We continually monitor each of our core markets for historically low inventory, aggressive bidding, and strong price appreciation in order to capitalize on peak selling opportunities. And what we have noticed in the past few months is that, in select locations, real estate valuations are currently at the high end of their range. In these markets, this is a prime opportunity to capitalize on the built-in gains.
We also predict that suburban rent growth will continue to outpace urban, and Class-B properties will outperform Class-A buildings, due to the former’s affordability. Our active funds are focused on Class B core-plus properties, with good cash flow and a strong tenant base. Furthermore, since our investments use no debt, our investors have significantly lower exposure to risk and achieve much more stability in investment returns.
There are still many investors out there looking to invest in multifamily housing. Rent growth – especially in fringe areas close to the urban core – remains strong. Going into next year, we expect rising interest rates to start putting pressure on cap rates, with modest appreciation in 2022 compared to what we’ve seen in 2021. We will continue to employ a tactical approach to enhance the operating income of our current properties, and with disciplined market monitoring and trend tracking, we will make timely exits to maximize investor returns.
In this new market environment, the risk to reward balance shifts in favor of new development. This means that in the near future, BENA Capital will not be pursuing any heavy value-add additions to our portfolio. We have always said that we will not grow for the sake of growing. We will remain selective of the properties we invest in. We are building something special: a reputation as a trusted partner. Over the years, the rigor that we have put in our analysis and the network we have built have helped us be agile in these market shifts, identify future opportunities, and stay ahead of real estate trends. In this respect, 2022 will be no different.