The stock market remained treacherous through the third quarter of 2022, although one group did particularly well thanks to some help from government legislation: solar stocks. Retailers too, fared well, as consumer spending remained healthier than investors had expected.

Elsewhere, however, it was a bumpy road for stock investors as the market continued to be buffeted by rising interest rates and deepening worries about recession. With stocks erasing gains posted in the first half of the quarter, every sector except for consumer cyclical and energy was down at the end of the quarter.  

The worst-performing sector was communications services, with the Morningstar US Communication Services Index down nearly 12.7% in the third quarter. Dragging the sector lower were losses in index heavyweights Alphabet (GOOGL) (GOOG), Meta Platforms (META), and Verizon Communications (VZ), which fell 12.00%, 15.86%, and 24.24%, respectively.

Real estate was the second-worst-performing sector, where rising interest rates and concerns about slowing economic growth sent the Morningstar US Real Estate Index falling 10.7%. Leading detractors to the sector’s performance were American Tower (AMT), which slid 16%, and Prologis (PLD), which was down 13.08%.

Consumer cyclical stocks rose 3.21% despite the group’s sensitivity to the economy’s ups and downs. The Morningstar Consumer Cyclical Index got a boost from Tesla (TSLA), which rose 18.17% and is the second-largest stock in the index behind Amazon.com (AMZN). In addition, Amazon was up 6.4% for the quarter. On a year-to-date basis, Tesla and Amazon finished the quarter down 24.70% and 32.22%, respectively.

Gains in ConocoPhillips (COP), up 16% for the quarter, and Marathon Petroleum (MPC), up 21.55%, helped lift the energy by 3.12%.

Overall, stocks in Morningstar’s coverage list performed better the third quarter than they did in the second quarter. Of the 852 U.S.-listed stocks covered by Morningstar analysts, 258 stocks rose, with 46 increasing by 20% or more. That is more than the 110 that were up in the second quarter, when only eight stocks rose by 20% or more.

Reflecting the more muted declines in the broad market, declines on individual stocks were also less drastic. While 593 closed the quarter lower, that is fewer than the 758 that fell during 2022’s second quarter. Furthermore, only 110 stocks fell by 20% or more, less than half the 301 stocks that fell that much in the previous quarter.

Which Stocks Performed the Best in the Third Quarter?

Driving the top performers among stocks covered by Morningstar analysts were names set to benefit from the Inflation Reduction Act that was signed into law by President Joe Biden in mid-August. The biggest winners were solar stocks. “The act includes a bevy of clean energy incentives,” says Morningstar equity analyst Brett Castelli.

Solar panel manufacturer First Solar FSLR was the top performer, while Stem (STEM), SunPower (SPWR), and Enphase Energy (ENPH) also ranked in the top 10.

Shares of oilfield servicer Weatherford International (WFRD) rose 52.53% in the third quarter and ranked fourth among the top-performing U.S.-listed stocks covered by Morningstar analysts. Investors cheered strong results that showed the firm’s revenue increasing 13% during its second quarter.

Other stocks with large gains included Dick’s Sporting Goods (DKS), which impressed investors after it not only beat both FactSet earnings per share and revenue estimates for the second quarter but also increased its same-store sales growth range to negative 2% to negative 6% from negative 2% to negative 8%.

“Although sales are negative versus last year, they remain far above [more than 30%] prepandemic levels, which we attribute to strong demand for activewear and improved merchandise,” says Morningstar equity analyst David Swartz. Online retailer Poshmark (POSH) also soared during the quarter.

Alnylam Pharmaceuticals (ALNY) rallied 37.24% after the firm announced positive news from its Phase 3 study of its patisiran drug, which can treat nerve disease caused by certain genetic disorders.

Which Stocks Performed the Worst in the Third Quarter?

Stocks facing the worst losses on Morningstar’s coverage list in the third quarter were primarily those based in foreign countries.

I-Mab (IMAB), a China-based biotech firm, was the worst performer on Morningstar’s U.S.-listed stock coverage list. Shares slid 64.51% in the third quarter after news that Chicago-based biotech firm AbbVie (ABBV) backed out of a trial for lemzoparlimab, which was part of a joint venture to develop a treatment for two types of cancer.

Shares of Chinese electric vehicle maker XPeng (XPEV) fell after the company posted a softer-than-expected vehicle delivery outlook for the third quarter, says Morningstar equity analyst Vincent Sun. Similarly, Shares of Chinese data center operator GDS Holdings (GDS) slid after the firm reduced its revenue guidance to 2% lower for its fiscal 2022 because of impacts from China’s macroeconomic conditions and lockdowns, says Morningstar senior equity analyst Dan Baker.

