WEBVTT - How XpresSpa Converted Airport Spas Into Test Centers: CEO Satzman 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.439 and on Bloomberg dot com. This is Bloomberg Markets. I'm 0:00:20.440 --> 0:00:23.160 Carol Master in for Bonnie and Paul on this Wednesday. 0:00:23.640 --> 0:00:26.439 One of the industries we've covered a lot, and understandably so, 0:00:26.600 --> 0:00:29.800 throughout the pandemic is the hospitality industry, anything connected with 0:00:29.840 --> 0:00:34.199 traveling and tourism. Um. The airlines of course have been 0:00:34.320 --> 0:00:38.440 just shut down or closed dramatically. Uh. Their business is 0:00:38.479 --> 0:00:41.280 really just dropped as a result of the pandemic, and 0:00:41.360 --> 0:00:45.160 understandably so well. Our next guest and his company certainly 0:00:45.159 --> 0:00:47.960 plays into this. We're talking about the Express SPA Group 0:00:48.320 --> 0:00:52.360 tickers x sp A. They trade publicly. Uh. It's about 0:00:52.360 --> 0:00:55.160 a hundred and twelve million dollar market cap company. It 0:00:55.280 --> 0:00:57.960 is the world largest airport spat company. I've used them 0:00:57.960 --> 0:01:00.959 at an airport while traveling, and I'm sure you have two. Um, 0:01:01.000 --> 0:01:03.000 so let's get into what their business has been like 0:01:03.080 --> 0:01:05.280 and how they are dealing with the pandemic and what 0:01:05.319 --> 0:01:08.679 the future looks like. Doug Satsman is CEO of Express Spot, 0:01:08.760 --> 0:01:11.160 joining us on the phone in New York City. Doug, 0:01:11.240 --> 0:01:13.200 nice to have you here on Bloomberg. How are you, 0:01:14.319 --> 0:01:17.200 um great, good morning. Thanks care for having us on. Well, 0:01:17.240 --> 0:01:19.000 it's great to have you here. Tell me a little 0:01:19.000 --> 0:01:20.640 bit about what your world has been like. Take me 0:01:20.680 --> 0:01:23.160 back to March and what it's been like since then. 0:01:24.319 --> 0:01:28.640 So in March we all know what happened across our 0:01:28.640 --> 0:01:32.640 community and communities around the world. UM our core business 0:01:32.680 --> 0:01:36.679 has been airports. Spas were the largest global UH SPA 0:01:36.800 --> 0:01:39.840 operator in airports and we were deemed a non essential 0:01:39.920 --> 0:01:42.440 use appropriately so you know, by the end of March 0:01:42.560 --> 0:01:45.800 closed all of our spas down globally UH And then 0:01:46.400 --> 0:01:49.559 we had an idea from our chairman, Bruce Bernstein, could 0:01:49.560 --> 0:01:52.400 we offer COVID testing during this time and leverage the 0:01:52.400 --> 0:01:54.520 real estate we have in the spas. So we started 0:01:55.160 --> 0:01:58.080 a down and dirty project with a small group of 0:01:58.080 --> 0:02:01.840 people and in seventy five days we went from idea 0:02:01.920 --> 0:02:04.480 to concept to pilot and got our first one open 0:02:04.560 --> 0:02:08.600 in June and JFK Terminal four. And since then, we've 0:02:08.639 --> 0:02:14.120 been continuing to roll out express check clinics, which offer 0:02:14.240 --> 0:02:17.680 COVID testing for airport employees, T s A, agents and 0:02:18.639 --> 0:02:20.639 UH anyone who works for the airport as well as 0:02:20.680 --> 0:02:24.120 travelers UM, and we have been expanding around the country. 0:02:24.120 --> 0:02:28.520 We're focusing domestically first and then we can look broader, right, 0:02:28.639 --> 0:02:31.720 So like we're so what's your expectation moving forward? And 0:02:31.720 --> 0:02:34.640 and as you continue to I'm assuming branched out out. 0:02:34.800 --> 0:02:37.639 I know there was a headline, was it just yesterday 0:02:37.720 --> 0:02:39.640 or on Monday that you guys are going to start 0:02:39.639 --> 0:02:42.680 offering on site testing from select cities four NonStop flights. 