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Singaporean Investor Makes Big Foray Into U.S. Multifamily, Goes For Class-B Instead Of Class-A

Singapore-based CapitaLand Group, through its subsidiary CapitaLand International, has acquired a portfolio of 16 multifamily properties in the United States for $835M. The deal is the company's first foray into U.S. multifamily.

Marquessa Villas in greater Los Angeles, a property in the portfolio that CapitaLand acquired

The portfolio comprises 3,787 Class-B units in suburban Seattle, Los Angeles, Denver and Portland, Oregon. The price per unit is $220K/unit, which the buyer said is consistent with market conditions.

According to CapitaLand Group President and CEO Lee Chee Koon, who assumed the post last month, the acquisition diversifies the company's business outside of its two core markets of Singapore and China. It also enables CapitaLand to diversify its portfolio into developed markets as it continues to scale up in the emerging markets of China and Vietnam.

"The multifamily sector in the U.S. is broad, scalable and a growth sector marked with long-term secular trends," Lee said, adding that CapitaLand will pursue a value-add strategy with the properties, in addition for hunting for other apartments to buy.

"While we value add to this portfolio of freehold operating assets through asset enhancement post-acquisition, we will also be looking out for more opportunities to build up a sizable platform and strengthen our expertise in this asset class," Lee said.

The fact that the portfolio is Class-B speaks to the fact that some investors seem to have shied away from Class-A apartment properties as too expensive, or simply hard to find.

"The stable, reliable cash flows of these Class-B multifamily properties make this suburban portfolio more attractive than the higher-priced urban core segment," CapitaLand International CEO Gerald Yong said.  

"This portfolio of low-rise and garden-style properties continue to be a strong draw for middle-income and skilled professionals working in surrounding employment hubs," Yong said. 

The deal isn't the investor's first buy in the United States, just its first apartment portfolio. CapitaLand entered the U.S. market in 2015. Through its subsidiary Ascott Residence Trust, the company acquired five hotel properties with over 1,260 units in Manhattan and Silicon Valley. 

Last year, Ascott Residence paid more than $105M for the 224-room DoubleTree in Hell's Kitchen, Manhattan. 

In 2017, Singapore outranked China as the largest Asian investor in U.S. properties for the first time in five years as the Chinese government put the brakes on overseas investment. Most of the deals involving Singaporean capital were done by that nation's sovereign wealth fund, GIC Pte., which invested about $9.5B in U.S. properties last year.