Absolute Return Podcast · Accelerate Financial Technologies Inc.

#241 - Private vs Public REIT Investing with Armada ETF’s CEO Phil Bak

·41 min·4 clips

After two brain surgeries, Phil Back quit his corporate job to launch innovative ETFs, driven by a near-death wake-up call.

This episode features Phil Back, CEO of Armada ETF Advisors, discussing real estate investment trusts and ETF innovation with hosts Julian Clomachko and Michael Kesslering. Back is a veteran ETF product developer with experience at firms like the New York Stock Exchange and his own ventures, including Exponential ETFs. He shares his career journey, which was profoundly influenced by a health scare in 2016 that prompted a shift toward entrepreneurship and outspokenness. Back explains the appeal of ETFs as accessible, democratized tools that can achieve massive scale if they overcome initial liquidity hurdles. He cites Eric Balchunas's description of ETFs as "the Silicon Valley of finance" and uses GLD, the gold ETF, as a prime example of simplifying access to an asset class. The conversation covers the commercial success of ARK Invest's Cathie Wood, whom Back praises for her conviction and differentiation in a market he views as increasingly bland. He highlights current ETF innovations, particularly derivative-based strategies from firms like Simplify and Amplify, which aim to provide downside protection. The core of the discussion focuses on residential real estate, with Back arguing it is the most attractive segment within the REIT universe due to stable rental income and favorable supply-demand dynamics. A significant portion analyzes the growing divergence between private and publicly traded REITs, specifically referencing the Blackstone Real Estate Income Trust (BREIT). Back notes BREIT reported a 9.3% year-to-date gain while public REITs fell 20-40%, a gap he attributes to lagging appraisals in private markets. He details the structural risks in private REITs, including high fees, redemption gates, and the potential for a destructive cycle where forced property sales trigger deep write-downs. Back suggests the current environment presents a "quasi-arbitrage opportunity," as public REITs trade at steep discounts—like 70 cents on the dollar—compared to privately held valuations. He warns that gating redemptions, as BREIT did, can ironically spark a panic and a "run on the bank" scenario among investors. The tone is conversational and educational, blending industry insights with personal anecdote and direct analysis. It adopts a clear, opinionated style where Back "calls it like he sees it" based on his extensive market experience. Investors interested in real estate, ETF mechanics, and market structure will find this episode highly informative. Those seeking a purely technical discussion without personal narrative or strong opinion might find less value.

As heard by us

A technical look at how ETF structure shapes the private versus public REIT debate.

The episode frames private versus public REITs through ETF structure, with Phil Back bringing a long view on how ETFs have changed. The hosts move between residential real estate, private REITs, and portfolio construction without flattening the discussion into an easy bullish or…

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Why you'd press play

If you want the real public-vs-private REIT question and the ETF structure angle, start here.

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