0:02:42.680 --> 0:02:45.200 I think this was for Hawaii specifically. But how do 0:02:45.280 --> 0:02:47.919 you continue to kind of embrace the environment we are 0:02:48.400 --> 0:02:50.480 and kind of help your company as well as the 0:02:50.480 --> 0:02:53.679 airline industry kind of get back to normal. So what 0:02:53.840 --> 0:02:57.640 we're finding is it's the private companies that are leading 0:02:57.680 --> 0:03:00.919 the way trying to figure out the the best path 0:03:01.040 --> 0:03:06.519 for UM safe travel and returning consumer confidence. So it's 0:03:06.520 --> 0:03:09.839 the airlines, it's testing companies like US and some health 0:03:09.880 --> 0:03:14.800 app companies UM like the Common Paths, who we're partnering 0:03:14.800 --> 0:03:17.600 with to develop a process to partner with the airlines 0:03:17.720 --> 0:03:22.359 and destination cities or states UM and and to connect 0:03:22.400 --> 0:03:27.040 travelers through getting tested and then being able to convey 0:03:27.080 --> 0:03:31.680 their negative results and satisfy getting out of quarantine requirements 0:03:31.760 --> 0:03:35.000 or other requirements to be admitted into you know, a 0:03:35.040 --> 0:03:38.320 country or a state. We started with Hawaii becoming one 0:03:38.360 --> 0:03:41.480 of their trust to testing partners, and then we've had 0:03:41.640 --> 0:03:45.760 several recent announcements with United and with jet Blue and 0:03:45.840 --> 0:03:49.360 with Hawaiian Airlines where we have partnerships now with the 0:03:49.400 --> 0:03:53.000 three airlines to partner with them on select cities. Often 0:03:53.040 --> 0:03:55.400 we're focusing on Hawaii right now, but we're looking to 0:03:55.480 --> 0:04:00.240 Transatlantic destinations and and other destinations around the world. Um so. 0:04:00.360 --> 0:04:03.800 In fact, with jet Blue as an example, UM we 0:04:03.880 --> 0:04:07.000 are opening a second unit in Boston where we already 0:04:07.000 --> 0:04:09.320 have one express check, but we're opening a second one 0:04:09.440 --> 0:04:13.640 in their terminal UH to help facilitate Boston is being 0:04:13.800 --> 0:04:18.320 a hub for them to help open up more travel 0:04:18.360 --> 0:04:21.600 to more destinations and UH and there's other airlines we're 0:04:21.600 --> 0:04:24.159 speaking with as well. But these are the groups that 0:04:24.240 --> 0:04:27.760 are fueling the way. And then we're partnering with the 0:04:27.760 --> 0:04:31.120 airports to get either leverage existing real estate that we 0:04:31.200 --> 0:04:33.719 have from our SPA business, but more often than not, 0:04:33.800 --> 0:04:36.720 we're being offered new spaces that are more more convenient 0:04:36.760 --> 0:04:39.279 for travelers, like presecurity. I have to say the Investment 0:04:39.279 --> 0:04:41.359 Space has written that this has kind of created a 0:04:41.400 --> 0:04:45.360 resurgence and reincarnation for you guys as a company, and 0:04:45.400 --> 0:04:48.320 I do wonder, you know, how does this kind of 0:04:48.360 --> 0:04:52.880 factor into future longer term strategy at this point or 0:04:52.920 --> 0:04:56.599 is this just kind of a stop gap to get through. Uh? Well, 0:04:56.720 --> 0:04:59.839 it started as a stop gap to get through. You know, 0:05:00.040 --> 0:05:04.279 our our business was closed and this was a pivot 0:05:04.400 --> 0:05:08.520 that allowed us to serve the airport community, which where 0:05:08.560 --> 0:05:11.520 we've worked. But what's happened as we've learned through the 0:05:11.520 --> 0:05:16.719 medical side, we are we are developing a new concept 0:05:17.080 --> 0:05:19.719 UM that takes what we've learned from health and wellness, 0:05:19.760 --> 0:05:23.839 our history, what we've learned from medical and are developing 0:05:23.880 --> 0:05:27.760 it to launch next year, which will you know, continue 0:05:27.760 --> 0:05:31.080 with things like testing. It will run alongside Express check UM, 0:05:31.120 --> 0:05:34.880 it could run alongside Express spas, but in a post 0:05:34.920 --> 0:05:38.640 COVID world UM, things have definitely changed, and what travelers 0:05:38.839 --> 0:05:42.560 and employees are looking for are our new services that 0:05:42.600 --> 0:05:46.159 aren't offered at airports, and we're uniquely positioned to deliver 0:05:46.240 --> 0:05:49.039 that with our experience operating in the environment and what 0:05:49.120 --> 0:05:52.560 we've learned now working with doctors in our medical side right. 