Masterclass in Multi-Family with Joanna Zabriskie, CEO of BH Management
Willy Walker: Good morning from Las Vegas for everyone in the Western time zones, and good afternoon to everyone on the East Coast who’s tuning into the Walker Webcast for this discussion. And hello, Joanna. Great to see you!
Joanna Zabriskie: Good to see you, Willy.
Willy Walker: It’s nice to have you here in Las Vegas at Retcon. Thank you to Retcon for having the two of us here. I hope you all find this to be a really good, engaging 40 minutes with one of the true leaders in the multifamily industry in scaling BH from being a small family-owned multifamily owner operator into a very scaled national developer, owner operator of not only multifamily but also student housing and then also build-for-rent communities and now owned by one of the largest alternative asset managers in the United States. Let's back up a little bit, Joanna, and start here. You and I first met out in your offices at Harbor Group out in Santa Barbara with Pat years ago. Harbor was a great, small developer, owner, and operator of multifamily. In 2012, you moved over to BH as SVP of strategy. Then, in 2013, Harry asked you to become president of the firm. I'd known Harry for quite some time at that point, and at that time, it was a Des Moines-based owner, operator, developer—a very successful company, but small. From 2014 to 2024, you came in and scaled it into third-party management to get to the point where BH now manages 115,000 units across the United States, putting you all at number nine on the top 10 list of property managers in the country. You scale the ownership up to 46,000 units, 48,000 units across the country, high-growth markets, slower-growth markets, core assets, value-added assets, and core plus assets. In the process of all that, a lot of technology was added, which I know everyone here really wants to talk about. I guess the first question I'd have for you is, if you arrived at BH with the platform that was there, what did you see as the opportunity to grow the platform, given what Harry had built up until then?
Joanna Zabriskie: You're going way back. Thank you for that introduction. That was very nice. I arrived at BH having been a client of BH and Harry. My partner, Pat, and I had co-GPed up to 15 or 20 deals together prior to that. I will tell you that the Walker & Dunlop team was one of the very first to take a flyer on Harbor, and you provided the first handful of multifamily loans on the deals that we bought. So thank you for that. You got us started.
Willy Walker: Well, we’ve done over a billion dollars with BH over the last 10 years, so I am very appreciative of what we’ve done with all of you. It’s all good. It goes both ways, as most things in business do.
Joanna Zabriskie: I know, but back in the day, we had no track record in multifamily. Harbor did not. We were coming out of net lease real estate and grocery-anchored strips and making a transition into multifamily. We partnered with Harry by accident. It came out of a situation where we found a developer partner stealing from us. We needed a new management company ASAP, as we broomed that developer partner and had to find a management company that we felt comfortable with. We had all the name brands in our portfolio at the time, but I particularly wanted an accounting firm that would forensically look at cash. Because when somebody steals from you, all you care about is where the cash is. We interviewed all of the flavors of the day and chose BH, not because they could lease or not because they were the most forward-thinking company, but because they had great Midwestern values. Their accounting team was top-notch. They reconciled cash like nobody's business. We hired on a startup, BH, and that was going into 2010. We hit the Great Financial Crisis and ended up moving all of our assets over to BH because they were just such a solid operator. When Pat and I decided not to raise capital, Harry did. He asked me to come up to Des Moines, Iowa. I had never been to Des Moines, Iowa. I had to look it up on a map. I live in Ann Arbor, Michigan, and there was a direct flight down from Detroit to Des Moines. I took that flight, and I sat with Harry for the day, and coming out of that meeting, I had no idea what I was going to do at BH. But Harry and I had great chemistry. I signed on, and I was gonna do some special projects. We were still co-GP in this critical mass of assets that I was asset managing on one side but then working for BH as a property manager. I knew nothing about property management. I came from a different world—from asset management, capital raising, and the financial side of the business. I had no idea what I was getting into. But I was gonna do some special projects because we had used the other management companies across our portfolio, and there were some things that BH was not doing that I wanted to do. I put my head down and did some special projects, and Harry appreciated that and asked me to manage the property management company shortly thereafter. All of that growth that happened thereafter was a byproduct of bringing in super strong team members that are still with us to this day, reconstituting the management team, and then just actually looking at the property management business as asset managers.
