Latest / Bloomberg Intelligence / UnitedHealth Executive Fatally Shot

Transcript

UnitedHealth Executive Fatally Shot · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
0:08
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
0:12
Speaker 2: weekdays at ten am Eastern on Apple Card playing Android
0:15
Speaker 2: Auto with the Bloomberg Business app. Listen on demand wherever
0:18
Speaker 2: you get your podcasts, or watch us live on YouTube.
0:23
Speaker 3: Thank you everyone, there's cool press confidence. Thank you for
0:25
Speaker 3: a right.
0:25
Speaker 4: That was a press briefing from one police Applaza in
0:29
Speaker 4: Lower Manhattan. Poice Commissioner Jessica Tish, Chief of Department at
0:33
Speaker 4: Jeffrey Madra, and Chief of Detective Joseph Kenny providing an
0:36
Speaker 4: update regarding the hom side often Manhattan, the United Health executive.
0:41
Speaker 4: Let's get some more reporting on this with Miles Miller.
0:43
Speaker 4: He's managing editor for Bloomberg News. Miles, anything in that
0:46
Speaker 4: press conference strike you as of note here still obviously
0:50
Speaker 4: very very early in the investigation.
0:53
Speaker 5: Yeah, you know, this is a really interesting investigation. They
0:56
Speaker 5: have a suspect who is able to flee on a
0:59
Speaker 5: city bike after shooting an executive in Midtown Manhattan in
1:05
Speaker 5: full view of plenty of people. Midtown Manhattan, of course,
1:07
Speaker 5: flooded with people around the time this happened, just before
1:11
Speaker 5: seven o'clock in the morning. It's very striking that Brian Thompson,
1:15
Speaker 5: a CEO of a company that is currently trading at
1:19
Speaker 5: about six hundred and thirteen dollars a share, with no
1:23
Speaker 5: executive protection, walking from his hotel into investor with no
1:28
Speaker 5: executive protection, and he's able to be shot by a
1:31
Speaker 5: person who was able to flee into New York City
1:35
Speaker 5: traffic at the height of rush hour.
1:37
Speaker 6: So, Miles, you have extensive work having worked with the
1:41
Speaker 6: NYPD when you worked in local news, you also led
1:44
Speaker 6: communications strategy.
1:45
Speaker 7: For the FDN.
1:45
Speaker 6: Y tell me about the process inside the NYPD when
1:51
Speaker 6: something like this happens.
1:54
Speaker 5: Yeah, So the first thing that the nypds did was
1:58
Speaker 5: search Arcis cameras, so that is the NYPD's network of
2:01
Speaker 5: cameras throughout Manhattan, and from those cameras they were able
2:04
Speaker 5: to pull that photo of the suspects standing in a
2:08
Speaker 5: shooter stamps and aiming at the executive at Brian Thompson.
2:13
Speaker 4: So that's the first step.
2:14
Speaker 5: The second step is going to be working with those
2:16
Speaker 5: partners like City Bike to figure out where we wound
2:20
Speaker 5: up going number one, number two, to figure out where
2:23
Speaker 5: that suspect is, and then also trying to trace every step.
2:28
Speaker 5: They put all of these videos that they take the
2:32
Speaker 5: suspect from the moment it happened to him getting a
2:35
Speaker 5: Central Park. They put it together on an app called Patentizer,
2:38
Speaker 5: and they're able to figure out just exactly where that
2:40
Speaker 5: person wound up and how to continue doing the investigation.
2:43
Speaker 5: So the investigation will focus on where he is. And
2:46
Speaker 5: then also they're doing that search worn in Brian Thompson's
2:49
Speaker 5: hotel room. They'll try to figure out if there was
2:52
Speaker 5: anything there that can lead them to what may have
2:54
Speaker 5: happened here.
2:55
Speaker 4: All right, Myles, thank you so much for that. We
2:57
Speaker 4: appreciate your reporting. Miles Miller, Managing editor, Bloomberg News in
3:01
Speaker 4: this unfolding story, extraordinary fluid, very early stages. But we
3:06
Speaker 4: did get some comments from leadership of the NYPD that
3:10
Speaker 4: again they are working all angles as you can imagine, right.
3:12
Speaker 6: And United Health Group obviously has many different subsidiaries, and
3:15
Speaker 6: Brian Thompson is the CEO of one of them, so
3:18
Speaker 6: he was the CEO of United Health.
3:20
Speaker 7: They also have financial services.
