How REITs Really Work: Sam Zell, Boston Properties, and $4 Billion in Real Estate Deals | Jonathan Morris - EP09

What exactly is a REIT and why does Wall Street love them?

In this exclusive episode of The Wealth Clock with Steven Weinstock, we sit down with Professor Jonathan Morris—a REIT industry veteran who has served as Chief Investment Officer, CEO, and board member for legendary real estate companies like Boston Properties and Charles E. Smith Residential. With over $4 billion in real estate transactions under his belt, Jonathan breaks down the mechanics of public REITs, the rise of the UpREIT structure, and the exact moment that changed commercial real estate forever.

You’ll also hear the inside story of Sam Zell, the RTC crisis, and how REITs like Equity Residential, Equity Office, and Public Storage changed the real estate game forever.

🎯 Topics Covered:
 • What is a REIT in plain English
 • Public REITs vs Private REITs vs Private Equity
 • How Sam Zell used the RTC crisis to build an empire
 • Why public REITs avoid mixed asset classes
 • How Regulation A and Regulation A+ open the door to small REITs
 • Why public companies prefer 20–30 percent leverage
 • The role of FFO, AFFO, and why NOI and IRR don’t matter
 • How the “ATM” (At-The-Market) tool changed capital raising
 • What REIT analysts look for—and why structure matters
 • How REIT Academy is filling the education gap in commercial real estate

📈 If you're a real estate investor, syndicator, fund manager, or even a passive LP, this episode is a must-listen.

🔗 Learn more at https://www.reitacademy.com

Follow Jonathan On LinkedIn https://www.linkedin.com/in/jonathan-morris-7b063314/

🎧 Listen to more episodes of The Wealth Clock with Steven Weinstock wherever you get your podcasts.

#REIT #CommercialRealEstate #SamZell #BostonProperties #PublicStorage #EquityResidential #RealEstateInvesting #UpREIT #JonathanMorris #TheWealthClock #StevenWeinstock #REITAcademy #MultifamilyInvesting #Syndication #RegulationA #PublicMarkets #REITStructure #RealEstateFinance

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🎙 About Steven Weinstock
Steven Weinstock is a real estate investor and founder of WeCapital and the Goethals Capital Fund. Since 2001, he has built a diverse portfolio of residential and multifamily assets while helping investors access passive income through strategic real estate opportunities. On this podcast, he shares real-world insights on investing, capital raising, and what it really takes to build and scale in today’s market.

📩 Want to invest or get in touch?
Visit: www.WeCapitalX.com

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LinkedIn: www.linkedin.com/in/stevenweinstock1

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YouTube: https://www.youtube.com/@TheWealthClockPodcast

Transcript

Steven M Weinstock: 0:01

Hi everyone, and welcome back to the Wealth Clock with Steven Winestock. I'm Steven Winestock, real estate investor, fund manager and founder of We Capital and the Goel Capital Fund, where we buy properties in cash lock in deep discounts, and scale smarter after a refinance. As always, this show is not about me. It's about learning from operators, founders, industry leaders who are making big moves and sharing what actually works. Today, I'm privileged. I'm joined by Professor Jonathan Morris, one of the most respected voices in the REIT space, real estate investment trust space. Over a career spanning nearly three decades, Jonathan has served as a chief investment officer, CEO. And board member for some of the biggest names in the REIT world, including Boston Properties, Charles E. Smith Residential. He's completed more than a $4 billion in transactions, and pioneered the use of UpREIT structures and has spent over a decade as a professor at Georgetown University. Now he's the founder of WREATH Academy. An educational platform designed to fill the knowledge gap in the REIT industry, helping professionals, executives, investors, truly understand the mechanics, the strategies, and the metrics that drive REIT performance. We're going to cover a lot. Professor Jonathan, thank you so much for being here. I appreciate it. Thank you for having me. Steel for those new to the space, what is a REIT in plain English?

