Alternative Investing Report - February 25, 2025

*as of 2/24; Sources: S&P, BTC, FTSE, DJRE, CL50

Both private equity firms and ETFs seeking to mimic their strategies are targeting everyday investors. The firms have been eyeing partnerships with traditional brokerages to develop more liquid products that could be offered to retail investors. Meanwhile, a number of ETFs that buy publicly traded stocks meant to replicate a PE firm’s strategy have recently launched, such as the PEO AlphaQuest Thematic PE ETF (LQPE), the Man Buyout Beta Index ETF (BUYO) and Pacer’s PE/VC ETF (PEVC).

➨ TAKEAWAY: Private equity is still an asset class generally accessible only to institutional investors and a select few high-net-worth individuals. Still, the three new ETFs have combined assets of just $28 million so far, indicating that retail investors want the real thing, not just an imitation. A private equity firm will get regulatory approval for a real PE ETF at some point soon, which will begin to crack open the door to the asset class for retail investors.

The number of homes that sold for over $1 million rose 9.1% in 2024, with coastal cities leading the way, including San Luis Obispo, Los Angeles, and Seattle. Meanwhile, there were 1,700 homes that sold for more than $10 million in 2024, a whopping 350% increase compared to 2023. This year seems to be getting off to a strong start, with Manhattan, the nation’s capital of luxury real estate, having its busiest week since 2022, with 41 contracts signed for properties worth $4 million or more.

➨ TAKEAWAY: The typical buyer in the luxury market is somewhat insulated from the effects of higher mortgage rates, with a higher proportion of all-cash transactions - nearly half of all the sales in Los Angeles and Seattle, for example, are for all cash. There is also less of a supply issue, as fewer of the existing owners are subject to the “lock-in” effect that comes with having a property with a low mortgage rate. If the broader economy does well, expect the luxury real estate market to keep humming along in 2025.

🚀 Biopharma VC funding: While deal count for biopharma startups fell 12% in 2024, total funding increased by 20%, indicating bigger funding rounds for fewer startups, as VCs targeted more mature companies.

🏢 Microsoft cancels data center leases: The tech giant is backing out of a number of sizable leases related to AI infrastructure, sparking worries that there is less demand for data center capacity than originally thought.

🎨 Egon Schiele watercolor to be auctioned: The Austrian artist’s “Boy in a Sailor Suit” is being sold at Christie’s with a low estimate of $1.3 million. It is notable for its provenance - it originally belonged to Fritz Grünbaum, who was murdered at a Nazi concentration camp. Christie’s brokered an agreement between Grünbaum’s heirs and the consignor, and the proceeds of the sale will go to charity.

🪙 SEC drops Robinhood investigation: The enforcement agency is no longer investigating the investing app’s crypto trading division, a development that comes just after it also dropped its charges against the exchange Coinbase.

💵 JP Morgan expanding private credit efforts: The Wall Street bank is reportedly committing $50 billion to its direct lending program, a major expansion of its private credit program.

🚘 1935 Avions Voisin for sale: One of only three Avions Voisin C25 Aérodynes known to exist is coming to the Amelia Island car auctions in March and carries a $2.5 million estimated price tag.

More than 560,000 square-feet of the Greenbrier Mall in Chesapeake, VA is up for auction with a starting bid of $6 million. The portion that is for sale is 82.3% occupied and has a net operating income (NOI) of $3.5 million with room for improvement. Tenants include Macy’s, JCPenney, American Eagle, H&M, and Victoria’s Secret, along with a dine-in movie theater. Bidding for the suburban mall ends tomorrow at 3:15 PM ET.