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Company Spotlight

Kairos Living

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Q&A with Phillip Yates, VP of Operations & Head of Leasing & Marketing How Technology Sets Us Apart from the Competition Q: To begin, tell me a little about Kairos Living? A: Kairos Living began operations in July 2019 based out of Chicago. We are a vertically integrated real estate company that handles all aspects of property ownership and operations from sourcing and acquisitions to renovations, leasing and property management. We currently operate in 17 states and over 60 MSAs with a portfolio fast-approaching 2000 single-family homes with more on the horizon. Our biggest market is Oklahoma City, followed by Amarillo, Birmingham, then Dallas. We are also in Houston, Atlanta, and Fayetteville, to name a few. Our approach to utilizing progressive technology eliminates the need for local offices allowing for more freedom to expand our target markets. Our remote structure also significantly reduces the overall cost of the operation. We run a lean but efficient staffing model with just over 40 employees. Q: How long have you been involved and focused on the New Construction niche of the industry? A: Our original sourcing strategy was based on the renovate-to-rent model. As the pandemic hit early last year, we anticipated and quickly shifted our approach to focus on new construction homes acquired through several strategic relationships with national and regional builders. Q: What attracted Kairos Living to New Construction homes? A: The appeal for new construction homes is four-fold. The ability to capture higher rent due to a more desirable product for renters, lower R&M and capital expenses with builder and manufacturer warranties in place, lower turnover costs with superior building products and workmanship, and lower property taxes initially captured. Q: How and when were you introduced to PlanOmatic? A: Our Leasing Manager, Elizabeth Erikson, had used PlanOmatic at a prior company with great success and knew they would be an essential partner for us to successfully grow our portfolio. Consequently, we have been using PlanOmatic since the start in 2019. We consider PlanOmatic a Premier partner. The team at PlanOmatic has been extremely engaged and very responsive with the continued expansion of our processes as we grow. They are eager to find new ways to personalize services, reduce turnaround time and provide a superior product for us to hit the market. We greatly value the impact they bring to our business and really see this as a long-term partnership for years to come. Q: Can you describe how you use the PlanOmatic technology, specifically the 3D Tours? A: We currently utilize the full stack of services from PlanOmatic to help run our business, from new construction inspections using Property Insights to dynamically marketing our homes with Interior/Exterior Photos, Digital Floorplans and of course 3D Tours. Marketing a home is a lot like selling a great novel; the goal when a reader picks up the book is to be drawn into the story and visualize themselves engaged with the content. The more dynamic and accessible the book is, the higher probability you will capture a sale. The same goes with property marketing. For most renters, the point of origin starts online when looking for a place to call home. As you compete against other products, it is crucial to utilize every advantage in your arsenal. 3D Tours with PlanOmatic has done exactly that for us; making a defining statement online and hooking the prospect to tour in person. We see a visible ROI from increased lead generation and overall app volume. Q: Is your focus on technology a key distinction between Kairos and your competitors? A: Yes. Kairos Living sees technology as a key path to achieve a competitive advantage and differentiate ourselves from other industry players by leveraging that tech in every aspect of our business, empowering us to abandon the traditional “boots on the ground” ideology and embrace more of a centralized operating model. Proptech is still young in the SFR sector, but we see that changing everyday with new and seasoned platforms that have been servicing multi-family for years gaining large appetites for SFR growth. Our centralized model allows us to be agile, presenting as the ideal group to partner with as these platforms present themselves. Kairos Living’s success will continue to go hand-in-hand with a culture of innovation and embracing new technologies all while still providing a great experience for our Residents. For more information, you can email Phillip at pyates@kairosliving.com or visit kairosliving.com.

