2022 – Page 67

Bridge Investment Group Closes Gorelick Brothers Capital Transaction

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Bridge Investment Group Holdings Inc. (“Bridge”) (NYSE: BRDG) announced that the previously disclosed transaction to acquire certain assets of Charlotte, North Carolina based Gorelick Brothers Capital, LLC (“GBC”), including a portfolio of single-family rental (“SFR”) homes owned by GBC-managed vehicles and a majority of GBC’s asset and property management business, has closed. In connection with the transactions, Bridge acquired 60% of GBC’s business, valued at $50 million. Bridge has funded the acquisition with approximately 50% cash and 50% units of Bridge Investment Group Holdings LLC. The GBC team has joined Bridge to launch an SFR strategy on the Bridge platform, under a newly formed SFR investment manager that is managed by Bridge and the key principals of GBC. Additionally, Bridge and GBC principals have completed a $660 million recapitalization through Bridge-sponsored investment fund vehicles of the SFR portfolio comprising more than 2,700 homes in 14 markets, concentrated in the Sunbelt and certain Midwest markets of the United States. “We are excited to have completed this transaction with the team at Gorelick Brothers Capital and look forward to what we can achieve as a combined team in the single-family rental market,” said Robert Morse, Executive Chairman of Bridge. “The single-family rental sector will continue to be a rapidly growing factor in the overall residential rental market, and we expect the addition of the former GBC team to make Bridge a formidable player.” “Bridge’s hands-on, vertically integrated investing and operating model is a seamless fit for our business, and it has already allowed us to gain significant traction with our SFR strategy. We look forward to building a great enterprise together,” explained Todd Gorelick, Co-Chief Executive Officer of the new SFR investment manager, and Christopher Skardon, Co-Chief Executive Officer and Chief Investment Officer of the new SFR investment manager. RBC Capital Markets LLC acted as financial advisor to Bridge and Latham & Watkins LLP acted as Bridge’s legal counsel. Goldman Sachs & Co. LLC acted as financial advisor to GBC and Kirkland & Ellis LLP acted as GBC’s legal counsel. ABOUT BRIDGE INVESTMENT GROUP Bridge is a leading, vertically integrated real estate investment manager, diversified across specialized asset classes, with approximately $31.8 billion of assets under management as of September 30, 2021. Bridge combines its nationwide operating platform with dedicated teams of investment professionals focused on select U.S. real estate verticals: residential rental, office, development, logistics net lease, logistics properties, and real estate-backed credit.

Word of the Day: Prescient

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[PRESH-ənt] Part of speech: Adjective Origin: Latin, early 17th century Definition: Having or showing knowledge of events before they take place Examples of Prescient in a sentence “The psychic gave a prescient warning of things to come.” “No one understood how prescient the press statement was until a few days later.” About Prescient This word comes from the Latin “praescient-,” meaning “knowing beforehand.” This stems from the verb “praescire” — “prae” meaning “before” and “scire” meaning “know.” Did you Know? Jeane Dixon, a self-proclaimed psychic, was admired by many for her supposed prescience. She reportedly predicted John F. Kennedy’s assassination, that one pope would be harmed, and another would be assassinated during the twentieth century, among other predictions. Richard Nixon followed her predictions via his secretary, and Dixon was one of several astrologers Nancy Reagan consulted. However, Temple University mathematician John Allen Paulos coined “the Jeane Dixon effect,” which outlines a penchant for highlighting a few correct predictions while ignoring a larger amount of incorrect ones.

