We’re in the process of raising a $75M GP Fund to acquire value-add multifamily deals in the Southeast, focused on assets 1995 and newer.
The GP will be ~20% of each deal with the remaining ~80% coming from our long-term HNW and family office capital partners.
Assuming the GP
We all know the Nashville supply story is crazy and now for the first time I’m seeing a 5 month concession on a lease-up in the Gulch!
It feels like a race to the bottom.
A lot of multifamily owners are kicking the can down the road, raising pref to buy a 12-month interest rate cap, with the hope that rates come down or they see material NOI growth over the next 12-18 months.
I don't see either happening which will likely lead to some forced
This 550 SF studio is one of the best studio layouts I've seen; dedicated island (which is atypical in studios) and obvious layout for bed/living area.
@bobbyfijan
approved?
Spoke with 3 active FL multi brokers today all of whom said rates have not impacted pricing and all live deals are trending above pricing guidance. Why? Too much capital chasing too few deals....
We own an existing multifamily project that sits within the heart of the planned $6.5B Rays/Hines redevelopment of the 86 acre Tropicana Field.
It'll be the largest mixed-use development in the history of Tampa Bay and includes 8M SF of mixed-use development and a new baseball
Why would you bring a multifamily deal to market today? Two reasons I can think of; 1) You bought 5+ years ago and the returns look great, regardless of the 10%-20% pull-back or 2) you're bearish on the economy and believe now is the time to exit before things get worse.
Your primary residence is not an investment, but it is forced savings and often the largest financial asset for the middle class. How do you replace that as the middle class shifts to primarily renting?
Just got SD pricing back from our GC on a $50M ground-up multi deal. Pricing came in $4M higher than conceptual pricing with materials costs up 4% over the past 6 months...luckily rents are 10% higher than initial underwriting!
Nashville has 23k apt units under construction (equating to 14.7% of existing inventory) with 10k expected to deliver in 2023, largely concentrated in the downtown core. Glad I'm not a merchant builder delivering into that environment...
Dean Adler is a legend in the real estate business and recently started publishing a series of memos.
What attracts me to real estate, which Dean sums up perfectly, is the people and level of entrepreneurship. He describes it better than I ever could.
--
"What has inspired
Housing-related q's on my mind;
1. Will wage inflation keep pace with rent growth?
2. Are we as undersupplied in housing as everyone thinks?
3. Are the demo's (ages 25-34) for rentals as strong as everyone thinks?
4. What impact, if any, will interest rates have on cap rates?
One of the best podcast episodes I've listened to in a long time.
@Scottbeverett
is a big-thinker and inspiring to listen to and
@fortworthchris
killed the interview.
How are value-add multi operators underwriting deals today? We're targeting a 6.0% - 6.25% stabilized yield (yr 3) on deals built between 1995-2015 and located in high-quality Southeast markets. This is based on real taxes/insurance and assumes...
In August 2018, we locked in a 12-year fixed-rate agency loan at 4.32% with 6 years IO...looked terrible for past 4 years but is on the verge of looking attractive. That's the beauty of long-term fixed-rate debt.
I heard a multi deal recently traded in FL where the seller stayed on as a minority owner so the buyer could maintain the current insurance policy/premium. Not sure how that works, but gotta get creative in today's market to make deals happen
There's a gap in the real estate podcast world.
I'd love a weekly show where two experienced multifamily operators/developers give their thoughts on the market, share war stories, chat through deals, markets, running a biz etc.
No guests or interviews, just segments.
I'm
Two observations on high-quality multifamily in the Southeast:
1. More transactions are happening that people realize. Many of these are happening quietly off-market.
2. Pricing is holding up quite well, with tax and insurance-adj cap rates in the high 4, low 5 range.
Though
We signed 118 leases in Q2 at our new development in Nashville (Standard Assembly). While Nashville has one of the most robust supply pipelines (as % of existing inventory), leasing has been incredible. I attribute the strong leasing velocity to a combination of factors:
Here's my general investment thesis for buying high-quality multifamily deals in the Southeast today with the intent to hold for 7-12 years:
- Opportunity to buy newer deals at a significant discount to replacement cost. Construction costs aren't coming down and new development
Update here:
Just got a 6-unit, ~$500k deal under LOI. Buying for a 6.5% cap rate, plan is to put in ~$5-$10k/unit, increase rents from ~$1k to ~$1.2k and stabilize at ~8%. Will then either refinance or sell for a ~7% cap
@patekfelipe
(same person, he changed his @)
Real estate historians (
@moseskagan
et. al.), does anyone know where the tiered promote structure comes from? Seems unique to RE and removes the homerun scenario for investors. I've always struggled with it.
