Dear Partners:

As hard as it is to believe, the last quarter of the year is upon us.  Not everything about this year has been perfect but one thing is for sure, as per usual, Team Agracel has stepped up, pivoted where needed, and is wrapping up another strong year.  

We also don’t want to sugarcoat anything for you. The last few months have been trying on Team Agracel as we try to put together a game plan for 2024.  The struggle is real with rising interest rates, elevated construction costs (though thankfully stabilizing), and many of our community and regional banks cutting back on lending to preserve capital.  Though the demand may be there, we are also seeing many manufacturers hit the pause button until a more stable market materializes.  The UAW strike has only added to the instability we are seeing industry wide.  Thus, the typical Agracel deal flow has also slowed down. With that being said, we are still seeing deals, but our due diligence has become much more rigid.  No deal is better than a bad deal.

Today, however, I was reminded of why Agracel is so great and that these are temporary high waters and soon we will be standing on the pearly white beaches again.  Jack Schultz, our founder, happened to come through the office this morning and as he and I were talking about these headwinds he reminded me that we have seen this high tide twice before in Agracel’s existence. Even in the years where deals were slim and we took a very managed risk approach, Agracel came out smelling like a rose.  And why?? Because Agracel’s financial model works. We have 97% of our buildings occupied with long-term lease clients and debt locked in at lower interest rates.  Jack said, “Don’t forget, slow and steady wins the race.”  I remember the 2008 and 2009 Great Recession vividly.  Our deal flow was slow, in fact almost non-existent, but our steady lease payments kept rolling in, and on the other side of that downturn came great prosperity.

With that, we finish 2023 and enter 2024 cautiously optimistic.  Please know, we are working diligently to be good stewards of your investments and will continue to pursue deals that we feel have great long-term upside for you, your families, and Team Agracel.  As always, please do not hesitate to reach out to us with any questions.  

Best Regards,

Sarah Horner

Marketing Manager