MoSys and Peraso Technologies Announce Definitive Agreement for Business

September 15, 2021

Combined Company to Capitalize on Significant Growth in 5G,

Targeting Opportunities in mmWave and Multi-Edge Computing

 

SAN JOSE, CA and TORONTO, ON / ACCESSWIRE / September 15, 2021 / MoSys, Inc. (NASDAQ:MOSY) (“MoSys”), a provider of semiconductor solutions that enable fast, intelligent data access for cloud, networking, security and communications systems, and Peraso Technologies Inc. (“Peraso”), a global leader in the development of 5G mmWave silicon devices, announced today the signing of a definitive agreement (the “Arrangement Agreement”) for a business combination by way of a statutory plan of arrangement under the Business Corporations Act (Ontario) (the “Business Combination”). Upon the closing of the Business Combination (the “Closing”), the stockholders of Peraso are expected to hold, on a fully-diluted basis, a 61% equity interest in the combined company, with the remaining 39% equity interest to be retained by the stockholders of MoSys, assuming the Escrow Release Conditions (as defined below) are satisfied, or a 57.7% equity interest by the stockholders of Peraso and a 42.3% equity interest by the stockholders of MoSys, assuming the Escrow Release Conditions are not satisfied, in each case, as described further below. On Closing, MoSys will change its name to Peraso Inc. and expects shares of its common stock to continue to trade on the Nasdaq Capital Market under the new ticker symbol PRSO. The Arrangement Agreement and the Business Combination have been approved by MoSys’ and Peraso’s boards of directors and are subject to approval by MoSys’ and Peraso’s stockholders. The Business Combination is expected to close in the fourth quarter of 2021.

 

Management Commentary

“We are pleased to sign the Arrangement Agreement with Peraso, as we believe the Business Combination will provide substantial opportunities for our business across expanded high-growth markets,” stated Dan Lewis, MoSys’ Chief Executive Officer. “The combination will broaden our product lines, add operating scale and unlock potential selling synergies across common customers. Together, the company is uniquely positioned to target high-growth opportunities in 5G, as well as telecom and data networks. The deployment of 5G faces two key bottlenecks: the sub-6Ghz spectrum is exhausted and software-only solutions have become a limiting factor in effectively accelerating network hardware. Peraso’s market-leading mmWave technology, combined with MoSys’ accelerator engine ICs and virtual accelerator engine IP, directly addresses these bottlenecks and the significant spectrum needs of future 5G networks. With a combined IP portfolio of 130 patents, our technologies and solutions provide more bandwidth, better latency and faster throughput to meet the increased requirements of the more than 70 billion connected devices forecasted by 2030, as well as significantly expanded growth prospects beyond what MoSys can achieve as a standalone company.”

“It has been our goal at Peraso to develop market-leading technologies addressing the needs of the 5G market,” stated Ronald Glibbery, Chief Executive Officer of Peraso. “By joining with MoSys, we believe we can deliver a broader set of solutions to our combined customer base, using complementary technologies to address the networking and communication needs of our customers from the edge to the core and into the cloud. As a Nasdaq-listed company, Peraso will gain increased visibility and recognition, along with broader access to the global capital markets, which will support our long-term growth initiatives given the forecasted ramp in mmWave and 5G networks in the coming years. We believe the Business Combination provides meaningful benefit to both companies, their stockholders and other stakeholders. I am excited to become CEO of the combined company and look forward to working closely with Dan and all of the other members of the MoSys and Peraso teams, as we move forward.”

 

Business Combination Summary

The following is a summary of the key terms of the pending Business Combination, as contemplated by the Arrangement Agreement. The current report on Form 8-K filed by MoSys, Inc. with the U.S. Securities and Exchange Commission (“SEC”) will contain additional information about the Business Combination. The Closing is subject to the satisfaction or waiver of customary closing conditions, including approvals by stockholders of MoSys and Peraso. There can be no assurances that the Business Combination will be consummated. Pertinent terms of the Business Combination include:

The Business Combination will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario), under which a Canadian subsidiary of MoSys will acquire the issued and outstanding shares of Peraso. Peraso will survive the Business Combination and become a wholly-owned subsidiary of MoSys.

Directors, officers and significant stockholders of Peraso and the directors and officers of MoSys have entered into voting agreements under which the parties have agreed to vote their shares in favor of the Business Combination.

Peraso stockholders may elect to receive either shares of MoSys common stock or shares of a Canadian subsidiary of MoSys, which will be exchangeable into MoSys common stock (the “Exchangeable Shares”). Holders of Exchangeable Shares will be entitled to cast votes on matters for which holders of MoSys common stock are entitled to vote and will be entitled to receive dividends, if any, that are economically equivalent to the dividends, if any, declared by MoSys with respect to its common stock.

On a fully-diluted basis, the stockholders of Peraso will receive consideration of approximately 14.2 million shares of MoSys common stock or Exchangeable Shares on Closing, with approximately 1.8 million of such shares (the “Escrowed Shares”) to be deposited into escrow pursuant to the terms of an escrow agreement (the “Escrow Agreement”), such Escrowed Shares to be released to the stockholders of Peraso if, between 12 months and 36 months of the Closing, the common stock of the combined company achieves a VWAP (volume-weighted average price) of at least $8.57 per share for any 20 trading days within a period of 30 consecutive trading dates subject to earlier release upon a corporate sale or reorganization (the “Escrow Release Conditions”).

Prior to Closing, all debt of Peraso is to be converted into common stock or repaid in full, or will be reflected in an adjustment to the share exchange ratio.

The Arrangement Agreement also contains indemnification and termination provisions, and, under certain circumstances, requires the payment of a termination fee.

 

Management and Organization

The combined company will be led by Ronald Glibbery, Peraso’s CEO, with Dan Lewis, MoSys’ President and CEO, continuing to serve as President. The board of directors is expected to initially comprise five members, including three appointed by Peraso and two by MoSys.

 

Webcast Presentation

MoSys and Peraso invite all interested parties to view a webcast presentation by Ron Glibbery, Dan Lewis and Jim Sullivan for an overview of the combined company. The recorded presentation is available for viewing on the Investor Relations section of MoSys’ website or by clicking here.

 

Advisors

In connection with the Business Combination, Cassel Salpeter & Co. served as financial advisor to MoSys, and Mitchell, Silberberg and Knupp, LLP and Borden Ladner Gervais LLP served as legal counsel to MoSys. Evans and Evans served as financial advisor to Peraso and provided a fairness opinion to the board of directors of Peraso, and Stikeman Elliott LLP served as legal counsel to Peraso.

 

About MoSys, Inc.

