The Trillion Dollar Private Credit Bomb Is EXPLODING

Some of the biggest investment funds are freezing withdrawals right now. But the question is, should investors be worried? Well they should be worried. I mean, this is not Silicon Valley Bank, but if you think about what happened to Silicon Valley Bank, that was a bunch of withdrawals, they didn't have the cash. This is a way to control liquidity, because let's just be clear, redemptions force liquidity. So that's what it does. And the problem with that, of course, is this isn't necessarily a bad thing, unless you're an investor, of course, but these funds are in assets that aren't liquid, right? And so this is a liquidity problem. Yeah. So let's discuss that, because I think that gets overlooked. So when people hear that these funds are making it where you can't withdraw anymore, that is in the language of the fund, though. There's always withdrawal limits, whether that be quarterly or annually, for these funds. So they're just enforcing- Yeah, but most people don't look at those details, right? So here we are in a situation where people, let's just take a look at what's happened. This entire issue is a result of the rising interest rates and the loan maturities. You could just boil it all down to that. Now, if you take a look at if these funds are in, let's say, office buildings, office conversions, or debt funds, let's say. Debt funds is another big one. And the money at the time, the interest rates were, let's say, 3% or 4%. Now they're double. So the values are down, the liquidity's gone. And so it just depends on where all this money is focused. So the redemption, or I guess the limitation, is so that there's not a run on the bank, essentially. That's essentially what this is about. Right. Because there has to be withdrawal limits, because if not, then they would have to fire sale these assets. Like if all of a sudden a bunch of people wanted their money out of a commercial building, you have to literally fire sale the asset. And so that's not good for anybody. Right. So here we are. Jerry, you put up this chart. It's excellent. So the investors on the left, fund assets on the right. There's what we call the withdrawal gate, which enforces the rules, essentially. So you guys can kind of see the assets on the right are not, they're not liquid. Right. I mean, it takes, as you know, months, perhaps even longer to be able to sell off apartment complexes, warehouses, office buildings, et cetera. Maybe not on the private loan side. But if your back's against the wall, you're going to sell those at a discount. And so what's really happening is, as these loans start to mature, as these loans start to mature, an investor is going to be concerned, right? We already know, if you bought multifamily assets at peak pricing, for example, or you're in office buildings, you know when there's approximately a little over a trillion dollars of loans that are going to mature in 26 and 27. And there was five or 600 billion that matured in 25. So that's when the rubber hits the road. So what happens at that point? Well, there's a huge cash call to keep the asset or there's extend and pretend, I suppose, or there's loan mods and there's all the stuff that's going to be going on. But there's one thing that is a fact, there's no liquidity and those assets are not worth what they paid, period. Okay. So that's essentially what's happening. And so there's only a couple of things that can force the end. And one is when a loan matures. And so when a loan matures, just like the rest of us, you got to go through the process of resizing the loan based on what the asset's worth today. And the asset is worth a lot less in many, many, many cases. I'm generalizing, of course, and the purpose of a fund is to have investments all over the place. And so they're not going to be all in in multifamily or all in in commercial office or all in in debt. Let's say the whole idea behind a fund is to be diverse. And so if the funds, you might have something that's doing well over here, which is just going to offset something over here. But the redemption piece is, I think, though, the reason we want to talk about this today is because this could be the beginning of something that we should all be really, really watching. These funds, if they have to go mark to market, they're going to take huge hits in the next year to two years on their returns. So that's essentially what we're looking at. But it's important to note that just because a fund is holding its withdrawals does not mean it's collapsing. It's literally just enforcing the rules it has in place. Yeah, rules that you signed up for, apparently, you know, normally you don't. I mean, you want to think that it's, you know, it's kind of like a bank account, but it's not. Right. It isn't. They're invested and they're invested in things. And and, you know, these are stop gaps, you know, because there's a process of the way the funds being managed and the way things are are turning inside of the fund to create the kind of the rates or the returns, I should say, you know, that they're trying to hit. And it also prevents, you know, a rut, obviously. And the but the entire issue, of course, is based around liquidity. Right. And liquidity is super tight right now, whether it's you or whether it's a fund. Right. But I think you can miss the mark by focusing too much on the funds holding the money. That's really not the story. The story is more why people are wanting to take their money out of the fund. Yeah. So that could be a couple of things, you know, obviously it could be because the