When we started designing the Compound Manhattan ReTF, we were looking to create an investment product that provided access and exposure to the Manhattan residential real estate market to a broad group of investors.
We termed our targeted returns “Beta+” which means that the market will determine the majority of long-term returns (“Beta”), but we will also use our expertise and acumen to find value and acquire assets at below-market prices (the “+”). We still agree with that sentiment, but along the way, the Manhattan real estate market started to soften, and then softened some more.
Today, we feel that the current market is a once-in-a-decade (or possibly generation) investment opportunity.
Why do we think this?
Developers that only a few months ago were declining our low-ball offers are asking if the offers are still on the table.
Sellers are accepting our bids at 20%+ below already reduced asking prices.
While we can’t provide too many details on our negotiations, here are some more examples of seller distress:
So what does this mean for us? Well, we felt that our targeted returns were overly pessimistic because some of the assumptions in our pro forma financial projections were just too conservative. So, we adjusted them.
As you can see from the chart below, if you buy Manhattan real estate at the right time, the rewards can be plentiful:
Visit our Manhattan Residential ReTF Fund page to learn more about how we are facilitating investment in the Manhattan residential real estate market.
Compound is a venture capital-backed asset management firm that creates city-specific residential real estate funds called ReTFs designed for the next generation of investors. Our first fund invests in Manhattan residential real estate, an asset class that has historically been out of reach for the average investor but has outperformed almost every relevant benchmark, including the S&P 500.