Jordan Fitzgerald serves as a University editor for the News. Real estate offers valuable inflation protection. If a college is seeking to woo a student, accepting that student within a month of application submission, providing the student with a paid trip to tour science and engineering facilities, and providing opportunities to meet world-renowned researchers, professors, and Nobel Laureates is certainly the way to do it, he said. College and University Directory Data provided by the Integrated Postsecondary Education Data System (IPEDS) from National Center for Education Statistics (NCES). CBRE analyzed 5-year commercial real estate loans originated in 2018, 2019, and 2020 and the cumulative 2023 to 2025 debt-funding gap upon refinancing. Prologis has an unmatched global platform, strong competitive advantages (scale, data, and technology), and attractive embedded growth prospects. With this information, we'll do our best to display content relevant to your interests. Should economic, bank, and real estate distress emerge, we suspect the Federal Reserve will reverse course and lower interest rates thereby nullifying near-term headwinds. Hannah and Mark share some of the ineffective choices that regularly appear in essays and discuss why each choice doesnt work to the students benefit. CRE is a highly diverse sector that includes one troubled sub-sector in offices (about 15% of the market), but also apartments, hospitals, warehouses, data centers, nursing homes, retail, and more. Our real estate team continues to work hard to take advantage of the sell now and ask questions later mentality that has been pressuring several public real estate stocks by purchasing best-in-class real estate companies at highly discounted valuations. Despite the significant increase in applications over the past three years, admissions officers still review files one at a time and make decisions via committee discussions. The banking system is in much better shape than it was before. All rights reserved, Inside the Yale Admissions Office Podcast, Advice on Putting Together Your Application, Advice for First-Generation College Applicants. More recently, in January 2023, Nadeem Meghji, Blackstones Head of Americas Real Estate, said the following: We have ample capital to play offense in a world where we think theres going to be some interesting deployment opportunities. Jordan Fitzgerald The company owns a high-quality real estate portfolio that is concentrated in major global trade markets and large population centers across the Americas, Europe, and Asia. During Some office building borrowers may default on the loan and. Brookfields management team, who in our opinion, is credible and conservative, believes the company is worth $74/share today - more than double its recent price of only $32/share! Institutional investors are consolidating the number of asset managers they invest with. Now, following the Federal Reserves 2022/23 aggressive campaign to raise interest rates and lower inflation, portions of commercial real estate face refinancing headwinds in the form of higher borrowing costs and lower loan availability, in some cases due to lowered commercial real estate building values. Transcript, The Yale Admissions Office is a proud partner with QuestBridge, a national non-profit organization that connects students from low-income backgrounds with leading colleges and universities. Web2,290 9 Yale University 618K 1,924 Report Follow YaleUniversity and others on SoundCloud. The Fund is chock full of best-in-class companies that are on sale and offer prospects for strong returns in the years ahead. Alexandria Real Estate Equities, Inc. is the leading landlord and developer for the life science industry. Athens, OH, The University of Chicago This stands in stark contrast to the U.S. housing collapse that contributed to the GFC. Transcript, As COVID-19 causes massive disruptions around the world, Hannah and Mark discuss how the Yale Admissions Office has adapted and will continue adapting to new realities for applicants, admitted students, and prospective students. We tend to limit these to no more than 20% to 25% of the Funds net assets. Create a SoundCloud account 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. As long as I can remember, I have worked toward this one goal, Trustin said. 2023 Morningstar. Ivy League schools This same ED admission figure stood at 17.5%, 18.2%, 21%, and 21.9% for the Classes of 2024, 2023, 2022, 2021, respectively. In [Yales] case, I got a likely letter because I was a very strong STEM applicant, Pam said. CollegeXpress helped me by providing me with many scholarship opportunities and information about universities I want to attend. Following an eventful and volatile first three months of 2023, our current views can be summarized as follows: We remain optimistic about the prospects for the stock market, public REITs and non-REIT real estate securities, and the Baron Real Estate Income Fund. Join the CollegeXpress community! Morningstar calculates the Morningstar Real Estate Category Average performance and rankings using its Fractional Weighting methodology. We believe the companys global reach, capital, and the synergies among its businesses provide significant opportunities for growth. Toll Brothers has acquired, entitled, and developed a large and valuable owned land real estate portfolio in geographic markets with strong long-term demographics. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Even now, it feels surreal. 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. The admissions officers explain how the committee considers extenuating or unique circumstances and why those circumstances will not hurt a students chances of admission. While we are positive on the long-term secular trends underpinning American Towers business, we felt growth expectations were too high given the forthcoming headwinds combined with an elevated valuation. Likely letters give colleges a 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. Below is a table showing how REITs and other real estate-related companies have often outperformed the broader market coming out of market downturns. We are impressed by the variety of students throughout the world who are seeking the opportunity to study at Yale next year, said Keith Light, associate director of admissions and director of international admissions. If you have an ad-blocker enabled you may be blocked from proceeding. Per Ivy League regulations, colleges are Admissions officer Reed joins Hannah and Mark to discuss how application readers evaluate extracurricular activities and how applicants can stand out in this part of the application. Before he picked up, he expected to be notified about missing application materials from Yale Universitythe school was in that city, after allbut the message proved to be something much more welcome. We believe its valuation is unsustainably cheap and we remain bullish about Brookfields long-term prospects. Yale (4.5%) Brown (5.0%) Dartmouth (6.2%) Cornell (~6.9%) Selectivity is highly associated with Ivy League rankings; that is, the highest-ranked schools tend to have the lowest acceptance rates. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. 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. 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. The Morningstar Rating for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity, and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. 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. Transcript, The first in an occasional series. Examples include: Equity Residential is the largest U.S. apartment REIT with 80,000 high-quality apartment units concentrated in coastal markets with strong barriers to entry, compelling resident income/demographics, and high-cost home ownership. The company is valued at only 1.0 times tangible book value versus its long-term average of approximately 1.4 times book value and a peak multiple of approximately 2.0 times tangible book value. Yale The majority of real estate distress will be limited to a manageable portion of class B and C office buildings. But Dunn also credited current students as the offices most valuable asset in outreach. Hannah, Mark, and Jill review and debunk six more persistent myths about the admissions process. For example, 7- to 10-year BBB bonds increased from 2.8% early in 2022 to 5.5% in March of 2023. Regarding the possibility of real estate loan defaults, our view is that it will be mostly isolated to a manageable portion of class B and C office real estate and many lenders will choose to work with their borrowers to modify loan terms rather than. If the macroeconomic environment worsens, we expect business results to be resilient. The University plans to matriculate around 1,700 students from the early action and regular decision application rounds, University spokesperson E.J. Managements interests are aligned with its shareholders given that officers and directors own approximately 20% of the company. Core infrastructure investments include utilities, data centers, wireless towers, energy, and transportation (ports and rails). However, Trustin cautions against regarding these letters too seriously or being disappointed if the letter doesnt arrive. The company has superior long-term cash-flow growth prospects and lower capital expenditure needs than several other REIT categories. Equity Residential and AvalonBay Communities, Inc. were both detractors in the quarter amid a worsening economic backdrop, continued layoff announcements in high-paying jobs, tightening lending conditions, lingering bad debt trends into 2023, and potential supply pressure in certain markets. Peer institutions like Harvard, Yale and Columbia saw historically low acceptance rates of 3.4%, 4.62%, and 3.7%respectively. Elevated construction costs are constraining new construction. The best advice I've received is to understand that a school does not define a person, Trustin said. It turned out to be more valueless than valuable. Real estate companies that we consider best-in-class are rarely valued at discounted prices, but now is one of those rare occasions. 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. Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors. We send these likely letters only to those Annual expense ratio for the Retail Shares and Institutional Shares as of December 31, 2022 was 1.32% and 0.96%, respectively, but the net annual expense ratio was 1.05% and 0.80% (net of the Advisers fee waivers), respectively. Other prestigious liberal arts colleges and colleges like Duke, Stanford, and University of Chicago also send likely letters. Transcript, Most applicants to Yale are strong along many dimensions, but only a small group truly stand out. 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. Management maintains a strong and liquid balance sheet with staggered debt maturities. 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. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron Real Estate Income Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such an offer or solicitation. We believe that real estate merger and acquisition activity will re-emerge when the debt markets stabilize, and economic prospects improve. We are truly seeing the very best prospects from more than 150 countries and territories from all four hemispheres.. This limited inventory combined with strong demand is leading to robust rent growth. Past performance is no guarantee of future results. We believe prospective two- to three-year returns could be strong should a severe economic slowdown be avoided and 2024 emerge as a solid rebound year for economic and corporate profit growth. Long term, there is a lot to like about self-storage businesses. During the quarter, we reduced our position in American Tower Corp., a global operator of over 200,000 wireless towers. Transcript, Every admissions decision is made by a committee composed of five members of the Yale community. Heres what a Yale likely letter looks like! Admissions Officer John joins Hannah and Mark to discuss Yales evaluation process for these submissions. (preview: in our opinion, no! A large portion of the 2023 operating outlook that caused us to lower exposure in 2022 has been reflected in apartment REIT share prices with most apartment REITs valued at 6.5% capitalization rates and 25% to 30% discounts to net asset value. The public market implied valuation of its owned homes is only $320,000 per home versus acquisition costs of approximately $430,000 per home. Last year, Stanfords acceptance rate was 5.19%, a slight increase from its record-low 4.34% acceptance rate in 2019. While none of these choices will make or break an application, the officers explain why certain choices are more or less beneficial during the review process. Today, real estate is in a good place relative to prior economic slowdowns and recessions. Industrial REITs continue to benefit from strong secular demand drivers, resulting from continued growth in e-commerce, the build-out of logistics supply chains, and the shift from just in time to just in case inventory post-COVID-19. Of the students offered admission, 52% are women and 48% are men. 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. It was a nice surprise for both Trustin and Pamand others who have received likely letters from Columbia University in the past few weeksbut on the whole, its a mostly understated phenomenon. Various measures of REIT valuations improved from 2022 into early 2023. Login or sign up to be automatically entered into our next $10,000 scholarship giveaway, Eastern Washington University Trustin certainly knew that much. The company owns high-quality real estate and benefits from a compelling occupancy recovery story within senior housing. Earnings multiples (Funds from Operations) declined from 24 times earnings at the beginning of 2021 to 19 times earnings as of March 31, 2023. This episode is an update to Episode 6: Essays: The Little Stuff, originally released in summer 2020. The dearth of new real estate construction compares favorably versus past real estate cycles when the overbuilding of commercial and residential real estate contributed to a deterioration in real estate business prospects. WebEvery application to Yale includes three letters of recommendation two from classroom teachers and one from a counselor. Delinquency rates remain well below historical levels for most commercial real estate. 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. This occurred in the 1980s and precipitated the recession in the 1990s and a severe correction in real estate occupancy and rents. In fact, current credit conditions could ultimately expedite the Fed achieving its inflation goal, potentially allowing it to not go as far as is currently anticipated. This amount equates to more than $1.3 trillion of total real estate purchasing capacity, assuming typical 70% financing. AvalonBay and Equity Residential are blue-chip apartment landlords with apartment assets generally located in high barrier-to-entry markets with strong long-term demographic growth potential. In our opinion, the likelihood of systemic risk to the economy from certain commercial real estate challenges is low. applying early Yale 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. Headwinds that we did not fully appreciate included significantly higher financing costs (20%-plus exposure to floating rate debt), upcoming debt maturities, continued payment shortfalls