5
00:00:14.969 --> 00:00:25.860
Rachel Wein: To recap, don't paint retail all with a broad brush the hurt is primarily focused in the mall sector, the grocery sector is just exploding so online e commerce for grocery is

6
00:00:26.220 --> 00:00:32.280
Rachel Wein: beyond anyone's wildest expectations for adoption year over year quarterly increases.

7
00:00:32.970 --> 00:00:42.090
Rachel Wein: 215% across the board with Instacart being 497% of Amazon fresh 258% up

8
00:00:42.390 --> 00:00:48.900
Rachel Wein: You want to know where people are going to be going as they leave some of these mall retailers, it's going to be to the big box sector.

9
00:00:49.170 --> 00:00:57.210
Rachel Wein: Largely Walmart and target will be the beneficiaries of of the losses in the department store space with one

10
00:00:57.930 --> 00:01:07.080
Rachel Wein: Survey back from JC Penney shoppers asking, Where will you likely shop if your local JC Penney's closes a third of them saying target a third of them saying, Walmart.

11
00:01:07.410 --> 00:01:20.190
Rachel Wein: And then a brief recap on stores that are open versus closed when we spoke last at the height of retail closures 61% of retail stores in the US were closed representing

12
00:01:20.850 --> 00:01:25.500
Rachel Wein: 55 square feet of stores and that was April 14 FRIDAY, APRIL 14

13
00:01:26.280 --> 00:01:41.280
Rachel Wein: We are now, as of last Friday at 24% of retail stores closed representing 22% of square footage and then those are stories that are completely closed and stores that are open with significant restrictions.

14
00:01:41.730 --> 00:01:50.940
Rachel Wein: Represent 21% of stores and equally 21% of square footage. So that would be your basic retail update

15
00:01:52.860 --> 00:02:06.210
Richard Green: So I just on the response about target versus Walmart, given that target is smaller than Walmart. That means proportionately target will do even better than Walmart if people do what they say they're going to do, is that correct

16
00:02:06.690 --> 00:02:14.910
Rachel Wein: Yeah. What's interesting about target as well as a lot of their profitability comes from the more discretionary items and those were significantly down in the first

17
00:02:15.690 --> 00:02:27.060
Rachel Wein: Month. I want to say this was, you know, March they had 50% increases in their grocery and then they had 50% decreases in and apparel and soft goods.

18
00:02:28.320 --> 00:02:54.870
Rachel Wein: And I'd have to look back at the numbers, but what's what's really fantastic for target right now is the the online online purchase fulfilled by store so their pickup drive up and shipped delivery is up substantially shift is up 300% drive up is up 40% and it's it's really a soothing.

19
00:02:55.950 --> 00:03:16.170
Rachel Wein: 40% of people that used to drive up use it for the first time. So, and if you haven't used target drive up. It is fantastic but there comes sales targets calm sales Q1 of 11% comp digital sales up 141% and same day up 278%

20
00:03:17.280 --> 00:03:18.090
Rachel Wein: It's outrageous.

21
00:03:18.300 --> 00:03:29.940
Richard Green: And so there's sort of this sort of natural, natural experiment going on is is places opening at different times. Are you seeing that translate into retail sales so

22
00:03:30.840 --> 00:03:40.770
Richard Green: So Florida opening earlier. Are you seeing a substantial pickup and and what I mean by that is brick and mortar sales relative to the places that are closed.

23
00:03:41.430 --> 00:03:48.840
Rachel Wein: So, you know, it's a bit of a mixed bag because there's certainly some locations where things are open and yes Florida is largely open

24
00:03:49.710 --> 00:04:01.050
Rachel Wein: They're still there are folks that still don't feel comfortable going to stores and, you know, I think the last time we spoke Simon had just announced that they were going to open up 50% of their malls. Bye bye. May one

25
00:04:02.160 --> 00:04:13.170
Rachel Wein: Was unclear is how many of the stores within those malls are open and and it is primarily local stores that are open and operating and the national chains and the higher end chains had been

26
00:04:14.490 --> 00:04:29.940
Rachel Wein: Opening on a much lower rate. I will say one encouraging bit of information is that TJ Maxx announced that they're year over a year. Excuse me, weekly, this week versus like the same week last year was up.

27
00:04:31.110 --> 00:04:38.880
Rachel Wein: Was up like their sales were up year over year for that one week when they had the opening. So there is some pent up demand in the apparel space which apparel has just been

28
00:04:39.450 --> 00:04:55.530
Rachel Wein: Really crushed and something else I mentioned just before we wrap retail would be that 14 stores 14 change represent 25% of all mall space. I can actually, I can share this image if you

29
00:04:58.800 --> 00:05:00.060
Rachel Wein: Share it here.

30
00:05:02.250 --> 00:05:04.380
Rachel Wein: 14 stores equal

31
00:05:05.610 --> 00:05:18.360
Rachel Wein: Equal 25% of them all space. And if you see here these first three Macy's JC Penney and Diller, it's Adam up and it's about 15%. So this is really where the heart lives in

32
00:05:19.350 --> 00:05:29.250
Rachel Wein: In the retail sector right now. So I just want to encourage folks grocery retail is. It's fantastic. I mean, there, there are certainly we see the publicly traded rates and their rent.

33
00:05:29.580 --> 00:05:37.560
Rachel Wein: recoveries but even some of the private owners folks that we work with are in the 85 80%

34
00:05:38.190 --> 00:05:46.290
Rachel Wein: You know the nail salon that wasn't open isn't paying a Chinese restaurant that isn't open isn't paying, but a lot of the other folks are and I just show you a visual here.

35
00:05:47.250 --> 00:06:03.930
Rachel Wein: The numbers that I mentioned this is this is the latest update from last Friday, which shows the number of stores that are still closed again that's you know that down from the high of about 60% that was closed. A couple months ago.

36
00:06:05.520 --> 00:06:06.450
Rachel Wein: I can stop sharing

37
00:06:06.720 --> 00:06:18.360
Richard Green: Great, Rachel. Thank you very much. Let's move on to industrial and by the way, we will take questions and please type them into the Q AMP a box and I see we have one, but I'm going to hold off until

38
00:06:18.960 --> 00:06:30.030
Richard Green: We go through all four of our presenters. I will do my best to get all of the questions out to the panelists. Before we wrap at noon today. So, Lisa. Tell us about industrial

39
00:06:30.600 --> 00:06:42.150
Lisa Reddy: Yeah, thanks for having me today. Nice to see everybody in terms of industrial, you know, April, when everything came to a head. We had an influx of rent relief requests.

40
00:06:43.080 --> 00:06:52.980
Lisa Reddy: You know, our total requests were about 4.3% of our gross annual rent, but we ended up, you know, dividing the request and just, you know, subcategories.

41
00:06:53.340 --> 00:07:01.320
Lisa Reddy: Really focus on the on the customer who needed it the most, you know, the small mom and pop, not just the opportunities opportunistic asked

42
00:07:01.770 --> 00:07:18.330
Lisa Reddy: And this month, actually, we've seen a real shift in slowdown of those requests. So globally 95% of our customers are open at least partially operating. So it seems like it's been a real improvement from one month to the next.

43
00:07:19.350 --> 00:07:27.930
Lisa Reddy: In terms of the industrial sector. We're also seeing a real shift in what our customers are looking for. There's been a real

44
00:07:28.650 --> 00:07:36.780
Lisa Reddy: Need for immediate inventory because of the bulk of, you know, of consumer goods and inventory that has been in the supply chain so

45
00:07:37.020 --> 00:07:44.430
Lisa Reddy: We've seen a need for racked warehouses for cold storage, because the grocery food and beverage. You know, they have been

46
00:07:45.090 --> 00:08:01.110
Lisa Reddy: Kind of, you know, lagging in terms of their econ build up but now with the demand of Stan stay at home. They're real ramp up for them to find space immediately and they're working to improve district supply chain. And it's been interesting to see.

