#345 - Chuck Anderson - Co-Founder @ Bandera Ventures

Chris Powers: Chuck, thanks for joining me today. 

Chuck Anderson: Thanks for having me. 

Chris Powers: Let's start back in Nebraska. I've never met anybody from there. What was it like growing up there? 

Chuck Anderson: Well, I'm from a small town. I tell people that if you look at the map of the United States and find the absolute middle of nowhere, I'm 50 miles Northwest of there.

We're four hours from Omaha and four hours from Denver. It's a small town with 24,000 people; Union Pacific Railroad is the biggest employer. My dad and grandfather owned an Anheuser Busch Beard or Anheuser Busch distributorship there, so we ended up there.

I didn't know anything other than when I played basketball in college during my first year at Nebraska and transferred to SMU. And I called home in the middle of October, and my mom said it was snowing. And I looked down; I got flip-flop shorts and a t-shirt, and I was going to the SMU pool that afternoon.

I thought, Hmm, I'm never going to live there again. And I never did because it's just wild up there. 

Chris Powers: So they served beer, even in a small town in nowhere. 

Chuck Anderson: Oh, yeah. A lot of it. My dad's territory was about 100 square miles, but only about 50,000 people were in that 100 square, 100 square miles.

So, they drove a long way to deliver four cases of beer. For example, they might drive 40 or 50 miles round trip because the people in a small town needed their beer. 

Chris Powers: And then you went to Nebraska. Why'd you go to SMU? 

Chuck Anderson: So I went to the University of Nebraska because I was from Nebraska and had a lot of success in high school basketball there.

The coach who recruited me at Nebraska became a very close friend of mine. He was ten years older than me, and he took a job at SMU and said, why don't you drive down in the U-Haul with me and help me move down there? So I did. And the whole way down there, he goes, Oh, you got to think about going to SMU.

I asked what it stood for. Where is it? I mean, Dallas, Texas. I mean, I've never been there. I got down there and looked at the school. It was gorgeous. I just decided to on a whim. It was in July when school would start; probably 45 days later, I decided to transfer, and the rest is history.

I last lived in Dallas in the last 40 years. Or was that 42 years? 

Chris Powers: What position did you play?

Chuck Anderson: Big guard, small forward. 

Chris Powers: Is that position still available today? 

Chuck Anderson: Kind of, I guess. I'd be a point guard if I could handle the ball better if it were in today.

Chris Powers: Okay. When most people think of sales, they would think of it in business, but you sent a note and said the best sales job you ever did was during spring break in college. Tell me about that.

Chuck Anderson: Yeah. Again, I say it all the time because it's true. I met my wife and Penrod on the beach.

And she was there; she was in school in Boston at a small girls' school called LaSalle. I was at SMU; we thought we would get into the NIT that year. We didn't. So at the last minute of eternity, brother mine invited me to go to Fort Lauderdale, and she was dancing with some guy and Penrod's, And I was pretty cocky back then.

I approached her, looked at him, and said, Hey, you should be dancing with me, not him. And she went, wow. So anyway, we saw each other every night after that. She came to my fraternity formal in the spring, and I went out there. I was supposed to stay three days at her home in Virginia Beach, Virginia, but I waited two weeks and convinced her that she needed to transfer to SMU.

And her mom was okay with that because she wanted to transfer to the University of Miami. She thought SMU sounded much better than the University of Miami, so that's what closed the deal. But, yeah, we've been married 39 years in September. We've been dating since St. Patrick's Day in 1982. So that was the best sales job ever. It was a good one and paid dividends all the way along. 

Chris Powers: I love it. All right, let's start moving into a career. You began at Trammell. 

Chuck Anderson: My first job out of school is with City Corp and Investment Banking Group. Jerry, an old-time sports reporter on Channel Eight in Dallas, interviewed me because, in my last year at SMU, you always get my NBA. I had a red shirt, and Yoey said some goofy thing like, well, he's not going to the NBA; he's getting his NBA.

So this guy saw it on TV and hired me. He saw this interview on TV, and I worked for him for about a year. His exciting claim to fame was that he told me he was the only person I'd ever meet in my lifetime who could outspend an unlimited expense account. He did that six months into my tenure there and no longer worked there.

So, all my buddies were working in commercial real estate, and I said, well, God, this looks like a pretty fun deal. They look like they're working about half as hard and making more money. So I took a job with Criswell development company, the people that built Fountain Place downtown, and then about after a year, there were 186 people when I started, 26 of us left when I left, and I worked, went to work for Trammell crow.

And then I was there for 16 years, but I'd offered, had an offer from Crow every time before I took a job for the third time; it stuck and was there for a while.

Chris Powers: All right. I want to dig deeper because Crow has just been released. This genre has produced every all-star across the country.

It's the genre of the 1980s, like the Crow team. What did he have, and what was happening in those days that created so many all-stars?

Chuck Anderson: His most significant trait was his trust in people. Again, that got a little bad for him when the market went wrong, but he hired brilliant guys. I'm not saying I'm an intelligent guy.

I got in, but they have a bunch of Harvard MBAs, Stanford MBAs, Jennifer Chicago, Pennsylvania, all these people, and they give us a lot of rope. You can either hang yourself with it or make a lot of money. A book called Ten Best Places to Work in America came out.

One was Trammell Crow. And because there are more millionaires made than not. But I think the secret sauce is he trusted people, but I mean, you had to, you had to prove yourself, but once you had his backing, you could go, and really, you used his balance sheet to do a bunch of things that otherwise you couldn't have any chance of doing.

Chris Powers: So, was that the structure? It was his balance sheet for the most part.

Chuck Anderson: Yeah. I mean, he was. I am curious to know how many thousands of partnerships he was in, and guys got him in, and some were good. Some are bad. A lot of them were a lot of good, but yeah, and it was fun. We had a great time.

It was in the middle and late eighties, and it got dicey; in 1986, when I finished working at Criswell, we had 186 people and ended up at 26, and the market just crashed. When I worked at Crow, I was a financial analyst, and there was only a little to do because we weren't buying anything.

It was just trying to keep the doors on. And there'd be days when we were, I was a leasing agent there. We would be hitting golf balls into the drywall because we haven't anything else to do. Because when you could put a sign up on a building in Dallas in the late eighties, it said, well, you can office here for free, and nobody would take you up on it.

Chris Powers: Well, let's talk about crash for a second. Was that one of those, Hey, one day it was sunny and the next day it was dark or Did it, could you see it coming?

Chuck Anderson: I don't know, I could; I couldn't see it coming. Because I was so young, some guys woke up on a Tuesday, and then six months later, they woke up on a Tuesday and were broke.

They probably didn't realize it then, but it happened quickly because the tax law changed in 1986, and suddenly, you couldn't get all the deductions you could now. So we were building buildings where we would borrow 120 per cent of the cost and pull that money out. Suddenly, those tax deductions disappeared, making the buildings worth much less. However, we had a great time learning.

And I tell all the young guys I meet with today that the best time for them to learn is right now, when it will get tricky over the next two years. I'd much rather learn in a down market than an upmarket because there are guys if you're 32 years or less old right now, who thought they'd step out in the street and the money truck would hit them every year, and it just got bigger every year.

Now they're going to step out in the street, look left, and you're going to look right and go, well, the money truck didn't come. So many guys will get flushed out of the business over the next 18 to 24 months, but that's good for the company. By learning over the next 18 to 24, my thing will be phenomenal.

Chris Powers: We'll bounce in and out of history and intense market, but you just said something. Some people might be sitting here going, but Chuck, we're already two years into this thing. What do you mean by the next 24 months? What are you thinking?

Chuck Anderson: Well, it's barely starting right now.

Again, I mean, there is. It's certainly been slow. COVID, everybody. When COVID happened, okay, this is a thing that will knock the market off the box. What happened during COVID was that the industrial side went wild. The office side got hurt, but the industrial side just went wild.

The data to the centre side is just going wild right now, and we'll continue to do so. But we still have a way to go regarding the office stuff. Because it's election season, the banks aren't being forced to mark the market. The banks are going well, so let's work with you.

We'll kick the can down the road. I think a lot of the banks—I think everybody's scared the banks will get decimated in this. And I don't believe that to be the case because in the eighties, when we borrowed 120 per cent of the money, it was slightly different than the last three or four years, when we borrowed 65 per cent of the money, probably in the best-case scenario.

So they've got a 65 percent-cost building right now. Again, if it's a newer, more excellent office building, 65 per cent of the cost will be a good deal because the office will still get used. It's still going to get built. It's the same thing with multifamily. Again, the industrial side is in Dallas, in particular.

For the first time in my career, over 40 years of being in Dallas, Fort Worth, it's the best thing that ever happened to me. Usually, we'd crash the plane three years early, and we'd be, everybody else was having great success, and we'd be two years after that. But this year, this time, we got way too many people moving into Dallas, way too many companies, and it's just being a phenomenal, it's a great place to be.

If I were a young man or woman and wanted to work in real estate or the commercial real estate business, this was the only place I'd go. I want to be off both coasts. It's just phenomenal.  

Chris Powers: I agree 120%. So back then, you'd borrow your profit and everything, build it, and put 20% in your pocket.