Willy Walker: You make it sound very simple, but it wasn't simple in any way. The scale that you all built over the last decade is super difficult to achieve. I appreciate the Midwestern humility as you talk about that. But if you think back on that journey, particularly given that you didn't have deep experience in the property management space, what was it that allowed you to scale the third-party management business as dramatically as you did?
Joanna Zabriskie: First, I hired people that were a lot smarter than I am in property management and promoted them also from within.
Willy Walker: There you go again with that Midwestern humble pie. Keep going, it's alright.
Joanna Zabriskie: That's all right. I’ll share one of the things we did in 2016. Walker & Dunlop was doing the same thing around this time because I remember sitting in a room in NMHC and exchanging ideas about the tech platforms that we were building. One of the smartest people I hired was Brandy Daniel, who is now our chief data officer. She and I wanted to view our portfolio holistically. That was back in the day when we were drowning in a sea of Excel spreadsheets. That's how we managed the business. There was no quick snapshot or look at the data that happened yesterday or a portfolio view other than what was in Yardi. We ended up backing a small startup company that would ingest the data and visualize it. That was before PropTech and all of the tech hit our sector. We were 45,000 units at the time. Since we were worried about actually blowing that company up with the size that we were at that time, we invested in that platform and did all things that, in retrospect, we probably shouldn't have done. But it taught us a ton. It enabled us to build our own data visualization platform as we learned what they were doing, and that platform was soon bought about a year and a half later by one of the other major platforms and disappeared into that company. But we had our own platform then, and then we were able to launch other technological pieces around a data group that we built internally. We were one of the very first multifamily companies to do that. That attracted third-party management. It attracted the institutional capital that was hitting our business and our industry. Ten years ago, multifamily was behind the other asset classes in real estate, and we really catapulted forward in that last decade because of the institutional capital that was there with their demands for data and information.
Willy Walker: When you talk about data visualization, most people sit there and say, “Oh, data management.” The algorithm came back with some number that said to us, “Oh, buy there, sell there, add resources there, whatever the case might be.” When you use the term visualization, what does that then allow you to do? In other words, what was it that came out of that data visualization that said, “Okay, this is gonna guide either a strategy, deployment of capital, or management of resources?”
Joanna Zabriskie: It is the democratization of data. It is ingesting all of our operational, financial, Google scores, work orders from Siteplanet, and all of the different databases that we use within our ecosystem. We put that into one place, our data lake, and we're able to visualize the exceptions that are happening in our business so we can make better operating decisions. We started out simply, and it's a lot more complicated now. Now, we call it BH Fusion, and we have names for everything that we do. However, it started with a simple premise that we wanted our asset managers, our clients, our investors, and our team members all to start with the same data and the same exceptions that were happening within our operating sphere. We could solve the problems instead of having to find them. We would speak the same language. In 2016 or ‘17, at one of our management conferences, we rolled out our data visualization platform, spent a day with our regional managers, and then our community managers, teaching them how to use this platform, which meant teaching them financial metrics, how to use this system, and what to look for. We raised the bar across our company to be able to talk to institutional capital, to be able to talk to asset managers with these individual multimillion-dollar businesses that they were running. It became a vital tool to make really solid operational decisions to limit the number of surprises and to get ahead of trends before they were entrenched.
Willy Walker: The value of that information clearly went to your clients whose properties you all were managing. Was there a Fusion++ for BH as it relates to the buy side and using your own capital to go buy assets?
Joanna Zabriskie: Absolutely, all of that Fusion data is imported by our acquisitions group. They understand what our per-unit costs are per market, and they can extract all of that data very easily. When we make acquisition decisions, the beauty of being an owner-operator is that you can't blame the manager because you are the manager. You have to make sure that the regional vice president, the regional manager, and the operating teams buy into your investment strategy and that individual asset business plan. It's all interconnected. We all use the same data, and we're able to look at performance in submarkets and understand, “Okay, Kansas City, we like Overland Park. We like Creve Coeur and St. Louis. We like certain submarkets.” because of what the data tells us and the feedback that we have coming from the operators within that market.
