October Investor Report

Hello Friends and Investors,

As we approach the cooler weather and earlier fall sunsets, we hope you and your family have been well. The new season reminds us that change is all around us—and not just in the weather. The economic and political landscape is undergoing significant shifts, as the Federal Reserve’s long-anticipated rate cuts have finally commenced. After an extended period of aggressive rate hikes, the first cut in September marked a potential turning point for capital markets and the economy at large. This change brings both challenges and opportunities, and we are keeping a close eye on how it impacts multifamily real estate.

Speaking of weather, Hurricane Helene's impact on our friends in Florida, Georgia, North Carolina South Carolina and Tennessee is immense and the rebuilding will be extensive to say the lease. Our hearts go out to the millions of people affected by this historic storm. Seeing the devastation in particular in Western North Carolina, a place near and dear to our hearts, has been heartbreaking. Knowing many people personally impacted by this catastrophe brings it close to home. Our prayers go out to all those affected.

In addition, the 2024 Presidential election is heating up, with less than a month until Election Day. The political climate is creating ripples throughout the economy, but we remain focused on long-term growth and stability in the face of uncertainty. Remember, it's more important than ever to make your voice heard as voters. While we navigate the noise, we're finding ways to position ourselves for success in any scenario.

Here’s a look at our current projects and market trends:

1. Portfolio Performance and Key Updates

Pending Acquisition Delayed: In September, we expected to close on Island Club, a 314-unit multifamily community in the Eagle Creek submarket of Indianapolis, IN. However, official loan assumption approval didn't come in until a couple of days ago (finally!), and we're now working through nuances with the seller on a recent insurance claim to ensure our partners interests are best represented ahead of closing. We’re now anticipating a closing this month, and are excited to begin the value-add process with renovations, which will enhance both tenant experience and property value. NOTE: We do have a few limited slots remaining available for investors if you'd like to get in on the action for this opportunity!

Financing Extension and Refinance: We are working through an agency refinance for one of our Louisville assets which is expected to close over the next 30-45 days. Our business plan of renovating 90% of the units has been completed and initial projected premiums have been out-paced significantly. We've also successfully completed 100% of the asset reposition, which included rebranding, a new playground, dog-park enhancements, new parking lot, new roofs throughout, renovated leasing office, a new mural, renovated common area hallways, new windows, dumpster corrals and more. We look forward to delivering further long-term stability to our investors and residents as a result of this successful refinance.

Operational Improvements: Our properties are generally seeing improved occupancy rates and stronger rent collections, even in a turbulent market where everyone is feeling the lingering impact of the historic inflation of the past few years. Proactive management strategies, enhanced by recent property upgrades, have paid off, and more projects are ongoing at several of our assets. We are especially pleased with the feedback from tenants, whose satisfaction is essential to our long-term success, a leading indicator to future renewal performance. There's always room for improvement, and we're continuing to focus on economic occupancy optimization, and expense ratio management as we move into Q4.

2. Market Trends, Insights & Opportunities
Economic Overview: The U.S. economy is in a moment of transition. The Fed's recent rate cuts signal a shift towards a more accommodative stance, and although inflationary pressures remain, we believe this opens new opportunities for real estate financing and growth. Multifamily real estate continues to be a resilient asset class, benefiting from strong rental demand across the country. Migration trends into our markets in the Midwest and Southeast remain steady and robust, which supports our long-term investment strategy.

Interest Rates & Financing: The reduction in federal funds rates offers some breathing room, but the bond markets remain volatile as the economic landscape adjusts. We are actively exploring opportunities to leverage this shift, particularly in sourcing debt for acquisitions and refinancing our existing portfolio. Loan assumptions with favorable terms, like our Island Club acquisition, are becoming a critical tool for navigating these financial conditions. Anecdotally, recently we've seen the acquisition market get a bit more agressive of late, with multiple pursuits being awarded to competitor investment groups putting down hard money day 1 and pursuing extremely aggressive purchase prices and compressed cap rates. Is this a sign of things to come? We will see. We continue to pursue smart growth through asymmetric risk/reward acquisitions through the inefficient market, and we will keep you informed of future opportunities. We are cautiously optimistic that we will be securing our next opportunity for your investment consideration by the end of this quarter.

