March 2024 Review

Happy Easter!

Thanks for reading and welcome back. If this is your first newsletter, thank you for subscribing and wanting to follow the Rolling Rook story.

We are proud to keep you up to date with the future of our company, team, and industry as a whole. In this newsletter, we look to provide you with a snapshot of the day-to-day operations of RRC, give you the inside scoop of who we are as a team, and keep you up to date with pertinent information on the current real estate market.

If you'd like to learn more about how to start investing with us and get a deeper insight into deals on our radar, start here! Additionally, don't hesitate to pass this along to your family and friends who might share similar interests!

Discover the Latest from RRC

Rolling Rook Capital has been diligently evaluating numerous deals flowing through our pipeline, carefully assessing their alignment with our rigorous criteria. Each opportunity undergoes thorough examination from all angles, maintaining a steadfast focus on our valued investors and their desired returns. Transparency is paramount across all aspects of our operations.

?Amidst ongoing inventory constraints and rising interest rates in the multifamily housing market, it's crucial to conscientiously consider these factors when vetting deals meeting our standards. Reflecting deeply on this, we've made adjustments to pursue assets offering optimal returns for our investors, leading us to increase our focus on the self-storage market.

The Rolling Rook team is fully committed to identifying opportunities that maximize returns through effective strategies and tactics. Through regular Level 10 meetings and quarterly Rock reviews, we consistently pursue our objectives, promote transparency, and reinforce accountability within our team. Acknowledging the importance of establishing a robust operational framework, we remain dedicated to continual improvement to deliver secure and profitable investments to our community.

Market Updates

The Macro

Artificial Intelligence and Real Estate

The rise of artificial intelligence (AI) is causing a significant shift across various industries, with around 80% of jobs exposed to potential disruption. This has raised concerns about the impact on the real estate market due to changes in the labor market. However, historical precedents, such as the first industrial revolution spearheaded by mechanical knitting machines, suggest that technological advancements ultimately lead to economic growth and expansion in real estate markets. AI is anticipated to enhance productivity by allowing fewer people to achieve the same level of output, thus creating new opportunities. Companies like Microsoft are exploring a human-centric approach to AI development, aiming to assist rather than entirely replace human roles, which is expected to boost productivity and contribute to a 14% increase in global GDP by 2030.

The real estate sector is expected to feel the effects of AI in various ways, including changes in demand among assets, the emergence of new asset and product types such as intelligent buildings, and advancements in revenue generation and investment through AI-powered underwriting processes. Additionally, AI is set to influence design and space function, allowing for more personalized and experience-driven environments. With AI companies clustering around established tech markets, the geographical landscape of real estate is likely to evolve, concentrating growth in locations with abundant AI talent. The growth of AI is also translating into increased demand for real estate, particularly from the AI sector itself, with significant investment pouring into AI-powered PropTech companies globally. As the real estate industry embraces AI-enabled solutions, early adopters are already experiencing notable returns, suggesting a promising future for AI integration in real estate functions.

?For further details, you can access the complete article here.

The Micro

Midwest Self Storage

In an article featured on REJournal titled "Too much Stuff: Self-Storage Boom Continues in the Midwest," Dan Rafter highlights the continued prominent growth that self-storage experiences in the Midwest.?

?The latest Midwest self-storage report from Marcus & Millichap underscores the ongoing demand for self-storage units driven by the perennial need for additional space to store belongings. This trend does not seem to be going away anytime soon. With vacancy rates expected to drop to 11.2 percent by the end of the year, the Indianapolis region stands out as a particularly robust market, witnessing significant decreases in vacancies alongside rising rents. While the Midwest as a whole is projected to experience modest rent increases of 2.3 percent, Indianapolis is poised for substantial gains, with self-storage rents predicted to surge by 5.1 percent in 2017, reaching 90 cents per square foot. Climate-controlled facilities are also expected to see notable rent hikes, rising to $1.24 per square foot, reflecting a trend of sustained growth in the region's self-storage sector.

?Beyond Indianapolis, recent high-profile self-storage sales across the Midwest underscore the investment appeal of this asset class. Notable transactions include the sale of Lombard Self Storage in Illinois for $9.8 million and Mini Storage Depot in Michigan for $11.3 million, signaling investor confidence in the stability and potential for returns in the self-storage market. Despite the modest overall rent increases projected for the region, these transactions highlight the continued attractiveness of self-storage properties as lucrative investment opportunities across the Midwest.

You can read the entire article here.?

New With RRC

Recently, we have dedicated significant resources to thoroughly exploring a specific market, focusing our attention on the self-storage asset class for a multitude of reasons. This strategic shift was undertaken to gain deeper insights into our next investment endeavor, enabling us to operate this deal with maximum efficiency and deliver optimal returns to our investors, who entrust us with their valuable capital.

Ongoing discussions with potential cosponsors aim to elevate the production rate and initiate a more robust deal flow. Despite a relatively slow year for many real estate investors, Rolling Rook is confident that persistent work on systems and adherence to set criteria will yield exciting deals in 2024. The commitment to not compromise on standards remains a key aspect of the strategy for the coming year.

We express our gratitude to all our readers and hope you will continue to enjoy our content. As we embark on our journey towards achieving our goals in 2024, we invite you to follow our progress and stay engaged with the exciting developments ahead. The course is set, and we are enthusiastic about pursuing our objectives. Thank you for your continued support!

Investment Philosophy

Our investment strategy centers on targeting B to C-class properties, identifying those with inherent value-add potential through strategic renovations and operational enhancements. Our market selection involves a meticulous analysis, integrating distinctive trends that align with our accumulated expertise from prior service. Additionally, we actively cultivate an off-market pipeline, consistently evolving, with the primary goal of maximizing returns for our esteemed investors.

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