Willy Walker: When people hear you talk about Fusion, is there the opportunity for third-party software that focuses on a specific segment of the market or PropTech or FinTech that can be integrated into Fusion that would say to somebody, “Hey, they ought to come knock on your door?” Is it all bespoke, built by you, and does it actually have all the various bells and whistles covered?
Joanna Zabriskie: We use a combination across our platform of things that we develop and then things we use off the shelf. Our goal is always to use a platform that's off the shelf so we don't have to develop. If we use that, then we use an API in our database, so we grab that data. But BH Fusion was the start, and since then, we've built a revenue management tool. We have built a budget tool, and we have a digital media marketing placement, “A List” it’s called, so we place all of our digital ads ourselves. All of these platforms are built with a single focus, which is to decrease operating expenses and improve NOI. When we introduced our revenue management platform, we purposefully priced it below the other offerings in the marketplace because we're owner-operators. It was important for us to have a great tool that performed better and was also less expensive.
Willy Walker: We'll get to the Pretium acquisition of BH and all that. But during the period of time of building up that software platform and the visualization of the data, did you think about potentially spinning that out as a standalone technology company?
Joanna Zabriskie: We've talked about that, but we've developed everything for our own use. If somebody knocked on the door and said, “Hey, we wanna buy your revenue management platform,” we would entertain that. We wouldn't want to offer that to the market ourselves because we are in the business of managing properties and not data, tech, and software. What we have developed internally is to make us a better operator in the multifamily space.
Willy Walker: As you talk about revenue management and software, I can't help but go to the suit against RealPage that is out there today. You all have been outside of that, to my knowledge. Correct? You all haven't been named in that suit? No. I guess my question is...
Joanna Zabriskie: I'm not going to talk about that on the advice of counsel.
Willy Walker: You can't talk about that at all. We're going to move on beyond that topic really quickly. I will say that because I work with a lot of the companies that are named in that suit, I do find it very interesting in our world that is trying to figure out where AI takes us tomorrow. You can listen to the comments made at the World Economic Forum by some of the leaders in AI talking about how fast AI is innovating today. There isn't a company out there that is neither using AI or using algorithms to try and guide where their companies are going and where they are setting pricing. Amazon spends every single day with algorithm after algorithm, figuring out exactly where to price products. The concept that the Justice Department came out with in the multifamily industry (this is Willy Walker speaking, not Joanna), but that the Justice Department came out through the multifamily industry and somehow accused it of trying to set prices has always said to me that it was an ill-founded lawsuit. But we will see how that all plays out, and I totally get the fact that you can't comment on it. Let's switch gears for a second. Once BH had built this great scale, it surprised the markets that you all got sold to Pretium. BH always was very focused on the consumer, on the client, on being a Midwestern company. Then, all of a sudden, you're acquired by one of the largest alternative asset management companies in the world. As I look at Pretium, it's filled with really smart people with a lot of Harvard and Yale degrees and Goldman Sachs and Morgan Stanley backgrounds. How did you all decide to be sold to Pretium? Did you go out looking for Pretium specifically, or did you do a more broadly marketed deal to say, “BH is for sale, and let's talk to some potential acquirers?”
