Fund News: Stonecrest’s Real Estate Growth Fund – Q4 2018

After studying the nationwide real estate market very closely, we believe the odds are that 2019 will be a flat year. We still see houses in some areas of the country commanding multiple offers,
while others in those same areas are having to cut their listing prices. Those homes that are fully remodeled and initially priced correctly are selling.

What does this mean for Stonecrest’s purchasing strategy? We are getting more research upfront than ever before, being more discerning with regards to the areas on which we bid, and are
bidding on fewer properties than usual as a buffer. As a result, we will win fewer properties but, until we feel comfortable with the overall direction of the market, we will stay the course. We have
also ramped up our ‘Consumer Direct’ division by connecting with a direct mail/marketing firm. Purchasing directly from homeowners has typically given us a higher profit margin. As a result, we’d like to have these transaction types make up a larger percentage of our overall purchases.

Some good news is the Federal Reserve’s recent decision not to increase interest rates and that it will be more in tune with the needs of the 2019 financial markets. This should help the overall
real estate market.

We continue to see some banks and auction companies take larger than usual discounts at the end of each fiscal quarter or year. As a result, we’ll purchase many more properties at these calendar
points and fewer in the intervening months.