Blackstone Reshuffles

Plus: Rolex wants to stamp out fake watches ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

December 2, 2022

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TOGETHER WITH

Good morning.

In the magic kingdom of Disney, animators create legendary characters, writers give superheroes and Jedi knights life on screen, and “Imagineers” create new worlds in theme parks the real world over.

In the kingdom of McKinsey, magic is more of a line-item expense.

So Disney’s creative executives were naturally a bit concerned to see the world’s most notorious business advisors skulking around their offices at the invitation of former CEO Bob Chapek, according to WSJ. But after McKinsey proposed giving studios execs control of content decisions for films and television programs, the content team revolted and Chapek was removed from the castle throne. Returning Disney chief Bob Iger has reportedly pledged to banish the McKinsey suits and give content creators back their magic wands.

Morning Brief

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Blackstone is singing Viva Las Vegas.

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Narcan may soon have an OTC competitor.

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Rolex gets on the pre-Love Train.

Casinos

Blackstone to Sell Stakes in Vegas’ MGM and Mandalay Bay Casinos

(Photo credit: David Vives/Unsplash)

Always bet on Black…stone.

On Thursday, investment firm Blackstone agreed to sell its minority stake in two Las Vegas hotels in a deal that values the properties at $5.5 billion, according to The Wall Street Journal. The transactions continue Blackstone’s hot streak in the Entertainment Capital of the World.

Casino Royale

Whether it’s the slot machines, endless buffet tables, or a mystifying Cirque Du Soleil performance, Las Vegas is flush with tourism and gambling, rivaling even the before times of the COVID-19 pandemic. Overall hotel revenue was up 51% in October compared to the same time in 2019, and Caesar’s Palace – a bellwether for casino resorts – saw $2.9 billion in revenue for the third quarter. With Sin City rolling lucky sevens, Blackstone remains bullish on the local real estate market.

Interest rates are expected to increase –if less dramatically– yet again in 2023, so Blackstone’s real estate plan is to shuffle its hand, ditching properties with fixed incomes to focus on those with growth potential. Earlier this year, the New York-based operation sold the Cosmopolitan casino and hotel on the Las Vegas Strip for $5.65 billion, the firm’s most-profitable sale of a single real estate asset ever, according to a letter sent to investors. And now Blackstone is playing the same hand with two more properties:

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Blackstone will sell its 49.9% stakes in the MGM Grand Las Vegas and the Mandalay Bay to Vici Properties, which owns the other 50.1% stake in the properties. Blackstone would receive $1.27 billion in cash, and Vici would assume Blackstone’s share of some $3 billion in debt.

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Sources told the WSJ, Blackstone intends to use the proceeds from the deals to purchase rental apartments and industrial properties, which would be higher-returning assets.

Crapshoot: Blackstone isn’t just pulling aces, however, Withdrawals from its Real Estate Income Trust exceeded 5% of the quarterly threshold, a sign that wealthy investors are fearing a recession and want cash on hand in case the economy slips even more. In response, BREIT announced Thursday it would limit redemption requests, sending the firm’s stock down the most in more than five months. Investors are trying to leave the table, but Blackstone won’t let them.

Pharmaceuticals

First OTC Overdose-Reversal Medication Could Soon be on the Way

Over 100,000 Americans died of a drug overdose during the 12 months ending in March, according to CDC data, a disturbing 44% increase from just two years prior. Thankfully, a powerful new tool to fight the epidemic may soon be on the way.

On Thursday, healthcare startup Pocket Naloxone announced it had submitted positive test results to the FDA showcasing game-changing data for its over-the-counter overdose-reversal nasal swab. It’s a major step in the FDA’s push for such innovations.

Anything Narcan Can Do…

Experts suggest first responders and laypeople alike carry Narcan, owned by Emergent BioSolutions, or one of its generic competitors to combat the opioid-overdose epidemic. But the popular corrective, a nasal spray, is available by prescription only, prompting the FDA to encourage drugmakers to develop an OTC alternative last month after years of urging Emergent to develop an OTC version of their own.

After finding critical success in a randomized trial of 60 healthy volunteers, Pocket Naloxone now says it plans to apply for priority review drug approval for its nasal swab product in the first half of 2023. If successful, the startup could save lives — and tap a lucrative market in the process:

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In 2020, Narcan commanded nearly 80% of the market and scored sales of $224 million, a massive increase from just $56 million in sales in 2017, according to drug sale data provider IQVIA.

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Meanwhile, its cheaper competitors have barely made market inroads due to reliance on a needle injection. Worse, prices for the harm-reduction drug have skyrocketed over 500% for uninsured patients between 2014 and 2018, according to a recent JAMA Health Forum study.

The FDA’s goal is shared by the White House, whose Office of National Drug Control Policy has also publicly stated it wants to see naloxone widely available on an OTC basis. Pocket Naloxone isn’t the only firm to answer the call. In late October, Purdue Pharma-backed nonprofit Harm Reduction Therapeutics submitted an overdose-reversal product of its own to the FDA.

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Luxury Commodities

Rolex Starts Certifying Pre-Owned Watches

Rolex is known for its innovative, fast-moving seconds hand — and for countless fake second-hand watches bearing its storied name.

But on Thursday the Swiss timepiece titan announced it’s launching its very first certification program for pre-owned watches. The company will keep a watchful eye on its pre-loved pieces via its network of trusted retailers — which sadly excludes your local (and highly reliable) trench-coated alley-dweller.

Fine-Tuned Fashion

The pandemic juiced luxury watch sales, creating supply shortages and driving consumers to scout second-hand models. More recently supply has caught up with demand, causing pre-owned prices to fall 21% from April to October per a Morgan Stanley report. But the pre-owned luxury market is growing, fueled in part by online-savvy millennials and Gen Zers hunting for deals, according to Deloitte.

Rival Swiss watch companies already offer certification for pre-owned units, but Rolex is taking a deliberately slow-and-steady approach:

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This month, only one of the company’s authorized dealers, Bucherer, will be allowed to certify pre-owned watches. Rolex said it will let other cogs in its distribution machine certify from Spring 2023 — so Merry Christmas Bucherer!

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Although in most cases getting second-hand items is a good way to nab yourself a deal, for some specific Rolex brands, such as the Rolex Submariner, supply is still low, meaning a second-hand unit fetches more than retail price.

Don’t flip out…: Rolex’s new program will only certify watches that are more than three years old in an effort to discourage people from just using the system to quickly flip watches for a profit. It’s also hoping the new certification will help in its ongoing war against counterfeiters — a recent chapter of which saw the NYPD seize a cache of fake designer goods from street vendors with a street value of $10 million, a chunk of which were bogus Rolexes selling for… $75.

Extra Upside

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He’s putting what where?! Elon Musk says he’ll put a Neuralink implant in his brain.

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Like a pencil through a folded sheet of paper, scientists have developed a holographic wormhole.

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Here at The Daily Upside we are always looking to cover, analyze, and dissect the latest trends important to investors. So when we read that StartEngine has funded 550+ successful offerings, grown revenue 600% over the last three years, and just acquired competitor, SeedInvest*, our ears naturally perked up. Want in on the action? You can invest in StartEngine too.**

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Have a great weekend!

Disclaimer

*Completion of the acquisition is subject to closing conditions and regulatory approval.

**Reg A+ offering made available through StartEngine Crowdfunding, Inc. No broker-dealer or intermediary involved in offering. This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment. Please see the most recent Supplement, Offering Circular and Related Risks for more information.

Written by Isobel Hamilton, Griffin Kelly, and Brian Boyle.

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