3:22
Speaker 6: They have a Medicare division, community division, and employer division,
3:25
Speaker 6: so he headed one of those divisions for the overall
3:28
Speaker 6: United Health Group and Bloomberg News will be keeping you
3:31
Speaker 6: updated on any headlines as they cross. And we heard
3:34
Speaker 6: also that the tree lighting ceremony today, the whole event
3:36
Speaker 6: starts at seven pm, and that will go on as
3:39
Speaker 6: expected with a much heavier police presence as well as
3:42
Speaker 6: ununiformed detectives.
3:44
Speaker 2: Yeah.
3:45
Speaker 4: I mean, I think one thing New York has shown
3:46
Speaker 4: over and over again is the resilience of the city
3:48
Speaker 4: and its people. And we move on, you know, as
3:52
Speaker 4: most folks tried to do as well.
3:55
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
4:00
Speaker 2: week days at ten am Eastern on applecar Play and
4:03
Speaker 2: Android Auto with a Bloomberg business ad. You can also
4:06
Speaker 2: listen live on Amazon Alexa from our flagship New York station,
4:09
Speaker 2: Just say Alexa Play Bloomberg.
4:11
Speaker 4: Eleven thirty, Let's check in with Steve Miller, who he's
4:15
Speaker 4: the chair of the ISM Services PMI, Steve, thanks so
4:21
Speaker 4: much for joining us here. I'm looking at the ISM
4:22
Speaker 4: Services Index came in at fifty two point one. The
4:25
Speaker 4: consensus was fifty five point seven.
4:27
Speaker 8: Here.
4:27
Speaker 4: What are we seeing on the services side of the
4:29
Speaker 4: US economy here?
4:31
Speaker 3: Now, I think this month's number is a solid number.
4:34
Speaker 9: It's on trend. If you look past the last two months.
4:38
Speaker 9: I had a couple of interviews that I was in
4:40
Speaker 9: over the last two months. I mentioned just as likely
4:43
Speaker 9: those blips in new orders and business activity as well
4:47
Speaker 9: as supplier deliveries could have been the result of the
4:51
Speaker 9: port strike, people getting ready risk management around port strike
4:54
Speaker 9: and hurricanes, and those seem to be off trend. This
4:58
Speaker 9: one seems to be right on trend and continues to
5:01
Speaker 9: reinforce slow to moderate growth in the services sector.
5:04
Speaker 7: So the market is taking a little bit of different view.
5:07
Speaker 6: If I just look at the front end of the
5:09
Speaker 6: yield curve, you're seeing a bin to the BUN market
5:11
Speaker 6: yields a little lower, the dollar is dropping, and the
5:14
Speaker 6: S and P.
5:14
Speaker 7: Is off its highs.
5:15
Speaker 6: And I say that because it seems like the market
5:17
Speaker 6: is taking it as more weakness. Is that how you're
5:22
Speaker 6: describing it, like continued weaker services grinding.
5:25
Speaker 7: Lower or some sort of like, yeah, it's fine.
5:29
Speaker 3: I think for the next six months. To me, it
5:31
Speaker 3: looks fine.
5:32
Speaker 9: It's a trend of about fifty two percent, which is
5:36
Speaker 9: which is a solid number, although lower than it's been.
5:39
Speaker 3: In previous years.
5:41
Speaker 9: I think more of the concern is when you look
5:42
Speaker 9: at the summertime, which in non COVID years has been
5:46
Speaker 9: anywhere from half a percentage point up to six percentage
5:50
Speaker 9: points down from where it is in the September to
5:53
Speaker 9: November timeframe.
5:54
Speaker 3: So I think in the near term it looks solid.
5:58
Speaker 9: I'd be you know, there there's so many variables out
6:01
Speaker 9: there on tariffs and interest rate changes and that type
6:04
Speaker 9: of thing, fedrarate changes. I think, you know, I think
6:08
Speaker 9: the summertime is more of the question mark.
6:10
Speaker 4: All right, Steve, thank you so much with that. Steve Miller,
6:13
Speaker 4: he's the chairman of IM. That's the Institute for Supply
6:17
Speaker 4: and Management on Zoom from Aledo, Texas. How about that.
6:21
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
6:25
Speaker 2: weekdays at ten am Eastern on Affo card playing Android
6:28
Speaker 2: Outo with the Bloomberg Business app. Listen on demand wherever
6:32
Speaker 2: you get your podcasts, or watch us live on YouTube.
6:36
Speaker 4: Salesforce dot com big tech company reporting big earnings last night,
6:41
Speaker 4: stock up nine and a half percent at a hitting
6:43
Speaker 4: an all time high market cap just below three hundred
6:48
Speaker 4: and fifty billion dollars. One of the real winners here
6:50
Speaker 4: stocks up thirty eight percent year today. Let's break down
6:53
Speaker 4: some of those numbers on rog Rana joins us the
6:55
Speaker 4: freshly shaved on a rock rana, Thank goodness, shave that
6:58
Speaker 4: thing off. Technolog Jannel's Bloomberg intelligence from.
