Considering Alternative Investments Before the Cycle Turns

Most economic indicators remained in the plus category this month. Job growth, unemployment, inflation, and consumer confidence all continue to suggest a solid overall economy. But there are also growing concerns tied to the much anticipated slow down. The September employment report, for example, showed that while the jobless rate fell to a 50-year low, net hiring fell short of expectations. Several other indicators, including business investment and manufacturing activity, also point to slower anticipated growth. Heightened political uncertainty and the ongoing tariff dispute with China have kept investors on edge and increased market volatility.

As the momentum of this decade-long expansion begins to slow, it’s important to review your schedule of real estate owned with a trusted professional and look to longer-term, fixed-rate, non-recourse debt options that offer protection in a downturn. Meanwhile, it may also be a critical time to consider investments in alternative property types. Protecting real estate assets ahead of a recession means thinking through fundamentals such as location, functionality, and occupancy as well as reducing leverage and safeguarding cash flow.

Protecting real estate assets ahead of a recession means thinking through fundamentals such as location, functionality, and occupancy as well as reducing leverage and safeguarding cash flow.

Certain asset classes simply weather recessionary periods better than others. For example, single-tenant net lease properties with investment-grade tenants should generate income at solid yields with relatively lower levels of risk. The industrial and logistics sector continues to benefit from the growth of eCommerce, offering steady returns and lower operating costs when compared to other alternatives. Multi-housing demand remains robust and the sector could benefit further as tenants concerned about their personal job security choose the flexibility and mobility of renting over homeownership.

As the expansion loses steam, the next 12 months will be critical. Before the economic tide turns, contact us to help you evaluate the composition of the assets in your portfolio, and ensure that your debt is appropriately structured for long-term success.

Chicago Multifamily Research

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Considering Alternative Investments Before the Cycle Turns

Considering Alternative Investments Before the Cycle Turns

Protecting real estate assets ahead of a recession means thinking through fundamentals such as location, functionality, and occupancy as well as reducing leverage and safeguarding cash flow.

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