Tony Cardoza: Today is where you have to show up. You might as well have fun.

My guest today is Tony Cardoza, a principal and Managing Director of Cityview which is a vertically integrated institutional asset manager and multifamily developer based out of L.A. Tony has over 20 years of experience in real estate. Prior to Cityview he helped acquire and develop 5,000 units for Real Estate Capital Partners, he also spent time at Prometheus in a land and multifamily acquisitions role. Tony holds a B.A. in Economics from Middlebury College and an MBA from the Haas School of Business at UC Berkeley.​

While I only know Tony in the professional sense, I consider him a friend and I think you’ll see why that might be. His personality is undoubtedly an asset for his acquisitions role.

This pod’s a bit technical, and Tony’s saying a lot in short periods of time. I really tried to open up his thinking around the entire topic of development to show not just how complex it is, but how top-tier developers think about the component parts of the business.

Listen in as we cover topics that include:

How Cityview doesn’t invest in markets (say LA) but only sub-markets (Hollywood).

The implications that obsolete office space has on their development pipeline.

The magnitude of the decline in apartment values over the last 24 months.

The financial and physical qualities viable development projects portrays at this point.

How Cityview interfaces with the community, endeavoring to truly listen to those affected by their projects.

How to assess and manage costs when building, and that fact that you never really know costs until you execute a contract with a builder.

Why Cityview takes a partnership mentality with their general contractors.

How flexibility and agility play into success in finding property that’s suitable for development.

Why knowing a deal inside out and front to back is table stakes to the game of recruiting equity capital.

How to deal with dishonest people.

How winning the day, personally, as your first accomplishment, can make the workday seem almost inconsequential.

And finally, how some good winds are coming to the commercial real estate market.

Transcript

[00:50] Kevin Choquette: Welcome everyone to episode 23 of Offshoot. My guest today is Tony Cardoza, a principal and Managing Director of City View, which is a vertically integrated institutional asset manager and multifamily developer based out of LA.

[01:04] Tony has over 20 years of experience in real estate. Prior to City View, he helped acquire and develop 5000 units for real Estate Capital Partners. He also spent some time at Prometheus in land and multifamily acquisitions.

[01:17] Tony holds a BA in Economics from Middlebury College and an MBA from the Haas School of Business at UC Berkeley.

[01:24] While I only know Tony in a professional sense, I consider him a friend and I think you’ll see why that might be. His personality is undoubtedly an asset for his acquisitions role.

[01:36] This pod’s a bit technical and Tony’s saying a lot in short periods of time. I really tried to open up his thinking around the entire topic of development to show not just how complex it is, but how top tier developers think about the component parts of the business.

[01:53] Listen in as we cover topics that include how City View doesn’t invest in markets, say la, but only submarkets. Think Hollywood, the implications that obsolete office space has on their development pipeline, the magnitude of the decline in apartment values over the last 24 months, the financial and physical qualities viable development projects portray at this point, how City View interfaces with the community endeavoring to truly listen to those affected by their projects, how to assess and manage costs when building, and the fact that you never really know costs until you execute a contract with a builder why City View takes a partnership mentality with their general contractors, how flexibility and agility play into success in finding property that’s suitable for development, why knowing a deal inside out front to back is table stakes to the game of recruiting equity capital, how to deal with dishonest people, how winning the day personally as your first accomplishment can make the workday seem almost inconsequential and finally, how some good wins are coming to the commercial real estate market.

[02:59] I hope you enjoy the podcast.

[03:07] Tony, welcome to the podcast. Thanks for joining me.

[03:10] Tony Cardoza: Hey Kevin, good to talk to you. Thanks for having me, man.

[03:13] Kevin Choquette: Yeah, I appreciate you taking the time. I know you’re a busy man.

[03:17] Look, to get us going, maybe just tell us about City View and, and what you guys are up to. I mean, obviously I know you, but those in the listenership world don’t know, may not know anything about City View.

[03:31] Tony Cardoza: Sure. So look, City View just had its 20th anniversary two years ago, so we’re coming up on our 25th, which I guess makes us kind of new, kind of young for a real estate company, but we’re a real estate investment management and development firm based out of la, actually founded by a gentleman, Henry Cisneros, who was the Secretary of Housing and Urban Development for about eight years in the Clinton administration.

[03:55] And he wanted to move from the. From the public sector housing to the private sector housing. So we got our start with a significant series of investments from some public pension funds, including CalPERS, and have always really been focused since then on multifamily, both for sale and for rent.

[04:11] We’re based out of LA, as I mentioned. We probably do 70% of our business in California, although we’re from Houston and Dallas all the way to the West Coast. And we look at ourselves as, you know, one of the parts of trying to solve the housing crisis that really plagues a lot of the cities that you.

[04:28] In the areas that we cover.

[04:30] Kevin Choquette: Are you guys still doing for sale housing? I didn’t, I actually didn’t know that.

[04:34] Tony Cardoza: We haven’t done it in a while, not since the gfc when, God bless us, we’re looking at it again, which maybe, which should be interesting, but we are looking at a series of potential for sale housing opportunities just because that’s where, that’s where the market is right now.

[04:49] There’s a lot of development that used to make sense as multifamily, that doesn’t. That now makes sense as for sale. So we try and be as agile as possible, respond to the market, respond to the needs of our investors, and find opportunities where we think we can.

[05:04] Kevin Choquette: Yeah. So what are you seeing right now? I mean, it’s.

[05:07] I would say it’s been difficult, but what are you guys seeing? What’s happening? What are the challenges? What are opportunities?

[05:13] Tony Cardoza: Sure. So kind of two challenges. So there are two sides of the same coin, right? Challenges and opportunities. On the existing product side, as we all know, rents have fallen. Excuse me, values have fallen significantly.

[05:26] A lot of that was triggered by obviously the steep rise in interest rates and the expansion of cap rates as a result. But I think in the brave new world we’re in, we’re not expecting the kind of low cap rates that we’ve seen for the last seven or eight years.

[05:38] And so on the sell side of that, we are selling some of our assets at prices that are far below our expectations, far below our investor expectations as well. But you know, that’s the reality of cycling through real estate, that it’s not just the buy and what you can add a value, it’s really the disposition that determines your ultimate fate.

[06:00] So on the sell side, it’s a little challenging. On the buy side, we think there are great opportunities. We’ve bought a series of assets this year at well below replacement costs, sometimes well below developer basis and infill markets that we feel are supply constrained and have existing and continued demand characteristics going forward that we really like.

[06:19] Kevin Choquette: Well, on the cap rate side of things, if you guys, you know, you would have underwritten things, let’s just say 20, 20, 20, 21 to.

[06:30] I’m not going to put numbers up, I’ll let you do that. But how much of a cap rate spread do you think we’ve seen Now? There was a moment in time where things were quite ludicrous, but you know, you guys are, if you’re buying and selling right now, where do you think market clearing cap rates are?

[06:47] Tony Cardoza: Yeah, I mean, so as you know, it’s really by submarket and there’s some, finally there’s some variability. I think at the peak of, of the go go years, you know, five years ago, there was no difference between, you know, Palmdale and Santa Monica.

[06:58] Rates were sort of low regardless of where you were. Or Santee and La Jolla for San Diego people, that’s gone. I think it’s reverted more to a more sustainable norm, which is the market recognizes there is difference in values and sort of future cash flows based on the market you’re in.

[07:14] So we’re seeing two things. We’re seeing differentiation by markets, which I think is healthy.

[07:19] And we’re seeing, you know, we’re seeing cap rates probably 75 to 100 basis points higher than we’ve seen them, than they were, you know, three years ago, let’s say.

[07:32] Kevin Choquette: So is that like. I know, I get what you’re saying, it’s location dependent, but we’re talking four caps or now four, seven fives. Something on that?

[07:42] Tony Cardoza: Yeah, yeah. And I’d probably lean towards 100 basis points. So I’d say 4 caps are now fives. And we just sold a project in, in Mountain View at a, at a 4.4

[07:52] cap, which sounds amazing. And it is on, on an absolute basis, on a relative basis, I think, you know, that would have traded at a 375 to 3.5, you know, a married three or four years earlier.

[08:02] Kevin Choquette: So pre, pre pandemic, were you guys able to underwrite to three and a half or 375 back then?

[08:09] Tony Cardoza: No, I mean, I should be fine more than once.

[08:12] Kevin Choquette: Yeah, right.

[08:14] Tony Cardoza: We did not underwrite to those numbers. But you know, you bake them into your assumptions as you go forward and as you operate the asset and you make disposition decisions based on where you think the market is and when that, when that shifts pretty violently underneath your feet, you know, you find yourself making disposition decisions less on the value of the asset, more on where’s your debt or you know, what’s the term of your investors that want to stay in the asset?

[08:37] Kevin Choquette: Are, are you guys strictly a merchant build or do you also build for duration of hold?

[08:44] Tony Cardoza: Yeah, both. So we’ve got a decent portfolio of assets we’ve owned, you know, more than seven or eight years and those are longer term assets we hold in portfolios with our investors.

[08:52] But you know, most of what we sell, I’d say most of what we build, excuse me, two thirds of it, we sell within a, you know, you typically a five to seven year window.

