Speaker 1:

One of the things about the affordable housing space, that workforce housing space is the profile, those cash flow profile and attributes. It's a great diversifier to some of our other residential investments in the portfolio overall. And so, that's really a part of the portfolio construction, is to have that. And so the affordable housing workforce housing strategy is a great diversifier to have in your portfolio. And I would add,, affordable housing is not just a US issue. This is definitely a global issue.

Nancy Lashine:

Hello and thanks for tuning into Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners. Park Madison is a capital solutions and advisory firm serving the global institutional real estate business. Our job is to build relationships between real estate managers and their capital partners. Capital is the lifeblood of the real estate industry, but the decisions on where and how it's allocated are driven by people and personalities. Who are they? What motivates them? What have been their biggest successes and lessons learned throughout their careers?

On this show, we introduce you to some of the real estate industry's most influential thought leaders and decision makers, and we talk about what is important to them, how they make critical decisions, who has influenced them, and a lot more. Today's rebroadcast features Bob Sessa, head of Real Estate at the Employees Retirement System of Texas. Bob is a great guy and also a well-known and highly respected figure in the institutional real estate investment community, and has been at Texas Employees for over 20 years.

Since he began, Texas ERS's total assets have ballooned to approximately $33 billion, and real estate is now a much bigger piece of the pie at a 12% target allocation. My conversation with Bob occurred in November 2021 and covered a range of topics, from Bob's personal background, Texas employees real estate investment strategy, how Bob approaches manager selection and due diligence, and even a little bit of politics. Our conversation begins with Bob discussing his upbringing in the suburbs of Oklahoma City.

Well, first I have to start with a disclaimer, which I promised you, Bob, I would say. The opinions Bob is expressing here are his personal opinions and not that of his employer. So, listen up everybody. Thanks for joining us, Bob, and we're really delighted to have you. Let's talk about your background, for starters. You grew up in Oklahoma, you went to school in New York. As I recall, you swam on the swim team. We have that in common. Tell us a little bit about your background.

Speaker 1:

So is the common part, you grew up in Oklahoma or you swam?

Nancy Lashine:

The swim team.

Speaker 1:

I figured as much. I grew up in Oklahoma. I grew up basically in a fairly homogenous suburb, Oklahoma City, in a town called Edmond, and went to Fordham in the Bronx on a swimming scholarship. So I literally went from one end of the spectrum to the other end. So it had a profound impact on me.

I talk about my enlightenment evolution as a person, including views on life due to that experience. I continue to evolve to this day, and that was a big foundation for that. So it really sparked some inner growth and contemplation in me. I was really exposed to poverty and social justice issues that I really wasn't growing up, and it really got me thinking and made me more aware of the broader issues facing society.

Nancy Lashine:

We've also talked about how you spent some time near the border of El Paso doing volunteer service. I believe you worked with an organization, you lived in a homeless shelter. Tell us a little bit about that.

Speaker 1:

Just as we mentioned, talked, grew up in Oklahoma, go to school in New York, and I stayed and worked for five years. So I spent about nine to 10 years in New York, and my employer at the time really encouraged volunteer work, so we could spend an hour or two a week doing something in the community. And so, it really got me thinking that I should be getting more involved doing something. And my wife is basically a social worker/teacher. She had taken a year off when she graduated college to do a year of volunteer service. So I had never even realized you could do that. I'm going through life in New York, and my joke is I got home one night at 6:30 and felt like I worked half a day, and I'm like, "I got to get out of this lifestyle."

I'm getting brainwashed into the New York lifestyle, and I've seen another way of living life. But anyway, so I had been thinking of all this and I was like, "It's time for a change." I was speaking to my wife, and we thought I wanted to do a year of volunteer work, part for me to focus on my spirituality and part to try to give back, or at least thinking I was going to give back. But in the experience, you're actually getting more out of it than I think you're putting in, but we can talk about that later. We decided it was either now do this, and I wanted to go to business school, so it was a good break to do. Or we'd have to do it when we're 65 and retired. So we thought it was a good opportunity to hit pause on the career track and take this year off and do it.

