Timothy J. Swanson’s Post

Are apartment rents headed higher again? KKR has completed its largest-ever purchase of apartment buildings, the latest in a string of big-ticket deals, signaling that some of the most prominent investment firms are betting on a broad rebound for multifamily housing.  The New York-based private-equity firm paid $2.1 billion for more than 5,200 apartment units across the country, from California and Texas to New Jersey, KKR said. The deal for the multifamily properties, which are 18 new mid- and high-rise buildings, closed Tuesday. KKR’s acquisition and other recent major purchases could indicate a growing confidence among large investors that rents and values for apartments will soon begin rising again. Rent is already starting to pick up in several Midwest and Northeast cities. In April, Blackstone agreed to pay $10 billion for the landlord Apartment Income REIT, while last month Brookfield bought a portfolio of 7,000 apartments for $1.55 billion. #inflation #housing #apartments #rents #privateequity #KKR #multifamily #housingshortage #blackstone #brookfield #commercialrealestate

🏢💼 KKR Bets Big on Apartment Market Rebound with $2.1 Billion Purchase 💼🏢 📢 KKR is making headlines with its largest multifamily real estate investment to date! The firm has acquired 18 complexes from Quarterra Multifamily, a subsidiary of Lennar (LEN), for a staggering $2.1 billion. This massive deal includes over 5,200 units in Class A midrise and high-rise buildings across key states: Washington, California, Colorado, Texas, Florida, Georgia, North Carolina, and New Jersey. 🌟 🔍 Deal Details: - Portfolio Size: Over 5,200 units in prime locations - States Involved: WA, CA, CO, TX, FL, GA, NC, NJ - Operators: KKR will partner with Carter-Haston, MG Properties, and Dalan Real Estate to manage the assets 📈 Portfolio Growth: This acquisition boosts KKR’s real estate portfolio by 3%, now making up 12% of its $575 billion assets under management. KKR is leveraging current market conditions, which they view as favorable for long-term real estate investments, highlighting significant economic potential. 🔑 Why It Matters: KKR’s substantial investment underscores a robust confidence in the multifamily market’s recovery, even in regions previously hampered by high supply levels. The firm anticipates rent growth for high-quality rental properties, especially in strong markets like California and New Jersey. 🌟 Houston Spotlight: Houston's population growth continues to positively impact the rental market. With an increasing demand for housing, the multifamily sector in Houston is poised for recovery and growth. 📊 According to recent data, Houston's rental market has shown resilience with a steady increase in rental rates, reflecting a strong economic environment and a promising sign for multifamily market recovery. 🚀 The Takeaway: KKR’s bold move signals a bullish outlook on the multifamily market. Despite recent challenges, the firm believes in the long-term potential for rent growth and stability in the rental market. This investment is a testament to the enduring value of high-quality rental properties in thriving markets. 🔗 #RealEstate #Multifamily #Investment #Houston #RentalMarket #KKR #Quarterra #Lennar #EconomicGrowth #MarketRecovery #PropertyInvestment #AssetManagement #PopulationGrowth

Multifamily Real Estate Perspective KKR's recent acquisition of over 5,200 apartment units for $2.1 billion highlights a growing confidence in the multifamily housing market. Despite recent struggles in the sector, such as flat rent growth and higher interest rates that have suppressed property valuations, prominent investors are signaling a potential rebound. With a downturn in new construction starts suggesting a forthcoming decrease in supply, rent increases are expected to accelerate by 2026. This shift is creating attractive investment opportunities, particularly as distressed properties become more prevalent. For investors, this could be a strategic time to consider multifamily real estate, especially in markets where future supply constraints are likely to drive up rents. https://lnkd.in/gPC4rFWt

