Happy New Year from Ashford Capital
Investors and Colleagues,
It’s time to turn the page on the calendar and step into a brand new year. Each year at this time, I like to take a few moments to reflect on our business over the past year – to take stock of the current situation – and to set goals for the coming year.
On a day-by-day basis, we are constantly busy managing our portfolio of properties, negotiating with the banks and FDIC for new purchases, and communicating with builders and developers. It’s a busy job, which is why it is so important to step back and take a look at the big picture from time to time.
2011 In Review
The past year was a tremendous period for us on the acquisition side of our business. For the majority of the year, financial institutions and the FDIC were motivated sellers with balance sheets full of distressed assets and an acute need for capital.
In this type of environment, buyers with capital are at a huge advantage. Our team put together three major acquisitions – buying residential developments for literally pennies on the dollar.
Each of these transactions gave us ownership of a block of residential lots with infrastructure (roads, utilities, zoning) already in place – making these prime lots for builders to purchase in the near future.
Drawing on our expertise in the Atlanta area, we passed up a number of opportunities that were in areas less likely to experience economic growth, and focused exclusively on metro-Atlanta communities that will be high-demand areas. This is the advantage of working exclusively in Atlanta, giving us unsurpassed expertise in this specific market.
While the majority of our acquisitions in 2011 are already committed to existing Ashford investors, there are still a limited number of slots available. New investors can purchase a direct interest in a specific development – giving them a chance to profit when we sell these developments to builders in the near future.
Speaking of the future – let’s take a look at how 2012 is shaping up…
Looking Ahead to Opportunities in 2012
This coming year we are looking at an exceptional environment on both the acquisition as well as the distribution side of the business. Financial institutions are still facing challenges in terms of their capital structure.
New regulations and pending economic risks make it necessary for banks to raise “tier 1” capital – meaning cash and US treasuries. The only way many regional as well as national lenders can meet these requirements will be to liquidate their real estate holdings. Remember, they hold many residential developments after foreclosing on bad loans.
Our team is currently negotiating with these institutions to secure the best possible pricing for our investors. We’re also in the early stages of research on some other properties that are just now coming to market.
On the distribution side, the picture is even better! New data shows that builders are benefitting from a rebound in the housing market – and with spring approaching, they need to have inventory to sell to new home buyers.
For the month of November, new home sales were 7.3% higher than the previous month – hitting the highest level in 19 months!
You’ll remember from my last letter that the number of new permits issued is also rising. This indicates that the environment should continue to improve as new homes are built and builders see their inventory moving.
Bottom line: We’re past the point of seeing a few individual data points that show “potential” improvement. The data is confirming a truly positive trend in the housing market – which means our current investments should perform very well in 2012!
Setting Financial Goals
The New Year offers a great time to take inventory of the professional side of our business, but our most important focus at Ashford Capital is much more personal. Our ambitions always revolve around YOU, our investors who trust us to provide strong returns with their capital.
As we enter 2012, I want to ask you to take a moment to look carefully at your own investment plan. Are you excited about your opportunities in the coming year? Do you have confidence that you will meet your short-term AND long-term financial goals? Are your assets working as hard for you as they should be?
If you’re unsure about how competitive your rates of return are – or if you are looking for diversification and strong returns in the coming year, I would love to have a chat with you. You worked hard to build your investment account, and now your money should be working just as hard for you. Whether your funds are in a retirement account or a traditional investment account, Ashford Capital can help you protect and grow your wealth.
Wishing you a happy New Year,
Matt
Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners