CRE News Hour 8/2/2019
From the business desk at st broadcast news this is the c. arena news hour. I'm steve lubeck. It's friday august second twenty nineteen in this week's edition of the sierra news news hour considerations for high net worth investors looking at qualified opportunities zone funds has potential investments. We'll take a tour of the discovery discovery labs a scientific research facility near philadelphia that hopes to keep life sciences companies in the property from the workbench start up to whole whole buildings of research and manufacturing and we'll talk with an atlanta startup that wants to make small investors into hotel owners with room discounts as part of the benefits. We'll be back with the top cr news stories right after these messages turn earn your podcasting passion into profits the book the business of podcasting describes the business side of podcasting including how to become a professional national podcast. You'll learn about position your clients expertise who podcasting to plus the best business models how to find clients and much more visit the the business of podcasting dot com oh today you can't wait for the media to cover your company buzney. You have to be the media. Take advantage of the power of audio and video. It's the best way to showcase your expertise to prospective customers. Let the lupatkin you bet can media companies handled the technical side. We're award winning audio and video producers. We can help you produce podcasts and video programs remotely or in our fully fully equipped studio in cherry hill visit being the media dot com for more information. Welcome back to the see our news hour. We hope you're enjoying our broadcasts. We like to ask for your support to keep these programs in production visit state broadcast news dot com and click on the patriot button on the right side of the page to pledge some financial support to the sierra news hour and of course if we have story suggestions or comments on the reporting that we're doing drop me a line. My email addresses steve at st broadcast news dot com now. Let's take a look at some of the news stories breaking in the commercial real estate markets as expected last week the federal reserve cut the federal funds rate by twenty twenty five basis points to arrange of two to two and a quarter percent. The cut represented a marked change in the direction of monetary policy in the first half of twenty nineteen eighteen following a hike of twenty five basis points in december spencer. Leave the chairman of c._b._r._e.'s america's research and a senior economic adviser to the firm. Tom thinks it's a good sign for the commercial real estate industry the current state of the u._s. Economy remains supportive of commercial real estate fundamentals as uncertainty and slower slower growth way on returns and other asset classes the relative attractiveness of u._s. Real estate will influence capital flows lower hedging costs will also support more international investment investment into u._s. Property markets today's fed rate cut will support these dynamics c._b._r._e. Expects continued growth and lower than expected interest traits and growth closer to its longer term trend of two percent in twenty nineteen bain capital real estate the real estate investing business of bain capital. It'll sold a one point. Three four million square foot corps life science portfolio in the heart of the research triangle. That's in north carolina. It's one of the top innovation hubs in the u._s. The portfolio consists of eighteen buildings on four campuses and bain sold it to its partner. Longfellow strategic value fund in a transaction action valued at about four hundred five million dollars. The ninety four percent leased portfolios home to some of the world's leading life science innovators including genetic research firms top ranked clinical research organizations and leading agriculture technology companies bain capital real estate started to build the portfolio with longfellow in twenty a fourteen since then the teams created namic ecosystem of life science healthcare and technology tenants that enjoy state of the art buildouts and a robust mix of modern amenities trans western commercial services is expanding its healthcare advisory service teams exclusive leasing property management and construction management assignment for a medical medical office portfolio owned by american healthcare investors. That's a real estate. Investment trust in addition to the original fifteen assets totalling about four hundred forty four thousand square feet in atlanta the teams now going to provide services for six other properties. The twenty one asset assignment now spans almost eight hundred thousand square feet with an and overall occupancy of eighty eight percent the newly assigned properties include three medical office buildings totaling two hundred eighteen thousand square feet in cullman alabama a thirty thousand square foot medical office building homeward alabama a fully occupied forty three thousand square foot medical office in cell koga alabama and a forty five thousand thousand square foot medical office building in mount juliet tennessee common grounds workplaces signed a long term lease for sixty two thousand square feet in the thirty two story seventeen nineteen hundred market building in the heart of philadelphia's center city. The workplace is scheduled to open in late. January twenty twenty common grounds as an enterprise grade workplace workplace as a service company collaborating with office owners and providing flexible space in co working solutions in multiple u._s. Cities common grounds will build the flexible work space as on two floors in the recently renovated eight hundred fifty thousand square foot building. It's located two blocks west of suburban station. The seventeen hundred market building provides hides quick access to regional rail and subway systems in philadelphia. Come and grounds announced long term leases this year of over two hundred sixty four thousand square feet in midtown town atlanta. Los angeles is financial district seattle's south lake union and to washington d._c. Locations in twenty nineteen common grounds opened new workspace. He's in minneapolis portland and salt lake city and it has three additional locations opening this summer with nine more under construction investment management company carter will have a bird's words. I