CRE Capital Markets with Rick Jones—How Distress, Demand and Debt are Reshaping the Real Estate Cycle

Rick Jones, Founder and Principal of Jackstay Ventures LLC, joins the LightBox crew to unpack the latest capital markets chaos stirred up by post-tariff volatility and macro uncertainty.  The conversation spans the latest pulse on recession risk and lender behavior to the evolving role of warehouse lending and the long-awaited wave of distressed debt. Rick’s take? The CRE market is doing just fine—but there are some tells that he says will warn us when real trouble is afoot. Never one to shy away from knotty topics, Rick makes the case for considering CMBS conduit reinvention, and why the best time to rethink assumptions is when no one thinks it’s necessary. Always entertaining, Rick takes the team conversation to high-rise mausoleums, magical thinking, and the dangers of overusing adjectives. 

01:58 The Impact of Volatility on Commercial Real Estate

06:41 The Role of Non-Bank Lenders

10:36 The Distressed Debt Market

13:07 Warehouse Lending

15:16 The Slow Burn of Market Distress

21:03 Office Distress: The Race to Resolve

22:04 Is it Time to Rethink CMBS Conduits?

27:26 Magical Thinking in Market Analysis 

Have questions for the pod team? Send them to Podcast@LightBoxRE.com. 

www.lightboxre.com

Transcript

The CRE Weekly Digest by LightBox

Episode 41: CRE Capital Markets with Rick Jones—How Distress, Demand and Debt are Reshaping the Real Estate Cycle

April 11, 2025

[00:00:00] Martha Coacher: This is the CRE Weekly Digest by LightBox a firm transforming the commercial real estate landscape by connecting every step of the CRE process with comprehensive tools and data. I'm Martha Coacher with Manus Clancy and Dianne Crocker. This week we're talking to Rick Jones, a well-known leader in capital markets and securitization.

We're gonna be talking about macro conditions for capital markets, which is a meaty topic given the latest news, the lending environment, and possibly whether it's time to remake the CMBS market. Rick is a founder and principal of Jackstay Ventures and editor of the newsletter Crunched Credit. He's a former partner at the law firm, Dechert and actively involved in numerous trade organizations for real estate and finance.

He's a recipient of both the CREFC Founders Award. And a distinguished service award from the Mortgage Bankers Association for his leadership. So we've got a nice, healthy resume, Rick. Thank you. Let's start with the macro environment, and there's no lack of information there given what's happened in just the last week.

[00:01:05] Richard Jones: My, oh, my what a time to be talking about the macro environment here on Monday, the 7th of April on a Monday. That was supposed to be a black Monday, and it's not quite as black as they thought it was gonna be, but troublesome enough. Interesting times, Washington seems untethered from traditional morays about what they might do and at what pace they might do it, and has created obviously, vol volatility across the entire economy.

And commercial real estate should not feel left out. I think we will feel the tailwinds or the headwinds of what's going on the tariff side and the tax side and all the other initiatives from this White House all year long. And it's for the foreseeable future. 

[00:01:43] Manus Clancy: I'm a big fan of Crunched Credit, which is the newsletter written by Rick for many years.

Not only is he incredibly well-informed, but he is also incredibly insightful and humorous. So with that, Rick, let me pivot to something very quickly. In times like this, lenders tend to pull back. Have you seen any of that yet? And are you expecting it? 

[00:02:10] Richard Jones: I don't really think so. Mass, I think this could be an interesting year for CRE.

Anyone who thinks they know what's going on is clearly wrong. Because I'm not even sure Mr. Trump knows what he thinks is going on, but on the other hand it's conceivable that what we're looking at, while bad for the economy, writ large and certainly bad for my 401 could actually be, positive for commercial real estate and commercial real estate finance that we don't know the scale of the disruption. We don't know whether we're gonna see a recession. I saw today the clarity thinks that the chance of a recession is now up to 55% in the next 12 months, up 30% in the last two weeks, I think.

And so I think we can't dismiss the possibility of a recession, but you could make the case and you could pick your narrative and enjoy it as much as you like. You could take the narrative that was, we toy with a recession of some level, the Fed is gonna step in and begin to lower the short end of the curve.

