Phase 2 - Real Estate 101 (How to or one big idea)

Podcast - Sponsor DNA With Todd Laurie

Adam Hooper
September 2, 2021
Podcast - Sponsor DNA With Todd Laurie

Listen as Adam Hooper and Todd Laurie discuss the inner workings of a real estate sponsor.

Todd Laurie s a Partner at Baceline Investments. He is responsible for meeting the capital needs for acquisitions activities, overseeing due diligence activities for institutional investors, managing human resources for the firm and plays a key role in the formation of new investments.

Mr. Laurie has a strong background in leadership, relationship building and operations, with over 20 years of experience in these areas. After graduating from the University of Colorado at Colorado Springs with a Bachelor’s degree in Psychology, where he was inducted into Psi Chi, Mr. Laurie established himself as a leader in the staffing industry by successfully turning around underperforming branches for several publicly traded firms.

In 2008, Mr. Laurie became a Director of Corporate Development with a private bank/wealth management firm, where he spearheaded merger and acquisitions efforts, played a key role in the launching of new lines of business, contributed to relationship management, business development and commercial banking activities and was responsible for the recruitment of key, executive positions for the firm.

Since joining Baceline, Mr. Laurie has been integral to growing the firm’s assets under management by playing a direct role in the capitalization and acquisition of over 30 properties valued at over $115 million.

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Adam Hooper - Hey, Tyler.

Tyler Stewart - Hey Adam, how are you today?

Adam Hooper - I'm great and welcome RealCrowd listeners to another episode of the podcast. Tyler, what are we doing today?

Tyler Stewart - Adam, today we have Todd Laurie of Baceline Investments.

Adam Hooper - Yeah and we're doing a little different format today. This is our first of the Sponsored DNA series. We're trying to get into the operations of the real estate companies, how they think about things and how they operate at a little higher level than we've been in the past. We've got a little bit nerdy on some of these topics, haven't we?

Tyler Stewart - We have and we thought it'd be a good time to take a step back and really take an inside look at these real estate companies, what key factors they look at, what their strategies are, and listeners are going to find each real estate company kind of has a unique niche strategy for what they do.

Adam Hooper - Yeah and that's the goal is to increase awareness and give investors certain things to look at as they're looking at different opportunities. Different sponsors have a little better idea of how some of the actual operational side of things come to play and what they might be able to learn across different sponsors they look at.

Tyler Stewart - That's right and listeners will really be able to pick and choose which key factors they like from each real estate company and it should help listeners to identify real estate companies they really want to partner with.

Adam Hooper - Yeah, and Baceline Investments based in Denver, Colorado, we did a few deal with them before. One was actually a debt-free income fund, focuses on kind of heartland America retail value-added strategies, we'll get into some of that. We talk with Todd today about some of things that they do for their investors, some of the diligence material they prepare for the investors and how they look at operating the real estate and that's ultimately what it's about, the nuts and bolts of how they manage their real estate. And as always, listeners out there, if you have any questions, comments, or feedback, or topics you'd like to hear covered on the podcast, please send us an email to Tyler, with that, let's get to it. Let's go.

RealCrowd - This podcast is brought to you by RealCrowd, the leader in online real estate investing. Visit to learn more about how we provide our members with direct access to commercial real estate investments. Don't forget to subscribe to the podcast on iTunes, Google Music, or SoundCloud. RealCrowd, invest smarter.

Adam Hooper - So let's start before Baceline. Tell us a little bit about your background, what you were doing before you joined Baceline and ultimately why you ended up coming into the real estate world with Baceline.

Todd Laurie - Before coming onboard with Baceline I worked for a local/regional private wealth management and private bank here in the Denver area doing a variety of special projects which included working with our commercial lending group and got to know the principals here at Baceline through mutual work at some non-profits here in town and had conversations about providing them with banking services and really enjoyed the conversations that we had with them. Then when Baceline began looking for successors to come into provide long-term continuity for the firm, they approached me because of that background to see if that's something I might be interested in. I was incredibly intrigued with their business model. I was very much impressed with the ethics and the professionalism of the principles and what they had been able to accomplish and was really excited about the potential of helping them to grow the company and have that continue on into the future. I made that move about four and a half years ago and the rest is history.

Adam Hooper - When you said you were impressed by the business model at Baceline, what was it about the business model that really had you impressed and engaged with what they were doing?

