The Future of Retail with Andy Weiner, President of Rockstep Capital (Ep. 108)

Dustin Sutton (00:01.014)
All right, welcome to another episode of tools, talents and techniques. And here he is, Mr. Anthony Wiener. He's the principal of Rockstepp Capital. without any further ado, here he is, Andy. Welcome to the show.

Andy Weiner (00:13.451)
Hey, excited to be here, Dustin, thanks.

Dustin Sutton (00:15.34)
Yeah, it's gonna be fun. And we spoke a little bit before and talked more about your company and what you do and how you do it. So I'm really excited to share with our audience all the details from a macro and the micro level. So would you please just take a moment to briefly introduce yourself and a little bit about what you do.

Andy Weiner (00:32.215)
Yeah, sure. So it's Andy Wiener, president of Rockstepp Capital. We're a real estate investment company based in Houston. I'm actually sitting in Houston right now. Been in business about 30 years, have built or acquired about 10 million square feet of shopping centers. We currently own shopping centers in 11 states, three different types, open air grocery, open air non-grocery. They're called power centers or neighborhood centers. And then we also buy enclosed malls.

Our geography is secondary tertiary markets. have a name for them. We call them hometowns. These are markets that have something driving population growth, whether it's a university or a military base or a Fortune 1000 company or tourism or growing hospital district. And then when we buy a shopping center, particularly an enclosed mall, we do something nobody else in the country does. We get local business leaders to be part of our equity.

which helps us reduce risk with all the city related issues. It helps us find debt and it actually helps us sell the property five or six years after we buy the property.

Dustin Sutton (01:42.616)
There's a lot that I want to talk about your origin story and all the principles behind Rockstepp Capital. But before we do so, there's something that I want to ask about retail and how you do it. Congratulations on 30 years. That's amazing in itself. It's crazy when you think about time and this industry we do. But just before we go into all the run up to where you are now.

Andy Weiner (01:46.167)
Sure.

Andy Weiner (01:56.951)
Thank you. Thank you.

Dustin Sutton (02:10.924)
What is your overall temperature as of today, which is in March of 2026? What's the temperature of retail in the United States, in the markets that you're in?

Andy Weiner (02:20.992)
First of think it's a great question. think a lot of your listeners would be concerned that retail is at risk because of the Amazon effect. The ability of Amazon to basically steal trips from going to stores. I will tell you that retail today is different than it was three or four years ago. And as a sector in commercial real estate, and there's really four big food groups, there's multifamily, there's industrial, there's office, and there's retail.

Retail was out of fashion until about three or four years ago, but today it's in fashion for two reasons. Number one, Amazon killed the weak retail players. Amazon Coven was the final knife in the heart. Killed the weak retail players, but those that survived against Amazon have their own e-commerce strategy and they're very effectively able to compete against Amazon and hold, if not grow market share against Amazon.

And these companies typically, almost all of them have very strong balance sheets. And Justin, they're telling Wall Street, know what, Wall Street, we're going to grow by TJ Maxx, 130 stores a year. Aldi, 225 stores a year. Five below, 150 stores a year. Burlington, 110 stores a year. Ross, 110, 100 stores a year.

and on and on and on. There's dozens of companies that have survived Amazon that are growing. And here's what's the interesting piece. The interesting piece is that there's no new shopping centers. None are being built. Construction costs went up by 40 % and there's no new inventory coming on market. So unlike multifamily where there's hundreds of thousands of new multifamily being built and lots of new industrial being built, there's no new shopping center.

So all these companies are expanding into an inventory that's not expanding. And as a result, it's favorable supply demand dynamics. If you own an existing shopping center, you have a lot of positive pressure to replace weaker tenants with tenants that will pay more rent and leverage to push rents higher. So you've got a lot of positive.

Andy Weiner (04:43.02)
you're in a positive situation. The wind is at your back. Second, you've got cashflow. So there's a term in the commercial real estate business called positive and negative leverage. Retail has got positive leverage. What that means is that the cap rate, the yield at which you buy a property, net operating income divided by price, that yield, that percentage is higher.

than the interest on the debt that you put in your property. We bought a grocery anchored center at a 9 % yield, 9 % cap rate, and our debt was at 7%. So by putting debt on the property, you increase the cash flowing to your equity. Okay? We're buying a property in a hometown right now that's going to be a 15 % cap rate, 15 % yield. And our debt today is at about 6.5%. And you have tremendous amount of cash flowing to equity. That's a...

It's a very cash rich yield sector. Now, the opposite has happened in multifamily. Multifamily was valued in Houston or Los Angeles or the big cities at four and a half or five cap, but your debt is at five and a half or six percent. So it's upside down. You add debt, you hurt the cash flow coming to your equity. That's called negative leverage. Negative leverage is bad.

