March 16, 2024

JF3481: The Formula for Risk Mitigation and How to Play (and Win) in Single-Tenant Industrial ft. Neil Wahlgren




Neil Wahlgren, a partner at MAG Capital Partners, joins host Ash Patel on the Best Ever Show. In this episode, Neil discusses risk mitigation in single-tenant industrial, focusing on the importance of credit analysis and vetting a business’s financials. He also evaluates the current industrial real estate market, the state of industrial lending, and explores how his firm handles expiring leases for long-term tenants.

Neil Wahlgren | Real Estate Background

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Ash Patel (00:01.95)
Hello, best ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel and I'm with today's guest, Neil Wahlgren. Neil is joining us from San Francisco, California. He is a partner at MAG Capital Partners, where they purchase triple net leased industrial properties, focusing on lease structure and tenants more than the real estate itself. Neil's portfolio consists of industrial triple net leased properties, short term rentals and multifamily syndications.

Neil, great to have you back on here. How are you today?

Neil Wahlgren (00:34.823)
Doing great. Thanks for having me on Ash.

Ash Patel (00:36.806)
It's our pleasure and best ever listeners. Neil was a repeat, Neil is a repeat guest. He was on episode 2,654 as well as 3,075. Is that right, Neil? You've been on here twice. Yes, okay. If you Google Neil Walgren and Joe Fairless, his episodes will pop up. Neil, if you would give the best ever listeners a little bit more about your background and what you're focused on now.

Neil Wahlgren (00:50.352)
That's right, yeah. One with Joe, one with you.

Neil Wahlgren (01:03.419)
Yeah, absolutely. So Neil Wahlgren, I'm a partner with two other guys, Dax Mitchell and Andrew G at MAG Capital Partners. We are a really an industrial commercial real estate investment shop. We've built a, over the last 10 years, built a really niche focus in buying an investment grade single tenant, net least manufacturing industrial. Just to paint a picture, these are typically, about 100,000 square foot buildings out in the Midwest, often with 50, 60, 70 year tenured American manufacturing buildings as tenants or companies as tenants there.

My background, California native. Had a prior career as a Air Force pilot. So I flew C-130s for both the Air Force and the Navy Reserve for about 12 years. And then I've been in really the capital markets focus side of commercial real estate for the last 12 years.

Ash Patel (02:06.09)
Neil, with MAG Capital, you take down institutional grade properties. When I hear that, my assumption is the margins are quite low. What are typical margins on your large properties?

Neil Wahlgren (02:21.339)
Yeah, great question. From a return side, it's really going to span a number of key factors. You have on one end what they call credit tenants. These are going to be, think like Amazons and Home Depot and even down to smaller size but larger, typically publicly traded tenants. Those are going to have a lower perceived risk. In addition, they're going to have a you know, more new grade think like Amazon warehouses, you know, grade A buildings that are going to be much more stable long-term, but going to have a lower yield. You know, typically, uh, I would say low, low double digit or high single digit IRRs, um, we play in a slightly more niche space where we're working with, uh, typically privately owned, what we call private credit tenants. Um, so these are not going to be publicly traded.

As such, to really understand the risk profile of who's in your building, we have actually built out an internal underwriting team of credit analysts to be able to really understand that relationship between the risk of, or put a different way, the certainty that our tenant's going to stay in place, pay rent over the course of our hold period, and the price that we're paying for the building.

Ash Patel (03:42.43)
And let's emphasize that for a second because a lot of people would think if you buy a building with a business that's been around for a number of years, maybe they're multi-location and they have a corporate guarantee, that should be good enough. But you take it a step further and you dive into the business's financials, engage the health of that business. Is that right?

Neil Wahlgren (04:05.455)
Absolutely. I mean, from a comparison standpoint, you know, a lot of our listeners have either exposure to or familiarity with say multifamily. And multifamily, you're going to have an aggregated assortment of tenants. And those tenants are going to typically have a relatively low, what I would say credit profile. So you're going to expect some defaults, expect some turnover on those tenants across the course of your investment.

When you have a single tenant type of operation like an industrial, the quality of the credit behind that tenant becomes much, much more important on a comparative standpoint. And that really drives the importance of understanding not just the quality of the lease, but more so the quality of the person signing that lease that guarantor and understanding how secure that lease truly is.