7:02
Speaker 7: The technial them, I don't recoonize them.
7:04
Speaker 4: He looks like a professional now makes some years younger
7:07
Speaker 4: from that tech hub of Chicago, Illinois. Ana Rod talk
7:10
Speaker 4: to us about Salesforce dot com. They seem to really
7:13
Speaker 4: put up some good numbers. What is this street like
7:15
Speaker 4: about it?
7:16
Speaker 8: I think when you really peel the numbers on sales
7:18
Speaker 8: and backlog, they were pretty much in line. But I
7:21
Speaker 8: think what is really happening and something that we highlighted
7:24
Speaker 8: during a preview w some notes that we wrote earlier
7:28
Speaker 8: in October, they released a new product, Collegent Force, which
7:31
Speaker 8: is truly their AI product. Now that's not going to
7:34
Speaker 8: drive revenue over the next twelve months, but it really
7:37
Speaker 8: changes the shape of the company and with the direction
7:39
Speaker 8: it's going in, and I think that's what investors are
7:42
Speaker 8: buying in right now, along with their steady margin expansion.
7:45
Speaker 8: Margins were so good yesterday. That has been a big
7:48
Speaker 8: story for them as well. So I think on all
7:51
Speaker 8: fronts they're doing well and as I said, the sales
7:54
Speaker 8: growth is not going to show up near time, near term,
7:57
Speaker 8: but I think they have a clear strategy how they're
7:59
Speaker 8: going to play this game.
8:00
Speaker 6: So to this point, if Salesforce are doing this well
8:03
Speaker 6: without agent Force materially contributing to its bottom line, like
8:07
Speaker 6: I mean, what kind of upside do we really have
8:10
Speaker 6: and when do they read sort of full tilt on that.
8:13
Speaker 8: Yeah, I think I would agree with you on that
8:15
Speaker 8: because you know, people are buying into that without seeing
8:17
Speaker 8: the results.
8:18
Speaker 4: And I think this is.
8:20
Speaker 8: Truly what we have seen a lot in the software
8:22
Speaker 8: space is people really figured out which are the companies
8:26
Speaker 8: that will benefit in the long run, and a lot
8:28
Speaker 8: of that, you could say, value realization happens sooner, you know,
8:32
Speaker 8: when the revenue realization is so perhaps down the road
8:35
Speaker 8: there will be a time when the software space may
8:37
Speaker 8: not see evaluation uptake, but the sales growth will go up.
8:41
Speaker 8: But you know, one of the things you have to
8:42
Speaker 8: think about it when former Salesforce point of view, they
8:45
Speaker 8: have two really critical products. One is sales automation for
8:48
Speaker 8: salespeople and the other is customer service products for customer
8:52
Speaker 8: service people and in enterprises AI and is the biggest
8:57
Speaker 8: beneficiary to those customer service people chat pots AI agents.
9:01
Speaker 8: We recently did a conference and when we ask the
9:06
Speaker 8: question as to how many people use chat pots, it's
9:09
Speaker 8: still less than twenty percent at this point. So that
9:12
Speaker 8: is the direction where the world is going in terms
9:15
Speaker 8: of working with retailers, working with you know, airlines, and
9:19
Speaker 8: these guys are right in the middle of it.
9:20
Speaker 4: All right, So what is what's getting the market all excited?
9:23
Speaker 3: Here?
9:24
Speaker 4: This this this AI product? What is their AI product
9:27
Speaker 4: and what is it supposed to do? Because I actually
9:29
Speaker 4: moderated a panel with the Salesforce executive and I forgot
9:33
Speaker 4: everything he told me, So think about it.
9:36
Speaker 8: I actually have a very interesting demonstration if you go
9:39
Speaker 8: to YouTube and look at their Dreamforce and demo, it
9:41
Speaker 8: was actually pretty interesting because they did Sacks Fifth Avenue.
9:44
Speaker 8: So think about it this way, Paul, you you buy.
9:47
Speaker 8: You know, the presenter bought a jacket from saxs Fifth Avenue,
9:51
Speaker 8: didn't like the size or something, just went to the
9:54
Speaker 8: chatpot and say can you find me a different size?