47
00:08:02.130 --> 00:08:16.080
Lisa Reddy: We've also seen an uptick in construction and home improvement. Good. So people staying at home, wanting to better their house, etc. So the industries that we've seen that have been hurting obviously have been the auto

48
00:08:17.400 --> 00:08:22.050
Lisa Reddy: The, you know, retailers who only have the supply chain focused on retail

49
00:08:22.950 --> 00:08:41.430
Lisa Reddy: We think that diversification of the supply chain is really what's going to carry these industrial users to the next level. When we start the recovery phase. So we just anticipate that the customers who have the devices diversified supply chain and are focusing on the

50
00:08:41.670 --> 00:08:43.230
Lisa Reddy: Evolution of E com

51
00:08:43.590 --> 00:08:45.780
Lisa Reddy: Are going to be the ones who come out the strongest

52
00:08:47.430 --> 00:08:55.710
Richard Green: So let me let me follow up on your comments on the supply chain and David out this morning I'll ask you this question, too. And we come around to you, but

53
00:08:56.580 --> 00:09:05.760
Richard Green: Given the deterioration relationships with the relationship with China. Is that going to have a big influence on particularly your piece of

54
00:09:06.150 --> 00:09:17.460
Richard Green: Supply chain and are you thinking about how that's going to change your peace and what What strategies are you using in order to deal with that or do you think it's just not going to be that big a deal.

55
00:09:19.320 --> 00:09:25.920
Lisa Reddy: I think already you know I think already industrial transportation providers industrial manufacturers.

56
00:09:26.400 --> 00:09:33.900
Lisa Reddy: I think, you know, since the end of 2019 when all of this was, you know, starting to come to a head. I think they've already been looking at diversifying

57
00:09:34.260 --> 00:09:49.320
Lisa Reddy: Where their products are sourced where they're doing manufacturing. So I think it's just going to add an element to the industrial sector that's kind of already been in the works. I don't anticipate it you know having a huge, you know, throwing a wrench in the in the chain.

58
00:09:50.100 --> 00:09:56.700
Richard Green: Okay, so you don't see, I guess, particularly this week with China cracking down on Hong Kong.

59
00:09:57.810 --> 00:10:10.470
Richard Green: Secretary state talking about sent new sanctions that that relationship is going to deteriorate further and it seems to me yet. I mean, for example, we know that stuff is living in

60
00:10:11.310 --> 00:10:26.940
Richard Green: China, but a wholesale move all the stuff. The Chinese has been doing would be, it would be difficult to make that pivot over night. Um, but it sounds like from what you're seeing if it was because it was heading in that direction. It's really not affecting your business, very much.

61
00:10:28.620 --> 00:10:32.910
Lisa Reddy: Right. I mean, we've actually seen. It's interesting. We've seen an increase demand.

62
00:10:33.930 --> 00:10:38.640
Lisa Reddy: This month in, you know, like I mentioned the need for immediate immediate

63
00:10:39.330 --> 00:10:50.250
Lisa Reddy: Space, because they already have our customers already have a buildup of this inventory and many of the customers that I talked to over the past 35 you know 30 to 45 days.

64
00:10:50.700 --> 00:11:04.440
Lisa Reddy: The ones who have been able to weather the storm have already had a diversified supply chain. So they've, it seems like they've already had in the back of their mind that you know product can't just come from one place so they've they've started to do that over time.

65
00:11:05.670 --> 00:11:13.890
Richard Green: Right. Well, okay. Again, I remind you if you have questions for the panel please type them into the Q AMP a box, David, what are you seeing out there.

66
00:11:15.510 --> 00:11:26.070
David Dollinger: Well, we specialize mostly in R amp D buildings and Silicon Valley. A lot of multi tenant, as well as retail in Southern California in Northern California in the R amp D sector.

67
00:11:27.300 --> 00:11:41.730
David Dollinger: It's been fine. I think all the tests have been doing well. I do have a couple manufacturing test out a lot. They're already starting to come back from China, like you were saying to us for manufacturing. So I think that trend that's been going up the last few years will continue.

68
00:11:43.080 --> 00:11:55.050
David Dollinger: But all the r&d tense or it seems to be pretty steady pretty good. We've done a few deals with some big Fortune 100 companies, the smaller tenants are all kind of on hold. At the moment on retail

69
00:11:56.670 --> 00:11:57.300
David Dollinger: We have

70
00:11:58.560 --> 00:12:04.350
David Dollinger: Collected rents from all the big box. Guys, we get three day notice is to a lot of them and we still were able to collect the rents.

71
00:12:05.220 --> 00:12:17.100
David Dollinger: After we give the notices the restaurant space is tough. And we have to continue working with all those small tenants. We have signed a couple leases and the last week with some small retailers and that has

72
00:12:18.360 --> 00:12:19.950
David Dollinger: What happened here and

73
00:12:21.270 --> 00:12:26.280
David Dollinger: That's been a little bit surprised to get some small retailers actually signing leases in this environment.

74
00:12:27.360 --> 00:12:31.140
David Dollinger: But generally rent collections were way up in May.

75
00:12:32.430 --> 00:12:40.770
David Dollinger: I think a lot of the small tenants got the PPP loans that they may April, May together and having the retail R amp D was already close to 100%

76
00:12:41.340 --> 00:12:56.130
David Dollinger: The retail WAS LAGGING but may was really good. So we'll see what happens now. In June, as everyone's opening where they can all make the rent payments and such, but it seems in my portfolio that hurt seems to be concentrated in the small Qasr is in restaurants.

77
00:12:56.820 --> 00:13:11.160
Richard Green: Well, so under restaurants and Rachel. If you want to jump it on this side, like your views to but how many of you do you think how many you think will be flushed out because of this, and how many will survive give a sense of that.

78
00:13:13.110 --> 00:13:24.240
Rachel Wein: Yeah, I think it's hard to to place a number on it, but it's going to be large scale. We already have some bankruptcies in the restaurant space mall based restaurants like the parent company of Rio.

79
00:13:25.560 --> 00:13:29.670
Rachel Wein: And any buffet type restaurants like

80
00:13:31.500 --> 00:13:38.940
Rachel Wein: Sweet tomato and some of the others. I mean those just can't be, can't operate, given the the health constraints. So

81
00:13:40.530 --> 00:13:57.870
Rachel Wein: Depending on how long the seating restrictions last we may be looking at a large scale rent reset in the restaurant industry, the hurt is felt increasingly along the price spectrum. So the you know Qasr

82
00:13:59.280 --> 00:14:09.600
Rachel Wein: To pull is going to be fine but fine dining and it's going to be much harder for them to get back online. So I would just, I would echo what David said.

83
00:14:10.650 --> 00:14:19.710
Richard Green: Do you have any sense of more of them are doing the drive up business. How much revenue, just that replace and can that be used as a supplement

84
00:14:20.550 --> 00:14:24.120
Richard Green: To they're spreading people out inside the dining room.

85
00:14:24.660 --> 00:14:32.190
Rachel Wein: What we see is typically a restaurant would get five to 10% of their sales from drive up

86
00:14:32.910 --> 00:14:47.430
Rachel Wein: Pick up takeout whatnot and with the stores being closed that was roughly doubling and in some cases it was doubling. So, you know, double 10% 20% still an 80% reduction in overall sales. So in many cases.

87
00:14:47.880 --> 00:14:52.980
Rachel Wein: You have to layer in the employment factor as well, which is that in some cases.

88
00:14:53.520 --> 00:15:02.370
Rachel Wein: These employees are receiving more and unemployment, which just complicates matters for getting folks back online. And then how many folks do we need to get back online.

89
00:15:02.730 --> 00:15:14.280
Rachel Wein: When we have the diminished capacity. So there's, there was a question about why retailers way to reopen and this is part of it that the employment issues complicate matters.

90
00:15:15.750 --> 00:15:23.490
Rachel Wein: And what are the best practices, how are we to keep our team save our going to keep our customer safe and that's that's that's been written yet.

91
00:15:24.330 --> 00:15:31.800
Richard Green: So you know you. I can't help but interject just one of my favorite hobby horses is the willingness of government to invest in technology.

