CrowdStreet's Anna-Marie Allander-Lieb is joined by Zack Streit, Senior Vice President at George Smith Partners to discuss the recent vaccine news and how markets have reacted, what that means for the potential of another stimulus and the positive effects that are rippling throughout the CRE and stock markets alike.
Anna-Marie Allander Lieb, Director of Investments
CrowdStreet
CrowdStreet
Anna-Marie Allander Lieb is our Director of Investments, sitting on CrowdStreet's Investment Committee while also managing the team responsible for identifying and reviewing potential offerings for the Marketplace. Prior to joining CrowdStreet, Anna-Marie worked for the Tax Credit Investment Group at PNC where she specialized in underwriting innovative tax credit equity and debt financing solutions for Historic Tax Credit, and Low-Income Housing Tax Credit investments. Anna-Marie started her real estate career in Boston where she was a member of the CBRE New England Capital Markets Team. Anna-Marie holds a B.Sc. in Economics with a concentration in Real Estate from the Wharton School of Business.
Zach Streit, Senior Vice President
George Smith Partners
George Smith Partners
Zachary D. Streit has arranged and closed in excess of $1 billion and has underwritten in excess of $6 billion of debt and equity financings for a broad array of real estate transactions. He has significant experience arranging and closing construction loans, CMBS loans and private/hard money loans across all commercial property types. Zachary’s clients recognize him for his relentless focus on execution and responsiveness.
Zachary is an active member of real estate industry groups and related charities and has a number of professional designations. Affiliations include: Urban Land Institute (ULI), International Council of Shopping Centers (ICSC), National Association of Industrial and Office Parks (NAIOP), Jewish Federation Real Estate and Construction Group (REC), AIPAC Los Angeles Real Estate Group and Jewish National Fund’s (JNF) Commercial Real Estate Division. Zachary is a Member of The State Bar of California and is also a licensed real estate broker in the State of California.
Zachary has 12 years of real estate experience, including 5 years of experience as a principal lender. Prior professional positions include: Managing Director of Originations for Anchor Loans LP; Vice President of Originations at Colony American Finance, a Colony Capital subsidiary; Founder and President of Streit Lending; and Investment Associate, Aviva Investors’ Global Real Estate Multi-Manager Group.
Zachary has a Master of Science in Real Estate Finance from New York University, a Juris Doctorate from the Benjamin N. Cardozo School of Law and a Bachelor of the Arts, Summa Cum Laude, in Political Science from Yeshiva University. Zachary remains involved with his alumni associations.
00:00:04 Welcome everyone to this week's edition of StreetBeats, where we're gonna talk all things capital markets. I'm Anna-Marie Lieb, uh, Director of Investments here at CrowdStreet, and today I'm joined by, uh, Zack Streit, the senior Vice, uh, president at George Smith Partners. Um, Zack, thanks for joining us. So it's been a, a historic week, I would say, kind of highlighted obviously by, uh, president-elect Biden's, somewhat contested victory. Um, and also the news that came out, uh, with the breakthrough from Pfizer and Bio and Tech on, on the vaccine there. Um, and it's kind of 90% efficiency.
00:00:37 It's been a huge week <laugh> with, with probably, you know, some certainty in terms of the election outcome. And it's almost like a positive one too. And I don't think we've had like, good news, and I'm not saying it in a partisan way, just good news from a all right, we have certainty and we kind of know what things are looking at. And then just some incredible news with respect to Pfizer and some small, also good news tacked on in the end with Eli Lilly's experimental antibody treatment, which I think is good too. But sure, no question that at Pfizer was the big news. You saw a massive pop in the stock market yesterday, uh, 4% pop in the market overall. I think a m c stock was up something like 50% Yeah. In one day. So they had been holding out for some great news, which they finally got.
00:01:23 Airline stocks were up, I think Delta was 20%. And then in the REITs, Simon May, rich Westfield all up over 20%. So just an incredible rally around, you know, positivity for some end to Covid and maybe some election certainty where there was, you know, a lot of fear that, you know, who knows what it would look like, you know, post facto. But so far it seems like it's holding up well, big rally in the treasury market also, you know, up 20 bips yesterday in widening of spreads from like a 75 basis point tenure to a 95 basis point. Uh, you know, tenure. I don't know if that sticks, but, um, you know, it's something to watch. So huge week, and I think we're all, we're all just really, really excited by Pfizer.
