A Return To Real Estate Market Fundamentals, With Michael Tillman – OpportunityDb

29 minutes, 52 seconds Read

The sudden turn from a longstanding zero-interest rate policy to our current environment of higher interest rates has paused capital markets and resulted in a slowdown in real estate investment volume.

Michael Tillman, CEO and CIO of PTM Partners, joins the show to discuss why a return to fundamentals is key to any successful Opportunity Zone real estate investment strategy in today’s market.

Buy/sell, rent/lease residential &
commercials real estate properties.

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Episode Highlights

  • Analysis of the current macroeconomic environment, and the need for investors to return to fundamentals when underwriting any deals.
  • The evolution of pre-TCO Opportunity Zone deals, and the challenges in acquiring such deals.
  • Why Opportunity Zones are so great, and some ideas for how they can be improved.
  • PTM Partners’ investment thesis, and a look at some of their portfolio of OZ projects.
  • Trends in multifamily real estate development.

Guest: Michael Tillman, PTM Partners

About The Opportunity Zones Podcast

Hosted by OpportunityDb founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in the Opportunity Zones industry.

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Show Transcript

Jimmy: Welcome to the “Opportunity Zones Podcast.” I’m Jimmy Atkinson. Today’s guest is CEO and CIO of PTM Partners, Michael Tillman. Michael joins us today from Fort Lauderdale, Florida. Michael, how you doing? Thanks for coming on the show. Welcome.

Michael: I’m doing well. Thank you for having me.

Jimmy: Absolutely, Michael. Before we dive in, just a bit of background on my guest today, because he’s been involved with Opportunity Zones since the very beginning, or even before the very beginning. So, Michael, I’m sure some of my audience might already be familiar with you and your firm, PTM Partners. As I mentioned, you’ve been involved with Opportunity Zones since the very beginning. But for anyone unfamiliar, can you tell us a bit more about yourself and what makes PTM Partners unique?

Michael: Absolutely. So, PTM Partners was founded by myself and two partners of mine, Nick Pantuliano and Scott Meyer, formerly all senior executives at the LeFrak organization, based in New York, one of the largest private development firms in the country. We founded PTM as a purpose-driven vehicle, focused exclusively on development and investment within the Opportunity Zones. We had the unique opportunity to be involved very early on, while the Florida governor’s office was actually going through their designation methodology, and, you know, played an active role in giving thoughts and ideas as to the characteristics that would make certain Opportunity Zones, or potential Opportunity Zones, more fitting and successful in the long run. Obviously, those were ultimately decisions made by the mayors’ and the governors’ offices, but we’ve been watching it and participating in it from the day the Tax Cuts and Jobs Act got passed, and have been very proud to, you know, play a pioneering role in seeing the program continue to mature and evolve over the course of the last almost six years now.

Jimmy: Very good. We’ll talk plenty about Opportunity Zones throughout our conversation today, but to start us off, to dive in, I really wanted to just zoom out and take a look at the broader macroeconomic picture. You know, for the better part of a decade, we were spoiled with ZIRP, a zero interest rate policy, and obviously, a lot has changed in the last couple of years. Can you characterize how you’ve seen the evolution of that economic landscape from zero interest rate policy to higher interest rates? What have you noticed that’s changed in the marketplace?

Michael: I’ll use a saying that my mentor, Richard LeFrak, had said quite frequently, is, anybody can call themselves a developer, right? But not everybody can call themselves a builder. And during zero interest rates, all these folks who said they were developers, they had the winds at their backs. And low cost of capital helps shield and mask a lot of mistakes, and provides for a lot of forgiveness in what is historically a very unforgiving business. Right? There is no more humbling business than real estate development, to my opinion. Every day you think you solve an issue, well, three new ones sprout open, right? That’s the nature.

