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October 10, 2024
What is the J-Curve?
The term “J-curve” is a concept often used to describe the typical investment performance trajectory of private equity and real estate funds over time. It represents the pattern of cash flows and returns that investors can usually expect during the lifecycle of these types of funds. The J-curve’s name is derived from the shape of the curve, which resembles the letter “J” when plotted on a graph, with time on the horizontal axis and returns on the vertical axis. When applied to real estate funds, the typical J-curve illustrates an initial dip in performance, a gradual increase, and eventual positive returns (as demonstrated on the graph below). Understanding the J-curve is important for investors, fund managers, and related parties as it provides insights into the expected timing of returns and the associated risks of investing in private real estate. The Stages of the J-Curve Stage 1: Investment Period (Capital Deployed into Markets) Stage 2: Value Creation (Operational, Financial, and Managerial Improvements) Stage 3: Harvest Period (Exit Investments to Realize Gains) Stage 1: Investment Period This initial downturn is primarily due to the upfront costs associated with establishing the fund and acquiring real estate, such as organizational costs, administrative costs, acquisition…
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September 23, 2024
2024 Annual Fall Event
We recently had the privilege of hosting investors, partners, and team members at our headquarters for our Annual Fall Event! With nearly 350 registrants, the event was a tremendous success, made even more memorable by the enthusiastic participation of everyone who attended. From start to finish, the evening was filled with excitement, inspiration, and meaningful connections. One of the highlights of the evening was the panel discussion featuring Principal & CEO, Tim Wallen, along with SVPs Billy Fox and Daniel Price, and moderated by VP Nathan Clayberg. The panelists shared their deep insights into what sets MLG apart, our perspective on the current market, and our proven investment strategy. Their expertise and perspectives highlighted the essence of MLG and the strategic vision guiding our approach. During the event, there were countless opportunities for networking, great conversation, and exploring new partnerships. The room was energetic as individuals and industry leaders exchanged ideas, shared experiences, and celebrated each other’s successes. As we reflect on this remarkable evening, we are excited about the opportunities ahead. We look forward to continuing our collaboration, fostering innovation, and celebrating ongoing successes! View Photos From the Event Here (Click image for photos of the evening)
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September 17, 2024
2024 MLG Market View: Navigating the Private Real Estate Investment Market
2024 Insights The real estate market is constantly evolving, influenced by macroeconomic pressures, shifting work habits, and changing investor sentiment. Each Fall we share our insights on the multifamily, industrial, retail, and office sectors, along with the current trends in capital markets. Above you’ll find a quick video of Tim Wallen, Principal & CEO, Billy Fox, Senior Vice President and Dan Price, Senior Vice President, sharing their core takeaways. If you’d like, you can download a full explanation of our Market View by asset class and full deck presentation below in this post. Here’s a breakdown of the key takeaways from the MLG Capital 2024 Market View: Multifamily Sector: Long term stability amid short term supply wave The multifamily sector continues to demonstrate resilience, even as broader economic challenges persist. Our analysis underscores the enduring appeal of multifamily investments: Sustained Demand: Demand for multifamily housing remains strong. Continued population and household formation growth combined with increasing unaffordability of single-family homes, driven by higher mortgage rates and home prices, is pushing more people into renting. Further, many renters are renting for longer as marriage and having children are pushed out to later ages, bolstering the multifamily market. Short–Term Supply…
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September 4, 2024
Is Now the Right Time to Invest in Private Real Estate? Insights from Tim Wallen, Principal & CEO