Okay. Positive leverage is good. So in retail, you have favorable supply demand dynamics and you have yield. So investors who are looking at, know, where do they invest? Do they still invest in the stock market or do they invest in hard assets like real estate? If they like income, they're investing in shopping centers.

Dustin Sutton (06:32.238)
You know, it's one of the funny things because in this podcast, I interview people in lot of different areas, know, entrepreneurship and, you know, leadership coaching and all those things. every probably five times a year, I interview somebody that works in the industry that I work in, which is commercial real estate. So it's fun to hear you talk about some of these things and actually educate, you know, me and the guests on some of these things. So this will be educational.

episode in a lot of different ways. Sure. Sure.

Andy Weiner (07:04.037)
So let me add one other piece to the story about Amazon. Amazon is maturing. So Amazon grew at a very heavy pace, very rapid pace. And then at COVID, it spiked and then it's leveled off. It's not flat, but it's not rising at the same level. Why? Because the strong retailers that survived have their own e-commerce strategy.

whether it's TJ Maxx or Ross or Hobby Lobby or Target or Costco or Walmart, and they're pushing back against Amazon. So Amazon's still a force, but they're maturing as a force. Okay. And there is a group of 30, 50, 75 retailers that have figured out how to compete. And these companies want to grow. Now let's talk about why do you need stores? Okay.

And what's interesting is that if you're a pure play e-commerce retailer, you have no stores, just a website for the first part of your life as a company. Life is good. It's very inexpensive to get new customers, but you have a problem over time. The cost of acquiring customers grows higher and higher. You've to buy paid ads. You've got to buy.

Facebook ads, you've got to spend money to attract new customers to the point where the value of a new customer is often less than the cost of getting that customer. Now, stores are the lowest cost way of getting new customers and protecting your brand. So the perfect combination for a retailer is a great e-commerce strategy and delivery, whether it's

deliver from the stores or deliver from, distribution centers, a great app and a fleet of bricks and mortar stores. And here's something that's interesting. If a retailer opens up a store in a market where it's not located, it's e-commerce sales in that market actually rise. It doesn't go down because of the brand ability of that store and the ability to attract new customers at a low cost.

Andy Weiner (09:30.484)
into the ecosystem of that retailer.

Dustin Sutton (09:34.582)
The amount that you're in this ecosystem and that's retail, you mentioned the food groups and it's industrial office, then you can even break that down into like medical office and all those things. However, I think it's really interesting to talk about, and I love this, especially somebody who's really good at what they do, like this specific niche, and you are that in retail, but I think it's really interesting and be helpful for our audience to talk about how you originally

Andy Weiner (09:48.801)
Yes.

Dustin Sutton (10:03.193)
to this because your family wasn't in like retail real estate per se. you tell me in the audience a little bit about your origin story?

Andy Weiner (10:10.892)
Sure, yes. a long, long time ago in a land far from now, a long, long time ago, my grandfather started a clothing, he opened up a clothing store near downtown Houston and it ended, and this is in the 20s, 1920s, and it ended up becoming a chain of over 150 clothing stores. Okay. The stores were the size of a TJ Maxx and it was called our family name, Wiener Stores, Texas and Louisiana.

Dustin Sutton (10:16.974)
You

Andy Weiner (10:36.844)
And we sold family apparel, budget apparel. We also sell Nike and Levi's, but basically men's, women's kids shoes. And so I grew up in the business. I ran the operations of the company. I ran the stores. I ran real estate, HR, systems, logistics, and finance. So I learned about retail and how do you operate in retail? How do you think about retail? What's the role of the inventory? What's the different pricing strategies? High, low.

versus everyday low pricing, locational strategy, store metrics. In other words, investment in the new store. What is the return on the cost of a new store? I studied all that. Studied competitive environments. What's the role of Walmart? What is the off price? How did off price affect the clothing industry? All these kinds of things. I'm a student of that. And then I started my company in 1997 and started investing in

real estate shopping centers because I understood shopping centers. understood leasing. I understood location strategy. And then I've developed that business, this business over the last 30 plus years.

Dustin Sutton (11:49.424)
When you made that decision, because I'm sure you didn't just say one day, say, you know what, I know this, I'm going to buy one of those. Was there a specific opportunity that came up or did you say, you know, this is something that I want to do. I see how they're doing it. I can do it just as good. I'm going to do it. What was that initial opportunity?

Andy Weiner (12:05.965)
So the answer is it was circumstances. We did, our company did a chapter 29. Okay. You know what a chapter 29 is, Dustin? So we did two 11s, a chapter 11, two 11s and a seven. That's 29. Okay. That's a joke by the way. the way, I've only had one person ever figure that one out. was a, it was a bankruptcy attorney. figured that out. So we were competing against Walmart. Okay. And I, I did, I just did a video on this.