Jonathan Morris: 1:46

In plain English a reit, a Real Estate Investment Trust is a type of legal entity that. You can set up to own multiple properties in unlike a limited partnership, which has always been the traditional method of commercial real estate ownership. A REIT has two different entities, one of which is a C corporation. The other is an operating partnership, which is also a limited partnership. There are many benefits to the UpREIT structure. The Upper UpREIT structure was invented in November of 1992. A year earlier the we had something called the dawn of the modern REIT era, which is when new comp companies that were formally decades old companies with brand names converted to a reit. Went public due to the fact that there was virtually no capital available for commercial real estate. So the pivot, if you will, was to take your portfolio, create a reit, move your assets one by one into the reit, and then using that as your base, sell a portion of your portfolio. Into the stock market and overnight you be, you are now a public company with your stock trading on a daily basis. But that was a huge benefit to many companies at the time. And many of those companies today are the leading REITs in the market.

Steven M Weinstock: 3:28

Can you explain the difference between a public REIT and a private REIT and private partnerships?

Jonathan Morris: 3:34

Sure. So the first question, public versus private. A lot of people might form a private REIT because the structure itself is flexible. For example, if you wanna a, if you run a private REIT and you wanna acquire a property. That property is say 20, 25 years old, but it's very well located. It's in great shape, and the seller is interested in selling it. You can bid on the property and you can bid cash for it, but you can also buy it in another venue. That venue is exchanging equity in the REIT for the property. The seller pays no capital gains taxes on that deal, and as long as the equity is valuable and you can define it as such, then the seller may be inclined to do that with you due to the fact that they've depreciated the property significantly over the years. Any sale for cash would incur a large amount of recapture of depreciated basis. So they might sell it for $25 million, but they may end up paying $8 million in taxes. The public REITs are those companies that I mentioned earlier. That were sizable, had big portfolios and were very well thought of the investment bankers that approached those companies. One was, one big one was Merrill Lynch, another was Goldman Sachs. Their focus was to have them create the REIT. Move their assets into it and sell a portion of the company, be it 5% or 10% of the company into the public market, and therefore the company becomes a publicly traded reit. And as a result of that. Everything that goes on at that company is intended to be transparent. So they need to file documents with the Securities Exchange Commission at a minimum quarterly with all their financial statements, and the good REITs will file more often. So if there's a material event that occurs, they're gonna buy a property, they're gonna hire a very senior executive they, they have a big CapEx issue at a property. Most of that gets filed with the SEC, and you and I can go on the SEC's website and read those filings in real time. The difference between either a public REIT or a private REIT and a limited partnership is it's pretty stark. The. The way a REIT works at its core is by its ownership. Remember I said there's two parts? The bottom part is an operating partnership that is actually a limited partnership. Okay? The top part of the structure is a C corporation. The C corporation is the general partner of this operating partnership. So the benefits are many. When you create a reit, you move your assets into the operating partnership, and in that way, you are effectively trading. Quote, like kind equity, so the equity in the asset comes into the operating partnership in exchange for equity in the operating partnership. To the former owner of the property. Now the property is in a large pool of assets and it benefits significantly from that. For example, if there were five properties that you owned each in its own limited partnership, and let's say two or three of 'em are doing fine, they've got good cash flow, you're reserving some cash for future CapEx, but let's say one. Has not been doing particularly well and it needs a new roof. There may not be enough capital in reserve to pay for the new roof. You may not be able to borrow against it to put on a new roof, and you may need to make a capital call to the limited partners. If it's inside of an operating partnership of a reit, it can access cash from any place to put that new roof on. So the people who sell their properties into a REIT in exchange for equity, they get equity in the reit, which means instead of owning all the equity in one asset. They're exchanging that equity for equity in a very big pool of assets. So they get the diversification, they get the upside. They get a lot of benefits from that, and most importantly, they defer capital gains as a result.

Steven M Weinstock: 8:35

Professor, tell us a little about yourself. How'd you get into real estate? Is this the first career you had? Were you flipping burgers? No. How'd you get into this business?

Jonathan Morris: 8:47

I was delivering newspapers for a while.

Steven M Weinstock: 8:50

For our younger audience, newspapers used to be something that gets delivered. It was on a piece of paper. And on the subway in New York it would be the New York Times would be folded in fours. Sorry, go ahead.