U.S. Foreclosure Activity Drops

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Foreclosure Starts and Completions Hit New Record Lows Nationwide ATTOM, licensor of the nation’s most comprehensive foreclosure data and parent company to RealtyTrac, the largest online marketplace for foreclosure and distressed properties, released its Year-End 2021 U.S. Foreclosure Market Report, which shows foreclosure filings— default notices, scheduled auctions and bank repossessions — were reported on 151,153 U.S. properties in 2021, down 29% from 2020 and down 95% from a peak of nearly 2.9 million in 2010, to the lowest level since tracking began in 2005. Those 151,153 properties with foreclosure filings in 2021 represented 0.11% of all U.S. housing units, down from 0.16% in 2020 and down from a peak of 2.23% in 2010. “The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022.” ATTOM’s year-end foreclosure report provides a unique count of properties with a foreclosure filing during the year based on publicly recorded and published foreclosure filings collected in more than 3,000 counties nationwide, and those counties account for more than 99% of the U.S. population, also available for license or customized reporting. The report also includes new data for December 2021, showing there were 17,971 U.S. properties with foreclosure filings, down 8% from the previous month but up 65% from a year ago. Bank Repossessions Decrease 98% Since Their Peak in 2010 Lenders repossessed 25,662 properties through foreclosure (REO) in 2021, down 49% from 2020 and down 98% from a peak of 1,050,500 in 2010, to the lowest level as far back as data is available — 2006. “We believe that repossessions will continue to be lower than normal throughout 2022,” Sharga noted. “Homeowners have a record amount of equity – over $23 trillion – and over 87% of homeowners in foreclosure have positive equity. This means that most borrowers will have an opportunity to sell their house at a profit rather than lose everything to a foreclosure auction.” States that saw the greatest number of REOs in 2021 included: > Illinois (3,472 REOs) > Florida (2,287 REOs) > California (1,839 REOs) > Pennsylvania (1,293 REOs) > Texas (1,236 REOs) Those metropolitan statistical areas with a population greater than 1 million that saw the greatest number of REOs in 2021 included: > Chicago, Illinois (1,733 REOs) > St. Louis, Missouri (1,255 REOs) > New York, New York (814 REOs) > Baltimore, Maryland > Philadelphia, Pennsylvania (571 REOs) Foreclosure Starts at New Record Low Nationwide Lenders started the foreclosure process on 92,346 U.S. properties in 2021, down 30% from 2020 and down 96% from a peak of 2,139,005 in 2009, to a new all-time low going back as far as foreclosure starts data is available — 2006. States that saw the greatest decline in foreclosure starts from last year included: > Maryland (down 81%) > Oklahoma (down 70%) > Idaho (down 64%) > Nebraska (down 63%) > Connecticut (down 60%) “The government’s foreclosure moratorium, the mortgage forbearance program, and the mortgage servicing guidelines enacted by the CFPB in August have kept foreclosure starts artificially low over the past year,” Sharga added. “While the recovering economy should prevent a huge increase in defaults, we should see a gradual increase in foreclosure activity as these programs expire, and servicers exhaust all loan modification options for delinquent borrowers.” Counter to the national trend, four states saw an annual increase in foreclosure starts. They included: > South Dakota (up 20%) > Vermont (up 36%) > North Dakota (up 71%) > Nevada (up 85%) Those metropolitan statistical areas with a population greater than 1 million that had at least 500 foreclosure starts in 2021 and saw the greatest declines in foreclosure starts from last year, included: > Philadelphia, Pennsylvania (down 56%) > Washington, DC (down 52%) > Charlotte, North Carolina (down 51%) > Cleveland, Ohio (down 42%) > Chicago, Illinois (down 42%) However, counter to the national trend, three metropolitan areas with a population greater than 1 million that had at least 500 foreclosure starts in 2021, saw an annual increase. They included: > Birmingham, Alabama (up 4%) > Miami, Florida (up 17%) > Las Vegas, Nevada (up 142%) Nevada, Illinois, and Florida Post Highest State Foreclosure Rates in 2021 States with the highest foreclosure rates in 2021 were: > Nevada (0.26% of housing units with a foreclosure filing) > Illinois (0.23%) > Florida (0.21%) > Delaware (0.21%) > New Jersey (0.19%) Rounding out the top 10 states with the highest foreclosure rates in 2021, were: > Ohio (0.18%) > South Carolina (0.15%) > Indiana (0.15%) > Connecticut (0.13%) > Maryland (0.13%) Cleveland, Las Vegas, Lake Havasu Post Highest Metro Foreclosure Rates in 2021 Among 220 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in 2021 were: > Cleveland, Ohio (0.37% of housing units with a foreclosure filing) > Las Vegas, Nevada (0.31%) > Lake Havasu, Arizona (0.30%) > Peoria, Illinois (0.30%) > Atlantic City, New Jersey (0.29%) Metro areas with a population greater than 1 million, including Cleveland, Ohio and Las Vegas, Nevada, that had the highest foreclosure rates in 2021, were: > Miami, Florida (0.25%) > Jacksonville, Florida (0.25%) > St. Louis, Missouri (0.22%) Average Time to Foreclose Increases Quarterly and Annually U.S. properties foreclosed in the fourth quarter of 2021 had been in the foreclosure process an average of 941 days, a 2% increase from the previous quarter and 10% increase from a year ago. States with the longest average time to foreclose in Q4 2021 were: > Hawaii (2,491 days) > New York (1,529 days) > Pennsylvania (1,502 days) > Louisiana (1,476 days) > Florida (1,378 days) Q4 2021 Foreclosure Activity High-Level Takeaways > There were a total of 56,174 U.S. properties with foreclosure filings in Q4 2021, up 23% from the previous quarter and