I've probably toured 50 new apartment developments over the past year and there's one trend that has stood out to me.
Developers are spending more money on amenities and less on unit interiors.
I continue to be blown away by the lavishness of the amenity set and clubroom, then
The buyer demand today for value-add multi deals with attractive assumable debt is massive.
Discretionary funds are sitting on a ton of capital they have to put to work and there's a scarcity of deals on the market.
Not a bad time to take some chips off the table...
Animal Spirits with
@awealthofcs
and
@michaelbatnick
is one of my favorite podcast. Two relatable guys who are intellectually curious, know what they don't know, are in the trenches in their field, and talk like two buddies at a bar. I need a version of this for real estate....
Was chatting with a large insurance company who we have a construction loan with. They are forecasting a 4.99% 10-year T-bill in 2 years and believe multi caps will hit 5.75% to 6% over the course of the next 24-36 months.
So much for survive til 25'
Multifamily investors help me understand this. There seems to be a consensus that things will get worse in multi due to a deteriorating economy/consumer, wave of new supply, sustained high rates etc. and as a result many buyers are on the sidelines. (1/4)
When raising money from HNW and family offices, it’s important to know the story of the deal. Multifamily real estate is more than numbers on a spreadsheet, it’s an emotional investment.
Here are some of the aspects of a deal which are critical to our pitch:
- Why is the
Question for multifamily operators. How do you quote going-in cap?
- T12
- T3 rev and T12 opex tax-adjusted?
- T3 rev and T12 opex tax and insurance-adjusted?
- Recent avg effective rents (90 days or so) and T12 tax and insurance adj?
- Other?
@seandsweeney
@EstateRanger
We sold a multi deal in FL in 2016. Achieved a 2.0x net to investors and thought the buyer overpaid. They’re listing the deal today and the whisper price is $65M. No renovation work, just pure market rent growth and cap rate compression. Selling can be painful in hindsight
This week we closed on a 256-unit value-add deal in Savannah, GA. Despite the pessimism in the market, there were over 30 bidders for this deal. Here's why I like it -
BREIT is currently selling a new construction multi deal in FL for 15% below what they paid for it in 2021.
@MRossG199
can you help me make sense of this? Floating rate debt where the cap matured and deal has no upside?
It's crazy to see how much other income has skyrocketed at multi deals; fees for valet trash, package systems, bulk wifi, pest control, deposit replacement programs, parking, car charging etc. etc. have become the norm
@drorpoleg
this is an aspect of real estate tokenization I haven't thought of....game-changing for developers and hopefully shifts the dynamic for those merchant builders developing cheap wood-framed multifamily...
Congrats to
@Kriseman
and his team on selecting Midtown Development to oversee the Trop redevelopment. The 86 acre site is one of the preeminent development sites in the country and will reshape the future of Downtown St. Pete -
I spent the last 3 days in Nashville and Savannah touring multi deals and talking with onsite teams. Here are a few of my random scratch notes:
- Differentiation is hard, but there's a massive opportunity in multifamily...
Interesting chart from the WSJ on the bid/ask spread in multi.
I anticipate this narrowing relatively quickly for a few reasons:
1. Forced sellers driven primarily by debt/interest rate cap maturities
2. Buyers coming off the sidelines due to more predictability of rates and
We brought in
@hicommon
to manage our property in Downtown St. Pete and they're definitely on a different level when it comes to online marketing. Check out their blog post on what they've learned about DTSP over their 1st month -
Awesome conversation. A few takeaways:
- "Real estate is a simply business that's hard to do"
- David says "I don't know" a lot. I appreciate his honesty. He doesn't pretend to have the answers.
- Knightvest does one thing and they do it very well. They're never going to deviate
Imagine buying 28 units for just $12,000. Thats $430 per unit.
That was the first deal David Moore, CEO of Knightvest Capital, purchased back in 2009. Since then they have gone on to purchase 55,000+ units.
This is one of the best real estate stories I’ve come across.
David
Why I'm bullish SE multi - cities with the highest quality of life and job growth: "Last year, avg multifamily asking rents in ATL, Georgia; Austin, TX; PHX, Arizona; and Orlando and Tampa in FL all met or surpassed the national avg of $1,557 per unit for the first time ever....