Joanna Zabriskie: Great question because I think we did surprise the market when that was announced. If you go back in time to late ‘23, BH was at an inflection point. We were all the things that you just talked about. We had grown wildly. We had a great, awesome senior management team. No problem is too big or complicated for them to tackle. We had scale. We had data, technology, innovation, and a great reputation in the industry. But what we didn't have was a strategic capital partner or a fundraising desk. We were looking at what was potentially going to be a very impactful buying opportunity in the multifamily industry. I've been saying that for 18 months, and it hasn't happened yet, but we know it will. We also had a wonderful but aging founder and no succession plan for that founder. It's hard to raise capital around that fact. At the board level in late ‘23, we had a conversation about what's next. What got us here was not gonna get us there strategically. Where was BH gonna go? Stone Point was a minority interest through their family office holder of the management company. The board decided that we would hire an investment banker and we would test what was out there. We would potentially sell or recap the management company. We hired CenterCap Group. It was a great choice because CenterCap had been on the buy and sell side of a couple of management company assignments in the industry. They knew who was looking for a multifamily operating partner. We were quiet about going to market, though. We didn't want the industry or the BH team to get rocked by a potential sale. CenterCap invited about 20 companies, international, domestic, all flavors, and all structures. A very small group of us met with all of these companies, and we narrowed it down to three different choices, of which Pretium was one. Then, I did something that I was told by numerous people not to do. I was given all this advice about not doing what I was about to do. I invited our 14-member senior team under the tent. I was told that would create drama and it would get out into the marketplace. It would get out into the company. I would lose team members. “Don't do that, Joanna.” It was a terrible idea, but I did it. We, as a team, went through extensive due diligence with those final three companies. We were all in the room, and my whole senior team presented. They did more talking than I did. I think we impressed the heck out of each of the three of them with how passionate, intense, and collaborative that team was. I think it was actually an important part of the sale, in retrospect. Pretium stood out from the get-go as having great personalities, a great culture, entrepreneurial, hard-charging, data-focused, and innovative. We can talk a little bit about Pretium and where we fit in in a moment, but they were head and shoulders above the other companies. While the senior team didn't have a vote, their opinion was very important. The board voted on this, but the team had their opinions. There was a little bit of drama. There was the uncertainty of change amongst the senior team. We had to address what's gonna happen to me and what's gonna happen to the company. We had to talk about the status quo as going backward. We had to do something strategically to go forward. We had all of those conversations while we were going through due diligence and while we were talking to these three and then making the choice for Pretium. When we made that announcement to the marketplace and to our company, that senior team understood the why. They were able to explain it to their downstream teams. They were able to take all those phone calls because our phones all blew up when that announcement hit the wires. They were right alongside. It turned out to be one of the better decisions. But it just goes to show the strength of the senior team that is still in place and moving BH forward now under Pretium's umbrella.
Willy Walker: Pretium, I believe, has six operating companies that it now owns, that it's essentially taking a strategy of raising the capital and then, if you will, use those six operating companies as our distribution network. Is that a fair way of looking at it?
Joanna Zabriskie: Yes. If you look at Pretium, it is more than an investment management company. It is really a residential housing ecosystem. Each of those investment strategies is vertically integrated with an operating company. Obviously, BH is the multifamily and BTR operating company supporting multifamily debt and equity as well as BTR strategies. I'm gonna do a commercial alert here, a commercial break. We are going to market with our first multifamily debt fund next quarter. We will be providing loans to construction value add and bridge loans to multifamily operators and developers, so non-recourse loans. My partner in all things multifamily, Karen Colvin at Pretium, will be heading that up and will be supporting it. Really excited about the expansion into multifamily debt with a multifamily equity raise coming later this year.
Willy Walker: I hear you say you're becoming a competitor of mine.
Joanna Zabriskie: But in a small way, Willy. There's plenty of business for everyone.
Willy Walker: I have to tell you, all of my clients seem to be competitors of mine today. We're competitors of a lot of theirs, and they're competitors of ours. It's the way the world is turning as it relates to increased consolidation and where the capital flows are going.
Joanna Zabriskie: Very true, but we're still going to buy and sell assets with you.
Willy Walker: You do, and then hopefully finance them with us afterward.
