From a small northwestern observatory…

Finance and economics generally focused on real estate

ACCRE Report, August, 2021

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Sorry we’re running late this month — Labor Day travels and such really got us behind the curve.

One challenge of running a “hedged fund” is that when the market is going straight up, the hedges tend to work against you. August was a case in point. This was one of the very few months when the S&P real estate index beat ACCRE, and of course the S&P 500 was on a huge bull run this month, earning nearly 3%. I would note that so-far in September, ACCRE is doing much better, but we’ll get back to you on that in a couple of weeks.

Our Sharpe Ratio statistics also tell an important story. We continue to be uncorrelated with the broader market, but the S&P’s average daily excess return is has been nothing short of amazing of late. Naturally, we hope this bull run continues, and we’ll continue to monitor our hedge positions going forward.

S&P 500:
Average Daily Excess Return0.0532%
Standard Deviation1.2606%
Sharpe Ratio4.2184%
Average Daily Excess Return0.0395%
Standard Deviation1.1903%
Sharpe Ratio2.2149%
Overall Correlation (life of the fund)50.4275%
Monthly Correlation19.2982%
ACCRE Metrics as of August 31, 2021

We hope everyone had a great Labor Day holiday! As usual, if we can answer any questions on these or other real estate topics, please don’t hesitate to reach out.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

September 14, 2021 at 2:27 pm

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Investing in Single Family Rental Housing

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Last week, I had the very real pleasure of speaking to partners in several boutique law firms about real estate, and specifically about issues facing their clients who invest in single family rental housing. Note that I am not a critic of these investments — far from it, in fact. However, there has been an explosive growth in single family rental investing in the past few years, and particularly during the pandemic. The investment growth, creating a significant supply of such housing, has been matched with demand growth as rental householders move out of central business districts into the suburbs and into larger rental units providing more room for home-work, home-schooling, and extended family households. Nonetheless, as new investors move into this market, and as prices are bid up to record levels, an abundance of caution may be in order.

First, some of the numbers. There are about 140 million housing units in America. If the average value of each unit is $200,000, then this is a $28 TRILLION market. Hence, even small shifts at the margin have very large economic impacts.

For the last 50 years, somewhere between 63% and 70% of these housing units have been owner-occupied. The trend got very close to 70% during the pre-2008 bubble, but generally hovers around 65%, slightly higher in the South and Midwest, and slightly lower in the Northeast and on the West Coast. At the end of the 2nd quarter, 2021, the number stood at about 65.4% nationally, but that was sharply down from 67.9% just a year ago. While a 2.5% movement may not sound like much, that’s a shift of about $700 BILLION in housing from owner-occupied to tenant occupied (and thus, investor owned) in one year.

Of that big slice of the market that is tenant-occupied (and investor-owned) about 37% is in single family residential (“SFR”) homes. By the way, another 29.4% is in duplexes, tri-plexes, four-plexes, and small apartments with 9 or fewer units. Historically, this type of investment has been owned by individual investors or perhaps small partnerships, although that model is rapidly going by the wayside.

Both publicly traded REITs and private funds (including private REITs) are getting into the game big-time. Public REIT investing offers a high degree of liquidity, but sometimes with the trade-off of lower returns. Private REITs and funds promise higher returns (although don’t always deliver) but with almost no liquidity. Traditional rules of thumb suggest that a public REIT may aim for combined returns, both price-return and dividend income in the range of 7% over the long haul. Statistics from the National Association of Real Estate Investment Trusts bear this out. Private investors aim somewhat higher, and usually there is a trade-off between potential price gains and potential dividend returns.