Todd Laurie - Yeah, you know one of the things that really appealed to me was having been a commercial lender and been at a bank and a wealth management company during the Great Recession and having seen first-hand and heard additional stories about private investments, particularly in real estate, imploding and having issues, I was very impressed with how Baceline Investments in particular had handled their investments in real estate during that time period and they have done several things that were in the investor's best interest that really stuck out to me. One is that when they began to experience some difficulties with industrial properties and office properties that they had in their portfolio during that time period, they refunded any profits that they made leading up to the Great Recession back to the investors and made the decision to continue to operate those funds through the recession knowing that they weren't going to make money, knowing that they were never going to get back to a position of being into their profit split for Baceline but knowing that that was the best thing to do for their investors. That was incredibly impressive to me and--

Adam Hooper - Todd, I just want to jump in here real quick. So that's something that the recession obviously proved a lot of mettle for sponsors out there, right? And that's, so much of RealCrowd is investors trying to figure out who are the right sponsors. Obviously you identified something within Baceline that they stood by their investors and they knew that, while they weren't going to be into the promote, they did what was right. What are some of things that investors can look at? Is it track record? Is it talking to other investors? How can people that don't necessarily have that direct working relationship with sponsors, how can you tell that?

Todd Laurie - It's always really interesting to hear from a manager's perspective or a sponsor's perspective what they would do quote unquote "in theory" in a downturn and what somebody might speak about doing in theory and what they actually wind up doing aren't always necessarily the same thing. We're not defined by what we say, by what we do, right? And so that was one of things that was really fantastic about Baceline is that I wasn't hearing their philosophy about how they would handle a downturn, I was seeing the actual behavior. To kind of circle back to your question, yeah, I think it's really important to ask sponsors, managers, what their actual learning moments have been and we incorporate that experience into our due diligence questionnaire that we provide to all of our investors. When I offer references for Baceline, I include references from investors that went through that period before us, because it's one thing for me to tell you about it, but it's something else entirely for me to have an investor say, "You know, one of the reasons I really like Baceline is because I went through the Great Recession with them and saw the lumps that they've gotten and the bruises and I believe that they handled things in a very ethical and prudent manner." And that speaks volumes. When taking a look at investment, it's great to have somebody that is intelligent, somebody that's got a business model that you believe will be ultimately profitable and I think it's an additional layer that provides some comfort that's really hard to come by to have somebody that's actually kind of been there and done that.

Adam Hooper - Definitely. At that time, was that following, and for a little background, we did your prior funds on there, we have the debt-free fund on the platform. Was that a debt-free strategy at that time or were these leveraged assets? And maybe kind of talk a little bit about that strategy on the debt-free historically, because I think that's a pretty interesting approach and we've seen a few funds on the platform that are debt-free.

Todd Laurie - Yeah. No, that's a great question, and during the time that I came onboard with Baceline, one of the strategies that we've operated that has been pretty prolific for us was a debt-free strategy in order to provide income for investors, and we certainly had properties that were in that debt-free strategy during that time, but we also do a large number of value-add investments as well which use leverage and certainly have properties with leverage during that timeframe as well. Another thing that I've always appreciated about Baceline is that we're very prudent in the use of leverage. The strategy where we didn't use any leverage, and we did four of those funds, and it was the fourth fund that we had listed on RealCrowd, has some nuance to it that appeals to a certain type of investor and primarily it doesn't generate any UBTI, unrelated business taxable income, and because of that it's ideal for a non-taxable account. You can use your IRA money to invest in that and you don't have to worry about paying the taxes on it and so it had a real following for that reason.

Adam Hooper - We'll plug our prior podcast on the self-directed IRA investing.

Todd Laurie - Yeah, I mean it's an important tool for a lot of investors and so the debt-free strategy was an homage to recognizing that people are looking for that type of an investment vehicle where they can get something that's outside of the public markets and do it in their IRA account. That was a great strategy providing income for folks in that manner. We've also been very intrigued at the same time with value-add deals. Value-add deals with the prudent use of leverage, meaning when we put leverage in place, we make sure that the in place income off of the properties is able to support that debt, which could be 40 to 60% leverage on a property. And so the properties that the firm operated during that time period also had between 40 and 60% leverage on those so that when the economy started to decline, we weren't pinched in the way that investors who had used 80% leverage or had done cash out refinances on the properties in order to maximize the amount of debt and the income off of the properties had done that, so...

