Austin, Texas – As the trade routes of the world opened over the past century, we now find ourselves as more of a global economy than a collection of national economies. While much celebrated, this also brings much to be feared. After a 15-year run of near-zero interest rates worldwide, nearly all markets trade at a significant multiple of where they were before the so-called Global Financial Crisis of the late 2000’s. We are now faced with what could be our first global depression – a scary proposition, indeed. With nearly all assets currently overvalued, we find ourselves asking: Where is a safe haven to allocate my assets while still achieving significant gains?

$8 trillion in U.S. debt is maturing over the next 12 months. Additionally, the U.S. deficit will grow by about $2 to $3 trillion, and traditional buyers of U.S. debt remain mostly on the sidelines. We are now witnessing failed bond auctions in the U.S. Treasury market, something previously unimaginable. Globally, current inflation and interest rates are skyrocketing to the highest levels in over 15 years. Central banks’ monetary policies have caused tremendous deficits in governments throughout the world, causing massive inflation.

We are looking at a tsunami of debt accumulation worldwide, with governments refusing to curb spending. Consumer debt is at an all-time high and the average principal and interest payments on 30-year fixed rate mortgages in the U.S. are up 26% year-over-year. Bankruptcies are up 30% over the 12 months ending September 30^th, 2023. 60% of Canadian mortgages are set to come up for renewal within the next three years and homeowners are facing a “payment shock” unless interest rates significantly decrease, according to the Royal Bank of Canada. All nations are being forced to go deeper into debt to save their economies.

In addition, the worldwide banking system is on the verge of collapse. U.S. banks alone could be grappling with at least $650 billion of unrealized losses in their securities portfolios, according to an estimate from Moody’s. U.S. interest payments on its debt are at an all-time high, per Reuters. Since 1990, home prices in Australia, New Zealand and Canada are up 532%, 602% and 331% respectively, compared to 289% for the U.S., according to Oxford Economics. Even U.S. Fed president Jerome Powell admits that the global path we are on is ultimately unsustainable.

The future is bleak, but the solution is clear. Real assets will stand the test of time. There is a finite amount of desirable land in the world, and it is quickly being scooped up for future developments as populations grow.

In early 2007, after selling one of the largest equity trading firms in the world, I set out to find where to safely invest money amidst the upcoming GFC. After consulting with one of the largest real estate firms in the U.S., I was directed to Austin, Texas. With a job market traditionally rooted in government and higher education, this once sleepy college town had lost a large percentage of its employment base by 2004. The table, however, was set for an economic boom of unprecedented proportions, as Austin began actively recruiting tech companies to take advantage of its low cost of doing business and highly educated workforce.

Austin and the Central Texas region quickly became a destination for migrating talent. This is due to Austin’s central location within Texas and the U.S., and the fact that Texas is one of the very few zero-income-tax states in the country. In 1999, the population of Austin was 587,000. In 2015, the Austin metropolitan population surpassed 2 million. The decade ending in 2020 saw a 33% population increase.

Additionally, the Austin suburbs of Georgetown, Kyle and Leander rank as the fastest growing affordable suburbs in the U.S., with growth rates since 2020 of 26.7%, 23.7% and 22.2% respectively, according to MoveBuddha. Austin is now known as “Silicon Hills,” as many tech companies have relocated operations out of high-tax, business unfriendly states like California. Texas now has more S&P 500 corporate headquarters than any state in the nation. Houston, Dallas, and Austin are now projected to be the three largest cities in the United States by 2050, with Austin’s population projected to reach over 22 million by the year 2100, according to MoveBuddha.

My team and I have had tremendous success capitalizing on Austin’s explosive growth, returning 39.1% (annualized, net of fees) in our prior REBEL Real Estate Investment Fund I and 56.5% in our REBEL Qualified Opportunity Zone (QOZ) tax-qualified fund, focused on investments exclusively in rapidly expanding opportunity zones. Both of these funds comprised exclusively of assets in Central Texas and were fully liquidated in mid-2022 in foresight of the looming economic distress.

Having sold all legacy assets, we began repositioning for the present opportunity with the introduction of Next Frontier Real Estate Holdings Fund I and QOZ Fund I. These newest Next Frontier funds are positioned to acquire distressed and opportunistic real estate throughout Central Texas, and have remained entirely in cash holdings since opening in early 2023. Being in an all-cash position without legacy assets affords us an unbridled agility to uncover and acquire premier opportunistic deals as they begin to unfold, in accordance with our extremely strict and disciplined underwriting standards.

Our target assets include raw and undeveloped land, industrial and data centers, and medium to large size multifamily developments. These are three sectors that will continue to experience growth over the long term as large corporations, their employees, and American families continue to relocate to the region. Promising opportunities have already begun to unfold, with many more to come over the next year as the effects of crippled capital markets continue to permeate property values. We are steadfast in finding opportunity amidst economic distress, with the belief that strategic and savvy acquisitions in such time will reward visionary asset managers and their investors.

Utilizing our expansive network of banks, servicers, receivers, brokers and property managers, we have the capacity to uncover the best off-market opportunities in the nation’s fastest growing and most promising metropolitan area. As economic uncertainty continues to boil, foundational cracks in over a decade of commercial real estate growth are beginning to form. Through the turmoil, high-growth markets like Austin and the greater Central Texas region will have a much greater ability to persevere into the next generation of real estate expansion and wealth generation. Not only are we in an agile cash position free of legacy assets, but we have the experience, expertise and connections to capitalize on the market shifts that loom.