Local Market Dynamics: Our targeted markets—Indiana, Kentucky, Ohio, and Tennessee—are experiencing steady population growth and economic expansion, which continue to support rental demand and stable property values. The moderate pace of new development in these regions, coupled with ongoing economic development, makes them attractive areas for long-term multifamily investment. While more volatile Sunbelt markets experience challenges from excess supply, our approach remains steady and strategic.

3. Looking Ahead
The last few months of 2024 promise to be eventful, with both the election and the economy's shifting tides. We remain focused on identifying value in these transitional times and are poised to capitalize on opportunities that align with our strategy of slow, steady, and calculated growth. Stay tuned for opportunities for your participation. We remain patient yet persistent in continued expansion of our portfolio.

As always, we appreciate your continued trust and partnership. We are committed to navigating the road ahead with you and remain available for any questions or discussions about your investment goals.

Here’s to a great fall season and continued success!

In Partnership,
Bryan & Tyler

PS. There's no higher compliment than you referring us to your friends, family, and colleagues. We'd be honored by the opportunity to become a part of their trusted networks. Share your experience investing with CF Capital & invite others to become an investor here.

From the Desk of CF Capital: August Investor Report

Hello Friends and Investors,

The last month has been quite eventful in our country and across the world. As the 2024 U.S. presidential election approaches, we expect tensions to remain high. In July, President Trump miraculously survived an assassination attempt, and President Biden decided to drop out of the race, with VP Kamala Harris emerging as the presumptive Democratic nominee. Meanwhile, the Federal Reserve hinted at potential rate cuts in September, leading to a decline in treasury yields following revised economic data. Are we on the brink of a soft landing, or is a hard landing more likely as recession expectations rise?

In addition to these domestic developments, global conflicts in the Middle East, Eastern Europe, and South Asia are intensifying, fueling fears of broader geopolitical tensions. As investors, it’s crucial to stay informed without becoming overwhelmed or pessimistic, especially with many events beyond our control.

These factors impact our portfolio management and short-term growth strategies. However, our focus remains firmly on the long term, and these current events are just that—current—and they too shall pass. Our North Star continues to be investing for the long term and managing through short-term noise. During both good times and bad, we aim to find opportunities where we can identify and drive value.

We’ve been saying that the current multifamily market in our region presents a “window of opportunity” to acquire attractive deals at a compelling basis—below replacement cost and well off the historic highs of recent years. Now, we are assessing whether this window will expand, prolong, or retract. With rates potentially declining, the market could become more conducive to transactions, which have largely stalled over the past year. However, this could also reignite irrational exuberance, driving pricing and cap rate compression, trends that have eased since mid-2022.

We remain nimble and prepared for either scenario, maintaining our long-term perspective while avoiding the trap of short-term volatility. Long-term trends are our calling card, and partners like you resonate with this approach, knowing that it’s impossible to “outsmart” the market consistently.

For investors on this journey with us, thank you for your continued trust in our team to steward your capital. We are committed to elevating our performance for your success. For those considering joining us, we would be honored to discuss your goals, the current market conditions, and future opportunities.

Here's to wishing you a great month as the kids head back to school and routines return!

In Partnership,
Tyler & Bryan

From the Desk of CF Capital: September Investor Report

Hello Friends and Investors,

Hope you had a great Labor Day weekend and unofficial end to your summer! While the end of summer is always bittersweet, change is in the air with a new season right around the corner, bringing excitement and newness. Of course Fall includes favorite past-times like football, pumpkin spice lattes (PSLs anyone?!), colorful foliage depending on where you live, and generally comfortable temperatures across the country.

In this particular season, we're also in the midst of a historically significant 2024 Presidential election and we are anticipating potential rate cutting cycle to commence from the central bank beginning perhaps this month. Implications of the next few months will be momentous, for many years, as things play out. We invite you to make your voice heard, as it's our civic duty to be heard and our wishes to be reflected in the policies implemented across our government. We continue to pay close attention and to find opportunities that exist amidst the very loud noise.

On the ground level, we continue to see opportunity in our markets and within our existing portfolio, so we're excited to share a few updates.