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Q&A with Jennifer McGuinness, President of Invigorate Finance

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Starting a New Chapter and Looking Ahead REI INK had the opportunity to interview Jennifer McGuinness, the president of Invigorate Finance, a newly formed partnership between Mortgage Venture Partners and Fay Financial. McGuinness brings over twenty-five years of lending and aggregation, banking, asset management, servicing, securitization, and structured finance experience to Invigorate Finance. Most recently, she was the Founder and Head of Aggregation & Structured Finance for Mortgage Venture Partners. She is also the Founder of Strategic Venture Partners. Both Mortgage Venture Partners and Strategic Venture Partners were named 2020 Top 25 FinTech Innovators. Q: You recently announced a new chapter with Invigorate Finance. Why did you decideto partner with Fay as opposed to staying on your own with Mortgage Venture Partners (“MVP”)? A: Both MVP and Invigorate Finance are closed loan mortgage conduit aggregators. Under the MVP structure, we were solely able to offer delegated correspondent aggregation. But with Invigorate Finance, we will also shortly launch a non-delegated correspondent channel. In addition, generally lenders face two really big challenges:  (1) the cost to originate is expensive and (2) servicing transfer is difficult and can cause significant “noise” for their customer leading to, for example, a less than desirable customer service experience when they make their first payments or take their first draw on a line of credit. I have known Ed Fay a long time and he has done a good job building  a services business that I believe will add significant value for certain Invigorate Finance clients. This partnership allows for us to deliver a quality of service that no other aggregator can match. Invigorate Finance truly offers complete solutions and is a real partner for lenders and investors alike. We are not merely a “take out”. Q: How do you work with Lenders to increase production without sacrificing customer service? A: Entities that are solely in the aggregation business to flip loans to other investors will make a little money standing in the middle, but they tend to outsource everything. When a lender deals with an “outsourced” aggregator there is a general lack of consistency in standards and practices, which is important because it can impact how loans are underwritten and whether exceptions are prudently assessed, for example. This is not the Invigorate Finance business model. Invigorate Finance does not outsource the operational features of its business, such as credit; hence the lender truly builds a relationship with us that is based on knowledge and that is how a business thrives. At the end of the day, Invigorate Finance is a customer service driven business. If the lender is working on an exception when underwriting a loan, they are going to be working with our internal team; if they are working to clear a condition before we purchase the loan they will be working with our internal team. We do not ask vendors to run our business for us. We run our business and that creates true rapport with our lender partners and investors. Q: Whenever you take a new step in your career it seems to be to invent something. Why is that? A: I think it is less about inventing things and more about the enjoyment of taking on a challenge that, if achieved could bring the market forward or enhance access to credit. I also love to learn new things or grow aspects of my knowledge base further. Throughout my career I have been very lucky to have been given the opportunity to truly build and run the full lifecycle of origination, asset management, servicing and structured finance, and have done so in lenders, banks, aggregators, hedge funds and REIT’s. I believe this background allows me to look at an opportunity from all sides rather than from only one “silo” and therefore provides me, our team, our lender partners, and investors with optimized outcomes. Now, it is important to note that I have not done any of the things I have achieved alone. I have been blessed with great mentors and team members over the years and it is their achievement as well as my own. Q: You are making a push to solve some of the supply problems we are seeing in the single-family rental space through aggregating new construction lines of credit—explain your thinking here. A: When looking at the market today, the biggest challenge I see initially is that demand does outweigh supply if you are solely looking at “for sale” real estate and mortgage rates. The demand of the homebuyer, coupled with the demand of the institutional investor, continues to drive home prices up in many markets. This, hand in hand with record low mortgage rates, has well positioned home buyers to make better purchase offers which could result in lower investment returns for investors, should they have to increase “buy prices” to acquire additional real estate. Single Family housing starts have increased by over $1.2 million in November 2020 per the Census Bureau which is more than a 25% increase from 2019. While a lot of the new construction will go to owner-occupants, this significant addition of new homes will begin to equalize the lack of supply for investors. By offering new construction lines of credit we are funding what is necessary to effectuate the build of the homes to actually help that demand be put to work. Q: Where do you think the market is heading? A: Now that the broader market has begun to equalize, the non-QM and non-agency markets are both starting to rebound. In addition, with recent announcements from the GSEs, there are additional opportunities opening up for non-agency segments of the market. For example, the 7% saturation for non-owner-occupied properties really does create opportunity for other lending programs to pick up additional volume to service this customer base. Good examples are our 1st lien HELOC, our 1st lien jumbo and our non-QM 1st lien programs—they all have applications for second homes and non-owner-occupied dwellings. The obvious follow up question is, “Will that create