Shares of plasma derivative producer Grifols (GRFS) slid 48.15% as concerns over the firm’s ability to recover from coronavirus headwinds, inflation, and high financial leverage had damped investors’ sentiment toward the company’s position, says Morningstar healthcare strategist Karen Andersen.

American-German dialysis company Fresenius Medical Care (FMS) was the sixth-worst performer during the third quarter. The company’s profitability was battered by factors such as labor inflation and operating inefficiencies, causing the firm to cut its 2022 profit outlook to a high-teens decline from a low- to mid-single-digit percentage increase, according to Julie Utterback, Morningstar senior equity analyst. Investors subsequently sold off on the stock, leading to a 43.70% decline during the third quarter.

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According to a recent report from Realtor.com, the real estate markets of Austin, Raleigh, Las Vegas, Phoenix and Charlotte slowed have down the most over the past year. In all five of these metro areas, the typical time it takes to sell a home increased significantly in 2022.

Looking forward, housing markets like Austin, Raleigh and Las Vegas could experience the biggest slowdown in 2023 as well. These, and many other metro areas across the country, are cooling rapidly after nearly two years of overheated conditions.

A ‘Slower’ Housing Market Likely in 2023

A few days ago, the research team from Realtor.com published its “September Housing Report” with data for the nation’s 50 largest metro areas. Among other things, this report showed that it’s taking longer to sell a home these days, compared to a year ago.

And that’s not surprising, when you consider all of the headwinds working against the real estate market in 2022. Spiking mortgage rates. Higher home prices. General inflation. These trends have made many would-be home buyers wary about (or incapable of) making a purchase.

So it’s no surprise to see a slowdown in the pace of sales nationwide. And that’s exactly what this latest report revealed.

According to the September 2022 Realtor.com report:

“The typical U.S. home spent 50 days on the market in September, up seven days year-over-year compared to an annual increase of four days in August, which marked the first increase since the early days of COVID.”

Those are national statistics. When we drill down to the city and metro level, we find that some housing markets have slowed down a lot more. Austin, Raleigh, Las Vegas and Phoenix are among the most rapidly cooling real estate markets in the U.S., as of fall 2022.

Biggest Slowdowns: Austin, Raleigh, Vegas and Phoenix

Over the past year, the five metro areas listed below experienced the biggest increase in “time on market.” That means they’re experiencing the biggest housing market slowdown, when measured among the nation’s major metro areas.

Metro Area	Median Days on Market	Median DOM Change, Y-Y (Days)
Austin-Round Rock, Texas	51	23
Raleigh, N.C.	43	23
Las Vegas-Henderson-Paradise, Nev.	48	17
Phoenix-Mesa-Scottsdale, Ariz.	47	17
Charlotte-Concord-Gastonia, N.C.-S.C.	43	14

The middle column shows the median number of days that homes stayed on the market, based on Realtor.com’s data. The column on the right shows how much that timeframe has increased over the past 12 months, in number of days.

Austin, Texas stood out in two ways. It had one of the highest “median days on market” among the 50 biggest U.S. metros, as well as the biggest increase in time on market. In other words, a major cooldown in real estate activity has turned Austin into one of the “slowest” real estate markets in the country.

Raleigh, Las Vegas, Phoenix and Charlotte rounded out the top five, in terms of the biggest increase in number of days on market.

What These Five Markets Have in Common

The five real estate markets shown above, and others like them, actually have several things in common. Over the past two years, all five of these metro areas experienced the following trends:

• A massive influx of buyers during the early days of COVID (2020).
• A sharp decline in housing inventory during 2020 and 2021.
• Skyrocketing home prices due to the above trends.

The above changes accelerated these housing markets like never before, leading to an unprecedented level of competition among buyers. Now, however, real estate markets like Austin, Las Vegas and Phoenix have very different trends in common:

• They’re all experiencing major inventory growth.
• They’re seeing a steady increase in the number of price reductions.
• They’re slowing down steadily, with homes taking much longer to sell.

In all five of the housing markets above, the total number of property listings increased by more than 50% over the past year.

Austin, Phoenix and Raleigh had the biggest increase in real estate listings, year over year. In fact, those three housing markets experienced triple-digit increases in the number of active property listings. Phoenix led the pack with a whopping 167% increase in listings, compared to a year ago.

These metro areas have also experienced an increase in the number of price reductions by sellers. A “price reduction” occurs when a seller lists a home for one price, only to reduce it at a later date. Usually, homeowners reduce their asking prices due to a lack of buyer demand and offers.

According to Realtor.com’s September Housing Report:

“Western metros posted the biggest gains in the share of listings with price reductions, led by Phoenix (+32.3 percentage points), Austin, Texas (+27.4 percentage points) and Las Vegas(+20.0 percentage points).”

