Royal Oak Conversations – Andy Cunningham & Eric Smith

Welcome to the fourth episode of Royal Oak Conversations. This discussion features Andy Cunningham and Eric Smith, both Vice Presidents, Investor Relations for Royal Oak.

We're also excited to share that Royal Oak Conversations is now available on Apple Podcasts, Spotify, and Amazon Music. Please click to subscribe to the show in your favorite podcast player.

Transcript

Royal Oak Conversations is produced by Royal Oak Realty Trust for informational purposes only and does not constitute an offer to sell or a solicitation to buy any security. Investing in non-traded REITs involves risk, including potential loss of principal. Please consult your financial or tax advisor before investing.

Now: onto the show.

Josh Foladare (Host): So welcome everyone to another Royal Oak Conversations. This is a special one. I'm joined by two colleagues. We have a little three-man weave going today. Joined by our two Vice Presidents of Investor Relations - both remote colleagues, not in Rochester. But Andy Cunningham and Eric Smith are here today, so thanks for coming in, guys.

Eric Smith (Guest): Great to be here.

Andy Cunningham (Guest): Glad to be here.

Josh: Appreciate it. So we kinda all do a very similar thing, so this'll be fun for me to pick your brains on what we do. But before we ask questions, I want to get started. How did you guys find yourself in this seat today? So Andy, I'll start with you. Little background origin story.

How did you get into fundraising, equity raising? What brought you here today - that story?

Andy: Yeah, I met Mark in early 2024, and just, we kinda clicked in late '24. Had the opportunity to come to Rochester and spend some time with Mark and the team. And a comment was made in passing that they potentially may look to hire a fundraiser in the Southeast.

And fast-forward to January of '25, and I started in April of '25.

Josh: Perfect. Eric, how about you?

Eric: So after graduating Miami in 2000 with Mark, that's how I've known him, obviously, for 26 years now went right into the role of institutional equity research sales, which basically is calling on large institutions.

Hedge funds, pension funds pitching stock ideas. So I call it an inch deep, a mile wide. So it's across sectors, whether it's real estate, consumer, biotechnology, financial services, you name it. So I got to learn a lot about a lot of different industries. I realized that I kinda had an entrepreneurial itch but was never smart enough to come up with the idea.

And fast-forward, call it 20 years later, so in 2019 helped my neighbor raise some money. We co-founded a frozen food manufacturing company really from the ground up, so total about face from the financial services world. But what that really taught me is really what, a lot of what our tenants see. We were a single tenant. We had 70,000 square feet. Really how you think about that building and maximizing the efficiency of that building. And as we were going through different financing needs, we were looking at a sale-leaseback, which is when I reached back out to Mark to see if that would be an option for us.

We didn't end up doing it. It wasn't a Royal Oak fit, but I really saw it more from our tenant's perspective. And then Mark and I just started talking more and more, and lo and behold Cleveland's our largest market. I've been in Cleveland 26 years. As far as, number of tenants, obviously the number of investors there as well, and it was just a natural fit after meeting the broader, obviously Royal Oak team.

Josh: Yeah. It's been great to get you guys on board. I know for a while it was Mark and I, and it's nice to have some additional help and some different ideas to bounce back and forth. But in that same vein, the day-to-day at Royal Oak can be frustrating sometimes, not because of Royal Oak, but because of the work, right?

It's not always easy calling on people where you're not necessarily the top priority. You're waiting a lot. But every day we still get up, we do the job, we're here. What about it did you like? I think we all seemingly didn't fall into it, but found it in a different way, not necessarily shooting to be on the equity raising side.

What about it kind of day-to-day keeps you coming back? What's interesting? What do you like about the role? Eric, I'll start with you.

Eric: Yeah, I think frankly, it starts with talking with people. I like hearing people's stories. I like being a solutions provider. So whether it's Royal Oak is a fit for some of our clients or not, I always want to understand what they do, what are their pain points, how can I potentially connect them and help them through my 26 years of being in the professional world.

Obviously Royal Oak is, as we all know a great story. It's very simple. And so that's frankly the easiest part, I believe, of our job, is that the same first slide that we have in our deck is the same slide what, 10, 11, 12 years ago. So it's a really fun and easy story to tell.