9:57
Speaker 8: And can you the chatbot basically took care of everything,
10:00
Speaker 8: basically knew what size this person was, was able to
10:04
Speaker 8: return the jacket, you know, send another one to this
10:07
Speaker 8: person's address, or that matter, if it wasn't available, you
10:11
Speaker 8: could go to the store and pick it up without
10:13
Speaker 8: the intervention of a human. That level of sophistication coming
10:16
Speaker 8: into a chat pot so quick in the game, I
10:19
Speaker 8: think it's really what people are getting excited about and put.
10:23
Speaker 6: Some numbers on that, like how much is that going
10:25
Speaker 6: to do for them in terms of revenue? And how
10:28
Speaker 6: much do they charge for like that chatbot? So say
10:31
Speaker 6: like that chatbot works for me for two minutes, what's
10:34
Speaker 6: the translation of money?
10:36
Speaker 8: So the pricing starts at two dollars per conversation. Now
10:40
Speaker 8: the question is what does that mean. So when you
10:42
Speaker 8: look at you know, a person calling AD and D
10:46
Speaker 8: or Hoverizon, that call could cost as much as ten
10:49
Speaker 8: to fifteen dollars. If it's a quasi mix of an
10:51
Speaker 8: automated chat pot and a customer service person, you know,
10:56
Speaker 8: that call could be seven dollars eight dollars per conversation.
10:59
Speaker 8: Salesforce pricing at two dollars or so, so it will
11:03
Speaker 8: force companies to pix their customer service because think about it,
11:07
Speaker 8: if you're an insurance company, if you are a phone company,
11:10
Speaker 8: that's really a very large portion of your cost. Amazon's
11:13
Speaker 8: already doing so much of that in the chat pot.
11:15
Speaker 8: If you are used to returning things on Amazon through
11:18
Speaker 8: their chat pot, it's actually pretty impressive right now. But
11:21
Speaker 8: it is still rule based, which is, if it can
11:24
Speaker 8: only do so much based on the data that's available,
11:27
Speaker 8: it doesn't take you to the next level. And this
11:29
Speaker 8: is what Salesforce is saying is the direction of that
11:32
Speaker 8: is that the agent or the chat pot is able
11:35
Speaker 8: to execute a transaction for you without getting a human
11:39
Speaker 8: involved in it, which is refund the money for you
11:41
Speaker 8: return your things, give you an alternative of whatever you
11:46
Speaker 8: were doing before without any person getting in, and that
11:49
Speaker 8: really saves costs.
11:51
Speaker 4: All right, So this company's got like thirty nine to
11:53
Speaker 4: forty percent EBITDA margin. Pretty much all of that goes
11:55
Speaker 4: down to the free cash flow line. What do they
11:57
Speaker 4: do with their cash right now?
12:00
Speaker 8: They're buying back years. I'm sorry, Paul, but that's exactly
12:03
Speaker 8: what most software companies do when they have it.
12:05
Speaker 2: Now.
12:06
Speaker 8: Think about it this way. Just one and a half
12:08
Speaker 8: two years ago, this was almost ten percentage points lower
12:11
Speaker 8: because they were spending even more on sales and marketing.
12:14
Speaker 8: The big story for Salesforce in the last one and
12:17
Speaker 8: a half years has been a real improvement in margins
12:20
Speaker 8: and as of today, compared to let's say March of
12:23
Speaker 8: twenty twenty three, it's up ten percentage points. That's big
12:27
Speaker 8: if you look at from any you know, financial metric.
12:30
Speaker 6: All right, An, I really appreciate it, really good stuff.
12:34
Speaker 6: I'm if you give me a chatbot that can actually
12:36
Speaker 6: do something that when I call City Bank doesn't take
12:39
Speaker 6: me an hour.
12:39
Speaker 7: I'm gay. I'm down for that.
12:41
Speaker 6: All right, enter a ground on Bloomberg Intelligence Technology and
12:43
Speaker 6: I was joining us.
12:44
Speaker 7: It has not worked for me yet. It hasn't worked
12:46
Speaker 7: for me.
12:46
Speaker 4: Call for customer service. It freaks me out when I
12:49
Speaker 4: don't get a live.
12:50
Speaker 7: Yeah, and I keep saying my name and they're like,
12:52
Speaker 7: I don't understand you. Please talk to a real good boy.
12:55
Speaker 3: That's unders. Yeah.
12:58
Speaker 2: You're listening to the Bloomberg and Intelligence Podcast. Catch us
13:01
Speaker 2: live weekdays at ten am Eastern on applecar Play and
13:05
Speaker 2: Royd Auto with the Bloomberg Business App. You can also
13:08
Speaker 2: listen live on Amazon Alexa from our flagship New York station,
13:12
Speaker 2: Just Say Alexa, playing Bloomberg eleven thirty.