investor needs it or it could be because the investor knows that they want to take their cash out before these assets, before the loans mature and they have to go what's called mark to market. In other words, you know, if you guys are wondering why there's not more of these toxic real estate assets that are hitting, it's precisely because you think about it just like your home. You know, as equity in your home goes up and down, it's all meaningless until you actually sell it. Right. Like when you sell a home or you have to refinance a home, that's actually when you start to take a look at what it's actually worth. So if that asset goes out to the market and gets sold, then you actually know whether you made money or lost money, right? When it actually trades hands. Not always do you know when there's a loan being modified or potentially or there's an extent and pretend. Not always. You might know, but the investor, you know, more than likely understands that higher interest rates drove values down. They drove cap rates up. And of course, we haven't even talked about expenses, so those expenses are a bummer right now. Like, you know, we're fighting insurance and fighting property taxes and fighting utilities and fighting labor costs and fighting, you know, all the components of the inflation. And this is pre-tariff, you know, pre-war. So, you know, who knows what the future has there? So there's all these things. So a smart investor is looking at all of this and just like you would, where should I move my money? Yeah. And one of the biggest things is people are scared right now because there's unknowns. You know, people don't do good with unknowns. Markets don't do good with unknowns. And there is a lot of that right now. And that is a big concern as to why people are wanting to pull their money out. Well, I think there's a perception that for some reason, the Wall Street is going to manage it better or differently. Obviously, they're going to manage it differently. And so this all goes back to the investor itself. And this is the entire point of this channel is you have to be asking really good questions. So when I looked at investing in REITs, the first thing I looked at was what were their fees? What was their load? You know, how many people are involved in the decision-making process? And more importantly, what is it going to be invested in? You know, is it invested in office buildings? Is it invested in apartments? And if you don't understand what you're actually putting your money in, then that could be a problem, right? Because then you don't even know what questions to ask. Now, a fund, by the way it's set up, is supposed to be diverse, right? So you have all these different kinds of things. But that is precisely what's supposed to diversify your risk. So investing in one apartment building may or may not be better than investing in a fund that you may or may not know what it's invested in. So I think the very, very sophisticated investor is probably the one that's trying to get their cash out, right? But most of what I would call the retail investors, they don't know, right? They might read stuff. You know, Jerry, let's put up a couple of the articles that you pulled up. I think that's really, really important. So these are just a couple articles from last week. So what's happening here, this is not the $50,000, $10,000, $100,000 person. This is the millions. These funds, they get money from pensions and they get money from all kinds of things. These are $100 to $200 to $300 to $400 million investments into these funds. So that's essentially probably who's freaking out the most right now, because they're trying to mitigate their losses as those funds try to diversify their money into these kinds of funds. So the writing's on the wall here, guys. The real estate value, especially commercial real estate, has been severely affected by the higher interest rates. Hopefully you guys know that, because you can only pay so much if the mortgage rate's up higher, the mortgage payment's higher. And so these are very sophisticated investors, and they're going to get clipped more than likely as the loan matures or they have to sell some of these assets, and everyone gets clipped. The BlackRock Fund gets clipped if they have to sell, if they might not. And the money that they raised also gets clipped, so it just goes up all the way up the chain. Yeah, and it's not just out of fear or concern for the market, but another reason people are trying to pull their money out is they need the liquidity. It's their own issue. They have cash calls over here or business issues over there, and they need the money out. Potentially, yeah. You could be right. It could be that they're also having their own liquidity issues. I mean, if you look at a lot of the money, like in the Blackthrone B-REIT, for example, a lot of times these funds are raised internationally, right? So you have international money investing in these types of vehicles. So as you guys should know, things aren't always great outside of the U.S., and we always bitch and moan about the U.S., and I'm not saying you shouldn't be. But if you step outside, things aren't that rosy as well in many, many, many, many areas. And so depending on where that money's from, and the question is if they pull it back, but also what else are they invested in? And so you got to go all the way up the chain and see. So you're right. There could be liquidity issues within the people that provided the money, or maybe they're too heavily in one sector. Obviously if they're in debt, a debt fund, or they're in an office building, and they're in multifamily, I can tell you right now it's 30, 40% off of what it was. Now typically there's a lot more diversification than that. But the big deal on that is if the bank lets them extend or not, correct? Or not the bank, but if they extend or not. Yeah. The real issue is going to be what happens with that loan, right? So typically equity is more expensive than debt, typically, right? So you know... Explain what you mean by that. Well, debt is secured by the asset itself in the form of collateral. So like in your home, let's say, if you default, hopefully you do not, the bank, they're secured by the asset price of your home. So you might be out your money, but the bank is in first position with the debt. So therefore the risk of the debt is less. The interest rate is typically less because it's backed up by the collateral. The second, call it the capital stack, is the equity. So the equity is after the debt. And that's the one that goes like this, right? So that's... You know, if you're talking about single family, as you guys all know, there's a tremendous amount of trapped equity sitting in people's homes as the home prices went up. And so that's fake equity right now, because that could change, right? You know, so you might have $100,000, $200,000, $300,000 of equity sitting in your personal home, but if it's $300,000, it could be $200,000 in a year. We just don't know. You know, hopefully you guys understand the difference. And so the first piece is debt. That's usually priced better than equity. So typically equity is a little more expensive than debt. That's what that means. So we have some great conversations going on in the chat, and we're going to get to some of your guys' questions right after this from our paid sponsor, Monetary Metals. Gold is near all-time highs, but appreciation isn't the only way to benefit. 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It's pensions, it's retirement accounts, different things. The ones that are hitting the news are, you know, this is big money, guys. When you put your money into a pension, let's say, like my father who worked his whole butt, his whole life, his whole life, he worked his butt off his whole life. He put his money, he's part of a union, and that money was being managed, right? And so that money gets invested, you know. Retirement money gets invested. As you dump your money into 401ks, it gets invested. So this is literally Wall Street taking Main Street's money and investing it in some form or fashion. And not necessarily all of it is U.S.-based either. Yeah. I thought it was interesting because Ray on YouTube was saying, you know, these pensions trying to make more money invested into a lot of these deals. And then now they're going to suffer potentially some losses. Well, you know, I don't normally side with Wall Street, but usually, you know, they have all these risk mitigation techniques and, you know, the funds are supposed to be diverse and all kinds of stuff. And so, you know, that's what they're supposed to be doing for the retail investor because they want the retail investor to keep coming back, right? And so, you know, it's very difficult to predict what's going to happen with these because you don't really know what the allocations are, right? If it's 100% multifamily, I can tell you for sure that, you know, these are 30-40% the values of whatever they bought are 30-40% off of what they were a few years ago. But the chance of them being 100% multifamily is extremely low. So, you know, so you have to look at the allocation of what it is. For example, what if they invested in silver or gold or oil and multifamily, right? So you start to see these balances, right? You know, so there's all these things that you have to look at that make up a fund's return. And the issue that they're facing is, again, just going back to the granular, is if they're invested in commercial office or let's say some of these debt funds or even multifamily, to me those are the three big ones and they bought in the last few years. Then you're going to start to see this, the repricing, right? And then that repricing, of course, who takes the hit? The fund. The fund takes the hit. If somebody bought something for $50 million and then they sell it for $35, the fund takes the $15 million hit, period. That's how that works. And so some of these investors understand that some of this stuff has been repriced. And the one thing that cures all of this is time. Like, honestly, it's just time, right? And so- Well, explain what you mean by that. Well, hopefully you guys, if you've owned a home before, like I made a huge mistake. I built a home in 2008, like you imagine, like in the heyday, right? Bought the land, designed a house, built a house. And my costs, of course, just like all bubbles, my cost to build it was high. The price was high during that point. And then you guys all know what happens, you have to say, boom, okay. So I own this home and the value went down after I moved in. And the big real estate investor that I am, I lived in this house for a long time. But again, it didn't matter to me because I was raising the family there and I had zero plans to sell that house. I wasn't flipping it. I wasn't trying to refinance it because I, thankfully, had done a construction, a perm. My rate was 2.8. But the value was down. So I had this fixed rate at 2.8. So I had that home for, gosh, 14, 15 years. So what happened was the value was down, but it didn't matter to me. I was still paying the payment and living my life. And then eventually, it got back to where it was. And then I sold it