Citigroup Inc. (C) Earnings Call Transcript & Summary

[Audio Gap] lodging team at Citigroup. I'm extraordinarily excited to be able to moderate this panel for all of you that are watching in the virtual world. Now one thing to note, we did record this session on Friday the 13th, which, I guess, maybe in hindsight, we shouldn't have chose Friday the 13th. But we do live in a pretty precedented time. So if we say something that's weird or out of context relative to what has happened over the last 5 days since we've recorded this, now you'll know why it hasn't come up. But I'm really excited to be able to moderate this panel for so many reasons. And I think you're all in for a really big treat. And so why am I so excited? Well, if you look on the screen, we've been able to bring together 3 superstar investors who have each been involved in our industry for a pretty long time. They each also bring a lot of heft to the discussion with their firms collectively owning over $40 billion of REIT securities just in the U.S. Thirdly, each has been involved in other parts of the market, collectively, bringing their perspective of other listed sectors, private real estate as well as the broader real assets asset class. And most importantly, I have known each of them for the majority of my own sell-side career, and they were all pretty gracious accepting my invitation to be here with us today. So with that, let me briefly introduce each of our esteemed panelists. The first, Nora Creedon, who should be on the bottom right of your screen or at least she's on the bottom right of my screen in Zoom. It would be a lot easier if we were together in person to get on stage. But Nora is the Global Head of Real Estate and Infrastructure Securities within the Fundamental Equity team at Goldman Sachs Asset Management. Now I first met Nora when we were both at Goldman Sachs in the early 2000s and got to work with her a lot in those couple of years before she moved over to Fidelity, to the REIT team, to the buy side. I think she had probably too much fun planning property tours and writing research that she decided to actually go invest in securities. Nora eventually made her way to Fortress, where she facilitated real estate investments globally and then actually went back to Goldman Sachs in 2010 into asset management. And over the last decade, Nora has really elevated Goldman Sachs' offering into new product areas as well as just new products, and she's been able to do this as a working mother to 4 children, and Nora, I guess 5, if you include your wonderful husband Matt. So thank you for being here today. The next is John Vojticek, who is the Head and Chief Investment Officer of Liquid Real Assets for DWS, and he's also a member of Deutsche's Asset Management's Alternative Executive Committee. John joined RREEF, the predecessor of DWS, in 1996. And prior to his current role, John served as a trader, an analyst and portfolio manager initially within the real estate sector and is responsible for launching DWS' first listed infrastructure strategy and was previously the Head of Listed Infrastructure Securities business at DWS. Now I've known John for the majority of my sell-side career as he was retail buy side analyst when I was the retail REIT analyst back at Goldman Sachs. And John, I think, I don't know if you remember, but I went to my first Bulls game with you back, I think it was in the early 2000s, and we were reminiscing recently over a Zoom call into our homes and his daughter walked by, and John reminded her that her and her sister came to our Global Property CEO Conference when they were little toddlers. They're now teenagers at this point. So it's a pretty long time. And so lastly, Jonathan Simon is a Portfolio Manager in the U.S. Equity Group at JPMorgan Investment Management, where he's been since 1980. Jonathan has held numerous key senior management positions in the firm, including being the President of Robert Fleming's U.S. Asset Management operations and Chief Investment Officer of the U.S. Value Equity product. A few years ago, he gave up some of the management roles to concentrate on being a value equity portfolio manager. Clearly, he's [indiscernible] punishment in the last number of years, and he's currently the Lead Portfolio Manager of the JPMorgan Mid-Cap Value Fund, the JPMorgan Value Advantage Fund and the JPMorgan Equity Focus Fund. Now John, I think -- Jonathan, I think I first met you, I think it was '02 or '03 when David Kostin who was the Goldman Sachs analyst at the time took me along marketing. And Jonathan, you and I have shared many meetings since and lots of festivities together at our conference. Now despite Nora and John's extensive history in the REIT world, Jonathan actuality trumps both of them. He dates back to REIT investing to the early 1990s just as the modern REIT era was starting. And he really has been around for the whole ride, and I'm so honored that you have agreed to be here today. So with that street cred announcement, I'm really thankful for each of you being here today. This really has been an unprecedented year. And while not the first time that we've seen challenges in real estate, the COVID-19 global pandemic has had significant implications for how we work, how we live and how we play. But in the words of my Canadian Prime Minister, Justin Trudeau, "this COVID-19 situation sucks. It really, really sucks." That was his quote, which I tend to agree with. Now the good news is the industry entered the pandemic and the resultant recession that we're living through on pretty good footing. Low leverage balance sheet, access to a lot of liquidity, redefined portfolios after years of portfolio repositioning and improved communication, governance and disclosure. And this Monday's vaccine news, we may get more vaccine news early next week, which will be, in hindsight, when you're watching this, just like some "back to the future" type of thing. The vaccine news is pretty good, over 90% efficacy, and it provides a lot of hope that we're going to be on the other side of this pandemic at some point, likely in the back half of next year into 2022. Now at the same time, we have that positive news, COVID cases are spiking here in the U.S. and other parts of the world. And we may be entering a period of more uncertainty with restrictions and lockdowns. In addition, fiscal support is still not completed. And with a lame duck congress, we may not get enough money to support our economy to get to the other side. More stress and likely more to come in certain states and cities. Now as we're going to talk about, given the significant changes in property sector weight, it's not all bad within real estate. Actually, we estimate over 50% of the REIT market cap today actually has had positive implications from the pandemic. Industries like data centers, industrial, life science, cell towers, single family rentals, manufactured housing and self-storage all have done well. Whereas the significant issues have been really concentrated within lodging, retail, senior housing and urban office.

So with that backdrop, I want to start with how each of you are approaching investing, given such an uncertain backdrop and a dispersion in returns. And perhaps, Nora, why don't we start with you about -- given all of these uncertainties, how are you managing? And how are you approaching investing in this world?

Yes. Well, maybe before I get there, Michael, let me just say on behalf of not only John and Jonathan, but really the broader REIT community, a big congratulations to you on being awarded the Industry Achievement Award this week for NAREIT. We are really so proud of you, and you are very deeply deserving of that award. You have been not only a great colleague and person to learn from in the REIT business, but a great friend. So congratulations from all of us. So with that good news out of the way, we can talk about investing in today's market, which is clearly pretty challenging. I would say in a normal year, we try and be pretty concentrated in our investing in REITs. We try to create an edge in terms of where we think companies are going to earn their cash flows in the next 2, 3, 4 years as opposed to the next year. Well, that doesn't really work in an environment where you can't model what companies are going to earn in the next quarter. So this has been challenging. I think the key is you have to keep adjusting your mindset to the world that we live in and use the information that we have today. This is not a time to get your head stuck in the sand because we've never been in anything like this before. And so both going into it, living in it and eventually recovering from it is going to look different than anything any of us has ever seen before. So I do think the vaccine news that you mentioned, that is a game changer, because while we all knew that was going to come eventually, now that we actually have that information available, we can start to model, we can start to think about what does this -- how do these dots kind of connect in terms of recovery in the next 1, 2, 3 years. And that's just not something you were able to do prior to having that information. And the last thing I would say is we have to be aware that there are a lot of very crowded positions that are out there today. We saw that when we got the vaccine news and you saw incredibly dramatic price movements in a single day because a lot of folks were in a lot of the same positions. And so you have to be aware of that as you invest.

Now JV, does that change for you in terms of how you're looking at the world and how you've approached investing?

I think no. [Audio Gap] All right. Sort of hit it on the head, maybe going into it. I mean the difference between '09 and now is liquidity was an issue, it's more of a solvency. You sort of had the winners, which we've talked about, those companies that obviously have short-term challenges. And then sort of in the middle, just sort of regular way fundamental deterioration that you would have with -- when you have significant job losses. When we -- in early October, we do a weekly [indiscernible] the headline, I said was election, stimulus, fed, virus, sort of thinking that was the order in which things would be remedied. Obviously, we think we have the election part remedied. The stimulus, still forthcoming. I think that's going to be important just to bring us to the other side. But again, from a virus perspective, notwithstanding the increasing cases, I think what Nora pointed out, at any time in investing, you can cut a tail off. And you think about probability of outcomes, you cut off a tail, you have what we have going on right now. So I think it's certainly -- I think people have different views on whether or not some of these secular asset classes. But if you look at just historical premiums and discounts to NAV, the winners are trading at 10% to 15% above their average 5-year premiums, because typically those and then the losers are trading at 10% to 15% discounts to their normal discounts that they typically trade at. So I think, again, from the standpoint of broader backdrop, and you have China, which I think is doing very well, I think the Fed is going to be very aggressive. The U.S. bond market was the last one to collapse from a nominal yield perspective. And so we are in a bit of a reflationary environment, I think, and so far as oil continues to hang in there, you're going to have sort of a steep inflation acceleration, growth acceleration in the first half of the year. And I actually think REITs are actually a little more cyclical than typical, right, typically that's not the best environment for REITS, it's a good environment for more cyclical, natural resource equities, et cetera. But because of sort of being down sectors, you could have, again, a bit of a place where those sectors start actually acting very well. And the high multiple sectors, clearly, if all you have is high multiple, inflation accelerating is bad for multiples typically, broadly speaking. And Jonathan, as a value investor, will be pleased to hear that.

JV, you're talking like a true dedicated person. When the answer is always buy REITs as the -- it doesn't matter what environment we're in, REITs are always going to do well. But Jonathan, I think your perspective in looking at all of the sectors would be really interesting to how you're navigating this environment.

Yes. Well, I'd like to hear JV say, buy REITs at all times. It's different, obviously, for a generalist equity investor. We don't actually really have to earn REITs at all. But for some reason, can't fully explain, I've always had a soft spot for real estate. So I look at it today as a value investor, and I look at the REIT space and it is. It's a microcosm of what's going on in the market as a whole. And you've already talked about that how the half of the market cap is in companies that are doing great. And actually, probably our great fund investors have some exposure to data centers and possibly even towers. We've got core investors typically, now that it only makes up about 2.5% of the S&P 500. They're going to be 1 or 2 names. And obviously, they're attracted to industrial logistic type properties. But in the value space, I have to say that I'm pretty excited about it because on a year-to-date basis, I think, for our value indices, the 3 worst-performing sectors have been financials, energy and real estate. Obviously, because the value real estate benchmark has a lot of, as you say [Audio Gap] the retail office and some of the more challenged sectors. But to me, the fundamentals are improving. Quarter-by-quarter so far, it looks as things are getting a little bit better for the more challenged sectors. I wouldn't be surprised if the next 2 quarters will take a little bit of a step in [Audio Gap] direction. But to me, the trends are in the right direction. As JV said, there's a cyclicality there now, which is greater than they used to be. And given that these companies are very well financed and are trading at very attractive valuations, to me, I'm very happy with our value strategies in large-cap to have a modest overweighting versus the benchmark. And actually, mid-cap value, which is one of my main funds, REITs make up about 10% of the index. So there's a lot of opportunity there. And I feel comfortable at this stage of the cycle, having a good representation across many different subsectors of REIT will be, with the caveat, the next 6 months, there's a lot of uncertainty. But that's okay.

Right. And I think that's part of the challenge right now is we have this great news that we have some more certainty. And I think, Nora, you talked a little bit about like right now we know that there is a vaccine, and we can start to model what eventual the fundamentals and asset values may become. But in the short term, it could get worse. And I guess as equity market investors, you tend to be forward looking. And how do you balance sort of that short term, what's going to be 6 to 9 months of probably worse than the last 6 months? And how that may affect -- we've had these bouts of value rallies over the last 6 months. How do you allocate capital with what will still be a pretty choppy environment in the next few months? Nora, if you want to take that one?

Yes. That's the challenge, but that's the fun part of this job. I mean if we weren't excited about doing that and forming positions and views and creating weights that are different versus a benchmark, then we shouldn't be in this industry. So that's the fun part. My personal view on that is that it's hard for things to get a whole lot worse than they've gotten for those beaten up sectors. So I don't know that anybody cares that while we, of course, care about the health impact on folks from this next surge and we care about lockdowns that'll happen, I don't think people are that focused on whether occupancy dips again for hotels, right? Because it can't really get a whole lot worse, particularly for the publicly traded companies, whose portfolios are concentrated in those coastal areas and in the CBDs that are being impacted. So their occupancy is significantly worse than what the national average is. So I think people are probably going to look through this current surge period. I think, again, maybe that's an optimistic view from my end. And so I'm being a dedicated REIT investor on this, but I think people are going to look through that. They're just going to start thinking about what is the path of distribution for the vaccine, how will that -- how and when will that get rolled out and how people will return to normal pre-COVID types of activities. And clearly, we're not going to return back to all the same types of activities and lifestyle decisions that we had before and that's what's going to make a market because someone's going to decide that office is an investing opportunity and other folks are going to say, no, this is really a fundamentally different future for office, and it's the new retail, right? And I think in the -- particularly in the dedicated REIT world, nobody wants to miss that trade again. You can't afford to miss that trade again. And so that means that you've had a lot of folks coming down on those [Audio Gap] and the valuations have shrunk a lot as a result. And so that people will start to form a view on that in the next few months. But I don't think that we're going to go back to the lows that we experienced before with the information that we have today.