MoSys, Inc. (NASDAQ:MOSY) provides both integrated circuits (ICs) and intellectual property (IP) solutions that enable fast, intelligent data access and decision making for a wide range of markets. MoSys’ primary product line is marketed under the Accelerator Engine name and includes the Bandwidth Engine IC products, which integrate its proprietary, 1T-SRAM high-density embedded memory and a highly efficient serial interface protocol resulting in a monolithic memory IC solution optimized for memory bandwidth and transaction access performance. In 2020, MoSys began offering for license its initial Virtual Accelerator Engine IP, which consists of software, firmware and related IP. The Virtual Accelerator Engine IP include multiple function accelerator platform products, which target specific application functions, initially Packet Inspection for routing, security and operations, and will use a common software interface to allow performance scalability over multiple hardware environments. For additional information on MoSys, Inc., please visit www.mosys.com.

 

About Peraso Technologies Inc.

Based in Toronto, Canada, Peraso is a fabless semiconductor company with a focus on the development of mmWave wireless technology and Wireless Gigabit (WiGig®) chipsets. Peraso is also a leading supplier of semiconductors in the PtP and PtMP markets. Since its inception in 2008, Peraso has developed a broad range of core competencies in the field of 5G mmWave semiconductors, including mmWave RF circuits, mmWave signal processing algorithms, beam forming and beam steering algorithms, real time calibration and system monitoring, low cost/high performance antenna technology and high volume production test capability. For additional information, please visit www.perasotech.com.

 

Additional Information and Where to Find It

A full description of the terms of the Business Combination will be provided in a proxy statement for the stockholders of MoSys (the “Proxy Statement”) to be filed with the SEC. MoSys urges stockholders, investors and other interested persons to read, when available, the preliminary Proxy Statement, as well as other documents filed with the SEC because these documents will contain important information about MoSys, Peraso, and the proposed Business Combination. The definitive Proxy Statement will be mailed to MoSys stockholders as of a record date to be established for voting on the proposed transaction. Stockholders will also be able to obtain a copy of the definitive Proxy Statement (when available), without charge, by directing a request to: MoSys, Inc, 2309 Bering Drive, San Jose, CA 95131, attention: CFO or by sending an e-mail to priv_IR@mosys.com. The preliminary and definitive versions of the Proxy Statement, once available, can also be obtained, without charge, at the SEC’s website (www.sec.gov).

 

Participants in Solicitation

Under SEC rules, MoSys, Peraso, and their respective directors, executive officers and other members of their management and employees may be deemed to be participants in the solicitation of proxies of MoSys’ stockholders in connection with the proposed Business Combination. Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of MoSys’ directors in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on March 18, 2021. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies to MoSys’ stockholders in connection with the proposed Business Combination will be set forth in the Proxy Statement for the proposed Business Combination when available. Information concerning the interests of MoSys’ and Peraso’s participants in the solicitation, which may, in some cases, be different than those of MoSys’ and Peraso’s stockholders generally, will be set forth in the Proxy Statement relating to the proposed Business Combination when it becomes available.

 

Non-Solicitation

This press release is not a proxy statement or solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed Business Combination and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of MoSys or Peraso, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

 

No Offer or Solicitation to Sell

This communication is for informational purposes and is not intended to, and shall not, constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the “safe harbor” created by those sections. All statements in this release that are not based on historical fact are “forward looking statements.” These statements may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “strategy,” “goal,” or “planned,” “seeks,” “may,” “might”, “will,” “expects,” “intends,” “believes,” “should,” and similar expressions, or the negative versions thereof, and which also may be identified by their context. All statements that address operating performance, development of the events, objectives or goals, refinement of strategy, and anticipation of certain behavior of stockholders in connection with MoSys, Peraso, or the Arrangement Agreement, the expected synergies, and other financial benefits from the Business Combination, that are not otherwise historical facts, are forward-looking statements.

There can be no guarantee that the proposed Business Combination described in this press release will be completed, or that they will be completed as currently proposed, or at any particular time. Actual results may vary materially from those expressed or implied by the statements here due to changes in economic, business, competitive or regulatory factors, and other risks and uncertainties affecting the operation of the businesses of MoSys and Peraso. There are a number of specific factors related to the Business Combination, including:

  • The ability of MoSys and Peraso to obtain stockholder approval for the Business Combination and related transactions;
  • The ability of Peraso to obtain court approval for the plan of arrangement implementing the Business Combination;
  • The ability of the combined company to successfully maintain a Nasdaq Capital Market listing;
  • The ability of the combined company to successfully integrate the operations of MoSys and Peraso;
  • Conditions to the Closing that may not be satisfied or that the Business Combination may involve unexpected costs, liabilities, or delays;
  • The occurrence of any other risks to consummation of the Business Combination, including the risk that the Business Combination will not be consummated within the expected time period or any event, change or other circumstances that could give rise to the termination of the Arrangement Agreement;
  • Risks that the Business Combination disrupts current MoSys’ plans and operations or that the business or stock price of MoSys may suffer as a result of uncertainty surrounding the Business Combination;
  • Risks related to the COVID-19 pandemic, including public health requirements in response to the outbreak of COVID-19 and the impact on MoSys’ business and operations; and
  • MoSys or Peraso may be adversely affected by other economic, business, or competitive factors.

 

MoSys does not intend to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.

For further information:

Investor Relations Contact:

 

Shelton Group

Leanne K. Sievers | Jeffrey Schreiner

949-224-3874 | 512-243-8976

sheltonir@sheltongroup.com

 

MoSys, Inc. Contact:

Jim Sullivan, CFO

MoSys, Inc.

408-418-7500

jsullivan@mosys.com

 

Peraso Technologies Inc. Contact:

Ronald Glibbery, CEO

Peraso Technologies Inc.

416-637-1048

ronald@perasotech.com

 

SOURCE: MoSys, Inc.

 

Click here to read the full article.

Click here to read the PDF.

 

Investment Bank Cassel Salpeter on Institutional Investors

By Javacia Harris Bowser
August 20, 2021
 

  • An institutional investor is a company or organization that invests pooled assets on behalf of its clients.
  • Examples of institutional investors include hedge funds, mutual funds, and endowment funds.
  • Because institutional investors buy and sell large amounts of securities, they can greatly influence price dynamics in the market.
  • Visit Insider’s Investing Reference library for more stories.

All investors are not created equal, and institutional investors are in a league of their own. They’re often called the “whales of Wall Street” because of their influence on the market. There are several different types of institutional investors, and you may be wondering what sets them apart from the average investor.

What is an institutional investor?

An institutional investor is a company or organization that invests pooled assets on behalf of its clients. Institutional investors buy and sell much larger quantities of stocks, bonds, or other securities than the average individual investor. Examples of institutional investors include mutual funds, pensions funds, and insurance companies.

Because institutional investors manage more capital than everyday investors, they often have access to resources the average investor does not.