What we’re seeing now is really a thinning out of the competitive set when it comes to ground-up development. And this isn’t just limited to Opportunity Zones. This is both in the OZ and outside of the OZ. But as the cost of materials have increased, as a result of the inflation and the supply chain disruption we saw during COVID, and the inflation post-COVID, and candidly, the inflation we continue to see today, combined with the Fed’s attempts to temper that inflation with rising interest rates, you just see a very difficult environment to navigate for developers, especially with the new breed of developer that came to light during the zero interest rate regime, which is these merchant build folks, who, very talented real estate investment professionals, who identify a site, design, build, stabilize, and then flip, and are able to do that with the use of short-term to transitional-type debt.

Well, those days are changing now, and it really is a focus on the long term, which plays well for Opportunity Zones, and was why, part of the reason why myself and my partners got involved in it in the first place, is that real success in real estate development is measured by your equity multiple, not necessarily your IRR, right? IRR is an exponential rate of return, which is impacted by the duration of which you hold your investment. So, when you really wanna create profit, which, the OZ legislation allows you to get the benefits of tax-free treatment on, well, then, your goal is to maximize your equity multiple. And that’s only done by holding the asset for the long term. So, that’s what we’re seeing to, you know, kind of a return to fundamentals, as it relates to real estate investment and development.

Jimmy: So, what do you mean by that? What needs to happen in order to return to fundamentals?

Michael: So, I think it starts from the bottom, right, of folks getting back to doing their bottoms-up analyses of both markets, projects, and sponsors. Right? Does this market truly need another 300 multifamily units right now? What does the supply-demand landscape look like? Right? That’s part one. Part two is, you know, who is the sponsor that we’re investing with, or working with, right? Have they demonstrated that they can execute on this before? Do they have their own in-house operating and execution capabilities, or are they completely reliant on third parties to provide that? And if they are reliant on third parties, is there an alignment of interest between the sponsor and the third parties that are actually doing the work?

And then, last, it’s, does this deal fundamentally make sense, right? And I think that all of these fundamental things that that we look at so carefully at PTM, right, I think a lot of people were caught up in the excitement, I’ll say, of the last several years. And, you know, I won’t say a lot of deals got funded that should not have, but I think that we’re going to see the opportunity to fix a lot of projects that may have gaps in their capital stack as a result of flaws in one of those three characteristics I just enumerated.

Jimmy: Yeah, the margin of error has decreased significantly as interest rates have gone up. That’s for sure. Well, you mentioned a gap, and I think that brings us to our next topic, which is TCO, or C of O, Temporary Certificate of Occupancy, or Certificate of Occupancy. And why it’s important in Opportunity Zones is, first of all, one of the main requirements for an Opportunity Zone deal to be eligible for Opportunity Zone tax benefits is it has to be either substantial improvement or new use. So, you have to take on a lot of development risk, particularly with regard to that second criterion of original use. However, there is this exception for investors to acquire a building after it’s already substantially been completed, as long as it’s before it receives its temporary certificate of occupancy or its certificate of occupancy, it’s called in some places. So, either a pre-TCO or a pre-CO deal. How have you seen that change over time? Because I don’t think anybody was really talking about pre-TCO or pre-C of O deals up until the last year or so.

Michael: Sure. Let me zoom out a little bit, and dive into what you said a little bit more, Jimmy. Right? So, the OZ legislation afforded two opportunities, right, effectively, for investment. One was substantial improvement, which was a murky definition until it got clarified in the final regs 18 months later. Right? And then you have the other, which is “before original use,” right? Which is defined as when the asset is actually ready to be the depreciated. Right? So, as you said, that would be at occupancy, which, in some markets, is pre-certificate of occupancy, or pre-temporary certificate of occupancy. And, again, starting with the first question, when you’re in a zero interest rate environment, the projected yield you’re able to generate on development is, for all intents and purposes, going to be higher than what you would be able to acquire a completed building for. So, for the first four or five years of the legislation, the focus of investors on the real estate side was really around the substantial improvement side of the legislation, whether that was ground-up development or adaptive reuse, both things that PTM has done in the OZ, that was really where people’s heads were focused.

