Thoughts on Acquisitions, Capital Markets. +$2,000,000,000 of deals closed (and counting).
Feb 16, 2023 • 21 tweets • 5 min read
What the hell is happening in real estate?
Is blood coming or does the music keep playing?
I've spent hundreds of hours talking to owners, operators, brokers and investors to get answers.
My pulse on the market (coming out of NMHC)
->
There are two sides of this coin:
- Operations
- Capital Markets
Uncovering operations starts at the macro-level and trickles down to the tenant-level.
Let's first discuss the impending issues
->
Oct 11, 2022 • 19 tweets • 4 min read
Following several meetings with large LPs, capital raising events, deal sourcing, seller feedback, and broker conversations, my thoughts on the market as it sits:
Syndicators are in a tough position.
They have two options. Refi or sell.
First, most syndicated deals are structured with a waterfall based on IRR thresholds. A refi extends the exit timeframe (TVM), diminishing the IRR and therefore the promote (GP profit).
/
Sep 12, 2022 • 13 tweets • 3 min read
People think real estate owners get rich from mailbox money.
In reality, owner/operators are usually paid last.
The real secret to making big $$$ in real estate comes from unequal cashflows.
Operators (General Partners) call this a waterfall model:
A waterfall model is a way for partners in real estate transactions to split cashflows unevenly, generally tied to performance.
GPs can often 2x-10x their investments in the deal!
Jun 22, 2022 • 4 tweets • 1 min read
Properties purchased in the last 12-24 months at high basis', aggressive uw, and floating debt are going to hit market as they enter distress sale upon refi.
I have been trying to creatively get in front of the upcoming deal flow that brokers and lenders will have access to.
/
For Brokers:
- Offer on deals (with intention). Brokers want to see you on the bid sheet and be able to point at you.
- Provide insight and thought process. If you can give brokers ammo for their clients, you are in a place of value.
- Offer surety. If you want the look, close.
/
Jun 20, 2022 • 4 tweets • 1 min read
42% of buy-now-pay-later loans are late, plus increasing credit held, as rents rise to all time highs.
Consumers are being pinched. Retailers likely see explosion of supply as built-up inventory sits. Supply chain to “reset”. We are entering a rare wealth entrance moment /
Rates have already begun driving down asset values. This likely continues through year end. Price discovery mode should play to a discount once we begin to stabilize debt. A Buyer’s market is forming and well capitalized groups will benefit tremendously. /
Jun 17, 2022 • 7 tweets • 2 min read
There are two main options to hedge against rate hikes:
Swaps and Caps
Each option offers unique pros and cons by betting on future movements in the capital markets environment.
/
Swaps offer borrowers the opportunity to synthetically trade out floating interests for fixed using same bank. Rate is calc'ed by averaging the forward curve over term. Prepayment penalties can run really high when rates drop, incentivizing borrower to hold loan /
