Why Real Estate Dynasties Are Breaking a Cardinal Rule to Never Sell
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Wall Street welcomes back fatter bonuses. And real estate dynasties are beginning to do the unthinkable, sell their core properties. From the very beginning, they realized as long as you held onto these properties, they would continue to gain in value. And that was the message that they passed on from one generation to the next. And what's happening right now is that the office market looks so bleak that it no longer makes sense to do that. Plus, the

The U.S. Justice Department hits the brakes on UnitedHealth's expansion in the home health and hospice care industry. It's Tuesday, November 12th. I'm Traci Hunt for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. President-elect Donald Trump is continuing to fill out his administration as he prepares to return to the White House. ♪♪

According to people familiar with the matter, Trump has chosen South Dakota Governor Kristi Noem to lead the Department of Homeland Security, fleshing out the team that will oversee his immigration agenda.

Noem will join anti-immigration hardliner Tom Holman, who will serve as Trump's border czar, and Stephen Miller will be his deputy chief of staff for policy. They'll be responsible for implementing Trump's plan to crack down on illegal border crossings and conduct the largest mass deportation operation in U.S. history. A Trump transition spokeswoman and a spokesman for Noem didn't immediately respond to requests for comment.

If confirmed, Nome would oversee an agency with a wide-ranging mission. The department is responsible for natural disasters, cybersecurity, and transportation security, in addition to its central role in immigration enforcement. Nome was elected as South Dakota's first woman governor in 2018. In 2021, Nome sent 50 National Guard soldiers to the southern border and expressed concern about allowing Afghan refugees evacuated after the fall of Khabibzadeh

to resettle in her state. In a separate development, Trump also announced today that he would nominate former GOP governor of Arkansas and presidential candidate Mike Huckabee as U.S. ambassador to Israel.

What questions do you have about Trump's campaign promises and how they may be implemented and what they mean for you? Send a voice memo to WNPOD at WSJ.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show. ♪

In business news, the Justice Department today sued to block UnitedHealth Group's $3.3 billion acquisition of Amedisys, alleging the deal would give the health industry giant too much power over the market for home health and hospice services. The government's move represents an effort to stem the roll-up of different health care services under a single owner.

UnitedHealth last year acquired one of Ametis' major competitors, LHC Group. UnitedHealth also owns the country's largest health insurer, UnitedHealthcare, and its Optum arm includes a sprawling network of physician groups, clinics, and a large pharmacy benefit manager, among other assets. Ametis agreed to United's takeover back in June 2023.

And after amassing a $5 billion stake in the company, activist investor Elliott Investment Management is calling on Honeywell, one of the few remaining industrial conglomerates, to break itself apart.

Honeywell has avoided being broken up like its peers, General Electric and Dow Chemical, but recently its share price underperformed the broader market, leaving the roughly $130 billion giant vulnerable. In a letter sent to Honeywell's board, Elliott is calling for big changes. It is recommending Honeywell separate its aerospace and automation businesses. Honeywell makes everything from home thermostats to aircraft landing gears and

It gets about 40% of its annual revenue from the aerospace business, which makes engines and cockpit systems for Boeing and others. A Honeywell spokesperson said the company appreciates all shareholder perspectives and looks forward to engaging with Elliott and obtaining their input.

In U.S. markets today, a rise in government bond yields put a pause on a vigorous stock rally that has propelled major indexes to records in recent sessions. The S&P 500 and Nasdaq slipped 0.3 and 0.1 percent respectively, and the Dow lost 0.9 percent.

Raises in bonuses come back to Wall Street. Bonuses often make up a big chunk of pay for employees at financial firms. And for the first time in three years, they're on the rise. Justin Baer is a senior writer for The Wall Street Journal, and he joins us now. So, Justin, what's going on? Why are we seeing this rise in bonuses after so long?

