Pedro Marrero • Managing Partner • Radix Hawk

08/01/2022

What Does “Don’t Put All Your Eggs in One Basket” Mean?

Diversification of investing all your resources in one single source. If you are in Agriculture, this could mean, having two different types of crops, to protect from weather or pest that may affect one crop in one way, and the other one differently.

It is meant to increase your returns, while reduce your risk profile. When it comes to investing, there are various ways to diversify.

1. Diversify by Size of Companies – One can do this by owning shares in a large company such as Apple or Disney, as well as owning shares of smaller size companies such as Ethan Allen Interiors.

2. Diversify between Owning Shares in a Company or Lending Money – Shares can go up or down with the market so lending money to companies, otherwise called bonds, can provide buoyancy to your portfolio as these loans will pay a fixed interest rate balancing the ups and downs of owning shares in companies.

3. Diversify by Alternative Investments – Normally we are accustomed to hearing about stocks and bonds. Alternatives, are for the most part, are anything else besides stocks and bonds. Alternative Investments that we work with, are in the Commercial Real Estate Space, but there are many more options to help even more layers of diversification to one’s holdings.

The JP Morgan Portfolio Diversification Information Page from their Guide to The Markets Offers a very good example of how adding an alternative investment layer to diversification can make an impact on one’s holdings.

07/28/2022

4.3 Million Apartments Needed in the US by 2035

By 2035, the US will need 4.3 million additional apartments to meet the demand for housing, according to a new study from the National Apartment Association and Multifamily Housing Council. This is a significant increase from the 1.5 million units that were needed in 2018, and it represents a loss of affordable housing options for millions of Americans. The study predicts that the majority of new units will be built in Florida, Texas, and California, which are already struggling to provide enough affordable housing for their residents.

The finding comes as apartment construction is expected to slow this year, due to rising interest rates and construction costs. NIMBY (Not In My Back Yard) also create challenges for Multi-Family Development, and attitudes over Multi-Family must change for the betterment of all communities in the USA. The lack of available housing is one of the biggest challenges facing America today, and the study provides more evidence that the problem is only getting worse. With the demand for housing continuing to increase, it is clear that something must be done to address this growing crisis.

Find the Article at Link Below:

https://product.costar.com/home/news/shared/1830527967?utm_source=newsletter&utm_medium=email&utm_campaign=personalized&utm_content=p1&t=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJjb250YWN0SWQiOiI3MjY0MTAxMSIsImN1bHR1cmVDb2RlIjoiZW4tVVMiLCJpYXQiOjE2NTkwMzM2NjF9.GBBYeN_LDfUilIPaWCmmtCAMBbTpwp-m2b94uOkR3Nc

California, Florida and Texas Have the Most Need for New Rentals, Study Finds

07/28/2022

Protection Against Inflation by Diversification into Private Real Estate

When it comes to protecting against inflation, Private Real Estate also known as an Alternative Investment, is often touted as a solution to combat inflation, and for good reason. Over the long term, real estate has outperformed other asset classes, including stocks and bonds. This is due in part to the fact that real estate is a tangible asset with a relatively low correlation to the stock market. In other words, when the stock market goes down, real estate tends to hold its value or even appreciate.

JP Morgan Asset Management, speaks more to the role of Private Real Estate in ones Portfolio, found in their recent article “Is there a role for private real estate in my portfolio?” written by David Lebovitz, Global Market Strategist at JP Morgan Asset Management.

Private Real Estate typically provides a higher yield than other investments, making it an attractive option for income-seeking investors. Investors seeking higher income yields, should consider that if the stock market starts losing value, high yield debt, will not provide the diversification from stocks investors seek.

There are no guarantees when it comes to investing, but private real estate can help you achieve your goals while hedging against some of the risks associated with other asset classes.

Learn More through the attached JP Morgan Asset Management article “Is there a role for private real estate in my portfolio?”

What has not come into question is whether investors will need alternative sources of income and diversification. As such, it seems increasingly likely that private real estate will be part of the broader investment conversation in the years to come.

07/27/2022

FED RAISES INTEREST RATES BY 75 bps SECOND CONSECUTIVE TIME THIS YEAR

The Federal Reserve has raised the Fed Funds Rate by 75 basis points, bringing the target range to 2.25% - 2.50%. This is the third rate increase this year, and it indicates that the Fed is confident in the strength of the economy. The main reason for the rate increase is to keep inflation in check, as higher interest rates make borrowing more expensive and help to cool down the economy.

While this may have some negative impacts on consumers and businesses, it should help to keep the overall economy on track. In the long run, higher interest rates should lead to higher growth and more jobs.

