This year is Avistone’s 10-year anniversary, and we want to thank each of our investors for the confidence placed in us to deliver returns above industry benchmarks.
We are proud to say that Avistone has weathered the volatility of the past three years quite well having completed the sale of all our industrial properties at top of the market pricing. Today, Avistone is well positioned to take advantage of lucrative opportunities in the next downturn.
As we head into 2023, we are optimistic that we may be nearing the bottom of a market cycle within the next 12 months presenting the most compelling investment opportunities that we have seen in the decade.
Since our inception in 2013, Avistone has operated a multi-tenant (flex) industrial platform, and more recently added a hospitality platform to capture opportunities arising from the Covid-19 pandemic and recent boom in the travel market. To date, we have acquired and sold 24 flex industrial properties and three hotels representing more than 4 million square feet of space in California, Georgia, Ohio, Texas, Virginia, and Florida.
4.1 MILLION SQ FT
Weighted Internal Rate of Return
Weighted Hold Period
Full Cycle Investments
Weighted Investment Multiple
Weighted Yearly Distribution Yield
Being longer-term bullish does not mean we don’t take a hard-nosed view of reality. We expect the next several months to be challenging, with recessionary conditions in certain sectors getting worse before they get better. However, history shows that contrarian investors that “buy the dip” most often get rewarded when the markets stabilize. To fight inflation, the Federal Reserve has raised the Fed Funds rate to 4.5%, with predictions of a 5% rate by mid-year. While we believe the rate of increase of inflation has now slowed, at least in the near-term, we expect higher inflation and interest rates to continue for the foreseeable future than those in the recent past.
While no asset class is immune from inflationary pressures and increasing interest rates, we believe historically, income-producing real estate assets have proven to be one of best hedges against inflation, while providing wealth protection and increasing income over time.
Over the next year, we believe the key to finding and realizing the best investment opportunities will go to those with liquidity, strong creditworthiness, the ability to act quickly and to borrow at rates considerably higher than only 12-months prior. Longer term, when rates decline, refinancing opportunities will enhance cash distributions and increase overall returns.
Over the last few years, Avistone has been a seller of flex industrial properties. We have not acquired a new flex industrial property since February of 2021. In our opinion, market prices were over-heated and the risk/return proposition did not meet our high standards. We patiently watched from the sidelines as historically low interest rates and insatiable investor demand resulted in exceedingly high prices for flex industrial properties.
At the same time, the extraordinarily high cost of construction due to material shortages kept nearly all multi-tenant industrial development at bay. The vast majority of new industrial development during this period was large space of at least 50,000 square feet; in contrast, the average tenant size of our nearly 4 million square foot flex industrial portfolio was 6,000 square feet.
Over the last several months, the investment market has changed abruptly and dramatically as interest rates have risen from the mid-3% range to over 6% for flex industrial space. Interest rate increases and the threat of a slowing economy have cooled the investment market resulting in reduced prices. Because of this, we are currently seeing cap rates for flex industrial properties in the 6% to 7% range, while tenant demand, occupancy, lease rates, and market dynamics remain healthy. We believe this gives us the opportunity to, once again, acquire industrial properties with attractive yields, inflation protection and the opportunity for capital appreication.
Today, we believe that the combination of reduced prices, relatively high interest rates, high occupancy, as well as an under-supply of new space has potentially given us an exceptional buying opportunity in the flex industrial space. We are currently seeing buying opportunities that offer the yield and value our clients have come to expect.
We are optimistic that 2023 will be another busy and productive year for the Avistone team. We greatly appreciate your ongoing loyalty, support and confidence in our ability to bring you high quality and expertly managed investments. We will continue to work hard to earn your business and trust, and to ensure your experience with us remains positive and profitable.
© 2024 Avistone, LLC. All rights reserved.
Communications from Avistone, LLC or its affiliates (referred to together as "Avistone"), whether it is transmitted through its website, social media, email, text or any other marketing platform used by Avistone (collectively termed "Avistone Communications") must not be taken as recommendations or endorsements to purchase, sell, or hold any securities. Furthermore, Avistone Communications should not be considered as advice related to investment, taxation, finance, accounting, legal matters, regulations, or compliance.
To gain a comprehensive understanding of the risks associated with the securities mentioned herein or in Avistone Communications, it is essential to review them with related private placement memorandums and other offering documents. Participating in private placements requires substantial financial commitment and the ability to tolerate a complete loss of the investment. Avistone Communications provide a preliminary overview and insights into Avistone sponsored investments, and are intended for initial reference. However, they do not encompass all relevant information and should not be considered a complete representation. The information presented is subject to further updates without notice and qualification as provided in the relevant offering materials. It's important to note that Avistone is not registered as a broker-dealer, and Avistone does not make any claims or warranties regarding the legality of investments in Avistone sponsored investments ("Avistone Investments").
Investing in alternative securities or real property carries inherent risks, are illiquid, may depreciate in value, and is limited to accredited investors under the Securities Act of 1933. These risks include market fluctuations, credit vulnerabilities, interest rate exposure, and potential loss of capital. Before investing, all prospective investors must conduct an independent assessment, evaluate fees, uncertainties, and risks outlined in offering materials, and consult with investment, tax, financial, and legal advisors. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or endorsed any Avistone Investment, or authenticated the accuracy or exhaustiveness of any information or materials furnished via Avistone Communications.
The information in Avistone Communications is not a recommendation, investment advice, or a solicitation to buy, sell, or hold any security or investment strategy. It is not provided in a fiduciary capacity and does not consider an individual investor's specific goals or circumstances. The information reflects Avistone's market interpretation, and the success of Avistone Investments is not guaranteed. Investment decisions should be based on individual goals, in consultation with financial professionals. Past performance does not predict future outcomes. All research and supplementary information in Avistone Communications are for informational purposes only, and Avistone assumes no responsibility for inaccuracies or omissions in the content or linked resources.
The financial and investment benchmarks, including forecasted internal rate of returns (IRR), total return, distribution yields, multiples, and investment holding period returns, displayed on Avistone Communications are projections, subject to change and should not be considered as actual investment outcomes or guarantees of future results. These benchmarks always come with inherent risks, such as market volatility, operational uncertainties, and limited liquidity. Additionally, financial metrics and calculations within Avistone Communications have not undergone independent verification or audit and may differ from actual financial metrics for any investment. The investment data provided is sourced from entities believed to be reliable, but no assertions or warranties are made regarding its accuracy or comprehensiveness, and Avistone assumes no responsibility for any inaccuracies.
Avistone’s historical track record in the industrial sector showing past performance is no guarantee of future results. The performance of Avistone’s prior industrial projects have not been audited by any third party. Not all investors received the same returns due primarily to investments in different property offerings. Full-Cycle Track Record average metrics are based on weighted averages that treat investment dollars equally and are calculated after summing the results of all Avistone full-cycle industrial investments, weighted by each investment's respective capitalization amount for each Full Cycle Investment.
Materials or data emanating from third-party media external to this domain or Avistone Communications may address or refer to Avistone or correspond to information contained herein, however, Avistone does not extend endorsement or accountability for such content. Hyperlinks to external sites or reproduction of content from third-party sources do not denote an endorsement or approval by Avistone of the content thus linked or reproduced.