1. Portfolio Performance and Key Updates

Pending Acquisition: In September, we are on track to finalize the acquisition of Island Club, a 314 Unit Multifamily community in the Eagle Creek submarket of Indianapolis, IN. This asset is expected to generate attractive returns due to it's location, inherent value, strong day 1 performance, accretive assumed financing, straightforward low-risk business plan and forced appreciation. We will begin renovations immediately upon closing, with completion anticipated by the end of Q4 2026. We are confident that this asset, with it's very attractive assumed debt and low-risk business plan, will significantly contribute to our portfolio’s performance and deliver consistent cash flow and capital appreciation for our partners.

Financing Extension Completed: In August, we successfully extended our financing for one of our communities in Indiana. Given the current state of the capital markets, we deemed it would be in the best interest of the investment for us to continue forward for another year to continue to drive value through further renovations and NOI growth, while the capital markets potentially ease further. For investors who are looking for an opportunity to protect their capital from persistent inflation, we are offering 12% yield on a promissory note to complete further interior unit renovations. We've included a section below for more details on this opportunity.

Operational Successes: Our portfolio continues to perform amidst the noise, with a notable recent increase in occupancy rates across our properties. While there continues to be work to be done (as always!), proactive management strategies and targeted marketing campaigns have successfully reduced vacancy rates and enhanced overall tenant satisfaction. We are also pleased to report that rent collections remain strong and above industry averages.

Property Upgrades: We are advancing with several property improvement projects designed to enhance tenant experience and increase property value. Recent upgrades include modernized amenities, data plan internet installations, and maintenance enhancements. Feedback from residents and our teams have been very positive, which bodes well for continued resident retention and satisfaction. As we take care of our residents, our investments are positioned for long-term success.

2. Market Trends, Insights & Opportunities

Economic Overview: The multifamily real estate market remains largely resilient despite broader economic fluctuations, a core benefit of investing in human shelter. Demand for rental properties continues to be extremely healthy, driven by factors such as domestic and international migration, and a relatively strong job market in most industries. Current economic indicators in our Midwest/Southeast region suggest a stable environment for real estate investments, with steady rental growth and low vacancy rates, yet we remain vigilant in the face of anticipated (and unanticipated) economic headwinds - largely focused on the macro level job market stability and consumer stability.

Interest Rates and Financing: Federal funds rates have been in a period of stabilization after the historic rate hiking cycle of the past two years, yet bond markets continue to exhibit a bit of volatility, based on the economic data reported and absorbed across the markets. We are leveraging favorable terms via loan assumptions (such as our current pending acquisition) on mortgages placed in the past 2.5+ years to optimize our capital structure and enhance overall returns for our investors, and are beginning to see some relief on the new origination side for deals available free & clear. Our team is closely monitoring market conditions to capitalize on any opportunities that exist during this "window of opportunity" buyer's market that persists, focused on positive leverage, acquisitions well below replacement value and low-risk value add business plans.

Local Market Dynamics & Upcoming Opportunities: Our targeted markets of the major MSAs in IN, KY, OH and TN are experiencing steady population growth and economic development and steady new multifamily development, retaining equilibrium and continued rent growth. These factors contribute to higher rental demand and a trickle down is property value appreciation, all things being equal. We continue to conduct thorough market research to identify emerging submarket trends and investment opportunities that align with our strategic goals. We will keep you informed as new secured opportunities arise that provide asymmetric risk to return potential with light value add B to B+ assets in A/B locations. Many markets outside of our target markets, such as major growth (read: boom or bust) markets throughout the Sunbelt, have seen challenging operational conditions due to major influxes of new supply delivered to the market, placing downward pressure on revenue. We're reminded that in a market like this, slow and steady wins the race.

3. Appreciation & Long Term Mindset

We want to extend our sincere gratitude to each of you for your continued support and confidence in our multifamily real estate ventures during these transitional times in our economic and political history. Your partnership is instrumental in driving our collective success, and we are committed to delivering exceptional results for the long haul.

Should you have any questions or wish to speak to us further about your objectives or about anticipated opportunities, please do not hesitate to reach out to us. We are here to support you and ensure your investment experience is rewarding, enjoyable and transparent.

Thank you once again for your partnership. We look forward to continuing our journey together and achieving new milestones in the coming months. Here's to wishing you a great September!