Click on the link to see the 1 minute CNBC Video

CNBC’s Steve Liesman reports on the Federal Reserve’s decision to raise its benchmark interest rate by 75 basis points, the fourth rate hike since March 2022. The central bank has been waging an aggressive fight against historic inflation.

07/26/2022

Our Countries Unfortunate Housing Crisis!

In a new article “Cities Look to Turn Backyards into Apartments to Ease Housing Shortage”, written by Thomas James from CoStar News, with the image credit to John Othic, from CoStar.

It reports the City Council in , has started opening its single-family neighborhoods to .

Every part of the country has experienced an incredible rise in cost of living, home purchase, interest rates, you name it. We live in a country where everyone deserves the opportunity to have a roof over their head, a place to call home, this is the best country in the world, for goodness’ sake!

I can also say, that just about any city I have been to, there has always been conversations for the need of more , which, in today’s market, I correlate that to a .

While just about everyone talks about it, the reality is that most counties in the United States, and their respective City Planning Commissions, every year make it more challenging to develop affordable housing, due to the consistent rise in Impact Fees as well as limits on housing density, which means, how many homes can be built per acre).

The City Council in Spokane, Washington, appears to be taking a first step to alleviate some of the housing problem, Kudos to them. I look forward to more City Councils, like the one in Spokane, to continue and find solutions to alleviate the in our great Country.

Find the full CoStar article at the following link:

https://product.costar.com/home/news/shared/459735865?utm_source=newsletter&utm_medium=email&utm_campaign=personalized&utm_content=p1&t=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJjb250YWN0SWQiOiI3MjY0MTAxMSIsImN1bHR1cmVDb2RlIjoiZW4tVVMiLCJpYXQiOjE2NTg4NjAyMDJ9.G89D39z28J--AJbn4WDOsBBYjpbkorhoH65J2ZlLqQ4

Visit Radix Hawk Online at www.radixhawk.com

07/22/2022

WOW! Hotels in Major Urban Areas Making a Major Recovery WOW!

In a new article “Strong but Uneven Recovery Underway Among Hardest-Hit US Urban Hotel Markets” written by Emmy Hise and Romy Bhojmani, from CoStar.

It reports what projected during the middle of the COVID 19 pandemic, everything that goes down, eventually returns to par. Our team took a contrarian approach to the vast majority of analyst, that projected, the death of , and, if it came back, it would take a decade to recover. We know our Central Florida market, we are owners of Orlando Hotels, and felt, the market would recover faster than those projections. I must say, we did not expect it to recover as fat as it did. The major indicators one reviews in the performance of hotels is Occupancy, ADR, and RevPAr. Over the last 12 months the Orlando Hotels Occupancy has gone up by 13.2%, ADR by 20.30%, and RevPAr by 35.96%.

The current performance chart provided by CoStar, will reflect a significant improvement in the current Central Florida hospitality market.

Find the CoStar article at the following Link

https://product.costar.com/home/news/shared/1220721174?utm_source=newsletter&utm_medium=email&utm_campaign=insights&utm_content=p1&t=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJjb250YWN0SWQiOiI3MjY0MTAxMSIsImN1bHR1cmVDb2RlIjoiZW4tVVMiLCJpYXQiOjE2NTg1MTEzNjl9.Akgw4A_RiutjT-clGIm_Ch9CnfKilyMWbLQeGdEPzPQ

Visit Radix Hawk Online at www.radixhawk.com

07/21/2022

Is Radix Hawk being too Conservative in their Multi-Family Underwriting and Investment Strategy?

In a new article “Apartment community near Champions Gate sells for $100 million, written by the GrowthSpotter
It reports the second asset near Champions Gate selling for $333,333 per unit. In May the property Echelon Way on County Road 532 sold for $342,000 per unit.
Given our expectation of a shift to equilibrium, we are underwriting our per unit sales in five years to be at $326,000, in a similar market, which bears the question, are we being too conservative?

Visit Radix Hawk Online at www.radixhawk.com

This is the second multifamily asset near ChampionsGate to sell this summer at a high cost.

07/20/2022

Inflationary Periods Necessitate Strategic Diversification into Real Assets

Strategic Diversification into specific Real Estate assets during high inflationary periods has proven over the last twenty years the need for broader diversification to traditional investments such as stocks and bonds. Asset classes such as Multi-Family and Hospitality are a powerful hedge against inflation. Multi-Family rental income typically increases through tenant lease payment resetting higher annually. Hotels, even more so, through nightly lease resets to keep pace with inflation.
The following two charts provide examples of historical returns amongst different asset classes in high inflationary periods.

Visit Radix Hawk Online at www.radixhawk.com