Adam Hooper - That was obviously a lot of the challenge with the run-up to the recession was debt was so easy and cheap and you could get such high leverage loans that it was easy, right? I mean if you could get 80% leverage at a great rate and you could totally choose returns, why wouldn't you do that? It's hard to stay prudent and stick to your guns and your fundamentals when you've got the capital markets just throwing ridiculous debt at you, right?

Todd Laurie - No, I think that's right and for folks that hadn't experienced a recession, we certainly had those questions asked of us. You know, "Why aren't you using leverage in the debt-free strategy or why aren't you using more leverage because your overall cost of capital is then less and you're able to pay out more return to your investors?" And we just said, "Look, if there's an issue, we don't want to be in the position of having to negotiate terms with our banks about not taking over the property or turning a property over." I'm proud to say that of the total properties, 81 properties, that we've purchased throughout the history of our firm, we've never turned a property back over to a bank and there aren't a lot of folks out there that can say that, and so we're really happy about that.

Adam Hooper - And so strategies going forward, you mentioned in the prior funds there was some industrial. Right now though you guys are focused primarily or exclusively on retail, is that accurate?

Todd Laurie - Yeah, during that timeframe of the recession, the industrial properties and office properties that we had in our portfolio were hit the hardest and if it hadn't been for the retail properties that we had in our portfolio, we know that we would have had a different outcome. What we've decided is, you know we call that style drift. We started off with retail properties and then leading up to the recession, we thought that we'd get into some of their asset classes and there may be experts in those areas that are more adept at managing those types of properties or know nuance that we weren't familiar with at that time, but we've decided to go back to kind of what our original knitting was, which was neighborhood community shopping centers.

Adam Hooper - Got it. The bread and butter for Baceline is retail. How do you feel about the negative news surrounding retail?

Todd Laurie - Yeah, it's kind of hard not to go anywhere in here. The--

Adam Hooper - It's dead. Retail is dead, it's dying.

Todd Laurie - Yeah, it's dying, right? And I have a lot of mixed emotions about it. First of all it's created opportunity for us because people are concerned about retail. Second of all, it's really struck me how some people that are incredibly educated and very thoughtful are speaking about what does a broad nuanced sector in a very particular and universal type of way. There's nuance and there are niches within retail. We do not acquire a big box, discretionary durable good type of retailers, so you're not going to find us in a Macy's or in a Sears or in a JCPenney's with 25 to 50,000 square feet of durable good discretionary type of retail. We focus on the everyday goods and services providers that you would find in a neighborhood or community shopping center. Focused on non-durable goods, necessity-based types of goods and services, be it a liquor store, or a nail salon, or a dry cleaner, or a medical use chiropractor or dentist, those types of shopping centers which have not been impacted by the internet pressures and because they tend to be smaller spaces, aren't experiencing the same pressures of being overly large and in dealing with those types of pressures.

Adam Hooper - And then geographically, and I guess taking a step back from that, I agree with you completely that the broad brush retail is dying, is dead, whatever that might be, you can't really paint that picture for the whole asset class. And we did a prior podcast with Eric Hohmann and dove pretty deep into that. There are so many different sectors, so many different facets of the retail space, it's really hard to paint such a general picture of that. Geography obviously plays into that as well. I know you guys are focused on primarily the heartland of America versus some of the coastal markets that may have more volatility. Can you kind of explain your approach to your geographic focus and how you guys kind of came into that?

Todd Laurie - Yeah, I think that you know it's really been fantastic for us in that we don't play in the playgrounds or in the particular asset class niche that has institutional appeal to it, right? So the big box retailers, the large mall scene, the gateway city markets are all expensive places to play and so that's where institutional investors have always gone because they needed to deploy large sums of money in as few or reasonable number of transactions as possible. The fact that the majority of the properties that we buy are sub $10 million dollars, and that they're in secondary markets in the central part of the US means that we haven't had the same type of experience or had the same types of pressures that have influenced those institutional investors that also by the way have the biggest bullhorn and that's why we hear so much about the struggles of retail right now. It's more because those investors are the people that are struggling along with it and they have the biggest bullhorn. We've carved out a niche for us in the central part of the US in these small business retail kind of a niche and that's thriving throughout the US right now or throughout our part of the US and we're not experiencing the same things that institutional retailers or institutional investors are experiencing.

