Vertically Integrated OZ Investing, With Ryan Tobias

Opportunity Zones represent an attractive value proposition for HNW investors seeking tax-advantaged investment vehicles. But different OZ funds employ different strategies, and vertical integration is one area where they vary widely.

Ryan Tobias, managing partner at Jackson Dearborn, joins the show to discuss how vertical integration has given Jackson Dearborn an edge that can help enhance returns for LP investors.

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Episode Highlights

  • Why Jackson Dearborn originally started investing in student housing.
  • The unique economics behind student housing, and how this sector compares to multifamily.
  • The importance of vertical integration in an OZ project, and how it can increase returns for LPs.
  • Ryan’s insights on cap rates and interest rates, and how they should factor in to investor decisions.
  • The geographic markets that Jackson Dearborn is focused on, and the attractive factors behind this focus.
  • Why Jackson Dearborn structures each of its OZ offerings as distinct funds, and the advantages of this approach as compared to a diversified fund approach.
  • The company’s current project pipeline, and how interested investors can get in touch.

About The Alternative Investment Podcast

The Alternative Investment Podcast covers new trends in the alternate investment landscape. Hosts Jimmy Atkinson and Andy Hagans discuss tax-advantaged investment strategies to help you grow your wealth.

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Show Transcript

Andy Hagans: Welcome to the Alternative Investment podcast. I’m your host Andy Hagans and today we’re going to be talking about vertically integrated OZ investing.

And what Ryan Tobias, the Managing partner at Jackson Dearborn is seeing in the market right now. We’re going to be talking about a lot of the exciting projects that they have going on, so Ryan, welcome to the show.

Ryan Tobias: Thanks for having me appreciate it.

Andy Hagans: Yeah to start off it’s good to have another Michigan resident here on the program so are you a tigers fan, or do you have another team.

Ryan Tobias: I’m a sad sack die hard Tigers fan.

Andy Hagans: Oh that’s awesome yeah we are too and.

it’s been kind of a rough year but you know, had had Michael EPA scope on the program recently from origin investments and he’s a cubs fan, and you know their seasons going almost as poorly as ours is so.

Ryan Tobias: They get a fairly recent rate, so they can’t complain too much or we’re pushing 40 years out now.

Andy Hagans: Exactly exactly so let’s let’s turn to some happier happier topics here Jackson Dearborn.

And a lot of the funds that you have going I know Jackson Dearborn has a focus on multifamily and student housing.

And mixed use so let’s start with these sectors, what is it about these sectors that you find appealing, you know as opposed to other common sectors, you know at the institutional real estate level.

Ryan Tobias: yeah I mean you know part of it, to be honest with us, this is the real estate that i’ve worked in my entire career, so you know it may have gone they’ve gone differently and I come out of college and started a career.

officer industrial or retail or something like that, but but I started out in multi family and kind of branched into student housing few years after that and really.

enjoyed that sector kind of wrapping our arms around that those you know I felt like the student housing business was still kind of evolving in the mid 2000s.

And maturing in a way that it’s really become more of an institutional asset class but yeah we we love multifamily student housing for loss embraces laughs do I mean it it’s quick to respond to the market it’s got government back capital markets options and the agencies.

just got a few things going forward that others don’t and it’s um it just having.

I don’t know we like having hundreds of tenants or seven one or two feels like it’s risk, but again.

Again I don’t know I mean a lot of that is just that’s kind of what you know and it’s been a bit of a darling of the real estate industry last five or 10 years off it’ll always be the case, but it’s been a good run.

Andy Hagans: So you say it’s been a darling are you referring to student housing or multifamily general.

Ryan Tobias: yeah well, it was a you know, there was a time where a student was definitely a bit of a darling.

And then it really sense yeah Kobe can offset that a little bit and it’s a multi family is that, along with industrials for the other fellow Bob last couple of years.

But yeah there was there was a time and I were student was really you know coming out of recession, for you know the great recession fit really well and showed a resiliency and in fact I think you know even through coven coming out of it it’s shown that.

