The survey also found that 40% of
respondents are actively pursuing one or
more real estate alternatives. CRE debt
remains the most common sector, at 52%,
followed by self storage, seniors housing
and student housing, each of which were
favored by nearly 30% of investors.
None of this, however, is to suggest that
investors are completely shying away from
the CRE transaction market this year.
Overall, the survey found that 98% of the
respondents intend to make acquisitions
in 2019.—Erika Morphy
Institutions Bet Big On
SFR, Workforce Housing
Amherst Residential, the residential real estate division of the
Amherst Group LLC, recently closed on the acquisition of 446
single-family rental homes for $103.3 million. The properties
are located in 43 markets across 18 states, including Miami,
Atlanta, Memphis and Phoenix, and Greensboro/Winston
The company has been snapping up single-family rental
assets at a rapid clip since October 2018. Since that time and
including this transaction, the Austin-TX-based firm has
acquired 2,400 single-family rental properties valued at approximately $404.1 million. With these acquisitions, Amherst
Residential has expanded its national footprint to cover 29 markets and entered new markets including Salt Lake City, Las
Vegas, Seattle and Denver.
The firm is taking advantage of the market fragmentation in
the single-family rental home space, says Drew Flahive, president of Amherst Residential. Since establishment in 2012, the
company has acquired in excess of 23,000 single-family homes.
It is targeting the purchase of more than 10,000 single-family
rentals by the end of 2019.
Meanwhile, global private markets investment management
firm Hamilton Lane has recapitalized a workforce housing portfolio owned by Asia Capital Real Estate for $147 million.
Located in Florida, Ohio and Georgia, the 1,700-plus apartments have been folded into a new fund structure.
It is a significant transaction for ACRE not only for its size but
also because of its institutional backing. according to Michael
Van Der Poel, who is co-founder and managing partner of the
long-term affordable housing owner operator.
“We have been investing in workforce and affordable housing for seven years and have spent much of that time educating
institutional investors about their merits and differentiating
factors,” he explains.
Until now, Van Der Poel adds, ACRE had secured much of its
financing from family offices. The single-family rental space “is
typically a non-institution asset class but increasingly, we are see-
ing pension funds and other such inves-
tors express an interest in our model.”
The business case is straightforward:
there is an ongoing affordable housing
crisis in the US along with a shrinking
supply of housing among B and C grade
properties. This demand-supply mis-
match creates an opportunity for institu-
tional investors that want to see buildings
running full, he explains.
Van Der Poel, who says ACRE has been
posting 20% IRRs for its funds, says that
for institutions, “it’s a chance for social
impact investing with great returns.”
Currently, ACRE is deploying its third
private equity fund focused on workforce housing which, along with separately managed accounts, exceeds $250
Debt Funds Shift Lending Landscape
One of the more interesting trends this cycle has been the effect
that debt funds have had on capital flows, according to panelists
at MBA CREF/Multifamily Housing Convention and Expo 2019.
Debt funds have clearly come into their own as a mainstream
source of CRE finance, the panelists said, while at the same time
other capital sources are also leveraging their strategy by providing warehouse lines, investing in funds or even acquiring funds.
Competition from banks is diminishing as their risk departments are strengthened. “When you put significant ropes on
that source of capital, it does have a significant impact on the
lending market,” one panelist said. “Global banks are still gun
shy on real estate portfolios.”
For debt funds and other capital sources, though, “it is an
opportunity rich environment,” said Jack Gay, managing direc-
tor and global head of debt at Nuveen Real Estate. “People are
looking for ways to get value-add deals executed.”
Indeed, capital is so plentiful that in some cases funds are
coming up with new structures to accommodate it.
“If you have a $400-million debt fund and you are trying to
build a diversified portfolio, what are you going to put in each
position, $20 million? That forces you to cater to certain demographics and borrowers,” commented Justin Guichard, a managing director with Oaktree Capital Management LLC. “We haven’t
seen the number of funds raised that focus on that type of borrower, neither from a caliber of asset nor from a capital requirement perspective, so we feel comfortable with what we are investing in. Our targets are in line with what our investors expect.”
He added that the regulatory environment has been a tailwind.
As the industry matures, it’s being viewed as a more permanent
part of the capital structure, he explained. “We’re getting closer to
the end of the cycle and have raised large distressed debt funds;
we’re preparing ourselves for the next downturn.”—Natalie Dolce
JLL has appointed Stephanie
Plaines as its global chief
financial officer, reporting
to Christian Ulbrich, chief
executive officer. She will
also join the Chicago-based
company’s global executive board. Before coming to
JLL, Plaines served as CFO
for the US retail segment of