Dustin Sutton (12:14.543)
No, no.

Dustin Sutton (12:21.057)
Okay. I was gonna say I know it but it's great.

Dustin Sutton (12:29.359)
Of course.

Andy Weiner (12:36.021)
I've got a channel called the shopping center channel and I just did a very detailed video on the rise of Walmart and how it killed family businesses like ours. Okay. So if you go to the shopping center channel, you can see, we just released it about three weeks ago and it talks about how Walmart impacted retail companies like ours. We also made some mistakes, but Walmart is just for formidable.

So if anybody likes to learn a little bit about retail and the history of retail, we just released that video on Walmart. Two weeks ago, we released a video on the rise and the value and the strength of the off-price industry. And then we just released a video last week on the history of the department store industry. And we just shot a video this week on the role of youth sports tourism.

as a driving mechanism in the mall business in what are called hometowns. So I'm putting a plugin, Dustin, a little bit for our shopping center channel.

Dustin Sutton (13:36.239)
No, no, that's all good. And also on the show notes, I'll include the links to to you, your to Rockstep Capital to your show. I'll include it all. So no worries.

Andy Weiner (13:41.152)
Okay.

Great, great. So our goal, the way, Destin, is to be the country's leading educator for investing in shopping centers. So we want people who don't understand commercial real estate, who don't understand retail, who don't understand shopping centers to be able to be educated by going to our education center at rockstep.com. We've got over 200 articles on every aspect of shopping centers.

terminology like co-tenancy and exclusive provisions, everything. And then we also have about over 75 videos about every aspect of dealing with investing in real estate and investing in the shopping center sector.

Dustin Sutton (14:24.996)
I love it. So I don't want to jump too far ahead, but you know, this is just a conversation here, but I think this goes along with what the principles of Rockstep Capital are. And, you know, as far as you educating and you having things in place, I would love for you to walk us through that. Like what are those things with Rockstep Capital and the foundations and the pillars that you're built upon? Yes.

Andy Weiner (14:49.389)
Sure, Thank you for asking. So your listeners won't know this. Most likely they won't know this. But the word rock step, even though it's not in the dictionary, is a dance move. It's a dance step. And I like big band music. I like swing music. This is Frank Sinatra and Ella Fitzgerald and Sammy Davis Jr.

the 1950s, 1960s swing era. And when you dance, swing dance or ballroom dance, you generally, you rock step on count seven and eight when you switch directions. One, two, three, one, two, three, rock step. Or if you're taking lessons, sometimes your teacher will use the word rock step, sometimes they'll use the word ball pivot change. Okay. So if you've ever done couples dancing,

whether any type of you probably are rockstepping. So we use it as a metaphor to be responsive, to be agile, be nimble, to listen to the music in the industry. And then Justin, if we've got a problem, we use it as a verb. Justin, we got a problem, we need to rockstep. Or hey, Justin, there's a great opportunity, let's rockstep. And so we use it as a verb. Everybody in our company, we have about 100 employees, we're

vertically integrated, which means that we do everything in house, leasing, property management, construction, everything is in house. But everybody at the company knows what that word means and they use it all the time. Hey guys, we've got a rock step here. Okay. Say no. In addition, I wrote 26 very detailed rules of behavior for everybody in our company and they're required to follow all 26 rules.

I, and I wrote every word and every sentence of each of these 26 rules. And we call these rules, you know, the answer, we call them rock steps. Okay. And we've had this ritual. have a ritual that every week we have a rock step of the week, 10 o'clock Monday, 10 o'clock central. Everybody gets on a zoom call a hundred, every hundred people in the company and the company from all over the country. And we talk about the rock step of the week.

Andy Weiner (17:11.637)
And we've done this for 10 years. Twice a year, we go through all 26 Rock Steps. So this week, we are on Rock Step 12, which is be process driven. And I'm going to read it to you. Look to create processes for every aspect of your work and then turn those processes into habits to achieve consistent results. Review our processes regularly to identify opportunities to improve.

by eliminating wasted steps, time and effort. And so somebody wrote an essay on that about what does it mean to them. And then they call on three people at random, Justin, what does it mean to you to be process driven? So everybody's on their edge thinking, okay, now I got to think about this rock step. What if they call me? Okay. And so we do this every week, 52 weeks a year, twice a year we rotate. And if

You are going to come and interview at Rockstep, Justin. You're going to have to go to rockstep.com. You're going to have to look at the Rockstep way online and you're going to have to go study these 26 Rocksteps and tell whoever's interviewing you, what are your favorite three and why, and what are your most challenging three and why. And that's the first part of your interview. So I'll tell you my favorite three and why. And my most challenging three. So Rockstep number one, do the right thing always.

the core of our business, we're in the investment business and the investment business has ambiguity at times. And so you've got to think through how do you handle this if it's a gray area? Number a second fit, not second favorite. One of my three favorites is number Rockstep number two, keep family first at Rockstep. We believe that you take care of your health first. You take care of your family first, and then you take care of Rockstep. Okay. And then another one of my favorites is Rockstep number five, be punctual.