92
00:15:32.700 --> 00:15:40.650
Richard Green: When I was hired. This is a problem. So apparently, the reason why the unemployment benefit is just a flat $600 increment over what it was before.

93
00:15:41.580 --> 00:15:52.770
Richard Green: Is because cobalt doesn't allow any other method of supplementing unemployment, so you know the sensible thing would have been to say you did percentage increases.

94
00:15:53.130 --> 00:15:58.080
Richard Green: By 25% or 30% so the idea was you didn't want people to lose too much of their purchasing power.

95
00:15:58.800 --> 00:16:09.420
Richard Green: But the software that unemployment claims run on doesn't permit that. And so the short term answer was just, okay, let's just give everybody an extra 600 bucks.

96
00:16:10.050 --> 00:16:20.190
Richard Green: So invest in technology makes it makes things better. David, I just wonder, do you have any comments on restaurants young with rituals just

97
00:16:20.910 --> 00:16:32.280
David Dollinger: Um, it's interesting the takeout. We've heard some restaurants are doing this. They're all Qasr side, we don't have any SIT DOWN RESTAURANTS per se. I have one Sizzler and

98
00:16:32.850 --> 00:16:43.530
David Dollinger: They're close but some of us ours, they say are doing anywhere from 50 to 90% of their pre volume in take out. So some of the retailers have it down where they're really going to take out

99
00:16:44.550 --> 00:16:51.540
David Dollinger: But they're just all starting to reopen now. And so I think we will see how this all shakes out in the next month or two.

100
00:16:52.440 --> 00:16:59.640
David Dollinger: Like I said PPP kind of papered over some of this, though. The one thing that is a little frustrating is from a tenant relations standpoint is

101
00:16:59.970 --> 00:17:07.980
David Dollinger: We have a number of there's a number of tenants, though, mostly restaurants that don't call you back. They don't pay their rent. They may be open for take either may not

102
00:17:08.280 --> 00:17:21.030
David Dollinger: But you can't make a deal with them. You can't even give them free rent. You can't do anything. They just ignore you, and putting their head in the sand and you can evict them either. And so that is another issue that I'm not sure how it's going to get resolved in the short term.

103
00:17:22.260 --> 00:17:39.900
Richard Green: I can't help but notice that my neighborhood McDonald's. The line of cars outside of it now is about as long as the London entire fund was before the crisis. So who would have thought Stanley. Last but not least, they asked me to go last. As he covers so many different product types with

104
00:17:41.010 --> 00:17:42.450
Richard Green: His company. So, Stan.

105
00:17:43.980 --> 00:17:53.100
Stanley Iezman: So I think the biggest issue that we're focusing on right now is trying to maintain tenant relationships with all of the retail tenants in a manner that

106
00:17:54.090 --> 00:18:08.220
Stanley Iezman: Supports long term relationships and tries to understand the synergies that exists between those tenants and ensuring that we work with them to try and keep them in the property. Our biggest fear and

107
00:18:08.940 --> 00:18:14.430
Stanley Iezman: And we are primarily in grocery anchored shopping centers. We have a couple of power centers.

108
00:18:15.090 --> 00:18:22.320
Stanley Iezman: But in the grocery anchor. We want to make sure that the these shops tenants that are there are capable of serving the local needs.

109
00:18:22.680 --> 00:18:29.910
Stanley Iezman: And that we're doing the right thing to keep them in place with the expectation that rent will ultimately come in to play.

110
00:18:30.300 --> 00:18:37.350
Stanley Iezman: And that they will be able to survive on the power center side, obviously it's a totally different story. And there, there's a

111
00:18:37.950 --> 00:18:50.130
Stanley Iezman: Different calculus that has to be played there. But the biggest issue we're focused on in all of our assets is the re entry protocols and what we are going to be doing and reentry and how we're going to

112
00:18:50.670 --> 00:18:54.960
Stanley Iezman: Get people to be comfortable. And that's really the key issue is getting people to be comfortable

113
00:18:55.650 --> 00:19:06.630
Stanley Iezman: To be able to come back into the workplace, to be able to shop at the ground floor retail in our office buildings to go back to the shopping centers to go into our

114
00:19:07.050 --> 00:19:15.360
Stanley Iezman: gyms that are multifamily properties certainly industrials and a totally different conversation because there's less comfort that's needed there.

115
00:19:16.380 --> 00:19:27.330
Stanley Iezman: But we're really focused on that. And I think that that is taking an immense amount of time and the the benchmarks are constantly changing, because nobody really understands

116
00:19:27.780 --> 00:19:36.030
Stanley Iezman: What that criteria really should look like. So what we thought about reentry, two weeks ago is changing on a daily basis as we start to understand

117
00:19:36.570 --> 00:19:45.540
Stanley Iezman: What's available. What can we do, how do we do it. I mean, we've gotten to the point where do we in office buildings to reach us people

118
00:19:46.500 --> 00:19:53.070
Stanley Iezman: Can we allow testing to occur in the lobby, do we test our own employees when they're coming in.

119
00:19:53.700 --> 00:20:01.530
Stanley Iezman: The US thermometers you scanners on what is the appropriate protocol to give people comfort that they can go to work and they're not going to get sick.

120
00:20:02.370 --> 00:20:10.560
Stanley Iezman: That that is a that is a key issue that that we're focusing on the other two issues that I think are critically important to all of us.

121
00:20:10.920 --> 00:20:22.590
Stanley Iezman: Is to really look at the impacts the longer term impacts and what this is going to do to city states and counties with regard to their budgets and what that impact is going to be on valuations.

122
00:20:23.280 --> 00:20:34.500
Stanley Iezman: Because we're very concerned about property tax increases in all majors in all major cities in all major states as well as income tax increases.

123
00:20:35.340 --> 00:20:47.490
Stanley Iezman: Around the country so areas that historically have been what we would call safe zones. The Nashville's the the Charlotte's the Raleigh's the Dallas's Houston's the Austin's

124
00:20:48.480 --> 00:20:54.150
Stanley Iezman: Nashville's mayor just announced that they're looking to increase their property taxes by 32%

125
00:20:55.020 --> 00:21:05.550
Stanley Iezman: If that happens, that hasn't that calculus changes valuations. And what we're doing with deals that we're looking at there. So in each of the major markets where we have to do is and extrapolate

126
00:21:05.940 --> 00:21:14.700
Stanley Iezman: Where we think that's going to occur. And what the impact of that's going to be and how do we build it into our evaluations and does that really impact tenants coming

127
00:21:15.420 --> 00:21:22.770
Stanley Iezman: leasing at the same rates that they were leasing out before or is there going to be some diminution in that rents that we're going to ultimately receive

128
00:21:23.550 --> 00:21:35.460
Stanley Iezman: The third item that we're really focusing focusing on right now is the legislation that is working its way through in all of the progressive states. So for example, here in California.

129
00:21:35.970 --> 00:21:48.810
Stanley Iezman: I'm sure many of you have heard about SB 939 which is essentially going to allow restaurants to and and those small businesses that have lost

130
00:21:49.650 --> 00:22:00.540
Stanley Iezman: 25% or more of their income to essentially go back to their landlords and the renegotiate the lease and if they don't get a successful renegotiation. They have the right to terminate the lease.

131
00:22:01.110 --> 00:22:09.510
Stanley Iezman: That legislation has a high likelihood of passing. And unfortunately, it has the significant the support of a lot of cities.

132
00:22:09.900 --> 00:22:20.910
Stanley Iezman: And counties and a lot of our politicians who are supporting this obviously there's a there's a reason why they they believe that but the net impact.

133
00:22:21.780 --> 00:22:34.710
Stanley Iezman: In California is going to be rather significant because it may impact we haven't talked to lenders yet about this, but we think that when lenders really start to realize what this looks like.

134
00:22:35.520 --> 00:22:40.920
Stanley Iezman: And if it, if it gains legs and other areas. That's that restrict the number of loans.