[09:00] Kevin Choquette: Okay. And because nobody else knows what, what’s your specific role within City View? I mean, we’ll give a lot of context to our conversation here.

[09:10] Tony Cardoza: Sure. So I, I co head acquisition. So I’m sort of on point for finding new opportunities in the spaces and in the markets. And that can be for sale, that can be buying notes, that can be distressed deals, that can be stepping into deals that are partly under construction, kind of all of the above.

[09:25] My job is to source those deals and underwrite them and put in a business plan, get them approved, get them financed, and then hand them off to either our development group or our asset management group or construction management group to go execute the business plan.

[09:39] And so my job is really. Yeah, right.

[09:43] When it all comes together, sometimes it seems like it is, but, but, but in the middle of it, it usually never is. Yeah. My job is to try and get the various stakeholders, some of which are internal.

[09:53] Right. You have development, you have asset management, you have property management, you have construction management aligned with our external stakeholders. Right. Which are investors, equity investors, debt providers, and actually the market itself.

[10:07] Right. Brokers and property owners, everyone else. So I’m trying to get all those people working in unison is kind of What I focus on.

[10:15] Kevin Choquette: Huh. That sounds like way more than just acquisitions.

[10:20] Tony Cardoza: I call it herding cats.

[10:22] Kevin Choquette: Yeah, yeah, exactly.

[10:23] Tony Cardoza: Friendly cats, but still cats. So that’s what it ends up.

[10:27] Kevin Choquette: But go back, you know, we, we sort of said hey, opportunities, challenges, same coin values was, was one part of that but and you said you guys are looking at some existing assets, picking them up below replacement costs.

[10:40] What else is on, on like the 2024 coming into 2025 horizon maybe let’s just focus on opportunities. What do you guys see?

[10:47] Tony Cardoza: Yeah, opportunities. So actually we think there are great development opportunities out there, just not today because they’re, they’re difficult to finance today. So if you look at the difficulty finance for a number of reasons, right.

[10:58] The equity markets are not, I think don’t feel safe enough out there to do long term development and B, you can buy stuff at well below replacement costs. It’s hard to justify new construction.

[11:08] Now we think the, the below replacement cost phenomena is a window in time, sort of by definition it can’t be there forever. And what we’re seeing is nothing, you know, very little, I shouldn’t say nothing.

[11:19] Very little is getting built in the pipeline over time. That’s going to do what Kevin, drive.

[11:25] Kevin Choquette: Rents and then get us back.

[11:28] Tony Cardoza: Yeah, drive rents and get to some equilibrium. So development is a cyclical business. It’s up, it’s down. Right now it’s down. What we’re trying to do is identify the sites we like, tie them up, entitle them over an 18 to 24 month period, you know, get all the plans in place, get a gmp, get debt ready and then at land close bring in an LP to build those.

[11:47] So if you think about that, that’s a two years to entitle and get plans two years to build, another year to market. You know, that’s kind of a five year window that we’re looking to delivering product into the, and we think that in the right locations and obviously we’re, you know, as I always say, we’re not in the market business.

[12:02] We’re in the sub market business, you know, in the right locations, in the right sub markets. If you, if there hasn’t been supply delivered, there continues to be demand. We think there’ll be a real opportunity there.

[12:12] So we have projects in San Diego, in Claremont area, we have projects in la, in Westchester, we have projects in Torrance, in la, we have a project in Denver, we’re working on a project in a neat little submarket in Dallas.

[12:29] We think that long term we’re still Our DNA is as developers and we think there’ll continue to be opportunities to do that.

[12:38] Kevin Choquette: The comment of buying below replacement costs, from my perspective in the industry, I agree with you. LP equity is pretty reluctant to look at development period.

[12:50] But how much of the product, let me say it this way, Supply, demand equity, looking for an attractive risk adjusted return as the demand side supply being apartment buildings that are newly built and are going to sell below replacement costs.

[13:08] What’s that overall balance look like? And just how much of this stuff is out there that, that, you know, really is going to be like, hey, we just pick that up for 50,000 less than the cost of construction.

[13:21] Tony Cardoza: How much of that’s going to be out there in the market? Yeah, yeah. I don’t think a ton. I think it’s a moment in time.

[13:27] Kevin Choquette: That’s what I think. Yeah, yeah.

[13:29] Tony Cardoza: Those that are able to do it successfully and find the financing to find the right partner and have the right business plan are going to have great vintages from, you know, 24 and 25.

[13:38] But I think we’re already seeing more competition out there on deals and that means prices will creep up. So I think that window is going to disappear over time and it kind of behooves you for the deals you like in the submarkets you like to really lean into and try and find a way to make it work.

[13:56] Kevin Choquette: Yeah. And when you’re saying development doesn’t work right now, is that for you guys a function of, you know, hey, we’ll take the revenue, we’ll strip out vacancy, we’ll make our intelligent model around operating expenses.

[14:10] We’ll come up with noi. But then we’ve got to stack that on cost and that’s not economical. Meaning you don’t have enough yield on cost to say let’s do that.

[14:19] Or is it just that you can’t find a capital partner to come in?

[14:23] Tony Cardoza: So it’s a great question. I’d say both. I’d say both, depending. So let me, let me have my cake and eat it too. There are some deals that we, that just do.

[14:33] We love the location, they don’t pencil. Most of that’s driven by cost.

[14:36] You know, the Bay Area, I probably looked at two dozen deals over the last 18 months and given the cost parameters to build in the Bay Area, there’s deals there do not make sense.

[14:44] So we’ve been unable to, to, you know, bring any of those to fruition on deals we do like. And there are a number of them we have found at times, you know, difficulty in getting LP equity on board today, I think they’ve expressed the sentiment they want to do this, they believe in the investment thesis, but they want another 12 to 18 months to get there, which is fine.

[15:04] You know, that’s, that’s the market speaking and that’s the decision they make. So that’s why we’re less interested in RTI or immediately developer projects and much more focused on, you know, controlling assets, controlling sites that we can entitle and then bring to market in 18 or 24 months when we do think there’ll be more liquidity and more demand in the capital markets for new development.

[15:25] And it’s hard to do new development when you can buy below replacement costs today. Because your comparison of projects are tough, right?

[15:33] Kevin Choquette: Yeah. I mean, you may have a different vantage point, but I don’t think there’s that much to be bought for, proportional to the amount of equity that wants to go buy that asset.

[15:45] I don’t think there’s that much out there.

[15:48] Tony Cardoza: I would, I would totally agree. I think, I think that. But they all have the idea that that’s all they’re going to buy is the challenge.

[15:55] Kevin Choquette: That’s right. Until they prove themselves that they can’t, they’re going to keep looking.

[16:00] Tony Cardoza: Exactly. So in reality, there’s not that much to do. And everyone said we want to stress at the beginning this year and you know, most of the stress came from the debt side and from debt terming out.

[16:09] And most of those lenders decided to work with their existing sponsors who were able, you know, in for the most part to recap those deals and stay in them. Some weren’t and there’s some been some good buys on that basis, but there hasn’t been, I think the level of wholesale distress at least in the, in the, in the urban markets and in the western US markets that we’re in that people, you know, wanted to see.

[16:28] So a lot of people sat on the sidelines waiting for the perfect deal and missed very good deals, in my opinion.

[16:33] Kevin Choquette: I agree.

[16:34] Go back though. So we’re talking cap rates and we’re saying, hey, maybe the 4 cap is a 4, 7, 5 or a 5. When you guys find not the site that’s infeasible because costs are too high, but the site that you like, that you actually think you can stack costs and make it work.

[16:51] Let’s just say your, your exit caps of 5. What kind of spread are you guys looking for these days to get LP to, to jump?

[16:59] Tony Cardoza: Yeah, it’s going to be, it’s going to be 120 to 150 basis points.

[17:03] Kevin Choquette: Yep, that’s what I would think. So everybody says 150 and it seems impossible to find.

[17:08] Tony Cardoza: Right. It’s pretty tough I think for a better submarket, you know, like we’re working on a deal in Newport beach, you know, you’re going to see a lower spread and for a more maybe you know, not as rarefied submarket, you’re gonna, you’re gonna find a bigger spread as needed.

[17:25] Kevin Choquette: And, and you said something about we’re in the submarket business and you know, I, I obviously you know this, but I have some long standing relationship with City View and I’ve seen some of what you guys do talk about how you think about the urban ecosystem, the streets, the places, the locations you will and will not invest because I think it’s quite unique relative to some of the other shops.

[17:52] Tony Cardoza: Yeah, okay, sure.

[17:56] Look, I say the submarket business is people say are you investing in la? And my answer is no, we’re not investing in la, but there are submarkets that we’re doing deals in in LA.

[18:05] I mean LA is a, you know, 10 million person megalopolis and within that there’s sort of everything from A to Z. From, from a life perspective, but certainly from a real estate perspective.

[18:15] We try and look at places that are hard to build for, for lack of a better description, that have supply constraints. And those supply constraints can be geographic in nature, they can be political in nature, they can be community based in nature, they can be cost based in nature.

[18:31] And so we try and find sites that, or areas that we think will have limited supply at least at the cost basis we want to get in at and that will eventually, you know, play out in terms of, of, of rent growth for the asset.