Though obviously the long end of the curve's already moved down considerably making mortgage finance in the fixed rate market more amiable. So we could see, the cost of borrowing money begin to retrace its long run up over the past several years. And then it's a race, right?

It's a race between whether the. Economic conditions are more negative for income or more positive for expense control. And I don't know who wins that race, but you know, on balance, there's a fair chance that real estate could become more easily financed over the next few years. Next few quarters anyway than we thought it had been.

And, the legacy problem and the distress of debt bulge that we've been looking at might get a little easier to deal with. More assets might actually pencil out that were not before. So, if you're looking for the silver lining gang gig here, you could say that what's bad for the economy writ large might actually not be so bad for a commercial real estate market where there is a lot of pent up demand.

There's a lot of cash on the sidelines. A lot of borrowers I think would like to reprice. And get on with their lives and, unbalance it. It's not all negative from the point of view of our little corner of the capital markets. 

[00:04:11] Dianne Crocker: Well, Rick, it sounds like we're all gonna get along fine because this crowd does tend to run a little optimistic.

I'll second Manus and welcoming you to the podcast. We're really honored that you're here today. I'm also a new fan of Crunched Credit, which I just subscribed to. One that I read just prior to this was a blog that you wrote in late February that was called What Just Happened, and in light of what happened last week, I thought it seemed particularly prescient because you wrote When market participants.

Think that business is getting better, animal spirits are released, and that in itself turbocharges transactional activity and that would be our reality in 2025. So at LightBox, the metrics that we watch, especially in March. Were particularly strong, the number of properties listed for sale, the volume of commercial appraisals that lenders were asking for.

The volume of environmental due diligence that typically happens before a loan or a refi or a property purchase. And what you warned in the blog was as you enjoy this kind of mojo bump, let's all remember that the winds of the intangible. Gestalt can change on a dime. Now, based on what you just said, it doesn't sound like you're overly concerned about the news last week, upsetting the market, what do you see that may make our market change on a dime?

What are you concerned about? 

[00:05:35] Richard Jones: There's plenty to be concerned about, and I think the market still wants to break up. I think that the gestalt for it could be a better year, is still sort of in place. It might be a little ragged. On balance, I think the market would like to break up. Could that optimism be destroyed on the surface of that dime we're talking about?

Sure could. We've certainly seen a lot of massive headline risk over the past two or three weeks, and I'm not sure we've had that break of the gestalt to the negative yet. Maybe we will, certainly full scale trade war with absolute impossibility to continue to trade products because we're looking at a hundred percent tariffs one way or the other.

And all our world leaders are sticking out their tongues at each other and saying, N nah, nah, n nah. I mean, you could destroy this market. You could destroy those animal spirits. I think they're fairly robust and they so desperate to be true. I think we'll hang in there for a while.

There's so much money on the sidelines that needs to get invested. There's so much pent up demand that it's gonna take a real, two by four into the head, I think before our market falls apart entirely. 

[00:06:40] Manus Clancy: I'm happy for your optimism. I have to say that I feel the same way, but all it takes is one hiccup and then we're back to 1997.

[00:06:49] Richard Jones: Discontinuity would do it. Right now we're in a period of high vol and that makes everyone nervous about, how do you price, how do you price anything when you're not sure where it's going? And that sort of volatility will, I think, impact deal volume and velocity a little bit.

People are trying to work their way through it. And let's face it, I mean there was a time when lenders issued things called commitments and they were good for 60 or 90 days and they tried to hedge 'em, kind of, sort of, and borrowers had clarity as to their cost of funds. Those days have gone, and pricing is pretty close to the day of which the money is dispersed.

The risk of volatility has been shifted, I think from the lender side to the borrower side over the past several years. That's just the way the world works. But unless those types of masks, those types of discontinuities, it's hard to see. I. One on the horizon right now, which of course doesn't mean much since we never see them on the horizon.

All we know is that the things that kick us in the ass you don't see coming because they're behind you. Right? But you look out there, in the last sort of discontinuity that really struck us was the bank failure issue. From the mismatch to their treasury book. Those issues seem to be gone. The banks seem to be pretty damn well capitalized.