As a remarkable resiliency there was a tough year certain markets, during that time period but it’s rebounded really well and I can tell you, our student housing portfolio doing the best it’s ever done by a landslide.

Andy Hagans: And so, why is that just the occupancy rate or the just the valuation.

Ryan Tobias: or yeah I mean you know yeah occupancy is I mean you know will be at literally 100.0 or sad, I think this year for our.

nets and I don’t know that we’ve ever done that, before we get a lot of bets.

Get almost 5000 beds and so, but we really should be there, and maybe it will be 99 point, something that we should be all the way their rent growth has been pretty strong some of that’s inflation and some of that is.

It just kind of macroeconomic factors but done really well you know we’re at you know big 10 schools that fair really well there are certainly some smaller universities small private and and get a second tier schools in the Midwest or thesis struggle, a bit where we’re at.

Andy Hagans: So so big 10 schools are sort of perennially popular there the the class a of student housing.

Ryan Tobias: yeah you could say that, I mean it really when we talk about in the student housing space, you know you’ve got sort of what we call tier one tier two and tier three universities.

and looking at it from a sort of a investment grade Catholic perspective and tier one or by larger your large publix.

With division one football programs so that’s that’s big 10 it’s fact well that’s SEC ACC etc.

Those are your you know your top notch schools and, in particular those with really high kind of academic standards those tend to you know they just hold up really well they’ve had a national or international draw.

Then you get your tier tues which are you know, makes it private and then candidate public service sort of your secondary state schools.

A little bit smaller, more regional draw.

You know those in the Midwest the Northeast areas that have flat, you know or lower growth rates are declining population basis, those are those are challenged.

You know those kind of draw regionally you mentioned we’re here in Michigan Michigan.

You know, school like central Michigan university it’s draws predominantly from certain northern central Michigan it’s not an area of the whole lot of population growth, they kept struggle with the wallet and then you have your tier 310 schools which are.

Really small schools your comedy and hope college, maybe it would be like a tier three small private market, those are, it is a lot smaller those most of us are focused on those tier one schools selection of tier two schools in higher growth markets.

Andy Hagans: So I know Jackson dearborn is historically invested a lot in student housing.

But then you’ve shied away and pivoted away for the last couple years and now you’re sort of looking into it again So could you kind of walk us through the trends of.

You know, obviously, in the interest in the first place, you know you mentioned the resiliency and.

And all that but, but what what caused the pivot I mean it sounded like that was even before covert or the lockdown, which is obviously a factor, so what caused it pivot let’s let’s start with that.

Ryan Tobias: yeah so well, historically, you know student housing is a little bit different piece in multifamily right it’s.

At least, is a annually like cyclically you’re releasing all around you open up a call August 15 of September 1 so that.

You know, hopefully, you fill up your properties and you know pat yourself on the back the next day you start releasing again for the for the next year.

And so it’s a very you know it’s a bit of a hamster wheel that case and it’s a little more operationally intensive.

As you might imagine you’re renting to 19 2021 year olds there’s all of that all of the drama and whatnot that comes with that and so so.

In the in there in the smaller towns around the country, and you know, for all those reasons.

You looking back you know 510 1520 years ago that they would trade a higher yield compared to multi family.

I mean let’s say just using a CAP rate is an example, if the CAP rate for multifamily dishonest five comparable student housing property Maybe it was a six or something along those lines.

anywhere from 100 basis points or 150 basis points or more difference because you know you have to get in you’re in a smaller town, the operational challenges, etc.

Andy Hagans: What I Sorry, I find that really interesting that you know student housing would trade a discount because, with grant you know pell grants and you know the federal money flowing to schools, I would view it in some ways as a safer bet I suppose it depending on the market.

Ryan Tobias: Well, I think that you know that gets to where I was going there, so there, I think that that that you know institutional capital and the investment market sort of agree with you and and you saw the return.

Difference start to converge and and all of a sudden student housing is trading or similar data it’s it’s a multi family.

Or maybe even lower in certain cases for really great product at you know some of the top schools that a sequel or even here in Ann arbor or Austin.