00:02:07 Oh, for sure. I think, you know, it's, it's great news to see that especially, you know, I think going into this, people were worried that, you know, is the, the vaccine is gonna be, you know, the 50% efficiency, like something, right? What you see for the flu vaccine, which
00:02:19 Staggering
00:02:20 The, the 90% is, is huge. Um, well, with that though, I mean there's still, you know, the, the whole looking forward, you know, we're gonna have to get this distributed. Um, and, you know, previously, yeah, um, for most kind of vaccine programs is generally, you know, manage over years and here, you know, we have to approach something where we wanna get this out as quickly as possible, get it distributed to people, um, and there's a lot of moving parts in that distribution that has to come into place. So it's, it's, you know, probably gonna take, take some time. It's not gonna be immediate, but this vaccine gets approved and we're good to go. So I think, um, you know, as we look specifically kind of at commercial real estate and kind of those office retail sectors, you know, I think it's still gonna be a little time before it gets back to normal, but this is definitely great news.
00:03:06 I, no question. And look, even if it's not a 90% effective rate and it's 70%, I think we'll all still take it and be really happy. Yep. And, and it's gonna take time and it'll probably be triage and how it's distributed. I imagine first responders get it first probably followed by, you know, elderly and people who are at risk followed by everyone else. But I agree with you, just the thought of knowing that it's out there is going to help. I just think like we needed just a positive, you know, psychological week like we had this week, which we haven't had really in a long time. And, and this is going on while there are some surges that are occurring too, and, you know, I think it's gonna be tough, you know, with respect to colder climates and, you know, indoor dining and kind of figuring all that out.
00:03:50 But, but knowing that there's some light at the end of the tunnel, I just think is gonna go a long way psychologically into the markets. I think, you know, continued, um, fed support, um, is, is gonna be huge and I don't see that going away, whether it's keeping interest rates, lows or purchasing in all types of securities, treasuries, mortgage bonds, corporate bonds, um, you know, I think, I think that's gonna help. And look, I, I think also potential for the next stimulus is gonna help. I, I don't know if it's gonna happen in a lame duck session. I, I, I don't think so from latest I read, but there seems to be some market optimism that Biden and McConnell, uh, president-elect Biden, uh, and McConnell run the Senate, um, if he runs the Senate, um, will be able to, you know, hammer out some sort of deal because they've worked together for, I don't know, 30 or 40 years and something should happen. So I, I think that's positive too. And I think, I think more stimulus is needed over that near term, uh, you know, help with the economy in general and maybe even some real estate asset classes. So, you know, we're pretty focused on, on seeing, you know, how that kind of unfolds, you know, over the coming weeks.
00:04:53 Yeah, definitely. I know, I, I think I heard that, you know, there's hope that maybe we get something by Christmas in terms of the stimulus. We'll, we'll see kind of what plays out there, but definitely something we're watching last week too, at the end of the week coming out in terms of kind of new, uh, non-farm payroll numbers, right. We had an additional thousand added, which is, which is great news, um, in terms of things moving in in the right direction.
