WEBVTT - How E-Commerce Is Changing Commercial Real Estate 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.560 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:31.639 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. We 0:00:31.720 --> 0:00:34.800 are broadcasting live from the Eisner Amper Global Leaders in 0:00:34.920 --> 0:00:39.040 Real Estate Summit. It's in partnership with a Global form 0:00:39.080 --> 0:00:42.519 and we are in the Latti New York Palace in 0:00:42.560 --> 0:00:46.839 Midtown Manhattan. And who knows more about real estate in 0:00:46.960 --> 0:00:49.839 New York and really around the world. I don't know 0:00:49.920 --> 0:00:54.360 who except Larry Silverstein. He is the chairman of Silverstein 0:00:54.440 --> 0:00:57.760 Properties and he joins us now. So seeing thanks very 0:00:57.840 --> 0:01:01.400 much for being with us. You know, I was looking 0:01:01.400 --> 0:01:03.120 at the background. I'm wondering if you know, when you 0:01:03.200 --> 0:01:07.559 first started out in real estate from Brooklyn with your father, 0:01:07.920 --> 0:01:11.240 did you never imagine that you'd be building four seasons 0:01:11.319 --> 0:01:14.679 properties and the World Trade Center and all these buildings 0:01:14.720 --> 0:01:16.679 around the world. Did you ever imagine that this is 0:01:16.720 --> 0:01:19.400 what real estate would become? Never in a million years, 0:01:20.360 --> 0:01:25.640 it was beyond beyond, beyond visualization. What brought you into 0:01:25.640 --> 0:01:29.199 the industry, what made what attracted you to it? Well, 0:01:29.319 --> 0:01:33.200 I saw a I saw something that that seemed exciting, 0:01:33.800 --> 0:01:39.520 and at the early stages I functioned as a real 0:01:39.600 --> 0:01:43.319 estate broker. But it became obvious to me that the 0:01:43.360 --> 0:01:46.640 money wasn't in brokerage at that time, it was much 0:01:46.680 --> 0:01:49.240 more in ownership. And so with time I said, be 0:01:49.360 --> 0:01:53.280 decided somehow we had again moved moved towards owning real 0:01:53.400 --> 0:01:56.640 estate and ultimately developing real estate. And that's where we 0:01:56.680 --> 0:01:59.200 are today, Mr Self Furstein. I want to talk about 0:01:59.240 --> 0:02:01.960 the World Trade Center site. I know that you had 0:02:02.080 --> 0:02:06.240 a lease in the World Trade Towers ninety year lease 0:02:06.480 --> 0:02:08.760 right ahead of September eleventh, and then after that you've 0:02:08.800 --> 0:02:12.160 devoted yourself to really rebuilding the site. Um, and the 0:02:12.200 --> 0:02:15.600 tower that now has become really headquarters for media, for 0:02:15.720 --> 0:02:19.480 modern media in some ways. Um, where is that? How 0:02:19.560 --> 0:02:22.800 how well occupied is that? And um? What do you 0:02:22.880 --> 0:02:26.919 envision for that whole region going forward? Well, first of all, 0:02:26.919 --> 0:02:30.760 we've least about six six plus million feet of space 0:02:31.080 --> 0:02:34.200 in the buildings down there, and there's more to go. Um. 0:02:34.240 --> 0:02:39.080 And certainly media is a very significant occupant of space 0:02:39.320 --> 0:02:43.680 in that part of the world. Media technology the tammy, 0:02:44.200 --> 0:02:49.600 the tammy areas um and so it's a finance is 0:02:49.600 --> 0:02:53.119 still there, but is not the dominant factor in Lower 0:02:53.160 --> 0:02:57.120 Manhattan today as it was not very long ago. I 0:02:57.160 --> 0:02:59.239 don't think of media though, is having the same degree 0:02:59.240 --> 0:03:02.919 of money as finance. Uh. We see media companies going 0:03:02.919 --> 0:03:05.720 at a business left and right, So I have to wonder, uh, 0:03:06.160 --> 0:03:09.600 you know, what the sustainability of this trend is, and uh, 0:03:09.800 --> 0:03:12.440 what your optimism is that there could be more businesses 0:03:12.440 --> 0:03:15.200 that come either to New York, saying Amazon coming to 0:03:15.240 --> 0:03:17.440 the tower, which I'm sure you would be excited about, 0:03:17.880 --> 0:03:22.000 or others. Given the high cost and uh, some of 0:03:22.000 --> 0:03:25.560 