October 4, 2025 • 19 mins
Ben Reinberg is based in Newport Beach. He specializes in industrial and in medical office. On today's show we are talking about the factors influencing medical office. To learn more and to connect with Ben, visit https://www.alliancecgc.com/ or visit his personal website at https://www.benreinberg.com/
-------------
**Real Estate Espresso Podcast:**
Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)
iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)
Website: [www.victorjm.com](http://www.victorjm.com)
LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)
YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)
Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)
Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)
**Y Street Capital:**
Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)
Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)
Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
Welcome to the Real Estate Express, a podcast your morning
shot of what's new in the world of real estate investing.
I'm your host, Victor Minash. This is the WEEKEND edition
where we interview notable people from the world of real
estate investing. Today is no exception.
We have a great guest all the way from Newport Beach, CA
Welcome to the show, Ben Reinberg.
Victor, thank you so much for having me.
I really appreciate it and look forward to adding a tremendous
(00:24):
amount of value to your audience.
Well, Ben, great to have you here.
You're multiple different asset classes.
You speak publicly on a wide variety of different things.
Before we dive into the details,maybe give a little bit of your
back story and how you got to this point in your journey.
Well, Victor, I didn't come frommoney.
I was born and raised in the Chicago area and I built my
(00:46):
empire on a shoestring and I started it when I was in my
early 20s. And being from Chicago, I used
to see the Crowns and the Pritzkers and and the Zells and
all the well known established billionaires in our market.
And I said to myself, what do they do to build wealth, not be
rich. You know, rich is about how much
(01:06):
you own today. I was looking to say, I was
seeking to say, how do they become wealthy?
And that's through hard assets. And so if you look at my new
book, Hard Assets and Hard Moneyfor Hard Times, I wrote it for
not only the Ben Reinberg 32 years ago, we got started before
he did billions of dollars in transaction.
I also wrote it for the billionaire because anyone can
(01:27):
take the hard asset blueprint, pull it off the shelf every
single day because there's so many things where you say I need
to amend, I need to adjust, I need to think about this.
We talk about things like data and privacy, all these different
things that everyone around the world utilize, but don't really
think about it. And so when I wrote the book, I
wanted you to think. And so when I was younger, I
started Alliance consolidate group of company.
(01:50):
We built millions of square feetof office industrial, the
hundreds of syndications and funds.
And I realized the key to wealthwas through hard asset.
And my favorite hard asset is commercial real estate.
And so with that being said, I became a leader in industrial in
office. I saw a general office and I
said, you know what, to our investors 2324 years ago, my 32
(02:11):
year career Victor, I said we need to pivot.
We need to find something a little bit more stable.
And so then we became, we pivoted into medical office.
We became a leader in the UnitedStates and medical office
ownership and then recently we opened up a multi Family
Division. So I am a principal.
I'm a fiduciary of capital and that's what I do.
(02:32):
That's my niche, that's what I focus on.
I tell everyone you get rewardedfor focus.
And so my focus is commercial real estate.
That's my expertise and that's what I've been doing the past 32
years strictly as a principal. Love it.
Well, Ben, certainly office has gone through a massive
dislocation. That's not news by by any means.
(02:52):
And you focused on a specialty segment of that, which is
medical office. And one of the things that's
great about that you're not going to, yes, telehealth is
increasing, but for the most part, if you have a health
issue, that's an in person type event.
And when a doctor or Medical Group puts the infrastructure in
place, whether it's the air handling, the compressors, the
(03:15):
autoclaves, all of the stuff that's necessary for medical
office soldered into that building, they're not moving for
a long time. And they pay their bills.
So they're, you know, a credit worthy tenant.
How did you? And this is a business that's of
course, gone through a lot of consolidation evolution.
How have you kept up with the changes that are taking place in
(03:38):
a lot of that consolidation? Well, let me get the basis of
the decision. In medical office we know and I
know as I say as frequently, thehuman body is never going on
style right. In medical office, we have upper
80s percentile renewal rates on our leases and so there's
significant investment. I create a box years ago of
exactly how we best where we invest.
(03:58):
We look for certain dense areas,pro growth probusiness areas.
We look for significant investment by our tenants.
The the challenge for medical office in the high barriers
entry, which I've been through as you just don't go by a
medical office, you need to understand the business.
You understand how it's related to hospitals and you understand
what what exactly they do, how their business works.
(04:18):
So we dive deep into financial statements when we're
underwriting these tents becausewe understand what is the
dynamic of the doctor group. If it's a physician group,
what's the dynamic of the business?
Is it private equity, injected capital?
