LOS ANGELES—TruAmerica Multifamily expects this cycle to extend longer than others. As GlobeSt.com recently reported, the value-add investor has purchased a seven-property portfolio for $255 million. TruAmerica underwrites its properties for five years, and, as such, it expects the cycle to be healthy for the next several years.
“The fundamentals are unique in this cycle because you have a paradigm shift with homeownership continuing to decline,” Noah Hochman, senior managing director of acquisitions and investor relations at TruAmerica Multifamily, tells GlobeSt.com. “New construction is really being built for a small segment that can afford the expensive rents, so there is a large demand from millennials and people who are downsizing. I think this cycle is going to be longer than previous cycles. We are bullish, and we still think that there are opportunities. You might not see the run up that you have seen in the last 24-months, but as long as you have job growth, I think that we will continue to see opportunities for value-add the next several years.”
However, we have heard from many value-add investors that the value-add properties are in limited supply. Hochman disagrees, explaining, “I think that you have to be very selective of the geographies that you are looking at. I do think that this cycle will extend longer than others. We are currently seeing a lot of positive demand drivers.”
In terms of geography, the company focuses on suburban markets just outside of urban cores, specifically targeting Seattle, Portland, Salt Lake City and Denver. The firm generally considers these markets to be primary locations. “We focus on the first submarket outside of the primary market, which, from an institutional investor and lender standpoint, is viewed as one in the same,” Mark Enfield, chief administrative officer at TruAmerica Multifamily, tells GlobeSt.com. “As a general rule, we typically underwrite five years. It takes a few years to implement the value-add improvements.”
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.