The Assets Classes
The Fund invests in 7-10 different real estate assets from three asset classes - all with a track record of continuing to perform in a recession. The managers have deep relationship with multiple best-in-class real estate operators across the US. The Fund will invest as an equity partner with these operators with the specific aim of protecting principal and generating quarterly cash flow.
MOBILE HOME PARKS
Mobile home parks are counter-cyclical because they offer an affordable housing solution.
The U.S. is facing an affordable housing crisis that continues to grow.
Demand increases during economic downturns:
20+ million people live in MHPs in the US accounting for 6.6% of all households
The US is shifting to lower paying jobs
An increasing number of retirees are downsizing or have low income
Self-storage facilities are stable during a volatile market cycle.
Self-storage REITS delivered a 5.1% total return through the 2008 financial crisis compared to general REITs generated a 38% loss.
Self-storage adapts quickly to the market:
Incentives may be offered to attract tenants
Operating expenses are very low compared to other types of real estate
Majority of leases are month-to-month so the rental price can be increased with 30 days notice
Demand for affordable apartments often increases in a recession as many single-family tenants downsize to reduce their cost of living.
39 million people (1 in 8) in the US live in apartments - demand is at an all-time high.
Value-add Affordable Multifamily focuses on:
Buildings/communities in good locations with some deferred maintenance and upside potential
Highly attractive and low cost debt is available compared to other assets