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DEER ISLE: Insights, Flows & Investment Trends (March 2022)

by Dianna Raedle March 14, 2023

Oil: Oil prices continue to surge toward $150+/barrel, the level we highlighted in last month Insights.

Chinese Interest Rates: While rates in the rest of the world are rising, Chinese interest rates are falling. In fact, Chinese 10-year bond yields are trading near pandemic all-time lows. Is the Chinese economy weaker than the market expects? And could this weakness spill over into the OECD countries? With rates hovering around 2.75%, if we see a break below 2.5%, watch out!

Crypto Markets are seeing outflows from liquid instruments (i.e., ETFs) and into wallets. A bullish sign that crypto is being stored rather than sold (i.e., holders are not signaling that they need liquidity).

Real Estate/Hotels: Can currently buy good branded midsized hotels with 200/300 rooms in stabilized (midsized urban centers) at 10 cap rate given COVID impact, whereas long term average is closer to 8. Also have the opportunity for increasing NOI as travel returns to normal. For comparison, Multi-family is 3 to 5 cap rates.

Reps & Warranties Insurance: While it is widely known that R&W insurance is gaining adoption in lower middle market deals, one lesser-mentioned implication is that diligence expense and time may increase due to the presence of R&W – e.g., a recent deal found that capital providers were satisfied with a sell side quality of earnings, but the R&W carrier was not.

Contact Us:

Deer Isle Group

info@deerislegroup.com

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Founded in 2007, Deer Isle is a differentiated investment bank that empowers Capital Participants with the right tools to ensure transparent, smooth, and efficient direct capital markets outreach. Since our founding, we have successfully transacted over $5 billion in capital, through Deer Isle Capital, LLC (our FINRA registered broker/dealer), for companies and funds in a wide variety of security types, sectors, and geographies.  

The foundation of our approach is innovative unbundled capital capabilities, expertise, and guidance that are customizable depending upon our client’s requirements.  

Our services, available on an “as needed” basis include:

Strategic Capital ConsultingTM (“Deer Isle Bootcamp”) to prepare for a capital or M&A transaction including Strategic Capital PositioningTM, Strategic Capital Modeling, Due Diligence Preparation and Capital Markets Landscaping.

Beacon (“Proprietary Technology”) offers “Direct Issuance/Contact” capabilities, as well as Capital Markets Brand Building, which helps ensure capital markets success today and in the future from a relevant universe of 10,000+ institutional (fiduciary) capital markets organizations/45,000+ institutional capital markets people. 

Closing Advisory/Guidance (including “Shepherding”) expertise, through Deer Isle Capital, for structuring, negotiating, and completing a successful capital/M&A transaction.