Chuck Anderson: Yeah. You'd put the land in it and inflate the price. So you're making a lot of money from these things, but there's a lot of recourse debt. The Crow company got in trouble in the late 1980s and early 1990s because they had done this over the barn, but it was guaranteed.

The famous story is that Mr Crow went in and met with all the banks and had all the keys to all the different builds and just shoved them across the table and said, they're all yours, which of course they were like, no, we don't want those. And we just did a lot of workouts. And so what I did the first probably five or six, seven years of my career was working out bad problems, not problems that I created, but problems I was there, and we had to clean them up, and boy, you'd get a pretty good tongue lashing.

Every time he went in and saw somebody and you guys, this, you got, did that, he was like, look, Hey. We didn't do it. We're just here to help clean out the horse stalls. We didn't make the mess in the horse stalls. 

Chris Powers: How did you clean it up? 

Chuck Anderson: It was a lot of hard work from a management leasing perspective, and then I had to deal with many problems, right?

We had buildings that needed to be leased. We had to figure out a way to get them leased. We had to be. Don Williams always said we behaved our way into this market and our way out of the market. So we did; we caused a lot of this stuff. So it was just:

Roll your sleeves up.

Get dirty.

Go back to the basics.

Lease space.

Fill things up.

Try to create some value from that perspective.

But there are a lot of guys who just cut bait and run. And, again, you can drive around in the early to mid-to-late eighties. All types of stuff had no reason to be built, but I can drive you around Dallas today and point out probably 25 different buildings.

That thing should never have been built and has never been leased. But you had a dentist who hired an architect and a contractor because money was tight. They went to make a building and needed to figure out what they were doing. 

Chris Powers: Do you think if Trammell was sitting here right now, Mr Crow, and I asked you, I said, did you see it coming? You're like, I was too young in my career to see. Do you think he saw it? Did people see it coming, or was it because you see it coming right now?

Chuck Anderson: Yeah, I'm sure they did, but they also thought it would be a much shorter cycle than it was.

And, like I said, it lasted in Texas for years. It wasn't just, hey, it's going to be 18 months. We're out of this thing. It was three, four, five years, six years, and we're still cleaning out stalls. So they saw it coming but probably didn't think it would be as bad as it was.

Again, the developers are very positive and like how we will build this building. It's going to be the most remarkable building in town. I don't care if there's a 40 per cent vacancy; everybody will want to be here. It's not dissimilar. We discussed the building you may be moving into; you have two distinct markets.

You have a brand new building, which is double the cost of one. It's adorable, but it's three or four blocks away. People like new, especially people in Texas, particularly in Dallas and Fort Worth. I want something new and shiny and cool. 

Chris Powers: One last question on that breed of guy is, When you read—you've read, I've read books—they call them super chickens, but let's just call them these high-powered guys, girls that want to kill it.

It seemed like Trammell had just hired everyone. Was anybody ever competing with each other? Was it a dog-eat-dog, or did he have it so everybody could run in their lanes without running over each other?

Chuck Anderson: It's much more dog-eat-dog than everybody running in their lane.

It's like, look, when we had five or six leasing guys. When I started downtown, we had 6 million feet. So we had a lot of space, but I wanted to beat the next guy. And it was not only that I wanted to beat the guy by getting deals. I tried to beat the guy by the economics I would perform to.

So, one of the big things that Harlan always stressed to us is, Hey, your guy's job is to make me a lot of money. And after you make me a lot of money, I will let you make some money. But so, to do that, we had to do excellent deals, right? So if the market was 20 a foot, how can we get 21, 22 and 23, and how do we shorten the free rent period or give them fewer concessions?

It was very competitive from that perspective. There were guys you knew who made a lot of leases. But you knew they wouldn't advance because they were doing; if the market were 20, they'd hit 20 every time because it's easy. And a lot about a lot of third-party leasing companies.

Their only job is to convince me, the owner, to do something I shouldn't do so they can make a commission. That's where the whole asset management thing comes into play. So, if you own a building, you have to be sure that you know what's going on in the market and not just let the broker tell you.

Again, I don't fault them, but their job is to make commissions—not to make me money. Their job is to make their money, but mine is to make money for me, our partners, and our investors. 

Chris Powers: Do you think he knew that by creating that kind of culture, it wasn't a game of, it was, how long can I get these guys to stay before they inevitably go out?

And as we sit here today, create Bandera. You go down the list, and it's just company after company. Do you think he knew these guys would never be with me forever? It was a churn; keep them for a decade, knowing they would go into the wild. 

Chuck Anderson: I would probably not because what happened is they bring guys in.

If you did, if you're successful, they'd say, Hey, we need to open the Los Angeles office. Would you like to go there? Hey, we're open to the New Orleans office, the New York City office, the DC office in Raleigh, or any city nationwide. That's where, how you, if you advance, typically what happens is we'd take great leasing guys, and they'd get an opportunity to run an office.

If they did well, they asked me to move to LA once, and I was asked to move to Denver once. For me, it was just that I loved Dallas and thought it was a great place to live. And after 40 years, it finally turned out that we would be in the best market this time.

Compared to where we were the last three or four times we went through this thing. 

Chris Powers: You've been saying it for decades. 

Chuck Anderson: Yeah. It's going to come true eventually if you say it enough. 

Chris Powers: What did your job look like towards the latter years of Trammell? 

Chuck Anderson: So, in my last job at Crow was, I was in charge of all the development we did for the western half of the US.

So, I think of the development group then; we had about 4 billion in process before Blackwell, my business partner, ran the whole thing. I had the Western half of the U.S. Tom did all of the institutional stuff, all of the higher learning hospitals, and he was also a prominent industrial developer.

So yeah, it was a big job, and I flew everywhere. I'd wake up and go, wow, where am I in Portland or Seattle, or did I fly to San Francisco yesterday? It was a ton of travel. I have 6 million miles in America. I don't view that as a badge of honour. Yeah, I think that. If I had to do it over again, I wouldn't do it as long as I did, but I loved what I did.

I love the Trammell Crow company. I loved Harlan Crow for the opportunity he gave me early on in my career, and I still am very friendly with him. I am undoubtedly loyal to them and to the extent we can help them. We always want to do that. We've partnered with him on some things since we left, but only a little lately.

Chris Powers: That's so awesome. One of my favourite things I've read is the letters from the partners at Crow. I am trying to remember the vintage, but it's the eighties. And it reflected the crash of the eighties and early nineties. And if anybody listening to this still needs to read it, Google it or ask somebody in the industry, but it's 40 or 50 pages of just letters.

Chuck Anderson: That goes around every time we have a bit of a downturn.

That thing is all over the internet; people send it to each other because it comes with much wisdom. It was really from the school of hard knocks. If I had to do it repeatedly, I would have done these ten things when we went into the downside. And that's from a bunch of guys from all over the country who had a lot of hard knocks.

And these are the guys, again, who thought they were worth 50 million and bulk up one day, and they were worth a negative 50 million. And it was, yeah, a lot of learning experience from that. 

Chris Powers: I need to reread it. It's been a long time, but I remember the first time I read it; I was like a kid in a candy store.

It was also in the middle of 2013, 14. So we had a ways to go, so it'd be a good time to dust it off. All right. How did Bandera start coming into the picture?

Chuck Anderson: The biggest issue is that we had giant jobs at the Crow. I had, and before that, Tom hadn't had the best jobs in the commercial real estate business anywhere in the country.

We had great jobs. The problem was we needed to be working on commercial real estate. We were managing people who were managing people who are doing what we love to do. And so, we just travelled all the time. I was on the road three or four days a week. And I had daughters at the time, who were 14 and 11.

I said, look, if we're going to do this, it's time to do it now. So that's the most significant impetus. We wanted to spend more time at home. And we wanted to work on deals. The only discounts we worked on were in those senior roles where the deals were so messed up, and everybody was so mad; they wanted somebody senior, they came in, and they yelled at me instead of yelling at the other people, but it was a great learning experience. I still have great relationships with guys I worked with nationwide.

As you said, the Crow alum directory is crazy. It's about an inch thick, and hundreds of companies have been started over the years. Again, Mr Crow gave these guys a lot of rope. They learned a whole bunch from his nickel, making him very wealthy. But it's just a great company. 

Chris Powers: All right. You've been vocal in some of our discussions and just heard around, but how did you put your current partnership together? How did you think about embedding these guys? You all had worked together, but as I've studied you and just learned, you were intentional about these being the guys I will work with and do life with. How did you all think about that?

Chuck Anderson: I probably didn't think about it as much as we should have. It just happened. But I'd worked with these guys for 16 years, so they called me the junior partner. We've worked together for 38 years.

They've worked with the other two. I've worked with each other for 40 years, so I'm the junior guy at 38. But a lot of it was being around each other. Seeing how people act and the worldview that we had from a Christian faith standpoint, we'd been through a lot of life together.

We buried our parents and our previous son in 2008. Those things bring you close, and I'm a big believer. I say this all the time: If we ever have to pull out our partnership agreement and read what we need to do, we're done because, at that point, everybody knows what's right, and our partnerships are straightforward.

If a dollar comes in, we split it three ways. If the dollar goes out, we split it three ways. So, we'll never pull that partnership agreement. We did have to pull it out five or six years ago because the attorneys wanted us to put some stuff in there that we needed. We were still determining where the copy of the partnership was, but ultimately, we found it and did what we did. Then, we throw it back in a drawer and pull it out again.

