Avenue33, Stockbridge, GA
I’m getting a little slower start to the day after driving 8 hours yesterday. Took the family up to Clarks Hill Lake (just north of Augusta, GA) for our annual week on the lake. I’m very thankful for an awesome team that keeps the ship moving. I think work-life balance is a bit of a misnomer in our modern environment of remote work and constant email. My goal is making the most of each day along the journey and including the family as much as possible. Nonetheless, it’s nice to get away for a few days and have a chance to plan for the year ahead. In many ways I think it’s actually easier to step away from the desk and still stay in touch with the technology we have. It’s all in how we use it!
Why Not to Time the Market
A recent drop in manufacturing activity, as well as inflation adjusted spending, are just the beginning evidence that the Fed’s recent rate hikes are taking hold. The economy is deteriorating fast and we’re expecting rates to top out before the end of the year. Rate expectations have already moderated from topping out at 4% to topping out in the low 3s.
That means our debt has already started to get better. It’s also part of the reason that the cap rate spread has narrowed with little adjustment – people aren’t expecting long-term deteriorating fundamentals. It’s also the main reason I stay away from timing the market. Rather just price each deal as best as possible given the current market conditions and keep our focus on long-term cash flow. It allows us to buy in any market and keep deploying capital, so it doesn’t get eroded by inflation (especially now).
Deal Update
Our current deal in Atlanta is ready to close next week. We’re excited to be adding another value-add deal with debt locked in at 1.5% lower than we’re seeing today. Another opportunity with day 1 cash flow and rents achieving year 3 pro forma with nice upside in a phenomenal market.