That said, this year has been nothing short of amazing for OWNERS of SFR homes, although perhaps not for those who have been buying into this bull market. Case in point, last week, Bloomberg News reported that US SFR rents rose 7.5% year-over-year in June. The largest increases were in the Southwest, with Phoenix reporting an increase of 16.5% and Las Vegas showing 12.9%, year-over-year. Not surprisingly, investors have been flocking to funds that are in those markets. Just as an example — and there are others we could use — Invitation Homes (INVH), a publicly traded REIT, owns over 80,000 SFR homes, mostly in those hot sunbelt states. Enjoying a 96% occupancy, their stock price has risen over 40% just this year, driving their dividend yield down to 1.67%.

Data from Yahoo Finance, graphic from Greenfield Advisors

Not all is smooth sailing, though, and increases in rents don’t always lead to an increase in rent INCOME. Case in point, in the face of such great statistics, why not raise the dividend yield? Consider, however, pandemic-related collection issues, commonly referred to in the industry as “tenant chargebacks.” In a normal year, we would expect this number to be in the range of 1% – 2% for a well-run fund. However, another REIT we examined, American Homes 4 Rent (AMH) has also exhibited greater than 40% stock price appreciation this year, but has a dividend yield at 0.95%. Digging deeper, we find that AMH reports a 13.5% tenant chargeback. As bad as this is, after the pandemic-related eviction moratorium runs out, this may be a ticking time bomb for some funds.

Private funds – with almost no liquidity – promise substantial returns when they finally close out, usually in 3 – 7 years. Expectations in 12% and above range are not uncommon. We were recently shown one fund, which shall remain nameless, and buried deep in their offering circular was some nebulous language about a 3-year maturity and a 13+% expected annualized return. However, upon closer examination, we found that this will be the developer’s third fund, and the only one of those to reach maturity (this summer) ended up with a somewhat disappointing 5.17% annualized return. Nonetheless, this developer will almost assuredly raise $20 million in $25,000 increments from hungry individual investors.

This chase after the bull real estate market isn’t just limited to individual investors. Consider New Residential Corp, which until recently was a publicly traded REIT. They owned 14,600 homes in nine sunbelt states with a “carry value” of $1.873 Billion. They’ve been losing money for a while, and in the third quarter, 2020, managed to lose $63 million on revenues of $57 million. Their debt/equity ratio was about 85%, which is comparatively high for a REIT. The “book” equity was only $312 million. Nonetheless, a private fund bought New Residential, lock, stock, and barrel, for $2.4 Billion.

Don’t get me wrong — real estate over the long haul has been a strong contender for a well-balanced portfolio. If you had invested $1 in a SFR on January 1, 2000, by today you would have $2.46 with surprisingly little volatility. Even with the housing “bubble” and crash, your investment would never have been out-of-the-money. Plus, over the years, you would have enjoyed tax benefits and either a place to live or rental income. Compare that with investing that same dollar in the S&P 500. Today, you would be a bit richer — $2.85 — but your investment would have been a loser for most of the last 20 years. Indeed, you wouldn’t have been “in the money” until 2013, but for a short period in 2007. Further, the market volatility would make your head swim.

Data from Yahoo Finance and CoreLogic, Graphic from Greenfield Advisors

There is a very real growth in both the demand for and the supply of SFR rentals. Portfolio benefits can be quite good, but caution is the watchword for newbie investors diving into this market. Historic rules-of-thumb and trade-offs between current income and capital growth may be out-the-window for a while, and there will almost certainly be a settling out period after the COVID pandemic is over.

Note:  Dr. Kilpatrick and/or Greenfield Advisors may, from time to time, have investments which are mentioned in this presentation.  Nothing in this presentation should be construed as investment advice. 

If I can answer any other questions, or be of any assistance on these matters, please let me know.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

August 23, 2021 at 2:56 pm

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REAL Estate and ESG Investments

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ESG is an acronym for “Environment, Social, and Governance.” It is the current buzz-word in the industry for what was formerly called “green building”, although as you can tell from the title, it is so much more than that.