And so, we spent a year on the border. As I always say, we're a function of our life experience. And this was definitely an important time, and continued that enlightenment evolution for me as a person. And the border was just so powerful from a number of perspectives. The one thing is you saw the love and generosity of the people that literally had nothing, and I mean nothing. These were people that were homeless basically or that were leaving their hometowns to try to find a better way of life.

And one example of this of just the generosity and just the perspective of life that it helped bring to me was there was a teenager. And you would say prayers before each meal. And this one time a teenager gave thanks for the roof over his head, a safe place to sleep and meals, and prayed for those without a place to sleep. And I'm thinking, this person, this teenager has no shelter. And yet he was so grateful for what that little bit he had. And here I am worrying about all sorts of meaningless things. And he's giving thanks for something that I just take for granted every day. And so it was those kind of experiences that really just make you appreciate life and really all the things we do have. So it was a good experience for me, and also learned how to meditate down there, which has also been very [inaudible 00:06:12].

Nancy Lashine:

Are you still meditating?

Speaker 1:

It's kind of like exercise. It's fits and starts. So I'm back into it now. COVID helped me get back into it, so I'm trying to do that a little bit more, but it's tough.

Nancy Lashine:

Yeah, I learned to meditate as a teenager and was pretty religious about it, but I haven't actually meditated in years now. And people are talking about a lot lately.

Speaker 1:

I definitely strongly recommend it because it does help give you clarity.

Nancy Lashine:

So when you think about getting back from that experience more than you gave, what are the takeaways and how does that impact your life and the way you live in your profession today?

Speaker 1:

The generosity. There's another example where a mother who had some kids. And she finally got a job. She went out and got her first paycheck, and she bought coke and chips for the kids and stuff. And the kids were sharing it with us, and they were saying, "No, you got to try this, you got to try that." I'm like, "No, no, no, this is yours." Because their moms had worked so hard. And just the generosity and the love that they showed and the happiness, because it's all relative, and yet sometimes we get so worked up and stressed, and yet we have so much more than probably 90% of the people or 95% of the people on this planet. And so, that was very powerful, just so many experiences like that.

And then another thing was I was just able to see the plight of the undocumented people, and why would they risk their lives to try to get to the U.S. And you realize it's just pure human survival. Who wants to leave their house, their home, their hometown, unless you have no other choice. And that's basically what they were up against. And so, it really helped me to realize that they're not coming up here to piss us off or to leech, but they're just trying to find a job and just to live life, to just have sustenance.

 And I really think our border issues are more a function of failed foreign policy than anything else. And we really should be looking for better ways of creating a sustainable economy for our neighbors to the south. We just can't put up a border. It's just, if you think of your neighborhood, if you're living next to a crack house, you can put up as tall a fence and security as you want, but you're still going to probably have issues. So we got to find longer term better solutions to that issue. It is an issue that we have to address, but I'm not sure that just putting up a wall is going to create a long-term solution.

Nancy Lashine:

You touch on two such important issues. One is just the power of gratitude, and how if you wake up every morning and you're thankful for the roof over your head and just being alive and all the things that we can be thankful for, it definitely just is a change in perspective. And also immigration, which of course, is a lightning rod political issue.

And I think we have such a different perspective. I was in Arizona last week, and at one point, I was looking at the mountains that are 10 miles from the Mexican border. And it's such a different perspective about immigration if you're looking at that mountain range than when you live in New York City and you're in a melting pot, and you know that without immigration there'd be nobody to do half the jobs that you're dependent upon to get through your day. We are a big country, and these are such powerful and complicated issues, so thanks for raising them.

Let's talk about something that's a little simpler, which is ERS and the real estate strategy. You've accomplished so much with the real estate program there. Maybe just give our audience a little bit of background. So tell us about how it started and how it's evolved.

Speaker 1:

Yes. So I started at ERS as a basically General Equities Analyst, a Public Equity Analyst. And within a year or two years of joining, the REITs got added to the general indices, so the S&P 500 or the S&P 400, et cetera. And when they got added to the indexes, I raised my hand to cover that sector. So that's when we started investing in REITs, obviously in an extremely small way. But a couple years after that, I started advocating for creating a dedicated portfolio of REITs. So we started off with a domestic REIT portfolio that was launched shortly thereafter. And then we added international REITs probably in 2005 or '06.

