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David Moghavem (00:47)
All right, hello everyone. We have another episode with the one and only Ryan Moody from Orlando. Ryan, how you doing?
Ryan Moody (00:56)
Doing great. How are you doing today?
David Moghavem (00:58)
Great, thanks for hopping on. I'm gonna give a quick intro. Ryan Moody, he's Executive Managing Director with Newmark, based in Orlando office. In this role, he focuses on multifamily brokerage, investment sales, and land sales, primarily in the greater Orlando, central, west, and north Florida markets. Ryan focuses on the value-add product type across these regions.
Ryan has been a Orlando resident for 35 years. Wow. Nice. So, and I'll also add Ryan is amazing to work with closed a few deals with him in Orlando. and he's got a lot to say about the market. So Ryan, thanks again. let's jump right into it. So
Ryan Moody (01:44)
Yeah, absolutely.
Glad to thank you for having the opportunity to join with you today. Looking forward to discuss the Orlando market. So yeah, go for it.
David Moghavem (01:52)
Awesome.
Awesome. So I think first question, we'll just get straight to it. Why Orlando? Give us the 30,000 foot overview and elaborate just the high level pitch on why should investors be bullish on Orlando?
Ryan Moody (02:09)
Yeah, I think, you know, Orlando has changed significantly over the past couple of decades. I mean, when Orlando was typically known for, you know, Disney World and the parks, I think that has changed substantially over the past couple of years. You know, obviously we have diverse employment set now with Lake Nona, South Orlando, bringing in a lot of the medical space. Obviously UCF, one of the largest
universities in the entire country, minus our football team being very poor this year. It just seems that if you draw a big circle over Orlando, you can look at either North Orlando, South Orlando, Central Orlando, or East Orlando, and there's going to be great office markets and employment.
David Moghavem (02:45)
Hehe.
Ryan Moody (02:59)
Yeah, so it's the employment sector, you know, typically, you know, it's been highly about 20, 25 % of hospitality. Now we're seeing the deployment sector, employment sector more like the professional and business services at 19 % education and health services pushing like 12 to 13%. So the employment sector is completely different than what it was 20 years ago when Orlando was known for Disney World.
So I think that's one of the major drivers for central Florida. In addition, Orlando has been one of the top transactional markets over the past several years. So we have outperformed on the number of transactions really throughout the entire country. So there's a lot of opportunity for growth. It depends if you're a buy and hold or a buy in selling a few years, it gives you the opportunity and the flexibility to do.
David Moghavem (03:28)
Yeah.
Ryan Moody (03:58)
to both.
David Moghavem (03:59)
Nice. I mean, I would add to that when we're looking and we opened our office in Miami about three years ago, we were looking at different markets for in-migration patterns and we were shocked to see, shocked at the time, but not shocked now, that Orlando has one of the strongest in-migrations of the Florida, major Florida MSAs, bigger than Miami, more than Tampa. And that's what keeps us.
pretty bullish on it as well.
Ryan Moody (04:31)
Yeah, absolutely.
David Moghavem (04:34)
yeah, go on. What were you gonna say?
Ryan Moody (04:35)
No, was saying kind of side note. Yeah, I mean, for living here for 35 years, you know, Orlando used to be, I-4 used to be very, you can get from one place to another in 20 minutes, and now it's one place to another in 45 minutes. So obviously it's great to see the growth, but traffic is, I feel like where you guys used to be from, LA now.
David Moghavem (04:57)
Yeah, yeah, LA traffic now is everywhere, it seems like, but definitely Orlando where it's seen a lot of growth. So Ryan, mean, talk us through, we have the map up right now, talk us through the different pockets when you say North Orlando, East, West, where are some of like the borders, where are some of the locational areas that lay the land of how to understand Orlando when you're looking at a map?
Ryan Moody (05:00)
Yeah, for sure.
Yeah.
Yeah, certainly. So we'll start at the top. So North Orlando, which is your Seminole County sub markets. If you want to kind of dive into like the Lake Mary, the Sanford's, the out some out Springs. So Seminole County has typically been known for the best grade schools in all of Orlando. So fun fact, Lake Mary was voted the number one place to live in the entire country for many years.
quite some time ago, but you've got nine million square feet of office space in Lake Mary, and a lot of that is Class A office space. So you've got a great office park in Lake Mary. Also in Maitland, which is hovering your Seminole and Orange County sub-market, you've got several million square feet of office space there as well. So you'll find typically Seminole County is heavy residential single-family homes. So there's not a ton of apartment supply in those markets.