the challenges to the industry. You know, the high cost 0:03:25.639 --> 0:03:28.880 is certainly there. But one of the things that you 0:03:28.960 --> 0:03:32.240 can do when you're building new buildings is building too 0:03:32.280 --> 0:03:36.560 those buildings the latest in technology and provide for tremendous 0:03:36.640 --> 0:03:40.160 dentification of real estate, so you could put more bodies, 0:03:40.400 --> 0:03:44.480 more people into the same square footage that then existed 0:03:44.920 --> 0:03:49.280 years ago. And so the the economics of new construction, 0:03:49.520 --> 0:03:52.800 while it may sound more expensive, is actually becoming much 0:03:52.800 --> 0:03:56.480 more efficient and less expensive for square foot of occupied space. 0:03:57.680 --> 0:03:59.720 What's the biggest mistake that people who want to get 0:03:59.760 --> 0:04:06.360 into real estate make. I think they consistently underestimate the 0:04:06.400 --> 0:04:10.320 amount of capital required to do more money than you 0:04:10.400 --> 0:04:15.240 think invariable. That like a story for life though, well 0:04:15.640 --> 0:04:18.360 certainly children, right indeed, But you know, one of the 0:04:18.400 --> 0:04:21.799 thing I wanted to mention is the negotiating prowers because 0:04:22.000 --> 0:04:24.599 you're you were not the you were not the selected 0:04:24.720 --> 0:04:28.680 as the person to take on World Trade Center, Right, 0:04:28.920 --> 0:04:32.520 that was correct? How did that happen? Well, the winning 0:04:32.560 --> 0:04:36.760 bidder UH was a public company and they ran into 0:04:36.800 --> 0:04:39.520 all kinds of problems when it came to negotiating at 0:04:39.600 --> 0:04:41.960 lease with the Port authority. Port authority asked to do 0:04:42.080 --> 0:04:46.160 certain things, which is a public company that had difficulty doing. UH, 0:04:46.560 --> 0:04:49.240 as a private entrepreneur, had no difficulty with at all, 0:04:49.640 --> 0:04:52.160 and so it just became a question of time until 0:04:52.240 --> 0:04:54.719 they realized it was not going to work. They dropped out, 0:04:55.000 --> 0:04:58.000 and then we came along and closed it. So right 0:04:58.040 --> 0:05:00.240 now we're broadcasting from midtown, but I know they you 0:05:00.080 --> 0:05:04.599 yourself are moving from midtown UH to downtown, and that 0:05:04.680 --> 0:05:08.440 makes me wonder, especially as I pass empty storefronts, do 0:05:08.480 --> 0:05:10.240 you think that the shot that that this sort of 0:05:10.279 --> 0:05:14.159 tide has shifted from midtown and that downtown will see 0:05:14.160 --> 0:05:18.240 an even bigger resurgence. You know, we're we're in an 0:05:18.279 --> 0:05:23.279 era where um e commerce is playing an increasingly important role, 0:05:23.920 --> 0:05:27.800 and so people are buying more today online than they 0:05:27.800 --> 0:05:31.080 have had before. UM. I think it's I think what 0:05:31.120 --> 0:05:34.599 you're gonna see is a is a diminution in the 0:05:34.680 --> 0:05:40.120 number of branch stores UM than we've had in the past. UM. 0:05:40.200 --> 0:05:47.520 And so retail will adjust um to this reality just 0:05:47.560 --> 0:05:50.240 as they've always adjusted in the past. They're going through 0:05:50.279 --> 0:05:53.200 some more difficult times now they'll figure it out. Well. 0:05:53.200 --> 0:05:54.920 But what does that mean for all the commercial real estate? 0:05:54.960 --> 0:05:56.400 What does that mean for all the storefronts that have 0:05:56.440 --> 0:06:01.000 been empty? I think with time rents and some of 0:06:01.000 --> 0:06:03.280 those shops will come down. Some of those locations will 0:06:03.279 --> 0:06:06.320 come down. I think that the locations might find themselves 0:06:06.480 --> 0:06:11.279 being used differently. We see food today uh far far 0:06:11.440 --> 0:06:15.039 greater dependability on a need for food, and so you 0:06:15.080 --> 0:06:17.479 see you see restaurants popping up all over the place. 