for significantly more, the millions more that I built it for. But the point is, time fixed that, okay? Just like anything, time fixes things. So what we have right now is we have high interest rates, we have high cap rates, we have high expenses, and we have a repricing going on, okay? Well, what will happen is that stuff, just like in all the cycles, will get gobbled up by new money, new equity, new entrepreneurs, new syndicators, new this, new that. And it'll make its way through. And then, like everything, rents will start to go up again, and values will start to go up again, and who knows about interest rates. And that's what I mean by time. So if you bought something for 50 and it's worth 35 today, if and if you can wait, the chances, based on what I know about apartments, the chances of that going up over the next few years are very, very high as a result of this new construction is going to be burnt off by that point, concessions will start to go away. Nobody knows what's going to happen under this administration with interest rates or the Fed or anything like that. Then, of course, the big question mark is inflation. So if inflation hits as a result of the war and some of these other things that we're starting to see, it's very possible that the Fed keeps their rates high. Okay, so that's a contributing factor. So all this stuff, and then you got unemployment, right, which is the AI thing. So you have both of these things happening at the same time. The Fed's got a lot of work ahead of them in the next few years. And so, but that's what I mean by time. So you just got to be opportunistic. But one thing is for sure, a single family for sure is not going to get any cheaper. A rent, in my opinion, multifamily is going to correct, occupancy is going to go up, rents will start to stabilize. We're still going to have a bugger with expenses, but the values will go up naturally. So the goal, of course, would just get back to 50. If you're 50 and you're 35, the first goal is just get back to 50. What do you mean get back to 50? Well, just get back to that. If you bought something at 50 million and it's worth 35 today, it's probably worth the loan or even under the law. So if the loan's due, then you're in trouble because a bank is not going to renew a 100% financed deal. They're going to say, we can only finance 25, and so you got to come in with 10. So add a loan maturity. Or if you sell it, you take a $15 million haircut, and then that affects, obviously the syndicator, the fund, or whatever it is. So time fixes a lot of stuff. If you can kick the can down the road, continue to manage this thing, and wait till the values come up to first 40, and then 45, and then to 50, now you're in a much, much better position. And that's what I meant by time. But there's a lot of people that are very frustrated right now with this war and everything because we were anticipating the Feds taking down rates, but now the Fed's probably going to pause because of all this inflation around oil, which inflates a lot of things. If we see that, I don't want to get too far into this, but there's a whole point of going into Venezuela and all this stuff. And some people think that this is going to be a really short term issue. I took an Uber the other day, and I was asking the guy specifically about this, and he said, my gas prices are already a dollar higher than they were. And for somebody who makes their living from driving, it's quite a deal. Obviously, a lot of things get transported, flown around. I heard it's now going to start hitting airline ticket pricing and things like that. So yes, it's starting to make its way. It'd be great if it corrected, but I can assure you this administration is all over this issue. So Lyle's asking for those, what should you do with your money right now, really, though? Like if you're able to pull money out of a fund that you don't want to be in, what would you do with it? Well, first of all, if you're able to pull it out, I would look at a couple things. The first one is, why would you? That would be the first thing. So I wouldn't automatically say you should, because again, it all boils down to what's it invested in. So just like you guys, I have a lot of money invested in my multifamily portfolio, and it's repriced. So would I want to sell it? I would not, because it's being managed well, it's got low leverage, and as our distributions are down, our cash flow's down, yes, all that's happening. However, 30 years I've been doing this, I know that just like everything, there's a cycle here. So that would be the first question. The second one would be, of course, then what? Like if you do, do you have a tax problem? May or may not, right? And so is it better to keep it there? Hard to say. Depends on what it's in. If you do that, what I think the best thing to do is to put it in cash and try to get the best interest rates you can. I personally think this is a great time to build up your liquidity. It's exactly the problem that these redemptions we started talking about. If you're liquid, right now is a phenomenal time to be looking at deals, and I'll just give you one example. I won't tell you where, but last week, our group, our investment committee found a deal that's 5% occupied. Like let me just say that again, 5% occupied. And now, it's like almost a 300 unit apartment project, 5% occupied. And so, we're like, well, it's probably, I think that the lender might take 15% of that to 17,000 a door. Now I know that probably shocks some of you guys, but it doesn't shock me at all, because we're looking at deals like this. Okay, so why