In the manufactured home community industry there are few trophy properties, and none more prestigious than Point Dume in Malibu, California. The L. A. Times reported that the sales price was around $200 million, but that's only part of the story. There is a priceless historical tapestry of this community dating back to 1892 as well as the simple fact that it might be the most coveted location in America. Here are some of the key facts from this transaction:
- Highest price per site MHC ever to transact.
- The land known as Point Dume Club of Malibu is part of the original Rancho Malibu, which was built and still owned and managed by the direct descendants of Frederick and May Rindge, the founders of Malibu.
- You can see photos of this incredible property here Marketing Photos & the Marketing Video here Point Dume Club of Malibu.
- Marcus & Millichap exclusively listed the property and represented the sellers – the direct descendants of Frederick & May Rindge, the Founders of Malibu.
In this discussion Frank Rolfe interviews Doug Danny and Dustin Wilmer – the landmark Marcus & Millichap brokers that handled this incredible sale – and topics include the history of the property, why manufactured home communities are now worth more than many office buildings and shopping centers, what drives these values – even a discussion on interest rates. All in all, this is an hour of information that you don't want to miss whether you are a current owner or future buyer.
And Doug Danny and Dustin Wilmer have offered their contact information to anyone who wants further information on this transaction. You can reach them at Dustin Wilmer: [email protected] | 619-302-6008 & Douglas Danny: [email protected] | 619-559-1169.
The Facts About The Sale Of The Point Dume Community In Malibu, CA - Transcript
0:00:00.2 Frank Rolfe: Welcome everybody. You know, there are not a lot of trophy properties in the mobile home park sector. Office buildings, obviously the Rockefeller Center, the Empire State Building, the Chrysler Building. But over in manufactured home community world, it's very rarefied air. And you probably read recently that probably the most prestigious, the most well known property in our industry finally went to market and sold, Point Dume. Many of you may have seen in your past travails around Los Angeles. I knew of Point Dune back when I was in the billboard business in the '80s, I owned some billboards in Los Angeles and we drove by Point Dume and I remember driving down Malibu and saying, how in the world is that, back then I would know it as trailer park, on the side of the road here by the beach? Obviously, a lot of celebrities have lived in the property over the years. It's very well known, featured in the media frequently. And so we've been fortunate enough to have the two brokers who represented the seller in this transaction. We got Doug Danny and Dustin Wilmer with us. And Doug Danny is about as famous as Point Dume.
0:01:10.6 Frank Rolfe: I knew Doug Danny back in the '90s when I got in the business. He was thought as the godfather of mobile home park brokerage. And obviously, Dustin is now also famous for being part of this transaction because there will probably never be another one like it. So we thought it'd be interesting to get everyone together here and talk about it because we don't have enough celebration in our industry of the uniqueness and value of the properties. In the office sector, retail sector, they all publish giant articles with great pride on their trophy properties. But in our industry we just never talk about them. So on that note, guys, first off, thanks for being here. And then, give us an overview of this property. I mean, it's such an interesting, fascinating story. Tell people how this property came to be.
0:02:02.7 Dustin Wilmer: Okay, I'm going to start with it.
0:02:05.2 Doug Danny: You're the historian.
0:02:05.9 Dustin Wilmer: Okay, so our clients were the Miller family, Jane Miller, Eddie Miller, Jerry and Deborah and Frederick Rindge and May Rindge were Jane's great grandparents. So Eddie, Jerry and Deborah were the great, great grandkids. They kind of run the park. All live there. But Frederick Rindge came from a decent, wealthy family in Massachusetts and decided he didn't really want anything to do with the family business and decided to drive cross country, travel and leave Massachusetts to find his own way, find like a place to build a family home, to find his own kind of paradise is what he called it. So along the way, he met May Rindge. And I think it was 20 days later they got married and then they drove out to California. And he found... He drove by this area, he thought it was beautiful, it was called the Rancho Malibu at the time. And he was like, this is... He had been to Italy and France and he viewed this as, you know, the American Riviera, like where I could build a ranch home and just live in paradise. It was rocky, cliffy, like no one had any sort of forward vision for this land.
0:03:21.8 Dustin Wilmer: So he ended up buying it for $10 an acre, which 13,300 acres at the time, about 133 grand in our dollars today would be about 4.5 to 6 million. At the time, it was the highest price per site purchase per acre. Excuse me, highest price per acre purchase at the time. And everyone was like, he must have got ridiculed. Like he overpaid for the deal. This is in 1892. 1928, the LA Times valued the property at 100 million roughly for the 13,300 acres.133 grand, I can't buy Doug dinner here in San Diego, I don't think. It was just an insane... Yeah, a car. So 13,300 acres. They expanded that to 17,000 because there were, you know, during the homestead period, you have people kind of settling on the land. So he would go to them and be like, I'll buy you out. He just didn't want anyone on the properties, like, this is our land. He bought them out and it ended up being 17,000 acres at the time they owned Rancho Malibu. Then, as California tends to do, the government got involved and it was Southern Pacific Railroad tried to take the property, part of it building a railroad through the land by eminent domain.
0:04:39.0 Dustin Wilmer: So he found a... Was with the Interstate Coastal Commission. He found a loophole in the law that if there's already a railroad going through that property, they can't build another. So he decided to build 15 miles of standard gauge track through the property and thwarted the Southern Pacific Company Railroad at the time. Then he passed away in 1905. So May Rindge had to take this over. So she continued building it, still fighting with the city, and built the what is now Malibu Pier. So the railroad went all the way down. They loaded grain and different materials onto the boats from the train. Just really utilized it for the ranch. They built their family house there, which is now known as the Mount Lagoon Museum. But as things do, I mean, it just got costly to fight them, constantly being in legal battles, building a railroad. So she decided to start selling off some of the land to high net worth individuals, celebrities. And that started the Malibu what is now known as Malibu Moviecon. In Malibu she's known as Maverick is known as the first landlady of Malibu. There's LA Times bestselling books, the Iron Mistress with that.
0:05:53.3 Dustin Wilmer: So, there were still people trying to take the land and I guess a long story short, they sold off a lot of land. They family donated all the land that Pepperdine sits on now, everything like the Malibu Tile Company. She was looking... She hired a geologist to look for raw, rare materials on their land. And they found materials in the clay or something that could make these amazing tiles. And that was when she started Malibu Tile Company and still built today, the Malibu tiles are everywhere. Most people that are from there will know. After she passed away in, I think 1940, and obviously, the family still owned some of the acreage and they built this park, Point Dume Club in 1969, then expanded it I think another 20 sites or so a few years later. But when we ended up selling this, the property sits on roughly 95.4 acres. And this is the final 95.4 acres of that original 13,300 acre purchase. Over time the city of Malibu passed a rent control ordinance that was almost taken from the city.