On time is five minutes early. And if you're on time, you're late. It's about courtesy. It's about paying your bills on time. It's about productivity by everybody being ready to lean in on time. Most challenging rock set number six, be responsive. I have trouble keeping up with all of the inbound emails in particular. I just can't keep up. It's a problem. I'm working at it. Rock set number nine, listen generously.

Andy Weiner (19:35.001)
Keyword is generously. It is not a strength of mine, Justin. My wife would tell you and your listeners that she would, yeah. Dustin, I'm sorry, I'm sorry. You're right, it is Dustin. I called you Justin, my God. Dustin, excuse me. Okay, so that's Rock Step 27. Apologize when you make a mistake. So, so that's it. Listen, I guess I wasn't listening earlier. So I,

Dustin Sutton (19:42.64)
Well, yeah, but it's Dustin, not Justin. That's all right. Oh, yeah. I hope I'm right with that.

Dustin Sutton (19:53.879)
Hahaha!

Andy Weiner (20:02.254)
I'm impatient, I sometimes interrupt, it's a bad habit. My wife would confirm that I have issues here. It's definitely a challenge. And then Rockstep 26, keep things fun. My wife, Dustin says, I take the fun out of fun. Okay? So I'm very serious. I just want to let you know I'm happy on the inside. My wife is giddy on the outside. She's kind of a nervous wreck on the inside. So we balance each other out. So these are required at Rockstep by, to everybody at Rockstep,

Dustin Sutton (20:17.092)
You

Andy Weiner (20:32.152)
has to live by these, don't expect perfection. In order to build trust, resolve conflict, build a great team, we've got people at Rockstepp from Blackstone companies, from Brookfield, from CBL, from companies that are some of the major REITs, the public real estate companies. And one of the reasons I believe that they come here is because we really try. We try to live by this. I'm passionate about it. To the mat.

Number one, there's no number two, tiers, everything with the rock steps. We're required to live by these rock steps with our investors, tenants, our communities, our professionals, our lenders, and we can be held accountable.

Dustin Sutton (21:15.738)
That's great. That holistic view of the person and how they interact with everybody that they come into contact with is amazing. And the fact that you're so consistent with it, that it's part of the process, which is one of the rock steps, as part of the process is to live this and that you do it every week. I just think that's so special, especially because a lot of people have core values or pillars of their company. And that's great.

but unless you're actually living them and have them as your measuring stick for your behaviors and your actions, then they're not really your values. They're just decorations. They're words on the wall, you know?

Andy Weiner (21:55.391)
Well, then, well, I would differentiate between values and behaviors. Behaviors are things that you either yes or no values oftentimes are fuzzy. Okay. So it's yes or no. one, rock step 23. Don't be a jerk. Okay. Either have jerks in your company or you don't have jerks in your company. Yes or no. If you're a jerk, you're out. Okay. Yes or no. Okay.

Dustin Sutton (22:02.609)
Hmm.

Andy Weiner (22:25.002)
Speak straight. It's another one of our rock steps. You're required to speak straight. speak straight for the benefit of an issue, not to be a son of a bitch. Okay. But you're required to do that. That is a behavior. Okay. So it's different than values. It's really about how do you treat people and how do you behave to people in order to build a really high performance team.

Dustin Sutton (22:53.829)
When it comes to your, cause you have a hundred people in your, or about a hundred people in your company and the leadership roles that people are in. Walk me through if there is any differentiation between, like these, these rock steps and the things that you put in place for them and accountability. think, let me, let me.

Andy Weiner (22:55.15)
Yeah.

Andy Weiner (23:16.43)
Yeah, let me walk you through our business operating system. Okay, so there's a difference between the rock steps, which are the behaviors. And then how do you run an operative business? Are you familiar with EOS?

Dustin Sutton (23:22.373)
Yeah, please.

Dustin Sutton (23:27.217)
Mm-hmm.