135
00:22:41.400 --> 00:22:48.240
Stanley Iezman: That are going to be coming in, or is there going to be greater recourse that is going to be required, or is there going to be more reserves that are going to be built in.

136
00:22:48.600 --> 00:22:58.590
Stanley Iezman: Into the lending platform. So all of these things are evolving. I didn't go back to the, the one area where we were stressed previously was in retail

137
00:22:58.920 --> 00:23:05.460
Stanley Iezman: Interestingly enough, the retail tenants are now picking up on their rent. I'm all the majors that paid. We don't have

138
00:23:06.180 --> 00:23:16.950
Stanley Iezman: Any real challenges with the majors. I won't mention names of those retailers. They know who they are and they understand what they're doing but but the goal is to work with them and to help them.

139
00:23:17.670 --> 00:23:25.350
Stanley Iezman: Get, get sustainability and to allow them to be able to survive and recognizing, of course, it is Rachel indicated

140
00:23:25.770 --> 00:23:31.800
Stanley Iezman: And I think it's an important one, is that all this stuff is exacerbated what has already been happening for a number of years.

141
00:23:32.250 --> 00:23:38.130
Stanley Iezman: And the real question is, is can the retailers. Those who who are going to make it. Can they create a viable.

142
00:23:39.060 --> 00:23:48.540
Stanley Iezman: Value creation strategy that is going to track the interest of the consumer. And I think that's what we're all fighting what all retailers are doing right now is trying to

143
00:23:48.960 --> 00:23:58.830
Stanley Iezman: Gain the attention of the consumer and be able to capture their imagination and allow them to be able to convert from e commerce to two

144
00:23:59.310 --> 00:24:09.870
Stanley Iezman: Bricks and mortar commerce and you do that virtuous circle of omni channel because that's really what's going to drive retailing for the for the future you everybody has to have an E tailing

145
00:24:10.980 --> 00:24:19.800
Stanley Iezman: Outlet and everybody has to, they should have a retail of the bricks and mortar retailing. And I think if you talk to some of the major retailers they recognize

146
00:24:20.100 --> 00:24:25.530
Stanley Iezman: The value of what is called the halo effect of when you buy something and then you go back to the store.

147
00:24:26.250 --> 00:24:42.450
Stanley Iezman: To return it. You typically buy more when you're in the store than what you actually return. So it's a dynamic that is going to play itself out. And don't think that retailing is remotely dad and don't think that office buildings are remotely dead by any stretch of the imagination.

148
00:24:43.710 --> 00:24:49.080
Richard Green: So let me let me there was so much there that I want to follow up on. Let's start with 939

149
00:24:49.680 --> 00:24:53.640
Richard Green: What are they, I don't think it really defines what a small business is other than

150
00:24:54.060 --> 00:25:04.890
Richard Green: If you're a publicly traded company. You're not a small business, but other than that, I, I looked through the bill, a couple of times. And it's been revised so maybe it just has changed, but I couldn't find the definition of a

151
00:25:04.890 --> 00:25:06.390
Richard Green: Small business today where the

152
00:25:06.720 --> 00:25:07.470
Richard Green: In the bill.

153
00:25:07.590 --> 00:25:10.200
Stanley Iezman: It doesn't, you've got to look at it very carefully.

154
00:25:10.680 --> 00:25:11.550
It does.

155
00:25:12.690 --> 00:25:16.650
Stanley Iezman: That no i don't know what the definition is. I think it's a very vague definition.

156
00:25:17.010 --> 00:25:18.780
Richard Green: I don't think it has a definition.

157
00:25:19.260 --> 00:25:32.940
Richard Green: Other than, you know, if you're publicly traded, you're not. But there are some pretty big companies that are closely held and so I mean now. That to me is one of the their number of issues with it, but that, in particular.

158
00:25:35.040 --> 00:25:42.180
Richard Green: To leave open that something like that opens up the possibility of even more mischief than it might have created otherwise.

159
00:25:42.960 --> 00:25:55.380
Stanley Iezman: Oh, can all I can suggest is to all of our listeners is right to your, your appropriate down city, city official and State official and tell them that you don't support. This is going to have a big problem for all of us.

160
00:25:55.620 --> 00:26:01.350
Richard Green: So, so I'm going to do the things you said so what recommendations would you so I'd say about Texas.

161
00:26:02.640 --> 00:26:05.040
Richard Green: Texas has an Avalon property tax system.

162
00:26:05.160 --> 00:26:19.920
Richard Green: And in fact, they have a month, even though they have no income tax their sales taxes are kind of love, but they have among the highest property taxes have any statement country. Um, so one could imagine property texts in Texas actually going up quite a lot just sort of by default.

163
00:26:20.940 --> 00:26:30.000
Richard Green: What would you recommend to these governments that are bleeding revenue and do have to like school kids to collect garbage and that kind of stuff.

164
00:26:31.200 --> 00:26:35.880
Stanley Iezman: Unfortunately, I don't have a solution for the

165
00:26:36.900 --> 00:26:50.640
Stanley Iezman: The political implications of this, I would suggest, though, that we need to step back and realize that if we are going to tax our properties which are as an indirect tax to the owner

166
00:26:51.390 --> 00:26:57.750
Stanley Iezman: That is going to have an impact on the on valuation, which is going to reduce

167
00:26:58.170 --> 00:27:11.760
Stanley Iezman: The values that they're taxing on so the circle is is that if you increase your taxes, it will reduce your valuation, which is going to result in all of us going in and appealing our taxes. I don't have a fair way of

168
00:27:11.850 --> 00:27:19.260
Stanley Iezman: Doing suggesting what those taxes should be. But I do know that the higher the tax base is going to be, it's going to drag out business.

169
00:27:20.760 --> 00:27:25.950
Richard Green: So that file on interest on retail is the more generic point beyond cove it

170
00:27:26.760 --> 00:27:35.070
Richard Green: And we've seen apparel sales fall. And that's not an e commerce versus bricks and mortars, people are spending less money on clothes.

171
00:27:35.580 --> 00:27:48.660
Richard Green: One could imagine this accelerating that I mean I haven't put on a tie and 10 weeks now, something like that. Um, I have a couple of beautiful sits in my closet that

172
00:27:49.230 --> 00:27:53.220
Richard Green: I haven't worn. I mean, are we going to be used to a work environment.

173
00:27:53.970 --> 00:28:08.730
Richard Green: Where we really don't need to dress up. And so, you know, women don't buy heels. Men don't buy top. Well, there are many times we get the point. Is there a secular trend that's problematic for all retail that people are just not going to buy as much closest things to

174
00:28:10.830 --> 00:28:20.250
Stanley Iezman: Us. I mean, use myself as an example I always wore a suit every day. I did where time but I did wear a suit and a shirt. I've had to go out and buy lots of

175
00:28:20.760 --> 00:28:21.810
Stanley Iezman: Sweaters like this.

176
00:28:22.500 --> 00:28:33.990
Stanley Iezman: With unique different colors. So I didn't blend in so my consumption patterns actually over the last three months of increased dramatically as I've gone online and had to search for stuff that I normally did not wear

177
00:28:34.650 --> 00:28:41.730
Stanley Iezman: So yes, my, my suit maker is going to be going out of business, possibly, but my sweater maker maybe baby able to do that.

178
00:28:43.410 --> 00:28:50.850
Rachel Wein: Stanley is not indicative of large swath in America. But one thing we can take from this is

179
00:28:51.540 --> 00:29:01.470
Rachel Wein: People still need clothes but they need different clothes. So when you look at the year over year increases and what brands are really performing well

180
00:29:02.310 --> 00:29:20.850
Rachel Wein: It's Lou lemon is doing exceptionally well 40% increase in sales year every year, but also house brands at Amazon at Target at Costco at Walmart. Those are also doing really well. And a lot of the mall based brands yeah h&m Burberry

181
00:29:22.110 --> 00:29:32.970
Rachel Wein: North base unit glow big decreases in year over year sales, but you know, I think we're gonna we're going to be spending differently, but we're still going to need certain things and certainly the staples are going to same so

182
00:29:33.240 --> 00:29:39.750
Rachel Wein: You know when you look across the industry. Some, some folks are going to be unnecessarily depressed right now, but will

183
00:29:41.220 --> 00:29:46.860
Rachel Wein: It a lot of this is just going to depend on how long this really last which I think for any of us to be able to say

184
00:29:47.880 --> 00:29:49.290
Rachel Wein: We would be unreasonable.