In Partnership,
Bryan & Tyler

From the Desk of CF Capital: September Investor Report

Hello Friends and Investors,

Hope you had a great Labor Day weekend and unofficial end to your summer! While the end of summer is always bittersweet, change is in the air with a new season right around the corner, bringing excitement and newness. Of course Fall includes favorite past-times like football, pumpkin spice lattes (PSLs anyone?!), colorful foliage depending on where you live, and generally comfortable temperatures across the country.

In this particular season, we're also in the midst of a historically significant 2024 Presidential election and we are anticipating potential rate cutting cycle to commence from the central bank beginning perhaps this month. Implications of the next few months will be momentous, for many years, as things play out. We invite you to make your voice heard, as it's our civic duty to be heard and our wishes to be reflected in the policies implemented across our government. We continue to pay close attention and to find opportunities that exist amidst the very loud noise.

On the ground level, we continue to see opportunity in our markets and within our existing portfolio, so we're excited to share a few updates.

1. Portfolio Performance and Key Updates

Financing Extension Completed: In August, we successfully extended our financing for one of our communities in Indiana. Given the current state of the capital markets, we deemed it would be in the best interest of the investment for us to continue forward for another year to continue to drive value through further renovations and NOI growth, while the capital markets potentially ease further. For investors who are looking for an opportunity to protect their capital from persistent inflation, we are offering 12% yield on a promissory note to complete further interior unit renovations. We've included a section below for more details on this opportunity.

Operational Successes: Our portfolio continues to perform amidst the noise, with a notable recent increase in occupancy rates across our properties. While there continues to be work to be done (as always!), proactive management strategies and targeted marketing campaigns have successfully reduced vacancy rates and enhanced overall tenant satisfaction. We are also pleased to report that rent collections remain strong and above industry averages.

Property Upgrades: We are advancing with several property improvement projects designed to enhance tenant experience and increase property value. Recent upgrades include modernized amenities, data plan internet installations, and maintenance enhancements. Feedback from residents and our teams have been very positive, which bodes well for continued resident retention and satisfaction. As we take care of our residents, our investments are positioned for long-term success.

2. Market Trends, Insights & Opportunities

3. Appreciation & Long Term Mindset

From the Desk of CF Capital: August Investor Report

Hello Friends and Investors,

The last month has been quite eventful in our country and across the world. As the 2024 U.S. presidential election approaches, we expect tensions to remain high. In July, President Trump miraculously survived an assassination attempt, and President Biden decided to drop out of the race, with VP Kamala Harris emerging as the presumptive Democratic nominee. Meanwhile, the Federal Reserve hinted at potential rate cuts in September, leading to a decline in treasury yields following revised economic data. Are we on the brink of a soft landing, or is a hard landing more likely as recession expectations rise?

In addition to these domestic developments, global conflicts in the Middle East, Eastern Europe, and South Asia are intensifying, fueling fears of broader geopolitical tensions. As investors, it’s crucial to stay informed without becoming overwhelmed or pessimistic, especially with many events beyond our control.

These factors impact our portfolio management and short-term growth strategies. However, our focus remains firmly on the long term, and these current events are just that—current—and they too shall pass. Our North Star continues to be investing for the long term and managing through short-term noise. During both good times and bad, we aim to find opportunities where we can identify and drive value.

We’ve been saying that the current multifamily market in our region presents a “window of opportunity” to acquire attractive deals at a compelling basis—below replacement cost and well off the historic highs of recent years. Now, we are assessing whether this window will expand, prolong, or retract. With rates potentially declining, the market could become more conducive to transactions, which have largely stalled over the past year. However, this could also reignite irrational exuberance, driving pricing and cap rate compression, trends that have eased since mid-2022.

We remain nimble and prepared for either scenario, maintaining our long-term perspective while avoiding the trap of short-term volatility. Long-term trends are our calling card, and partners like you resonate with this approach, knowing that it’s impossible to “outsmart” the market consistently.

For investors on this journey with us, thank you for your continued trust in our team to steward your capital. We are committed to elevating our performance for your success. For those considering joining us, we would be honored to discuss your goals, the current market conditions, and future opportunities.

Here's to wishing you a great month as the kids head back to school and routines return!

