lot of what you said. I think the consumer, like you just look at the prices of things right now and you're just kind of like, how do most people afford to do much right now? I mean, stuff's expensive. We got two sandwiches the other day at Great Outdoors. It was 40 bucks. 

Scott Arnoldy: At Great Outdoors?

Chris Powers: At Great Outdoors. Now I got double meat, but that's it. That's it. That was the only upgrade. I definitely agree on Q1. Again, our little neck of the woods is just one thing. I think shallow bay has continued to kind of be a bright spot, even though for sure there's been repricing and for sure there's been challenges. I tell people it's like, it's not just interest rates. OpEx and CapEx and maintenance are up. Insurance is doubled. Property taxes are up. Like you're getting squeezed from every which way right now. And so, a lot of people say, well, there's a great rent growth story coming. And I'm like, maybe, but rents have been going up for quite a damn while. And if we're already saying that there's not much more room to push on pricing, I’m not saying it can't happen, but I don't think it's the big bet. Certainly wouldn't be putting in five, seven, seven or anything close to that, which is kind of what you need if everything else is going to stay the same.

Scott Arnoldy: Which by the way, that on housing is even crazier. 

Chris Powers: I think interest rates coming down helps. The 10 year’s below four today, which is better than not. But I think it's been kind of priced into our system. Like I think you would say you're not jumping off the sidelines right now because it went under four. It might make it easier to refinance some stuff you have. But I don't think it necessarily just full throttle down, even with a rate cut probably coming. I think the wild card is Trump right now. He's a very pro-bullish, pro-business, pro-America. We're heading into the midterms in two years. And not that he’s... I don't think he's necessarily playing games around the election. I think he wants to get elected, but his mandate is to grow the hell out of this economy, even with the bill that they just passed. Doge did what it did, but it wasn't what we promised. 

Scott Arnoldy: It's funny. The thing, I was just at- Perot was speaking, and on one hand, he's the chairman of the US Chamber of Commerce, and he said, small business is really hurting. They're getting clobbered by tariffs, and they can't operate. I mean, for really small business... the example he gave was a wedding dressmaker in Florida. All their supplies are double. And so like, there was like... they need some runway. And then, five minutes later, he's talking about how NVIDIA and this rare earth metals company are all expanding like crazy at Alliance. And so it's like so hard to know what to do with that. On one hand, you're telling me it's really bad for small business. On the other hand, you're telling me about all this investment that's going to be made in America. And so, I'm like, it's just a tough one to see your way through. 

Chris Powers: And look, I haven't been around long enough, I don't think I’m smart enough to say this because everybody says it's different this time. It's like the cardinal sin to say that. But even you saying like, I never thought the yield curve could be inverted for two years. Stock market go up and like everything else fluttering. It can't last this way forever. Something's got to give. And it's probably the thing that nobody wants to talk about, which is values and pricing at some point, not necessarily in real estate, stock market. 

Scott Arnoldy: It's like the book you gave, Psychology of Money. That's the punchline at the end. 

Chris Powers: So that's a really good question. I've been wrong three years in a row. So, I'll be wrong again and say I think we'll be... I'll define success in real estate as a better cadence of transacting. I think we're better off a year from now than we are today. 

Scott Arnoldy: In real estate?

Chris Powers: Yes. Because all that we said, plus ’26, ’27, ’28 are when notes are starting to come due. So, you're either going to be looking at, do I want to refinance this? If my team's out of the promote, do I want to refinance it, hold it for five more years, knowing that we're not going to make anything?

Scott Arnoldy: I mean, to your point where you said that, like it just made me think, like on our multifamily side, we're starting to see some like very interesting opportunities because there's... there's real...

 Chris Powers: People have to make a decision. There's no more cake in the can. 

Scott Arnoldy: Yeah, syndicator markets, as you said earlier, is kind of dead. And so that's where we're actually starting to see some really compelling opportunities. We're under contract with some multifamily right now. But it's also, I don't know that I've ever seen the rent versus own disparity this wide... When I was at Stockbridge, you'd always be doing this analysis on how much the shelter rent was compared to owning, because you knew that they would empty the apartments and go buy. Well, it's like... 

Chris Powers: TLDR, it's better to rent. 

Scott Arnoldy: Yeah, but now it's 40% better to rent, which by the way, means you need 25, 30% rent growth to build. So, it’s like on one hand, you could say that's a big bull case for acquisitions and rent growth, but then it's like, well, how do you have rent growth if things feel soft? I still think, in my mind, it's a good time to be in a hard asset class. That's the other thing I always say is, well, I'm glad I don't have too much debt in not a hard asset because at least I can, if there is an inflationary pressure, either because of lack of supply or tariffs, then I feel good about being in real estate. To me, there's the decision tree I still anchor. I still think it's a great asset class for this environment, just finding the good picks throughout it, should have, we should have just done data centers at the end of the day. 

Chris Powers: All right. In a year, I'll take a clip of our last bit of the conversation and I'll send it to each other. We'll see how we ended up. 

Scott Arnoldy: I love it. 

Chris Powers: Scott, thanks for joining me today. 

Scott Arnoldy: Appreciate it. Thanks for having me.