Category: 3. Business

• USD/JPY hits four-week low of 142.68, but rebounds as US jobs and ISM data support the Greenback.
• Powell keeps hawkish tone, saying July rate cut not guaranteed; RSI signals limited bullish momentum.
• Key support lies at 143.00 and 142.11; resistance capped near 144.50–145.35 Ichimoku cloud zone.

The USD/JPY posted mild losses of 0.17% after hitting a new four-week low of 142.68, sponsored by upbeat economic data in Japan. However, good US jobs and business activity data, along with a hawkish Fed Chair Jerome Powell, lent a lifeline to the US dollar, which staged a comeback versus the Japanese Yen (JPY). At the moment, the pair trades at 143.77.

USD/JPY Price Forecast: Technical outlook

The USD/JPY remains neutral-to upward biased if the pair remains above the May 27 swing low of 142.11. However, upside movements could be capped by strong resistance at the bottom of the Ichimoku Cloud (kumo) at around 144.25-50. This, along with the Relative Strength Index (RSI) remaining bearish, suggests that consolidation lies ahead.

For a bullish case, the USD/JPY must clear 144.50, and the confluence of several moving averages, such as the 20- and 50-day SMAs. Once surpassed, the next area of interest would be the Kijun-sen at 145.07, ahead of the Tenkan-sen at 145.35. A breach of the latter will expose the 100-day SMA at 146.32, followed by the June 23 high of 148.02.

On the other hand, if USD/JPY falls below 143.00, a further downside is expected to occur, with a potential target of 142.00.

USD/JPY Price Chart – Daily

 

Global law firm K&L Gates LLP advised Terramont Infrastructure Partners, a North American-focused infrastructure investment firm, on its US$160 million capital commitment to Dispatch Energy LLC, a leading provider of distributed energy solutions. Terramont is focused on companies that are critical to the economy and which seek to make a positive, measurable sustainability impact. Dispatch’s investments will focus on generating cost savings, enhancing resiliency, and providing grid services designed to meet the growing demand for on-site power generation.

K&L Gates served as corporate counsel and fund counsel on this deal. The team was led by New York partners Ed Dartley and Adam Tejeda and included Charleston partners Andrew Lloyd and Lauren Garenne, Kansas City partner Jim Goettsch, New York partner Chris Carson, Boston associate Christopher Phillips-Hart, Charleston associate David Caughran, and New York associates Benjamin Augugliaro and Jamie Robinson.

Dartley commented: “We’re very pleased to have advised Terramont as deal counsel on their latest transaction and as fund counsel. The strength of our platform allowed us to assemble a cross-practice team that leveraged capabilities across several offices and disciplines. We very much forward to continuing to advise Terramont on future transactions.”

“We were extremely pleased to work again with the K&L Gates team on this important investment for our Fund,” said Terramont co-founder Vikram Singh. “K&L Gates has been a partner with us since our launch of Terramont Infrastructure, and a trusted advisor as fund counsel and as corporate counsel. Their knowledge and experience across multiple industries is unparalleled and we look forward to working with them on future deals as we continue to invest in the infrastructure space.”

Based in New York and San Francisco, Terramont invests in best-in-class businesses alongside top-quality management teams. Investment sectors include renewable power, sustainable energy, transportation, digital, environmental, and other infrastructure businesses.

PITTSBURGH, July 1, 2025 – Wabtec Corporation (NYSE: WAB) announced today that it completed the acquisition of Evident’s Inspection Technologies division (Inspection Technologies), formerly part of the Scientific Solutions Division of Olympus Corporation, a global leader in Non-Destructive Testing, Remote Visual Inspection and Analytical Instruments solutions for mission critical assets. This acquisition strengthens Wabtec’s Digital Intelligence business with industry-leading inspection technologies that enhance customer productivity, reliability, and safety, while also positioning the company for accelerated, profitable growth.

“Today, we are a stronger company with the addition of Inspection Technologies,” said Rafael Santana, President and CEO of Wabtec. “The acquisition expands and strengthens our Digital Intelligence business, with advanced products and services for the Company’s rail, mining, and industrial sectors, while broadening our reach into other high-growth, high-margin end-markets. It enhances Wabtec’s existing portfolio, is accretive to key financial metrics, and aligns with the company’s long-term vision to lead the industry in innovation for our customers.”

