3 Things: US Debt Payments Unsustainable, Telecom Giant Shifts to Dallas, & Old Capital Multifamily Conference
3 Things: US Debt Payments Unsustainable, Telecom Giant Shifts to Dallas, & Old Capital Multifamily Conference
"It's not about timing the market, but about time in the market." - Warren Buffett
SEPTEMBER EDITION
01 America's Debt Burden: Are Interest Payments on the Brink of Collapse?
The President of the Committee for Responsible Federal Budget, Maya MacGuineas, has
warned that the United States’ debt interest payments are heading down an unsustainable path.
Projections indicate that interest payments will surpass defense spending within four years, and
by the year 2051, these interest payments will become the largest federal expenditure,
surpassing even social security.
As of June 2023, the United States’ debt-to-GDP ratio stands at 122.8%, and the nation’s debt
has reached an all-time high of $33 trillion. Prominent government officials, including Janet
Yellen, have attempted to reassure the markets by highlighting the metric she considers most
critical for assessing U.S. fiscal health: net interest as a share of GDP. Currently, this ratio is
around 1%. However, the Congressional Budget Office (CBO) projects that this payment will
increase to make up 6/7% of GDP by 2023, raising concerns about the country’s fiscal
sustainability.
Our takeaway:
Against the backdrop of high-interest rates and persistent inflation, it becomes crucial for
Federal Reserve Chair Jerome Powell to guide the economy toward a soft landing. However,
doubts linger about whether he can successfully achieve this, especially with the 11th increase
in the fed funds rate and another one expected by year-end, as indicated in his statement. Such
an unprecedented rate increase could potentially trigger a recession, causing significant
disruption to the economy. At Jara Capital, we maintain a vigilant and diligent approach to our
investment decisions. We adhere to the fundamental principle of real estate, which is " location,
location, location." This principle helps us navigate the challenges presented by the current
market conditions.
02 Frontier's Bold Move: Heading South to Dallas for New Headquarters
Frontier Telecommunications has revealed its intentions to shift its headquarters from
Connecticut to Dallas, Texas. Scott Beasley, the Chief Financial Officer at Frontier, cited several
reasons for this move. It is primarily motivated by the exceptional talent pool available in Dallas,
the favorable business environment in Texas, and the central location of DFW within the United
States. The company has already signed a lease for 95,000 square feet in the Uptown area in
2022, with plans to create approximately 3,000 jobs in Texas over the next decade.
Our takeaway:
Dallas Fort Worth continues to shine as an attractive market for businesses, with a significant
influx of companies relocating or expanding to the area in recent years. Since 2020, more than 200 businesses have chosen Dallas Fort Worth as their new home or for expansion. This list
includes several Fortune 500 companies such as Caterpillar, AECOM, AT&T, CBRE, Comerica,
Fluor, Jacobs, McKesson, NTT Data, and Toyota. There are several key factors contributing to
the regions’ appeal. The Dallas-Fort Worth area boasts a robust economy, a low cost of living,
and a favorable tax environment for businesses. Additionally, the presence of world-class
universities and colleges in the region ensure a steady supply of skilled and qualified workers,
further enhancing its attractiveness to businesses.
03 Crafting Connections: Mastering Skills and Forging Bonds at the Old Capital Conference
Jara Capital is excited to announce our participation in the Old Capital Multifamily Conference
on October 5th and 6th. This conference will bring together over 500 investors from across the
US for networking, insights into multifamily market trends, and expert presentations. Among the
speakers are industry leaders like Mark Allen and Paul Yazbeck. We’re eager to engage with
professionals and enhance our DFW real estate presence at this event.
Ready to invest?
As you evaluate your 2023 strategic investment plans, Real Estate is and will always be a solid asset class for investment. Jara Capital is well positioned to help anyone looking to invest some capital in the multifamily real estate sector.
Regards,
Caleb & Toyyib
Co-founders & Managing Partners
Jara Capital Partners “Delivering Extra”