0:05:52.600 --> 0:05:54.960 And my understanding is you guys doing testing for things 0:05:55.000 --> 0:05:59.040 like the regular flu and mono and offering flu vaccines 0:05:59.080 --> 0:06:01.920 to which is which is pretty fat fascinating How quickly 0:06:01.960 --> 0:06:04.600 just got about twenty seconds here? Twenty five seconds? How quickly? Though? 0:06:04.640 --> 0:06:06.880 Do you you're not abaniting of the SPA business or 0:06:06.920 --> 0:06:10.720 are you? We haven't abandoned the SPA business, but we're 0:06:10.720 --> 0:06:14.000 watching traffic to continue up, and we've been successful in 0:06:14.080 --> 0:06:19.040 raising funds to help fuel future growth expansions um and 0:06:19.080 --> 0:06:22.480 to have a very solid balance sheet for investors to 0:06:22.480 --> 0:06:24.600 to stay in with us. We'll be fascinated to check 0:06:24.640 --> 0:06:27.800 in with you throughout one to uh see how it's 0:06:27.800 --> 0:06:31.239 all going, especially as you guys have pivoted dog. Doug Satsman, 0:06:31.360 --> 0:06:33.479 he is CEO of Express Spa on the phone in 0:06:33.480 --> 0:06:38.919 New York. That's stock by the way down in and 0:06:38.960 --> 0:06:40.720 I'm just going to put that out there, so we've 0:06:40.720 --> 0:06:43.440 got the perfect guest to talk about that. Specifically when 0:06:43.440 --> 0:06:46.960 it comes to investing in wine. He's got an interesting 0:06:46.960 --> 0:06:49.560 platform out there. Orv Goldman is with us CEO at 0:06:49.560 --> 0:06:52.279 Acker and he joins us on the phone in New York, 0:06:52.400 --> 0:06:54.640 or nice to have you here. Uh, you know, tell 0:06:54.720 --> 0:06:57.599 us a little bit about UM, because I've covered what 0:06:57.680 --> 0:07:00.279 you guys are up to over the last couple of years. 0:07:00.520 --> 0:07:02.839 Tell us about because you've got a new wine markets 0:07:02.839 --> 0:07:05.240 an analytics platform. Tell us a little bit about what 0:07:05.240 --> 0:07:08.960 you're doing. Okay, So what we wanted to do was 0:07:09.040 --> 0:07:14.520 we wanted to create a digital data and analytical platform 0:07:14.560 --> 0:07:20.040 to give people invested interested investing in wine, uh, a 0:07:20.320 --> 0:07:25.880 sophisticated tool to really analyze the wine market that does really, 0:07:26.240 --> 0:07:28.760 up to this point, has never existed. There have been 0:07:28.880 --> 0:07:34.360 just some generic wine indexes. But we created the most 0:07:34.400 --> 0:07:39.480 comprehensive wine indexing an analytical tool UM in the market. 0:07:39.760 --> 0:07:41.840 And it's kind of like a Bloomberg for wine. It 0:07:41.880 --> 0:07:45.440 almost sounds like it is hoping. Even that I had 0:07:45.480 --> 0:07:48.560 a thirty five years in financial markets that was very 0:07:48.560 --> 0:07:51.920 friendly with Michael at the beginning of my career. Yes, 0:07:52.040 --> 0:07:54.920 we we we did do it. We created a Bloomberg 0:07:54.960 --> 0:07:58.400 for wine. So before we get into exactly the analytics 0:07:58.400 --> 0:08:00.200 to involved in it, because I am curious about that 0:08:00.240 --> 0:08:02.400 and how it works. Tell me why wine is a 0:08:02.400 --> 0:08:07.400 good investment, So why it's very interesting. Wine is actually 0:08:07.800 --> 0:08:12.280 outside of the SMP. If you take all the asset classes, 0:08:12.680 --> 0:08:17.880 the second best performing asset class over time, and more importantly, 0:08:18.600 --> 0:08:22.480 it is about seven timeless volatile in terms of its 0:08:22.520 --> 0:08:27.080 annual returns than all the equity markets, So it is 0:08:27.280 --> 0:08:35.199 a relatively uh, nonvolatile, high performing asset. The average return 0:08:35.280 --> 0:08:38.880 of wine over fifteen years is almos almost nine and 0:08:38.920 --> 0:08:43.920 a half percent, and um, it's