Fannie Provided $1.6B of Financing in 2015 for Small Multifamily Loans

Good piece in National Mortgage News about the volume of lending that Fannie is providing to buyers of smaller multifamily properties. We have certainly taken advantage of this program, and it is good to see that it is growing and that it is a "critical part" of their work! The availability of financing at rates that are now within 20 basis points of the large balance loans is a big deal in the small property space - especially since smaller complexes can often be purchased at cap rates that are 200 basis points better than those for which larger complexes sell for. From the Article: Fannie Mae touted its financial support to the small multifamily loan market last year, saying it provided $

The Walmart Effect: Compressed Cap Rates on Net-Leased Big Boxes

Great article in National Real Estate Investor today on the big-box sector, and it had some surprises in it: the investor appetite for NNN big-box stores is actually increasing, despite competition from the web. Definitely need to be choosy - investors are staying away from the "stale" big-box retailers who may be out of business or scaling back in the face of competition from the likes of Amazon - but the surge in store count of the Walmart Neighborhood Markets, as well as constant demand from quality tenants such as Hobby Lobby, is really compressing the cap rates. From the article: Recent data suggests that the Walmart Neighborhood Market chain is driving down cap rates on net-leased bi

Stronger Retail Demand, Rent Growth Seen Shifting to Second-Tier Markets

Much to absorb here in this recent article from Costar! The long-and-short of it is that retail rental rates are seen rising - in particular in secondary and tertiary markets, and in particular the Carolinas are looking very well positioned. Almost all of the increased construction activity is focused on the big City - metro areas such as New York and Miami, and that means that the overhang of current inventory is steadily - and rapidly - declining in our neck of the woods. On a first hand basis, we are seeing this with our recently completed Hope Valley Pointe investment - the phone is ringing off the hook for the vacancies we are marketing, and our leasing agents claim to be much busier t

Consumers Power Past Headwinds

Great piece in the Wall Street Journal on consumer spending picking up - this should be welcome news to retailers and multi family property owners. From the article: U.S. consumers showed signs of strength in January, taking advantage of low oil prices to increase their spending and offering a welcome counterpoint to the gloom that has gripped investors and roiled markets since the start of the year. Sales at retail stores and restaurants rose 0.2% in January from the prior month, the Commerce Department said Friday. And December’s retail sales were revised to a 0.2% gain instead of a drop, showing a better end to the year than initially estimated. The increase offers hope that the U.S. econ

Class B Offers Choice Investments

We came across this article which appeared this past summer in “Multi Family Executive”. It does a nice job of making the argument as to why Class B/C apartments are turning out to be better investments than the Class A properties which are getting all the headlines! This has been a theme that resonates with Prudent Growth Partners. We believe that B/C properties – which tend to be smaller and which tend to trade at a higher cap-rate (typically 7.25 to 7.75) represent a superior investment to larger, lower cap-rate class A properties. This is true for several reasons: 1 – There is less new inventory being built in the B/C market – almost all new construction occurring in the markets tracke

Retail Sales Stronger in January

Great piece today in Bloomberg on retail sales increasing strongly in January. While retail means many things to different people - big box, neighborhood centers, grocery anchored centers, necessity centers, etc. - there is no question that the combination of lower gas prices, along with several years of below average construction is good news for existing retailers and landlords. Prudent Growth Partners firmly believes that acquiring reasonably priced neighborhood centers, with tenants ranging from medical clinics and neighborhood restaurants to pharmacies and fitness centers, is a great long term portfolio strategy. From the article: Greater job security, improving wage growth and falling

REITs Outpace Market in January

Great article highlighting the great diversification available to investors who have REITs in their portfolio. However, the real estate LLCs that are structured by Prudent Growth Partners provide something even more attractive – cash-on-cash distributions that are, on average, 2 or even 3 times higher than a typical REIT. This is mainly due to the fact that we only buy true “value properties” with strong cash flows. It is also due to the “illiquidity premium” associated with a private investment: since your capital is tied-up longer, an investor should expect a higher return. Is illiquidity always a bad thing? Not necessarily – frequently the inability to access funds will force an investo

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