Multifamily has long been viewed as a great place to invest in real estate and now it looks like the country's largest investors are back in the game. Despite two years of transaction volume dropping by 50% off the norms we are starting to see large transaction in the space. - KKR just completed its largest ever purchase of apartment buildings. The NY based private equity firm paid $2.1B for more than 5,200 units at 18 properties across the country. - In April, Blackstone agreed to pay $10B for the landlord Apartment Income REIT. - Last month, Brookfield bought a portfolio of 7,000 apartments for $1.55B. - KKR has made a few other property acquisitions recently. In April, it paid $1.64 billion for a student-housing portfolio owned by Blackstone Real Estate Income Trust, and last month it bought an industrial campus in Nashville. These recent acquisitions could indicate a growing confidence among large investors that rents and values for apartments will soon begin rising again. This is significant activity considering the flat rent growth we experienced over the past year or two due to an over supply of units coming out of covid. Investors say they are encouraged by the falling number of construction starts for new apartment buildings, portending lower levels of new supply and faster-moving rents by 2026. This activity adds support for our investment thesis that the lack of new construction starts today will lead to a supply and demand imbalance in 2025 and beyond which will drive rent growth and NOI higher resulting in greater returns for investors. https://lnkd.in/geRCUdfZ

Institutional firms placing large bets on the U.S. apartment building market. The apartment sector has been struggling as of late, and valuations are below the premiums that they traded at in the last 2 years. Apartment-building prices were down more than 20% in May from their July 2022 peak, according to data firm MSCI Real Assets. Where there is distress, there is deals to be made. Well-capitalized investment firms see this period as an opportunity and have been quite active this year. KKR closed on a $2.1 billion portfolio of 5,200 units across the country. This follows a $1.64 billion dollar purchase of a student housing portfolio back in April. Blackstone is ramping up investment in the apartment space, announcing its $10 billion purchase of AIR communities back in April. Brookfield is buying a 7,300 unit apartment-building portfolio for $1.55 billion, spread across 11 markets. Such acquisitions could indicate a growing confidence among large investors that rents and apartment valuations will soon begin to rise again. Could the next 12 months be a turning point in the market for apartment buildings? #commercialrealestate #realestate

KKR is joining other large investors in betting that multifamily rents and values will rebound. The private-equity firm paid $2.1 billion for more than 5,200 apartments in Class-A buildings located across the United States (including in California, Texas, and New Jersey). Quarterra -- Lennar's apartment-development division that reported losses in recent quarters because it overbuilt in saturated Sun Belt markets -- sold the portfolio to KKR. This is the latest sign that large investors believe the multifamily market has bottomed and is ripe with opportunity. Two months ago, Blackstone acquired AIR Communities (which owns upscale apartment buildings in coastal markets including Miami, Los Angeles, and Boston) for $10 billion. Brookfield bought a portfolio of 7,000 apartments last month for $1.55 billion. "Investors say they are encouraged by the falling number of construction starts for new apartment buildings, portending lower levels of new supply and faster-moving rents by 2026. 'Even Sun Belt markets where supply is growing fastest should rebound quickly once new supply slows,' KKR said in a recent report addressing the multifamily market."

$2.1B for Multi. #WednesdayCRE #CommercialRealEstate #CommercialDebt #CommercialInsurance KKR has acquired a portfolio of 18 multifamily assets from a closed-ended fund sponsored by Quarterra Multifamily for $2.1 billion. The recently-built, Class A portfolio consists of over 5,200 units concentrated primarily in growing coastal and sunbelt markets including California, Washington, Florida, Texas, Georgia and North Carolina, Colorado and New Jersey. The portfolio, a mix of mid-rise and high-rise buildings, serves high-growth metropolitan areas where new supply will slow down significantly looking out beyond the next couple years, according to Daniel Rudin, Managing Director at KKR. #SourcingAndSelling #SellingAndSourcing #Retwit #2024 ~ If you have real estate, and you are willing to entertain offers, have debt to refinance, or in need of insurance for your properties, reach out to me with the details: Lance@RealtyByLance.Com 305.203.2070 ~ Contact Us for Commercial Investments, Financing and Insurance. ~ Multifamily, Industrial, Hotels, Office, Retail, Development Sites, Plus. #ListWithLance #LanceLoans #LetLanceInsureYou #CRE #Owners #InvestmentProperties #Multifamily #Industrial #Hospitality #Retail #Development #Construction #Commercial #CommercialTransactions #CommercialFinance #CommercialInsurances #CommercialTitleAndClosing #CommercialProp https://lnkd.in/gVC85mAY

