A Conversation on the Alternative Investment Landscape with Bryan Mick

In this episode of Non-Beta Alpha, Bryan Mick, founder and CEO of Mick Law, helps us understand how the alternative investment landscape is coping with the pandemic.
In this episode of Non-Beta Alpha, Bryan Mick, founder and CEO of Mick Law, helps us understand how the alternative investment landscape is coping with the pandemic. Mick discusses which sectors in the real estate industry have been most heavily impacted by the pandemic, and which sectors have fared better. He also delves into the potential volatility of office space, commercial real estate, and multifamily living.

Mick also touches on topics such as the national economy and the gradual process that will constitute our nation’s recovery. Stimulus packages offered by the government act merely as a band-aid for a much larger wound; the only way to accelerate recovery is to focus on fundamental economic drivers: Consumer Spending and High Employment.

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Ryan Morfin:                    Welcome to “Non-Beta Alpha”. I’m Ryan Morfin. On today’s episode, we have Bryan Mick, the founder and CEO of Mick Law, a due diligence firm that focuses on broker-dealers, RIAs, and family offices, and their allocation into alternative investments. This is “Non-Beta Alpha”.

                                           Bryan, thank you for joining the show today. We appreciate you coming on.

Bryan Mick:                      Ryan, thanks a bunch. Appreciate the opportunity.

Ryan Morfin:                    Well, Bryan, you’re one of the thought leaders in our space, keep a lot broker-dealers educated on a macro environments and due diligence. I was wondering if you could share some of your insights on this episode about where we started end of 2019 and what you think is happening, maybe the response to coronavirus, where we are in getting back to normal, and then maybe some items that we should all be thinking about, wealth managers allocating to alternative investments, and maybe share some insights from past business cycles of things that may or may not come to pass that we should be keeping our eyes on for people that we’ve invested with.

Bryan Mick:                      Sure. Well, I think towards the fourth quarter of 2019, generally speaking, things were humming along. You had a reasonably positive… You had a positive GDP, and it was business as usual. I think fourth… Well, the second half of ’19, there were a lot of, on the real estate side, there were actually quite a few asset classes that were nearing cycle tops, and we were starting to see some cracks storage. Understand real estate, of course, individual projects, they’re always unwritten at the local basis, the submarket, because those are dramatically different MSA to MSA.

                                           But, for instance, on storage, we were starting to see some vacancy numbers ticking up, on oversupply issue, that kind of thing. We saw some in multi-family. Most of the top 50 metros were at the apex of the cycle in multi-family. Continuing into first quarter, the COVID-19 crisis obviously threw a wrench into everything, and I think at this juncture, it’s a little too early to prognosticate. Many have, and I think you can, certain asset classes within the real estate industry, you can be pretty confident in. In fact, their performance is probably enhanced, if you will.

                                           You’ve got the fourth, the traditional four food groups, office, retail, multi-family, and industrial. But then you have these other subgroups, senior housing, student housing, storage, et cetera. Logistics, to a degree, that’s an industrial-plus, but if you look at data centers, for instance, anything significant logistical facilities, Amazon-related, et cetera, those are doing fine. Multi-family, from what we’ve seen so far, we think the Class A new stuff, and the Class C workforce will probably be adversely affected or affected the most. I mean, the C properties is obvious. A lot of the service industry employees were the first to lose their jobs, and frankly, those jobs will probably be laggards in coming back, given the localized and statewide orders on restaurants, bars, et cetera.

Ryan Morfin:                    It is interesting. I mean, it’s been also a pause given that a lot of local governments and third parties, engineers, appraisers, have had to shelter in place. Nonessential transactions, real estate transactions aren’t happening. As that starts to get relaxed, maybe as the country starts to reopen, what do you think maybe the haircut to purchase price for an office building or a retail center, how do you see the underwriting changing in the next six months? How are you going to stress test the underwriting going forward?