[18:43] So you know, we did worked a project with you that you brought us into Little Italy and that was. Scott, was that 10 years ago?

[18:51] Kevin Choquette: Yeah, something like that. Might even even been longer, I don’t know.

[18:55] Tony Cardoza: You know, great site, great location. It was a, it was an old caliber collision site. We do a lot of repurposing of office buildings and, and retail buildings and some, some industrial buildings.

[19:06] We’ve done industrial buildings in la, we’ve done, we’re doing an office building in San Diego, we’re doing an office building in Dallas, we’re doing an office building in Denver. Trying to repurpose existing real estate because a lot of existing real estate is infill in its nature and so there’s not a lot of building opportunities near it.

[19:21] So we’re very, very supply sensitive and really don’t want to build commodity product against commodity builders because they can, you know, they may be able to do that better than we are.

[19:32] Kevin Choquette: That office you’re referencing, is that demo the office and build new or is that full adaptive reuse?

[19:39] Tony Cardoza: Yeah, all those examples were full demos. I think the adaptive reuse is a great theoretical construct, but it’s, it’s, it’s pretty challenging in real life.

[19:48] Kevin Choquette: Yeah, yeah, it’s really expensive.

[19:52] Tony Cardoza: Yeah, really expensive. And, and just ornery. And you know, most of those are, I would call first tier suburban markets that we’re in where we’re doing that because they’re the ones that are, you know, suffering the most pain and have the lowest basis and are easiest to get into.

[20:07] You know, these high rises you see in the downtown areas, those are, I don’t know what’s going to happen to those. I don’t think you could repurpose them as residential.

[20:17] You know, what they gave repurpose of is really anyone’s guess. But it’s gonna be interesting to watch that play out in a place like downtown LA over the next five to 10 years.

[20:25] Kevin Choquette: Yeah, I agree.

[20:27] So you got your submarket, you got your street, what city have you building? You doing like walk up SFR0 lot line, you know, townhome products? Are you doing high rises?

[20:38] What’s, what’s the widget that you guys like to build? And maybe related is what widget is actually buildable right now based on the cost structure?

[20:46] Tony Cardoza: Well that then that’s a great question, Kevin, because they’re intertwined, right?

[20:51] I think over the last 10 years we built a fair amount of podium and wrap product because the cost basis, because the rents allowed you to do that and the accessibility to debt allowed you to do that.

[21:03] I think we’ve looked at a lot of sites where repurposing is much lower density.

[21:08] And so that comes out of the land value. Right.

[21:11] You pay less for the land for a less dense product, but it means your build costs are much lower too. So you’re able to achieve a higher yield that you need to be able to get the financing.

[21:19] So we’re looking at a number of deals where we’re building wrap instead of podium and we’re building, you know, three story and four story walk up instead of wrap.

[21:30] And that’s been a change in the market that, that you know, we identified pretty early and you’re seeing more and more communities and really more and more landowners accepting that because that’s the Only way to get a trans transaction together.

[21:40] Kevin Choquette: That was going to be my question. They’re, they’re not still attached to some broker’s whisper price from three years ago about how much their acre and a half is worth?

[21:51] Tony Cardoza: Brokers do that.

[21:52] Kevin Choquette: No.

[21:57] Tony Cardoza: I mean they are, but once they bang their heads against the, the wall known as the market for long enough, I think eventually they have a, you know, come to Jesus and they, they realize if they want to transact, that’s what it’s going to take.

[22:07] Now a lot of them don’t, A lot of them wait it out and you know, if you can wait it out, if you don’t need liquidity, if you can sit on, you know, either, either vacant or let’s say non optimal use land, you’ll probably get a comeback later in the cycle.

[22:21] But today those are really tough to make work in a, in a, in a high density format.

[22:29] And for the record, we’ve never built a high rise and I don’t think we ever will.

[22:33] Yeah, it just goes against the risk reward we feel of high rises is not justified or we’re not good at it or all the above, but we just have not been interested in the risk associated with high rise and the returns that we don’t think they’re sort of commensurate with that risk.

[22:49] Kevin Choquette: Have you gotten into that tweener space where maybe you’re seven stories and you’re keeping that top floor below 75ft?

[22:56] Tony Cardoza: Absolutely.

[22:58] Kevin Choquette: Yeah, yeah, yeah. So then you’re doing, let’s just say three or four story walk up 50 units, 300 units. What’s the scale that you guys like?

[23:09] Tony Cardoza: You know, we have a project we’re working on in Denver that’s probably about 280 units of three story walk up in the first phase and another two or 300 in the second phase.

[23:18] Excuse me. Second phase is 280. Third phase is two to 300.

[23:22] It’s easier for us to build with some density. I’m, excuse me, some, some volume. I think anything under 150 units, regardless of the product, you know, we’re not, we’re not that keen on just between, you know, the resources you have to marshal and the opportunity cost of those resources doesn’t make a ton of sense.

[23:39] I think the project we did with you, Kevin, in, in Little Italy was what was 126 units?

[23:45] Kevin Choquette: I couldn’t tell you right now, to be honest. That sounds right.

[23:49] Tony Cardoza: But yeah, I think that’s the smallest project we’ve done.

[23:52] And we did it because we Thought it was a special location and a special submarket and it worked out great.

[24:00] But yeah, sort of 150 units and above to justify the new construction process.

[24:07] Kevin Choquette: So I get that comment on scale in terms of like marshaling your own internal human capital and then you know, having enough, as they say, you can’t eat irr.

[24:17] Tony Cardoza: Right.

[24:18] Kevin Choquette: But how does that same comment on unit count impacts the, you know, in unit operations or on property operations and operating efficiencies? Because I, I mean I certainly hear people say X scale is optimal.

[24:35] I don’t know if I believe it, but it’s probably worth exploring and just in terms of main containing your operating expenses.

[24:44] Tony Cardoza: Yeah, I think, I think that’s completely true. I think the same metrics that drive your development decision, drive your operating decisions and, and below, you know, optimal units for us and I think it’s different for everybody based on how you manage your properties and what your expectations are and how you staff.

[24:59] And the optimal size for US is usually 2 to 250 units from an operational perspective. Any smaller than that and you lose some of your efficiencies. And at least for us, any bigger than that and you know, you end up sometimes having to chase your back door to keep your occupancy up.

[25:15] So you know, as it turns out, most of the projects we do fit within that window anyway. And I don’t think that would ultimately drive our decisions. I think the lower end would drive our decisions from an operational standpoint.

[25:27] The upper end, when you get too large, you end up, get, you end up both in financing, you know, financing challenges, but also just keeping your, your, your front door open when your back door closed so that you don’t lose leases while you’re in operation.

[25:42] Kevin Choquette: So people are moving out as quick as you’re getting them in.

[25:45] Tony Cardoza: Yeah, and we have a 370 unit project we’re in lease up right now in Oakland on the water in a place called Brooklyn Basin. That’s, it’s quite nice.

[25:54] And we finance that with 10 year option money. So we’re sort of long term holders there and you know, that’s the law. I think 370 is the largest project we’ve done and you know, we’re very aware of the challenges of that.

[26:06] So you know, let’s check back in a year or two and I’ll tell you how it’s gone.

[26:09] Kevin Choquette: Mm, design. How do you guys think about design? So you know, hey, we’ve, we’ve gone. Okay. It’s not la, it’s specific sub markets of la they’re supply constrained. We’re gonna pick off the parcels that we like.

[26:24] We’re gonna put the right product on there, that’s three or four story walk up or a podium.

[26:29] Now we gotta go like, okay, how are we gonna program the physical space? How important is that to you guys?

[26:35] Tony Cardoza: Yeah, super important.

[26:37] Look, we’re not always long term holders, but we look at our assets as long term assets for the community. And you know, there’s two groups there. One is the actual community you’re surrounding that you’re building something that adds value to, you know, how, how they’re living there and what the community is about and what they’re trying to do and that on that, you know.

[26:55] In that regard, we frequently partner with local nonprofits and other groups in the community to be, to sort of meet their specific needs in the design or the, the accessibility of the public spaces, et cetera.

[27:09] And then from a tenant perspective, it’s really of critical importance to you know, retain your tenants and be able to have them have a, A, a lifestyle that they want for the rent they’re paying.

[27:18] And that goes for, you know, whether that’s our hold or the next person we sell it to. That’s the sort of long term value of the asset. So we, we do a couple things, Kevin.

[27:25] We try to partner with local groups throughout our process. We try to use local designers and architects for the in, in the actual markets themselves. So we don’t bring a Northern California architect down to San Diego, for instance.

[27:38] We try and really use local architects, local designers. They know the market better than we do. They know what’s acceptable, they know what’s liked, what’s disliked and we try and incorporate that into our design.

[27:50] Kevin Choquette: That’s cool.

[27:53] And then now is the fun part here. Well, not that it all is, but you brought up two things. One, partnering with nonprofits. Has City View ever gone into, you know, aside from kind of a state density bonus thing to get more units, have you guys ever played in the affordable space or are you pure market rate?

[28:12] Tony Cardoza: Yeah, I mean we have not gone into the 100% affordable space. LTECH space bond financing space. I actually think the best delivery of, of, of, of lower income units, you know, whether that’s moderate to extremely low, is through a mixed income type of scenario.

