WS1903 Successfully Converting Office Space to Multifamily | Highlights Kenny Wolfe

In this  highlight episode, we feature Kenny Wolfe, an experienced real estate investor, back to the show. Kenny provides an update on his business, which now has $715 million in assets under management. He discusses his ventures in multifamily, triple net funds, and office conversions. Kenny explains that while multifamily deals are currently scarce, the underlying metrics such as rents and occupancies remain strong. However, the challenge lies in managing debt and navigating interest rate fluctuations. 


He advises investors to focus on surviving until 2025 when interest rates are expected to decrease. Kenny also shares his experiences with triple net funds, highlighting the stability and high credit tenants involved. He emphasizes the importance of selecting the right tenants and managing property taxes and insurance. 


The conversation then shifts to office conversions, with Kenny explaining the process of transforming vacant office buildings into multifamily spaces. He discusses the challenges of plumbing and maximizing space within the existing floor plan. Kenny also mentions the benefits of historic office conversions, including grant money from the federal and state governments. He concludes by expressing his belief that the office conversion trend will continue as businesses assess their physical occupancy needs.

Click here to listen to the full episodes:

https://lifebridgecapital.com/2023/10/17/what-to-do-if-your-deals-are-struggling-kenny-wolfe/

https://lifebridgecapital.com/2023/10/18/how-to-convert-office-space-to-multifamily-kenny-wolfe/

Don't miss out on the valuable insights and discussions in these episodes! Tune in now to learn more about real estate syndication and how you can build wealth in the industry.

VISIT OUR WEBSITE
https://lifebridgecapital.com/

Here are ways you can work with us here at Life Bridge Capital:
⚡️START INVESTING TODAY: If you think that real estate syndication may be right for you, contact us today to learn more about our current investment opportunities: https://lifebridgecapital.com/investwithlbc

⚡️Watch on YouTube: https://www.youtube.com/@TheRealEstateSyndicationShow

📝 JOIN THE DISCUSSION
https://www.facebook.com/groups/realestatesyndication

➡️ FOLLOW US
https://twitter.com/whitney_sewell
https://www.instagram.com/whitneysewell/
https://www.linkedin.com/in/whitney-sewell/

⭐ Be Our Guest!
We are continuously working hard to help our listeners with their journey to real estate syndication. If you think you can add value in any way to our listeners who are in commercial real estate, then we’d love to have you over.
Apply here: https://lifebridgecapital.com/join-our-podcast/

Transcript

Whitney Sewell: This is your daily real estate syndication show. I'm your host, Whitney Sewell. Today, we've packed a number of shows together to give you some highlights. I know you're going to enjoy the show. Thank you for being with us today. Kenny, welcome back to the show. Honored to catch up with you and have you on again. It's been a while. We were just looking it up and it was your show 222 back in the beginning of 2019. So a lot's happened since then, no doubt about it. But you're one of those in the business that I respect in a big way and you're out there making it happen. And so I love talking to guys and gals like yourself that are very experienced and are doing well. you know, especially in times like this, right, when deal flows almost non-existent on the multifamily side. I know we're going to jump into that. Why don't you give the listeners a little bit more about your background? It's been a while since you've been on, you know, and maybe you can highlight some of the, some of the things in your business, or maybe we'll talk about a few of them just so the listener knows we're going to do a series. We'll do at least a couple of shows with Kenny and highlight some of those moments that have helped you to, to move forward, you know, in this space and in your business as you, as you go.

Kenny Wolfe: Yeah, so I'll kind of update everybody. So we now are at 715 million assets under management today. So we're knocking on the door of the billion mark. That's pretty exciting. We think maybe next year we'll cross over that because a few of our, we have some development projects that should be delivering first quarter, starting first quarter next year and kind of rolling off the assembly line. But yeah, so we do existing multifamily, like you said, we've done that ever since 2010. So almost 14 years in the space in commercial real estate investing. And then, so seven years ago, we still buy those today, but seven years ago, we added two arms. So we have a triple net fund, a retail fund, actually have five now. So this is one of our fifth fund now. They're great for monthly cashflow, all high credit tenants. So think Dollar Generals, Walgreens, CVS, those kind of, tenants in those funds. And then the opposite of monthly stable cash flow is development. So we do both ground up multifamily now in Texas and Ohio. And then we got into the office conversion to multifamily game about three years ago, right in 2020. What better time to buy a vacant office building? So anyways, so now we have 12 of those office conversions going on right now, 2.2 million square feet across the country. 11 of those are for downtown locations. One is in the suburbs. We're excited about those projects. Like I said, our first one should be delivered back to us in January or February of 2024.