13:16
Speaker 4: We love talking about commercial real estate all around this country.
13:19
Speaker 4: Because it's such a dynamic business and it's undergone a
13:22
Speaker 4: tremendous amount of change, particularly resulting from the pandemic, as
13:26
Speaker 4: this industry tries to continue its recovery and reinvention. And
13:29
Speaker 4: we love talking to some good, smart people about that.
13:32
Speaker 4: We got that today. Liz Hart, she's at over at Newmark.
13:35
Speaker 4: She's the president of Leasing for North America, and that's
13:38
Speaker 4: US and Canada. Abigail Deulttle Joints is too. She's our
13:41
Speaker 4: market correspondent in our Bloomberg and Directive broker studio. So Liz,
13:44
Speaker 4: let's step back and as we think about the last
13:47
Speaker 4: few year has been very difficult for certain parts of
13:50
Speaker 4: commercial real estate, not all, but certainly like office for example.
13:53
Speaker 4: I knows you as an industry always looking forward. What's
13:56
Speaker 4: the view forward for commercial real estate.
13:58
Speaker 1: In this country? We really see twenty four five is
14:00
Speaker 1: the year the real estate gets redefined. We're five years
14:03
Speaker 1: post of the pandemic. We're putting that all behind us.
14:05
Speaker 4: Now.
14:06
Speaker 1: People have experimented with different ways to view commercial real
14:09
Speaker 1: estate and now it's really about setting the value and
14:12
Speaker 1: creating the value going forward.
14:14
Speaker 7: So across key.
14:16
Speaker 1: Urban markets, particularly in New York and San Francisco. We're
14:18
Speaker 1: seeing demand that we haven't seen in five years, which
14:21
Speaker 1: is a really good thing to see because that demand
14:23
Speaker 1: will start to create future value in those assets.
14:25
Speaker 7: What kind of demand? What are you hearing in terms
14:28
Speaker 7: of demand?
14:29
Speaker 1: I think the most active segments of the market are
14:30
Speaker 1: still financial services across the country. Also, technology has a
14:34
Speaker 1: very strong and growing portion of demand, so we're seeing
14:38
Speaker 1: both of that.
14:39
Speaker 10: So relative to Newmark, let's back up for a moment,
14:42
Speaker 10: publicly traded company, one of the top real estate advisory
14:45
Speaker 10: firms in the country. Lots of different businesses. What's the
14:49
Speaker 10: main business and in terms of this thesis about twenty
14:53
Speaker 10: twenty five being the reset, what are the data points
14:56
Speaker 10: that you're seeing.
14:57
Speaker 1: Well, we've certainly created a purposeful kit of different parts
15:01
Speaker 1: that will come together to drive our business forward. So
15:03
Speaker 1: we're number one in capital markets across the country. As
15:06
Speaker 1: you're looking at what's going to happen in the debt
15:07
Speaker 1: markets and what's happening with the debt that will be
15:10
Speaker 1: maturing in the next year, there will be an onslaught
15:13
Speaker 1: of capital markets activity that will happen across the country
15:15
Speaker 1: and that will really.
15:16
Speaker 7: Reset the value.
15:17
Speaker 1: And that mixed with tenant demand is what's going to
15:20
Speaker 1: drive the business forward. So we think the services business
15:23
Speaker 1: is going to have really spectacular years in twenty five
15:25
Speaker 1: and twenty six.
15:26
Speaker 10: So in terms of being the top capital markets, that
15:29
Speaker 10: means you're actually doing these financings because we keep hearing
15:32
Speaker 10: and talking about this let's call it one trillion to
15:35
Speaker 10: one point five trillion dollar wall of maturity is coming,
15:38
Speaker 10: but there's been some extent and pretend.
15:40
Speaker 7: So you'll be very much involved in that activity.
15:43
Speaker 1: Yes, we have an incredibly active debt market team right
15:46
Speaker 1: now and they've traded a billion dollars just in REZI
15:49
Speaker 1: to or C the office to RESI conversions alone in
15:51
Speaker 1: the last couple of months. So we're seeing that turn on.
15:54
Speaker 1: So we're last year it was a lot of hey,
15:55
Speaker 1: what are we going to do next? It's starting to
15:57
Speaker 1: hit trades and then actually move forward, and we think
15:59
Speaker 1: that's really optimistic for.
16:00
Speaker 7: The year ahead.
16:02
Speaker 4: Where the part within commercial real estate, where's the growth,
16:04
Speaker 4: where's the opportunity? Because I still feel like in office
16:07
Speaker 4: we I'm not sure maybe we're starting to form a bottom,
16:10
Speaker 4: but we haven't seen a ton of activity, but I
16:12
Speaker 4: know there are other parts that are working.