So it really starts there. But it broadens out beyond that to being more of a solutions provider.

Josh: That makes a ton of sense. Andy, you - previous life - I guess previous career - you had a whole host of things to talk about, a lot of solutions to provide. We give you one tool right now. How does that stay interesting?

Andy: Being at my previous firms, my blessing was my curse. I had 50 to 60 four and five-star mutual fund products that I could sell. So which ones did you choose? Obviously you can't go with them all, so you kinda believe in the story that they have.

So coming over to Royal Oak, having one story that you believe in, that you're passionate about, that, to Eric's point, it's not hard. We're providing a tax efficiency income play, and it's not for everybody, but the ones that seem to invest in it, they like it. We do what we say we're going to do, and we follow through with it.

So going from 50 to 60 mutual fund products to one has actually been really nice 'cause I can consolidate my focus on that and think of creative ways to provide this solution to those out in the industry.

Josh: I think it's interesting, Eric, you mentioned you like meeting people, solving problems, being a helper to them, a trusted advisor. Mark brings it up so maybe that is a Miami of Ohio mindset, but what early in your career kinda led you to have that thought process? There had to be some type of relationship, a big deal you won, a good client that you really liked and respected. What kinda helped you on that path? 'Cause there's a bunch of ways to do this role, but I think we all come at it from that relationship building standpoint.

Eric: Yeah, it really starts with asking questions. And I learned pretty early on, a mentor of mine actually hired me out of Miami he was a CFA, CPA really digging in and understanding companies and asking a ton of questions.

Maybe they're not always the best questions. But at least it gives you a better perspective on where people are going. People always want to talk. If you ask them about their career or, where they're actually going they're happy to open up. And so that's how I just generally kinda start by asking questions, and then it builds on itself. And the more questions you ask, and thoughtful questions, and you remember those sorts of things, you can bring that all back and it shows, it shows to people clients' relationships are real, they're authentic. It's not just, "Oh, you gave me that answer," and it was one, in one ear, out the other.

Josh: Leading question, Andy, but I'll ask it anyway. I think- What we do, I'd call it the right way, right? We're not trying to force anything down anybody's throat. If it doesn't fit, it doesn't fit. We want to provide the tool. What's that philosophy for you? It probably is pretty similar, but what does the right way of that process look like?

Andy: I think it's that identifying the need of the advisor and the client. And early in my career, we prided ourselves at a previous firm on needs-based selling, where we would have the conversation with the advisor community and identify that there was a need for them. And I think that's where we are here. We don't want to be all things to everybody. We want to simply be who we are at Royal Oak. We want to be authentic, we want to be true to ourselves, and we want to, we want the same for our advisor community and our investor community.

Josh: How do you draw that out of somebody? I think that's the maybe the most interesting part of conversation is we can read an ADV, we can see what they invest in, we can talk to them, we can get glimpses. But actually getting someone to admit that they're looking for this specific solution I don't know why it seems so difficult, but it does feel like that sometimes. How do you draw that need out?

Andy: I think it's asking open-ended questions, to Eric's point, listening- Sure … to what they're saying, and understanding that this is a long sales cycle. This is a long-term play. We're not trying to solve a need that they don't have currently, but if we can be there for them, support them, help grow their book of business, help provide solutions, solve problems of their everyday business, in the long term, I think that's what builds the relationship that allows them to open up to give you a glimpse into their needs.

Eric: Yeah, I think it starts with their client base. We're talking about obviously starting with accredited investors obviously. I think going beyond that, real estate generally gets painted with a broad brush. And when people write off an entire real estate sector it's a little confusing to me, to be honest with you because there's 15 sub-sectors beyond that. So it's peeling back the onion. Yeah. So starting with the clients that they actually have, how they think about their real estate exposure, how they think about their fixed income exposure, credit exposure. And trying to understand that process a little bit more.

And if they even are doing anything in alts there's a big swath of RIAs and advisors out there that are still working with the 60/40 model.

Josh: Yeah it's funny. My background, my degree was in education partially, and my joke is that I don't use my degree in any way, shape, or form, but that's wrong.

A lot of this job is educating, right? It's teaching people. It's building awareness not only about Royal Oak, but what's an alternative? Where could it be useful? How does this fit? 'Cause again, these advisors have a ton of things going on. They cannot focus on small sub-sectors, small subsets.