So what we’re seeing here is a pendulum swing from one extreme to the other. Formerly red-hot housing markets like Austin and Phoenix are now cooling much faster than other U.S. metros. And this trend will likely continue into 2023.

Economists Predict Buyer-Friendly Conditions in 2023

All of the trends mentioned above point to one thing. The U.S. real estate market is moving steadily in a more buyer-friendly direction.

And that’s a huge change from what we were seeing during the second half of 2020 and throughout 2021. Back then, home buyers across the U.S. had to contend with fierce competition, super-fast sales, bidding wars, and a real estate market that strongly favored sellers.

But the Realtor.com report cited above, and many more like it, show that the market is currently shifting in a way that favors buyers for a change. Many economists expect this shift to continue — and perhaps even intensify — as we move into 2023.

According to a September 29 report from Zillow:

“Sky-high mortgage costs are driving down competition among home shoppers, and a market firmly in favor of buyers is expected next year, according to a majority of economists and housing experts polled in the latest Zillow Home Price Expectations Survey (ZHPE).”

This was based on a survey of more than 100 economists and housing market experts, conducted between August 16 and August 27 of this year. As the report’s authors pointed out, rising home prices have created affordability issues in many cities, which in turn has pushed many prospective buyers onto the sidelines.

Many would-be buyers have now been priced out of the market entirely, due to higher prices and mortgage rates. And of those who can still afford to buy, some might be reluctant to do so for fears that prices will drop over the coming months.

While no one can predict future real estate trends with complete accuracy, one thing seems likely. The housing market of 2023 could be a lot slower than what we’ve become used to.

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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. To keep the lesson grounded in practicality, we’ll use ROE to better understand EPR Properties (NYSE:EPR).

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Put another way, it reveals the company’s success at turning shareholder investments into profits.

See our latest analysis for EPR Properties

How To Calculate Return On Equity?

ROE can be calculated by using the formula:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for EPR Properties is:

6.2% = US$160m ÷ US$2.6b (Based on the trailing twelve months to June 2022).

The ‘return’ is the profit over the last twelve months. That means that for every $1 worth of shareholders’ equity, the company generated $0.06 in profit.

Does EPR Properties Have A Good ROE?

By comparing a company’s ROE with its industry average, we can get a quick measure of how good it is. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. If you look at the image below, you can see EPR Properties has a similar ROE to the average in the REITs industry classification (6.6%).

NYSE:EPR Return on Equity September 30th 2022

That isn’t amazing, but it is respectable. While at least the ROE is not lower than the industry, its still worth checking what role the company’s debt plays as high debt levels relative to equity may also make the ROE appear high. If a company takes on too much debt, it is at higher risk of defaulting on interest payments. Our risks dashboardshould have the 2 risks we have identified for EPR Properties.

How Does Debt Impact ROE?

Virtually all companies need money to invest in the business, to grow profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.

Combining EPR Properties’ Debt And Its 6.2% Return On Equity

It’s worth noting the high use of debt by EPR Properties, leading to its debt to equity ratio of 1.09. Its ROE is quite low, even with the use of significant debt; that’s not a good result, in our opinion. Debt does bring extra risk, so it’s only really worthwhile when a company generates some decent returns from it.

Summary

Return on equity is useful for comparing the quality of different businesses. In our books, the highest quality companies have high return on equity, despite low debt. If two companies have the same ROE, then I would generally prefer the one with less debt.

But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So I think it may be worth checking this free report on analyst forecasts for the company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is complex, but we’re helping make it simple.

Find out whether EPR Properties is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis
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NEW YORK & CHICAGO & SALT LAKE CITY–(BUSINESS WIRE)–Private real estate investment manager Highland Real Estate Partners announced today the final close of Highland Multifamily Opportunities, the firm’s debut discretionary investment fund. Highland Multifamily Opportunities raised $44m which surpassed its initial target of $35m and grows Highland’s equity capital under management to $65m.

Highland Real Estate Partners has already begun constructing the fund’s portfolio, with 9 acquisitions completed to date comprised of 211 apartment units in the Chicagoland and Salt Lake City markets. The team is focused on adding value to this portfolio and is implementing operational plans to drive occupancy gains, grow net operating income and enhance asset quality.

Ben Frazer, Investment Partner & Co-Founder, said, “This fundraise positions Highland to continue executing on our strategy and scale our platform and, along with the strong performance of our initial investments, is a testament to the market opportunity and our differentiated strategy. We are grateful for the confidence and continued support of our investors, despite the challenging macroeconomic backdrop, and remain committed to delivering attractive absolute and risk-adjusted returns.”

Dylan Grigg, Operating Partner & Co-Founder, said, “We carefully built Highland from the ground up, scaling our property management business and streamlining our investment processes to drive competitive advantages in the highly inefficient sub-institutional multifamily market. Our investments have benefitted from the vertical integration of property and asset management, achieving strong rent growth, occupancy rates and yield. We look forward to continuing to deliver strong results for our investors.”