But I mean, really, if you're a family and you're looking to be in the suburbs, a lot of families are looking to be in that Seminole County sub market. So you're Lake Mary, you're Altamont Springs, you're Ovitos, you're Winter Springs, Sanford as well. So in and around that entire area, just great schools, great employment. And obviously, you're still close to the central Orlando being 15, 20 minutes away on I-4.
David Moghavem (06:47)
And you're
saying most of these residents are kind of working in that, that suburban office park you mentioned with the 9 million square feet of space that they're not really commuting down or, or is it a little bit of both?
Ryan Moody (06:57)
Yeah, correct.
It's a little bit of ill for sure. So
I mean, the traffic flow into the city every single morning from Seminole County is going to be heavy to get into the core of downtown Orlando. But you have Verizon as one of the headquarters in Lake Mary and Sanford. So you've got a lot of bigger names for the office park in between the Lake Mary and Sanford region.
You have really good hospitals in and around Lake Mary and Sanford as well. So you've got a big hospital in downtown Sanford. You've got another big hospital in Lake Mary and Altamont and Longwood. So you've got really good employment in and around all of Central, all of Seminole County.
David Moghavem (07:52)
Definitely. Medical is definitely one of the drivers that we've been seeing on some of the properties we've bought in Orlando for a demographic of where people are working. So guess moving further south, talk to us a little bit about, first of all, downtown Orlando, the CBD, and then maybe some of the other markets further south as well.
Ryan Moody (08:16)
Yeah,
yeah, for sure. So obviously if you're coming down the Orlando or the I-4 corridor from Seminole County heading south, you obviously get into downtown Orlando. Downtown Orlando has 13 million square feet of majority of Class A, Class B office space. Orlando on the west side of I-4 has now built out the newer
KIA Center, which is where the Orlando Magic played. They converted the old Orlando Magic Stadium to now what is known as the UCF in downtown. So UCF has built a campus in downtown Orlando, which now has several thousand square feet of new office space and student housing and multifamily deals coming online. So you're seeing EA Sports is building a large office.
building there on the west side of I-4. So typically the west side of I-4 in downtown Orlando was a tougher area, but to see the information that they've done over the past couple years with now UCF being there, bringing on the Kia Center, they're actually about to break ground on a new entertainment district in the west side of I-4, which is right next to the Kia Center where the Orlando Magic play.
David Moghavem (09:22)
Like over here.
Ryan Moody (09:41)
We also have a newer soccer team that was formed within the past 10 years. They built out a brand new soccer stadium on the west side of I-4 as well. So there's been a ton of growth on that side with UCF and entertainment. And then on the east side of I-4, which is where the CBD is for downtown Orlando, that's where the majority of your office space is at.
David Moghavem (10:05)
Mm-hmm. And are you seeing a lot of people living in the urban core or are you seeing more people still being in suburban? What's like the dynamic there of live, work, play environment in the urban core versus suburban?
Ryan Moody (10:22)
Yeah, a hundred
percent. actually live in downtown Orlando. I've been there for about 15 years now. So yeah, I mean, there's, there's been a ton of new towers built over the past, you know, probably 10 years with 55 West and, the view and modern. several office, sorry, multifamily buildings, a few condo buildings, but we typically have seen really good lease up rates in downtown Orlando.
So, occupancy for downtown, the core CBD is very high. your lease rents and market rents for downtown Orlando is probably the highest throughout the entire Orlando MSA. So, I mean, you know, your two bedrooms are pushing in and around like 3000 a unit, which is very healthy for a two bedroom in Orlando, but no, you know, I think it's a different profile of a tenant in your downtown compared to your suburban areas and suburban core areas.
But yeah, downtown Orlando is seeing significant rent increases and occupancy is very strong in that market.
David Moghavem (11:27)
Nice, and then I guess moving down towards South Orlando, I guess, can you break down some of these markets further south? I know we, you and I earlier this year worked on a deal and closed on a deal in Conway, which I love, would love for you to give the pitch on that as well. But I guess break down South Orlando and some of the growth going on there.