In Partnership,
Tyler & Bryan

From the Desk of CF Capital: July Investor Report

Hello Friends and Investors,

We hope you had a happy and enjoyable 4th of July! As we move into the second half of the year, we are excited to share updates on our progress, team developments, and market outlook.

Team Updates

We are thrilled to welcome Leslie Andren as our new Managing Director of Asset Management. Leslie brings a wealth of experience in real estate asset management and will be instrumental in enhancing our portfolio's performance.
Bio: Leslie Andren has over 30 years of experience in commercial real estate across various roles and institutions. Starting in commercial real estate banking, she handled distressed debt and originated loans for major U.S. developers. Her career spans both distressed commercial real estate debt and multifamily investments. Leslie's employers include Continental Illinois National Bank & Trust, GE Capital Corporation, Bank of America, Prudential Insurance, Equity Residential, Moran & Company, Cushman & Wakefield, Alliance Holdings, Atlas Apartment Homes, VennPoint Real Estate, and Strategic Properties of North America. At Equity Residential, she acquired a $380 million portfolio in her first year and managed a 15,000-unit West Coast portfolio. Leslie co-founded Atlas Apartment Homes, establishing key departments and acquiring hundreds of millions in assets. She holds an AB in History from Kenyon College and an MBA in Finance and Real Estate from the University of Wisconsin, Madison, and has been a member of NMHC, ULI, and CREW Chicago.

Highlights and Personal Updates

Tyler Keynotes at the Strategic Capital Raise Summit

Our very own Tyler had the honor of delivering the keynote address at the Strategic Capital Raise Summit. His insights on "The Power of Mindset in Shaping Success" and ensuing effective capital raising strategies were well-received and sparked engaging discussions among industry leaders.

Summer Fun with the Kids

The summer has been a blast for our collective families! Our kids are enjoying swimming, basketball camps, and various summer camps and activities, making the most of the sunny days.

Celebrating Birthdays

This month, we celebrate the birthdays of Dan Michael and Leslie Andren, two of our phenomenal team members. Please join us in wishing them a fantastic year ahead!

Looking Forward: Second Half of 2024

As we begin a new quarter, we are focused on achieving our goals for the second half of the year. One of our current initiatives being to close on our active acquisition in Indianapolis, Island Club—Invest Now, which is expected to be no later than mid-Q3. We remain hyper-focused on optimizing operations within our existing portfolio and successfully navigating upcoming capital events to protect and secure investor equity. Our recent quarterly offsite was a great success, providing us with the opportunity to align our strategies and set ambitious targets. Our company runs on "Traction," and we relish in the opportunity to step out of the day-to-day to work on the business on an annual, quarterly and weekly basis. This edition of the quarterly offsite yielded exciting clarity on some existing initiatives and strategies to employ for us to get closer to our Vivid Vision.

Market Outlook

We remain optimistic about the multifamily real estate market, while fully sentient on the current market challenges. The capital markets remain volatile, and we anticipate that volatility to remain throughout Q3 and into Q4 as this election cycle kicks into high gear. On the ground in our target markets of the major MSAs in Kentucky, Indiana, Ohio and Tennessee, fundamentals and trends indicate a stable demand for quality housing (with mostly stable new product deliveries and absorption), and we are well positioned to capitalize on the most attractive opportunities. Our team is diligently interacting with and monitoring market conditions to make informed decisions that will drive growth and deliver value to our investors. We're continuing to underwrite a robust pipeline of potential acquisitions on a daily basis and expect the next opportunity for your consideration to be coming soon. We still believe we're in a window of opportunity to acquire assets at very attractive discounts that will not last when rate cuts come back into the picture.

Thank you for your continued support and partnership. We look forward to sharing more updates and successes with you in the coming months.

Best regards,
Tyler & Bryan

From the Desk of CF Capital: June Investor Report

Hello Friends and Investors,

Hope you're having a great start to the summer and you have some exciting plans to make the most of this fun part of the year. As we all take some time to enjoy the warmer weather and longer days, I want to take a moment to share some updates and insights into our company's journey and the opportunities that lie ahead.