About Highland

Highland Real Estate Partners is a vertically integrated manager of private real estate investments, focused on acquiring and operating lower middle-market multifamily, affordable and university housing assets in select markets. Highland aims to consolidate sub-institutional sized multifamily assets and drive returns via exploiting inefficiencies and operating at scale in a fragmented landscape dominated by smaller, undercapitalized market participants. As of September 30th, Highland has approximately $110m in real estate under management, spanning over 500 apartments in the Greater Chicagoland and Greater Salt Lake City markets.

To learn more about Highland, visit www.highlandptrs.com.

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ARNOLD, Md. – September 30, 2022 – ( Newswire.com )

Record funding levels for Bioscience companies in recent years have fueled increasing industry demands for more lab space and properties. Investors have answered this call by building into existing markets and creating bioscience hubs in new markets. While facilities play a crucial role in achieving those goals, informed decision-making has been hindered by the lack of comprehensive national data about bioscience real estate, including such basic facts as location, size, construction, and transactions.

Maryland-based Revista has a solution. Revista began providing the nation’s only medical real estate data service, RevistaMED, in 2014, which now boasts more than 1000 users and attendance at their annual executive-level networking event of nearly 500. Now, Revista will be offering the industry’s only property-level database of all U.S. life science real estate, RevistaLAB, with industry statistics and resources, metro and regional market reports, and a directory of industry product and service providers. RevistaLAB will also host high-level, strategic networking and educational events, including in-person forums and webcasts with industry-specific, data-based subject matter and experts.

“We are excited about our partnership with Revista,” says Mark Burkemper of Harrison Street, which is a Founding Partner with Revista. “We share their vision of improving the availability of life science real estate data and information to ultimately facilitate a better-equipped industry that is ready to meet the country’s growing demand for pharmaceutical research & development. We look forward to collaborating with Revista’s well-established team through participation in the advisory board, events and in the presentation of these key resources to the industry.” Healthpeak Properties, Inc. is also a Founding Partner for this service.

“Life Science has become a dynamic real estate sector that is attracting the interest of the broader real estate investment community,” says Erik Tellefson, Senior Managing Director of Capital One, which has a longstanding relationship with Revista. “The increased transparency and analytical tools that Revista is building will provide specific insight into these powerful trends that will benefit both investors and providers.”

First database and national event will be unveiled next month

Revista will introduce data for three bioscience markets—Boston, San Fransisco, and San Diego—in October, roll out the remaining markets during the next several months, and hold a national launch event at the Encore Boston Harbor on Oct. 13-14, 2022. Access to the one-stop online resource will be easy to use and subscription-based. With a simple registration and a highly specialized interface, users can filter and customize the search results in various ways. These resources are provided in collaboration with Revista’s life science real estate industry partners.

The national event will feature six of the most popular general sessions from their medical real estate event with a new life science focus. Sessions include a macro-overview of the sector; a data-driven state of the industry presentation; a Capital Markets panel with executives from top investors in bioscience; a construction & development case study panel; a dealmakers spotlight session, and a real estate economy keynote featuring Jim Costello, Head of Real Estate Economics MSCI | Chief Economist MSCI – Real Assets. Registration is open, and information is available here. The editorial press is free with credentials.

Revista’s resources are being designed for a wide range of potential users, including real estate brokers; property owners, bioscience real estate executives, managers, and investors; advisory firms, investment banks, and underwriters; equity research analysts; academic and government researchers; merger and acquisition firms; development/construction firms; architecture firms; and legal firms.

About Healthpeak

Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns and develops high-quality real estate in three private-pay healthcare asset classes of Life Science, Medical Office and CCRC. At Healthpeak, we pair our deep understanding of the healthcare real estate market with a strong vision for long-term growth. For more information regarding Healthpeak, visit www.healthpeak.com.

About Harrison Street

Harrison Street Real Estate Capital (HSRE), headquartered in Chicago, IL, is a real estate private equity firm founded in 2005 that directly and through its affiliates, has approximately $7.5 billion in assets under management (AUM) through commingled funds and public securities products. The commingled funds focus exclusively on the Education, Healthcare and Storage segments of the U.S. real estate market. Since inception, the Firm has acquired or developed over 450 properties in 40 states, including over 60,000 student housing beds, more than 11,800 senior housing units, over 5.1 million square feet of medical office space, and more than 86,000 self-storage units. Additionally, Harrison Street Securities LLC, an affiliate of HSRE currently manages over $780 million in REIT securities through distinct long only product offerings. For more information regarding Harrison Street, visit www.harrisonst.com.