Chris Powers: All right. You said some things there, but we'll talk about Bendera. I want to take a step back. For some people, having cancer might be the worst thing they've ever gone through. You've said it was the greatest thing you've ever gone through —not maybe the greatest, but one of the best things you've ever gone through. 

Chuck Anderson: Yeah, without question. And again, I'll expand on the story a bit. So, I'm 37 years old. We had just taken the Trammell Crow company public in 1997 in November. In January, they sent us all out to the Cooper clinic to get these executive physicals and do the physicals, and I'm very competitive.

So, I was not in the top 1% on the stress test. I died trying all that kind of stuff. And we did that. And I sat down with the doctor afterwards and said his name was Ted Mitchell. I asked Ted if there were any other tests you could give me. Cause one of our partner's wife had just passed away from breast cancer.

I was freaked out about that and said, what are the tests you got? And he says, well, we have a scan upstairs. You're way too young. You're well, way too healthy. I, you shouldn't do it. And I go, I want to do it. And so I did it, and then, I did the scan, and 10 minutes later, we sat in front of a screen going through my scan, and they stopped at my right kidney.

And I saw one person come up from the left side, one person come up to the right side, and they're looking and circling things. And all of a sudden, I'm not feeling excellent about things. And they said, look, it seems like you have renal cell carcinoma. And so I went back the next day, did the scan again with iodine, with contrast, and when it lit up, it said 99. There is a nine percent chance you have renal cell carcinoma. So that was a big hit for me because I was in great shape. I've always prided myself in being a lot of shape. And I do believe that God used a group of guys, all guys that you'll know, Mike Lafitte, Mark Gibson, Jody Thornton, Scott Dennis, Tom Liza, one of my partners, was in a Bible study that five years before I had my cancer incident, invited me to the Bible study.

I said, Nah, I go to church on Sunday. I don't need that. I'm good. Thank you. So I have this cancer situation. And again, so for a week between when I got the scan and then I had an operation where they removed my right kidney and adrenal gland, I went to brain scans, bone scans. As it spread, I thought I was going to die.

You know what happens? And I got little girls who were eight and five at the time. And It was unbelievably gut-wrenching for a week. And so I go, and I get the surgery, and they call it a surgical cure. So I was very fortunate, didn't have to get chemo, all that kind of stuff.

But I've got a scar now that's about 18 inches. It goes from the left side of my body all the way around to the kind of almost to my back on the right side. So these guys invite me to this Bible study and. I'm like, okay, you all go to the Bible study, cause right now I'm a little freaked out cause I think I thought I was going to die, still think I might die, cause it to come back, all those kinds of things.

A guy named John Maisel, the founder of East West Ministries, led the Bible study. During that study, these guys walked me through how to know you're going to heaven. So it's Romans three 23, everybody's a centre; Romans six 23, the wages of sin is death or eternal separation from God.

Romans 5 and 8 say that God demonstrates his love for us. And this, while we were still sinners, Christ died for us. Romans 10 and 9 say that you will be saved if you confess with your mouth, Jesus, Lord, and believe God raised him from the dead. And I always tell people—I like to emphasize there's a period there, not a, Hey, do all these great things, and you'll get to heaven.

You only get to heaven by trusting in Jesus. And. 9 grabbed me: For you have been saved by grace through faith in this, not from yourselves as a gift of God, not by works so that no man can boast. It was through the Cooper clinic, which I didn't want to go to five years before, to a guy named John Maisel, who was teaching this, that God used me to study the Bible.

And I will tell you, Chris, at that point, you, my eyes were so wide open. I was like, Oh my gosh, how did I miss this? How did I go to church for 37 years and not know that Jesus was the way, the truth and the life? And so, for me, it was the most significant life change ever. And so I tell people all the time that cancer was the best thing that happened to me, and I don't wish it on anybody unless that's what it takes.

Because eternity is a long time, and if we spend it somewhere, I want them to spend it with me, Jesus, and everybody in my family in heaven. Again, it was a very trying time but a great time. My mom and dad thought I was crazy, thought I'd lost my mind because I was going to quit my job.

I was going to go into the ministry. My wife's going, Oh my gosh, he's going to move me to Timbuktu. What's going on here? Ultimately, I had another conversation with John Maisel. So not only does John lead me to Christ, but John saves my job at Trammell Crow Company. He said, look, he goes, you have got.

It's a platform already. You don't need to move to Africa or Timbuktu to have a platform and administer. You have a platform. The question is, will you use it or not? And so from then on over the last, what is that? 20, 26 years. I've used my platform as a business guy in Dallas and a real estate guy in Dallas, too. I talked to between 100 and 150 young kids every year, and they come in, and they want to know about the real estate business, and gosh, I'd love to talk to ChPowerswers and say, well, I've got his number, call him, email him.

Bill Colley, Jody Thornton, Mark Gibson, all these guys they're always going to get, you got to quit sending me people. I tell them that I've talked to five for every person I send you. And so, I share all my knowledge from a real estate perspective and tell the guys they should speak to what I think they ought to do.

And then I get a chance to share Christ with them. And I'm sure some guys walk out of my office. Go, man, that guy's crazy as all get it. I will never see him again, but it's a calling for me. It's what I love to do. I mean, I would say 20, 25 percent of my time now is spent meeting with young people, trying to mentor them and give them opportunities from a work perspective, and then three, I want to make sure that they've at least heard the name of Jesus.

My job is not to be a salesman for Jesus. My job is to present the truth as I know it. And I hope the Holy Spirit grabs them. He'll hold him again if he doesn't, but at least they've heard it from me. And I don't want to. I don't want to ever get to heaven, and Jesus says, " Hey, good job.

Well, good and faithful servant, but I sent you 5,000 other kids, and you didn't swing. So we have these at-bats every day—all of us do. And the question is, are we going to swing? Are we going to watch the pitch go by? I don't want to, so it's one of my favourite things to do.

Chris Powers: And you're incredible at it; a buddy of mine often says your job is to catch him, and he's talking about fishing or what a metaphor to fish, and you see him, and God will clean them. I want to go back real quick cause I share a similar path of having grown up going to church my whole life, but a particular group of men at a specific weak moment in my life changed it all.

So my question is, What do you think you got from that Bible study with that group of men that the church didn't give you 37 years ago?

Chuck Anderson: It was a pretty intimate situation. There were probably eight guys there, including John Maisel, if you've never met John.

He's the modern-day Paul. I've never been with John Maisel; he hasn't shared Christ with anybody. Every restaurant, every server, every hostess—the guy is unbelievable. So it was that, and I had close friends, right? These are guys who stood by me when I had cancer.

These are the guys I worked with. Mike Lafitte was there. I worked at Trammell Crow with him. Scott Dennis, Jody Thornton, and Mark Gibson worked at Crow together. We'd done a ton of work with those guys, Tom Lizer. I went to graduate school and then worked with Bandera to Crow and have them together. So it's an intimate setting where guys can speak the truth to you.

Then you have a guy named John Maisel, who's like the velvet hammer. You know what I mean? Everything, everything, every opportunity he sees is an opportunity to share Jesus. And he just pounded on me, and it was incredible. It was like the scales fell off my eyes. I mean, I could not believe that I go, Oh my gosh, 37 years in the church. And how did I not hear this? And I, and I, I went back one time. I made a deal with Watermark, where I go to church, and I figured out I'd probably heard the gospel about 1500 times. And I think God said that this guy is not getting it. So we're going to throw a little cancer his way.

We'll slap him upside down, wake him up, and figure this out. And that's what happened. As I said, it has been a phenomenal experience ever since. I've had a lot of time to go on mission trips with my kids, and I love many people.

The world needs a lot more people loving each other and not being afraid to talk about who Jesus is. And I think one of the most significant issues we have as Christians is that we'll sit back and say we're Christians, but we don't act like we're Christians, and we'll go to church.

But I mean, the church ends Sunday at midnight and then Monday morning at six o'clock when you get up, well, the church has gone now, and I'll wait until I get next Sunday, right? So at Watermark, they always say, have a lovely week of worship. The big W's during the week, and the little W's on Sunday, and you're getting prepared Sunday to go out on Monday and be a warrior.

Chris Powers: Do you remember what, like the first? I don't know if it's a significant change, but you have cancer. You go into this Bible study, and men surround you. You meet this, John Maisel. What was the first significant shift in your life in the future that made you feel like this is here to stay? If that makes sense, do you know what I'm asking?

Chuck Anderson: Yeah, I think so. It was an enormous conviction to study God's word more, attend church now, and listen while I'm there. Right? It changed almost everything. Hopefully, I love my wife better, and my kids are better. I've got to be an example for my children.

And they've got to see me love my wife well. So one day, when my girls got married, And they are married now when they get married, they saw how a husband is supposed to love their wife. And it changed everything. And the way I treated people, I mean, I, and again, I can still be not a great guy.

I can yell at somebody, but I mean, hopefully, what I'll do is once I realized that I could turn back, call the guy back and go, Hey, I, what I said, I shouldn't have said I want to, I asked you to forgive me and then have a conversation that way. And I think that tells a lot of the young guys around you sometimes, so they see that I said, you just saw me chew this guy's what out, and you're going to see me calling back and asking for his forgiveness because what I did was wrong. And so, again, it changed every aspect of my life. 

