Avenue 33, Atlanta, GA
Hope you had a good weekend and the week is off to a good start! The summer is usually a super busy time for us and this one looks to be par for the course. This week I have more than the usual number of topics to cover so I’m going to jump right in…
ECONOMIC UPDATE
The job market continued to gain momentum as the economy added 390,000 jobs in May. While this was more than expected, it wasn’t quite enough to nudge the unemployment rate down from its (already) low 3.6%. The details of the jobs report showed hiring took place across many different sectors of the economy (i.e. not just one industry that was growing). Most importantly, in my opinion, we also saw the participation rate increase to 62.3%. Consumer confidence also came in strong at 106.4, supported by the strong jobs market. We’re seeing some folks re-enter the workforce as the government stimulus comes to an end, and the cost of living continues to rise. This is a positive, as we need that added labor force to accommodate the GDP growth and help keep a lid on inflation.
Nonetheless, some economists estimate that there is still around $2.3 trillion in COVID savings (money that people built up during the pandemic while stores/shopping was shut down). This is a built-in cushion as we head into a potential economic slowdown brought on by the Fed’s rate hikes. Bottom line, all of this points to an extremely tight labor market. Average hourly earnings rose a moderate 0.3% m/m (a positive sign) but nominal wage growth continues to lag consumer price inflation. That being said, long-run inflation expectations have eased almost 30bps over the past month, driving a decline in the 10-year Treasury yield.
DEAL UPDATE
ATLANTA: We officially kicked off our new deal in Atlanta with a live webinar last Thursday. This B-class property sits in an up-and-coming area with tremendous job growth and the potential to achieve A-class rents with better property management. We’re about 70% committed
Highlights:
- Currently achieving $200-400/mo rent bumps
- Projected returns 10% COC and 15% IRR
- Opportunity to address deferred maintenance items and bring the property back to A-class
- Closing late July 2022
SAN ANTONIO: We’re headed to San Antonio on Thursday to walk a stabilized value-add property that we were just awarded. It’s 304 units about 10 minutes up the road from our new development project and has huge rent upside potential. There’s also 16 brand new units due to a fire several years back. It’s right in our wheelhouse for improved property management and interior renovations. More details to follow once we’ve completed our due diligence.
APARTMENT INVESTING BASICS – LIVE Q&A ON JUNE 15TH
For those of you who may be newer to apartment investing – or just newer to investing directly with an operator like REM Capital – we thought a live Q&A would be a good opportunity to ASK US ANYTHING. From picking a sponsor to understanding the tax benefits, we would love to answer your questions. We’ll also talk about how our portfolio has performed during the pandemic and what we expect to see going forward during these uncertain times. Find the link to the conversation here.