August 2023: New Website and Portal

New Offering - Cooper Bend - Hanahan, SC (Charleston MSA)

We recently launched Cooper Bend, our newest investment opportunity. We are very excited about this project because we are acquiring the property for a phenomenal basis of only $91k per unit, which is not only one of the lowest price-per-units we've seen in the Charleston MSA since COVID, but it is also $15k per unit less than the current owner paid for the property in 2021.

We're forecasting strong investor returns for this opportunity, so if you would like to learn more and/or register a soft commitment.

Closing Announcement - Summers Run - Asheboro, NC

Matheson Capital successfully completed the acquisition of Summers Run on August 17th. We purchased the 112-unit workforce housing property at a price of $16.3 million, making this project our largest acquisition as the lead sponsor and also our largest equity raise to date.

While we experienced significant delays due to the loan assumption, we were able to work through everything, and we believe this project will deliver great cash flow to investors for years to come.

We want to give a special thank you to all of our investors. It goes without saying, but without you, none of this would be possible.

In The Media

It was another busy month in the media for us. We made our second appearance on the Street Smart Success podcast, and we also appeared on the Creative Capital podcast.

Additionally, we appeared in print for the first time! We were used as a source for an article fact checking Grant Cardone. (Spoiler: if you qualify a statement enough, it's very easy to be "potentially true")

New Website & New Investor Portal

We're making a lot of changes right now to improve the overall investor experience. As a part of that, we recently updated our website, so if you haven't visited in a while, take a look.

The next step will be updating our investor portal, which we will launch to investors later this month.

WHAT WE ARE LOOKING FOR

Distress, distress, distress! We said it in our last update, and it's even more apparent now. We've now analyzed over half a dozen properties that are being shopped for less than the current owner paid for them. Unsurprisingly, the story is pretty much the same for all of them. The operations are strong, but the floating rate bridge loan is too much for the property to handle, so the seller has to sell.

Over the coming months, we'll be doing our best to capitalize on this distress so we can deliver great opportunities to investors.

MARKET INSIGHTS

Flip a Coin: Distress is Heads

We've all been reading about this for months now, but it becomes more and more relevant with each passing day. Unlike office, multifamily commercial real estate's issues are largely based on the financing, not the underlying fundamentals of the properties.

These issues are only going to be further compounded as more and more lenders leave the market. Many mortgage REITs have stopped lending, and we've already seen multiple bank failures. With fewer options to borrow from, more owners will be forced to sell, which we are already seeing.

To buy property in this environment, the options are seemingly limited to agency financing or relationship lending.

Opportunity is Tails

The other side of the coin is opportunity, and more and more people are starting to catch on. Starwood is eager to deploy capital, while Brookfield sees the best real estate opportunities since 2009! Wall Street is lining up to buy properties at distressed values, and we're attempting to do the same.

For a peak at our not-so-secret playbook, you can see the charts in this article.

Inflation

It wouldn't be an update without an update on inflation. I've been writing this section for 2 years at this point and it never gets old.

Anyway, mixed signals are everywhere. At Jackson Hole, Powell warned that inflation was too high so the Fed may need to hike again. At the same time, July inflation data was pretty good, and traders believe we're done with hikes, so who really knows.

Our position is that the Fed is going to keep talking tough because they don't want people to start pricing in too many cuts.

However, there is more and more data that suggests the Fed's data is worse and worse. We see headline after headline about how the job market is so hot, but the numbers continually get revised down, so is it really that hot when they are revised down every single month!

Additionally, the Fed's measure of shelter is what is keeping inflation up, and the shelter measure has an infamous delay of about 12 months, so why are we relying on it?!?!?!?! Penn State runs a much more reliable index that captures rent in real time, and if you use that data, inflation is already negative. (As a side note, the Penn State also answers the question of "where was all of the inflation pre-COVID?)

Why does the Fed constantly cite bad data? Ask them.

Student Housing

Student housing is a sector we are very bullish on. Schools are pouring billions into their campuses, and despite all of this, some students still struggle to find housing.

Student housing tenants often have better credit than work force housing properties due to parental guarantees on leases too, which further helps with cash flow. More and more investors are catching on, with investors planning to pour billions into the sector in the coming years.

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