uh, you know for 0:08:44.240 --> 0:08:49.400 people looking to diversify, Uh, it's been a really well 0:08:49.440 --> 0:08:52.360 performing asset class and if you can there's a lot 0:08:52.400 --> 0:08:55.800 of smart money that's involved. And what we've been doing 0:08:55.880 --> 0:08:59.040 is providing a platform for the average consumer to take 0:08:59.080 --> 0:09:01.120 advantage of it. Tell me how it works, because if 0:09:01.160 --> 0:09:03.400 I go to acro wines dot Com, I can certainly 0:09:03.400 --> 0:09:05.319 shop and I can buy wine. But it's a lot 0:09:05.360 --> 0:09:08.079 more than that, is what you're saying. Correct, Yes, So 0:09:08.200 --> 0:09:12.920 it's a basically there's two things. Um, you can take 0:09:13.000 --> 0:09:18.040 any one of our two hundreds uh proprietary wine industries 0:09:18.080 --> 0:09:23.000 to analyze either the broad market or we've broken it 0:09:23.040 --> 0:09:28.679 down to looking at regions looking advantages, looking at specific 0:09:28.760 --> 0:09:33.560 producers and actually looking at any specific wine and you 0:09:33.600 --> 0:09:39.720 can literally compare their its performance against any other wine index, 0:09:40.360 --> 0:09:44.760 any other financial asset, and you could really get into 0:09:44.800 --> 0:09:48.640 the minutia if you will, uh in a very discrete 0:09:48.720 --> 0:09:53.320 way of analyzing uh a particular wine. So just like 0:09:53.400 --> 0:09:55.440 you can on a Bloomberg monel to do with equities, 0:09:55.480 --> 0:09:57.960 you can look at the broader markets, you can look 0:09:58.000 --> 0:10:01.200 at you know, sectors, and then you can look at 0:10:01.200 --> 0:10:04.480 specific stocks and you can compare them. And that's what 0:10:04.559 --> 0:10:07.199 you can now do with wine, which is interesting. So 0:10:07.360 --> 0:10:10.480 you know, when somebody invests in wine, do they actually 0:10:10.720 --> 0:10:14.200 you know, take possession of the bottles? Can they take 0:10:14.240 --> 0:10:17.360 possession of the bottles, do they own them? Can they 0:10:17.440 --> 0:10:19.080 drink them? Or can they sell them? Or they can 0:10:19.080 --> 0:10:21.720 do kind of all of that. They can do all 0:10:21.720 --> 0:10:24.679 of it. So a lot of so uh. You know, 0:10:24.800 --> 0:10:28.680 when you look at the market, there are uh, there 0:10:28.760 --> 0:10:32.320 is a large segment of the market where they from 0:10:32.440 --> 0:10:37.000 investment standpoint, people will buy wine and then have them 0:10:37.040 --> 0:10:41.360 professionally stored and over a period of time of five 0:10:41.480 --> 0:10:45.240 or ten years, and those people then ultimately sell them 0:10:45.360 --> 0:10:49.480 and pick up their capital gate right, and then there 0:10:49.520 --> 0:10:51.960 are those people that like to do that but also 0:10:52.080 --> 0:10:55.800 drink part of their seller and they can just access 0:10:55.800 --> 0:10:59.760 at any time they want from these professional storage of 0:11:00.000 --> 0:11:02.600 facilities and you just call up and say I want 0:11:02.640 --> 0:11:04.280 to drink this wine this week, and you pull it 0:11:04.320 --> 0:11:06.880 and send it to me. And that's that's really how 0:11:06.920 --> 0:11:09.800 it works. It's a combination of all so the data. Obviously, 0:11:09.840 --> 0:11:12.040 the analytics are only as good as the data. It's 0:11:12.080 --> 0:11:14.560 based on where is the data coming from at this 0:11:14.679 --> 0:11:16.680 point and how reliable, I mean, what kind of back 0:11:16.720 --> 0:11:19.000 testing can you do? Because wine can be so fickle. 