The Fund invests in companies of all sizes, including small and medium sized companies whose securities may be thinly traded and more difficult to sell during market downturns. Near term, we are mindful that expense headwinds and slower top-line growth are likely to weigh on growth in 2023. We expect Brookfield Infrastructures earnings (funds from operations) to grow by more than 10%, yet its shares are valued at only 10.8 times earnings. Though we are cognizant of the reasons to be cautious about the outlook for certain segments of commercial real estate, our preliminary sense is: Though we do not have a crystal ball into the macroeconomic, banking, and commercial real estate outlook, we anticipate: We expect a reduction in lending - in part due to the possibility of some banks hoarding deposits, a higher bar for incremental capital outlays, increased scrutiny of existing loan books, tighter bank regulations, and lower commercial real estate values - but we believe the likelihood of a widespread credit crunch is low. And when the application is submitted, and there is nothing more to be done, the best possible thing to do is to continue to uphold your academicperformance and to enjoy this fleeting and bright thing we call life. Therefore, I've had to begin to think very deeply and specifically about the kind of education I want to pursue, although I know it will most likely be in a STEM field. In our opinion, forecasts of widespread distress in commercial real estate are unduly alarming, sensationalized, and unlikely to materialize. We believe the Fund - with the demonstrated merits of our actively managed REIT and income-oriented investment approach - is a compelling real estate mutual fund choice. 2014 - ADVS 1110 - MID-TERM REVIEW MATERIALS - FALL 2014 -REV (2) 70 pages. At this stage, we believe the near-term and long-term prospects for real estate in the public markets are compelling. The Fund invests in debt securities which are affected by changes in prevailing interest rates and the perceived credit quality of the issuer. For these reasons, we remain positive on the outlook for Baron Real Estate Income Fund. The company has a four-year supply of land that it purchased prior to the large increase in home prices during COVID-19 - so management believes impairment risk is minimal and book value is secure. While the company is enjoying strong bookings from its smaller enterprise customers, a much-improved pricing environment, and limited new supply in key markets, it was unable to convert its attractive top-line growth to cash-flow per share growth given higher interest rates, foreign exchange headwinds, and financings. New construction activity has been and is expected to remain low. Those students will be joined by the 378 frosh who elected to take a gap year for the 2020-21 academic year, meaning that the Class of 2025 is expected to be around 400 students larger than usual. In the last few years, a large portion of commercial real estate was financed with historically low interest rates, which contributed to a rise in commercial real estate property values. Transcript, As they begin putting together college applications, high school seniors around the world will encounter unforeseen issues that can provoke concern and anxiety. Brookfields financial and operating capabilities are, at times, the tie breaker that results in the company being chosen to participate in complex transactions across multiple geographies that require a heavy operating component. Current performance may be lower or higher than the performance data quoted. Brookfield is well positioned to increase its market share of the growing pool of alternative assets. Christian worship event Rekindle brings together local and international attendees, Lupe Fiasco named Saybrook Associate Fellow, 202 York Street, New Haven, CT 06511 | (203) 432-2400, Yale accepted 4.62 percent of 46,905 applicants. The aggregate buying potential of $1.3 trillion is more than 85% of the enterprise value of all publicly traded U.S. REITs! Admissions officer Reed joins Hannah and Mark to answer questions and address topics that listeners have sent to the Inside the Yale Admissions Office email account. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. Generally, from what I know, they send out about 120 every year to students that they want a better chance at getting to attend Yale, knowing those same students will likely have other Ivy League options. Realized my initial answer was not the most helpful. They share insights into the offices new initial review process, which helps officers invest more time in the files that will get a full hearing in the admissions committee, and they detail the notes and ratings officers use when writing application workcards. In our opinion, the issues that weighed on REIT performance during the GFC are not in place today. The students come from all 50 states, plus Washington, D.C., Guam, Puerto Rico, and the U.S. Virgin Islands. CBRE also compared the coming debt-funding gap to that of the GFC. Many public REITs and non-REIT real estate companies now offer compelling return prospects that, in some cases, may include a trifecta combination of growth, dividends, and an improvement in valuation. Last spring, Yale accepted 4.62 percent of 46,905 applicants, and in 2020, 6.4 percent of 35,220 were welcomed to join the class of 