With pricing frothy and competition fierce, it's getting harder to find stellar returns in multifamily. (Have you looked under the couch cushions lately?) Here are some tips from pros around the country:
LA: The more affiliates, the merrier
El Segundo-based value-add apartment investor Coastline Capital Partners has been able to unlock value in underperforming properties via its affiliated property management and construction management companies, principal Steven Ludwig (center, at the San Diego Triathlon Challenge), tells us. A recent heavy reno of a 42-unit building in LA included exteriors and interiors, an engineered wood facade, and modernized plumbing/electrical. In the past year, the company has sold six buildings, originally purchased for $28M and totaling 195 units, for an aggregate sales price of $37M and a 19% IRR. Average hold time: 3.6 years. How's that for value?
PHILLY: Bring the 'burbs to the urbs
In Philly's Logan Square neighborhood, International Financial Co kicked off construction of Whole Foods-anchored Rodin Square, which it has called "a suburban shopping center in an urban location." That unique conflation is expected to draw both Millennials and empty nesters to Rodin Square's 293-unit Dalian on Fairmount, says DC-based Dalian Development SVP Brady Nolan (the site's multifamily developer, pictured taking a stroll with his son). More floor space than average, including some penthouse units approaching 2,000 SF, will also be a big selling point, along with 13k SF of interior amenities and a 35k SF green roof with an infinity pool above the site's retail.
HOUSTON: When in doubt, refocus
Traditional multifamily returns may be squeezed, but seniors housing demand will boom for decades to come (thanks to the silver tsunami of Baby Boomers) and has shown incredible ROI, we learned at Bisnow's Houston Seniors Housing Summit this week. (Science is keeping us alive longer, so we have to live somewhere.) Why this need-driven niche could be your smartest investment: Seniors housing was the only property type to trend positive through the downturn, so even institutions (which wouldn't have taken these assets for free in the '90s) want in.