Whitney Sewell: Yeah, nice. Give us maybe some of the the the big moments in your career that like were big leaps for you. All right. You know, 2010, you got into, you know, multifamily, you know, was there something then that really set you on a path to success, you know, and maybe a year or two later? Or, you know, was there anything anything that stands out to you? It's like, man, these are the crucial moments that really pushed me forward.

Kenny Wolfe: Yeah, I mean, I think it's the, you know, it's, you know, 2010 was a big move. I came from oil and gas accounting, so I had no background in commercial real estate. But I was, I think, fairly intelligent, just surrounded myself with vendors and folks that would help me get to our end goal for our investors. So, you know, the management company, the pick the right insurance team, all those kind of things, line those up beforehand, figuring that team out definitely shortened the learning curve for us. And then really the other kind of key things were kind of leaning in. And so we branched out quickly, I mean, three, four years into it out to Colorado. So we bought out of state pretty quickly. as well to widen our deal flow. And then I'd say 2020 was a big deal for us because I just kept coming to the office. I deemed myself essential and just kept coming to the office. I stayed home for like a day and couldn't do it with two dogs and two kids. So anyways, I love them, but it was too loud. I couldn't focus. Anyways, came out of the office and just really grounded out. So we ended up buying a very institutional deal, a deal that should have gone to an institution group buyer in downtown Dallas, and that kind of put us on the map. And then again, we bought our first office, vacant office building, the Rockefeller building in downtown Cleveland, that also was a splashy kind of headline. But those key deals, when you kind of can lean in, at a time when maybe the institutional guys back out is a way to really move your business in a big way. Because then after those two deals, we started seeing all these institutional style deals brought to us. We're invited to the table, so to speak, once that happens. That was a big deal for us as well.

Whitney Sewell: Nice. That's awesome. Leaned in. I love how you express that. It's like institutional deals that maybe not too long before that, you may have thought were too big for you. Exactly. Yeah, absolutely. Yeah. Yeah. Good for you. That's awesome. I love hearing stories like that. Well, let's talk about multifamily a little bit. I know that was your bread and butter, right, for a long time. And like most of us, what's your settlement on multifamily right now? And I know I want to get into how you all pivoted and into, you know, some triple net and office conversions. We're going to talk about that just so listeners know as well. But where you at on multifamily right now, maybe some expectations around multifamily. What are you seeing? And, you know, let's talk about it.

Kenny Wolfe: It's really strange right now for multifamily. It's a really weird time to be in it. It's been weird for a while, I guess, but this is really strange because what you have now is underlying metrics. So your rents are still going up. Your occupancies are really high, but your debt's crazy or it could be crazy, right? So that's the thing. If you have low interest fixed rate loans, then the grass is very, very green and will be for the next 10, 15 years, whatever it is. foreseeable future. It's the folks that bought in the past, I'd say 2021 and on. If they didn't want, if they did a bridge loan, that's fine as long as you buy a rate cap. If you didn't buy a rate cap, then you're being hammered right now by capital costs. I mean, there's just no way to keep up with that quick of a spike in interest rates. And then even those of us that did buy rate caps, what we're watching is in 2024, 2025, you're going to have these rate cap, your loans are coming up on these bridge loans. So what are interest rates going to be? No one really knows right so everybody's kind of watching that very closely on the debt side but again your underlying metrics your rents your, your demand is is outstripping the supply and will for decades to come, just because we're so under supplied as a nation. Some markets are better than others on that. But still, you've got the window at your back on that side. So as long as you can figure out the debt side, you're going to be just fine. But there's going to be some pain felt for sure by folks that either didn't get the rate cap or just have bad timing on resetting. If they're not stable now, go into a Freddie Feeney loan.