Are they putting out a lot of debt?
What does it mean? We look at going concerns and so
we look at so many different factors that's from a business
(04:39):
standpoint. Then from my commercial real
estate background, I'm also ACPA.
So for my commercial real estatebackground, I look at the
fundamentals. We look at market rent and
absorption. We look at construction, we look
at ingress egress, parking is isa big, huge type of factor to
look into understanding how flows, patient flows.
(05:03):
We look at conditions of elevators, roofs, everything,
you name it. So that's the real estate side.
OK. Then we're looking at what other
outstanding factors can impact the real estate investment for
medical office. So it's not for the faint hour.
It's it's a very complex underwriting if you want to be
successful. We've been doing it for a long
time, had great tenants. I started with a little company
(05:25):
called DaVita. I went to their headquarters and
said here's where you got to start investing in after we
bought and developed our first deal, We, we are the ones that
screwed up the market. We were one of the first
companies that sold for a six cap and I said we'll never sell
for a six cap and we sold for a six cap.
And then all of a sudden it was 5 caps in, in medical office.
And because it's conservative asset with upside and it's why
(05:49):
when you look at our track record and we have upper 20s IRR
with our entire portfolio medical office, we're mid 20s
for conservative assets. So that's pretty good.
And so we have a great leadership team.
We understand medical office. And if you really dig into using
your experience of the real estate fundamental and then you
(06:09):
understand the business side of it, you can do very well.
But it's not, it's not, it's notso simple.
It's it's there's a high barriers entry to really
flourish in medical office investing.
That's why a credit ambassadors,Victor love what we do because
they can invest passively. We do all the heavy lifting.
We manage it and everything. And people say, well, it's it's
(06:30):
management intensive. There's a lot of work you got to
do to manage it, to make these doctors and tenants happy.
It's it's a lot of hand holding,it's a lot of management
intensive. It's making sure things flow.
You have multiple people going in and out of these buildings.
So safety and insurance come into play.
Parking lots, the conditional parking lots, landscaping, the
aesthetics also comes into an addition to safety.
(06:53):
So there's a lot that goes on, alot you have to consider.
And because we've been doing it so long, it makes it a lot
easier to take down a property when you can understand it no
have the confidence you can manage it properly for your
tenant or tenants to flourish. There have been a few medical
outfits that have gone belly up over the last couple of years.
Not many, but they've been fairly high profile when you
(07:16):
look at those. Have you done any root cause
analysis on why they went bust? Because you know, the
conventional wisdom is, well, ifyou're in medical, you're all
set. I mean, there you're, you've got
a great income stream and yet there have been some spectacular
failures. Have you looked at any of those
and seen you know what are some of the root causes?
Well, some of the root causes are the way that business
(07:36):
functions and it could be insurance reimbursements to it
could be also like we don't buy emergency rooms.
That's one thing I stay away from.
I'm not a big believer. OK, I was going to ask about
that. In urgent care clinics, Urgent.
Care, We'll own urgent care thatI'm, I'm OK with because you
know, you could take like a hospital system like HCA, which
owns a lot of urgent care is good credit.
(07:58):
You could look at how it flows and you can understand the
business emergency rooms that westay away from.
But one of the things that's really important, that's been
prevalent, I would say the last handful of years is that these
private equity firms are coming in and buying some of these
medical, like autism is a huge concept that we own.
And the private equity is comingin.
(08:20):
And what ends up happening is you see when you look at their
historical financial statements,you'll see the amount of
leverage they're put on these things for expand and they're
expanding rapidly. They'll go from 40 locations to
90 in two years. It's huge expansion, putting out
a lot of debt. And then you say to yourself,
can they sustain themselves? Are they going to start
consolidating? Those are the risks you see as
(08:42):
consolidating made gang rib because they expanded way too
fast and they weren't waiting for their income to catch up and
they're and they're playing thiscatch a game and they got to
keep raising money. Yeah.
I mean, the typical private equity play is a roll up where
they want to aggregate as many of these businesses together to
get a higher multiple on an exitdown the road.
And it doesn't matter what happens 10 years down the road,
(09:04):
they're mortgaging it today so that they can get that higher
multiple and get out. Yeah, it's scary because when
you are a landlord and let's sayyou sign a 10 year lease with a
tenant, you have to ask yourself, OK, well how am I
adding value? Am I going to hold this thing
for 10 years? Where's my rent compared to
market? And then you got to look at the
fundamentals and say, OK, how amI protecting my downside?