Contact Information:

Elisa Infante Freeman

Principal

elisa@revistacompanies.com

443-949-8794

Press Release Service by Newswire.com

Original Source: Revista to Launch the First Customized Life Science Building Database

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The median implied capitalization rate for U.S. equity real estate investment trusts rose in the second quarter, reaching 6.3%. The figure marks a 44-basis-point jump over the quarter prior and a slight 6-basis-point increase year over year, according to S&P Global Market Intelligence data.

The analysis included all U.S. REITs that trade on the Nasdaq, NYSE or NYSE American with market capitalizations of at least $200 million at quarter-end.

Market Intelligence calculated the implied capitalization rate as net operating income generated in the last 12 months divided by the REIT’s implied real estate value — calculated as market capitalization including operating partnership units plus total debt, preferred equity, mezzanine items and noncontrolling interest, less non-real estate assets such as cash, securities or loans.

* Click here to set email alerts for future Data Dispatch articles. * Click here to download the U.S. Real Estate Field Calculations template that includes a line-by-line breakout of the implied capitalization rate calculation. * Read some of the day’s top real estate news and insights from S&P Global Market Intelligence.

Hotel REITs see largest YOY increase

The hotel sector posted the largest year-over-year growth in their implied cap rates, up more than 5 percentage points on a median basis. Within the hotel sector, Braemar Hotels & Resorts Inc. logged the largest increase, up 8.5 percentage points from a year ago. Xenia Hotels & Resorts Inc. and Ashford Hospitality Trust Inc. followed next, with their implied cap rates expanding 7.7 and 6.7 percentage points, respectively.

At the other end, REITs in the specialty sector — advertising, casino, communications, energy infrastructure, farmland and timber REITs — experienced the largest year-over-year compression in their implied cap rates, a median of more than 1 percentage point. Data center REITs also saw cap rates compress by a median 75 basis points.

The median implied cap rate for the retail sector dropped 77 basis points year over year. Within the retail sector, implied cap rates for regional mall REITs fell 69 basis points on a median basis, while cap rates for shopping center REITs compressed by 77 basis points. The “other retail” sector, which includes single-tenant retail and outlet center REITs, saw cap rates drop by a median 96 basis points.

Highest implied capitalization rates

Among the U.S. equity REITs with market capitalizations of at least $200 million, advertising REIT OUTFRONT Media Inc. held the highest implied capitalization rate at quarter-end, at 18.5%.

Two timber REITs, PotlatchDeltic Corp. and Weyerhaeuser Co., followed next, with implied cap rates of 17.6% and 15.9%, respectively.

Information storage-oriented Iron Mountain Inc. and communications REIT Uniti Group Inc. rounded out the top five, at 15.0% and 14.3%, respectively.

Lowest implied capitalization rates

At the other end, Market Intelligence calculated casino REIT VICI Properties Inc. at the lowest implied capitalization rate, 0.2%. Within the recent quarter, VICI completed its acquisition of MGM Growth Properties LLC.

IStar Inc. and Safehold Inc. held the second and fourth spots at 1.1% and 2.3%, respectively. The two REITs announced their merger Aug. 11.

In the third spot was CTO Realty Growth Inc., with a calculated implied cap rate of 1.5%.

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HOUSTON, Sept. 29, 2022 /PRNewswire/ — Civitas Capital Group, through its residential development subsidiary The Shelter Companies, is developing a 238-unit, 381-bed residential multifamily project on approximately 1.09 acres in Houston’s thriving Montrose district. The development, UNITi Montrose, will provide attainable rental housing in one of the most expensive and desirable submarkets of Houston through a unique blend of co-living, shared common areas, and micro-units.

General contractor Arch-Con® Corporation is constructing the six-story, 199,320-square-foot multifamily building stacked on a three-story, 109,000-square-foot cast-in-place concrete parking garage. Designed by Meeks Partners, the development includes 14,122 square feet of amenities, balconies, a fourth-floor pool and courtyard, and 4,000 square feet of retail space on the ground floor.

Shelter is a disrupter in the traditional multifamily market, anticipating historic shifts in the Sun Belt region of the United States to accommodate residents. UNITi Montrose is an example of the firm’s investment strategy to deliver solutions for cost-burdened renters.

“UNITi Montrose will provide fully furnished units, flexible lease terms, Class A amenities, and all-inclusive rent payments that provide a frictionless experience to an evolving demographic of renters,” Shelter’s Principal Mark Drumm said.  “We are seeing that renters are willing to share certain amenities in exchange for convenience, flexibility, and high-quality living, and this project provides just that.”

The project, located in the Montrose neighborhood, is less than 10 minutes from Houston’s central business district, including Midtown, the medical center, The Ion, and major universities. It is expected to generate more rent per square foot than traditional multifamily dwellings, while providing attainable rental rates for middle-income earners.

