RCLCO Fund Advisors

Impact investing is a win-win – not only does it deliver on a social mission, it’s a strategic investment that can deliver financial stability. Lisa Davis, Partner, Real Estate and Head of Asset Management at The Vistria Group, shares how affordable housing attracts a diverse pool of investors: ?? Banks and foundations — motivated by community impact ?? Pension plans and family offices — focused on stable returns and low volatility Discover the full discussion, including insights from Altus Group's Niall McSweeney and RCLCO Fund Advisors's Bill Maher: https://lnkd.in/gfFcvEDy #cre #commercialrealestate #affordablehousing #realestate

I'm?attending?the @National Rental Home Council's 2025 Industry Leaders Conference. Looking forward to connecting with other industry leaders! #NRHC #ILC2025

The RCLCO Real Estate Consulting and RCLCO Fund Advisors teams returned last week from the National Multifamily Housing Council (NMHC) Annual Meeting. Multifamily industry participants were excited to be back in Las Vegas, but the mood at the conference was a bit more circumspect than last year. Attendees were encouraged by the 20%+ increase in multifamily transaction activity in 2024 and more competitive debt markets, but acknowledged that supply pressure will continue to weigh on market performance in the near term and elevated rates may be here to stay. Here are some of the common themes from the week Part 1: 1.????Interest Rates – Whereas last year the Fed signaled four rate cuts and attendees were hoping for eight, owners this year are less optimistic that Federal Reserve rate cuts will have a meaningful impact on values (at least in the first half of 2025). 2.????Supply?– Deliveries will continue to weigh on rent growth and occupancy in the first half of 2025. Attendees were optimistic about near-term performance in lower-supply markets (e.g. many Gateway markets and those in the Midwest) but expect headwinds to persist through early 2026 in certain Sunbelt markets (e.g. Atlanta, Austin, and Phoenix). 3.????Capital Raising – The fundraising environment is expected to remain difficult in the short-term as moderated transaction volume is hindering investors’ ability to recycle capital into new opportunities, investors remain selective (focusing on higher quality assets and locations), and investors foresee longer roads to positive leverage. HNW/Family Office and foreign capital are more active than traditional institutions. Anecdotally, a number of multifamily operators are offering asset management services without co-investment to generate fee income in the near-term and offset internal overhead. ? 4.????Distress– The multifamily market has not seen a lot of distress (e.g. banks taking back assets), but buyers continue to wait for these opportunities. While financing terms improved marginally, and more lenders were willing to extend loans in 2024 than previously expected, there continues to be signs of ownership stress related to floating rate debt with upcoming loan maturities. Those that will not or cannot contribute additional equity are running out of time and will be forced to sell. Also in the near term, there remain sales from investors that need liquidity, whether for their investors or to support other assets.?

Common themes from the NMHC Annual Meeting last week Part 2: 5.????Development – Making development pencil continues to be a challenge, but developers indicated that interest in development has increased as investors are starting to get visibility into the other side of the supply wave. Attendees expect construction starts to remain muted in 2025 as capital is more selective (keying in on strong submarkets, locations, and fundamentals) and acquisition pricing remains relatively attractive. This means there should be a first-mover advantage for those able to deliver in 2026 and beyond. Tariffs and concerns with administration changes were not major concerns for developers, but last week’s tariff announcements may drive some additional cost pressure on development in the near term. 6.????Value Add – Value Add was not a frequent topic of conversation at this year’s conference. With record supply weighing on B and C rents, attendees seemed more cautious about their ability to achieve attractive ROIs on unit renovations. The Sunbelt markets, in particular, are seeing little investor interest as current yields represent negative leverage with difficult paths out as rents recede and renovation premiums pull back. Given the aforementioned difficulties with Value Add business plans, older assets are finding their way into vehicles targeting lower risk. 7.????Low-density Residential – There remains enthusiasm for low-density housing (i.e. single-family rental and build-to-rent). The demographic tailwinds are strong, and owners and managers are rapidly learning the nuances of operations. Another key theme was product type, with operators and investors focused on the best size and bedroom mix to attract demand. Overall, the sector should benefit from less supply headwinds than multifamily. 8.????Markets – There is continued caution in markets with near-term oversupply (e.g. low barrier-to-entry Sunbelt growth markets), optimism for the Midwest, and continued interest for the primary West Coast markets (particularly Seattle and the Bay Area). 9.????Operating Expenses – Operating expense growth has moderated due to slowing inflation and a pullback in insurance rates. Investors are closely monitoring the insurance industry’s response to large casualty losses during the 2024 hurricane season and Los Angeles fires. 10.????Rightsized and Repositioned Companies – After two years of challenging market conditions, most apartment sponsors have now optimized their organizations for a lower volume of activity. Many tough decisions have been made, and most firms are operating with leaner, more focused teams. At the same time, well-capitalized groups are taking advantage of the shifting talent landscape. With top professionals more accessible than in past cycles, strategic hires—we're hearing a lot about leadership in new markets and capital markets functions—have become a priority for firms looking to strengthen their competitive position.

Watch #RCLCO Fund Advisors' Scot Bommarito give a 5 minute #macroeconomic update of the current economic and capital markets trends for the month of January! See all past updates in the 5 Minute Macro Update playlist on YouTube now! https://lnkd.in/eqHWm5-s

How are key real estate benchmarks evolving? What are the implications of benchmark updates for markets, managers, and reporting? How can investors navigate these changes? Rich Kleinman is eager to share insights on real estate benchmarks and their impact on investors at the upcoming 2025 Visions, Insights & Perspectives (VIP) Americas conference, taking place January 27 - 29, 2025, at the Monarch Beach Resort & Club in Dana Point, CA. Join us for a thought-provoking panel discussion featuring Richard alongside industry experts Benjamin Maslan, CFA of RCLCO Fund Advisors and Mark G. Roberts, CFA, AIA of Crow Holdings Capital and moderator, Loretta Clodfelter of Institutional Real Estate, Inc. We're looking forward to an engaging exchange of ideas and perspectives! https://ow.ly/xSg050ULT1s #InvestingTodayForTomorrow

Watch #RCLCO Fund Advisors' Scot Bommarito give a 5 minute #macroeconomic update of the current economic and capital markets trends for the month of December! See all past updates in the 5 Minute Macro Update playlist on YouTube now! https://lnkd.in/ezqXX4Tn

Residential real estate remains a dynamic sector, with panelists exploring the performance of single-family rentals, affordable housing, multifamily, and more. Discussions highlighted market headwinds like interest rates and housing supply while identifying emerging opportunities across various residential sectors. Moderator: Tommy Brown, LGT Capital Partners Speakers: ? Jackie Blickman Dash, Hamilton Lane ? Cyndi Thomas, RCLCO Real Estate Consulting ? Jonathan Woloshin, CFA, UBS Global Wealth Management ? Ned Stiker, Cortland #MarketsGroupRE Patrick Egan Madeline Heckman Gianluca G. Joshua Michi Bianca May Pe?aranda Bleriona Bahidi Beatriz Danna Manota Mollie Capener Wami Medina Luana Barretos Camille Cross John Paul Zajas William Lim Victoria Cepeda Elena Cohen Sara Katrenich Courtney McQuade Giseli Cristina A.