Chris Powers: Well, you've met a lot of people. I'll ask this one: We're in the real estate industry, which, every day, the real estate industry, gives you two paths. Most of them are doing the wrong thing, or you can skirt by, or you can, but if somebody's in that position, what do you tell young people that look, everybody around me knows my baggage?

I'm experiencing a life transformation. How do I move forward without losing friends or everybody wondering what's going on with this guy? How do you talk to young people about that? You mentor a lot of young people.

Chuck Anderson: A lot of it is that you always have to do the right thing. I think that's the, have the main thing be the main thing—the main thing, Jesus. And I think that would lead you to believe that you always need to do the right thing, whether people are looking or not looking. And I always tell young guys that look, guys, you've got to figure out who Jesus is. And then you've got it. You need to follow him if he is who he said he is. And if not, just go crazy and spend money and be a fool. But you must follow him if he is who he said he is. Following him is trying always to do the right thing. And I will tell you, the first guy to admit, I don't always do the right thing.

But once somebody points out that I didn't do the right thing or I figure out I didn't, I want to go back and rectify it. Again, that's as big of a witness as telling somebody about Jesus. How did I react in a situation where I did wrong? What did I do? To go back and fix it? 

Chris Powers: For sure. It's not a game of being perfect. It's a game of knowing when to repent and after forgiveness. And that's easier said than done.

Chuck Anderson: Sometimes, it's hard to do, especially when the guys mistreat you. I've been in a lawsuit with a guy who had a chance to go to the. After the lawsuit was settled and we lost, I had the opportunity to sit down with the guy and share Jesus with him.

I'll never get another lawsuit. That's the main thing that taught me. But, just again, you have to love people. In today's society, everybody wants to be correct and only wants to be there. So you have to—I have to—love people and do the right thing.

It's all about Jesus. John always says it's Jesus plus nothing. We can't add to his glory or take anything away, so if we focus on him, we'll all be okay. 

Chris Powers: I love it. All right. Back to Bandera. Okay, here we go. So you've had a life change.

You've left Tramell and partnered with two guys you've been with forever. How do you determine what you will work on? You have done many deals in different arenas, so let's start there. How do you know what to pursue and what not to pursue?

Chuck Anderson: Well, being a serial deal junkie, which I think you probably could identify a little bit, you know? So, I always tell people that a salesman is the easiest person to sell. So we're always looking at deals, and everything sounds great, right? So it's true. Our office has a rule that we will only do something if we have unanimity, right?

Unless everybody agrees, all three of us—two guys can be against one if you can convince the third guy—we will do it. Yeah. So we passed on things. That's a good filter, but we'll get it. We get excited about stuff, and what we know how to do is build and buy buildings.

And so we've done a lot of that. We've helped start a bank called What's TBK. It's now T Finn. When I met a young guy in Bible study, I came back off and said, Hey man, this guy's unbelievably intelligent. I am still determining what he will do, but we want to be involved with whatever he does, and that's been a significant investment.

It's Aaron Graph, the CEO of the bank, who is just a phenomenal young man. He's not so young anymore. He's going to be in his mid-forties. I told him the other day, and I said Aaron, you realize that the age you are now was the age I was when I met you; time flies. 

Chris Powers: Are you on his daily devotional? He is so talented. He's put me on there for the last couple of years, and it comes out daily. It's very thoughtful. He's a particular dude.

Chuck Anderson: Yeah. He is unbelievably special. He loves Jesus and is among the most brilliant guys I've ever been around. Again, we hired—all we hired at Crow were Harvard MBAs and Stanford MBAs, and many of those guys thought that because they had a Harvard MBA and put it up on the wall, money would suddenly rain on them.

I mean, he's humble, and he's just brilliant. I mean, he just, I mean, half the time, half the time. So Aaron, pretend like you're talking to a sixth grader here. You're talking way over my head, but he's super-intelligent. He's a great guy, a great family guy and his runner created a great business.

Chris Powers: Okay. Let's dig into that. I had the triumph note. I didn't know if we'd get there, but we're here. So, an intelligent guy met in Bible study. You trust him. I know that there, and he told me this when we did our interview: the first business plan was working out bad loans and being a real estate guy to some degree.

Chuck Anderson: Yeah, I mean, it was like, Hey, we're going to buy bad loans and, or we'll make loans. And if they go bad, we'll take them back or buy CMB. So what we did when we first started was we bought a bunch of CMBS notes, and because he was an attorney that practised that kind of law, he wouldn't have, didn't have any fear about foreclosing on them, taking back, fixing up and selling that and making money.

And that's how we first got started. And then, literally one day, he came to prior, and I, along with Carlos Sepulveda, who was the other, Carlos was the initial investor, and Tom Pryor and I were the second investors. He came to us and said, I want to buy a bank. And we're like, well, what do you know about banks?

And he's well; my dad's been at the bank and home for 24 years. Okay, well, what do you know about it? He found this little bank in Dallas, and prior nine, some others went around Dallas, and people would look at us, and they'd go, look at him and go, what do you know to go? Well, my dad runs the bank. Could you not come with it? Look at us. Go, what do you guys know? We don't know anything. We know he's brilliant, and he's going to figure this thing out. And our strategy on that was, it was a hundred per cent jockey bet. He was one of the smartest, brightest, with the highest integrity, highest character guys we've ever met. He said this is a guy we want to partner with, and he's proved it every step of the way.

Chris Powers: And just as a recap. What was the first acquisition?

Chuck Anderson: So we bought a bank called Equity Bank, which was interesting enough. That was seven guys who were five or seven guys who left Andy Bills Bank and wanted to do an Andy Bill-type bank. And this was an Oh seven. So they just got hammered when the great financial crisis happened.

And, it was under a cease and desist order, and Aaron's, I think, 29 years old, and we're going into the board of directors saying, Hey, we're going to buy this thing. And who's going to run it? I am. And it was just a phenomenal deal. So we had it under contract for about 18 months cause we had a bunch of approvals to get to. We had to raise 55 million on that deal where he had two real estate guys running around Dallas, and Hey, we're going to start a bank, and this guy's brilliant, and he'll figure it out if he doesn't know what's going on.

We were fortunate that many friends trusted us to invest in the bank. We raised the 55. Then, two people at the bank said, Hey, I'll give you a year, but I'm going to do that. Well, one of them retired two years ago, so they've been there for 17-plus years, and the other one's still there.

Again, it's a lot because of the culture, but these people knew what they were doing. Gail Lehman and—I forget the other guy's name, but I'm drawing a blank—are phenomenal. Gail's still at the bank. 

Chris Powers: It's incredible. From your vantage point, from your seat, if you had to describe the series of inflexion points going along because the story is remarkable, what was like the next inflexion point?

Chuck Anderson: The bank public probably took it. I can remember sitting in a conference room in New York City, and the investment bankers were playing the game that they always play: Hey, we told you it was going to be this, but the market stuff.

So now it's going to be less than that. And because I've been through it once before with Crow and had other experiences, well, let's not do it. So they'll go out and come back, go out and come back. Ultimately, we did what they wanted us to do, and thankfully, we did: We made it public.

And, but that was a whole other thing. And then all of a sudden, we're public, and then it's like, well, what are we going to do? And again, Aaron has a lot of vision for what he wants to do. So, we'll start acquiring banks. We bought a bunch of banks in Iowa, Illinois, Kan, Kansas, and some in Colorado.

We have a small presence in Dallas, but it's a small presence. Again, he sees things six months or a year down the road that others don't. Now he's got the whole transportation thing working, and again, that happened because we bought a factoring company.

It's been an enjoyable ride on the board. The things that happen there and the things they think about are amazing. 

Chris Powers: It's incredible. Let's go back, though. You have built and bought office buildings and industrial ones. I wanted to talk about the data centre.

You've got this massive data centre going. Let's spend some time on it. Is that the first one you've ever done? 

Chuck Anderson: No. So, we started a company called Skybox. 

Chris Powers: Oh, so you own Skybox? 

Chuck Anderson: Yeah, so, well. The Skybox guys, Rob Morris and some others started Skybox with us in 2014, and we made an exciting deal with them in Houston.

It took us a long time to get at least up, but it was successful. Our partners made four or six times their money, but it was over an extended period. We did a couple of with them here in Dallas, and then they wanted to go nationwide. And we were like, Hey guys, we're going to—I'm not going to get on there, but I'm going to get on an aeroplane to have fun.

I won't get an aeroplane to look at a real estate deal, so they went out alone. They've teamed up with many urologists, and they are unwritten. It's not a written rule that we said if you return to Dallas, we want to continue working with you. So they came back and said, Hey, we love to do something in Dallas.

Tom Lizer is one of my oldest partners. He's probably been with me for about four years. About seven or eight years ago, he took four years off building industrial space to study the data centre market. Was that a wise move? I wish to develop more industrial space, but he understands it better than anybody.

We had this opportunity when we bought 100 acres in Lancaster and partnered with a great financial partner. It's going to be a huge deal. The issue with the data centres now is that they take so long to build. So we're building a 50 million substation on our site. That will take 24 to 30 months.

It's all about long lead items and things like that. And then, when you build the data centre, you make the physical structure, which is easy. I mean, that takes you—it'll probably take us nine months to do that—but it's all the stuff that goes inside. You have to figure out how you get that.

