March 2023 Requity Report
MARCH?2023
ISSUE 3
Welcome to the third edition of?Requity Report.?March has been an event-filled month for our team, highlighted by the closing of Lake Monroe Village, a?183-site?waterfront RV campground located in Bloomington, IN.?We want to take the opportunity to say "THANK YOU"??once again to our investor partners for a successful capital raise and an overwhelmingly positive response to our latest offering, fully committing it in under 24 hours.?This is our first deal in the Midwest, increasing our footprint outside the Southeast and adding our 11th campground to our growing portfolio.?With our first closing of 2023 officially in the books, we hope it sets the tone for more to come as the deal flow continues to pick up.?
In general news, on March 10th, California state regulators seized the nation’s 16th-largest bank.?Silicon Valley Bank (SVB) was placed into FDIC receivership, marking the largest banking collapse since 2008. Two days later, New York authorities closed Signature Bank for irregular practices.?
If you're interested to read more about this, be sure to subscribe to our long-form newsletter that gives you all this information and more!
Property Highlight
North Kentucky RV Park in Dry Ridge, KY, is comprised of 80 full hookup RV sites that are big rig friendly and include a combination of back-in and pull-thru pads.?It's located off Interstate-75 (I-75), which crosses?Kentucky, passing through Lexington (1-hr) before passing the Ohio River into Cincinnati?(30 min).
Since we acquired this property in December 2021, we have added gravel to the property roads, completed landscape upgrades, remodeled the office and park store, and installed a cold river mining activity for guests.?Lastly, like at our other property Flag City MHP, we are working alongside a team of engineers for a potential expansion project that we hope to execute in the near future.
Here is a recap of the work done at North Kentucky RV Park:
To learn more about TRG Resorts and North Kentucky RV Park, visit?www.trgresorts.com.
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Market Updates
Bank Closures Spur Capital Markets and the Impact on?Commercial Real Estate?
The recent collapse of Silicon Valley Bank (SVB) and Signature Bank due to the tech industry's challenges and a chain of events dating back to the pandemic has created turmoil in the banking sector.?The banking collapse has led to wider spreads and a more cautious stance by the Federal Reserve on interest rates. SVB's demise was caused by its allocation of a large portion of its capital base to securities and long-term U.S. treasuries, which dropped in value as rates increased, and the wave of withdrawals by tech firms during a period of industry-specific headwinds. The bank's attempt to cover its losses by selling $2.25 billion of?equity?and preferred convertible stock backfired and led to a freefall, ultimately leading to its collapse. The federal government responded quickly to curb fears of a broader financial market contagion event. Despite the challenges, the higher probability of more stable rates in the near term could serve as a positive for real estate transactions ...if you would like to continue to read this and more, be sure to subscribe to our long-form newsletter!
Softer Rate Hike Outlook Potentially?Clears Some Hurdles for Investors
The Federal Reserve has raised the federal funds rate for the ninth time in 12 months, citing still-too-high inflation and a tight labor market. However, the recent seizures of Silicon Valley Bank and Signature Bank have prompted more caution around the banking sector, leading to a more measured approach to rate hikes. The Fed is likely to continue to take time to assess the full impact of the recent banking shock and is expected to be more measured in the future. A more stable federal funds rate will aid commercial real estate lending, allowing capital providers to more readily set terms and determine valuations. While recent rate increases have increased capital costs... If you would like to continue to read this and more, be sure to subscribe to our long-form newsletter!