Your September Newsletter from CALCAP!

CALCAP CONNECTIONS

September 2021

PRINCIPAL'S CORNER

CALCAP Surpasses $1 Billion Milestone!

I am pleased to announce that CALCAP has now surpassed $1 billion in real estate transactions since we began this journey back in 2008. When we started the company during the Great Financial Crisis, our simple goal was to start building a balance sheet by purchasing distressed apartment assets, and to try to “keep the lights on” by doing bridge loans on the side.

The first apartment deal we purchased was a 52-unit Fannie Mae REO in Phoenix, AZ for $955,000 or $18,365 per unit and $28.74 per square foot. The market was still cratering in Phoenix, borrowers were defaulting at an unprecedented rate, rents were plummeting, tenants were losing their jobs and moving out of the state. The market was the equivalent of a burning building that people were rushing to get out of as quickly as they could. We took a big risk and ran in. When we tried to finance the purchase, no lender would even consider it. Not even the hardest of the hard money guys! Most investors we approached turned us down and told us we were “crazy”. Eventually we were able to convince 9 brave souls along with ourselves to put up the $1mm needed to close. That property today is worth approximately 10x what we paid for it. Were we smart or lucky? Probably a little bit of both-- but the rest is history! Since then, we have:

Acquired 36 properties for approximately $212 million
Sold 21 properties for approximately $223 million (with an average annual investor ROI of 34%)
Originated over $600 million in bridge financing
Raised money from 450 HNW investors
Started of property management company that has over 4,000 units under management
Retained AUM of approximately $450 million

We have been able to accomplish this with a clear vision, a great team, hard work and continued commitment from our investors. We are proud to say that we have done this all through high net worth investors who believed in us, and have never taken a dime of institutional capital.

I want to thank all of our employees, investors and stakeholders involved in this great milestone!

Edward M. Aloe

Founder and CEO

626-229-9057

Latest Headlines...

Red-hot US housing market begins to cool

There are fewer bidding wars and homes selling above asking price, Redfin report finds

The decrease in pending sales is just one indicator of a softening in the competitiveness of the housing market: the number of homes with an accepted offer within two weeks on the market fell nine percentage points from the 2021 peak set in March, and the share of homes sold above asking price dropped to 50.1% from 55% in early July 2021, according to Redfin.

Redfin’s lead economist Taylor Marr said in a statement that he believes this cooling off in the housing market to be seasonally typical and that he expects demand for homes to remain strong throughout the fall.

View Article Here

Apartment Affordability by Percentage of Rent-to-Income

During 2020, U.S renter households in professionally managed properties spent on average 27% of their income on rent. Understandably, there is a broad variation in the share of income renters spend on rent at the state level. Primarily, income levels and rental rates are key contributing factors to rental housing affordability. States which are often considered to be affordable are not necessarily so because households in those areas have lower incomes. Likewise, states often viewed as costly are generally more affordable because of their high-income levels.

To assess rental housing affordability, NAA Research analyzed of rent-to-income percentages, which are based on residential lease applicants screened by TransUnion’s ResidentScreening platform between January 1, 2020 and April 30, 2021.

View Article Here

The Rapid Increase in Rents

What is happening? Why? And what will happen.

We are witnessing strong, broad-based demand for apartments as the U.S. economy continues to recover,” noted NMHC Chief Economist Mark Obrinsky. “Many U.S. gateway metros, which were among those hardest hit during the coronavirus pandemic, have now seen their occupancy rates return to near-pre-pandemic levels. Meanwhile, rent growth remains particularly strong in a number of Sun Belt and Mountain markets.”

The Market Tightness Index increased from 81 to 96 – the highest index number on record – indicating widespread agreement among respondents that market conditions have become tighter. Nearly all (92 percent) respondents reported tighter market conditions than three months prior, compared to only 1 percent who reported looser conditions.

View Article Here

On the lighter side....

About CALCAP Advisors

About CALCAP

California Capital Real Estate Advisors, Inc., and its affiliate entities (CALCAP Asset Management, CALCAP Properties, CALCAP Lending, CALCAP Senior Healthcare and CALCAP Strategic Opportunities, collectively known as “CALCAP”), is a California based investment company founded and 2008 and headquartered in Pasadena, California. The Company sponsors alternative real estate investment opportunities focused on demographically driven housing. CALCAP has been able to consistently provide both individual and institutional investors with outstanding returns over the last 12 years. The Company uses a highly selective and disciplined investment approach, focused on delivering superior risk-adjusted returns. CALCAP currently has over $400mm in Assets Under Management. To learn more visit www.calcapadvisors.com.

Social Mission

CALCAP CARES is a 501(c)(3) private foundation organized to encourage employees to find a way to give back to the neighborhoods where we invest. CALCAP has created "GiveTime4Autism" as its initial program which will allow employees the ability to donate unused vacation and sick days for a very worthy cause.