Tami Bonnell

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Childhood Lessons Taught Me to be a CEO By Tami Bonnell Real estate was always a part of my life. I did not exactly grow up in the typical real estate family of people listing and selling; my dad was involved in building and developing. He had an eye for two things, people and possibilities. I am one of six children and one of the best things we were ever taught was work ethic. All of us started working when we were really young. I started answering phones in my father’s office on weekends and during school vacation starting at 8, maybe 10. I can still say it, “Good morning, Graham Associates, how may I help you?” My dad would take me along to collect rents on Saturday mornings. Before going out he did his homework on everyone. He would go in and have personal conversations with people. He knew if they were struggling with rent because they had things going on in their family or a medical problem, etc. He would listen and say, “Okay, let’s put a plan together.” Because he was so understanding, they would pay him first. He probably taught me more about personalization than anyone. The Beginnings That truly came in handy at my first real estate related job. I was a mortgage originator until I went into management and that gave me an opportunity to focus on a consultative sale as opposed to just being a salesperson. I got to find out and focus on what people’s dreams were, what was really important to them and what their circumstances were, so I could pick the right program for them. By learning those things, I could be sure that they were not going to be buried when the adjustable-rate mortgage adjusted or if they only needed a temporary loan, etc. I did a lot of homework on the people and that really made a difference. Following my time in mortgages, I was instrumental in building three major brands. I found that in a consultative sale, you are selling a dream. Though someone wants to own their own business, not everyone is qualified to do so. The average person in real estate might be a really good salesperson but not necessarily a really good businessperson. I enjoyed being able to help teach them and give them a track to run on. I could help them become a better businessperson by teaching them how to be more effective in their community and helping them to recruit people into their company. I taught mergers and acquisitions and acquired 114 companies for another brand prior to joining EXIT Realty Corp. Back when I was selling franchises for another brand I distinctly remember sitting in the audience at a convention, and Tom Peters was speaking about the pursuit of “WOW.” He said, “How many people in your company go into work to WOW people every day?” I remember thinking, “Oh, my gosh, just me.” I had six potential franchisees there, and I felt sick to my stomach, like I was selling something I did not believe in anymore. You cannot sell something in which you do not believe! I decided that day to look into business opportunities. A friend sent me information about EXIT Realty, which in 1999, did not even have an office in the United States. EXIT Realty Corp EXIT made really good business sense. They were in the business of real estate, and it was as if they had thought of everything, from leadership, education, training, technology, and being a good corporate citizen to having a vested interest and residual income. I found over this period that the best thing for me to personally invest in was people. My lane was two things, making EXIT famous in a good way by selling franchises, doing mergers and acquisitions, and selling regions and finding that sweet spot in a person, literally catching them doing something good and helping them to find their lane. It was simply icing on the cake that it turned out to be real estate related. I started with owning the rights to New England in 1999, then became Vice President over the US in 2000, President over the US in 2001, and in 2003, I broke some world records selling out 50% of the regional rights by population in the company. Then, we hit the worst recession since the depression and needed to lock arms and pull together more than ever. I believe investing in our people made all the difference in the world when the recession hit. Along with Steve Morris, the founder and Co-Chairman, and Erika Gileo, the Chief Operating Officer, we decided only people in leadership positions would take a pay cut and we would not lay anyone off. Our strategy was to outsell and out-think our way out of the recession. Instead of laying off people in droves, we put together a stimulus package worth more than $50 million. We reached out to our administrators, brokers, regional owners, and agents in their homes through videos, webinars, techinars, and Live Interactive. We helped them study everything from Eckhart Tolle, yoga and meditation practices to how to excel in listing and selling real estate. We invested in our people and they trusted us. Valuable Lessons Learned I held the title of CEO of EXIT Realty Corp. International since 2012 and in September of 2021 I became Co-Chair. This year, we added the positions of co-chair, United States CEO, Canada CEO, and a new US President. We are positioned to further grow organically by providing our people with a legacy and an excellent quality of life! During this journey, I have learned some things that have helped me further succeed and that can help any business owner or investor. First, intention is not going to accomplish anything, only action will. I created a six-week action plan early on in my career, so halfway through the month I plan out the next six weeks.

“Servant Leadership”