0:07:15.7 Dustin Wilmer: I talked to land brokers hypothetically, I'm like what would you... If this was just a blank parcel, what would you sell this land for? 95.4 acres overlooking Zumba Beach and Malibu. We'd list it for a billion dollars and probably have a bidding war. I could go on and on about the history, but that's kind of the history of the property. And when we came in it was Jane Miller, the great granddaughter lived in the park. Unfortunately, her husband had passed away then. Deborah was the general manager. That's Jane's daughter. Jerry kind of oversaw operations and Eddie was just, he busted his butt maintenance, ran the property, knew everything about the property, what the materials are made of. He can tell you every clean out. It's a wastewater treatment plant which is gigantic.
0:08:02.6 Dustin Wilmer: It was kind of surprising to me that all of Malibu is on private sewer and septic. Beyonce's house is serviced by septic. And it was just very cool history. I really got into it and the family we met, this Malibu, pretty much the founders of Malibu. How are we going to fit in with them? And they're the most down to earth people you'll ever meet. Just normal folks. And we just, the relationship we built, I can't stress it enough, I still text with Deborah every day. They just became really good friends. The relationship we built, putting the client first, doing what's best for them and kind of treating, you know, we like to treat our clients like what would we do if this is my grandmother and my mother, you know, how would we approach this? Not what's best for us, put the commission in our pocket. What's best for them.
0:08:55.2 Doug Danny: I just wanted to add that we got, basically, I was contacted by an appraiser that worked for them, had done the original appraisal. And I think the family had let him know that they might want to consider getting us, you know, not an appraisal, but appropriate payment of value.
0:09:11.1 Dustin Wilmer: So they had to separate a bunch of people.
0:09:12.8 Doug Danny: Yeah, to see what the park was worth. And he asked me, he said, well, would you be willing to do a proposal? I swear you're twisting my arm, but I'll do it. And so we set it up, got all the information from Jerry and we went ahead, put the proposal together. Then we drove out there. We hadn't met him at that point, we had only talked to him. And we had a copy of the appraisal. We did our own due diligence, figured out what we thought they could go to market at.
0:09:38.9 Dustin Wilmer: First we just did the meeting and then we did a proposal.
0:09:42.9 Doug Danny: After we did, you and I had a pretty good idea what it was worth. And so we did the meeting. And it turned out to everyone's surprise, we had a great time. The meeting was comical, it was fun, it was enjoyable. It wasn't two brokers trying to hammer them into getting listing. It was more about, you know, why in the world would you sell the park? That's usually my first question.
0:10:03.8 Dustin Wilmer: I think they even said, you're the first guys that didn't show up here in your Mercedes Benz and in Italian suits saying, you need to sell now. I'm the best broker to do this.
0:10:14.0 Doug Danny: I asked like I always do, why in the world would you sell?
0:10:17.4 Dustin Wilmer: I think they said it's a benefit. Pardon my French. I think we said, why the f would you ever sell this? They wanted free and clear.
0:10:24.5 Doug Danny: Then they told us, they gave us the reason why, because I believe there's seven, mom and then there's six different kids. Six or seven kids, they're all in their 60s, heading into their 70s. What they want to do is get control on their own. They have a brilliant trust in place. And so they wanted, at this point, the grandma, mom, Leilani, they call her leadfoot Leilani is in pretty good shape. And I think she's got a number of years.
0:10:51.2 Dustin Wilmer: Yeah, they've got a lot of grandkids.
0:10:53.9 Doug Danny: They wanted to be able to take control of their portion of the equity and reinvest it themselves and be able to manage it as an independent family, not as a group.
0:11:03.5 Dustin Wilmer: Essentially just enjoy life at that point.
0:11:06.6 Doug Danny: What was hilarious is he and I are driving back to San Diego. We figure, oh, maybe in a month we'll get a phone call that we thought it over and so on. You know, here's what we want to do. Three days later, we get the phone call. How fast can you put together the proposal, all of the different stuff that we want to put together?
0:11:26.0 Dustin Wilmer: Yeah, they were like, we really like you and we want to list with you. I think I almost had a panic attack.
0:11:30.0 Doug Danny: No, you did have a panic attack.
0:11:32.4 Dustin Wilmer: Doug had to resuscitate me.
0:11:33.3 Doug Danny: No, your whole world changed.
0:11:35.8 Dustin Wilmer: No, it was great. I mean, you kind of had, because you've got all the Wikipedia, doctor type of people in Malibu. So that's got to be worth 500 million, 600 million. And we told them that this kind of park, it's like, there's not comps for it. You can't do comps. We can play with the numbers and type, show different returns, but I think there's more into it that someone will take into account. We want to show the history, the background of the property. There's a lot more, you know, intangibles that go into this purchase, but it's still going to be based on returns. I mean, like, during the... So we showed them, like, you know, I think it was...
0:12:10.8 Doug Danny: When he says return, at this level, it's ego and narcissism. That's return. It's not going to be cap rate and cash flow and cost per side. I want to own the park, and I'm willing to pay whatever it takes. And we had a lot of those offers when we had a number of offers.
0:12:25.8 Dustin Wilmer: Oh, my God. Offers from just... I think that what helped with this process, I think what our role to buyers now is extremely unique in our industry because, I mean, the type of people we talk to that were interested, I mean, we talked to Larry Ellison's group. I talked directly to Mark Cuban on the phone, like the guy that created those vapes, the jewel vapes, he offered on it. But there's a lot of people that also...
0:12:50.4 Doug Danny: We told them to take a couple hits before they sold.
0:12:53.1 Dustin Wilmer: Yeah, we took a couple hits.
0:12:54.3 Doug Danny: We wanted them to be high. Well, it's not... There's no marijuana there, I know. Still. But the main goal is, we're not selling this as a redevelopment play because you can't. There's no way you can redevelop it. I mean, there's tenant relocation impact studies and in California, you got to buy out every tenant and then relocate them somewhere similar. And there's nothing similar. So it would be so, you know, financially unfeasible to do that. So it was just basically, we're selling this as a park. We're not selling as a redevelopment opportunity. Or even a tenant sponsor.