wouldn't I buy that? Well, we're trying to, but the point is, so what makes something like that move quickly? Cash. It's not financeable. What bank's going to give you with 5% occupancy? Which by the way, those five people, or those 5%, they're probably, I don't even know why you would live there when it's 95% vacant. And this is a nice property that was fully renovated. I think it was worth about 45 million bucks back in 2021, 2022. So just in four or five years, it was renovated, and then I think there was like a 20 to five to $30 million loan on it. And we're hoping to get it for maybe eight, nine grand, million, something like that. Okay, so who loses on that deal? The equity loses, the debt loses, all that. And so this is the arena I'm looking at right now. So to answer your question, I would be building up my cash and have a liquid position so that I could take action. That may or may not be a good deal, by the way. If we're awarded it, obviously there's a lot of risk with trying to lease up an existing property with lots of capex to it and negative cash flow and all that kind of stuff. But the point is, is that because we have cash today, we can buy that thing all cash and solve somebody's problem. And so that's primarily where I would go. So I had to laugh because Falal from YouTube said, vacant sounds like a dream to live in. Yeah. And by the way, I'm going to talk about this more. I'm going to actually, I'll tell you what I will do. I'm going to talk about this deal on our podcast because, by the way, in this particular market, there's three that are under 10% owned by the same lender. And these are all two, you know, my, you guys know my buy box is two to 300 units, right? And so there's stuff going on behind the scenes right now with these distress debt, bad operators. And I know in my head, but by the way, when my investment community brought me this deal, the first thing I thought of is why would I ever buy a dog like that, right? Like it's got to be horrible. It's got to be in a horrible location. It's got to have all this stuff. They showed me a photo. I couldn't believe it. I was like, are you kidding me? Like fully renovated just four years ago, I think it was. So you know, I was like, oh, this is going to be a good buy. So make sure to check out our podcast that'll be out on Thursday, the Ken McElroy show. So let's talk about why analysts are concerned and why this might not be a big deal. And then when it would become a big deal, the whole withdrawing. So short term, it's not really a big deal because they're just enforcing the rules of the fund. Yeah. Like guys, like, you know, a lot of these deals that are invested are just aren't liquid, period. Right. So the reason those rules are in there is so that you can't just, you know, make a run. Right. Now, there's a whole process to getting liquid. Right. And the problem is, is even if they sold them, a lot of these, the ones I've been talking about, there's no liquidity anyway. So the debt is worth more than there's a cash. It's more of a cash in than a cash out. So you know, so I think smart investors are just trying to get ahead of this. That's all that's happening. So but it would become a big deal if it continues, right? Sure. Yeah. But the pressure continues. Time solves this. I'm telling you guys right now. Time solves this. We're heading into this, what I would consider to be an incredible, incredible buying window. Like, like, if you can buy, buy fully renovated assets, you know, two, 300 units at 15 grand a door. Like, come on. Like, that's what we used to spend to renovate it. Like, it's nuts. Right. And so now you really got to know what you're doing here. Like, you have to have a team that can assess all the, you know, where all the bones are buried. Like, because there's a lot like, you know, like, what's the real capex number, right? You got to look at the roofs, the fire systems, you know, all the issues that you're going to have, or anything that was deferred maintenance, which basically everything when you when, you know, at some point, while it's going through default, and while it's going back to the lender, there's a zillion things, right? Like the pools and the fitness centers, and, you know, every single unit, and there's a big number to fix it. And it's going to take at least two years, right? It takes two years to fix something like that. So it's not for the faint of heart, and there's no cash flow. So I already know there's a million six negative per year today, if we if we step into the shoes today, it's a million six, what I don't know is yet is because we can we can get pretty close with that. But I don't know is how, you know, again, where do you start and stop on the renovations? Right. So so these are the kinds of things that that we're starting to see out there. And so this is an incredible couple year period we're going to go through. This is this is just like 2008, in my opinion, for for commercial, not really for residential. Oh, for sure. Yeah. Yeah. This is all about, you know, the space I'm in, which is, you know, to Neil, do you always try to pull me back? Well, but people because when you say 2008, a lot of the audience thinks, oh, home prices are going to crash. And that's just not the case. And 2008 was rough time for single family. It's not going to be that way. So there's things that the administration can do and are probably going to do and have already started to do because they're not going to just sit back and just watch everything, you know, implode. Right. So they can get involved and they do get involved. And the first thing is