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Industry sign banking colorado forbearance agreement now

good afternoon and welcome to Walker and Deluxe Wednesday webinar I'm Susan Webber your moderator I would like to welcome Willie Walker and jeff blauser EO of related companies Willie and Jeff will discuss how related is shifting its business strategy to navigate the current economy as well as the New York City market and how both New York City and other metropolitan cities will recover from the crisis thank you for joining us and now I will turn the call over to Willie excision and happy Wednesday to everyone and good afternoon if it's Wednesday it's the Walker Wednesday webinar and I'm super thankful honored and excited to have Jeff plowed a Jeff and I have known each other for quite some time and getting Jeff's perspectives on the market in the world we live in today will be very insightful and informative and so thank you Jeff for joining us before I'm going to be here well I jump to Jeff in the and and the questions that I have for him we had a really good discussion last week with Andy Florence CEO of costar and before Andy and I jumped in last week I invited Walker nolot board member John Rice to join me to provide some thoughts on social justice in America and how corporate America is responding to these issues today I would reiterate something that John said last week which was that time is up for random acts of diversity and that it is time for corporations across the country to take real action and to implement real goals as Mellody Hobson of Ariel Investments said last Tuesday on CNBC there's not a board of directors in the country they would accept management team saying we'll do better on something next year we all know how to quantify issues we all know how to put real metrics to them and I will just put forth that I was very pleased that I could share some of Walker and Don lumps metrics on these issues with listeners last week and to everybody out there who is in our industry looking for ways to make a difference I would just put forth that platitudes as it relates to the concern over the social unrest in our country are obviously welcomed and needed but what's really needed is long-term action plans to make a difference on these issues and make a difference to the communities that we all work and live in a moment on the overall market before I turn to Jeff and get his perspectives we all saw the jobs numbers last week be better than expected in the equity markets rally we have seen the 10-year Treasury move up out of a band of 52 basis points and 78 basis points to over 90 basis points during the court the beginning part of this week the move up in Treasuries actually is hit sort of the floor rates that many lenders had had prior to the move up and so we're now actually for instance on Fannie Mae 90 day system your Treasury so we really only moved up to the floor which means that the overall borrowing costs out there today are very similar to where they were a week ago and we are continuing to see a significant amount of activity in volume in the multifamily market as it relates to refinancing of properties I would also say that during the month of May we saw some activity on the investment sales side of things with five transactions and while that's well off of where Walker and Dunlop typically would be on the investment sales side of things it is great to see that buyers and sellers are finding a market and starting to transact once again in the multifamily space as we focus on opening up Jeff's views on new york are going to be very informative as it relates to the market that has been hit the hardest by the co bid crisis I would say I've been watching the headlines that are talking about increased number of kovat cases across the country the one state that I've been watching very closely after having governor Poulos on the webcast a couple weeks ago is Colorado and if you actually look at a state like Colorado that's now been open almost as long as any state in the country what is very very reassuring is that as they're testing numbers have gone up significantly to a peak of about 8500 tests a day but they're averaging somewhere between four and five thousand the number of positive tests has actually dropped from about fifteen percent down to about two and a half percent and behind all of that is number of new cases has gone from about 400 a day down to 150 a day and thankfully the number of deaths has dropped from a peak of 38 in the state of Colorado down to no deaths for two days over the last week and two or three deaths on the other days so if you look at someone like a state like Colorado the data actually looks very good as it relates to opening the economy back up and maintaining or controlling the growth of the virus but clearly as states open back up we are gonna see higher testing numbers which invariably are gonna drive higher infection rates coming to our knowledge if you will but really the issue is those infections turning into hospitalizations due the hospitalizations hospitals have the capacity to be able to deal with that and then obviously behind all that is the morbidity rate but overall things are looking very good as it relates to where the market is as it relates to the opening of the economy and finally on multi-family rent collections many of you saw the nm HC survey data that came out for the first five days of the month of June those numbers were better than the month of May which were better than the month of April and so collections so far in the month of June are tracking very well and that is a welcomed early indicator that rent rolls are holding up in multifamily and clearly the number of loans that Walker and Dunlop and other lenders have that have entered forbearance has not been nearly as high in number as anyone had expected which are all good signs the real question is what happens when the government stimulus dollars that have come out of the are either extended or not extended to come August September over and into q3 so let me let me turn to Jeff now um so Jeff back in 2013 right after you became CEO of related you said in an interview that you did with Bloomberg there are so many opportunities not to do the right thing in this business you have to keep your moral compass with everything that's going on in the United States right now as it relates to both the civil unrest and social justice um what are you and related Ewing to do the right thing right well first thanks for having me here today I've watched a couple of these and I'm excited to talk about the issues we're facing so with regard to that question I think that the first thing to talk about is really related response to the Cova crisis you know very