MULTIFAMILY ASSET CLASS

Typical Garden Apartments
Rehab/ Redevelopment
Suburban Apartment Community
Urban, Mid, and High-Rise Apartments
Workforce Apartments
Typical Garden Apartments

MULTIFAMILY RATIONALE

  • Demand for multifamily is outpacing supply.
  • Baby Boomers and the large Millennial generation are driving demand for multifamily.
  • These older and younger adults prefer the flexibility renting provides over home ownership.
  • Healthy demand and favorable demographic outlook (annual household formations in the U.S. is estimated to require net new housing increases of 1.3 million units per year for the next 14 years).
  • U.S. Home Ownership remains at historical low.
  • Increasing Affordability Gap, with lack of low-cost rental housing.
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COMPELLING CHARACTERISTICS
  • Attractive, risk-adjusted returns and relatively low volatility.
  • Dependable Cash Flow & Diversified Credit Risk.
  • Short-term leases allow immediate adjustment to market conditions, including inflation hedging characteristics.
  • Relatively low capital expenditures can be more accurately forecasted.
  • Preferential mortgage market and abundant financing sources.
  • Relative Liquidity.
  • Favorable regulatory environment.
  • Third-party leasing and management options.
  • As an inherent means of survival, multifamily stays steady and doesn’t experience the dramatic changes that retail and office often experience.
  • Multifamily is the least risky real estate asset class, and all demographic indicators suggest it will be a strong market for years to come.

MULTIFAMILY INVESTMENT CRITERIA

Property Type:
Garden-style; Mid-Rise and High-Rise Apartments

Asset Class:
A+ to C

Preferred Markets:

  • Secondary markets in the U.S. that are comparatively undervalued versus U.S. Gateway Cities, and are also projected to grow by > than 20% by 2030.
  • Population metrics where significant Millennial in-migration trends are forecast
  • Outsized job growth projected
  • 18-Hour Cities & Expanding Suburban locations

Property Size:
200 to 3,000 units (single or portfolio)

Pricing:
$8 Million to $250 Million (individual to portfolio acquisition)

Property Vintage:
1980’s to new construction (case-by-case for older vintages)

Investment Structure:
All cash to seller; Loan assumptions on a case-by-case basis.

Investment Objectives:

  • Submarkets with “barriers to entry” attributes, and investments situated in “path of growth” locations.
  • Acquire below replacement cost, and where a mispricing is identified.
  • Assets where rents and the property’s grade or class is below that of other competitive properties in its submarket.
  • Target Cap Rate: 5%-7%
  • Target IRR: 12%-18%

INDUSTRIAL AND LOGISTICS

Cold Storage
Re-purposing/Development
Last-Mile
Multi-Tenant
Distribution
Flex-Office Park

INDUSTRIAL RATIONALE

  • We believe the expansion of e-commerce is far from over, and the need for facilities to accommodate a denser distribution network is acute and will only increase over time.
  • Three main economic drivers will continue to positively influence the industrial real estate sector:
    • E-commerce
    • Expansion of the Panama Canal
    • Onshoring of manufacturing to the U.S.
  • Every consumer good has passed through one or more warehouse or distribution facility at some point in the global supply chain.
  • Without warehouses and logistics distribution centers, which are key industrial property types, the global economy wouldn’t function.
  • E-commerce spending in the U.S. is projected to grow 60% over the next five years, while consumer expectations for rapid product delivery continues to increase.
  • Long-term credit leases with CPI adjustments provide attractive bond-equivalent-like yields, together with appreciation potential; additionally, short-term leases allow immediate adjustment to market conditions.
  • Diversified credit risk.

Industrial Investment Criteria

Property Type:
Warehouse/Distribution (including cold storage), manufacturing/light assembly, R&D/Data Centers

Asset Class:
A+ to C

Preferred Markets:

Primarily transact in targeted secondary and select major US markets that:

  • Are comparatively undervalued versus US Gateway Cities, and projected to grow by > than 20% by 2030;
  • Positive population metrics;
  • Access to qualified labor;
  • Technological and infrastructure investment, proximity to sea ports, inland ports, intermodal facilities, airports, and other logistical cross roadways;
  • Opportunity Zone investment.

Property Size:
100,000 S.F. (single) to 3,000,000 S.F. (portfolio)

Pricing:
$8.0 Million to $250 Million (individual to portfolio acquisition)

Property Vintage:
1970’s to new construction (case-by-case for older vintages)

Investment Structure:
All cash to seller; Loan assumptions on a case-by-case basis.

Investment Objectives:

  • Markets/Locations with “barriers to entry” attributes, and those situated in “path of growth” as well as “last-mile” locations.
  • We seek to acquire properties below replacement cost, and where a mispricing is identified.
  • Our value-add investments focus on competitive properties at earlier stages of the development, re-purposing and/or leasing process.
  • IRR: 12%-18%
  • Target Cap Rate: 5%-7%
  • Target IRR: 12%-18%

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