Jonathan Morris: 9:02

That's okay. Actually when I went to undergrad in, in Baltimore, and by the way, I went on a track scholarship. Ah I ran the sprints, the hundred, the 200, the 400. But my interest was really peaked when I took a class on what's called securities, which is stocks, bonds, et cetera, et cetera, and I really enjoyed the class. I took a follow-up class with the same professor. I took finance classes and I thought, okay, i'd like to be involved in this, but I'm from Washington, DC and Washington DC doesn't have offices or corporate offices of Merrill Lynch or any of the big firms. So I ended up going to work for what was called the National Association of Securities Dealers, which is the Association for the Securities Industry. So I got a little bit of my objective, stated, but not a lot. I ended up getting my first real estate opportunity as I think a lot of people, at least at my age do through relationships. And when I was in high school, I was best friends with a guy who, his family owned a massive. A real estate development company in the Washington Metro, but when you're in high school, you don't think about these things, and he didn't come to school with fancy anything. But at the end of our 10th grade. Back then, we were 15 years old going on 16, but my friend was four or five months younger than me, so he came up to me at the end of our 10th grade year and he pushed me up against the locker as buddies used to do, and he said, Hey man. You get your driver's license yet? And I said, Steve, if I got my license, you'd be the second person to know about it. He goes who would be the first? I said, my mother, and she's taking me on Friday. He said, you better pass the test. I said, I intend to pass it. And I said, why? And he goes, 'cause I got us a job working on one of my dad's sites for the whole summer.$3 and 50 cents paid cash per hour every Friday. And I said, I'm in. So I worked with my friend Steve for three summers in a row.

Picked him up every morning at 6: 11:21

00 AM dropped him off at, 4 15, 4 30, and one day they invited me in for a sandwich. My friend Steve was a big guy. He liked to eat, so they invited me in and that happened every week or so. One day I was there and his father came home early. Which, ordinarily wouldn't excite me one way or the other, but everybody in the room which was his mother and two people helping, were like, oh, Mr. Smith's home. So I got up like this in my chair, and he comes in. And if you hadn't seen him before, you would think that he was the US ambassador to a European country, just impeccably dressed, double breasted suit pocket square, perfect hair. And he looks at me and he says, don't tell me. Is that John Morris, number 80 on the whit Walt Whitman Vikings football team, and who caught a pass last Saturday. And he went on and on. And I stood up and I said, yes sir. And I went over and shook his hand. And from that point on for many years, I became good friends with the family. If they had. A brunch or a charity event, they would invite me and everything was cool. When I got outta college, I got my first job at a brokerage shop in DC first real estate job, and I was actually doing quite well, and I was invited to a brunch and I saw Mr. Smith and he came over and shook hands and he said, Steven, my friend, tells me you're doing really well. And this was late eighties, early nineties.'cause I'd like to find out what you're doing exactly. And he gave me someone's name and phone number, no pen, no paper. He goes, call so and so at this number on tomorrow, which was Monday, and set up an appointment. I want you to come in and talk. I said, okay. So I rushed to their kitchen so I could write down the name and phone number. Thankfully that I got it right. And I went in to his office, but this time I was all dressed up and suit and tie and the whole nine yards, and we ended up talking for two and a half hours, and he was really curious about where values were going, et cetera, et cetera. He had built a massive portfolio of apartments, office buildings, retail hotels, but the truth was he didn't have. On the ground insight into what was happening in, in the markets, in the Washington, in the wa, in Washington dc and he was really thirsty for that information. So at the end of our conversation, he says, listen, we're thinking about changing gears here and it would be wonderful to have somebody like you here. When can you start? And I was caught off guard. But I got everything together quickly and I looked at him and eyeballed a eyeball. I said, whenever you'd like me to start. So two weeks later I joined the company and then six months later we started our process to convert to a reit. And that's what got me started in the reed industry, the actual work. Necessary to take a very big privately owned company, move it into the REIT structure, and then take it public. Once we went public, I ran what was called the acquisitions group, which meant simply put. I needed to be out every single day looking for apartment properties. We were a apartment reit, apartment properties to add to our portfolio, and if you talk to anyone involved in acquisitions who's good at it and has been doing it for a while, those deals are hard to find. And so I developed my own, process. I developed a handful of brokers. At the time, it was very, it was in 19. 94 and 95 when I started doing this. And back then we didn't have the infrastructure of apartment brokers that we have today. We didn't have the detailed information that we've got today. You could go take a look at a building, you could walk it, and if you're lucky, they give you the, the rent roll and the tenant roster and then you're on your own. The good news is our company was quite large and we had our own engineering department with a guy who'd been there for 40 years, and I would take him to see the properties and he would jot down what it needed. I would take our property management folks to the property, they would jot down what it needed, and a week later they'd both. Both groups would give me their numbers, how much we're gonna have to spend on this, that, the other, and I would take the current income and , the property management group, would show me that it was not being well managed. It really could do better. Some of these properties had 86, 80 7% occupancy, and our portfolio was 96 or 97% occupied, so we could scooch up the rents. We'd have to layer in the expenses. And if it looked good, I put it in a nice format and I took it to Mr. Smith who said, all right, bring it, to the board. Brought it to the board, starting get started getting deals approved, and we started buying, a lot of apartment buildings fairly quickly, which got the attention of. The analysts, the stock analysts that cover REIT stocks., We had about eight or nine analysts covering us and they would write reports every quarter on us. But now they were talking about how the Charles E. Smith residential REIT is really active, finding, underwriting, and buying new deals. So lo and behold, the stock price starts going up. So that was a good feeling.