(09:26):
So one of the biggest issues I see is with these private equity
firms expanding so rapidly is what happens with the landlord
At the end of the day, the 1015 year lease there won't sign, you
know, in order to get the best TI package or in order to get
the best rent, you know, to keeptheir costs down.
Then you then you got to really look at say, well, tell me about
(09:47):
the business plan. When are you going to be
profitable? Well, we're going to be
profitable in 2027. Then don't worry about it.
You just hang tight and hang in and now you're betting on their
business. OK.
And so the good news is maybe your rent is below market.
You can afford it based on your basis, but at the end of the
day, you have to be very carefuland underwriting.
(10:07):
You have to really look at your fundamentals and say, how do I
protect my downside in the situation?
If I'm going to bet on this particular tenant, how do I
protect my downside? And doesn't make sense.
So sometimes you make these decisions because you have a
vacancy. You say, hey, I want to and
right now their credit's OK, they got equity.
But sometimes, you know, Victor,a year or two down the road, you
(10:29):
know, with all the debt they start putting on it, that equity
that you underwrote from the appget Go changes and their
creditworthiness changes. So you really have to look at
the fundamentals when you're doing these type of situations.
So do you re underwrite after? If there has been a transaction
that's taken place with an existing tenant, do you re
underwrite the deal to assess your risk?
(10:50):
Yeah. I mean, we're constantly
looking. Every year we're getting
financial statements for our tenants and to make sure we're
looking at, OK, what's going on,what's it look like we have to
refinance this particular property.
So we're constantly monitoring. This is part of great asset
management that we do at Alliance is not only engaging
with the tenant and the corporate headquarters.
(11:11):
What's going on the business? What do you plan on doing?
Explain me some of these line items in the financial
statements. We're going knee deep shoulder
to shoulder with these companiesand these businesses to make
sure that we're going to get rent, we're going to collect
rent, make sure we protect our downside on a frequent basis.
It's not an annual. We're doing it monthly and
quarterly too on some of our portfolios.
(11:31):
So This is why the user experience for the investor that
invests with Alliance is that 7 star white glove service because
it's what goes on behind the curtain, so to speak that they
don't see that we're doing to protect their capital.
And protecting capital is the number one thing that we do for
all our investors around the world.
(11:53):
It's, it's critical, it's, it's the number one priority that we
have in Alliance because our core values, so you know, is
transparency, integrity, consistency and expertise.
And if you work at my company, that's what you adhere to.
And part of that is how do we treat our tenants?
How do we treat our investors and how do we move forward as a
company as the world is constantly changing?
(12:15):
As part of your process, there'sobviously a debt cycle, debt
maturity and you know renewing that debt on whatever time cycle
makes sense. Is that synchronized with your
lease renewals or is it out of step with that?
How do you manage that push pullbetween what's happening on the
leasing side and on in in the credit markets?
(12:37):
Well, we're one of the best firms that placing debt on
properties we're outstanding. I've been doing it for a long
time. I do all non recourse financing
through banks. Only one I know does that
frequently and part of that is, is understanding debt and having
flexibility in your loans. I am a big proponent of
flexibility because like I said,this was the greatest lesson I
(13:00):
learned a long time ago was the ability to hold.
When I first acquired my first property, which was a 95,000
square foot industrial building back in the early 90s and I lost
a tenant the first week after I closed and I panicked.
I was a young guy, I was in my early 20s and I panicked, but I
(13:20):
ended up problem solving and I subdivide renegotiated.
And what it taught me is that the ability to hold is
everything in our business, whether it's reserves,
underwriting or properly doing enough due diligence.
And that first deal meant everything because it taught me
the greatest lesson in investingthe ability to hold.
(13:43):
And so with that being said, when I look at credit and debt,
it's the same thing. I need the ability to hold.
So what I do, and I learned thisfrom another deal I did $50
million office campus, 300,000 square feet.
I was young and a little guy named Warren Buffett decided to
pull out of two floors of one ofmy buildings and change the debt
service company real quick. Again, it reinforced the ability
(14:05):
to hold. And so for everyone out there
listening, if you're going to put debt on, I suggest do not
over leverage, don't take on meds debt.
Don't think that hey, if you have to raise, you know, someone
taught me this. He used to work for Sam's Al.
He said don't over leverage properties, which I already
knew. But he said don't ever sign on
loans, which I don't. And #3 is I have the ability to
(14:28):
hold. And when you put debt on a
property, make sure in your covenant you have flexibility.
So whenever I sell a property, no prepayment penalty for Ben
Reinberg. I don't believe in that.
I want flexibility. I want to benefit my investors.
