MORE BUYERS FOR MULTIFAMILY DEVELOPMENTS AS INSTITUTIONAL INVESTORS EYE CRE
Analysts tracking institutional investment in commercial real estate report that large institutional investors plan to redirect $135 billion into the sector over the course of the next few years. This investor group, which currently controls $12.3 trillion in assets, represents a deep well of new capital that will further support CRE’s already strong fundamentals.
As our sector draws attention from bigger investors, PointOne Holdings sits in a favorable position to market our development multifamily properties to these potential buyers.
WHO ARE THESE INSTITUTIONAL INVESTORS
Bisnow highlights well-known companies like BC Partners, which has historically concentrated its efforts in private equity throughout the United States and Europe.
Other large firms who have made a move into CRE investment include life insurance companies and investment firms who have developed niche strategies to maximize current market conditions. For example, Aegon RA has identified a significant opportunity in so-called “opportunity zones” where investment in multifamily and other CRE has the potential to deliver strong returns:
Last year, London-based research firm Preqin found that the number of global institutional investors with $1 billion or more in commercial real estate increased 13 percent over the prior year. NREI reported that these firms represent enormous direct buying power for commercial real estate assets:
The Preqin report uncovered a wide variety of firm types that had made significant CRE strategic moves, including: wealth managers, superannuation schemes, banks, private sector pension funds and public pension funds.
As investors seek to diversify their portfolios, these firms are answering the call with creative strategies and new vehicles, such as commercial real estate, that deliver a hedge against recession and strong returns for their buyers.
WHAT MAKES MULTIFAMILY ATTRACTIVE
TO INSTITUTIONAL INVESTORS
Multifamily properties and investment vehicles offer a unique set of advantages to investors of all sizes, including institutional investors.
We have reported on multifamily’s strength and stability for many years, and we have developed a strategic investment approach built on our years of experience and research that bears out those findings.
Factors contributing to multifamily’s stability include:
The numbers back up that last bullet point. Data shows that, between 1992 and 2018, multifamily posted annual returns of 9.75 percent – higher than any other CRE sector. Those returns coupled with multifamily’s low volatility, make it a uniquely attractive option for large investors.
PointOne Holdings welcomes these changes to the investment landscape because they mean more potential buyers for our office and multifamily properties. With investment firms of various types backing commercial real estate with significant capital, it supports the whole sector. These firms will bring a level of healthy competition to CRE acquisition that can only benefit our development investment platform and strategy.
PointOne Holdings is a real estate investment firm headquartered in South Florida and Atlanta with properties located throughout the Southeastern United States and Texas. The firm owns and manages a diversified portfolio of residential and commercial assets valued in excess of $730 million. PointOne Holdings’ core principles are founded on precise investment selection, thorough due diligence, creative deal structuring, strong financial management and proactive and responsive communication. PointOne Holdings’ principals are seasoned professionals with over 40 years of combined experience who have collectively conducted over $2 billion in real estate transactions.