Atlanta is a hot spot for investing in multifamily assets as the market emerges from the COVID-19 pandemic. The apartment market’s fundamentals, including occupancy and rent growth, have held up considerably well, making the market extremely attractive to buyers. Because the Atlanta market has an abundance of capital looking to be deployed, prices are being driven up significantly and cap rates driven down. Multifamily has outperformed many other commercial real estate sectors during the pandemic, considered a “hot-ticket asset class” by investors, which leads to new capital swarming the Atlanta apartment market. Many multifamily properties are now routinely trading at a sub-4 percent cap rate, indicative of the vast amount of available capital and the confidence that investors have in the product type. However, rather than clearing the market and searching for as many prospective buyers as they can, sellers are looking at a smaller subset of dominant, well-known investors that they know will deliver and get the transaction done. They are seeking six to 12 well-recognized, established players that can execute a deal at top prices. It is an extremely competitive process, and all buyers know they have to swing high on pricing. Oftentimes, no one broker is selected …
CHICAGO — Blackstone Real Estate Income Trust Inc. (BREIT) has entered into a definitive agreement to acquire Chicago-based Home Partners of America (HPA), valuing the company at $6 billion. HPA purchases, owns and operates single-family rental homes and provides a path to homeownership for individuals and families across the United States. HPA’s portfolio includes more than 17,000 homes across the country. BREIT intends to support the HPA management team as it explores opportunities to expand access to high-quality housing for lower-income households, including by formally launching its Choice Lease program. This program aims to provide a direct and tangible opportunity to help address housing affordability challenges for families, according to Blackstone. “The fundamental premise of the HPA platform is to provide residents with the opportunity to live in their chosen home with the option to purchase it,” says Jacob Werner, senior managing director with Blackstone Real Estate. “We intend to build on that goal and expand access to homes across the United States.” The transaction is expected to close in the third quarter. BREIT is externally managed by a subsidiary of Blackstone (NYSE: BX), which maintains approximately $196 billion in investor capital under management.
Consistent with much of the nation, the Mid-Atlantic region locked down at the onset of the COVID-19 pandemic in March 2020. However, by late August 2020 and throughout the first quarter of 2021, activity in the multifamily asset class picked up considerably. As operations stabilized and investors could better determine valuations, regional transaction volume quickly heated up as investors returned with pent-up demand. Aided in part by the continued government stimulus and rent regulation in the Mid-Atlantic, Baltimore’s durable “meds and eds” employment bases, anchored by the life sciences, medical, higher education and technology sectors, bolstered the region’s stability. The Baltimore multifamily market has performed in-line with comparable metropolitan areas in the Mid-Atlantic, with flat to moderate rent growth. Rents are expected to stagnate or struggle in response to heightened development occurring in Downtown Baltimore, Owings Mills and Towson, and the new supply may surpass demand in the near-term. Despite muted rent growth projections, transaction volume has returned with an expanded pool of multifamily investors, driving cap rates down and valuations up. Shifting east “Charm City” boasts blue-chip Downtown employers such as T. Rowe Price, Pandora, University of Maryland Medical Center, Johns Hopkins Hospital and Under Armour. In theory, this …
GRAND PRAIRIE, TEXAS — Taylor Morrison Home Corp. (NYSE: TMHC) will develop Christopher Todd Communities at Dechman, a 140-unit single-family rental (SFR) community in the central metroplex city of Grand Prairie. The property will be situated on 15.9 acres and will offer one- and two-bedroom residences that will range in size from approximately 750 to 1,050 square feet. Communal amenities will include a pool, fitness center and a dog park. Christopher Todd Communities is providing design and management services for the project. Construction is set to begin in the coming weeks.
LAWRENCEVILLE, GA. — Atlanta-based Parkland Residential has broken ground on Sweetwater Springs, the company’s first build-for-rent (BFR) community. The property is located at 1510 Duluth Highway in Lawrenceville, about 28 miles northeast of downtown Atlanta. The development will be completed by December 2021. Managed by Lincoln Property Group, Sweetwater Springs will be one of the first BFR communities in Gwinnett County and the first stacked townhome property within the county. Parkland Residential has begun leasing the townhomes at rents ranging from $1,950 to $2,300 per month. The three-bedroom units total 1,950 square feet and offer two-and-a-half baths plus a loft. Two-bedroom units offer 1,630 square feet of total living space. The rear-entry stacked townhomes in Sweetwater Springs will offer one-car garages and two- or three-bedroom units, including private owner’s suites with walk-in closets and baths featuring dual vanities. The open floor plans will feature kitchens that open into family rooms with covered outdoor living spaces. NorthMarq arranged $12 million of construction financing through Trez Capital on behalf of Parkland Residential. The developer says it plans to build several more BFR communities over the next several years as it provides an attractive housing alternative for the middle class.