Company Updates

Firstly, I’m thrilled to report that this quarter has been one of significant achievement for the CF Capital team and our partners. We successfully completed due diligence on our current acquisition for our Indianapolis Multifamily Investment at Island Club, onboarded an Investor Relations Associate (along with continued onboarding and integration with our Senior Real Estate Analyst and Regional Property Manager), and conducted a thorough recruitment leading to a narrowed final set of candidates for our open Director of Asset Management leadership role. These developments are not only a testament to our team's hard work and dedication but also signals our commitment to continued growth and expansion in the face of a changing market cycle. We're positioning our team and underlying systems for enduring growth for the coming decades of opportunity.

On the operational front, we have wrapped up renovations at one ~250 unit asset that began 3 years ago, and are currently wrapping up another renovation project on another ~130 unit project by the end of this month. Seeing these projects through while remaining on budget and transforming the physical aspects of two value-add investments is rewarding, financially and otherwise for our partners and our team. Furthermore, on the site level throughout the portfolio, we've been navigating the changing market conditions by acquiring talented leadership on site and replacing less than optimal performers. These efforts lead to lagging results which we expect to capture throughout peak leasing season where we find ourselves now.

Looking Ahead

Looking forward, the roadmap for wrapping up Q2 and for the next quarter is focused on a few core areas, including the following:

Navigating Refinances: Over the next 90 days, we are pursuing a couple of refinances and extensions on assets in the current portfolio as their current debt matures. Our focus remains on protecting equity and optimizing positioning for capital growth for a future time frame when market conditions are more favorable for a sale.

Closing Island Club - Indianapolis Acquisition: We are set to close in mid to late July and roll out our value add business plan immediately thereafter. We're currently 90% committed on the equity side of things, but if you have interest in partnering with us on this opportunity in the meantime don't hesitate to reach out while the opportunity is still open. Invest Now

Onboarding Director of Asset Management: Plans are underway to onboard an extremely talented, dynamic and experienced team member to lead our asset management division with a focus on protecting the interests of our investors via optimized asset performance, risk management, and leadership of the property management operations.

We are immensely grateful for your continued support and belief in our vision. While the market is changing rapidly, with the current challenges, opportunities are abound. We look forward to capturing them together with you.

Closing Thoughts

As we continue on this exciting journey, your insights and feedback are invaluable to us. We invite you to engage with us anytime. Together, we are not just growing an investment platform and enduring company; we are leading the way in Elevating Communities Together - with a focus on doing what's best for our residents, staff, and partners. Thank you for your trust and partnership.

Enjoy your June, stay safe, and we look forward to our continued success together.

Warm regards,

Tyler & Bryan

From the Desk of CF Capital: May Investor Report

Hello Friends and Partners,

The 150th running of the Kentucky Derby was quite the exciting photo finish, creating the most dramatic race in over 70 years for the heralded event. For folks from Louisville, the greatest 2 minutes in sports capped off a spectacular week of pageantry and fellowship for our team and families. We participated in some of the festivities throughout the week, enjoying each others' company and discussing opportunities and developing further our ever so important long term relationships with team members, partners, and vendors.

Aside from enjoying ourselves at Churchill Downs, we've had an extremely active month. We officially launched our latest opportunity, Island Club, in Indianapolis and are more than 75% full with limited slots remaining. While the market remains challenging, we believe this opportunity is extremely compelling and project outsized returns on this deal. Due diligence has been a success and revealed our expectations are in line with the potential of the asset, and we along with our management team expect even further upside after gaining detailed familiarity with the asset. Needless to say, we're excited! If you'd like to learn more about the deal or discuss your specific questions, please reach out while the opportunity is still available.

On the day to day front, we're excited to share that we're actively recruiting for a Director of Asset Management to join the CF Capital family. If you know someone with experience driving results for multifamily real estate in this capacity, we'd welcome the opportunity to connect with them and explore the possibility of this role together.

Apply Here

On the "greater good front," we were proud to have hosted and facilitated a "Financial Literacy for Kids" event at a school for under-privileged middle school kids in our community. The name of the event was "How to Become a Millionaire" and we covered financial literacy topics such as making budgeting fun and approachable, making more money, and leveraging the wonderful concept of compounding. We believe that giving the gift of prosperity is one of the most important gifts we can give, and were very gratified to have delivered this experience. We look forward to these children applying these learnings in their future and continuing to give back to our community and to others around the country in the future.

