The New Trend in Institutional Investing: Large Blocks of Multifamily Apartments
December 11, 2015
The new institutional sentiment appears to be acquiring large blocks of multifamily apartments. The below transactions summarize approximately $20 billion in recent multifamily portfolio acquisitions.
- Blackstone’s $2 billion portfolio buy of 10,000 apartments from Greystar Real Estate Partners.
- Blackstone’s $5 billion plus acquisition of 11,000 unit Peter Cooper Stuyvesant Village.
- Starwood Capitals $5.4 billion apartment acquisition of 72 properties from Equity Residential.
- LoneStar’s $7.6 billion privatization of apartment REIT Home Properties.
- $1.5 billion Starwood multifamily acquisition from Joe Lubeck’s LAT Residential REIT.
- Blackstone’s $700 million Manhattan apartment acquisition from the Caiola Family
In part, the factors which are propelling investors to invest in multifamily apartment acquisitions include:
- Recent market reports make it clear that the fundamentals for multifamily apartments are strong, “Nationwide, apartment vacancy remains tight and will support robust rent gains….continued growth in employment will create new rental households and drive demand.”
- Demographic trends will remain highly favorable for the apartment sector with a substantial lift coming from millennials entering the workforce and forming households, and other adults and empty nesters downsizing from owner occupied housing, according to MMI.
- The employment to population ratio for the prime renter cohort – ages 24-34 – is at an all-time high, industry reports suggest.
- Higher down payment demand requirements, limited construction of starter homes, and stringent mortgage underwriting continue to suppress single family home purchases by first time home buyers and delay the transition from rentals to single family homes.
- Noting that increasing job growth translates to greater mobility, boosting apartment demand nationwide. Accordingly, MMI predicts that apartment vacancy will decline 20 basis points by year end to 4.3%.
- Noting that increasing job growth translates to greater mobility, boosting apartment demand nationwide.
As indicated by the approximate $20 billion of multifamily real estate acquisitions completed by some of the biggest institutional names in the business, multifamily apartment acquisitions are in favor with investors.
We strongly suggest that you contact Carlton because we currently control approximately $1 billion of multifamily joint venture and direct acquisition properties which contain the strong fundamentals which are discussed heretofore.
We look forward to speaking with you.
Howard L. Michaels