And why? Why is because the pre-TCO affords opportunities on investors to invest in a project where the development risk is removed from the equation. Right? And the short-term, the term until they can start to receive potential cash flow is significantly reduced, because the risk now is on the lease-up of that building, which is still part of substantial improvement, right, but in substantial improvement you also have to actually build the building. So, the pricing on these assets was, these pre-TCO assets, was typically based on forward-projected NOI. And the cost developers understood, that there was a real tax value for an OZ investor to buy these things, the going-in cap rate that they would assign to these assets was in line with what folks would acquire a stabilized core asset. Right? So, you were talking, in certain markets, sub-5%. In the hotter markets, right, South Florida, Texas, Tennessee, you were sub-4%.

And so, it was very difficult, if not impossible, for that math to work. Well, as we were talking, interest rates have moved. Cost of materials have moved. And the desire to, or appetite for acquiring a completed asset has increased because the math has improved relative to building a new building. Right? The gap between the going-in yield on your development project versus your going-in yield on acquiring a pre-TCO has narrowed significantly. And so, when you factor in the cost savings, time savings of one, to two, to even three years on pre-development and development, plus the short-term duration until you should be receiving cash flows if you buy a good asset and lease it up, it starts to become a much more attractive investment, in today’s world.

Jimmy: And have you, so, have you seen a lot more pre-C of O or pre-TCO deals get done, and are you guys engaging in any of those types of deals?

Michael: Well, we’re definitely looking. Right? I think they’re very much a needle in a haystack for finding a good one. You know, you’re effectively buying a completed asset, or getting involved in an asset at a period in time during its development where you’re entering into a forward contract purchase. What we’re seeing as a result of, again, materials cost increases, and these interest rate increases, where the banks are now requiring additional interest reserve from developers, is the ability to come in and potentially plug a gap in the capital stack, and then have an option to actually acquire at TCO, which kind of gives you a little bit of flexibility and variability. And this is when you get into the nuance of the Opportunity Zones, where, in the instance we were to do one of these projects, and capitalize it with OZ dollars, right, as long as you’re getting involved in it in the last, I’ll call it year to year and a half of development, right, you have the ability to do a short-term 18-month loan, under the Opportunity Zone legislation, that allows you to play in that option time. Right? Where you say, “Okay, I like this. This is a good building. We understand the bricks and sticks of it. The developer has done a good job. We will exercise our option to acquire.” Alternatively, we’ll collect our interest, be able to recycle the dollars, and move the OZ funds on to the next investment. Now, we have not done that yet, but that is certainly a structure that, where we’re exploring as the world continues to evolve.

Jimmy: You haven’t done it yet. I’ll have to have you back on the podcast in a couple years, and see what’s transpired, right? A lot has changed.

Michael: So, but look. I’ll tell you, there’s a lot of guys out there doing pre-TCO, or making that their primary focus, that have completely shifted from allocation of capital to OZ developers, to allocation of capital to pre-TCO buildings.

Jimmy: Absolutely. And for those investors, it does eliminate a lot of that development risk, and that period of time before the building is cash flowing. It shortens it pretty dramatically. So, it can be a pretty enticing opportunity in today’s higher-interest-rate environment. Michael, you and I both love Opportunity Zones. I hope that’s obvious to our viewers and our listeners. I’ve called Opportunity Zones the greatest tax incentive ever created. I know you like it quite a bit. You’ve been involved with it since the beginning. It’s not a perfect tax policy. It’s not a perfect investment vehicle. There is no such thing as perfect when it comes to something like this. It’s a little bit clunky in some ways, but we still like it quite a bit. A two-part question for you about Opportunity Zones broadly. What do you like best about Opportunity Zones? What makes them so great? And then part two is, what can be done to make the program better, or what would you improve about Opportunity Zones?