Dustin Sutton (23:33.489)
Uhhhh

Andy Weiner (23:35.032)
Okay, so EOS is called the Entrepreneurial Operating System, and we operate on EOS. It's run, about 40,000 companies around the world use EOS as a way, as their operating strategy. So what that means is our leadership team meets offsite four times a year to set quarterly goals for the company and quarterly goals for each member of the team. And then each

quarter, every team in the company, all the way down to all hundred people, they set quarterly goals. You call them rocks. What are the five to seven things that each team and each individual can do over the next 90 days that can have the biggest impact on the company and the biggest impact on the team? And then, so you set these rocks and then every week during that quarter,

you have a very structured way of dealing with a meeting called an L10, a level 10 meeting. It's a 90 minute meeting where you look at your weekly scorecard, you look at headlines, you look at your to-do list and you look at your rocks. Am I on track for hitting that quarterly rock or am I off track? And then if you're off track, you move it to an issue.

and you look at the issues for your team in a systematic way every week where you say, okay, there's 10 issues our team has. What are the three most important issues that affect this team? And you rank them one, two, three, and then you go to issue number one, you spend 60 minutes. What is the issue? What is the root of this issue? Let's talk about it. You discuss it on your team and then you try to get consensus. And if you can't get consensus and the leader of the team will make a decision, you solve that issue, you go to number two.

Every single person in the company every week is working on the most important things for that person and the company and has accountability every week to deal with how am I doing on achieving that rock? If there's a roadblock, am I trying to resolve issues? And you're resolving the most important issues for your team. And you're measuring this and everybody in the company is doing this. You create traction and you create growth.

Andy Weiner (26:00.43)
And so that is our business operating system that we've been using for three years. And I would recommend it to every team under 500 employees. It's very powerful.

Dustin Sutton (26:13.252)
When did you start to implement this? there... Okay.

Andy Weiner (26:15.503)
Three years ago, three years ago. Yeah. And it's very, very powerful. So all of our teams have an L10 every week. We have a scorecard. We measure what are the most, the 15 most important things that your team should measure to figure out if they're on track or off track. You're the pulse for the week. And then you identify your issues for your team. What are the most important issues?

And then you solve those issues systematically, boom, boom, boom, boom, boom, week in your L10. And it's called an L10 because you rank at the end of the meeting, you rank the meeting. How did we do? Did everybody lean in? Did everybody really give it their all to try to solve the issues? And the goal is to rank it a 10. You don't want to be ranked at two, a terrible meeting. You want to rank a nine or 10.

And if you're running your company correctly and your team correctly and everybody on that team is leaning in, you can have a ranking of a nine or 10 and you can move your company towards growth and towards traction.

Dustin Sutton (27:23.282)
amazing. As far as leadership is concerned, specific with those leaders, how do you look at measurement of the leadership? Is it all something that's done continuously, or do you take all these things into account later on and add them up in a typical annual review?

Andy Weiner (27:50.426)
You know, what's very interesting. Yeah, it's, you know, we don't have the formal review structure that some other companies have. I would say we're, we're continually reviewing and you know, it's not like we're thinking, okay, towards the end of the year, you know, now what should we do with this or that person? Because we're hopefully living by the rock steps.

Dustin Sutton (27:50.674)
Okay, because it just sounds like there's a lot of process here and a lot of thought behind this.

Andy Weiner (28:20.161)
Okay. And if there's an issue, know, Dustin, I got to speak straight with you. There's two areas that I'm concerned about. You have the obligation to speak straight and not wait till the end of the year to speak straight. Okay. And by speaking straight and by living the rock steps and it pushes everybody forward, forward, forward, unless they're out.

Dustin Sutton (28:49.276)
Yeah. Yeah, that makes sense. That makes a lot of sense. So let me ask you this about the Rockstep. with 100 people, I'm sure, and you mentioned every time somebody needs to pivot or you need to do something different, you say, hey, we need a Rockstep. How often do you think that happens? And I know it's going to vary by role. some people need to Rockstep more than others. But in general, how often does that happen, say, per week, per month, whatever? Yeah.

Andy Weiner (29:13.965)
A lot, a lot, because if everybody leans in and hopefully, first of all, everybody at Rockstep should be really good at what they do. Okay. And they should, so to come to Rockstep, you got to be really good at what you do. hope that's our goal to stay at Rockstep. got to live by the Rocksteps. Okay. So if everybody is leaning in and pushing themselves and trying to resolve the most important

important problems on a regular basis, things kind of work out. And if you're not leaning in and you're not kind of following the rock steps, it kind of shows.

Dustin Sutton (29:50.471)
Yeah.

Dustin Sutton (29:58.739)
Yeah, you find out right during the process when it's happening. That makes sense. I want to ask you, this is more of a technical, well, not too technical. As far as the relationships with the brokerage community and the major retailers, what does that relationship look like with your firm? Because I'm sure you're tracking everything and what's going on in the market. Do you have a

Andy Weiner (30:27.184)
Yeah, I would say, I would say that we've got great relationships with retailers and with brokers. Okay. So retailers are our lifeblood. They are the ones who lease in our store and in our shopping centers. And because my background is retail, I certainly understand how retail thinks.