[28:29] So say density bonuses or San Francisco is 20% out of the gate. I think having mixed incomes, living together in is probably the best way to deliver product into the community.

[28:40] So we don’t do 100% affordable, but you know, every project we do. By definition, just about every project is, is mixed income.

[28:48] Kevin Choquette: Okay, so costs, Right. You’re the acquisitions guy. You’ve got to make these things work. You go schematic design, and let’s just say we’re doing a 5 over 2 podium in some submarket of LA.

[29:04] And I’m sure you guys have done enough of this that you’ve got a sense of it. But in my vantage point in the industry, I will see the same projects, you know, in, in rough sense from three different developers, and their budgets are completely different.

[29:20] So how the heck do you guys get to like, okay, actually we can build it for that number.

[29:25] Tony Cardoza: Yeah, you’ve got an interesting vantage point. Right?

[29:27] Kevin Choquette: Yeah, I honestly, I don’t get to see. Yeah, I would have thought costs would be like plus or minus, you know, 5 or 7% just over the years I’ve kind of given up because there’s so much volatility.

[29:40] It’s just like, I don’t know, your number is completely different than his number, is completely different than that guy’s number. But how do you guys get to a number you can trust?

[29:50] Tony Cardoza: Well, I think the answer is you don’t have a number you can trust until you’re at gmp.

[29:53] Kevin Choquette: Mm.

[29:55] Tony Cardoza: And even then, you know, some people call that the gross minimum price. Not the gross price, maximum price, guaranteed minimum price. But, you know, setting that aside, that’s a whole nother discussion.

[30:05] I think that we try and be prudent. You know, we’re pretty active in our markets, so we pull a lot of cost data from the projects we’re currently involved in.

[30:15] And we typically drill down pretty deeply. So we don’t, we don’t necessarily go to GCS for pricing, we go to gcs, but we really go directly to the major substance.

[30:24] So we sit down and we have relationships with, you know, the top, say, five to seven subs, and we’ll go through multiple iterations with them on an ongoing basis. And they drive, you know, 70, 80% of the cost, let’s say, for those major subs.

[30:37] And so we try and, you know, for, for lack of a better word, go straight to the horse’s mouth and really get a sense of what’s happening on their, on their demand side, what’s happening with inputs, what’s happened on their labor side.

[30:47] And you know, can, can we. Can they stand by this cost?

[30:51] And we found by doing that, by the time we get to gmp, we’re much closer at G with what our expectations were going into the project. And part of that is not being delusional going in.

[31:01] You know, top five subs give you tough numbers. Like, those are the numbers going and shopping them and trying to find a lower number is not necessarily going to do yourself any favors because it’s the number you end up paying, not the number you start with, that really matters.

[31:16] Kevin Choquette: When you go direct to those subs, let’s say it’s your plumbing contractor or your framer.

[31:22] And then you go back, I’m just going to make up a general contractor, let’s say Swinnerton. And you say, hey, guys, we want to, we want to engage you here potentially, you know, make us an offer.

[31:32] And oh, by the way, this is, this is who I want you to put on framing this, who I want you to put on plumbing. Or do you just let them kind of go out to the market and see what they find?

[31:42] If you’ve already been talking to the sub, you.

[31:44] Tony Cardoza: Yeah, yeah, yeah, yeah. Now we won’t put a sub to them. We will let them say, you know, this is where we believe the market is based on our relationships and they have their own relationships and there may be an overlap.

[31:54] Their job is to go out and canvas the market and beat the numbers that I have.

[31:58] So that’s how we look at it.

[32:00] Kevin Choquette: Okay, cool.

[32:02] So let’s do this. How did you end up here? And you could take as big a view of that as you like.

[32:10] I know you were at Prometheus before, and I think you’re west coast kid through and through, but zoom out. How do you end up being a partner and an acquisitions lead for what?

[32:23] You guys have two and a half billion dollars under management. How did you get here?

[32:26] Tony Cardoza: Yeah, that’s a great question.

[32:29] So, look, I got out of college. I went to liberal arts school, Middlebury College in Vermont, which is a.

[32:34] A fun school and great. I don’t know how well prepares you for. To have a job and work in life.

[32:41] And I traveled around. I lived in Japan for a while and taught English there, and I lived in Spain and worked there. And then I came back to us and was like, wow, I have to find a job.

[32:49] And so my sister had gone to school with these guys who started a juice company, and they just started it that summer. It was called Nantucket Nectars.

[32:58] And I got to know them and I was like, I need a job. And they’re like, great, we need someone to drive our truck. And so I started driving the truck for Nantucket Nectar.

[33:06] That was my first job out of college, first real job.

[33:09] And I did that for A couple years, and we had some success. We sold the company and I had a little piece of it. So I took that money, went back to business school.

[33:16] School and I went to business school at UC Berkeley, the Haas School of Business, and wanted to focus on real estate. I’d grown up working on construction sites as a kid or as a high schooler, I guess, because they paid the best.

[33:29] And I liked it. I spoke. Spoke Spanish, so I, you know, I would talk to all the laborers there and just kind of liked it. And so saw it from that end, went back to school, got a degree, had a focus in real estate and went.

[33:40] Went to work for a pretty large sized developer in the Bay Area named David Martin, who was head of the Martin Group. That’s kind of how I got my start.

[33:50] Kevin Choquette: And didn’t David end up at the top of City View at some point for a short, A short time or something?

[33:56] Tony Cardoza: Yeah, he recruited me here, actually.

[34:00] I worked for David, and then I worked for Prometheus for a few years, for about five years. And then I worked for a equity firm out of New York called Real Estate Capital Partners for five years.

[34:11] And I ran their west coast operations.

[34:13] And then I was there, and David called me up one day and said, you know, we raised this money with Lacera. We want to go start doing some deals in the Bay Area.

[34:20] Why don’t you join us? And so I came down here and met everybody and, and signed on. And that was 13 to 14, 13 years ago.

[34:27] Kevin Choquette: Wow.

[34:29] So for you, you know, it’s sort of like, okay, I was, I was the truck driver, by the way. My, my stories of the things I’ve done are even more interesting than truck driving.

[34:39] I hope so.

[34:40] Tony Cardoza: I hope so.

[34:41] Kevin Choquette: But you, you know, at some point decided, okay, real estate, commercial real estate. So free today. Like, what. Why is it. What’s your. Why. Why do you trade commercial real estate?

[34:50] Why do. Of all the things that Tony Cardoza could do, why commercial real estate?

[34:54] Tony Cardoza: Yeah, well. Well, I.

[34:57] Okay. My father once told me when I was young, he said, be careful what you get good at, because you’ll end up doing it your whole life.

[35:04] And that’s a, that’s a little fatalistic, I know, but. But there’s, there’s some definite truth to it. And so I got into real estate and, you know, was able to sort of have a job and support a family and never really looked past that.

[35:18] Now I feel lucky to be in real estate. I think it’s one of the most creative industries out there. I think you can if you can figure it out, there’s a, and you, you hustle and you put the pieces together.

[35:33] There’s a, there’s a lot of satisfaction in that. And you know, everyone looks at a piece of dirt differently, as you saw, from people’s cost structures, but design wise and investment plan wise and, and that, I think that’s a really interesting and fun process.

[35:46] I get to work with a lot of different people internally and externally, which I enjoy, so I have no regrets. But, you know, I, I, it wasn’t, it wasn’t conscious on my part.

[35:58] It was just the passage of time more than anything.

[36:02] Kevin Choquette: So the golf. I’ll go out on a limb here. I don’t think I’m going out on much of one, to be honest, but I think you’re really good at what you do in terms of going into a dense urban environment, finding a really high quality site and acquiring it.

[36:19] Here’s the hard part. At a price that allows you guys to do what you do profitably.

[36:25] And you just alluded to it, right. Like, it’s really fun when you can put it all together. But what are some of the components of that that you think have made you successful or would make anybody in that role successful?

[36:35] Tony Cardoza: Sure.

[36:38] I think two things. I think being flexible, that what you go in and think is going to happen is probably not true. And being, you know, we say agile at City View, but, you know, being flexible, being agile, being able to figure things out as you go along, being able to pivot and, you know, redo it and go from one product to another for sale to market or senior housing or, you know, try, try and be flexible and try and understand what the seller wants and meet their needs.

[37:02] That’s a big part of it. And the second part is just being, and you know this well, Kevin. Being persistent.

[37:09] Right. I think for any, and I think that’s true in any profession, but I can only speak to mine or hours. Being persistent, you know, not giving up the ghost, staying on it.

[37:18] Some deals take years to come together, but, you know, you can have multiple irons in the fire. If you stay on top of them, a lot of times they’ll come back to you.

[37:27] Kevin Choquette: Yeah. And I suppose there’s a quality there of just being organized too, Right. Not forgetting about the, the guy you talked to seven years ago in downtown la and coming back to him, right, Saying, hey, you interested in selling now?

[37:41] Tony Cardoza: You remember me, pal? Yeah, absolutely true, absolutely true. But you know that from what you do.

[37:47] Kevin Choquette: Yeah, yeah.

[37:49] Tony Cardoza: You have to be persistent. I’d Say that there are young people out there listening, whether it’s real estate or anything else, you know, be persistent in the work you do. And I think over time that pays off.