Ash Patel (04:56.586)
And what happens when one of your tenants default?

Neil Wahlgren (04:59.959)
Yeah, so really, from a downside protection standpoint, first it's important to know, what does the industry look like in industrial, right? So typically default rates in the private credit side from American manufacturing are gonna sit somewhere around two to two and a half percent per year in most markets, so very low, right? And again, that's gonna be industry wide.

Our firm, personally has a track record of really less than about 0.2% annual default rate. So across 10 years, over 100 tenants, we've actually only had one default across our company's history. So very low. When it does happen, really there's a lot of different options. So most of the time, these companies will have multiple locations. And what makes it kind of interesting is just because a tenant defaults doesn't necessarily mean that they are going to vacate or reject the lease they have with your property.

So they may look at all of their properties and they may break down their company and say, hey, these parts of our company are making us money and these parts are losing us money. And they're likely to uphold leases on profit centers and mission critical operations and likely going to reject leases across those parts of the business losing money. So our credit guys will actually look into that for yet another level of what I call downside protection, even if a company goes through a chapter 11 reorganization.

Ash Patel (06:29.302)
The health of your tenant is vital to your ongoing success. You underwrite them initially. Do you get quarterly annual statements from them? And do you continue to underwrite their health?

Neil Wahlgren (06:40.751)
We do, yeah. I mean, the way we approach it, the most important decisions come in really before you make that decision to purchase the property. So we do typically two to four months of really a deep dive due diligence. We look at audited financial statements. Our credit team will interview the executive team on that tenant firm, really understand, okay, let me...

Let me build me this picture of what's happened over the last couple of years for your company's financials. If you had a down year, was this related to say COVID or did you have a certain business pivot on business model and then understanding, hey, how did you come out of this? How are we once again comfortable with it? And then once we acquire the property, the leases that we have in place, we actually require our tenants to continue to send us financial statements. So typically once a quarter,

We get a snapshot of their debt lows, their revenues, their liabilities, and then once a year, we'll ask for audited financial statements.

Ash Patel (07:45.642)
Neil a lot of our best-ever listeners are probably wondering how you get these businesses to open up their books My assumption is you're doing sale lease backs meaning the business owner owns the building as well They want to sell it at a healthy profit healthy cap rate you guys buy it with the stipulation that They open up their books make sure they're viable That's correct

Neil Wahlgren (08:10.109)
Yeah, that's the underlying structure of the sale leaseback.

Ash Patel (08:14.402)
What if you're buying a building that's not a sale lease back? It just has an existing tenant, let's say, you know, an Amazon competitor. They're not going to open up their books for you.

Neil Wahlgren (08:27.279)
It's typically required. And so when you're coming in, and let's say you have a third party owner, right? So you're coming in, you're buying a property, there's an existing tenant. And what's gonna happen in that scenario is a buyer will buy the property and typically assume the lease. So we're gonna assume that the tenant stays in place. We're gonna assume that existing lease will simply, the landlord component of that lease will change from the seller to the new buyer there.

And that scenario, because there's a single tenant and because that lease typically drives value to the real estate, that new buyer will demand to see at a minimum, summary level financials to know how weak or secure that tenant is, and as such, how much they're willing to pay for that property. Put another way, the cap rate, which is ultimately a function of risk, will depend heavily on both the strength of the tenant and the strength of the lease.

Ash Patel (09:28.426)
Okay, so if it's in the existing lease that the tenant has to provide quarterly financials, I get that. Would you ever buy a building where you don't get to see the tenants' financials?

Neil Wahlgren (09:39.919)
In some scenarios. So in those cases, really it would be much more tied to the provisions of the lease. So just to paint a picture here, right? If I'm going into say a medium-sized market, maybe Waco, Texas or Champaign, Illinois, but an area where my property is somewhat central, and then say I look at market rate rents, and maybe the rents have moved up to six bucks a foot, but the lease on this tenant say is three bucks a foot.

I may look at that and go, you know what? Even if I did have a tenant default here, I feel confident based on the vacancy rate in this Metro that I could release. And I feel confident that in the scenario of releasing, I could at least match, if not increase the rent on the new tenant compared to the one that I purchased the building.