They almost miss what they're not using because they're so invested in what they have already. So it's a educational piece I find myself going back to constantly of "All right let's just teach. We're going to teach what's going on here," and if it's helpful, they'll keep asking, and if it's not, that's okay. You don't mind nos.

Eric: The other thing I was going to mention is there- keeping people aware of how to not step on rakes. And so one of the things I lead with is say, "Look, whether or not Royal Oak's a fit for you, if you're looking at private REITs just be cognizant of the fees and the returns and how they go to, how they go to market." 'Cause you, like us, want to be a good fiduciary. And if you can help raise that awareness or that education process I think people really appreciate it.

Andy: Yeah and I think along the lines of the education process, you never want to… I never want to talk about a subject I don't understand, right? So if we can't clearly get an understanding of the education level of what an advisor thinks of a REIT or alternatives or whatever it may be: If they can't get past in the comfort level of knowing exactly what it is, they're not going to want to present that to their clients 'cause they don't want to, be caught off guard or look not professional.

Josh: Foolish is not a good way to look. I think my favorite thing in this role is when an advisor or an investor or someone who's not even invested, a prospect, will call asking my opinion or asking for help on something completely unrelated. 'Cause that to me shows that we've built this trust and this relationship that I'm a person that they count on for advice, for opinions, for information, and that to me is a win, right?

If you can build out that relationship and that trust that someone's going to come to you for something unrelated and trust that you're not going to steer them in a weird direction or back to Royal Oak. I don't have a problem if it's not related to Royal Oak. You want to be helpful and a good partner and yeah, that trust is huge.

Andy: 100%. And it works both ways. I love sitting across the desk from an advisor and just getting their perspective on how they're growing their business, how they're prospecting because it's fascinating to see how these folks have gained their success over the years.

Josh: I'll use, Eric, a recent conversation you had in an intro for me and my marketing group is we found an advisor who was doing a great job bringing in new clients, and we got introduced to them, and it's been super helpful for us from a storytelling marketing standpoint. That to me is really cool when you can do those types of things.

Eric: Yeah, a lot of it's best practices. And then we're going down this path now of AI. Right? AI is this vast unknown. And as you talk to advisors and think about it, they all want to be more efficient at their job and be careful about it, but can you share best practices among, advisors saying, "Hey, I picked up, something really interesting. You might want to take a look at this." "And, oh, by the way, I'll connect you guys."

Josh: It's not always easy, though, right? They're not always good relationships. So I'm going to ask now just toughest moment? Maybe break it that way. You've obviously, you've gotten to situations where you had to work through something or maybe you thought it was great, you left the meeting and it was like, "Dude, no chance. There's no way this is going to happen."

Let's talk to the opposite of that. Can maybe not talking about the toughest part, but how do you get over that hurdle? How do you kinda move past a not ideal situation?

Eric: I think it all comes back to authenticity. Address it for what it is.

At the end of the day we don't want to waste anybody's time. We don't want to waste our own time. But I kinda live under - and I think we all live under - the mantra of it takes a lifetime to build a reputation, it takes a minute to destroy it. So I'm always going to leave a meeting with something.

But there's definitely been situations where, call it what it is. There's no shame in it. And if it's not a fit, it's not a fit.

Andy: Just move on. Move on. Lesson learned.

Josh: All right, so moving more towards the state of the market, I think anybody who's fundraising right now for real estate, for private equity, for private credit you name it, it's an interesting environment out there.

There's a lot of macro issues that we can't control that may be causing problems. There's a lot of internal to other fund situations that could be good or could be bad for us. When you guys are out there now having those conversations, what do you feel like the state of that market is from a fundraising standpoint?

Andy: I think the tide's turning. This first half of the year, 2026 was difficult. Everything from the, the private credit headwinds to tariffs at the end of last year to the Iran conflict this year. I think people have been a little bit slow to move. But I equate it, being from St. Pete, I do a lot of fishing. I equate it to we were trying to fish the outgoing tide, and now I think the tide's starting to come in. We're starting to see a lot more momentum. A lot more engagement. I'm getting a lot more proactive emails from the advisor community saying, "Hey, can we set something up? We'd love to have a conversation."