Bryan Mick:                      Well, there’s going to be some permanent partial reset for an extended period of time, I think, in certain asset classes. You look at office. Those small businesses that actually survive this, small to medium, and maybe segments of Fortune 500 companies for that matter, are going to analyze their various functional areas. And if there are salespeople, engineers that can do their CAD stuff on their laptop at home, whatever the case may be, they’re going to look at, okay, what was the productivity during the COVID separation work-at-home timeframe and the productivity otherwise, and there’ll be employees that are making the case, “Hey, listen, here’s what I did from my sales goal perspective, and I want to continue this.”

                                           Now, a lot of people have, oh, say small children at home, and they may say, “Nah, this is not for me. I want to go back to the office environment.” But there’s going to be a segment of the office users that disappear or reallocate, if you will, their location. That’s going to be hard to determine, but we’ll definitely be looking at tenant rosters and use and the rent roll and the expiration dates and figure out how these tenants are doing within the different projects.

                                           Multi-family, it’ll come back, obviously, but the real stress right now, multi-family’s probably one of the areas where there’s still some financing getting done. The problem is if you look at… You would think, and most people watching this know the valuation of real estate is a three-step process. It’s the 10-year Treasury. It’s the spread over the 10-year from the lender’s side, and then there’s a spread over that for the owner/developer taking the risk of owning a non-liquid asset for a long period of time. I mean, positive leverage is what makes real estate work.

                                           If you look at 12 months ago to today on the 10-year Treasury, the 10-year Treasury’s down 90 basis points. The problem that we run into is twofold. One the GSEs, Fannie and Freddie on the multi-family side, are putting floor rates on their quotes. If you’ve got a floor rate of 90 or 75 and you’ve got a higher spread up to 250, 275, you’re getting back to that four-plus number, whereas if a lot of these deals were being financed at 300 basis points sometime not too long ago. That’s going to affect valuation.

                                           What we’ve been doing on the multi-family, and we look at lot of the 1031 DST product, probably 80% of at least the universe and the broker-dealer independent RIA channel. What we’ve been doing is we’re taking rents flat for at least 12 to 18 months. Small increases, and again, it depends on what Reece and CoStar’s feeding us from a local MSA perspective, right? But generally speaking, that’s the approach. We’re going to take up the vacancy by newer from 500 basis points to 10%, and we’re going to play that out for 18 to 24 months. Then we’re back to normalizing, rent growth, expense growth. Vacancy’s back to where they were, say, 12 months ago in that particular market. The early stuff, the early period, early holding period, we’re testing hard. Then we’re doing our standard 10-year ARGUS modeling on the exit.

Ryan Morfin:                    On the retail side, are there any kind of major credit tenants that you guys are worried about? People like Chipotle or some of the big box retailers have just said, “We’re done paying rent until further notice.” Is there anybody that you think’s going to be really, really poorly situated post this normalization?

Bryan Mick:                      Well, I heard… Well, to preface this, we still look at a lot of, a fair number of triple net deals. We got a little bit weary of triple net, just the direction on cap rates over the last few years, and early on, we were wrong. I guess COVID makes us right, but there just wasn’t a whole lot of juice. You know what I mean?

                                           You’ve seen some of the public stuff, Subway, Mattress Firm, Cheesecake Factory, where the franchisors are either coordinating with their franchisees, or groups of franchisees are saying, “We can’t pay rent, and we’re not paying rent.” There are more out there. We work a lot with The Boulder Group out of Chicago, Jimmy Goodman and Randy Blankstein. They’ve had a good pulse on the national triple net market. They say there’s more to come.

                                           Now on the flip side, Tractor Supply yesterday said they were increasing their quarterly dividends, so their stock was up, and their credit’s still good on the triple net side. But there’s going to be big empty boxes, and you can guess who that might be. My niece is furloughed. She lives in Manhattan. She’s furloughed from Macy’s. Will Macy’s close some stores? There’s discussion the last couple days about Neiman Marcus filing for bankruptcy. Yeah, there’s going to be a fair amount.