Ash Patel (10:33.322)
Just yesterday there was an article in the Wall Street Journal that said there's an anticipated 200,000 additional jobs coming for green manufacturing and mining. Industrial is absolutely on fire. Is Mag Capital selling some of their assets and reaping profits?

Neil Wahlgren (10:51.075)
Yeah, I know. We've seen from a demand standpoint, really the two main drivers from our perspective are going to be what we call reshoring. And that is really American manufacturing firms that at one point outsource the manufacturing to overseas components or even down to Mexico. And a lot of them based on experience of supply chain cramps and increasing cost of overseas labor have been moving a lot of those operations back states.

So that's created a lot of additional demand on a finite supply of industrial properties. And then the second piece really is the growth of e-commerce. So just year over year during recessionary periods, during good years, e-commerce has grown year over year in the states. And as that grows, it puts pressure on warehouse space, which is a really a direct manufacturing in terms of putting additional demand on a finite supply of industrial.

So the demand curve continues to increase in the sector. And then from a sales standpoint, what we've seen is, at least this past year, it's been a phenomenal time to buy industrial, probably not a ultra opportune time to sell. And really that's going to be driven by rates. There's fewer qualified buyers to buy. And ultimately, with these long-term leases, we're often not backed against a wall and forced to sell. So we'll enjoy a good cash flow and we'll kind of wait out these small blips in economic cycles until we feel it's more of a seller's market on that side.

Ash Patel (12:28.41)
You're anticipating it being more of a seller's market in the future.

Neil Wahlgren (12:32.411)
Absolutely. Yeah. So we, you know, we've seen rate interest rates increase over the last roughly 18 months. I think from our standpoint, the general consensus is more or less flat this year. And then we expect to see some, some decrease in interest rates, which will typically swing the pendulum to make it more attractive to sell versus buy.

Ash Patel (13:07.442)
Neil, your IRRs are high single digits, low double digits, and you take on investors. MAG Capital has investors. As a matter of fact, I'm one of the investors because I was a judge at the Pitch Slam at the Best Ever Conference. You were the winners, so happy to be an investor. But my question is, with low IRRs, what's the return to typical investors?

Neil Wahlgren (13:34.323)
Yeah, and a quick clarification there. So when some of our competitors work with larger, what we call credit tenants, and those are going to have a lower IRR profile, in the private credit space, we're typically able to achieve between 15% and 18% IRRs historically. And so that's typically our projected return structure. It's really more similar to a value-add multifamily spectrum in the space that we play in, based on the private credit nature of our tenants.

And so given that, really most of our funds, we look for a combination of cashflow during the hold, that's really predictable, we have rents coming in, we really have no expense exposure, and then we have fixed rate debt. So between those three components, we're able to predict out the yield that we're able to distribute during, typically a five to six year hold period. While we hold, there's some engineered appreciation.

And that's through built-in rent escalators in most of the leases. And then that's also through paying down principle on long-term amortized debt. And then we also have more of a hands-on value-add component. And that's gonna be, while we own these properties five, six years, I'd say about one and two or one and three, over the course of that period, will sometimes come to us and say, hey, we need more space. We need improvements to the properties.

And even though it's their responsibility through a triple net lease, we have a really kind of a value add offering to our tenants to say, hey, we can actually build out additional square footage for you. We can do an expansion on this building, you have excess land, and we will actually do that development on their behalf, which they end up paying for through the form of a brand new extended lease at a higher rent rate. And that's the way that we're able to build really what I call kind of low risk value add return profile.

Ash Patel (15:31.582)
Neil, does MAG syndicate individual deals or does everything fall under a fund structure?

Neil Wahlgren (15:38.291)
So about two and a half years ago, we moved most of our industrial net lease products into the fund structure. And really the main driver on that was, it helps diversify what typically is a very binary occupancy risk. So when you have a single tenant property standing alone, you're either 100% occupied or 0%. And that can create a little bit of uncertainty, especially for someone who has a lot of capital in one property.

But when we're able to diversify that across, say, 12, 15 different properties, it's really a nice blend and return profile that can absorb the occasional unlikely event.