They're talking, well, they have to put it on a railroad train from Pennsylvania to Dallas. And it's going to take nine months to get there. Or you can break it down into smaller components and truck it. But it's wild, all the hoops you have to jump through. It's like the gold rush.

Now, it's a land grab. It's less land but Megawatts; how many megawatts can all these big providers, all the big names, how much can they grab? And what we've seen is we've had four or five of the biggest, very biggest ones in the country, trying to make a deal with us.

We'll make a deal with one of them very shortly. Then we've got to sit and wait, wait for the stuff to get in, build the substation, and then build the building. That'll be a 150-megawatt deal, and we want another 150 megawatts on the same site.

Again, we're discussing that with Encore and others, but the city's been great, Encore has been excellent, and Skybox understands the language. I can sit in a meeting about a data centre. I am still determining what they're talking about. They use acronyms and buzzwords and all this stuff. For example, what's the per-square-foot cost of this thing?

Can somebody answer me? Tell me that. They'll dumb it down for me and tell me that, but look, they don't speak that language. It is a unique business. When we first got in 2014, the yields you could get were ridiculous: 15, 16, 17, and 18 per cent yield on cost. It is an unleveled yield on cost. And, now, they've been pushed down; they're less than the double digits now. It's less than double digits, but it was brand new back then. And, this whole AI thing, everything, everybody believes that it will take it and make it, a hockey stick up into the right.

Again, we're out looking for more land, and there's land out there that, guys, one of my good friends, who has been on this podcast before, was fortunate enough to buy at three bucks a foot. Two years later, he'll probably sell it at 18 to 20 bucks a foot just because the demand's gone crazy, and people, he's buying it for an industrial building.

It turns out that the data centre truck ran him over. And, if you think about it, the land cost for one of these things is nothing. They could pay two or a hundred bucks a foot of land. It doesn't matter. Because of the other costs, building one of these things costs 15 to 1,750 dollars a foot.

Chris Powers: And it's basically all about proximity to the substation or to get the power that matters.

Chuck Anderson: It's all about power. Now, sometimes they want dual-feed power cause it's a latency issue as well. But a lot of the AI stuff doesn't require that. It's just like you got to have the power cause it's, the AI's just going to keep going up and up and up. So again, I hope that we've got the one done. Hopefully, we'll get another couple of them started in the next, by the end of the year, but who knows? I mean, I really, last year, I think I joked with you, and we met last, I mean, last year, I played a hundred rounds of golf because I figured that if any deal that I would look at and do was one that I shouldn't because I thought the market was getting softer.

I didn't look at any deals, but I have heard the same mantra: Banks will be forced to do some things in the fourth quarter of this year after the election. Again, it's not that banks will get hurt because they will not get hurt as badly as people think.

Many guys believe they have equity in their projects but don't; who are what I'll call dead men walking? They have yet to realise that but will sometime in the next 12 months. I'll look and go, gosh, I pay. I bought this apartment complex for three and a half, and my debts are eight and a half.

And the rents can't go up fast enough, and that rate interest rates can't go down fast enough to make me hold again. So they're going to get wiped out. The banks are made whole. They may take some loss, but the equity guys are wrong. They don't know it yet.

Chris Powers: Okay. I asked you about deals, and you rattled off a bank and a data centre company. One way to do deals is to help start-up companies you partner with and invest in. Are there any more? Let's get them on the table now.

Chuck Anderson: There are probably some deals. I don't want to talk about that.

Probably didn't work. I, the only story I will tell you that, and I love telling this because it, again, just goes to show you that when you, you should, you should stick to knowing what you're doing. So we had a friend of ours who had this golf magazine. He was going to start, and I was on, we're going to be able to get on Augusta.

We're going to get—this is going to be unbelievable. You'll play golf anywhere you want to. And so I tell people that right now in my closet, I got an 83,000, 333,000 shirt, and that's what I got from that investment. So it was a costly 250 000 lesson for the three of us.

But that was just one of the goofy things we do. And again, when you're a deal junkie, I mean, everything sounds great. So, again, when you're a salesman, it's easy to get sold. You're like, Oh yeah, man, I'm yeah. Well, man, this golf thing is going to be unbelievable. And it, well, I bet we didn't, I bet we didn't know less than six months, and it went under, and it's like, wow, it's a nice golf shirt, but it could be more sociable.

Chris Powers: How are you all structured? Can I go to the website? Very few people, but you have lots of deals. So, how have you thought about it? Cause you're not, you're not managing. You're not leasing. You're probably outsourcing even more. What do you think about it? We're going to stay agile and small, and we're going to let everybody else do X.

Chuck Anderson: Yeah. We started. We hired an intern and devised a business plan to recreate the Trammell Crow company. And we all looked at each other and said, well, why are we doing that? We just had the best jobs in the industry. Why would we try to recreate that?

It became clear that we wanted to avoid managing hundreds or even thousands of people, which we had a crowd of. We tried to keep it small, and outsourcing some stuff is the way. So, we originally bought into the Stream. So we owned about five or 10 per cent of the Stream, which was great.

Mike and Lee worked with both of those guys and us at Trammell Crow. They loved those guys and still do. They bought us out, probably ten years ago, because they were growing and needed this stuff there, and we wanted somebody to manage at least our property. That was a perfect deal because we had this mindset: if we wanted to own, whoever would do that.

So, about eight or nine years ago, my brother had a company in Austin called HPI. They wanted to come to Dallas, and we said we'll partner with you. So we own a piece, they own a piece. Then, the young man who runs the company in Dallas, Hunter Lee, also owns a piece of the deal.

So that's who does all of our majors, and we leverage them. So if we do an office building today, we do it with those guys. We did Ross Tower downtown. We did the buildings at Preston Centre together on the industrial side. We're still doing our own thing in the data centre.

But I can see us becoming more entwined with them over the next several years because Tom Prior and I want to. I don't want to attend a construction meeting every week. I've done that for a long time, but I want to help those guys get a construction deal.

I want to help those guys get a development deal, capital, debt, and all those kinds of things. So I'm thinking of it like, what will be, of council or. I want to be something other than a vice chairman emeritus; there are too many vice chairpersons, but just guys there to help the younger guys.

We will officiate together by the end of the year, and I'll get a lot of energy out of that because I love young guys. Mind you, I meet with many of them, young guys and girls, so I'll get a big kick out of being around them and the energy it provides.

We'll be able to help them, and they won't make some of the mistakes we made. One of the things we all agreed on when we left Crow was that we would not sign a recourse debt. We don't. We'll sign completion guarantees, but we'll not sign recourse debt.

And I can't tell you the number of guys Crow, as I said before, thought was worth 50 million while they signed a bunch of notes. And six months later, they owed 50 million, right? I mean, it just flipped on them real quickly. And we're, I see that as our deal with the bank: if things go long, we have the right to return it to you.

That's the deal we negotiated. We've never had to do that and don't want to. And we don't have to, at least not on the existing stuff we have now. But you must prepare for Armageddon and hope it never shows up. 

Chris Powers: What would you tell somebody then? And I'm sure young people ask you this. It's easy for you to say, I won't take recourse debt. You've got an established career. You've got a balance sheet. There's a lot of people that don't have that. Would you sell them and tell them to code GP with somebody?

Chuck Anderson: Yeah, I will bring a partner in, get somebody who'll guarantee some guys' run around guaranteed debt for guys, and take a piece of the deal.

I do that. I do anything to prevent somebody from signing personal leverage, lower leverage, whatever it takes. Man, you can get non-recourse debt if a deal's good enough. You're going to get the equity. You shouldn't do the deal if you can't do both.

And especially for a young guy, look. You have to be dogmatic. I need to determine the number of open banks when we left Crow. We sat down with—I bet 15 or 20 banks and every single one. But we're on the recourse then, or we'd say, great, well, let's have a nice lunch then. We don't need to talk about business anymore.

They looked at us like we were crazy. Then, we figured out how two or three banks took a risk on a plane's capital bank, which was one of the first. When Alan White was running the bank, we made a bunch of deals with them. They were all non-recourse. So then the American Bank of Texas decided to do it.

American National Bank decided to do it, Guarantee Bank agreed, and JP Morgan did non-recourse. So, all of a sudden, it snowballed. And if you are determined to say no—not no, but no—then I think people take no for no. And then again, there are some banks we've never done business with, and that's okay.

They have the money and can do with what they want, but we're not going to put ourselves in a position where we could have one or two deals and take down everything we've worked for so long. And that's the problem with recourse debt, and people getting them like, oh, this is a great deal.

It's going to be awesome. Well, then, why can't you get recourse debt for it? Or get some rich guy to sign the loan for you. Some guys do that, taking 25 or 10 to 25 per cent of your deal. Could you give it to them? It's worth it. 

Chris Powers: Is there anything you won't do? Are there any asset classes you've learned over all these years that you won't participate in?

Chuck Anderson: The answer is probably no because we do nothing. We have yet to book a hotel or do any multifamily. I wish we'd gotten the multifamily business. One of my best buddies is Jeff Court, right? He runs Lincoln's development group.

I've loved watching him be unbelievably successful there. Again, we should have stuck our toes in the water 15 years ago, but we didn't. So I wish we'd have done that. My brother does some multifamily stuff, so we may have opportunities to invest in that storage.

