At the end of last July, FYNSAUpper completed the sale of two residential rental properties in Houston, Texas, known as Morgan & Wilcox. These properties were the first acquisition by the FYNSA Upper Residential Income US I Investment Fund, made in July 2021.

The transaction is a concrete example of investment opportunities in the U.S. real estate market. To discuss this and the Fund’s strategies with its clients, FYNSAUpper organized meetings in Chile and Peru with Sohail Hassan, co-founder and managing partner of MarketSpace Capital, the firm through which FYNSAUpper invested in Morgan & Wilcox.

Topics such as MarketSpace's model for searching for and evaluating real estate opportunities MarketSpace and the outlook for interest rates were central topics of the meetings. 

“Investors in general were also interested in knowing what stage of the U.S. economic cycle we are in—whether we’re in a real recession or justa technicalone, ”says Pablo Massera, real estate manager at FYNSA.

The Morgan & Wilcox operation is, in this regard, an excellent case study.

 “We purchased 624 units at US$87,000 each, and less than a year later, we sold them for US$120,673. This resulted in an IRR of 71% for investors and a capital multiple of 1.7; which brings the return for our investors to 31%,” Hassan explained. 

“This is not just an isolated case; it is one of several similar cases at 13 other real estate businesses where the investment cycle has been completed, led by MarketSpace,” says Juan Eduardo Biehl, a partner at FYNSA.

The profits from this investment were available for reinvestment in other projects, allowing for the deferral of capital gains taxes. About US$22 million is now ready to be invested. “At this point, we don’t need to raise equity, which puts us in a very advantageous position,” says Hassan. “What we’re seeing now is a debt environment with rising interest rates: debt is now the asset, and property is the liability.”

“The success of the operation is the result of a combination of our strategy for capitalizing on opportunities and identifying market niches,”,” Hassan emphasizes.

MarketSpace focuses on opportunities in the state of Texas, which is experiencing a period of significant economic growth. “Texas welcomes a thousand people every day,” says Hassan.

“It’s a combination of the cost of living and the business climate, which is very favorable. That’s one of the reasons Texas is attracting many large companies, such as Tesla, which is setting up its offices in Austin.”

In this context, investments are focused on multifamily projects. “The residential sector, unlike the office or retail sectors, is highly resilient,” says Biehl.

“Rents in the U.S. have risen by an average of 15%, and in select markets such as Miami or Austin, rents have risen by 25%,” Hassan points out. Given the housing shortage, residential rental property is one of the most conservative strategies for entering the U.S. market.

The results of this tour to explain opportunities in the U.S. real estate market have been very satisfactory. “The meetings we’ve had with clients have been very productive,” says Hassan. “I was very surprised by the caliber of the questions they asked us—they were very sophisticated. It was clear that these people had done their research on the U.S. market, as well as the interest rate environment.”

“My impression is that many of these questions arose because no one has come here to explain how the U.S. real estate market works. It’s an opportunity to gain visibility and build relationships to invest in these kinds of opportunities,” concludes Biehl.