Whitney Sewell: Yeah. Yeah. You know, those that are, uh, I guess I'm sure you've seen some already that, that are in trouble, right? I know I have had different people text me and say, Hey, Whitney, have you, you know, anybody that's done this yet or been through this or done a capital call yet, or, you know, uh, and are asking questions, uh, cause there's definitely some distress, you know, starting, um, what do you see as some options? I know that like every situation is so different, right. But, but at a high level, maybe from some that you've heard from already, What are some options for them that you know of or from that they should be doing right now to maybe not lose a deal, right, or have to do a capital call?

Kenny Wolfe: Right. I mean, so it's all about surviving to 2025 because everybody's basically agreed that interest rates will be lower in 2025. We don't, maybe that starts in 2024. No one really knows. The Fed doesn't even seem to know. It seems like, but now with this war in Israel, it's going to be interesting to see how that affects the Fed as well. But, Anyway, so everybody's watching that. So for those that are in specific deals, I mean, it's really kind of like going to your lenders now before you have trouble and trying to get a work out kind of an early extension or something. Again, just your goal is to push that out. till 2026, knowing that in 2025, it's all kind of, I guess, understood at the moment that it's going to be back to a big seller's market in 2025, as long as you can survive 2024. So that's really kind of what everybody's trying to solve for now. So you're digging in and looking at each deal. When's your loan due? Hopefully it says 2025 or beyond. If it doesn't, then those are the ones you got to focus on now and maybe go to your lender, try to get an early extension, try to work with them already before you're in trouble. You may have to do capital calls. No one likes to do that, but right now, as a syndicator, your number one job is to save the deal, is to save your investors money. Sometimes that means going, saying that ugly phrase, capital call. And no one likes it. The investors won't like it. You won't like it. But again, you're trying to save the asset. That's A number one. And then again, if you can make it through 2025 and beyond, then again, interest rates should be down lower. And then you're going to be just crushing it on the returns since then. So that's really kind of I don't know, that was a lot to unpack maybe, but that was a long answer. But that's really kind of what we're doing up here now too, is weeding through all that. And then I know other syndicators are as well.

Whitney Sewell: Yeah, yeah. No, I loved how you said that. And even placing the first priority on not losing the deal, right? Not losing investor capital, even if it means having to do a capital call, if it gets you through till 25, right? Then, you know, hopefully you can still save the deal and save your investors money, right? Even if it means everybody having to put a little more in at the moment. But are you still looking for multifamily deals at the moment? Are you still expecting to be able to close any multifamily deals right now? Is that a focus at all for you all?

Kenny Wolfe: So we did close one this year in April. It was a rollover for 2022, though. There just wasn't been a lot of deal flow. I mean, I think I heard a quote that the sales volume is down 75 percent from last year for multiple families. So you're just not seeing a lot of deal flow on that side. we really haven't even, we've seen some, but nothing that is super exciting at the moment. Everybody's kind of sick into their pricing at the moment. So we actually tested the market on three of our assets that are stable, just to see what's the value, what's the market paying these days. And so one of those deals we're going to, we already went to best and final. It's a deal here in Dallas, Fort Worth, but it's actually our first syndication deal. So we've owned that thing for a very, very long time. I just wanted to test it out because we didn't have to sell it, but we're selling it at about a five and a half cap. I mean, it's a B-class deal. It's nice. It's fixed up. It's stable. So they're able to go to Fannie and Freddie, get fixed interest rate loans, avoid the rate cap. And the other two are in Cleveland, Ohio. And again, those were probably maybe only a 5% discount from last year, from 2022. So you're So you're still seeing folks are very, very hungry to do multifamily deals this year. And if you do put one on like we did, those three, you're kind of the bell of the ball because there's nobody else out there selling anything. So it was interesting to see that, too. And we're going to hit some awesome returns for investors on all three of those three of those deals.

