Investment Commentary - Kairys Properties
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February 2021 Commentary

 

Covid-19 has certainly impacted commercial real estate. Retail may bounce back, but I’m not as optimistic about Office. Student Housing however has actually increased demand for off campus housing as dormitories struggled with viral transmission. Our floor plans are more house like, with each student having their own in-suite bath. Our tenants and their parents felt comfortable remaining in our properties and studying online from there. Such was not the case with dorms and more ‘hotel type’ student housing.  Vacancy was not impacted throughout our portfolio.

 

Interest rates continue to remain at historic lows. The ten year treasury is just over 1.00 and I do not believe rates will go up significantly for the next 18-24 months. The Fed has indicated that inflationary pressures would be controlled. With such low rates and a robust investment demand for student housing, it has been a seller’s market. On the buy side we have to be patient. Although deals do come along, they are harder to find and we do not want to stretch. The keys to 2021: Sell at a sub 5 cap, maintain great property management, cash flow and patience.

 

Ted Kairys

Kairys Group, Inc.