The US Green Building Council was formed in 1993 to “promote sustainability in the building and construction industry”. While it is active in many areas of real estate, it is perhaps best known for the LEED building certification. For quite a few years, the National Association of Real Estate Investment Trusts (NAREIT) awarded the “Leader in the Light Awards” to honor REITs that “demonstrated superior and sustained energy practices.” Back in 2015, I conducted a study about these awards and presented a paper at the annual meetings of the American Real Estate Society investigating whether or not there was any stock price bump (or other meaningful market reaction) associated with such an award. While I couldn’t find any statistically significant market reaction to the award itself, there was anecdotal evidence to suggest that such “green” behaviors were already capitalized in the stock price and the return generating process.

In recent years, the focus has shifted away from just “green” issues toward broader themes, including all of the ESG topics. Both large and small consulting firms (including Greenfield) are engaged in some or all of the ESG issues, including such key elements as dealing with catastrophic events, setting corporate goals for community development, and establishing adequate data protection.

(c) Greenfield Advisors

Real estate firms of all stripes are increasingly considering ESG in their business models. There are enormous direct benefits up and down the real estate ladder. Local governments are now looking policies, commitments, and goals in some or all ESG areas as a precursor for permitting. ESG is a significant marketing tool, and customers are reacting positively to the ESG message. For example, Blackrock’s CEO, Larry Fink, announced at last year’s Morningstar Investment Conference that they planned to integrate ESG metrics into all of their portfolio by the end of 2020. This year, NAREIT reported that 98 of the top 100 REITs reported publicly on their ESG efforts.

By some reports, climate change has been a primary driver of ESG attention. Energy usage at the property level can be immediately reported and analyzed for potential cost savings. Noting that the incidence of climate events causing $1 Billion or more in property damage have quadrupled in recent years, it comes as no surprise that this has nearly everyone’s attention. Recent back-to-back environmental disasters in Texas have been cited as particularly concerning to investors.

S&G — social and governance — have worked their way into investment underwriting, and despite a surplus of liquidity in the market, investors want to know that S&G issues are being meaningfully addressed. This is particularly acute with public funds and public securities holdings. The Pension Real Estate Association (PREA) has instituted annual ESG Awards “[T]o recognize excellence in ESG programs within institutional investors in real estate.”

Many say that the pandemic has catalyzed ESG policy adoption, although the trend was clearly strong before the COVID outbreak. Nonetheless, it is now almost universally recognized that the ESG momentum will continue to grow. This doesn’t mean that universal adoption is imminent. Some firms still stand on the sidelines waiting for the metrics to come in — capital flows and returns being key touchstones. Transparency and benchmarking will be key elements to further adoption down the road.

As usual, if we can answer any questions on this topic, please do not hesitate to reach out.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

August 17, 2021 at 2:52 pm

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ACCRE Report, July, 2021

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July was a “boringly good” month. I say that because ACCRE and other portfolio components all performed extremely well. ACCRE slightly outperformed the S&P (2.68% versus 2.27%) but neither of these can be sneezed at. The S&P Global Property Index had total returns of 2.36%, also a solid performance. I would note that the S&P broad market index has had 6 straight months of positive returns, and 17 positive months out of the past 24. As such, ACCRE is competing in rarefied territory.

Thus, a dollar invested in ACCRE at the inception (April 1, 2017) would be worth $1.78 today, for an average annual return of 14.36%.

S&P 500
Average Daily Excess Returns0.0516%
Standard Deviation of Excess Returns1.2712%
Sharpe Ratio (Life of Fund)4.0604%
Average Daily Excess Returns0.0470%
Standard Deviation of Excess Returns1.1894%
Sharpe Ratio (Life of Fund)3.9508%
Correlation (Life of Fund)50.9401%
Monthly Correlation (July, 2021)12.0631%
ACCRE Metrics as of July 31, 2021

ACCRE continues a healthy overall correlation (life of the fund) with the S&P, but also continues a two-month run of surprisingly low monthly correlations. We suspect this has a bit to do with the volatility of both indices, but we’ll continue to monitor.