Whitney Sewell: Love that. It's incredible. It's nice. You don't have to sell them, right? But you can go out and test the market like that and see what happens. And it's interesting to hear the turnout, though, of buyers for those deals. And so congratulations to you, you all making that happen and having some deal flow there. Speak to the when you determined to say pivot into some other asset classes, I know you're doing a few other things now, uh, you know, as well outside of multifamily, uh, you know, like the triple net or the office conversions, and we'll dive into a couple of those, um, you know, um, but when did you, when were you comfortable to say, Hey, let's go tackle this other asset class as well. Um, you know, outside of say your, maybe multifamily was your main focus, but you did decide at some point to branch out.

Kenny Wolfe: Yeah, so seven years ago, around 2017 for both actually for the retail fund. We did our first retail fund, bought $7 stores in Texas and Oklahoma. All my investors thought I was crazy. Kenny has lost his mind. He's a multifamily guy buying dollar stores. What's going on? So it took a lot of education. So if you are a syndicator, you're known as a multifamily person and you jump into any other other type of offerings, it's going to be like pulling teeth. And so I think on that first fund in 2017, we only raised like a million seven, which at that time we were easily raising four or five million, maybe more a pop on a multifamily deal within like a couple of days. So It's like pulling teeth. But then it really caught on. So now we've got 61 of those stores. So the 2022 fund, we raised $20 million in that single fund, bought 24 stores in that fund. And those are great. Like I said, they're all high credit. So you're buying those for your monthly cash flow. And so really, we had a request from an investor who wanted more. Multifamily is great, but it's operational heavy. So you have to chase rents, and you have to fix toilets, right? And so it's going to be up and down every month. But they wanted something more stable, because they just wanted to roll around their RV, collect ACHs, you know, every month from us, that's very stable, they can rely on it. And so basically, the idea was to strip out the operational risk as much as we could. So I actually talked to a guy that was mortgage broker in the business, Paul Peebles. You guys probably know him. I talked to him, asked him, what do people do after multifamily? Thinking that maybe there's some progression there. And he said, they either do medical office or they do triple net, not because you make more money, but because there are a lot less headache. So anyway, so we jumped into the retail side. We love those. Again, all high credit there. And then the development side, That one's a lot more moving parts. That one, I just went out myself, bought some townhome lots across the street from our first syndication deal, and then knew I wanted to do a deal that was already zoned, so I didn't have to mess with zoning. I talked to a developer about that. He says, never fight city hall, just buy stuff already zoned. Then also too, I wanted a deal where I did have to work with the city a little bit, so it was four townhome lots and I could turn them into six. And so by, you know, by the Texas code so anyways went there and did that work with them had, you know how to present in front of the city, city hall and the city meeting and everything like that so it was good, good practice, you know, best basically built a team, the GC team and then my team. that can manage that process as well. Then we did that deal, made some good money, and then ended up buying six acres and doing an 88-unit ground-up multifamily deal. We could prove it out to our investors that we knew what we were doing because it's a 160-step process. That's what we have it down to. It's a lot more than your existing multifamily and definitely way more than like the retail fund. So it's really building your team around you and making sure you have that before you go out and syndicate your first ground up multifamily deal.

Whitney Sewell: Yeah. So you found some experience, development experience to either partner with or bring on the team, I guess, before doing that.

Kenny Wolfe: How did you do that early? I see. Yeah, that was the whole idea behind those talent homes. Build those first and get a feel for that and get comfortable with that process. Because if you can build six talent homes, you can do 80, 100, whatever it is. I mean, it's about the same steps. It's just you make more money on the bigger ones. So you might as well go bigger.

Whitney Sewell: Yeah, yeah, might as well. So how did you narrow down, you know, Paul Peebles said triple net or medical office, you know, what were your thoughts about, you know, those, you know, like medical office or, you know, but you all went into, yeah, the triple net, Walgreens, Dollar Generals, those, you know, what were some of the deciding factors and what asset class you were going to move into?