Arch-Con began working with Shelter and Meeks Partners in the spring 2021 on pricing and design. “Multifamily projects of this type require measured preconstruction efforts to ensure they are economical and timed just right,” Arch-Con’s Vice President of Multifamily Bryan Tufts said. “Making sure this project was cost-effective for Shelter and its future residents was equally important as we thrive on finding the best solutions for our clients.”

About Civitas Capital Group

Civitas Capital Group is a nimble alternative investment manager, founded in 2009, offering compelling, niche opportunities in U.S. real estate. Civitas exists to create opportunities that enrich our communities, investors, and employees alike. Driven by relentless creativity, Civitas digs deeper to uncover opportunities that others miss. Follow Civitas Capital Group on LinkedIn.

About The Shelter Companies  

The Shelter Companies, a subsidiary of Civitas Capital Group, is a private real estate company focused on developing and repositioning attainable multifamily housing, including co-living and micro-units for more than one-third of the U.S. population. Shelter is a disrupter of the traditional housing market and stands at the forefront of historic shifts in technology, lifestyle, and job markets. Shelter’s strategy allows for opportunistic returns while providing a high-quality experience to renters at a fair market price. For more information, visit The Shelter Companies at https://www.sheltercompaniesllc.com.

About Arch-Con® Corporation

Arch-Con® Corporation is a national commercial general contractor founded in 2000 with offices in Houston, Dallas, Austin, and Denver. Arch-Con’s award-winning team simplifies the construction process using the latest cost-efficient technologies to stay on the cutting edge of the industry. With experts in the construction of office, industrial, cold storage, retail, hospitality, corporate interiors, healthcare, multifamily and community developments, we make construction easy. Learn more at www.arch-con.com.

SOURCE Civitas Capital Group

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By Gregory K. Tanaka |
chinadaily.com.cn |
Updated: 2022-09-29 13:36

SHI YU/CHINA DAILY

Despite their best efforts, US economic policymakers are not yet out of the woods. Inflation is rising. The “US Labor Participation Rate” continues to decline.

A growing percentage of Americans are feeling the pinch caused by a combination of rising food and gas prices and lower job participation rates.

One can now add to these trends the recent report that “the number of Americans filing for first time unemployment soared to 8-month highs” (Zero Hedge, 21 July, 2022).

The most alarming development, in my view, is that there are now deeper signs of “structural weakness” beginning to appear in the US economy.

For example, “US manufacturing” is a key structural component of the US economy, but US manufacturing has been in decline for several decades. The problem is that those who own or manage US manufacturing companies have been moving their plants offshore to countries that offer much lower labor costs than the US.

While this structural shift has resulted in higher profits for the owners of these multinational corporations, it has ruined the lives of tens of millions of American middle and working class workers who had come to rely on having decent paying jobs located at US manufacturing sites.

Secondly, “the US agriculture,” another structural pillar of its economy, is now under attack by their own federal government which ordered that large swaths of land not be planted this year.

This policy is in parallel with an effort launched by massive multi-state combines to gobble up tens of thousands of small farms at low prices—farms that had once sustained millions of American families in the Midwest, South and West Coast.

To prop up a structurally failing US economy, the Federal Reserve Bank has been furiously printing trillions of dollars with the hope that by flooding the economy with ready cash, economic trends will reverse and turn rosy. This gambit has not worked. Worse, foreign investors are beginning to think the US dollar is not what it used to be because of the excess money printing and have begun dumping their holdings of US Treasury bonds and other US assets. This includes nations with very large economies like Russia, China, Brazil and India.

With more and more nations starting to reject US Treasury bonds and other dollar denominated assets—including stocks, state and local bonds, and US real estate—the dollar itself has begun losing its “global reserve currency” status where other nations were formerly required to trade with each other using the dollar as their medium of exchange.

In halcyon days, having that global reserve currency status meant the US could “export its inflation abroad” because other nations would later be collecting on money they had loaned the US by being paid back in inflated and thus much cheaper dollars.

However, with the great structural weakening that comes from losing global reserve currency status, the US can no longer rely on using the dollar to “export” its inflation abroad. What that means is that this total accumulated inflation will one day come bouncing back on to the US consumer.

Meanwhile, record levels of debt continue to appear across all sectors in the US Total accumulated debt among all 50 states is now running at $1.1 trillion. Accumulated local city and county debt has reached $2 trillion. Total accumulated personal debt among Americans has exceeded $23 trillion and total accumulated debt owed by the federal government has now reached an astounding $31 trillion (US Debt Clock, 22 September 2022).

With massive debt and money printing coming to define US capital markets—and the US slipping deeper and deeper into recession—the real possibility is raising that its citizens will one day weather a period of hyper-stagflation redolent of the 1930’s.