Ryan Moody (11:53)
Yeah, for sure. So as you move down, yeah, we'll stop in the Conway Submarket where Bridgewater was, which we closed earlier this year, as you mentioned. So Conway Submarket, it's a very strong B plus sub market. You you're probably 10 minutes from downtown Orlando. You're 10 minutes from three major hospitals in that area. You're 10 to 12 minutes from the International Airport. So a very central location. It's very infield.
There's nothing really that can be built in and around that area unless you get out towards the airport.
So great sub market. I think that area has really transformed over the past couple of years where it was more probably a B minus sub market. But I think all of the majority of the apartment communities in and around that area has been bought by groups like yourself, receive significant renovations. And I think some of, you know, the, so the apartment communities have gotten much nicer in and around that area. And I think a lot of the retail has as well. So there's a little sub market in Conway called the hour glass district.
which is a few years old now, but it has new coffee shops and breweries and kind of trendier restaurants in and around that area. So I think it's a combination of new ownership coming in and renovating the retail and the residential. And I think people realize that you're so close to the CBD of downtown Orlando that it's just overall just a great location.
David Moghavem (13:25)
Yeah, we kept doing lunch meetings in this area. It's awesome. mean, really incredible how that Curry Ford Road has completely transformed.
Ryan Moody (13:29)
Yeah.
Yeah, 100%. And as you get further south, mean, next year Universal is opening their fourth theme park, Epic Universal. So that's going to be a huge development. There's going to be 15,000 permanent jobs coming online next year for that area. So obviously, another good employment driver for that kind of South Orlando hospitality.
centered region and then as you continue to move south you're going to run into the Lake Nona sub-market which is UCS Medical Campus which has seen a ton of growth over the past several years with brand new office parks, brand new medical, brand new multifamily, brand new entertainment and restaurants and retail. So that's obviously a new
employment and driver for the Orlando market that has seen you. You'll see very high wages within and around that area, which is great as well.
David Moghavem (14:41)
Nice, and I guess one of the things to put a little bit of numbers and yields to some of these locations, how are you BOVing some of these value add deals versus core core plus deals? And are they pricing in different ranges based on the various sub markets that we were talking about?
Ryan Moody (14:49)
Yeah.
I think majority of Orlando will be consistent for your cap rates, whether it's the type of an asset it is or the asset class it is. There's a couple...
different areas within central Florida that might see some higher yields like your pine hill sub markets your west orlando but really for value add i mean for for 70s product now we're we're being bov in place cap rates adjusted for taxes and re and insurance at like a very high five to maybe a six i think your 80s product is seeing anywhere from like a five and a half to a five seven five and then obviously it tailors down when you
get
into your core to core plus or merchant bill deals when you're really like a sub five on year one and really just depends on the amount of upside there is for that deal as well.
David Moghavem (16:01)
Yep. And, you know, one of the sub markets that, that we're seeing a lot of development going on is, is around the I-4 corridor and then all the way down to Kissimmee. Maybe talk a little bit about that, the growth, the construction starts and some of the market dynamics going on there.
Ryan Moody (16:22)
So we had roughly about 12,000 units delivered in 2023. And our peak was this year about just over 13,000 units. So next year, it's actually dropping off to 8,000 units. And then from there, it's gonna fall off even more in 2026 and then in there beyond. So we've seen a ton of supply in and around the very South Orlando and the Kissimmee markets.
which we're seeing concessions throughout those sub markets. Rents have flattened a little bit, but I think really what people are excited about is seeing that supply drop off into next year. So this year, rent growth for really the Orlando MSA was flat.
where they're now looking at 3 % rent growth for Orlando. And then they're actually have us targeted anywhere from four to 6 % rent growth in 2026 and 2027. And that's all really due to the supply and demand as supply continues to fall off over the next couple of years. Obviously the demand for Orlando, the population growth is not slowing down. So I think people are excited about that metric. I think it was very worrisome throughout this year, 2024, but I think that's changing into next year.
David Moghavem (17:38)
Yeah, I would agree with that. mean, one of the things that was interesting about the market dynamics in Kissimmee is there was a ton of supply and it seemed like it was even, it didn't really, it kept going for longer than some other markets, but I think the momentum of it was really due to the demand and the fact that it was all being absorbed so well. And when you're seeing these absorption numbers continue it.
allows for developers to justify building. And now you're starting, as you said, starting to see that supply fall off a cliff a bit more. And I think with the demand continuing and there's no signs of it really slowing down, these could be pretty good buys down the line for sure.
Ryan Moody (18:27)
Right. Yeah. Agreed.