Ash Patel (16:20.382)
Are MAG's investors typically retail investors or institutional?

Neil Wahlgren (16:25.755)
We've got a mix. So we started really on that core, you know, friends and family group, retail, high net worth. And then as we've grown, really we brought on channels of RIAs, family offices, and some small institutional partners.

Ash Patel (16:41.442)
All right, let's go back to those friends and family days and let's talk to some of our best ever listeners that want to get into this space. They want to go into larger industrial and warehouses. What's your advice to them?

Neil Wahlgren (16:55.363)
Yeah, it's, I mean, it can be a daunting experience largely because not a lot of folks have firsthand exposure or experience with industrial, right? You could live your entire life and go through multiple careers and never even step foot in a industrial manufacturing center. So as such, I typically, my recommendation is usually to understand the space first with a partner.

you know, managers out there, sponsors who, you know, I would say have business models that vary from kind of what we do to the larger single tenant net lease. Some will specialize on more of what I call flex industrial, and that's going to be smaller spaces, you know, shorter term leases, more of a self storage or multifamily profile, and then there's everything in between, and those tend to be a great way to learn as you go kind of get in, understand the product, understand the risk profile. And then as you get to see that experience and work through with a sponsor, at that point, depending on capital availability, that can be a good departure point to consider exploring that individually.

Ash Patel (18:10.09)
What are some pitfalls they should avoid, and What mistakes did you guys make early on?

Neil Wahlgren (18:16.571)
Great questions. I think some people will chase returns or cap rates without understanding the true underlying risks because of the credit. So if you don't come from a strong credit underwriting background, my advice would be as you're doing due diligence, almost certainly hire out that piece. So there's a lot of small credit shops who will basically be available on a per deal basis that you can employ them as party of due diligence on a deal, let them analyze the credit and bring in kind of a professional who does that for a living to really truly understand what the underlying default risk is on that property you're considering. 

Beyond that, the net lease structure is really nice from an owner's standpoint because you are really insulated from the day-to-day surprises of owning real estate. And that is one of the most compelling pieces of the net lease structure. And you're gonna see that in most industrial leases, just the nature of the asset class has sort of funneled into full triple net leases. So, you know, let's say your insurance premiums go up, your tenants gonna eat all that, right? Your tax assessor says, hey, there's a 50% bump here, your tenant eats all that. So really it creates a much more flat predictable line of free cashflow, NOI, if you will, on these investments compared to some of the other ones.

Ash Patel (19:47.834)
MAG's investments I'm going to guess are typically $5-30 million range.

Neil Wahlgren (19:53.332)
Um, that was a very good guess. Exactly that.

Ash Patel (19:54.942)
Okay, good. And the reason I ask that is one of the most trendiest real estate assets today is industrial flex. Now, there are some very large flex buildings that are in that price range. Is MAG playing in that arena as well?

Neil Wahlgren (20:13.083)
We don't, you know, those tend to have a little bit more of a property management component, you know, requiring leasing agents and really, I would say more of a boots on the ground presence to effectively manage those assets. That's not our particular asset specialty, but those who, especially if you're coming from property management intensive asset classes, that can be a really great opportunity to, you know, create exceptional yields still with relatively low downside risk.

Ash Patel (20:43.614)
Are you afraid to pivot? And I'm going to preface that question. Industrial wasn't always this hot. And during the next economic downturn, it might take a hit. Would you not pivot into different asset classes?

Neil Wahlgren (20:59.279)
We'd always consider it. You know, at MAG, we brought in several JV channels and outside channels for individual deals. For example, we have a multifamily JV operator. We also brought on a private equity component where under that side channel, we will purchase not just industrial real estate, but also the underlying operating companies. So all of these kind of create, you know, I would say relatively changing opportunities within the field.

And down the road, if Singleton and at least become saturated, we could always do an internal shift on what sort of deal opportunities we pursue.

Ash Patel (21:38.814)
Understood. What's your exposure right now to multifamily syndications?

Neil Wahlgren (21:44.123)
We have three JVs, all with a specialty operator down in Southern California in the Inland Empire. So very focused on a value-add model with an operator that's done that exclusively for about 30 years.