Ryan Morfin:                    Yeah, that’s interesting. The retailers, the grocery stores, have really proven the necessity to have bricks and sticks, but a lot of those folks don’t pay a huge amount in rent on a per-square-foot basis like the rest of the tenants in those strip malls. But I do think it’s going to put some interesting dynamics in play about the importance of some of these retailers, or at least communities appreciating the fact that there’s a Kroger or a Holt Foods down the street because a lot of grocery deliveries are not happening because there’s a surge in demand for these kind of Amazon grocery providers. I think it’s hopefully going to give a boost in the arm to some retailers, but it’s definitely hurting the viability of a lot of others. Can you maybe touch-

Bryan Mick:                      Sorry to interrupt you. But grocery-anchored, I agree. I mean, the grocery stores pay six bucks a foot, and the inline tenants might be at 18 or 20, but that grocer’s rent check right now is a highly appreciated thing because there’s-

Ryan Morfin:                    [crosstalk 00:12:28] debt service.

Bryan Mick:                      Yeah, it can cover a chunk of debt service. But we have our real estate symposium in Scottsdale every October, and we were talking October 18 and 19, there’s kind of “The Twilight Zone” of, how can it get any better in commercial real estate? At the time, whether it’s grocery-anchored or non, neighborhood shopping centers, I said for the cap rate you pay, that’s probably the best risk/reward opportunity on stabilized assets because shoot, even in a bad recession, people will pay six bucks for a Chinese lunch. And they’ll go to the dry cleaners, and they’ll get their hair cut. Well, guess what? First time in the history of the world, all three of those tenants are down. All bets are off in the COVID world.

Ryan Morfin:                    Yeah. No, it’s going to interesting to see how long this lasts. Maybe you could touch about hotels. I mean, those poor owners have been decimated. I think occupancy rates are at 20% right now nationally. What do you see in store in the crystal ball?

Bryan Mick:                      I took a recent trip to Madison, Wyoming. I had to spend the night in Rapid City, South Dakota, and granted, that’s Rapid City, South Dakota, but I think it’s happening all over the country. I paid $19 at a branded select service hotel. I wonder whether that barely covers the variable expenses. But, yeah, the hotel industry has been hit hard, and, again, it will be a slow climb back. The development deals are probably okay, if you’re just now buying the dirt, or maybe you’ve been working for a few months, and you got the site prep done because the delivery on that will be 18 to 24 months out. All other things considered, the right market and the good quality financing and all that, wouldn’t be too afraid to do a hotel development deal today.

                                           But on the quote-unquote stabilized, they are highly unstable right now. You have the Paycheck Protection Program loans where the hotel franchisees qualify. That will, if these are all funded with the additional 484 billion they approved this last week, I think 250 of that’s going, if my memory serves me right, 250 of that’s going to the Paycheck Protection Program, so the franchisee can run for another 60, the rule is 60 days after your date of funding. If they’re on life support but paying all the bills right now with a furloughed workforce, 60 days from a week or two or three from now, you’ll get through some of it, but then what?

                                           Now, one of the nice things about hotels is that operationally, it’s all labor. Most, not all, but significant labor expense, so that’s a variable component. You had a staff of 18 running that hotel, you’re going to be down to five or six.

Ryan Morfin:                    I heard something crazy. It’s at $900 billion, almost a trillion dollars of revenue that’s going to be lost this year in the hotel industry. That’s a big donut that’s going to impact capital structure. I think it’s going to be wildly disruptive to that industry. But you mentioned the human element, which is the unemployment rate. Maybe we go back up to a macro level, we might be at a 20% unemployment rate, so they may be higher, what do you think’s going to happen in the economy over the next six to 12 months? We had tremendous stimulus, tremendous demand destruction. Is it enough? What do you think’s going to play out?

Bryan Mick:                      No, because stimulus only works for so long. Stimulus is… I don’t want to… Calling it a Band-Aid is probably too harsh, but ultimately, the fundamental economic drivers have to be at play, and that is primarily full unemployment, a consumer that’s confident and is spending. I mean, 70% of our GDP is on the backs of the consumer, and if the consumer isn’t going back to some of those activities… And think through it. We’re talking about hotels, restaurants, bars, movie theaters. The daily life of the consumer will not be the same. Early on in this, early on being, what? Five, six weeks ago, people were talking about, “Oh, yeah. We’re going to have a V-shaped recovery, and everything’s going to be normal in the third quarter.”