Joanna Zabriskie: Exactly. Then, Progress Residential is the single-family manager of the scattered platform, over 100,000 scattered homes. I have an incredible appreciation for how hard, nuanced, and complicated that business is because we now get to work very closely with them across the residential platform. Deephaven and Selene originate and service non-QM mortgages, and then our West Coast-based anchor provides home builder finance loans, residential transition loans, etc. No one owns the intersection of housing and data like Pretium, with all of those residential housing touchpoints. But how BH fits into that platform is an easy fit for us. Don Mullen started this business coming out of the Great Financial Crisis the hard way, very entrepreneurial. He bought 55,000 to 60,000 homes one by one. Then, he formed Progress Residential alongside that to manage those homes. Now, the company's at 60 billion AUM. That's an incredible entrepreneurial story. Yes, Goldman alum and Morgan Stanley alum are littered throughout the organization; it's done in a very data-centric, financially focused way. But it's entrepreneurial, and it's strange; for being a New York-based firm, it’s full of very nice people. BH has welcomed our entrepreneurial spirit; our data and our innovation have been embraced. And if you would ask about 98% of the people at BH and all of our clients and investors, they haven't noticed a difference. The BH name's still on the door, and our culture's still the same. That was the two true North as we approached this whole process. We wanted to keep our culture. The BH culture is something special, and we wanted access and to be closer to the capital. I think we've checked both of those boxes.
Willy Walker: If you look at the go-forward plan under Pretium's ownership with 120,000 units under management, 48,000 units are owned in your portfolio.
Joanna Zabriskie: Let's talk about that. Let's talk specifically about what Pretium buys. They bought the management company, obviously, but they also bought the investment management group out of the BH equity side of the shop. We have listed our acquisitions and asset management team and our track record. That 30-year cycle-tested track record was also part of the acquisition because all of those investment professionals came with it. What we left over in equities with Harry as a legacy portfolio were about 100 assets that have some level of BH equity in them. Whether it be 10% on a GPLP basis or 100%. We signed long-term property and asset management agreements with that portfolio and with Harry so that there is alignment with our track record with those assets that are on our track record with Harry specifically, with Pretium, and BH. We're all tied together. As we go forward, that track record is what we'll be presenting to the market and what BH is so good at, which is that value-add, operational, and renovational lift to B and A- assets. That will be our focus going forward.
Willy Walker: Understanding what they bought and what they didn't, as I look at it, are we gonna see the number of assets or units managed to go from 120,000 to 250,000, or is that a business that you're gonna underweight? Are the owned assets gonna go from 48,000 units to 100,000 units, or is that gonna be underweighted? Student, you own 9,000 units. Are you gonna go heavy on student? Under the build for rent, you talked about the size and scale of Pretium. You all had 40 communities, I believe, before the acquisition. Pretium obviously has many more. Then the final piece would be data and technology and the software platform that you all have put into those assets that you manage. Of those five areas, what's getting over-weighted going forward as it relates to the Pretium strategy?
Joanna Zabriskie: As Don Mullen says, “Option A, all of the above.” We are gonna continue to grow the third-party business that's made us wildly successful. It helps us scale. It helps us stay sharp because we are hearing from all of our clients about what's out there in the marketplace. We may not agree with it, but it keeps us sharp. We will grow AUM on behalf of Pretium. We, Pretium's AUM, will manage it, but we will be part of that debt and equity raise around the multifamily and BTR space. We are managing all of Pretium's BTR now. We managed Pretium prior to the acquisition. We were managing DR Horton when they bought the ARC portfolio of 4,200 homes. Even prior to us going to market, we were starting to get some more management from Pretium. There's great alignment there with our asset management and operating teams. The answer to your question is that we're gonna grow every which way.
Willy Walker: Given that, and given the economic backdrop we find ourselves in today, really solid CPI print this morning, inflation coming down, and rates going up. Because if you listen to the analysts on television, we've got a trade war going on out there and seemingly no top to the size of the tariffs we plan to put on Canada and potentially Mexico and potentially other trading partners. Even though we've got inflation coming down and you should be getting into a rate-cutting environment with the Fed, we see the 10-year go up because of the broader economic outlook as it relates to inflationary pressures coming back into the system. That is now into a 420 10-year. We had a lot of investment sales activity in the multifamily market back in Q3 of 2024 when rates had come down, cap rates had moved up, so people could…
Joanna Zabriskie: Rates were stable. Let's just call it what it was.