view of the new york financial district. The firm signed a seven year lease for thirty six thousand square feet taking the entire eighty first floor of one world trade center the seven year old companies relocating from offices at five fifteen greenwich street. Carta is an ownership network changing. How assets are acquired valued in transacted acted founded in two thousand twelve car manages five hundred seventy five billion dollars in equity for more than eleven thousand companies well towers buying summit medical groups forty three acres six building medical office campus in berkeley heights new jersey for one hundred and forty million dollars. The two hundred seventy thousand square foot campus will be mr least by summit under a new twenty year absolute net lease the campuses the largest and most comprehensive of five hubs in some. It's eighty location hub-and-spoke model l. It'll bring well towers total footprint with summit to more than five hundred thousand square feet the sales expected to close in the third quarter of twenty nineteen summit summit recently announced it would merge with city m._d. A leading urgent care platform with significant scale in the new york new jersey metro area jails healthcare capital the markets experts completed the sale of one hundred twenty six thousand square foot outpatient facility fully occupied by affiliates of duke health to venice for about eighty one million dollars fantasies s. and p. five hundred company and a leading real estate investment trust with a portfolio of about twelve hundred assets in the u._s. canada and the u._k. Okay the five story class. A outpatient healthcare facility was constructed. No opened in two thousand eighteen it consolidated fourteen critical sub specialties of the duke health enterprise located in the south point sub market of durham. The outpatient centers the largest off campus facility in the duke health outpatient network it houses. This is practices in neurology cardiology ophthalmology o._b._g._y._n. Pediatrics and primary care tech talent employment in the new york city metropolitan area a reach two hundred sixty four thousand jobs last year. That's a forty four percent increase since twenty eleven according to c._b._r._e. In its latest tech talent viewpoint c._b._r._e. Says is the pace of growth is accelerating growing from an annual increase of two point two percent in twenty sixteen to three point three percent and twenty seventeen to four percent in two thousand eighteen. Nearly half of the growth in two thousand eighteen was in technology engineering related occupations which grew by substantial thirty nine percent meanwhile the the n. y. C. metro region so modest but steady increases across other tech occupations and continues to boast a deep pool of software developers and programmers the most. I highly skilled tech talent. The report based on c._b._r._e.'s north american scoring tech talent report also found the new york metro areas the largest producer of tech degree graduates in north america adding more than thirteen thousand new tech grads in twenty seventeen a growth rate of forty eight percent in the past five years. A couple of executive moves in the state of new jersey at agencies that deal with real estate issues. Donna renderos has been named executive director of the office of planning advocacy and secretary of the new jersey state planning commission renderos previously served as chief of administration for the new jersey housing and mortgage finance agency z. tycoon who was a guest on the july nineteenth episode of the sierra newshour has a new job ties been promoted to vice president for policy and communications at the new jersey economic development authority cooper who joined the f._d._a. In february will report to eda c._e._o. Tim sullivan. You're listening to the c._r._a. News hour from st broadcast news dot com qualified opportunity zones continue to be a huge topic in commercial real estate. They provide some fairly significant advantages for high net worth individuals. Kevin matt's is a partner at the law firm stroke stroke and levion. He's also a certified public. Accountant kevin specializes in domestic and international estate date and tax planning kevin water. Some of the key things that high net worth individuals need to keep in mind. Everybody's interested in opportunity. Zones high net worth with people clearly want to invest in them. What should they be thinking about. And how do they need to position their investments so that they don't find themselves running afoul of the rules. I've is very important for the high net worth individuals to understand <hes> the three significant tax benefits they can obtain and then from there be able to comprehend at least generally some the governing rules that apply so what i'm advising a client on there are three significant snippet benefits to bear in mind number. One is tax deferral saw. Someone asks -nificant gain. Let's just use round numbers because it's easier to illustrate with big numbers. Let's say someone has a twenty million dollar game okay so a nigga game and it could be a game back into uh early part of two thousand eighteen which may be more than one hundred eighty days ago <hes> but there's a rule that's in the proposed regulations and actually actually in the first trunch and said that if you had the game unless unless an election made otherwise and it's from a partnership or an s. corporation or or could also be a trustor states to pass through entity you can have an election to have the game treated as the trigger point as being the last day of the tax will year so that it could be as late as december thirty one twenty eighteen in that in that example if waters listen to this this this conversation later maybe we're talking december thirty one twenty nineteen but bear in mind so the hundred days and you could take that game and if you invest in qualified opportunity fund with an one hundred eighty days and money here by the way is fungible very importantly. It's not like a like kind exchange. <hes> where you have to have escrow funds you just simply invest an amount that equals the amount of capital bowl game that you have could be measurement questions <hes> but but putting that aside for now you put that into a qualified opportunity fund with one hundred eighty days and you're able to defer for that game until the early to occur of two days one is the date