0:13:30.5 Dustin Wilmer: No. Yeah. And to go back on that, to buy out the tenants from the homes, the homes sell for an average of $2.5 million in Malibu for a mobile home. I put it, you know, down the street in San Diego, we get 350, you know, so I remember when I first started with Doug in 2018, I was looking on LinkedIn and I saw Malibu mobile homes listed at 5.6 million. I just think in my mind, I could have sold that park for so much more if they would have maybe called us. Then I clicked and I was like, this is one home? I was like, how's it... So since that day, I had as my screensaver the picture of the park. And I did mention earlier when we talked, Frank, that beginning of my career, I listened to all your podcasts and before I, you know, was faking it, I made it and I might owe you a commission for all the knowledge you taught me.
0:14:30.1 Doug Danny: You've been a phenomenal agent from the beginning and very focused, dedicated, hard working, collaborating with the tenants, pardon me, with the owners and the tenants. And we've had a great deal of success in exclusively representing the sellers that want to go to the market.
0:14:48.4 Dustin Wilmer: I learned that from you.
0:14:49.7 Doug Danny: Well, that's one thing that when you get to be my age, off-market business is not as appealing as being able to represent the seller, be able to create a competitive environment, bring in offers so that the our clients know that they're getting a fair market value for their park. And we've had very good success with that.
0:15:07.5 Dustin Wilmer: I think they did. They, I mean the Millers had a bunch of off-market offers too. I think the highest one they received was like 130, 150 million off market And I know, I think it appraised at 194, something like that. So, Doug taught me all that, to put clients first and, you know, if you have commission on your breath, it's going to be a lot harder to get deals. This is all. Our job is we are paid psychologists, therapists, relationship managers. This is what the industry's about, relationships. And not just, you know, you have to make it not transactional.
0:15:48.5 Doug Danny: It's good to convey and Dustin is taking advantage of it. Status is a wonderful situation amongst the rest of the brokers that we work with on a regular basis, that as you become more grounded in the industry, it's esteem that's important. It's the way you conduct your business. The quantity of business is one thing, but how you do it with the tenant or with the resident? But I'm a park owner, so I think separate that out. What the clients think of you and the way you handle it and their ease and comfort with your direction and guidance becomes increasingly more important. And it's beginning to resonate in the people that are reaching out to Dustin and to me to represent them in the marketplace.
0:16:37.2 Dustin Wilmer: Yeah, to touch on that too. I think going back, we would have done this for zero commission because the recommendation letter we got after that from the Miller family with the Point Dume Club logo has been more valuable than any commission you get paid on this. And just knowing that, you know, like, you changed their life. They retired, moved to spending more time with the grandkids, family members. It's just the quality of life is just, you know. I talked to Deborah the other day, she's like, I can't thank you enough. And I'm so happy. It's no stress, just bought a new home. It's just, it's so good to hear that kind of stuff.
0:17:14.7 Doug Danny: We had a pretty exciting closing dinner with them.
0:17:17.4 Dustin Wilmer: Yeah. No, just the relationship we built, it's... When it closed, I was almost more, I mean, I had to... Some post sale depression, even though it's a great experience. It's all downhill from here.
0:17:31.3 Doug Danny: It's called PTSD.
0:17:36.9 Dustin Wilmer: Post Point Dume Club depression. But no, it was an excellent process. And I still think it's just, you can't really... I just have guys call me, I'm like, so what did it sell for? I'm going to use it as a comp. I was like, can't use this really as a comp thing. It's just, we didn't put comps in there, you know, I mean, it's just, I don't think it's a... It's just a one of one. It's hard to put a comp on. I do use the cap rate when I talk to sellers and say, well, we went to, you know, x cap rate for this. I'm like, well, we didn't sell for this cap rate. I don't know if we can get you this for yours in a similarly rent control market. But it is helping with that.
0:18:15.3 Frank Rolfe: So guys, why did the Millers set aside this property out of 17,000 acres? Because this is some of their best property, it's oceanfront, right? Why did they make that into a mobile home park to begin with? Did they give you any insight?
0:18:32.3 Dustin Wilmer: I think he built it in 1969 to provide affordable housing options because Malibu is like all celebrities and high net worth. So he's trying to build something that provided affordable housing. I mean, they are, you know, they're very charitable. And when it closed, like the family donated to one of my family members as a young or a youth foundation, and they donated to that foundation. You know, like I said, they donated the land of Pepperdine. So I think it was just trying to provide affordable housing options. And then the city of Malibu comes in and puts this rent control ordinance in. That is almost like we're trying to... We still need to make some money. So, that's why I think they built it was to provide affordable housing in the most expensive place to live in in the nation, in my opinion.
0:19:23.9 Dustin Wilmer: So what's crazy to me is that, yeah, it's an annual CPI increase. It averaged out to be about 2.8% you could raise a year. But the tenants were allowed to, there's something that code that you could, the tenants could sublease it. So like the average rent, depending on when, there were people that still lived there, from when in the '70s and '80s, so they're around 2500, but the highest rent was around 6500. And that's a factor of anytime there's vacancy deed controller turnover, you can raise it 15%. So like, there's been homes that have sold maybe eight to 10 times, but the average rent is around three grand. But a tenant can sublease their home. If they're subleasing, you can charge an additional 15% of the site rent. But tenants are subleasing their home for like 12,515 grand, almost triple what the property owners are making. There's no laws or regulations on that.
0:20:17.2 Dustin Wilmer: It was almost a taking from the city in my opinion that limited the, even though we sold it for the highest price per site by far ever to sell for a park, the delta between the value of a park and the value of, let's just say you could... There would be a little bit more leniency on what if I did carpet complex here or a hotel. That delta was one of the biggest I've ever seen between current use and highest and best like over 800 million bucks.
0:20:47.8 Frank Rolfe: Yeah. And I won't try and pin you down on the price because I know you have NDAs and things, but I think the LA Times reported it was around $200 million just to give people a ballpark of value on it. And I guess in the ballpark of that price, that makes that one manufactured home community worth more than many office buildings, retail centers. The biggest office building in St. Louis, the AT&T Tower, '80s pink granite 1 million square foot building sold for 4 million on the courthouse steps recently. And I know there's been some major regional malls which are sold under 10 million. How have we entered a moment in which manufactured home communities are worth more than office, giant office buildings or retail centers? How did that ever happen? Because I know Doug, back in the '90s you would never have seen that coming because I sure didn't. Maybe you did.
