Exciting progress on our Maxwell project in San Jose, CA!. 590 units connected to Bascom Station light rail. Adjacent 200k SF medical office building. 1 acre Plaza Green between the buildings leading to the train platform.

Randomly listening to @moseskagan interview @sweatystartup at @REconveneLA 2021 and Nick talks about storage REITs having on-site manager vs him entirely remote. With today’s technology, can a large MF property be remotely managed and increase NOI, even if you get lower rents?.

Coming out of the GFC I heard over and over again from lenders and equity sources that they extended capital quickest to those who told them how bad it was EARLY. If you want capital to take advantage of the opportunities coming out of this reset, over communicate NOW.

Reminder:. Now is the time to OVER COMMUNICATE with partners. Investors, lenders, tenants, consultants, etc. No one likes surprises. People understand bad news as long as they are given time to digest it. Give folks time to digest, talk internally, and plan.

So here’s to hoping the appraisers see that the market has indeed changed, the odyssey funds adjust their NAVs appropriately, and the market returns to normal sooner rather than later…. Even if I may be more pessimistic that this happens quickly.

On top of that, the major institutional investors who invest in these funds start to go back on offense as soon as they no longer have outstanding redemptions.

The veterans in the room who have been through multiple cycles said historically there has been a huge correlation between redemption queues and transaction volume picking up. As soon as NAV drops to a level where the redemption requests go away, the market unfreezes and things.

So it is not until there are comps from real trades within a particular submarket that NAVs start trending down. And even then, because every property has unique characteristics (location, credit, amenities, etc), portfolio managers will be arguing why their property is different.

So if two funds have properties in the same submarket (or same street!) that have similar characteristics, they most certainly will have similar valuations. And the appraisers are under enormous pressure to not drop valuations too quickly by multiple clients.

This is where the appraisals come in. There were managers of some of these odyssey funds in the room and I learned the majority of the odyssey funds use the SAME appraisal firm for their quarterly valuations!. And many investors are in multiple odyssey funds so see the valuations.

But it can be more complicated than that. The disruption which is causing the lower values can be temporary (see COVID). Real estate is indeed a long game. There is less volatility in the private market and that is one of the benefits.

So why don’t odyssey funds just quickly adjust their NAV down to meet the market?. Couple reasons. The most cynical of which is these funds are paid fees based on the NAV. The lower the NAV, the lower their fee revenue.

In times of market dislocation where values have dropped quickly, like today, it is common for these odyssey funds to have large redemption queues. Investors would prefer to redeem their position with a higher NAV than the market value and invest those funds in something like.

Every quarter odyssey funds value every property in the portfolio with appraisals and DCFs to determine the fund’s Net Asset Value (NAV), later corroborated by an accounting firm. This NAV is the value an investor can either invest into the fund or redeem their position out at.

These odyssey funds are infinite-life vehicles with investors who have the ability to enter or exit the fund on a periodic basis, subject to contribution or redemption requests. The funds have limits on the amount of redemptions at any given time. This helps prevent these funds.

NCREIF produces a fund index called the NCREIF Fund Index - Open End Diversified Core Equity (NFI-ODCE) which is widely used to track institutional core private real estate returns. The NFI-ODCE (commonly called “odyssey”) includes some of the largest private real estate funds

Was recently in a room with some of the smartest real estate pros in the country talking about when transaction volume would pick up and a topic was discussed that I had never considered:. Open-ended core funds, redemption queues, & quarterly NAVs. Let me give a little background.

The kiddos don’t always think dad has the coolest job when I take them to drive development sites on the weekends, but when I bring them to @REconveneLA and they have the entire amusement park on the Santa Monica Pier to themselves they start to have second thoughts!. Thanks to

I know we all try to copy Blackstone but LIV Golf stealing Link Logistics logo takes it to another level.

Interesting correlation I heard recently that I hadn’t thought about before: Regional banks vs BREIT. Why did some regionals go under in the past few month but BREIT survive?. BRIET could limit redemptions but First Republic, etc. couldn’t limit a run on deposits.