Seven Two Partners – Real Estate Opportunities in 2013

On January 24th and 25th Nicholas Rotello spoke at IMN’s 10th Annual Winter Real Estate & Private Fund Investing Conference which proved to be an outstanding opportunity to see the US Real Estate market from the eyes of developers, operators, and service providers.  There were also a number of niche funds in the crowd, many of whom attended Mr. Rotello’s panel on Emerging Managers.  Here were some of the highlights:

  • Real Estate cap rates continue to look attractive relative to treasuries, even though absolute levels remain low.
  • Tier One cities have seen significant cap rate tightening, and it is not realistic to model additional tightening into future expectations.
  • Beyond Tier One cities, liquidity remains a significant challenge. In some cases the higher cap rates make up for the additional risk.
  • Service providers to real estate investors have been busy, and expect investors increased appetite to spur deal flow in 2013.
  • Funding remains inexpensive for investors, with all types of lenders very willing to compete for business.
  • There were a lot of bridge lenders considering a fund structure for more permanent capital.  Most projected 7% – 10% net of fee returns to investors when using modest leverage.
  • Single Family Residential has performed exceptionally well in large cities such as Phoenix, but seems to remain an opportunity in smaller cities.

We found the IMN conference to be an exceptional use of time for real estate investors, don’t hesitate to contact them directly if you’d like to learn more.  As always, feel free to call us for any reason.