Steven M Weinstock: 17:42

Yeah. Stock price going up typically is a very good feeling. What are some of the barriers to become a public reit? How large are we talking about? Could I own 1200 apartments spread out over three properties with a total value of $26 million and, open it up to the public and become a publicly traded reit. What are some of the. High level or barriers to get in?

Jonathan Morris: 18:09

That's a good question. Today there's a couple ways to go. Now if you take what we created now, we owned, we owned 33 high-rise apartment buildings that had been developed ground up by the company from the early, mid sixties, all the way through the early, mid nineties. And they were all done by the company on ground that Mr. Smith had either acquired or owned, and the portfolio was worth many billions of dollars. So if you went to an investment banker today, what they would tell you is. If your company has a billion dollars worth of assets, that's the starting point. But then the assets need to be similar. You need to have a constant theme through those assets, and they have to be in great condition and they have to be well maintained. Several years ago, however, the SEC came out with some new regulations. Called Regulation A and Regulation A Plus. And the objective of those regulations was to effectively make the opportunity to become a public company much more efficient. For example, regulation A allows you to raise 20 million a year. Public offering funds and regulation, A plus I think is up to 70 million per year. So the baby regulation A is very slipstream. You could take those 1200 units and put 'em into a reg a structure. Raise money around it and be a public reit. It wouldn't be a big public reit, but it would be a public reit. The

. Steven M Weinstock: 20:04

So you have different REITs that are out there, and for the most part, these REITs own the same class of properties that you'll have warehouse REITs, you'll have residential REITs office space REITs. There's never a mix where it could just be a hodgepodge. Great assets, whether it's a fancy hotel on the water in Florida and a downtown skyscraper in Manhattan. Do you, you never have that. It's always similar.

