Investing
WHY INVEST IN APARTMENTS?

Reliable Cash Flow Stream - Apartments provide reliable cash flow due to the number and diversity of tenants, and ability to change rents to maintain occupancy and revenue.

Highest Risk-Adjusted Returns - Apartment investments offer higher risk adjusted returns and appear to have lower volatility when compared to other property types.

Inflation Hedge - Staggered, predictable rental expirations provide the opportunity to continually adjust rents to offset inflation and increase revenue based on market conditions and tenant demand.

Liquidity at Time of Exit - Apartments are traditionally a favored property type by both debt and equity investors and as such offer better liquidity potential at the time of sale when compared with other property types. Institutional and private investors seek quality apartments through various economic cycles because of their consistent cash flow attributes and ease of debt financing (particularly through apartment lenders such as Fannie Mae and Freddie Mac.)

Portfolio Diversification - Apartment investments provide portfolio diversification at a low relative risk level.

WHY INVEST IN APARTMENTS OVER THE LONGER TERM?

Demographic Trends Support Apartment Investment:

  • Echo boomers now beginning to enter the rental market substantially increasing the prime renter pool of households 18 to 35 years in age.
  • Immigration is an additional source of ongoing rental demand in most major markets.
  • Growth of lower paying jobs creates additional demand for apartments, particularly those geared to working families with moderate incomes.
  • Lifestyle decisions such as delaying marriage, divorce, rise of single parents, etc. continue to increase the pool of renters.

Historic Return Series - Historic track record of stable and reliable cash flow. Unleveraged apartments have generated total returns in excess of 9% over the past 25 years according to NCREIF.

DO MARKET FUNDAMENTALS SUPPORT INVESTING IN APARTMENTS?

Demand for rental apartments continues as the rush to homeownership fades. Tighter mortgage lending requirements and for-sale housing slump will keep more households in the rental pool over the next several years.

New apartment construction has declined precipitously, which will cause a future tightening of supply and upward pressure on rents.

Fannie Mae and Freddie Mac continue to provide a source of acquisition & refinance debt not available to other property types.

The long term outlook for apartments is favorable:

  • Short-term nature of apartment leases allow investors to take advantage of economic strengthening in the coming years through rental rate increases.
  • Demographic profile of the echo boomer generation will facilitate robust rental demand in the future.