Thinking about why the fees we all saw yesterday bothered me so much, and wanted to share some quick thoughts on fees in general. LPs want you to eat. They (should) want to cut the biggest promote checks they can because it means that the deal crushed.

That said, your acquisition fees (if syndicating) or management fees (in PE) should not be a profit center.

Barry Sternlicht on UJA webcast, a few highlights.

- Remember Mel and Herb Simon, while on the Forbes 400 list, walking into Neil Bluhm's office, crying because they were broke. Malls were trading at 5 caps so they had huge paper net worth, but couldn't service the debt at 10% - Second deal at JMB was apartment in SF. I flew there, talked to tenants, knew how many blades of grass there were, everything. In IC, Head of Acq. asked me "how far apart are the stripes in the parking lot? We're full - if there's space, then we can add more spaces".

1) It's my birthday today so here are some random things that I've learned or thought about a lot this past year. 2) "Circle of Competence" is completely misunderstood and an excuse to be lazy. I'm a dumb RE guy, but I've made more money this year in public markets (in real estate equities) than I have in privates.

I have been thinking about this concept a lot lately given where "high quality" assets, predominantly multifamily and industrial, have been trading recently.

https://twitter.com/PinkPoloShorts/status/1277620364118499329

I've been seeing a bias towards a lot of higher-cap rate assets with the sentiment being that you'll make higher cash returns and hold longer, so who cares about residual value. I think there's a fallacy in that argument - higher cap-rate assets trade that way for a reason.

Thinking through hotels really quick, particularly the big three C-Corps. We all agree that franchisor business models, and these ones in particular, are amazing - capital light, big ability to reinvest at high rates of return, international expansion, etc. Forget who tweeted it (maybe @LAForeverHall?) but a franchisor's business is only as good as the underlying economics for the franchisee. So despite how great Marriott's business is if the Marriott hotel owners aren't making money this is moot. Very relevant!

Thread on eBoys, which is probably the best book I've read since High Rise. (1/x) (2/x) eBoys is an account of the first few years of Benchmark Capital, the venerable VC firm known for investments in eBay (part of the genesis for the name of the book), Uber, WeWork, and Snap. More info here: wsj.com/articles/bench… and here: forbes.com/sites/alexkonr…

(1/x) Few thoughts about replacement cost since it's been a bit of a hot topic here. Replacement cost is simply the cost at which you could rebuild an asset. Buying below replacement cost doesn't guarantee that you're going to make money, plenty of examples of that in retail... (2/x) And buying above replacement cost doesn't mean that you're going to lose money, so long as your rents (and NOI) keep rising. However, keeping tabs on replacement cost is super important to protect your downside.

Couple thoughts here. Think it's really important to distinguish by chain-scale when considering the benefits of being branded. IMO the benefits accrue mostly to the select-serve side, and hotels that have are corporate than transient. The reason being that at the lower end

https://twitter.com/BluegrassCap/status/1135940770882629632

the product is really commoditized and bookings are done mostly through the brand. Same thing at the corporate level - if your employer has an account with Marriott that is what drives your decisions. Those benefits are weighted against the franchise fee, PIP requirements....

(1/x) Read 100 Baggers over the weekend and wanted to share a few quick thoughts both on the book and some things it illuminated about the investment business writ large (2/x) Essentially there are two ways to find stocks that return 100x - hit a lottery ticket (Canadian gold mining stock, drill co. hits a gusher, etc) or find a great business early on that can reinvest capital at high rates

(1/x) Want to highlight the best podcast episode I've listened to this year, Ofer Yardeni on @NYMultifamily's "Behind the Bricks". Real estate fintech has been a really hot area for investment (and conjecture) and Ofer had the best answers I've heard for where MF RE is headed (2/x) Taking a step back, he's been investing in NYC MF for 30 years and has been through several cycles and he said that what's allowed him to make it through cycles is his ability to see how the industry is changing, both in demand / supply trends, but also in technology