From Where I Sit: Episode 13 with Don Tepman Transcript

Tom McGee:

Welcome to From Where I Sit, I’m your host, Tom McGee, President and CEO of ICSC, the preeminent membership organization serving the commercial real estate and retail industries. Each episode, I’ll be joined by top experts to explore the trends impacting communities and commerce and the spaces where people shop, dine, work, play and gather.

I'm excited to introduce Don Tepman, President and Founder of TownCentre Capital and the man behind the popular X account, Strip Mall Guy, to the latest episode of From Where I Sit. Don has over 20 years of experience in commercial real estate and his work at TownCentre Capital is focused on the acquisition and improvement of neighborhood retail properties, including strip malls across the United States.

Last year, he also revealed himself as the person behind Strip Mall Guy, the X account he started in 2021 sharing his candid real estate advice to almost 250,000 followers. Don, looking forward to the conversation. Welcome to the show.

Don Tepman:

Thanks so much Tom, I'm excited for this one for sure.

Tom:

Well, I'm excited too. And you've been so prolific on social media and provided a lot of advice to a lot of folks, but let's start out with the very basics. So, for our listeners, you're known as the Strip Mall Guy and we'll get to how that became. But first, just define what a strip mall is as it relates to your definition.

Don:

Sure, I think a lot of folks put retail in one category, which is a mistake. And of course there's grocery anchored, there are power centers, the mall, single tenant. And for us, a strip mall, the way I look at it is typically under 30,000 square feet. It’s going to have service oriented businesses. So typically most of the shops are going to be under 1,500 square feet or so. And they're going to be in the communities. So I think a lot of the customers that visit our strip centers are not walking away with anything in their hand. They're not shopping for something, it's eating, it's working out, going to the dentist, getting their nails done. So very much service oriented. Typically, these are going to be in the neighborhood of, let's say, on average of $5 to $6 million for us.

Tom:

And Don, you own or have purchased over 40 of those in the last number of years, haven't you?

Don:

So we actually bought one in Temecula, California, which was our 45th, but definitely feel like we're still just getting warmed up.

Tom:

Tell our listeners how long you've been in the industry.

Don:

Sure. So I started in 2002, graduated from school at Santa Clara, didn't know what I wanted to do. And I ended up working for a small shop in Silicon Valley, doing mostly leasing of these class B and C strip malls and had no experience before then. I knew nothing about real estate in ‘02 and started going to ICSC in Monterey back in 2002 as really a 22-year-old. I didn't know anything about the industry and would walk around not knowing anyone. And so yeah, definitely been a nice long road since then.

Tom:

Wow, you’ve built quite a business. Did you not have family background or anything in real estate? You really-

Don:

No, it's funny. It's funny because, love my dad. Great guy. Brilliant engineer, but he's not someone that you would say is an entrepreneur or really cares about or talks about investing or business. My mom is a nurse, retired now. And so, no, I really was focused on tech. It was 1999 during college and everyone in our dorm rooms, we all had a startup. And so I did as well. And then we were day trading and everyone thought that they'd be dot com millionaires. And then when that crashed, I needed to find a different path.

Someone introduced me to a local broker and I wasn't sure what he really did, but it seemed like he was doing well. And he focused on these strip centers and I said, hey, let me give it a try. And I will say the first six months I was on Monster.com weekly seeing what else I would do if it didn't work out because you have to go earn the business and yeah, I had to really go learn it from the ground up.

Tom:

And Don, so you started out as a broker. When did you transition into acquiring your first property and just walk through your mind at that point, the decision making process to take the job from being a service provider to somebody that's actually going to take the leap and acquire an asset?

Don:

Sure so it kind of happened organically. So in 2006, I was four years in the business after I'd spent all my time understanding how to lease these mom-and-pop spaces. How do you get a nail salon to go forward with you? And so I started recognizing that there were many inefficiencies in the strip malls. Spaces that were vacant that really shouldn't have been vacant. I understood how to proactively go find tenants and lease them. If the rent should be $3 and the tenant was paying $2, it's something that you can bridge that gap. And so four years in, a property came on the market that was a million four in Fremont, California, and it had a vacancy in the back, way off the street. And so there's no visibility. And I looked at it and I thought, wait, if I build a monument sign on Fremont Boulevard for $5,000, whatever it was, it creates visibility. And then I'll lease that back space quickly and sell the property. So I got so excited. It was very straightforward.