2024. Many prestigious schools send "likely letters" to their most coveted students to entice them to enroll. We remain comforted by what we continue to learn from most real estate management teams regarding current business trends and business prospects. The officers share how effective letters can bolster and enhance an application, and they express their gratitude to the educators who write for their students. The majority of real estate distress will be limited to a manageable portion of class B and C office buildings. Im so grateful for this because the information provided by CollegeXpress has also helped me see that there are so many college opportunities, and it always informs me by email. Global sales of electric vehicles hit 10 million in 2022 and are set to reach 14 million this year, according to a report from the International Energy Agency. Stream Likely Letters by YaleUniversity - SoundCloud At its recent price of only $32 per share, Brookfields share price is highly discounted versus managements assessment of the companys intrinsic value of $74 per share! We believe the recent underperformance of REITs and other real estate-related companies may lead to improved absolute and relative performance. The likelihood of a widespread commercial real estate crisis is low. Transcript, Applicants to Yale who have highly-developed artistic talents or experience with advanced STEM research have the option to include supplementary material with their application. Real estate continues to offer diversification benefits. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. Triple Net REITs (3.9%): We remain optimistic about our triple net gaming REIT investments in VICI Properties Inc. (VICI) and Gaming and Leisure Properties, Inc. (GLPI). WebEvery application to Yale includes three letters of recommendation two from classroom teachers and one from a counselor. Latest Yale University topics - College Confidential Forums Single-Family Rental REITs (3.7%): We remain optimistic about the Funds investments in single-family rental REITs Invitation Homes Inc. (INVH) and American Homes 4 Rent (AMH). Our sense is that the companys annual cash flow growth will decelerate from 14% in 2022 to just 3% in 2023 and remain low over the coming years. In addition, we believe a series of headwinds are likely to temper SBAs growth in the next few years including higher debt financing costs with significant upcoming maturities, wireless carrier decommissioning, headwinds from the companys Latin American operations, and perhaps foreign exchange headwinds. Public real estate securities are currently highly discounted relative to private real estate alternatives. Welltower is well-positioned to benefit from cyclical and secular growth over the coming years. The Morningstar Ratings are for the Institutional Share Class only; other classes may have different performance characteristics. Manufactured Housing REITs (2.0%): We remain bullish regarding the prospects for our investments in manufactured housing REITs Sun Communities, Inc. (SUI) and Equity Lifestyle Properties, Inc. (ELS). Is this happening to you frequently? Delinquency rates remain well below historical levels for most commercial real estate. However, there is now a much stronger feeling of acute determination to absolutely and fully utilize this opportunity I've been given., The likely letter often functions as a marketing tool and a way for Ivy Leagues and similar institutions to compete with one another for what they believe are the best applicantshowever subjectively that best may be defined. In our judgment, characteristics of a best-in-class real estate company are: Our view is that special best-in-class real estate companies should generate superior returns over the long term. The podcast gives firsthand accounts of how officers read applications, make decisions within the Admissions Committee, and collaborate with other offices and resource centers. We believe the favorable arbitrage between public and private real estate valuations bodes well for the return prospects of public real estate companies in the next few years. For example, industrial real estate occupancy is currently 96%, on average, versus 88% in 2009. Miranda told The Daily in January. We believe several of our recent purchases are on-sale gifts that we expect will contribute to strong long-term real estate returns. VICI Properties Inc. is a triple net REIT that owns a large and high-quality portfolio of market-leading gaming, hospitality, and entertainment properties. Admissions officer Chandler joins Hannah and Mark to preview the additions and discuss the offices goals for the new questions. The company, with its well-capitalized balance sheet and deep and experienced management team, is well-positioned to capitalize on several years of infrastructure investment opportunities around the world, which should enhance future growth. Transcript, As part of the whole-person review process, the Yale Admissions Committee consider each applicants engagement with extracurricular activities pursuits and commitments outside of typical academic work. If youre wondering whether a particular institution offers likely letters, a Google search may suffice. Transcript, Ten months into the COVID-19 pandemic, Hannah and Mark give an update on the admissions offices rapid changes to work that would normally include thousands