And so that to us was in knowing the challenges and we manage most of those student housing that’s ourselves it’s you know just didn’t really make sense to us.

It is operationally difficult in you know it’s a limited market right so even a big school new school 50,000 kids at it.

can sometimes be upset pretty easily because you know, three or four projects might be built at one time in a way that a larger.

MSA let’s say you know buy a property Boston you know, like three or four projects Okay, I mean the comparable amount of supply that would have to come into the market to upset the market would be 50,000 units, or something like that.

Right, you know the applecart is is a little more easily upset and that’s where you see some ups and downs a little bit anyway, we felt like there was a number of reasons they’re actually should be that spread of return.

And you know it wasn’t there, so we kind of pivoted a little bit.

It says come back a little bit, but that’s really more to do with what we’ve seen happen in the multifamily space, which is all of a sudden CAP rates multifamily go to.

Go to three or upper to lowes rates, even in this kind of rising interest rate environment still you know even you know high threes the low fours negative levers type situations in certain markets.

Andy Hagans: You know.

Ryan Tobias: That is created this gap again good student hasn’t you know it certainly hasn’t gone up quite to that level.

And so, then you know that became somewhat interesting yeah you know we’re looking at multifamily versus student there what’s that delta there that we felt was the appropriate risk adjusted return.

Andy Hagans: So when we’re talking about student housing are we talking about like regulated student housing.

Ryan Tobias: that’s.

Andy Hagans: Like on campus are we talking about like a multi family asset there’s a bad just into campus that sort of unofficial student housing, I mean, is there any overlap or what’s the technical or precise.

Ryan Tobias: yeah yeah yeah, so this is, you know this year we’re talking about private.

Private off campus students.

Andy Hagans: Okay okay.

Ryan Tobias: There you know there’s obviously there’s on campus housing that university owns and manages, and there is a sort of a hybrid spaces, is a fair number of.

Public Private Partnership deals out there were if there is privately owned or managed on campus housing that’s still fairly small percentage of the overall space, you know we talked about student housing this kind of.

Investment class we’re talking about private off campus.

Andy Hagans: got it okay so as you began to pivot away from student housing what were the other sectors, I should say sub sectors.

That you invested in in the meanwhile.

Ryan Tobias: Well, you know by large multifamily I mean we’d always thought multifamily and student housing and.

Just generally family family to be easier or consistent.

Since been extremely attractive as a classic last couple years but it’s really overall that one of the best performing asset classes for.

20 some years now, and so we have a lot of experience in that we just sort of allocate a little work time and resources into that into that space we’re doing a lot of ground up development now that’s a mix of.

Opportunities known and not opportunities own we’d love the opportunity space to news on space typically that more long term holders anyway, so it kind of fits with our ios so combine that with you know the asset class who likes multi family it’s a gamble.

Andy Hagans: So you mentioned, you know CAP rates they got kind of crazy in the multifamily world tons of the threes.

But, but obviously with opportunities zones you’re doing mostly ground up construction, so you know do do you view those CAP rates as a problem or are they more an opportunity, because I guess from the perspective of ground up construction.

They imply a higher relative Roi for the ground up construction versus you know, taking my capital, and you know quote unquote overpaying for a value add asset.

Ryan Tobias: Right, well, I mean it’s you know it’s very different equation to right, I mean you know we don’t get not getting caught up in.

And they going in yield me we’re solving for a young cost, you know, to make sure that development pencil sort of on its own right, and that is.

More or less time to existing current CAP rates, you know you want to have a spread between your your development yield at current CAP rates but.

we’ve always had a pretty you know we’ve always tried to be 150 basis points between are you a lot of costs and existing CAP rates and so so moved a bit you don’t we try to move that as well, but when you’re looking at it through being a tax advantaged investment over 10 plus years.

CAP rates of.

Are not super relevant you know I mean the project will be completed in 2024 2025 will look to refinance you know at that point or so after that you know so obviously what CAP rates are at that moment, is important and we did make some projections on that.

it’s difficult and.

