San Diego, CA – October 16, 2024 – We are excited to invite you to our upcoming Open House on Friday, November 15th in Charlotte, North Carolina. If you are a current investor and have not received your invitation, please contact our team.
Here is a recap of Equity Street Capital’s activities for the third quarter and outlook for the remainder of 2024. More detailed information on specific assets can be found in our Quarterly Reports on your Equity Street Capital Investor Portal.
Portfolio Update
Our Management Team is working diligently on each asset in order to adapt and adjust business plans based on market conditions.
The team successfully refinanced four properties and project to close on the sale of two assets and two outparcels over the next 90 days.
During the quarter, Johns Creek Town Center, our 303K square-foot, open air retail shopping center that was acquired in the second quarter, delivered distributions in line with underwriting in our first full quarter of ownership.
Additionally, we wanted to take the time to highlight other key developments and trends throughout our portfolio:
Florida Office: We are still assessing damage from Hurricane Milton, however initial indications are that our properties only suffered minor damage. We feel fortunate thus far as many properties throughout the market sustained considerable damage. All four buildings in our Florida Office Portfolio are now open and with power. We will provide additional details to our Florida Office investors in our quarterly reports. The office portfolio is 92% leased, on a weighted basis.
Retail: During the third quarter, the Leasing Team executed new leases with national tenants including TJ Maxx, and TJ Maxx concepts Homegoods, HomeSense, and Sierra Trading. Lease renewals were signed with 27 tenants totaling 280K SF. Major store openings include Barnes & Noble, Rally House, Popshelf, and Hamricks. The retail portfolio is 95% leased, on a weighted basis.
Multifamily: The multifamily market continues to face competition from new supply in the market. Our leasing teams are working diligently to renew existing tenants and differentiate our properties in order to boost new leases during this competitive period as the market absorbs new supply. The multifamily portfolio is 92% leased, on a weighted basis.
Inflation & Fed Update
On September 18th, the Federal Reserve cut interest rates by an aggressive half percentage point, the first cut since 2020. At the time, Federal Reserve officials penciled in lowering interest rates further this year, by at least a quarter point each at upcoming meetings in November and December. Meeting minutes recently released from the central bank’s rate-setting Federal Open Market Committee meeting in September revealed supporters of the larger cut “generally observed that such a recalibration of the stance of monetary policy would begin to bring it into better alignment with recent indicators of inflation and the labor market.” As of Today, the markets project that the Federal Reserve will cut rates by 25 basis points at its upcoming meeting in November. The probability changes daily and can be tracked here according to CME’s FedWatch.
Acquisitions and Dispositions
We are on track to close the sale of one of our multifamily properties by the end of October, at a sale price of $53.5M. This 276 unit multifamily property was acquired in May 2019 for $38.15M.
Our Acquisitions Team continues to source, underwrite, and evaluate new acquisition opportunities. The market remains limited largely due to the pricing disconnect between buyers and sellers driven by elevated interest rates. We continue to participate in the bidding process on a number of marketed opportunities, reaching best and final in a handful of deals, but remain firm in our convictions and pricing as we refuse to deviate from our investment thesis, principles, and pricing.
In the coming months, we expect market conditions to improve as interest rates continue to stabilize post election, which is expected to increase buying opportunities in 2025 and beyond.
About Equity Street Capital: Equity Street Capital (ESC) is a San Diego-based commercial investment firm renowned for its focus on achieving attractive risk-adjusted returns while maximizing long-term capital appreciation. Founded by real estate investors and entrepreneurs Than Merrill and Paul Esajian, Equity Street Capital is dedicated to providing transformative real estate investment opportunities to it’s investors.