early on we realized that there was an opportunity for us to really get involved in a way more than just throwing dollars at the situation and you know we did a couple of very unique things that I think became very helpful to the city here in New York for example when Governor Cuomo originally thought that we might be short 140,000 hospital beds he reached out to us and we since our construction sites were closed down we moved for example our construction crews from Hudson Yards and we actually put a brought a hospital on line out of an abandoned building in ten days we brought 700 beds online and you know I think that type of work utilizing resources that we have to do good you know can make significant changes and big differences we also at Hudson Yards we set up one of our buildings is right across from Javits Center which as you probably know was turned into a field hospital and had federal troops there supporting that hospital and we realized early on that since all the food places were closed that the medical workers wouldn't really have any place to get food and we opened up in our building at Hudson Yards in partnership with Jose Andres and a food kitchen called world central kitchen and we utilized out-of-work restaurant workers chefs from all the Hudson Yards restaurant to staff world central kitchen and we provided almost 90,000 meals over the course of the time that it was that the Javits Center was open as a field hospital we took we took empty hotel rooms obviously all of our hotels were closed and we donated hotel rooms for frontline workers and so and what was really great about doing all that type of work is that our staff our own related employees came in and volunteered to do all that work nobody had to ask right nobody nobody forced and it was you know I spent a lot of time volunteering at the food kitchen with my son and it was just it was just great to see that we can we can make a difference doing things like that and then I guess you know obviously all the racial issues that have come up in recent days you know this is we said weeks I mean this is really something we've been committed to for a long time and again you know in our own way we have been trying to make a difference here and just to give some examples you know we have for many years tried to increase our percentage of minority contractors on our new developments and not only have we tried to increase the percentage of minority contractors we've invested with minority contractors to help them grow their businesses and we've actually found you know it's a little bit of do good by doing good we found that by making those early investments with contractors those contractors have become very loyal to us and we continue to do lots of repeat business and you know I think that's how doing things like that breaking the cycle of inequality by utilizing the resources that we have and not just throwing money at a problem is a way that we can uniquely try to change.we when when we opened Hudson Yards we needed to hire a thousand new workers to actually staff the buildings and the properties around it and so we decided instead of just doing the conventional hiring path that we would set up a job training program and reached out to more minority communities to attract people to come work to Hudson Yards and train and train them in the types of work that we do and bringing kind of that customer service mentality to the new workers and so we're in our own way we have been trying to make a difference for a long time having said all that you know what's happened over the last couple weeks has really shown that you know more needs to be done you know in our industry and not just for our company but for the entire industry and so I think getting more people attracted to the industry doing that early on in education at schools at colleges where we recruit to make the real estate industry more attractive or actually just to inform to inform black students about the opportunities in the real estate industry would help us overall grow the pool of qualified talent and I think if if we continue to do that over time we will see we will see tremendous change because as you know the industry today is not is not particularly diverse I was just gonna let's let's talk about that for two seconds longer which is you know you're on the Graduate Executive Board at Wharton and you've got a fantastic incoming african-american Dean and Erika James and I would salute you and others at Wharton for having selected her to be the next Dean at Wharton but you know last week I received a note from the Dean at HBS and was actually quite shocked that for the last three decades the number of african-americans at HBS has hovered in the sort of 50s so 50 percent for our students of color which I mean you think about institutions like Wharton and HB that have put concerted effort into recruiting more african-american students and that's obviously the pipeline for companies like Walker and Dunlop and related and clearly this is not a new issue any thoughts Jeff as it relates to what institutions like Wharton can do to try and get more talented african-americans to come back do nba's and then come out and into companies like Walker and all up and related right so that was part of the thinking with the Dean and I'm sure we're gonna see some new programs and announcements coming out of of Wharton I will also say at my other alma mater University of Michigan we are we are working with the Ross School there with the Business School to implement programs to further kind of as I was mentioning education around the industry and so we're working on an initiative to kind of teach students what the real estate industry is all about get more black and other minority students interested in the industry and so and and potentially even combine that with scholarship programs and so I think I think that type of early education is critical there's also you can even go earlier and I think ultimately that could be beneficial there are programs like here in New York called prep for prep at the high schools or SEO even where job training and internships are made available and so we've been very active in those two organizations and I think ramping up those efforts as part of kind of our commitment to change on to something that will we will definitely put in place so everything that you said as it relates to related working with the state of New York and the efforts that you made to create hospital capacity things of that nature are absolutely fantastic I went to try bet the Tribeca tower website which I believe Tribeca Tower was one of the first developments that you actually worked on at related and as I was looking at it I was immediately impressed with the with the pop-up