0:06:17.760 --> 0:06:20.200 And the truth of matter is younger people, for some reason, 0:06:20.320 --> 0:06:22.159 they don't like to cook any more. They like to 0:06:22.160 --> 0:06:24.720 eat it will give you a few reasons. And so 0:06:25.240 --> 0:06:30.680 uh you find we find restaurants uh increasing in frequency 0:06:31.000 --> 0:06:35.160 and presence, uh, and so many cases those shops will 0:06:35.240 --> 0:06:38.000 will be replaced by food of one type or another, 0:06:38.400 --> 0:06:41.240 and so fast food lots, so fast food, so forth, 0:06:41.240 --> 0:06:44.440 different types of foods. It's a it's a fascination. You'll 0:06:44.480 --> 0:06:46.760 have that uptown as well as downtown. They'll certainly seeing 0:06:46.760 --> 0:06:49.520 it downtown. There's no question of that. Based on what 0:06:49.600 --> 0:06:52.800 you know or have heard about the President's efforts for 0:06:52.880 --> 0:06:56.080 a tax reform, what can you tell us about your 0:06:56.160 --> 0:06:59.480 views on tax reform and is it necessary? And what 0:06:59.480 --> 0:07:01.600 would it do if indeed we do get some kind 0:07:01.640 --> 0:07:06.000 of tax reform? Well, Uh, it's it's totally premature uh 0:07:06.040 --> 0:07:10.040 to be able to opine on the ramifications of this thing, 0:07:10.080 --> 0:07:13.200 because you don't know what state, what status it's going 0:07:13.240 --> 0:07:16.280 to have. Uh. You're needing far more definition of a 0:07:16.480 --> 0:07:19.640 most specificity uh than you can't than we have today 0:07:19.840 --> 0:07:22.720 to be able to give you a concrete answer to 0:07:22.760 --> 0:07:25.120 that question. So you don't you don't even pay attention 0:07:25.120 --> 0:07:28.760 to the noise. It's there's a lot of noise at 0:07:28.760 --> 0:07:32.160 this point. Uh. It will become more more less symbolic 0:07:32.240 --> 0:07:35.160 and more meaningful as the days go forward real quickly. 0:07:35.200 --> 0:07:38.720 I'm wondering, from a foreign investment standpoint, how concerned are 0:07:38.800 --> 0:07:42.480 you about curbs on China money leaving the country and 0:07:42.520 --> 0:07:46.400 what that would do to us real estate. Well, there's 0:07:46.440 --> 0:07:48.560 certainly a diminution on the amount of money that can 0:07:48.600 --> 0:07:52.679 come out of China into America. But at the same time, 0:07:53.000 --> 0:07:56.040 there's such vast amounts of wealth has been created around 0:07:56.040 --> 0:07:59.160 the world, So much of that wealth is coming to 0:07:59.280 --> 0:08:03.000 America as a safe haven. And so the first place 0:08:03.120 --> 0:08:06.120 finds itself is usually New York and then it starts 0:08:06.120 --> 0:08:08.640 fanning out to a Jamaica urban centers around the country. 0:08:08.840 --> 0:08:11.600 So I think we're gonna do just find here. Larry Silverstein, 0:08:11.640 --> 0:08:14.239 thank you so much for joining us. Larry Silverstein's chairman 0:08:14.640 --> 0:08:19.640 of Silverstein Properties, incorporated in New York City, and he 0:08:19.840 --> 0:08:23.080 is a lion of the real estate industry, certainly in 0:08:23.120 --> 0:08:36.800 New York as well as around the world. I want 0:08:36.800 --> 0:08:39.760 to turn our attention to uh real estate, in particular 0:08:39.880 --> 0:08:42.839 the security around that real estate in a place like 0:08:43.000 --> 0:08:45.840 New York City. And here to join us is Governor 0:08:45.880 --> 0:08:48.800 David Patterson, the former governor of New York. So I'd 0:08:48.800 --> 0:08:51.679 love to to get your sense on the cost of 0:08:51.679 --> 0:08:55.719 some of these anti terrorism measures that are being increasingly 0:08:55.760 --> 0:08:58.760 taken in New York City and from your perspective, whether 0:08:58.760 --> 0:09:02.760 they have been uh ashiant to adequately protect us. Well, 0:09:02.760 --> 0:09:05.920 we were just talking about that in a session and 0:09:07.080 --> 0:09:11.959 my colleague Jeff Murdler, who was one of my appointees 0:09:11.960 --> 0:09:15.480 to the Port Authority, talked about the fact that the 0:09:15.600 --> 0:09:18.400 new one World Trade Center, the first seven floors don't 0:09:18.400 --> 0:09:21.760 have any people on it. They're concentric layers of concrete, 0:09:22.320 --> 0:09:28.280 and