The debt fund business has got lots of capital and lots of liquidity. I think one of the tells out there was if you see the big banks start to pull in their horns on the warehouse business, the repo warehouse business, that would frighten me. That could significantly impact our business.

But right now I don't see that happening. I don't see any threat of it. I haven't really heard much talk about it. 

[00:08:20] Dianne Crocker: Well, you just answered my question, which was what do you think would make lenders pull back the reins again? I'll harken back to another blog that I just read that you wrote, which was that 2025 and even 2026 would continue to look a lot more like 2024.

I. The transformational dreamscapes from the White House were the resistance. That was your actual sentence. Clearly the biggest change in the market, I think in, December, January and certainly through the end of March was just that banks came back, after several years of really kind of staying on the sidelines.

They're in a better position today, as you just said, to make loans. So that's why I wanted to ask you, when you predict that this year would look a lot more like 2024, are you still feeling that? 

[00:09:01] Richard Jones: The good thing about being a talking head is that when you're wrong, no one remembers.

And when you're right, you have the chance to tell everyone how right you were. Wrong is not an unlikely scenario. I still rather think though that there's more continuity. I think that the current situation is not gonna crash. The commercial real estate space, what could do it?

A screaming recession combined with increased inflation, the classic stagflation of the seventies, that would be a killer. And we're worried about it, and I think we're worried about it for reasons that are not without a basis in reality. But I don't really see it happening and threatening as we sit here today.

In that case, I think continuity will out and we'll continue to see, a not a spectacular growth year in terms of production. I've seen a lot of loans recently in the bridge space, transitional loans, which are kind of the most sensitive to these types of issues.

Those loans are really good. They're tight on covenants. They have pretty decent spread, certainly spread to the cost of, the lender's cost in terms of their equity plus their warehouse position. And they've got decent protections all around. The trouble is there's not been enough of them.

So I, I was joking the other day. I said there's 3000 loans to be made this year and there's 3000 non-bank lenders trying to make them. So everyone gets a loan. The banks I think are coming back. I think the death of Basel III was huge and maybe more important, sort of the restatement or reset of how the examiners are approaching the banks is huge.

I think that means that the regionals and sub regionals, they've got more confidence in their risk-based capital position. They're not worried about getting to a place where they can't lend, and so they're prepared to come back to the marketplace. I think those banks will also be prepared to dump some of their legacy bad assets.

They've got enough RBC on board that, they can take the hickey from a disposing of an asset at a discount and move on. So I think, we're gonna see, more of that going on which could lead, and I've said this in print two, with both a robust origination market and a robust distressed debt market running in tandem, which would be pretty weird, but certainly the basis of which is there, I mean, there's, there are billions of dollars of legacy assets that still need to get repriced.

And unless interest rates come screaming in. I think they're gonna come in, but not scream in those assets, are gonna need more capital. Whether from the current owners of those assets or from the, you know, the pirate ships of rescue capital that's gonna set up some opportunities in the distress debt space.

People have been waiting for that, like waiting for gado, right? They've been waiting for distressed debt to become a thing for years. And this, maybe eventually, you get it right, like a stop clock maybe. Maybe it's time for the clock to stop on the right number here.

[00:11:41] Manus Clancy: Let me peel back on something that you said just a moment ago. I'm curious about this. You talked about banks pulling back on warehouse lendings and then you pivoted to non-bank loan originators. When you talk about banks potentially pulling back on warehouse lendings, are you worried just about the fact that non-bank lenders may no longer.

A source of liquidity in that scenario, or is it more, there's ultimately a capital call and some of these non-bank lenders get into bigger trouble with actually running a ground like we saw at various points during high volatility in the past? 

[00:12:19] Richard Jones: Well, the non-bank lenders need leverage from the, they need back leverage to make their models work.

And they become very dependent on it. The banks for a long time been of two minds about warehouse lending have now concluded Warehouse lending's. Terrific. I remember trying to talk one of our big banks in London into doing warehouse lending 10 years ago, and they thought I was an idiot, but I kept telling 'em like, you're gonna get two thirds of your coupon on the underlying loan. You're gonna get a partial guarantee. You're gonna get cross lateralization, and your attachment point is 48%. What's not to like? And the warehouse lenders have poured into the space and they're holding in. I think they're working with borrowers, the non-bank lending set, dealing with the problem assets.