screen as it relates to related doing your part to keep your tenants safe and it had details on you know cleaning employee monitoring air flow elevators such as implementing nanotechnology buttons package delivery and using the related app talked about Co vid as it relates to specific things you've implemented at your properties and both of the successes as well as some of the future challenges that you see Jeff as we continue to open up the economy and as people both live in your buildings and then also head back into offices and start to interact with people in offices and retail spaces that you all own and manage right so we we have i've learned more about cleaning technologies in the last couple of weeks than I maybe ever wanted to know but we have implemented tremendous protocols for each of our buildings to return back to work and so you mentioned residential on the residential side we actually created an entire brochure around kind of the new protocols and benefits that we put in place effectively return to home because in many of their urban markets in which we have apartments people have left their apartments and and gone to other locations like as I could see you are now not in your office and so the idea is is for companies when when they go back to work and open their offices that people return back to their apartments in the urban centers and what you know there's obviously trepidation people are nervous about coming back to work and people are nervous are going back to the urban centers and so what we tried to do is put in place protocols and you mentioned some of them certainly extra extra cleaning independent for our employees Cobie testing temperature checks obviously wearing PPE elevators spacing Plexiglas at the front certain rules around package deliveries we also realize that some of the amenities that people have come to enjoy around their buildings are not open it so we actually invited some out-of-work chefs again from Hudson Yards and we hired them to provide home-cooked meals in each of our residential buildings and so we have a home chef available in our apartments so we're doing some unique things and we on the apartment side we worked with Mount Sinai Hospital to really codify all of these protocols and we're actually providing on-site kovat and antibody testing for any resident that wants to do that on the office side it did involve in a return to office protocols that we put out did involve a greater use of new technologies so in all of our office buildings we have new thermal scanning equipment installed in the lobbies we are requiring all of our tenants to have their employees do temperature checks at home and fill out a survey or a questionnaire every day before they come in confirming that they haven't been in contact with anyone that has Cova that they don't have kova they took the temperature we're also working with our tenants to stagger start times so that the law of these are not I'm not that busy we do have the dots on the floors and and things like that to show acceptable social distancing our turnstiles are touchless so you can wave your hand over a turnstile it'll allow entry it will also tell you which elevator to take and call the elevator so you don't have to touch the buttons alternatively you can call it on your iPad so we're trying to make the whole experience as friendly and easy to use customer service you know forward as possible to really make people comfortable going back to the office and so far we've had a tremendous response from our tenants as they gear back up to go to work how comfortable are you personally in heading back into the office and and were related as it relates to your company getting back into the physical office yeah so we've talked a little bit about this you know I I am very comfortable I mean I'm in the city now the governor in New York I believe is going to open phase two which would allow return to office on June 22nd and related is going back full force on June 22nd I'll be there and my entire team will be there and you know I think there's there's two reasons because that's I would I know where you're headed with us and that's not probably the majority of people right now first you know we have about 4,000 employees across the United States about 60% of our workforce worked all the way through either in buildings or on construction sites as as essential workers and I just I believe that it's important that if they if our work if our field workers are doing their job throughout this that if the corporate office you know can be open that we need to be there to support our team and so we are all going to going to be back as soon as possible I think in another very very important reason and and you know I've seen a little of this from my peers and other CEOs in New York and around the country is there's been a little bit of an attitude you know maybe I'll just take a slow return and I'll let my employees come back maybe after Labor Day and kind of have a slow of summer you know I think I think our cities have been hit with with you know something pretty traumatic and you know the restaurants and the retail stores are all suffering and we need to go back we need to go back to work everybody I believe needs to return you know to their offices and and kind of get it started again because otherwise those restaurants the the coffee shop that you go on the waiter to the office the card store and you know whatever it is those things rely on all these office workers and you know I think you know I'm on the board of the New York partnership and you know we've been talking about you know creating a campaign around New York is open for business right we you know come back to New York and I think that's a campaign that many cities are gonna have to go through now and I think the sooner we can all get back to work the better it you know it'll be for those economies that's a pretty good segue to your your landlord on residential on office and on retail as well as hospitality talk about the overall health if you will of those asset classes and where you are from a collection standpoint across the spectrum there what's what's holding up well and if you would Jeff let's go from office to retail and then we'll end with multifamily because I want to dive a little bit deeper on the multifamily side given the breadth or view over ownership and portfolio on the resi side so if you could go office then retail and then we'll end with resi I'll go deeper on resi once you've given us the numbers there right so I mean what I'd say an office is I think there's going to be a tale of two cities in that sector so I think I think the Class A buildings have held up tremendously well I mean literally to a hundred percent collections and