185
00:29:49.950 --> 00:30:01.620
Rachel Wein: But the reality is we you know we were on one end of the pendulum in January or February, and we were on the other end, maybe towards the very end of April with everyone at all across the country.

186
00:30:01.890 --> 00:30:13.530
Rachel Wein: You know, the idea that we're going to get back to some kind of before coven normal is unrealistic. We will get back to something that approaches somewhere along those lines, but

187
00:30:14.310 --> 00:30:22.950
Rachel Wein: Simply for the patterns that have changed in buying and in the consumer economy. Many of those patterns will naturally stick

188
00:30:24.690 --> 00:30:34.170
Richard Green: So let me turn to start turning over to audience questions here. And again, if you have a question, please type it in the Q AMP a box. I am also looking at the chat will answer that one too, but

189
00:30:34.440 --> 00:30:38.370
Richard Green: It just easier to organize if you type them into the Q AMP a box. So please do that.

190
00:30:39.000 --> 00:30:51.900
Richard Green: I'm from Grand Walberg regarding industrial demand, given the all time high construction levels how bullish are you on industrial demand will we see long term reversion to hire vacancy or not. So, Lisa, David, let me

191
00:30:53.040 --> 00:30:54.570
Richard Green: Have one you tackle that one.

192
00:30:55.980 --> 00:31:06.210
Lisa Reddy: Yeah, actually. So from, you know, pro largest we have an internal research team we anticipate that the demand is going to increase. Just because of the evolution of the

193
00:31:06.600 --> 00:31:13.710
Lisa Reddy: More, more companies going to e commerce. So naturally, it's going to take up more estriol space we anticipate

194
00:31:14.310 --> 00:31:28.440
Lisa Reddy: inventory levels increasing so so companies, keeping more stock on hand so that you can be ready for the consumer demand and not you know something like this happens again it's not stuck in the chain. So we anticipate

195
00:31:29.250 --> 00:31:35.370
Lisa Reddy: We anticipate the industrial need going up obviously right now, construction and industrial has slowed, you know,

196
00:31:35.760 --> 00:31:49.920
Lisa Reddy: In some parts stopped. So as we enter recovery. You know, I think that the the new development is going to take a little longer, just to resume but stock inventory of industrial we anticipate that it's going to be in higher demand.

197
00:31:50.640 --> 00:31:59.850
Richard Green: So, Lisa, I think your point about inventory is a really interesting one. And and basically a response to the fragility of the economy that was revealed by having a very tight.

198
00:32:00.480 --> 00:32:11.430
Richard Green: Supply chain but you have any that how long you think. And again, this is a bit of an unfair question. But before we forget this lesson that a little bit of redundant because redundancy.

199
00:32:12.000 --> 00:32:25.020
Richard Green: As a cost a quarterly income statement standpoint, it's not appealing really to Wall Street analysts and yet clearly having some inventory is a good idea.

200
00:32:26.130 --> 00:32:34.440
Richard Green: So do you think people will learn a lesson because this is so severe. For a long time, or do you think we revert back to the way things were a couple of years.

201
00:32:35.700 --> 00:32:39.600
Lisa Reddy: I mean, I know if I had a crystal ball. Oh. Um, I don't know. I

202
00:32:39.900 --> 00:32:42.810
Richard Green: slightly unfair question, but I'll ask it anyway.

203
00:32:44.130 --> 00:32:48.180
Lisa Reddy: Yeah. You know, I think, I think it will just take time to see

204
00:32:48.810 --> 00:32:57.810
Lisa Reddy: How, how fast will that inventory. Inventory term. You know, like as Rachel and Sam were mentioning, when I walk our warehouses with our customers now.

205
00:32:58.140 --> 00:33:12.060
Lisa Reddy: Customers who used to store. Let's say luxury goods they get, they they've shifted and they're storing, you know, washing machines and industrial strength cleaners. So it's a shift and what they're storing and what the demand is so I think

206
00:33:12.870 --> 00:33:25.380
Lisa Reddy: I think it depends on how fast the world goes back to, you know, let's say normal and, you know, will it ever go back to pre coven normal. I mean, I hope so. But I don't know, I think. Only time will tell.

207
00:33:27.000 --> 00:33:29.490
Richard Green: You want to weigh in on us.

208
00:33:30.390 --> 00:33:38.640
David Dollinger: Well, like I said, Silicon Valley. We really haven't had any and industrial like you're talking about built in yours was one or two projects.

209
00:33:39.240 --> 00:33:54.840
David Dollinger: But the R amp D sector, I think will get tighter because you're not writing elevators it single story can get access to it and it out. I think that Tantra going to take more space rather less so they can space out there workers.

210
00:33:56.250 --> 00:34:02.250
David Dollinger: So I think the ultimate impact will be for greater demand for that R amp D sector.

211
00:34:04.170 --> 00:34:13.650
Richard Green: So let's move on to Stanley, if we have a couple of questions that office from Garland from Sunday civilian I'm going to combine their two questions into one.

212
00:34:14.820 --> 00:34:20.670
Richard Green: Which is are you seeing office tenants 3 million less are downsizing in place student more employees working from home.

213
00:34:21.240 --> 00:34:38.370
Richard Green: And this is the stuff to house with Sonia's question about how we look at what Facebook said last week with Twitter said a couple weeks ago about having more than worker stay home. In fact, Facebook saying even leave the bay area that will pay less money if you want to move to a supermarket.

214
00:34:39.780 --> 00:34:41.280
Richard Green: What do you see from all of this.

215
00:34:41.340 --> 00:34:48.000
Stanley Iezman: Well, first of all, let's separate the headline from the trend lines, so to speak, if I could use that term.

216
00:34:48.660 --> 00:34:53.940
Stanley Iezman: I know what they're saying. But they're not necessarily doing anything different. They're taking down more space.

217
00:34:54.780 --> 00:35:02.040
Stanley Iezman: So the tech companies are clearly growing what they've done is they've basically said, you can work at home. If you want to work at home.

218
00:35:02.670 --> 00:35:12.630
Stanley Iezman: But there. There's no diminution necessarily in terms of the demand side there's not a lot of leasing being done right now, so I can't point the data points is to suggest you

219
00:35:13.050 --> 00:35:17.640
Stanley Iezman: That there are people that are taking down a million square feet at this moment in time.

220
00:35:18.570 --> 00:35:36.780
Stanley Iezman: But our expectation is, is that as people become more comfortable. They're going to accelerate the number of people coming back from the offices and that those buildings that are dense are going to have to figure out how to do dense Ify both on a tenant side and a on a on a owner side.

221
00:35:38.070 --> 00:35:44.370
Stanley Iezman: Being very practical, though, I think we have a lot of time as we work through what this is going to look like right now.

222
00:35:45.150 --> 00:35:57.540
Stanley Iezman: I was on a call in New York with the other owners of the major New York office buildings and the commentary is that they don't expect more than 20% of their employees to come back to work for the foreseeable future.

223
00:35:58.020 --> 00:36:05.940
Stanley Iezman: And I think that really is going to be a function of just people trusting, whether they're going to be able to be safe in the buildings and whether there's appropriate

224
00:36:06.840 --> 00:36:18.570
Stanley Iezman: security and safety in place to be able to make them feel that that comfort level. So it's an evolving process that I don't necessarily know is going to be the death knell of the office industry by any stretch of the imagination.