He does that, too. We may invest in that. Hotels. I would be cautious of them because, again, you have to lease them every single night. The good news is you can catch the rates going up, but you can also get shut down quickly. COVID happened in a hotel dead. At least during COVID-19, we had people with obligations in the office buildings, and they continued to pay us.

Chris Powers: If you were going to do an office deal right now, what would it look like? 

Chuck Anderson: Well, you need to build a lovely office building. Amenities are the most important thing; it should be walkable. You need to be able to walk out of your building. It would help if you went to the dry cleaner, the bank, or Preston Centre.

We've got 20 restaurants and 27 or 37 banks. I mean, it's wild. All the amenities you have right there are the most important. Preston Centre, in particular, is landlocked. Two sites in Preston Centre can be built now.

So there's a barrier to entry. So we're leasing a building that was built in 1975. PNCs are now the lead tenants; they're moving out, but we were 98% leased when we bought it on April 20. We've raised the rent by 12 to 15 bucks a foot over that time. And again, it's 98 per cent lease. So we're done. They've got guys wanting to move in. So it's like a jigsaw puzzle for us now. And PNC will be moving out in the next 18 months. We'll have most of their space backfilled before they even move out. I bet you.

Chris Powers: How do you think about TI in today's market? I talked to Bill Colley about that TI running away from you.

Chuck Anderson: Yeah, it's wild. If you have TI today and can make leases, that's a big bonus. You're making many more leases than the TI thing.

At the end of the day, and I don't know how this ultimately happens, we need to learn the value of office buildings differently. It would help if you looked at the TI and fully advertised it over the lease term. Then, the commission is the same: your net rent.

It's not that if you're doing 30 bucks a foot net rent, you give him 100 bucks a foot on a 10-year deal. It needs to be a 20 net. You're right, and that's your yield on cost. We fooled ourselves into believing that it just goes to your basis. But the reality is that every time you do a 10-year lease with 100 bucks a foot, when that lease comes up, they want another 50 to a hundred dollars a foot to redo it.

Even if they don't want to redo it, the market will demand that you do so. So, there will be some more arduous underwriting criteria. If I were a lender, if I were the equity on some of these deals, I'd work hard and look at the actual yield on these office buildings because they're not what everybody thinks they are, right?

So if you're buying an eight-cap, what, and if it's a leased building, you're probably buying on a six- or five-cap because you've got to put so much capital in the thing, again, it's a lot because we've got a lot of good brokers running around town, and they can get guys to give them concessions.

But being able to make tenant improvements is a big deal in the next 12, let's say, 36 months. Our giant office building downtown, we got to refinance, not refinance. We reworked our financing on that six months ago and made tenant improvements in commission dollars.

And there will be some buildings downtown that don't have gas. So, that'll give us a chance to make some leases, and then you'll get up. We're 73 per cent now, and we can get it to 85. We'll sell it and try to get everybody their money back.

Chris Powers: Are there deals that are too small that you won't do? Then again, on your website, this is a six-thousand-foot building. 

Chuck Anderson: The answer is no. It came up to us when we were offset in Preston centre. They have these little 10,000-foot lots where you can buy these things.

We used to be able to buy them for two or 300 bucks a foot to the land. And then we could lease them. We started renting them for a perfect example. We built a headquarters, a little building for ourselves that was 6,000 feet. It's on Sherry Lane. 

Chris Powers: That's across from the office building, right? 

Chuck Anderson: No, this one's no. This one's down a little bit further and closer to Preston Road.

So we have this office—it's almost done—and I get a call from a friend of mine who's a broker. He says, Hey, I got this ten that they were. We want to have your office, but we're not. We're moving it in 30 days. There's no way. And the prior in the background is going, do not lease our building up underneath us.

Finally, he kept calling me. So, here's the, if they pay 80 bucks a foot, triple net, then we'll do it, which, who knows what the market was 50 at the time or something like that, something that they're not going to do. They come back, and they hit the bid. So now I have to tell you a good time.

Hey, guess what? We're not moving to our new building. We leased it to a bank, and they took it. So it's just fun little deals for us. So we've taken a deal where we paid $1.6 million for it. We were fortunate enough to get a bank drive-through on it, and suddenly, we sold it for $6 million.

We had a lot of positive leverage on those, and they're hard to come by. It was a sleepy market. We were dogmatic about this: this is the price we want and the only price we'll accept. And ultimately, when you have a lot of banks looking in the marketplace, people are going to compete, and they're going to want to get that.

Chris Powers: Okay. We chatted about your thoughts on luxury markets, not commercial but residential. When you look at what's happened to some of these mountain towns, there are just specific markets. Everybody listening knows what they are, but how have you seen them? How are you thinking about it?

Chuck Anderson: It's incredible to me when I look back in hindsight, cool, at what COVID did. And you think we went into COVID and suddenly, second homes doubled, tripled, and quadrupled in value? It makes no logical sense to me. You would think it's got to come back or pull back a little bit, but I don't see any evidence of it doing that.

Also, many people made so much money during COVID-19 because money was free. And you could borrow money at 2%. That created a lot of wealth, and people put a lot of that wealth into second homes, which many guys paid cash for. There is only a little debt in many of these mountain and beach towns, but I need clarification.

It could be more logical, and this whole work-from-home thing. If you're young, you want to be around many people while working. You can't mentor a kid over Zoom. It just doesn't work that way. And so I do think people would be back in the office, but I mean, I had a friend of mine who runs a law firm, and, He had this, he got a thing from the bank that said, one of your partners is trying to buy a house in Crested Butte or something like that.

And he called the guy in and said, well, what are you doing? You're buying a house in Crested Butte. Yeah, I'm going to move up there. I'm going to work from Crested Butte. And he goes, not at this law firm. You're not, I mean, your job's in Dallas. And many people just got used to this and took advantage of the situation, saying, I'm going to buy a second home, and I'm going to live up there and work.

That'll change slightly, but I don't know if that means housing prices will go down. They will continue to go up. 

Chris Powers: You've always been on the, I'll say again, just as this is observed in a few conversations, you're always a little early into the next spot.

Suppose you had to say, how do In't talk about Aspen? Everybody knows Aspen's good. What would you look for in a second hometown or an emerging area you'd go to? This place has the potential to be another thing. You'd want to buy into.

Chuck Anderson: I think so much of it. We talked about offset amenities.

I've got five grandkids now, so everywhere we go has got to have tons of amenities. The place that we go out to, like Tahoe, has this thing called the Big Red Barn. It's got a basketball court, a bowling alley, a soda fountain, and an art studio. They've got five parks, so they're the most excellent parks you've ever seen.

And I think as we become grandparents—I become a grandparent—you still have young kids. But if you go and take your kids, you want to have something for them to do on campus. And the lake deal we discussed earlier—I mean, that thing will have so many amenities. I can see myself going to that lake, spending a week there, and maybe never getting in my car.

There are times when we're like Tahoe where I don't get my car, drive a golf cart for four or five days going the last time I got in my vehicle. And I hadn't been in it in four or five days because everything was right there. So amenities are the most significant thing, and then proximity to things that people love to do, like where snow ski or get on the lake or all those things.

Chris Powers: Okay. All right. I want to go back real quick. Okay. How do you pick partners? How do you decide if you'll pass the hat and do it with, call friends and family or go to a big institution?

Chuck Anderson: Yeah, it's relatively simple for us. We do it ourselves if it requires a check of five to seven million or less.

If it's more than that, we go to an institutional partner and have great partners. We've done a lot of stuff with; we go back to the same guys over and over and over again. And we last did country club deals, which I call country club deals, passing the house with many friends.

We did a bunch of, we did six retail centres and did that. That started with Jack Gibbons, a young man who worked in the retail force, who began the week before COVID-19 happened. He and I went to lunch, and they shut the world down the next day. So we did it that way.

We've had many guys invest with you over the years, and one did this, so we did that. The first three have worked out well. The last three because of interest rates and things like that, I am still determining how the will work out. It may be more challenging for us to make money on those than the first three.

It's much more institutional or our money than passing the hat to our friends. Again, when you have your friends, you see them every day. I mean, they're going to ask about it every time. And two, you need to perform. You don't want to let anybody down, for sure.

And I don't want to let any institutional partners down, either. We've got, and these guys have been good to us for the last 35 years. We've been friends. So, we used to say we'd crawl over broken glass for 5,000 bucks. We want these things to be successful, and getting your reputation takes a lot of work.

It's straightforward to lose, so you must have high character integrity and do what you say you will. Sometimes, you might have to Put yourself in a second position with your partners to be in the first position. That's why the three of us have worked out so well: When I leave Dallas, Tom and Prior have my chequebook and the same happens when they leave.

And I know that if a bullet's coming at my back, one of them is going to jump in front of it, right? So it's that partnership is so much more than a piece of paper. And people, look, we're partners, and what does that mean to you? Well, we've got a piece of paper that says this, this, and that.

That's not a partnership, right? My collaboration is caring more about the other guy than you do about yourself. If you do that, everybody will succeed for the three of us. But if you have one or two guys who are like, Hey, I'm, this is, I'm all about me because we've never had a year.

There have been years when Tom has made a lot of money. Before that, I only had a little to do that year, and vice versa. He didn't sit down after a great year and say, " Hey guys, I made a lot of money this year. I had to get a more significant cut. We have never done that.