Ash Patel (21:57.67)
And you're not in the sunbelt state so you haven't had that parabolic rise and now a bit of a fall.

Neil Wahlgren (22:03.827)
Correct, yeah, much more of a, I would say, institutional style, you know, multifamily profile versus, you know, some of what you just described there.

Ash Patel (22:14.798)
Can you talk about lending for the types of properties that our best ever listeners would start out with? So let's, you know, maybe a couple million dollar warehouse, flex or industrial. What does lending look like for those types of assets? Both if they're a value add meeting, there might be a fair amount of vacancy or fully leased.

Neil Wahlgren (22:38.127)
Yeah, I mean, I'll start on the fully lease side, just because that's the space we plan. And that scenario, especially paired with a triple net structured lease, you have a very predictable level of income coming in, but as such, you wanna pair the structure of your debt with the profile of your income. And so because our income is very structured, predictable and consistent, we always, always pair long-term fixed rate debt.

So we build in a spread between that income and that debt service. We know what it is in advance and we know that spread is going to increase as those rent escalators kick in every year. So that we're typically putting in, you know, seven to 10 year fixed rate debt from a leverage standpoint between about 50 and 65% is what we see in our space. So I would say conservative leverage that ultimately allows us to hit the yields that we're looking for.

Ash Patel (23:39.69)
I'm assuming you're doing CNBS non-recourse loans?

Neil Wahlgren (23:43.859)
We do a small bit of that and then we also do some full recourse loans as well. And so the full recourse tends to be a little more flexible, which we like, especially in a higher rate environment here. If we do see rates go down, say in the next 24 months, if we're planning to hold these properties for say five, six years, that gives us the option to refi out a lot easier with a recourse loan than more structured CMPS profile or structured loan there.

Ash Patel (24:16.642)
For newer investors, do they have the option to go CNBS or do they have to stick with a local or regional lender?

Neil Wahlgren (24:24.959)
You know, I mean, us personally, we found the most success with working with regional lenders and regional lenders. Here's the reason why is industrial assets are typically not going to be downtown. They're not going to be on, you know, the middle of, uh, you know, the main street. They're going to be less concerned about being focused in, you know, the best school districts or, you know, have high traffic count instead, they're typically what I call a commutable primary, maybe 45 minutes or an hour outside of downtown, or more commonly in secondary or even slightly tertiary metros.

As such, national lenders tend to have less familiarity and exposure in those markets, whereas credit unions and regional lenders tend to be laser focused on those lesser served markets. So for us, that's been a really a nice relationship with repeat debt from those regional lenders that know those areas well.

Ash Patel (25:21.618)
Neil, if you sign a 15 year lease and the years start to add up, you're approaching year 13-14, everybody's got to be getting a little bit nervous because if that tenant doesn't renew, then what? What do you do to remediate those situations?

Neil Wahlgren (25:38.435)
Yeah, I mean, that's a great question. So put a different way, you know, we usually look at what the, um, the term in our industry is Walt. So that's weighted average lease term. Um, and that could either be a single lease or if you're buying a portfolio, kind of the blended term on that, that portfolio across all the leases. Um, the Walt, you know, we play in a space where we're typically putting new leases on 15 to 20 years we'll hold for, you know, like I said, five or six years, we almost always will have more than 10 years left. And that's intentional.

So we play in kind of a conservative space there. And then we're selling to someone who probably won't hold the whole time either. They will usually hold it down to say, five or four years remaining. And then at that point, when they sell, that last buyer will likely get some discount off the price because they're taking on more and more of the releasing risk, right?

And so there's almost always long extensions built into the lease to give that tenant security that they can stay in place and continue their operations. But the further along you go down the line, the more you really have to understand that business and feel comfortable that, Hey, there might be three or four years left, but we really feel comfortable this tenant wants to stay in place, they're committed to this location. You might look at their customers and say, Hey, where are they shipping these items? If they have big customers in the local area, that will make that kind of a commitment to that particular property much stronger than say one who's shipping their goods a long distance away. So these are things as the lease gets smaller, you want to get more and more comfortable with the actual day-to-day operations of that business.

Ash Patel (27:23.058)
Neil, what is your specific role with MAG?

