Current thoughts on the market.

Current thoughts below on the markets and potential implications.

Short-term outlook - more volatility + fragility: The public markets (debt and equity) have seen excess volatility for the last 60 days or so, and while public markets don't necessarily drive the private markets, they do influence the private markets in a meaningful way. With the recent introduction of geopolitical risk, continued supply chain issues, admission by the Fed that they are probably late to the rate rising game, and persistent inflation (this morning's print of CPI +7.9%) - I think really think that we're in a position where one more substantial negative event or development could tip the mood into a strong sell off, pullback in capital, and shallow recession.

Underwriting tightening, lenders repricing: I see the debt markets as the plumbing to all that is financial. Availability of debt capital drives and enhances equity valuations. Current environment has lenders starting to tighten underwriting primarily in two areas - leverage and exit assumptions (for us that's cap rate and refi assumptions). Also, we're starting to see some pretty significant repricing in the public debt markets (CLO, CMBS) for deals coming to market. This is a sign that more risk (shown by spread products) as well as higher interest rates (fixed rate / term structures) are being taken into account. This can have downstream implications for availability of capital for all, but at the moment really reflects to me a signal that we're at a possible turning point.

Challenges, opportunities ahead: All this said, while we are all working on various items and deals, it behooves us to keep an eye on the markets to be mindful of potential impacts to the deals as well as who and how we partner with capital. Structure of deal, financing terms, and assumptions all become areas worth rethinking or confirming. But this market volatility and fragility will also likely provide additional opportunities that we should pay attention to in order to see if we might be able to find something beneficial and profitable.