We've got 155,000 new residents that are expected from now to 2027. and I think that's going to continue. So that, that entire.
South Orlando, Kissimmee market. I you there was, there were some cheaper land options down there too. So obviously that was helpful, but I think, it just seems like the corridor of I-4 is connecting from Orlando and Tampa. And that's continuing to show which is South Orlando, which is Kissimmee, which is continuing to show why there's a ton of supply. But I definitely do think, as you mentioned, it seems like the absorption over the past couple of years and why the developer saw was a very encouraging stat. And that's, that's why you saw some of that supply there as well.
David Moghavem (19:09)
Yeah. I mean, you hear all the time people talk about the in-migration patterns into Florida and how Florida has completely transformed as a state. But some people might be thinking that's Miami or at least someone like me who's an urban guy from LA now living in Miami. You hear Miami lot of, but Orlando is really where most of the in-migration has, has drawn to and even other unaffordable parts of Florida going into Orlando.
for that affordability and quality of life, which is incredible. I guess talk a little bit about, I guess, the main concern that a lot of investors feel when they think of Florida is insurance. One of the things why I like Orlando, and I'm sure you agree, is it's central Florida. And so you don't get as much exposure to some of the coastal markets in Florida. But in your experience from all the deals you guys have been doing,
Talk a little bit about how buyers and sellers have been navigating with insurance.
Ryan Moody (20:14)
Yeah, I mean, for me personally, I think insurance was a non-issue over the past couple years in the terms of...
We've seen this happen in Florida time and time again over the past 20 years. When a hurricane or a storm hits us, we'll see insurance spike and then it continues to fall off within the next two to three years. if we were selling a deal and we were underwriting and adjusting that cap rate and pricing to what we were doing last year and we're from $1,500 to north of $2,000 a unit, all that was was value creation for the buyer. Obviously, it your returns
in the first year or two, but as those insurance quotes and premiums are falling, as we can see into this year, most likely it's going to continue into next year. mean, there was a ton of upside for the buyers. I mean, I still think that storyline is there because we're still adjusting for like the low teen numbers for some of the value add deals, 12 to call it 1,400 a unit. And I think by next year, we're going to see that continue to fall. So it's just
It's an opportunity for the buyer to just hold through that period and have a ton of growth and appreciation by just holding the deal.
David Moghavem (21:33)
Yeah, definitely. mean, the way I see insurance is similar to how investors look at real estate. It's a function of capital flows, right? think we're at a time where there's limited capital flowing into the real estate market and there's also limited capital flow going into the insurance markets. And what you're seeing from there is now insurance premiums starting to go high. Yes, from risk of some
catastrophic disasters that may or may not happen, more importantly, it's just less liquidity in the insurance market. I think when that liquidity comes back into the market and insurers start coming back into the market, we're gonna see, just as you said, insurance pricing stabilize and normalize. And so if you can make a deal make sense today with the insurance today, I think you're gonna get paid for it down the line.
Ryan Moody (22:28)
Yeah, 100%. And I think we've seen some of the buyer pool in the past, you know, since the insurance market has...
You know, it's been about 18 months has really increased in doubled in some occasions. I think we've seen some of these buyers get on the sidelines. And I think that's the exact opposite of what you should be doing. If you're an opportunistic buyer looking for value, because all those guys that have bought in the past two years, yes, rates interest rates have been high, but the value creation that you're going to see by insurance, if you bought a 2000, and then it's going to drop to 800 bucks in two years. mean, that's tremendous amount of value, 1200 bucks a unit over the, over
over a two and a three to 400 unit deal. They're gonna be very rewarded, for sure.
David Moghavem (23:13)
Yeah,
and I guess like talking in the same tone, one of the biggest sentiments that we've been hearing this year is flight to quality. And I know you focus a lot on the value add space and you've seen how yields have moved in the value add space. One of the pitches that I kind of come back to at that is, yes, flight to quality is very important in regards to risk return profiles of assets.
And you're seeing a lot of the core core plus stuff in Orlando still trading like in the fives and even sub five as what you said. But if you're seeing value add deals, you know, even a hundred bips or some or higher, it starts to get really interesting. I guess talk a little bit about the value add space in Orlando and how this looks.
Maybe it's not the flights of quality strategy, but there's still opportunity in the value add space.