[38:04] You know, someone once said 50% of success is just showing up. And I would say, yeah, 50 is showing up and showing up and showing up and showing up.

[38:15] Right. If you do that, enough things will break. Things will break in your favor.

[38:18] Kevin Choquette: It’s the, it sort of rhymes with the idea that luck favors the well prepared.

[38:24] Tony Cardoza: Yes, exactly.

[38:25] Kevin Choquette: Yeah. So when you guys are looking at a deal and trying to, you know, I get like some part of what we’re talking about, site selection and just the, the pro forma.

[38:36] Right. Like we don’t need to get into the whole thing of **** in, **** out. If, if you’re making bad assumptions and you’re just deluding yourselves, but outside of, you know, site selection and hey, this thing looks like it’s economically viable, how do you guys think about all the other risks?

[38:51] And how do you, whether that’s a hostile neighbor who’s going to file a lawsuit against you, whether it’s a CEQA challenge or something else, the interest rate environment, the influence of new competing products, the macro supply drivers in terms of job formation.

[39:12] When you’re trying to figure out is this a good investment outside of site selection and making sure you’ve got a, a viable, I’ll just say economic widget in the building, how do you guys think about all the other risks and how to mitigate those and, and manage to the downside that, you know, there’s risk in this business.

[39:32] Tony Cardoza: Real risk. Yep. 100. Yeah. I think the answer is, you know, ongoing and continuously.

[39:38] I don’t think you can check the box on any of those and think they’re put away. I mean, you brought up a lot of great things. There’s community risk, there’s, there’s, you know, entitlement risk, there’s macroeconomic risk, there’s debt risks, there’s equity risk, and those all, you know, David Martin, when I first started working for him, he said, you know what this job is like.

[39:55] And he was a very successful developer.

[39:58] I said, what? He said, do you ever watch.

[40:00] Who was the guy before Carson who was a late night guy in the 50s and 60s?

[40:06] Kevin Choquette: I don’t know if you said his name I’d know it, but yeah, whoever.

[40:10] Tony Cardoza: He was, he said he used to bring in these, these acrobats from China. And one was the plate spinner, right. Like 50 plates. And he’d spin them and you Go from one again.

[40:19] Spin and spin and spin. He said, that’s the job. I was like, wow, that does not sound very fun.

[40:25] But the job as a developer is to keep the plate spinning. You have to keep the plate spinning. So there’s no, they’re never done.

[40:31] They’re always spinning. You go back and check the next one, you check the next one, you check and you go back and check the next one. So it’s, it’s a.

[40:37] If you like multi variable uncertainty development’s a great place to be because there are so many variables that you, that you don’t control and some of you don’t even know that you don’t control.

[40:50] You know, there’s the known unknown and the unknown unknown. There you go.

[40:54] That was a rummy quote.

[40:55] Kevin Choquette: It was a rummy quote. I use that all the time.

[40:59] Tony Cardoza: But. Right, but, but it’s true. So, so use. How do we do it? Like, I don’t know, man. You stay on it, you spend the. Keep spinning the plate.

[41:06] And if you ask specifically about some of those things like getting something entitled or dealing with a difficult neighborhood, what you reach, you always be as open kimono as possible.

[41:14] You reach out to the neighborhood, you listen to all their concerns. Most of the time people want to be heard.

[41:19] They don’t have to be right or act upon, but they do need to be heard. And that’s part of the requirement when you come into a community. And we use consultants and we use people that have relationships and we try and as much as possible be the good guys because we think we actually are the good guys.

[41:35] Not everyone sees us that way, but that’s our challenge and our problem to.

[41:39] Kevin Choquette: Sort of overcome what makes it that way, that you’re the good guys. Like, why would you go to bed at night going, well, hey, we’re the best thing that could happen.

[41:46] And it’s not that I disagree. I just want to.

[41:48] Tony Cardoza: Yeah, sure, sure. So we’ll take a site that is a retail site that’s, you know, fall into disrepair, that has all sorts of issues on site with crime or homelessness or, or whatever it may be.

[41:59] And we will say we’re going to invest $100 million here. We’re going to repurpose your community.

[42:05] We’re going to put jobs in here, we’re going to put housing in here, we’re going to put retail in here, we’re going to open it up to the public. Those are, we think, value add benefits for communities.

[42:14] Much more so than a blighted sort of underutilized or under resourced project.

[42:20] So if you can house people, which we’re all responsible for on some level. Right.

[42:26] If you can create jobs as part of that, not just jobs on the construction, but ongoing jobs. If you can provide service retail to the community, if you can provide parking to the community, and you can provide something visually appealing to the community, I look at that as a net benefit.

[42:42] Kevin Choquette: When you’re in those community meetings, is the experience one of being spoken to, or do you find that you actually are in dialogue with the community members?

[42:56] Tony Cardoza: I think it’s a dialogue. I mean, if you manage it well, I think it’s a dialogue. Yeah.

[43:00] By the time you get to the large community public meetings, you know where people stand and who they are. Because we do a series of outreach meetings with all the communities before we’re in a public forum.

[43:13] Kevin Choquette: Huh. Just like email campaigns or you’re sending mailers or how are you. How are you starting to get a feel for who these people are before you?

[43:23] Tony Cardoza: Sure. Every community has neighborhood boards, has, you know, what do they call them, Development boards. Every community has overlays. You can go, you go to the city council, you say, who are the constituents here that speak for the community?

[43:35] And we do. We do open houses all the time. So by the time we go into a public forum, we’ll have done it, you know, a dozen open houses with all different constituents from the community.

[43:45] And at least they know us. They know we’re listening. It doesn’t mean we necessarily agree on everything, but at least they have a sense of what we’re trying to do and why.

[43:52] And why we think it’s a benefit for their community.

[43:54] Kevin Choquette: And does that dialogue inform your design decisions and your. Yeah, absolutely. Yeah, yeah.

[44:02] Tony Cardoza: It doesn’t. It does. It informs it. It doesn’t decide it, but it certainly informs. And if you’re not going to. If you’re going to listen and make no changes, then, you know, you might as well not listen because you’re going to.

[44:11] You’re going to rub a lot of people the wrong way. And look, to get things entitled and done takes community support.

[44:17] Kevin Choquette: Yeah, I think it was.

[44:23] Now I’m blanking on the guy’s name that. La Caruso. Caruso. I think I read an article on him where he said, you know, I know I’ve won when the community groups are telling me what kind of trees they want to see as they look across the property.

[44:38] Right. Because, like, okay, you would know he’s.

[44:41] Tony Cardoza: Won a few times.

[44:42] Kevin Choquette: He’s won a few times. Yeah. But I mean, it’s, it’s, it’s in alignment with what you’re saying, which is you’ve listened well enough to have them enrolled. And so now they’re saying, well look, if you’re going to do that, can we get these kind of trees?

[44:55] Tony Cardoza: Sure. I know exactly, exactly. If you’re talking trees, yeah, you’re in a great place.

[44:59] Kevin Choquette: Exactly.

[45:02] You talked about at the top of the chat here, this kind of triangle of developer, architect, gc, or at least alluded to. And you’re like, that’s a whole nother thing.

[45:14] But the developer says, hey, architect, draw me up something beautiful. Needs to be really efficient, need to be able to meet all these site constraints, zoning constraints, setback constraints, shadowing constraints, energy efficiency constraints.

[45:31] Oh, and by the way, here’s my budget. And then you go to general contractor and you’re like, hey, here’s the plans, give me a price. And don’t ever go over that price because this is the, what is it?

[45:41] Guaranteed max or guaranteed minimum? But anyway, the guaranteed maximum price. And now there’s this like triangle set up where the GC will point to the architect and say, hey, you didn’t give me a complete set of plans.

[45:55] This is not part of what we bid. So I need a request for information and a change order. And you know, you’re trying to manage both architect and GC just to keep this thing going.

[46:04] I mean, it just seems fraught with all kinds of challenges. And candidly, this to me is the Achilles heel of, or at least one of the main ones of what you guys do.

[46:14] Commercial real estate development. I think it’s unbelievably challenging to manage those three people and the risk sort of hot potato that’s being passed around. How do you think about that whole dance and that sort of trio of characters.

[46:30] Tony Cardoza: How do I think about it now or at three in the morning when.

[46:32] Kevin Choquette: I wake up in a corpse sweat?

[46:36] Tony Cardoza: Look, I think you identified it. There’s a fundamental misalignment of interest in that tri party agreement or partnership. And so there are real challenges. But okay, your job as a developer is to figure that out and make it work.

[46:51] I think what we do well is we try and do two things. We try and treat our general contractors as our partners.

[46:58] We want them to make money on the project.

[47:01] We’re not trying to say you should work for free. We want them to have a built in profit. We want them to see that. We want them to know that, you know, we understand their challenges and we want them to make money.

[47:11] And the Second thing is we reward those who, who can do that and can behave that way by using them multiple, multiple, multiple, multiple times on projects. So they know, you know, we’re sort of good for it.

[47:21] Meaning that if we say we’re going to do something, we’ll do it. And this is an opportunity to find more business. And they’re, you know, they’re in the business development business.

[47:28] So that’s how we try to mitigate it. Now, there’s lots of things we do. We spend a lot of time with our architect, we go to the subs, we bid it out.