So they're looking for solutions and unique solutions. So I think as we transition to the back half of this year, I think it's I think the momentum is there and we're starting to see that tide come in.

Eric: Yeah, I couldn't agree more. I think you start with interest rates, right? I think people have more of a visibility of higher for longer now. And that's okay. As long as there's visibility, things happen. Yeah. And so whereas real estate was a bad word for a number of years, really starting in what, '22 as interest rates were rising it's starting to thaw for sure.

I think the success of private credit and now the issues that are arising are only coming more in the way of our favor. Especially around redemption issues and everything else. The other side of that, though, is everyone talks about the silver tsunami, right? The mass generational wealth transfer.

The same thing is happening in real estate. People don't want to own. If Generation one bought it, Gen two improved it, Gen three wants nothing to do with it. And so you're seeing this massive real estate transfer as well, and those dollars need to go somewhere.

And not even the dollars, but how do we position ourselves or find ourselves positioned in helping that process? Whether we're the buyer or not, or the beneficiary or not how are we inserting ourselves in that process to be again we use the term solution, but be a solution, be a help.

Josh: And it's interesting, to your point earlier, a lot of people with the broad brush strokes, it's real estate. Everything is real estate. So post-COVID, real estate was in trouble. Not all real estate was in trouble. And so I think as issues pop up in different sectors, I think you're starting to see investors and starting to see advisors and other folks in the space not necessarily realize, but start to dive into let's not be that specific.

What is doing well? What is not doing well? Like they would with a stock, with a bond, with anything else that they're trading. And so from my vantage point, I think people are starting to look for the areas that are doing well or the areas that have been successful across those cycles. We happen to be a beneficiary of that because I think kind of smaller format industrial's done really well for a really long time, and we've got some nice tailwinds.

Eric: Yeah, the mission critical stuff for sure.

Josh: It's huge. And that to me, I think as more education comes out, more people are becoming interested in alternatives. I think it's now just table stakes. You have to have something that's not a 60/40 portfolio because it's a commodity at this point for advisors, right?

They need something, they need planning, they need interesting alternatives for folks who might have more capital than they know what to do with. You want places to put that money, and for the younger generations to keep them involved, to your point, it can't be the same thing they did for father, the grandfather kind of generations back.

Eric: Yeah, I think on the alternative side The folks that were operating the traditional stock and bond portfolio, the world of alternatives can be scary. It's big. And sometimes it had a bad connotation for a long time. The question that you see is how do you dip your toe in from a risk-adjusted standpoint?

And so we I think I can speak for all of us, we find ourselves in that position as people start to dip their toe in the alternative space. We've got more liquidity, it's more risk-averse more of that fixed income bond-like structure.

Andy: And I think alternative in the past was an ugly word. I think a lot of investors and advisors, when they thought of alternatives, they thought aggressive. And that's not true. You can find, of course, you can find your aggressive alternatives, but you can find your kind of bond equivalent of alternatives as well.

Again, I think it goes back to earlier in the conversation, we talked about the education process and educating the client, the end user on what exactly an alternative is and the many different forms that an alternative can take.

Josh: So education, good word, good segue. When you're sitting in those meetings now, what are you getting asked? I think those questions have probably shifted over the last few years. What are you hearing from advisors or investors or other folks in the industry that you talk to that people are asking about to figure out what's happening, what's going on?

Eric: People want to know what's going on with the industrial landscape. And it's really a tale of, I wouldn't say tale of two stories, but the distribution warehousing side of thing is very different than mission critical, where we obviously play. So people want to understand the landscape, and as we all know, the market's pretty tight.

And on the other side of it, I think people want to know if there's a residual impact of data centers and how that could potentially impact. Obviously we don't touch data centers directly, but the biggest residual or second derivative impact is really power. Power component, how do you get power to the existing infrastructure? Or the power, or the infrastructure that has the power is even more valuable to say it another way. So it's really, it starts with the macro side, and then it comes back to, look we're a tax play.

It's tax efficiency. And what I've found the common theme among literally everybody is that they don't want to pay more taxes. And so those are really the two sweet spot, really understanding the tax efficiency side and how they can simply tell that to their clients.

