The Best Ever Conference just may be the biggest event of the year for private real estate syndicators, fund managers, and individual investors in the commercial real estate space. It’s a good place to learn from other fund managers, connect with fellow investors, and really take the pulse of the market. Our company had the privilege of being a sponsor of the event, and I was fortunate enough to attend with not only members of my Investors Relations team but also with PPR’s Real Estate Portfolio Manager Chris Cordes and our co-founder Dave Van Horn.
Today, while only a small portion of our portfolio is in opportunistic multifamily properties, it was reassuring to be positioned differently than most others given the current market conditions. And I came to learn that this economic environment also made for a real estate Investing event that was probably unlike any other….
Scene Report
First things first, I have to point out that the Best Ever folks put on a high caliber event overall – perfect location (both in venue and scenery), had an accommodating team, and of course quality content to match. In its 8th year, the Best Ever team has built a well oiled machine to deliver a quality event. And although there was optimism about the ongoing strength of economic fundamentals, there was definitely an overall atmosphere of pessimism around the current economic environment, especially in the commercial real estate sector.
In conversations with operators and fund managers, I kept hearing about the lack of quality deal flow and the difficulties many of them were experiencing in terms of high prices and just generally low supply. Not to mention, I heard candid speeches from the stage about the need for many managers and syndicators to pause distributions and even make capital calls to salvage deals that had been impacted by rising interest rates as floating rate debt was reset. Likewise, investors seemed cautious although most seemed to think that current challenges were temporary.
Overall I heard an increased interest in capital protection and safety and less of a concern about achieving strong returns. I would also add that investors seem to get more sophisticated every year, and this crowd definitely understood many of the nuances of how asset classes are being affected differently now and how operator response was a key factor in navigating the current environment successfully. Outside of Best Ever, I’m hearing similar things from other investor communities and events that PPR participates in such as Left Field Investors. There’s simply an increased level of caution in many investors’ approaches to private real estate right now.
Where We Go From Here
The takeaway I saw for most syndicators was that they should focus on what they can control and make daily progress on. Things like maintaining constant communication with brokers and investors to cover both sides of the spectrum – sourcing and capital. For investors, it was to be on the defensive and conduct proper due diligence.
Thankfully, due to the nature of our primary asset class (Non-Performing Loans), PPR hasn’t been dramatically affected by the challenges faced by other commercial real estate funds and operators. Our loan portfolio continues to perform at or above expected levels month over month, and our multifamily projects have been chosen opportunistically (such as our Affordable Housing project in Austin TX) in high growth markets mostly during this rate flux and have thus far been largely unaffected. All of which has continued to allow us to make monthly distributions each and every month, just as we have uninterrupted for the past 16 years. We look forward to keeping readers up to date with more conference reports and hope to connect with more investors at the next big conference of the season, the REI Summit, May 4th -5th, in Denver, CO.