from a key tenant in India, and foreign exchange headwinds. Portfolio holdings are subject to change. We believe Brookfield is poised to remain a major beneficiary of this consolidation trend because of its strong long-term investment results and its, but also attributable to three key competitive advantages: Scale advantages: Brookfields large-scale and strong balance sheet position the company to be involved in multi-billion dollar transactions where the competitive buyer pool is relatively narrow. Prologis, Inc. is the worlds largest industrial REIT. Companies, households, real estate landlords and developers, banks, and other financial institutions generally maintain balance sheets that are liquid with appropriate levels of leverage, fixed-rate debt, and staggered debt maturities. Both Equity Residential and AvalonBay are owners of Class A apartment buildings largely located in high barrier-to-entry coastal markets with favorable long-term demographic trends and muted overall supply growth. Management sees a path to growing the companys senior housing cash flow by more than 60% over the next few years, with further upside through enhanced asset management. These efforts culminate in Bulldog Days, a three-day open house event produced by the same admissions officers who review applications. Between 2023 and 2025, CBRE forecasts that the debt refinancing gap will be almost entirely limited to office owners. Implied capitalization rates increased from about 4.5% range in January 2022 to approximately 6.0% in March of 2023. Morningstar ranked Baron Real Estate Income Fund Institutional Share Class in the 74th, 17th, and 2nd percentiles for the 1-, 3-, and 5-year periods, respectively. The companys value proposition of providing mission-critical infrastructure to a highly diversified customer base yields pricing power and must have versus nice to have infrastructure deployments. Brookfield has investments in publicly traded and private real estate-related businesses. Dean of Undergraduate Admissions and Financial Aid Jeremiah Quinlan joins as a guest to discuss how high school students should think about the selective admissions process in the face of the global pandemic. 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. New loan proceeds may not be sufficient to repay the debt coming due. Apartment and industrial owners are not forecasted to have any debt refinancing gap. All deadlines are 11:59 PM (Mountain Time). (Source: Citi Research). We agree with the perspective of Bridgewater Associates, LP, a highly respected money manager founded by Ray Dalio, who said the following on March 30, 2023: We dont think commercial real estate (CRE) is a systematic risk, in large part because the sector lacks the problems that existed in (mostly residential) real estate in the late 2000s: bad lending standards, lots of leverage, and a supply glut following a construction boom. Of the University of Pennyslvanias 37,267 applicants in 2015, only 3,697 were admitted, and only 400 received a likely letter, according to The Daily Pennsylvanian. Brookfield Infrastructure Corporation is one of the largest globally diversified owners and operators of high-quality infrastructure assets in the world. Don't worry about it. 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. Hannah and Mark discuss the last week of the committee process, known as Final Review, when loose ends are tied up and the hard reality of the selection process necessitates that some decisions change. Explore all our articles and advicenow! Though we are mindful of key risks to the equity and real estate market outlook, we are optimistic about the near-term and long-term prospects for public real estate. They share strategies for learning about schools, maximizing academic and extracurricular opportunities, and keeping the process in perspective. These developments would be deflationary. Non-REIT Real Estate Companies (14.1%): We emphasize REITs but have the flexibility to invest in non-REIT real estate companies. Its also a way to boost yield.. Does not involve the biggest banks. 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. Though Quinlan said that it is impossible to attribute direct cause and effect relationships between various outreach strategies and the application yield, Mark Dunn, the director of outreach and communications at the Office of Undergraduate Admissions, credited virtual outreach methods with the record applicant pool. 