Been underwriting a bunch of multifamily development deals in FL and given where costs are, unless rents are $3.00/SF+, it's nearly impossible to hit our target 5.25% untrended yield-on-cost
" In the future, winning places — cities, offices, residential communities — will be those that are made with "passionate intensity," with a point of view, with a direct connection to a specific group of people (and no one else)." via
@drorpoleg
Can someone help me understand why population growth in Orlando is outpacing other FL metros?
To me, a major appeal of FL is the year round beach/water access...
In a world over-saturated with digital content, I wanted to highlight two phenomenal commercial real estate newsletters.
1. Asphalt Jungle by
@iononrecourse
: Eric is an incredible storyteller with many stories to tell. Short & sweet, his newsletter is both entertaining and
I toured 3 garden-style deals in Savannah today built by the same developer in 2017, 2021, and 2023. They were designed using the exact same unit layouts and every leasing agent complained about the same 1BR floorplan which lacked kitchen cabinet space and bedroom closet size...
Seems like a great time for long-term focused core-plus and light value-add money to snatch up select newer vintage deals in markets poised for long-term growth. Why am I wrong? (4/4)
@KenefskyCole
@MattLasky
@MRossG199
@gabebodhi
I've been helping manage a luxury STR in South Florida and over the past 4 months we've received 5 bookings from
@vrbo
and 0 from
@Airbnb
. Same listing, photos, rates etc. Any thoughts on why such a disparity
@rohindhar
?
As a real estate investor, the obvious play is to plan to hold that property as long as possible, but that's easier said than done!
Can't wait t see this play out over the next decade+! H/T as always to the great coverage at
@StPeteRising
-
I'm looking to create a stand-alone website for a single luxury STR (6BR house in South FL) with the goal of developing a brand and driving more bookings.
Any good examples of this in STR/hospitality at this small scale?
@isaacfrench_
@rohindhar
@hanslorei
@chadludeman
One of the easiest ways to differentiate in design is really cool/unique bathrooms. On the other hand, is there anything worse than a high-end restaurant, bar, or café with a basic/unkept bathroom? Such low-hanging fruit...
Shrinking apartments is a byproduct of rising land/construction costs, not a change in resident preferences. The realty is that developers generally build deals that pencil and not necessarily the ideal units mix and product for the submarket.
I recently shared a few of my thoughts heading into 2024 -
2023 was by far the most difficult of my professional career which started in 2011. There's no sugarcoating it.
I had to navigate many deal and market-related issues; uncapped floating rate debt
I've seen varying estimates of the quantitative benefits of OZ investing...based on our calc, it's a 400-500 bps higher post-tax IRR to LP's on a typical 15% gross IRR deal.
@DallasAptGP
does that sound right to you?
[New on ASotREG] I've always thought Class B multi was heavily supply-constrained, but now I'm not so sure. A combination of conversion opportunities and technological/construction innovation may lead to increased supply -
Experiencing some softening in rents across FL for the first time in a while. Yieldstar is lowering rents in Sarasota and Jax over the past week with slowing leasing momentum and lower occupancies across the comp set. Not concerned, but haven't seen this in 6+ months.
High retention is keeping our southeast multi deals well-occupied despite slow down in new lease demand. We renewed 20 or 21 expiring leases for Oct in Naples (a cool 95% retention w/ 20%+ avg. increases).
quality product that is well-priced and resonates with our target residents, an unrelenting resident focus, aggressive and creative marketing tactics, a great onsite team, and a highly sought after neighborhood. RE is hyper-local and market-level stats don't tell the story
I need
@packyM
and
@juniper_square
to connect for a Not Boring deep dive.
Packy is my favorite business writer and Juniper Square is the most useful real estate related technology platform out there.
@bsedloff
how can we make this happen!?
We're doing our first 506C raise and launched a landing page for our latest Opportunity Zone fund. Would love any feedback from the
#retwit
community -
@DallasAptGP
How do apt owners think about refi timing when there's been significant value creation, but LtoL is burning off at a pace of $10k/mo. and rates are rising? There's a ton of value of waiting another 6-8 mos, but risks as well....
@MRossG199
@moseskagan
@Keith_Wasserman
Anecdotally, I'm hearing multifamily construction costs are down 3%-5% across most markets. Likely not enough to make new developments pencil, but helping push some stalled projects forward.
It was 70 and sunny yesterday in Jersey and I spent the entire day playing outside with my young kids. It was pure joy and it inspired me to compile a list of things I thoroughly enjoy.
- Eating breakfast at old school Jersey diners with my kids
- Creative writing in inspiring