Jonathan Morris: 20:32

Yeah. L let me tell you why first. Okay. The whole essence of a REIT and the way REITs got started. Was back in the late 1950s, there was a growing desire objective groundswell by the newly formed middle class. And I'm sure American history. We went through the Great Depression. We went through World War I, world War ii. And the country was in complete disarray during those times, but by the late 1950s and 1960 in particular, the country and the economy had time to heal from all that. And what evolved from that was something called the middle class, which was educated people getting good jobs. Good income, buying their first home and having families. And as a result of that, they were very conservative and they saved as much as they could for investment, but there were few investments available back then. So in the real estate space, these. These guys, the fathers who would drive to work and drive back, they would drive by apartment buildings, they would drive by, retail stores. They would drive by office buildings. And they were thinking, I've saved up a lot of money. I was wondering if I could invest in one of this. And if they found a way to talk to the person who developed it, they would find out number one, that yes. This person was willing to take in equity, but the minimum check would be 500,000, and the middle class didn't have that. So what happened was the evolution of a bill that created the real estate investment trust and it democratized investing in commercial real estate. So once the bill was passed. Several companies here in the Washington Metro created their own REIT and went public. And the objective, Steven, was that these were intended to be conservative investments. They were not intended to be high risk. They were not, buy low, sell high. They were really intended to be conservative investments that. In most cases, the middle class could invest a thousand or 5,000 or$10,000 into these REITs, and they would get a dividend each quarter, and the dividend would be a competitive yield, and if the stock price went up. Then the value of what they invested in would go up and the goal was to own properties in good condition of similar type, very long term. And today, across all public equity REITs, the average debt is about 31%, which to a private owner. Is insane. Now, rates, some people think rates are high. I'm not sure that's true anecdotally, but leverage in the private sector kind of starts at 60% leverage in the public reach sector starts at around 20% and gets up to 30 or 35%. If you have more than 35% debt as a public reit, the analysts that cover you are going to mention. That you've got 35% debt, and if you continue borrowing or your stock price goes down, your debt may go to 40%. And that's starting to ring emergency bells in the minds of REIT analysts. So you keep the debt low, you buy high quality assets, or you build them. And they're all of the same type. The reason for that is this, when all the REITs were going public in the early nineties all the way through 99, there were several REITs that attempted to have different property types in the company, and what happened was the REIT analysts would meet with. The management team, and that's what they do on a almost quarterly basis. And they'd interview 'em and what they wanted to know was, okay, you own hotels. Where's your hotel guy? You know the guy, his name's Ken. You know I'm right here. Okay. So he rattles off the metrics of the hotels and then they say, okay, you own eight community shopping centers. Can we talk to your shopping center guy? And the guy says, yeah, I'm Ken. I'm right here. Alright, tell me about your shopping centers. And then office. And the analyst decided that. A management team cannot be all things to all people. They're just not going to get one of these. They can't. So eventually when REITs, when public REITs started going up that owned similar assets, the other REITs started going flat or going down, and there became less and less investors interested. What you would call a diversified reit, and today there's very few REITs that are actually diversified. As a matter of fact, most of the public REITs that were diversified have sold off, one or two asset class types so that they could just focus on one.

Steven M Weinstock: 26:15

Why does a company decide to become a REIT versus just a public company? A public regular company, for example public storage, which is a large business. They own a lot of real estate but they're also running a business, the self storage business and they're classified as a reit. But then you might have a gas station operator or a fast food chain who might own their real estate, and they're not classified as a reit. What are some of the benefits? What are some of the reasons why? Some opt to becoming a REIT and some opt to just being a regular member on the public markets.

Jonathan Morris: 27:00

That's a good question. So public storage is a reit and they're a big one. They've got a lot of history and, the benefit to public storage being a REIT is access to the public capital markets, which are the biggest source of capital in the world. Now, public storage has gotten to such a size that when they need equity, they couldn't get the amount of equity they get in the public markets from. Anywhere else. They might have a consortium of five pension funds that want to give them equity, but they've passed that point long ago. Having access to public capital, be it debt or equity is a massive benefit. And. What you need to do as a REIT that's a public REIT, is you need to check as many boxes as you can for investors and REIT analysts, and once you check enough boxes and you have access to public capital. The world is your oyster in terms of raising capital. This may surprise you, but years ago something was invented in the REIT world and it's called the ATM. And you familiar with an ATM,

Steven M Weinstock: 28:35

The ATM machine? Yeah. Yeah. Yeah. It used to be these little kiosks outside of banks before my phone would be able to pay for items. At the fast food store,

Jonathan Morris: 28:45

you put your card in, you punched a few buttons and cash comes out, right?

Steven M Weinstock: 28:48

Correct.