Dustin Sutton (30:28.058)
Contact with those folks.

Andy Weiner (30:57.072)
Okay. So today I had lunch with the head of real estate for a, you know, $10 billion retailer. Okay. So I know, I know how they think and our team, our leasing people are really seasoned. They've been doing this for a long time. They follow the rock steps. They're good, really good negotiators. They're good professionals. They're good people. And the goal is to build.

really strong relationships. And, you know, it doesn't mean always giving in, but it means negotiating so that there's mutual benefit so that we can get a tenant at the right type of return and a store can get an opportunity at a rent structure where they can be profitable.

Dustin Sutton (31:50.996)
How, when it comes to these relationships with these retailers, it's because sometimes it doesn't work out. They'll go under the chapter 11, those things happen. Have there been any moments that you don't have to use specific names of those firms or anything? how is that, especially as you're developing these relationships and something goes wrong, but there's a lease and there's all these things, how do you normally handle those types of situations?

Andy Weiner (32:20.826)
You mean like when a tenant goes bankrupt, for example?

Dustin Sutton (32:23.633)
Yeah, or goes dark or dealing with struggles through COVID or whatever it may be.

Andy Weiner (32:28.179)
Look, COVID is a different, COVID is a once in a lifetime thing. We had 550 tenants that stopped paying rent. Okay. And some of them could pay rent, but some of them couldn't, but they all stopped. Okay. And so we had to renegotiate 550 leases in a period of 30 to 45 days, which is, we normally negotiate 10 to 20 leases a month. Okay. This was all.

there. So look, you want to

We've got great relationships with these tenants. We want them to be profitable, but we also have to have a return on our investment of space and of real estate capital. And so it's a balancing act. And I think our people are really good. We understand retail.

Dustin Sutton (33:21.83)
Yeah, that's one of the things that jumps out. I think I'm asking some of these questions because you understand. And I'd imagine a lot of people enjoy working with you and the thoughtfulness of you and your team. And how do we do this together and how do we work through these things? So that's a really cool thing. And I really think just retail in general and how the complexity

of certain things, and especially in my experience and working with different asset classes, retail is a special beast. And there's so many different things involved. And for me, retail center, and I'm sure you can dissect it even further, but they're like little cities. They're like little towns, and there's so many different things that go on and happen. And you have to be the mayor and the sheriff and all these things in this little town.

Andy Weiner (34:15.984)
You know, once you've been doing it long enough, you can get comfortable that you can manage all the issues associated with it. And we have seen everything. Okay. So we love retail. It's not perfect. There's advantages of multifamily. There's advantage of office. There's advantage of industrial. There's advantage of retail. Retail is in favor today for the reasons I mentioned.

There's not enough new shopping centers and all these stores want to expand and you can buy them at a price that allows it when you put debt on it. You are able to have really good cash flow to your investors. So it's the yield sector. And, you know, we're in a, in a very challenging time, let's just say it. And so many people who've got money in the stock market are trying to figure out.

do they do alternative investments? know, whether it's oil and gas or whether it's real estate, we're real estate. And then I recommend that at least part of somebody's investments and usually as people, as family offices get wealthier and wealthier, that percentage goes up, but generally it's 10 to 15 % in real estate. But as...

Families want to build and protect wealth. They'll often go to 20 and 30 percent real estate and some higher. But at least you consider it. And there's advantages to it. There's great tax advantages. There are some disadvantages to it. Real estate is not liquid. That's one of the big disadvantages of real estate. So people who want to invest in real estate need to get comfortable with a lack of liquidity.

And the way we think about the lack of liquidity is that investors should expect a liquidity premium for a lack of liquidity or a liquidity premium for having their money be a liquid. And so on average, the stock market's done 10 % over the last 10 years per year. The projections from Goldman Sachs over the next five years is about four to 6 % a year. So most commercial real estate

Dustin Sutton (36:17.14)
Hmm.

Andy Weiner (36:33.329)
investments offer from 8 to 20 % return a year. We have a fund is called Hometown America. We target 15 to 18 % a year, but which is a premium over where the market should be. But to get that premium, the trade off is lack of liquidity. So if people need their funds and need liquidity, they shouldn't invest at least in private equity real estate, which is what we do.

If they want real estate, they should invest with the REIT. And there's great REITs out there. There's Kimco REIT. I like those guys. There's Simon REIT. So there are public ways for people to play in the shopping center sector with some really good options.

