Multifamily

We recognize that the demand fundamentals for multifamily real estate assets, even in the wake of different economic cycles and conditions, continue to remain a stable area of investing.

In tougher economic climates, Class A and B+ renters may be forced to trade down to Class B/C multifamily assets. Specifically, in 2008 and 2009, occupancy levels in B and C multifamily assets declined by ~1.0-2.6% in each year. Ultimately, everyone needs a safe and comfortable community to live in during robust and weak economic cycles.

Multifamily properties have exhibited a stronger sense of resilience in maintaining asset values as well as lower volatility with market rents and occupancy levels relative to other property types. In the Houston region alone, property performance data for Class B and C apartments from 2008 to 2010 specifically exhibited a 2-3% standard deviation of annual occupancy change from 2003 through 2013.

Competitive Advantage

As active investor-operators, we take a disciplined approach across all avenues pre and post-acquisition. Our team of dedicated professionals works thoroughly to monitor key performance indicators and optimize asset performance, engaging in in-depth market research and data analysis. We additionally provide a thorough due diligence process and a holistic, hands-on asset management model, maximizing our attention to detail on all ends of the spectrum.

Operational, marketing, and leasing strategies implemented at the site level place heavy emphasis on customer service, which we believe to be paramount in successful property engagement.

Investment Thesis

For every investment opportunity, we place a strong emphasis on favorable economic and demographic trends along with supply/demand dynamics through the strategic acquisition of assets across all real estate verticals.

We provide tangible income-producing assets with attractive risk-adjusted returns. Whether it’s assets for a high cash-yield or assets with land value and downside protection, we always ensure that each of our investment options offers favorable returns for all our investors.

Money Supply Growth

M2 money supply in the US has increased materially* resulting in higher volumes of capital held by pension funds, endowments, insurance companies., private equity and venture funds, family offices, etc. all pursuing a limited set of attractive investment opportunities.

With lower borrowing costs, we have observed return compression across all traditional asset classes (i.e. private equity, venture capital, real estate, stocks, bonds, private debt, etc.) over the last several decades.

US Domiciled Assets and Real Assets

Globally, investors globally continue to demonstrate preferences for US domiciled assets given corporate governance, legal frameworks, and other controls that provide enhanced business integrity and asset safety.

The US continues to be viewed as a safe-haven for foreign capital; investors increasingly seek tangible assets with current income and downside protection.

Wage Disparity and Cost of Living

As the wage gap and income disparity across the US continues to widen and population continues to grow, the lower middle class is being forced to find more affordable housing alternatives, thereby increasing the aggregate demand for value-add properties.

Cost of living continues to rise particularly in select coastal cities/states; cities/states with no or low state income tax, business friendly environments and lower cost of living will continue to attract new residents.

Homeownership Trends

Homeownership levels remain near 20-year lows at ~63% and rental demand continues to grow. Stringent borrowing requirement imposed by traditional lenders make it increasingly difficult for the lower middle class to purchase homes.

Millennials increasingly forgoing home-ownership and moving to larger cities (i.e. Houston, Dallas, Austin) compared to prior generations fueling further demand for multifamily. Homebuilders continue to struggle and pull back development around any economic uncertainty further supporting multifamily.

*From $8+ trillion in 2009 to record highs of $13.8 trillion in 2018 (Source: Federal Reserve)