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Making a Habit of Best Practice

Keystone Asset Management Finds Solutions in Every Real Estate Scenario.  By Carole VanSickle Ellis Keystone Asset Management has been on the path to big things from its very inception. Founded in 1995 in Philadelphia, Pennsylvania, Keystone started out, as CEO Ryan Hennessy describes it, as “a real estate company in ‘Philly’ handling distressed bank-owned assets for lenders including Fannie Mae, Freddie Mac, HUD, and various financial institutions.” Keystone is a family company; Hennessy’s mother, Jane Hennessy, and a then-partner realized in the mid-1990s that there was a need in the market for an asset management company specializing in distressed assets and REO (real estate owned) properties. Soon, business was booming, and the two added a valuation unit to handle broker price opinions and other facets of valuation. “By 1997, they had a national platform,” Hennessy said proudly. From there, the company continued to grow and expand to meet investor needs. Today, Keystone offers a vast range of services from property valuation to REO asset management to property preservation to property tax consulting and insurance. “There are so many things that go into a successful plan for each asset in a portfolio. As investors encounter diverse scenarios across their portfolio, we can help them formulate best practices, commonsense solutions, asset protection strategies, and even brand protection and building processes,” explained Jim Jacquelin, the company’s Director of Operations. The company combines decades of experience and deep-dive economic analytics to create custom management strategies for large real estate portfolios. “Effective, profitable asset management requires constant monitoring and evaluation of assets, strategies, and analytics. Our service and quality remain the same, but we adapt to our asset owners to reprioritize strategically and analytically to meet their specific goals and needs,” Hennessy said. Keystone employs a vast array of experts in a wide variety of fields including field services, performance and execution and an economic arm. This combination approach has served the company well, particularly since the end of the Great Recession when institutional investors entered the housing market in full force and began dealing with the kaleidoscopic and intricate details of single-family residential real estate. As the face of institutional investing and high-volume portfolio owners has changed over the past decade, Keystone has evolved to keep up with the changing and diverse needs of these major real estate players. Fitting All the Pieces Together Because Keystone is a national company catering to clients with vast geographic spread in their portfolios, nearly every service sector within the corporate structure is equipped to identify bellwether signs of a changing economy and respond appropriately. However, Hennessy said, that positioning, while starkly apparent today, has been serving Keystone clients well for decades. “We know that markets are cyclical, and certain types of investor behavior in certain sectors are also predictable. Combining those two facets of knowledge gives us a head start on the rest