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An Investment Strategy Worth Imitating

I’m writing this on my return flight from a conference in Denver, where we spent three days learning from and engaging with some thoughtful people.

Key themes of the weekend were where we are in the market cycle, what 2022 will hold, and the impact of projected interest rate increases on the real estate market and property values.

During one of the panels, the discussion circled around the re-allocation of investment dollars by large institutions. COVID-19 revealed certain asset classes to be riskier and less resilient than we once thought, and that has led to a likely long-term shift in how and where the largest investors/companies in the world are investing their capital.

Much of that shift has occurred towards the multifamily and self-storage space, and even in the single-family housing space. I’ve written previously about the build-to-rent trend, how large institutions are building and buying single-family homes with the long term in mind, and how this, in turn, is driving unprecedented demand for the very assets we’re investing in.

However, as we know, investing isn’t always up and to the right, and we have been in a bull real estate market for ten plus years now. At some point, it will inevitably correct. When that will be, what the catalysts will be, and how severe are the billion-dollar questions. A key aspect of a wise investment strategy is to look at what other investors who have been successful over the long term are doing, and, in the sincerest form of flattery, imitate them.

As you likely know, investing in high-quality assets in the Sun Belt states has been at the core of our strategy for several years. The reasoning behind that lies in the strong fundamentals of those markets and the historical performance of higher quality A & B+ Class assets. So, it’s quite validating to see one of the largest institutions in the world effectively mimicking our strategy…

Blackstone REIT To Buy Preferred Apartment Communities in $5.8 Billion Deal

The affiliate of New York private equity giant Blackstone Group said Wednesday it will acquire Preferred, which includes 44 multifamily properties totaling about 12,000 units concentrated largely in its home base of Atlanta as well as Charlotte, North Carolina; Nashville, Tennessee; and the Florida markets of Orlando, Tampa, and Jacksonville.

Blackstone is one of the largest investment firms in the world, with $881B AUM [assets under management]. Their REIT [real estate investment trust] is primarily made up of multifamily and industrial assets, and they are well known as one of the smartest investment management firms in the world. They like these markets & assets for the same reason we do, rent growth that well outperforms the national average due to population growth, a strong employment base, and undersupply that won’t be corrected anytime soon.

At PassiveInvesting.com, as we look ahead, we, of course, don’t know what the future holds, but we continue to make well-informed, strategic, conservative decisions on your behalf. Knowing that the smartest, most successful firms in the world are validating our strategy with billions invested gives us a measure of comfort and confidence, and it should for you as well.