Why Timing the Market is Hard: Insights from a 35-Year Real Estate Veteran The real estate market has always been a dynamic landscape, filled with challenges and opportunities for both investors and professionals. With over 35 years of experience in the real estate business, I’ve seen numerous cycles and many opportunities arise. One common theme I’ve encountered is the desire among many investors to time the market perfectly. However, timing the market is incredibly difficult, and this approach can often lead to missed opportunities. Market Conditions & Investment Opportunities The real estate market is currently experiencing a shift that has created a favorable environment for buyers: Institutional fund inflows are down approximately 80% from previous years, resulting in reduced competition. This reduced competition allows us to acquire assets at historically favorable cap rates of 5.5% to 6% and significantly below replacement cost. Consistent investment over a long period of time tends to produce the best results. Trying to time the market precisely, aiming to buy at the absolute low, often means missing out on great opportunities. Today’s market presents an interesting scenario where the assets we purchase now are likely to be sold in the future when interest rates are…
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July 16, 2024
Investing with MLG Capital’s Dividend Fund Offering; Retirement, Foundation and Endowment Investor Focused
At MLG Capital, we are committed to providing innovative and strategic investment opportunities for our clients across the United States. One compelling offering is the Dividend Fund option that lives within our Series of MLG Private Funds. The Dividend Fund was first announced in 2018 as a parallel offering of MLG Private Fund IV LLC. This Fund option presents a unique pathway to investing in private real estate with retirement accounts, through foundations, endowments, or even cash investors. What Makes the Dividend Fund Special? The Dividend Fund is designed as a secondary pathway to investing in our Private Fund series, offering the same underlying assets, return targets, and investment strategy as our primary Private Fund. This option, however, features a distinct legal structure that can exempt investors from additional taxes typically associated with debt-backed asset investments within retirement accounts, or with foundation or endowment investors, commonly known as Unrelated Business Tax Income (UBTI). This can make it a good choice for those looking to diversify their retirement, foundation, or endowment investment accounts while maintaining compliance requirements for these types of investors. Why Would a Cash Investor Consider the Dividend Fund? Additionally, the Dividend Fund option may be a consideration for…
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April 30, 2024
How Investors are Paid: MLG’s Private Fund Return Structure
The series of MLG Private Funds provides investors with access to investment opportunities that aim to produce tax-advantaged cash flow and appreciation over time. The Funds focus on growing investors’ wealth, capital preservation and diversification within private real estate investment. Understanding how and when returns are sent to investors is perhaps one of the most important elements of any investment structure. Within the private markets, there are a myriad of different structures that may exist. These structures can be frequently misunderstood. Our Funds utilize a “European equity waterfall return structure”. This is specifically designed to be an investor friendly return structure. This demonstrates our firm’s commitment to investors and our confidence in our ability to execute. MLG Private Funds Return Structure: Our latest Fund, Private Fund VI, intends to underwrite potential investments to a target internal rate of return of between 11% and 15% (net of Fund expenses and fees), on a leveraged basis. Each of our funds utilizes a three-tiered return structure. 100% of available distributions are paid to investors as follows1; (Tier 1) 8% cumulative preferred return on invested equity (Tier 2) 100% return of original principal invested, after a full 8% cumulative preferred return is paid (Tier…
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March 27, 2024
The MAD Initiative: Notre Dame School of Milwaukee
Through the Making a Difference (MAD) Initiative, MLG Capital is able to support the Notre Dame School of Milwaukee (NDSM), a K3-8 Catholic school sponsored by the School Sisters of Notre Dame. NDSM’s mission is to challenge students to reach their full potential, while empowering them to use their God-given gifts to transform the community. This mission is reinforced through their three guiding principles of respect, responsibility, and regalo or gift. The history of this school started in 1996 when the School Sisters of Notre Dame created an all-girls middle school, focusing on giving educational opportunities to young girls in an expanding Latino community. To this day, their efforts are based on the needs of the community, while their focus stays on faith. After 17 years of growth and success, Notre Dame School of Milwaukee was able to open a primary school. Given the increase in quality education options in the area, the school soon began expanding quickly, going from 26 students in its inaugural year to 200 students in 2012. Over time, the community requested a middle school for boys, and Notre Dame School of Milwaukee was able to address this need. In 2018, they opened an all-boys middle…
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