0:11:19.440 --> 0:11:21.400 You can have a great brand, a great region, but 0:11:21.440 --> 0:11:24.120 you can have an off year and unfortunately, um or 0:11:24.160 --> 0:11:27.320 if I've only got about forty five seconds left, okay, 0:11:27.440 --> 0:11:35.400 so um, you can basically go through and look at 0:11:35.440 --> 0:11:39.520 that specific level of detail on the platform, right, so 0:11:39.840 --> 0:11:43.439 you're you're able to analyze that where you haven't been 0:11:43.480 --> 0:11:46.839 able to do that before. Interesting, But where are you 0:11:46.840 --> 0:11:49.120 getting all the data from? Just quickly, so the data 0:11:49.559 --> 0:11:53.520 I'm sorry, the data, uh comes for all the data 0:11:53.559 --> 0:11:57.040 and we did this specifically and rushing is that we 0:11:57.080 --> 0:12:01.679 have twenty years of actors all data, okay, and we 0:12:01.720 --> 0:12:05.960 represent this year, we were thirty of the global market historically, 0:12:06.000 --> 0:12:09.800 we're so we think it's very representative. We cleaned twenty 0:12:09.880 --> 0:12:12.520 years worth of data, got it, and we got it 0:12:12.559 --> 0:12:17.920 to we have uh, discrete parts of information about the 0:12:18.040 --> 0:12:21.440 data that has my apologies, we've got to run, but 0:12:21.480 --> 0:12:22.880 you've got to come back and do more because I 0:12:22.880 --> 0:12:25.679 find it fascinating. Irv Goldman he CEO at Acker check 0:12:25.720 --> 0:12:31.280 him out at acker wines dot com. So we've definitely 0:12:31.320 --> 0:12:34.000 covered the equity markets on this Wednesday, but let's get 0:12:34.000 --> 0:12:36.440 another check on what's going on when it comes to 0:12:36.440 --> 0:12:38.920 fixed income. Perfect guests to do that. Stephen Kane is 0:12:38.960 --> 0:12:43.200 Group Managing Director portfolio manager at tc W. They've got 0:12:43.280 --> 0:12:46.560 roughly two five billion dollars in assets under management that 0:12:47.160 --> 0:12:49.959 as of the end of the second quarter. He joins 0:12:50.080 --> 0:12:52.160 us on the phone in l A. Stephen, good to 0:12:52.200 --> 0:12:55.040 have you here with us. So getting ready just a 0:12:55.040 --> 0:12:58.160 few more days here in the trading, actually just today 0:12:58.200 --> 0:13:02.000 and tomorrow to wrap up what a year it's been. 0:13:02.040 --> 0:13:04.520 To say the least. When you look at the fixed 0:13:04.559 --> 0:13:07.640 income trade, do you anticipate that there will still be 0:13:08.200 --> 0:13:10.760 a very low rate environment and a lot of easy 0:13:10.800 --> 0:13:15.360 money slashing around? Uh? Well, first of all, thank you 0:13:15.440 --> 0:13:20.280 and good morning, thanks for having me on. And and um, yeah, 0:13:20.360 --> 0:13:25.240 I think the uh it is uh a good time 0:13:25.320 --> 0:13:28.840 to put in the rearview mirror. I uh was reading 0:13:28.880 --> 0:13:31.800 an article this morning actually that summed up pretty well 0:13:31.800 --> 0:13:35.079 that it's been a bowl market for risk assets and 0:13:35.160 --> 0:13:38.400 a bear market for humans. So it's our story. It's 0:13:38.480 --> 0:13:40.920 I've been quoting that story left and right because it 0:13:40.960 --> 0:13:44.120 has stayed with me. I think it ran last week. Um, 0:13:44.160 --> 0:13:47.160 that is that is right in a headline. Yeah, so 0:13:47.200 --> 0:13:50.079 we can we can certainly hope that ends the bear 0:13:50.200 --> 0:13:53.760 market for humans at a minimum. Um. But in terms 0:13:53.760 --> 0:13:57.120 of the financial markets and what we expect going forward, 0:13:57.160 --> 0:14:00.800 I think that um, certainly with rates, UM, I think 0:14:00.800 --> 0:14:03.840 the FAT is very committed to keeping the front end 0:14:03.880 --> 0:14:08.200 of the curve anchored and purchasing assets at a high rate. 0:14:08.320 --> 0:14:13.200 In so I think that certainly volatility and the treasury 0:14:13.240 --> 0:14:15.720 market is likely to be muted, though we do expect 0:14:15.760 --> 0:14:18.080 some upward drift at the long end of the curve 0:14:18.320 --> 0:14:23.000 as inflation pressures begin to build throughout the year. In 0:14:23.120 --> 0:14:27.680 terms of the credit markets, UM, you know, we've pretty 0:14:27.760 --> 0:14:30.360 much round tripped in terms of spreads from where we 0:14:30.360 --> 0:14:33.840 were a year ago. So investment grade spreads are abound 0:14:33.960 --> 0:14:37.960 ninety basis points, high yield spreads around fifty basis points. 