Neil Wahlgren (27:27.427)
So I run the capital market side of the company. So myself and my team, we work really with all those investor channels that I mentioned before and really just walk them through, understand the asset class, understand the risks and the return profile, and really communicate through the course of the investment.

Ash Patel (27:47.958)
What's one thing on your list of things to do that you've been procrastinating?

Neil Wahlgren (27:54.228)
I finished my book. I started a book in COVID. Really what I found is our business. I know, but hear me out, hear me out. I found our business was evolving at a rate that I felt like the book was no longer representative of, and maybe I'm making excuses, but really it's.

Ash Patel (27:59.808)
COVID, man, it's 2024.

Neil Wahlgren (28:19.287)
It was interesting to see, you know, as the lessons coming out of COVID came out, we really, you know, beefed up how we look at credit. We took on the fund structure and really there was a lot of, you know, kind of large evolutionary changes within Mad Capital Partners. You know, and I felt I wasn't quite at that point ready to tell my story. And I definitely plan to do so. And if we, if we have another podcast sometime in the future, I hope you ask me about it.

But that's been my biggest procrastination.

Ash Patel (28:51.194)
I hear a lot of excuses just because the markets evolved, the companies evolved. Turn the book into a memoir that tracks that evolution, right? Let the audience come along with you on that ride. So no excuse, man.

Neil Wahlgren (28:58.14)


Neil Wahlgren (29:05.063)
I like it.

Neil Wahlgren (29:08.725)
No, no, I appreciate the honesty there.

Ash Patel (29:12.202)
Neil, what's the hardest lesson you've learned in this industry?

Neil Wahlgren (29:16.943)
I would say the hardest lesson I've learned would be really to communicate quickly and personally when things deviate from plan. And just to use an example, we've had one default across our company's history, 10 years, over 100 tenants, we had one default. And really it was the struggle of at what point...

Do we say, hey, we've captured this scenario in flux, and when are we ready to introduce this? Is it immediately? Is it 48 hours from now? Is it one week from now? And really kind of learning that. And we opted to understand the scenario, and luckily we took the decision to call every tenant in that property and say, hey, here's what's happened.

Property is gone, the tenant went into bankruptcy court. What was good about it was we were able to say, hey, and the judge ordered them to continue paying rent even though they vacated the building. So they had assets, they ended up kind of doing a precautionary chapter 11 filing because of an external lawsuit, a customer was levying against them. So we had rent coming in, we had an empty building, and at that point we had enough to tell there.

But I think the challenge was to really understand at what point do we have enough information that we're ready to go to our investors and tell the scenario and tell what we plan to do about.

Ash Patel (30:54.05)
As part of your buying criteria, do you make sure that if the tenant were to default, you can release the space at a similar rate?

Neil Wahlgren (31:03.971)
It's going to change. So if we are, for example, if I'm going to go look at a property that's more tertiary, for instance, I'm going to really, really want like an ironclad credit profile of my tenant, right? Whereas if I'm going to be more in a primary metro, if I'm going to be in an area with watertight occupancy, on those scenarios, I'd be willing to look at slightly more mid-grade credit such that, or I'll look to get it at a great basis on the real estate and below market rents, right?

And if I have that sweet spot combination, I mean, really the deals are bulletproof at that point. You can lose a tenant, you could release it, you could probably release it more and increase your overall return profile in that scenario. But really it's going to be a combination of location, releaseability and basis that you came in.

Ash Patel (31:59.522)
Would you consider purchasing a building that's very specific to one tenant and it would be very difficult to release to other tenants without let's say, you know, a major demo. And if the tenant had the right credit would Mag consider doing that?

Neil Wahlgren (32:18.092)
So if I'm hearing you right, I think you're asking more of like a special use property, is that right?

Ash Patel (32:23.406)
Correct. And I'm trying to think of an example, let's say something that has a lot of pits cut into the floor for heavy machinery, and that's very difficult to release to another tenant without a lot of work. Is that something you would consider or do you try to stick with assets that are easily rentable if your current tenant leaves?

