A number of multifamily owner/operators and real estate investment trusts (REITs) have openly expressed plans to be more active in the acquisitions arena during the second half of 2015.
A grouping of these firms will acquire rental properties utilizing capital from recently launched funds. An increase in the formation of newly established funds indicates that more investors want to commit at least $5 million toward larger multifamily investment vehicles.
Continental Realty Corp. just launched its fourth investment fund, which received nearly $165 million in private equity. The fund will target value-add acquisitions in the Mid-Atlantic and Southeast, typically via off-market transactions.
Another buyer focused on value-add, Grubb Properties, launches its fifth fund that will focus on deals in Southeast-located secondary and tertiary markets. Recent acquisitions by the firm have occurred in Savannah, Georgia, and in Charlotte, North Carolina, and Greenville, South Carolina.
Specifically targeting acquisitions in Detroit, Capri Investment Group is in the process of raising equity for a future fund. Only mixed-use properties in Detroit’s downtown will be considered. Properties in this market are commanding lower rents than in other major downtown markets and are selling at higher cap rates.
By year’s end, Ethika Investments hopes to launch a new fund that will target rental-to-condo conversion opportunities. Properties in Los Angeles, Boston and possibly Houston will be considered. In these locales, the pricing gap between newly built rentals and condos is narrowing.
As development opportunities become harder to find and carry increased risk, more national developers will form programmatic joint ventures with regional or local builders.
One of the nation’s largest multifamily developers, Trammell Crow Residential, is partnering with Thompson | Dorfman Partners to fund at least $500 of mixed-use development and acquisitions in the San Francisco Bay Area. Advance Realty will also focus on mixed-use development, but in New Jersey with partner DeBartolo Development.