obviously lower interest rates. And this was all going according to plan pretty much until the Iran war, I guess you could call it, which has now spiked the oil prices. Well, it wasn't really declared. Well, I think that, you know, you're supposed to go to Congress for active war, right? Or I don't know. Maybe that's getting in the weeds. But so anyways, so I have no comment. Well, so the lower interest rates is one thing the administration can do. And lower interest rates solves a lot of this problem because a lot of the problem in multifamily and in a lot of these private equity funds was because the interest rates rose so fast. So if they can get them down and that's part of what you were saying about time, then the math starts to work again. I think it helps a lot of them. But, you know, like we looked at a chart last week that my investment committee put together. Listen to this. So every single deal that you have, you sign a loan document inside of there, there's what they call loan covenants. And inside of that, it's called the debt service coverage. Right. The DSC, debt service coverage. And what debt service coverage is, is let's say you have a net operating income of 100 grand. Your debt service coverage should be 1.25, 1.3, let's say, which means you essentially have 25 percent or 30 percent of insurance from the debt side. So so you have that much more NOI to be able to cover your debt payment. We looked in just Dallas, had 968 apartments, 968 individual properties that had a 1.0 debt service coverage or less just in Dallas. So what does that mean? That means that 100 percent of the cash flow is covering their payment. That means there's no cash flow. So so you start to look at these little things that is public information and you start to get a little bit concerned about, you know, the liquidity. Right. And so so, you know, that's that's kind of the world I'm looking at is, you know, again, I'm I'm very focused on apartments and that's just one city. By the way, we looked at, gosh, there's 30, 30 different cities. So the the, you know, the the values are down, period. They're down. And and the big crusher was interest rates. So interest rates went up as a result of the high inflation. And that's what Daniel's talking about. So if we continue to have high inflation, what is the one of the Fed's tools is to is to is to raise interest rates. And that's not what everybody wants. And so I don't really think that it's going to unlock and save a whole bunch of multifamily folks personally. It might help for sure if somebody's but up to this point, there's been a lot of cash in certainly very, very little distributions in this space. And, you know, like a partner like Ross and myself, you know, we personally funded a lot a lot of this stuff because, you know, we're we're certainly in the same bucket as everyone else. Not in a huge way, but we certainly we've taken our licks over the last couple of years. And I think I've talked a lot about this. And so the question is, you know, a quarter point here, half point here, even a point here, it's not going to move the needle that much. And what it's really going to do, in my opinion, is it will unlock all that equity that's sitting in the single family side. So this is, you know, lower rates is going to really help the Main Street more than it than it will Wall Street. And and, you know, so the accredited investor, the high net worth, the family office, the private equity, you know, that'll make its way through. But Main Street, lower rates is really going to help Main Street more than anything. So Straight Drive brought up something interesting. They said private credit has been a lifeline for many businesses and real estate. And if this goes bust, it's going to be hard to get a loan because big banks are going to take a lot of time and ask for a lot of collateral. Yeah, that's an excellent point. I was actually at an event and I ran there was a CEO of a big, large bank. I went up to him afterwards. I'd never met him before. And I started asking him, you know, and I introduced myself and I said, what do you what keeps you up at night? He goes, office buildings. I'm like, yeah, me too. Like, you know, so so, you know, this is a I'm not going to say which bank, but so, you know, we think about this right out, right, right out of the gate, like office buildings. He's like, we're not investing in any office. So if they're if they have loans or debt for office buildings or potentially even equity or maybe even partnerships, you know, you know, the cracks are showing and what's happening is they're kind of being bandaided together. Nobody wants to lose anything. Like, let's just be clear. Nobody. Nobody want if a bank loan me money. You know, it's there's a whole process, you guys, as you know, with the property being the collateral. But if the collateral is worth less than the loan, the bank is like raising their eyebrows. And and again, it doesn't matter unless the loan matures. So this is all about maturity. Well, that's something else to bring up, because when we're talking when what the administration can do to step in, you know, they can provide cushion to these banks to be able to hold on to these loans. If they need to. Yeah. Like, you know, like, you know, I mean, I suppose that the you know, the reality is, is that, you know, we've seen this happen before. And what will happen is the the stock price will go down. And some of these finance, the financial institutions, the ones that have really done a very, very good job of of, you know, managing what loans and where they are, they're going to be