“Institutional investors have access to a fair amount of databases and analytical tools to help them do their job,” says investment banker James Cassel, chairman and cofounder of Cassel Salpeter & Co. “They also sometimes have access to the management of companies and to individuals with expertise in different fields that can help them in making investment decisions. They try to do proprietary research that individuals may not have access to.”

The access they have to the management of companies helps them to have deeper insight into the businesses, explains Jeremy Cohen, senior vice president of Investor Relations at Edelman.

“Institutional investors have more resources to conduct deeper due diligence, whether that is channel checking or having their analyst call on customers to get a better sense of trends,” Cohen says.

Quick tip: Institutional investors sometimes use program trading, which is the use of computer-powered algorithms to automatically buy or sell stock based on certain momentum in the market. Institutional investors employ teams to examine every aspect of the different markets they buy, sell, and trade in. Individuals on these teams must have extensive knowledge of the markets and money management, and may come from a finance or accounting background.

They may be former investment bankers or stock analysts. Many will have a CFA certification on their resume, but Cohen says a liberal arts degree can be just as valuable if research and critical thinking skills were adopted along the way.

How do institutional investors impact the market?

Institutional investors are sometimes called market makers because they can have such huge influence in the financial industry. This is because of the large amounts they trade and how involved they are in important market events.

  • Influence security prices: Institutional investors routinely trade large amounts in the market and are a driving force of supply and demand. In fact, the proportion of US public equities managed by institutions has risen to about 67% in 2010. These large movements cause stock prices to rise and fall depending on their activities. These changes in prices, although typically short-term, do influence how other investors interact with the market and can have a wider effect on the economy.
  • Report earnings: Institutional investors are responsible for reporting earnings, usually on a quarterly basis so that clients know how a company is performing financially. This will provide insights into whether investors should buy or sell – which can result in volatility within that quarter.
  • Provide liquidity in the market: Because institutional investors are often large funds and financial institutions, they’re able to provide capital to companies when they need it.
  • Participate in initial public offerings (IPOs): Institutional investors have the resources to utilize both public and private information to inform how and when to engage in an emerging company IPO. An academic study found that newly public companies with substantial institutional investment significantly outperformed those with less. The same study found that these institutional investors succeeded by making better use of the available public information – focusing on key metrics such as operating history, prior earnings, size, and liquidity.
  • Monitor governance issues: Institutional investors play an important role in monitoring corporate governance issues, which has previously included: majority voting, focusing on the quality and diversity of Boards of Directors, as well as compensation structures and concerns about the runaway growth in executive pay.

Types of institutional investors
There are several types of institutional investors, and each type is responsible for managing a large number of assets and investing these funds based on their clients’ goals. Examples of institutional investors include hedge funds, pension funds, endowment funds, and private equity funds.

Let’s break down each type:

  • Hedge funds: These are pooled investment funds that aggressively invest in a wide array of assets, with the goal of providing the highest return as quickly as possible.
  • Private equity funds: These types of funds gather money to be invested in companies that likely will have a high return rate. Unlike hedge funds, private equity funds are focused on long-term potential and may not seek a return on investment for four to seven years.
  • Pension funds: These types of fund accumulates money that will be paid to employees after retirement. These funds gather contributions from employees and employers – or both – to be invested in capital markets such as stock or bond markets. The goal, of course, is to multiply the money for the benefit of retirees.
  • Endowment funds: These are investment funds established by a foundation with donations made to the organization. Universities, nonprofit organizations, churches, and hospitals often use endowment funds. The foundation typically makes frequent withdrawals from the endowment fund, within the guidelines of the fund’s established usage policy. A university, for example, may use an endowment fund to award scholarships.
  • Commercial banks: These types of financial institutionals invest a portion of the money they hold for customers, but federal regulations restrict how much risk banks can take on to protect your deposits.
  • Insurance companies: These types of companies make money in part by investing a portion of the premiums received from their customers.
  • Mutual funds: These investing vehicles allow investors to pool their money for investments that are actively managed. Examples include bond funds, money market funds, stock funds, and target-date funds.

Quick tip: Institutional investors oftentimes have experience in specific industries that helps them make their investment decisions.

Retail investors vs. institutional investors

Institutional investors are not to be confused with retail investors. Understanding the difference is important because institutional investors and retail investors have different resources and regulations and even face different fees. “A retail investor is an individual; an institutional investor is an organization,” Cohen explains.

If you’re working with a brokerage firm or robo investing app to invest your own money for your own personal goals – such as planning for retirement, paying for kids’ education, or buying a beach house – you’re a retail investor.

Retail investors are considered less savvy than institutional investors and therefore are subject to more protective regulations from the Securities and Exchange Commission (SEC) to prevent them from making complex, high-risk investments. Retail investors also have considerably smaller purchasing power and thus often pay higher fees.

Institutional investors, on the other hand, invest funds from other entities for the benefit of those clients and on a much larger scale and more frequently. “The biggest difference is size and sophistication,” Cohen says. “An institutional investor will have analysts and portfolio managers and they’ll have the infrastructure to trade more quickly.” Because of their size and sophistication, institutional investors can typically negotiate better fees and are under fewer restrictions. Here’s an overview of the major differences between the two types of investors:

Institutional investor

  • Invests and manages the money of other people and organizations
  • Trades frequently and works with large amounts of money
  • Able to negotiate lower fees
  • Has access to specialized knowledge, research, and resources
  • Subject to fewer protective regulations

Retail investor

  • Invests own money
  • Trades infrequently and works with a relatively small amount of money
  • Subject to high brokerage fees
  • Has limited investing knowledge and resources
  • Subject to more protective regulations

Quick tip: Individual investors can get access to professional money management. You could, for example, invest in a mutual fund through Fidelity or Berkshire Hathaway and get institutional management with expertise in investing.

The financial takeaway Institutional investors are companies or organizations that invest on behalf of their clients – usually other companies or organizations. Institutional investors are the big fish of investing because they can greatly impact the market, in part by making much larger and more frequent trades than the average individual investor.

As with nearly all things, when it comes to investing, knowledge is power. Institutional investors have deep pockets and a wealth of information to help them manage the massive amount of funds they’re in charge of. While you may not be able to buy, sell, and trade like the market makers, you can empower yourself with a deeper understanding of investing.

Click here to read the PDF.

As Delta Variant Spreads, Business Leaders Continue To Struggle Against Covid

By Edward Segal

August 9, 2021

The list of major companies and organizations affected by the Covid pandemic
and recently discovered delta variant continues to grow, as do the lessons
business leaders can learn on how to respond to the crisis.

According to Bloomberg.com, ‘’Some events, like the New York International
Auto Show, are being canceled due to virus concerns. Companies including
Alphabet Inc.’s Google, Amazon.com Inc. and BlackRock Inc. have all
recently pushed back plans to return to the office as well.’’ And Apple
has delayed plans to open its first brick-and-mortar store in India this year
because of Covid’s impact on that country.