0:21:41.1 Dustin Wilmer: That was actually something I wanted to talk about because as you're managing expectations for pricing with the sellers, because they, like I said there was guys are saying that's got to be worth 300 million, 500 million, whatever. And they showed that right here's... But the buyer that closed on it wasn't even the highest offer but they did care about legacy, the people that were going to take it over. We toured two of the new owner's parks with the family to show how they're make sure there's no trash around the park, make sure they're gonna keep it clean and uphold the standards they've been doing it so far. But to get to that price, I put together and did a whole Zoom call with the entire family with Point Dume Club trophy asset sale comparables throughout the whole nation. Showing, like you said, the Bank of America Tower sold for 150 million. Something more than that. These resort within Disneyland sold for like 140 or selling this for the number that LA Times reported. I did every like major area and showed like, Frederick Rindge would be happy with this price.
0:22:52.9 Dustin Wilmer: And I also showed that the total commercial real estate sales over the past five years showing how many sold over 150 million. And I think it was 0.005% of all commercial real estate sales are over that amount. And it was like point once you go to California in rent control markets was like.0007% of all sales are at this price. And like mobile home parks, and there was a big one in Florida that sold for over 300 something million but it was over a thousand sites and the price per site was half. There was one that sold for 400 grand a site or so, but that was redeveloped into a hotel. And this one was over 650 grand or something per site. I think that was something to consider for them. Seeing all that in the brochure, these just crazy beautiful landmark properties that sold for less than what they're getting.
0:23:56.0 Frank Rolfe: And guys, what do you see in the future? I know you do more than just landmark and trophy properties. You sell manufactured home communities all over the place. Some super nice such as this, others more geared towards affordable housing. What does this sale tell you as far as the future of all values? What's the future you think on values?
0:24:19.9 Doug Danny: I've been in the business for 45 years. I've been a park owner since '88. And what I'm seeing is that it used to be they would look at manufactured home community tenants and owners. You have to black out a few of your teeth, get a banjo, pair of bib overalls and maybe you could kind of fit in. And we had to use the gross tooth multiplier, figure out how much rent the tenants could pay. We had to base it on the number of teeth times what we thought the gross multiplying would be. Today, especially after the '90s which you and I can remember clearly, the only asset that held its value throughout that turn down created by that change in being able to write off passive loss against active income. Mobile home parks held their value. It held their value, it held their occupancy. And even during COVID with all the ridiculous non-eviction, the parks remain. They maintain their, most of them maintain their occupancy and the collections.
0:25:24.2 Dustin Wilmer: 90% plus collections overall.
0:25:26.2 Doug Danny: This was park-owned homes, so it's a different story. So what we're looking at is we have people migrating into this business that are very excited to get into the mobile home park business. And consequently, the demand exceeds the supply. And so what we're finding is that we're seeing one star listing on scale 1 5. We're looking at, you get down into a major market, a one-star community can sell around $60,000, $70,000, $80,000 $100,000 and have a line of people.
0:26:02.3 Dustin Wilmer: Yeah.
0:26:02.7 Doug Danny: As you get up in quality, you get into the two, you know, you're still at much lower cap and a higher cost per site. We're seeing properties even today with interest rates, let's say six and a half. We're seeing, we're trading deals in the five and six. We're having negative leverage transactions. And then you get three, three to five star, there once again becomes ego and narcissism drives the buyers because there's so few of them. And then the other thing we all know is try to build a mobile home park in California. Try to build in other states, Arizona, Texas. Some of the other states are a little more reasonable about creating real affordable housing. But some of the more, let's just say the blue states, for lack of a better designation.
0:26:55.2 Dustin Wilmer: They call them the politically unstable states.
0:26:59.6 Doug Danny: Yeah. They put you through an amazing process just to be able to determine whether or not you can build that park. Meanwhile, they're all over here talking about affordable housing. And I look at, we really do offer affordable housing despite our reputation as owners. You know, our residents, my residents are living in a three bedroom, two bath manufactured home in a gated community for $700. If they had to go rent an apartment or a house, they would certainly not be available.
0:27:30.3 Dustin Wilmer: I think we know, I mean everyone on this call I think knows that manufactured housing is the only true solution to the affordable housing crisis, in my opinion. It's all I put my money into. I invest with different clients and I think the municipalities know that too. But there's not enough tax dollars in it for them to make it so we can build more. I mean, we even had 15 acres of land at Bakersfield listed zoned for mobile home park usage, permitted for 137 sites to develop. Once we got into it, they said yeah, you know, talked to the city. Yeah, you can develop a park but we got to charge you, I think it was 11 to 14 grand per site impact fees. They had some tax credit, some credits and funding they could use. And if you build garden style apartments here, affordable styling apartments, we'll waive those fees.
0:28:17.8 Doug Danny: The real issue was, he was about to bring it up, is that what they finally confessed to to a buyer that wanted to buy it who owned the office building that housed the county folks. He knows all of them. They finally said, well, if you build a mobile home park, we don't get any affordable housing credits from the government. So I think there's a disconnect between, for affordable housing, between the governments, what they consider to be that merits those types of credits versus what they should be considering these affordable housing.
0:28:52.6 Dustin Wilmer: I think they still view them as, when you say mobile home park people, I mean, when I tell what I do, they have no idea what I do and just think I'm selling Eminem 8 Mile style trailer parks. But people don't get to these newer homes. You can't even tell half the time. I mean, we're just in the MHI conference. They had these beautiful homes outside in the courtyard and there's places where I feel comfortable with my mom living in this home. And they last just as long as single family homes are built to last now. It's not the same industry and I'm seeing, to Doug's point, more and more people wanting to shift into the manufactured housing space because they're seeing the office failing. Retail is getting tougher and tougher, apartments, lower cap rates and they're seeing what used to be just a hidden gem wanting to get into space. We talked to a ton of people that just, they're allocating money to get into our asset class with the right deal. But spending a quarter billion dollars on their first park was probably not best idea for them.
0:29:56.1 Dustin Wilmer: There's so many more people coming into the space that want to buy on a larger scale. So banks are even getting more comfortable for it. When I first started, it was like with park-owned homes, it would underrate benefit, no revenue for the home rent even if the home's been rented for 30 years, and it's just stable. They would just take that out when they do the site. Right now they're getting more and more comfortable in certain markets underwriting the home income. And I think as we move on, it's going to be more and more will be accepted I think hopefully soon.