If a lender says wait a minute, we'll have prepayment for
yourself, I'm like, look, the whole objective is to make a
profit. You're making a profit off of
(14:48):
us. If you understand banking, you
could underwrite it properly andnegotiate with them and
understanding covenants that impact their biggest thing is
that service coverage. Can you pay the mortgage?
Are all the bills going to get paid and you're not going to
default? And by doing that is don't over
leverage problems, GO-65 or lessLtd if you can have enough
(15:09):
equity. The other thing I teach people,
OK, I teach people all around the world about investing is I
tell people that now I don't puton too much leverage.
Have enough reserves in your bank account to deal with the
rainy days and the what ifs thathappen to have the ability to
hold. But also, it's also extremely
important that if you need to put more equity in your
(15:32):
properties and take less leverage, do it.
If you have to pay a lower return to your investors, let's
say you're paying A6 or 7% preferred return to your
investors, pay them A5. They'll appreciate it because if
you get explained to them, hey, we're taking on less leverage to
protect your capital. But there's upside at the back
end that would project maybe a decent IRR.
(15:52):
That's what investors want to hear.
So protecting capital is everything in alliance is what
we do very well. And when it comes to credit,
make sure you have flexibility, make sure you don't over
leverage and make sure you have enough reserves to deal with the
what ifs. Because everyone thinks cash
flows just keep ascending into the air, Victor.
That's the whole concept of whenpeople get into risk.
(16:13):
But what reality is, I can tell you from over 3 decades of being
in this business and being a leader is real estate.
Cash flows are like moguls, OK? If you ever been skiing, they're
like moguls go up and down and you have to be able to ride
through the different cycles anddifferent points.
Look at what happened, Victor, in 22 and 23, investment sales
(16:34):
were down 80%. In my entire career, I've never
seen that. And I was wondering, I said, how
are deals ever going to trade? What's happening?
We're ascending in the United States, ascending rising
interest rate markets, values are down, trillions of dollars
of loans coming due over the next few years and lenders were
lacking liquidity. So I said, OK, well this is
(16:56):
going to be a perfect storm to get into multi family because
all my peers are doing these five year bullet loans and
they're coming due. So we're going to open up
division, which we did. But I also saw that you have to
be able to ride through these storms.
So with a lack of deals being transacted in that 1 1/2 to two
year period, you have to say to yourself, OK, are there tenants
(17:16):
running around? How am I going to deal with my
lenders? And it was interesting times,
those times. But again, it reiterates the
ability to hold, to be able to ride through cycles, make sure
you're doing the right things, proper underwriting.
And you know what, sometimes yougot to walk away from a deal
that you're underwriting, that you're looking to acquire, and
sometimes it's the best thing you've ever done.
(17:37):
And so to go back to credit, flexibility, ability to hold.
And by the way, here's somethingI want to teach everyone out
there. It doesn't matter how
experienced you are, have a relationship with your bank or
your lender. I know they jump around the loan
officers go to workout guys, andI've been through it, I've seen
it all. But the reality is have a
relationship with your bank. If you could do multiple deals
(17:59):
with them. But the reason why is when you
have a challenge or refinance orthe market changes, you have to
be able to pick up the phone andhave a conversation. 100% Well,
Ben, if folks want to connect, if they want to learn more,
what's the best way? Well, there's a couple ways.
I mean, if you want to invest with us and learn how we can
build you wealth and incredible tax benefits, we do some very
(18:20):
unique stuff for taxes. I'm also CPA, go to Alliance
cgc.com. That's alliance cgc.com.
If you want to invest with us more and more about investing
you can get on our blog. We talk about all different
things. We're on the sub stack.
We have great webinars. It's all about educating you how
to become wealthy and increase your investment portfolio.
(18:42):
If you want to follow me and learn how to invest in
commercial real estate, you wantto watch my new TV show I own
it. You want to see me speak or do
you want to take our courses or you want the new book to learn
how to continue, amend, grow, defend and compound your wealth,
go to benreinberg.com. That's my name, Ben reinberg.com
(19:03):
and I will show you personally how to grow your hard asset
empire as you start growing it. And also, if you do have assets,
let's say a thousands and thousands of multi family units
or industrial, whatever is your Bailey with, I will teach you
things that you should be considering that will open your
mind to it. So if you get my book hard
assets and Hard Money for Hard Times, you'll be able to learn
(19:24):
that. But also we have courses that
bring the book to life that if you want to advance your
commercial real estate and investing experience, you can
take our course. They're very cheap.
I love it. Well, Ben, great to connect.
