Stocks are now solidly in bear market territory and analysts are forecasting a recession.
Regardless of market factors over the rest of the year, we are comfortable operating — and even buying — in the current environment. Why?
- A large margin of safety was taken into account for our property acquisitions. We have always invested with downside outcomes at the forefront of our underwriting.
- We generate a majority of our revenue from established companies with strong financial wherewithal.
- We do not use excessive portfolio leverage. We’re currently leveraged at ~50% of value. Further, our property level loans are fixed rate and long dated, which means we do not have to refinance and face the current challenging credit conditions that this market presents.
- We are more optimistic than ever that we will be able to buy quality properties at discounted prices now that fear has set in amongst market participants.
We never intended to shoot for the moon and use financial engineering to juice our returns. We never adopted a grow-at-all-costs mentality that is all too pervasive in the fintech world. Instead, we have aimed for steady returns with conservative leverage in order to generate a steady return for investors. Now that fear has spread across the market it’s time to take advantage of our positioning to further fortify the portfolio with quality properties.