And I think at that point I'd saved maybe $100,000 after four years, it was like, my savings. I put basically all of that in and started enthusiastically calling everyone I knew and said, we have to buy this. This is a no brainer. And so I raised $400,000 from, think, don't know, 12, 15 investors.

Tom:

Was that from friends and family or-

Don:

It was coworkers, it was friends of friends. No one in my family put any equity in that though. And it was small checks, $20,000, $30,000. And I think people around me just saw my enthusiasm for the deal. And so we put $400,000 down and got $1,000,000 loan. One of the investors who didn't want to invest said, hey, I'll do the financing. This is a no brainer for me at whatever, 7%, whatever it was. And so we got a private loan for $1,000,000 and bought it for a million four. Put up the monument sign. Leased the space and then a year and a day later, I think it was, we sold it for a million eight. So everyone doubled their money in the year and they were like, can you do that again? And I said, I think I can do it again. But for me, I didn't know that was a business. I just wanted the commission on the sale and on the leasing. I wasn't even thinking about, well, this is what syndication is. And so after that happened, I wanted to do more of them and then we did one more in ‘07, it was the Bank of the West building in downtown Hayward, California, and that was going into ‘08. And so we bought that one, ended up selling it. We did well on it as well. And things really took a pause, obviously in the market. And then I didn't do another deal for a couple of years during ‘08 or ‘09 while everyone was getting their bearings straight.

But I think it's really tough to be great at brokerage and also great as an investor because if you're telling brokers, hey, I'm competing with you for listings, but also sell send me your deals. It's a tough narrative. That's not always well received. And so I think you have to sort of pick one to be really good. I think a lot of brokers and investors do both, but I think you're spread thin and in a lot of ways they're conflicting narratives. And so in 2010. I made the switch and said, okay, I'm no longer competing with the folks that I'm trying to get deal flow from. And so that was the Blockbuster Video building that we bought in San Jose. So during those years, it's hard to leave brokerage because you like as an investor, you're really not making much money, especially in the beginning. It takes a while to ramp up and you really have to have some scale. And so I took that leap in 2010 and when brokers don't think that you're competing with them, a whole world of opportunity opens up.

Tom:

What a great story, by the way. You graduated from college in 2002. You don't know what you want to do. You kind of land in real estate and brokerage, as you said, would visit Monster.com because you weren't 100% sure you wanted to do this. And lo and behold, a few years later, you become an investor and then start doing that full time in 2010. Now, let me just ask you, you started investing in 2010. The two examples that you shared was you made the acquisition, you made some improvements, then you turned around and sold the property at a profit. Is that the model that you employ today or do you buy them, improve them, manage them, or are you looking to quickly turn them around for a sale?

Don:

So it's really the exact same model. And so the way I look at investing is I want to identify on day one headache issues that are a pain to address and address them and earn my profit based on true value add. I think that the term value add, it's stretched and it's a lot of folks look at it as value add is buy a property and you raise rents a little bit and then maybe cap rates compress and then you sell it. It's more passive. And to me, value add is this seller has a big problem and it's a problem that's not easy to fix. It involves construction and it involves facade changes and maybe buying out a tenant that has created a parking problem for you. A lot of owners make mistakes with co-tenancy, they’ll lease to someone who's really busy at lunch. Sushi restaurant with a variety of spaces is also busy at lunch, but they have 22 parking spaces and all of a sudden everyone else says, where am going to park when I go to the dentist? So they stop going there. So I look for inefficiencies day one to address.

Now what changed in 2010 was the Blockbuster Video we bought that I thought would be an AutoZone when we bought it. The rent for Blockbuster, I think, was paying a dollar and a half and it was a $2.50 market and the property was fully marketed, but you know, it was a six cap and the market was like, we're not going to buy a six cap with a tenant that many think is going to go bankrupt. And so for me, I said, well, wait a minute, if they leave, there's upside in the rent and AutoZone I knew wanted that site. And so we bought that deal and, AutoZone, that deal ended up not happening, which happens all time. No big deal. Love AutoZone. But now I had offers from Chipotle and Panda Express and I'm thinking, I know nothing about construction. How do I turn a Blockbuster into a strip center? I don't know what doing. And so I went and hired an architect who's done similar projects and said, Hey, can you render this? What does it look like? I started getting bids from contractors and we ended up making that deal with Panda and Chipotle. They both got each end caps, Capitol and McKey over there in San Jose. And that became the last piece of it, which is the construction piece. And so again, big pain. You're taking a Blockbuster and you're it's two years of work and you're on site and you're really rolling up your sleeves. So that's the same exact thing that we do now. There's no free lunch, especially in the, so much capital chasing this asset class that for me, I have to go in there and solve a major problem and earn my promote. So yeah, it's a very similar structure to that first deal.