I think there's a there's several reasons I mean one the newer buildings typically have you know large credit tenants in there that can't afford to make the rent payments and have made rent payments for the most part there are some bad actors out there but for the most part they've made their rent payments the the Class A buildings typically have you know large lobbies that it can accommodate all these new technologies and and separation that's required they typically have large high-speed destination dispatch elevators that you don't have to touch and have lots of room in them and they typically have you know brand new HVAC systems where you can dial up or dial down fresh air circulation and and other other ways to make sure that things are clean and they typically have healthy kind of expense budgets so they could afford to bring on the extra cleaning staff and PPE that's required so I think that they I think that Class A buildings come through this very strong you know with little to no change and also you know there's there's a question that everyone likes talk about you know what's the future of office is everyone gonna work from home are people gonna go back to work I think people at the end of the day we've gotten used to this technology and it actually has been an incredible tool we've all been able to run our businesses while this has happened but I think this is a terrible way to operate a company the loss of culture the lack of innovation the lack of creativity I think is ultimately takes its toll on companies how do you hire new people and get them to understand your culture on zoom' it's it's very difficult and so I do think people are gonna go back to the office and in fact those companies in the classe buildings they have already reached out to us and said that they need more space right because they were either in trading floors or bench seating and those companies can afford to do something about it because the last thing that you know a fortune one 500 company wants to do is tell its employees that they need to come back and bench seating right now and so I think there'll be more demand from that sector go to the other side you have the Class B buildings you've got lower credit tenants they may not be able to pay they've got small lobbies they've got small elevators they have smaller companies in there that may have to do more work from home because a they think it works or the they can't they can't afford to keep as much space as they as they could so you know people ask me all the time you know what crews they have all these office REITs the stocks are down and so on is that a good buy or not a good buy I don't think there's one answer I think you really need to study who has newer buildings versus older buildings and I think there's going to be real differentiation in those markets on would you want to retail in that retail next yeah so on retail it's also a little bit of kind of tale of a couple different cities so retail has been probably one of the hardest hit sectors obviously hotel maybe slightly worse but you know retailers have been going through change for a long time you know people say this all the time but I think we are we are really seeing acceleration of trends that were happening and so many of the retailers are not going to make it through this obviously Neiman Marcus filed JCPenney it's j.crew my guess is that there's many more and so I think ultimately we have too much retail in this country you know we're both friendly with Bobby Taubman if you ask him we've heard him say this over and over again there's 1,200 malls in this country he thinks that there should only be 300 and of those 300 only 100 ever make any money and so that's a dramatic change to the retail landscape so I think I think this will accelerate some of that the my biggest concern are the small retailers right so restaurants and local shops that make you know certain places like Hudson Yards and Time Warner Center are very unique to New York and you know we are doing everything that we can to make sure those restaurants and small shops make it through this and stay in business while at the same time really pushing our credit tenants to pay their rent and make sure that they're doing what they you know their share and doing what they're supposed to be doing to get through this so you know in terms of numbers I think the numbers in them in the mall rates have been hovering around 20 percent collections we've averaged about 40 percent in our urban centers now what's interesting we have a whole nother group of retail that we call boroughs or big-box retail you know which typically has Home Depot target tjs food a lot of that has been open throughout this and so as the central essential workers central companies and we've been collecting 70-plus percent all the way through in that type of Center so again it's it's a little bit you know I hate to answer just how's retail I think it's you know Geographic based and asset type is Jeff you talked a moment ago about how I think successful your product is going to be in the office space given its newer product its scale its size its finish all the things that are gonna bring people back into the office and I and it's it all makes perfect sense to me when you think about the fit and finish on a Neiman Marcus and Hudson Yards in the amount of capital that was invested there what are you and your team thinking about if that space has to be repurposed what what can that type of a space turn into it does go to does it remain retail does it get turned into office what what have you all been looking at as it relates to if there are failures as there clearly have been announced and space has given back to you what can you do with that physical space right so we have at Hudson Yards we have we have about 700 thousand feet of rentable all retail space in that Center Neiman's is probably 30 35 % of that of that space they as you know they did file they have not told us if they're accepting or rejecting the lease you know at this point so we don't have any more information but if it were to head down the path that they were not going to reopen and I don't I don't I don't know the outcome of that yet we would probably look to convert that to office space because the office market has been very very strong and I ultimately think department stores are not the attraction that they used to be I mean in in days past you would never open a mall or Center without an acre department store and you know that that was the formula for every mall across the country today I actually don't think they're that I'm they're that important and I think things like retail and fitness and you know Whole Foods become much more of attract much more anchor attractions than than