And for the listeners at home, definitely you'll want to
connect with benreinberg@alliantcgc.com or at
benreinberg.com. The links will be in the show
(19:45):
notes. And in the meantime, have an
awesome rest of your weekend. Go make some great things
happen. We'll talk to you again
tomorrow.
Welcome to the Real Estate Express, a podcast your morning
shot of what's new in the world of real estate investing.
I'm your host, Victor Minash. This is the WEEKEND edition
where we interview notable people from the world of real
estate investing. Today is no exception.
We have a great guest all the way from Newport Beach, CA
Welcome to the show, Ben Reinberg.
Victor, thank you so much for having me.
I really appreciate it and look forward to adding a tremendous
(00:24):
amount of value to your audience.
Well, Ben, great to have you here.
You're multiple different asset classes.
You speak publicly on a wide variety of different things.
Before we dive into the details,maybe give a little bit of your
back story and how you got to this point in your journey.
Well, Victor, I didn't come frommoney.
I was born and raised in the Chicago area and I built my
(00:46):
empire on a shoestring and I started it when I was in my
early 20s. And being from Chicago, I used
to see the Crowns and the Pritzkers and and the Zells and
all the well known established billionaires in our market.
And I said to myself, what do they do to build wealth, not be
rich. You know, rich is about how much
(01:06):
you own today. I was looking to say, I was
seeking to say, how do they become wealthy?
And that's through hard assets. And so if you look at my new
book, Hard Assets and Hard Moneyfor Hard Times, I wrote it for
not only the Ben Reinberg 32 years ago, we got started before
he did billions of dollars in transaction.
I also wrote it for the billionaire because anyone can
(01:27):
take the hard asset blueprint, pull it off the shelf every
single day because there's so many things where you say I need
to amend, I need to adjust, I need to think about this.
We talk about things like data and privacy, all these different
things that everyone around the world utilize, but don't really
think about it. And so when I wrote the book, I
wanted you to think. And so when I was younger, I
started Alliance consolidate group of company.
(01:50):
We built millions of square feetof office industrial, the
hundreds of syndications and funds.
And I realized the key to wealthwas through hard asset.
And my favorite hard asset is commercial real estate.
And so with that being said, I became a leader in industrial in
office. I saw a general office and I
said, you know what, to our investors 2324 years ago, my 32
(02:11):
year career Victor, I said we need to pivot.
We need to find something a little bit more stable.
And so then we became, we pivoted into medical office.
We became a leader in the UnitedStates and medical office
ownership and then recently we opened up a multi Family
Division. So I am a principal.
I'm a fiduciary of capital and that's what I do.
(02:32):
That's my niche, that's what I focus on.
I tell everyone you get rewardedfor focus.
And so my focus is commercial real estate.
That's my expertise and that's what I've been doing the past 32
years strictly as a principal. Love it.
Well, Ben, certainly office has gone through a massive
dislocation. That's not news by by any means.
(02:52):
And you focused on a specialty segment of that, which is
medical office. And one of the things that's
great about that you're not going to, yes, telehealth is
increasing, but for the most part, if you have a health
issue, that's an in person type event.
And when a doctor or Medical Group puts the infrastructure in
place, whether it's the air handling, the compressors, the
(03:15):
autoclaves, all of the stuff that's necessary for medical
office soldered into that building, they're not moving for
a long time. And they pay their bills.
So they're, you know, a credit worthy tenant.
How did you? And this is a business that's of
course, gone through a lot of consolidation evolution.
How have you kept up with the changes that are taking place in
(03:38):
a lot of that consolidation? Well, let me get the basis of
the decision. In medical office we know and I
know as I say as frequently, thehuman body is never going on
style right. In medical office, we have upper
80s percentile renewal rates on our leases and so there's
significant investment. I create a box years ago of
exactly how we best where we invest.
(03:58):
We look for certain dense areas,pro growth probusiness areas.
We look for significant investment by our tenants.
The the challenge for medical office in the high barriers
entry, which I've been through as you just don't go by a
medical office, you need to understand the business.
You understand how it's related to hospitals and you understand
what what exactly they do, how their business works.
(04:18):
So we dive deep into financial statements when we're
underwriting these tents becausewe understand what is the
dynamic of the doctor group. If it's a physician group,
what's the dynamic of the business?
Is it private equity, injected capital?
Are they putting out a lot of debt?
What does it mean? We look at going concerns and so
we look at so many different factors that's from a business
(04:39):
standpoint. Then from my commercial real
estate background, I'm also ACPA.