Ryan Moody (24:11)
Yeah, a hundred percent. I I think a lot of the issues for Florida on the older value add space was the insurance market. you it was, we heard throughout the year, which has kind of fallen off now, but it was insurers are looking for 1995 or newer, and then it was like 85 or newer. So I think as we see cap rates continue to compress or start to compress wherever we're at the market today, I think
you'll have some of those 70s and 80s deals at 100, 125 basis points higher than some of your core or, you know.
core plus type assets. And I think people then start looking for yield. Like where's the yield? Where are people not at right now? And buyers are always asking me, it's like, Hey, you know, where should we be looking in Orlando? Where should, type of assets we should be looking at? That's why we, and you talk so hard on Bridgewater. And that's why I pitch you guys are like, listen, this is a deal type that people are scared of insurance right now. They're scared of seventies because of the insurance market, but you can see the yield that you guys bought that at. so I think once can cap rate.
it's kind of compressed on the newer stuff. People are going to be looking for that yield and that's when they're going to start chasing the seventies and eighties again. And we've seen it time and time again and I think we'll probably start to see that into next year.
David Moghavem (25:30)
Yeah, there was like, there was a post I came across the other day that was making a case for older products being functionally obsolete. I I completely disagree with that. I just think it's really a blip in time right now where there might be a good buy for something newer because it's below replacement costs and the JVs are off and you're seeing those five caps getting done on the newer stuff. as
Cap rates begin to compress with the JV equity and the REITs starting to come back into the market. These value add deals are going to follow that and as people start to look for yield. if you can buy a deal today that can stand on its own two feet, an older product deal that has positive leverage and has a strong yield and has great bones.
So, know, not every old deal, not every 70s deal is built the same. And Bridgewater is a great example of that that's been well taken care of and ran well and is a great community and people want to live there. In no way is that functionally obsolete. That's a deal that's gonna do really well in the near term and in the long term.
Ryan Moody (26:43)
Yeah, 100 % agree. think there's, you know, a lot of these older deals were built in some very infill locations that are great, like the Conway sub market, which you guys are in. You can't, you can't build new there. And, you know, if a tenant wants to be close to, you know, the trendy coffee shops and restaurants and what have you, then that's, that's where you're going to want to live. And that's where they're going to, that's where they're rent out.
David Moghavem (27:06)
Yeah, exactly. And these, these, these older deals have stood the test of time. And exactly what you said, they've been in neighborhoods that have been developed for generations and generations that have character. And, there's, there's nothing that can really replace that. I know we've touched a lot, in different areas about supply and we talked about, about the, optimism there. What would you say?
Ryan Moody (27:20)
Yeah.
I agree, absolutely.
David Moghavem (27:35)
out of the different markets, does the supply picture look most promising? Where you're a betting man, you're like, I would like to buy a new construction deal in X neighborhood. Where are you seeing the supply getting absorbed the best and you think is a good opportunity to buy?
Ryan Moody (27:55)
Yeah, mean, supply, I if you can find anything in the Seminole County sub markets for newer construction, I think that's definitely the way to go. You know, as we touched on in the beginning of the conversation, yeah, I mean, just families want to be there. There's not as much supply being delivered in Seminole County, but that's just a function of, as we were just mentioning, it's somewhat infill and it's somewhat built out in some of those areas. So yeah, I mean, obviously, you know,
Seminole County for sure, you know, I think out by the college UCF, which obviously will be a little bit more student based. But I think those areas, if you're in and around.
Like Winter Park, Winter Park, your Ovitos, which is in Seminole County. I think those are the markets that you can find. mean, Kissimmee right now, as we've touched on, has some supply issues, but as we've mentioned, yeah, that's going to be fading off into next year.
David Moghavem (28:56)
Yeah, so like the Seminole County deals, I guess, would you say in general, the yields are there today versus what they were during the ZIRP era, the zero interest rate period era?
Ryan Moody (29:09)
Yeah. Yeah. I mean, we were selling deals during that area in the low three, three cap range, you know? and now we're probably on year one, you know, probably sub five, you know, kind of your core core plus type stuff, value out. I still think regardless of where it's at the 70 stuff is still, you know, around a five, seven, five to a six, your eighties at five and a half to a five, seven, five. but your, your newer core stuff,
David Moghavem (29:21)
Mm-hmm.
Ryan Moody (29:36)
Yeah, you can see that the Delta in cap rates there and also, we're not just a sub five on in place, but we're sub five adjusted for that insurance number that we talked about.
