It has been longer than six months since my last blog. I confess, I have been as astounded, shocked, scared, and as surprised as any of us. With no answers, no insight, nothing to offer, I remained silent. In turn, I was impressed with all the new bloggers and podcast/webcast offerings, as well as all the virtual conferences and discussions. It is wonderful to know our industry boasts so many entertainers and subject matter experts.

So why write now? I wanted to encourage EVERYONE to get out and VOTE! By mail or in person, PLEASE get out and vote. I have voted by mail (early) and I remain concerned about our country, our economy, our industry. While I have my preferred candidate, I don’t care who you vote for; just vote. I believe in 2016 slightly more than 100M votes were cast; the ads on the NFL TV broadcasts suggest this was merely a 60% voter turnout. Can we reach 120M? 80%? PLEASE make your choice known.

A coach once told me that “context gives meaning to content.” Wars are fought over content; people, teams, departments, companies, even a country can be united over and led by a compelling “Just Cause” or context. For my business at Stronghill we hold the context of reliabilitya predictable process that leads to certain results that our clients can rely upon in order to be able to execute on the outcomes they seek better, faster, more effectively. In my consulting business at Darkknight Ventures, my context is to help others optimize their journey. At the risk of sounding condescendingly preachy, I ask voters to consider a choice that is best for the community and our country (rather than prioritize their self-interest).

I fear our Republic has suffered from individuals exercising their powers, casting their votes, making their proclamations out of self-interest – what they would do for their benefit, what they hope others will do for their benefit personally. JFK said (something to the effect of), “ask not what your country can do for you; rather, ask what you can do for your country.” My dad use to say, “what is good for Cohen Financial is good for the associate; not, the other way around.” No two people can agree on everything or see the landscape the same way. Leading with and prioritizing each individual’s perspective first is simply not unifying; though it need not be divisive. It’s finding a common ground, a context, where the intersections of a “Venn Diagram” exudes mutual benefit. No matter how nominal. It can be the only restart that we need.

A strategist once stated that countries and civilizations crumble based on the gap between the wealthy and the poor. The strength of a country – even a company – is based on the strength and vibrancy of the middle class. We need to focus on and exude actions over what is simply best for the populous of the United States of America. Consider the possibility that the pandemic and the derivative effect on our economy has exacerbated the gap between the haves and have nots; and, this is what is at the core of all the social unrest. This social unrest needs to be addressed.

The pandemic has been horrifying to our country and its effects on our industry are not yet fully known or have been fully experienced. The derivative effect of the pandemic on our economy is being felt; however, its not over. The restaurant industry is a visible reminder of the effects on our economy. Visible small business taking a beating and some never to recover leaving vacancies in “Amazon proof retail.” Sure, in a trade, a transaction, there is a zero-sum game; I am not trying to be naive. There will be lenders and borrowers – users and providers of commercial real estate capital – that will face threats. That said, opportunities as well are on the horizon. Even if its as simple as more restaurants offering take out and home delivery rather than inside dining service due to the coming winter months.

The economist who stated “there is no such thing as a free lunch” was indeed prescient. The sad reality is that we all face a limitless onslaught of unintended consequences. I don’t like what Oregon has legislated seemingly to protect their borrowers. There is local legislative (and political) changes that will have an effect on our business. In Illinois, the Governor is proposing a progressive wealth tax on top of Illinois being one of 12 states with a death tax! Do you think any wealthy people will move out of Illinois and move to Florida? How about Colorado? I am concerned about the way the current occupant of the White House is rushing the replacement for RBG on the Supreme Court bench. Legislation and regulation have always lurked on the sidelines of our industry. Front and center has arrived.

Real Estate is a long-term asset (IMHO). There is no question in my mind that our industry will be forced to deal with erosion of asset values due to the unintended consequences of legislation and government regulation. It’s not bad enough that property vacancies will increase, rent growth will soften and possibly deflate in order to keep occupancies up. Further, credit loss and collection costs, security costs, cleaning costs, operating expenses will rise. With NOI erosion values will drop and LTVs will rise. Watchlists will grow. Equity owners and their lenders will need to have a strong courage of conviction about their portfolio holdings as they watch values drop.

We live in very fragile times. I hope only a few of you have been touched by the virus and I wish you all safety, prosperity and to stay well and virus free.
And PLEASE VOTE.

Respectfully posted, with humility, and from a caring space,

Jack M. Cohen
President and Chief Innovation Officer
jcohen@stronghill.com