Jonathan Morris: 28:49

So the ATM was invented and it means at the market, so public REITs the stories of the IPO. Then once the IPO's completed, maybe a year later they do another offering of equity. A big offering of equity. Those are all set up over many months of planning. And they'll go out and raise a billion dollars, or 800 million or something like that. But on a day-to-day basis, public REITs are also selling shares, new shares into the stock market. An investor calls his broker or he goes online and says, I wanna buy a thousand shares of this REIT Okay. The, through the magic of technology that person is sold new shares. From the company, okay, because the company has filed for an ATM, and while on a daily basis, it's not a significant amount of stock over 3, 4, 6 months, they could raise 50 million, a hundred million dollars just incrementally through this ATM. The good news is that by doing this, it doesn't really disrupt their stock price. If they were to come out with a $1 billion stock offering, and let's say their current outstanding stock was worth 10 billion, all right, so they're gonna come out with a billion dollars. That's 10% of their current equity in the market, and there's a chance that selling all that stock at one time might reduce the price per share it. It doesn't always happen that way. Sometimes it goes back up. But doing it incrementally in bite-sized pieces is a real boon to public equity REITs. They can just, they can continually raise capital this way. But let me tell you where it really helps today. Years ago, and this was after I spent all this time doing it, some of these REITs, and not just a few, but a few dozen became really large, and when I say really large, 15, 20, 30, $40 billion. Okay. Value wise when the CEO and the CFO, et cetera looked at the balance sheet, it was just jaw dropping. In terms of how much equity they had, how much cashflow they had, and how little debt they had. So what they did was this, they sat down and they took the forms from s and p, Moody's and Fitch, and they said, okay, here are all the three forms. We're gonna fill these out. We're gonna go meet with the bond rating agencies and we're gonna tell 'em about our portfolio. We're going to give 'em all the metrics, da. And what we expect is a legitimate credit rating from. The agency, the rating agencies, and they got it. And a lot of REITs started out as triple B minus or triple B plus, but there's some REITs that are actually double A minus rated. And what that does, Steven, is this, if you want to raise debt capital, you can go to the massive public market. For debt capital, which is where all the bonds are traded. It is trillions and trillions of dollars go back and forth every day, and you can go raise 10 billion, 20 billion in those markets without disrupting a. It's just like it's so big that there's no number you could come up with that would ever disrupt that market. So Res figured this out and they got rated R-A-T-R-A-T-E-D. Now when they want to issue debt, they can align with big corporations that are rated, similarly to them and get these tremendous interest rates. So if treasuries are, I don't know what they are today, but if they're 4.2%, that means that's what the United States Federal Government can borrow at. 4.2%. If you wanted to go out and get a loan for any one of your properties, you would pay 4.2% plus a spread. And let's say that spread's 200 basis points, so you gotta pay 6.2%. A big REIT may pay the 4.2% plus a spread of 80 basis points or 70 basis points. Yeah. Because the market sees them as a certain credit rating. They don't see real estate, they don't see, CapEx, they don't see occupancy levels, they don't see any of that stuff. They see one thing, their credit rating, and they can literally push a button and sell debt in a day into the bond markets. This all started with the ability to sell a percentage of your portfolio into the public equity markets, meaning the stock market. And that was a phenomenal achievement. But being able to sell your debt in the public bond market is yet another big achievement that these big REITs have accomplished.

Steven M Weinstock: 34:48

You founded REIT Academy to fill an education gap in the industry. Tell us about REIT Academy. What inspired you to create it?

Jonathan Morris: 34:58

So everything that we're talking about, I experienced firsthand, and when I started, or shortly after I started, REITs were being created very often. You don't remember this, but leading up to the 1990s we experienced in the US a horrible situation for commercial real estate. Most of the eighties was up and away. Every major city was growing rapidly. DC was growing like crazy and office buildings were being built left and right, and. They were also getting leased left and right. However, by 87, 88, things had slurred down a lot, but developers still had buildings going up. And what happened was those last 10 or 20 buildings got completed. They never got leased. And within 18 or 20 months, the lenders foreclosed on those buildings and took them away from the developer. And the developer may have had five years of planning into it. 10 years of planning into it didn't matter. The lender was desperate to get repaid somehow, so they attach the ownership of the property in the objective of selling it quickly. Recouping the cash that they lent. Unfortunately, even the sellers who took back these properties couldn't sell'em, and the lenders failed themselves. We had something called the SNL Crisis in the late 1980s, and by 1990. The Congress of the United States, they got wind of all this and they worried that the situation in the commercial real estate industry was going to impact the US economy negatively. Okay, so they created something called the Resolution Trust Corporation, or RTC, and they did it using emergency legislation. So the bill was submitted on a Monday. By Friday, the RTC was created. They started staffing up. They were right here in downtown dc. Their goal was to take all these failed assets from all these now failed savings and loans, and sell them. As quickly as possible.

Steven M Weinstock: 37:29

Were they taking them off the balance sheet of these SNLs, Jonathan Morris: Assuming Understood. Just to give an example they foreclosed on a $20 million building, but it's, it's, the bank is struggling, holding onto this building. The government created this legislation and basically handed a check for$20 million and now took ownership of the building, or did they? Or was that the original plan and it just never went that way?