And as part of that discussion, we were also looking at adding alternatives generally, so private equity, private real estate, some of those other hedge funds. And so, we decided to go ahead and create a separate real estate asset class. So those dedicated REIT portfolios were housed in the public equity book. And then in 2007 and '08, we went ahead and got approval to create a separate real estate asset class and got an allocation of about 8%, I think it was, 7% or 8% to real estate in general, which included the private real estate as well as the REITs. And then we made our first commitment about 2009 or '10.

Nancy Lashine:

Oh, perfect timing, Bob.

Speaker 1:

Yes, we got very lucky. We were able to learn a lot from people, so that was very helpful.

Nancy Lashine:

Yeah. Wow, that is perfect timing.

Speaker 1:

[inaudible 00:11:00] GFC.

Nancy Lashine:

So-

Speaker 1:

Wish I could say we had the crystal ball to time it that perfectly, but.

Nancy Lashine:

The audience probably doesn't appreciate how well your real estate portfolio has performed. I guess I've been just really impressed that you've been early into different strategies, European debt way before others in the market, early into industrial and overweight industrial as we've entered into this COVID period where pricing has just taken off. You've had just an impressive ability to see opportunities early. Share with us a little bit about your secret sauce. What are your valuable resources that you use to figure out where the puck is going?

Speaker 1:

Sure. There really is no secret sauce. It's really just how I research things. So I really try to listen and read to a variety of people and sources to form a mosaic view of the landscape and the world and where things are trending. I really do try to get a sense of secular trends as well as cyclical. And importantly, I'm also trying to look for those views that are counter to what I believe in or what I might disagree with to poke holes in either my thesis or to see what I might be missing. And that again, is just part of that mosaic and really just looking at a variety of various perspectives and views to help you form your own view.

And I will say I'm somewhat constrained by nature, so that when something's out of favor, I tend to take deep dives into those areas. So the European debt was easy with that. Industrial was a little different. We were studying the property types. That really stood out for its casual attributes, and we weren't getting a lot of exposure through diversified managers, so we started adding dedicated portfolios. So we got pretty overweight in that.

Unfortunately we took that bet off, so my clairvoyance only definitely has limits there. But you look at these areas where people may not like or feel are out of favor, and you dive deep, and sometimes it makes sense, and then sometimes the consensus view is correct. So retail is a great example of that. When everybody was not liking it, et cetera, we took a look, and then decided, yeah, you know what? This isn't for us. So we're underway at retail for that reason. But we do look at retail deals on a situational basis because we do feel there are some babies thrown out the bathwater because of that because people will just strike it with a broad brush. So we found some interesting deals there, but it's still got a lot of headwinds in it.

Nancy Lashine:

What does the portfolio look like today?

Speaker 1:

So we are essentially about 20% to 25% is international, with probably 70% of that in Asia. And 25%, 30% of that is in the UK and Europe. We don't do anything in Latin America. And domestically, we are overweight, the residential sector. And I say residential because that includes multifamily, student housing, manufactured housing. We actually have a pretty decent exposure to manufactured housing, which is really difficult to get, but we've been pretty fortunate in finding a manager who's been able to source some great deals, so we've got decent exposure there.

And senior housing would obviously be part of that too, but that's a little bit less of a focus. We've been concerned about some of the supply demand issues there and the operational aspect of it, it's operational intensive, so we really don't have much exposure there. So we're overweight multifamily, I mean residential, which includes the multifamily. Part of that was a function of pre-COVID. We were long in the tooth in the economic cycle. Residential typically performs better on a relative basis. You can still lose money, but you'll typically lose less money. And then we are underweight office and retail. Those are structural underweights for us. And neutral industrial.

Oh, and I would say we're overweight REITs right now too, relative to the general benchmark, I mean to our general trust level targets.

Nancy Lashine:

Is that because of your investment or because they're up over 50% this year?