Tom:

And your typical holding period on these. So do you have a target in regards to how long you're going to hold it? So you find, as you said, the opportunities to have true value add, which means there's some challenge associated with it. You just explained one and then you fix that challenge. Are you looking to hold these for a two year period, a three year period? Is there a target period of time that you're looking to hold and manage?

Don:

Great question. And it's been definitely a subject of controversy a little bit. It's funny, I guess, my most famous kind of antidote on this is Charlie Munger in October of 2023. I was in his living room, miraculously. It was crazy. And so we, you know, we talked for about an hour and a half.

Tom:

That's a bucket list item for anybody.

Don:

It's amazing. I'll show you the photo next time I see you. It's crazy.

Tom:

Okay.

Don:

No, he wanted to talk to me. It was amazing. He's like, oh, have a seat, Don. And so we spoke for an hour and a half. He's grilling me. He's asking me, what are your fees? And he knew what to ask. And I could tell he, he loved what we're doing. Charlie bought a lot of real estate actually in California as well. And so towards the end, he's like, wait a minute. He's like, so let me get this straight, Don. You find these properties that are hard to find. They're in our community. You go in there, you make them beautiful. You recruit great operators. He goes, and then you sell them! He literally screamed. And he said, call your investors now, tell them you’re going to hold forever. So I don’t-

Tom:

Well certainly that's the Charlie Munger philosophy, the Warren Buffett philosophy to buy and hold forever. Buy a good asset and hold onto it.

Don:

Sure, and so the issue there is it's two things. Number one, once I've added the value and the property looks great and you have your $48 rents and you have great tenants, because we take pride in bringing in great operators who have history of doing well. Once you do that, the only way to continue making money as far as the value going up is if interest rates go down, that's how property values go up in commercial real estate. Or if rents go up, right? Both of those are crystal ball predictions. And my idea of investing is I want to be able to control as much as I can of the value and being subject to literally interest rate fluctuations, right, volatility there, is it's hard for me to buy property put in two years of work, three years of work where- You hear some of our asset management calls. It's hours of, okay, so the stucco contractor made a mistake and these are $5 million deals. And so if we earn a certain amount of money on paper for our three years of true grinding and then rates go, cap rates go from five to 7.5. All of my efforts, my promo goes to zero. And for the investors, the value that we added, now it's largely been offset. And so I know if the market crashes, we'll break even because there's a big spread between where we got the income to. So there's a lot of leeway there, but for me, it's tough to be at the mercy of things that I can't control.

Okay. And also I'm- to Charlie Munger who has got more than I know. He's still a product of 40 years of dropping rates. And also one thing that I wasn't going to call out, but we're buying $5 million deals on average. So the absolute dollars involved here for me are not such that I can take the gamble and say, oh, let's hold these long-term and not worry about fluctuation. And so Berkshire wasn't buying $5 million assets that they’re turning into $7.5 million assets.

It's a debate that we continue to have with our investors, but to answer your question, once we stabilize the asset and really take the risk away and make it an attractive asset that someone could easily finance and I get out because it's kind of like my work here is done.

Tom:

I see. Well, you know your business, that's your business model. That's what you feel comfortable with. So you're sticking to your strategy, which is always the number one rule of businesses. You have a strategy and if it's successful, make sure you stick to it.

Talk about selling. So who are the typical buyers of these properties? You don't have to provide names, just like the profile, the type of folks that buy.

Don:

Yeah. So it's the same people that sell. It's a lot of local families, local investors who, you know, a lot of 1031 buyers. We don't, I don't know that I've ever sold to an institution. You have, think 95% of the properties are not owned by institutions in a strip mall category. That's changing a little bit. Like the last miles of the world, etc., who love those guys. I don't see them in California. Most of our assets are in California. And so-

Tom:

I was going to ask you, are you still primarily focused on the West Coast, mostly in the Bay Area still?

Don:

We're focused on anywhere where there's a deal that makes sense will do. You know, we bought in the last couple of years a deal in Crown Point, Indiana. We bought a deal in Tucson. We just bought Temecula. We bought El Cajon. And so just because I spent 20 years before moving to New York, I was in the Bay Area and like our core team is there. So any Bay Area broker, we're usually one of their first calls, I would hope. And so with social media, which we'll get into later, it's expanding other places. But yeah, our main footprint is in Silicon Valley, the East Bay. I think most of the deals over the next 10 years are going to be outside of the Bay Area.