As always, if we can answer any questions about REITS or real estate in general, please reach out. We look forward to hearing from you.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

August 3, 2021 at 9:57 am

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Repeat Sales Analysis

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It’s always nice to be cited in someone else’s research paper! Case in point, a nicely done real estate paper written by three young scholars out of U. Aukland and U. Hong Kong just hit my desk, and much to my enjoyment, they cited my Journal of Housing Research piece on Repeat Sales Analysis. Intriguingly, my original work was on the use of this technique to identify the negative impact of environmental contamination on property prices. Conversely, their work was on the positive impact of water views on property prices. Indeed, this illustrates the fact that, at the far ends of the valuation spectrum, the same methodologies can prove useful.

After exploring repeat sales as a potential tool, the three authors ended up opting for a weighted least squares regression, noting (and I agree with them on this point) that repeat sales models have a “well known error distribution characteristic.” The simple fact is, parametric models, with which most real estate students are familiar, are usually not handy for dealing with real estate data, which is highly non-parametric. However, parametric models (such as regression analysis) require lots of data, and real estate analysis problems are often challenged with thin data sets. There are good non-parametric methodologies out there (such as repeat sales) for such limited data situations, but the statistical properties are not well characterized. However, they were able to incorporate repeat sales into their hedonic regression model. At Greenfield we’ve similarly used nonparametric methods to inform instrumental variables in a method that emulates 2-stage least squares.

As the demands for reliability of valuation models increase, finding ways to better characterize the reliability and confidence of appraisal methods deserves increasing attention. Academic research scholars are used to using large data sets and parametric methods with well-defined statistical characteristics. Practitioners — a category that includes both appraisers and investors — are usually faced with poor data sets and traditional, somewhat heuristic models which work well in practice but have little in the way of statistical characterization. Some academic organizations, such as the American Real Estate Society, strive to span the gulf between research and practice, but more remains to be accomplished in valuation modeling.

The paper, by the way, is “An Empirical Study of Sea View Value by Repeat Sales Method” authored by Edward Chung Yim Yiu (U. Aukland) and Chau Kwong Wing and Siu Kei Wong (U. Hong Kong). Their study was supported by the Research Group on Sustainable Cities and the CRCG Conference Grant for Teaching Staff of the University of Hong Kong, and their findings are available on the Social Sciences Research Network and on Researchgate.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

July 23, 2021 at 11:25 am

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More liquidity, fewer RE deals

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There is a lot of attention on the owner-occupied housing front, with costs/prices skyrocketing and affordability tanking. However, COVID has had complex and somewhat unpredictable impacts on the commercial real estate (CRE) market.

First to set the stage, commercial lenders became much more conservative after the 2008/10 debacle, even though most of that was felt in the residential sector. Non-performing commercial real estate debt was a manageable 0.86% among the nation’s 325 largest banks at the end of 2020, albeit up from 0.41% at the end of 2019. By comparison, at the peak of the previous recession, this stood at 8.6%. Banks have largely focused on lower-leveraged loans and kept higher reserves. Indeed, the lack of distressed inventory has put distressed buyers in a position of having too much money chasing too few deals. Distressed buyers are hoping for discounts in the 30% range, but having to settle for 10% to 18% discounts.

Even in the non-distressed arena, there is a lot of capital (both debt and equity) in the market. Surprisingly, a lot of this is coming from debt funds, which leverage returns by getting an equity slug on top of the dent. As of early May, 2021, there were about 130 such debt funds in the market place chasing fewer and fewer deals. By the end of 2020, CRE sales had fallen by 32% from 2019, according to Real Capital Analytics. In the month of January, 2021, sales were down 58% year-over-year. Among the investments of choice, save sectors (multi-family, industrial, self storage) are getting even better terms than they were pre-COVID. However, lenders are asking more detailed questions now about minutia such as collections and tenant financials. Nonetheless, there is money to be had, even for distressed deals, and while banks are holding out for 60% – 70% LTVs on construction lending, some borrowers are getting as much as 90%. Some development companies are finding success raising equity for pipeline deals, rather than traditional property-by-property investments.