Speaker 1:

Yeah. No, that's because again, we did take a look at the relative value compared to the basically general public equities. And we talked to our CIO earlier in the year and said, this looks like a great... And the way I think about investing, it's all about probability. So going back to your question about the secret sauce, to me, it's all about probabilities because we really don't know what the future's going to hold, but if you've got things more stacked in your favor than against, or the downside is more limited than not, those are probably better bets to take than when they're the other way.

So in this instance with the REITs, the relative valuations were at all time disparities. They had underperformed the prior year. Again, at all time disparities relative to general indices. You have the reopening trade. Debt wasn't an issue during the GFC, so they had decent balance sheets. And then just the talk about inflation, et cetera. So there was a lot of positives that were, I think, more than offsetting the negatives or the risks. And so, we felt it was a good risk-reward trade off. And so, fortunately, the CIO agreed, and we were able to go overweight REITs, which has played out so far this year, but who knows.

Nancy Lashine:

Does ERS think of real estate as an inflation hedge?

Speaker 1:

We do incorporate that aspect. It's one of many factors of why we invest in real estate. And so, I would say it's an imperfect hedge. It really depends on how inflation manifests itself. And then within real estate, you've got certain property types that are based better inflation hedges than others. So I would say yes to an extent, but obviously, it depends. That famous, it depends.

Nancy Lashine:

Right. So how does ERS benchmark performance in real estate? Are you indexing? Are you using a specific benchmark, and are you using a real rate of return hurdle?

Speaker 1:

Well, I'll start off with the public real estate REITs. That's a simpler process because we have the FTSE EPRA Nareit Developed Index. So we use that as our benchmark on the REIT side. And that's very easy because it covers all the basis and whatnot.

On the private side, we use the Odyssey Index, which is an imperfect benchmark. It's better than nothing, and it's much better than, I think, for other alternative or illiquid assets. It's pretty decent, but it's domestic only. It's core only. And so, there is some laws to it compared to how we manage our book because we do have a non-core exposure, and then we also have international exposure, which that benchmark does not include. So it's an imperfect, but that's how we look at it and we just try to account for it with that in mind.

Nancy Lashine:

How are you thinking about this incredible rise in pricing for multifamily and for real estate, the real estate that's in favor generally and declining cap rates? Are you worried about the exit cap rates? Are you worried about pricing? And how, if at all, can you protect yourself against rising interest rates and rising cap rates?

Speaker 1:

Well, really are we worried about it? I worry about everything and everything, it seems like. The one thing we are monitoring, so on the inflation side, we are watching it closely. I'm not too concerned about it near time because I do think it is that transitory, that dirty word. It seems like it is a function of COVID coming back, the supply chain disruptions. And so, maybe it lasts another 12 to 18 months. But longer term, with the wage growth we've seen and the reconfiguration of the supply chain, which will take longer, that'll take three to five years and longer.

We think that sustained inflation could be here for years because wage inflation is typically stickier. That reconfiguration of the supply chain where you're bringing some of that manufacturing back to the U.S. or nearshoring, those are going to be more expensive goods. So that is going to be an issue. And so, on the cap rates and the interest rates, our big thing is as long as the interest rates go up in a measured way, in that they don't spike or create a disruption in the market, we should be okay.

And they're going up for the right reasons. Are they going up because there is strong economic growth, et cetera, then we will be okay. And real estate should be okay. There's been a lot of studies talking about there's usually a very long lag between cap rates and interest rates, assuming again that the interest rates aren't too volatile or anything like that to create a major disruption or chaos in the market. Real estate should perform fine, and cap rates should go up in a measured way too.

We're trying to figure out too of how does the inflation come about, but that's why we like our Rezzi exposure because we think it would benefit from some inflation like we're seeing now with-

Nancy Lashine:

Right. So speaking about Rezzi, let's talk a little bit about affordable housing. Obviously, a national issue. Is ERS an investor on the affordable side? And when I talk about affordable, I mean a small [inaudible 00:20:03], not necessarily the government programs, but rather building or buying housing that's meant for the working population.