that um the reinforcements dwarf what existed on Towers 0:09:28.320 --> 0:09:31.160 one and two at the World Trade Center uh years ago. 0:09:31.240 --> 0:09:34.960 These are massive amounts of money and extra billion dollars 0:09:35.120 --> 0:09:39.080 was spent just on security alone at the World Trade 0:09:39.080 --> 0:09:43.440 Center and is now being replicated uh at you know 0:09:43.520 --> 0:09:47.840 other edifices that are being developed around the city. Can 0:09:47.880 --> 0:09:50.640 I just play Devil's Advocate for for just a moment, 0:09:50.679 --> 0:09:54.800 because all of this security, while at the macro level, 0:09:55.120 --> 0:09:58.559 we understand that it may be necessary, but it is 0:09:58.600 --> 0:10:02.360 in a sense non productive spending. In other words, it's 0:10:02.400 --> 0:10:07.679 concrete as you just describe, it's many layers of security 0:10:08.200 --> 0:10:12.040 at the same time that we have municipalities going bust. 0:10:12.520 --> 0:10:16.880 So is there a contrast between what we are securing, 0:10:17.080 --> 0:10:19.960 which seems to be deteriorating in some cases, and the 0:10:20.000 --> 0:10:25.280 amount of money that is being spent on security services. Uh, 0:10:25.440 --> 0:10:30.280 that is a brilliant question. It's a sacrifice in many 0:10:30.360 --> 0:10:34.240 respects what we're finding. Let's think about it. Two years 0:10:34.280 --> 0:10:37.120 ago in France there was an attack on a restaurant, 0:10:37.640 --> 0:10:40.880 and then, uh, one month after that, in December of 0:10:41.040 --> 0:10:46.239 twenty fifteen, there was an attack on a holiday party 0:10:46.280 --> 0:10:48.720 that was actually in a in a you know, regular 0:10:48.800 --> 0:10:52.680 office building, So terrorists could read a lot of havoc, 0:10:52.960 --> 0:10:54.960 but not even going near the World trades. And they 0:10:54.960 --> 0:10:57.360 can do it in the subway system. There's no way 0:10:57.400 --> 0:11:00.560 we could secure seven miles of track in the New 0:11:00.640 --> 0:11:03.840 York City subway system. So your point is very well taken. 0:11:04.400 --> 0:11:08.280 But I guess psychologically, if there was another attack on 0:11:08.280 --> 0:11:11.120 one of the major buildings, the Empire State Building or 0:11:12.040 --> 0:11:14.480 Madison Square Garden, on one of these places, the person 0:11:14.640 --> 0:11:17.000 everybody would say is why didn't someone do something about it? 0:11:17.960 --> 0:11:21.840 Governor Patterson, I wonder if you could enlighten us about 0:11:22.040 --> 0:11:26.720 whether it's underappreciated. How many potential threats have been thwarted 0:11:27.080 --> 0:11:29.760 to New York City and how many threats you're aware 0:11:29.760 --> 0:11:33.320 of that were imminent that didn't happen. I'm aware of 0:11:33.400 --> 0:11:40.400 about of UH for every one UH situation had happened. Friends, 0:11:40.440 --> 0:11:45.160 when I was governor, there was a bombing um on Street. UH. 0:11:45.400 --> 0:11:49.000 It didn't it wasn't effective. But what had occurred. But 0:11:49.160 --> 0:11:53.120 I told the group this morning that I was told 0:11:53.160 --> 0:11:55.000 there would be an attack on the New York subway 0:11:55.040 --> 0:11:58.040 system during the Thanksgiving holidays in two thousand and eight. 0:11:58.480 --> 0:12:01.960 And you know what. My staff came in my office 0:12:02.000 --> 0:12:04.400 today before Thanksgiving and they were all looking down, they 0:12:04.400 --> 0:12:07.600 were glum. I thought, oh my god, we've got another 0:12:07.760 --> 0:12:11.520 September eleven situation. And it turned out they wanted to 0:12:11.559 --> 0:12:14.760 tell me about the attack in Mumbai when they blew 0:12:14.840 --> 0:12:19.120 up the hotel and in India, and um, it was 0:12:19.160 --> 0:12:23.440 a horrible situation, terrible tragedy. We sent supplies from New 0:12:23.520 --> 0:12:26.840 York State. I felt guilty of others, but I was 0:12:26.920 --> 0:12:30.680 relieved that New York had been spared. They are all 0:12:30.720 --> 0:12:33.000 types of threats that we never know about. We have 0:12:33.120 --> 0:12:35.800 