U.S. Capital Markets Glide Path to Clearer Skies

Strategic Recommendations

• Monetize high-quality, mature multifamily or industrial assets that have already achieved their business plans and accumulated strong returns. • Target grocery-anchored and experiential retail acquisitions in attractive locations. • Acquire stabilized, transit-oriented multifamily product in prime locations. • Identify residential-oriented acquisition strategies such as senior housing or student housing that provide secular demand drivers that run independently from the macro cycle. • Target high-quality office acquisitions at low basis with long-term, high-credit WALT offering best-in-class amenities in vibrant locations. • Acquire high-quality assets that offer counter-cyclical, downcycle protection (medical office, data centers, affordable housing). • Develop Class-A industrial in robust corridors proximate to strong population growth. • Acquire distressed assets with optionality for either repositioning or adaptive reuse into multifamily, life science, or mixed-use. • Acquire low-quality, highly vacant malls that offer opportunity to bank land in highly accessible locations, scrape and build logistics product. • Develop high-quality, trophy office in supply-constrained, proven and resilient locations with targeted completion post-recovery (2025+). • Buy high-quality office buildings with high vacancy and/or required strategic capital investment to lease up, stabilize and sell. • Develop grocery-anchored and other retail strip and power centers in undersupplied micro-markets. • Develop a vertically-integrated specialty in growth niche/alternative sectors gaining private capital and institutional interest (self storage, life sciences, cold storage). • Acquire individual assets that can be aggregated into a portfolio as their sectors mature (e.g., industrial outdoor storage). • Buy unleveraged today, acquire at an attractive basis, especially for short-term MTM/WALT profile deals where negative leverage puts a drag on returns; refinance later. • As the Fed pivots and rates move down, shorter and floating-rate product will improve (even as spreads may remain wide due to uncertainty and recession). • Rather than financing floating today, swap over the 3- or 5-year, while negotiating a 1- to 3-year open period on the back end to offer some flexibility. Allows for a lower all-in coupon today with opportunity to refinance without being locked in for a longer duration. • Shorter-term durations, and smaller loan sizes are more likely to have liquidity and are more appealing to fixed-rate lenders today (LifeCos and Pension Funds remain selective and recently indicating their 5-year buckets starting to fill up). • Focus on some more esoteric assets in the market (niche assets) such as self storage, manufactured housing, cold storage, etc. • Provide bridge loan financing to high-quality assets and development projects in preferred sectors such as multifamily and industrial. • Private credit opportunity of a lifetime: given more constrained liquidity for conventional senior mortgage financing, provide subordinate capital in the form of preferred equity or mezzanine debt for maturing loans that need infusions of capital.

Defensive/Core

Value-Add Opportunistic

Debt Market Strategies

Source: Cushman & Wakefield Research.

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