Speaker 1:

So I was going to say, we define that as workforce housing, and we definitely have exposure there. We've got some multifamily exposure there. We're in manufactured housing, which I think is a great example of affordable housing. It's actually cheaper than apartments, and it allows a very affordable option to live in a community.

So we do have exposure to that, and we're looking at adding another fund or two as well. Because one of the things about the affordable housing space, that workforce housing space is the profile, those cashflow profile and attributes. It's a great diversifier to some of our other residential investments in the portfolio overall. And so, that's really a part of the portfolio construction, is to have that. And so, affordable housing, workforce housing strategy is a great diversifier to have in your portfolio.

And I would add, affordable housing is not just a US issue. This is definitely a global issue. Berlin is looking at potentially nationalizing, since it's the city, but taking over some of the housing in that city from the private market, it's a serious issue that we really need to be thinking about.

Nancy Lashine:

Are there parts of the country where you're more interested in investing in workforce housing than others?

Speaker 1:

I think it really, I mean, we leave that up to the manager. We are a little worried about some of the rent regulations out there, so the "blue versus red states." So we get a little worried about that with government intervention in the market, which can really distort and impact it. It really comes down to the supply demand and making sure you're in an area that's got good growth, good fundamentals, et cetera.

Nancy Lashine:

Since these are your opinions, I can ask, what did you think about the national foreclosure moratorium during COVID?

Speaker 1:

Well, it was interesting, but I think it was necessary due to the pandemic. So I think there are definitely times in our lives where you need to do something like that because you can't kick people out into the street and they literally would have nowhere to go, especially with everything shut down, people are losing jobs.

And so, I thought that made good sense for the society and community at large. We were probably all better off for that because you don't want people running around. There'd probably been a lot more crime and social havoc. So I think that was necessary. What really bothered me though was when you had national retailers who refused to pay their rent, but you know they could. They had the balance sheets to do that, that really miffed me because I don't think they realized that some of the land owners are indirectly these pensioners. And our pensioners get $20,000 a year. Every dollar we earn for them helps. So those national retailers didn't pay. That was a little tough.

Nancy Lashine:

Yeah, You touch on how complicated all these issues are because once you start favoring one group, by definition, you're disadvantaging another. And it might affect the banks or the mortgage and foreclosure and who holds those mortgages, and there is a ripple effect for every decision. And so, it is a very tricky balancing act. But as you said, not taking people away from their roofs was clearly a national priority. Are there other national political issues that are impacting your investment strategy today?

Speaker 1:

Something else on the affordable housing issue is that we keep talking about one side of the equation, which is the cost, and we're not looking at the other side of the equation, which is the income side. And we're not spending enough time understanding why people that have full-time jobs are not able to live in the city they work in. And why is that? Why are they work for not paying them enough? I think there was a study out there that some national companies like Walmart, McDonald's have meaningful amount of employees on government assistance. Why are we subsidizing their payroll?

And so, I think we need to really look at these issues broader and holistically because we could be creating unintended consequences by creating these affordable housing mandates versus let's browbeat these companies into paying their employees enough so that they're off government assistance. There's definitely going to be a segment of the population that needs help, needs government assistance, et cetera, but there's definitely going to be some that don't. And we should be really looking at this issue deeper and broader to make sure we understand all these pieces to it. So

Nancy Lashine:

Are you thinking about, for example, mandating a higher minimum wage at the national level?

Speaker 1:

That could be part of it. That's another complicated issue. The example I use is my sons, they didn't need to work in high school, and we had enough money to support them, et cetera. There's other families where those kids actually might be contributing to the family income. But anyway, I don't want my sons getting paid $15 an hour because that's going to give them too much. I wanted them to work.

So the bottom line is I wanted them to work, so I wanted to teach them work ethic, et cetera. I wanted somebody else to tell them to clean the bathroom besides their mom and dad. And so, they would work, but they don't need as much disposable income. They don't need as much income because we're paying for a lot of their expenses. And so, if they have too much disposable income, we know what can happen with that versus somebody who's working next to them where either they're providing for a family or they're providing for themselves and they need that money to live, to pay for rent, to pay for transportation, et cetera.