to thank our New York City Police Department, the state 0:12:35.840 --> 0:12:39.760 police in our national government for their successes. Can you 0:12:39.800 --> 0:12:42.280 just speak a little bit about the threat the fiscal 0:12:42.400 --> 0:12:46.400 threat to states and municipalities. We've got a potential bankruptcy 0:12:46.520 --> 0:12:52.559 right now at Hartford, Connecticut. Yeah, it's overwhelming. UM. There 0:12:52.640 --> 0:12:59.120 was the little uh city Pritchard, Alabama. There was the 0:13:00.480 --> 0:13:06.640 municipality in near Orange County in California. UM, we are going, uh, 0:13:06.840 --> 0:13:13.800 We're uh. Governments are spending more and then they had 0:13:13.840 --> 0:13:16.760 to because of all types of myriad problems that exist 0:13:16.800 --> 0:13:19.880 now that then existed before. There's no doubt about that. 0:13:20.040 --> 0:13:22.880 And we're going hopelessly back into debt and I hope 0:13:22.920 --> 0:13:26.760 that's not another prelude uh to a government crisis like 0:13:26.840 --> 0:13:29.520 we sew in two thousand and eight. Do you think 0:13:29.559 --> 0:13:35.480 that's possible? I mean, from leaving out finance, I think 0:13:35.520 --> 0:13:40.160 just from a government perspective, the amount of debt that's 0:13:40.200 --> 0:13:43.600 being run up by cities and states is incredible. Right 0:13:43.600 --> 0:13:46.800 here in in in New York. At one time, about 0:13:46.800 --> 0:13:49.800 ten years ago, the m T A was the fifth 0:13:49.880 --> 0:13:53.480 largest debt or in the country. California was number one, 0:13:53.480 --> 0:13:55.079 New York State, New York City with two and three, 0:13:55.120 --> 0:13:58.040 Massachusetts number four and then the m t A. It's 0:13:58.040 --> 0:14:00.480 as if they are a state, and so the point 0:14:00.559 --> 0:14:04.600 is that, um um, we don't manage money right the 0:14:04.640 --> 0:14:06.320 way we should. Well, I want to thank you for 0:14:06.400 --> 0:14:08.920 your service to the state and to the country. Former 0:14:08.960 --> 0:14:12.240 Governor of New York David Patterson joining us here at 0:14:12.240 --> 0:14:15.280 the Global leaders in Real Estate Summit for Eisener Emper 0:14:15.320 --> 0:14:18.880 and partnership with I Global Form. You're listening to Bloomberg. 0:14:31.400 --> 0:14:34.480 We are broadcasting live from the Eisener Emper Global leaders 0:14:34.520 --> 0:14:37.600 in Real Estate Summit. It's in partnership with I A 0:14:37.640 --> 0:14:40.920 Global Forum, and we're broadcasting from the New York Palace 0:14:40.960 --> 0:14:44.520 Hotel in Midtown Manhattan. Joining us now is really our 0:14:44.560 --> 0:14:47.320 host for the whole morning. I want to appreciate it. 0:14:47.520 --> 0:14:50.360 Thank you very much, Charlie Weinstein. He is the chief 0:14:50.400 --> 0:14:53.200 executive of Eisener Emperor. Thank you for having us, Thank 0:14:53.200 --> 0:14:55.880 you for having thank you for covering us this morning. 0:14:55.920 --> 0:14:58.280 And good morning Lace and him. Great to be great 0:14:58.320 --> 0:15:00.000 to be be here. You know. One of the time 0:15:00.160 --> 0:15:01.760 I wonder if we could just jump right in. I 0:15:01.800 --> 0:15:03.840 want to understand a little bit more about the Center 0:15:03.880 --> 0:15:07.440 for Family Business Excellence, because I think that many people 0:15:07.480 --> 0:15:11.680 who either own companies or are equity holders in either 0:15:11.760 --> 0:15:15.040 private companies or in real estate deals. This is something 0:15:15.320 --> 0:15:18.760 that you're trying to build for them. Center for Family 0:15:18.800 --> 0:15:23.400 Business Excellence is um a new initiative that we've started 0:15:23.400 --> 0:15:27.040 at the firm. Lisa Stewart is the executive and our 0:15:27.160 --> 0:15:32.800 firm who's responsible for family uh, family businesses, and family business. 