Thank you for the feedback on the recent updates. My last few notes have focused on the challenges we’ve navigated across the market and within the GVA portfolio, along with key lessons learned coming out of this cycle. For those interested, I’m continuing the lessons learned discussion on LinkedIn.
Today, I want to shift the focus forward and talk about opportunity. What I’m seeing in the market today and how I would approach it.
Despite how painful the last cycle was, many of the same factors that created widespread distress are now creating opportunity.
Here are some of the positives I’m seeing in the real estate market.
The market is resetting.
Supply is decreasing. Cap rates expanded meaningfully, and from 2027 – 2030 we should see compression alongside improving occupancy and rents. Still varies market by market.
Macro is improving.
Trump appoints a new Fed chair in May, with a stated purpose of lowering rates.
Capital is getting more flexible.
New rules allowing private equity and real estate exposure inside 401ks bring in a new pool of capital.
The economy is still moving.
The economy continues to grow. Tariffs are working. Labor and wage growth will increase with continued deportations. AI buildout and technology advancement is happening. GDP growth in the 5-6% range is not out of the question while keeping inflation in check.
The headwinds are slowly shifting to tailwinds, and I expect momentum to build over the next four years. If you think about the GFC cycle, peak pricing was 2005, and some of the best buys didn’t show up until 2012. In this cycle, peak pricing was 2022, and similar opportunities should emerge around 2029. No one can perfectly time the market, so I’d focus slightly before and after that inflection point.
We’re starting to see distressed loan pools on sale and discounted lender REO pools. It’s early, but it’s happening, and we’re assessing what opportunities make sense.
More thoughts to come on specific opportunities and how to build a robust portfolio as the opportunities unfold.
Thank you,
Alan Stalcup
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