Market Commentary

2015

August 1, 2015

JCR Sees the Market Uncertain Before The Wall Street Journal

Below are the key issues pointed out by the Wall Street Journal and outline of when these were first discussed in JCR’s Market Letters.

  • Stock market slow down: The article points out issues that could slow down the stock market.  JCR has already outlined these issues in prior market letters.
  • Uncertain markets: JCR has been calling the investment market uncertain for the past year.
    • Greek bond defaults: JCR warned of this November 2014.
    • Increase in interest rates: (“Federal Reserve stops easy money policies”) JCR has been warning about the effects of this for the last two years.
    • Strong dollar hurting corporate profits: JCR discussed this in its market letter dated November 2014.
    • Oil price decline causing dislocations: JCR discussed this in market letter dated November 2014.
  • Bumpy ride: The Journal describes the market as a bumpy ride.  JCR made the bumpy ride statement in its November 2014 market letter.

JCR has been out front on its view of the uncertain market and we are glad to see the Wall Street Journal catching up.

Review of JCR’s Economic Outlook:

U.S. economy: Volatile.  Periods of growth and contraction.  Mild to medium recession likely to occur over Fund III investment period.

Real estate fundamentals: No growth in fundamentals.  Overall values may decline due to rising interest rates and cap rates.  Specific property types more susceptible to value decline, primarily new construction and Class A multi-family.

Interest rates: JCR is assuming a 100-300 basis point increase over its investment period.

The JCR strategy is anticipating all of the factors outlined in the Wall Street Journal article.  In fact, we are ready for the volatility of these markets as JCR is a distressed investor at heart, and is actually hoping and anticipating a market correction/dislocation.

 

Important Information: This summary is not an offer to sell any security and intended for our institutional contacts. There is risk of loss with any investment and past performance is not a guarantee of future results. One cannot use graphs or charts alone in order to make an investment decision. Forward-looking statements, targets or opinions stated in this letter are opinions and subject to change. As a private real estate fund, investments are illiquid and investors cannot readily withdraw their investment in the funds. Portfolio performance can also be affected by general market conditions, interest rates, availability of credit and other economic conditions that affect real estate markets. Net IRR accounts for JCR’s best estimate of fund fees and expenses. We report only Gross IRR or Target Gross IRR at the investment level.