Right. And so there appears to at least some consistency amongst the 3 of you that the value trade, which we've had some of these bouts of value rallies over the last 6 months and each of them hasn't held, that this one may be one that carries us forward. Is that a fair statement or would someone disagree with that?

I think it's probably going to be -- you asked this before we started this, how you thought 2 years from now, 3 years from now, we're going to work, live and play. And those are difficult questions. But to me, I think we're going to live and play pretty much the same way. So work, I think, is the most challenging one of those few questions. I think that the millennials who basically preferred to spend money on experience than, say, over stuff, goods and everything. That's what we would have said a year ago. Obviously, there's been a switch from spending money on goods and then less on services for obvious reasons. But I think people, when they feel comfortable will go out to play and travel and all that sort of stuff. I don't know how businesses are going to react. But I would imagine that there'll be a lot of Peloton bikes and outdoor heat lamps gathering dust in the basement of people's houses. So ideally in self-storage facility is the key.

I like that. JV, if you -- how do you balance? And what do you see as the biggest risk today and do you build a portfolio to hedge against that? And we talked about the vaccine timing, interest rates. We have, obviously, a new administration coming into the White House with a divided government. I guess how much time on the macro level do you spend in trying to hedge a portfolio for what you may see as the bigger macro risk itself there?

Yes. Again, we think about thing as sort of an economic regime perspective, sort of growth and inflation and what types of asset class. And then clearly, within REITs, it's more what kind of duration you want to have in your portfolio. There's not a lot of differences. But there's also times where REITs just don't act well. And again, I think one of the things I'm somewhat optimistic about overall is that, listen, I think the Fed is all in and they're just waiting. I think December 16, we'll get something on inflation targeting that's much more robust. And in the November meeting, they had the election coming up. Their outlook relative to what they're doing is incongruent. So we have that. I think there's been some chatter that the Biden administration may let the Fed be a little more aggressive with some of the tools they have towards commercial real estate. Some of these [indiscernible]. When I look out 6 to 12 months, notwithstanding, again, rising death counts, rising cases, which are clearly would short-term hurt restaurants and some of those things, I'm not sure those have been the drivers of the bounce in employment, et cetera. So I think it may be -- it slows the rebound. But going back to what Nora said, I don't think anyone -- I think we all sort of thought third quarter of '21. I don't know if anyone on this call thinks otherwise, like, oh, that's when, maybe I'll get on a plane again and fly internationally, and that's when analysts maybe work better than NAREIT or something else. And the vaccine just sort of cemented that and took away the downside scenario. To think about if you're -- let's say, in the fitness world, I think the lending community will be willing to underwrite, hey, you might actually get their cash flow back in reality instead of -- but they didn't -- if you think through to the actual underlying tenants. So I don't really have any much negative to say. Again, I think we could be an experience of higher interest rates. I think they're still low now and the valuations can imply cap rates [indiscernible] corporate bond yields. If we say 300 basis points, that averages 100 basis points over the last 10 years. So got a lot of wiggle room for our rates to go up and still have valuations expand. So again, I don't -- and if anyone else has anything I really fear, notwithstanding the vaccine not coming to fruition. And as well, I guess, some of those sectors that should rebound have become smaller as part of the benchmark. I guess, insofar as the good [indiscernible] sectors have come down to some degree. How does that manifest itself just because, again, I mean, the nominal size of office and retail in the benchmark is pretty small. And clearly -- and hotels, clearly, those will be the ones that benefit the most.

Yes. I would just jump in on that and say, I think the angst right now, because the vaccine has removed a lot of angst from us. But I think the angst is over, the political anger in this country, right, no matter who you were for on November 7. It turns out at least 75-ish million Americans were very angry about whatever that outcome was going to be. And I think this whole issue about the office and you go back to this work from home issue and what happens to offices and therefore cities, I think the reverberations of that are going to be really, really big. And those are still just huge capital values in the real estate market, right? There's just a lot of capital tied up in New York, San Francisco and major urban areas. And I think the implication is like we're going to keep thinking about this in the next few months, all these little ricochets that come from that. So even -- let's take logistics, Jonathan mentioned one of the best sectors. If you're a generalist, that's clearly where you were going to go to, that's where the growth was. Well, they've been spending a lot of money investing in urban last mile delivery at very, very low cap rates, very high prices per square foot. And as you see people leaving the cities, obviously, the first thing you do is you sell apartments in those major urban areas, but let's think about the ongoing ricochet effects of that, right? Like you probably don't need as much of what we were doing on the logistics side and last mile. I'm not speaking out against it, because I know those are great companies and probably great assets and probably cities recover and will be fine. But I think because there's so much capital invested here, because this has been a multi-decade trend toward cities that could be unraveling, that's probably where we have a lot more angst, I would say.