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How Kyle Amerson Built His Real Estate Business Serving Others As a student at Dallas Baptist University, Kyle Amerson learned a lot about “servant-leadership.” Not only was it the university’s mission, but it was soon to become a way of life for the young business school graduate. He applied these teachings and philosophies not only in his personal life but in his business career as well. The Beginnings As a prelude to becoming a HomeVestors® independent business owner, Amerson owned and operated his own real estate appraisal company for seven years in the Dallas-Fort Worth area. It was during this time that he looked into HomeVestors as a way to buy just a few extra properties each month. In January 2014, at the ripe old age of 34, he bought a HomeVestors franchise and formed Amerson Properties LLC. Amerson’s intention initially was to begin this new opportunity only part-time. It did not take long, only a few months, before he made the decision to go full-time. In those few short months, he was already beginning to see the impact, complete with the flexibility he desired and more time to spend with his family. His family at the beginning of the HomeVestors journey was his wife, Jessica, and his son, Jack, now 8 years old. It has since blossomed to include daughters Brooklyn (6), Whitney (4), and Bryn (4 months). Jessica’s passion is her family, and after seven years of working in the advertising industry, she is now thrilled to be a full-time mother and supporting Kyle’s business goals. The Amerson Way of Doing Business When Amerson looked at HomeVestors, he saw several additional attractive features that made his decision a “no-brainer.” “Not only did I envision a lifestyle change, increased flexibility, and more family time, but I also saw a proven wealth building system. Most importantly, I saw an opportunity to be able to help sellers out of ugly situations with their houses,” he explained. “My goal is to find the best solution for the seller whether I buy the house or not.” His servant-leader attitude and faith in God also guide him in his role as a Development Agent (DA) in the DFW market. “I’ve been a DA now for six months and I am very excited about the opportunity. I have always had a passion for training, so I love helping new franchisees get started and grow their businesses by coaching them on how to use the extensive tools and systems provided by HomeVestors. One of the things I teach is if your only goal is to buy the house, you’ll buy a few. But if your goal is to solve a problem and help people, you’ll buy many.” Present Day Amerson Properties, a single-operator business (read no staff), buys 35-40 properties per year, a combination of fix-and-flips, buy-and-holds, and wholesaling, and sometimes owner financing for families that cannot get traditional financing. As a single-operator business, Amerson answers his own phones, makes his own appointments, makes his own travel arrangements, and even empties the office trash. Amerson’s key to success is simple: Create “win-win” situations. If your goals are to solve sellers’ problems, it is hard to fail. Faith has always been a huge part of Amerson’s life, and he credits his faith for where he is today. Faith, plus his servant-leader philosophy, is a genuine recipe for success. HomeVestors What exactly does it mean to be a HomeVestors® business owner? Owning a real estate business is life changing and naturally comes with risks! When you become a HomeVestors business owner, you get immediate access to motivated seller leads, financing resources for qualifying purchases and repairs, one-on-one coaching with your local Development Agent, proprietary software for analyzing properties and deals, and access to a nationwide network of coaches and peers. Your house-buying business is yours and you run it as your own venture with a focus toward your individual business goals. If you are interested in a franchise, call 855-454-4578. Each franchise office is independently owned and operated.

SFR Investors Data Preferences and Uses

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Only a Small Percentage of SFR Investors Take Advantage of Readily Available Key Data Points By Kori Covrigaru SFR investors collect and utilize property data for various reasons, but surprisingly, many do not take advantage of the full gamut of benefits. In a recent survey we conducted, PlanOmatic found that out of a total of 1,893 responses, property data collected onsite was mostly used for property maintenance purposes, which accounted for 24.9% of the total responses. This was followed by portfolio forecasting, which showed a slightly lower contribution at 21.4%; and renovations and acquisitions represented 19.6% and 17.6% respectively. In stark contrast, the category with the lowest percentage of responses included valuation, accounting for 16.5%. When asked which data points SFR investors need to assess a property acquisition and/or determine maintenance, where respondents could select from multiple choices, geographic location (busy street, commercial district) ranked the highest with 6.5% of the vote. This was followed in a second-place tie by “basement or crawl space” and “exterior general condition” with 5.7%. With a slightly lower percentage, 5.3%, “exterior surface” was the third most important data point needed. Scoping repairs for SFR properties is crucial for investors in order to thoughtfully plan for renovation costs and turn estimate time. According to PlanOmatic’s survey, RenoWalk is the most used software amongst SFR investors and owners for scoping repairs, accounting for 29.3% of the total responses. The second most used software is HappyCo with 28.6% of total responses. Facilio and Verisk/Xactware are ranked third and fourth, representing 26.8% and 14.6% respectively. The nationwide survey was conducted Nov. 2-4, consisting of an online survey of 1,893 respondents comprised of SFR investors, owners and developers. The booming SFR market is showing no signs of slowing down as investors bet that demand for suburban homes will continue to support higher rents. Investors are looking for ways to gain a competitive advantage, and as such, the focus on how property data and technology solutions aimed at optimizing both investment strategies and property management processes has become even more important. Traditional home inspections work great for traditional home buyers. Investors and property managers need something different. The details about the location, renovation specifics, and rentability of a property are key factors in the due diligence process. Our survey indicates only a small percentage of SFR investors, owners, operators and property managers are taking advantage of the key data points that are readily available at every property. Property data and technology will continue to play an increasingly key role in the SFR space in 2022 and it is time for investors to take advantage of the benefits to stay ahead of the competition.