Jonathan Morris: 37:58

I don't think anybody got a hundred cents on the dollar back. Okay. But what happened was that the SNLs themselves implode, so they were worthless and. You're probably aware of this, but banks and SNLs are constantly for sale. And the selling price has to do a lot with deposits and et cetera, et cetera. And there's a lot of people that enjoy owning banks, right? So when these SNLs failed, their balance sheet for all intents and purposes went to zero. They did have deposits, and those deposits were guaranteed by the FDIC or the F-S-L-I-C, so they, the government could sell those banks to you and then you would rename it, like the Steven Savings loan and you could buy it. But then you were under the rules and regulations of the SNL world. But the prior entity was toast and the, all of the properties that had been foreclosed upon went to the RTC and all of the notes that were in default went to the RTC and the RTC would either sell the notes. Or work through the foreclosures and sell the properties. So Sam Zel had gotten a reputation on the chief during times of. Tough times in the economy and this period was made for him. So he ended up sending a team of three or four young folks to Washington who every day would show up at the RTCs offices on H Street, and they would wait for the incoming list of properties, which would be sometimes in the hundreds. They would scan the list, they would this was early technology, but they would type up emails to different people in different parts of the country. Go take a look at this address. They would go, they'd take photos, they'd send them all back to Sam Cell in Chicago, and Sam would direct them to make an offer on different buildings, which he did frequently. Merrill Lynch put together a $500 million fund to bank Sam Zell in this effort. And the way it was described was they raised money from the highest risk tolerance investors they could find. You give us 10 million, we might lose it all, but we might make money too. The only thing they did was they told them that. You are stopped out at whatever you give us. We're not gonna sign you up for additional recourse. So Sam Zell ate through that first fund. They opened a second fund. He ate through that 500 million. He ended up doing four funds with Merrill and he put out $2 billion worth of equity for all this failed real estate. He went undercover for a while, but what he did was he took all those properties that he acquired inexpensively, by the way, and he separated them into their quote sector. So over here, he put the apartments over here and put the office building. He's over here. He put the shopping centers. And over here he put the industrial building. So he got four big piles of real estate. He took each one of them and created a REIT and took it public. So Sam Zell used all this cash to buy a lot of properties inexpensively, and then he allocated them to their own property type and took 'em public. And that's how equity residential, for example, came about. That's how equity office came about. Equity lifestyle came about. And he was probably one of the more creative guys in the reed industry, but there were many other very creative. People at the time that, took their decades old company that their father had probably started and converted it to a REIT and went public. And today, a lot of these companies are brand names that you hear about frequently. So they've converted themselves from a privately owned commercial real estate firm, which I worked for before we went public and. Working for the Charles E. Smith companies, I thoroughly enjoyed it, mainly because I was, I was friendly with the chairman, but beyond that, it was a well-oiled machine. When we became a public company, things changed dramatically. There were more checks and balances, there was more reporting. There was so much, year end what's called true ups and et cetera, et cetera. Because we were now a public company and we were reporting all this information to the Securities and Exchange Commission. We needed lawyers, we needed accountants, we needed appraisers, we needed everything. And the re community is a big community, but it's also a pretty, close knit community. So let me answer your question. I enjoyed those frenetic times when REITs were new and they were coming out frequently. We have not seen that time come back. And the last group of public REITs that went public might've been 10 or 12 years ago, and even then, it wasn't like the nineties, so today. REITs, the public REIT industry is a massive industry. The total value of public equity REITs is, I think 1.6 trillion. But most people don't understand a reit. They don't know how it's structured. The numbers we use are very different than private. Real estate. We don't use NOI. We don't use, we don't even use IRR. So if you wanna understand what's happening with any given public read, in my opinion, you really need to take our class. Number one, you can read the textbook we use and it's an excellent text. But as I was describing to someone this morning by email, I said, look, you can probably find a book on how to climb Mount Everest. But you're never gonna get there. You have to hire a Sherpa or two to get you, to the top of Mount Everest. That's what our class is. If you wanna understand REITs, sign up, take our class, you'll get everything that I learned from the moment I started learning about it until this very moment and. We explain the numbers, we go through analyst reports. I've got guest speakers who are the top REIT analysts in the country, and they explain how they approach a company and what they look for and what they don't look for. If you're gonna be involved, you really need to level up your learning. Last but not least, and this is occurring now in real time. A lot of these REITs are pretty big and they have hundreds of employees, but each quarter when the public REIT files its information with the Securities Exchange Commission, what they do is they schedule what's called an earnings call, which is a webinar, and the CEO and the CFO, and maybe one or two others comes on and describes the earnings for the past quarter. They will also talk about new initiatives, objectives, et cetera, et cetera. At the end of the call, there's a Q and a session, and the stock analysts, the REIT stock analysts will call in and ask the CEO and CFO questions. And that's where it gets interesting because that's where you learn. If the analyst says we heard that you're working on a development in, east so and and if the information has never been filed with the SEC, they won't talk about it. But if something's been filed, they will talk about it. Now take that and you've got a lot of employees that work there. As part of that, you've got a portion of those employees that have been at the company for a long time, maybe before they were a reit, and they sit in conference rooms to listen to the earnings call, which can go for an hour and a half or more because they love working for the company. They're loyal, they're long-term, but I'll tell you this, they cannot understand what is being said on that call. So we had one, one group I don't mind mentioning it, but it was Health Peak Properties. They're a $20 billion healthcare reit, and their senior execs have seen their way to sending folks to our class regularly because they want these folks who are their leaders. To be able to understand what's being said, what's being filed, what's being talked about. We just finished the second class with them and I made it my mission to take their own company's SEC filings and put 'em on screen share. Explain what each of the numbers meant so that they would have at least, a baseline knowledge. But then I took that and I compared it to the numbers of other healthcare REITs so they could see where they stood. The good news is they're a great company and they stand very high in that regard, but slowly but surely, I would really like to see more. CEOs of public REITs begin sending us their people because if you're gonna have someone who's worked there for 10 or 15 years and they're gonna work there for another 10 or 15 years, I think. It's almost incumbent upon the executives to give them a chance to learn all this information. We get lots of stock analysts, we get lots of lawyers, we get lots of accountants, we get investors. We've had four or five people that wanted to. Create a REIT from their portfolio who took the class. And it's a great cross section of people, but what I would like to see is more and more REIT employees take the class and we're a hundred percent upfront. If they wanna start sending people, we'll give 'em the discount. Not a problem.