‘Multiple Headwinds’

Laurence Ales, associate professor of economics at Carnegie Mellon
University’s Tepper School of Business, observed that, “The pandemic has
presented businesses with multiple headwinds hindering growth and
expansion opportunities. First and foremost is the increased level of
uncertainty. This is not only a pure economic uncertainty but is also
entangled with the uncertainty on the evolution of the pandemic and of the
vaccination effort in the U.S. and abroad. In addition, consumers have reacted
to this pandemic-induced recession differently than previous recession[s].
“The consumption basket has changed, sometimes in expected ways (decline
in travel and hospitality) sometimes in less expected ways (the boom in home
furnishings). Finally, firms have to also confront headwinds in terms of their
inputs when considering expansions,” he noted.

Ales said, “These obstacles have been not only in the form of limited access to
intermediate and capital goods (supply chain disruptions) but also limited in
the access to workers. This last labor component is driven by multiple forces
ranging from fear of working in public, to lack of childcare
to disincentive[s] provided by various forms of fiscal expansions.”

Business leaders continue to do the best they can in responding to the many
challenges and consequences of the 18-month-old crisis.

Disruptions

Lucinda Wright, CEO and co-founder of Cask & Kettle, said “The impact of the
current surge in Covid on our business has been very direct. The president of
our distillery informed me yesterday that they must shut down for up to a
week because of an outbreak at the facility.

“Additionally, while ordering ingredients for our next big production we have
been told that the lead time for several critical components will take twice as
long (or more) to be delivered, which jeopardizes the substantial new
distribution we worked hard to secure,” she said.

According to Wright, “This evolving situation puts our young company in a
cash flow crunch as well as in danger of losing business that is essential to our
survival and growth. Based on decades of manufacturing and supply chain
experience, we know that ‘top-to-top’ collaboration with critical suppliers is
key to developing creative, out-of-the-norm, solutions to solve these
extraordinary challenges. No company can successfully navigate these
turbulent waters on their own without help from their ecosystem.”
Daniel Rutberg is the co-founder and chief operations manager of digital
marketing agency MuteSix. He observed that, “This pandemic has created a
number of challenges, but the most apparent ones in the business realm have
been the disruptions in plans, expansions, and strategies. Many of these
obstacles were spurred by budget cuts, but others had to do with acclimating
to the completely new environment seemingly created overnight.
“For example, marketing strategies geared toward friends and families
enjoying themselves at group gatherings were suddenly a no-go, so marketers
struggled to find compelling ways to promote products and services that
weren’t exactly useful during a global lockdown. In short, company leaders
had to dig deeper and pivot faster than ever before,” he said.
Rutberg noted that, “Those who were most successful adapted quickly and
went on to take the necessary measures to get their team onboard. Sadly,
those who settled for a ‘let’s wait and see approach’ didn’t experience many
positive outcomes.

Closing A Store

Will Cutler is the co-owner of 23 Subway franchises in South Carolina. He told
me that they had to shutter one of their stores because of slow sales and the
lack of help. At other locations, operating hours were shortened, stores were
closed on some days and remodeling was postponed.
“We are having difficulty getting products from suppliers for our
restaurants…. having trouble finding parts to fix items in our locations [and]
have increased wages several times and offset them with increases in pricing.
[We also] offered bonuses to get people to come on board and stay on board,”
Cutler said.

Expansion On Hold

Danielle Ferrari, owner and founder of Valhalla Resale, recalled, “We had
plans to expand Valhalla to our second retail location in 2020. Plans for
expansion had already begun before the country started shutting down to help
slow the spread of Covid-19. Luckily, we were in the very initial stages
of expansion, so the impact was minimal. We planned on using an equity
crowd sourcing platform to sell shares to raise the funds for expansion.
“I hope that one day we can bring Valhalla to every major city. While
expansion is still in the [works], those plans remain in the future as Covid-19
lingers. I’m not sure when we’ll be able to put expansion plans back into
motion,” she said.

Advice For Business Leaders

Investment banker James Cassel, chairman and co-founder of Cassel Salpeter
& Co. said, “The biggest concern that I see is what will really transpire long-
term. Is this a new way of working or will things slowly go back to the way it
was?

“Being flexible will become very important. Companies will be required to
make a major decision when their leases come up for renewal. Companies also
need to expend more money in technology especially relating to security when
their workers are working remotely,” he advised.

“Keep in mind many businesses don’t have this option. They need their people
to be on site. Be it a retailer, a restaurant or other kind of service organization,
you can’t do this remotely,” Cassel counseled.

Follow Edward Segal on Twitter or LinkedIn. Check out his website or some
of his other work here.

 

Click here to read the full article.

Nine Must Reads for the CRE Industry Today (July 29, 2021)

By WMRE Staff
July 28, 2020

The CDC’s revised guidance on masking has shaken up return-to-office plans for companies. Some are shifting timelines and policies. Other companies are moving towards requiring employees to be vaccinated before they can return. These are among today’s must reads from around the commercial real estate industry.

  1. Google delays workers’ return to office, will require COVID vaccinations for employees “In a Wednesday email sent to Google’s more than 130,000 employees, CEO Sundar Pichai said the company is now aiming to have most of its workforce back to its offices beginning Oct. 18 instead of its previous target date of Sept. 1. The decision also affects tens of thousands of contractors who Google intends to continue to pay while access to its campuses remains limited.” (KTLA)
  2. Work-from-home threat “overstated,” Boston Properties CEO says “While the continued work-from-home trend will have a long-term impact on the office market, the threat is ‘overstated’ for landlords of Class A office space, Boston Properties CEO Owen Thomas said Wednesday.” (The Real Deal)
  3. New C.D.C. mask guidance complicates back-to-office plans. “Companies that have already opened their doors must decide whether to retrench on masking policies. When the C.D.C. lifted its masking guidance in May, many companies issued new guidelines allowing fully vaccinated employees and customers to return without masks. The move served as an important incentive for workers, as well as a signal that the pandemic was winding down. For employees, it provided a sense of safety and normality in returning to offices.” (The New York Times)
  4. It really is different this time “When we examine the most-recent recession versus previous recessions, its status as an outlier becomes even more stark and apparent. If we measure duration in months versus severity (as measured by peak unemployment rate) a clear relationship emerges: deeper recessions are also longer recessions, while shallower recessions are shorter recessions. But the 2020 recession breaks that relationship with a deep, short recession, the likes of which we have never observed in the U.S.” (JLL)
  5. Beyond Zoom: Can Virtual Reality And Hologram Tech Reinvigorate Remote Work? “These different spins on the sci-fi premise of speaking to holograms at the office share a few things in common, namely a desire by Big Tech to make videoconferencing better and iron out the kinks in personal communication in newly remote and hybrid offices. Gartner research predicts by 2023, more than 40% of workers will work remotely at least one day a week, up from less than 30% before the coronavirus pandemic.” (Bisnow)
  6. Private Equity Makes Play for Skilled Nursing “The tragic human effects outweighed others, but there were also economic and business impacts from the pandemic that are currently still affecting the skilled nursing segment. REITs looking for stable income got nervous, according to investment banker James Cassel, chairman & cofounder, Cassel Salpeter & Co.” (GlobeSt.com)
  7. Social Clubs Could Be Way To Lure Office Workers Back “As workers trickle back to offices across the U.S., many employers may be seeking ways to encourage in-person interaction among employees who’ve worked remotely for 16 months. They would be interested to know about the forecast recently put forth by architecture, design and strategy firm NELSON Worldwide. Its prediction: The future office will evolve to become more like a social club than workplace.” (Forbes)
  8. ‘A Wild 15 Months’: Pandemic Spurs Conversion of Offices to Labs “Across the six largest U.S. life sciences markets, more than 20 percent of the laboratory spaces being built are conversions from offices. In San Francisco, Chicago, Boston and Raleigh, N.C., asking rents for lab space have increased more than 60 percent since the beginning of 2016, while office rents have crept up only 15 to 30 percent.” (The New York Times)
  9. Hot Housing Market Lets Banks Sell Mortgage Risk “The transfers are a product of the effort to shield Fannie Mae and Freddie Mac from the risk of a mortgage-market reversal. Banks are now using them to raise capital and otherwise shore up their balance sheets, a process that ultimately adds to their lending capacity, analysts said.” (The Wall Street
    Journal)