[47:36] There’s a lot of underlying things that we do to try and, you know, mitigate those risks as much as possible. But look, there are risks and there are miscommunications and there are gaps in scope and there are all the things that you mentioned.

[47:48] And so having a partnership you can work with in that helps to, I wouldn’t say solve all of those, but certainly mitigate those. And part of that is getting your GC to feel that you have an alignment of interests over time.

[48:01] Kevin Choquette: And what about the relationship between the GC and the architect? Do you guys have any predisposition to work with a group that maybe already has a working relationship? Meaning? I said Swinnerton before.

[48:15] So architects Orange and Swinnerton, like, if they’ve already done deals together and seem to have some synergies, does that bias you to maybe use that team or are those choices made independent of each other?

[48:27] Tony Cardoza: I think they’re generally made independent, Kevin. I think that, you know, we have our biases with architects not just on the design, but on the quality of their production drawings and whether they have a full scope.

[48:36] Right. And whether we’re going to run into RFIs in the future. And, you know, we use a. A handful of architects by market, by sub, by market that we have confidence in.

[48:46] So they’re not necessarily tied to the GC though.

[48:48] Kevin Choquette: Okay. How many people are at City Mark or City Mark? City View. City View these days?

[48:56] Tony Cardoza: We’re up to 175.

[48:59] Kevin Choquette: And how many are on the property management side? Like a hundred?

[49:02] Tony Cardoza: Yeah, about 100 on the property management side. About 75 on the. On the, I guess corporate City View side. Yes.

[49:09] Kevin Choquette: How do you guys think about that beast that must be fed? I’ve no idea what payroll for 175 people looks like on a monthly basis, but it’s not a small number.

[49:22] How do you think about that? And like what we just discussed, which is real estate cyclical, and there’s Times when it’s difficult. How do you manage that?

[49:30] Tony Cardoza: Yeah, I mean one of the things we consciously did as a firm about seven years ago was really think about not just being in development, but having enough of a portfolio, enough of a property management portfolio, enough of a acquisition portfolio and pipeline that we could smooth out some of the ups and downs that are inherent in the development business.

[49:50] So you know, we, we are able to drive income from a number of sources that support our overall business with a little less cyclicality than you would if you were just in the development business which is, you know, really full of ups and downs.

[50:03] So by diversifying our business streams like any other business, we smooth a lot of that out and that’s helped. That doesn’t mean there’s not, you know, boom times and lean times but, but there’s certainly not boom and bus times.

[50:16] Kevin Choquette: And that’s like the assets under management for long duration assets where maybe you guys are getting a fee for being the steward of. I’ll just make up 150 million or 150 unit apartment complex.

[50:29] And then property management I know you have in house does that, does that. I think it’s called West Home. Do they also do external property management or is it all just City View Properties?

[50:40] Tony Cardoza: Yeah, we made a strategic decision just to use West Home for City View Properties because we really look they are an income stream but more importantly they allow us to, we think execute on our plan, our projects and our, our business plans in a way that is tougher with third party where you know, the accountability is direct.

[50:57] You know I meet every, every Monday morning, we all do with head of asset management, head of property management, get all the reports on the assets and so there’s direct feedback which is, it’s tougher to do with a third party management company Company.

[51:09] So that was a strategic decision just in terms of if we’re going to be in the development business, if we’re going to be in the asset management business, we should be in the property management business because they’re the people touching our customers and the people providing feedback on the assets.

[51:23] Kevin Choquette: But are those the only. Not that they’re insignificant, but it’s the capital management side and the property management side that evens out the ups and downs of development.

[51:32] Tony Cardoza: Yeah, I mean there’s capital management, there’s property management. Development is ongoing. We delivered three, we delivered I think a thousand units in LA this year.

[51:43] We delivered another 400 almost in, in Northern California. So we always have projects. We have about 2200 units under, in pre development Right now that’ll come into market next year, start construction.

[51:56] So it’s not that, it’s not that the spigot goes to nothing on development. It just slows down and then we do acquisitions. So acquisitions generates like anything else generates, you know, profits for our investors and extent for investors.

[52:11] There’s feast to us as well.

[52:13] Kevin Choquette: Okay, got it. And, and you are at the, the helm recruiting capital for all these deals, right?

[52:20] Tony Cardoza: I, I’m, I work with our team to do so, yes. So when we have it, we have a deal. I, I get on the, I get on the zoom calls and walk them through the deals.

[52:29] No one knows the deal better than the acquisition person. And so, you know, and ultimately bring them hopefully into the, into the fold.

[52:35] Kevin Choquette: What, what do you, what are you seeing in terms of what works and what doesn’t? You know, sort of tricks of the trade, things to avoid, you know, from your, I mean, obviously I do this, but what do you think is, let’s talk specifically equity.

[52:52] I think debt. You know, it’s easier to make a market and you can kind of pick your, pick your partner with some level of acumen. But pulling in equity seems tricky.

[53:01] How do you think about recipes of success?

[53:05] Tony Cardoza: I think two things. One is you should, you better know your deal inside and out. You better know it a lot better than they do. Right. Because you’re the expert and you’re asking for their money.

[53:15] So you better understand not just what you understand, but every single thing that they’re going to want to know, you’re responsible to know. And that’s your, your job as a good steward and bringing them into something.

[53:25] I think the second piece is what I said before. You have to be persistent, so you have to go to again, again and again. And when they come up with challenges or things that they don’t like, go, go get an answer to that and come back to them.

[53:38] You know, it takes several, several, several rounds to finally have someone sort of buy into and trust your business plan and want to move forward with you.

[53:46] Kevin Choquette: But being persistent isn’t, if I’m hearing you right, it’s not keep calling them after they said no, it’s keep, keep, it’s keep chewing on the bone. If they’re showing interest but have some reservations, keep going until you get them all shot down.

[53:59] Tony Cardoza: All right. Chew on it and chew on the meat and spit out the bone.

[54:02] Kevin Choquette: Yeah, exactly. There you go. So, Tony, let’s switch over to the, the personal side.

[54:09] You know, you obviously a high, high level operator in the commercial real estate side. Daily routines. You know, for me, I try to see if I can get my head straight first thing in the morning.

[54:19] If I do that, I feel like I might have a better chance of having a successful day. And if I can do a bunch of those in a row, then maybe I’m on the right track.

[54:27] You?

[54:28] Tony Cardoza: Yeah, yeah. What’s your head straight routine, Kevin?

[54:32] Kevin Choquette: Well, look, to be honest, I probably hit it 4 out of 7 days, but it’s 10 minute meditation. I use the waking up app. Sam Harris.

[54:42] And then I’ve got a.

[54:45] I’ll call it a vision board. But it’s not just like the, you know, little like PowerPoint slide with the images. It’s more like what I’m up to and what’s important to me.

[54:53] And I’ll just kind of roll through that and get my head in that game and be like, okay, yeah, that’s what I’m up to. Because I think natural thing is really add, and if I don’t do that, I just kind of drift wherever.

[55:05] Yeah, but that’s mine.

[55:08] Tony Cardoza: Good. So I think, well, for starters, I mean, my routine is to get up early. Yeah, I just feel that, that if you get up early, you’re ahead of the game for you and you’re ahead of the game relative to your competition.

[55:18] And so I, I like that sense of like, when I’m up early and I’m active and I’ll get into what that means in a second. I already feel like I kind of won the day and then the rest is just, you know, knocking it out as you go through it.

[55:29] So I get up. My first choice would be to go surfing in the morning, which is, you know, hit and miss. Having moved to LA five years ago, the surf here is absolutely terrible.

[55:38] Yeah, it just is. So, you know, that’s pretty hit and miss. So if not, I try and go to the gym and work out before I go into, go into the office.

[55:48] I just feel that, you know, if I go surfing when I, by the time I get to the office, I feel like I’ve already won and everything else is a bonus and I’m sort of sitting on top of the hill and I can manage anything.

[56:00] Jim helps a lot in that regard as well. If I don’t do either of those things, I still get up early and I’ll. I usually, I almost always read the New York Times.

[56:08] It just, I feel centered when I do that in the world.

[56:12] And then I go through, you know, I get ready, I get out to school, I’m with my daughter and Go from there.

[56:18] Kevin Choquette: Yeah. Well, I left out the workout part, but I agree with you. If I can get out and have a morning experience in nature, whatever, it’s in the sea or just out on trail, you know, it’s everything.

[56:32] Like the rest of the work day is put in a proportion that makes it just kind of foregone conclusion. Like, yeah, work, like, come on.

[56:42] Tony Cardoza: Yeah, exactly, exactly.

[56:44] Kevin Choquette: What about growth? Like, sharpen the saw. Right. Stephen Covey’s like, you know, stop sawing. Take some time to maybe sharpen that saw and, and get a little bit better at your craft.

[56:53] What do you do to, you know, either sharpen yourself kind of emotionally, spiritually, or in the discipline of what you do. What. Where’s the way you pull back and. And do that?

[57:04] Tony Cardoza: Yep. I. I find, like, I’m. I’m not that wise, so I read a lot of wise people, so I read a lot of books. You know, I don’t know if you follow the stoics at all.

[57:13] Kevin Choquette: I do, yeah.