. Steven M Weinstock: 48:49

Jonathan, this was great. Professor Jonathan Morris joined us here. We're gonna cut it over here, but

Jonathan Morris: 48:56

wait a minute. I got one last thing to mention.

Steven M Weinstock: 48:58

Go ahead. Go ahead.

Jonathan Morris: 48:59

I love your glasses. Where'd you get 'em? How long have you had 'em?

Steven M Weinstock: 49:04

My wife got it for me somewhere local in Brooklyn. I've had it for about a year and a half. And if my wife listens then she will Appreciate that comment. Thank you very much, professor. I appreciate it.

Jonathan Morris: 49:15

Yep. They look good. They look good on it.

Steven M Weinstock: 49:18

Thank you. Again, thank you so much for joining me. If I was sitting next to you on a plane to Australia and the wifi was down, I would still have plenty to talk to you about. You are extremely interesting. It was a lot of fun and I really liked this. Tell the audience where they could reach out to you, contact you, et cetera.

Jonathan Morris: 49:38

Sure. You can reach out to me at Jonathan, J-O-N-A-T-H-A-N. Dot Morris, m as in mother, O-R-R-I-S at REIT academy.com.

Steven M Weinstock: 49:53

Okay, great. You're also active on LinkedIn. LinkedIn and your website is reit academy.com. Jonathan, I had a great conversation with you. I appreciate you sharing not only your deep industry knowledge. Your passion for educating everybody else, it's clear that your work is helping shape the next generation of real estate leaders and investors. For those listening, make sure to check out reit academy.com to learn more about Professor Jonathan Morris's programs and the upcoming executive REIT masterclass. Did I see that somewhere?

Jonathan Morris: 50:28

Yep.

Steven M Weinstock: 50:29

Okay. And don't forget to subscribe to the Wealth Clock with Steven Weinstock, so you never miss an episode. Thank you very much. Till the next time. Thank you.