Now, one disadvantage of the public sector of buying a stock is that you don't get the tax advantages of real estate. tax real estate gives you great depreciation and you can't get that if you buy a REIT stock. So that's kind of the disadvantage. Advantage of liquidity, disadvantage is no tax benefit.

Dustin Sutton (37:41.296)
You mentioned the markets that you look at and like what are the things that you look for and you know, mentioned government, you mentioned schools and all those things. Can you walk us through like how you look at that and you're doing the research and what those numbers that jump out to you that makes them specially attractive?

Andy Weiner (37:41.841)
Yeah.

Andy Weiner (37:59.462)
Yeah, so we've identified about 100 hometowns in the United States, 125 markets that are under a million, more than 100,000 that have this low cost of living, great quality of life, low crime, engaged civic community, but it's got some essential driver, like I mentioned, it's that university or a military base, the country's remilitarizing. So I mean, that's obviously a factor of growth, tourism.

hospital districts that are growing, Fortune 1000 companies, things that drive growth. And what we're seeing is that the major metros, the cost of living has gotten higher and higher and it's gotten more out of reach for many families. And you're seeing families move into what we call hometowns that have a great quality of life and they can get two to three times the size of a home for less than what it would be in a big city, okay?

And you're seeing that and there's certain markets that are attracting those folks and those are the markets that we like to invest in.

Dustin Sutton (39:08.808)
When you get all your research, is there, I'm sure you have a research team. How does that work out? Like where you're pulling the data from and where you're getting it all from?

Andy Weiner (39:18.287)
Well, first of all, we study the markets. study, we get feedback on how every retailer does in every shopping center in the United States. So we look for traffic trends in certain markets, in shopping centers. We study population growth. we look at universities above 10,000 people. We look at proximity to a military base or a government research facility.

or a military munitions plant. mean, this is where the growth is for the next three to five years, just given the way we are in the world. And we study all that, and then we create lists and we look for opportunities in these markets that can provide us that 15 % plus or minus annual return where

Our goal is to basically double our investor fund money in five to six years with very good tax advantages. And so we look, that's our geography. And we look at dozens and dozens and dozens and dozens and dozens of opportunities to try to buy that one or two, um, you know, and really not overpay. You know, you don't, there's a lot of money chasing retail right now. Retail is the sexy sector. Now I will talk about sex for a second.

Dustin Sutton (40:37.973)
Yeah, of course. Yeah.

Andy Weiner (40:45.277)
we do not like sex at Rockstep. Okay. And I'll, I'll say it a different way. We don't like sexy properties. We like boring properties. Yeah. So, okay. I gotta be careful. I gotta be careful. Okay. No comment personally here, but, but we like boring properties that produces cash. We call it boring cashflow. That's what we like. It's not the gallery in Houston or King of Prussia.

Dustin Sutton (40:56.223)
Gotcha. That makes more sense.

Andy Weiner (41:14.179)
in Philadelphia or these beautiful, fancy lifestyle centers, all that kind of stuff. We like boring cash. That's it.

Dustin Sutton (41:23.957)
All right. right. So when before we got a few more minutes left here and I want to ask you some more high level high level questions. Really, as far as the company itself is concerned, number one, how many deals is like your goal for the year versus how many are you looking for?

Andy Weiner (41:44.731)
Sure. I would say our goal is to buy two to three shopping centers a year. That's our goal.

Dustin Sutton (41:52.191)
So you're looking through a lot of different deals to find those.

Andy Weiner (41:54.961)
We look at a couple hundred a year.

Dustin Sutton (41:58.198)
Yeah, to find those very few. And what's the overall goal for the company? Where do you want to be in five years, 10 years?

Andy Weiner (42:00.017)
Hmm.

Andy Weiner (42:06.713)
Yeah, so we have shifted our business model to become a fund driven company. We grew up as a deal by deal syndicated investment growth company. And we now are shifting to a fund, diversified fund driven company, five to seven properties, Hometown America is the name of the fund. And our goal is to grow with fund one, fund two, fund three, fund four.

continually starting a new fund every two years and have the dry powder to be able to get the best deals because you have to have a fund in order to convince the seller, particularly distress sellers, that you can close. And so to get the best deals, you have to have committed capital. And the investor gets the advantage of getting institutional type of real estate with diversification in terms of

product type and diversification in terms of geography.

Dustin Sutton (43:10.569)
You know, it's funny, what's one of the things that when the tool sounds and techniques, I ask about tools and then he's like, softwares that you use or any things that, that jump out to you that are like, Hey, these, these make a big difference to the way we do our business. there any that stand out for what you currently do?

Andy Weiner (43:26.085)
Look, we use real estate leading software. Our CRM, we use HubSpot. And so, you know, we want to make sure that we can track our conversations and track communications so that we're efficient. you know, improving that efficiency and improving our level of communication is one of our goals.

