Posted byJonas Levy on Tue, February 25th, 2014 10:32:55
Within the multifamily industry, the value-add segment is gaining traction. As investors focus on portfolio diversification and yield, they are actively pursuing strategies with Class B and even Class C assets. Paul Bubny writes about this shift in his article, “MMI: Value Add Apts. Will Draw More Interest.” Bubny cites the “2014 National Apartment Report” from Marcus & Millichap Real Estate Investment Services in his article.
We found two statements from the “2014 National Apartment Report” that hit home with the value-add message: “Facing no new competition, stronger rent growth by Class B/C assets will catalyze the number of renovations.” And this one: “Value-add strategies offer stronger returns and the recent dip in the average cap rate signals a recovery in non-premium assets. Sellers have been slow to bring properties to market, however, thereby limiting the number of opportunities.”
The Marcus & Millichap researchers also write that value-add strategies are poised to deliver higher yields, as are investments in non-core markets. Here’s another direct quote from the report: “Increased lending by national banks and CMBS conduits will support property values in secondary and tertiary markets.”
To add perspective, Arleen Jacobius reports in the Pensions & Investor article, “Investors may flirt with riskier real estate strategies in 2014,” that value-add strategies will be in vogue in 2014, but then she also reports that there are experts who say that investors may shy away from apartments altogether because NOI could be affected by oversupply and little opportunity for growth.
What are your thoughts on investments in multifamily value-add? Share your comments with us in the space below.
We found two statements from the “2014 National Apartment Report” that hit home with the value-add message: “Facing no new competition, stronger rent growth by Class B/C assets will catalyze the number of renovations.” And this one: “Value-add strategies offer stronger returns and the recent dip in the average cap rate signals a recovery in non-premium assets. Sellers have been slow to bring properties to market, however, thereby limiting the number of opportunities.”
The Marcus & Millichap researchers also write that value-add strategies are poised to deliver higher yields, as are investments in non-core markets. Here’s another direct quote from the report: “Increased lending by national banks and CMBS conduits will support property values in secondary and tertiary markets.”
To add perspective, Arleen Jacobius reports in the Pensions & Investor article, “Investors may flirt with riskier real estate strategies in 2014,” that value-add strategies will be in vogue in 2014, but then she also reports that there are experts who say that investors may shy away from apartments altogether because NOI could be affected by oversupply and little opportunity for growth.
What are your thoughts on investments in multifamily value-add? Share your comments with us in the space below.
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