The Marx have been very private. There's no evidence of a panic. Where everyone marks everything to zero and runs away and that blows the world up. I don't see any of that happening. So I think the warehouse lenders will hang in there and today, the way the warehouse deals are structured, the banks, particularly the big banks, get securitization treatment on their warehouse positions, which means their risk-based capital is, 20% of what it would be making actual loans.

Secured by commercial real estate. So I don't see that as a place of, as of tension. I'll tell you one thing though, as a tell though, if the warehouse business begins to be crippled, we're gonna land a hurt and it won't be a, it won't be a year of continuity. 

[00:13:39] Manus Clancy: So one of the big topics du jour Rick, is distress in commercial real estate in general among non-bank lenders, and certainly within CMBS.

The office market has been decimated. There's also the term extend and pretend, which we saw a lot in 2008 coming back. The wall of maturities is talked about all the time. How do you see the market of people that have no equity, negative equity? Have lost tenants, low DSCR, the whole litany of things right now in distress.

How do you see that playing out in 2025? 

[00:14:14] Richard Jones: Distress is great fun if you do what I do for a living. There's no better fun than you have in the distress debt cycle when you join the pirate boarding party and you bail out an asset which is maybe good for the asset, but generally bad for all the human beings on board.

It's kind of a neutron bomb of financing. The market has been predicting a significant distressed debt cycle. In six months for the past five years, and they might finally be right. So stop clock, we may be right this time. That wall of maturity is real. Last time I said to the back of the envelope, it looked like there's about, 400 to 500 billion of assets that will need material new capital infused.

It'll be, cash in financing, not cash out financing to make them continue to work. And some of them are, and some portion of that are nowhere near. Penciling. There's some if you did a deal 10 years ago or eight years ago, you probably have enough revenue growth to, to make it all work.

But the boy, for the things done in the three or four years of zero bound interest rates right before the recent times, those assets are gonna need are gonna need help. We're seeing an increased number of office assets in conduit deals again, particularly the five year market. Because there's some offices office assets that are great.

But some are horrible and the bad ones are really bad and on the bad ones, no one knows where the bottom is. Can you buy these assets? And I do remember back in like the early nineties of selling a giant office building in Chicago for the amount of the outstanding property tax liability. So I had a client who burned $170 million of invested money and got $25 million back.

There's a price for everything. I always used to say there's no bad assets. It's bad pricing. Most assets over enough time do get better. S just how long. But I think we're in a place now where unless interest rates come screaming in. That's a sort of a binary issue for me, and or a massive recession happens.

They're not bridges, they're peers. They can't get to the other side. A long cycle is indistinguishable from a secular change while you're enjoying it. And if that's true, then extended pretend stops functioning. 'cause you don't have a rational way to get to the other side and throw the asset out.

There've certainly been a lot of anecdotal talk about. Lenders getting to the point where they're not really prepared to extend without an awful lot of repair. Extended, pretend really should be extend, repair and not extended. Pretend, because most lenders are requiring some significant new capital or some fix in order to extend.

But after you've done it twice, at some point you gotta say, timeout. This is just not getting better. And I think we're closer to that place today than we have been any time in the past two, three years. Which means I think we're gonna see more ex, I think we're gonna see more assets actually trade in the marketplace.

[00:17:04] Dianne Crocker: It does seem when you, when we look back at the previous downturns the forecast of distress coming on the market, they're always hyperbolic. They're always, predicting this wave of distress. And for folks that work in that business, they get potentially excited about a new opportunity and then it comes through a little bit slower than anybody forecast.

I just had someone ask me the other day. Why they weren't seeing more non-performing loans come on the market. And I will for sure direct him to listen to this podcast so he can hear your answer there. It certainly sounds like the expectation is we will start seeing more banks are in a better position to move them into play given market conditions, and there are more debt funds certainly coming online to buy non-performing loan portfolios.

But sounds like it'll be more of a trickle or a drip than a true deluge. Is that right Rick? 

[00:17:53] Richard Jones: I think that's right. I think it's gonna be highly episodic. The business of distress, that is painful, right? Because you, if you've gotta raise money to do distress, you gotta be raising money long before distressed occurred.