The strategic acquisition helps accelerate Wabtec’s growth trajectory and meets the increasing demand for advanced diagnostic technologies. It also aligns with Wabtec’s stated growth drivers, including accelerating the innovation of scalable technologies, increasing the installed base, expanding high-margin recurring revenues, and driving continuous operational improvements. Additionally, acquiring Inspection Technologies expands Wabtec’s Digital Intelligence business growth opportunities and recurring revenue, effectively doubling the size of its total addressable market (TAM) from approximately $8 billion to $16 billion, while enhancing its ability to deliver innovative solutions to a broader range of customers.

“Inspection Technologies’ product portfolio strongly complements our existing digital technologies, while adding advanced automated inspection capabilities in a space where data acquisition, analytics, and automation are critical,” said Nalin Jain, President of Wabtec’s Digital Intelligence Group. “It will accelerate the development of scalable technologies by integrating advanced analytics, sensors, and AI technology to deliver enhanced predictive maintenance capabilities to our customers. Evident Inspection Technology employees have done a fantastic job in delivering these innovative technologies and I am looking forward to welcoming them to the Wabtec family.” 

TRANSACTION DETAILS

Wabtec acquired Evident’s Inspection Technologies division for $1.78 billion (~$1.68 billion after tax benefits). The transaction was financed through a combination of cash on hand, newly issued term notes, plus term loans and short-term borrowing under the Company’s credit agreement. The transaction is anticipated to provide immediate shareholder value with a high single-digit revenue growth outlook, accretive Adjusted EBIT margins and accretive return on invested capital (ROIC) over time.  Additionally, the acquisition is projected to be slightly accretive to Adjusted EPS in the second half of 2025.  The purchase price reflects an estimated multiple of 12.0x projected 2025 EBITDA adjusted for transaction and separation costs, anticipated tax benefits, and projected run-rate cost synergies of $25 million.  The Company intends to incorporate the revenue and EPS impact of this acquisition into its Full Year Financial Guidance during its Q2 Earnings call.

About Wabtec Corporation
Wabtec Corporation is revolutionizing the way the world moves for future generations. The Company is a leading global provider of equipment, systems, digital solutions and value-added services for the freight and transit rail industries, as well as the mining, marine and industrial markets. Wabtec has been a leader in the rail industry for 155 years and has a vision to achieve a sustainable rail system in the U.S. and worldwide. Visit Wabtec’s website at http://www.wabteccorp.com.

About Evident Inspection Technologies Division
Evident’s Inspection Technologies and Microscopy divisions were established in 2022 when Olympus Corporation spun off its Scientific Solutions Division to form a new company. Evident’s Inspection Technologies division delivers solutions that solve complex challenges, inspecting mission-critical assets and infrastructure with nondestructive testing, remote visual inspection, and analytical instruments for maintenance, manufacturing, and environmental applications. Visit Evident’s website at ims.evidentscientific.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. securities laws, including statements regarding the expected benefits of the Inspection Technologies acquisition, the anticipated synergies of the transaction, the expected impact on Wabtec’s operational and financial performance, (including business growth opportunities and TAM), and certain projected financial results of Inspection Technologies. These statements and all statements other than historical facts constitute forward-looking statements concerning future circumstances and results and are sometimes identified by the words “anticipate,” “estimate,” “expect,” “outlook,” “position,” “project,” “recur,” “strategy,” and “will” or other similar words or expressions. Forward-looking statements are based upon current plans, assumptions, estimates and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information on these risks, please refer to Wabtec’s filings with the SEC.  Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or expenses resulting from the transaction; (2) uncertainty of the expected financial performance of Inspection Technologies and the combined company following completion of the transaction; (3) risks associated with the integration of Inspection Technologies and the potential for failure to realize the anticipated benefits and synergies of the transaction; (4) the ability of the combined company to implement its business strategy; (5) inability to retain key personnel; (6) changes in general economic and/or industry specific conditions; and (7) other risk factors as detailed from time to time in Wabtec’s reports filed with the Securities and Exchange Commission. The foregoing list of important factors is not exclusive.

This press release also contains certain non-GAAP measures. Non-GAAP measures should not be considered as a substitute for items calculated in accordance with GAAP, as they are subject to inherent material limitations.

(Bloomberg) — Wall Street traders drove a rotation out of the tech megacaps that had powered stocks from the brink of a bear market. Bond yields rose as an increase in job openings dimmed the outlook for Federal Reserve rate cuts. The dollar remained at its lowest since 2022.