Click here to read the full article.

Private Equity Makes Play for Skilled Nursing

Covid deaths have had a big impact on investments in the sector.

By Erik Sherman

July 27th, 2021

The pandemic had a brutal effect in nursing homes. Mortality levels jumped from 17% in 2019 to 22.5% in 2020—nearly a one-third increase—according to a report from the Office of the Inspector General for the Department of Health and Human Services. “This 32% increase amounts to 169,291 more deaths in 2020 than if the mortality rate had remained the same as in 2019,” the report said.

The data was based solely on Medicare claims, as nursing homes weren’t required to report Covid-19 cases and deaths before May 8, 2020, and so the number of deaths in nursing homes was likely higher.

The tragic human effects outweighed others, but there were also economic and business impacts from the pandemic that are currently still affecting the skilled nursing segment. REITs looking for stable income got nervous, according to investment banker James Cassel, chairman & cofounder, Cassel Salpeter & Co.

 

Click here to read the full article.

Click here to read the full pdf.

Yahoo Finance Logo

SoftBank Unit to Invest in Thiel-Backed Crypto Exchange Bullish

By Miles Weiss
July 16, 2021

A unit of SoftBank Group Corp. agreed to invest $75 million in Bullish, the sponsor of a not-yet-operational cryptocurrency exchange, as the startup prepares to go public through a merger with a special purpose acquisition company.

SB Northstar LP will acquire 7.5 million Bullish shares for $10 each at the time it combines with Far Peak Acquisition Corp., according to documents filed July 9 with the U.S. Securities and Exchange Commission. It will also buy 3 million warrants to purchase shares of Far Peak, the SPAC taking Bullish public in a move that could value the combined entity at about $9 billion.

The SoftBank unit made the commitment through a $300 million private offering that Bullish held last week, according to the filings, though it was not identified in a subsequent release as one of the buyers. Representatives for SoftBank, Bullish and Far Peak all declined to comment.

By participating in the deal, SB Northstar joins a who’s who of executives involved with Bullish. The crypto company was launched in May by Block.One, a blockchain software company backed by Peter Thiel and hedge fund managers Alan Howard and Louis Bacon. Other investors include Hong Kong tycoon Richard Li and German entrepreneur Christian Angermayer. Meanwhile, upon completion of the SPAC transaction, Far Peak Chief Executive Officer Thomas Farley, a former president of the New York Stock Exchange, will become Bullish’s CEO.

SB Northstar, the asset management arm of Masayoshi Son’s SoftBank, became known as the “Nasdaq whale” after it made multi-billion dollar wagers on publicly traded tech stocks. SoftBank’s bets in crypto have been much smaller so far: It also disclosed this month that its Latin American Fund invested $200 million in Mercado Bitcoin, a Brazilian digital assets platform.

Still, it’s a sign that Son, who reportedly lost $130 million on Bitcoin when he sold in 2018, may be starting to warm to the crypto sector. In May, he said Bitcoin’s popularity has made it into a platform that “can’t be ignored,” though he doesn’t know its true value or if it’s a bubble.

SB Northstar will acquire the Far Peak warrants from either the sponsors of the SPAC or its anchor investors, which include funds managed by BlackRock Inc., according to the filing.

The seller will take a $1.5 million loss by selling the warrants below cost. That’s a step that SPACs may take to attract high-profile investors, said James Cassel, chairman of Cassel Salpeter & Co., a Miami-based investment bank that advises on SPACs.

“SoftBank has said ‘you can use my name and it will validate the deal and make all of the stock worth a lot more,’” Cassel said in a telephone interview.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source. ©2021 Bloomberg L.P.

Click here to read the original pdf.

Bloomberg Logo

SoftBank Unit to Invest in Thiel-Backed Crypto Exchange Bullish

By Miles Weiss
July 16, 2021
  • Bullish to sell 7.5 milliom shares to SoftBank’s SB Northstar
  • It’s the second crypto wager disclosed by SoftBank this month

A unit of SoftBank Group Corp. agreed to invest $75 million in Bullish, the sponsor of a not-yet-operational cryptocurrency exchange, as the startup prepares to go public through a merger with a special purpose acquisition company. 

SB Northstar LP will acquire 7.5 million Bullish shares for $10 each at the time it combines with Far Peak Acquisition Corp., according to documents filed July 9 with the U.S. Securities and Exchange Commission. It will also buy 3 million warrants to purchase shares of Far Peak, the SPAC taking Bullish public in a move that could value the combined entity at about $9 billion. 

The SoftBank unit made the commitment through a $300 million private offering that Bullish held last week, according to the filings, though it was not identified in a subsequent release as one of the buyers. Representatives for SoftBank, Bullish and Far Peak all declined to comment. 

By participating in the deal, SB Northstar joins a who’s who of executives involved with Bullish. The crypto company was launched in May by Block.One, a blockchain software company backed by Peter Thiel and hedge fund managers Alan Howard and Louis Bacon. Other investors include Hong Kong tycoon Richard Li and German entrepreneur Christian Angermayer. 

Meanwhile, upon completion of the SPAC transaction, Far Peak Chief Executive Officer Thomas Farley, a former president of the New York Stock Exchange, will become Bullish’s CEO. 

