Austin, Texas – On December 31, 2006, my fund and its three SEC Broker/Dealers, Spectrum Capital Partners, liquidated all holdings and returned all capital to investors. We had outperformed the market eight years in a row. What followed was a multi-year train wreck that was “fixed” by the Federal Reserve bailing out banks and insurance companies. Solving the illiquidity crisis in 2009 saved the banks from losing money at the cost of burdening the economy with enormous debt.

In mid-2022, my prior real estate investment fund, REBEL Realty Investments, liquidated all holdings and returned all funds to investors, once again, with market-beating returns. We have witnessed a 15-year bull run in real estate, unprecedented in its size and scope. Quantitative easing and continued bailouts (as we saw for the well-heeled depositors at Silicon Valley Bank) have permeated our economy for over 13 years.

Asset managers shift assets regularly, so what is new this time?

We are currently seeing the consequences of the mother-of-all asset bubbles. The combined assets of the three latest bank collapses – SVB, Signature Bank and First Republic – were greater than the all the assets during the Lehman Brothers collapse, in which many more banks were dissolved. But nothing to see here, right? No headlines, no concern.

Here are the facts:

• Our US Treasury market, the $22 trillion bedrock of the global financial system, is jeopardized by $32 trillion in debt and will be adding $4 trillion more this year.
• Yield shifts on government bonds have become greater since global Central Banks began ramping up rate hikes to tame inflation. Moody’s cut our banking system’s rating to negative from stable.
• Mortgage rates have now spiked over 7%, and the Fed is poised to raise again.
• The 13-year bank arbitrage game of obtaining higher rates through longer-term T-Bonds was effectively “free money,” as banks borrowed from the government at zero or near zero interest rates.

We are at the end stage of the biggest asset bubble in history, so where is my money safe?

With $2.5 trillion in loans coming due at higher rates in the next few years, we will be seeing defaults at an unprecedented scale, especially in the CMBS sector.

Next Frontier has been preparing for this environment for the past year and we are monitoring the commercial loan market on a daily basis. Our funds are completely in cash, and we remain poised to take advantage of these upcoming opportunities through asset purchases, loan purchases, and recapitalization strategies that keep existing owners in their properties.

The time to act is now. Once again, we cordially invite you on our journey into the Next Frontier of Real Estate Investing.