You know, and then you’re looking at you know what’s what’s this theoretically going to be worth 10 years from now, which.

fool’s errand to try to project that but you know we do we, you know we offer some CAP rate expansion and growth rates over a 10 year period and try to put a put a round number to that, but it’s it’s just a very different equation, then just try to apply a value ladder, of course.

today’s market.

Andy Hagans: So how conservative is that underwriting so you know you mentioned, you know modeling and CAP rates after 10 years I mean that there’s obviously a fine line between giving you that margin of safety.

versus you know being so conservative that you never greenlight a project, you know so what’s your approach or philosophy with underwriting.

Ryan Tobias: yeah I mean I I feel like everybody says, I mean I feel like we’re we try to interact and serve I mean I feel like we are, I can say this, I mean we.

The lowest capra exit CAP rate we’ve ever uses maybe like four and a half percent you know when the Arctic was three and a quarter right and so.

we’ve always felt like we’re you know we’ve given ourselves quite a bit of room for error.

But we are being more conservative going forward reason really have the interest rate reserves and rate gaps and.

You know much harder contingency line I construction all the last part is kind of settling a little bit.

You know overall we’re just you know we’re trying to go into these deals eyes wide open it be you know really conservative and well positioned with our with our capital to make sure that.

We get this project done, we can get at least up and get a refinance and obviously with a capital calls.

You know, so far, so good, but certainly not without its challenges.

Andy Hagans: Well, you know there’s certainly seems like a unlimited demand for multifamily units so it’s like if you can get them built.

You know you’re going to be able to lease up that asset.

Go ahead.

Ryan Tobias: No yeah I mean yeah I hope so, it has been the case, and what that looks like next year to three years from now, with some of these projects in a current construction pipeline start building temples see.

Obviously, interest rates have gone up a lot that’s got a fat on the fact that the housing market.

yeah the one hand it’s going to force prices come down, and it also makes it more difficult to to buy.

Andy Hagans: rates.

Ryan Tobias: Stay I don’t know that they will, if they do.

You know that certainly affects our backend values, but it also probably puts more renters and in the market, so you know pros and cons, I suppose.

Andy Hagans: So, you mentioned the construction costs or you mentioned construction kind of getting under control are settling down a little bit is that a reference to the construction loans or you just mean direct inflation.

Ryan Tobias: Labor and across and construction loans or hire as challenging as they’ve had an.

account.

Or you know windows between a little bit right so there’s definitely a lot less capital out there for construction financing anything it’s not pretty low leverage pretty conservative.

and construction costs or material specifically is stabilized but we’ve seen commodity prices come back recent instability across the board, you know at the futures level and we’re starting to see that a little bit it’s certain items kind of in the project construction costs schedule.

it’s not it’s still a lovely not say things are coming down necessarily more just it’s felt like they were going up at.

5% a month for a while there, and maybe that’s an exaggeration that’s certainly what it felt like and now it’s it’s those last three or four months it felt like the cost of more or less stabilized so i’m still coming up with others coming down a little bit.

You know we’ll see where that takes us.

Andy Hagans: Do you think the commodities market is just pricing in the recession they’re basically saying yeah we think we’re going to get inflation under control that’s the good news The bad news is we’re doing that.

By going into recession.

Ryan Tobias: I mean it.

seems to me, mostly indicators, what the market is pricing in both of.

Our market body pricing pricing in the recession of indeterminate length and depth, but that that certainly those tea leaves seem pretty clear to me right now, we have no idea how that’s gonna play out that’s what the market seems to think.

We tend to think you will do we think interest rates high interest rates are relatively short term almost because they have to be you know things that were more focused on things like the 10 year treasury whatnot will you know price that it sooner rather than later.

You know, as economic indicators kind of lagging right now for the next quarter.

Andy Hagans: Okay, so if i’m an LP you know or institutional investor and i’m looking at multi family and different private placement offerings.

You know how do I, how do I integrate the recession, I guess into my thing in in May investment thesis I mean I tend to look at it, as as basically a good thing in terms of you know it’s better to get in when valuations are a little bit more reasonable on assets.

Although we’re starting to see you know inventory is piling up.