Dustin Sutton (43:44.533)
Mm.

Dustin Sutton (43:51.957)
Yeah. Another question I have for you because we got a couple minutes left here, but are we good? Okay.

Andy Weiner (43:56.285)
We're good, we're good, we're good. we need to go, if we need to go a few minutes extra, no problem.

Dustin Sutton (44:01.462)
Okay, cool. Cool. I just want to be respectful of your time. So when it comes to like, all the things 30 years, there's been a lot of things that happened over that you mentioned COVID. I mean, we 9-11 we got, you know, there's so many things and you know, 2008, you know, what are were some of the harder challenges that you faced?

whether it's personally as a company, and I'm sure a lot of this is intertwined, what were some of the harder times or the things that had an impact on you and how you make decisions or where you had the rock step?

Andy Weiner (44:36.274)
Sure. Yeah, I will tell you, think the biggest, one of the biggest challenges was a great financial crash of 2008, GFC. And what happened there was we were growing by building to suit, build a suit, tractor supplies in small town America. And in 2008, the GFC came and we decided that we had to learn how to raise equity from

family and friends investor and family office investors. And I never raised equity before. And we came up with a model in 2010 that we've replicated and we did it started in Vicksburg, Mississippi, where we got local business leaders in Vicksburg to be part of the equity for two assets we bought in Vicksburg, Mississippi. And then we got River Hills Bank, a local community bank to be our lender. And we liked the fact that local

input, whether it's from the lender or local business leaders, can help reduce risk and improve returns in an asset. And we have replicated that model everywhere around the country when we buy in closed malls. We currently own 14 enclosed malls and are actively buying more. That was by far the hardest challenge was learning how to raise equity. Well, I'm an operator. I'm a shopping center guy.

Dustin Sutton (45:59.616)
Yeah.

Andy Weiner (46:02.802)
And so asking people to invest with me is a skill set that I had to learn. It was very hard.

Dustin Sutton (46:11.517)
Yeah, well, it's great. Some of those things that you come up with challenges, you come up to challenges and you have to rock step and get through them or get over them. You got to do it. Yeah, man. have to be at a low. So with a lot of things that when you have these obstacles, these challenges and you do these things, is it communicated?

Andy Weiner (46:18.642)
Yeah, you're using the language already. You're a convert, Dustin. OK, you're a

I like

Dustin Sutton (46:42.057)
through the company, just with the Rockstep, just open communication, like, this what we're dealing with, this is how we do it.

Andy Weiner (46:47.698)
Well, so one of the, one of the rock steps, and I really believe it is be transparent. Okay. And that is, let me tell you the number here. It is number 16 with appropriate respect for confidentiality, share information freely throughout the organization. So one of the things we do as a result of EOS, we have a state of the company every quarter. We're going to do it Monday where I share how the company did on its rocks, how the leadership team did on his quarterly goals.

I share the profit and loss for the previous quarter with everybody in the company. I share our yearly goals, our three year goals and our 10 year goals with everybody in the company. So we believe in being transparent. if, yeah, and if there's problems, we share them and life is not perfect and life is not easy.

Dustin Sutton (47:33.664)
that's amazing.

Dustin Sutton (47:39.156)
Yeah.

Yeah, that's amazing. listen, before we take off and again, thank you for being so generous with your time. Is there anything you want to share with our audience? Any mottos that you live by? know that there's rock steps. You got a lot of them. You just said how many you have of them. But like, there is there anything you want to leave the audience with? And of course, where they can find you and all the

Andy Weiner (47:46.79)
Of course, of course, course, Destin.

Andy Weiner (48:04.338)
Sure, sure. guess that what I want to share the audience with is that real estate is a place where people should think about. is real estate investing. And there's great companies in shot. If you go on our website and look at some of the stories, I recommend five shopping center investment companies, not Rockstepp, that are great companies to invest in. I have five in multifamily, five in office, and five in.

and industrial and that you should think about part of your wealth in commercial real estate. And then if you like shopping centers, you owe it to yourself to learn what are the different terms, what are the different sides? We have 200 articles, we have retailing 101, we have shopping centers 101, we have Rockstep 101 and all these different articles. Take the time to understand

commercial real estate, understand the shopping center sector, go to our education center at rockstep.com and learn. It's just, we're in a very turbulent world and I believe we're in an inflationary world because of tariffs, prices are going up and in inflationary world, hard assets are a good place to be for part of somebody's wealth.

That's it. Yeah, of course. Hey, it is a pleasure. Thanks, Jess.

Dustin Sutton (49:32.529)
Andy Weiner, thank you very much. That was great. I really appreciate it.