00:05:16 Yeah, I mean, you've got an unemployment rate that's basically half, I think, I think you were at like 14%. Some had it even higher depending on how you counted furloughs and how you counted like underemployed, but it seems like it went from 14 to seven, so that's, that, that's more optimism. Obviously we've got wood shop, I think that's gonna be the theme of this conversation, but, but it's another really positive data point
00:05:38 For sure. Um, yeah, no, we, we definitely saw it drop down below, below 7% to, to the, the 6.9. Um, also, I know we were talking, um, earlier kind of as our ongoing topic about kind of travel and what's happening there. Um, yeah, the TSA numbers, you know, uh, average per the week, week was about at that 36% that we, that we've seen. But if we looked at kind of the end of the week after some of maybe that, you know, uh, the election stuff was outta the way mm-hmm. <affirmative>, we actually, the numbers that were 41% of huge compared to last year, which is big. So it, it seems to be kind of trending slowly. Um, and that
00:06:13 Yeah. And that's, and that's what we need. I mean, look, we're not gonna come outta this overnight, but if we can build confidence, you know, move a out and lift a stone kind of a thing and just continued positive numbers, I think that's good. I know Malcolm and I have been traveling, uh, we were in Boise and Reno together last week, and so it felt really good to, you know, be in markets and looking at properties. Um, I was in San Fran a couple weeks ago. He was in Phoenix. I know he is going up to PortAllander tomorrow to meet with Ian, which is gonna be great. Um, cause we haven't, you know, yet may haven't seen each other in a long time. So we're all, we're all pretty excited about that. And, and look, there's no question that this has gonna have some impact, um, on the real estate industry and, and you know, I think most specifically hotel owners, you know, are ones that are really focused on these data points, you know, so continued positive travel news of a vaccine. Um, you know, and I'm already hearing that, you know, you might get your first, you know, sort of in-person conferences starting in the fourth quarter of next year. I, I wasn't hearing that to date. Yeah, I was
00:07:13 Sure
00:07:13 22, 23, you know, for the group in corporate hotels, which are obviously the ones that have been hit hardest by this. So, you know, to hear this now, I think is just incredibly optimistic for the sector. And then, you know, raises questions as to, you know, is there now an endgame, um, you know, for covid distress product types are, are you not going to see big notes sold at a discount here? Um, are you going to see more lender forbearance, um, or accruals to keep property going? Um, are you going to see rescue capital? But maybe not at the cost of capital that we thought it would be, which was, you know, the circa 20%, you know, range where we saw some deals get done, but really very few, you know, are you now gonna see it, I don't know, in the low teens range where it has to come in, uh, when it has to come in. So, you know, all of a sudden, you know, with one big announcement, um, there, there's a very positive ripple effect, um, you know, into the more distressed segments of real estate that have been hurt by Covid.
00:08:13 Definitely. You know, I think the, the positive kind of news that's come out, you know, it's, it's shown that there is a kind of a light at the end of the tunnel and it, it seems to be reach, um, which, you know, is, is just such great news. Um, at the the same time though, I mean, if, if I think about here in Portland, I know they just announced, um, just given the, the kind of increased amount of Covid cases that, you know, we're going into pause. I mean, not similar lockdowns that we had at the beginning, but you know, they're, they're putting some more restrictions in place, um, to see if we can bring down these cases. So it'll be interesting to see how that plays out in, in other markets as well.
00:08:48 You know, uh, I think all eyes on Utah at the moment Yep. If they're governor basically passing, uh, I guess a state executive order requiring masks, um, you know, in all outdoor spaces. Um, we haven't seen that in California. Um, I don't know if you guys have seen that in Oregon. I I don't think most states have seen that. Yeah, they're obviously very concerned and, and you know, the winter months are on us. I know there's a foot of snow and Mammoth now, and, you know, imagine that there's, there is or is going to be snow across the mountain stage shortly. So that, that is something to, to watch for for sure. This just clearly doesn't mean that covid, um, goes away. It just sort of, you know, gives us, uh, perspective on an endgame. So yeah, we, we, we still need to be careful
00:09:29 Exactly. It, it provides kind of a little more clarity on, on what that timing may look like. Well, Zack, you know, I appreciate the, the time today, as always. It was great, great chatting. Um, you know, I wish you safe travels ahead as you mentioned, you'll be hitting the road, um, yeah. And next week I believe it's gonna be me, Malcolm, and Ian back here, um, for the StreetBeats Capital market, so
00:09:50 Everybody Yeah, well I know he is looking forward to it, and thank you Anna-Marie. And I'll say this is probably the happiest StreetBeats I've done in, oh, I don't know, seven or eight months. So, uh, we'll take it.
00:10:00 All right. Appreciate it. Thanks so much.
00:10:01 Awesome. All right. Take care.
00:00:37 It's been a huge week <laugh> with, with probably, you know, some certainty in terms of the election outcome. And it's almost like a positive one too. And I don't think we've had like, good news, and I'm not saying it in a partisan way, just good news from a all right, we have certainty and we kind of know what things are looking at. And then just some incredible news with respect to Pfizer and some small, also good news tacked on in the end with Eli Lilly's experimental antibody treatment, which I think is good too. But sure, no question that at Pfizer was the big news. You saw a massive pop in the stock market yesterday, uh, 4% pop in the market overall. I think a m c stock was up something like 50% Yeah. In one day. So they had been holding out for some great news, which they finally got.
