Kay Properties closed 2020 with a substantial increase in deal volume. Last year, the firm, which operates a 1031 exchange marketplace, completed $408 million in deals, a 77% increase from 2019 when deal volume totaled $230 million. While high net worth investors drove the activity, the firm also saw new investors from a wide range of disciplines.
“New investors who have discovered our marketplace, more specifically highly sophisticated real estate developers, institutions, family offices and large real estate owner/operators who are investing capital coming out of or into 1031 exchanges, 1033 exchanges and making direct cash investments,” Dwight Kay, CEO and founder of Kay Properties, tells GlobeSt.com. “Historically, many of our clients have been investing between $50,000 and $5 million with us and had a net worth of $2 million to $20 million. Today there are more larger investors stepping into opportunities on our platform, in addition to the high-net-worth folks who have been with us.”
New investors also arrived to the platform looking for more guidance to mitigate the challenging market conditions last year. “We’ve seen more investors who typically would have purchased their own properties outright decide that the pandemic and economic headwinds were just too great for them to justify not diversifying their capital into multiple properties, in multiple geographic locations, in multiple asset classes and with multiple tenants,” says Kay. “This can be easily accomplished through a range of DST investments.”
In addition, many investors arrived at the platform looking for asset diversification as a way to mitigate risk. “Although diversification does not guarantee profits or protection against losses, many investors are realizing that it’s just as prudent to diversify their real estate portfolios as their stock portfolios,” says Kay.
The firm saw investments across several asset classes, including multifamily, industrial, medical, single tenant net lease with essential businesses as the tenant, and manufactured housing. These investments were concentrated in Mid-Atlantic, Southeast and Texas. Kay notes that these markets are considered strong growth markets in the US.
This year, Kay is already seeing similar momentum, and anticipates another strong year. “Already in January and February we have clients who have deployed or are about to close on approximately $100 million of equity investments,” he says. “Kay Properties has had many years of doubling the amount of equity invested on our marketplace from year to year, and we are excited for the future.”