Adapting to Economic Currents: Bryan Properties’ Approach to Growth (Sponsor Letter)

As we embark on this exploration of economic growth in our region, I am honored to introduce this section with insights from Bryan Properties, a company deeply invested in the pulse of our local economy.

Over the past decade, Bryan Properties has experienced significant growth, primarily focusing on developing student housing, multifamily residences, and hospitality spaces. While we celebrate our successes, we are not immune to the challenges that accompany growth, particularly in today’s economic landscape.

One of the pressing issues we all face is inflation. Rising costs in wages, maintenance supplies, insurance, and real estate reassessments are affecting not only our multifamily housing projects but also our endeavors in the hospitality sector. These inflationary pressures manifest in various ways, including increased room costs, impacting the hospitality industry’s bottom line.

Despite these challenges, our Springfield portfolio benefits from a robust economy characterized by low unemployment and diversity, fostering a tenant and traveler base with disposable income. However, amidst these favorable conditions, concerns loom, notably the burgeoning credit card debt, now surpassing a staggering $1 trillion. This underscores the importance of economic prudence and foresight in our business strategies.

Looking ahead to 2024, we remain optimistic, with strong advance bookings in key markets such as Branson, Springfield, and Tulsa. Nevertheless, the specter of rising interest rates casts a shadow over our expansion plans. The rapid escalation, with rates climbing by 5% within a 16-month period ending July 2023, poses challenges to the viability of new projects and strains our pro forma projections.

Despite these headwinds, we remain committed to strategic growth. Our approach is one of discernment, focusing on locations with manageable entry points and the potential for sustained revenue growth. Moreover, we explore opportunities for product extension in markets where our management presence is established, while also offering our expertise in property management to third-party assets.

As we navigate these economic currents, we must also acknowledge the broader context, including the upcoming election year. Regardless of the outcome, the economic landscape will undoubtedly be shaped by political decisions, influencing the trajectory of our businesses as we move into 2025.

In reflecting on our journey at Bryan Properties, we’ve gleaned valuable lessons that we believe resonate beyond our specific industry. First and foremost, adaptability is paramount. In an ever-evolving economic landscape, the ability to pivot, innovate, and embrace change is crucial for sustained growth. Secondly, prudent financial management, including judicious risk assessment and strategic investment decisions, forms the bedrock of resilience in the face of economic uncertainties. By embodying these principles, we believe businesses across all sectors can navigate the complexities of economic growth with confidence and resilience.

I invite you to delve deeper into the insights and perspectives shared in this section, as we collectively seek to understand and navigate the intricacies of economic growth in our region.

Sincerely,

Brad Gebhard, Chief Executive Officer, Bryan Properties