of the field when it comes to adjusting asset strategy,” Hennessy said. By working closely with clients to identify what type of investment strategies are most comfortable for them and what types of assets they want to leverage, the company can create the best position for each asset in the portfolio. For example, when a new “file” or asset enters the process, occupancy is the first piece of the equation. This is particularly important at present when the COVID-19 pandemic creates unusual issues with tenancy, leasing, rent payments, and evictions. “There are a lot of factors that go into working on a property with a tenant to create a positive outcome for everyone involved,” said Jacquelin. “Even if there is no one residing in the property, there are certain liabilities we protect against like securing the property against the elements, preventing break-ins and squatting, and preventing anyone from getting hurt while on the property.” Even before COVID-19, each state and local government had different rules, laws, and codes for these issues. Failing to address the logistical “fine print” could be catastrophic from both a legal and financial standpoint, particularly for high-volume investors who might be particularly attractive targets for litigation and bad publicity. “We have to handle all of those angles before we dive into figuring out what strategy will be the best fit for that property,” Jacquelin said.  Getting in the Best Position for 2020 and 2021 Thanks to Keystone’s extensive work with high-volume portfolios and owners with a diverse set of goals, Hennessy has been able to identify certain investing characteristics and types of investor over the years. Embracing certain strategic tendencies can position any investor, regardless of the volume of properties they currently own, in a prime position to emerge from the current economic downturn better off than they went in. “You must know who you are as a real estate investor and be flexible,” Hennessy said. “Does your strategy dictate your portfolio or, through pool acquisition, does your portfolio dictate your strategy?” In 2020 and 2021, the latter type may have an innate advantage over the former due to rising competition in the single-family marketplace. “We have a unique ability to aggregate critical data points surrounding the four core inputs on asset decisioning: geography, occupancy, valuation and intangibles—title, HOA, taxes. Ultimately, correctly aggregating data on these inputs paint a true picture on management philosophy and optimal disposition paths,” Hennessy added. “If you are the type to strategically acquire a specific type of property, then you should take a close look at your ‘buy boxes’ to see how they are affecting your long-term goals right now,” Hennessy said. “It might make sense to stretch the box or diversify a little bit.” On the other hand, most institutional investors tend to be acquirers first and strategize second, mainly because they tend to acquire in bulk. In this case, the portfolio itself will dictate strategy and, ideally, each asset will have a unique strategy that makes the most of that asset while protecting the interests of the new owner from every angle. “Institutional players tend to look at things at a much