While the S&P 500 barely budged after notching all-time highs, a violent rotation took place at the start of July, with money chasing losers at the expense of recent winners. Momentum was unwinding at a pace not seen in over two years, and the small-cap Russell 2000 index beat the tech-heavy Nasdaq 100 by the most since April.

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“If you’re long recent winners and are feeling the pain today, we would not be making any dramatic portfolio shifts just yet,” said Bespoke Investment Group strategists. “It could be the start of a longer-term shift that develops, but a one-day move is simply too soon to tell.”

Short-dated Treasuries, which are more sensitive to imminent Fed moves, underperformed longer maturities.

US job openings hit the highest since November, largely fueled by leisure and hospitality, and layoffs declined. Fed policymakers have consistently characterized labor-market conditions as strong in recent weeks.

“As long as the labor market remains solid, the US economy can continue to chug ahead, while helping reduce the risk of stagflation” said Bret Kenwell at eToro. “It would also buy the Fed more breathing room when it comes to interest rates.”

Speaking Tuesday during a panel in Portugal, Fed Chair Jerome Powell repeated that the central bank probably would have cut rates further this year absent Trump’s expanded use of tariffs. Still, when asked if July was too soon for a rate cut, Powell didn’t rule out the possibility.

The government’s June employment report, due Thursday, is expected to show a slowdown in nonfarm payroll growth and an uptick in the unemployment rate.

“Federal Reserve interest-rate policy is likely on hold for now,” said Josh Hirt at Vanguard. “If the labor market remains on the trajectory we expect, the Fed can afford to be patient. We anticipate the Fed will be able to make two more rate cuts later this year in this environment.”

Separate data Tuesday showed US factory activity contracted in June for a fourth consecutive month as orders and employment shrank at a faster pace, extending the malaise in manufacturing.

“While the hit to manufacturing activity from tariffs so far appears to have been limited, the further small rise in the prices paid index last month adds to evidence that firms are facing higher costs as a result,” said Thomas Ryan at Capital Economics.

Meantime, Trump said he is not considering delaying his July 9 deadline for higher tariffs to resume and renewed his threat to cut off talks and impose duty rates on several nations, including Japan. And his $3.3 trillion tax and spending cut bill passed the Senate.

Corporate Highlights:

• Sweeping tax legislation passed by the Senate would make it cheaper for semiconductor manufacturers to build plants in the US, delivering a win to chipmakers and boosting US efforts to expand the industry domestically.
• Tesla Inc. sank as Trump threatened to withdraw subsidies from Elon Musk’s companies and examine the billionaire’s immigration status.
• Boeing Co. said Stephen Parker will oversee the defense, space and security unit on a permanent basis, as Chief Executive Officer Kelly Ortberg molds his top leadership team, including the appointment of a new chief financial officer.
• Ford Motor Co.’s electric vehicle sales plunged 31.4% in the second quarter after the automaker ordered dealers not to sell its battery-powered Mustang Mach-e model due to a safety flaw that could lock occupants in the car.
• UnitedHealth Group Inc. and Memorial Sloan Kettering Cancer Center resolved a contract dispute that threatened to interrupt treatment for thousands of cancer patients in the New York City area.
• AMC Entertainment Holdings Inc. said it reached an agreement with a majority of bondholders to end litigation that resulted from the movie theater chain’s debt restructuring last year.
• Wolfspeed Inc., a chipmaker caught in President Donald Trump’s push to reshape Biden-era tech subsidies, filed bankruptcy to enact a creditor-backed plan to slash $4.6 billion in debt.
• Macau’s monthly gaming revenue rose 19% in June, exceeding analyst expectations as visitors poured in to the world’s biggest gambling hub for Cantonese pop concerts and other entertainment offerings.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.1% as of 4 p.m. New York time
• The Nasdaq 100 fell 0.9%
• The Dow Jones Industrial Average rose 0.9%
• The MSCI World Index fell 0.1%
• Bloomberg Magnificent 7 Total Return Index fell 1.5%
• The Russell 2000 Index rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1793
• The British pound was little changed at $1.3741
• The Japanese yen rose 0.2% to 143.75 per dollar

Cryptocurrencies

• Bitcoin fell 2.1% to $105,393.95
• Ether fell 4% to $2,404.6

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.25%
• Germany’s 10-year yield declined three basis points to 2.57%
• Britain’s 10-year yield declined three basis points to 4.45%

Commodities

• West Texas Intermediate crude rose 0.9% to $65.70 a barrel
• Spot gold rose 1% to $3,337.42 an ounce

©2025 Bloomberg L.P.