225
00:36:19.620 --> 00:36:29.100
Richard Green: So, you know, has anyone done work yet to sort of spec out how much more space. You need per employee than OR is currently being used in order to maintain social distancing

226
00:36:30.270 --> 00:36:37.680
Stanley Iezman: Yeah, I think the number I saw the other day is if you go, you're going to go from 150 to 300 it's going to be literally doubling

227
00:36:38.490 --> 00:36:49.740
Stanley Iezman: The amount of space, you would need if you go from 150 square feet per person to 300 square feet per person. And I think it's actually a little bigger than that, when you go to the 16th spacing.

228
00:36:50.700 --> 00:37:05.520
Richard Green: Okay, it's how if if you're doubling the amount of space, you need per employee in order to keep social distancing and the number of employees working in the office drops 20% that's still a big increase the demand for office space. If I'm doing math properly.

229
00:37:06.600 --> 00:37:12.570
Richard Green: It will be a 60% increase in demand right we know is only 20% if you only have 20% people showing up.

230
00:37:12.630 --> 00:37:13.590
Richard Green: You would probably

231
00:37:13.710 --> 00:37:15.210
Richard Green: Cover okay

232
00:37:17.100 --> 00:37:21.660
Richard Green: Okay. All right. Oh, so I misunderstood. You see, said only 20% are showing up not

233
00:37:22.230 --> 00:37:23.310
Stanley Iezman: Yeah, yeah. The anticipation

234
00:37:23.850 --> 00:37:26.850
Richard Green: Sorry. Okay. All right. So that means, you'd be at

235
00:37:27.960 --> 00:37:32.190
Richard Green: About 40% of previous occupancy so

236
00:37:33.330 --> 00:37:36.660
Stanley Iezman: By the way, I do want to go back to the question you asked Lisa about supply chain.

237
00:37:36.930 --> 00:37:37.230
Richard Green: Sure.

238
00:37:37.500 --> 00:37:46.020
Stanley Iezman: I think it's really important. The, the notion that we're. I mean, the expectation is, there's going to be brought on shoring in a much more significant way.

239
00:37:46.620 --> 00:37:54.960
Stanley Iezman: The, the ability to be able to manufacture certain products. But the challenge is going to be is the cost structure overseas is significantly lower than

240
00:37:54.990 --> 00:38:06.030
Stanley Iezman: Us here. So, it is going to create a challenge because the consumer may not necessarily be capable of paying that increase price in order to get that supply chain consistent with what they want.

241
00:38:07.350 --> 00:38:12.870
Richard Green: So I think that's I think the idea of ensuring particularly things like textiles.

242
00:38:13.740 --> 00:38:31.290
Richard Green: Um, is highly unlikely. I mean, there's a long history of textiles, going to the place of cheap labor. It started in New England 200 years ago and then it moved to the south and then it moved to Japan, and then it moved to Taiwan and then it moved to China and now it's

243
00:38:34.980 --> 00:38:36.630
Richard Green: In the China would blow up bug with

244
00:38:36.930 --> 00:38:37.770
Vietnam.

245
00:38:38.850 --> 00:38:41.850
Richard Green: But what happened is because China started getting expensive.

246
00:38:42.990 --> 00:38:45.180
Richard Green: Stuff was all moving to Bangladesh in Vietnam.

247
00:38:45.360 --> 00:38:48.450
Richard Green: Anywhere. Anyway, I don't know where you go from Bangladesh.

248
00:38:48.900 --> 00:38:54.060
Richard Green: Because that's really low cost on perhaps I don't know. Go on.

249
00:38:55.440 --> 00:38:59.970
Richard Green: But yeah, it. And so the idea of on shoring

250
00:39:01.260 --> 00:39:20.250
Richard Green: low skilled manufacturing just doesn't seem plausible to me. But how quickly you can move over to even India from China is also that that's not something that can be done quickly, so like making iPhones in India. Is that something that could be done.

251
00:39:21.510 --> 00:39:26.700
Richard Green: Overnight, and you know, short run, you might have some of that come back here and it's just more expensive to buy an iPhone.

252
00:39:27.300 --> 00:39:36.750
Stanley Iezman: So, you know, send us question about office usage. And one of the questions that we're all looking at who are owners of companies around working staff and home.

253
00:39:37.170 --> 00:39:46.140
Stanley Iezman: Is the effectiveness of that that staff and does it is it really productive and I think that we're finding that it is highly productive.

254
00:39:46.830 --> 00:39:59.820
Stanley Iezman: With a lot less noise and a lot less drama people being in the office and what that may do is, there's going to be a certain constituency that we're going to have the rest of time that's going to result in more people working from home.

255
00:40:00.720 --> 00:40:09.600
Stanley Iezman: In and coming into the office less frequently because let's think about it from an employee standpoint if I'm sitting down, I'm looking at an hour and a half commute or an hour commute each way.

256
00:40:10.080 --> 00:40:14.160
Stanley Iezman: And I'm looking at having to spend money to park and I'm having a look at money to buy a suit.

257
00:40:14.460 --> 00:40:24.960
Stanley Iezman: Or buy clothes and go out to lunch. The amount of savings that is available there by just working at home is pretty significant. And it's something that I think is going to create a break greater pressure in the working environment.

258
00:40:26.070 --> 00:40:42.810
Richard Green: Well it. The other thing to think about is if people do work two days a week at home so 40% of the time at home. We know in LA about 40% of trips are work related trips 60% or not. But if you reduce

259
00:40:44.580 --> 00:40:52.590
Richard Green: Travel by work trip travel by 60% 60% times 40% is a 24% reduction in cars on the road.

260
00:40:53.490 --> 00:41:01.230
Richard Green: Presumably, people are not going to be going in the movies during the day, if they're supposed to be working. And there's two ways we figure that out. And so this could actually have an enormous impact.

261
00:41:02.010 --> 00:41:12.660
Richard Green: On the capacity of our infrastructure. This is my looking at the bright side part and how we use that infrastructure and I'm very curious to see how that's going to move forward.

262
00:41:13.050 --> 00:41:14.820
Stanley Iezman: Guys, a question of race on because

263
00:41:15.210 --> 00:41:15.900
Stanley Iezman: I've been intrigued by

264
00:41:16.350 --> 00:41:24.630
Stanley Iezman: If we all look at apparel, and we look at apparel in the in the e commerce space and we look at free shipping free returns

265
00:41:25.230 --> 00:41:42.660
Stanley Iezman: What is the percentage of returns that come back on apparel and what is the profitability of those soft goods. Those stuff that stores when they've got a big online presence and they're doing a lot of e commerce work.

266
00:41:43.860 --> 00:41:58.260
Rachel Wein: So that's, that's a loaded question. And I can answer it. Some of that at least the latest data that I've seen has approximately 50% of apparel sales being returned, and I think the question about profitability.

267
00:41:58.500 --> 00:42:00.480
Richard Green: That's

268
00:42:00.870 --> 00:42:02.280
Rachel Wein: Five, zero.

269
00:42:03.480 --> 00:42:12.960
Rachel Wein: 55 050 and I can say that I surely contribute to that. And I feel like I have been personally wrapping up the apparel business for the last few months.

270
00:42:14.340 --> 00:42:17.100
Rachel Wein: But I think we have to separate out

271
00:42:18.270 --> 00:42:28.920
Rachel Wein: Multiple different pieces of the e commerce sector and look at profitability individually. So it depends if it's fulfilled by

272
00:42:29.340 --> 00:42:38.730
Rachel Wein: A distribution center versus if it's fulfilled by a store. It depends on how many stores are needed, or how many locations are needed to fulfill a certain order on

273
00:42:39.270 --> 00:42:55.830
Rachel Wein: And and that gets to be a little bit more complicated. It appears as though grocery will actually be easier to get right then apparel, as we move into further grocery e commerce and that's in part because if you have something that hasn't

274
00:42:57.870 --> 00:43:06.720
Rachel Wein: That isn't in stock. You can generally find a replacement. It's not like if you don't have a red sweater. You're just not going to get a red sweater. And so that's that's beneficial.

