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A Pivotal Shift

As we enter the final quarter of 2024, the real estate market is nearing a crucial turning point. Until now, the landscape has been shaped by a mix of promising growth and persistent challenges, particularly due to high borrowing costs and economic uncertainty. With the Federal Reserve reducing the benchmark rate by 0.5%, and further cuts anticipated into 2025, we may soon be approaching the bottom of the current market cycle.

Cheaper lending is expected to draw increased competition, particularly from institutional investors who have been waiting for the right moment to re-enter the market. With over $382 billion in capital waiting to be deployed globally, we anticipate a rise in demand, but we remain confident in our ability to navigate this landscape and continue delivering value.

The growing competition for value-add properties presents new opportunities, and lenders are beginning to sell off assets. At Bright Peak Capital we are proactively identifying and acting on these emerging opportunities, ensuring we stay focused on securing the best investments that align with your goals. As rates continue to drop, those who are positioned to act will be ready to capitalize. This is an exciting time for all of us and we are committed to guiding you through every step of the process.

Market Pulse

Essential Financial Indicators at a Glance

As of market close Sep 30, 2024 (MoM change)

US Ten Year Treasury Yield: 3.785% (-0.115%)

SOFR (Secured Overnight Financing Rate): 4.84% (-0.49%)

10 Year Treasury Minus 2 Year Treasury Spread: 0.2% (+0.2%)

30-Year Fannie Mae & Freddie Mac Rates: 6.08% (-0.27%)

S&P 500: $5,762.48 (+$114.08)

NYSE Steel Index: $2,087.09 (+$109.01)

Spot Price Gold: $2,647.60/oz (+$131.20)

Crude Oil Price: $68.22 (-$5.43)

Bitcoin: $63,662.31 (+$4,714.27)

Ethereum: $2,606.35 (+$97.53)

Rates listed are estimates and may not reflect actual rates depending on term, sponsor location, and other factors.

National Market News

A Changing Market Brings New Opportunities

As we close out 2024, the multifamily real estate market is proving its resilience amidst economic uncertainty. In Q2 alone, transaction volumes surged to $38.8 billion, returning to pre-pandemic levels. This resurgence isn’t just a number—it reflects a fundamental market shift that we recognize.

Slower development has kept absorption rates high, ensuring demand remains strong, while slow and steady rent growth continues to provide stability. And with multifamily mortgage debt increasing by $19.4 billion in Q2, it’s clear that major capital sources like government-sponsored entities, banks, and insurance companies see lasting potential in this asset class.

Another emerging trend is the rise of distressed asset opportunities. Over $100 billion in multifamily debt will mature in the next 24 months, and lenders are starting to offload underperforming properties now. For those who can move quickly, the coming months may present rare opportunities to acquire properties with more attractive terms.

Looking ahead, further rate cuts by the Federal Reserve are likely through 2025. Investors prepared to act as market conditions evolve will find themselves in a position to benefit from new opportunities. The key is staying informed, being ready, and moving when the moment is right.

Local Market News

From MSA's we are Actively Evaluating Investment Opportunities

Microsoft Solidifies Des Moines as a Tech Powerhouse

Microsoft is expanding yet again in Des Moines with the construction of its sixth data center, starting in 2025. This project will increase the company’s total investment in the region to over $6 billion. These data centers are key to supporting Microsoft’s cloud services and AI platforms, contributing more than $2 billion to the local tax base and creating over 400 permanent jobs, and over 3000 construction roles.

Beyond job creation, Microsoft’s focus on renewable energy will continue with the new center, which will primarily run on wind power. The city's infrastructure, including roads and utilities, will also benefit from this growth as the City of Des Moines invests $15 Million to support the booming tech sector.

In addition to Microsoft, Des Moines has attracted major investments from tech giants like Apple and Meta, cementing its reputation as a growing tech hub. The city's economy is further strengthened by its leadership in agriculture, manufacturing, and financial services, making it a diverse and thriving center for business expansion.

The Path Forward

Opportunities Exist for Those Who Are Prepared

As we move through the final quarter of 2024, the real estate market is entering a pivotal phase, with both challenges and opportunities on the horizon. The resilience of multifamily properties, combined with emerging distressed asset opportunities, makes this a crucial time for investors to stay informed and proactive.

At Bright Peak Capital we are closely monitoring market shifts, ensuring we are ready to seize the right opportunities at the right time. We remain committed to navigating these evolving dynamics with a strategic, long-term approach that protects and grows your investments.

Together, we’ll continue to pursue investments that align with your goals and the long-term health of the real estate market. Stay connected with us as we guide you through this exciting period of change and opportunity.

Thank you for your continued trust and partnership.

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