Los Angeles

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The Fed's decision to cut interest rates last year were met withenthusiasm, but will they have an impact on investment activity in2020? The answer really depends on the investment company andbusiness strategy. For powerhouse workforce housing investorTruAmerica Multifamily, the decrease in interestrates will have little impact on the firm's investment activity orbusiness strategy this year.

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"It certainly gives more confidence because if you can refinanceat a lower rate, you get more cash flow, but it hasn't really oneway or the other changed our strategy," Bob Hart,president and CEO of TruAmerica Multifamily, tells GlobeSt.com. "Ithas definitely helped the deals that are on the market or in somecases where we have underwritten at a certain level, it has been anet pick-up."

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One reason that the interest rate dip—or one that could comeagain this year—won't drive buying power is because the firm buysbased on a specific business strategy. "Interest rates don't havemuch of an impact. We are buying on fundamentals," says Hart.

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In addition, TruAmerica often utilizes a variable interest rateon its purchases, making it less exposed to interest rate changes."A lot of our financing is variable rate anyway, so even thoughindexes have gone down, spreads have widened," says Hart. "Peoplehave been borrowing in the low to mid 3% on variable rates and high3% , low 4% on fixed rates. It has really been that way,give-or-take 75 basis points, for a while now."

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And, this year, the firm's strategy—a focus on affordable andworkforce housing—will prove to be among the top investmentsegments for multifamily. "It is all about affordability. You arestill going to have the renter by choice; that is never going away.But, the population is growing from the bottom, not from the top,"says Hart. "When you look at what is driving population, it isprimarily immigration in coastal, blue states. The no-tax statesand the purple states are seeing more in-migration where people areshifting away because they need more affordability. Everythingpoints to affordability."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.