Adam Hooper - Can we dive a little bit deeper into that? You know we've talked about necessity-based, non-durable. Let's break that down. You mentioned some medical uses, some service uses, how would you identify what the ideal tenant mix or what you feel is a more I guess Amazon-proof type of a tenant mix for these properties?

Todd Laurie - It's important to understand the needs of the community around a particular property, right? So when we're looking at a property, we're looking at what other retail services are provided within a one, three, and a five mile radius of a particular property. When we're acquiring it, we may be able to see that there isn't a pizza provider or pizza delivery service that's within this community in a three mile radius, so that's something that could be serviced very well. That there isn't a dry cleaning drop off that's in this community, so that's another service that could be strong, or provided in there. I wouldn't say that there is a secret formula for every property where I know if I've got one dentist and one liquor store and three restaurants, that that's success for that particular property. We try to be very sensitive to what the particular needs of any given community that that property is in and make sure that we're meeting the needs of the community around that property.

Adam Hooper - Now as an investor, if I'm looking at deals whether it's on RealCrowd, other platforms, or just direct, how should I go about trying to get that knowledge? Am I relying entirely on your guys, are you telling that story? Are there any tools or anything that I can do as an investor to try to get a better picture for what that might be or what that opportunity might be?

Todd Laurie - Yeah, you know I have 55 people that work here at Baceline across all of the different areas. We also manage our properties and we have a group that does the leasing for us and I'm glad that I don't have to do all of that work myself. There is an amazing amount of information and research that goes into doing what we do on a daily basis for our investors, so I guess, two things. One, if I'm an individual investor and I'm looking for direct investments, then I probably want to do it in my backyard, and indeed, the majority of the properties that we buy today are owned by individual investors or small groups of investors that dedicated considerable amount of their time getting to know what are the needs within their particular market, or particular needs around that property. If I'm actually interested in participating in a particular sector of real estate but I'm not interested in doing all of the research or I'm interested in getting away from my particular market where I live, then yeah, then I think that all of the due diligence actually falls on finding a sponsor or a manager that has the expertise and the know-how to perform due diligence on every market and on the properties that is keeping up on the changes that are going on with a particular sector so that I have an assurance that if not a guarantee, it's not a guarantee but an assurance that they are taking the prudent steps and the proper steps for ensuring a good investment.

Adam Hooper - Yeah, so when an investor reaches out to you and to Baceline and they might be investing with Baceline for the first time in a market they're not familiar with, what sort of steps do you go through with the investor to help them become comfortable with you as a sponsor and what sorts of questions do you encourage the investors to ask?

Todd Laurie - We get all kinds of questions obviously. What we try to do is provide a streamlined process for them to perform due diligence, so we have a due diligence questionnaire that addresses a lot about our strategy and our tactics in managing the properties we have, track record reports that show what we've done with our properties across the life cycle of holding those properties. When I get investors, individual investors that want to ask more nuanced questions or in the weed questions for example, what are the comps that you pulled for this particular property and what were the lease rates on this particular property relative to the property that was across the street or the competing properties that were within a one mile radius? Then I'm certainly happy to provide that information and show them that yes indeed, we are thinking about those types of things and this is what we found to hopefully get them over the hump and understanding that we are a professional operator and that we are looking at all those things so, I think that there's a necessity to be very transparent and giving in the information that we have and that we collect on these properties so that our investors know that we really are being very thoughtful about the acquisitions that we move forward with.

RealCrowd - Thanks again for listening to the RealCrowd podcast. If you like what you're hearing, please visit to learn more and subscribe at iTunes, Google Music, and SoundCloud. RealCrowd, invest smarter.

Adam Hooper - When an investor is going through that due diligence with Baceline, are there points to your strategy or the process that you run that might surprise the investor?