275
00:43:07.350 --> 00:43:15.390
Rachel Wein: However, most of the grocery commerce is being fulfilled right now is not very profitable at all. Very unprofitable and

276
00:43:15.660 --> 00:43:18.090
Rachel Wein: We can talk a little bit more on Chris e commerce.

277
00:43:19.470 --> 00:43:21.090
Rachel Wein: If that's if that's of interest.

278
00:43:21.840 --> 00:43:32.010
Richard Green: Um, so I, it is of interest, but we have a bunch of questions that I want it. I want to get to some of these I think are really worth telling you about. One is, I mean, from Matthew more

279
00:43:32.730 --> 00:43:38.760
Richard Green: Vegan economics published data showing that up to half a decline in retail consumer spending in Q1 wasn't healthcare sector.

280
00:43:39.300 --> 00:43:50.640
Richard Green: Retail an office landlords recording healthcare related tenants do their installation from online competition or work from home. What is the outlook for the shopping center dentist or office building physical therapist.

281
00:43:55.830 --> 00:43:59.370
Stanley Iezman: What what the question is, What is the outlook for the shopping center.

282
00:44:00.480 --> 00:44:06.030
Richard Green: Yeah, it is. So yeah, there was a view that the way we're going to save shopping centers.

283
00:44:06.300 --> 00:44:11.730
Stanley Iezman: Services. I mean all of our grocery anchored shopping centers morphing more and more towards and I'm sure, Rachel.

284
00:44:12.300 --> 00:44:16.350
Stanley Iezman: Validity validate this is that we're moving more to services on the in the shop space.

285
00:44:18.090 --> 00:44:26.700
Stanley Iezman: So the real question is, so the Massage Envy is the dentist anything where there's going to be somebody who's going to be working closely with somebody else.

286
00:44:27.000 --> 00:44:33.930
Stanley Iezman: Where they're going to be hovering over their body. You're looking into their mouth, where there's a potential for transmission of disease. I think there's going to have to be a

287
00:44:34.320 --> 00:44:45.480
Stanley Iezman: comfort level with the consumer, being able to utilize that with protocols in place, they're going to protect both the provider of those services and the consumer. So I don't know what that's gonna look like postcode

288
00:44:46.680 --> 00:44:46.890
Stanley Iezman: Now,

289
00:44:47.520 --> 00:44:54.450
Rachel Wein: There's a difference between their routine care and then the one time care. So I'm not familiar with this study that the question. References

290
00:44:55.230 --> 00:45:00.540
Rachel Wein: But you know it hospitals across the country had to stop doing routine.

291
00:45:00.870 --> 00:45:15.870
Rachel Wein: Procedures and what's considered a routine to to you or me. It's kind of broad, but a knee replacement is considered routine. In some cases, cancer treatments are considered routine. And those are things that people are going to do as soon as they're able to

292
00:45:16.380 --> 00:45:24.390
Rachel Wein: But it's possible that someone would skip their teeth cleaning and just not get this one done and go on to the next one. So in that case, it's more like

293
00:45:24.660 --> 00:45:34.770
Rachel Wein: Like a haircut. You can get your hair cut three times because you didn't do it once every three months. So I think it's going to be a nuance there but services are going to be back, people still need to get their teeth clean eventually

294
00:45:35.790 --> 00:45:38.760
Richard Green: Given you look like you are. You had something to say about that.

295
00:45:39.660 --> 00:45:41.340
David Dollinger: Oh, I thought her hair cut analogy was great.

296
00:45:45.420 --> 00:45:53.010
Richard Green: You know, it seems to me there's gonna be p p will be the key is, is people just being comfortable that their providers are doing that right

297
00:45:53.880 --> 00:46:03.000
Richard Green: Way and, you know, it really does work is in Mohan one's health care providers started shooting up properly.

298
00:46:03.570 --> 00:46:16.050
Richard Green: On there was, I think there was not a single case. Okay, maybe you don't translate the Chinese data, but that this is the sort of thing. It's such specific that you could dig up somebody who got the disease if if they had and

299
00:46:18.660 --> 00:46:28.680
Richard Green: So I think people getting comfortable with your dentist wearing you know a whole lot of plastic over there thinks is going to be critical to getting people

300
00:46:29.160 --> 00:46:41.670
Richard Green: Back in the dentist chair and all I know I should want to get my I'm glad I got I think about this. I got my teeth cleaned, about a week before the shutdown and I'm really glad I did that. So, um,

301
00:46:42.720 --> 00:46:46.170
Richard Green: You know, I can have one of these without cap rates is we have

302
00:46:48.180 --> 00:46:59.190
Richard Green: From Graham Walberg. Given the high spreads to the risk free rate you know 10 year Treasury is still well under 1% do you think cap rates will go lower

303
00:47:00.120 --> 00:47:07.320
Richard Green: And I think this is more about a longer term things, of course, none of us know what cap rates are right now. But let's say looking at six months a year from now.

304
00:47:11.100 --> 00:47:12.720
Stanley Iezman: Do I think cap rates are going to go lower

305
00:47:13.080 --> 00:47:13.470
Yeah.

306
00:47:15.060 --> 00:47:18.720
Stanley Iezman: I think that with borrowing rates relatively low, there's

307
00:47:18.810 --> 00:47:27.960
Stanley Iezman: A chance. The question is, is what is the risk. I haven't seen any real material change in cap rates going down. I've seen them snake.

308
00:47:29.460 --> 00:47:34.080
Stanley Iezman: Move up a little bit in certain areas, certainly in industrial they haven't gone down at all.

309
00:47:35.130 --> 00:47:43.260
Stanley Iezman: As a matter of fact, there's more demand for industrial than ever before. Um, I think office in major cities may there may be a short term.

310
00:47:43.950 --> 00:47:52.530
Stanley Iezman: Impact I think based upon the public market pricing, they're certainly going when can extrapolate which is not capable of being extrapolated there is an impact.

311
00:47:54.120 --> 00:48:01.740
Stanley Iezman: But we haven't seen there's no there's no real data points yet to point to and transactions where we can say that there has been a repricing

312
00:48:02.640 --> 00:48:03.630
David Dollinger: Right now.

313
00:48:04.710 --> 00:48:06.300
David Dollinger: Right, Richard.

314
00:48:06.510 --> 00:48:09.810
David Dollinger: Yeah, I was gonna say is right now pricing.

315
00:48:10.890 --> 00:48:18.720
David Dollinger: The 10 year Treasury is sort of irrelevant, because all these lenders have put floors in place the condo market is basically

316
00:48:19.500 --> 00:48:30.630
David Dollinger: Just starting to do a few loans goldman sachs did a pool. About a week ago and some other lenders are starting to quote their very first loans right now. Any Wells Fargo just quoted their first one

317
00:48:31.050 --> 00:48:39.660
David Dollinger: So, and they have much wider spreads built in. Then prior. So just because you're seeing the 10 year treasury of point six three or whatever.

318
00:48:40.890 --> 00:48:55.050
David Dollinger: Their, their, their loans are being priced with interest rates of 4% and above. So you're not, you're not going to benefit of that now as typically happens and all these downturns within a few months I six I expect that spread to

319
00:48:56.070 --> 00:49:08.130
David Dollinger: Get narrower and then your cap rates will start to reflect that. But right now, in this short term, I'm looking at buying some properties right now, but the financing costs a lot more than it was two months ago, or three months ago.

320
00:49:08.340 --> 00:49:09.510
Stanley Iezman: And proceeds are lower.

321
00:49:10.590 --> 00:49:13.230
David Dollinger: Yes. Yeah, and they want reserves and some other things.

322
00:49:13.350 --> 00:49:18.900
Stanley Iezman: And they want. Yeah, they want to structure and they want personal liability uncertainty more personal liability report.

323
00:49:19.680 --> 00:49:29.610
Richard Green: So, so it's procyclical lending policy, which is not very helpful from the macro standpoint, Lisa. Rachel, any, any comments on cafritz

324
00:49:31.680 --> 00:49:38.970
Rachel Wein: Yeah, I haven't, I haven't seen a whole lot. That's, that's really transacted to be able to give an indication of trends.