So for my commercial real estatebackground, I look at the
fundamentals. We look at market rent and
absorption. We look at construction, we look
at ingress egress, parking is isa big, huge type of factor to
look into understanding how flows, patient flows.
(05:03):
We look at conditions of elevators, roofs, everything,
you name it. So that's the real estate side.
OK. Then we're looking at what other
outstanding factors can impact the real estate investment for
medical office. So it's not for the faint hour.
It's it's a very complex underwriting if you want to be
successful. We've been doing it for a long
time, had great tenants. I started with a little company
(05:25):
called DaVita. I went to their headquarters and
said here's where you got to start investing in after we
bought and developed our first deal, We, we are the ones that
screwed up the market. We were one of the first
companies that sold for a six cap and I said we'll never sell
for a six cap and we sold for a six cap.
And then all of a sudden it was 5 caps in, in medical office.
And because it's conservative asset with upside and it's why
(05:49):
when you look at our track record and we have upper 20s IRR
with our entire portfolio medical office, we're mid 20s
for conservative assets. So that's pretty good.
And so we have a great leadership team.
We understand medical office. And if you really dig into using
your experience of the real estate fundamental and then you
(06:09):
understand the business side of it, you can do very well.
But it's not, it's not, it's notso simple.
It's it's there's a high barriers entry to really
flourish in medical office investing.
That's why a credit ambassadors,Victor love what we do because
they can invest passively. We do all the heavy lifting.
We manage it and everything. And people say, well, it's it's
(06:30):
management intensive. There's a lot of work you got to
do to manage it, to make these doctors and tenants happy.
It's it's a lot of hand holding,it's a lot of management
intensive. It's making sure things flow.
You have multiple people going in and out of these buildings.
So safety and insurance come into play.
Parking lots, the conditional parking lots, landscaping, the
aesthetics also comes into an addition to safety.
(06:53):
So there's a lot that goes on, alot you have to consider.
And because we've been doing it so long, it makes it a lot
easier to take down a property when you can understand it no
have the confidence you can manage it properly for your
tenant or tenants to flourish. There have been a few medical
outfits that have gone belly up over the last couple of years.
Not many, but they've been fairly high profile when you
(07:16):
look at those. Have you done any root cause
analysis on why they went bust? Because you know, the
conventional wisdom is, well, ifyou're in medical, you're all
set. I mean, there you're, you've got
a great income stream and yet there have been some spectacular
failures. Have you looked at any of those
and seen you know what are some of the root causes?
Well, some of the root causes are the way that business
(07:36):
functions and it could be insurance reimbursements to it
could be also like we don't buy emergency rooms.
That's one thing I stay away from.
I'm not a big believer. OK, I was going to ask about
that. In urgent care clinics, Urgent.
Care, We'll own urgent care thatI'm, I'm OK with because you
know, you could take like a hospital system like HCA, which
owns a lot of urgent care is good credit.
(07:58):
You could look at how it flows and you can understand the
business emergency rooms that westay away from.
But one of the things that's really important, that's been
prevalent, I would say the last handful of years is that these
private equity firms are coming in and buying some of these
medical, like autism is a huge concept that we own.
And the private equity is comingin.
(08:20):
And what ends up happening is you see when you look at their
historical financial statements,you'll see the amount of
leverage they're put on these things for expand and they're
expanding rapidly. They'll go from 40 locations to
90 in two years. It's huge expansion, putting out
a lot of debt. And then you say to yourself,
can they sustain themselves? Are they going to start
consolidating? Those are the risks you see as
(08:42):
consolidating made gang rib because they expanded way too
fast and they weren't waiting for their income to catch up and
they're and they're playing thiscatch a game and they got to
keep raising money. Yeah.
I mean, the typical private equity play is a roll up where
they want to aggregate as many of these businesses together to
get a higher multiple on an exitdown the road.
And it doesn't matter what happens 10 years down the road,
(09:04):
they're mortgaging it today so that they can get that higher
multiple and get out. Yeah, it's scary because when
you are a landlord and let's sayyou sign a 10 year lease with a
tenant, you have to ask yourself, OK, well how am I
adding value? Am I going to hold this thing
for 10 years? Where's my rent compared to
market? And then you got to look at the
fundamentals and say, OK, how amI protecting my downside?
(09:26):
So one of the biggest issues I see is with these private equity
firms expanding so rapidly is what happens with the landlord
At the end of the day, the 1015 year lease there won't sign, you
know, in order to get the best TI package or in order to get
the best rent, you know, to keeptheir costs down.