0:15:32.840 --> 0:15:37.280 Center for Family Business Excellence really has its focus on 0:15:37.320 --> 0:15:42.520 the challenges that family owned businesses and privately held companies 0:15:42.560 --> 0:15:47.760 have on succession, planning and transition, and Lisa has been 0:15:47.760 --> 0:15:50.560 doing this for twenty years. We're very excited to be 0:15:50.600 --> 0:15:53.760 able to bring this initiative to our clients, and especially 0:15:53.800 --> 0:15:56.920 in the real estate industry where family owned real estate 0:15:57.360 --> 0:16:01.040 provides a challenge for leadership trains issue. You know, as 0:16:01.080 --> 0:16:04.200 we were talking before this segment, one thing that struck 0:16:04.200 --> 0:16:07.080 me was that the main topic of the day is 0:16:07.120 --> 0:16:08.640 somewhat different than I thought it would be. I thought 0:16:08.640 --> 0:16:11.040 it would be about taxes, frankly because of the tax 0:16:11.080 --> 0:16:13.680 plan that was released by President Trump, but it sounds 0:16:13.720 --> 0:16:15.480 like that's not the that's not the case. In fact, 0:16:15.520 --> 0:16:19.080 it's actually the technological revolution that's kind of underpinning the 0:16:19.080 --> 0:16:21.400 real estate market right now? Can you give us a 0:16:21.440 --> 0:16:24.040 sense of what that is? Absolutely? And so it's very 0:16:24.120 --> 0:16:30.520 interesting because we are a leading accounting and advisory firm, 0:16:30.560 --> 0:16:34.560 but even eisener Amper has morphed into a technology focused 0:16:34.640 --> 0:16:38.560 term and that's impacting real estate in so many ways. 0:16:38.640 --> 0:16:41.400 And so if you think one way in particular would 0:16:41.440 --> 0:16:44.840 be blockchain. And so what's coming in blockchain is going 0:16:44.880 --> 0:16:51.560 to have a tremendous impact on title and ownership, mortgage recording, um, 0:16:51.600 --> 0:16:55.359 all of these things that perhaps were impacted in the 0:16:55.400 --> 0:16:58.800 meltdown in two thousand and eight, those are going to 0:16:58.840 --> 0:17:02.680 be impacted in a big way by blockchains. So when 0:17:02.720 --> 0:17:05.040 you say impacted, does this mean that there's going to 0:17:05.119 --> 0:17:09.440 be more profits or sort of a fewer costs attached 0:17:09.520 --> 0:17:13.600 to purchasing a home with a mortgage or does that 0:17:13.640 --> 0:17:16.080 mean that it's just going other places? I mean, what's 0:17:16.080 --> 0:17:19.399 the significance of this for buyers of real estate? To me, 0:17:19.520 --> 0:17:23.639 the significance is transparency. And when you have transparency, you 0:17:23.720 --> 0:17:27.359 have more effective and efficient markets, and we will see 0:17:28.000 --> 0:17:31.320 the lowering of risk and we will see more investment 0:17:31.359 --> 0:17:36.120 dollars come into this sector as risk gets lowered. All right, now, 0:17:36.200 --> 0:17:38.600 I know you wanted to move away from taxes, but 0:17:38.640 --> 0:17:40.440 I'm sorry, I'm just gonna have to focus you there 0:17:40.440 --> 0:17:42.840 because I know, for example, that you are one of 0:17:42.840 --> 0:17:46.280 the attendees at the White House at a Business Council 0:17:46.320 --> 0:17:49.800 meeting with President Donald Trump, and of course taxes is 0:17:49.840 --> 0:17:52.040 in the headlines right now. What if you could speak 0:17:52.040 --> 0:17:56.320 about this idea of succession planning and the estate tax 0:17:56.400 --> 0:17:59.280 for businesses and then maybe just segue if you can 0:17:59.320 --> 0:18:03.600 into the whole then thirty one exchange uh business, because 0:18:03.880 --> 0:18:05.840 that may be on the chopping block at least that's 0:18:05.840 --> 0:18:09.879 according to some people in Washington. Well, so a state 0:18:09.960 --> 0:18:13.360 tax if and there are very few details out yet 0:18:13.560 --> 0:18:17.200 in terms of tax reform and what impact it's going 0:18:17.280 --> 0:18:21.000 to have, Uh, the state tax will go away, and 0:18:21.119 --> 0:18:26.520 so that will change, um if if the proposals are 0:18:26.560 --> 0:18:29.880 filled in the way that that they're spoken about now, 0:18:30.680 --> 0:18:32.600 a state tax will go away. That will have a 0:18:32.720 --> 0:18:39.119 significant significant impact on succession planning for families especially, And 0:18:39.160 --> 0:18:42.399 so we're looking forward to more details coming out and 0:18:42.440 --> 0:18:46.879 hopefully we will see some changes in the estate tax. 0:18:47.400 --> 0:18:52.840 Um In terms of specifics, ten thirty one exchanges limitations 0:18:52.920 --> 0:18:56.800 on business interest deductions, all of these things are going 0:18:56.840 --> 0:19:01.200 to have a major impact. It's a little bit uncertain 0:19:01.240 --> 0:19:03.440 at this point if they're actually going to go through. 