Willy Walker: Relatively speaking, as you know, we were at a 360 10-year in Q3 of last year. I think anyone would say that's rates down from where we had been previously during the great tightening. But what you ended up with, Joanne, as you know better than I do, is that you finally got back to the point where you had positive leverage. You could be buying something at a 525 cap rate. You could be putting high fours, low fives, dead on it, and it made sense. Then all of a sudden, the 10-year started to surge, even though the short end of the curve was being cut and cap rates had come down a little bit, and all of a sudden, everyone found themselves back into an inverted acquisition market, if you will. Now here we are at a 420 10-year, cost of financing is in the low sixes, most cap rates on multifamily are in the low to mid fives, you're back upside down. So, is BH a net acquirer or a net seller in 2025?
Joanna Zabriskie: Good question. I wish my crystal ball was a little bit less foggy than it is right now. What's happening macroeconomically is confusing, to say the least. We will be in the market looking for good opportunities to buy in 2025. We sat on the sidelines in 2024. It was hard to make deals pencil. We did a handful. But I think that there are opportunities in BTR. I think we're starting to see a drip of opportunities coming out of the banks. Unfortunately, they are C-class assets right now, and we don't feel that the turnaround is worth it. The juice isn't worth the squeeze yet, but we're starting to see that trickle coming our way, both for management and acquisition possibilities. We're going to be looking hard for the dislocated assets where we can apply our operating and value-add skills and create cash flow from where the asset sits right now. It'll be harder to find, and there's a lot of capital sitting there. But what we've done over the past few years is we've created a centralized platform that enables us to scale our operations and really cut costs and OpEx, which maybe smaller companies or aggregators cannot do. We've got some tools in our tool chest coming out of COVID and spending the last three years becoming a more efficient operator with a centralized platform with data and technology that we can apply and create NOI that wasn't there previously.
Willy Walker: Given that you're looking for, if you will, assets where you can apply your management capabilities, does that diminish the need for a strong macro environment behind it? You talked about the US macro environment, which obviously right now is challenging to get any real conviction on which way we're going as it relates to an economy. Are we going into a recession, or are we gonna have a soft landing? Are rates gonna stay stable at 420, or are rates gonna go up to six or go down to three and a half? It's a very difficult time to try and project forward on those issues. But when I hear you say that you wanna apply BH's management capabilities, there are a lot of our clients who are saying, “I wanna go into a high-growth market that has been oversupplied in the last couple of years. There are some assets that haven't leased up that fast, but they're great assets. If I buy them, I'm getting the play of a good, if you will, a macro play in that market that's been oversupplied. I buy it, I take a little bit of pain for the next year, but then it's going to be an undersupplied market, rents are going to go, and I've got a great new asset.” That doesn't sound like your strategy. Are you looking for an under-managed, underutilized asset, almost regardless of the market, or does the market backdrop have to be a certain type?
Joanna Zabriskie: No, market matters, for sure. We investigate every sub-market, and we look at our geographic footprint, which is the smile in the Midwest. We're in 30 states, and we have great operating statistics in each of those states. We understand the submarkets. We understand what we can do with them in terms of OPEX. But that strategy, I like that strategy as well. We would take a look at assets that are in lease-up that the market's been oversupplied, and we think we can apply our OPEX strategy there to reduce it with our centralized platform equally well.
Willy Walker: You said the smile and the Midwest. Most people who invested in the smile and the Midwest cut off this part of the smile for some time. Anybody in the room who doesn't understand what the smile strategy is, put a pen in Seattle, Washington, and draw a smiley face across the United States up to Boston, Massachusetts. Anything that's below that line you buy, anything above that line you don't buy. That runs down and picks up all of California. It picks up Arizona. It picks up Texas. It picks up Nashville, Tennessee. It picks up Charlotte, North Carolina. It picks up Miami and Orlando. What it doesn't do is go to Chicago. It doesn't actually go to Denver, even though the Smile and Midwest.
Joanna Zabriskie: It doesn't go to Des Moines, Iowa either.