And usually that precedes a price drop, so I feel like maybe you know, three months from now, six months from now, even will start to see prices, be a little more attractive for all kinds of assets, certainly for housing.

You know, but on the other side of the equation, you have to have cash to put the cash to work right so that’s the issue of the recession is.

Am I selling low to buy low you know versus a year ago, maybe I was selling high and buying high I mean at the end of the day, does it really make that much of a difference is just a wash or should it change how I approach things as an LP.

Ryan Tobias: yeah that’s a great question.

You know it’s hard to know current pricing.

yeah transactions, it really just slow like on existing assets, as people is it tends to win.

reads move quickly and sellers say hold on you know i’m not ready to accept that my property like the word that virus graph would say I was.

Raised 200 basis points higher may my crisis and reflect that seller says, you know let’s just let’s wait and see i’m not so sure that our seller here, maybe i’ll wait and see what it looks like six months from now.

So we haven’t even we really have any data points to kind of know where pricing lands, but you know, assuming, you know this obviously these higher rates or or cure stay for the short term, through the end of the year, at the very least, probably well into 2023.

You know, there are some deals that have to transact and we will see some more data points there and.

You know it’s hard to like the stock market it’s hard to either by the low get the trough whatnot I mean you just buy an asset that you have you know the market, we have conviction if you’d like to probably getting a little bit of a discount from where was previously and.

You know I don’t expect multi family, most of the markets, you know, mostly kind of stronger markets around the country to have some huge off cliff it really you know, without a doubt, I feel like they’re probably already drawn down 15 or 20% of X.

20 30%.

But there will be more transactions it’s more kind of sellers computers.

In for us in the ground up space, you know I mean we are know it’s a long game right, so I mean you know you’re looking at something that might be getting out of the ground say.

Q4 of this year and opening two years from now, leasing up you know looking to stabilize need to refinance or sell say three to four years from now, you know and so.

A lot can happen in that time period I mean we could go into a pretty deep recession come fully back out of it, you know by that we looked at data and the great recession and.

You know I mean that that would have been the case right if we put it a bit of ground up project, right now, at 2008 by the time you got out in 2010 brands it taken a little bit of definitely back stronger than they were before.

You know it so we’re you know that what we’re focused on is like we believe in this location this market, this asset we’d like this basis it’s still call it 100,000 units below the existing property itself or right now.

Then yeah it feels it feels good it feels like a good investment and feels like maybe we will weather the weather the storm swinging hammers.

Andy Hagans: yeah absolutely you know i’ve had that conversation with a couple of guests on the show MED favor comes to mind.

who wrote the IV portfolio book and you know we kind of talked about the illiquid nature of alternatives, you know some of these private placement offerings.

You know, maybe it’s a feature, not a bug right like if if I own an asset that i’m not selling in the next two years, and the price dips 20% and then it goes up 35%.

At the end of those two years what differences, a swing really make you know, the only difference, it would make would be psychological psychological ride that i’m along the ride for but because it’s a liquid.

Who cares right, I mean it is a sponsor you’re doing these projects, you know, year in year out you’re launching projects, probably every year over decades and that’s going to kind of dollar cost average in and out over time right.

Ryan Tobias: yeah, no doubt, I mean, I think that you know things get really ugly I mean you’re looking at you know the sales of the half of the.

folks that have to sell for one reason or another, whether it’s just the end of a fun life or it’s a private deal it’s a situation family situation or something like that, or you know those are forced to sell because they’re over elaborate or whatnot which get mostly spaces.

I don’t see like a wave of that happening or some deals that we’ve seen trade its older products are really high price per pound basis where folks baby have rich dad at 80 plus percent leverage.

Those are deals and probably give me a little bit give me a little harder right now but beyond that you know I don’t see I don’t see a lot of carnage out there, I see the press packs maybe that’s wishful thinking that’s just kind of what channel.

Andy Hagans: yeah absolutely so let’s talk about opportunities on so I know Jackson Dearborn is a big believer in oh z’s so across your whole portfolio, how many of your assets are in opportunity zones.