Todd Laurie - Yeah, I think that there probably are and you know, it's great to be an individual investor and I think that a lot of entrepreneurs really dig rolling up their sleeves and jumping into acquiring a property, but there's some nuance that I think that doesn't necessarily lend itself to being an entrepreneur that I think over the time span of Baceline being around that we've really honed. For example, when we're acquiring a new property, we don't just get a property condition report, we actually send out a paving expert, we send out an HVAC expert, we send out a roofing expert to the properties. We send out a property manager that's going to have that in their portfolio to look at the properties so that we're not just getting kind of a glossed over or a watered-down version of what the property condition is, we're getting expert advice and insight into what's going on with the property. We don't just interview a key tenant in the property, we interview every tenant in the property to find out what their experience has been there and what they're seeing going on at the property, and it's amazing what we find out about what's been transpiring at the property both between the tenant and the landlord and other tenants and that kind of a thing, and we hear from the tenants themselves about how business has really been going. I think that to an individual that's looking to acquire property, it may not occur to them to do all of those things and the other steps that we put into place. They get surprised when they get the property and they find out two months later that a tenant has vacated, or they find out that a tenant had a special agreement with the landlord, and so they haven't been paying their CAM (Common Area Maintenance) expenses for the last six months and those types of things. And so I think that that's one of the things that we bring to the table that when we're talking with new investors and point out that these are steps that we're taking, they go, "Oh wow that's a great idea, I guess it didn't occur to me to do that."

Adam Hooper - I think what you're saying is it's a lot of work.

Todd Laurie - And again, I'm glad I've got a team of people that help with that, because I certainly am not capable of doing all of that, right?

Adam Hooper - Yeah, and so it sounds like you guys are taking obviously on the acquisition side, going into the deal, a very active approach with doing the underwriting, doing 10 interviews, going beyond what certainly a private owner might do if you're looking to acquire a building, again, in their backyard, and that's one of the things that we're excited about what we're doing at RealCrowd is giving people access to guys like yourselves, like Baceline that actually does that work in markets they don't have access to. Once you do that work, you've identified the property, and this could even be some information that might be helpful to people that do own their own properties, how do you guys look at that activity or involvement with the property in these service retails, necessity retail properties after you close it? Are you guys doing, do you have any special programs, or how do you look at making sure that those tenants that are there are successful?

Todd Laurie - Yeah, and thanks for bringing that up Adam, because there are now some things that we're able to do in partnership with our tenants that five and 10 years ago we weren't able to do just because we now have a size that allows us to focus on it. Our tenants really appreciate not just collecting rents from them, but really partnering with them in order to ensure their own success, it's their livelihood the majority of the time. A couple of things that we've done that are pretty exciting and I think show our commitment to our tenants and to the communities that our properties are in, we now have a full time person that spends all of her time putting together events at our properties. Whether it's a farmers market or a car show, or a concert, we now make sure that we go to our properties and have some events there to drive traffic to our shopping centers, which helps our tenants. Then we also have another person, a full-time person send that spends her time working with tenants to make sure that they're marketing themselves in the best way possible. Also, Yelp is one thing that, and the internet does affect our shopping center. When I'm out and around and I'm looking for a restaurant to go to in a particular area, I might pull up Yelp and say, "Hey, what's a great restaurant near me?" What we do is we spend time with our tenants showing them how to make sure that they have a good electronic presence, and that they have multi-channel visibility to potential consumers for them as well. We're seeing, we're seeing improvements and traffic to the properties that we own. We're seeing increased satisfaction from our tenants, knowing that we're there to help them be successful, not just to collect rent checks, and that's really exciting. One other thing that we're really doing that I believe is different is we're spending time working on how to make our centers more environmentally friendly. We've installed charging stations at a couple of our centers. We have installed smart thermostats at some of our centers which has resulted in real tangible decreases in the energy bills for some of our tenants. We're looking at how can we install more efficient lighting, better lighting, better roofing materials, better paint on our properties to be more environmentally conscientious as well. And I think all of those things really show in action how we are committed to our communities, committed to our tenants and trying to improve the areas in which we operate.

Adam Hooper - You mentioned the multi-channel approach for these companies to not only just can you continue engagement with the base of current customers, but also to grow that. Getting back to we talked about before, this whole internet killing retail thing, that's pretty much contrary, I mean, this is the internet supporting retail, right? This is other channels that are helping these businesses grow and, do you agree with that or do you see that being a--

Todd Laurie - No, I think that's right.

Adam Hooper - Success going forward?

