Welcome to TwinRock Partners’ Quarterly Newsletter. Our Q4 newsletter is as much an update on our target markets as it is a roadmap of the exciting developments and opportunities we have in the pipeline.
In 2015, our concerns grew on the U.S economy and financial markets because of the impact of slowing growth in China, the potential for higher interest rates, and heightened levels of overall volatility in stocks to go along with the drastic drop in energy prices. With that said, if there is one word to describe the multifamily
market – it is “resilient.” Continued robust growth from multifamily and single family property types suggests global volatility has had little impact on U.S. real estate so far. In the multifamily sector, landlords continue to exercise pricing power in the face of strong demand and still limited supply, though this trend is showing signs of weakening in coastal markets.
As real estate enjoys much positive press and continues its run as a favored asset class- the cycle is in its final phase in heated markets, as prices outpace valuations. With underlying pricing of core real estate markedly increasing in 2015, we continue to focus on improving income growth and stable investments in secondary markets, while exploring opportunistic investments elsewhere. After seven years of a U.S. expansion the inevitable correction will occur at some point, but if you have a long-term view in low beta markets with high yielding annual cash returns, as with our multifamily and student housing platform, we believe this is your safe harbor investment.
We mentioned in our last quarterly report “Winter is Coming” and so it has for Wall Street. “Some of the best opportunities to invest capital come during times of turmoil or great uncertainty.” says Aizaz Shaikh, new partner of TwinRock Capital. Stock market investors are reactionary. When markets fall, panic sets in. In times of turmoil, people tend to forget investment fundamentals, choosing to liquidate out of fear and perceived risk. We are seeing this today in the equity and credit markets as they experience volatility and downward pressure.
Last year, we had something big in the works, and are now excited to announce the launch of TwinRock Capital, an investment management company that will expand our current investment offerings and provide advisors and investors specialized investment strategies designed to address today’s dislocation in the
markets. Our upcoming TwinRock Value Opportunity Fund, under the new TwinRock Capital umbrella, will be focused on identifying dislocations in the fixed income and equity markets, initially in higher yield bonds.
At TwinRock, we always look for the opportunities that others don’t see, and are excited to also be launching TRP Fund VI, a fund primarily focused on Distressed Canadian Real Estate. With the recent and steep downturn in oil prices, weak Canadian dollar and oversupply of new construction, sectors of the Canadian economy have begun contracting since 2014, which will create an opportunity to acquire undervalued assets at distressed prices near the end of this year and into next. We will be able to capitalize on the potential of an economic rebound and alignment of perceived risk to market conditions.
For investors in our HOA foreclosure strategy funds – we have a major positive announcement. Earlier this month, we were able to obtain title insurance on one of our homes purchased at an HOA foreclosure sale. With title insurance, we are now able to sell the home for full market value to a conventional buyer. We have
been in the process of identifying properties to acquire in a new separate account that we will offer to investors.
Please stay tuned for updates on our upcoming investments as we expect to deploy capital opportunistically over the coming quarters.
Sincerely,
Chief Executive and Investment Officer