KKR makes a big move into the apartment market with their $2.1B acquisition of over 5,200 apartment units. The acquisition involved newly built developments from California, Texas and NJ. Building starts with five or more units dropped 51.7% year-over-year to a seasonally adjusted rate of 278,000 in May. This reflects that over-building has occured in many markets with new rents declining. Long term investors will see the drop in building activity as a positive. Only four large metros have rents rising at 5% over the past year. Apartment rents in the US are down -1% YoY. Labor Dept data shows new rents down even more at -5% year-over-year. Are there buyers and sellers for multi-family assets? Yes! Thinking of buying or selling please contact me. Stay informed about the evolving real estate landscape by following me on LinkedIn. #realestate #apartments #multifamily #privateequity #deals #acquisition #california #texas #newjersey #kkr #blackstone #lennar #sanfrancisco #losangeles #sandiego #marin #sonoma

📢 Big News in Real Estate! KKR Makes a $2.1 Billion Bet on Multifamily 📢 Global investment firm KKR has purchased a major apartment portfolio from Lennar's Quarterra for $2.1 billion. More signs that everyone is getting comfortable with the current enviroment: 💼 Deal Overview: KKR bought 18 Class A multifamily properties with over 5,200 units. The properties are located in high-growth markets across the US, including coastal and Sun Belt regions. This is KKR's largest investment in the apartment sector. 📊 Market Conditions: Despite a 40-year high in apartment completions in 2023, KKR is confident in the long-term fundamentals of the multifamily sector. The recent surge in supply has affected valuations and rent growth, creating a buying opportunity for well-capitalized investors. 🏢 Property Details: The portfolio includes a mix of high-rise and mid-rise developments. Ovation Apartments in Seattle, built in 2022, has seen rents fall by 5.5% over the past year. 📈 Strategic Insights: KKR plans to manage the assets with Carter-Haston, MG Properties, and Dalan Real Estate. The firm believes transaction activity is picking up after two years of dislocation in commercial real estate markets. 🔍 Historical Context: Quarterra, originally Lennar Multifamily Builders, faced operating losses due to overbuilt markets and slowing rent growth. The company first considered a sale in 2022 but pulled back due to unfavorable market conditions. 💡 Future Outlook: KKR's recent multifamily market report is optimistic about acquiring high-quality properties at discounts through 2024. The firm's scale, relationships, and local knowledge provide advantages as a buyer. This significant transaction underscores KKR's confidence in the multifamily sector's potential for long-term growth and stability. #Colliers #Pittsburgh #MoreIn24 #ThriveIn25 #ClosersCoffee #ColliersCapitalMarkets https://lnkd.in/edX-fBXR

We are certainly in the midst of increasing distress within the multifamily space right now, due to a variety of issues: flatlining rent growth; high interest rates; short term debt coming due, etc. In addition, there are clearly a lot of new multifamily deliveries still to come in the next year or two, further depressing short term rent growth (though the current trendline shows a sharp drop-off in new housing starts in 2024). Overall, this might point to the timing on KKR’s part as fortuitous, assuming a 3 to 5 year hold. But is this the right time for big ticket purchases in the sector? Regardless of where we are in the cycle, a good deal (at the right basis) should always pass muster— but generally speaking, I am of two minds regarding this transaction. On the one hand, if you waited another six to twelve months, pricing would likely be more competitive, assuming (as I do) the Fed won’t be lowering rates anytime soon. On the other, (as some of my smartest mentors have pointed out,) you don’t have to wait till the very bottom of the market in order to make money when buying. Either way, I would be curious to peel back the layers on what this portfolio actually looks like— where are they buying specifically, and what kind of assets is KKR actually getting for their money?