We've never even gone back and said, well, prior has made this many deals, Chuck made this many deals, and Prior or Tom made that many deals. And so we've never even done that Because we've never thought about it like that. We were in this thing together, and what we try to do on all our projects is everybody knows enough to be dangerous.

Like, I can go to a meeting on a data centre, but don't ask me anything other than you kind of where it is and how many megawatts it's going to be, but yeah, we can fake it enough or, or have enough knowledge about that, to get by. Well, to the 

Chris Powers: To the extent you're willing to share, how does that work amongst the three?

You bring a deal in like. How could one partner make more than the others?

Chuck Anderson: Well, Tom, for example, we built an industrial building in southwest Fort Worth. Yeah, it was an unbelievable deal. It was just more than our wildest expectations, right?

So we sold it for 30 per cent more than we thought we would sell it for. And it was 30 per cent at least. So, people, people wanted vacant. They paid more for vacant space than they did for lease space. It is like 21, 22. Yeah. I mean, it's just wild. And Tom did that deal. Tom and a guy named Marty McFarlane did that deal.

And before that, I couldn't drive you to it right now. Yeah. But it was just that we brought the deal, and we all talked about it and said, yeah, we agreed to do it. Tom presents a case of why we should do it before an hour of thumbs up, and he executes. And like I said, we all know a little about what's going on, but he's the detail guy, and he's the guy who will bring the thing to fruition.

And, it's not like, well, God, that deal made pick a number. It made 10 million. Tom doesn't get eight because he did it. We, we split the 100%.

Chris Powers: Oh. So when you're talking about making more money, it's whose deals made more money here, but not who made more money. That leaves some room for that, which makes sense.

Chuck Anderson: A dollar comes in at split, and a three-dollar goes out. So, yeah, it's. There were years or several years ago when Tom was doing industrial work, but he was crushing it. But we all split it a third.

Chris Powers: The deal you all did. It was a gateway by the airport.

Chuck Anderson: Yeah, that was a nice one too. Yeah, that was great. We've been very blessed on many different fronts. And again, a lot of it has great partners, both on the financial side and the guys on either side of me who are proficient at their business.

Tom's developed 70 million square feet of industrial space in the Metroplex. I don't know that there's any one person who could point to more buildings that he's had his hand on. Early on, we tried to buy industrial buildings, and the problem was Tom walked in and found a hundred things wrong with every building he didn't build.

So, consequently, we just said we had to develop them because we couldn't buy anything. After all, Tom didn't like anything. 

Chris Powers: And again, these are questions for me because we have a more prominent company now, but there are some days I wonder what it would be like to return to having fewer people but more third parties at any time.

It's been there. What's the most developed? I'll start with this question: What are the most development deals you've had at once? 

Chuck Anderson: Oh, it's probably four or five. 

Chris Powers: And so, are you all engaged with architects? Like, where does your job start and end?

Chuck Anderson: One of us would run point on those cases.

So when we built the office centre with Trevor Reese Jones, it was prior, and he and I took the lead. However, we said we've helped get the land done in every construction meeting. We have to get the financing done. Trevor was our equity. Then, he decided to be a tenant as well.

Kelsey Warren came in later and wanted to be a tenant. So, from start to finish, cradle to grave. Suppose Tom's doing something like the data centre and will be cradled to the grave with that thing. 

Chris Powers: And every partner's job is to bring in deals.

Chuck Anderson: Yeah, bring in deals. And I mean, you'll have an informal investment committee, the informal, it's the three of us sitting down, the best of the three of us sitting down, and if we can't, if one guy doesn't want to do it, we won't do the deal.

Chris Powers: Does that happen often? 

Chuck Anderson: Very rarely does it happen. 

Chris Powers: You all probably have a hive mind.

Chuck Anderson: Yeah, very, very rarely. But now and then we'll go, that just, it doesn't, that's—wild. We don't need to do that. But I can't even think of an example of when we turned down. But again, if a guy has a convention on it and you trust them, you've done a lot of life with them and seen all they've done.

It's compelling when a guy comes and says, Hey, we need to do this deal. And here's the reasons why. And then we do it.

Chris Powers: You think DFW is the best market in the country? 

Chuck Anderson: Yeah, I mean, almost for anything, right? 

Chris Powers: If you left the population growth story out, which is the primary driver? Why else is it the best market?

Chuck Anderson: We're getting so many new companies moving here. You can get anywhere from Dallas—I mean, anywhere. Think about it. We could now go to DFW, Tokyo, Singapore, Sydney, Australia, London, Paris, and anywhere else.

And then, when I was a crow in the western half of the U.S., I made day trips sometimes to everywhere, but Seattle was on the west side of the U.S. because it was too far. It's hard because I fly in, and I have meetings. We do that. And these guys had families.

I wanted them to home that are families, and I wanted to get home to mine. I'll fly in early and have as many meetings as possible. And then I'd get on an aeroplane at night, fly home, and try to sleep in my bed. 

Chris Powers: Are there any markets you wouldn't do deals in? Are you all only going to do DFW deals?

Chuck Anderson: I think we're only going to do Texas. That was also why we left; we're always on aeroplanes. We wanted to get to the point where we could sustain ourselves as a DFW. When we first started, we did some water burgers in Florida.

We bought an office building outside of Boulder, Colorado. And then, we did a few deals in Houston but wanted to stay local. That's what's come for the last 21 years. The Metroplex has been so good to us. And again, going into this downturn will be much shorter than ever in the previous 40 years because there's just.

With all the people and companies moving in, we're very pro-business here. It's not like Houston, where you have crazy zoning everywhere. You've got great pockets of growth. The most significant issue will be for people moving to Dallas in particular because that's what I know the best: Where do you send your kids to school?

Private schools are challenging to enter, so people move to the park cities. This means housing prices will continue to rise even in what people consider a down market. The same goes for country clubs. If you move to Dallas, you can stay in a country club.

And if you do, it's a five- or seven-year wait, or you must know the right people. So it's pushing some people to Frisco because they're building campuses there. They have great golf clubs. I've got great schools out there. But again, Dallas, Fort Worth is where I want to be.

And what do they think? We will have 10 million people sometime in the early thirties. 

Chris Powers: So, do you speculate on land and not infill land? Have you bought the edges, the path of growth, anywhere? 

Chuck Anderson: No, we never really did that. Typically, when we buy a piece of land, we're ready to, when we, by the time we close on land, we want to be breaking ground.

We try to because it takes all the risk out of it. Again, there are some things we could have speculated about. So, we bought a 20,000-acre ranch. 

Chris Powers: I would like you to bring this up. Is this the 2008 1031 exchange? What happened there?

Chuck Anderson: Yeah. So it was a, we sold and built two industrial buildings.

It was for a company called ADVO, one in Houston and one in Dallas. We had this money to 10 31 prior, and we know a lot about ranching and things like that. So we bought a 19,000-plus-acre ranch pre-crash. And we were brilliant, and we were going to take the 20,000 acres and divide it up into ten smaller, 1900-acre ranches.

We ran a 16-mile water line, and I know nothing about ranches. So you picture this. So we're in the car, driving me out to shackle for the county, driving around, and I'm going, they're just, and all over the place. And I'm going. I don't understand this. Please tell me what you guys are looking at.

I see some tumbleweeds, rocks, and cows, but I need help understanding the ranch. They convinced me. So I went along with them, and we bought it. And, again, we bought it. Not at the height, but pretty close to it. And then we needed to get out of it. And we were very fortunate that we ended up selling a large portion of the Trevor Reach Jones, one of the most honourable guys we've ever dealt with, because he said, this is what I'll pay.

And he never wavered. He could have returned and said, Hey, I'm going to pay this minus 10%, 15%, 20%. We needed to sell it to his credit and really to our benefit. He was a man of his word and did what he said he would do. So, every time I see Trevor, I want to run up and hug you because it was a great deal. And he enjoys the ranch. Prior, he kept about 4,000 acres for himself. And cause I didn't get the ranch thing. I didn't understand that. He ended up selling that right before the code; 2019 or 2020 ended up selling that. But yeah, that was a significant 10 31.

We had, and it turned out okay. It wasn't, it wasn't a great deal by, by any stretch, but we got our money out. We didn't lose money. And, like I said, Trevor Reese Jones is a man of his word and will forever go on saying that. 

Chris Powers: That's awesome. You could have bought Frisco early.

You could have bought North of Frisco early. And you're all just saying we're just not playing that game.

Chuck Anderson: We were so much more about development than the land speculation; in hindsight, I wish my daughter would start riding horses in 2007 or 2008 when they were riding down Argyle and prospering and stuff like that.

I wish it had gone up when they started. I had about a hundred acres of land. I would have paid for every horse I could have owned, but I didn't. So it was costly, but we never did. We did one deal: we bought a small retail centre, flipped it, and bought a few pieces of land there.

That was a bit of speculation, but we had already made a lot of money on it. We were just 1031 into two or three pieces of land and made good money. But in hindsight, it's something we should have done. We should have done that. We should have done multifamily, but we still need to.

And here we are, and we'll stay the same. Our mantra on land is that unless we go through something in the next 24 months, we see a gigantic discount, and you can buy some industrial land cheaply. Or a fantastic office site. That's how we bought the office site and Preston centres; coal was coit.