And then once you raise the money, if you can't put it to work, your investors crochety about the fact they're not getting a return on the, all this money they expected to get 19% on. So it's a very hard trade to, to get done. So the multi-strat, bigger non-bank lenders who can simply say, I got a bucket.

I don't have to use it, but I can use it, are the ones who are gonna be best positioned to succeed in the distressed debt marketplace. All these new funds would say, I'm gonna raise money to do it. They're gonna miss the boat. 

[00:18:33] Manus Clancy: For years we watched the mall space play out so slowly seemed like it was on life support from 2015 to even now in some cases, loans that were made 15 years ago.

The debt has not been resolved. It's been extended three or four times. It's the patient that just. Continues to breathe, and of course it made sense, right? We had e-commerce and it ate away a tenant base and so forth. The contrast in the last couple years has been the office market where there's been a race to resolve.

We've seen so many of these things sell at 30 cents on the dollar, 20 cents on the dollar. It seems like property owners couldn't give these things away fast enough. They had no interest in trying to keep these things going. Have you been surprised at the pace at. How quickly owners have thrown in the towel in that market, in so many cities, Los Angeles, San Francisco, Chicago.

[00:19:22] Richard Jones: It's interesting to see what I would think is rational behavior. Rational behavior generally takes some time to, to break out. It's the old Winston Churchill code about after we do all, everything that can't possibly work, will eventually get around to something that does. I think this is a rational response to what's happening in the office market.

It usually takes longer to manifest this time it, it people got there pretty quickly and maybe because we've seen this movie on other asset classes before. Decided, let's not wait around and watch our equity just dis dissipate. Because you look at a lot of these buildings and, it's apparent to everyone.

They're not gonna work. If you're investing in one Vandy, you're fine. If you've got, a block on Sixth Avenue between 42nd Street and the park, you might have a problem. I suggested by the way that we think about converting these buildings into high-rise mausoleums, because those people don't, are not troubled by the fact the floor plate is 85,000 square feet.

They don't need air conditioning much, they don't need windows. And it's a perfect reuse of an existing asset. And I was, I did, I said that, obviously tongue in cheek, but then someone sent me an article that said, in Korea, highrise mausoleums are the big thing. So there you go. New business plan.

[00:20:29] Manus Clancy: Well, when I decide to go dark, I always joke with Martha that these things may end up as either billboards or stocking stuffers. It's hard to know at this point so we'll see. But I should let you take over. Martha, we have a lot of questions on the CMBS market as it exists today and where it might be going.

[00:20:44] Martha Coacher: You recently pitched Rick in one of your. Blog posts and perhaps in other places that there might be some thinking around a remaking of the conduit loans and the statute behind remix as they're known. Is it time to remake CMBS? 

[00:21:02] Richard Jones: I think there's a lot of people have thought it's been time to make remake CMBS for a long time, but we all have day jobs and that sort of thinking gets pushed to the back burner.

Yeah. I wrote about the possibility of amending remic. At a time when, Donald Trump is pursuing a big, beautiful bill, which will probably be 2000 pages long, and if we could slip a couple of pages in there that reduces the Remic Strait jacket, I thought that could be a positive for our industry.

I also have thought for a long time that, we do have a fundamental problem in the business is that borrowers don't particularly love us. I remember writing an article with Jack Cohen 20 years ago called the Miranda Warnings for Borrowers before they entered the CMBS market.

Make sure they understood what they were getting themselves into. And, it's, people's experience, particularly in the. It's not so much the SASB market. If you're talking about the really big boys, the capital markets works just fine. But for the smaller players, whether it's conduit or whether it's CRE CLO or whether it's other asset categories, the servicing structure, the rigorous guardrails around what can and cannot be done in a CMBS loan are problematic.

And, one of those things you can't fix, which is in portfolio lending, you could. Walk into your lender and say, Hey, Mr. Lender, I know this loan just sucks badly, but hey, work it out and I've got a new loan for you. And that type of trade was how the log rolling occurred in the primary lending market for years.

And it doesn't work in capital markets 'cause you're dealing with a party charged with servicing the loan that has no interest in your next deal. Can't fix that. But there's a lot of things we could think about to try to make the servicing. Function more like a portfolio lending model. And I think we should, this is not a suggestion that we should replace what we have.