16:13
Speaker 1: Yeah, I mean, I think the opportunity is trophy has
16:15
Speaker 1: been talked about a lot, so we know there's opportunity
16:16
Speaker 1: in trophy. But right below that, there's a category that's
16:19
Speaker 1: being repositioned right now towards having more amenities and being
16:23
Speaker 1: better space. That definitely is a segment of the market
16:25
Speaker 1: that we think there's a lot of opportunity, particularly in
16:28
Speaker 1: places like Seattle, San Francisco, Boston where you do see
16:31
Speaker 1: the demand picking up at such a large level. So
16:34
Speaker 1: that would be one category. We also see a lot
16:36
Speaker 1: of opportunity in office to RESI conversion that can happen.
16:40
Speaker 1: We're tracking probably about two percent of the market could
16:43
Speaker 1: be converted, and two percent sounds like a lot. And
16:45
Speaker 1: I'm a leasing broker, so you're probably wondering, why is
16:47
Speaker 1: the leasing broker advocating for an office to RESI conversion.
16:50
Speaker 1: But when you have twenty percent of availability across the
16:53
Speaker 1: entire market, there's still a lot of space that companies
16:56
Speaker 1: can transact on from an office perspective. But we have,
16:59
Speaker 1: you know, four to seven million homes that are missing
17:01
Speaker 1: in America, and so if we can take that real
17:03
Speaker 1: estate and reposition it, I think that's really an exciting
17:05
Speaker 1: part of what we'd see in twenty five, but it's
17:07
Speaker 1: unlikely to happen without the assistance of tax abatements, government
17:11
Speaker 1: interference and really pushing this forward, like we're going to
17:13
Speaker 1: have to do this together.
17:14
Speaker 6: Well, I was going to say, I've heard that the
17:16
Speaker 6: convergence there isn't as easy as it may sound. That
17:18
Speaker 6: it's a lot more complicated, particularly like windows and like
17:21
Speaker 6: central air and like moving walls and stuff.
17:24
Speaker 1: It's physically very complicated, which is why you don't see
17:27
Speaker 1: it happening on even a larger part. But what's interesting
17:29
Speaker 1: is we started tinkering this more and more post pandemic,
17:32
Speaker 1: and there's some very notable projects that will set the
17:34
Speaker 1: blueprint going forward that are delivering this year, including twenty
17:37
Speaker 1: five water in New York City. So we really see
17:39
Speaker 1: this as being something that will pick up.
17:42
Speaker 10: As our markets correspondent. Also with this real estate beat,
17:46
Speaker 10: I of course took a look at Newmark Stark because
17:48
Speaker 10: we don't talk to a lot of real estate folks
17:50
Speaker 10: who are around publicly trading companies, or at least that's
17:53
Speaker 10: not something that I've been in my coverage so much
17:56
Speaker 10: so far over the last year year and a half.
17:57
Speaker 7: But it's really interesting.
17:58
Speaker 10: So you went public in twenty seven and then up
18:01
Speaker 10: and then down, and then up and then down about
18:03
Speaker 10: sixty five percent on the real estate downturn, but then
18:07
Speaker 10: up almost two hundred percent off of that bottom into today,
18:10
Speaker 10: still a little bit below your record high, but it
18:13
Speaker 10: tells me that some of those smart investors out there
18:16
Speaker 10: are seeing something similar to what you're talking about in
18:19
Speaker 10: twenty twenty five being redefined. You have a sense for
18:22
Speaker 10: why people are gobbling up your stock like this.
18:24
Speaker 1: Yeah, I mean, I think that there's certainly a sentiment
18:26
Speaker 1: in the market that the markets are improving. But also
18:29
Speaker 1: Newmark has a very big strategy focused on top talent,
18:32
Speaker 1: and that's something that's very differentiated from a lot of
18:34
Speaker 1: our peers. So with AI and all the changes that
18:37
Speaker 1: are happening, we're still doubling down and investing in the
18:39
Speaker 1: downturn and top talent, and I think that's incredibly important
18:42
Speaker 1: as we recover, because fundamentally, those people are the ones
18:45
Speaker 1: that are making the decisions about how to reprice and
18:47
Speaker 1: how to think about what the value creation is going forward.
18:50
Speaker 1: We really know how to create alpha for our clients,
18:52
Speaker 1: and I think that's what we're seeing people be attracted
18:54
Speaker 1: to in our stock.