Read more: Thiel-Backed Crypto FirmBullish in $9 Billion SPAC Merger

SB Northstar, the asset management arm of Masayoshi Son’s SoftBank, became known as the “Nasdaq whale” after it made multi-billion dollar wagers on publicly traded tech stocks. SoftBank’s bets in crypto have been much smaller so far: It also disclosed this month that its Latin American Fund invested $200 million in Mercado Bitcoin, a Brazilian digital assets platform. 

Still, it’s a sign that Son, who reportedly lost $130 million on Bitcoin when he sold in 2018, maybe starting to warm to the crypto sector. In May, he said Bitcoin’s popularity has made it into a platform that “can’t be ignored,” though he doesn’t know its true value or if it’s a bubble. 

Read more: Masayoshi Son’s Not Racing to Join Tesla in Buying Bitcoin

SB Northstar will acquire the Far Peak warrants from either the sponsors of the SPAC or its anchor investors, which include funds managed by BlackRock Inc., according to the filing. 

The seller will take a $1.5 million loss by selling the warrants below cost. That’s a step that SPACs may take to attract high-profile investors, said James Cassel, chairman of Cassel Salpeter & Co., a Miami-based investment bank that advises on SPACs. 

“SoftBank has said ‘you can use my name and it will validate the deal and make all of the stock worth a lot more,’” Cassel said in a telephone interview. 

— With assistance by Pavel Alpeyev 

Click here to read the PDF.

Yahoo Finance Logo

How US Defense Spending Has Changed Over the Past 10 Years

By Nicole Spector
May 12, 2021

We all know that our federal taxes help fund the U.S military, but the ins and outs of this financial relationship and exactly what it all means for the average taxpayer is more esoteric knowledge. To put it very simply: our tax dollars are hard at work, and, to some extent, at war.

How much the U.S. spends on defense fluctuates, but from a big picture spending perspective, we’ve been on a downward slope.

“From a taxpayer’s perspective, the amount of taxpayer dollars that is spent on defense has been generally decreasing for the past 70 years,” said BG Michael J. Meese, USA, Ret., Ph.D, president of The American Armed Forces Mutual Aid Association (AAFMAA). “In 1953, during the Korean War, 69% of federal tax dollars were spent on defense. During Vietnam in 1968, defense represented 46% of federal tax dollars. During the Cold War in the Reagan administration in 1987, 28% of taxes were on defense. In 2010, with a surge of forces in Afghanistan and Iraq, 1 in 5 (20% of) tax dollars were spent on defense. With today’s budget projections — under the budgets of either President Trump or President Biden — taxpayers now have the smallest proportion of federal tax dollars spent on national defense since before World War II (in 1937). Those proportionally smaller federal dollars support American military worldwide with an All-Volunteer Force.”

To get more granular, here’s a look at the Department of Defense’s (DoD) budget each year for the past decade, along with some insights into what was going in the sphere of the military at the time.

Last updated: May 12, 2021

1. 2011

  • DoD budget: $687 billion
  • Year-over-year difference: -4% or $0.58 billion

The 2011 Budget Control Act (BCA) was signed into law on Aug. 2. A resuscitation of the Gramm-Rudman-Hollings passed in 1985, the (BCA) reinstituted budget caps for defense, amounting in a reduction of some $1 trillion over the next decade.

Read: This Is Where Your Tax Dollars Actually Go

2. 2012

  • DoD budget: $645.5 billion
  • Year-over-year difference: -6.04% or $41.5 billion

The National Defense Authorization Act for fiscal year 2012 was enacted, which implemented major budgetary reductions. For the first time in over 10 years, the U.S. base and war budget declined.

See: The Most Expensive US Conflicts From 1950-2020

3. 2013

  • DoD budget: $577.6 billion
  • Year-over-year difference: -10.5% or $67.9 billion

More drastic cuts in baseline military spending occurred under the Obama administration in 2012. These cuts were the most significant in the past decade but progressive economists reasoned that military spending was still untenably high.

Check Out: All You Need To Know About the Economy and Your Money

4. 2014

  • DoD budget: $581.4 billion
  • Year-over-year difference: +0.66% or $3.8 billion

The U.S’s involvement in the Syrian Civil War kicked off on Sept. 23, when it launched air raids in Syria against ISIS. In this year, Washington deployed 2,000 soldiers to the battle-scarred land.

More: All About the Federal Budget and Its Role in Your Life

5. 2015

  • DoD budget: $560.4 billion
  • Year-over-year difference: -3.61% or -$21 billion

More troops were sent to fight ISIS in Syria while tension between the U.S. and China heated up. More pleasantly, the Pentagon lifted its ban against women in combat, opening up all jobs to them at long last.

Read: IRS To Send Supplemental Stimulus Payments to 2020 Tax Filers

6. 2016

  • DoD budget: $580.3 billion
  • Year-over-year difference: +3.55% or $19.9 billion

Donald Trump was elected president of the United States, brewing expectations of significant military buildup and a big boost in spending as anticipated by military members, who largely favored Trump over Clinton.

See: Just How Rich Are Elon Musk, Donald Trump and These Other Big Names?

7. 2017

  • DoD budget: $606 billion
  • Year-over-year difference: 3.55+% or 19.9 billion

Trump was sworn into office, which triggered the anticipated surge in defense spending. The overseas fight against ISIS intensified. The U.S dropped its largest non-nuclear bomb on an ISIS branch in Afghanistan.

Check Out: National Debt and Deficit — What Is It and How Does It Affect Me?

8. 2018 

  • DoD budget: $670.6 billion
  • Year-over-year difference: +10.66% or $64.6 billion

Space Force, a new military branch devoted to space, launched in 2020. Toward the end of the year Defense Secretary Jim Mattis resigned, ostensibly because of then-President Trump’s orders to remove troops from Syria.

More: Understanding US Productivity and All the Ways It Affects You

9. 2019

  • DoD budget: $687.8 billion
  • Year-over-year difference: +2.56% or $17.2 billion

Former President Trump became the first U.S. sitting president to step across the military demarcation line between North and South Korea, doing so with North Korean leader Kim Jong Un. Meanwhile, in the states, the president struggled to erect the wall along the U.S.-Mexico border. In merrier news, more black female cadets graduated from the United States Military Academy than ever before.

Read: What Are the World’s Best Tax Havens?

10. 2020

  • DoD budget: $712.6 billion
  • Year-over-year difference: +3.61% or $24.8 billion

A war with Iran was suspected to be on the horizon when, on Jan. 3, the U.S. killed Major Gen. Qasem Suleimani, the leader of Iran’s Quds Force. Iran then attacked U.S. military bases in Iraq. COVID-19 came and everything was upended, but the military continued to recruit, train and deploy during the pandemic.

