Our latest macroeconomic update is featured in Blue Vault's 2024 Alternative Investments Mid-Year Outlook. Our section of the report, which begins on page 57 and ends on page 60, focuses on our opportunistic approach with economically sensitive asset classes and why we continue to remain defensive and conservative on behalf of representatives and advisors and their investors at this time.
Key Takeaways
STAYING CONSERVATIVE: ExchangeRight has met or exceeded investor projections in all of its offerings since its inception by focusing on macroeconomic conditions and adjusting its strategy accordingly. As recession risk rises, ExchangeRight continues to serve investors’ needs for stable income and capital preservation with diversified portfolios of necessity-based net-leased real estate focused on recession-resilient industries and tenants.
MULTIFAMILY MARKET: The multifamily sector faces heightened risks due to oversupply driven by cheap financing, creating potential discounts as that oversupply gets delivered into increasingly softening markets. Despite a 15–20% decline from its cycle peak, we do not believe multifamily has reached its trough.
MULTIFAMILY CONSTRUCTION: Multifamily construction now accounts for nearly 60% of residential construction, compared to a historical average of 30%, playing a key role in elevated employment throughout this extended macroeconomic cycle. Given the prominence of multifamily development this cycle, the feedback loop between recession and multifamily declines may be outsized.
COMING DISCOUNTS: To take advantage of anticipated discounts in economically sensitive asset classes in approximately 12–18 months, ExchangeRight is in the early stages of underwriting multifamily acquisitions. While we want to avoid distress that may impact multifamily in the meantime, we believe there will come a point where the discounts are significant enough to make this asset class an attracting buying opportunity once again.