Again, simplicity's so huge now that if they can't tell the story in 30 seconds- They're not going to do it. … It's tough.

Andy: I would echo his comments on tax efficiency. I think that's the number one thing that I feel is a theme in my conversations. The other one is access to managers that not everybody has.

So looking for as you're starting to see the migration away from the wire house into the RIA channel you're starting to see a lot of these aggregators go out and acquire these former wire house broker dealer teams. I think now what they're looking for is unique solutions that they never had access to in the past. And I think that's a, that, that's a big selling point for us is we can provide that.

Eric: Niche players, for sure.

Josh: How do we go about solving that problem? I think one of our benefits is our size and being nimble and being able to get in front of a lot of people, but some of these big exits, kind of ejections from wire houses, are some massive firms.

And so one of the questions I've gotten a lot is around capacity and capacity constraints, and how we can potentially digest an amount of capital that a firm would want to provide to make it reasonable for them to spend the time on it. How do we kinda solve for that problem, or do we?

Eric: It's identifying who's the right size, right? As we're continuing to grow, obviously we're north of a billion dollars now. That threshold is pretty meaningful for folks. And so I think it's opening a lot more doors. But there's also the, the largest of the large where, maybe they need to put $2 billion to work and…

Josh: That ain't us.

Eric: That's not us. And so until there's a fund-to-fund structure that they'd probably have to develop on their own probably not a fit. Which is okay. So I think it's identifying kind of the sweet spot of size of, leaning in not only to alternatives, but what's the size of the overall firm. What's a meaningful position size for them versus us. It all comes down to fit.

Andy: Yeah, and we're going to do what's right for our shareholder. We're not going to take money on to take money on. We're going to make sure that we're providing the solution. We're doing what we say we're going to do.

Dan talks about that all the time. We want to tell them what we're going to do, and then we want to do it. And for us to be able to stay true to that is, to Eric's point you're looking to drop $2 billion with us, we're probably not the fit for you.

Eric: But also to your point, I think we've, we've talked about this, is that the fact that, this is prior to Andy and I, obviously, we put a pause on capital raising- back in '21. That speaks volumes for who we are and what we do that we don't need to grow the portfolio for growth's sake.

Josh: Correct. It's a big selling point. It was hard to do in the moment. Saying no is not my favorite thing, but it was the right thing to do, and so we did it, which is good.

Andy: And I'm sure our shareholders and the board appreciated it.

Josh: 100%. I think we engendered a ton of support and commitment and trust because they saw a real time kind of stress test, and I'd say we passed it.

Eric: If you think about it too, if we were buying properties, then they'd be underwater. So it was the right call all the way around.

Josh: No, it was it was a good choice. No, no disagreements there. Similarly. Same vein, different question. You both are bright individuals who could do a lot of things, but you came to Royal Oak. You've talked a little bit about what we do and how we operate, but what's impressed you about the firm kind of a year-plus in that maybe you didn't see from the outside or expect?

Andy: The depth of the talent at the firm, hands down.

Josh: Oh, don't say that to my face. That's just nice.

Andy: I think, I feel confident that there is anybody from our IR team that I can put in a client-facing role, anybody from our acquisitions team that I would put in front of my top clients. I think the depth of the firm from the partners all the way down to the support that we have is second to none.

The other thing is I don't think there's egos. I think we truly are all in the boat trying to row in the same direction to achieve the right goal. Coming from corporate America, there's a lot of ladder climbing. And I do not feel that is a solution or an issue here.

Eric and I have partnered on many opportunities that cross over our states. You and I have partnered on many opportunities where I've asked you to come in to help support or I've made an introduction to you, and I've, to a lesser extent, supported. It's truly been an unbelievable team environment and it's been refreshing.

I told Mark a few months ago. He was kinda checking in as I hit my one-year anniversary. He's like, "So you still happy? How you doing?" I go, "I haven't had a case of the Mondays yet." I go, "I'm a year in and haven't had a case of the Mondays." I wake up, I'm fired up to, to go to work. I'm fired up to see what the day brings because in my past life, I was very nuanced on the advisor that I called on.

I had a focus on retirement plan advisors that had a billion or more in assets and now it's there's no meeting's a bad meeting. I can meet with a CPA, a commercial real estate broker, an attorney, a financial advisor, an individual. And it's the, the other thing is that's been really fascinating to me is seeing how people have made their money and how they want to protect it and invest it.