0:30:33.3 Doug Danny: Stability, predictability, net cash flow, I know how it's worked out for a lot of the owners that we deal with. The fact is you have a resident but you're also the resident's the owner, they have owner mentality and they have collateral on the site. And we're just finding that in most cases, as long as you have a tenant-owned situation that there's very little default in rents. Occasionally, people have problems. You have to deal with it.
0:31:04.5 Doug Danny: And I think the predictability and durability of cash flow over the period of ownership is becoming another motivator. We show people that in the long haul you might open the door at a 5% or 6% return, but as time goes on, benefit of the parks if you've got realistic underwriting and you've got reserves for future capital improvements underwritten on a monthly basis. Modest rent increase usually become cash flow. They become NOI and don't get absorbed for vacancy turnover, having to remodel a unit to re-rent it. And that's the thing that we've seen is that the reliability and long term-benefit of the ownership as far as realizing the cash flow, long-term stable rate of return on that investment. Then ultimately, Dustin pointed out, lenders are starting to realize that gee, when you close the loan, the first thing that they would think as soon as they close the loan, the park is going to go vacant. Everyone's got to move out. This goes back a few years. Today in the mobile home parks, you look back at the '90s again, the number of foreclosures, they weren't in the mobile home market into 2008.
0:32:23.0 Doug Danny: Foreclosures were not in the mobile home park business. They were in other. Maybe the ones we saw on foreclosure we had septic issues. But what we're seeing is that ultimately, you're able to get a good stable cash flow that's reliable, it's going to escalate with modest rent increases. Then ultimately, you're able to, let's say, increase your debt level. You kind of get a mortgage over basis situation without losing the cash flow and be able to buy, be able to reinvest that into the mobile home park.
0:32:57.3 Frank Rolfe: Now guys, the office and the retail industry has obviously been hammered by the internet. So when you want to buy something today, I go on Amazon or I go on eBay, I don't go to the store. Many people now work remotely using Zoom and other technologies. But that had no impact that I've seen on mobile home parks. And some would say, well the kryptonite has to be rent control. But here you are selling point Dume at a big price in a state that has rent control.
0:33:23.4 Dustin Wilmer: I think you just need to... That comes down to the underwriting.
0:33:26.8 Frank Rolfe: Is there any big kryptonite out there for the industry and if so, what is it?
0:33:30.9 Dustin Wilmer: We're still going to have... Doug would probably be able to expand on this. But we're still in it's never going to change a product type that has increasing demand and shrinking supply, so you can underwrite it correctly with showing there's still return of future upside and there's still stuff in each rent control that you can overcome. The CPI increases like the vacancy deed control that's meaningful. Even point at15%, we were able to show 10 homes in the park sell per year. So 15% once you get up to certain rents, that's a pretty significant increase. There's some markets in California that just make it impossible to do business. It's really got to be like Oceanside, I think once a tenant moves out like CPI increases of 75% or something like that. And when a tenant moves out, gotta keep the rent exactly the same. It could be a half mile from the ocean and people are paying 500 bucks. Yeah. Santa Paul has an ordinance, same thing, 75% of CPI. I think it was 3.2% last year. When the tenant moves out upon turnover you can charge them a one time $25 administration fee but have to pay... How's 25 bucks gonna do?
0:34:40.9 Dustin Wilmer: And for owners like Doug that have been, and the owners, most of the deals we've done are mom and pop owner, the family built the park so they know everyone's name in the park. Doug, his rents were affordable, he's always just very fair with rent raises. I think we're what, 300 below the market in Bell Gardens and they passed a rent control ordinance that he can raise like 3% a year so he's... Jesus. So it's like people that have been ethical and very fair with rent increases are now, there's got to be some discussion like, if you're so far below the market, above the market, everyone in California would be okay if mobile home parks were subject to this AB 1482 that's more than 5% plus CPI I think 8% cap, everyone's fine with that. But then the mobile home parks get hit the hardest and they're not one-size-fits-all.
0:35:37.8 Doug Danny: Let me interject. The problem is in dealing with the smaller communities, for example, you said what could be a possible roadblock in our business and rent control is going to become an increasing concern. And what we look at is we try to collaborate but LA County, they've got their problems but it's workable. You get an annual bump and 10% turnover if there's a turnover in the unit, and they can abide by their own rent control. They will honor their agreement. The smaller communities, two or three recent turnovers are paramount, we're not sure yet. Bill Gardens cut and some of the smaller communities, the only people that they listen to are the activists. We go to the meetings. I got to know the people that are the city council, they only listen to the activists. They don't listen to the owners, in many cases listen to the tenants. And so they're creating a situation where we're getting more and more involved in trying to show them that in one case we're allowed a modest 3% increase if the rent, the tenant's rent is less than 80% of market rent.
0:36:46.6 Doug Danny: Getting them to understand that market rent is not the existing rent of the park, it's the rent that you created turnover, that's the market. And so, we have provided rent surveys, all sorts of information. It's been going on a year now. We're still trying to get them to understand that there's average rent, there's market rent. And eventually, I think we'll get to the point where they're honoring the 3% and then try and capex, to do any kind of capex, five year repay of some percentage. It's quite a process.
0:37:22.8 Dustin Wilmer: We'll see more guys in these rent control markets too, like being comfortable with certain percentage of park-owned homes because these ordinances apply to the site rent. So if you own the home, typically abide by that statewide rent control. But I see parks like the ones we have listed where the site rents 500, but people are renting out the homes for 2,600 bucks. To go rent an apartment, you're spending 3,500 bucks for 700 square feet. So that's a way that people are kind of put in more as, you know, 25%, 30% of the park is a horizontal apartment complex and increasing returns there. If you can rent out a home for 400% more than you can charge on site rent, people are okay with paying it and are signing a lease. And, I mean, what is the problem there?
0:38:15.4 Frank Rolfe: And Doug, you've owned a park since the '80s and you and Dustin both have a catbird seat on the industry because you see a lot of transactions. Where do you see the future of the industry going at this point? Will the product look the same 30 years from now? What do you think lot rents will be 30 years from now? Cap rates, what do you see? Are we going to be just the same as we are now, or will there be some changes in the decades ahead?