David Moghavem (29:45)
Yeah,
that's a very important caveat, right? That it's a tax and insurance adjusted today, insurance today adjusted. And I think you're going to see some upside down the line. Obviously can't underwrite that in no way. But protecting that downside by underwriting insurance today. And one of the things we did is we got a master policy in place to stabilize the insurance figures year over year.
and reduce that volatility. But as you start to see the capital flows come back into the market, not only in real estate, but in insurance, I think you're going to definitely see some strong upside from the insurance expense.
Ryan Moody (30:30)
Yeah, 100 % I agree.
David Moghavem (30:33)
guess one other question. What's the biggest mistake new investors make when they're entering the Orlando market?
Ryan Moody (30:42)
I some of the groups, mean, I'm speaking about the value add here, value add assets. I think some of the groups, come in and they're, they don't, they're not running the assets properly. I think that there's a lot of, you know, seventies to nineties deals that have a ton of upside, but you got to implement the business plan.
David Moghavem (30:48)
Mm-hmm.
Ryan Moody (31:09)
I don't think, you we're not back in 2000 and the end of 2020 or 2021 where we're seeing record number of organic red growth. So I think if you're underwriting a deal and we're presenting a deal and we're showing you the upside, if you guys close and then don't implement, you know, the interior renovations or the exterior renovations, which we've seen happen in the past couple of years, whether it's due to difficult times or not, I think that's, I think that's the mark that's been missed.
also just like being attentive, you know, just being an ownership that's, that's staying in contact with your, your onsite team, whether it's, you know, weekly calls, bi-weekly calls, just on, you know, hands-on management from the upper end and showing that onsite team that you are there and you care about the asset. You know, when you're not, when you're not having calls with them and they feel like,
Maybe the deal is not so important and there'd be, you your onsite team is kind of just running the property as is. I mean, you know, if there's a vacancy issue and you're unaware of it and they're kind of just making decisions on the fly, that might not be the best result for the property. yeah, this, you know, in short, you know, implement the business plan. If you're underwriting two interiors next to your renovations and definitely be hands on with the property.
David Moghavem (32:30)
Yeah, a hundred percent.
think us being vertically integrated is a, is a huge step and a huge benefit for implementing the business plan, being nimble with the business plan too, right? Like recognizing when to tweak the business plan accordingly based on anything that may come unexpected. And had just having a hands-on approach for everything. It's super important, super important.
Ryan Moody (32:58)
Very important.
Yeah, very hands on.
David Moghavem (33:01)
yeah, I think on our, on our deals in Orlando, we've had a business plan. We've executed on it, but then we've seen things that were curve balls to us that were like, okay, let's test the ROI on this. Let's test, if it makes sense to do this or not. And I think just being nimble, especially in a volatile market that we're in today, it's very important. Also being on top of delinquency. think that's like.
one of the number one thing I think in Orlando you see a little bit less of that than in some other Southeast markets, but you still see it. think maybe more a lot of late payers. So just being on top of people paying and working with the tenants and having that personal touch with tenants and working with them instead of just, you know, pushing, pushing pencils and trying to do things behind a desk.
Ryan Moody (33:57)
Yeah, 100 % Yeah, it seems like the deals that are are struggling the most is from On the ownership side that are just not paying attention to the property or they don't know what's going on with with with performance so yeah, mean you guys do a great job and yeah, I mean if you can try to show up to the property, you know This is the ownership side, you know stop it, know
David Moghavem (34:08)
Mm-hmm.
Yeah.
Ryan Moody (34:22)
go there once a month, but would be there. Make sure that the on-site team knows that you're reachable.
David Moghavem (34:29)
Yeah, I mean the
deal the deals that might be struggling operationally where their minimum once a month at this point, know, and some of the other deals that are cash flowing. OK, someone someone from corporate is there once a month, maybe not the asset manager every time. Maybe I stop by while looking at acquisitions like someone just needs to touch base and it goes a long way. goes a long way. I guess you you mentioned some of the deals struggling. Have you seen?
Ryan Moody (34:35)
Yeah.
Yeah, agreed.
David Moghavem (34:58)
this wave of distress that people are kind of hoping for as buyers or, and if you have why and if you haven't why, I would love to hear your take, I guess in the past year or two on what you've seen on the distress side in Orlando.