FLAGSTAFF, ARIZ. — Walker & Dunlop has arranged debt and equity financing for the purchase of The Bungalows on Pine Cliff, a build-for-rent housing developing in Flagstaff. The structured transaction includes $37.6 million in bridge financing as part of a joint venture partnership. St. Clair Holdings is the borrower. Heather McClure of Walker & Dunlop’s Build-for-Rent (BFR) team advised the borrower and identified New York City-based Dome Equities as a capital partner for the project. Dave Hendrickson and Pat Modig of Walker & Dunlop’s Capital Markets group identified the opportunity and collaborated with the firm’s BFR and structured finance teams to provide the full capital solution. Developed in 2020, Bungalows on Pine Cliff features detached one-, two- and three-bedroom rental homes averaging 1,097 square feet. Community amenities include a leasing center, clubhouse, modern kitchen, fitness center, dog washing station, gas fire pits with seating areas, bocce ball court, dog park, barbecues and two electric car charging stations.
MIAMI — Transcendent Electra, a joint venture between single-family rental (SFR) platform Transcendent Investment Management (TIM) and multifamily owner/operator Electra America, has purchased 1,889 new single-family homes. The company has $496 million in contract process and closing and another $1 billion in the pipeline. This acquisition marks Transcendent Electra’s first significant acquisition since launching in February. The properties are new single-family homes and townhomes that are purchased directly from homebuilders throughout the following markets: Birmingham and Huntsville, Ala.; Florida; Savannah and Atlanta, Ga.; North Carolina; South Carolina; Nashville, Tenn.; and Dallas, Houston, San Antonio and Austin in Texas. Transcendent Electra aims to acquire or develop approximately $3 billion in SFR housing over the next three years, with a focus on new-build homes in the $175,000 to $300,000 price range, where average rent will be $1,500 to $2,800 per month.
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‘Astronomical’ Multifamily Investment Demand Drives Up Pricing, Says Marcus & Millichap’s IPA Panel
The U.S. multifamily sector remains an attractive option for real estate investors looking for a safe haven. Beyond the pool of traditional buyers who are actively acquiring apartment properties, the sector has become a landing spot for companies that aren’t legacy multifamily owners. Steven DeFrancis, CEO of Cortland, cited REITs like Blackstone Real Estate Investment Trust as newly establishing a presence in the multifamily sector. BREIT recently made a $240 million preferred equity investment in Tricon Residential connected with Tricon’s purchase of single-family rental (SFR) homes in Nashville. Nuveen Real Estate is also a recent institutional investor entrant in the emerging SFR sector. “We’re seeing a lot of new capital, whether it’s coming from overseas or from here,” said DeFrancis. “Institutional capital is continuing to move into real estate, and then within real estate there’s a lot of movement from other sectors into multifamily.” Jessica Levin, senior director of acquisitions at Intercontinental Real Estate Corp., said that the influx of capital into the U.S. apartment market the past six months has been “astronomical.” She also said that there’s no slowdown ahead. “Competition is stiffer now than in the past 10 to 15 years, and it’s only going to increase from …
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Build-for-Rent Space May Outperform Conventional Multifamily on Occupancy, Rents
The past few years have seen a surge in interest in single-family rental (SFR) and build-for-rent (BFR) spaces in commercial real estate. Traditionally the domain of small- and medium-sized investors, the SFR/BFR space has begun to attract institutional investors. BFR, in particular, can often offer higher occupancy levels and rents while promising lower capital and operating costs than traditional multifamily housing. Keaton Merrell, managing director, Capital Markets, Walker & Dunlop, spoke to REBusinessOnline about debt and equity in BFR, as well what to know when it comes to agency involvement. First, Merrell briefly clarifies the terminology: “Oftentimes, people use SFR and BFR interchangeably. They are two totally separate asset classes and are looked at differently by capital. SFR is defined as a cluster of homes in various geographies that are pooled together for investment purposes. BFR is purpose-built housing within contiguous rental communities, much like traditional multifamily properties.” For a more in-depth look at the SFR and BFR in general, read more on the asset class here. REBusinessOnline: What is the current state of debt and equity capital in the market when it comes to BFR? Merrell: I will start with equity and then move on to debt. The equity that is coming into the …
WINTER HAVEN, FLA. — Pintar Investment Co. has secured $9.3 million in refinancing for Lake Lucerne, a 56-unit single-family rental home community in Winter Haven. LendingHome, a San Francisco-based lender for residential investors, provided Pintar with the loan. Pintar chose LendingHome in 2019 to supply a $6.3 million acquisition loan, and Pintar selected LendingHome again to refinance the bridge loan. Built in 2019, Lake Lucerne’s homes feature four-bedroom floor plans averaging 1,678 square feet. Each home features a dedicated two-car garage and a lot size that averages 6,500 square feet.