0:38:41.5 Doug Danny:I think as an owner, the stability of the asset is going to be consistent. The political intervention into the business is going to create concerns and create issues. But right now, the demand is what's intense. We have people coming in the parks, knocking on the tenants' doors, residents' doors, trying to see if they'll sell their home or, you know, is there a vacancy? Can I bring my home in?
0:39:16.7 Doug Danny: We haven't had it. And the problem is when you look at, let's say, multifamily versus manufactured housing, the turnover, and you've experienced this, the turnover in the communities, I'm lucky if I have 1, 2, 3 residents turnover every five years. They move in. I have tenants who've been with me 20, 25 years and they don't move. It's not a rapid turnover like apartments where you're able to catch up because of the turnover. We can't use that necessarily to continue to escalate the expense or escalate the revenue. Keep up with OG. We just did an inspection. We had the insurance. Every insurer, every major insurance company wants out of California.
0:40:12.3 Doug Danny: So now they're going through your mobile home park saying, I just got a report today. They go, there's no sign on the pedestrian gate. I'm trying to figure out, what sign would I put on the pedestrian gate? Like, warning, tenants are vicious animals. Do not enter. What am I supposed to put on the pedestrian gates? I got, I called my agent. You're supposed to advise me as to what sign do I put on there. Danger, gate opens outward? I mean, they're getting to this type of detail. And then they come back and they, you know, I'm sure that you guys have experienced it. We're looking at dramatic increases in the cost of insurance.
0:40:53.0 Dustin Wilmer: I don't see the demand going down at all. I think no matter what deal it is, though, you got to be cognizant of underwriting the property with current debt. You know what I mean? And getting accurate and several quotes because that's a big thing we learned on this product. As nice that it is as it is, anyone, I don't care if you have a billion dollars, they were going to leverage the property in some way and no one wants to be negative leverage. They got to make some sort of return. We do probably have a rare case where we're okay with kind of breaking even the first couple years, and then...
0:41:23.4 Doug Danny: I think good guidance from at our level with all the brokers being able to articulate features, the benefits, risks, the rewards, and be able to lay things out honestly and openly, so that somebody reads your spreadsheet, they look at your underwriting, and it's not phantom. You're not creating psychic income, and you're sharing with them, even like we did the close transaction, buyer's name was Leo. So I call him Pope Leo. And I said, how you doing? He goes, rent control. I said, sweetheart, we gave you the ordinance. We went through it in detail. We described everything to you. But even after getting all of that, agreeing, closing, and then you actually get in, you actually get into the situation and realize. He called me and said, I'm going to contact every owner in the city who owns a mobile home park. So I said, fine, good luck. So I sent him the name of every owner phone number so they can get together. But I said, I think we've had rent control in that community for 20, 30 years. I'm sure every owner is not the same. It's extremely, it's limiting and it requires a lot of time and effort to stay on top.
0:42:38.9 Dustin Wilmer: Yeah, I don't see the demand going anywhere but up. The only thing that scares me is the political interference, the unknowns. It's not a matter of if every area in California is going to have specific rent control or business, just when and what is it going to be.
0:42:53.0 Doug Danny: The other thing is, today I live in San Diego, and to, a low income tenant today is making $100,000 a year.
0:43:03.5 Dustin Wilmer: That's considered low income.
0:43:04.9 Doug Danny: That's considered low income. And so as housing prices continue to escalate, they're going to be looking at all of this in the industry. They're going to say, well, housing is a human right. You're a human being. You should be providing this at a reasonable resource. Reasonable, make it affordable, which we're already doing.
0:43:23.1 Doug Danny: But the other thing, we were talking to a couple of the other guys in the business. I said one thing that would be really nice if they wanted to offer it would be tax credits, some sort of incentive to park owners that we can help the tenants, help us too, give us something that we can be able to, like in my case, I've owned the parks 30, 40 years, had no appreciation. So maybe give me some tax credits or something and I can work with you and make it a, kind of a two-sided negotiation from the top where we're dealing with a concept that maybe there's some other benefits that we can get by trying to work together and be able to offer affordable housing that will address some of the issues that we're going to be looking forward into the future unless they come up with another way other than living in a tent up in the canyon, to provide housing for people.
0:44:24.1 Dustin Wilmer: That's where Doug used to live, in a tent in the canyon before he started. That's where I met him. I was also living there.
0:44:32.1 Doug Danny: I still do.
0:44:34.7 Dustin Wilmer: It's a beautiful area.
0:44:34.7 Doug Danny: I live in the river.
0:44:36.1 Dustin Wilmer: Yeah. I think, going through all this, my favorite story that Doug tells, I always had him tell the clients, one of the first parks he bought in the '90s at Compton. I know we're getting close to our time being up here, but I think he should tell that story where it was overrun by a gang. And I would love to have this on air, to be honest. I would love to hear, I think Frank would love to hear.
0:45:05.9 Doug Danny: I listed 28 site park for Farmers & Merchants Bank and they had lost control.
0:45:12.5 Dustin Wilmer: And what year was this?
0:45:13.9 Doug Danny: 1995. And so anyway, I went over and this is after we're in the '90s. And I went over and looked at it and there were 12 vacant homes. And we had, all the gang members were squatting in the home selling drugs and weapons and whatever. And it turned out that my on-site manager, two sons were the leader of the gang, 133rd Street locals. And so I went over and checked it out, and we've been in the low-income apartment business. I'm not afraid of that industry. And so I went over and of checked it out, and I talked to the guys at the bank and I said, guys, this is not going to sell for 200 grand or 250, whatever you have it listed for. They go, what would you pay for it? I said, I'll give you 90 grand for 28 spaces. All right.
0:46:05.1 Dustin Wilmer: In LA County.
0:46:06.6 Doug Danny: It was great scouting. I said, okay, we'll do it, but I want a two-month instrument I want to take control of. Management would say agreed to. So the first thing I did is I brought in the sheriff at both ends of the park. We came in, they arrested anyone in the park that had a warrant which cleared out about half the squatters. I had warrants that got arrested. And then the next week I came back. I set up three pullers to take the homes out because homes, I couldn't renovate them. But I went over on a Saturday morning at 9:00, figuring all of my squatter residents, we have a big night the night before, they'd be hangover. Maybe not Davis, and I had met with each one of the kids that were in the homes. And I said, hi, I'm Doug. I'm in the affordable housing industry and I don't know what business you're in, but I want to tell you out of courtesy and respect that I'm going to be pulling this home out of here on Monday. I said, so if you got anything of value, don't leave it in here. Just make sure you can get everything that you own out, because the home won't be here in the afternoon when you come back.
