We encourage our investors to reach out anytime between quarterly updates with questions or comments. Earlier this month, we received an email from one of our investors who wanted to pick our brains on the current state of affairs, as an outcome of the COVID-19 pandemic. He asked whether we were adjusting our real estate investment strategy and what actions we were taking to adapt to the new realities, post-COVID.
This is a great question because no single event in American history has plunged the U.S. economy into a recession faster than the COVID-19 pandemic, and we wanted to leverage this platform to share our thoughts with our broader audience.
While the number of new unemployment claims has been declining since April, the weekly total is still far above records from previous downturns, and more than 18MM Americans remain unemployed. A recession will inevitably impact real estate markets and investment returns, which is why strategic positioning, nurturing key relationships (between brokers, property managers, and tenants, etc.), and a little bit of patience can make all the difference in terms of emerging from this storm stronger than before.
BENA Capital’s investment strategy is built to ride out economic turbulence and to successfully weather conditions such as these. Our Funds are unleveraged, which means portfolio risk is inherently low. Furthermore, our properties are purposefully located in growing cities with diversified economies, which support cash flows and asset values. We have been proactively working to limit vacancy, and the majority of our tenants have continued to pay rent on time and in full. Some have had their health and/or employment impacted by the pandemic, but we have been working close with our property management team to help tenants secure the government unemployment benefits they need.
For the remaining fund capital yet to be deployed, we are being conservative. Our overall strategy remains unchanged: to acquire stable, cash-flowing properties in locations with growing populations and diverse economic bases. However, given the recent spikes in COVID-19 case rates, uncertainty around the potential future impacts of a “second-wave,” or cessation of government economic support/stimulus payments to businesses and individuals, we are being cautious in the near term while also trying to optimize returns to investors.
We have not yet seen significant drops in multifamily residential asset prices in our target markets, which is balanced by the fact that supply is also very thin, much lower than in Jan/Feb. We will continue to be selective and aggressive on price until we see more clarity come through from the economic front. This means not rushing to buy into a market, but still working to actively identify and pursue properties that present good value.
The number one rule in investing is “Don’t Lose Money.” Our focus at BENA Capital is and has always been on the protection and preservation of our investors’ capital and the trust they have placed in us.