Todd Laurie - What is retail? Retail is consumerism, right? And so, retail is definitely going through metamorphosis and is experiencing changes, but it continues to grow. And if you look at Census Bureau data, retail has grown 5% year-over-year almost every year coming out of the recession. I mean, continues to grow. Internet transactions account for about 10% of overall retail sales. Retail is not going to change. We might do more acquisition, more purchasing of durable goods, discretionary items on the internet, but we also are using the internet to be smarter consumers when we do go out, so we're looking to find restaurants that have an experience that is really desirable that we can't get in our home, or we're looking to find the best haircut salon for our kids we're looking to see which dentist is open on Saturday that will perform a root canal, those types of things, are online and retail is continuing to thrive. And the internet in that way is assisting retail, it is not operating against retail.

Adam Hooper - It's funny, I think we become blind to that, and you mentioned just two days ago, we had to get a little dude a haircut, and what do I do but I go on the internet and I Google around and I try to find a few different options in the area, and I pick one that's got the best profile online, they've got the most pictures of haircuts that they've done, it has the best customer reviews, and that's how you can feel comfortable with it. That's the internet doing anything but killing business in retail, it's just making it more accessible, making it more available, giving people more information and that does change how retail is typically consumed, and that was one of the things we talked about before was this shift towards more kind of experiential retail versus just the traditional brick-and-mortar, you go in, you look at what you're going to get, you buy it and you go home. And you mentioned some of the things that you guys are doing at your properties on the experiential side. Do you see that as a big trend? Is that something that's going to stay, get bigger from the experience that people get when they go to a retail project versus just purely being there for getting their goods?

Todd Laurie - Yeah, I think that's exactly right, and I think that that's one of the areas where the retail from the 90s into the early 2000s really kind of lost track of how to drive traffic in what people were looking for, you know? What they wanted was as many square feet possible to display items, and they almost became warehouses, right? And there really was no experience associated with it and it got to be a kind of a tedious activity to go into a mall and wander around and try to find a few things with really pushy salespeople telling you to buy more and have you try this, and so it got really uncomfortable. And fortunately, we're not in that particular niche of retail but I think that as we become, as consumers, as we as consumers and we as retail operators are aware that people still want experiences, they do want to go out and touch and feel things. I want to make sure that when I buy socks that they're nice feeling socks, it's a good fabric, certainly you can return them if you wear them online, but there's something to me about the tactile experience about being around other people, about the energy that's created, and when it's a nice experience, that's something that I look for again and again. And so, in partnering with our tenants, that's where were explaining to them, Look, if you make an experience for your consumers and if you are making sure that they can find you readily then they're doing that search item online to find what's the best hair salon to take my kid to, then you will see an increase in your business and you will continue to thrive as opposed to "I've got a signup, I've got a lot of square footage and just because I've got a lot of product, people are going to come see me." That isn't how that works anymore.

Adam Hooper - Do you see that any different in, thinking the heartlands, geographical area you focus in versus some of the other markets out there? Do you think that's a fairly universal--

Todd Laurie - No, I think that's a pretty universal thing? And marketplaces have been around for a long, long, long, long time, right? And it was always considered to be a gathering place and I think that having events, making experiences hearkens back to that early desire for people to be around others and to have positive experiences and find the goods and services that you looked for on a regular basis.

Adam Hooper - Where would you peg the overall health of what you guys are seeing, again, in the markets you're looking at with the kind of retail that you guys are focusing on? Where would you peg the overall health of that? Are we in a good spot, are we rising, are we declining? What's your gut feel on how that sector of America's doing?

Todd Laurie - Yeah, two things. One, anecdotally, we continue to see increased absorption of vacancies, less time on market for vacancies, and a strong desire for the types of centers that we operate. More factually, there is data online that's provided that folks can go and look at. I don't know if I can put in a plug, but there's a great article, a review that was done by Marcus & Millichap in 2017 about national retail which shows that yeah, there's increased absorption, that vacancies are going down and they're spending less time on the market, particularly in this area of retail. It's not just my experience because it serves me well to say that there's a particular niche of retail and in these markets, it's doing well, there is data out there to support it and you just need to look for it.