0:47:10.3 Doug Danny: And so we did the poll, took them all out, came in, we set up and started incubating the property a month later. This is the story of about a month later, I'm contacted by Earthquake and Junior, the two gang members, the two shot callers. They go, we want to have a meeting with you. I said, all right, I'll have a meeting with you. So we get together in that. We had a mobile home we were using as an office. We met with them and a couple of the other gang boys, gang guys. And I said, okay, so what can I do to help you guys? They said, well, we wanted to let you know we had a meeting. We were a little concerned about the fact that you displaced all of our members. And we wanted, we were trying to decide whether or not we're going to retaliate. I said, okay. I said, so what are we going to do? He goes, you showed courtesy and respect. You came over here personally. You addressed each guy on a one-on-one basis and we feel you did the right thing. Therefore, we're not going to retaliate.
0:48:14.3 Dustin Wilmer: But we could not be sitting here today.
0:48:16.4 Doug Danny: Well, what happened is, then we begin. It's amazing. You can get these little gang thugs that you take out of football. Say, can you catch a pass? And you start playing with them. Pretty soon they begin to develop a field like football. And the other thing would help me get work where I had to say, okay, you need a turtleneck, because whoever's going to hire isn't going to want to see all the tattoos on your neck. Of course, you have to put some makeup over the teardrops, and we'd go take them to TJ Maxx and get them a pair, get them an outfit so they could go in and get a job. And to this day, the two boys, one of them probably will be my next manager. And they, every now and then we get together and I have to do the tattoo and bullet hole inventory, knife wounds. But we get together. They're now in their 50s and they still remember. Remember, you helped Juanito and you did this, you did that, and being able to relate to the kids and the culture at that level made a huge difference.
0:49:29.5 Dustin Wilmer: What did it pay for recently?
0:49:31.4 Doug Danny: 3 million.
0:49:32.4 Dustin Wilmer: Bought it for 90k.
0:49:34.3 Frank Rolfe: That was a good buy.
0:49:35.6 Doug Danny: It was a good buy.
0:49:37.0 Dustin Wilmer: Point is like the way just Doug just told that story is, you know, the way that I know a lot of park owners run their parks with care and ethical standards. And then you get hit by the city for rent control ordinance, even though maybe it wasn't raising the rents, but now you barely raise them. And it's kind of not fair when you run it with such care and the empathy with these kind of tenants. I think we're not selling a 28 site park. We're not selling a 297 site park. It's 297 tenants. 28 tenants that are going through different things in their life, whether it's health issues or losses of the job. So it's not just, you know, if they can't pay, you kick them out right away. He knows every tenant's name, works with them.
0:50:26.9 Doug Danny: They all have my phone number.
0:50:28.1 Dustin Wilmer: They work through it, payment schedule. I think that's something we think about too, is you're dealing with 297 tenants, not just a 297 site park that's making 5% cash-on-cash return. We are in the affordable housing industry and that's something you got to think about too, because if you do stuff like that, like you said, there's in there 50 years later or whatever it is, or they're gonna be 50 years, stay there forever, don't move. Yeah, 30 years. But no, he's 50 years old now.
0:51:03.7 Frank Rolfe: Right.
0:51:04.2 Dustin Wilmer: I thought that was, I always think that's a really cool story.
0:51:06.9 Frank Rolfe: It is. It's a good thing. It's a great story for me.
0:51:09.7 Dustin Wilmer: For me, I'm very lucky to have met Doug. I started with my interview, I was bartending at the time. I've done residential. I hated it. Single dad. She's gonna be 13 in June. So I have full custody, working at nights. And I was... Everybody said, you just come in and interview for commercial real estate job. This guy needs a junior that I work with. And I was like, I always wanted to do commercial real estate. So I went in and met him. And I got in the Marcus & Millichap office and just like, oh God, everyone's suited and booted walking around like, I don't know if I'm gonna fit in here. Then I see a guy coming out of the bathroom with a Hawaiian shirt, guts hanging out a little bit, and it was Doug. We ended up talking for over an hour. You look like a guy from CSI talking about his drink. Now I call him and his wife grandma and grandpa.
0:51:57.1 Doug Danny: Yeah, I've gone from godfather to grandfather.
0:51:59.8 Dustin Wilmer: So emphasize that learning from a good mentor in this industry that does things the right way, treats clients right way has changed my life completely. So I want to emphasize that about my appreciation for him.
0:52:16.0 Frank Rolfe: That's a great story. Doug, I've heard nothing but great things about you for three decades now. So I know you are a top guy.
0:52:23.5 Dustin Wilmer: He's going to outlive us all, Frank.
0:52:26.0 Frank Rolfe: I wouldn't doubt that. But let me ask you one last question that's on everyone's minds. Obviously, interest rates have been a real shock because we all got accustomed to very low rates. And then Jerome Powell kind of went crazy back in Q1 of '22 and raised the fed funds rate by 5 points. And everyone has their own internal opinion on where rates are going. And I know, Doug, you were in business and I was in business back during the Reagan era where we saw rates go to 18%, I think is as high as they went. I was in the billboard business back then. I had no idea how I would survive that. I did somehow. But that's the last time I remember so much interest rate pressure uncertainty, because we haven't had any in so long. So just again, it's just an opinion. What are your thoughts on interest rates, guys, when do you see them going down or do you see them going down or what do you think?
0:53:22.3 Doug Danny: You gotta remember that in, that was in the 80s. '81, '82. I bought an 18 unit apartment building for the 2 year long came. And the gentleman that I bought it from, renowned owner in mobile home park business. He's now 87. I go visit him every opportunity I get. But the loan came due and I said, can you extend the loan? He just goes, no, you've got to pay it off. So to pay that, I can't remember how much. I bought the property for 180 grand. So maybe I owed him a hundred or something. I got the perfect vision on 20 points, 20%. So what I'm looking at with the rates is that we've been very fortunate. When you can refinance something at 3.5&, 4% long-term benefits for so many years, that's a whole different market changing environment. Today you're six and at least we've come down to 6.5. And we're finding that...