of ultimate disposition of being best in the qualified opportunity fund and these doc in trash proposed regulations that came out in april of this year provided some some color on on that and including potentially but then gifting context and the second the the ultimate outside date is december thirty one twenty twenty six so if you're holding the invest in the fund and and december thirty one twenty twenty six cubs along at that point in time the deferred gain comes do but not potentially all of it and also varies significantly they could. There's no interest charge on this so someone has to twenty million dollars gate again. Big numbers simply just to illustrate <hes> that adam outcomes do before putting aside basis adjustments comes december thirty one twenty twenty six so long as it's no earlier disposition would no interest charge whatsoever however so there's a significant benefit time value of money with i'm talking to the to the high worth individuals who has been saved their additional benefits beyond that so so you start out with a zero basis the rules tell us generally if you happen on to hold the interest in the qualified opportunity fund for five years you get ten percents step up in basis on the defer gain so ten percent of twenty million dollars in this example would be two million dollars. Step up <hes> if you happen to hold it for seven years and you with a december thirty one twenty twenty six outside they have investment done by december thirty one twenty nineteen eighteen to accomplish that you get additional five percent above back steep so you would have a total fifteen percent step up in basis <hes> under these assume facts back twenty million dollars for a game. That's <hes> that's three million dollars. Step up which reduces the amount of the gain from twenty million dollars to seventeen million billions so you've just by virtue of holding the interest in the fund this period of time not only do you achieve the furrow without interest charge but you actually reduce use the amount of the gate wanting to watch out for though talking to clutch we don't own with tax rates will be on capital gains. Come twenty twenty six bit it could be higher there could be lower that could be the same but you do get the benefits of deferral and you also do without interest charge and you also get the the potential step up partial step up in basis to eliminate part of it the third main <hes> benefit than that. I bet high then we'll discuss with <hes> my my my clients or high net worth individuals is that you wanna target if you can hold in the interest in the fund for ten years because once you get to ten years to get an additional benefit which is that if the fund goes up in value and at that point in time that will be after we're just ever thirty one twenty twenty six so you will pay the tax on the <hes> although again as mentioned before the amount of <hes> game could be potentially reduced deuce two basis adjustments but come after ten years any subsequent appreciation is completely tax-free <hes> and and that is potentially huge benefit now of course one was always considered. You never know if the fun up in value they could go down. Fortunately there's there's a rule that caps the amount of defer game at fair market value as of the relevant point in time which could be again if there's no prior disposition december thirty one twenty twenty six but if it were to go up say to just for round number purposes to fifty million dollars at that the point in time you'd be looking at fifty million dollars about realized stuff's good disposition a basis of twenty million dollars by virtue basis adjustments assignments due to what i mentioned before and also by virtue of december thirty one twenty twenty six at the deferred tax about coming to that's a thirty thirty million dollar game. If the individual happens to hold the interesting qualified opportunity fund at that point in time for ten years. That's a magic a number that thirty million dollar gain is completely <hes> tax free <hes> completely excluded from taxation so that's that's very powerful unlike unlike tax tax exempt organizations which have to have pre approval for their status but then every service that is not the case here that is apps that is not the case here to make it easy. There's effectively. There is a self certification process big qualified opportunity refunds simply files with its tax return and it's so it'd be a tax attorney were inferior in two thousand nineteen. It'd be a tax return filed in twenty twenty and i._r._s. Interest for him eighty nine ninety six bad says i meet their carbon being qualified opportunity fund in insofar as <hes> <hes> either domestic corporation or domestic partnership now importantly when leaving out here can't be a single member elsie. That's a disregarded entity. That's not allowed <music> out here. It has to be either domestic corporation or domestic partnership. You could have a sole shareholder be of a c. corporation or an s. corporation that could work too so so and then in addition to that there is ninety percents of asset test ninety percent of the assets according to statute that you have to be devoted to holding a qualified opportunities own property or interest in qualified options zone business that in turn owns uh-huh qualified opportunities and a property when i'm talking to clients and say well that sounds almost impossible to to meet how how are you going to know from day. One will fortunately be be <hes> two different trash proposed regulations that have come out have provided quite a bit of leeway here in guidance so first off up in the second trash proposed regulations first six months of cash. That's received the qualified opportunity fun so long as it's made sustained solely in cash cash equivalents or short-term data instruments and that's defied is not to exceed eighteen months it completely does not get considered the purposes of the ninety percent test. It doesn't taint it's completely. It's completely not considered so that keeps me way. They're the big benefit though oh comes when instead of having simply an investment of qualified opportunity fun qualified opportunity intern has investments in qualified the opportunities zone businesses so as i mentioned before the qualified opportunity fund can invest directly and property that's located in the opportunities on so-called economically distressed communities <hes> berry in mind as all based on the two thousand ten census which is now what nine years as this as this certain point in time in the rear view window so much judge for -cation has occurred in certain areas <hes> or it could be investment in a qualified alpine opportunities own business <hes> which and the second trash proposed regulations have provided some guidance as to it's pretty easy to figure out real estate is located is an opportunity zone if it's held by his own business but what if it's operating a brain trader business <hes> guidance has been provided concerning komo the other things that fifty percent gross income tested and various day parts were provided with the two the two key <hes> benefits that are provided the leeway items that were provided was number one be happy investment in the zone business only substantially all the assets have to a particular his own business. I have to be <hes> located in opportunities own. Substantially all is defined in the regulations as meeting seventy percent in this context i and the explanation provision to the first drudge propose regulations say what that really means is that it's ninety percent of the qualified opportunity fund or q oh f- level seventy percent at the qualified options of business level you multiply ninety percent by seventy percent you'll link after have effectively sixty three percents <hes> investment devoted to it and then secondly if you have his own business that's operating as they working capital exception. There's a whole series series. Requirements among requirements are <hes> that you can't have more than five percent of the assets beat on the in financial type asif asif but there's a big big exemption on the proposed regulations <hes> which was addressed both in the first and the second tractors that says that if you meet this this disqualification of of <hes> having a plan for the deployment of working capital over time over appear you could have the benefit of up to thirty one months wants to deploy working capital <hes> these the second trust proposed regulations also said he would be on that that if you you have a plan to deploy but he don't get government approval you can even go beyond that and that is extremely helpful right there so i think those are those are many any of the key points i'd like to emphasize <hes> at the outset in in discussing mismanages quality to opportunity zones with high net worth individuals and how they can go about taking they're taking me amount of their capital gains investing it and what to expect the one one thing i would notice one never has cristobal as far as how <hes> these investments will will play out <hes> the one thing we do. Juneau is that there will be a liquidity need. Come december thirty one twenty twenty six to pay the tax now again as i mentioned before the amount of tax could be reduced <hes> by judah basis adjustments. There's also a special rule that caps the amount of the game deferred at fair market value at that time so if you've be <hes> valued investment has gone down <hes> that's generally not a good thing but at least the amount of tax due gets gets reduced <hes> to to recapped it that the concern that one has to has to think through an clients need to be advised on his well december thirty one twenty twenty six six. That's for twenty twenty seven <hes>. How am i going to pay for tax. You need to have effectively thinks through a funding mechanism you have sufficient funds is to do it but other questions that arise well. What if you die now. I'm gonna stay planning lawyer. <hes> the rules provide that effectively ah income in respect to seed and <hes> concepts apply which means adapt is ordinarily not gonna be recognition of him be <hes> the the <hes> the taxation <hes> that was deferred carries over to ever happens to hold the interest in the fund on december thirty one twenty twenty sixth unless there is a prior inclusion of n._s. Defined and be a second tranche proposed regulations <hes> with a carryover of the holding building periods of five years seven year and also for purposes of of of ten if you if you happen to make it to ten years there's attacking a holding period end of the day though someone someone be at the estate or beneficiary who has been bequeath. Perhaps an interesting unqualified opportunity fund <hes> have to pay the tax at that time <hes> so that that needs to be planned for as well <hes> belva mentioned in discussing with high net worth individuals if we're talking about a general gifting plan <hes> the second truck proposed regulations took a very dim view of gifts from the point of view that this just as a general rule <hes> that's gonna be considered <hes> an inclusion events <hes> if done prior to december thirty one twenty twenty six however however and this is very significant if the gift happens to be to what's known as a grant or trust for federal income tax purposes which very generally generally as a as a trust that is treated as one the same as a grand tour <hes> for income tax purposes although it may be as a result of a taxable gift outside sided wins taxable estate for state a gift tax purposes. If it's too aggressive or trust that will not be considered an inclusion but that there are still some <hes> open issues concerning that i can tell you that <hes> american college which states council is working on follow up on on a comment letter ah that's designed to to flesh out and address and can broaden the scope with the exemptions there <hes> if especially in context of gifts <hes> but those are some of the concerns and some the items that that i will discuss with a high net worth individual who's considering <hes> <hes> employing are going gore investing equality so let me ask you this <hes> the benefits from investing in these vehicles seems to be very large for high net worth individuals <hes> and there is this sense that it sunsets in two thousand twenty six. Do you have any sense that the program is going to be extended attended a renewed and start over and how do people handle the investments if that happened would they just roll them over into a new vehicle or continue them as they are or how does that work well. That's a good question steep <hes> that involves to some extent crystal ball gazing that we do know a couple of things here. This is the one prevision in the task custom jobs. That was an accident twenty in late two thousand seventeen but actually