                                           Well, I think they’ve thrown the V out. I think you can throw the narrow U out. I think you can probably throw the U out. We’re looking at a Nike swish, or swoosh, sorry. That’s what it’s going to look like. I think it’s going to take longer than six to 12 months. Again, there may be a little bit of a permanent reset. We may be talking to each other three years from now and the general consensus from the macro economists, who are a lot smarter than I am, might be that 6% unemployment is full unemployment. It used to be 2% because of the people that quit looking and then part-time teenagers and whatever else, but that number could change.

Ryan Morfin:                    That’s an interesting point that the earnings curve, I guess, is going to get dragged out until we really, by hopefully a catalyst in the healthcare space, convince people they’re safe again to start traveling and going back to the office. One question I had for you… Yeah, and I think until we do that, I think people are going to continue to be skeptical given all the mistrust of whether it’s fake news or propaganda or an administration they don’t buy into. I think the lack of trust and partisanship is forcing the general public to pause a little longer than I’m sure a lot of people would like.

                                           I think one question is, do you think we’re at risk of a depression if we don’t get the municipal bond market sorted, or if we don’t get back to work? Is there a risk that we get the policy wrong here, and we go into a real, real sharp depression?

Bryan Mick:                      Boy, I don’t know. That’s probably above my pay grade. You would think that the interim fiscal stimulus would help with that. I don’t know. I don’t think so. I think it’s a severe recession unlike we’ve ever seen, of course, at least in the short term with the unemployment numbers. We don’t want to get too political about this, but you start to question the resources and the restrictions and everything else for the, pick your number, under 50 healthy people.

Ryan Morfin:                    Yeah. Absolutely. Well, switching gears a bit, the oil and gas space has been really volatile. Never in my life did I expect to see negative oil prices. Maybe you could share some of your thoughts on the oil patch.

Bryan Mick:                      Right. And I don’t want to engage in too much promotion here, but just last week, Brad Updike is our lead energy lawyer in the office. He does most of the work on the energy space, and that is drilling, royalties from minerals, MLP infrastructure, all that. They did a podcast, Brad did a podcast with Steve Burr, our lead petroleum engineer out of Dallas, and a gentleman named Dan Steffens, who’s a consultant in the industry, very experienced and well-respected. That podcast is up on our website, micklawpc.com. That goes into a lot of detail. I think the… and this is true in some aspects of the real estate space.

                                           One thing, by the way, we should point out, on the commercial real estate side, generally speaking the trough across the board is going to lag the general economy by a good six months, if not more. The real estate opportunities, even if you see positive GDP numbers in the fourth quarter of 2020, the real real estate opportunities may be 12 months from now.

                                           Now, getting back to the oil patch. Right, so the prices now require somebody to pay you, a producer to pay you take his oil. That’s going to normalize a little bit, and there was a little bit of blame on the massive ETFs in computer trading driving some of that price collapse, but clearly demand is way down, and it ties back into what we’ve been talking about. Are you going to go to a vacation to a crowded beach or a crowded national park? Yellowstone attracts hundreds of thousands every summer. Are people going to be elbow to elbow at the geyser? I doubt it.

                                           You have a demand, a softening of demand. I think the Saudi-Russian thing’s getting fixed a little bit, but a softening of demand that’s going to continue. What do you do in our world, the private placement world? There’s opportunity, obviously. You can buy minerals on the cheap. You can do royalty deals. The nice thing about doing royalty deals, you buy the royalties, and it’s just an IRR consideration. If the privates and the publics that have the capital to drill… Well, they’re not going to drill today, and they may not be drilling 12 months from now, but eventually they will. If you can buy those royalties today on a discounted, prospective discounted cash flow basis that makes sense, that’s probably a pretty conservative way to go about this.