fine. It's the ones that have it. Right. So, again, just just imagine like it's hard to wrap your head around this. Imagine you're a, you know, a local bank in the middle of Oklahoma. OK, let's just just say you own something, which which is entirely a lot of people do. And you've invested primarily your commercial lines and office and multi that you're probably a little concerned. Right. Because now because it's a standalone business now, some of these bigger banks, of course, you know, might not have those kinds of issues. But just just look at what happened with Silicon Valley. You know, and just look at just look where a bank invests and how they invest and what they invest in matters. And and on from a debt standpoint and who, of course, so all of that stuff makes its way. Those losses hit and they hit the shareholders or they hit the people that own the banks or, you know, whoever. Again, just as you guys know, you can follow these things. So it's going to be very, very, very interesting. And I actually looked into this one time and all the big name banks are actually not that exposed. Well, it's a small regional banks that are really, that's kind of the really exposed because they're the ones that do a lot of these real estate loans. But, you know, we could see, you know, banks being the smaller banks being bought out by the bigger banks if they're really in trouble. That's exactly what happened. If you guys if you if you controlled a huge bank and there was a small regional bank that had all these deposits, all these customers and they were in trouble, you would you would try to take over that bank just like what has already happened. History just repeats itself. So what advice would you get to give to people that are sitting in these funds that are trying to withdraw from these funds that can't withdraw from these funds right now? Well, again, you got to look at, you know, it doesn't mean you should like honestly. I mean, what if what if you're primarily in gold, silver and oil? You're probably fine, right? Well, knowing our channel, though, what if they're in? Yeah, I know. But if you're in a fund, the chances of it being 100 percent multi is is low. So there's not a lot you can do again because you go back to the liquidity when people want out. It's based on the value today. I mean, it's you're not going to be able to you're not going to get out at what you got in at if the values are down. That's true. You know, you just that's a good point. That's a good point. It's not like you put in 200 grand and you're getting back out 200 grand because the fund's down. So it's priced at what it's priced at. Right. Correct. That's actually the issue. Right. And I think from you start to take a look again, getting back to these sophisticated investors, they're looking forward. Right. It's just type in, you know, what's the what's the commercial loan maturity wall look like in twenty six, twenty seven and twenty eight? And you'll see the next this year and next year is over a trillion. OK, so if you want to give you more specific, all you got to do is see where what cities, you know, I'm in Boise, Idaho. You know, what's the maturity wall for commercial in Boise, Idaho? I'm sure you can figure this out. Right. Oh, look at this, Jerry. Oh, wow. There's your maturities. The four point eight trillion dollar maturity wall. That's funny. It's one point two six billion. Don't you mean a T there, Jerry? Oh, look, I finally got Jerry. Finally got Jerry on a technicality. So just take a look at those. Those are big numbers, guys. Like, you know, like these are real things happening. Like when there's a loan, if you own something like a car, let's say, you know, like, you know, a car is a great example. Right. You you you you buy a car and you lease it. And you take it in. And guess what? The lease and the car, the value, it doesn't match up. Right. So, you know, you owe more on the lease than the car's worth. This is all that is. And so what do they do? They keep you in their dealership and they they finance that into the next one. And so, you know, are we going to have loan modifications? Perhaps. Or is there going to be an infusion of equity? Perhaps. Is there going to be a preying extent? Perhaps it's going to be based and extend or extend and pretend and pretend to pray. So, yeah, I don't know. Like, you know, it just depends on the lender. It's going to depend on so many things. You know, I do know there are a lot of lenders. This is something to watch. There's there are lenders that specifically put together debt funds for asset classes. Right. So I would keep an eye. And just go just go look those up. And, you know, so it's just we're going into a really interesting time. So this is a great time to be liquid. And and it's a it's a great time to but you can really you can make some mistakes here, too. You don't want to catch it, as I like to say. You don't want to catch a falling knife. You don't want to catch something too early and then not know what that means. Because the the pricing depending, you know, I guarantee you, here's the first thing that's going to happen. The the lender, they're going to put they're going to put the asset out for the loan. Right. By the way, equity is gone. And then the market will tell you whether or not it's worth that or not. And if it's not worth that, then the lender has to decide, do I sell it for less than the loan? And if I do, then the lender takes that hit. So that's that's the process. Yep. Well, we'll see you guys on Thursday for our podcast, The Ken McElroy Show. And if not, then next Monday. See you guys.