0:19:03.560 --> 0:19:08.400 So let's here, what's your expectation. You look skeptical. Um, 0:19:08.520 --> 0:19:13.760 I believe that will have tax reform, but uh, interest 0:19:13.800 --> 0:19:17.480 groups are lobbying already. I think the plan is to 0:19:17.600 --> 0:19:20.840 keep details light until the proposal is ready to be 0:19:20.920 --> 0:19:23.840 voted on interest groups so hard at work. Well, I'm 0:19:23.840 --> 0:19:28.320 wondering from the mortgage interest deduction standpoint, whether you think 0:19:28.320 --> 0:19:32.920 that could potentially be on the chopping block. Certainly sounds 0:19:33.560 --> 0:19:36.280 as though they're going to keep it for individuals, but 0:19:36.480 --> 0:19:42.000 business interest deductions sound like they're going to be limited. 0:19:42.119 --> 0:19:44.200 And if that's the case, that will have an impact 0:19:44.240 --> 0:19:47.520 on corporate real estate and real estate investment. In other words, 0:19:47.520 --> 0:19:52.919 commercial property values could deteriorate pretty rapidly. Absolutely. Is there 0:19:52.960 --> 0:19:57.480 a misnomer about the industry that people do deals for 0:19:57.560 --> 0:20:01.240 tax reasons? I mean, is taxes a secondary issue or 0:20:01.320 --> 0:20:06.960 the primary? I'd like to think tax planning is your friend, 0:20:07.880 --> 0:20:11.160 and so it's a component of every aspect of deal 0:20:11.200 --> 0:20:16.120 making in real estate, and savvy real estate investors take 0:20:16.200 --> 0:20:19.199 advantage of the opportunities in the tax code as it 0:20:19.280 --> 0:20:23.879 stands today. UM, it'll be interesting to see with tax reform, 0:20:23.920 --> 0:20:27.080 if we have tax reform, what those opportunities will be 0:20:27.119 --> 0:20:30.840 going forward. That's our business. Charlie Weinstein, thank you so 0:20:30.920 --> 0:20:32.960 much for joining us and for having us here today. 0:20:33.000 --> 0:20:36.119 Charlie Weinstein's chief executive officer of Eisner Amper, which is 0:20:36.160 --> 0:20:40.479 based in New York and facing a pretty rapidly changing 0:20:40.560 --> 0:20:43.800 landscape for at least the underbelly of the real estate industry. 0:20:43.840 --> 0:20:48.359 As so many industries are facing disruption from technological advances. 0:21:00.560 --> 0:21:02.840 The bond market is experiencing a bit of a sell off, 0:21:02.840 --> 0:21:06.000 at least the US government bond market. You are seeing, uh, 0:21:06.160 --> 0:21:08.560 some of the risk your markets rally a little bit. 0:21:08.600 --> 0:21:10.560 I want to bring in Mark Branch, chief strategist at 0:21:10.600 --> 0:21:15.080 Hilltop Securities in Bloomberg Profit for our Bloomberg view site 0:21:15.200 --> 0:21:16.800 up Mark, thank you so much for joining us, and 0:21:16.880 --> 0:21:19.520 I want to start with should we care about this 0:21:19.640 --> 0:21:22.240 selloff in the bond market or will this just be 0:21:22.400 --> 0:21:25.640 a buying opportunity like all of the other small blips 0:21:25.720 --> 0:21:30.399 upward in bond yields. I think it's a buying opportunity. Lisa. 0:21:30.560 --> 0:21:35.360 The technically the lines in the sand or to sixteen 0:21:35.440 --> 0:21:39.000 and two thirty two were right at the high level 0:21:39.040 --> 0:21:42.320 of the support resistance line at two point three to 0:21:42.440 --> 0:21:48.000 eight as we speak. And I think the our yields 0:21:48.040 --> 0:21:51.560 of the United States, even though we're the largest economy, 0:21:51.640 --> 0:21:55.080 the strongest economy, or so much higher than European yields, 0:21:55.680 --> 0:21:59.840 as long as the central banks keep printing