department stores and you know if we were to convert the Neiman's and and put a tech company in there with 2,000 employees I think the traffic generated from the incremental office base would bring much more business to the retailers down below then even a different department store if there even was one to take that kind of space so you know I'm still I'm very bullish on ways to kind of repurpose centers you know even even the malls that are now gonna have closed department stores at you know typically they were endcaps on wings of the malls and I think the opportunity to close those down and and build apartment buildings or suburban office around on those malls remember the malls were based in the center and communities grew around them so they're typically in great locations I'm sorry I think there's I think there's good business to be on there if you if we're talking about smaller retailers related owns Equinox as well as SoulCycle and I love the if you will Fitness focus and you just talked about Fitness being such an important component of not only the office environment but also the retail environment what are your thoughts as it relates to the reopening equinox and solstice to usership if you if you look at things like peloton stock price peloton obviously has benefited dramatically from the stay-at-home orders and I would put forth that you know the idea people going back into a SoulCycle studio where you're really kind of shoulder-to-shoulder with a person on the bike next to you is probably not what most people right now are envisioning is sort of the ideal workout experience so what's similar to sort of how you deal with the space make an artist that might need to be repurposed what's the thought at Equinox and soul cycle as it relates to what the new normal looks like right so I would say a couple things you know in terms of fitness in general I think post kovat I think the demand for fitness wellness will be greater than it's ever been and I think it's been proven in this pandemic that those that were healthier had better success in fighting this virus and I think it has really pointed out you know the the state of kind of help in our economy and in our society and I think there's gonna be a renewed emphasis on that and so I think there's actually going to be more demand for working out and staying healthy post the issue obviously is how do we make these spaces safer our members for equinoxes members and equinoxes has launched you may have seen online tremendous kind of safety and kind of return to the health clubs the fitness club protocols including very similar things to what we're doing in the office buildings temperature checks and filling out online on the on their app questionnaires and spacing and PPE we opened Equinox opened in Texas last week two weeks ago now and we are they are back to essentially almost pre coded usage levels in the club spaced out by time but in terms of people per day and so we were very excited to see that SoulCycle also open they're now in SoulCycle we had to do as you suggest more separation of the bikes and so following the 6-foot rule and so on so we've limited capacity in the studios and we the sole cycle studios that have opened are completely sold out you know days in advance and and we've we've added more classes to kind of allow the same number of riders but over multiple classes so they're not as packed in so there will be changes to the business model d densifying kind of the usage in some cases possibly requiring reservations but everybody's gonna have to change their business model a bit I think when we get to the other side of this pandemic in a vaccine is here I think you know they as I said the interest in in Equinox and health and wellness is gonna be greater than ever before so I'm pretty optimistic about about the future there yet there are a lot of people who've been trying to sort of figure out bourbon versus suburban we've clearly seen over the last decade a real urban migration across the country where not only have companies moved from suburban locations to urban locations but people have sought an urban setting and particularly young well-educated Americans have migrated to the urban core right now given kovat there are lots of people who are sitting there saying where are things gonna go from here are people going to want more space and move out of multifamily to single-family are people going to want to get out of the densification that exists in the urban core and move out to suburban communities whether that's in a single-family or a a multi-family setting what's your thought given where related has been investing across the country as it relates to that sort of urban suburban trade-off decision do you think that that if you will the brains and the investment continue to go to the urban core do you think we start to see some more migration out to suburban communities in suburban office right so look I think you know our Chairman Steve Ross always likes to say you know when things are bad you can never think about how they're gonna get good and when things are good you can't you can't imagine how they're gonna get bad and I think you know I often think about that and I think there's a often a lot of overreaction in bad times and so you're seeing you know everybody say oh I'm gonna move out of the city I'm gonna move to the suburbs you know and there are people projecting that suburban home prices are gonna go through the roof I actually don't think that's going to happen there might be a little bit of that in the short ter as we as we kind of get to the other side of this vaccine but there's a reason that people have been moving to the cities for the past 20 plus years right people love to be in cities people like to be around people people like to go out to restaurants and go to music clubs and you know it's the place where art and culture come together and that intellectual talent resides and that's what my company is ultimately you know have moved headquarters and continue to move into cities so I think there's going to be this period 12 to 18 months where people are kind of feeling their way back into the cities and there might be you know more usage of the suburbs you know as people are might be on half shifts and they're off is 50 percent working so I think I think would be a little bit of that but ultimately those all those reasons that people love cities still hold true and will hold true post vaccine and and you know I think that these cities are going to come back you know if people you know New York has been kind of one of the great cities of our work you know around the world and and you know I would say don't ever bet against against New York so on that if you think about sort of the kovat crisis