Kenny Wolfe: Yeah, I mean, so we like I like the high credit, I like the guarantee of those Walgreens and dollar generals, because the parent company guarantees the rent. So, so since 2017, we've never missed a rent payment at all from any of our tenants. And then and then even through COVID, we didn't have any kind of rent relief, or even a rent reduction request at all on all of our portfolio, because we focused on these high credit tenants, and they were open all through than pandemic, all of our folks. So we really didn't have an issue with that and I'm glad we did because there's other folks that I knew in the business that they went into like strip malls, strip centers, and they had a lot of mom and pop owners and they definitely had rent relief requests and things like that. So they were really kind of nervous throughout COVID. But But ours, again, because who we picked on the guarantors and they stayed open, we didn't have any kind of request at all. So I think that was good to pick to stay with those high credit tenants like that on the retail front.

Whitney Sewell: Yeah, yeah, no, that's incredible. Great to know that as well. Yeah, speak to maybe a couple items, a couple of things that maybe the passive investor would need to know when they're investing with an operator in a triple net fund or something like that. What are some questions, you know, if they've always done multifamily, what are some things they need to know about that type of fund?

Kenny Wolfe: Sure, yeah. I mean, I think it's definitely, you know, what's the track record? And also, you know, you need to ask, you know, what's the biggest risk? So the biggest risk to those is buying one store. And that's why we do a fund setup structure. And that's the only fund structure we do with those, because if you buy one store, it can be risky, right? Because it's like buying a single family home. If you're vacant, you're 100% vacant. So it's more risky to buy one house than three. So, anyways, that's the thinking is that we put into a fund structure. So that was a big deal. The other thing, too, is, do they have experience repurposing building? So, we haven't had any go dark since 20 or since we started. We've done a lot of renewals already, but what we have made us made a point to do is acquire. former Walgreens that now have tenants like Family Dollar, Dollar General. We have that experience and know what they're looking for because what we're seeing now is even if Walgreens or CVS goes dark, you're seeing these dollar stores want to move up and square footage to those. Then the same thing if you see some Family Dollar or Dollar Tree, and they almost never go dark, but if they do, you're seeing auto parts companies trade up to this space. What's interesting is no one really reports on it. All these retailers want more square footage. So we all hear this like Amazon is gonna take all the business. Well, Amazon has retail locations now that you can walk into. And then also all these retailers that we've seen, they're trading up when they can for bigger square footage. So it's interesting to see that actually in the side on that. And then how high credit are your tenants? So we are 100% high credit. So all of our, attendance, except for one at one location. They're all publicly traded. The one that's not publicly traded, they are still high credit. The parent company, it's an LA Fitness outside of Orlando, but they still guarantee the rent. So we are 100% high credit. A lot of folks are maybe 60, 70% that are in the business as well.

Whitney Sewell: Okay, so that passive investor, man, they need to know, obviously, the operational experience of the operator, right? Or have they done this before? No doubt. But I like what you said, you know, the biggest risk is buying one store. You know, sometimes I think you would, maybe even investor, you know, have a group that they trust, they might want them to only they the thinking might be, well, I only want them to start with one first, right? But man, And that could be the opposite of what really needs to happen. Right. But I like that you said that. But and then that's why you did a fund structure, no doubt about it. What about. You know, I was thinking about that type of project, that type of building. Are you all managing those as well? Probably a lot less management, less hassle, I'm sure, right?

Kenny Wolfe: Yeah, it's a lot less management, but you do have to do some. So we did have to create a new management company actually in-house once they hit about, I think, stores for 30. Just because you do. So we get reimbursed for property taxes and insurance. But you still have to pay it and submit it and get reimbursed. And so track that. And then some of these are double net assets. So kind of a worst case scenario is our typically family dollars. Those were responsible for the roof, the structure, the parking lot, and part of the HVAC. And so we have to manage that as well on the CAPEX side as well. So it was enough that we around, like I said, I think it was around 30. Store 30 that we created in that new management company. Like you said, it's a lot less, but there's still enough to be where you need some hands-on experience about getting reimbursed and all that.

Whitney Sewell: Yeah, wow. OK. And then, you know, I want to I want to dive in more in a moment to the office conversion. And we've received a lot of questions about that and or people wondering, hey, is that even possible? And, you know, they've heard a lot of the issues, you know, that you run into. Sounds like you're tackling that head on and all these office spaces that are vacant. What do we do with them? There's got to be a way we can use those, right, or use that space or convert them to something. And we're going to dive into that today. Kenny, welcome back to the show.