If you look back at 2022 and 2023, there weren't a lot of deals. Companies weren't necessarily confident about the direction of the economy, and so they weren't merging or acquiring other companies as often as they had. With rising rates, it became more expensive for essentially everyone.

consumers to big companies to borrow money. So that gave them less incentive to make the kinds of investments that you would need to finance. That all kind of began to change as we got into this year. And all that sort of fueled confidence,

for both companies and investors and got these businesses rolling a bit. Who will benefit the most from this bonus increase? We cited a survey and analysis that a pay consultant does every year. And what they found in talking to a lot of these firms was that probably the biggest winners this year were those that help companies

sell debt out to investors. So think of bonds, think of loans. That was one group that is certainly in line for bigger bonuses. Also true for those that do this mentally similar role in the stock market. So they help companies sell shares, sell various derivatives based on

on stocks, and they did quite well as well. For the debt capital markets folks underwriting bonds and other debt structures primarily for companies, they should see a bonus increase of 25% to 35% over a year ago. That's according to Johnson, the pay consultant. Stock underwriting, otherwise known as equity capital markets, they'll see a nice bump. Johnson estimates between 15% to 25%.

Stock traders also up, looking like they're getting a nice raise of 15% to 20%. And as far as the advisors to companies over mergers and acquisitions, they're looking at a 5% to 10% increase. That was Wall Street Journal senior writer, Justin Baer. Thank you so much, Justin. Anytime. Coming up, real estate scions are rethinking a key part of their business. That's after the break. ♪

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Families who built multi-generational wealth through real estate empires like the Rudins and the Kaufmans are breaking a cardinal rule, never sell. Real estate investment banking firm Eastill Secured says that New York real estate families have sold about 10 office buildings over the past 24 months. In the previous decade, there were fewer than five such deals.

Peter Grant is a reporter for The Wall Street Journal, and he joins us now. So, Peter, why are these families selling now? Well, the families now are under the same sort of financial pressure that the entire office industry is under. After COVID, the return to office was a lot weaker than landlords would have hoped. Demand is now down. Cash flow has tumbled. They're facing debt maturities. And

And that's putting a lot of financial strain on them, so they have to look to sell. What does it mean for these families when they do decide to sell? Well, most of the families are going to be okay. Nobody should be worrying about them. However, they're not getting as much as they would have gotten before the pandemic. A building on Water Street just sold for close to $100 million. Five or six years ago, it would have gone for maybe twice that much.

Also, they're no longer transferring these assets from generation to generation. In the past, these handouts would always produce wealth for the next generation. The buildings, even in tough times, would get through the tough times and they'd once again be producing a lot of income. And this would be great for family members and they would be continually cash-flowing.

And what about now? Are they all in agreement or is there a tension between family members about whether to sell or not?

There always has been tension within these families. Everybody has different financial incentives. Some family members need that cash immediately. Some prefer to have quarterly distributions. In the past, it's been a matter of how much money do we get. What's happened now is that to save these buildings,

a lot of capital has to be invested. And just the opposite is now the case. Instead of getting quarterly distributions, there's something called a capital call, which means that partners have to pony up a certain amount of money to make new capital investments in these buildings. That greatly increases the kind of stress that's on these families because some of the family members just aren't going to have the money. So who's buying these buildings? Well,

Well, that's a really good question. The buyers of the building tend to be investors who are planning to put these properties to a different use.

primarily multifamily, primarily apartments. There's still a lot of demand for apartments in New York City, but there isn't as much demand for office. So it does make sense to convert these. But what has to happen to convert this office property is that the prices of the building have to reach such a low level that it makes sense for these new investors to step in. That was reporter Peter Grant. Thank you so much, Peter. Great talking to you. My pleasure.

We exclusively report that Meta Platforms plans to give European users of Instagram and Facebook the option of receiving what it says are less personalized ads without paying a fee. Meta's new ad option comes amid pressure from European Union regulators who say users should have access to a free version of the company's apps with less personalized ads.

But as technology reporter Sam Schechner told our Tech News Briefing podcast, it's unclear if the new concession will satisfy EU regulators. Each time I think this story is over, it continues a little longer. I wouldn't be surprised if there are more twists and turns. Meta, for its part, has been making more noise about how the fact that they think some of these rules are going to stifle innovation.

Our sources have told us that they've told regulators that this will hurt their bottom line. And publicly, they talk about how they say less personalized advertising will hurt small businesses that use their platform. EU regulators have several more months left in this probe that they have launched. And so it's possible that they will say, no, you need to sweeten your concession offer a little bit more. And you can hear Sam's full interview on tomorrow's Tech News Briefing podcast.

And that's what's news for this Tuesday afternoon. Today's show was produced by Pierre Bien-Aimé and Anthony Bansi with supervising producer Michael Cosmitas. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.