PrivateBullets Newsletter, April 2024

Things I have found or explored related to investing in Private Markets

The Private Markets Landscape Changes. (For Educational or Awareness Purposes)

·       Equity Multiple recently acquired HoneyBricks, an emerging multifamily real estate investing company. This strategic move underscores their commitment to modernizing and diversifying real estate investing.

Things I Have Learned from Podcasts, Webinars, Media

·       From the Best Ever Conference in Salt Lake City. Session with Jeremy Roll, J Scott, and Paul Shannon. Addressing the topic of capital calls, the advice was to treat any capital call as a new investment. Do you believe in the deal moving forward? Show me the new business plan (prior to investing)!

·       From the Best Ever Conference in Salt Lake City. Session with Jeremy Roll, Matt Faircloth, and Mauricio Rauld. Addressing the topic of preferred returns in a syndication. The advice was to understand how the preferred return (in a common equity investment) is paid. Does it roll forward each year, or to the end of the deal (exit)? Read your operating agreement and understand this prior to investing. In times like these, the preferred return provides important protection for private investors.

Recent Observations from My Private Portfolio

·       Private debt, with proper securitization, has been working nicely, as has preferred equity.

·       Common equity investments are noticeably quiet. It could be worse given the Fed’s onslaught on short-term interest rates over the past two years. It appears that asset management functions are challenged these days, busily working to figure out how to maximize value over a longer-term horizon. Transaction activities are constrained by lack of financing.

Regulatory Updates / Enforcement

·       On January 10th, 2024, we welcomed the launch of the revised regulatory framework for European long-term investment funds (ELTIF 2.0). The change should have the effect of increasing the number of investors that can participate in private markets. More analysis on this in our next blog scheduled for May 2024.

·       SEC has launched a campaign to try to help investors avoid fraud. Researchers have found that investment fraudsters hit their targets with an array of persuasion techniques that are tailored to the victim's psychological profile. Protect your investments by watching out for these red flags:

1.       It sounds too good to be true.

2.       Guaranteed returns (do not exist)

3.       The "halo" effect, which makes con artists seem likable or trustworthy.

4.       "Everyone is buying it" pitches.

5.       Pressure to send money right now.

6.       Small favors (free lunch or workshop).

Private Market News /General Thoughts

·       Commercial office properties continue to dominate the negative press.

Upcoming Conferences of Interest

·       The New York City Super Summit, New York NY, May 7-9, 2024. The #1 private investor club event in New York City in 2024 features 400+ investors and more ultra-wealthy investors speaking on stage than any other event in the Northeast. New York City Super Summit 2024 | Investor RSVP (familyoffices.com)

·       The Multifamily Network Investor Conference, Denver CO, June 1, 2024. MFIN is a one-day, no-sales pitch event for multifamily investors, syndicators, and multifamily vendors. “MFIN Conference is packed with high-caliber speakers, workshops, and networking opportunities that will help you succeed as a multifamily investor. We bring together people who are serious about building wealth through income-producing real estate.” The Multifamily Investor Network Conference (mfinvestornetwork.com).