[57:15] Tony Cardoza: I’m reading a book called Extreme Ownership right now, which is really interesting.

[57:18] I read a lot of. I read a lot of mountain climbing and some are semi disaster books. You know, the John Kracauer types. I find those very inspirational. What people can do and what they can get through.

[57:30] There’s a great, great book out there I’m reading for like the fourth time called Touching the Void.

[57:34] Kevin Choquette: Yeah.

[57:35] Tony Cardoza: Which is. I don’t know if you’ve read that or seen that documentary, but it’s an amazing, amazing book. I just find those things inspiring and helps me recenter myself about, you know, what I can achieve and what I can do.

[57:46] Kevin Choquette: Uhhuh. I dig it. Yeah. What about, like, and end of the day, you know, you’ve had, let’s just say, seller cancels contract. You guys have been in it for 18 months.

[57:59] You’ve got $420,000 of soft cost sunk in the thing and thought you had it under control, but some sort of foot fault happened and blows up.

[58:11] Where. Where do you go for some sort of relief from that? I’m sure those days happen.

[58:17] Tony Cardoza: Oh, yeah, they certainly do.

[58:20] Look, I try and give myself 24 hours of mourning. Like, I’m ******, I’m down. I don’t want to hear, it’s okay. It’s not okay.

[58:28] You know, I really try and let myself take it hard and mourn it, and then I try to, within 24 hours, shrug it off and move on, but some people are like, yeah, okay, you win some, you lose some.

[58:39] I’m not that way. I’m bitter, I’m angry, I’m distraught. If you put a lot of emotion into things, it’s hard to just dial that down when you. When you hit that, you know, that bottom part.

[58:49] So I try and give myself some time to mourn, honestly, sometime to be salty. But then once I’m through it, then I. I feel like I process it. It’s through me, and I.

[58:59] You know, and I move on and go from there. But for me, until I mourn it and process it, it’s hard to move on. So I’ve learned that I got to let myself be down, down and beaten down for a while.

[59:10] You know, I say 24 hours, probably more like 48 or 72, and then you move on.

[59:15] That’s how I do it.

[59:16] Yeah. What do you do?

[59:20] Kevin Choquette: We have a core value that we. We say is cool heads prevail. Right.

[59:25] And there’s things that happen in my business where I want to pick up the phone and, you know, just say something I shouldn’t say.

[59:34] So what I usually do is just chill. Just like, yo, shut it down. Just be with it. Like, let it roll around in you.

[59:44] And it usually moves, right? It moves from what? My initial. If I could do this with my wife, by the way, we’d have a much better relationship.

[59:54] But it usually will change if I give it the time.

[59:59] So that’s probably what I most do, is just pause and then see how I react. And then if I. If there’s something that needs to be done, I can come back with a lot more clarity and conviction about how I.

[01:00:12] I feel. I need to address it versus just that emotional impulse.

[01:00:18] Tony Cardoza: Got it. Okay. Yeah. Look, everyone has their own process, and something’s got to work. I think we both said something similar, which is, I don’t react to it. I don’t yell at people.

[01:00:26] I don’t blow up. I don’t curse people. That doesn’t do you any good.

[01:00:31] Kevin Choquette: Yeah, yeah. Not. Not in the long term, it doesn’t.

[01:00:35] Tony Cardoza: Not in the long term.

[01:00:36] Kevin Choquette: For a minute.

[01:00:37] Tony Cardoza: For about a minute. And you’re like, what did I do?

[01:00:40] Kevin Choquette: So, personally, what kind of challenges have you had to go through to. To get here? I mean, it sounds like it’s been a bit of an odyssey from kind of liberal arts.

[01:00:48] And then let’s go to Japan and Spain and let’s go work for this little startup my sister knows.

[01:00:53] Tony Cardoza: And.

[01:00:53] Kevin Choquette: And, you know, this is kind of a.

[01:00:55] I’m guessing you can’t connect those dots from front to back, only from here, looking back.

[01:01:03] Yeah. What kind of challenges have you had to overcome to, to kind of get here?

[01:01:10] Tony Cardoza: Oh man. Here in life or here in my job? What do you mean?

[01:01:15] Kevin Choquette: I would say life, like I got, got your job. But like for, for me, like one of them is just add, right. Like I’m, I’m a kid with add. Like I’m, I have a four year old daughter and I look at her and I’m like, oh boy, you’re gonna be just like me.

[01:01:32] But I had to sort of figure out how to work with that. That would be. Yeah, but I don’t know if there’s anything that you might resonate with there, but I’m just asking.

[01:01:41] Tony Cardoza: Yeah, I mean, I got married in my 20s, which I wouldn’t recommend to anybody. Sorry to be blunt, but you know your twenties, you don’t know yourself, you don’t know the world, you don’t know anyone, you don’t know the other person.

[01:01:52] Ultimately that didn’t work out. But I have two sons from that, which I’m very grateful for.

[01:01:56] You know, they’re grown up, they’re 23 and 20, so I just sort of raised them and took them through life and now I have a six year old daughter.

[01:02:03] So I’m spending most of my life raising kids, which is, which is not what I expected, but certainly been a blessing and it’s been interesting.

[01:02:12] That’s been probably the biggest impact on my life, you know, as an individual, just raising kids. Now I’m raising a daughter, understanding who she is, where she is in the world, you know, what she needs.

[01:02:24] So, you know, those have been probably the biggest impacts on my life.

[01:02:28] Kevin Choquette: So the Nantucket and then how many years before you were a dad?

[01:02:38] Tony Cardoza: Let’s see, 20, 18. About five years. Yeah.

[01:02:43] Kevin Choquette: So you were, you were starting your commercial real estate career with young children.

[01:02:49] Tony Cardoza: Yeah, I was. Yep.

[01:02:51] Kevin Choquette: That’s a heavy lift.

[01:02:53] Tony Cardoza: Yeah, I was having left. But like people have heavier lifts first of all. Right.

[01:02:58] Kevin Choquette: Yeah, for sure.

[01:02:58] Tony Cardoza: Incredibly heavy lifts out there. So it ain’t that heavy lift, you know, like anything. You just do it.

[01:03:03] Kevin Choquette: Yeah.

[01:03:04] Tony Cardoza: You know, you just do what’s in front of you. Yeah.

[01:03:08] Kevin Choquette: Same on this, like big picture stuff. What, what are some of the biggest lessons you’ve learned just in the entire experience of, you know, rolling into what you do now?

[01:03:21] Tony Cardoza: Let me think about that.

[01:03:22] Kevin Choquette: People. It could be people, it could be principles, it could be ethics, it could be. I know that’s like a super open ended question, so I’m trying to give you something to grab onto.

[01:03:32] Tony Cardoza: Yeah, I mean, not Everyone has the same ethics you do or the same approach. And you have to accept that. You still have to stay true to, you know, what you believe and what you think and what you’re comfortable with.

[01:03:44] I think. And you, you alluded to this earlier. Managing your emotions during difficult times is, I’ve learned, is very important.

[01:03:52] No matter how difficult the time is, it’s not necessarily the end of things. And you have to manage your emotions through that. So you can listen to, you know, have a relationship and figure things out on a going forward basis.

[01:04:02] It’s probably been my biggest lesson.

[01:04:05] Kevin Choquette: Have you had to deal with bad people, just straight up bad people?

[01:04:10] Tony Cardoza: I don’t know if anyone’s bad because they all think they’re right.

[01:04:13] Kevin Choquette: But the fun part, Right, right.

[01:04:16] Tony Cardoza: They’re like, no. Yeah. I mean, I’ve dealt with a lot of difficult people. Yes.

[01:04:20] Kevin Choquette: Yeah.

[01:04:21] Tony Cardoza: Difficult, dishonest, you know, and, you know, you can’t really control that. I mean, you can be who you are, you can’t change who they are, and you really have no input or, or effect on them.

[01:04:34] So kind of is what it is.

[01:04:37] They’re out there in every business, all over the world.

[01:04:40] Kevin Choquette: Yeah. Are we?

[01:04:43] Like, there’s this tug of war that I think about in this, which is don’t be jaded, don’t be cynical.

[01:04:51] Don’t think that everybody’s out to get you.

[01:04:57] Or you could take it the other way and say those all in affirmative. Right. Everybody’s. Everybody’s out to get me. I can’t trust anybody. Right. Because. Because you’ve experienced those people that are dishonest versus, hey, man, like, everything under the sun, like, it’s all normal, it’s all natural.

[01:05:15] Some people are good, some people are bad. I’m just gonna carry on. On.

[01:05:19] I, I have a little internal arm struggling about or arm wrestling about.

[01:05:25] Do I project myself because I’ve seen human nature and I know it’s out there. Or I just go, well, Tony seems like a good guy, and until he proves otherwise, Tony’s a good guy.

[01:05:35] Tony Cardoza: Right. I think you got to go with the ladder. Right. Like, too short.

[01:05:39] Kevin Choquette: Yeah.

[01:05:40] Tony Cardoza: Right. Because if you, if you don’t go with the ladder, you’re going to miss out of all these amazing, wonderful, fun, creative, awesome people. People. Right. So you got to give people the benefit of the doubt.

[01:05:49] And if they disappoint you, that’s okay. They disappoint you. That’s part of life, right?