money, which 0:21:59.840 --> 0:22:02.800 they are way more than the fetters talking about cutting back, 0:22:03.480 --> 0:22:06.840 I think you'll stay low. Well, Mark ran if you 0:22:06.880 --> 0:22:09.280 if you'd stay low, what happens in December if the 0:22:09.280 --> 0:22:13.040 Federal Reserve raises interest rates, I think the yield curve 0:22:13.160 --> 0:22:18.760 just flattens further. We've seen a huge flattening over the 0:22:18.840 --> 0:22:22.320 last year. As you know, phim better than anybody, and 0:22:22.320 --> 0:22:25.159 and Lisa, you both know that how many people have 0:22:25.840 --> 0:22:28.520 come into the media we're going to have three to 0:22:28.600 --> 0:22:32.720 yield on the tenure and it just has not taken place, 0:22:32.760 --> 0:22:35.520 and I don't expect it to anytime soon. Well, you know, 0:22:35.560 --> 0:22:38.920 I think that one change in the equation could be 0:22:39.320 --> 0:22:44.120 a tax plan, and President Trump did unveil his proposal yesterday, 0:22:44.119 --> 0:22:47.240 at least the outline um and there's some speculation that 0:22:47.320 --> 0:22:50.480 the sell off that we're seeing is an expectation that 0:22:50.680 --> 0:22:54.080 the federal deficit will deepen. Therefore, even if we don't 0:22:54.080 --> 0:22:57.680 see the growth, we will see uh, some inflationary pressures, 0:22:57.720 --> 0:22:59.440 or at least we'll see that the US is becoming 0:22:59.480 --> 0:23:03.880 less credit worthy. How much do you buy into that argument? Um, 0:23:03.920 --> 0:23:06.840 there's no question so that the cause of the markets 0:23:06.880 --> 0:23:09.480 to sell off the last few days has been the 0:23:09.520 --> 0:23:14.040 president's tax plan. I do not think the country's going 0:23:14.119 --> 0:23:17.080 to become less credit worthy. It just depends on how 0:23:17.160 --> 0:23:20.000 much growth you think we're going to see from lower 0:23:20.040 --> 0:23:24.520 taxes to upset this and uh, I think the growth 0:23:24.560 --> 0:23:27.800 will there will be growth, and you know what the 0:23:27.880 --> 0:23:30.560 number is is very difficult to tell, but I think 0:23:30.600 --> 0:23:33.919 that's the offset for the tax cuts. And also, of 0:23:33.960 --> 0:23:38.720 course people will have more money to spend, which should 0:23:38.720 --> 0:23:41.479 be a positive for the economy. Mark, can you tell 0:23:41.560 --> 0:23:44.400 us a little bit about demand from institutional clients right now? 0:23:44.440 --> 0:23:48.040 What are they looking for? Yeah, the institution, the big 0:23:48.040 --> 0:23:50.800 institutional clients and Ideal with quite a number of them 0:23:50.840 --> 0:23:55.640 directly are outside of the box, if you will, out 0:23:55.680 --> 0:23:58.120 of the box. But what they're looking for, they're they're 0:23:58.160 --> 0:24:02.600 not getting enough yield and traditional public investments, and most 0:24:02.680 --> 0:24:06.600 of them were doing privates in the debt market, or 0:24:06.680 --> 0:24:10.719 private equity or real estate. They're doing all kinds of 0:24:10.760 --> 0:24:15.000 things to try to lock in yield because they cannot 0:24:15.119 --> 0:24:18.040 get it in the public debt markets. Well, you talk 0:24:18.080 --> 0:24:20.320 about locking in yield, does that lock in their money 0:24:20.359 --> 0:24:24.120 because of limited liquidity in many of these investments. Well, 0:24:24.160 --> 0:24:28.280 a lot of these big institutions, especially the life insurance companies, 0:24:28.320 --> 0:24:31.680 don't need much liquidity. There. You have a longer time 0:24:31.760 --> 0:24:36.399 horizon and the yield that they're getting the cash flow 0:24:36.520 --> 0:24:41.320 is much more important to them than uh liquidity. So Mark, 0:24:41.359 --> 0:24:43.439 you are saying that, Um, there sort of seems to 0:24:43.440 --> 0:24:47.800 be this tense balance here between a commentative monetary policy 0:24:47.880 --> 0:24:52.119 globally as well as your expectation that the tax proposal 0:24:52.200 --> 0:24:56.800 would potentially increase growth in thus inflation and thus potentially 0:24:57.520 --> 0:25:01.480