0:14:38.040 --> 0:14:40.480 Is you know, if you if you went to sleep 0:14:40.520 --> 0:14:42.200 at the end of last year and woke up today, 0:14:42.440 --> 0:14:45.480 you'd think it was a very quiet year in as 0:14:45.520 --> 0:14:50.000 we know as anything but um is likely to be 0:14:50.240 --> 0:14:53.120 uh certainly less volatile, but we think they're still going 0:14:53.160 --> 0:14:57.920 to be quite a bit of turmoil and winners and 0:14:58.000 --> 0:15:01.920 losers um, you know, in the corporate sector, you know, 0:15:02.040 --> 0:15:04.680 leading to disparate returns. So we do think there's gonna 0:15:04.680 --> 0:15:07.640 be a lot of opportunity for active managers, though the 0:15:07.720 --> 0:15:10.240 overall markets like likely to be a lot less of volatile. 0:15:10.320 --> 0:15:12.360 It's like you were reading into Bloomberg this morning, I'm 0:15:12.360 --> 0:15:16.320 like so impressed, what's interesting, And just to give props 0:15:16.360 --> 0:15:19.400 where it's due. Michael Reagan of Bloomberg Business Week gets 0:15:19.400 --> 0:15:21.200 the story he did. It's been a great year for 0:15:21.200 --> 0:15:23.280 stocks in a bear market for humans. It's just has 0:15:23.320 --> 0:15:25.240 stayed with me since I've read it. And this whole 0:15:25.280 --> 0:15:28.920 idea of you know, investors just again and again ignoring 0:15:29.000 --> 0:15:31.440 the pain of the pandemic and betting on a future 0:15:31.440 --> 0:15:34.120 where companies rely less on labor. And that's something we 0:15:34.240 --> 0:15:36.760 just talked about with Sarah pons Act. Just this kind 0:15:36.760 --> 0:15:39.920 of human capital, it's just not as valuable, uh, and 0:15:40.080 --> 0:15:43.160 companies aren't valuing it as much. And you know the 0:15:43.200 --> 0:15:45.600 expectation that as a result, we might not have as 0:15:45.680 --> 0:15:48.440 much hiring and labors coming back to the workforce next year. 0:15:48.440 --> 0:15:51.480 And I do wonder what that could potentially mean in 0:15:51.600 --> 0:15:57.160 terms of economic momentum. Steve come Well, I think what 0:15:57.240 --> 0:16:00.480 it means is that while you may see the overall 0:16:00.520 --> 0:16:03.360 economy grow at a reasonable pace, you know, it may 0:16:03.400 --> 0:16:06.800 grow low single digits in aggregate, you're going to see 0:16:06.840 --> 0:16:09.160 certain sectors of the economy doing much better than others. 0:16:09.640 --> 0:16:11.760 And I think you're going to see some areas of 0:16:11.800 --> 0:16:15.320 the economy that are under stress right now. Travel, leisure, 0:16:16.000 --> 0:16:19.760 retail continue to face pressure, you know, even though the 0:16:19.840 --> 0:16:23.120 vaccines can to allow them to open up. So we 0:16:23.160 --> 0:16:25.680 think that's going to mean that credit work is going 0:16:25.760 --> 0:16:28.480 to be extremely important. It's going to be important to 0:16:28.480 --> 0:16:30.720 be in the right sectors of the fixed income market 0:16:30.720 --> 0:16:33.840 and the right credits as well. And we think another 0:16:33.920 --> 0:16:37.640 area of the fixed income markets and economy, they're going 0:16:37.640 --> 0:16:40.360 to be affected is commercial real estate? Um, what is 0:16:40.360 --> 0:16:41.920 that going to happen? I mean, I walk up and 0:16:41.960 --> 0:16:43.520 down and I know New York City is maybe a 0:16:43.520 --> 0:16:46.360 city unlike you know, no other, but man, the amount 0:16:46.360 --> 0:16:50.840 of empty space, especially retail space, um, is pretty remarkable. 