Willy Walker: It doesn't go to Des Moines, Iowa either. But the reason I said it cuts off here is that many people over the last couple of years who've said smile strategy have avoided Washington State, Oregon, and California and really started the smile in Arizona. Are you still looking at opportunities on the West Coast?
Joanna Zabriskie: We are not in those three markets. We start in Las Vegas.
Willy Walker: I was correct; you're not in those three markets.
Joanna Zabriskie: We're not, yeah.
Willy Walker: It's this smile minus the right side.
Joanna Zabriskie: Right, we start in Vegas and go up to Richmond. We've got some assets in the Northeast as well. We've been finding value in suburban markets in the Midwest for 30 years. It's a very core part of our business, and cap rates are a little bit higher, and there are good values there. Guess what? People live and work in the Midwest, too.
Willy Walker: But that is very different; those markets have been great for the last two years because they were undersupplied markets. You've actually been able to get rent growth over the past couple of years. But a lot of people sit there and say, “That's great. But at some point, the bloom will come off that rose as it relates to sustained rent growth. Whereas a Nashville or an Austin, while they are oversupplied right now, are going to get back to looking at massive rent growth in ‘26, ‘27, ‘28.” Are you not suckered by that one?
Joanna Zabriskie: Not suckered by that one. We've been in the Midwest too long to be suckered by that one. We understand that cap rates are higher in the Midwest. You can get a better basis play, and you can drive rent growth through the value-add programs that we're able to apply. You can buy a B asset, move it to a B plus, and create the NOI growth and the returns through doing that.
Willy Walker: Finally, on the macro backdrop and what we're seeing right now, as it relates to the cost of labor, cost to build, the cost of actually buying existing assets, oversupply in the market in ‘24 and ‘25, but probably an undersupplied market in ‘26,’ 27, as you look at standard market rate multifamily, BFR and SFR, and student, which are the three major food groups that you're in right now, and you fast-forward to what the current economic policy is today, where are you over-weighting over the next couple of years? Is it standard multifamily because people are gonna need affordable housing and the for-sale market is gonna fall off? Is it BFR or SFR because the need to have a detached single-family home doesn't go away, but people can't afford to buy their own home? Or is it on student because the university system, actually, which is under a lot of pressure right now, continues to move forward, and students continue to go to college, and there's a need for more student housing.
Joanna Zabriskie: I think demographics are a tailwind behind all housing right now. Let's put it into context: 133 million households in the United States, 88 million households own their own homes, and 45 million renters, 29 million are in apartments, and 14 million are in single-family homes. What's interesting is that of those 14 million, only 255,000 are in built-to-rent communities. I think build-to-rent communities are garnering a small piece of the pie right now. But I'm excited about that piece of the pie. Harry says it's the future of the industry. Harry is prone to hyperbole, but I don't think he's wrong on this. I think that BTR extends the renter continuum. As people graduate from living in student housing to apartment communities, they want more space; they're buying homes. People are buying homes at an older age now, age 38 versus 31. Seven years later, Boomers are staying in their homes 15 years longer, they're aging in place. We have a shortage of single-family homes, and people are buying later. Think about those adult milestones that are all happening later. Buying a home, moving out of their parents' home. A third of 18 to 34-year-olds are still living at home. They're having children later, they're buying homes. We need more rental housing. As people graduate from the apartment communities, they're going to BTR. They want more space, they want a yard, they want more bedrooms, pets, children, et cetera. The BTR, I think, is where the industry is going because it is efficient for home builders to clear off their balance sheets and sell blocks of homes to investors. There's a lot of capital interest in BTR because it skews toward multifamily in terms of cash flows and somewhat in management. But it doesn't have the headline risk that is perceived to be in the single-family rental market. I think we will grow around the BTR space faster than we will grow in the multifamily space, but we're starting with a bigger multifamily base of units as well.
Willy Walker: Joanna, I'm super appreciative of all we've done together over many years. I'm super appreciative of you joining me here at Retcon for this conversation, and good luck with Pretium in the next chapter of BH.
Joanna Zabriskie: Thank you very much.
Willy Walker: Really appreciate it. Thank you.
