Answers to three questions investors are currently asking us:
Topic:
1) Why invest now versus putting available funds in a money market fund?
You can do both! We do not call your commitment unless we’re acquiring a property. In the meantime, you can keep your dry powder in a US Treasury or money market fund earning 5%. Once we call your investment, you start earning a preferred return and will be investing in a property with a return target in excess of 10%. Being an investor now puts you in the best position to reap the rewards of Calvera’s distressed investing.
2) New multifamily construction starts are slowing. Is this good or bad for Calvera Partners?
This is generally a good thing for Calvera. Many major markets have seen a surge in new apartment supply and that has caused rents to decline. Because rates are so high, construction costs remain elevated, and rents are soft, it no longer makes sense to develop new multifamily communities. This will bring supply and demand back into equilibrium, and rents will return to an upward trend.
3) Have your investment criteria changed at all in this environment?
No. We’re still underwriting deals the same way we always have. What has changed is that we’re able to pursue nicer assets. When all values are down, it becomes a great time to trade up in quality. That’s the profile of deal we’re trying to seed our new fund with.
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San Francisco, CA 94111
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Minneapolis, MN 55401
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