and where it's hit both the states as well as cities on your you know your portfolio on the resi side is is very concentrated in the major US cities and in many instances if you will in blue states you know New York Massachusetts with Boston Illinois with Chicago California with LA San Francisco and DC and we've clearly seen the Kovach crisis put significant pressure on not only the city budgets but the state budgets as we think about opening back up and as we think about related has significant properties what's your take on sort of that I don't mean to put it into political terms of blue versus red but that has sort of been a delineating line and more importantly I guess Jeff is governmental moves and in taxes as it relates to if we're running up big deficits right now on a state basis and clearly at the federal level what does that mean as it relates to tax rate tax rates and what does that mean as it relates to population base going forward in some of these big cities we're related has made very significant bets all right so I'm gonna take that and combine it with a little bit if your last question about people going back to the cities you know again I think that there had already been in place kind of a trend to advance to what had historically been called secondary cities you know whether it's Boston or Denver or Charlotte or even slightly suburb cities a little bit so for example we are still in California but we are building we're about to start a construction in Santa Clara you know right outside of San Francisco on a thirteen million square foot development on two hundred and fifty acres that we own they are right across from the 49ers stadium and you know if you think about that market it's it's the home to Apple Facebook and Google all around us you know III think those businesses the tech companies you know have come out of the cove aid situation you know probably stronger than ever before and so I think you know for us it's not just a focus on those you know a couple of urban centers but I think doing something that's a little bit more less vertical and more spread out over over but still creating a city center or a Main Street where we will have office retail residential hotel restaurants as a Main Street in a kind of suburban type location semi suburban type location I think is a way for us to kind of go to other areas and continue to create great places like we've done in the urban centers we also as you as you know we've we have rolled out the Equinox Hotel concept and kind of with that we we have used that to anchor developments in you know Austin you know a city that we have had and typically developed in before Dallas was on is on our list San Francisco as a site so I think Nashville is certainly a place that we're gonna look to bring that product so I think you know it allows us to enter a market with with a brand and a concept that's a real differentiator because you know it's very hard you know to sit in New York and say oh I'm going to develop in Nashville do this and kind of you show up there's a lot of smart people there they've been doing it for a long time and so you know just because you know we're a bigger a big company it doesn't mean that you're automatically successful there you have to really do something that's gonna make us stand out and so you know that that was really our way to differentiate our product in those markets and once we kind of get over to the other side of this kovat situation we're gonna continue to pursue those markets because I think I think there's there's gonna be some great opportunities there as well the Equinox Hotel concept is one that I absolutely love given the weakness at the at the high end on the hospitality side are you all basically moving forward with those development plans on those sites you have are you doing more about let's wait and see how things you know kind of more fo given that you have opened up your Equinox Hotel in Hudson Yards which I'm assuming has gotten you know hit extremely hard during this downturn and we'll see how it comes back up what's the what's your view as it relates to the rollout on Equinox right well as you know I'm generally optimistic about most things but this is a tough one hospitality sector I think is going to is going to suffer for a while you know Equinox Hotel at Hudson Yards opened up to incredible success and reviews I mean really on a roll and you know just to watch it every day being closed it kills me a little bit but okay I think you know like I said I as strongly as I felt that people are tired of kind of all the zoom stuff and will return back to their office you know pretty quickly I think there will be hesitation you know I would jump on a plane for an hour meeting across the country you know on a moment's notice typically I think there's gonna be hesitation to do that for a while and use the airlines and stay in hotels and I think people will now so familiar with this technology say hey I can I can avoid that trip and do a zoom call you know I ultimately think it comes back but I think it is a much more delayed response than than the office situation and so we we have downtown Los Angeles underway with an equinox and a couple others you know pretty far along but we're gonna see we're gonna see how fast that comes back before major Spanish in there so we've talked about related really having an incredible not only portfolio but brand at the high end of the market whether it be in office retail or multifamily but you all also are absolutely huge and fantastic owner and operator of affordable and workforce housing in the multifamily space you've got I think over 60,000 units in that portfolio first of all hats off to you and related for having been such a big supplier and owner of that asset class at a time when it's more needed than ever how are the fundamentals in that sort of segment holding up as it relates to rent collections and then what's your outlook as it relates to the focus between luxury brands that you all have been so successful at developing recently and then sort of that core affordable and workforce housing mandate that related has carried for as long as Steve is you know had the company right so you're right I mean Steven founded the company the affordable housing business and you know it is at our core it's part of our culture you know we are today one of the largest owners of affordable and continuously invest in preservation of affordable housing and new development of affordable housing it's where we have created lots of opportunities in minority communities in terms of providing affordable housing in terms of hiring workers from those communities in terms of construction in those communities and you know as you said it's it's more important