00:01:23 Airline stocks were up, I think Delta was 20%. And then in the REITs, Simon May, rich Westfield all up over 20%. So just an incredible rally around, you know, positivity for some end to Covid and maybe some election certainty where there was, you know, a lot of fear that, you know, who knows what it would look like, you know, post facto. But so far it seems like it's holding up well, big rally in the treasury market also, you know, up 20 bips yesterday in widening of spreads from like a 75 basis point tenure to a 95 basis point. Uh, you know, tenure. I don't know if that sticks, but, um, you know, it's something to watch. So huge week, and I think we're all, we're all just really, really excited by Pfizer.
00:02:07 Oh, for sure. I think, you know, it's, it's great news to see that especially, you know, I think going into this, people were worried that, you know, is the, the vaccine is gonna be, you know, the 50% efficiency, like something, right? What you see for the flu vaccine, which
00:02:19 Staggering
00:02:20 The, the 90% is, is huge. Um, well, with that though, I mean there's still, you know, the, the whole looking forward, you know, we're gonna have to get this distributed. Um, and, you know, previously, yeah, um, for most kind of vaccine programs is generally, you know, manage over years and here, you know, we have to approach something where we wanna get this out as quickly as possible, get it distributed to people, um, and there's a lot of moving parts in that distribution that has to come into place. So it's, it's, you know, probably gonna take, take some time. It's not gonna be immediate, but this vaccine gets approved and we're good to go. So I think, um, you know, as we look specifically kind of at commercial real estate and kind of those office retail sectors, you know, I think it's still gonna be a little time before it gets back to normal, but this is definitely great news.
00:03:06 I, no question. And look, even if it's not a 90% effective rate and it's 70%, I think we'll all still take it and be really happy. Yep. And, and it's gonna take time and it'll probably be triage and how it's distributed. I imagine first responders get it first probably followed by, you know, elderly and people who are at risk followed by everyone else. But I agree with you, just the thought of knowing that it's out there is going to help. I just think like we needed just a positive, you know, psychological week like we had this week, which we haven't had really in a long time. And, and this is going on while there are some surges that are occurring too, and, you know, I think it's gonna be tough, you know, with respect to colder climates and, you know, indoor dining and kind of figuring all that out.
00:03:50 But, but knowing that there's some light at the end of the tunnel, I just think is gonna go a long way psychologically into the markets. I think, you know, continued, um, fed support, um, is, is gonna be huge and I don't see that going away, whether it's keeping interest rates, lows or purchasing in all types of securities, treasuries, mortgage bonds, corporate bonds, um, you know, I think, I think that's gonna help. And look, I, I think also potential for the next stimulus is gonna help. I, I don't know if it's gonna happen in a lame duck session. I, I, I don't think so from latest I read, but there seems to be some market optimism that Biden and McConnell, uh, president-elect Biden, uh, and McConnell run the Senate, um, if he runs the Senate, um, will be able to, you know, hammer out some sort of deal because they've worked together for, I don't know, 30 or 40 years and something should happen. So I, I think that's positive too. And I think, I think more stimulus is needed over that near term, uh, you know, help with the economy in general and maybe even some real estate asset classes. So, you know, we're pretty focused on, on seeing, you know, how that kind of unfolds, you know, over the coming weeks.
00:04:53 Yeah, definitely. I know, I, I think I heard that, you know, there's hope that maybe we get something by Christmas in terms of the stimulus. We'll, we'll see kind of what plays out there, but definitely something we're watching last week too, at the end of the week coming out in terms of kind of new, uh, non-farm payroll numbers, right. We had an additional thousand added, which is, which is great news, um, in terms of things moving in in the right direction.