Xiaomi opened orders for the five-seat YU7 SUV earlier this week, with prices for the Model Y-sized EV starting from 253,500 yuan – right in the wheelhouse of the 263,500 yuan Tesla.

However, not even Xiaomi could have predicted just how popular it would be, with company founder and CEO Lei Jun announcing massive interest in the YU7.

“My goodness, in just two minutes, we received 196,000 paid pre-orders and 128,000 lock-in orders,” Lei said in a video after it launched last week. “We may be witnessing a miracle in China’s automotive industry.”

While not every one of the orders guarantees a sold vehicle, the circa-325,000 combined paid pre-orders and expressions of interest represents more than all vehicle sales in Australia between January and March 2025.

It could also put a big strain on Xiaomi’s current production capacity of 150,000 vehicles, however a second factory with equal capacity is due to start operations within weeks.

Of course, China is a significantly larger market, with the almost 18 million vehicles it produces and sells locally annually representing about two-thirds of the nation’s overall domestic sales.

Last year, Tesla sold 480,309 examples of the Model Y in China, with all of those – as well as the versions of the electric SUV sold in Australia – being produced at its Shanghai factory.

Like the Model Y’s relation to the Model 3 sedan, the YU7 is closely related to the SU7 sedan, based on the same Modena platform and offering similar electric motor and battery combinations.

Variants start with the entry-level self-named YU7, producing 235kW and 528Nm from its rear electric motor, fed by a 96.3kWh LFP battery. The step-higher Pro adds a front electric motor, increasing outputs to 365kW and 690Nm.

At the top of the range is the YU7 Max, which uses a 101.7kWh NMC battery to feed two more powerful electric motors, capable of producing up to 508kW and 866Nm.

The YU7 sadly has no answer to the SU7’s Ultra variant, which can pump out approximately 1140kW, propelling it to the top of the EV lap-time leaderboard around the Nürburgring Nordschleife.

Evan Kharasch, professor of anesthesiology and vice chair for innovation at Duke University, has developed two approaches that may aid in fentanyl addiction recovery. After attending MIT’s Substance Use Disorders (SUD) Ventures Bootcamp, he’s committed to bringing them to market.

Illicit fentanyl addiction is still a national emergency in the United States, fueled by years of opioid misuse. As opioid prescriptions fell by 50 percent over 15 years, many turned to street drugs. Among those drugs, fentanyl stands out for its potency — just 2 milligrams can be fatal — and its low production cost. Often mixed with other drugs, it contributed to a large portion of over 80,000 overdose deaths in 2024. It has been particularly challenging to treat with currently available medications for opioid use disorder.  

​​As an anesthesiologist, Kharasch is highly experienced with opioids, including methadone, one of only three drugs approved in the United States for treating opioid use disorder. Methadone is a key option for managing fentanyl use. It’s employed to transition patients off fentanyl and to support ongoing maintenance, but access is limited, with only 20 percent of eligible patients receiving it. Initiating and adjusting methadone treatment can take weeks due to its clinical characteristics, often causing withdrawal and requiring longer hospital stays. Maintenance demands daily visits to one of just over 2,000 clinics, disrupting work or study and leading most patients to drop out after a few months.

To tackle these challenges, Kharasch developed two novel methadone formulations: one for faster absorption to cut initiation time from weeks to days — or even hours — and one to slow elimination, thereby potentially requiring only weekly, rather than daily, dosing. As a clinician, scientist, and entrepreneur, he sees the science as demanding, but bringing these treatments to patients presents an even greater challenge. Kharasch learned about the SUD Ventures Bootcamp, part of MIT Open Learning, as a recipient of research funding from the National Institute on Drug Abuse (NIDA). He decided to apply to bridge the gap in his expertise and was selected to attend as a fellow.

Each year, the SUD Ventures Bootcamp unites innovators — including scientists, entrepreneurs, and medical professionals — to develop bold, cross-disciplinary solutions to substance use disorders. Through online learning and an intensive one-week in-person bootcamp, teams tackle challenges in different “high priority” areas. Guided by experts in science, entrepreneurship, and policy, they build and pitch ventures aimed at real-world impact. Beyond the multidisciplinary curriculum, the program connects people deeply committed to this space and equipped to drive progress.