What this means is that economic policymakers in the US are currently facing very stiff headwinds with little relief forthcoming in the way of possible options or solutions.

Gregory K. Tanaka, formerly a banker and a law school dean, is the author of Systemic Collapse and Renewal: How Race and Capital Came to Destroy Meaning and Civility in the US and Foreshadow the Coming Economic Depression (Peter Lang Publishing, 2018). The views don’t necessarily reflect those of China Daily.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.

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It never hurts to have a strong north star to guide your company through turbulent times.

That certainly rings true in the mortgage lending industry, which has been on a rollercoaster ride amid surging rates and persisting economic uncertainty that has dealt crippling blows to many companies in the sector.

While Rocket Mortgage hasn’t gone unscathed during the recent market shift, the Detroit-based lender has maintained its focus on the long game, adapting where needed and sticking to its own north star in the industry.

RISMedia Founder and CEO John Featherston and I sat down with Rocket Mortgage CEO Bob Walters who delved into how Rocket Mortgage is thriving amid market headwinds and its ongoing efforts to meet consumer needs today and tomorrow.

John Featherston: You, like many mortgage lenders, have had to reduce staff. But you took a buy-out approach as opposed to laying people off. Tell us about your approach to reducing staff.

Bob Walters: We needed to —as everyone did. The industry went from $4.5 trillion in 2020 and 2021…to a run rate of about $2 trillion or maybe less. You don’t need to be a math major to know that staffing needs are going to change. We offered people a buy-out on a voluntary basis. It was really generous, too. Dan Gilbert founded the company in 1985 and has always cared about long-term strength—building the company for the long run and caring about the people who work with us along the way.

JF: A number of your competitors have scaled back significantly with boots on the ground, but you’ve expanded into Canada. What’s behind your growth?

BW: When you make any decision, you have to start with your “why.” Why is Rocket good for consumers? Whether in the U.S. or Canada, our “why” is helping people get home financing. When I got into this business, clients had to walk into a bank office. It was intimidating, especially when you think about underserved communities where a client may walk into a bank where the bankers don’t look like you. The beauty of our technology is there isn’t an intimidation of talking about your finances while looking at someone across a desk from you. If you want to come in at 2 a.m. in your pajamas and you want to chat with someone, you can do that. When we look at our penetration into historically underserved markets, it’s substantial.

This is a big deal, and it should be a big deal for real estate agents because first-time homebuyers are the ones buying the homes of move-up buyers. If new buyers don’t come into the market, the whole ecosystem falls apart. The more we can access and increase homeownership, the greater the benefit to the people buying the homes, those selling their homes and the agents helping both of them.

A CEO of another mortgage company paid us one of the biggest compliments I’ve ever gotten. He said, “Oftentimes I hate you, but you’ve made us better. The experience that my clients have is better and some of it is because of you.” Competition is good that way. Innovation is good that way. I know we’ll bring some of that to Canada.

JF: In the next six months to a year, what are you going to do differently to help real estate agents in the purchase market?

BW: There are a few things that are really important to agents and certainly their clients.

One, they want to trust that the loan is going to close. It’s important for the buyer to get in the home and for the seller to transact. For the agent, that’s how they earn their living until the loan closes, they don’t make a nickel. They understand not every loan is going to close, but they want to know that you moved heaven and earth to try to close the loan.

Number two is that they want to know what’s happening. Anxiety comes from uncertainty. Human beings can cope with things we understand; it’s the things we don’t understand that bring us great anxiety. So transparency into the process is critical.

The third thing real estate professionals care deeply about is that they’re represented well, because their brand is on the line every single time they enter into a transaction. They want to know someone’s in their corner. Our job is to build products, services and tech and cultures that achieve those three objectives.

Maria Patterson: How is your technology solving for these objectives?

BW: There are tons of things we’re doing to build that transparency and more mobile solutions. We are becoming more of a 24/7/365 organization. That doesn’t mean we have people on staff at 3 a.m. on a Sunday, but the beautiful thing about technology is that it doesn’t get tired. If you’re able to give people answers to questions in real-time and they can access you 24/7/365, that begins to address that transparency.

JF: What are some of the biggest objections you confront in the marketplace, and how are you overcoming them?

BW: One of the things we hear a lot is, “we don’t want to work with you if you’re not local,” and I think local is a bit of code for “you don’t have the same vested interest in this transaction as somebody who is in my bowling league with me.”

We may be in Detroit and you may be in Idaho, but we do know your market. We have a lot of resources, my relationship is with you and we have the same goals. We are doing a lot of interesting things to help agents close faster and more affordably. This gives tools and resources to agents and their clients that they can’t get from the local person. We’re going to lean into that message and we are building those relationships one by one.