In summary, while we continue to strive to live life to the fullest, expand our existing and future relationships, we are continuing to acquire game changing multifamily investment opportunities, invest in our business, navigate day to day challenges, and give back to help make a massive difference for others. We're nowhere near perfect, but we appreciate the opportunity to continue to bring value to others around us in an exponential capacity. We welcome your continued and expanded partnership as we proceed forward! Reach out any time and let's discuss your goals.

In Partnership,

Tyler & Bryan

From the Desk of CF Capital: March Investor Report

Hello Friends and Investors,

We hope you and yours are doing well. This month, we're excited to be welcoming two new best-in-class team members to the CF Capital Family! Join us in celebrating the arrival of Andi Weis, Regional Property Manager, who brings 20+ years of experience in the property management business with institutional and private equity operational experience with prestigious outfits with strong presence in our markets. Andi is a graduate of the University of Louisville, a proud mom, avid fitness enthusiast, and we are very excited to bring her expertise to our portfolio to help drive results across the portfolio. Andi's leadership will be instrumental in ensuring our partners' interests are actively pursued and optimal results are driven on each of our sites now and into the future. This hire is pivotal for executing current and future investments at the highest level and we couldn't be more excited to be working with Andi.

Additionally, we are excited to be welcoming Dan Michael, Senior Real Estate Analyst, joining CF Capital from Equity Residential where he worked with the acquisitions and asset management teams in the same capacity. Dan will be bringing his sophisticated perspective toward leveling up our acquisitions team, asset management team, and investor relations team to help drive business results. Dan hails from Chicago and is a graduate of the University of Illinois. He enjoys golf, football, and all things Chicago sports. We're very lucky and excited to be bringing Dan on to our team to help us strengthen our intelligence and decision-making to optimize our future and current investments, along with leveling up our investor experience. 

Aside from these updates, we always think it's helpful for us to share our perspective on the market and where we see things going. If we didn't say the last couple of years have been challenging in this business we would be lying, to put it frankly. Most in real estate would agree that we've gone through a meaningful market downturn in large part induced by the most rapid rate hiking cycle in history, and a collection of other extreme headwinds (including factors such as inflation, insurance volatility, along with several other operational challenges). While the last couple of quarters have brought more stability, the market has still been doing its darndest to catch its footing and find some equilibrium, yet the forecasted outlook is still murky. Prices for multifamily assets have come down, creating compelling buying opportunities, but in large part there's still a bid/ask spread in the market of about 10%, causing the transaction market to remain largely muffled. All the while, our tireless acquisitions efforts have yielded several very attractive potential acquisitions we're circling closely that we hope to be sharing more with you soon.

With such a choppy market, it's been a challenging time for us to acquire more deals and offer more opportunities to partners such as yourself at the rate we desire. Nevertheless, we continue to invest in our business and grow tactfully and thoughtfully with the long term in mind. This, after all, is a cyclical business, and we are believers that continually investing in our infrastructure, team, and systems is always prudent, especially as we operate with long-term in mind. As we continue to strengthen our investment platform throughout all stages of the cycle, we are positioned to capture significantly attractive investment opportunities that this "window of opportunity" of market instability is generating and delivering results to our partners, such as you. We anticipate that as 2024 progresses, more truly motivated sellers ready to transact at market levels will surface, as the significant wave of debt maturities materialize mid-year. There hasn't yet been enough of a reason for sellers to actually sell in a depressed valuation market until now, yet that is rapidly changing.

Looking ahead, we're excited to invite you to our upcoming investor event. On April 11, from 5:00 pm - 7:00 pm, join us for an expert panel, networking, and a happy hour to follow. We look forward to a lively discussion on the state of the market, expert analysis and forecasts, deal-making, and relationship-building. We're excited to be collaborating with the folks at Ness & Associates on this exciting event, and hope to see you there.

We look forward to seeing you soon and exploring expanding our partnership together during this unique time in the market! Don't hesitate to reach out and schedule a time to discuss anything whether that be market analysis, current pursuits, your goals and objectives or upcoming investment opportunities. 