Michael: It’s a great question, Jimmy. I’m just writing it down so I don’t forget.

Jimmy: I’m asking you just to get on your soapbox.

Michael: So, what do I like? What do I like best about the program? So, it’s evolved over time, right? Because initially, back in ’18, ’19, ’20, and even early ’21, I would get to talk about, you have, there are three things the IRS can do with tax legislation. Right? They can defer your tax liability. They can reduce your tax liability. They can abate your tax liability. And typically, the tax legislation that gets passed covers one of those three things. In unique instances, it might cover two. To my knowledge, there’s only been one tax law that’s ever covered all three. And that’s Opportunity Zones. Right? We have, when it first got enacted, you had the ability, and you still have the ability, to defer the capital gains tax liability on your realized gain until fiscal year end 2026, which, we all understand, now, really means when you’re filing your returns, which could bring out much later into 2027.

That’s one. Two, for those people that were prescient enough and fortunate enough to invest in Opportunity Zones before year-end 2019 and year-end 2021, they received the benefits of the 10% and 15% step-up in basis. Right? Which acts as a reduction in their capital gains tax liability for fiscal year end 2026 on the gains realized already. And then you have the complete abatement of all gains generated on the investment in the new asset, if held for 10 years, because your basis steps up to fair market value, which is your sales price. That was arguably the best part of it, from a financial perspective.

Now, for PTM, one of the things that we focused on, and it comes from working within a great organization like LeFrak, and my prior experience doing real estate private equity in Asia, particularly in China, was we were able to create impact through our investments, right? We were able to deliver product types, and really, given the duration of the investment holds period, experiment a little bit on how to make our product more accessible from a price standpoint, while not sacrificing the luxury that we would find in typical Class A multifamily. And we’ve been very successful in establishing that model and prototype, both in South Florida, and in the Mid-Atlantic, in our projects, whereby our product competes with the top of the competitive set, Class A luxury products, but from a price point standpoint, for the bulk rent investor, we are more accessible to a larger swath of the surrounding population, and also have a portion of our buildings reserved for workforce housing needs nearby. And in some of the markets we’re in, i.e. Miami, the need for that is, you know, never been higher.

So, that, to me, is arguably the best part. Now, what can make OZ better? This is nothing new. I think a lot of folks on the show have said this, and certainly a lot of advocates, and critics, of the OZ have said it. We should have to report on what we’re doing, right? We should have to show the quantitative and qualitative impacts of the investments we’re making within the Opportunity Zones. And what I think a lot of folks don’t realize is they only look at the source of the investment as the impact. Right? That’s not the end-all, be-all. Yes, ground zero of where we put our shovels, that’s obviously the largest point of impact for the investment. But, creating jobs, right? For us, so, all of our projects, we strive to have at least 10% of the workforce in the various trades coming from the immediate community. We then also, as I said, have an allocation of units for workforce housing, to make sure that folks who are under the bar in terms of average wages are able to move into a new multifamily product, luxury multifamily project, in the market.

And then, all of our projects have some ground-floor retail and commercial, which we oftentimes look towards local vendors to take those leases. In one instance, in St. Petersburg, we even experimented with trying to do a food hall, where we would bring in, one, the food hall would run with Opportunity Zone dollars, but two, we would bring in local restauranteurs, and they would kind of have a monthly competition. And if they were good, right, with OZ dollars, we would support them being in a stall within the food hall. Unfortunately, that program was almost too good to be true, and the operator ran out of money before we really got it started. But these are the kind of experiments that being within the OZ allows us to do. And I think what would make the program better is being able to and having to share these ideas, and share the impacts of these investments, for everyone to see.

Jimmy: You want more reporting requirements. You want there to be more transparency into Opportunity Zones, to prove to the American people, to Congress in particular, perhaps, or the presidential administration, that Opportunity Zones are working as intended. Is that kind of what you’re getting at there?

Michael: I think that was way more eloquent than what I rambled on saying. So, thank you.

