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  • Acquisition Criteria
  • Acquisition Strategy
  • Repositioning Strategy
  • Multi-Family Focus
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Multi-Family Focus

Our investment strategy focuses on Multi-Family assets, because we believe this property type currently offers the greatest opportunity for return on investment.  We’re in good company - many industry leaders agree that apartments are a sound investment.

In stark contrast to the single-family residential sector, conditions in the apartment sector remain strong, according to the National Multi Housing Council’s (NMHC) latest 2008 Market Trends report.

“Apartments continue to be an investor favorite,” noted NMHC Chief Economist Mark Obrinsky.  “And rightly so.  ‘Real’ returns (that is, returns over and above the rate of inflation) to privately held apartments have averaged almost 11 percent over the last five years.”

Occupancy rates for apartments have remained stable, averaging in the mid-90 percent range, and rising in some cities.  Nearly one-third of Americans rent their housing, and more than 14 percent live in a rental apartment.

In 2007, the number of renters in professionally managed apartments increased by the largest amount since 2000.  In fact, the increase was as large as that for the previous five years combined.

The number of renters nationwide is projected to increase by almost four million households over the next 10 years, with half of those households likely to rent apartments.  To meet that demand, the nation needs to produce at least 250,000 new apartment residences each year.  Yet apartment completions have averaged just two-thirds of that in recent years.  Last year, both starts and completions of all multifamily units (both condos and rental apartments) fell to their lowest levels since 1996 and 1997, respectively.

“By all measures, new apartment supply clearly remains in check,” said Obrinsky.  “Thanks to those solid fundamentals, rents continue to show modest increases even as single-family house prices continue to fall.”

Rents for professionally managed apartments tracked by M/PF YieldStar rose by 3.5 percent in the fourth quarter of 2007, a pickup from the 2.9 percent increase of the previous two quarters.  Apartment vacancy rates have changed little over the last five quarters and are at exactly the same level as a year ago.

“The outlook for the apartment industry going forward is very strong,” said Obrinsky.  “The long-term demographics are quite favorable for rental housing.  The nation’s 75 million echo boomers are already entering the housing market,and most begin as renters.  Strong immigration levels add even more demand for rental housing.”

Source:  NMHC Market Trends report February 2008

Multi-Family Sector statistics*:

• Multi-family is the strongest of seven commercial property types in a comparison of income fundamentals by Moody’s Investors Service in January 2008.
• Vacancy rates in multi-family are expected to tighten in 2008, leading to rent increases.
• Average rents are also targeted to increase.

*Source:  The Grass is Greener; year-end reports put multi-family on top.  Chris Wood, March 2008 issue of MultiFamily Executive.