See: Here’s What Men and Women in Uniform Earn

11. 2021

  • DoD budget: $705.4 billion
  • Year-over-year difference: -1.01% or $7.2 billion

Under the Biden administration, the U.S has begun to pull troops out of Afghanistan. Debris from a Chinese rocket plunged through the atmosphere in May, and the military opted not to attempt to shoot it down. As expected, Biden softened the U.S defense budget.

12. What We Can Expect in 2022

So, what does all of this mean going forward in 2022? That’s a hefty question that has much to be determined, but we can already glean some insights into the year ahead, including a bump in the Pentagon’s budget.

“The good news associated with the Pentagon’s 1.6% increase in the 2022 budget of $715 billion versus 2021, is that non-defense domestic discretionary spending will surge 16%, with education spending rising 41%, health and human services 23% and the Environmental Protection Agency 21%,” said Joseph Smith, director of aviation services at the investment banking firm Cassel Salpeter. “Certain taxpayers may feel good about that reallocation towards more needed domestic spending.”

More From GOBankingRates

Methodology: For this piece, GOBankingRates looked at U.S. Department of Defense budget figures from the office of the Under Secretary of Defense for fiscal years 2001 through 2021. For each year, GOBankingRates found: (1) Department of Defense budget (in billions); (2) Department of Defense budget; (3) year-over-year change in DoD budget; and (4) percent change in year-overyear DoD budget. GOBankingRates also found the (5) total change in DoD budget from 2001 to 2021; as well as (6) percent change in DoD budget from 2001 to 2021. All data was collected on and up to date as of May 3, 2021.

This article originally appeared on GOBankingRates.com: How US Defense Spending Has Changed Over the Past 10 Years

Joseph “Joey” Smith of Cassel Salpeter & Co: “Passenger Preparation”

By Candice Georgiadis, Founder of Digital Day Agency
May 7, 2021

As part of my series about “developments in the travel industry over the next five years”, I had the pleasure of interviewing Joseph “Joey” Smith.

Joseph Smith, director of aviation services at investment banking firm Cassel Salpeter & Co., has more than 25 years of experience in the capital markets and securities industry. At Cassel Salpeter, Smith leads the aviation team, providing the firm’s clients with his expertise in mergers and acquisitions, capital raising, and advisory services to middle market private and public companies. He has structured, negotiated, and executed on numerous aviation industry transactions with institutional private equity and strategic investors, and has worked extensively with business owners, management teams, and boards of directors and their professional advisors, locally and nationwide. Since 2018, Mr. Smith has led the publication of the firm’s quarterly Aviation Industry Deal Report offering insights on industry trends while charting deal flow. Before joining Cassel Salpeter in Miami, he served as a senior vice president of Catalyst Financial and as principal and head of investment banking for Capital City Partners. He began his middle market investment banking career at First Equity Corporation of Florida, where he was a principal and managing director after initially being trained by Merrill Lynch and Shearson Lehman Brothers. He received a bachelor’s degree in history from Hobart and William Smith Colleges in Geneva, N.Y.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to get to know you a bit better. Can you tell us a story about what brought you to this specific career path?

My investment banking path was unexpected as I was a history major from a small liberal arts college and never aspired for a career in finance or Wall Street, but I loved the stock market, and the historical aspect of corporations. Their operations, growth, and finance were fascinating to me. When Merrill Lynch surprisingly hired me, I became very adept at bringing in clients and assets, achieved success, and became enamored with the industry and was all in thereafter.

Can you share the most interesting story that happened to you since you started your career?

I don’t have a specific story that stands out as particularly interesting during my career, but rather have a period of time. That was when I was a broker/banker during the internet/technology dot-com boom, bubble, and ultimate bust times of the late 1990s and early 2000s. That was probably the most interesting chapter in my career. It was literally the Wild West of investing, with valuations being at astronomical levels for private placements, IPOs, buyouts, leading to huge failures and losses. That, combined with the excitement of technology truly advancing with the internet and new business models, while we were all trying to understand this new landscape and ecosystem and trying to pick the winners from the losers, made for fascinating times to be in the business.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Early in my career, I was tasked to make sure a prospectus was printed for an IPO (before EDGAR online, etc.) so I was camped out late night/early morning in the office of the printing company (standard operating practice). Unfortunately, I fell asleep and my printing cohorts decided to prank me, by locking me in the small conference room I was working from. When I awoke, I could not get out of the office, so I freaked out thinking the prospectus would be late to the SEC and my boss and client would fire me (no cell phones back then). I almost broke down the door before they let me out, and they took pictures of me, a disheveled mess running out with the huge prospectus box in tow. Very embarrassing, too, when they sent the blown-up picture to my boss to memorialize the prank, and thereafter hung it in the trading room for many years.

The lesson learned was that in business, do not ever let your guard down, and “coffee-up” for all-nighters. And generally, to always have a plan B for all unforeseen events, and backup, just in case “what if” happens. Be proactive and find a colleague to buddy up with to have your back and vice-versa!

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”? Can you share a story about that?

As difficult as it is in the moment, be thinking long-term, protect your brand (image: how you are seen, perceived in the marketplace — internally and externally). Think of your career as a marathon with different milestones, constantly planting seeds and nurturing your story. Be willing to pivot and to forsake short-term gratification for the long haul. Be willing to be happy and to take risks, too. Try not to let yourself slide into a place where you are looking back with regrets because of inaction for the comforts of now.

For me, the entrepreneurial path was what I needed to explore when I was burning out, so I started my own advisory business, not necessarily to slow down, as I worked harder and longer hours than ever, but to control my own destiny and to have more flexibility for time with family.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

My father, who taught me many lessons, always stressed that there is no substitute for hard work, to be a great listener, to always seek to do good (charity), and as for your adversaries, “to kill them with kindness.” He taught me that success is not defined by money, but by doing the right thing and being a well-respected and solid person to all who cross your path! His wisdom certainly defined my ultimate views on happiness, health, and success. I am trying to always pass it forward to my three adult children.

Can you share with our readers how have you used your success to bring goodness to the world?

I have always believed in giving back, paying it forward (preferably anonymously) because it truly makes me feel good to give. Whatever success I have is because of so many others (known and unknown), and I am thankful for whatever I have, and feel obligated to do my best to give back. I believe that writing checks to charities/organizations that interest you are not enough (though necessary) as I like to try to get involved in the organizations and leverage whatever I can bring to the table. Most importantly to me, is to find the time in our daily lives to do the little acts of kindness and to speak with or try to help/uplift a friend/acquaintance and strangers (too many of us run around with a phone on our ear, in our own little world ignoring others).

Thank you for that. Let’s jump to the core of our discussion. Can you share with our readers about the innovations that you are bringing to the Aviation and Air Travel industries?