                                           The thing that drives me crazy, and you’ve seen this too, of course, the retail investor… Behavioral economics comes into the play, then retail investor gets scared at the time when he or she should be jumping in with both feet. I mean, Warren Buffett, our neighbor down the street, “Be greedy when others are fearful and fearful when others are greedy.” And he hasn’t deployed a lot of his 180 billion in cash, or whatever they’re sitting on, last I heard, at least publicly. There are opportunities.

                                           Remember the early ’80s when we were down to 10 bucks a barrel. Folks were buying drilling rigs and other heavy field equipment and storing them on the back 40. They were buying it three to five cents and storing them on the back 40, and five, six years later, they made a lot of money. You just have to think creatively and have the stomach for it and look at some of those opportunities.

Ryan Morfin:                    Yeah. One area that has been interesting to watch because it’s been litigious with the IRS is conservation easements, and it makes a lot of sense to have that product in place. By letter of the law, it’s allowable. It protects our environment. I mean, as an outdoors person, I enjoy seeing some of these projects be manicured and put together for future generations. Maybe you can give a state of play of what’s going on in that industry because it’s been a very interesting posture for the government to take on some of these projects.

Bryan Mick:                      Yeah, even though, the IRS is busy with other stuff right now, I don’t think they’re going to back off on trying to… You can use prosecute or persecute in this discussion, I think, some of the folks that are active in that industry. I’m in your camp. It’s Section 178. It’s allowed. It was reaffirmed by Congress 10 years ago, 12 years ago, whatever the date was, and made permanent in the tax code. Again, whether it’s conservation easement or a real estate development deal, it’s all about the assets.

                                           If there’s economic substance to the transaction, it can be underwritten and validated, at least on the development option. Then a conservation easement properly structured, it’s very complicated. There’s 92 things you have to do right. But it remains a legitimate powerful tool for high net worth or more appropriately, high-income people. We’ll see. I know there are at least two active sponsors in the space who will do multiple programs this year.

                                           Now, the issue, of course, in 2020, is what’s the demand component of that look like? If you’re a small business owner or you’re an executive who either voluntarily or involuntarily took a big pay cut, you’re not going to be looking at a CE-oriented investment.

Ryan Morfin:                    Well, that’s a great point. The environment has also thrown a monkey wrench in opportunity zones. Maybe you can give us an update on what you’re seeing there.

Bryan Mick:                      We haven’t looked at any new opportunity zones, probably in the last… Well, I take that back. Kyla did one urban catalyst, and I think they’re going to shelve for 90 to 120 days and see if there’s more clarity on a couple of their pending projects. It depends, I guess. No, it doesn’t really because most of the opportunity zones have been in the last, call it the last six to nine months, legitimately. I mean, at least in our space. There were folks, when they passed the regs in October of ’18, there were folks that jumped on it right away. “I’ve got an opportunity zone. I’m going to raise $700 billion.”

                                           Well, it’s a tale of two cities. The deals that we look at, the smaller private deals we look at, whether it’s a one-off project or a funds structure, and then the larger wirehouse name on an opportunity zone, those two segments of this space have been pretty successful in raising capital and deploying that capital. I think it’s the folks that ran out there and thought they’d start a fund and then partner with developers and the contractors later are really languishing.

                                           Even before COVID, my position was, there’s going to be some ozone dirt that’s on sale in 2020 because a lot of people were focusing, and I think it’s a red herring, a lot of people were focusing on the 5% basis bump that expired at the end of ’19. If it’s a quality project, there’s still a lot of horsepower in an opportunity zone. You look at Peachtree, for instance, their fund is going to end up with 10, 12, 15 assets. They’ve only COed one. They’re in development on three or four others, and then they have some dirt under contract and stuff they’re still looking for and quite a bit of money in the bank. I don’t have a crystal ball, but I think that fund, over the long term, remember, we’re talking about 10 years, is going to do fine.

