Bryan McCann’s Post

Blackstone’s $10B Multifamily Buy: A Strong Message to the Market As I shared during a recent panel at the Appraisal Institute - Metro NJ Chapter Conference in Princeton NJ, I emphasized the significance of Blackstone’s monumental $10 billion acquisition of AIR Communities. This strategic move by the institution sends a powerful message to the market, reflecting a shift in investor sentiment and providing valuable insights for industry stakeholders. Especially noteworthy is the fact that private capital typically moves much quicker than institutions. Thus, the institutions’ decisive action at this juncture indicates even greater confidence in the market. When institutions are making moves, it signals that this is indeed the time to take action. Despite recent challenges, including projections of temporary lower occupancy due to anticipated supply through 2025, the multifamily sector remains resilient. With single-family homes becoming increasingly expensive for home ownership, the demand for rental apartments is expected to rise, further bolstering the appeal of multifamily investments. This trend was further underscored by Blackstone’s recent acquisition of Tricon Residential , a single-family home operator, for $3.5 billion. Blackstone’s 10B acquisition underscores the value proposition of multifamily properties at this juncture. It signals confidence in the market and asset class and highlights opportunities for investors to capitalize on potential upside. As we navigate through evolving market conditions, staying attuned to transformative developments such as this is crucial for making informed investment decisions. #RealEstate #Multifamily #Apartments #Investment #MarketInsights #PropertyInvestment #Advice #newjersey Appraisal Institute Connor Montferrat Matthew Englehardt The Eider Group at Marcus & Millichap

While we’ve done dozens of development deals in the past few years, we’re excited to announce our first property purchase since February 2020: the impending acquisition of a 300-unit garden-style multifamily property in suburban Dallas.     In today’s Bisnow article, Origin Co-CEO David Scherer discusses the impact of recent high-profile transactions by investment giants like KKR and Blackstone. With stabilized interest rates and strong fundamentals, multifamily demand is set to outpace supply. Read the article here: https://bit.ly/3XIGcFY #realestate #multifamilyinvestments #markettrends 

Interesting read with your morning coffee ☕ As I previously stated in a corresponding post regarding this acquisition. Blackstone cannot be ignored... and it certainly hasn't. As the world’s largest commercial real estate owner, Blackstone’s impact stretches well beyond AIR and to the rest of the sector. Blackstone’s acquisition of AIR, which is expected to close next quarter, represents the company’s largest acquisition in the multifamily sector. Blackstone will take the company private. #multifamilyinvesting #multifamily #apartments

Leslie Shaver, Multifamily Dive. Blackstone, a New York City-based investment manager, and Apartment Income REIT Corp. (AIR), based in Denver, announced an agreement for Blackstone Real Estate Partners X to acquire all AIR's outstanding common shares for approximately $10 billion, including debt assumption. Blackstone, the world's largest commercial real estate owner, is buying AIR at $39.12 per share, a 25% premium over its closing price on April 5, 2024. AIR's portfolio includes 27,010 units across 76 rental communities, primarily in coastal markets like Miami, Los Angeles, Boston, and Washington, D.C. Blackstone plans to invest over $400 million in these properties for maintenance and improvement, with potential for further investment for growth. Blackstone, with $337 billion of U.S. investor capital under management, has previously acquired apartment firms including American Campus Communities, Preferred Apartment Communities, and Resource REIT. Nadeem Meghji, Blackstone Real Estate's global co-head, highlighted AIR's portfolio as exceptionally high-quality. AIR has operated independently since 2020 after spinning off from Aimco. Terry Considine, Aimco's founder, led AIR post-separation. The deal comes after a period of low merger-and-acquisition activity in the apartment market. MSCI Real Assets notes this transaction could indicate a recovery from COVID-related shocks and potentially inspire more deals in the sector, as public markets have undervalued apartments relative to private valuations. #blackstone #realestateinvestment #apartmentincome #airreit #multifamilyhousing #commercialrealestate #propertyacquisition #coastalmarkets #investmentmanagement #rentalcommunity #realestateportfolio #marketexpansion #propertyimprovement #housingmarket #realassets #sectorrecovery #propertydeals #apartmentsector #institutionalinvestment #marketvaluation

Am I a contrarian? Sure. Am I usually a bit early on my predictions? Perhaps. Am I occasionally too optimistic about situations? Absolutely... and, if I'm being honest with myself, it's more than just "occasionally." With all of those admissions out of the way, I am hopeful for the future of commercial real estate. And when I say commercial real estate, I mean the industry as a whole... CRE is more than just office. I believe a turning point is here and it appears Bruce Flatt, the CEO of Brookfield, shares the same belief. On a recent earnings call, Bruce Flatt stated, "The new story will soon become that there are major tailwinds behind real estate, fundamentals are good, and interest rates are coming down by 200 basis points." "You're going to see a much different story play out than what you imagined," Bruce states, and I agree. Am I suggesting the industry is going to recover in the next 60 to 90 days? No, absolutely not. Are property owners and developers still going to be facing tough decisions in the near term? Yes, without a doubt. But I do believe the turning point is approaching and there are many reasons to be cautiously optimistic. What are your expectations for CRE in 2024❓ https://lnkd.in/gCMpAQ-a #commercialrealestate #investments #development #acquisitions #interestrates