Ryan Moody (35:14)
Yeah, no, the stress story has not come at all. So, you know, the blood in the water, we haven't seen it. Obviously, I think everyone, it's been, you know, a bit of a slow year. I think a lot of the buyers were thinking that there was going to be some real opportunities this year and they never really came. And it seems like, you know, if you, if that...
David Moghavem (35:36)
Mm-hmm.
Ryan Moody (35:39)
Property or that sponsors in a tough position. They're figuring out some way
to kind of kick the can down the road a little bit. And it seems like they're having success in some way or another. So now that we're starting to see the market recover some quickly, think there's a lot more optimism in the market today than there was two months ago. And it seems like we're gonna be feeling that into next year. And maybe that kind of blood in the water is not gonna show its face at all.
David Moghavem (36:15)
Yeah, yeah, I think there's definitely some bleeding going on nationally. But as you said, I don't know if they're really translating to sales, right? There might be rescue capital recaps, other forms from A to Y before going to Plan Z, which is selling at a complete loss. And especially in Orlando, you're not seeing it because operationally, think Orlando is just still doing great.
Ryan Moody (36:23)
Right.
David Moghavem (36:43)
As you said, there might've been flat rents or a little bit of an uptick in vacancy, but it's nothing compared to what you're seeing in some other markets and units are still getting absorbed. People are still paying rent. Still is a promising outlook. So, and it's Florida and you have the fundamentals and the story and the lifestyle. So.
Ryan Moody (37:07)
Yeah, 100%.
Yeah, we've been blessed. Orlando and a lot of the Florida markets have done great over the past year to 18 months. Yes, it's been slower, but I think performance has really held for a lot of the assets throughout really all of Florida and specifically Orlando, which has really helped all of those owners that were potentially in a tough position.
David Moghavem (37:33)
Definitely. I guess last thing before we started recording, we were talking a little bit about NMHC. What are you expecting out of NMHC?
Ryan Moody (37:39)
Yeah.
I think people are excited for 2025. think a lot of the, obviously we're starting to see rates come down, interest rates come down, we're starting to see insurance come down. I think the supply and demand issue is going to change into next year. So I think there's a lot of the buyers that are saying, now is the time to get back on the playing field.
David Moghavem (38:13)
Mm-hmm.
Ryan Moody (38:13)
Because
as soon as we're off to the races, I think we're going to be moving and moving real fast. So I think, I think groups finally realize it. It's like now, it's like now or never. And if I was a buyer and I in all 20 million bucks, I would be hunting for deals now to get something before things really turn around.
David Moghavem (38:34)
Yeah, I agree. mean, I think there's definitely more optimism. I think with Treasury still above a four, it's not as big of a push today as it was when was Treasuries were at like three and a half that in October where you really saw the push. So I think that deflated things a little bit. But I think once we get back to a sub four Treasury and
Ryan Moody (38:51)
Right.
David Moghavem (39:04)
maybe some stronger operational upside with spring leasing and getting back into some of the lower insurance, stabilize insurance, stabilize rates, just some stability that I think we're going to see in 2025. You're going to start to see the bid-ask spread start to narrow.
Ryan Moody (39:16)
Yeah. Right.
Right. think we're starting to see that now. It seems like the deals we've been calling for offers on and working through best of final over the past month or two, it seems like the bid sheets are starting to stack up, pricing starting to be more aggressive. So I think we're going to see more of that into next year. yeah, I think think NMHC, I mean, I think a lot of the NMHC 2024.
There was a lot of optimism, but then it kind of fizzled out and we went nowhere. So hopefully it will be the complete opposite this year where, yeah, we're off to the races in a much different way.
David Moghavem (39:48)
Yeah.
Yeah, there was definitely some optimism that died very quick after had NMHC. And this year felt a little longer, obviously, but I think 2025. Everyone kept saying in January of 2023, NMHC, were saying, survive to 25. Here we are. So I guess we'll find out if it's survive to 25 or survive through 25. We'll see where that heads out.
Ryan Moody (40:00)
Yeah.
Yeah. Yeah.
Yeah, exactly. Yeah.
David Moghavem (40:24)
But Ryan, really appreciate it. Thanks again for hopping onto Deal Flow Friday. yeah, I guess I'll see you in January. I guess I'll see you at NMHC.
Ryan Moody (40:26)
Yeah.
Absolutely. Thanks for having me. Look forward to seeing you in Vegas. Absolutely. Thanks.
David Moghavem (40:36)
Awesome. Thanks.