Ryan Morfin:                    We’ve taken the position, we’ve only done project-level opportunity zone investments. A lot of our advisors who participated look like heroes because they forced some of their clients to take some profits Q4, and that was the right call, whether the reason and rationale for that was an accurate call or not. But the question is structurally, has the Treasury Department come out and fixed some of the uncertainty around a fund vehicle and some of the fee structures and the promote? Has that all been clarified in the last few months or the last six months?

Bryan Mick:                      Yep, it has. There was a final set of regulations they were at that was out probably, oh gosh, 60, 90 days ago. And I apologize. We have our underwriter and our legal lawyer in that space that handles that stuff. I mean, I look at everything that goes out the door, of course, but yeah, I think there’s plenty of guidance now to be comfortable doing a project.

Ryan Morfin:                    Private equity and venture capital, maybe you can talk a little bit about, there’s been a lot of money raised over the last few years, vintage years for privilege growth equity and venture funding. What are your views on those markets today?

Bryan Mick:                      We don’t do a ton of that work. We have a few deals every year we look at, I suppose. It’s tough. It’s tough in the retail IBD/RIA space just because there’s a filter. When we’re looking at it, is it a project that would have… If it would otherwise have been funded by a large wirehouse or investment bank, then we’re probably not looking at it. And it depends too on the size of the deal, of course. But, again, if you’re financing sources on the debt side are questionable, and you have capital to deploy in this environment and moving forward over the next year or two, there’s a lot of opportunity. Absolutely.

Ryan Morfin:                    That’s on the equity side. On the other side, the private debt side and BDCs, what are you guys hearing, and what are your thoughts about that market?

Bryan Mick:                      They’re going to be crushed. I have a personal bias, frankly, against, a lot of the non-traded rate and the BDCs. BDCs, really the larger risk that’s been omnipresent on the BDCs is they tend to borrow short and loan intermediate to long. Well, intermediate. You’ve got potential spread issues there. They are lending to non-investment grade sub-junk for… I mean, that’s the function. They’re going to be operationally challenged.

Ryan Morfin:                    Maybe this is just more of a market commentary of the industry, but there’s been a lot of consolidation in the broker-dealer channel and the RIA channel. What are you hearing from your clients? Are a lot of them doing well? Are they under pressure? Is there a need to consolidate further?

Bryan Mick:                      The question, number one is, I think it’s too early to tell on how they’re doing. I’m assuming a number of our clients, as have we… I mean, Bryan Micks is 55, and I’ve never taken a dime from any governmental entity in my life, but when they came out with the Paycheck Protection Program, my juicy rationalization was, I’m just getting the down payment on the multiples I’m going to have to pay down the road to service, where are we at now, 2.8 trillion in debt by virtue of this crisis? So I applied, and we’re going to use it, I’m sure a number of our clients have too.

                                           I hope everybody’s keeping folks employed. That’s our plan here, and we haven’t made any adjustment. We’ve made adjustments on the logistical side, of course, as everybody has, but we’ve made no adjustments in our employee base and don’t plan to. I think it’s a little too early to tell.

                                           I can tell you this. I mean, if you’re a broker-dealer that has your rep base is focused in a certain area, for instance, 1031 DSTs, that’s slowed down substantially. I think there’s still demand there from the investor side, but as a sponsor/issuer, how do you value this deal? How do you negotiate this deal? Can you even get a loan commitment, and what’s that look like? Are they going to price you at the close, so you don’t know what spreads are going to be like when you’re ready to close in 60 days? There’s a lot of uncertainty out there. If you’re practicing a particular area or heavy in a particular area, it could be significant. Then on the consolidation question, absolutely, there’s going to be more consolidation.

Ryan Morfin:                    I know the SEC’s asked sponsors to put out these COVID supplements. Do you think sponsors are, maybe some of the ones that you’ve reviewed or if you’ve seen any, are they being realistic in their earnings impacts, or do you think there’s probably going to be future supplements that need to be written as time goes on?