0:16:50.920 --> 0:16:52.960 And is it Amazon is just gonna eat it all 0:16:53.040 --> 0:16:55.800 up and do distribution centers everywhere? I think not? But 0:16:55.840 --> 0:16:59.040 how do you see it? Well? We think, I mean 0:16:59.160 --> 0:17:02.960 the trail addition away from retail has been going on 0:17:03.040 --> 0:17:07.320 for some period of time and accelerated the trend to 0:17:07.359 --> 0:17:11.600 e commerce. And we're seeing, um, you know, the retail 0:17:11.640 --> 0:17:14.040 sector under quite a bit of stress and a lot 0:17:14.119 --> 0:17:17.480 of retailers, um, you know, going bankrupt, and we think 0:17:17.520 --> 0:17:20.879 that is going to lead to defaults and bankruptcies, you 0:17:20.920 --> 0:17:24.280 know in retail malls, particularly the B and C ones. 0:17:24.400 --> 0:17:27.920 I think the you know, the A class retail properties 0:17:27.960 --> 0:17:30.520 will find a way to repurpose their space and and 0:17:30.960 --> 0:17:34.200 uh stay uh, stay relevant if you will. But there 0:17:34.400 --> 0:17:36.160 is going to be quite a bit of stress in 0:17:36.040 --> 0:17:38.560 the in the retail area. And we also think in 0:17:38.560 --> 0:17:40.919 in the office area. The world from home friend, we 0:17:41.000 --> 0:17:44.320 think is one that's here to stay. And um, you're 0:17:44.320 --> 0:17:48.520 already beginning to see vacancies uh increase in some urban 0:17:50.040 --> 0:17:52.399 business districts, and we think that is also going to 0:17:52.520 --> 0:17:55.040 lead to some pressure and commercial real estates. I'm going 0:17:55.080 --> 0:17:56.639 to put out another story on Twitter that I think 0:17:56.680 --> 0:17:58.399 you might kind of interesting, and it talks about the 0:17:58.400 --> 0:18:00.919 big COVID changes in the world economy or only just beginning, 0:18:00.920 --> 0:18:03.040 and just kind of goes through some of them and 0:18:03.080 --> 0:18:05.720 the impact it will be by our and UH Curry 0:18:05.840 --> 0:18:07.960 and UH some of the other members of the Bloomberg team, 0:18:08.000 --> 0:18:10.600 which is I think again another must read. Steve Kane, 0:18:10.640 --> 0:18:12.919 thank you so much, Group Managing director of at TCW. 0:18:13.119 --> 0:18:17.600 Joining us on the phone from Los Angeles, and we're 0:18:17.600 --> 0:18:20.000 just getting ready to wrap up here on Bloomberg Markets. 0:18:20.000 --> 0:18:22.480 Carol Masser in for Paul and Vonnie, but we have 0:18:22.480 --> 0:18:26.640 a great guest to wrap up our program on this Wednesday, 0:18:26.760 --> 0:18:31.440 and it has to do with something known as offsite dining. 0:18:32.160 --> 0:18:35.399 I hadn't heard about this, but apparently it is a 0:18:35.600 --> 0:18:38.399 new thing. So let's talk about this because it's a 0:18:38.440 --> 0:18:42.760 growing thing and it's impacting certainly a market that we 0:18:42.840 --> 0:18:47.119 know has been really impacted by the pandemic specifically, So 0:18:47.200 --> 0:18:52.000 let's get into it with Michael montag montagon No excuse me, 0:18:52.240 --> 0:18:54.840 Michael montagon O. He is CEO of Kitchens United and 0:18:54.920 --> 0:18:57.800 he joins us on the phone in Los Angeles. Michael, 0:18:57.880 --> 0:19:00.680 it's nice to have you here with us. UM tell 0:19:00.800 --> 0:19:03.000 us remind our audience a little bit of what you 0:19:03.040 --> 0:19:05.240 are doing, because we've definitely talked about it here at Bloomberg, 0:19:05.320 --> 0:19:07.560 but remind our audience what you guys are off to 0:19:07.760 --> 0:19:10.479 and when it comes to this whole growing world of 0:19:10.480 --> 0:19:14.800 off premise dining. Thank you, Carol, and it's great to 0:19:14.800 --> 0:19:17.800 be here. Thank you for having me on UM. Yeah. 0:19:17.920 --> 0:19:22.199 Look are our business is focused on a tool to 0:19:22.400 --> 0:19:26.720 enable existing restaurant brands to capture what is a changing 0:19:26.840 --> 0:19:31.520 consumer preference towards off premise UM that entails for us 0:19:32.640 --> 0:19:36.440 UH providing a CAPEX lightway for restaurant brands to expand 0:19:36.480 --> 0:19:40.520 into new trade areas, which in our centers we have 0:19:40.680 --> 0:19:44.080 kitchen centers that generally have ten to fifteen restaurant brands 0:19:44.080 --> 0:19:46.560 that operate within them in their own four wall units. 