Q1 2022: Macro Investor Trends with Co-founder & Principal, Sean Mabarak
Macro Investor Trends with Co-Founder & Principal, Sean Mabarak
Written by Sean Mabarak
Q1 2022 Newsletter
First, we are honored to announce Jennifer Warder as SPI Advisory, LLC's newest shareholder and principal.
Jennifer joined SPI in 2015 and has been instrumental in our firm’s ability to scale quickly from less than $100M in assets under management to over $2B today.
Jennifer’s dedication to SPI’s investment goals and business values has been unmatched since her first day with us. Jennifer’s diverse background as a proven leader in project management, software development, process redesign, and education transformed SPI’s operational capacities. Additionally, as the champion of SPI’s culture, she has defined how we attract, hire, and train our talented and dedicated team members.
We look forward to the path ahead for SPI as Jennifer helps us transform in new ways to accommodate the rapid growth of our company.
Well, the markets we've focused on for nearly a decade have finally made it to the big leagues where they belong.
The number of large institutions with acquisition teams now focused specifically on Dallas and Austin (and even San Antonio) has grown substantially. They have to place massive amounts of money in a short period of time, which is causing current market values of Class A property to race higher at a dizzying pace. We are also seeing a “flight to safety” where firms are taking large profits from projects in traditionally boom and bust markets like Florida and Arizona and aggressively allocating them in Texas. Traditionally, these large institutions are very disciplined and do not deviate from valuation practices that rely primarily on in-place operating data. However, they seem to be getting more and more comfortable pulling forward future revenues and focusing on cap rates relative to “marked to market” rental income. Given that old to new lease trade outs in these markets have averaged 15-30% for several months, it creates the situation we are in now where properties that would typically trade for an adjusted 3-4% cap are now trading for in-place cap rates in the low 2% range.
In this environment, it's more important than ever to maintain discipline. Partnering with a firm like SPI Advisory really levels the playing field for our investors looking to get into Texas Multifamily. These sophisticated institutional investors are coming for Texas Multifamily for a reason. The demographic and economic winds are at our back. They are betting billions and billions of dollars that Texas Multifamily will outperform the other investment alternatives for years to come. We concur with their investment thesis. Our job is to identify the mispriced assets and take them down.
We at SPI Advisory have well-established long-term relationships with the Texas Multifamily brokerage community. Additionally, we are based in Texas with offices in both Dallas and Austin. Every day on the multifamily playing field we are going up against these institutional teams. It's a good thing for us every day we are playing at home while they are the away team.
To a successful year ahead,
