We’re focusing on growing and optimizing our real estate portfolios, expanding our private equity investment footprint, and lending business operations support to our partners. You in?
I know I’m not alone when I say that I was hoping to refer to the pandemic in the past tense by this time. It’s October. It’s 2021. I think of my kids during a long, draining road trip (drive west through Nebraska, and you’ll understand more clearly): Are we there yet?
No. No, we’re not.
In fact, we’re not even sure where “there” is.
That said, while the news is increasingly pessimistic—the supply chain “ship show” and rising commodities prices, the number of Delta variant infections, and inflation, to name a few—there are a few reasons to be optimistic.
Especially when you’re not afraid to make far-reaching decisions under uncertain conditions (if that’s you, you’re our kind of investor—and we should talk).
At Percipio, we refuse to get discouraged by rising prices and increasing volatility. As value investors, we are always on the lookout for the fires of value destruction. These opportunities are almost always messy, but nothing we can’t handle. We’re built to raise opportunities from the ashes.
Poetic metaphors aside, there are some investments that benefit from inflation and instability—and I’ll walk you through some of these opportunities in today’s article.
Real Estate and the Rental Market
In the first half of 2021, our legacy portfolios recovered slowly from the low occupancy rates and heavy delinquencies brought on by the economic downturn. While we’re certainly not out of the woods, we’re staying ahead of the increase in property taxes and insurance premiums with higher occupancy and rental rates—and that is saying something.
While the single-family housing market experiences unprecedented demand, multi-family has stepped into its own, proving that with the right management and allocation of resources, it can weather almost any economic storm.
With the recent formation of Harvest Development IV, LLC—our fourth real estate fund—we are focused on building our portfolio of residential multi-family assets outside the metro-Omaha market. We’ll continue to build on our recent acquisition of a 47-unit assemblage in north central Nebraska with an eye on surrounding rural communities. HD IV will remain open to investors until December 2022 while we build on this acquisition with follow-on investments.
Private Equity and Small Pharms
We entered the small-town pharmacy market ahead of the pandemic and quickly learned to take our medicine. The pandemic presented us with difficult market conditions, which we offset by growing our respiratory division with a solid strategic and tactical plan—and a highly motivated sales team. It just goes to show that you can do almost anything when the right people are in the right seats.
Those of you who have been following Percipio’s growth and trajectory know that we’re big fans of sweat equity around here. We’ve found a particular sweet spot for evaluating businesses and lending business operations support to our partners—regardless of industry. Our foray into “small pharm” is a healthy example of this—we’re not afraid to roll up our sleeves to see bigger returns come to life.
Business and Workforce Development
Speaking of running toward a fire, the Percipio consulting platform continues to expand, serving investment partners as well as third-party clients with a broadening array of business support areas. Earlier this year, we added a Staffing and Workforce Development consulting practice, which builds on our plan to provide a full suite of business process capabilities to our clients.
The pandemic has hit our small business community in expected and unexpected ways, particularly in terms of the entry-level labor shortage, supply chain disruptions, and consumer reluctance. Weathering this storm requires a wheelhouse that is out of reach for most operators, and our finance and business operations practices have helped close the gaps so that more small business doors remain open.
It’s easy to be pessimistic about the pandemic’s impact on investment opportunities, but I’d challenge that most naysayers just aren’t looking—or working—hard enough. We at Percipio are proud of the durable and sustainable platform we have created and the value we continue to bring to our investors.
And we look ahead for more good things to come.
Have more questions about private equity investing, our Harvest Development fund, or multifamily real estate? Reach out to me on LinkedIn or send me an email at [email protected].