Jimmy: Yeah, well, that’s what I’m here for, I guess. Okay. So, well, let’s shift gears a little bit, because I wanna talk about PTM Partners specifically, and what you guys are doing, your strategy, and how you’re differentiated from some others who are doing some Opportunity Zone investments. Well, let me just ask you. Let me just start right there. What makes you a little bit different than other Opportunity Zone investments, PTM Partners?

Michael: Sure. So, when we started this, and remember, again, we started when the regulations, for those of your listeners that are not aware, I know most of them are, when the Tax Cuts and Jobs Act came out, the documentation of what defined an Opportunity Zone read like an economics paper, because it kind of really was an economics paper. It wasn’t until nearly a year and a half later that the final regs showed up, and gave clarity to fund structure… Right? I mean, look. How many groups started with a REIT, and had to reverse course when they realized that it wouldn’t have all the taxable benefits that folks initially thought it would? Then people thought they would have to do individual-asset special-purpose entities, that a commingled fund would not work. But what we realized very early on, kind of watching the various pieces and actors move into the space, was you really had a tale of two cities, to a degree. You had individual developers and sponsors, who were trying to raise Opportunity Zone capital for their singular deal. And then you had the allocators, who were raising pools of capital that they would then invest with local sponsors, and they would market that they have portfolio diversification. And your trade-off for portfolio diversification was really this double layer of fees, right? You pay fees to the local developer, and then the allocator charges you fees for their investment selection criteria and management.

Where, coming from LeFrak, coming from a development background, and, you know, one of my partners, Nick Pantuliano, Nick is a, ran construction management for LeFrak, is an engineer by trade, and doing it for 20-plus years. He knows the business inside and out. He understands the bricks and sticks. And we realized that what we really could do here was offer both, a hybrid. We could be the sponsor of the development projects. We could also be the co-sponsor of the development projects, but we could raise discretionary capital, and the primary difference between us and the allocator vehicle was two things. One, we had significantly more control to exert over the project, as we were either the sole sponsor or the co-sponsor, right? And two, we removed that second layer of fees that the allocator vehicles typically placed on their investments. And that was the niche that PTM found itself in in 2018, and that afforded us the ability, candidly, as first-time fund managers, our first one was a $100 million fund. The second fund was a $150 million fund, with several single-asset vehicle investors as well. And we were actually one of the first groups to have a sale of an OZ asset, where we took some of the gains and rolled them into a third fund. So, we’ve kind of seen a lot of the OZ, but we think that the structure we’ve created affords our investors with the most control over their investments, as if they’re investing with the individual investor, but provides them with the portfolio diversification that they get by working with an allocator.

Jimmy: Portfolio diversification, discretionary capital, but you are the developer, and, or the co-sponsor of these deals, and so, you avoid that double layer of fees, if I’m understanding you correctly. Let’s zoom in to your specific investment strategy now. What are you guys developing, exactly? Where do you like to develop? What sectors are you in? Tell us a bit about your overall investment thesis, and what you’re doing, within Opportunity Zones.

Michael: Sure. So, thesis-wise, as I touched on before, is what I love so much about the legislation. We look to create impact, right? We look to provide accessible housing product, that has all the bells and whistles of a Class A luxury product, but the units might be a little bit smaller. The product type is a little more efficient, which allows us to charge a gross rent price, right, that is much more achievable for, we typically target anywhere between 60% to 70% of the population living within the surrounding one mile of the site. Historically, the markets we’ve been focused on are markets where we’ve seen long-term growth. And that means, not from 2018, 2019, 2020, or not during COVID, right, places where we’ve seen a period of at least 10 years of consecutive population growth. So, naturally, that took us into markets like Florida, and Georgia, and the Carolinas, and Tennessee, all the way up through D.C. And our focus, and where we have deployed capital, is both in D.C. Metro, North Virginia, and then Miami and the Tampa-St. Petersburg markets. As well as Sarasota.