Tom:

Got it. And how many properties are you holding now?

Don:

I think now we have 15 at the moment.

Tom:

So you got a pretty sizable portfolio of things that you're at various stages of investing in, readying for transition. Wow. Okay. Of those 15, just a quick sense of geography. I know that you're investing across the nation now, but most of those are still on the West Coast or-

Don:

Correct. So out of the 15, probably 10 are in the Bay Area and then the rest are outside of the Bay Area. But we're circling deals in every market. I think it's like everyone else. It's hard to make things pencil now, but you know, I'm in New York full time. I've been here four years. We're growing our team out here. And so I really don't think that in today's world, where there's so much capital chasing deals and in the world of Google Maps and everything like that, you kind of, if you focus on only one small market, it's hard to really deploy capital with any kind of scale.

Tom:

Sure. You mentioned that given your history in Northern California and you have a pretty good network with the broker community, is that how you're finding most of the deals just through personal relationships? Although we're going to talk about social media, I'm sure that may be a source of deals as well.

Don:

Being a broker, I know what brokers want to hear in order for them to think of you when they come across a listing that they think is attractive. And so our narrative has been, we're going to be all cash. So it takes that risk away for the broker and the seller appraisal, financing, timing. So all cash. I can close any deal in 30 days if I have to. I don't want to advertise that too much, but you know, we'll leave it on this podcast, but it's fine. So that's one. Number two is, there is no handholding. So we know the asset class inside and out. So the broker is not going to be spending much time educating us, working on giving us market data, running around, convincing us. So it's really, it's a very hands-off approach there. We also don't touch their commission. I'm not bringing, I don't have a broker on my side. So that's always interesting because just in the nature of the business, commissions are a sensitive topic. So it's like, I don't go after broker commissions. We're not asking for a dollar. I think that there are buyers out there that want to split the fee, for instance. It's just, you're not in that world, but you want it anyway because you have a license. So we make it really easy. And plus a broker that sends us deals. We want to think of them when we're going to list the property. I'm not saying it's 100% of the time. Sometimes there's like a leasing broker in a different market. So we'll find a way to, but typically we would use the same broker that sold us a deal on the resale. So we make it really easy. We do things like getting back to people fast. You give them reasons of why a deal is a pass.

It's tricky because 99% of deals that you look at as a buyer are going to be a no. So it's like, how do you keep telling a broker no and having them still reach out to you over and over again for years, even though it's been a hundred no’s to eventually get to that yes. So we work the broker network, go to the ICSC events. Definitely that's how to do it, that's how you scale.

Tom:

It's the old adage in our industry, this is a relationship business. And so you fostered relationships with the broker community. You said 95% of the deals are going to be a no. And so that raises the question. And obviously there's a smaller deals. You need to do a meaningful volume of deals. I assume that's kind of your goal. Talk about the diligence process in deals of this size. How do you go about evaluating whether you're going to make that $5 million deal?

Don:

So first of all, most deals that we're sent are not pure strip centers. So like we get many centers that have a box in them or a grocery store. It's just not who we are. And so I would say more than half of the deals that we get sent that. And so, and then from there, you look at price per foot as far as what the asking price is versus what the price per foot in the area normally goes for. So if it's a deal in the Bay area and someone wants $900 a foot, that's going to be immediate no. I don't have to do much work. If it's in the Midwest and it's $500 a foot, it's the same thing. So you kind of have patterns that you develop of which areas, what the price per foot should be. And then when you just open up an aerial, it tells you so much as far as, okay, how is it situated? If a new Chick-fil-A just came in on the block, that tells you a lot, they did their homework. And so let's zoom in a bit more. And so start honing in. Okay. So this area that's usually ballpark price per foot that makes sense. Well, this site has an elbow is half the property. Elbows are hard to lease. So it's like, that's going to be lower than you normally would pay per foot because of that, or this property has two end caps. And one of them is a computer repair store that easily should go in line. And when it leases up next year, that's going to be your prime spot. So for that reason, it's being priced lower per square foot than it should be. So price per pound is huge with a combination of an aerial. And of course the rent roll, where are they paying in rent? And that's really the backbone of it all because if a center, if everyone's paying $12 and the market is $18, well, why is that? Are these leases up in 20 years or in two, three years? Are the triple nets higher here than market? A lot of people ignore triple nets, even though you have to underwrite them because the tenant can only pay what they can pay. So there's lots of variables, but I would say number one is price per foot.