Bryan Mick:                      Well, on the public, non-traded side, I would say, they’re probably not being realistic. The NAVs that are being reported, of course, from Q1, obviously, they’re suspect at this juncture. Q2 is going to be significantly worse. I wish they would take… And I shouldn’t paint a broad brush. A few are, but you really need to be proactive. Everybody in this industry needs to be proactive, from the sponsors to our due diligence firm to you running your business and down at the rep and client level. You need to be… If there’s bad news, the old mantra is, you talk about it early, and you talk about it often.

                                           We’ve seen leaders in the industry and how they operate the last several weeks versus others who are hiding under a rock and not communicating. And the former are going to hopefully salvage their business, solidify their reputation, and do phenomenally on the backend of this.

Ryan Morfin:                    Well, I don’t know if you have been following REG BI, but what are your thoughts about how it’s going to impact the alts industry? Do you think REG BI is going to preclude sponsors from participating in any other piece of the wealth management channel? Where do you see the line in the sand on delineating conflict of interest and eliminating it as it relates to the marriage between asset management sponsors and wealth managers?

Bryan Mick:                      Well, I mean our concern with REG BI, and I don’t want to engage in self-promotion here, but we have said since FINRA 1022, that if you are going to analyze, quote, and this is FINRA’s language, “the business prospects of the issuer”, or the achievability of the sponsor’s projections, you have to underwrite the asset. Before that, or underwriting assets, it’s all about the deal. You need to make sure disclosures are appropriate. You need to make sure that fee structures, splits, carried interest, all that are appropriate, but at the end of the day, it’s the asset that carries the investment.

                                           We believe with REG BI, from the commission perspective and comparing products, it is highly justifiable if you have two Class A multi-family projects in similar markets, that if one of them has a holding period 10-year underwritten IRR that’s 200 basis points over project B, then, of course, you make that decision based on the available, the two available at the time. And you can justify a higher compensation structure on a better performing asset. It’s going to come down to the due diligence that’s done at the dealer and rep level and who they utilize to help underwrite the project. If it’s properly documented, REG BI should be a non-issue.

Ryan Morfin:                    Bryan, I guess a few questions. What have you been reading during the quarantine period, the work-from-home period? Have you been reading any interesting books or any market insights, people you’ve been following that our viewers should think about reviewing?

Bryan Mick:                      Dang, put me on the spot. “The Spider Network”, it’s a book about the inside game on LIBOR and the manipulation of LIBOR, which, by the way, we’ll all be dealing with. I think that’s the end of 2021 where they drop LIBOR. That’s been a very interesting read. I have to confess. I read a lot during the day, so at night, we’ve been hitting the Netflix really hard. Most of them are favorites of a new series or a new season coming out on old favorites, “Yellowstone”, “Schitt’s Creek”, that kind of stuff.

                                           On the business side, though, just trying to make sense of everything. There’s plenty of sources out there, sometimes conflicting sources, and like we indicated in our recent [“Edeesa” 00:40:37] article, there’s a lot of postulating and speculating, but we’re in uncharted territory here. You have to weigh in from that perspective.

                                           I did notice, I’ve always stayed on top of the John Grisham. I see that there’s two books now, and I’m cheap, so I wait for the paperback, so maybe I’m not… Those aren’t available yet. But I’m looking forward to next couple of Grisham books. And Barings, I mean, I think-

Ryan Morfin:                    Yeah, I-

Bryan Mick:                      … I think pound for pound, Barings is about the best source out there.

Ryan Morfin:                    Yeah, I agree. I agree. I’ve doing a lot of Audible lately, and “Fauda” on Netflix is pretty good. I highly recommend that. Well, Bryan, I really appreciate you joining us and sharing some of your insights, and we’d love to have you back on the show in a few months time as this starts to unpack itself and we have more underwriting visibility.

Bryan Mick:                      Ryan, thank you. I really appreciate what you’re doing for the industry and getting that information that can help people make decisions.

Ryan Morfin:                    Thanks, Bryan. Have a great day!

Bryan Mick:                      You, too. Bye-bye.

Ryan Morfin:                    Thank you for watching “Non-Beta Alpha”. Before we go, please remember to subscribe and leave us a review on Apple Podcasts or our YouTube channel. This is “Non-Beta Alpha”. Now you know.


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