00:05:16 Yeah, I mean, you've got an unemployment rate that's basically half, I think, I think you were at like 14%. Some had it even higher depending on how you counted furloughs and how you counted like underemployed, but it seems like it went from 14 to seven, so that's, that, that's more optimism. Obviously we've got wood shop, I think that's gonna be the theme of this conversation, but, but it's another really positive data point
00:05:38 For sure. Um, yeah, no, we, we definitely saw it drop down below, below 7% to, to the, the 6.9. Um, also, I know we were talking, um, earlier kind of as our ongoing topic about kind of travel and what's happening there. Um, yeah, the TSA numbers, you know, uh, average per the week, week was about at that 36% that we, that we've seen. But if we looked at kind of the end of the week after some of maybe that, you know, uh, the election stuff was outta the way mm-hmm. <affirmative>, we actually, the numbers that were 41% of huge compared to last year, which is big. So it, it seems to be kind of trending slowly. Um, and that
00:06:13 Yeah. And that's, and that's what we need. I mean, look, we're not gonna come outta this overnight, but if we can build confidence, you know, move a out and lift a stone kind of a thing and just continued positive numbers, I think that's good. I know Malcolm and I have been traveling, uh, we were in Boise and Reno together last week, and so it felt really good to, you know, be in markets and looking at properties. Um, I was in San Fran a couple weeks ago. He was in Phoenix. I know he is going up to PortAllander tomorrow to meet with Ian, which is gonna be great. Um, cause we haven't, you know, yet may haven't seen each other in a long time. So we're all, we're all pretty excited about that. And, and look, there's no question that this has gonna have some impact, um, on the real estate industry and, and you know, I think most specifically hotel owners, you know, are ones that are really focused on these data points, you know, so continued positive travel news of a vaccine. Um, you know, and I'm already hearing that, you know, you might get your first, you know, sort of in-person conferences starting in the fourth quarter of next year. I, I wasn't hearing that to date. Yeah, I was
00:07:13 Sure
00:07:13 22, 23, you know, for the group in corporate hotels, which are obviously the ones that have been hit hardest by this. So, you know, to hear this now, I think is just incredibly optimistic for the sector. And then, you know, raises questions as to, you know, is there now an endgame, um, you know, for covid distress product types are, are you not going to see big notes sold at a discount here? Um, are you going to see more lender forbearance, um, or accruals to keep property going? Um, are you going to see rescue capital? But maybe not at the cost of capital that we thought it would be, which was, you know, the circa 20%, you know, range where we saw some deals get done, but really very few, you know, are you now gonna see it, I don't know, in the low teens range where it has to come in, uh, when it has to come in. So, you know, all of a sudden, you know, with one big announcement, um, there, there's a very positive ripple effect, um, you know, into the more distressed segments of real estate that have been hurt by Covid.
00:08:13 Definitely. You know, I think the, the positive kind of news that's come out, you know, it's, it's shown that there is a kind of a light at the end of the tunnel and it, it seems to be reach, um, which, you know, is, is just such great news. Um, at the the same time though, I mean, if, if I think about here in Portland, I know they just announced, um, just given the, the kind of increased amount of Covid cases that, you know, we're going into pause. I mean, not similar lockdowns that we had at the beginning, but you know, they're, they're putting some more restrictions in place, um, to see if we can bring down these cases. So it'll be interesting to see how that plays out in, in other markets as well.
00:08:48 You know, uh, I think all eyes on Utah at the moment Yep. If they're governor basically passing, uh, I guess a state executive order requiring masks, um, you know, in all outdoor spaces. Um, we haven't seen that in California. Um, I don't know if you guys have seen that in Oregon. I I don't think most states have seen that. Yeah, they're obviously very concerned and, and you know, the winter months are on us. I know there's a foot of snow and Mammoth now, and, you know, imagine that there's, there is or is going to be snow across the mountain stage shortly. So that, that is something to, to watch for for sure. This just clearly doesn't mean that covid, um, goes away. It just sort of, you know, gives us, uh, perspective on an endgame. So yeah, we, we, we still need to be careful
00:09:29 Exactly. It, it provides kind of a little more clarity on, on what that timing may look like. Well, Zack, you know, I appreciate the, the time today, as always. It was great, great chatting. Um, you know, I wish you safe travels ahead as you mentioned, you'll be hitting the road, um, yeah. And next week I believe it's gonna be me, Malcolm, and Ian back here, um, for the StreetBeats Capital market, so
00:09:50 Everybody Yeah, well I know he is looking forward to it, and thank you Anna-Marie. And I'll say this is probably the happiest StreetBeats I've done in, oh, I don't know, seven or eight months. So, uh, we'll take it.
00:10:00 All right. Appreciate it. Thanks so much.
00:10:01 Awesome. All right. Take care.