now than ever and we have a nude or an increased emphasis on that today coming out of recent situation and and so you know I think it's one of the biggest issues facing our country in the cities and so we are working with governments both federal state and local governments to you know help increase funding towards those initiatives and using sometimes non-cash benefits to make things happen whether they're a density bonuses and that cities can use to allow more development of same adjacent market rate housing whether it's conversion of Housing Authority properties from old kind of out of service buildings into new modern affordable housing so these are things that we definitely focus on and continue to focus on we have we also have developed a fair amount of workforce housing which is that middle area kind of not traditional affordable but workforce housing police teachers and and I think that's another critical component that cities are missing and and you know we will continue to do that with regard to the the luxury portfolio you had asked me once you know does branding and can you really differentiate in in our in in the luxury space with market rate and you know we have been very very successful in doing that you know about probably 15 years ago you know we sat down and realized that we had enough economies of scale to actually create a brand and that's that's not typical in the multifamily space there's normal you know typically you've got a XYZ not particularly you know great name Glen's landing or some other name of a multi-family property it doesn't mean anything you see our portfolio all those things landing sales place and so you know we realized that we can really create a brand and we did that with our related rentals brand and and then our reserve collection where we really by increasing amenities in the building but not just not just you know another room you know a gathering space but we program and we host events we create community within our buildings whether it's you know wine tasting or educational or kids programming and we've gotten a tremendous response to that and whether it's staffing we bring all of our building residents through customer service training and the idea was that if you lived in a related rental building essentially like living in our four seasons and all the typical hotel services and training that went into a four seasons employee is what we do on the residential side so you know if if you get off the elevator and the porter is vacuuming the hallway you know the what that port are supposed to do turn the vacuum off stand aside say good morning or whatever it is all those little cues are things that we have we have taught and trained our staff to do and I do think that we get a premium in those buildings for that so in in in terms of rent collections across the portfolio I you know do like the other sets we talked about I think it really does vary by product type so the market rate our high-end market rate product has held up extremely well people in those buildings typically have high credit scores and have savings and for the most part I've kept their jobs and so we've you know collections have been 95 plus percent during this period of time in the Affordable space you have an interesting dynamic in that a large majority the rent is paid through government subsidies whether they're section eight or local subsidies and so unfortunately the government is still making payments and so we've been able to collect all that and that's that's somewhere around 75 80 percent of our affordable revenue rent and rent that we get so it's really the twenty percent and and even in the 20 percent you know I think we were somewhere in the in the mid-seventies collection but if you take mid-70s on 20 and hundred on 80 you wind up back you know in a pretty good place so the you know the softest spot we probably had was in the workforce component so I would say in there its unsubsidized and at least the rents are typically unsubsidized the the developments are often subsidized I put the rent or not and I'd say our average income in those buildings probably eighty to a hundred thousand dollars and you know there's where you had a lot of job losses and so you know we were our collections were down you know in the eighties and that segment so not terrible we are working with all of our tenants that have been affected by kovat and again hopefully these were furloughed positions that ultimately come back and you know we'll kind of get back to business in the next month or so similar to your my question as it relates to the Equinox hotel and what you see happening in the hospitality sector kovat has an only impact in the United States obviously it's impacted the world related been making a number of investments recently outside of the United States you've got a joint venture in the UK with argent and you've got a another big venture in the Gulf region what's your thought now Jeff as it relates to international expansion of related versus sort of if you will the focus in the United States where there's still plenty of opportunity for you what's your what's your take on domestic versus international given what we're seeing across the globe not only the Kovach crisis but just sort of economies around the globe and who kind of comes out of this looking either better or worse than they did heading in right so I mean we have historically been pretty domestic focused as he mentioned we did do a couple things and we we did a big retail center in Abu Dhabi in partnership with one of our investors but we in London we actually opened up in office I mean one of the things that you know when I think about expanding and you know we have offices now throughout the u.s. in New York Chicago LA San Francisco Boston DC and then you know London was a place that we always saw a great opportunity and and started to be a city very similar to New York that we knew so well and we saw all these deals come in and you know we'd go run over there and go look at a deal and you know but ultimately when we open these offices it's always about people first it's not deals first and so we passed on many deals in in London that we thought were were good deals but we didn't feel that we were properly prepared with people and and ultimately this is this is a this is a people business that were and if you don't have the right people in place I don't doesn't really matter how good the deal is and so we were fortunate we had the opportunity to acquire a company called argent that was a spin-off of two pension funds in London and the management team joined us and and now you know I think it's they were the original developers of Kings Cross in London and you know now we have 130 professionals in London super