[01:05:53] Kevin Choquette: Yeah, that’s exactly right.

[01:05:55] Tony Cardoza: Otherwise you’re going to miss out on too much yeah.

[01:05:58] Kevin Choquette: So along the journey you like mentioned David Martin. I don’t, I don’t know if he’s a mentor or not, but who’s kind of helped you get, get here.

[01:06:06] Tony Cardoza: Yeah, David was certainly a mentor. Unfortunately, he passed away about three years ago, but he was certainly a mentor to me. It’s funny, man. I was thinking about this the other day and like I get mentored by a lot of different people in different circumstances.

[01:06:21] Other than David, I haven’t really had a mentor that I followed through my whole career. I more find people in the, in the jobs I work that I find I can learn from them or I can see new things through them.

[01:06:33] You know, my CEO, CEO Sean Burton here has been a mentor to me just because I’ve learned a ton from watching him, how he’s grown and how he manages things.

[01:06:46] Kevin Choquette: Anything in particular, like recently that you think worth mentioning?

[01:06:52] Tony Cardoza: Yeah, let me, I gotta think about that. Look, we live in a very, excuse me. This business is very unstable.

[01:07:04] Kevin Choquette: Right.

[01:07:04] Tony Cardoza: It’s just, there’s boosts, there’s booms, there’s busters, disappointments, there’s positive surprises, negative surprises. Sean is very good at keeping a steady pathway through all those different surprises. And I, I, you know, I’ve come to realize that’s an important quality and I’ve tried and emulate that myself.

[01:07:22] Especially when you’re leading people. When you’re leading people, you have to show some equanimity and some sense of, of purpose that goes beyond the day to day trials and tribulations of life.

[01:07:33] Kevin Choquette: What do you think that’s based on his calm in the storm? Is it a faith thing? Is it a knowledge thing, is it a conviction thing? How does he manage it?

[01:07:43] Tony Cardoza: Probably more a conviction and a self confidence thing. I think more conviction and self confidence. It’s served him well.

[01:07:50] I think he’s convinced that we’re doing the right thing and that we’ll find.

[01:07:53] Kevin Choquette: Our way through Natural leader.

[01:07:57] Tony Cardoza: Yeah, I say so.

[01:07:59] Kevin Choquette: Yeah, we talked about this the other day when you and I were kind of pre chatting early in our careers. We might, you know, just hope somebody calls us back. I’ll, I’ll, you know, be, I’ll be the same kid that you were around that time of driving trucks and you’re sending out resumes or you got a job and you know, you’re trying to just get some sort of toehold in the industry.

[01:08:26] And the visual I’ve used in the past is like you’ve got, you’re out on the island, you’re putting Your messages in the glass bottle, and you’re sending them out to sea and nothing’s coming back.

[01:08:39] Right. And then later on, you actually find the shore is kind of awash with all of these messages. And for. For me. And I think for a lot of people who’ve kind of gotten over that inflection point, it can be too much.

[01:08:52] Because now I’ll just say you’ve kind of arrived, right. You’ve found some degree of success. How have you managed that transition over your career as it’s gone from, you know, hoping for some inflow to getting way more flow than you might be able to deal with?

[01:09:06] Tony Cardoza: Sure.

[01:09:09] I don’t know. I think there’s always a drive. I don’t know how you are, but there was always a drive to prove myself and to show I can do this.

[01:09:15] And, you know, in the business I’m in, it’s not dissimilar to yours. Like, what you did yesterday doesn’t matter that much.

[01:09:22] You know, you have to show an ability to continue to be productive and creative and find solutions. And so there’s just not a lot of resting on the laurels. Now.

[01:09:32] I think there’s benefits to having done this for a while, that people will take your call or listen to you or give you capital or whatever it may be, but you still have to go prove yourself on an ongoing basis.

[01:09:43] There’s no, you know, residual income, so to speak.

[01:09:49] Kevin Choquette: But do you ever have that sensation of, like, a little too much here? A little too much like, well, eight hours in a day, even if you’re working 10 hours a day?

[01:09:58] I don’t know, maybe you could even work 12. Do you get the sensation that there’s too much at the inbox to kind of process.

[01:10:07] Tony Cardoza: All the time? Only all the time.

[01:10:10] Kevin Choquette: I was like, I want your job. But, yeah.

[01:10:12] Tony Cardoza: So how do you deal with that all the time?

[01:10:14] Kevin Choquette: Some more stuff and some more stuff and some more stuff. What’s. How do you. How do you deal with that?

[01:10:19] Tony Cardoza: Yeah, the ability to triage is super important.

[01:10:22] You know, the ability to triage. What, What. Based on your experience, your understanding of the market, you know, what’s going to be fruitful and what’s not. It’s just super important because all you, all, any of us really have is our time.

[01:10:36] So I try and be very judicious with my time, and if it’s not something that’s going to work, I just nip it in the bud quickly because it’s better for everybody.

[01:10:45] You know, whoever’s pitching you a deal can Move on to someone else that might be a better fit for.

[01:10:50] Kevin Choquette: Yep.

[01:10:51] Tony Cardoza: And I tend to have a pretty good sense of it pretty quickly on.

[01:10:55] Kevin Choquette: Well, and that probably comes part with the experience and sort of credibility that you’ve gained over all the years on the path. Right.

[01:11:03] Tony Cardoza: From a lot of failure. Yeah. From a lot of falling down, stupid tax.

[01:11:08] Kevin Choquette: Right. Experiences. What you get when you didn’t get what you expected.

[01:11:12] Tony Cardoza: Exactly. That’s a good one.

[01:11:14] Kevin Choquette: Yeah.

[01:11:14] Tony Cardoza: That’s right on point.

[01:11:17] Kevin Choquette: All right, so look out 10 years for you, for City View. Like, where, where are you guys going? What do you get? What do you see on the horizon?

[01:11:25] Tony Cardoza: I think we’re on a big, big growth trajectory. You know, I think when we came out of the gfc, we, we grew tremendously as a firm, both in terms of size, but in terms of expertise, scope of what we did.

[01:11:36] And I think we’re gonna see the next, you know, seven to 10 years exactly the same. I’m super optimistic about City View as a firm. I think that we’ve got the best people we’ve ever had.

[01:11:49] We have the best capital relationships we’ve ever had.

[01:11:52] We have the best sort of internal controls and resources we’ve ever had. So I’m very optimistic. Look, commercial real estate is not going away. People need places to live and shop and office and everything else, and we plan to be part of it.

[01:12:12] Kevin Choquette: Do you think the market macro in terms of institutional capital and the demand to, to. To deploy into professional firms like City View is at your back, or do you think there’s just enough that it’s like.

[01:12:28] I guess I’m asking, with all of the right things in play, do you think you have a tailwind coming or is it just that you guys have set yourself up and it doesn’t really matter which way the winds blow?

[01:12:39] Tony Cardoza: No, the winds matter. Direction of the wind matters. Right?

[01:12:42] Kevin Choquette: Yes.

[01:12:42] Tony Cardoza: We’re all sailboats. We’re all sailboats. So we got to put on our sail. Right. And get. And grab a hold of the wind. I think the winds are going to be great.

[01:12:50] I really do. I think we, we went through a reset and always in the darkest times, people always draw a straight line and say it’s going to remain dark. It doesn’t just like, it doesn’t mean bright and shiny during the bright and shiniest time.

[01:13:02] So I think we’re seeing a kind of epic time to buy assets right now, which we’re trying to do, and we’re going to see a great time to build assets as well.

[01:13:10] Kevin Choquette: Yeah. Cool.

[01:13:12] Any I’LL I’ll leave it with you for, like, any kind of closing thought or message you might have for real estate professionals. Entrepreneurs. Entrepreneurs, guys who’ve kind of come through it.

[01:13:22] Like, you have. Sure, yeah. Anything you want.

[01:13:25] Tony Cardoza: Yeah. Be persistent and, like, whatever you’re doing, have fun. Right. It’s tough enough as is. You might as well enjoy it while you’re doing it, you know, And I think that, you know, you doing this podcast, Kevin, is an example of that.

[01:13:37] Right. Business can be tough and challenging, and so you have to have fun with it while you’re doing it.

[01:13:43] Kevin Choquette: Yeah. It’s not very fun if you don’t.

[01:13:45] Tony Cardoza: It’s not very fun. It’s really not that fun if you don’t. It’s really not, so. And, you know, work with good people that feel the same way.

[01:13:53] That matters.

[01:13:54] Kevin Choquette: Cool. Well, Tony, thank you so much for taking the time. My production people will tell me for all you guys that are listening, especially if you made it through, go, go give us a review and do that stuff so we can get other people to hear it.

[01:14:08] But, Tony, thank you so much. And anybody that wants to learn more about Tony and City View, Google will definitely get you there. But, Tony, if you have anything else, I’ll just say thank you and I appreciate your time.

[01:14:20] Tony Cardoza: Hey, Kevin, I appreciate your time. Thanks so much. And thanks for an opportunity to, you know, have this conversation.

[01:14:26] Kevin Choquette: Right on. Thanks, Tony.

[01:14:28] Tony Cardoza: Okay, take care.

[01:14:29] Kevin Choquette: Bye.