So, very much, I would say Mid-Atlantic and Florida-centric, in terms of areas we have focused on. And truth is, is development, at the end of the day, is a local business. So, we have two offices, one here in Fort Lauderdale, one in Bethesda, Maryland. And that’s what affords us the ability to have the development projects in D.C. and North Virginia, and then projects down here in South Florida. Because, at the end of the day, you have to show up, right? So, we have guys on-site every day, you know, overseeing our construction projects. It’s not a dial-in kind of operation.

Jimmy: Good. So, you got boots on the ground locally. You’re developing in the Mid-Atlantic. You mentioned D.C. Metro, North Virginia, Miami, St. Petersburg. Maybe you can take me behind the scenes of your portfolio a little bit more. What are the types of projects that you’re developing here? Are they the Class A multifamily? Is it mixed-use retail? Maybe you can tell me about one or two of the projects in particular.

Michael: Sure. I’ll separate in geography. I’ll tell you about three of the projects quickly. Right? So, our first project was actually in Metro D.C., in the Buzzard Point neighborhood, right? When we started in 2018, there was one thing in Buzzard Point. Sorry, two things. There was Audi Field, which was the new MLS stadium. And then there was a vacant office building that was previously used by the Coast Guard and FBI. And that vacant office building was acquired by ourselves and our local partner, Douglas Development. And we took what was a vacant 700,000-square-foot, 1960s office building, and converted that into a 452-unit multifamily building, right on the Anacostia River. First residential redevelopment in the Buzzard Point neighborhood. And really quite pioneering at that point in time.

And nowadays, if you go over to Buzzard Point, you see a crane after a crane after a crane after a crane, with all this new development, Toll Brothers, MRP, I mean, major developers. And most of them not even utilizing Opportunity Zone, just realizing that there’s only so much, you know, real estate left in Metro D.C. that has great access into the city and over to Anacostia. And so, this was a really great example of OZ investment in what was historically a blighted area, that had been often overlooked. And now, people get it. So, that’s D.C. We call that project Watermark. It’s a fully-stabilized asset right now, and it’s great. Eight-minute bike ride into the city.

In Miami, similarly, our second project was actually a 360-unit, 18-story multifamily building in the Overtown sub-district of Miami, which, Overtown has been a historically Black neighborhood, that was one of the areas that many cities suffer, many areas suffered during, in the United States, when interstate I-95 was built. Right? And it just bifurcated certain markets. And it kind of took Overtown and cut it off from the rest of Miami. We were the first market rate development in that submarket in nearly three decades. And we built a product that was, you know, a lot of people said, you know, “I don’t know who’s gonna rent there.” And, you know, “Maybe that’ll work. Maybe that won’t.” We worked with the local municipality, and were able to take 20% of the units and allocate them for folks making between 60% and 100% of the area median income. And we ended up having a building where we underwrote, that we thought folks would be making anywhere between $50,000 to $75,000 a year. The blended GDP per capita in the building ended up being closer to $120,000, because, again, this was a building that, situationally, was right next to 95, was walkable to Biscayne Boulevard, right by the Heat Arena. Right? You had all this development happening, with the Miami Brightline and the Miami Worldcenter only four blocks to the east. Right? Miami Worldcenter is a $6 billion mixed-use luxury development. The new Apple Store is going there, and luxury condos, and…

But this provided a real catalyst to getting new developments going in the Overtown submarket, and, again, similar story. Right next door to us is a large, 18-story tower going up, market rate. Another is workforce housing building, two blocks away. And you’re seeing all this development and rebirth in this area of Overtown, which is just phenomenal. And it’s, what’s really great is it’s mixed-use. It’s retail, it’s market rate, it’s affordable, it’s workforce housing, it’s senior housing. It’s really a remarkable renaissance.