Kenny Wolfe: Thanks. I appreciate it. Yeah.

Whitney Sewell: Yeah, let's do that. Let's just hop right back in. And Kenny, I know you all, I think you mentioned in yesterday's segment that you're doing 12 of these right now, which kind of blows my mind a little bit. It's awesome. I love that. But office conversions, let's talk through that process a little bit. I've heard different people say, oh, it's so difficult because the windows aren't in the right spot or electrical is not in the right place. you know, like we can't use these buildings for multifamily or whatever. But talk through the process a little bit of what that looks like for from to take an office building to multifamily and why you would even consider it.

Kenny Wolfe: Sure, I mean, like you said, there's a big, there's a whole bunch of vacant space and the B and C class office spaces, especially in downtown locations, really everywhere. But downtown, it's kind of where we're focused on. The A class is actually interesting. A class office is actually increasing rents and occupancy right now. So it's really kind of a tale of 2 cities. So, but B class and below. If you're not highly amenitized, if you're not the newest thing on the block, you're really struggling right now. And so that's what we're focused on. We're buying these for pennies on the dollar right now. There's a lot of distress in the office space right now. And you're seeing it now. We're buying our first foreclosure right now directly from a bank that took back an office building. So we're starting to see those start coming to fruition. I think it's going to be picked up the next 12 months or so. But this is a commercial real estate issue and so it's going to be pretty clean and quick. You got to be ready to capitalize on those. We're buying these everywhere between $40 and $90 a square foot in downtown locations, irreplaceable locations, walk scores of 95 plus typically before we even get there. Awesome locations, we're buying them again on the cheap. These guys probably paid $200 to $400 a foot. for what we're paying compared to that. But it is a big construction site. We consider it development. You have to wear a hard hat on site. We've got the entire floor. You get down to the cement deck pretty much all the way. You're having to redo electric, AC, plumbing. Basically, all brand new systems, which I like. It's an A-class. It's almost like a ground up. You're getting brand new systems. throughout the building. And then our finish out, we're going for A plus. So, you know, quartz countertops, granite countertops, you know, Bosch appliances, those kinds of things, those high-level finish outs that we're going for. And then we're commanding almost $3 a foot rent. And so, those are really interesting deals. You have to know what you're doing, or like we did, hire somebody for our first one that did. So we teamed up with some amazing architects that knew exactly what they're doing, and they've done this many, many times before. Then also teamed up with some national general contractors as well that have done these adaptive reuse projects before as well. Those first couple, we were learning a lot. Now we know what we're doing after 12 in the process. It's really about plumbing. That's the biggest deal. I mean, everything else is pretty easy to run because you've got that middle, usually it's a middle core of elevator shafts and all that. In the middle of the building, you've got a hallway around and then you got windows, right? But really plumbing is the biggest deal and it's a lot of core drilling. I mean, you're just coring down all the way. I mean, these buildings that we're doing are 17 story buildings, you know, some are 12. I mean, some are 24. So we're a lot of it's a lot of core drilling to get new plumbing in the system. And then we usually have way too many elevators. And so we can use 1 or 2 of those as to run our utilities. Do a trash you those kind of things you have to be a little creative because you have to live inside this box, you got a, you got a floor plate, you have to live with them. And how do you fit, how do you maximize how many units you can put on there, and still make it feel roomy and open. And you've got some amazing views I mean it's just, we love these projects they're downtown like, and we're, you know, we're probably all in, at the end of the day maybe 200 to $250 a square foot net. And I say net because they're eight of our 12 are historic buildings. And so you get a lot of great money from the federal government, most of the time the state as well depending on the state. So we get a lot of, a lot of grant money on that and so the federal government is, you know, guaranteed you're going to get 20% of your hard construction costs as a grant. in year five, which is amazing. And then the states all vary as well. So like in Texas, they just do an additional 25% from the state of Texas. So 45% of your construction costs, your hard construction costs are a grant on these historic office buildings in Texas. In Ohio, it's a competition. We won it two years ago for property. We're submitting, we just submitted now to be on the competition now. But if you win, you get an extra $5 million of equity from the state of Ohio to your project, which again is a big deal. And then we're also seeing seller carries too. So there's a lot of, there's enough distress where we've had sellers actually four times now leave money in the deal. So they don't, they don't lose their shirt. They make some money. And then we come in and do the, you know, with our investor group come in at a higher ownership percentage, usually about the similar equity amount, but a higher ownership percentage. So we're getting some extra juice for our investors as well.