So it's a complicated issue on the minimum wage, but we do need to focus somehow on that. I was speaking to somebody on this, and they said, maybe we use experience as a way to get around age discrimination. So somebody who is 25 or 30 working alongside somebody who is 16 or 17, they could get paid more because they've been in the industry or have 10 years of a work experience, or something like that, to offset some of those dynamics. And I don't know what the answers are, but the bottom line is that's where we should be debating and spending our time, is finding out solutions, trying to understand the unintended consequences for various solutions that we think we're coming up with that would solve it.

Nancy Lashine:

Well as unapologetic capitalist, which I think you've also claimed that as part of your title. I am certainly an unapologetic capitalist. The pandemic has definitely created some supply shortages that should help solve a lot of these issues. And as we've seen all around the country, wages have gone up dramatically just to get people to come back to work. Something like 7 million people are still out of the workforce post-CVID. And many of them will go back, but they haven't all, for sure. And there's probably a couple of million people who can't figure out how to go back to work either because of childcare issues or they're concerned about COVID, and their circumstances have changed. But the market will definitely help increase wages, I would think, over the next year or two.

Speaker 1:

Exactly that's what it should do. You can't find your workers. You should be paying them more to draw them in.

Nancy Lashine:

So what, given, it doesn't sound like you're terribly worried about long-term inflation or stagflation. You're not worried about declining cap rates across the board because it should be commensurate with economic growth and rental growth, especially in the sectors that you're invested in. What are you worried about? What's keeping you up at night?

Speaker 1:

Besides neighbors' dogs, I would say that I'm not necessarily not worried about inflation because we're definitely monitoring it. So that's something that we're just trying to keep our finger on the pulse of. But I would say bigger picture, and broadly, geopolitics stands out. China is definitely beating to their own drum. Xi Jinping has definitely made it clear that Taiwan is part of China. And what happens with a formally... Make that happen, like what they did with Hong Kong, how does the global community react to that?

Domestically, our politics are so extreme, it's very unfortunate. We can't compromise or do anything. Infrastructure is a great example of that. Everybody agrees, especially anybody that travels globally, that our infrastructure needs serious upgrading. And not just upgrading, but repairs to make sure bridges don't literally fall into the water and stuff. So we can't even compromise on that.

And so, that just shows you how bad our politics. Are and the US is what made us great, is that we always do, when there does become issues or we see something that's an obstacle, we come and find a compromise solution that just continues to propel us forward. And it seems like that's been missing over the years. And that's a very big worry for me, long-term because of what that could entail. We could end up with a very far right or far left president or people in Congress, and so we're just too divided. We don't have critical thinking. We're not really looking at the issues just objectively and trying to solve them objectively. We've got a lot of serious issues out there that need to be addressed that we just either ignore them or kicking the can down the road. In a sense. That we can't do that with.

Nancy Lashine:

Yeah, it's really hard to invest long-term when you start to go down that road and think about what could happen, which is why it's good to either be liquid or to maintain control over your portfolio so that if things change, you have some real control. So would you invest in China given the political situation today?

Speaker 1:

Well, I've always been a China skeptic, so I would say even when China was very topical and everybody was going in there, when I looked at it and studied it, I had my concerns because you'd hear these stories. And my big worry was rule of law and property rights, and just how they did business in general. And to be fair, the US has some cities where it's not much different, where there's probably some graft and whatnot. Guess which city those are. But the bottom line is that the rule law and property rights and how the game was played really scared me. And so, we never did any direct or China-centric funds. Our exposure is only through a global fund or through a Pan-Asian fund that might invest in China, but we try to really make sure our China exposure is limited.

Now, I believe in the growth story, I believe in the growth of middle class, I believe in everything they're doing. It's impressive, but I'm not sure of what could happen. And I think what's transpired over the last year where basically the government is limiting how much video game time students can play, so they're getting their fingers into individual's lives, and they've done it with business too. We've seen many examples with that with the tech companies. And so that scares me.