Then you then you got to really look at say, well, tell me about
(09:47):
the business plan. When are you going to be
profitable? Well, we're going to be
profitable in 2027. Then don't worry about it.
You just hang tight and hang in and now you're betting on their
business. OK.
And so the good news is maybe your rent is below market.
You can afford it based on your basis, but at the end of the
day, you have to be very carefuland underwriting.
(10:07):
You have to really look at your fundamentals and say, how do I
protect my downside in the situation?
If I'm going to bet on this particular tenant, how do I
protect my downside? And doesn't make sense.
So sometimes you make these decisions because you have a
vacancy. You say, hey, I want to and
right now their credit's OK, they got equity.
But sometimes, you know, Victor,a year or two down the road, you
(10:29):
know, with all the debt they start putting on it, that equity
that you underwrote from the appget Go changes and their
creditworthiness changes. So you really have to look at
the fundamentals when you're doing these type of situations.
So do you re underwrite after? If there has been a transaction
that's taken place with an existing tenant, do you re
underwrite the deal to assess your risk?
(10:50):
Yeah. I mean, we're constantly
looking. Every year we're getting
financial statements for our tenants and to make sure we're
looking at, OK, what's going on,what's it look like we have to
refinance this particular property.
So we're constantly monitoring. This is part of great asset
management that we do at Alliance is not only engaging
with the tenant and the corporate headquarters.
(11:11):
What's going on the business? What do you plan on doing?
Explain me some of these line items in the financial
statements. We're going knee deep shoulder
to shoulder with these companiesand these businesses to make
sure that we're going to get rent, we're going to collect
rent, make sure we protect our downside on a frequent basis.
It's not an annual. We're doing it monthly and
quarterly too on some of our portfolios.
(11:31):
So This is why the user experience for the investor that
invests with Alliance is that 7 star white glove service because
it's what goes on behind the curtain, so to speak that they
don't see that we're doing to protect their capital.
And protecting capital is the number one thing that we do for
all our investors around the world.
(11:53):
It's, it's critical, it's, it's the number one priority that we
have in Alliance because our core values, so you know, is
transparency, integrity, consistency and expertise.
And if you work at my company, that's what you adhere to.
And part of that is how do we treat our tenants?
How do we treat our investors and how do we move forward as a
company as the world is constantly changing?
(12:15):
As part of your process, there'sobviously a debt cycle, debt
maturity and you know renewing that debt on whatever time cycle
makes sense. Is that synchronized with your
lease renewals or is it out of step with that?
How do you manage that push pullbetween what's happening on the
leasing side and on in in the credit markets?
(12:37):
Well, we're one of the best firms that placing debt on
properties we're outstanding. I've been doing it for a long
time. I do all non recourse financing
through banks. Only one I know does that
frequently and part of that is, is understanding debt and having
flexibility in your loans. I am a big proponent of
flexibility because like I said,this was the greatest lesson I
(13:00):
learned a long time ago was the ability to hold.
When I first acquired my first property, which was a 95,000
square foot industrial building back in the early 90s and I lost
a tenant the first week after I closed and I panicked.
I was a young guy, I was in my early 20s and I panicked, but I
(13:20):
ended up problem solving and I subdivide renegotiated.
And what it taught me is that the ability to hold is
everything in our business, whether it's reserves,
underwriting or properly doing enough due diligence.
And that first deal meant everything because it taught me
the greatest lesson in investingthe ability to hold.
(13:43):
And so with that being said, when I look at credit and debt,
it's the same thing. I need the ability to hold.
So what I do, and I learned thisfrom another deal I did $50
million office campus, 300,000 square feet.
I was young and a little guy named Warren Buffett decided to
pull out of two floors of one ofmy buildings and change the debt
service company real quick. Again, it reinforced the ability
(14:05):
to hold. And so for everyone out there
listening, if you're going to put debt on, I suggest do not
over leverage, don't take on meds debt.
Don't think that hey, if you have to raise, you know, someone
taught me this. He used to work for Sam's Al.
He said don't over leverage properties, which I already
knew. But he said don't ever sign on
loans, which I don't. And #3 is I have the ability to
(14:28):
hold. And when you put debt on a
property, make sure in your covenant you have flexibility.
So whenever I sell a property, no prepayment penalty for Ben
Reinberg. I don't believe in that.
I want flexibility. I want to benefit my investors.
If a lender says wait a minute, we'll have prepayment for
yourself, I'm like, look, the whole objective is to make a
profit. You're making a profit off of
(14:48):
us. If you understand banking, you
could underwrite it properly andnegotiate with them and
understanding covenants that impact their biggest thing is
that service coverage. Can you pay the mortgage?
