A t our recent investor sum- mit, I polled the crowd about their predictions of the Federal Reserve’s stance on continued interest rate hikes. Needless to say, there weren’t many optimists in the crowd. The majority of our investors predicted we’d be celebrating the start of 2024 before the first federal funds rate cut, and some even thought it wouldn’t be until third- or fourth- quarter 2024. I stand firmly with the former group, suspecting we’ll start to see cuts in nine to 12 months, once the cracks in the economy really start to threaten our founda- tion. We’re already seeing the first signs of these critical breaks in the economy within the bank- ing sector. With the recent collapse of Silicon Valley Bank and others, there’s increased capital flow to larger banks, less loan payoffs and additional scru- tiny, significantly compressing credit availability from our banking sys- tem. We predict the next shoe to drop will be the office sector, beginning with downtown towers. The work- from-home transition accelerated by the COVID-19 pandemic has left these large office buildings with historically high vacancies. Further- more, there are $500 billion in com- mercial loans maturing every year moving forward that will be forced to be refinanced in a tight capital markets environment with less favorable terms. Every savvy inves- tor knows that portfolio diversifica- tion is a sound strategy, but when it comes to real estate investment during these unprecedented times, we remain confident in the multi- family sector as the most resilient. There are an abundance of factors driving our focus in this asset class despite the capital markets environ- ment. Topping the list are continued for-sale housing unaffordability, inherent protection against infla- tionary pressures with12-month leases, reduced tenant concentra- tion risk with large rent rolls, stabil- ity of the government-sponsored debt markets and a strong labor market. Even the high supply and market impacts tell an overall encouraging story for our invest- ment thesis of acquiring in high- growth markets in the Intermoun- tain West. The boom of deliveries will likely hit larger metros harder than the secondary and tertiary Please see Brinkman, Page 21 INSIDE Preparing for the eventual financial thaw to keep multifamily projects on track Lending market Shining a light on housing for special needs community Affordable housing PAGES 25-42 Build-to-rent communities continue shaking up new home construction market Build-to-rent PAGE 14 May 2023 PAGE 6 Kevin Brinkman Co-founder and CEO, Brinkman Real Estate MF resiliency persists amid economic uncertainty Source: CoStar