Whitney Sewell: Incredible. Man, many great items there. I was just taking a bunch of notes. Love that. Yeah, that was great. It sounds like plumbing is the biggest issue, drilling through the concrete and all that, but it can be done, right? I love that we didn't just say, hey, it can't be done. No, we went out and we found architects who know what they're doing and said, hey, how can we make this happen? Even figuring out the grant. Man, that's incredible. 45% of the construction costs back.

Kenny Wolfe: Oh, it's a huge deal. So we bought this. Yes. I mean, I'll give you guys, I'll give you a live deal. So we bought a deal in Dallas in April. We raised $9 million of equity. We're going to get 16 million of grant money guaranteed. I mean, so it's fantastic. Yeah. I mean, it's just unreal. So our investors are loving these historic office conversions and we've got more teed up. So we like them too. It's a little bit more work because you have to keep it historical, right? But it's definitely well worth it for the returns for the investors. It doesn't add that much more per foot.

Whitney Sewell: Yeah. Wow. Well, I'd love to dive in even more. Unfortunately, we've got to move to a few final questions. Or maybe tell me this about this office conversion. When you're looking for these specific spaces, what are some deal breakers? Or is there no way we can do this one versus the ones you all have selected?

Kenny Wolfe: Sure. So, so far the biggest four plates so one floor that we're doing right now is 32,000 square feet. So, which is a pretty big for play 17 stories of that but 32 square feet on one floor. That one we had to be a little creative on some dead space. So when there's lack of windows and one section or whatever you got to figure it out. And then you also have to keep in mind fire code as well. So, you know, how quickly can folks get to the stairwell and then also fire, you know, make sure there's a firewall in between. So, what we did on that one, we actually created some very nice storage lockers all the way down that hallway. So, it broke up that hallway somewhat. So, again, for fireproofing and then solved our problem for the stairwell and at the same time fixed this dead space. So, it's kind of, you have to be that kind of creative throughout the space. I mean, you're, Some of our other ones we're doing, if they're bigger floor plates like that, you're having to get creative with the dead space. Some of them are doing alternating business lounges on every floor to a video game room, a movie theater, like that, break it up on those floors like that as well. Then you can have a lot of fun in the basement. These usually have basements. You try to put all your utilities down there if you can, your boilers, whatever you have down there, all that right there. And so that definitely helps with space. But again, it just comes back to, you know, make sure you have got the knowledge from those architects that have done this, especially on the historical stuff, because you got to preserve certain walls, certain finishings to qualify.

Whitney Sewell: Yeah. Do you see this continuing, this opportunity to convert office to multifamily? Or you see maybe it drying up or more people doing it, or maybe people coming back to the office? What are your thoughts?

Kenny Wolfe: I think if you're if you're if you're not at the office now, you're not going to come back. So I feel like everybody knows kind of where they're at now on their physical occupancy. And that's a big thing to talk about, too, is office office buildings. Occupancy is there. Make sure you ask the broker if they're leased. Or is it physical occupancy that's what we want to know physical occupancy because those leases are going to eventually burn off, and those are going to be trouble right so you, you want to know that going in, but if you're not back to the office you're probably not back now so I think feel like everybody knows kind of where the occupancy is. And each city is a little bit different on that as well. And what industry that you're in on the occupancy. But then, so now the owners know, okay, I know my occupancy, I've got debt issues. If I do have them, they're really big right now. And then how do we get out of it?

Whitney Sewell: Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the Real Estate Syndication Show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.