So just those examples is why we've been very cautious. And I call myself a China skeptic, but going again, believing in the growth and stuff is we try to play the derivative play. So being in the countries around there that are benefiting from it, the Japan's, the Australia's, et cetera, and try to take advantage of it that way, derivatively where we've got the rule of law and property rights on our side, but we can benefit from the growth from China.

Nancy Lashine:

Let's touch on the question of ESG because it's very much on everybody's mind these days. Does Texas ERS have an ESG policy?

Speaker 1:

I would say yes and no. I would say our policy is probably not as formal as some of the other state plans that are out there, and we don't maybe define ESG maybe in the same sense or look at in the same sense as some of the other state plans out there. But we do monitor the trends in the regulatory environment, which impacts our investments and how that could play out in what the future holds.

So in a sense, we do have an ESG policy because we're paying attention to what is New York doing with zero carbon emissions laws down the road. What London is doing are the UK in general with that. I think California is mandated that public companies have a certain number of women and minorities on their boards. So we try to pay attention to that, just to make sure we're not blindsided, but just to understand the market as well. But again, I don't think it's in the same vein as maybe what mainstream thinks of as ESG.

Nancy Lashine:

Yeah, well, I think mainstream is an evolving issue. I sit on the Global Council for Urban Land Institute, and there are European investors in that group, that they cannot bring an investment deal to their IC if it doesn't have a zero emissions program by 10 years out or even sooner. They have to be able to articulate what it is, and they wouldn't even consider bringing something to their IC without that. So they're just thinking about very differently in a much more concrete way than we are today.

Well, let's end up with some rapid-fire questions, if we can. Tell us, Bob, who is the most influential person in your life?

Speaker 1:

I always think that's an interesting question because we always think of the role models, etc. But talking about the earlier part of the discussion when I've had some life experience and whatnot. But as the Dalai Lama said, and I paraphrase, that people that cause you conflict are good teachers and they help you to grow as a person, and you have to really look at that.

So I've had a lot of influential people in my life from different perspectives, in that sense. Many, many people, from swim coaches, teammates, family, friends, co-workers, etc. But I would say the one person who's had a pretty impactful influence on me is my dad. He's such a great example of unconditional love and how we should be living our life. He's leaving such a legacy with how he treats people, and that is a gift that I've been fortunate to witness and see firsthand.

Nancy Lashine:

And you have a couple of sons. Tell us, what do you most want to communicate to your boys?

Speaker 1:

Yes, I have two sons, Zachary and Benjamin. One just graduated college, and the other is a senior in college. So they are definitely young adults. And the one thing I want to communicate is really summed up in this quote, and this is my favorite quote by Saint John of the cross. And he says, "In the twilight of life, God will not judge us on our earthly possessions or human successes, but on how well we have loved."

And I want them to go through life, and making sure they don't lose sight of our purpose here on Earth. It's very easy to get distracted by what society views as success, but that may not be really what success is in the next life, if that's what you believe in. So I don't know. I think there is one. You got to hedge your bets. And so, that is the one thing I want them to do, is just to make sure they treat people nicely and with love and kindness, etc.

Nancy Lashine:

Those are beautiful words. And Bob, what's your favorite place to travel?

Speaker 1:

Gosh, how can you have one favorite place to travel? There's so many to choose from. So it really depends on the mood and what we want. Do we want the beach? Do we want the city, the urban? So I'll have to leave it at that. I can't choose just one.

Nancy Lashine:

Fair enough. We've all spent a lot of time over the last year and a half dreaming about places we'd like to be that we can't go to right now. So I can appreciate there's a lot of them.

Thank you so much for joining us. Really appreciate all your thoughts and comments and words of wisdom. Good to have you on the show.

Speaker 1:

Thank you. Appreciate it.

Nancy Lashine:

I hope you enjoyed this episode of Real Estate Capital. Before you go, I have a quick favor to ask. We put a lot of thought and effort into the show and making sure we bring you insights from real estate leaders that you don't normally find in the mainstream media. So if you're enjoying the show, please remember to follow it on your favorite podcasting app so you never miss an episode. We'd also love for you to share it with others or give us a review on Apple Podcasts so others can find us.

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