Are all the bills going to get paid and you're not going to
default? And by doing that is don't over
leverage problems, GO-65 or lessLtd if you can have enough
(15:09):
equity. The other thing I teach people,
OK, I teach people all around the world about investing is I
tell people that now I don't puton too much leverage.
Have enough reserves in your bank account to deal with the
rainy days and the what ifs thathappen to have the ability to
hold. But also, it's also extremely
important that if you need to put more equity in your
(15:32):
properties and take less leverage, do it.
If you have to pay a lower return to your investors, let's
say you're paying A6 or 7% preferred return to your
investors, pay them A5. They'll appreciate it because if
you get explained to them, hey, we're taking on less leverage to
protect your capital. But there's upside at the back
end that would project maybe a decent IRR.
(15:52):
That's what investors want to hear.
So protecting capital is everything in alliance is what
we do very well. And when it comes to credit,
make sure you have flexibility, make sure you don't over
leverage and make sure you have enough reserves to deal with the
what ifs. Because everyone thinks cash
flows just keep ascending into the air, Victor.
That's the whole concept of whenpeople get into risk.
(16:13):
But what reality is, I can tell you from over 3 decades of being
in this business and being a leader is real estate.
Cash flows are like moguls, OK? If you ever been skiing, they're
like moguls go up and down and you have to be able to ride
through the different cycles anddifferent points.
Look at what happened, Victor, in 22 and 23, investment sales
(16:34):
were down 80%. In my entire career, I've never
seen that. And I was wondering, I said, how
are deals ever going to trade? What's happening?
We're ascending in the United States, ascending rising
interest rate markets, values are down, trillions of dollars
of loans coming due over the next few years and lenders were
lacking liquidity. So I said, OK, well this is
(16:56):
going to be a perfect storm to get into multi family because
all my peers are doing these five year bullet loans and
they're coming due. So we're going to open up
division, which we did. But I also saw that you have to
be able to ride through these storms.
So with a lack of deals being transacted in that 1 1/2 to two
year period, you have to say to yourself, OK, are there tenants
(17:16):
running around? How am I going to deal with my
lenders? And it was interesting times,
those times. But again, it reiterates the
ability to hold, to be able to ride through cycles, make sure
you're doing the right things, proper underwriting.
And you know what, sometimes yougot to walk away from a deal
that you're underwriting, that you're looking to acquire, and
sometimes it's the best thing you've ever done.
(17:37):
And so to go back to credit, flexibility, ability to hold.
And by the way, here's somethingI want to teach everyone out
there. It doesn't matter how
experienced you are, have a relationship with your bank or
your lender. I know they jump around the loan
officers go to workout guys, andI've been through it, I've seen
it all. But the reality is have a
relationship with your bank. If you could do multiple deals
(17:59):
with them. But the reason why is when you
have a challenge or refinance orthe market changes, you have to
be able to pick up the phone andhave a conversation. 100% Well,
Ben, if folks want to connect, if they want to learn more,
what's the best way? Well, there's a couple ways.
I mean, if you want to invest with us and learn how we can
build you wealth and incredible tax benefits, we do some very
(18:20):
unique stuff for taxes. I'm also CPA, go to Alliance
cgc.com. That's alliance cgc.com.
If you want to invest with us more and more about investing
you can get on our blog. We talk about all different
things. We're on the sub stack.
We have great webinars. It's all about educating you how
to become wealthy and increase your investment portfolio.
(18:42):
If you want to follow me and learn how to invest in
commercial real estate, you wantto watch my new TV show I own
it. You want to see me speak or do
you want to take our courses or you want the new book to learn
how to continue, amend, grow, defend and compound your wealth,
go to benreinberg.com. That's my name, Ben reinberg.com
(19:03):
and I will show you personally how to grow your hard asset
empire as you start growing it. And also, if you do have assets,
let's say a thousands and thousands of multi family units
or industrial, whatever is your Bailey with, I will teach you
things that you should be considering that will open your
mind to it. So if you get my book hard
assets and Hard Money for Hard Times, you'll be able to learn
(19:24):
that. But also we have courses that
bring the book to life that if you want to advance your
commercial real estate and investing experience, you can
take our course. They're very cheap.
I love it. Well, Ben, great to connect.
And for the listeners at home, definitely you'll want to
connect with benreinberg@alliantcgc.com or at
benreinberg.com. The links will be in the show
(19:45):
notes. And in the meantime, have an
awesome rest of your weekend. Go make some great things
happen. We'll talk to you again
tomorrow.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!