18:55
Speaker 4: Say I'm out in Middle America, I'm a developer. I
18:57
Speaker 4: want to put up a multifamily. Whatever is my bank
19:01
Speaker 4: and lend me the money. Where am I going to
19:02
Speaker 4: get the capital for that?
19:03
Speaker 1: These days? It depends on the situation. So it's obviously
19:06
Speaker 1: very unique on every single asset. But we are seeing
19:10
Speaker 1: debt and equity enter the market again because now that
19:13
Speaker 1: we have enough data points to know where the market is,
19:15
Speaker 1: people know how to price things right. I think the
19:17
Speaker 1: uncertainty of yesterday is now behind us and it's really
19:20
Speaker 1: about moving forward. That doesn't mean every project will pencil.
19:23
Speaker 1: It doesn't mean that every project will be at the
19:24
Speaker 1: same value that it was before. It just means there's
19:27
Speaker 1: an opportunity to move forward and create the next chapter.
19:29
Speaker 7: Where are the problem points still?
19:33
Speaker 1: I mean the debt that's maturing is still the problem point,
19:36
Speaker 1: because that's when the value is changing. And so there's
19:38
Speaker 1: this really interesting mix. And I can give a specific,
19:41
Speaker 1: you know, example from a building actually in San Francisco
19:43
Speaker 1: where the debt was just too high, that it was
19:46
Speaker 1: too high for anyone to do a transaction, but there
19:48
Speaker 1: there was a willing tenant willing to take one hundred
19:51
Speaker 1: thousand square feet in a building that they loved, right,
19:53
Speaker 1: everything else worth, but the capital structure below just didn't
19:56
Speaker 1: support it. I think, you know, there's a little bit
19:58
Speaker 1: of a standoff, and you can see that standoff being
20:00
Speaker 1: something that was really present in twenty three and twenty
20:02
Speaker 1: four because there's no way to move forward. But now
20:04
Speaker 1: I think people have realized, like, we are where we are,
20:07
Speaker 1: so we've got to move and I think we'll start
20:09
Speaker 1: seeing some of those become more liquid in the market
20:11
Speaker 1: and people just realizing, like, yesterday's value is gone, and
20:13
Speaker 1: I've got to move forward because I'm not able to
20:15
Speaker 1: meet the demand in the market today.
20:17
Speaker 7: So with that standoff, like we use that example, who caved,
20:21
Speaker 7: was that was the situation.
20:22
Speaker 1: Actually, interestingly enough, neither caved and the tenant went somewhere
20:25
Speaker 1: else and created the value for someone else, right, And
20:27
Speaker 1: then I guess that's there's this saying and commercial real
20:29
Speaker 1: estate that the best amenity is a well capitalized landlord,
20:32
Speaker 1: and you know that's probably going to continue to be
20:34
Speaker 1: true in twenty five, twenty six and for the next
20:36
Speaker 1: several years as this readjustment happens. But the fact that
20:39
Speaker 1: the demand is in the market does mean there's a
20:40
Speaker 1: lot of opportunity.
20:41
Speaker 4: Are we seeing equity people come in and say, at
20:45
Speaker 4: this value, I'm ready to put in equity into this
20:48
Speaker 4: building and lender, you're just going to have to work
20:52
Speaker 4: something out, and the lenders are willing to work something
20:54
Speaker 4: out certainly. I mean, because the lender at the end
20:57
Speaker 4: of the day will have to take a haircut the
20:59
Speaker 4: original equity. We're going to get a take take acrecut.
21:02
Speaker 4: But if fresh equity is ready to come in, because
21:04
Speaker 4: I would guess there's a lot of smart money out
21:07
Speaker 4: there that says, boy, fifty percent marked down, I'm in.
21:10
Speaker 1: There's a lot of smart money out there, and a
21:12
Speaker 1: lot of it is coming in places like San Francisco'd
21:14
Speaker 1: be a great example of that right where you can
21:16
Speaker 1: trade down and get something that will go for the
21:18
Speaker 1: next generation to create value.
21:19
Speaker 10: So this is certainly a news heavy cycle and year
21:23
Speaker 10: President elect Trump going to be taking office in January.
21:27
Speaker 10: What's the effect I've been dying to know what's the effect.
21:29
Speaker 7: Going to be on real estate?
21:32
Speaker 10: You know, if rates go higher but less regulation, what
21:34
Speaker 10: is the buzz out there?
21:36
Speaker 1: Yeah, I think commercial real estate largely sees. You know,
21:38
Speaker 1: Trump is being pro growth, as many people do, and
21:40
Speaker 1: so that's a positive for our industry. But I think
21:43
Speaker 1: for commercial real estate, what also matters, in addition to
21:46
Speaker 1: the national election is what's happening at the local level.