was bipartisan so it was supported by among others <hes> cory booker a democrat democratic senator from new jersey. <hes> i know sean parker <hes> <hes> the former c._e._o. Of facebook founder of master was also a supporter of it <hes> so it is possible and again we can only right now do the law that's on the books but it's possible that that subsequent congress congress may decide to push back or have some sort of additional benefit beyond twenty twenty seven thirty one twenty twenty six x was important to bear in mind that even though the tax becomes do at that point in time again you do get the benefits of deferral you get the benefit of the basis adjustments if you've held for five or seven years and then completely aside from that if you happen to have held it for ten years even though he invested prior december thirty one twenty twenty six x so long as you ultimately dispose of it by no later than twenty forty seven so that's more than twenty years after that <hes> that's about twenty eight eight years from wherever you are right now you can still get the benefits of having a designation attached which means you get the benefit of the exclusion. <hes> i'll be subsequent appreciation appreciation from happyhiller for ten years so <hes> so yes december thirty one twenty twenty six is a day in the future <hes> at eddie one needs to be concerned with <hes> but you can still start now and achieved benefits including the basis step ups and the the exclusion if you hold for ten years even though it's well beyond twenty <hes> at least that's the solution will be on december thirty. What twenty twenty six well it sounds like a lot to think about and i appreciate you taking the time to talk about. Why pleasure steve kevin matt's is a partner in the law firm stroke stroke in love and and in new york city. You're listening to the c._r._e. News hour i'm steve lubec in the peaceful suburban setting reading between conshohocken and king of prussia in eastern pennsylvania about twenty minutes west of philadelphia m._l._p. Ventures is redeveloping glaxosmithkline's smithkline's one million square foot research campus and the nearby six hundred forty thousand square foot innovation at renaissance campus into the largest co working ecosystem for healthcare life sciences and technology enabled companies in the country large research campuses all across the country are facing the same kind of redeployment deployment challenges chemical and pharmaceutical research is expensive and time consuming but companies can no longer afford to maintain large research facilities on their own being able to convert these facilities into shared spaces like the highly successful bell works development in central new jersey is going to be critical of these complexes. Is there going to survive for research uses now unlike bell works however which has been redeveloped for independent companies working alongside each other but not necessarily together the discovery labs represents the first large-scale co working for innovation of its kind m._l._p.'s hoping that the best and the brightest minds in healthcare healthcare life sciences and technology enabled industries will rub shoulders and create energy driving innovation in one mass of team oriented workspace the discovery labs encourages planned impromptu meetings among c._e._o.'s and employees to spark creative thinking and a free exchange of ideas. We took a trip out out to the facility for a tour with audrey greenberg chief financial officer of m._l._p. Tell me a little bit about what we're looking at here. We've got some some renderings of <hes> how how this is going to be redeveloped. Yes we're standing in the k. Legacy worldwide are in deep headquarters. <hes> that we purchased and started started <hes> leasing in the last couple months we're looking at the renderings from gansler did a phenomenal job putting in millennial centric trick high ceilings glass corridors light throughout the building and creating a cluster and east king of prussia where we we are housing life science technology companies under one roof to create an ecosystem for innovation was this building originally used for research and development in the life science in space sciences building. Was it a single company. It was it was yes k. and what made them leave the building and make it available for development. There's an interesting revolution occurring right now within life science so a lot of the large pharmacy pharmaceutical companies are consolidating and downsizing the real estate holdings outsourcing. There are indeed to biotech start-ups. Why is that the research and development costs have escalated to two point two two billion dollars just to develop a drug from idea to commercialization it takes fifteen years and a majority of the ideas fail the the return on equity. The farmer gets on these operations is less than two percent. That doesn't work for wall street so what's been happening as they acquire companies that are later in stage with the f._d._a. Approval process and commercialize those products for them. Which is what they're great at so so they don't need the space the the research is done differently. It's done differently. They still need space. They still do research but they need less space and they need more efficient use of space so <hes> <hes> they have consolidated their operations to three or four facilities into one so how do you take the space and make it attractive to multiple multiple tenants and multiple uses well. It's all about collaboration given the cost to develop you have to work with other players in sharing the costs in <hes> coming up with ideas and outsourcing part of your research so a lot of these c._r._o.'s komo outsource research organizations and manufacturing organizations do a lot of the work for you from a are in d. and manufacturing perspective and being able to partner with them under one roof provides a synergistic atmosphere for development in the way we do that here is through these <hes> collaboration areas collaborations zones in addition to our discovery village which we can walk over here and i can show show it to you. We are creating what we call like. I said discovery village where we're having a gastro hotel. European food hall a brew pub ebben distillery activated rooftops a fun atmosphere for people to get together not just inside the office but outside the office to stir creativity