Tom:

Got it. But in your co-investors, you talked in your first deal, you found a lot of friends and cobbled together some investors. You've become much more sophisticated over the years. How are you sourcing your investment funds today?

Don:

So we were deal by deal for most of my career. And then we actually launched a fund three years ago. So deal by deal for those not familiar, you find a property, you get it in contract, and then you're calling your group of investors and putting together an LLC and everyone gets their percentage share, which you figure out. But that involves lots of work. Every time you're buying a deal, like the more attractive deals, you have to move quickly. So, you know, dealing with raising money and times change. Some folks that are calling investors today, when we have some volatility in the stock market, it might not be a great day to be saying, hey, I have a deal versus a week from now where things may be calmed down a little bit. And so we went the fund route, which means that investors commit to capital in advance. And they basically are saying, listen, you know what you're doing. You've earned it. I think at that point, when I launched the fund three years ago, we had 29 exits in a row that were money makers. And so just based on the track record is what they're investing in. They're not investing in deals. We tell investors what we're buying after the fact. There's no one that I call and say, can I buy this or not? They hire my team to be the experts at this. And so at same time, it's really folks that are interesting people. You've got CFOs of billion dollar real estate companies, heads of venture capital firms, and people that I can call to get information about what's going on in their world. And so it's a great group of folks, there's about 90 of them in this fund. And so it's all high net worth. And yeah, a lot of people from my tech life, but then a lot of folks in the real estate industry as well. And so it's really a great combo.

Tom:

And any of your original investors in this fund? I just had a curiosity on that. In that very first deal that you did-

Don:

Yeah, Andrew Reeder. doesn't mind me using his name. Andrew was part of that first deal. He was then a broker at CB for a while and he's in this fund as well. It's definitely a much more diverse group now as far as different parts of different industries. I have folks that are executives at large banks. You've got a lot of folks that are finance world and so it's great. I call them all the time. Like every week I'll call a few of them say, what's going on? What are you seeing? What are you seeing in this sector? So it really helped me to be better GP to have such a great core group of LPs.

Tom:

It goes back to relationships again. I want to go to social media, but before we, there was a recent expose that you did where you talked about your tenants and about credit quality. And I just thought the way you talked about it was great. So just share that because you're going to have a lot of small businesses. You said it at the very beginning, a lot of small businesses, a lot of local businesses. You have some national tenants for sure, but you have a lot of local businesses as well. And how do you evaluate credit risk for them when they may not have the kind of brand and recognition that comes with being a national organization?

Don:

Yeah. And I think that that's my favorite question. And I'm so glad that you asked it because I think that there is a narrative out there in the real estate world and retail that is incorrect. And it's been that way for a long time. And so you have, generally speaking, folks that think of retail, they think of national tenants. I love the national tenants. We've done many deals with them over the years, but if you look at the strip mall space, it's actually mostly non-national tenants. And so I think for that reason, a lot of investors are like, oh, I want to stay away. I want nationals. But I think that a local tenant that has an existing location, if it's a sushi restaurant that's been there for seven years and you go in there and it's busy and they have an amazing buildout and they have the good reviews online, that tenant, I will give that tenant TI allowance and do a deal with them in a heartbeat. Because when things go south, they'll go hand out flyers in the neighborhood. They will figure out a way to make the business work. It's literally their identity, their livelihood. Plus they put hundreds of thousands of dollars in that space, right? And one day if they're going to retire, they end up selling the business. And so I think all of us that grew up in the suburbs can now picture the place that we went to during high school or that hair salon that you can name the first name of your barber that's probably been there for 30 years, 20 years, that pasta restaurant that we meet our mom for the nail salons or whatever it is and people underestimate the longevity and the strength of mom-and-pop tenants.

We've had, I was thinking about this yesterday, someone else asked me this question. I can't even think of many tenants in my entire career that, if you do a good job selecting the tenant who is qualified and really it helps you and them if you choose correctly, you're also saving them a big headache. We've had almost like no tenants leave it. It sounds a little bit crazy, but literally yesterday, I stopped to think about, okay, well, if I go back. And so we just signed a coffee tenant today out in Fremont. It’s their, I believe third location, 4.5 stars on Yelp. This is their life. This coffee shop is their identity. It's their life. They're going to put a bunch of money in the space. I think eventually Wall Street will realize that. Yeah, I agree. If you lease to any tenant and just here you go, here's the keys, give it a try. That's challenging. But if you do a good job choosing tenants that will succeed, I think that is a very underrated segment within retail.