325
00:49:39.660 --> 00:49:42.600
Rachel Wein: You know anecdotally things that I was hearing at the beginning.

326
00:49:43.530 --> 00:49:53.820
Rachel Wein: You know, certainly in the essential retail side was, you know, well, why would I sell now for anything worse than what I could have gotten a few months ago. I'll just write it out and then all of a sudden

327
00:49:54.090 --> 00:50:00.570
Rachel Wein: The mood changed, and it was almost well everyone wants to Central retail now and how could I dilute some of my

328
00:50:01.200 --> 00:50:13.110
Rachel Wein: Less well performing retail with some more essential so it's all around the board. I mean, I think most professional owners are going to sit it out and see what happens. I don't see a whole lot of distress immediately.

329
00:50:14.430 --> 00:50:22.440
Lisa Reddy: Yeah, and I agree with Stanley. I mean, you know, some some deals that were under contract, you know that some of our competitors are buying pre coated

330
00:50:22.950 --> 00:50:32.850
Lisa Reddy: They ended up closing during the pandemic and there was no price adjustment. I mean, this is core industrial and a strong market and they see the need and the benefit and it's

331
00:50:32.910 --> 00:50:42.300
Lisa Reddy: You know, in terms of industrial it's shown that it's critical to the essential, you know, the essential needs and goods supply chain, essentially.

332
00:50:43.980 --> 00:50:55.470
Richard Green: Question occurs to me. And I don't know if anybody has an answer this. But usually when in in tough times like this. You see distressed debt as a great opportunity for investment basically a way to acquire

333
00:50:56.580 --> 00:51:02.940
Richard Green: Really good real estate at a lower cost. And you see that opportunity arising as a result of this

334
00:51:04.080 --> 00:51:05.460
Stanley Iezman: Now, no.

335
00:51:05.940 --> 00:51:07.230
Richard Green: No, no, but but but

336
00:51:08.580 --> 00:51:09.240
Richard Green: Yeah, eventually

337
00:51:09.420 --> 00:51:14.910
Stanley Iezman: Arguably, I remember something, if you're going to buy the debt. You have to, you have to deal with the piano.

338
00:51:16.020 --> 00:51:17.250
Stanley Iezman: You're gonna have to foreclose

339
00:51:17.940 --> 00:51:24.600
Stanley Iezman: Yeah. Understood. So that's going to be your, your discount on your pricing has to be significant enough to take on the underlying risk.

340
00:51:25.110 --> 00:51:33.840
Stanley Iezman: It's around that. So, but there's no there's no distress. Now remember in 2007 wasn't until what 2008 nine

341
00:51:33.870 --> 00:51:37.500
Richard Green: That it was really 2009 the commercial real estate went to distress. That's right.

342
00:51:38.490 --> 00:51:41.550
Richard Green: I remember Bernanke he saying commercial real estate would save the economy.

343
00:51:42.270 --> 00:51:47.520
Richard Green: Because as as the housing market was tanking the commercial market didn't

344
00:51:48.660 --> 00:51:54.060
Richard Green: And then 2009 it didn't know it snapped back very quickly. Unlike the housing market.

345
00:51:55.530 --> 00:52:04.050
Richard Green: Because I think a lot of the distress in commercial real estate arose from are basically refinance just coming to that couldn't be.

346
00:52:05.160 --> 00:52:10.380
Richard Green: refunded that nobody would lead and so you had a lot of excess property on the market for that reason.

347
00:52:12.180 --> 00:52:16.170
Rachel Wein: Talked about hospitality. But that's going to be where the biggest hurt is going to be

348
00:52:16.710 --> 00:52:32.040
Rachel Wein: You know, if, if the rest of the property sectors that we're talking about here are, you know, a 90 day pain, period. It's going to be many, many, many months for hospitality. So I think that will be for anyone that's really interesting. That would be the opportunities to live.

349
00:52:33.090 --> 00:52:42.690
Richard Green: So on. And on that note, I mean, one of the things that one of the big questions for the economy more broadly. When are people going to start traveling again and I just

350
00:52:42.990 --> 00:52:48.960
Richard Green: If I had a poll. I'd ask the audience, but I don't have that function built in. Who here is comfortable getting on an airplane just now.

351
00:52:51.120 --> 00:52:53.130
Stanley Iezman: I can I rephrase the question.

352
00:52:53.130 --> 00:52:53.460
Richard Green: Yeah.

353
00:52:53.700 --> 00:53:02.310
Stanley Iezman: It's not whether you and I are comfortable getting on the airplane on an airplane. If you look at the traffic through traffic is up significantly and airplanes.

354
00:53:02.850 --> 00:53:11.640
Stanley Iezman: People are traveling. If you look at the numbers for all the major airlines, they're up pretty significantly on the month of week by week basis.

355
00:53:12.300 --> 00:53:14.820
Richard Green: But it came down, they were down in 95%

356
00:53:15.240 --> 00:53:16.410
Stanley Iezman: What okay

357
00:53:16.800 --> 00:53:26.640
Richard Green: Family, so I'm just looking at that. So the data is the number of TSA has the number of people that go through airports every day. And I think we're still down

358
00:53:28.950 --> 00:53:29.610
Richard Green: Right now.

359
00:53:29.700 --> 00:53:34.080
Stanley Iezman: Short, short term, short term we're gonna have a problem but long term we're gonna be fine.

360
00:53:34.440 --> 00:53:37.530
Richard Green: Yeah. Yeah, but I mean what is what. How long is long term.

361
00:53:38.760 --> 00:53:40.770
Rachel Wein: Think we're going to see a lot of domestic travel

362
00:53:41.280 --> 00:53:49.560
Rachel Wein: To hopefully that'll be good for consumer spending for folks that were going to spend a lot of money. This summer going to Europe going wherever you know if they can spend that money.

363
00:53:49.770 --> 00:53:59.010
Rachel Wein: Domestically, that would be fantastic. From a business travel perspective, it's not about if I'm comfortable traveling. It's about if whoever I'm going to see is comfortable seeing me once I arrived.

364
00:53:59.370 --> 00:54:01.320
Rachel Wein: So that's going to take a while before

365
00:54:01.320 --> 00:54:12.060
Rachel Wein: Some of the larger corporate folks are going to be welcoming you know visitors into their offices and I don't know if Stanley's gonna let me a new one of his office building. I need to show some kind of special card.

366
00:54:12.240 --> 00:54:12.600
Stanley Iezman: Just your

367
00:54:13.410 --> 00:54:21.840
Richard Green: Pitcher FYI is a year may 25 is the most recent comparable data, a year ago I may 25 two and a half million people went through American airports.

368
00:54:22.140 --> 00:54:33.750
Richard Green: This year 340,000 people went through American airport. So that's got about 85% still from where it was. And, you know, secure hospitality. It's, it's one number is going to tell you a lot about

369
00:54:34.080 --> 00:54:37.590
Richard Green: The other. And with that, we have to wrap up.

370
00:54:38.220 --> 00:54:44.550
Richard Green: The hour went very quickly. Let me thank our panelists. Again, very, very much. Lisa ready

371
00:54:45.150 --> 00:54:52.470
Richard Green: Rachel Elias Sweeney David Fincher and Stanley iseman thank you all for your thoughts. Our next

372
00:54:53.550 --> 00:55:01.110
Richard Green: Price for less perspectives will be next Wednesday at 11am, this will be another very good one will have Torsten slob.

373
00:55:01.500 --> 00:55:08.040
Richard Green: Is the chief economist of Deutsche Bank securities very informative and entertaining guy. So join us for that and then

374
00:55:08.430 --> 00:55:22.650
Richard Green: On Tuesday, the following week, June 9 we have David Griffin, who's the CEO of Freddie Mac will be joining us on that day. So we'll look forward to seeing, I hope. Most, if not all of you and thank you very much for coming.

375
00:55:24.330 --> 00:55:24.660
Richard Green: Today,

376
00:55:25.200 --> 00:55:25.590
Stanley Iezman: Thank you.