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Multifamily Fund I

Portfolio Asset

Name Multifamily Fund I
Type Real Estate

Description

Multifamily Fund I identifies and invests in multifamily ground-up development, value-add acquisitions and distressed opportunities, as well as takes advantage of anticipated lower overall cost basis of apartment deals, future rental housing supply constraints, and capital partners favoring strong sponsors during the economic recovery period with the goal of delivering outsized deal level returns.

The manager has shown over its long track record that the best opportunities for rental multifamily developments and value-add acquisitions have occurred in the first two years of a recovery. We anticipate that the Covid-19 pandemic, economic downturn, and pull back by capital markets will reset inflated land values down as well as encourage the sale of land sites and apartment buildings at a discount to previous market values to meet the liquidity needs of developers and ownership groups. The manager expects construction costs will drop as new construction starts to slow down, resulting in 2021 construction cost being 7-12% lower than 2019/20 costs based on our development experience. The manager has historically completed its highest return projects in the first few years of a new economic cycle. We anticipate that rents will stay flat for 2020 and the first part of 2021. But as new construction starts dwindling, creating a supply constrained, rising rent market in 2023-2025, the fund should deliver new construction or repositioned projects into and through the recovery period.

Multifamily I is actively pursuing opportunities in the following MSAs: Miami, Denver, Nashville, Tampa/St. Petersburg, Phoenix, Chicago (suburban), and Salt Lake City. Rent growth has accelerated in most markets, including 24-hour cities that lost residents during the pandemic [1] and institutional equity will become hungry for development opportunities.

[1] Based on Fifield’s observations and supported by Apartments List National Rent Report.