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Q&A With Cardone Enterprises’ Grant Cardone

35-year veteran of the real estate investment industry shares insights ranging from his personal journey to the post COVID-19 real estate world Grant Cardone is a 35-year veteran of the real estate game. He’s the CEO of Cardone Enterprises and has $1.7 billion under management. Cardone has always been seen as a forward-thinking business operator. He is often called on by Fortune 500 companies and real estate leaders for his practical business ideas and strategies. Cardone is a preferred borrower with Fannie Mae, Freddie Mac and life insurance companies. An entrepreneur, private equity manager and New York Times bestselling author, Cardone is known as the #1 Sales Expert in the world today. Forbes magazine called him one of the top CEO’s to follow on social media. Under Cardone Enterprises, Cardone currently owns and operates seven companies with $150,000,000 in annual sales. He also launched the Grant Cardone Foundation, whose mission is to impact the lives of children who grow up without fathers. According to Cardone, “the holy grail of every entrepreneur is taking risks in order to make more time and money.” Cardone was gracious enough to answer a few questions for REI-INK while he was on the road getting ready for a big event. His answers range from revelations about his own personal journey to his “macro” view of the real estate world post COVID-19. Q: How did your real estate investment journey begin—and what was it like? I’ll never forget my first real estate deal. I put down $3,500 on a $78,000 property in Bellaire, Texas, and I thought I was getting away with stealing. I knew nothing about finding tenants, listing the property, drawing up a lease—zero. All I knew was that I owned a piece of real estate and I had hit the big time. I finally got some tenants and a whole bunch of problems—roaches, plumbing, you name it. Then they moved out, and I was stuck with the payment. I ended up selling the place and turned my original $3,500 into $7,000. I made 100% with no idea of what I was doing. After that, I started doing my homework as I looked for other apartments. Q: Who were some of your mentors? I can’t talk about mentors without first mentioning my dad. He was the first person in my life to set an example for me when it came to showing up, putting in the time and doing the work. I also have to give my mom a lot of credit because she showed me what strength and determination were every day after my father died. Later in life when I was on the ropes in every way, someone looked me in the eye and asked me, “What are you doing?” That was a wake-up call for me. That guy put me on the track that led me to where I am today. Of course, I studied all the great sales trainers and professional speakers back in the day too. So, I owe my success to a lot of people. Q: Your company currently has close to $2 billion of assets under management. Are they single family, multifamily, land, retail? Cardone Capital is one of the largest private real estate funds in the country, and we got there through crowdfunding. In record time, I might add. We made it happen because we offer opportunities to both accredited and nonaccredited investors.  As far as our assets go, right now we’re concentrating almost exclusively on larger multifamily apartment complexes, especially in the southeast U.S. But that doesn’t mean we’ll limit ourselves to that sector. I’ve done retail, commercial, single family, you name it. I’ll invest in anything, anywhere if I think it will result in cash flow. That’s what it all comes down to, but right now multifamily is our sweet spot. Q: Do you favor one asset type over another? My third real estate deal was for a 48-unit property that I chose because I didn’t want to have to rely on just one renter for my income. Even if a few units are empty, I’m still collecting. Anyway, I put $350,000 on that deal and made $5 million. That was the game changer for me, where I was like, “OK, I’m investing in apartments from now on.” So right now, Cardone Capital is focused on multifamily properties across the South and Southwest because that’s where the money is. Plus, now more than ever, America is becoming a nation of renters. COVID-19 is going to accelerate that. So right now, I’m focused on apartment complexes of 300-500 units in good locations in the South and Southwest with everything tenants want nearby—good schools, convenient shopping, Starbucks, things like that. If you can offer all that, people will pay as much as $2,000 a month or even more, depending on the location and amenities. With that kind of cash flow, even if you don’t have full occupancy, there’s no way you’re losing money.  Q: What is your “macro” view of the real estate industry post-COVID? What everyone else is calling a crisis, I’m calling the biggest real estate opportunity of my lifetime. As soon as this COVID situation happened, I was like, get ready, people. I told everyone I knew to look at markets everywhere and not just for people with millions to invest. Every market in America has duplexes, four-plexes, 10 units, 20 units. Almost anyone can access those properties and once you do, you are set. Right now, large multi-family generates the most cash flow for me and my investors, but I’m always looking for new opportunities. Q: Tell us about the 10X Movement? 10X is a timeless principle for success to get what you truly want out of life. I boiled down the only difference between the times I was successful and the times I felt my ventures failed. It came down to just not thinking big enough. The 10X rule is almost like an insurance policy. You have to aim 10

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What to Do While You’re Waiting for the Turnaround