0:54:26.6 Dustin Wilmer: I'm finding that, the past few years I'm seeing if the park can qualify for agency debt. I'm seeing about 5.5, 5.8%. And then, your private banks that don't are the five year U.S. Treasury plus two to three points or whatever it is depending on if you have a long standing relationship by 6.5. But they're being more careful with it too. So in my opinion, I'll be 41 this June, this July. Everyone I've talked to, I'd be shocked if we see those high 2-4, even 4% rates again in my career. So I think everyone including myself are just hoping to kind of stabilize around 5%. But we'll see. Obviously, we're hopeful but I think if anyone's watching, waiting to get these 3% and 4% rates again, gonna have a long time to be advisable at that rate. We see a lot of seller financing in our industry. That's how we can escalate the price is know more seller financing deals happen in mobile home parks than in any other asset class. So, if we can get, once we do a seller finance deal, it's so much quicker. I would say, if I had to put a number on it, say hopefully 5%.
0:55:43.8 Doug Danny: Seller financing, and the other thing is a lot of the guys, you see a lot of people that have a tremendous amount of capital pay cash, get the benefit of with the cash purchase relatively fast, close certainty of the cash purchase, post the deal, stabilize it, then they'll refinance it and they'll recover however much of their capital they can. But you and I've been around long enough to remember when 6%, 7% and 8% were considered to be reasonable rates.
0:56:12.9 Frank Rolfe: Right.
0:56:13.8 Doug Danny: You know, the 3%, 4%, 5%, that's been more of a moment adjustment. But I would say that rates will have an impact, but I don't think it's going to slow down. But what we've got and primary reason I keep looking at this, when I started out in, gosh, it was in the 80s, I remember HCV, there were like 7,500 mobile home parks in California. I think today we're down somewhere in the 4s or 5s. I haven't checked but the parks are being purchased, closed and redeveloped. They're being repurposed and I just don't see a lot of new inventory coming in the market we've already discussed. So I came to think even you just have to work around what the rates are and think it can't. It may change values a little bit, but the demand for the asset class I think will continue to keep pricing stable, escalating, even though they're going to be low for the mid-term.
0:57:24.9 Dustin Wilmer: And that's also a factor of just the increase in demand, shrinking supply in California. So it's like, I think we'll be fine with the cap rates for selling things at because you don't have to worry about another park is going to be built right next to me. I'm going to lose tenants.
0:57:43.3 Doug Danny: What cap rate did you get in the red state that you recently sold?
0:57:48.6 Dustin Wilmer: Can you be more specific?
0:57:50.4 Doug Danny: Utah.
0:57:52.0 Dustin Wilmer: Well, that's still under contract, but It'll be about 5%, 5.5%.
0:57:59.5 Doug Danny: My folks are migrating. They tell me, well, I'm only buying in a red state. So they're looking at conservative states. So Washington is probably off the table. Oregon, we're not quite sure. California is definitely. I won't buy in California.
0:58:13.9 Dustin Wilmer: The Sovereign Fund of Dubai is one of the people we talked to for when they told us that they only buy in politically stable states and California is the most politically unstable state they see. It's almost like the Ukraine up here.
0:58:29.7 Doug Danny: So, we see this already. We see that people looking for conservative states. These are season pros, guys that own, let's see, a tremendous amount of California assets. And now they're slowly thinking about selling and they want to try to repurchase or trade into something in a state where they're not going to have to worry about rent control and all the other limiting factors. So we see this modest progression towards more and more control and stabilizing.
0:59:03.3 Dustin Wilmer: I think just knowing the reassessment of tax, property taxes in California too. I've done deals where they're running streamlined operations at 40% expense ratio. Then when you put in the tax reassessment for a new buyer goes up to 55% or something. What I'm doing now, it's 30% or 30 grand in taxes at the price that it was appraised at. And we're underwriting at the taxes go from 30 grand to $357,000.
0:59:33.7 Frank Rolfe: Wow.
0:59:34.8 Dustin Wilmer: So it's like, guys are seeing that, and they're like, all right, this is ridiculous.
0:59:40.6 Frank Rolfe: That's crazy that.
0:59:43.4 Dustin Wilmer: I mean, I'm not even get into it with Malibu. Went up to about 180s, but we're talking in the millions, right? And there's not really a way around it here. It's not like Florida, where you're allocating the goodwill and that's acceptable or intangible stuff like that. You can do a minimal amount if there's personal property or chattel or stuff like that, but it's not up to you. Maybe 20% they can get away with, but it's just, that's what hits you the hardest. Property, now they're talking about wanting to reassess the property every year to do new taxes. It's just, when's enough enough?
1:00:22.7 Frank Rolfe: Well, guys, we're out of time, but congratulations on closing one of the biggest sales in industry history, as well as probably the most famous mobile home park that will ever exist. So your names will be enshrined in fame as the guys who put that deal together. And it's a fascinating story of a family, kind of like the Yellowstone family that held onto their land forever, and it's a similar kind of Californian equivalent. So whole thing is amazing. But we also appreciate you being willing to come on here and help share your knowledge with people. I know, Doug, you probably have a better knowledge base than about anyone in the industry today. And then, Dustin, just from hanging around Doug.
1:01:03.8 Dustin Wilmer: Why are you gonna blow up his ego? I'm gonna have to deal with this for weeks to come.
1:01:13.2 Frank Rolfe: We really appreciate you guys being on here and helping people better understand the industry as it is, and then the future of the industry too, because it's obviously, a great industry. It does not get enough credit, it is not embraced enough, has a rich tapestry and history rarely mentioned, but we appreciate you being on here to share that with us.
1:01:32.8 Dustin Wilmer: We really appreciate you, and it's and honor.
1:01:36.5 Doug Danny: Everything that you have done over all the years in helping build the industry and educate the people that are coming into it. You've done a fabulous job.
1:01:43.7 Dustin Wilmer: If anyone's getting into the industry, check out Frank's sites. They were invaluable to me when I first started, even just learning the industry terminology, you know, first deal I listed, she said, I thought you've been doing this for 20 years, and you were very helpful. All the materials, you know.
1:02:00.8 Doug Danny: We found out when he drank the Kool Aid and he became very successful.
1:02:04.3 Dustin Wilmer: Very successful.
1:02:05.6 Frank Rolfe: Right. Sounds great. All right, guys, we're out of time again. Thanks very much for being here.
1:02:11.1 Doug Danny: All right, thank you.
1:02:12.1 Frank Rolfe: We'll talk to everyone again soon.
1:02:13.5 Doug Danny: Thank you, Frank. We'll see you.
1:02:14.9 Dustin Wilmer: Bye.
1:02:15.5 Frank Rolfe: All right.