of in-person meetings and travel around the world. Following a decline in its shares of 33% in 2022, we believe Prologis current implied capitalization rate of 4.2% is compelling. We reduced our position towards the end of the first quarter given the evolving headwinds but remain optimistic that the company can capitalize on the compelling secular growth opportunities ahead. Transcript, Part 1 of 3. Unlike the period during the GFC, the banking system today is well-capitalized and has ample liquidity. We believe that real estate merger and acquisition activity will re-emerge when the debt markets stabilize, and economic prospects improve. I stuttered and did not produce coherent sentences for about a minute before they asked if they should call back later, Trustin said. Hannah and Mark discuss how admissions officers try to gauge what an applicant would add to and take from the Yale experience. college decisions Equinix is a REIT and the premier global operator of network-dense, carrier-neutral colocation data centers. Admissions officer Alfie joins to discuss how officers and committee members work together to finalize the first-year class. Alexandria is a best-in-class company with several competitive advantages including an irreplaceable life science office portfolio concentrated in the premier life science markets in the U.S. and deep customer relationships. Its also a way to boost yield.. likely admittance Baron Real Estate Income Fund increased 4.73% (Institutional Shares) in the first quarter of 2023, outperforming the MSCI US REIT Index (the REIT Index), which increased 2.39%. The company maintains a strong and liquid balance sheet. Hannah and Mark discuss what officers look for when reviewing responses to Yale-specific questions. Multi-Family REITs (9.1%): In the first quarter of 2023, we increased our exposure to apartment REITs Equity Residential (EQR) and AvalonBay Communities, Inc. (AVB). As of February 2023, commercial real estate delinquency rates remained at only 3.12%, which compares favorably to the 10.32% delinquency rate during the COVID pandemic and the 10.34% delinquency rate during the GFC. Early action and early decision applicants enjoy higher acceptance rates Early Word on Brown Class of 2026 Early Decision The companys high leverage, approximately 6.9 times net debt to cash flow, will limit the companys ability for share repurchases and external growth opportunities. We continue to believe last years stock market recalibration has wiped away much of the froth in valuations and has set the stage for a favorable multi-year outlook for public real estate companies and the Fund. Historically, certain real estate businesses have had the ability to raise prices to provide inflation protection. For our more complete thoughts on the prospects for real estate, please refer to The prospects for REITs in the public markets later in this letter. We would note, however, that Prologis remains the largest position in the Fund, and we remain optimistic about the companys prospects. Likely letters give colleges a A debt-funding gap may occur when a borrower seeks to refinance real estate debt at a time when the expected value of a real estate property has declined and/or less debt is provided by the lender (lower loan-to-value). We send these likely letters only to those It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed products monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. For each, they discus why the myth is inaccurate while revealing the small kernel of truth at its core. Today, real estate is in a good place relative to prior economic slowdowns and recessions. There was a nice piece on Yale likely letters in The Yale Daily News yesterday. To help applicants understand which choices are more or less likely to help their candidacies, Hannah and Mark invite their colleague John to join in a game of up-voting and down-voting common application choices. While most universities don't announce that they send likely letters, all Ivy League schools, including Harvard, Princeton, Yale, and University of Pennsylvania, send likely letters. An acceptance through a likely letter, though without the formality of an official acceptance letter, can function as a stress-reliever after the pressure of submitting college applications. Long term, most data center REITs are poised to benefit from the secular growth tailwinds such as outsourcing of information technology, increased cloud computing adoption, and growth in U.S. mobile data and internet traffic. Institutional allocations to alternative investment assets such as real estate, infrastructure, and private equity, are expected to continue to grow in the years ahead because of expectations that alternatives will continue to generate attractive relative and absolute returns with less volatility than many other investment options. Real estate property owners in supply-constrained areas are often able to pass along higher operating costs by raising rents in periods of rising inflation. In this mini-episode, the offices director of recruitment explains why some regular decision applicants receive a likely letter and addresses some common misconceptions. Welltower is employing a proprietary data analytics platform and has recruited senior executives from the multi-family industry to drive operating margins and occupancy beyond historical industry