Standard Management Company founder Samuel K. Freshman on the post-pandemic economy Samuel K. Freshman, owner and chairman of private real estate investment and management firm Standard Management Company (SMC) and chairman emeritus of Stanford Professionals in Real Estate (SPIRE), has been in real estate since 1958.  Under Freshman’s leadership, SMC has acquired and managed more than 6,000 apartment units and 5 million square feet of office, retail, mixed-use and industrial space across 12 states and 25 U.S. cities during the past five decades. Freshman looks at it all with a mixture of pragmatism and patience. After spending this past spring working from home, he’d really like to get back to his Los Angeles office. He’s not holding his breath that he’ll get his wish anytime soon,however. “I think this turnaround is going to take longer than people expect,” Freshman said in a recent interview with REI-INK. “It’s going to take some time, and we could see some sectors experience significant crises before it’s over.” REI-INK sat down with Freshman to talk about how the current economic environment is affecting his company’s investments and whether the effects of the COVID-19 pandemic are as unprecedented as many would argue. Q: What kind of timeline do you expect for the economic recovery, or will there be one? A: First thing I would say to you is, “Your guess is as good as mine!” Then I would say, it is going to take longer than people expect right now. Until they actually solve the COVID-19 virus problem, things will remain tough. Unfortunately, efforts to alleviate financial strain on tenants by delaying or prohibiting evictions could stretch the recession farther because landlords will be in crisis as well. For example, there is currently a proposal to reduce rents by 25% in some jurisdictions. While this sounds nice, the reality is that nearly no operators make 25% returns to begin with, so there is nowhere to cut that much. It would immediately put operators under, and every single landlord out there would be asking for relief from that initiative. It would destroy the rental industry. The disaster and the disaster response both must be measured and proportionate or we will stretch the crisis out. Q: In March, many analysts predicted staggering delinquencies on rents. Did those delinquencies manifest this past spring? A: They have not yet [as of June 27, 2020]. We are collecting about 94%, down from 96%. The problem that many policymakers do not understand is that this means we are 6% down each month, which is about half of our net operating income (NOI). The “top dollars” in real estate go to NOI after you maintain the building, pay your taxes and loans, utilities, water treatment, etc. So, if you write down rents by 25% across the board, that eliminates all the NOI and puts the building into duress because no operator is making 25% NOI. Q: What types of assets do you find attractive right now? A: I would not be particularly enthusiastic about Class A assets, and I’m not sure what is going to happen to communities with Class C buildings, either. We are focused in the range between B- and B+, which seems to have held up pretty well so far; we have not yet had any great loss of rentals or ability to pay. There is a lot of risk across the board right now. Some people are starting to move back home; others are doubling up so they can afford rent on an apartment if they lose their job or lose hours at their job. We have not acquired much this year so far becausewe are sort of waiting to see what the trends are going to be. We have talked to people who say they are quite optimistic buying at a 4% CAP rate because they expect to increase rent, but I think rents may decline in the multifamily arena. Q: Is SMC still lending in today’s environment? A: Yes, although maybe not as much as we were. There are always exceptions. We are making loans on properties in Malibu, which is coming back pretty strong because of the beach. After all, they are not making any more of it! I would not necessarily want to do much lending on construction, but if there is an existing property, we will make the loan. We have to become more conservative because we do not really know in what direction we are going. Q: What regions of the country particularly interest you? A: As a practical matter, I prefer to stay invested in places that are no more than 90 minutes from L.A. However, if I lived in the Midwest or Eastern U.S., I would definitely be looking at Florida and Texas. Atlanta, Georgia, seems to be doing well also. We look primarily to invest in Nevada, Arizona, secondary California markets and the states on the West Coast. Q: Does state reopening policy affect your interest in an asset? A: It depends on how the economy in the state is doing. We just look at which states are doing well and which aren’t in order to decide. We don’t necessarily review their policies. Q: Is the current economy and national environment as unprecedented as most people seem to think? A: Unfortunately, the biggest problem is that the two main political parties in the country are at loggerheads. That is making the entire situation harder to resolve on top of the issue that the coronavirus is historically unique. Probably the closest comparison would be the Black Plague in Europe during the 1500s. The most important thing we can do is to get control of this thing or it will become even more serious. It’s very frustrating for me because they have opened my office building back up, but because I am over 65, they don’t want me to come in! As a nation, we need to watch the education system carefully going into the fall to make sure grade

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Q&A With Growth Group’s Steven Cinelli