One of the more interesting twists has been the movement of foreign investors from major markets into smaller markets. In 2011, for example, 76.9% of foreign investment in the US was in Top-10 markets, according to a recent study from Marcus and Millichap. However, thus far in 2021, this has declined to 58.5%. More striking — in 2011, about a third of foreign investment went to one city, New York. Today, only about 10% of such investment is flowing into The Big Apple. Not surprisingly, that same study finds that retail and hotel investment has declined precipitously, while multi-family and industrial have taken up the slack. Interestingly enough, office investment has varied widely over the past five years, down somewhat from 2019.

Graphic from Marcus Millichap, Data from Real Capital Analytics

Much of this information came from two great studies in the current edition of Real Estate Forum, one by Erika Morphy titled “An Abundance of Liquidity” and another by Erik Sherman titled “Distressed Real Estate Doubles But It’s Still Not Enough for a Buying Spree”.

Written by johnkilpatrick

July 9, 2021 at 2:00 pm

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ACCRE Report, June, 2021

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It was a very good month, but a hard one to figure out. ACCRE again outperformed the S&P on a monthly basis, but we’re still playing catch-up from the very uneven first quarter. That said, ACCRE’s total return was 7.93% for the month, and so a dollar invested at the inception (April, 2017) would now be worth $1.74. In comparison, the S&P 500 gained a not unrespectable 2.22%, and so if that same dollar had been invested in an S&P Index Fund bat the inception, it would be worth $1.82 today. Global real estate continues to lag, returning only 0.84% in June (again, not bad), and so that same dollar invested in the S&P Global Real Estate index would be worth $1.35 today, including both price and income returns.

As you know, we also track the Sharpe Ratio and correlation statistics to see how ACCRE performed as a diversifier for a broader portfolio. Here’s where things get interesting — we shoot for a 50% positive overall correlation coupled with a lower standard deviation of returns, which should allow ACCRE and the broader market to generally point in the same direction but to attenuate sudden market shifts. For the life of the fund, we are right at the 50% mark, and ACCRE’s standard deviation of excess returns is indeed lower than the broader market. However, in June, the correlation went nearly to zero. Now, both return streams were overall positive, but in very different ways. Note that 30 days is a fairly short time to consider correlations of returns, but it does point to something we’ll want to keep an eye on — buried in these prices are market reactions to a host of complex sector fundamentals. We’ll explore this later in the month.

By the way, this month I’ve included a day-to-day graph of daily returns for ACCRE and the S&P just to visually demonstrate the lack of daily correlation.

S&P 500
Average Daily Excess Returns0.0505%
Standard Deviation of Excess Returns1.2795%
Sharpe Ratio (Life of Fund)3.9456%
Average Daily Excess Returns0.0453%
Standard Deviation of Excess Returns1.1912%
Sharpe Ratio (Life of Fund)3.8060%
Correlation (Life of Fund)51.3918%
Monthly Correlation (June, 2021)1.9972%
ACCRE Metrics as of June 30, 2021

As always, if we can answer any questions about REITS or real estate in general, please reach out. We look forward to hearing from you.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

July 2, 2021 at 1:14 pm

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Inflation and Real Interest Rates

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This morning, the Philadelphia FED released an “update” to their periodic inflation report. “Updates” should always get your attention, and this one is particularly loaded with questions and, perhaps, a few answers.

First, the Phily FED’s forecasts interest rates over the next 10 years using a hybrid model that combines information from the yield curve plus a Delphi-type survey of professional forecasters. A year ago (June, 2020), their model forecasted very low short-term inflation, rising to about 2% – 2.1% in the longer term. However, inflation fears led to revisiting the model in May, and at that time, the inflation curve had flipped — somewhat higher short-term rates (about 2.4+%) and then calming down to about 2.3% in the longer term. Today (June, 2021), the short-term inflation rate is still expected to come out in the 2.4% range, but inflation should settle out a bit lower (roughly 2.25%) in the future.

However, this model is highly dependent on real versus nominal interest rates, and right now, under any reasonable estimates of inflation, real rates are negative. Indeed, for the past 20 years, real rates have generally trended downward, with some occasional hic-cups into positive territory. While the outlook for real rates is somewhat more positive than it was a year ago, forecasters still see negative rates for the coming decade.

Before returning to the topic of inflation, it may be useful to explore how and why real rates would be negative. This may seem counter-intuitive — why would I PAY YOU to borrow my money? To consider that, it’s helpful to recall from ECON 101 the four principal factors of production: Land, Labor, Capital, and Entrepreneurship. The value of any of these at any point in time is dictated by its marginal productivity. For example, the marginal productivity of labor is the amount of value-added to the system by an additional unit of labor. Unfortunately, not all labor has the same value. Right now, for example, there is a high value-added for truck drivers, skilled trades persons (e.g. — electricians, plumbers) and health care workers. Conversely, there is very little value-add for unskilled (counter staff at a fast food joint). As such, employers for unskilled workers have little incentive to pay a penny higher than minimum wage, and employees have little incentive to work for those minimum wages. Hence, we have the paradox of a shrinking workforce and unfilled jobs.

As for interest rates, the system is awash with funds. Automation has made production extremely efficient, and so a lot of money gets spent — and thus multiplied in the system — with little demand for borrowing or investment. Even though returns to equity have been quite good of late, and are forecasted to continue to be good, there are lots of structural reasons why some tranches of capital need to go into bonds. Hence, there is a surplus of lendable capital and surprisingly little demand for that capital, driving down real interest rates. If nominal short-term rates are, say, 0.5%, but inflation is 2%, then the real rate of interest is (0.5 – 2.0 = ) negative 1.5%. That’s the world we live in today, and the world that market participants forecast for the next decade at least.

But, back to inflation. If the Phily FED has a model that depends on the somewhat flawed yield curve as well as a Delphi-like survey of forecasters to guess at inflation, how good can that model be? Yes, it’s the model we all use, but anecdotal evidence suggests some contrarian thinking may be deserved right about now. While models like this are used to forecast inflation, the actual measure of inflation comes from the Consumer Price Index, which tracks the prices of a basket of goods and services used by a typical household. Certainly, there are discussions about what goes into that basket and how those constituents ought to be weighted. Nonetheless, this is supposed to reflect how a consumer experiences actual pocketbook issues. Unfortunately, it’s not an instantaneous measure, and so we don’t actually know what inflation was until a while after it happens. However, we can examine anecdotal evidence and perhaps understand why both consumers and sophisticated researchers and investors are raising the red flag.

Clearly, some components of the basket of goods and services are all over the map. Gasoline is most likely just a rebound from a year ago when no one was on the road. Coffee is a head scratcher (although my local grocery is running a sale, so go figure…) and certainly residential real estate is giving us all pause.

So, is inflation a problem or are the models correctly forecasting that the shorter-term spikes will ameliorate over time? One thing that is obvious is that a lot of capital is being converted into real estate right now. In part this is a flight to safety, but in part it is simply a reflection of the negative returns in to bonds.

As always, if I can elaborate on any of this, or answer any of your questions, please let me know.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

June 30, 2021 at 1:25 pm

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Real Estate Investing 101

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OK, maybe not 101… but certainly this is a pretty basic primer. Real estate is an excellent inflation hedge and provides diversification to a broader portfolio of assets. If you want liquidity (and this is true with any sort of investment) you may have to give up some potential returns by investing in publicly traded REITs. If you are willing to give up liquidity, you can potentially achieve higher returns with either direct investments or some pooled investment, such as a private equity or hedge fund. Either way, higher potential returns usually entail higher risks, and so diversification is key. I frequently use the word “curated” to describe a carefully selected and managed portfolio of real estate assets.