0:19:47.160 --> 0:19:49.359 And part of that value proposition that we offer is 0:19:49.400 --> 0:19:53.000 not only a way to stand up a restaurant in 0:19:53.000 --> 0:19:55.639 a new trade area and in a fraction of the 0:19:55.680 --> 0:19:58.879 capex investment in time, but also while they cook their 0:19:58.880 --> 0:20:03.120 own food to ensure there is consistency and the quality 0:20:03.680 --> 0:20:07.520 of the cuisine. We handle most everything else, from cleaning 0:20:07.520 --> 0:20:09.560 and sanitization to management at the front of the house. 0:20:09.600 --> 0:20:12.600 And then we have a consumer marketing channel that enables 0:20:12.640 --> 0:20:15.840 consumers to order from more than one concept. So if 0:20:15.840 --> 0:20:18.760 you have different taste preferences within your household, whether that's 0:20:19.200 --> 0:20:21.000 you know, my son wanting pizza for the night, but 0:20:21.119 --> 0:20:24.000 my wife wanting sushi and and I wanting salad, you 0:20:24.040 --> 0:20:26.280 can order that under one ticket. And so we deliver 0:20:26.320 --> 0:20:29.320 a fair amount of volume to our restaurant partners that 0:20:29.359 --> 0:20:32.520 occupy our premises as well. Um. So that's the general 0:20:32.520 --> 0:20:35.560 business model and how what we're doing through this time 0:20:35.640 --> 0:20:40.399 to help enable restaurants to navigate these very challenging times. 0:20:40.640 --> 0:20:42.800 You know, and I know you have been raising capital 0:20:42.840 --> 0:20:45.560 as well in terms of, uh, you know, supporting your 0:20:45.600 --> 0:20:47.439 expansion plans. Tell us about the growth that you have 0:20:47.480 --> 0:20:50.840 been seeing, and I am curious about, particularly in the pandemic, 0:20:51.200 --> 0:20:55.560 what kind of growth you've seen. Yeah, Look, we're very 0:20:55.600 --> 0:20:59.280 fortunate that our facilities are full. Um, we have great 0:20:59.320 --> 0:21:03.119 restaurant nurs um that we operate hand in hand with 0:21:03.400 --> 0:21:06.439 and and they're doing quite well through this. Through this 0:21:06.480 --> 0:21:10.040 time period as well, we've been laser focused on our 0:21:10.080 --> 0:21:13.880 own unit economics and building a foundational business that can 0:21:13.920 --> 0:21:17.000 scale UM. At the same time, critical to that is 0:21:17.080 --> 0:21:21.560 making sure that our restaurant partners operate profitably within our 0:21:21.600 --> 0:21:26.960 sites as well. We are very fortunate that Google Ventures 0:21:27.040 --> 0:21:30.240 g V is the largest shareholder in the company, alongside 0:21:30.640 --> 0:21:33.760 you know, great blue chip investors like Fidelity Investments and 0:21:33.840 --> 0:21:37.520 large real estate funds like ours, our Reality and Difico 0:21:37.560 --> 0:21:40.600 West UM. And you know, as we continue to grow 0:21:40.640 --> 0:21:43.479 and scale our business, uh, you know, we intend to 0:21:43.520 --> 0:21:47.200 continue to lean on the capital markets to help fund 0:21:47.200 --> 0:21:49.520 our expansion as we enter into our serious ce rays 0:21:49.560 --> 0:21:51.440 in the middle part of the next year. So you're 0:21:51.440 --> 0:21:54.600 in Chicago, Pasadena, Scottsdale, Austin. If I'm looking at your 0:21:54.640 --> 0:21:57.520 website and reading it correctly, and to me it almost 0:21:57.560 --> 0:22:02.159 sounds like kind of a new hey, new version and 0:22:02.320 --> 0:22:07.560 innovative take on food courts. Yeah, exactly right. You know, 0:22:07.720 --> 0:22:11.360 our focus, you know, through our our existing facilities has 0:22:11.400 --> 0:22:16.280 been driving consumer preference UM to our restaurant brands UM 0:22:17.119 --> 0:22:20.000 in the way that consumers wanted and you know, this 0:22:20.119 --> 0:22:24.320 whole idea of off premise certainly has accelerated through COVID, 0:22:24.440 --> 0:22:28.359 but there's really nothing new. We are consider ourselves to 0:22:28.400 --> 0:22:32.800 be a pioneer in the industry being founded. Uh and 0:22:33.040 --> 0:22:35.640 you know part of that when we got into this, 0:22:35.880 --> 0:22:40.760 we saw the trends, the trends Worth Calgary every year 0:22:40.800 --> 0:22:43.320 for delivery for the years leading up to COVID. And 0:22:43.400 --> 0:22:46.200