Futurist and growth advisor discusses outlook for the national and global economies Steven Cinelli is the founder of California-based Growth Group and the managing director of boutique advisory firm SLAMINA LLC. He also serves as an adviser for London-based fintech incubator and consulting firm FinTech4Good and has spent decades as a creative strategist, banker, adviser and fintech executive. Known for his uncanny ability to anticipate markets, Cinelli has been predicting the kind of global economic crisis catalyzed by COVID-19 for nearly two years now. “[In late 2018] we were in the middle of an alleged robust economy with a buoyant stock market, and most people did not want to hear the words ‘global meltdown’ or ‘global depression,’” Cinelli said. “The fundamental strength of the economy was surface-level, largely propelled by inexpensive debt within both private and public sectors. COVID-19 was merely the pin that popped the bubbles.” REI-INK sat down with Cinelli in mid-April—while most of the country was still in the middle of “shelter-in-place” and “safer-at-home” initiatives—to delve into his outlook for the national and global economies. Cinelli’s take on the economic situation at home and abroad was, as he put it, “certainly not a pretty picture,” but it opened some intriguing avenues of discussion relevant to real estate investors and the other business people who will likely bear the burden of supporting, bolstering and recreating the economy. What made you think the economy was in trouble so “early” compared to most analysts? It has been clear for some time that the fundamental strength of the U.S. economy was surface level. It seemed healthy, but when you started looking at the nature of employment and unemployment, you observe that we have a gig economy. People do not have steady jobs as they enjoyed years ago. They have one job today and a different job tomorrow. The government’s employment figures are “net” figures, the difference between new and lost jobs. The lost job number has been considerable for years; it’s just that new jobs outweighed the losses. Now, new jobs have come to a halt, and the unemployment figures will continue to increase. As mentioned, the economic performance is very surface-level, and—to further exacerbate the underlying instability—most people do not have very deep pockets (i.e., large savings). Just in the last four weeks, we have seen over 20 million individuals filing for unemployment benefits. Certain analysts claim the real unemployment rate is nearing 18%. That is unheard of. It matches the Great Depression. And when the economy reopens, whatever that means, how many of those who were laid off will be reabsorbed—and over what time period? The employment narrative has been part of the veneer of a very fragile economy. Certain asset classes, like equities and housing, have been fed by borrowing. When that window closes, the music stops and prices will fall. You ask why my forecast predates others: The biggest telltale sign was the rapid increase in overall debt levels without a corresponding increase in economic production. This has been clear since the early years of the expansion coming off the Great Recession. Cheap money has led to profligate spending and creating debt-fed asset bubbles. Think about this: If interest rates rose only by 300 basis points, we would virtually double the level of debt service in the economy, sucking a considerable amount of economic oxygen out of the room. Can the United States and real estate investors take any indicators or cues from what is happening globally to predict how things will look moving forward? One definitely has to assess things on a global basis now, not merely [look at the situation] in a domestic sense. There are fundamental weaknesses within all existing socio-economic systems right now, be they capitalism-democracy, socialism-autocracy, etc. In fact, these systems are, in many ways, becoming mirrors of each other. The capitalist U.S. has more safety-net programs and government regulation of industry than most and no longer ranks in the top capitalist countries in the world according to the Heritage Foundation. The recent CARES (Coronavirus Aid, Relief and Economic Security) Act and so-called stimulus programs, in my view, seem more socialist than capitalist, particularly those supporting big business. Why shouldn’t large corporations avail the capital markets for funding, rather than [take] a bailout from Uncle Sam? Furthermore, society has changed with technology continuing to influence behavior. As we move into the fourth industrial revolution, with artificial intelligence, internet of things, genome editing and other cyber-physical protocols, we will further alter the ways we live, work, interact and spend money. Our infrastructures must adapt to new realities, and one of the things that everyone must accept as soon as possible and be most concerned with is the level of debt the world’s challenged economies have taken on both before and during the COVID-19 outbreak. In the U.S., with this current transition, we could see our GDP drop to $15 trillion (down from $21 trillion). In conjunction with the stimulus bills, the CARES Act and deficit spending, we are likely to see federal debt move up to at least the $30 trillion level. Beyond that, we need to consider debt outside the federal level, like state and local municipalities, which carry almost $10 trillion, and household debt, like student loans, mortgages, auto loans and credit cards, which amounts to another $17 trillion. On top of that, consider the corporate debt in the marketplace today because many companies took on debt to buy back stock, which is probably another $9 trillion or $10 trillion and the unfunded pension and other statutory liabilities of nearly $150 trillion. Across the board, the level of debt in the U.S. is probably twice as much as it was in 2008. And with a shrinking economy, our debt to GDP ratio may approach Japan’s, at north of 200%. In simple terms: I believe the U.S. has moved to economic euthanasia. With such a financial situation, and with rates with no further room to drop, I fear that the debt

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