Or, I guess, on $1 weighted basis or project weighted basis you know, are you guys moving to being to being like 100% opportunity zone or is it more opportunistic pun intended.

What projects to pursue.

Ryan Tobias: You know and talking about opportunities now let’s use the word opportunity like 10,000.

The.

So we’re you know the answer is, I mean you know we have a large kind of existing portfolio existing assets which.

doesn’t really matter if there are opportunities that are just existing assets yeah there there, there are sorry but gotta go for it in the development pipeline for last couple years has been probably 80% of what we’ve been doing is in the is in the opportunities on.

Andy Hagans: Their out okay.

Ryan Tobias: What deals a go forward basis we started to ratchet that down a little bit so that our future pipeline it’s.

Closer to 5050 and that was really just because we weren’t sure what’s going to happen program and we’re still not sure.

To a certain degree there’s legislation can go through a committee right now that would extend the program and it’s got great bipartisan support, and we believe.

That it will get through, and it would be, it would be great for the program extend the life offer up some of the benefits that are kind of going away as first.

step up in basis, etc, and so we we surrender that down a little bit between you know we just didn’t know when that legislation was kind of.

is uncertain and going forward i’d say yeah at least 50%, if not more of the development projects we do, or to us know we’ve completed six we have three and construction and we.

were one of the more active opportunities are developers in the country jumped in with both feet back in 2013 really when the legislation was still in its.

Final export out yet and we love the program I said earlier that yes, you’re welcome we’re like the long term holders are relatively young company relatively principles over here and.

So it, you know fits with our general mentality about real estate and it’s just a tremendous program and we offset your capital these 2026 not having any.

capital gains taxes on the profits of the back end of the 10 years and no depreciation capture to cost segue celebrated bonus depreciation on these assets, I compared to a big number, I mean it’s a really great tax advantage play and there’s some great alternative model way to you know.

everybody’s thinking about this as a full 10 year old lighting up by an asset well that’s it for 10 years and sell but there’s some nuances of the bill will allow us to.

build an asset sell it be deployed in other opportunities on asset do it again, and you know over 10 years you could do you could do three products.

Really.

Andy Hagans: And that’s without a taxable event, so the LP.

Ryan Tobias: Without a taxable event along the way it’s also all that money goes back in the queue and then goes back in a new project within one year we can we can recycle that capital do more projects with it.

Andy Hagans: So, are you are you actively looking at doing that, with your noisy.

Ryan Tobias: yeah we were really thinking about.

Some products, I mean some some it may or may not make sense but that’s kind of a nuance.

To just discovered that you know in talking to professionals folks that are in the space or last year or so kind of realize it’s it’s definitely something that can be done, and maybe should be done.

To kind of stretch those dollars for cheap better search for investors and do more as a project.

Andy Hagans: Well, you know, especially if you think about the nature of the program where you’re doing ground up development, then obviously you know you want to lease up the assets stabilize the asset.

That, at that point.

If it’s cash flowing that’s not really helping your investors right, because any any net income coming out it’s not really you know, depending on the details it’s not really tax advantage, but if you could redeploy it.

And do another project to be weighted towards more future capital gain.

And sort of really wait, the entire.

10 year path of the invested capital towards capital gain.

mean from that financial perspective that makes sense if you have multiple oC funds in Jackson Dearborn can you talk a little bit about like the product so let’s let’s say i’m a i’m an LP as of July 2022 what are what are my options to invest with you all.

Ryan Tobias: yeah so like a lot of shops, I mean we we do not have like a large commingled farm we’re doing every project deal by deal.

You know the nomenclature program is that they’re all call a font even if it’s just one project but they’re so we have all these funds with their individual asset fonts.

So with us there’s usually a rolling schedule of you know at this time, we have one project it’s open for investment down the greater phoenix area we go to another project.

Denver MSA coming up for investment that it’s just deal by deal, and you know that’s it’s just a different way to look at it, the larger fun approach has its pros and cons and the one hand, you know you’re trusting the GPS got the.

Wind pool right there and select great projects fingers crossed.

But it’s also perhaps you know a little.