MP: Did the pandemic provide a silver lining in that it eroded some of that need to do business locally and in person?

BW: I don’t think any of us wanted to go through that crazy time, but it wound up being one of the biggest social experiments of all time. It’s changed society in many ways.

I like history, and one thing that’s always been true but has recently changed is that people had to be proximate to their work. It was beginning before the pandemic, but then the pandemic turbocharged it. The real estate industry saw a massive amount of it. You saw people decamp. People said “I’m going to live somewhere that I see as attractive from a lifestyle perspective because I don’t need to live in X city to be near work.” Most of us are dealing with each other technologically. That reality is helping us a lot.

JF: What does your ownership of For Sale by Owner (FSBO) mean for real estate professionals? What is Rocket’s relationship with agents in terms of business building?

BW: The number of people who transact by FSBO is quite small. Many of those do turn into leads for agents. The relationships we have with the real estate community have been net additive, providing a lot of leads that have been profitable for the network. But the most important thing in their world is getting the loan closed and providing the financing for that loan. We’ll continue to grow in that space. Those transactions are precious and that’s where we focus, especially at the mortgage company level. If you’re doing 12 transactions a year and one falls out, you just lost 8% of your income. That’s no joke. If we can provide leads that can add a closing, we just added 8% of their income. It’s a symbiotic relationship.

MP: In light of inflation and rising rates, what advice do you have for real estate brokers?

BW: I think it’s the same thing for us and for real estate brokers—at a different scale.

One, it’s important that you know your “why.” If you look at our balance sheet, you don’t see culture, you don’t see pride, you don’t see trust, you don’t see vision. That doesn’t show up, but it should. It’s as real as your accounts receivable. It is the foundation of your company and leaning in during difficult times is critical.

The second thing is to make sure you have a fortress-like balance sheet, especially cash. I had a finance professor say if you’re struggling with profitability, it’s like having a chronic disease. It’s not good, but it will take a while before it gets to you. If you’re having a problem with liquidity, it’s like a heart attack—that can take you down in a moment. We have more capital than 94% of banks in America. It’s reassuring for us, but it should also be reassuring for the people who rely on us: real estate brokers, agents, mortgage brokers and other people who work with us. We’ll be smart about our costs, but because of the aforementioned strength, we don’t have to gut the organization to respond to such a rapid change.

As far as strategic things, if you’re coming up with your strategy when things get weird, it’s too late. Of course you shift and change and think about products, but we’ll do the same things we were doing two years ago and really support agents to make their lives better because—at the end of day—they vote with their confidence every single day.

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US real estate business Adventurous Journeys (AJ) Capital Partners has acquired the Dornoch Hotel in Dornoch.

The property, acquired for an undisclosed sum, will join AJ Capital Partners’ Marine & Lawn Hotels & Resorts collection of hotels “located in the world’s most premier golf destinations”.

AJ Capital, based in Nashville, Tennessee, will reposition the property as Dornoch Station hotel, “honouring the hotel’s original name dating back to 1902, the Station Hotel”.

The hotel is closed and will undergo major renovations of all guest rooms, public spaces, exterior and grounds including the installation of a putting green, fire pits and additional outdoor amenities.

“We are thrilled to expand the Marine & Lawn collection with the addition of the Dornoch Station hotel,” said Phillip Allen, president of Marine & Lawn Hotels & Resorts. “The hotel marks our fourth in Scotland and our first in the Scottish Highlands, a beautiful and rugged area steeped in history and myth.

“Few golf courses in the world can match Royal Dornoch’s excellence and character, and we are eager to welcome many of its visitors to our hotel. We’re honoured to be stewards of historic properties such as Dornoch Station and look forward to continuing its legacy for many years to come.”

Sited a short walk to the first tee of Royal Dornoch Golf Club, the Dornoch Station hotel is the fifth property in the Marine & Lawn collection, joining Rusacks St Andrews in St Andrews, Marine North Berwick in North Berwick, Marine Troon in Troon, and Slieve Donard in Northern Ireland.

The hotel is expected to reopen in the summer of 2023. During renovations, the 122-room hotel will be “reimagined and reconfigured” to expand many of the smaller guest rooms.

The fully renovated property will offer 89 more rooms “that reflect the Marine & Lawn brand standards”.

AJ Capital also owns and operates Graduate Hotels, which includes The Randolph Hotel in Oxford, England and Graduate Cambridge in Cambridge.

A HOTEL voted as the “best B&B on the North Coast 500” tourist route has been put up for sale.

Applecross B&B in the coastal town of Toscaig, Wester Ross, is on the market with an asking price of £995,000.

Irn-Bru maker AG Barr has warned margins will be hit in the second half as it feels the impact of faltering consumer confidence and sustained pressure on costs.

However, the company declared it remains confident of increasing profits this year.

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