Neil Wahlgren (32:46.735)
We definitely exclusively stay on the ladder there. So that what I call asset agnostic. So I mean, when you look at our properties from the outside, they are as close to four walls and a roof as you can imagine. It's gonna have a concrete floor. All the equipment is gonna be on top of the floor owned by the tenant. You're gonna have typically steel sided walls and you're gonna have a flat roof. Within that, every tenant will do a combination of warehousing, shipping and receiving and manufacturing.

Some will be more weighted on one side, some on the other, but at the end of the day, it is a storage vessel that provides shelter from the elements, it provides covered storage, and provides frankly a dedicated space for a huge range of manufacturing. I mean, just in fun too here that we're wrapping up, recent tenants, you look at the buildings on the outside, they're identical right inside they range from we have a tombstone manufacturer. I've got a you know prefabbed residential door manufacturer. I've got a potato Processing manufacturer. I mean they range the gamut right, but they all share the need for covered storage Warehousing and shipping and receiving and those buildings provide it really across a huge range of industries for what?

Ash Patel (34:14.33)
Yeah, what you guys do and what I do, we're polar opposites on a lot of different levels. I don't want fully leased triple net properties. I want the ones that are half vacant, lot of upside. If you were to find one of those properties, is there room inside Mag Capital to take those down? Is there a separate fund or would you guys take it down yourselves?

Neil Wahlgren (34:38.267)
Yeah, we do the occasional, you know, what I would say, creative deal. And typically that type of deal would not fit the profile of our fund. So we would bring that out individually to our investor group, you know, and say, Hey, here's the merits of this deal. We think the basis is great, huge upside potential. And we definitely have and do tackle those, but we would do those outside of the traditional fund structure.

Ash Patel (35:03.11)
Okay, good, because I was worried that you guys are very systematic and you look for a very niche product. It's kind of painful when you see these great deals out there. It just doesn't fit your profile. But I'm glad to hear you guys still take it down. Neil, what is your best real estate investing advice ever?

Neil Wahlgren (35:23.983)
I would say, I mean, from the capital market side is invest in your people more than anything. And your people being your investment partners that have made you successful. I've been in this business 12, 13 years now. The earliest investors I have continue to invest with us. And that, I mean, they've been the glue that has allowed us to grow.

I mean, just to use an example, we probably put more effort into just investing in investors than we do selling our investment products. We do live events, we do golf tournaments, boat trips and fishing trips with our folks. It's created this bond that has gone past, hey, just we are a sponsor and LP, but really, strong friendships in many cases. To me, that's been the number one thing that's allowed us to grow.

Ash Patel (36:21.834)
It's a phenomenal philosophy. Neil, you've done the best ever lightning round a number of times. I will only ask you one of those questions. What is the best ever book you've recently read?

Neil Wahlgren (36:32.471)
Yeah, I actually brought it with me. It's vagabonding here. I personally, when my mind is free and I feel just mentally nourished, I can just do wonders in the professional world. This book is, it's about a really a lifelong traveler and he basically gives his theories and his you know, kind of learning points for the best way to truly travel and experience a place and immerse yourself.

And, you know, I feel like a lot of the COVID provisions have kind of unleashed, uh, or, you know, broken some of the physical ties to having to work always in one location, many people have the ability to work remote and travel a little bit as they work and, uh, I really just eaten up the, um, eaten up the book. So yeah, vagabonding by Rolf Potts over here.

Ash Patel (37:28.318)
And Neil, how can the best ever listeners reach out to you?

Neil Wahlgren (37:31.567)
Yeah, the best way you can either shoot me a line directly. My email is neil at or check out our website. We've got resources on there and an easy way to connect with our team. It's www.magcp for mag capital partners.

Ash Patel (37:51.838)
Neil, glad to have you back on the show again. We met last year. I became an investor in Mag Capital. I know a lot of your team is going to be at the best ever conference this year. And best ever listeners for 15% off your best ever conference tickets, use the code connect C O N E C T. So Neil, thank you again for joining us.

Neil Wahlgren (38:12.519)
Thanks so much, Ash. Cheers.

Ash Patel (38:14.55)
Best ever listeners, thank you as well for joining us. If you enjoyed this episode, please leave us a five star review. Share this podcast with someone you think can benefit from it. Also follow, subscribe and have a best ever day.

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