And lastly, you know, I just wanna highlight, you know, we’re active in the St. Petersburg market, which, kudos to the Tampa Bay and St. Pete mayors. They were arguably two of the earliest adopters of the Opportunity Zone, and really understood the legislation, understood the power of the legislation, and we have been active in St. Petersburg since 2018, and we are now, just now, delivering a 163-key limited service Moxy Hotel, which, you would say, “Okay. Well, the Moxy is this cool, trendy brand. How does that fit with your thesis of providing luxury housing to the masses?” Well, what it does do is it gives the masses the opportunity to experience a lifestyle hotel. Right? Lifestyle has become the “cool thing,” right? Very expensive properties, right? With bars and restaurants. Well, again, similar thesis. Smaller room types, lower ADR, but, great bar scene, great restaurant scene, rooftop pool and all that stuff. So, I rambled on and on. I took advantage of that … there. So, thank you, Jimmy.

Jimmy: No, good to know. I, always good to hear about some of the projects that are getting done within Opportunity Zones. These types of projects that you’re working on and other developers are working on all over the country can be catalytic for these different communities. So, good to get a look behind the scenes there. Great talking with you today, Michael. We’re winding down the interview. We’re running low on time here, but just wanted to zoom out and ask you a broader question, not Opportunity Zone-specific necessarily, but just, overall, what trends in the overall real estate development industry, and particularly focusing on the multifamily sector, are you keeping an eye on?

Michael: So, that’s a loaded question, and we could start the clock again. But I think the most interesting part of multifamily right now is the confluence of multifamily and hospitality, right? If you really look at a extended stay hotel, and step back and say, okay, take the flag off of this thing. Well, it looks a bit like a bare-bones multifamily building. Or, flip it. If you go to certain markets, right. To Nashville, Miami, D.C., LA, and you look at these new Class A multifamily buildings, they’re so amenitized that they kind of look and feel like a hotel. Right? And you have all of these Sonder… you know, Airbnbs, right? These, a lot of these groups are suffering right now because the truth is, their business, there’s no barriers to entry. Right? It’s just a rental platform. Right? So, what I think is interesting is, as developers think through various ways to make their deals pencil in this world, right, they have to look at the various uses that they can take advantage of within their building. Right? So, maybe you take two floors and make it SHORT term use. And that’s, all you’re doing is you’re taking the Sonder model, per se. But you’re managing it yourself. Instead of giving it away, you’re keeping control.

Similarly, if you can take some excess space in the garage, and utilize it as self-storage, right, you create another revenue stream that didn’t previously exist on your P&L. And I think, arguably, what could be the biggest and most important part is, you know, you’ll hear developers griping over the past 10 years about the one thing that consistently needs to get bigger in every single person’s building is their package room. Right? Everyone loves their Amazon. And Amazon has done an amazing job, as we all know, capturing that last mile. Right? But in these multifamily buildings, the last mile’s really important, but that last couple hundred feet is the most important. And things go missing in package rooms. Things end up, you know, disappearing. Right? So, how do you help Amazon get rid of that, and get those units into the buildings? Into the apartments? That’s the part we’re trying to figure out right now.

Jimmy: Yeah, these mail rooms that were built 10-plus years ago, before Amazon, really became what it is today. They’re not designed for all these big packages to be coming in on a daily basis. Good point there. Well, Michael, we are pretty much out of time now. It’s been a pleasure speaking with you today. Loved getting all of your insights on Opportunity Zone investing and the broader real estate market and macroeconomic picture. Before we go, where can our audience of Opportunity Zone investors and advisors go to learn more about you and PTM Partners?

Michael: Very easy.

Jimmy: There you go. And for my listeners and viewers out there today, I will, as always, have show notes available for today’s episode. You can find those show notes at, and there, I’ll have links to all of the resources that Michael and I discussed on today’s show. And please also be sure to subscribe to us on YouTube, or your favorite podcast listening platform, to always get the latest episodes. Michael, again, it’s been a pleasure. Thanks so much for joining me today.

Michael: Thank you very much.

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