It was a Heinz that had owned the land forever. They couldn't get anything done. We got it under contract and took it to Trevor Reese Jones. We said these five things, and Bill Bander Stratton was very helpful and said, well, let's do this thing. And JP Morgan had a drive-through bank on the site, and we needed to get moving.

Fortunately, we had a great relationship with a guy high up at JP Morgan who helped us there. Trevor was fearless of JPMorgan, and that's always a big help. When you have a guy standing behind you going, get them. When you own the bank now, it's fun.

But yeah, we just haven't been in the land that we'll speculate on land in Preston Centre. So whenever something comes for sale in Preston Centre, we figure out how to buy it. And typically, we set a high watermark. I mean, everybody's going to think we're crazy, but every time we've bought it, the next sale is 30 per cent or 50 per cent or a hundred per cent more. And press the centre because it's a quantifiable market. That's, got barriers to entry. It's a great little market for things.

Chris Powers: Is the lesson there that an ultra-call-it land type, but also call it ultra-luxury markets pricing, is that people aren't just looking at every nickel and dime? 

Chuck Anderson: Yeah, I think that's the case. We released that office, that little office building we built for ourselves for 80 bucks a foot when the market was probably, as someone could argue that the market was 40 or 50.

The market was 80 because it made a deal and was only available. So, if you build something unique in a landlocked market, you can't get in. Then it's almost like you name your price. The lesson learned is that if we could find anything in the present centre that comes up, we should figure out a way to buy it.

And often, we shake our heads, go, man, I can't believe we just paid that much. And then it always has worked out, and it's been good for us. And there are a lot of things we tried to buy. We didn't wish we had them. 

Chris Powers: Do you make 1031 every time you sell?

Chuck Anderson: No, no. Because we don't typically. We have several times, but only occasionally.

Our deal is that we typically will sell. So if we wouldn't pay what someone would pay us for it, we want to sell it. So we'll do the sale. And typically, that's an environment where everything's relatively hot. So we would only buy something we would pay for ordinarily. Now, we did exchange on a couple of the retail centres that, in hindsight, was probably not the right thing to do.

Again, we were still determining what interest rates would or should have locked in the longer term. We didn't, but for the most part, if we can profit, we take a problem. We love capital gains. Tom hates taxes. He will do all kinds of backflips and gainers off the high dive, not to pay taxes.

He hates to pay taxes, so we do a lot of it. Always ensure we get your capital gain in, then try to sell it and go from there. 

Chris Powers: All right. Last last question. Maybe not. We'll see how this development you started in the eighties, and I am trying to figure out what it took to develop a building. But from what I understand and talking to people, it was straightforward to get through the city.

You could conceptualize and create a plan and be open 12 to 16 months later. Getting a permit takes 12 to 16 months. And it looks like it's getting more complicated and more complex, not more accessible and more manageable. Do you care? What do you think about that?

Chuck Anderson: I think we think about it. It comes into play if you have an industrial site, and this is a great site. I need to get going on this. Part of the issue is that the cities are busy with all the growth in the Metroplex.

It takes work for them to get things done. And so, you have to build that into the budget. In timing, some, especially if you're building an office building, it's a two-year lead time. Who knows what the market can do between now and two years from now? So, in Preston Centre, we were unbelievably fortunate.

Mike Dardy could build one of the buildings in Uptown. I remember, I mean, he was building. What is this guy doing? I mean, the market's dead. And then, by the time it was finished, it came out of the ground, and he made a killing on the thing. Timing is location and time, and they are everything.

But timing is tricky to control now. And in the cities, there are issues with needing more people to get things done. But you'll ultimately be rewarded if you buy the right site in the correct location. 

Chris Powers: Well, developers' math doesn't. Some deals get struck differently, but in hindsight or theory, call it those two years of chasing and entitlements, you're not getting your development fee.

Your development fee starts when the shovel goes in. If the shovelling process took too long, you smoothed that development fee back to day one. You're not making money off your development fee; you're playing catch-up. So you either have to have lots of developments going on.

You are all in a different state if you're not a fee developer. 

Chuck Anderson: We won't do a development for a fee. I mean, we've had people ask us to do that. We're just, that's not.

Chris Powers: But do you charge you all a fee? You work for free for two years.

Chuck Anderson: Well, typically, though, we will only close on a piece of land once we have everything lined up because, in an ideal scenario, we want to close on that land on the day we put a shovel on the ground. And we've been fortunate about people, allowing us to tie things up long enough.

And if you can do that, then again, you're still, you still got to work, right? The development fee is paid later, but you have to do a lot of work before that in the interim and all the way through. So you got to do it anyway. You have to do it, and then you have to hope that the development fee was never meant to be a big profit centre for people.

It's how you cover your overhead and costs, but you want to make money on the back end, and that's why the whole development for a fee thing. Again, our time is precious, so we can only do so many deals annually. So I want to do the deals that I know I can make a lot of money on, and I wish only to do a development deal if we're going to have a chance to make a real, real pop on it.

Chris Powers: All right. I know you don't have a crystal ball. You talked about 18 to 24 months in the future. What needs to happen for the market to start moving again? 

Chuck Anderson: Well, the good news is that it will continue to move in Dallas. We'll have a pause. However, the banks must work through some of their issues and should only be forced to do that after the election.

Let's say kind of. The first quarter of 25 starts, and it'll take them a few quarters to work through that. So, people were saying, earlier, late last year, early this year, survived till 25. It's because you want to wait till 26. There will be opportunities to buy in 25, but the new development will start in the second half of 25, the first part of 26.

Chris Powers: So, you think you'll buy anything this year? 

Chuck Anderson: I hope so. 

Chris Powers: Are you going to be on another hundred rounds?

Chuck Anderson: Well, hopefully, I will try to play a hundred rounds of golf. And in the last quarter of the year, we'll start looking at buying some stuff. We've got a couple of guys that my brother's hired, and Hunter Lee has hired here in Dallas to look at the kind of debt, such as buying or purchasing debt.

As I said, I don't think the government's pushing people hard yet, but maybe as the election gets closer, they'll start predicting whether the Democrats or the Republicans will win, making them one way or the other. But eventually, they will have to take care of this stuff.

I feel bad for the guys walking around town with a bunch of equity in these deals that are gone, and they don't realize it's gone yet. Right. The reality is that they would sell it for something other than X price today. Well, six months from now, they die to have that price. And six months from then, they'd love to have the cost and get it six months from now.

So, many guys will get wiped out on deals they thought were great but didn't; they needed to have the right debt. Significant office buildings are leased at a hundred per cent but need cash flow right now. Wow.

And that's a problem because of debt; they had debt at three, and they didn't fix it. Now it's eight and a quarter, and they build a thing to a seven and a half per cent yield on costs. And now they're losing a point on everything. 

Chris Powers: Those banks probably will only advance TI and commission dollars if they get a vacancy because they're already underwater.

Chuck Anderson: They're underwater, so those would be job opportunities at a bank. You can buy it by the note, but then they'll put a note on that note, and that may be another way to skim the cap. 

Chris Powers: A note on a note. That's like the most American thing.

Chuck Anderson: That's, like, in the 1980s when he borrowed 120 per cent of costs, right? 

Chris Powers: Chuck. Thanks for today. 

Chuck Anderson: Thank you very much. I appreciate the time. It's fascinating to see what you'll do next. Continue to do so. It'll be fun.

Chris Powers: I appreciate it. I'm 37, So I'm at the same kind of pass you were. 

Chuck Anderson: That's wake-up time. What are you going to do? What are you going to do with significance in your life? That's the challenge for you to figure out: How do you do something that makes a lasting impact on people?

Undoubtedly, your family, correct? Cause you've got young kids, so you've got, you have a daughter. 

Chris Powers: I have a seven-year-old daughter, a four-year-old daughter, and a one-year-old son.

Chuck Anderson: Right. So you, those daughters, I mean, your job is to protect them spiritually and physically to you walking down the aisle.

And there will be times if everybody's not mad at you and your house that you need to do their job right. Because you've got to, you're going to have; God has put that responsibility on you, not your wife. And so you're going to have to make those tough calls. And make the tough calls.

Because it's easy to follow what the world says is okay. It's much harder to go along with what the Bible says and how we know what ought to happen, and those girls are precious. I mean, you, you, you wouldn't give your 400 000 Ferrari to a 16-year-old. Why would you let your daughter pick him up if he showed up now?

Why would you let your daughter get picked up by a 16-year-old kid in a beat-up pickup truck to take her out? I mean, it's not happening. 

Chris Powers: Yeah, man, I needed to hear that. If everybody's mad in your house, that's okay.

Chuck Anderson: It's then, you're doing it right at that point. You go, okay, I'm okay. It's going to be okay. 

Chris Powers: They're going to be like, why are you doing this? I'm like, Chuck told me it was fine. Suppose all of you were mad. It's true; making worknight decisions is not accessible.

Chuck Anderson: Yeah, it's easy to go along with the flow, and that's the world we live in today, right? Yeah, everybody's truth is everybody's truth.

And the reality is that truth is still truth. People don't want to hear it. Yeah. And we got it. We got to speak it. 

Chris Powers: Thanks, John. 

Chuck Anderson: Thank you.