Jonathan, what's your view of taking real estate relative to other places that you can invest in? And I guess, how are you balancing the risks, the macro risks that are there?

Well, I think that the [ key one ], I mean, JV referred to the spread, valuation spread. I take a long-term view. So I'm going to sit through the tough times, macro risks over the next 6 months and assume that the companies were invested in have the wherewithal to survive and, most importantly, not do anything silly like issue dilutive equity. So I feel pretty comfortable with valuations. I feel pretty comfortable with it. Obviously, a diversified approach. I'm not going to put all my eggs in one basket. But what gives me excitement is our fixed income, folks. I think that it's very much a lower for longer interest rate environment. And even up yield curve, even 10-year treasury, struggling to get back above 1%, I think it has to go a long way before it destroys the valuation argument for these companies. So to me, we've almost got the best of all worlds. We now have the potential cyclical recovery. If we can get back to good stabilized cash flow, that will be rewarded with a much higher multiple than it is today. So when it comes to risk, obviously, a little bit of diversification. But in general, I feel pretty good about it.

If we come back to -- Nora, you were talking about cities and going back to the office. I think you and I are right now the 2 in the office, but we are in the minority in that in many respects. How -- I guess, what's your outlook on cities versus suburbs? And I guess, where is your mindset on the recovery that we could see?

Well, when you think about cities, Michael, you referenced earlier how we've been working together for almost 20 years. And think about what New York was like when you and I started working together, right? Recovering From 9/11, which was also very specifically a real estate problem, people not wanting to live in New York, not wanting to work in high floors of an office building. And so we recovered from that. We looked very different as a city than we did prior to 9/11. And so I think cities are going to recover. I think they're going to look different. And that will be a lot of interesting investment opportunities that will emerge from that. Look, my personal belief is that cities like New York and San Francisco sit on very irreplaceable assets. When I say assets, I mean more than just the land and the real estate, but the cultural aspects and others that are currently suspended. And so you can understand why it's very easy to develop a bearish thesis on cities today. So I do believe they're going to recover. Having said that, I think we can't, as fiduciaries for our clients, ignore what we're hearing from tenants and companies. And they're telling us that they're going to move more people out of the city. And they may have been doing that even before COVID because they were looking for "high-value locations." These are the red states that have lower tax regimes and have more affordable housing associated with them. And so that was already happening. And I think you're seeing an acceleration of that. People have been leaving New York in a backdoor way for a number of years. We've seen that in migration data. And so that all just got accelerated. And we have to incorporate that into our models when we think about demand and what that will look like because the drumbeat from CEOs is increasing every day that they are going to incorporate more work from home and other locations. And so while I'm personally bullish on cities recovering, of course, my home town here recovering, I think we have to be realistic about that. And the only positive note I would end it on is, I think the fact cycles have compressed so much, and we're seeing -- we got to the bottom very quickly in New York. Does that make sense? Only a year ago, we were talking about [ peak ] New York and some of these incredible statistics we could all have cited about the cost of living here. Very quickly, we saw rents drop 30%. We saw condo prices drop. And it turns out there's a market there, right? What happens is people that would have lived in Queens or Brooklyn or on the Jersey side, they'll move into Manhattan at down 30% rents. And so I think that's bullish that we're getting to those down points quicker and just compresses the cycle. And then I think as everyone on this call would probably agree, the big wildcard is what happens on the political front in these cities in the next couple of years.

Jonathan, JV, do you have any takes on the city versus suburbs discussions? Jonathan, I think you haven't converted to being a U.S. citizen. So you can run back to London anytime you want, right?

Right. I really -- I'm afraid I commented anything to what Nora had said on the subject.