21:49
Speaker 1: So seeing half of the urban mayors switch in the
21:52
Speaker 1: last election cycle, seeing people like Daniel Lorie who are
21:55
Speaker 1: pro business, pro safety, pro transportation coming into office, that's
22:00
Speaker 1: really what starts to turn our cities on.
22:01
Speaker 10: You know. Regulation wise, there are some that said that
22:04
Speaker 10: in this election year that the regulation on regional banks
22:08
Speaker 10: was relatively laxed because of the presidential cycle, but that
22:11
Speaker 10: it could come on. Do you see any problems with
22:13
Speaker 10: the regional banks in the coming year, any kind of
22:16
Speaker 10: a crisis of sorts similar to the Silicon Valley situation
22:19
Speaker 10: last year.
22:20
Speaker 1: I think that the large crisis point is behind us,
22:22
Speaker 1: because now people are willing to realize that the values
22:25
Speaker 1: have changed and that we're moving forward. But certainly there
22:28
Speaker 1: could be some bumpiness in the next twenty four months.
22:30
Speaker 4: You just moved to New York City. I did from
22:32
Speaker 4: San Francisco. I did give us the expert view and
22:35
Speaker 4: just San Francisco, I mean, where are we has bottom.
22:40
Speaker 4: Is it coming back? What's driving it, what's good, what's bad?
22:42
Speaker 1: I would say never bet again San Francisco. It's a
22:44
Speaker 1: very resilient economy. It has been since the gold Rush.
22:47
Speaker 1: As you know, it is coming back. I think if
22:49
Speaker 1: you look at Market Street. Market Street's the big thoroughfare
22:52
Speaker 1: in San Francisco. Two years ago, everyone said Market Street's dead,
22:55
Speaker 1: it's never coming back, you know, write it off. Well,
22:57
Speaker 1: what's happened in the last twelve months, and the city
23:00
Speaker 1: anchored it because they're coming back to the office five
23:02
Speaker 1: days a week. At the midpoint, Notion, which is a
23:05
Speaker 1: growing AI company, you just took a very large lease
23:07
Speaker 1: from Brookfield, resetting that building to have increasing value. And
23:10
Speaker 1: on the other end, you have groups like BXP who
23:13
Speaker 1: are doing amazing work with the City of San Francisco
23:15
Speaker 1: to redo the plaza and make sure that it's safe
23:17
Speaker 1: for people who are coming and going from the downtown
23:19
Speaker 1: core right next to that rich transit of the Ferry
23:21
Speaker 1: building coming and going. So you see these signs across.
23:25
Speaker 1: It's just a fill in from there, and the streetscape
23:27
Speaker 1: still feels incredibly vibrant in San Francisco. So the other
23:30
Speaker 1: thing I really like right now is Daniel Lourie is
23:32
Speaker 1: calling leaders to participate in government, including people like Sam
23:36
Speaker 1: Maltman who are on his transition team. But he's also
23:39
Speaker 1: bringing back other businesses into San Francisco, making sure it's
23:42
Speaker 1: not just too reliant on the tech economy, but finance, legal,
23:45
Speaker 1: other sectors coming in and being vibrant in that city.
23:48
Speaker 10: So, speaking of San Francisco, Amy Price, president of Vigo,
23:50
Speaker 10: joined us maybe about two months ago or so, and
23:53
Speaker 10: she's one of the well known voices people in the
23:56
Speaker 10: commercial real estate space, and she said that she believes this.
24:00
Speaker 7: Fourth quarter is the bottom.
24:02
Speaker 10: She called it definitively from her view in about fifteen
24:04
Speaker 10: seconds or so.
24:05
Speaker 7: Do you agree, Yes, I agree completely, She's right there.
24:08
Speaker 6: You go appreciate that, all right, both, thank you very much,
24:12
Speaker 6: really appreciate that. Liz Hart Newmark, President of North America, Lisa,
24:16
Speaker 6: we very much appreciate it. Definitely come back, Thanks so much.
24:18
Speaker 6: Abigail Doolittle joining us from Bloomberg.
24:21
Speaker 2: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify,
24:26
Speaker 2: and anywhere else you will get your podcasts. Listen live
24:29
Speaker 2: each weekday ten am to noon Eastern on Bloomberg dot Com.
24:33
Speaker 2: The iHeartRadio app tune In, and the Bloomberg Business app.
24:36
Speaker 2: You can also watch us live every weekday on YouTube
24:40
Speaker 2: and always on the Bloomberg terminal