talented building Facebook and Google's headquarters as part of Kings Cross and and with that team we have really embarked on a program to build workforce housing for four Brits or Londoners as opposed to very high-end luxury housing there is a tremendous housing shortage in London we have about 13,000 units in the pipeline now and many of these will be institutional for rent products another another product that's unusual in that market most most product is for sale or individual units that are owned owned by individuals that have been rented and so the idea to bring our kind of luxury customer service Carribean market rate housing product to London and go into that market was something that you know we think is very attractive and you know because of the price point that that we're looking to compete in there I think will be less affected by kind of any short-term downturn in the economy and I'm very very positive about about continuing operations there we start to wrap things up Jeff you talked about teams you have a lot of both knowledge as well as if you will interest in two teams particularly because Steve owns the Miami Dolphins and your alma mater Michigan has a typically fantastic football team will we see the dolphins and the Michigan football team playing football this fall and if so are you going to be in the stands or they can be playing in stands don't have anything ISM oh that's a rough question with a lot of inside information but I'll just give you a my own opinion so don't take this as an off cial statement from from the NFL but I would guess and I think that there's a movement for football to be played and my guess is that there won't be there won't be people in the stands this year both both in Michigan and it you know and and the NFL but again that's my opinion that's not an official statement and I think I think it'd be great to get sports back on TV I think people are dying to watch the live sports and I think if the players and and the network's can figure it out that you know that's what what will most likely happen given the rivalry between Michigan and Notre Dame I know it's gonna be hard for you to give Notre Dame props but I would say the the leadership that Notre Dame took on saying that they were gonna open back up in the fall for the fall semester I think is is was a somewhat of a tipping point if we look at sort of schools opening back up and and and getting both university students back to universities and then hopefully secondary schools back in the fall any thoughts as it relates to schools reopening and and and the University of Michigan reopening again in my opinion not an official word but I do think they are trying very hard to get those schools open but they are definitely planning for a situation where there's a combination of remote learning and and in-person so I wouldn't be surprised if large lecture halls are done remotely or by zoom and smaller classes happen in person I think that type of combination will occur I also think that they're going to and this is not just Michigan I think many schools will look at eliminating the breaks so there's less travel back and forth and so you might you might go until it's a Thanksgiving and then and then it ends from there but not and not have that break and make it up so I think school will I think school will happen but I think it's gonna be a different a different set up next year notwithstanding what sounds like extremely good positioning for related clearly there will be specific assets that might not have the rent collections that one would hope for or a retail property that has some weakness to it but what's your thought Jeff as it relates to what we're going to see in q3 and q4 as it relates to the overall commercial real estate industry and I know it's a it's a broad question but do you think we've seen sort of the worst as it relates to the impact of Kovach or do you think that there's sort of a slow burn taking place here as we move through the rest of this year with potential defaults on debt and kind of a reshaping of the industry into 2021 and 2022 right now I definitely think there's going to be some more pain to come you know the the PPP programs are expiring many of our tenants have been in the industry have been relying on that you know most of the commercial lenders you know have entered into forbearance agreements you know with borrowers that needed it and so nobody's really had to had to battle with their lenders yet and and you haven't really seen any major defaults of foreclosures I think those forbearance agreements will expire and there will be trouble of assets so I think I think it's yet to come you know we set up about well in the last in the last downturn in 2009 we formed a company called related funds management to really do just that just this there's really two focus on opportunities that came out of the last downturn in the real estate sector and you know we really when we started that funds business it was all about utilizing our skills our our people our resources as an operator developer to to create execution opportunities so we probably bought you know half or more of the half built buildings in the United States during the last downturn in our funds business and it was it was because you know we had this great team that we had an ability to execute it's very easy for a bank to foreclose on a over-leveraged office building because they know how to operate it it's another thing for a bank to foreclose on a construction loan on a half-built building where they have 200 people working and you know what did they do the next day and we started getting all these phone calls you know would you help out would you help us out you know can you take this over and inevitably that business plan would require capital and so we we realized early on that there was an opportunity and so our funds business now manages almost eight billion dollars of capital we just did a big capital raised fund three and you know we I think there's gonna be a lot of opportunities in that space I am sure there will be and I'm sure that you and your team will do very well and I don't want to say take advantage of the situation cuz it's not a big advantage right any advantage of anything but I'm sure that you all will be able to execute and also quite honestly provide capital the market that is very much needed Jeff it's been a pleasure it's great to see you glad to see you well and that you're healthy and that your family is healthy and thanks for all your insights today to those of you who joined us thank you for taking an hour out of your day and out of your week to tune in and I hope everyone stays safe and healthy and thanks again Jeff for joining me today great thanks for having me thank you