Yes. I think her point about just the cost of living and, again, the people who make the most money and being taxed in these places which are -- have some issues, San Francisco, I mean Chicago and New York City, that higher earner is really the issue. I do think -- I live in Chicago, they've been building buildings downtown. It's people coming from the suburbs. I don't think millennials have decided they want to live in the suburbs all of a sudden, right? The reason why you have so many people moving from the big complexes in the suburbs of Chicago to downtown was to attract the talent that is in downtown. That wasn't the 47-year-old with 2 kids. It was the young person who wants to live in that environment. I do think your question is, what percentage of the workforce? There are savings of that. And there's the back office, et cetera. And so having a separate location for back office, is it you allow them to work from home. And so the aggregate demand issue. So again, I think my only thing [Audio Gap] maybe I'm a little more bullish on residential in those core cities than office in a 12- to 18-month time frame because, again, I don't think the average millennial wants to stay in a single-family owned to rent there in the suburbs.

But that millennial is getting older. And they -- it turns out when they do get into the mid- to late 30s, they have kids, there was probably a lot of pent-up demand of people who we can all think of our own offices that if they were in their late 30s, they had a couple of kids, they found themselves paying for private school, who, during the course of the pandemic, looked at all that inventory in Greenwich. I think that's where Jonathan is. So he can probably have a perspective on this and said, "Wow, this looks pretty good." And once you've made that move, unfortunately, we've lost you. You're not -- once you bought a house in [indiscernible] Greenwich or whatever, you're probably not coming back to the city to live in a shoebox and spend $100,000 a year on school. So I do think like that was -- we had a pent-up demand where people probably stayed in Manhattan for too long, stayed in San Francisco for too long, and those folks were likely to move to homes, single-family homes, and that has now happened. So I don't think we're getting those folks back anytime soon.

That's fair.

At that same time, after 9/11, you did see that migration out and people did come back, because they missed it.

Have they been able to sell their place in New York or have they been able to actually sell their place before they [ flump ] down a few million on a Greenwich house, I'm not sure about that. But clearly, we have -- I'm at the stage where people are downsizing. And people have had their house on the market, but 5, 6, 7 years, taking it on again, off again and put it back on in May of this year and sold it in 2 days. It was phenomenal.

All right. I tell you, last Saturday, being in the city, and you can see the cities across the world, right? The palpable shared experiences that you get in city dense environments is something really special and can't be replicated outside. And I do think that as a society, once we get over this pandemic, which none of us have lived through something like this in our lifetimes, things -- I agree with you, Nora. I think things get somewhat back to normal. It's going to be a different normal, but I think I'm a believer in cities and what they provide is just going to look and feel a bit different.

But we'll need a bit -- if people are working at home 2 days a week and going to office 3 days a week, they're going to need more space at home because they've made do with using the bedroom as their office for the last 6 months or so. But if that is a new norm, then they certainly want more space, but if rents are down 30%, as Nora says, then maybe they can get more space for the same price that they would have paid earlier.

That's the ideal environment of real estate is if people want to come in 2 or 3 days a week. Because my experience here at Goldman so far is people come in Tuesday and Thursday. And if everyone wants to come in Tuesday and Thursday, we kind of have to keep the same amount of office space, and you don't want to live too far away because you are commuting 2 days a week, but I do need more space at home because I'm working from home. That's sort of nirvana, if that's how it evolves. But you see how it would develop [ inside that] -- when I stay living in Manhattan with 4 kids, if I didn't have to commute to go, I'm probably not, right? So it really does come back to what happens with work.

Right. But then you also think about the travel, right? The travel aspect. And to me, the social bonds that are built, and I started this by talking about all the things we used to do in person together, right? Like, Nora, remember, we went to Des Moines, Iowa, right? And we -- our cab driver, Norm, we interviewed him, right, as we went to Jordan Creek Mall, which had just been developed, or John, we went to the basketball game. And Jonathan [Audio Gap] being at our conference, like nothing can ever replicate in-person. And it's great to see all of you in this virtual format. But to me, the in-person, and whether that's going to be in the office or whether that's going to be at your offices, I eventually think we're going to get back there because that's how we advance as a society. And I think there's a personal benefit and feeling that you get from being in-person with someone. Maybe I'm more optimistic than the market, but that's where, at least my head said, at least where I personally want to be doing. I don't want to be working at home or living at [ lodges ].

You have to ponder that with the fact that companies have realized how much money they save on T&E and they probably realize that they can operate a lot of that money with unnecessary spending just because people like to travel. And so I think companies will take a long hard look at how much they're going to spend on that going forward.

Right. I'm curious if we shift the discussion, each of you have different investor constituencies that are investing in your products. And the 3 of you have varied sources of that capital, different product lines. Maybe starting with JV, can you talk a little bit about how your clients are approaching this environment? And where you're seeing the most interest from a flows perspective?