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. Several of the best real estate purchases we made in the last 17 years have occurred during periods of financial and real estate market distress when real estate stocks correctly sharply, in many cases, with little regard to value - during the Global Financial Crisis (GFC) of 2007 to 2009 and the early days of COVID-19 from March to May of 2020. In the first quarter, we maintained our active approach managing the Fund due to: We believe our action steps continue to position the Fund for strong long-term performance. A large portion of the 2023 operating outlook that caused us to lower exposure in 2022 has been reflected in the share prices of AvalonBay and Equity Residential. The portfolio managers views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. Data Center REITs (8.9%): We remain bullish on the prospects for data center REITs such as Equinix, Inc. (EQIX) because we believe demand prospects are improving (e.g., bookings of new leases and rent pricing), construction is moderating due to higher costs, and valuations are discounted relative to recent data center acquisitions. How Anthony Albanese's housing policies will push up Dean of Undergraduate Admissions and Financial Aid Jeremiah Quinlan joins to discuss updates to the selection process, sharing what changed and what stayed the same during the Admissions Committees first meetings to select applicants to the Yale Class of 2025. WebThe origins of famous "Y" on the mountain above Provo, Utah, are found in friendly, rowdy rivalries between classes at Brigham Young University High School (1876~1968). In this mini-episode, the offices director of recruitment explains why some regular decision applicants receive a likely letter and addresses some common misconceptions. WebLikely Letters by YaleUniversity published on 2021-03-31T13:56:01Z Admissions officer Ashleigh joins Hannah and Mark to talk about likely letters a recruiting tool the Don't let a few people's opinions take that away from you.. The public market is currently ascribing zero value to Brookfields non-public investments, which we believe are also worth at least $32 per share. Four 0.25 percentage point cuts in 2024 and two 0.25 percentage point cuts in 2025. This allowed Equinix to be a standout within the broader technology space when many companies were reducing their growth outlooks and noting weakening demand. Admissions Officer Jill joins Mark and Hannah to discuss and debunk some of the most persistent admissions myths. The officers share insights on how financial aid applications are reviewed and advice on estimating your cost before applying. Colleges do this so that they can make sure top students know that the colleges really want them to come, Pam said. A likely letter functions similarly to an acceptance during the Early Decision or Early Action period of college applications in the fall, Trustin said. Top detractors from performance for the quarter ended March 31, 2023. Ventas, Inc. was a detractor from performance during the quarter. This is the official discussion thread for Yale Class of 2027 RD applicants. The office of undergraduate admissions will read through more than 50,000 applications to decide the class of 2026. Transcript, The transfer and nontraditional students programs make up a small but important part of the admissions offices work to create a diverse undergraduate community. Sun Communities and Equity Lifestyle Properties have strong long-term cash flow growth prospects and low capital expenditure needs. Your current browser isn't compatible with SoundCloud. Apply to scholarships, apply for summer programs, but don't worry about not receiving a likely letter. 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). Yale Class of 2027 Official Thread. The shares are valued at only a slight premium to most REITs, despite superior and more durable cash-flow growth prospects. What I love about CollgeXpress is how it provides a variety of information, and as the first child attending a university next year, it has been very essential and helpful. Real estate owners with short-lease durations in supply-constrained markets are well-equipped to raise rents to combat inflation. Additionally, we increased our exposure to VICI in the most recent quarter due to expectations for strong growth in the year ahead. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Admissions Officers Hannah and Mark share the complex and dynamic work happening inside the Yale Office of Undergraduate Admissions. 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. The valuations of several REITs and non-REIT real estate companies are cheap. Since 2018, Stanford has not publicly announced its acceptance rate, so it is unlikely they will do so today. The company is the only industrial REIT with an A credit rating. Valuations and return prospects are attractive. Office owners are expected to have a debt refinancing gap of $53 billion (in our opinion, this amount is not alarming). A few days later, an email was sent to me with a list of schools offering the course; amongst them was the University of the People, the school I got admitted to. CollegeXpress has helped me dramatically. Self-Storage REITs (14.9%): We remain optimistic about the Funds investments in self-storage REITs Public Storage Incorporated (PSA), Extra Space Storage Inc. (EXR), and CubeSmart (CUBE). Peer institutions like Harvard, Yale and Columbia saw historically low acceptance rates of 3.4%, 4.62%, and 3.7% respectively. Notably, in six of the seven down years, REITs rebounded with positive performance the following year. 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. For examples of attractively valued REITs and non-REIT real estate-related companies, please refer to Examples of best-in-class REITs and non-REIT real estate companies that are attractively valued later in this letter.