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...
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)
February 28, 2024
Supply and Demand in Private Real Estate
Hearing “supply and demand” likely evokes memories, good or bad, from your high school economics course. As a focal point of basic economic theory, it is a concept that follows us far beyond the classroom. The supply curve depicts how much of a good (product) will be provided at various price points, while the demand curve depicts how much of that good the consumer will desire at those price points. In a competitive market, the price is set where supply and demand are in equilibrium, or where the quantity demanded equals the quantity supplied. The real estate market is no stranger to the concept of supply and demand. The applications and significance of the concept are perpetual considerations in the analysis and decision-making process for every potential acquisition. Smart real estate investors will analyze the supply and demand equation prior to investing and consider how that relationship persists over the investment horizon. Supply and Demand Drivers in Real Estate Before diving into the significance of this economic law in real estate, let’s first consider some of the relevant drivers for both supply and demand. Real estate is relatively illiquid; after all, these transactions are usually not quick, and when owned,...
January 31, 2024
January 2024 – Why Invest Now?
In the current market landscape, we have outlined three compelling reasons why now is a favorable time to consider an investment in our diversified private real estate fund. Disruption breeds opportunity and uncertainty creates volatility. Investing during these periods of time are when outsized returns could be achieved. Limited Competition on the Buyside: Over the past two years, we have witnessed a unique convergence of events that has created an unprecedented opportunity in the real estate market resulting in less competition and capital flows into all commercial real estate investments. Institutional capital, adhering to strict asset allocation models, are redirecting capital into bonds due to the significant fall in bond prices caused by a surge in interest rates. Syndicators have found capital raising more challenging in the current environment often due to struggles within their existing portfolio from short term floating rate debt combined with higher leverage, further reducing buyside competition. This has resulted in a scarcity of fresh capital on the buyside, creating an environment with the lowest competition in decades. Invest now before capital begins to flow back into our favored sectors later in 2024. Focused Strategy on High-Quality Multifamily Assets: In today’s marketplace, limited competition allows...
November 14, 2023
2023 Economic Outlook with CEO, Tim J. Wallen
“Smart Real Estate Investments:” At MLG this is more than just a phrase. To us, Smart Real Estate Investments is all we do. We study the economics of real estate to understand current metrics, past trends, and future projections affords the opportunity to capitalize on unique opportunities and in doing so provide exceptional returns to our investors. – Tim J. Wallen We are excited to present our Q3 2023 Economic Outlook. Our team at MLG has collaborated to create a comprehensive presentation that highlights our perspectives on the real estate investing landscape as we look forward to another year of profitable investing. You can watch the full presentation above, or continue reading for a summary below. Summary The Q3 2023 Economic Outlook delves deep into the economics of supply and demand in real estate. Supply and demand are the focal points of basic economic theory, depicting how changes in the price and availability of a resource impact its value as an investment both now and in the future. Understanding the factors that drive supply and demand is imperative in the analysis and decision-making process for every potential acquisition. Below we’ll address three key questions closely related to supply and demand...
October 3, 2023
Smart Investing: Preferred Qualities in Multifamily Acquisitions
When considering a potential multifamily acquisition, there are a number of factors to consider. Where is the property located? What school district is it in? When was the property built? These are just a few questions to consider when determining whether a property might be a good investment. Before looking at the specific attributes and factors we review when evaluating a multifamily property, it’s important that we consider the fundamental goals of our multifamily investments: to maintain and grow net operating income that will, in turn, produce stable cash-flow during ownership and maximize the property value upon sale — all with the lowest possible risk profile and in the most tax-efficient manner. The following, and all attributes we review, are considered with that goal in mind: Cost Basis, Potential for New Supply When looking at a potential multifamily acquisition, you’ll often hear the phrase ‘price per unit’ mentioned. While the total number of units is relevant, it’s more important to consider the price you’re paying or selling each individual unit for. At MLG, we are a ‘basis conscious’ firm, meaning that we pay significant attention to price per unit (or per square foot). We compare these values to recent sales...
September 29, 2023
2023 Annual Fall Event
Last week, we had the privilege of hosting investors, partners, and team members at our headquarters for our Annual Fall Event! With nearly 400 registrants, the event was a resounding success, and it was made even more special by the enthusiastic participation of all who were able to join us. From start to finish, the evening was filled with excitement, inspiration, and meaningful connections. One of the highlights of the night was the keynote address delivered by our esteemed CEO, Tim Wallen. He provided insight into what makes MLG unique, our sought-after product offerings and our view on the current state of the market. His insightful words resonated with everyone, reminding us of the importance of innovation, partnership, and smart real estate investments. Another highlight of the night was the much-anticipated Golden Giveaway and the opportunity to toast to innovation and partnership alongside all of you! Throughout the event, there were countless opportunities for networking, sparking conversations, and discovering new partnerships. The energy in the room was electric as individuals and industry leaders shared ideas, exchanged experiences, and celebrated each other’s successes. For those who couldn’t attend, below is a copy of the presentation: As we reflect on this remarkable...
August 23, 2023
The MAD Initiative: St. Marcus School
MLG Capital is proud to support St. Marcus School as one of the beneficiaries of the MAD Initiative. St. Marcus School has three campuses in the Milwaukee area, serving approximately 1200 students in K3 through 8th grade. Through the MAD program, we share the opportunity to support St. Marcus with their goal of community transformation and educational reform in the city of Milwaukee. Founded in 1875, St Marcus School has remained an anchor in its ever-changing neighborhood. The school held fast through the tumultuous years of the Civil Rights Movement and into the present, staying the course of racial integration even as much of the city’s population fled to the suburbs. When St. Marcus joined the Milwaukee Parental Choice Program (MPCP) in 1997, it became clear that the demand for high-quality, Christian education in the city was great and that St. Marcus was positioned for tremendous growth. Today, 97% of the students enrolled at St. Marcus are part of the MPCP program. St. Marcus is one of ninety-six, 80/80 schools in Milwaukee, in which at least 80% of the students are black and at least 80% of the students are low-income. Among 80/80 schools, St. Marcus is a shining star...
July 19, 2023
How To Invest In Private Real Estate With Steve Kelly
Steve Kelly, AVP of Investor Relations, sits down with Jeremy Kiel, Host of Retirement Revealed podcast. Steve shares his insights on the various ways you can invest in private real estate and what you need to know to get started. Listen here: https://keilfp.com/blogpodcast/how-to-invest-in-private-real-estate/
June 27, 2023
Bonus Depreciation: What is it and where is it going?
The contents of this article are not to be considered as tax advice and individuals should consult their own tax advisor as to tax advice. Recipients of the information contained in this article agree that MLG Capital, its affiliates and respective partners, members, employees, officers, directors, agents, and representatives shall have no liability for any misstatement or omission of fact or for any statement expressed herein. Starting in 2023, the powerful tax benefits of bonus depreciation that were provided by the Tax Cuts and Jobs act in 2017 will begin to phase out by 20% each year, for 5 years, until they reach 0% in 2027. As this benefit begins to phase out this year, individuals from all backgrounds should understand what this means for their current investment, future investments, and personal financial plan. This article will discuss what depreciation is, how it’s used in real estate to create tax efficiencies, and how the bonus depreciation phase out will potentially impact the real estate investing landscape in the coming years. Real Estate Depreciation 101: The IRS allows owners of real estate to deduct specific costs associated with buying and improving an asset from the owners’ income taxes, this practice is...