In Partnership, 
Tyler and Bryan

From the Desk of CF Capital: February Investor Report

Hello Friends and Investors,

We hope you are doing well and having a great month so far. It's always great to get a chance to sit down and write this newsletter and share with you what we've been up to, what's on our mind, how we're viewing the market, what data and perspectives we're synthesizing, how we're making sense of key business decisions surrounding existing operations and potential acquisitions, and simply sharing with you company and personal updates from members of our team at CF Capital. We look forward to doing so once again today, and investing further into our long-term relationships together with you. Allow us to strive to strike the balance between covering all these bases without making this too much of a novel, a challenge indeed!

Ultimately, the real estate investment business can be either very complicated or very simple depending on the lens you look at it with. If we were to attempt to simplify, as we always say success always hinges on high quality relationships, nuanced and nimble intelligence (ie. distilling information and experience into wisdom), and effective action. To chunk it down even further, in multifamily real estate, it's all about providing a quality place to live at a fair market price, offering high quality service on maintenance or other requests, and operating the business by prudently managing to a realistic budget. This all assumes you made conservative assumptions prior to the investment and the return on investment is competitive and helps you reach your objectives, of course.

On the "nuanced and nimble intelligence piece," we continue to be operating within a complex and constantly changing broader climate currently heavily influenced by capital markets volatility, persistent yet recent reduction in quarter over quarter inflation (perhaps a degree of current disinflation, also depending on how you forecast), a unique labor market that appears to be healthy on the surface and complicated beneath the surface, an election year of momentous impact, and black swans (ie. unknowable impactful events) always swimming at some part of the horizon. While the broader US economy is not technically in a recession, most in real estate would agree that we've been operating within a downturn for more than the last year with significant reductions in transaction activity across the country, downward pressure on occupancy rates from record new construction deliveries (along with some markets outside of our targets in boom/bust territory experiencing significant downward pressure on rental rates), and operating costs materially rising. Market participants are challenged to find a "light at the end of the tunnel." Yet, all the while, and perhaps due to these conditions, significant opportunities are absolutely abound. In many respects, we believe we are in a window of opportunity for generational investment opportunities in multifamily real estate. With our relationships, expertise, we are positioned to capture these opportunities and will continue to keep you informed as deals develop.

In December the Fed Chairman Jerome Powell indicated the likelihood of 3 rate cuts in 2024 to begin as early as March, a surprising dovish stand from otherwise a very hawkish Fed as of recent quarters, and in early February the same Jerome Powell indicated that in light of recent economic data they would be treading lightly on any rate cuts. Bond markets reacted and impending interest rates responded in opposite directions to each set of commentary, and no one can truly predict where markets will lead as the year progresses. Forward looking curves could be as valuable as the paper they are written on for all we currently know. Further sauce to add to the saucepan of making sense of a market with conflicting indicators across the board. The result? Continued confusion and a continuation of somewhat of a stalled market. Yet, as this year unfolds, we are anticipating transaction activity picking up due to necessity for a myriad of reasons whether debt maturity or operational challenges related.

So now that you're either bored to tears by all of this analysis or confused with all of the conflicting considerations, let's ask the question that you've been waiting for! What else have the men and women of CF Capital been up to and what else is on our mind?

We are thrilled to announce that we just hired a new Regional Property Manager with over 20 years experience to oversee our portfolio exclusively. We couldn't be more pleased with this successful recruitment and cornerstone hire for our organization as we persistently deliver upon our promises to our partners on all active deals, into the future. More details to come as we introduce this team member to you in the coming months.

We're nearing the hire of a Sr. Real Estate Analyst who will be joining our team in the coming month. We're very excited to level up our nuanced intelligence and capacity for effective action on the fronts of intelligence, asset management and investor relations.

We had a great trip to San Diego for the annual NMHC conference to meet with the top brokers, operators and investors across our region and the country. The future certainly is bright with some of the brightest minds in our field!

We're keeping close tabs on the HR 2074 Bill that was recently passed in the House of Representatives, which includes provisions for the reinstatement of the 100% bonus depreciation of real estate investments, retroactive to 2023. This bill has been moved on to the Senate with tremendous bipartisan support.

As always, please reach out to us and let's discuss your thoughts, concerns, objectives or to catch up in general. We appreciate your partnership and look forward to continuing to earn your trust as time marches on.

In Partnership,

Tyler & Bryan