standards. The only time REITs did not bounce back in the year following a down year was in the two-year period of the GFC when REITs declined in both 2007 and 2008. Tags: Despite that, the admissions committee at Yale still admitted a typical number of students during its early and regular decision processes for the 2020-21 application cycle. Interestingly, this decision led to the 2025 graduating class to become the largest class in Yale history since just after the second world war. Fund investments in REIT categories as of March 31, 2023. Transcript, Admissions officer Ashleigh joins Hannah and Mark to talk about likely letters a recruiting tool the admissions office uses with a small group of applicants each year. All deadlines are 11:59 PM (Mountain Time). We prioritize real estate companies that have this two-pronged return profile because they have the potential to generate better returns. Throughout the whirlwind month, admissions officers, current students, faculty, and campus partners make countless connections with newly admitted students and their families. This embedded put scenario should limit downside for public valuations and stock prices. The portfolio manager defines Best-in-class as well-managed, competitively advantaged, faster growing companies with higher margins and returns on invested capital and lower leverage that are leaders in their respective markets. In the most recent quarter, we exited our investment in SBA Communications Corp. (SBAC), a global wireless cell tower REIT that owns a portfolio of wireless tower sites heavily concentrated in the U.S. We had been shareholders of SBA, in part due to our high respect for CEO Jeff Stoops who we have known for well over a decade. Need help? Admissions officer Deb joins Hannah and Mark to respond to listener inquiries about the honors section of the application, twins, home-schooled applicants, reapplying, and balancing priorities in senior year. We remain optimistic about the prospects for each company. Hannah and Mark explain the differences among these programs and share insights on how the Yale admissions office approaches its single-choice early action program. We expect both companies to benefit from homeownership affordability challenges and are positioned to provide partial inflation protection due to leases that can be reset at higher rents, in some cases, annually. Hannah and Mark take listeners inside a real admissions committee discussion and describe how the members reach consensus and make decisions. Transcript, The highly selective admissions process can be daunting and feel discouraging, especially for students who fear that some aspect of their personal circumstances will put them at a disadvantage. In our opinion, a further pullback in credit is likely to result in a similar outcomes to those that the Feds interest rate increases were intended to achieve that is, slower economic growth, more job losses, and lower inflation. As shares have become more attractively valued with growth headwinds better understood and a potential monetization event of its India business, we have been looking opportunistically to re-acquire shares given the compelling absolute and relative multi-year growth prospects that are highly visible and supported by long-term customer contracts. As of 3/31/2023, the Morningstar Real Estate Category consisted of 257, 233, and 209 share classes for the 1-, 3-, and 5-year periods. In other words, CollegeXpress has been like a guide for me as a future college student. Heres what a Yale likely letter looks like! However, Trustin cautions against regarding these letters too seriously or being disappointed if the letter doesnt arrive. Admissions officer Corinne also joins to share how Yale admissions staff review QuestBridge applications. Equinix is currently valued at only 20.5 times 2024 estimated cash flow versus private market data center transactions that have occurred at 25 to 30 times cash flow. We also believe there is a wall of capital from private equity companies that is interested in acquiring self-storage real estate should valuations in the public market become attractive relative to other opportunities. Quality matters much more to the Admissions Committee than quantity.. Though the first three months of 2023 have been full of negative developments - bank failures, the likelihood of a further slowdown in bank lending, and the possibility of a sooner-than-expected economic recession - and there are valid reasons for being cautious about the 2023 outlook, our views regarding the prospects for the stock market, REITs and non-REIT real estate securities, and the Fund remain the same. Performance listed in the above table is net of annual operating expenses. At the right level for you. We believe several best-in-class public REITs and non-REIT real estate-related companies are on sale relative to history and relative to private real estate alternatives. Inside the Yale Admissions Office Podcast I didnt even know likely letters [or] calls were a thing that colleges did, she said. We continue to believe that 2023 may ultimately emerge as a mirror image of 2022 in that many of the headwinds of 2022 reverse course (e.g., multi-decade high inflation and rising interest rates) and become tailwinds in 2023, thereby contributing to solid full-year returns.
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