tippety and innovation having a hotel on the property suggests that people we coming into staying for some period of time and they'll be traffic in and out that's right. That's correct and you know one of the greatest things about philadelphia and the location of this property is a proximity to an international airport lead a life science companies require that as part of their operations and transportation aspartame has specimens and the like so given that we're twenty minutes away and there's gonna be a lot of traffic at the site not just from our incubator. We've got one hundred and fifty thousand square foot incubator planned on the site but also from the large pharma and startup companies that are here as well or also on two hundred acres so we have a lot of building plan for the backyard what kind of building so we've got a million alien square feet internally with for lab office which refers with life science healthcare and tech enabled companies and the backyard. We're looking at <hes> manufacturing facilities naming namely a viral vector manufacturing facility viral vectors are a key part to the gene therapy process and cell therapy process. There's a up to an eighteen month. Wait for these factors all the outsource organizations our capacity to be able to provide these this valuable part of the genus cell therapy process process is helping to save lives and get therapies to the patients who need them. How soon do you expect the tennis to start moving in. We have attendant in the site g._s._k. <hes> is in the site and <hes> they have a cleanroom here. <hes> we are in final stages of negotiation with up to four hundred <hes> tenants four million square feet and it's been a very exciting process names that we're seeing so when do some of the others to to get here i would say <hes> we're going to start work in the next month or two and expect move ins shortly thereafter. We have some small tenants that are looking to move moving almost immediately in the next thirty to sixty days and some larger ones that have to do a little bit of planning. I so maybe six to nine months. We've got twelve interconnected buildings. They're all connected did view these class in glass enclosed corridors so you've got a lot of walking that you can do both internally and externally <hes>. We've got outside the buildings. We've got hiking trails running. Trails sports courts a helipad onsite for not just transportation executives is needed but also human specimens. A lot of the cells that are extracted from patients nations are tumors that are taken out require work immediately and are then transported back to the patient to be inserted into the human so the time line in the supply chain is very important a key feature of the campuses it self contained central utility plant which provides power steam and water utilities meeting scientific standards for all the labs on the site audrey explained the one billion dollar power plants importance to the property also at the site. We've got a cup is right here. A cup is a central utility plant which has dual grid electrical feed so if one of the substation because substations goes down the other kicks in and the cop in addition to being backed up by these two dual feeds also has a backup generator plan so it's important for life science to never go down and not awesome so they can do everything they can do everything on site and they can do it. Twenty four seven never lose power which is incredibly important when you're dealing with temperature controlled and humidity controlled environment a lot of these cleaners have high so specifications meaning the number of air changes per hour. It's important for the air to have a certain number or lack of a certain number of particles in it so it's important to always be run and always be putting the live work play environment of the discovery labs offers open spaces where tenants can cultivate a sense of community. The plan includes world class coffeeshops a ten million dollar conference inference center videoconferencing and two hundred seventy five seat auditorium with adjoining meeting at education rooms so we've got this auditorium which has stadium seating fits turner fifty people we've had many events here already and as you know oh millennials and executives in my generation love constant training and development you have to stay current in an atmosphere like this and in an industry that's constantly instantly changing at an exponential rate three times moore's law you've got to be constantly learning and this provides a setting an ecosystem for that we not only do we have this auditorium but we have several several breakout rooms and another training facility where actually in two weeks you'll be the first to here. We have the country representatives coming from around the globe that represent the state of pennsylvania trying to convince companies to come do business here so it's going to be an exciting event warehousing talking about the property and hearing some of the concerns and and some of the opportunities that the state of pennsylvania offers the discovery libs unique design also includes a fourteen thousand square foot state of the art fitness center enter with cardio and weight training equipment yoga pilates classes as well as outdoor options including tennis basketball and more than two miles of walking paths other other features include an outdoor amphitheater high end onsite restaurants and complimentary transportation to train lines. You know twenty minutes from downtown philadelphia very near to the route two corridor where seventy percent of the bio pharma companies are located. <hes> in the suburbs of philadelphia are really a thriving area. Were we're calling this area contract. Russia which is five minutes from conshohocken. You know five minutes to the king of prussia mall where there's incredible food opportunities dining and shopping we <hes> one of the greatest things about the site in my opinion is the proximity to public transportation got the radnor train station norristown line. You've got all all of these septa lines where we're going to be providing shuttle service and uber activated type shuttle service not only do we <hes> commensurate three eight are stop signs in our pickup times with train schedules but also wants somebody arise if they want to go to the airport if they want to go to the mall we're happy to provide that services well it kind of makes the <hes> <hes> transit agencies have to think differently because traditionally those stations were not intended or envisioned for people coming in in the morning rush power to go to work. They were intended for people going into center city from those locations. How are you working with. Are you working with the transit agencies and what kind of you've cooperation or you're getting there. They're very cooperative. We have been working with the state of the commonwealth. <hes> the governor's action team has been quite helpful. The economic development council also <hes> we are working. We're putting a boulevard in and they've been pen dot has been working with us on that and <hes> we're we're going to begin conversations and have already been introduced to <hes> the right players in that area to help us on that what about in terms of the <hes> the local environment the neighbors numbers <hes> sweetland road is not a very big road but there seems to be an enormous amount of traffic on it. I was surprised to see all of the eighteen wheelers that use that road going awake through what seems to be a residential kind of an area. This is zoned industrial so we're on two hundred acres. It's industrial <hes> we an in fact on the campus next door. Most of the manufacturing occurs for g._s._k. So although there are residential areas around here which i find to be an enticing part of the site because you've got brynn marr radnor and villanova very close but you also have conshohocken and some of these other areas so all prices of housing stock which makes it very attractive for the workforce here where we expect to have you know somewhere between three and five thousand employees we've got the twelve buildings here plus the cup plus. The buildings were putting in the backyard and that's the g._s._k. Campus that's discovery labs. We also have innovation at renaissance which is fourteen buildings across the street which are housed by very largely science companies including chop jefferson med risk amir source bergen. We're connecting those campuses to create one ecosystem and mm providing our amenities to both campuses so it just expands a footprint expanded traffic and also creates a more cohesive and exciting atmosphere for around here audrey greenburg who took us on the tour as chief financial officer of m._l._p. Ventures which is redeveloping the discovery labs and if you want more information about the discovery labs visit the discovery labs dot com. We'll be back in a minute. This is rabbi richard address. S. join us for our podcast series from jewish sacred aging titled seekers of meaning will explore some of the issues and events that impact ourselves our families. He's in our jewish world at large in light of the current revolution in eiji. The secrets of meaning podcast airs every friday morning at eight a._m. At jewish sacred aging dot dot com <music> today. You can't wait for the media to cover your company. Anthony you have to be the media. Take advantage of the power of audio and video. It's the best way to showcase your expertise to prospective customers. Let the luebeck lubeck in media companies handled the technical side. We're award winning audio and video producers. We can help you produce podcasts and video programs remotely or in our fully fully equipped studio in cherry hill visit being the media dot com for more information atlanta-based based startup hotelier co. Thanks it can make affordable hotel ownership a reality for small investors through crowdfunding not just for for accredited institutional investors hotel co. Began accepting investors in july under regulation a funding laws to bring investors early stage hotel development opportunities with a specific focus on boutique luxury lifestyle hotels and they started close to our stomping grounds in south jersey you down in the cape may area once an investor invests in a hotel co. Property he or she will own part of that hotel and gets a discount on stays as the property and of course any potential financial gains from that investment. Nathan kivy is the ceo of hotel co. Nathan thanks for joining us on the c._r._m. News hour tell us a little bit about hotel co. And what's different about this crowdfunding approach to people investing in hotels sure thanks thanks steve <hes> so until you co is a creation of fund management company and we're excited just to be able to do it in a way that uses regulation i plus crowd funding and what that means is any united states citizen over the age age of eighteen can actually participate in the ownership what's exciting about this is we're actually allowing access to hotel assets but that otherwise would have being <hes> just possible institutional money or high net worth individuals and so we're able to bring bring an asset class <hes> people to actually invest in and become part owners in something that we're hoping is exciting for them as it is for us. Now your materials indicate that people can start with an investment as little as twenty five hundred dollars. <hes> are there any particular qualification requirements that investors investors have to meet like in other <hes> crowdfunding or private placement situations with the private placement through regulation. I you can actually make the investment huddle as low as you like. So what we're actually doing is a post on is he's the kite my project and the reason was actually chosen a two and a half thousand dollar is because the mock it so typically we'll trade in peak season around six hundred dollars for an average night and we're actually trying to have some focus i mean this meant that the people that invest best <hes> also gang to be guests hotel <hes> so in the future we look to actually do some funds that a an easier entry point so even the two thousand five hundred and then the only requirement that we have in terms of the people investing is the unaccredited investment convince invest up to a ten percent of the annual salary or net worth so one of the requirements when people go swing this is like putting some information mation to do with their financial situation so that we know <hes> what the would be for their investment and one of the reasons that is <music> is ensuring that they're putting themselves in a position <hes> could cause financial stress to them. <hes> should invest in something that the form all active now the first property as you mentioned is