Insights

Making Sense of Multifamily

The last eighteen months in multifamily real estate have made it clear: it’s a good time to be an apartment landlord.

In markets across the country, the COVID-19 pandemic has accelerated a paradigm shift in market demand for traditional real estate asset classes such as office, lodging, and retail. Long-time operators and new entrants alike are still recovering from the economic fallout, while also reassessing how much of their pre-pandemic business models and market strategies are still viable.

And yet, multifamily demand has remained remarkably resilient. Interest rates and apartment vacancies are at their lowest levels in history. Rental rates have experienced double-digit growth and surpassed all major property types. And, despite the global pandemic, rental collections remain strong.
Zooming out paints an even clearer picture. Over the past four decades, multifamily real estate has generated the highest average returns on an absolute basis and per unit of risk compared to all other major property types, as the need for both temporary and permanent housing has created unwavering rental demand which has endured numerous market cycles.

Picture1Source: NCREIF Open End Core Equity Fund Index Historical Returns

Put simply, a historically strong asset class in multifamily, continues to get stronger.

However, understanding the nuances within today’s multifamily market environment remains a challenge. Cheap debt paired with an influx of capital into the sector has led to record-low cap rates, greater competition, and an influx of fund and investment offerings promising a competitive edge. So, how does an investor make sense of multifamily? How does one best uncover the greatest pockets of value and opportunities?

We see three key factors that investors should look consider:

  • identifying a proven and disciplined operator with product-specific experience across business cycles
  • finding a focused and executable strategy centered around targeted geographics and a product type to best uncover deal-level opportunities
  • seeking a blended economic strategy including both yield and upside growth

At Revitate Cherry Tree, we believe our value as a best-in-class operator coupled with a hybrid approach to investing in both multifamily workforce housing and value-add opportunities in the Midwest and Sunbelt provides investors with a unique balance of both income and growth in long-term, high-quality markets.

More importantly, our focus on social impact led by the preservation of affordable housing, the incorporation of community learning centers, and active community building in the markets where we operate is at the forefront of our mission and strategy.

 


 

Revitate Cherry Tree Multifamily Fund I, LP

Revitate Cherry Tree Multifamily Fund I, LP (the “Fund”) seeks to invest in multifamily opportunities which will generate a strong risk-adjusted return over a 5 - 7 year hold period. The primary focus of the Fund is Midwest Workforce Housing and Sunbelt Value-Add Multifamily with a target purchase price range of $10 to $40+ million.

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