Throughout the program, Kharasch’s concepts were validated by the invited industry experts, who highlighted the potential impact of a longer-acting methadone formulation, particularly in correctional settings. Encouragement from MIT professors, coaches, and peers energized Kharasch to fully pursue commercialization. He has already begun securing intellectual property rights, validating the regulatory pathway through the U.S Food and Drug Administration, and gathering market and patient feedback.

The SUD Ventures Bootcamp, he says, both activated and validated his passion for bringing these innovations to patients. “After many years of basic, translational and clinical research on methadone all — supported by NIDA — I experienced that a ha moment of recognizing a potential opportunity to apply the findings to benefit patients at scale,” Kharasch says. “The NIDA-sponsored participation in the MIT SUD Ventures Bootcamp was the critical catalyst which ignited the inspiration and commitment to pursue commercializing our research findings into better treatments for opioid use disorder.”

As next steps, Kharasch is seeking an experienced co-founder and finalizing IP protections. He remains engaged with the SUD Ventures network as mentors, industry experts, and peers offer help with advancing this needed solution to market. For example, the program’s mentor, Nat Sims, the Newbower/Eitan Endowed Chair in Biomedical Technology Innovation at Massachusetts General Hospital (MGH) and a fellow anesthesiologist, has helped Kharasch arrange technology validation conversations within the MGH ecosystem and the drug development community.

“Evan’s collaboration with the MGH ecosystem can help define an optimum process for commercializing these innovations — identifying who would benefit, how they would benefit, and who is willing to pilot the product once it’s available,” says.

Kharasch has also presented his project in the program’s webinar series. Looking ahead, Kharasch hopes to involve MIT Sloan School of Management students in advancing his project through health care entrepreneurship classes, continuing the momentum that began with the SUD Ventures Bootcamp.

The program and its research are supported by the NIDA of the National Institutes of Health. Cynthia Breazeal, a professor of media arts and sciences at the MIT Media Lab and dean for digital learning at MIT Open Learning, serves as the principal investigator on the grant.

Patients with multiple myeloma (MM) are more likely to experience early relapse if they have a lower percentage of regulatory T cells (Tregs) at diagnosis, a new report published in Cancer Medicine has found.¹

Low Tregs might also be an indicator of functional high-risk (FHR) status, the authors noted.

Corresponding author Fang Xu, PhD, of the University of Electronic Science and Technology of China, and colleagues wrote that assessing risk is critically important in MM because the disease is curable, and almost every patient will eventually relapse. Xu and colleagues pointed to a 2023 study that showed that more than 1 in 10 (11.6%) of patients who are not categorized as high risk using traditional baseline risk assessments will still go on to have an early relapse, which they defined as relapse within 18 months.²

“Therefore, identifying patients with functional high risk early has brought increased attention,” Xu and colleagues wrote.

FHR refers to patients who will experience an aggressive disease course and early relapse even when treated with novel agents like proteasome inhibitors and/or immunomodulatory drugs, autologous stem cell transplantation (ASCT), and CD38 antibodies, they wrote.

To identify FHR patients, Xu and colleagues started with the tumor microenvironment. Within the MM tumor microenvironment, Tregs play a particularly important role.

“Tregs can suppress the body’s immune response, thereby weakening the immune attacks on tumor cells,” they said. “Secondly, Tregs may promote tumor growth and survival by regulating the immune response in the tumor microenvironment.”

The investigators hypothesized that studying patient Tregs at diagnosis might therefore provide insight into potential correlations between Tregs and early relapse.

The authors identified 70 patients who were newly diagnosed with MM between 2016 and 2023. Participants’ Tregs were assessed at baseline. Early relapse was defined as relapse within 18 months following initial treatment or relapse within 12 months of ASCT. Sixteen patients in the study went on to have early relapses.

In the cohort as a whole, neither the median progression-free survival (PFS) nor the median overall survival (OS) was reached. However, in patients with early relapse, the median OS was 24.8 months and the median PFS was 10.8 months.

When the investigators analyzed patients’ medical records, they found that elevated serum creatinine levels, the presence of extramedullary disease, and a lower percentage of Tregs at diagnosis were associated with early relapse. Extramedullary disease and Tregs were found to be significant predictors of early relapse in multivariate analysis.

Previous research has suggested features like elevated LDH, extramedullary disease, and high-risk cytogenetic abnormalities were associated with early relapse.