There’s more, but that’s a good start. So if this is so basic, why was the market shocked — SHOCKED, I say! — when Scotland-based Aegon shut down it’s £381 million property fund last week and Aviva shut down its £367 million fund due to liquidity problems. It comes as no surprise that Brexit has been a real mess for investments in the UK, and coupled with the pandemic, liquidations in British property funds have outstripped new investments. Aegon said last week that they hoped to begin distributions in the 3rd quarter, and it would take a year or two to get the money out to everyone. Apparently the same is expected for Aviva.

This says a lot about investments in the UK in general, and particularly the future of real estate in the UK in the post-Brexit, post-Pandemic world. It also says something about whomever had been investing in these funds in the last year or two. However, it says very little about real estate in general.

Here in the U.S., we know that some sectors are having some problems. Retail, for example, looked like it was going to completely tank last year, but then rebounded this year after we started making some headway on COVID. Of course, some funds are dug in too deep (see my recent commentary on Washington Prime Group, here) but we’ve been fully invested with ACCRE throughout the pandemic, and while this hasn’t always been a smooth ride, care and caution have paved the way. However, even an index fund of REITs this year has outperformed other indices, as shown below from the Financial Times FTSE index:

Data courtesy NAREIT and FTSE

I hope this helps a bit. As always, if I can answer any questions, please let me know.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

June 28, 2021 at 2:46 pm

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US Global Leadership Coalition

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This may sound wildly off the subject, but last week I had the very real privilege of attending (via Zoom) the US Global Leadership Coalition’s annual Global Impact Forum, followed up by a day-long “virtual” visit to Capitol Hill to meet with several members of Washington State’s congressional delegation and/or their staffs. I was invited to join the Advisory Council for USGLC back in 2020, and I’ve thoroughly enjoyed and appreciated the interaction.

Yes, my focus is on real estate finance and economics, and we usually think of real estate as being highly localized. However, real estate finance and investment is truly global. Just take a peek at a the holdings of any random sovereign wealth fund to confirm this. The vigor and vitality of America’s real estate market depends in no small part on America’s economic leadership in the world, and USGLC is focused directly on that.

Speakers at the Forum included a panoply of luminaries, such as former NATO commander Admiral Jim Stavridis, CEO of “Save the Children” Janti Soeripto, Deputy Sec. of State Wendy Sherman, Sen. James Risch (R-Id), “CARE” CEO Michelle Nunn, UN Foundation CEO Elizabeth Cousens, among many others. USGLC brings together more than 500 businesses and non-profit organizations to engage policymakers in D.C. and around the country to build support for America’s International Affairs Budget. “In today’s interconnected world, America must use all its instruments of national security and foreign policy to ensure we keep our citizens safe, strengthen our economy, and save lives. Our nation’s civilian tools of diplomacy and development are underfunded and undermanned, which is why the USGLC supports a strong and effective International Affairs Budget.” Former Sec. of State Gen. Colin Powell (USA-Ret) heads up the Advisory Council, and Admiral Jim Stavridis (USN-Ret) and Gen. Anthony Zinni (USMC-Ret) head up the National Security Advisory Council.

America’s international aid budget takes up a surprisingly small portion of our overall fiscal picture — less than 1%. However, we gain enormous leverage via that chunk of the budget, and any top military leader will tell you that diplomacy is cheaper than bullets. Our strong military, coupled with our international leadership, sets the stage for America’s powerful economy. “America’s diplomats and development workers help put the building blocks in place so that U.S. companies can expand their exports, reach new markets, and create more jobs here at home. With 95% of the world’s consumers outside of our borders and the fastest-growing markets in developing countries, it’s vital that we stay competitive in the global marketplace, ensure a level playing field for American businesses, and reach more customers.”

John A. Kilpatrick, Ph.D. —

Written by johnkilpatrick

June 23, 2021 at 8:58 am

Posted in Uncategorized

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