Better risk strategy, just to spread out amongst 510 20 projects.

But you’re also probably paying kind of a little more fees and whatnot because we got a farm.

You know they’re partnering with developers like us to to do the project.

Andy Hagans: that’s interesting, so you, I guess, I was kind of wondering if that would give economy of scale like from like a fund administration standpoint to have a fun with you know six or 10 projects, do you think there’s actually better economic efficiency with with.

Ryan Tobias: That I guess it just depends on the nature of it, so I mean if.

If it is a visit developer like us doing a product doing a larger say we did 100 million dollar fund, we did four or five projects, out of that then, then yes that’s good economics, but most of the funds not all but I think most of the funds you’ll see out there is like a retail investor.

or a or an investment advisor you know you’re going to find that is then going to be the LP with another developer like us.

Right in you know so you’re you know there’s there’s just two layers now you know with us there’s just one layer we just don’t happen to have a larger vehicle we just do it individually and truth be told, they’re not in these individual que es or not.

they’re not as cumbersome as a larger commingled foreigner you mentioned, like the administrative costs and whatnot I mean this is more like the.

Just the LP entity proud to be there is obviously there’s accounting but it’s just not as quite as long.

And then you know, then we were you know we are the manager of that bottom are also the developer it affiliate JC so it’s kind of a vertical integration with us and investors.

Coming with us, and some of them are in six or seven projects and they’ve almost created a mini fun dynamic for themselves by I kind of spread it out, but folks they didn’t come to us and we allow investors who are real estate.

men or women and they like to look at a deal itself and look at our underwriting and really dig in to the location that particular asset and say, this is a long I like this, like I get this I.

I know that area it’s awesome you guys are going to kill it there, and I put all my money into this project vs you know you choose you know, hopefully, as it was at the end it’s their pros and Constable method that’s just the way that we’ve chosen to structure.

Andy Hagans: I really appreciate that just honestly there’s pros and cons each method, I mean I think that’s totally true and it.

It appeals diversified fun versus a single project fund might appeal to a different kind of invest or depending on the situation even the same investor, you know.

They might have a thesis on investing in a certain location or even a specific project that really excites them, and you know that they really believe in, I mean, I think.

I always tell investors lps you know you invest in in sponsors that you trust that have a good track record right.

So that’s that that that sponsor level and to me you diligence the sponsor and then that’s one level, but then the other is project specific, so I think that makes a lot of sense if.

A lot of your capital base are real estate folks they want to dig in you know, to the pro forma and and you know, look at those details, you know, and you mentioned.

Geographic focuses, and I know Arizona Colorado in Florida are three big states, for your firm, could you talk a little bit about these three states and why you like them specifically a man, I know that they’re all smile states, I would call united Colorado technically the sun belt.

Ryan Tobias: Maybe it’s the tip of the smile.

Okay.:

Ryan Tobias: we’re.

yeah you know we’re based in Chicago I live here in Michigan we still we like the Midwest we own a lot of assets here, but you know for round of new construction we’ve been.

Following a lot of the same demographic trends that that a lot of others are as well it’s not really a secret that they’ve spent a lot of, and this has been a lot of population growth in the States eventually so.

phoenix has been one we’ve been out there for like four years now.

You were we just love that market it’s had great growth it’s got it’s a low tax for business friendly areas continuing.

Jobs left and right semiconductor space it’s been huge the divi Community kind of grown up there.

Andy Hagans: Is there is anybody ever getting sick and moving to phoenix or that’s just going to be long after.

Ryan Tobias: me and you work on it well, I mean you’re right, I mean listen it’s July right now it’s it’s pretty warm down there but.

Now you know the rest of the year is pretty good, and I think you know it’s just a high quality life area but stayed relatively for blowing it’s changed a bit the last year too it’s just been such a certain demand pressure, but it’s.

yeah it’s really turn into a its got a great are balanced academy and strategic grow Colorado, and the reason one.

The Denver story we’re pretty heavy Colorado springs endeavor you know really high quality of life, just honestly beautiful state has had a great great job story and kind of continue populations of florida’s.