Eric: It's mostly the swag…No I couldn't echo your comments any better. It's really a team atmosphere. Everybody talks about culture. Culture isn't a sign. Culture is how people feel on Sunday night.

And it, that's the biggest thing that I've…Obviously, you and I have known each other for longer than me working here. But beyond that, it really extends to literally everybody in the organization. They're all really good people that I would want to hang out with outside of work.

Josh: It's my favorite thing to say when people, we interview folks and we bring 'em in, and they ask what it's like here, and it's "I genuinely like everybody that works at Royal Oak and Cambridge Street." It's not a lie. I don't have to force myself. It's like you get stuck in the break room making coffee with somebody, and it's not a bad thing. You're not stuck. You get to chat and hang out, and I'm not sure that's the same at every place. It's, that's refreshing. It's been great. It really is. It makes it enjoyable to come in because being around good people is a good thing.

Eric: I'd also say just the general reputation. Which starts in Rochester, right? Phenomenal reputation in Rochester, but then as I came in, Cleveland's kind of another, another Rochester, right? And just asking around, just phenomenal reputation. It goes all the way down to our tenants and, that a good percentage of them are investors in the company. That speaks volumes in and of itself.

And I'd say the last thing is really not only capability, but prudence. Deliberate prudence. We're not going to rush into anything. We put a pause on capital raising. We're going to take our time. We're going to be very methodical and diligent about how we move forward.

Andy: The last thing I would add is one of our core values is family. Yeah. And, we got the email of bring in our family to an event. There's that quarterly little bonus - do something nice with your wife or your spouse or whoever. And you can do a reimbursement on that.

Culture isn't a sign. It's little things like that. I know that if there's an issue at home that they - management and my peers - know that I will make up, you know. I may miss a little bit of time during the day, but I'll make it up on the back end to make sure everything's there. And that's not everywhere.

Josh: You're adults. You can do what you need to do and get things done, and there's a trust factor there. I don't think my kids have any idea what I do, which is okay 'cause they're still younger, but they do know that what I do provides an awesome Rochester Red Wings experience every summer.

And they look forward to that every year with a mascot and other kids. And the ice cream cart. And that's cool. That's what they think about this place and that's what I think about, too. It's a family piece.

All right. Closing, 'cause I'm sure we could talk about this stuff forever.

For all the young IR fundraising aspiring professionals that are listening to this podcast, hopefully that's a few of them what's some advice getting into this business, into this role that you would provide just in terms of maybe lessons learned. Things to avoid. What you like about it? What's a closing thought?

Eric: Meet as many people as you can.

Andy: Network. Network.

Eric: I kinda hate using the word networking 'cause it seems like it it can be cliche at times, but truly meeting as many people as you can. We have a phenomenal story at Royal Oak. We are not getting meetings unless we know somebody. The warm introductions, and so the more you can build your community of people that, you help them, they can help you- and that's how you make connections, that's how you get across the table from somebody. And there's thousands and thousands of products out there. Yeah. How do you get a seat at the table? You get a seat at the table because there's a warm introduction. Cold emails, cold calls work never.

Maybe once in a blue moon. But I would say meet as many people as you can, ask as many questions as you can. And look, you don't need to be defined to one industry. A lot in life is knowing what you don't want to do. And that goes with trying things.

Josh: I like that. Be the type of person that people want at the table, right? That's what you gotta kinda develop for yourself a little bit.

Andy: Do the right thing 'cause it's the right thing. Do what you say you're going to do, follow through with it, and just be a good person.

This is a unbelievable industry. I've loved every minute of my financial services career. I've met some incredible people, and there's been people that I've met that I've left the meeting and said, "You know what? Not my cup of tea." Maybe I'm not their cup of tea. They haven't taken a meeting back. Yeah. And that's fine, right?

But do the right thing 'cause it's the right thing. Don't worry about where the next trade's going to come from or the next opportunity's going to come from because if you take care of the right thing, everything will fall into place for you.

Josh: Gentlemen, I appreciate the time today. Thanks for jumping on the conversations and we'll have to do it again in the future.

Eric: Great being with you.