Adam Hooper - Yeah, and I guess to that extent, trying to equate this back to how our listeners today can take some thoughts away from this, what are some resources out there, again, outside of talking to a sponsor that's doing a deal? What are some resources out there that they can try to get some more this information in terms of what these opportunities might be, where to look for these kinds of reports or just educate themselves on some of these other aspects that aren't hit in those headlines with the doom and gloom of retail? 'Cause it's a very different picture. We talk to real estate guys all day and the practitioners outside of the guys that I think you said that have the the biggest microphones and the biggest soapboxes to spread this doom and gloom. You have to look at their motivations, right? Why are they necessarily doing this? But that narrative of retail's actually doing pretty good. That's just, that's not, you don't hear that out there a lot right now. So how can some of our listeners start to get that side of the story, outside of this wonderful podcast?

Todd Laurie - Throughout the year on a quarterly basis pretty much, systematically, I do searches for research that's put out by CBRE, by Marcus Millichap, by ULI, they all put out excellent reports on a fairly regular basis about what the trends are, whether you say what's the 216, or 2016 overview of real estate? Or if you plug in what is the 2018 forecast for real estate? That will pull up some really interesting reports from national reputable firms that folks can look through. And what I tend to appreciate about the ULI reports, the Marcus Millichap, the CBRE reports in particular is that they do a good job of breaking down the particular niches of real estate. They don't talk about retail in general, they talk about regional mall, then they talk about community neighborhood retail. And they don't just talk about office space, they talk about suburban and urban office space because there are different influences and variables that are impacting each of those things. As an individual investor, if I'm really curious, I will go to those. And furthermore I would say that when you're looking in an investment, the sponsor or manager should be able to direct you to current reputable and data and information about their investment as well because they should be keeping up on those things. And I think it's important for us to be able to direct our investors to information that's done by somebody else that I have contracted somebody to do for me.

Adam Hooper - Sure and then, as an investor in retail, what are some key data points or some key factors that investors should really hone in on when they're looking at these reports?

Todd Laurie - Yeah so, on the reports that I generally refer my investors to what I'm showing them or what those reports are showing the turnover of vacancies, whether or not there's demand for those vacancies, the changes in rents or asking rents for those vacancies. Is the manager or the operator able to implement standard increases in their rents and successfully still fill vacancies? And I think that those are data that are readily available. The other things are whether it's through the Census Bureau or through one of these other organizations that I mentioned they'll break out particular niches within retail and show what's going on in electronics and appliance sales growth, what's going on in furniture, what's going on in grocery, and break it out by particular sector of retail and give you an idea of what's growing, what's expanding, or what's retracting. Did that answer your question?

Adam Hooper - That did, yes, thank you. Todd, here's the crystal ball question. Is it going to continue, where are we going from here? How does heartland retail play out over the next couple years? Are we getting a little bit late in the cycle, or are we still in good growth mode? How do you guys see the retail landscape playing out over the next handful of years?

Todd Laurie - For us, because there hasn't been a new construction really picking up and we're getting an increased absorption of the vacancies, I think that we still have a few years of good runway before our particular niche of real estate kind of turns into a bubble. The things that I look for in particular niches, do you have more supply than demand for a particular part of real estate? And we're not experiencing that for ours right now, we're having increased demand. Whether or not, and what's really interesting also is because of the fog and misperception that's around retail right now is kind of playing out, well when does construction pick up for neighborhood retail? And I don't know that I have an answer to that right now. I think that we see at least the next three to five years the ability to continue to acquire properties. a quick side note, and hopefully this doesn't go too far afield as in a particular niche of retail that we're in, or real estate that we're in, these properties are largely owned by individual investors again, or small groups investors, and a lot of these folks are aging out of being landlords and are interested in continuing forward, so we're finding a lot of acquisition, momentum from folks that are looking to get out of this particular, this particular job for themselves. I think that that adds an additional layer of opportunity for us. I don't know what it's going to be 10 years from now, I don't know where the economy's going to be I don't know what are going to be the new influences going on, but I think everything for us right now looks like this is a very viable space to be in. We're pretty excited about what the next couple of years hold for us for acquisitions potential, and for the production of income off of these properties.