“Our results indicate that when traditional high-risk biological factors are incorporated, Tregs at diagnosis were demonstrated to be an independent risk factor for ER18 (early relapse),” they wrote. “Therefore, Tregs at diagnosis may be used to predict some type of FHR.”

Conversely, patients with a higher percentage of Tregs at diagnosis tended to have better outcomes.

Xu and colleagues acknowledged that their findings are at odds with a handful of previous studies that suggested higher Tregs were associated with poorer OS and PFS. One reason for the discrepancy may be changes in treatment regimens over time. They also noted that their study was a single-center study with a small sample size.

Still, they said their findings suggest that Tregs at diagnosis could be an important factor to incorporate into treatment planning as clinicians seek to personalize care.

References

1. Zhou Q, Xu F, Wen J, et al. Tregs at Diagnosis as a Potential Biomarker for Predicting High-Risk Functionality in Newly Diagnosed Multiple Myeloma. Cancer Med. 2025;14(11):e70980. doi:10.1002/cam4.70980
2. Yan W, Xu J, Fan H, et al. Early relapse within 18 months is a powerful dynamic predictor for prognosis and could revise static risk distribution in multiple myeloma. Cancer. 2024;130(3):421-432. doi:10.1002/cncr.35056

Welcome to Thoughts on the Market. I’m Ron Kamdem, Head of Morgan Stanley’s U.S. Real Estate Investment Trusts and Commercial Real Estate research. Today I’ll talk about the ways GenAI is disrupting the real estate industry.

It’s Tuesday, July 1st, at 10am in New York.

What if the future of real estate isn’t about location, location, location – but automation, automation, automation?

While it may be too soon to say exactly how AI will affect demand for real estate, what we can say is that it is transforming the business of real estate, namely by making operations more efficient. If you’re a customer dealing with a real estate company, you can now expect to interact with virtual leasing assistants. And when it comes to drafting your lease documents, AI can help you do this in minutes rather than hours – or even days.

In fact, our recent work suggests that GenAI could automate nearly 40 percent of tasks across half a million occupations in the real estate investment trusts industry – or REITs. Indeed, across 162 public REITs and commercial real estate services companies or CRE with $92 billion of total labor costs, the financial impact may be $34 billion, or over 15 percent of operating cash flow. Our proprietary job posting database suggests the top four occupations with automation potential are management – so think about middle management, sales, office and administrative support, and installation maintenance and repairs.

Certain sub-sectors within REITs and CRE services stand to gain more than others. For instance, lodging and resorts, along with brokers and services, and healthcare REITs could see more than 15 percent improvement in operating cash flow due to labor automation. On the other hand, sectors like gaming, triple net, self-storage, malls, even shopping centers might see less than a 5 percent benefit, which suggests a varied impact across the industry.

Brokers and services, in particular, show the highest potential for automation gains, with nearly 34 percent increase in operating cash flow. These companies may be the furthest along in adopting GenAI tools at scale. In our view, they should benefit not only from the labor cost savings but also from enhanced revenue opportunities through productivity improvement and data center transactions facilitated by GenAI tools.

Lodging and resorts have the second highest potential upside from automating occupations, with an estimated 23 percent boost in operating cash flow. The integration of AI in these businesses not only streamline operations but also opens new avenues for return on investments, and mergers and acquisitions.

Some companies are already using AI in their operations. For example, some self-storage companies have integrated AI into their digital platforms, where 85 percent of customer interactions now occur through self-selected digital options. As a result, they have reduced on-property labor hours by about 30 percent through AI-powered staffing optimization. Similarly, some apartment companies have reduced their full-time staff by about 15 percent since 2021 through AI-driven customer interactions and operational efficiencies.

Meanwhile, this increased application of AI is driving new revenue to AI-enablers. Businesses like data centers, specialty, CRE services could see significant upside from the infrastructure buildout from GenAI. Advanced revenue management systems, customer acquisition tools, predictive analytics are just a few areas where GenAI can add value, potentially enhancing the $290 billion of revenue stream in the REIT and CRE services space.

However, the broader economic impact of GenAI on labor markets remains hotly debated. Job growth is the key driver of real estate demand and the impact of AI on the 164 million jobs in the U.S. economy remains to be determined. If significant job losses materialize and the labor force shrinks, then the real estate industry may face top-line pressure with potentially disproportionate impact on office and lodging. While AI-related job losses are legitimate concerns, our economists argue that the productivity effects of GenAI could ultimately lead to net positive job growth, albeit with a significant need for re-skilling.

Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.