As an investment banker, I cannot say that I am personally bringing innovation to the industry, but I would hope that some of our early-stage capital raising efforts may bring some interesting, cutting-edge, technology, and originality to the aerospace ecosystem.

Which “pain point” are industry leaders trying to address by introducing these innovations?

For travel industry leaders, efficiency and environmental responsibility are the pain points being addressed. Efficiency, as to travel time and experience, supply chain productivity, reducing expenses for all participants, while trying to reduce the carbon footprint and utilizing new technologies for the benefit of the entire ecosystem.

How do you envision that this might disrupt the status quo?

The major players in aerospace and aviation (Boeing, Airbus, GE, defense contractors) are certainly participating in innovation with disruptive next gen technology/systems, but the entrepreneurial start-up world is where things get interesting when thinking about the longer-term future of travel, here on earth and beyond.

Are there exciting new technologies that are coming out in the next few years that will improve the air travel experience? We’d love to learn about what you have heard.

There will be lots of new and exciting technologies to enhance the passenger experience from robots in the terminals, to quieter and faster planes, to drones assisting with baggage and security, but the truly disruptive advancements are currently being funded and will reveal their unique, value-add services during this coming decade. A few examples would be:

Eviation has leapfrogged the competition as the first zero-emission, all-electric airplane. Designed to take nine passengers up to 650 miles at a cruise speed of 240 knots on a single battery charge.

Boom Supersonic — founded in 2014 and having raised hundreds of millions is developing a delta-wing supersonic passenger aircraft. Its upcoming Overture jet will travel at Mach 2.2, making it the world’s fastest airliner. It will carry up to 45 passengers, aiming to start transporting passengers by 2023.

All-electric jets with VTOL (Vertical Take-Off and Landing) short range taxi start-ups: Lilium & Volocopter — Germany; Joby Aviation and Opener — USA, among others.

As you know, the pandemic changed the world as we know it. For the benefit of our readers, can you help spell out a few examples of how the pandemic has specifically impacted air travel?

The pandemic has crushed the commercial aviation industry unlike any other event. To encourage commercial travel, the industry has put in place some of the most aggressive cleaning/filtration systems in the world onto their aircraft, and have embraced as much touchless/remote activities as is feasible. The issue will always remain the “in air” safety, but also getting to and from the airport and the waiting in terminals for flights, from a social distancing perspective. The airlines have been quick to accommodate but until the vaccine is widespread, many will continue to err on the side of caution and not fly unless necessary.

Can you share five examples of how the air travel experience might change over the next few years to address the new realities brought by the pandemic? If you can, please give an example for each.

Airline/Airport Remote/Touchless enhancements — AI and biometrics to enhance airline checklists, check-in, baggage, security, and boarding (collaborating with FAA, TSA, airports and airlines)

Airline Leniency with Passengers — change fees, rewards programs, and pricing flexibility

Aircraft Manufacturer/OEM safety enhancements — Plane ventilation systems and various safety equipment installed permanently or during pandemic to best deal with virus microns.

Passengers destinations/preferences — will likely be more domestic oriented and shorter distances (to avoid layovers/cancellations)

Passenger Preparation — more thought regarding meals before flight, staying in seat more during flight, transportation to and from airport/hotels, being more selective vs. Uber/Lyft

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be?

I would love to find a way for the for-profit and nonprofit world to engage in a global transportation/humanitarian project to promote food and health care equity to the over a billion people globally living below the poverty line. If I am dreaming big without budgets or borders, this initiative would utilize all transportation modes: air, land, and sea with the best-in-class technology to promote the mandate. It would be a supply chain project to include the last mile of goods (to reduce corruption) for food and medical supplies, while also transporting those in need to the hospitals, schools, training facilities in the developed world. The human interaction and cultural exchange component would lift us all, with ongoing engagement programs to keep the connectivity through many educational/out-reach venues. The current system of providing the needy with food and health care services is not enough, it must be more thoughtful, organized, bilateral, and sustainable to train the next generation of providers from within these communities of need. Hey, I am thinking big and outside the proverbial box!

How can our readers further follow your work?

Joseph “Joey” Smith may be reached via email at jsmith@cs-ib.com or via LinkedIn at https://www.linkedin.com/in/joeyibanker/. His firm’s website is: www.casselsalpeter.com

Click here to read the full article.

Business Travel Plans Could Leave Hotels High and Dry

By Erik Sherman

April 29, 2021

CRE companies in the office space market are getting accustomed to news of space cutbacks, like the 20% one in 2021 HSBC Holdings Chief Financial Officer Ewen Stevenson mentioned in an interview with Bloomberg Television on Tuesday.

But it was the second plan Stevenson referred to that underscores problems for the hotel industry: a 50% reduction of past business travel expenses. Why send people on the road when a video call gets there so much faster? Klaus Kohlmayr, chief evangelist for hospitality industry revenue management company IDeaS, tells GlobeSt.com that business travel is “absolutely critical” for hotels.

“I would say about two-thirds of revenue comes from some sort of business travel related segment,” whether individual traveler, managed or unmanaged accounts, or conventions and meetings, he says.

The signs for business travel are mixed, with “the lucrative business routes, both domestic and international, that are usually the mainstay of the airlines route profitability,” being crushed, Joseph Smith, director of aviation services at investment banking firm Cassel Salpeter, tells GlobeSt.com. “Many airlines have tweaked their route system to accommodate the leisure traveler, which is leading the post-vaccine travel recovery. As a result, the surging leisure travel segment is currently far outstripping the business/commercial passenger revenues, flights, and mileage.”

While Smith expects “travel norms and business activities to substantially increase, leading to a substantial, healthy and sustainable recovery for the airlines and the overall aviation ecosystem,” that will take a few years. It’s a sign that hotels will continue to face challenges.

“I think there’s going to be certain parts of business travel that will start picking up now,” Bruce Rosenberg, president of HotelPlanner, tells GlobeSt.com. “I think the first part will be sales calls, people going out there, mixing it up with customers. The expectations that you’re going to be meeting in person will return faster.” Even meetings have started to come back to life, though major events like the annual tech CES show could take another year or two.

“The last part of business travel that will be slow to come back will be intra-company trips,” in which executives and employees visit other facilities of their corporations, Rosenberg adds. “That’s going to take a while to come back, and that’s probably 25%, 30% of total travel trips.”

As of early 2021, hotel room demand was still down 32%, according to data from Oxford Tourism Economics. Depending on geographic region, average occupancy rates across the U.S., Europe, China, and the rest of Asia Pacific ran between 20% and 50%.

The loss of business travel is particularly worrying, as it’s traditionally one of the highest rate segments, Kohlmayr says.

According to commercial real estate marketplace CrowdStreet, overall improvement has begun to show strong momentum, but “while good news currently abounds for resurging demand in the hospitality sector, true recovery at the operating level is still likely months, if not a year away.”

 

Click here to read the full article.