Tom:

These businesses are what they're going to use to support their family, put their kids through college, all those types of things that are part of living an American lifestyle. In many respects, you're very much like a venture capitalist because you're helping small businesses start up. They may not be technology businesses, which are the ones that we all focus on, but these are true kind of American mainstream businesses.

Don:

100% and it's a gateway into entrepreneurship. Take Kenzo's Sushi in San Jose, California. I met that gentleman when he had a small location in Morgan Hill and he had this dream, I want to do all you can eat sushi. And like, it was a nice Korean family. They had the whole family out there and they're passionate. They're like, Don, we can do this. And here's why. And here's our spot now. It's too small for us. This is a better market. And so we made that deal. They ended up buying the building from us a few years later. That-

Tom:

Oh wow.

Don:

That changed their life. They opened a bunch of other locations. It was like a two hour wait o n a Friday night to even get in there. And so I think that story is not given enough attention. And if he didn't already have a restaurant and didn't have the enthusiasm he did and like his, and like a whole game plan, I'd be like, you know what, like I'm not going to, for your sake also, why are we all going to take a risk on this new five year lease or whatever it is? if you can pick the operators, Dishdash, in the Bay area, the best restaurant operator maybe I've ever known, right? We've done a few deals with him and I hope to do 10 more with him where there's, a lot of landlords would say, well, I want a national tenant. He is one of the best freaking operators in America. And it's like, why I would do a deal with him. He'll go head-to-head with any national out there. And so I think that there's a lot of Emad’s out there that do a really good job.

Tom:

Well, you're an entrepreneur yourself. So I would imagine you feel a certain kinship with many your tenants too, or entrepreneurs. You started your business really out of nothing and built a great business. And so you respect people that are doing the same thing.

Don:

100%.

Tom:

Okay. So we've talked about real estate. You're incredibly successful in the real estate business, but you're also quite a phenom in the social media space. You have 250,000 followers on X. How did that happen?

Don:

You tell me. No, it's, it's- Okay, so it happened by accident. It really truly did. I was never much into social media. My personal Twitter account had maybe 300 followers after 10 years and I was on an airplane killing time. And the reason it started is because I don't love the narrative that's been put out there for the last 10 years of in real estate where it's passive. Take on a lot of debt, mailbox money, just get in, it'll go up. I just think that it's terrible advice for a whole generation. And so I've always wanted to kind of push back on that, but every time I would try to do it for my account, I wouldn't hit publish because I would be afraid of what my investor might think or my employee or tenant. I'm kind of introverted. And like, I don't want the attention. I don't want to. So finally I'm on this plane. So, you know what, let me just start posting a bunch of stuff anonymously, just like nonstop. I'll put it out there and then maybe I'll close it in two days. And so Real Estate Bill and Bob were taken. That was going to be Real Estate Bill and Real Estate Trent was available and I grabbed it. I'll just be Strip Mall Guy because there's a guy called Some Hotel Guy on Twitter. And I was like, just thought, okay, he's a hotel guy. I'll be the Strip Mall Guy. And so I just started-

Tom:

What year was this? When did you start, just to share with the listeners?

Don:

June of 2021.

Tom:

Okay. So not that long ago.

Don:

And so we started posting like things that are, if a tenant has an option and parking ratios, four per thousand is kind of your minimum, but you want more than that. Things that I just thought were boring. Don't take on a lot of risk, like whatever it is. And it just started growing and growing really quickly. And I think a lot of folks in the industry started following the account and the algorithm picked that up and it started promoting it. And I just said, okay, I'll keep going. And it was anonymous. I had no incentive beyond this is fun and it's helpful to people. I didn't think I would get anything out of it whatsoever. So I would just share my secrets. If I came across a great new tenant trend, I would rather put it out there than hide it. And just, I would give advice and opinions that I would give my closest confidants or my investors. Just here it is. It's out there, use it. I hope you make money, compete with me, whatever you want to do. It's out there. I'm an open book. And it's given back tenfold. And so it started growing. That started turning into relationships. But what it did the most, which helps me as a GP, which it's led to tremendous deal flow for us. And that's something that I was always afraid of. I can never answer the question of, yeah, but how will you do the next deal? Like how do you get in front of brokers nationally? I think there's 20, 30, 40,000 retail brokers, whether they do leasing or sales nationally. It's a very high amount, whatever it is. And so how do you get in front of them beyond the Bay Area? And so this was by accident, way of reminding them of us every single day. And so after I went non-anonymous, they knew who to contact. Kyle Matthews gave me this funny kind of intervention the two years ago. He's like, Don, you stopped the anonymous thing. It'll help your business. So I ended up doing that. And then, and now I think last year we bought almost $40 million in deals, almost all of it was because of this brand. And so I, a couple of the large like, Terreno, which is an industrial publicly traded REIT, sold us a deal in November. For the institutions, they now have a buyer who gives them surety of close. It gives them, okay, this person knows what they're doing. They don't need hand holding. We know that if they're pursuing it, they have reputational risk. Like then wasting our time is bad. So now where in this fragmented value-add strip mall world where you really don't have brands that are known, you have large institutions. And brokers are saying, okay, this guy's going to close. I'm going to go to him. So it's kind of like Coca-Cola is advertising constantly to make you think of them when you're thirsty. I am, I'm doing podcasts, etc. It's a lot of fun. I throw an annual gala in New York, but it helps me as a GP tremendously because it brings us deal flow. And when brokers are like, hey, I'm like our deal in Crown Point, Indiana. I, Tom, I never heard of Crown Point, Indiana. One of the followers, local brokers, sent me the deal and we ended up buying it and now we're remodeling amazing shopping center in Crown Point, Indiana. It happened by accident. It came out of nowhere. And it's really a lesson of when you blindly just give, just to give, things really do come back tenfold. It's wild.

Tom:

It's a different way to build relationships, but it is relationship building. You're getting your brand out there and through that you're making new relationships. You couldn't be more descriptive. Strip Mall Guy, people know what- They know the asset class you're looking to, you're looking to acquire. You said one thing that you had an intervention from Kyle and that you need to not be anonymous anymore. And in an early, it was about a little over a year ago in an early interview, you kind of disclosed who the Strip Mall Guy was. And I had followed you and knew of the Strip Mall Guy, but I didn't know who it was. And introduced yourself to me about a year ago also. Did you go into that interview knowing you were going to disclose that you're the Strip Mall Guy?

Don:

Sure. So the first year I took it like way too seriously. I was just afraid of, I didn't want to rock the boat on my career. didn't think, I didn't know what my LPs would think. I didn't want to, I'm, I don't want to go out there. Oh, here I am. I didn't want a drastic change in my, in the way that my career trajectory was looking. And then when Kyle said that, I was on his podcast anonymously with no camera.

Tom:

Like the witness protection program.

Don:

Yeah, it was odd. I realized that I'm certainly not getting as much out of this as I could, but also I didn't know what life looked like being any kind of a public person. It's just never been who I am. I've not spoken on stage as much in my life. I don't have practice doing that. I've never, I've been under the radar because I'm buying boring strip malls. Like the real estate industry usually doesn't care about boring strip malls. That's now changing. And so I was fearful. Yeah. I don't want to be, I live in New York City. I walk around with my kids a lot and my wife and just being stopped ever. I just, that idea kind of freaked me out a little bit. And so I just had fear of the unknown. When Kyle said that it was eye opening because at end of the day, if I can't keep buying deals, I go out of business. No matter what my track record has been, like you have to keep doing this. And so that's always kept me up at night. Like how do I make sure that I keep doing X amount of volume every year? And like without changing our game plan or changing our threshold. And so there was opportunity with Real Deal. They were like, hey, if you want to do this, why don't you come in? We'll do a whole profile. And so I said, fine, might as well. And I sat down and had a long talk with my wife and saying, what does this look like? We have no idea. And I talked to a few investors and to kind of get their opinion, obviously as well, our employees. And then yeah, did this shoot with The Real Deal and the article did really well, which I didn't expect and didn't know how it would do. And so, yeah, and then after that brokers definitely know of us as active buyers of strip malls, which really is, couldn't be a better outcome.

Tom:

You're very generous with your feedback on your account. And I can understand why people follow you because you are very transparent. You're very open. So I kind of get it. Some of the things you post are advice about real estate, but sometimes you provide life advice, particularly to younger people that are trying to grow up in the industry or starting their career in general. I'm a big fan of the Gen Z generation. I have two Gen Z kids, but I just think that generation is absolutely fantastic. Hardworking, very socially conscious, ambitious, but their ambition might manifest itself a little bit differently than my generation and the way we approach things. Have you learned things about the younger generation through your activity on social media?