Everybody wants to be in Florida, we are we.

Andy Hagans: Are bananas, I mean the.

coppers hearing from Florida, or like I i’m not saying they’re going to dip I mean there’s certainly can’t be sustainable, but.

Ryan Tobias: yeah oh no doubt you know the growth in the.

Pricing that you’ve seen in all these areas that sustainable to say it’s all clip it’s more you know it was trending in a certain way or 2019 2020 and you know the last 18 months it’s just went to the moon and it’s gonna kind of referring more to me.

than the years leading up to that which is still.

Andy Hagans: still very good right still very good yeah.

Ryan Tobias: that’s example I mean it was leading the country record for like three years in a row before the epidemic and like 8% 8% asked her to put you in like you know at a place or something like that so, but you know it’s coming back and forth.

You get it right, I mean it’s you know it’s got the it’s a lower tax, you know area it’s got the climate it’s got the water.

You know it’s just got a lot of tunes we are just now trying to get our foothold in Florida to place we want to be long term we don’t have any existing projects there yet, but we want it to be kind of a Dr se leg of the tripod here as we grow.

Andy Hagans: I like that I like that yeah you know I appreciate.

How transparent honest, you know you’ve been you’ve been with us today just talking about the pros and cons, I mean, I think.

I love those the projects, I love opportunities on funds, I mean, I think there are they’re the best kept secret anymore they’re not much of a secret, I mean considering how.

how good the program is, and I mean that, both from an impact investing.

You know viewpoint but but also just from a pure financial.

standpoint, I mean the tax benefits are incredible.

I there’s been a lot of capital.

flowing into oC projects in the past year, it seems like it’s accelerated a little bit, but, from my perspective, it’s still is not enough, I mean if if people actually crunched the numbers I think there’d be even more capital flowing in those these.

Ryan Tobias: totally agree, I mean you’re right it’s not, I would say it’s a secret anymore, but still really small component of the overall market and.

i’d like to see it grow and, hopefully, you know more of this type of talk and getting out there to folks who maybe not as exposed to it.

But only help because it is a great around and it’s just it really tax advantage program and you know.

wanted to go back to the pros and cons, because you mentioned, you had Mike origin recently right their friends and partners of ours on a couple of different projects, and so they have a tremendous larger commingled opportunities on the phone I couldn’t recommend enough they’re great.

Andy Hagans: i’m an LP and that find actually so yeah you.

Ryan Tobias: Should you’ll you’ll do you’ll be very happy with that to do very well, and you know so they’re I think they’re just the best of the best in that space and then, if you want to get an individual project is great yes call.

Andy Hagans: So on that note when where can our visitors go to learn more about Jackson Dearborn and also your current and upcoming offerings.

Ryan Tobias: yeah absolutely so website is Jackson Dearborn calm.

You know i’m sure it’ll be part of this podcast here at some point but Jackson you’re very calm and it’s got a pretty good profile on everything that we’re doing all the projects that we have going.

You know, we try to do a pretty good job of updating it was always a few projects upcoming and having met yesterday to the website and encourage anybody to reach out and one of the magic words here really accessible.

email my cell phone is on the site i’m always happy to hop on a call and talk through some of the stuff we’re talking about right now and talk about some offerings gotta.

give an awesome hustling a plus location project and suburban phoenix that we’re going through entitlements on right now and we’ll be looking to do.

The race, the remainder of the equity on later this year and then another one suburb of Denver, as part of this amazing mastermind Community that’s going up there, I kind of an FDA gateway or the airport or and those are a couple projects we have upcoming.

Anybody reach out.

Andy Hagans: Great i’m sure we have some listeners who would be interested so, by the way.

To our listeners, if you want links to all of the resources we discussed in today’s episode, including links to Jackson Dearborn and the current projects, you can access our show notes at comm slash podcast and don’t forget.

to subscribe to the show on YouTube and on your favorite podcast listening platform.

So that you get our new episodes as we release them Ryan thanks again for coming on the show today.

Ryan Tobias: Hey thanks so much, it was great and I appreciate it.