I think of this exercise as entirely additive that are there other products this industry could sell? And let's think of this. We make shoes, right? We gotta, we have suppliers and we have customers. We gotta make. Suppliers, we have to work with the customers. Are there other o other products that can be sold by our business?

The CRE CLO was a pro, a new product. It popped up. Called the CDO words, which will never leave my lips in this part of the cycle. In 2004, I think I did the last CDO for the late Lamented Wacovia bank in 2008. And the sale was so tough. Closing dinner was beer and hot dogs.

So we renamed, it reentered the marketplace in the, in 2012, I guess 2013. And that became a robust new product for our business. So we were very active in that space. Economics turned against that space recently, and the market, crashed because of that. But that doesn't mean the product's not a good product.

And I'm still a big fan of the products. I think it's one of the best ways for the portfolio lending market the non-bank marketplace to raise capital on a permanent basis, something they desperately need. So that's not going away and that's grown and become successful. Could we do other things with it?

I've been an advocate of the multi seller, CRE CLO for some time. I know there's problems with it, but in a marketplace where it's hard to generate product. If you only have 400 million and you really need 800 million to make the deal economically successful in Herf, maybe you should think about partnering.

And we partner in the conduit market like, my God, you see 10 banks on a offering these days. So maybe that's something we could do. Could we broaden it into the infrastructure space? Yeah. Could we just think a little bit about the fundamentals of our market? We invented CMBS kind of in the 1980s.

Had a very slow start into the mid nineties. What happens if you go back and say, okay, let's pretend, let's go to the time machine. Let's pretend we're gonna build a capital markets based financing scheme in the English Sense, not the American Sense scheme. For commercial real estate. What would it look like?

Could we test some of the fundamental underlying principles that undergird our marketplace? I think we can, I think it's a useful exercise. If that exercise, if we get through that exercise and go, Nope, we got the best model in the world. Can't get to better than this, we're done, that's fine.

But in a time when issuance has gotten considerably smaller than it was before the Great Recession and if you take out SASB issuance is tiny compared to the before the Great Recession. Shouldn't we, as the industry start at least spend a moment and think about the underlying structure of the products we offer?

I think we should. Not an entirely popular view amongst my colleagues, but nonetheless, I think it's an exercise we should undertake. And maybe there's not better mousetrap. Maybe there's other mousetraps out there we could sell to the borrowers on the one side and the investors on the other.

[00:25:39] Manus Clancy: So let's stick with that for a second. When you say people object to your ideas, what in particular are they not fond of? It seems like what you're saying makes a lot of sense. Last year, conduit, what was it, 30 or 40 billion? Not exactly. Eye popping numbers. If we can double that or triple that, it would seem to benefit everybody.

Why not? 

[00:26:01] Richard Jones: Yeah. I think the why not is the participants in the capital markets right now are doing just fine with the structure we've got. Why step off the stone you're on and look for a new stone if the stone still works. I think it's something that's some conservatism to all of that.

Yeah. I think some people might have. Heard that I was talking about substituting one new product for another, which is not true. As I said, this is an additive process and I'm thinking about are there, we have an industry, we've got lots of professionals, we have lawyers, we have accountants, we have bankers who, and servicers, all those people need stuff.

Can we find more stuff for them to do? It would be nice to grow the business in that way. So that's my hope. 

[00:26:45] Dianne Crocker: Another blog that I thoroughly enjoyed that you wrote was how we seem to be falling into this trap of overusing adjectives, and I wondered what adjective you would use to describe commercial real estate finance right now.

And then secondly, give us a big prediction for commercial real estate finance over just the next 12 months. 

[00:27:05] Richard Jones: Wow. And as I said earlier, the great thing about being in my world is if I'm wrong, no one remembers. It's, that's, that gives me freedom to, to tell you what I actually think. Yeah. Look, I, in terms of a I love the adjective story.

I, I write about things which I think our market is interested in, and sometimes I write about things I'm just interested in and adjectives. Excessive adjective use and euphemisms was driving me crazy. So I wrote about that. They wrote about magical thinking because that was driving me crazy as well.