a ewing hotel which is a boutique hotel scheduled to open in twenty twenty one in cape may or actually west cape may in the very southern tip of new jersey. What made you choose this particular property for the first investments and what are some of the things investors should be looking for show so the exciting thing about kite ni- is it. It was a property that the people that are in the land <hes> mocking any had already gone through the process to have it approved to build a hotel and you know development. That's one of the most difficult hacks so <hes> those are teak for that part of being done. They were also understanding. The standing of the process involved to do this through crowdfunding. <hes> because there's a timing issue is helping it takes to go through the s._e._c. Persons and one of the other things that decide lent itself to is an assemblage so the property actually sits on a block that has a number of other a residential and been breakfast style accommodations and it's all commercial so <hes> the potential in this one is to we do a large assemblage and build a big hotel asset so it's a pretty exciting project the town itself <hes> tighten height. My is a resort destination <hes> somewhat seasonal but it's an absolutely beautiful town so we're excited to be able to bring something to people that were hoping pays heritage to the historic nature of the site but also provide some testing class accommodation that area and we're very very familiar with cape. May it's not too far from our studios in cherry hill <hes> which is <hes> about an hour and a half north of cape. May i would guess <hes> tell tell us a little bit about the reason why hotels are different you you indicate that <hes> there's a different calculation about the return on an investment in hotels compared with other commercial real estate talk a little bit about that so the reason high tells a different to other guess commercial properties is the fact that you return is not only based on the land and the asset but it's also based based on the business operations and the hotel <hes> the operation of the hotel so when you blend real estate with business operations we we actually believe he gives you so small areas that you can leverage the better returns and we're actually fortunate to partner with <hes> hotel management company denise velo who have very strong track record and then performance on other assets we have been involved in has been very successful so where we believe that they can bring that same sort of success to these asset so when you have an understanding of the real estate side had the landside location as well as the business operation it lends itself to a return that is not the in line with what a commercial cities and the other thing about a hotel is it's pressed daily so hotel rights can shift in real time with the market which also is something that is in the downturns hotels do get impacted faster than a commercial property however when the market is turning around or an upswing the benefits or you know the the improvement in the market is also felt a look quivering heights l. so it's a really good <hes> real estate play especially for people that have other real estate holdings to do this fully now the <hes> investor's <hes> who participate in this project will also in addition to potentially seeing capital gains on their investments will also get discounts if they wanna stay the hotel yes so what we're trying to encourages people to use the hotel that they upheld entering and and the way we do that is giving discounts to book directly to tell the great thing about that is the prophet of the hotel so is not diluted because of that <hes> discount because what would typically happen in america like cape may is p. Food get onto an online travel agent will search engine they book and typically those online travel agents can take anywhere from eighteen to twenty five percents for booking through that so having someone directly giving them the benefits of what would otherwise be asleep pay to another party goes directly back in the pocket of the best and that goes to stay there in hotel so we think it's a really interesting loyalty klay in a kind of loyalty platform that hasn't really been tested in the market before so we're very excited to be the first one to try something like that so assuming that <hes> it's met with a positive reaction from investors <hes>. Where do you see yourself. Taking the the fund the investment <hes> capability in the future so what we're actually looking at in the future is with talking to a boutique take lifestyle brand at the moment. We're hoping that early next year we launch a fund that specifically targets <hes> operating assets and <hes> an existing hotel. That's being converted to be take grant. We are also looking at bringing mean another fund that will be less style product towards the end of two thousand and twenty and then once the platform in the u._s. Is set up the hotel. Operating novello actually has a very strong presence in the united kingdom and stuff africa and they're just set up offices in and you buy in hong kong. I hope is that by two thousand twenty one. We start to look at an expansion globally and take this to the rest of the world. Do you have any plans for any other <hes> specific sites in the u._s. At this point we do have a couple of sites under contract but <hes> we have have signed confidentiality agreements. Hopefully something we can some exciting news that we can bring forward in the next two to three months. Nathan kitty is the c._e._o. Uh-huh of hotel liuqiu he joined us from his office in atlanta and you can get more information about hotel co. At hotel co dot com and and will include the link in the show notes at st broadcast news dot com. Thanks for being with us on the podcast pen. That'll wrap things up for this edition of the c._r._m. News hour you can send your comments suggestions story ideas s. two steve at st broadcast news dot com where you can leave an audio comment for us using the voicemail icon on the homepage at st broadcast kissed news dot com and we take this program in studio a at st broadcast news in cherry hill new jersey join us again for the next episode of the cr news <music> our next friday at eight a._m. Eastern time at st broadcast news dot com or wherever you get your podcasts. This is steve lou beckon. We'll see you out there on the net. Take good care.