Adam Hooper - Yeah, and you mentioned earlier, just a brief point kind of in passing that there are buying opportunities out there right now. When you have this view, this very pessimistic view that's being hit in the headlines and that's kind of the sentiment towards retail, when you're dealing with individual owners that, yeah, maybe they're tired of putting in all that work to operate these assets, that can create tremendous opportunities on the buy side for sponsors and guys like Baceline out there that are out trying to acquire these assets when there is that, I wouldn't necessarily call it a contrarian view because I think that, I would agree with you, I think the fundamentals are still pretty good right there. But when you have the perception of this doom and gloom, that can create some pretty good buying opportunities. And as investors out there to be able to take advantage of that, maybe those headlines can continue with the doom and gloom.

Todd Laurie - Yeah, it's interesting, right? If everybody's competing for what is bright and shiny at a moment, nobody's getting a deal, right? Because of the misperception around retail globally that has affected some of the perception around our particular niche, cap rates are fantastic for what we're buying right now. We don't have a lot of competition for buying these properties right now. That doesn't mean that I want other operators to start coming in to the center, competing for it, you know? But I do believe that that means that yeah, we're able to buy good real estate at good prices right now and that there's good availability, and some of that's probably attributable to that misperception.

Adam Hooper - Good, well, if you had maybe three points for our investors out there that are listening to the podcast and looking at retail investments, whether it's core deals in primary markets or necessity-based retail in the heartland, what would you say for from an investor standpoint are kind of the main things that they should be focusing on when they're looking at deals? I know obviously on the podcast here, we've obviously talked about sponsor, sponsor, sponsor. That's really who's making the decisions as a passive investor. Can you give us some knowledge in terms of looking at retail deals, some of those kind of high points that people should be looking at?

Todd Laurie - We are staying away from, and I mentioned this a little bit earlier too, we're staying away from Big Box retail at this point in time because I think that there has been an over-building of large box-types of retail so I would be wary of shopping centers that have a large number of, or a concentration of square footage dedicated to large box operators. That's probably one. Number two, I think that there are some, some battles going on in the grocery world that make me nervous about buying grocery-anchored shopping centers right now.

Adam Hooper - We didn't even talk about the Amazon, Whole Foods issue, right?

Todd Laurie - Yeah, and I think that, what's interesting to me is we never say never. I mean, we have a handful of properties that have grocery anchors. And I'm not saying that there aren't buying opportunities for grocery anchors. What I'm saying is that if you think that just because it is grocery-anchored, that's a good buy, that could be folly. Not only Amazon buying Whole Foods but there are a couple of the German grocers that are making big pushes into the United States as well. I think grocery stores have found that they have too many square feet. The consumer habits of buying two weeks worth of groceries on a grocery trip, people don't do that anymore, most folks are buying for a couple of days at a time, which means you don't need as much storage. There are a lot of these dynamics that are at play right now in the grocery space that I think people just need to be very thoughtful about acquiring those types of properties right now. And finally, your point, you hit it right off the bat, sponsor, sponsor, sponsor. It's important to know what horse you're hitching your wagon onto, and I think that a good operator, a good sponsor can find deals even in a tough marketplace, even in a tough city, even in a down cycle because they know what to look for, they know what the nuance is about what makes something good real estate that's going to be viable for a long time. And I think that that far outweighs the advantage of being an entrepreneur and being nimble. Having that expertise is probably be number one most valuable thing when looking at getting into real estate or buying a particular piece of real estate.

Adam Hooper - Good, well I think we agree with those points and that's something obviously that is talked about a lot on the podcast here is pick the good sponsors and they're the ones that are out there working for you and working for your money, right? You guys are the ones that are out there making the decisions and you got to make sure you pick the right folks. I think that should wrap us up here actually. I think that's a lot of really good information. We appreciate your time and hopefully your investors got some good nuggets in there about what's going on in the retail world.

Todd Laurie - I really appreciate the opportunity to speak with you guys. I think that your firm provides a real valuable service to investors out there that they otherwise wouldn't have available to them. And, applaud you for not only just making a marketplace for investors to find investment opportunities, but also taking the time to educate them in the area of real estate as well. I think that speaks volumes about what you guys are doing trying to do there.

Adam Hooper - And we didn't even have to pay you to say that. That's great.

Todd Laurie - No. A free plug.

Tyler Stewart - I will say it's fun for Adam and I to do this, and to have experts like yourself on. So, appreciate it, Todd.

Todd Laurie - It's a pleasure, thank you.

Adam Hooper - Thanks Todd. And listeners, if you have any comments, questions, feedback, always feel free to send us an email to We'll catch you next week.

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