And they're kissing cousins for sure, going, but going back to the more serious question of what's the market gonna look like this year? I think this'll be okay. CMBS board does a quarterly sentiment survey of the 55 members of the board, which is a big, big cross section of our industry, and there's a new one coming out soon.

I'll be interested to see what people say. There's certainly been more volatility in that index, for a long time it was like we were doing up, up, up, or we're doing down, down, down. And now the sentiment of the professionals is as quickly. Volatile is the sentiment of the population at large, worrying about how much their hotdog are costing.

So we'll see what they have to say. But on balance, and I always make the observation that, that no one can work into their calculus, the black swans that flap around our business on a on a continuous basis. But absent a new black swan, whether it's geopolitical or macroeconomic, I think this year's.

It's gonna be okay. We'll get over this anxiety over the Trumpian fascination with tariffs and I think, move on to a year that will actually play reasonably well. Maybe we'll look back on 24 is a particularly good year, but I don't think 25 will be a bad one. 

[00:28:44] Dianne Crocker: We'll have to have you back and see how it plays out.

[00:28:46] Richard Jones: Just don't remind the audience that I was wrong. That's all. 

[00:28:49] Martha Coacher: Well, you brought up magical thinking and for those who don't know, it refers to essentially having notions or ideas that are uncontested true. And you have that essay that called into question, that kind of thinking, where we need open debate and discussion on various topics.

And I'm curious where you think this is most needed today. 

[00:29:13] Richard Jones: Oof. It's a good question. Magical thinking is, yeah, this notion that I'm, I think something, therefore it must be true. And lots of historical examples. Galileo nearly got burnt at the stake because he had a different view than the Catholic church about whether the sun revolved around the Earth or the earth revolved around the sun.

I think right now I'm worried that we're gonna fall into the trap of characterizing the experience of the last few weeks, taking data points, drawing a straight line, and convincing ourselves that we're going somewhere, whether that's up, down, or sideways. And then stop looking at interstitial data to continue to reassess the views.

Magical thinking happens when, whenever we fall into the trap of concluding something is absolutely true. And incontestable, I think Michael Kreen, one of my favorite authors, famous, who was a doctor famously said, if it's certain it's not science. If it's science, it's not certain, well that can get you tossed out of many a party these days.

Those types of views where we infuse our conclusions with sort of higher levels of certainty that are appropriate or what gets us into trouble. 'cause once you decide something must be true, then you proceed from that assumption only in one direction. 'cause you have no other direction to go in.

Going back to this notion of animal spirits. If we conclude that the world just ended and this can't possibly get better, you know, we could work ourselves into a situation where economic activity begins in our space begins to slow deals aren't getting done. Enforcement of loans happens regardless of new capital where people pull their horns in.

And that would be a, that would be the scariest version of magical thinking available to us today. And I hope that doesn't happen because once the herd turns. It's hard for it to turn back. I was quoting one of my favorite authors, who I wish his name had not escaped me. We should make the story better but he said essentially that we lose our mind collectively and re acquire sanity one by one.

And, we could lose our mind here. All this distress, all this poking at us day in, day out on the 24 hour news cycle was painful. And if we all decide to run away, we'll all run away. And it could take a long time for sanity to reappear, and that's what I worry about right now. 

[00:31:27] Manus Clancy: Beer can certainly be contagious.

Tell us, Rick, we've touted your writings. We think it's great. Tell us how people can get on your mailing list and see what you write and so forth if they're not on it already. 

[00:31:39] Richard Jones: Yeah, thank you. If you Google Crunched Credit you go on the site and there's a button to push, to sign up. So you never miss my deathless prose.

And I do appreciate my readers and I'd encourage my readers, some of them talk to me about. Where I'm right, wrong, or indifferent, and I'd love to get those notes and I'd be happy to get more of them. 

[00:31:58] Martha Coacher: Thank you, Rick, for joining us today. It was very entertaining. Thanks to our producer Josh Bruyning.

Please join us every week as our LightBox team shares CRE News and Data and Context. You can listen and subscribe on any of your favorite podcast channels and send your comments or questions to podcast@lightboxre.com. Thank you for listening and have a great week. 

[00:32:15] Manus Clancy: Let's go.