Don:

Yeah, definitely. And it's something that I actually do post about a lot. And a lot of it is coming from what I've seen has worked for generations as far as how do you get good at something? How do you build wealth, success, etc.? I'm sensitive that a lot of folks in our industry that are younger follow the account. And so I try to hear their feedback rather than saying, okay, it should be done like this and that. I get it's obviously a different world now. You know, and it's what actually motivated me to open the account is speaking to them. And because I don't like the narrative that's been put out there, everything's passive and easy, etc. I think that a lot of folks look at what's in it for me day one, which is fine, except that sometimes that translates to them into the highest salary possible. And I would say that gaining knowledge is the best thing that you can do. So if you can graduate college and maybe your friend's making $120,000, but you're making $60,000, but you're going to be the right hand person for some major developer in Atlanta that's built like the most apartment buildings over the last 10 years. And they're going to let you sit in on all their meetings and be in all their calls and learn from them directly. I think that's worth a lot more than like work from home and go for the higher salary, etc.

I also think that I totally understand the work from home opinion. A lot of times we're on Zoom calls all day and what's the point of being in the office and commuting, but also I believe that being around the leaders at your organization is going to give you a big advantage over people that maybe aren't. And so I'm trying to get, to be open-minded about like, how do you have a mix of a lot of folks want to be more entrepreneurial now. Being an employee is seen differently, I believe, than how it was seen 10 years ago. It's a little bit seen more negatively. So I'm trying to be open-minded, but you know, at the same time, the tricks, if you will, that have led to success have really not changed in the last few generations, it's work really hard. It's learn as much as you can, become an expert in something, and delayed gratification, where it's like maybe the first five years, like you won't get to whatever it is, but it's about thinking more long-term.

So I do feel a responsibility and a lot of folks that are younger there that follow the account and giving them the narrative and being open-minded to hear kind of their perspectives as well in the social media world. I try to tell them to use social media, but use it positively. Don't just use it to follow basketball teams. If you can grow your audience as a broker, as a developer, whatever you do in the business, there is a lot of value in that. And I think everyone has a path that's interesting and seeing the world from a certain lens that they can share that has an audience that can grow. And it's not that hard if you do it consistently. So I'm a big fan of that generation. And so I'm with you and I try to be open-minded while still sticking to the beliefs that I think have been proven for many years.

Tom:

Well, some things are timeless and becoming an expert in something and doing the best job you possibly can in whatever role you're in at that point in time validates that maybe you should get the next role. You're not going to get the next role unless you do the role that you're in really well, which is kind of a timeless quality that's important no matter what's happening in the world or how much technology advances. Don, you've been so generous with your time. I want to give you an opportunity, any closing thoughts for our listeners?

Don:

I just want to say thank you to people. And so it's been such an honor to have my peers following the account and folks in our industry. It's one thing where you have followers of the account. It's like having people in our industry commenting, following, reacting positively is such an honor. I keep looking back to that in ‘02, ‘03, all those years where, and walking around ICSC, it could be intimidating, wouldn't know anyone. And so first of all, thank you. And I think that also a lesson that I've learned that I really want to share is doubling down on what you're working on and letting your knowledge compound, I think is very much underrated. A lot of folks want to graduate from going single tenant net and now they want to do grocery anchored and want to do whatever it is or whatever career path within retail they choose. You really get spread thin. And then, so I think just doubling down on what you do and becoming the main expert as time goes on, other people are going to kind of get spread thin. just so I would just keep focusing, drilling down more than getting spread thin. So just a lesson to relay there.

Tom:

Good advice. We touched on a lot in our conversation. A lot of things I'd like to have delved in even more. Will I see you at ICSC LAS VEGAS in a few weeks?

Don:

100%. I will be there.

Tom:

And I look forward to seeing you there. And I think you would agree that's an important place to make relationships in commercial real estate, is at ICSC LAS VEGAS.

Don:

100%. That's the place to be. That's the Super Bowl of the retail real estate world.

Tom:

Well, thank you for saying that. And thank you again, Don, for being on the podcast today, bring so generous with your time.

Don:

Likewise, thank you so much.

Tom:

Please follow and rate this podcast five stars on Apple and Spotify and share it with others that might find it interesting. Thanks for listening.