When people ask me why now is the golden window to buy multifamily? Here are a couple of compelling reasons: · Supply-Demand Discrepancy: A significant disconnect exists between supply and demand, promising continued strong absorption and rental dynamics. · Homeownership Cost Barrier: With homeownership increasingly out of reach for many, there's a growing renter pool, further bolstering the rental market. · Bond Market Dynamics: While bond markets are relatively high (at least for this decade) pricing reflects this state. Anticipated interest rate cuts could tighten spreads, potentially boosting investment values. · Buyer's Market Advantage: Presently, it's a buyer's market, offering less competition and more unique opportunities. · Inflation Hedge: Commercial real estate remains as an attractive option for investors seeking to outpace inflation and build long-term wealth.   As noted by experts from Blackstone, investing during periods of uncertainty can yield immense upside. “You want to be investing into this dislocation because there's a lot of uncertainty. When that uncertainty passes, those investments begin to deliver accelerated return.” While deals may be challenging in today's market, the potential upside CRE is unprecedented. For those with a long-term outlook, there's arguably never been a more exciting time to enter the nipsey hussle marathon than today. https://lnkd.in/e6FfhsH4 #greysteel #cre #blackstone #realestate #multifamily #investing

CEO & Managing Partner of The GSH Group, Gideon Pfeffer, recently wrote an article that appeared in Inc. Masters. Click below to read "4 Trends Reshaping the Multifamily Real Estate Market" to understand the trends that will help savvy investors seize emerging opportunities. https://hubs.ly/Q02Fz07N0 #gshrealestate #multifamilyrealestate #conciergerealestate #realestate #alternativeinvestments #investments #incmasters

KKR paid $2.1B for over 5.2K units spread across various states, including California, Washington, Florida, Texas, Georgia, North Carolina, Colorado, and New Jersey.They’re banking on dwindling apartment construction leading to lower supply and rising rents by 2026. What do you think about this move? Do you think Multifamily will rebound soon? #investNowCapital #privateequity #multifamily #Passiveinvesting

Blackstone's deal to acquire AIR Communities is priced 25% above AIR's stock price at the time of the announcement. But the valuation is closer to what apartment properties are actually trading for on the private market -- suggesting Blackstone is betting that the public markets are inefficiently pricing multifamily REITs. Whether that is true or not, we'll see, but apartments just haven't been trading at the values implied by REIT prices. One of my favorite commentators, CRE Analyst, published a post yesterday estimating an implied cap rate of 4.85%. That is by no means bargain bin discount shopping, but it is market reality. It's within the range of property-level trades for similar product -- high-quality assets in mostly high-quality markets. This is a good reminder that CRE and multifamily pricing indices based on stock prices are often poor gauges for real-world valuations. Stock prices can fluctuate for reasons that have nothing to do with the value of the underlying real estate assets. MSCI had a great chart last year showing valuations based on a repeat sales methodology were substantially higher than one using REIT stock prices. The deal also comes as no big surprise, given that Blackstone's Jon Gray has made headlines in recent months making the case that commercial real estate prices were bottoming and that now is a good time to buy. That's an increasingly accepted view in multifamily, where the consensus outlook now seems to be that multifamily is well-positioned for growth by 2025-26 after working through the multi-decade-high supply wave. It'll be interesting to see if this deal pulls other institutional buyers off the sidelines. I suspect it will. The AIR acquisition provides a good comp for apartment owners -- and a reminder to buyers that they aren't likely to see great real estate at greatly discounted prices. Bigger discounts are more likely to come in lower-tier assets in less-desirable locations. #multifamily #apartments #CRE https://lnkd.in/gCtiRm-B

A huge opportunity for serious operators to provide value to investors. In the wake of the pandemic, investors eagerly entered the multifamily real estate sector, drawn by low-interest rates and the essential nature of housing. This led to a rush in floating-rate loans and syndications. However, the scenario quickly changed as interest rates outstripped rental rate increases, causing market distress and a surge in defaults and foreclosures. Experienced investors are now spotting "generational opportunities" in this turmoil. Over $250 billion in private equity is earmarked for distressed real estate, half of which targets multifamily assets. Current and potential distress in this sector is significant, with MSCI reporting over $7.5 billion in distress and a potential for $65.7 billion more. Property values have nosedived, and transaction volumes have decreased sharply. This presents an attractive landscape for well-capitalized investors and private equity firms, who are poised to capitalize on these market changes. For instance, Three Pillars Capital Group strategically acquired the Chateaux Dijon complex in Houston before its loan matured, showcasing savvy investment strategies in this climate. The market's downturn is partly attributed to the influx of inexperienced investors during the boom, many of whom struggled with property management and maintenance. As the market continues to recalibrate, these investors face significant challenges. This dynamic market offers substantial opportunities for astute investors. The coming months will likely witness more foreclosures and acquisitions, as the multifamily real estate sector adjusts to these new realities. 👀 What's your take on these market shifts? Let's discuss below! #RealEstateInvestment #MarketDynamics #InvestmentStrategies #OpportunityAwaits