For us, overall return profiles haven’t changed but we are of the opinion that: (I) we need to underwrite more cap rate expansion overall given the uncertainty in where stabilized cap rates and long term interest rates might settle, (II) deals in more tertiary markets will carry inherently more risk than was assumed during the 2020-2022 period (so we need a great basis and would bump these deals up a return profile - such as from value add to opportunistic), and (III) the principals of (II) goes the same for deals that are not in in-fill locations or are on the path of progress (given the path of progress is likely to slow dramatically in the coming years).

 

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