INVESTMENT FOCUS: MULTIFAMILY HOUSING AND APARTMENT BUILDINGSLooking at one of the most active corners of real estate from a family office investor perspective.

Sponsored by the Family Office Club & Multifamily Lending Partners

WHAT IS MULTIFAMILY REAL ESTATE

What is multifamily residential real estate?

In contrast to single family real estate, multifamily real estate is built for multiple-unit occupancy. An apartment is an example of multifamily real estate, where there are many occupants living in the same building in different housing units.

WHO IS BUYING MULTIFAMILY?

Multifamily Properties

Investment Funds

Sponsors

Family Offices

REITs

Foreign Buyers

STRATEGIES

• Ground-up development• Value-add• Buy and Hold• Fix and Flip• Opportunistic• Distressed investing• Passive allocation• Emerging markets (UK

residential)

FAMILY OFFICES

• Building a portfolio of income-producing properties

• Vertical integration from property management to brokerage

• Geographic focus• Increasing direct investments,

managing the deal• Open to sponsored deals, but

need a strong incentive/justification

• 10+% of portfolio, can be much higher

PARTNERING ON DEALS

• Family offices looking to own assets directly

• Open to co-investments• Shifting away from strictly

passive investments (general trend)

• Sponsors need to justify share of the economics and structure

ECONOMICS

Source: https://www.slideshare.net/ljwicks9/unlisted-real-estate-funds-lecture-1-1

• Family offices might seek preferential terms, especially in new “blind” fund and independent sponsor

• Pressure on sponsors to reduce fees or more flexible terms

CAP RATES

Source: JLL U.S. Multifamily Investment Outlook | Q4 2016

SECURING AGENCY FINANCING

Fannie Mae

• Primary and secondary markets

• Stabilized properties only with a min of $750,000 loan amount

• Fixed or floating

• Traditional multifamily properties

• student housing

• affordable housing

• independent senior living.

• Max LTV of 80%, 75% on refinancings.

• Recourse or non recourse

Freddie Mac

• First position mortgage

• traditional

• student housing

• senior housing

• affordable housing property

• Either held in Freddie portfolio or sold to investors

• Fixed or floating

• Usually amortized to 25-30 years

• Max LTV of 80%

• Term of 5-30 years

HUD/FHA

• Purchase/Refi

• Multifamily

• Construction/Rehab

• Healthcare

• Non-Recourse

• Competitive Rates w/ 35-40 year fixed terms and amortization

• Longer diligence/underwriting period than most loans

• Typically either healthcare or multifamily

MULTIFAMILY

MULTIFAMILY

CASE STUDY – MULTIFAMILY PORTFOLIO

• $50m+ purchase price target • 600 unit deal in Southeast US• Needed 7 and 10 year debt

options• Repeat/Preferred agency

borrower • Negotiated exclusively to avoid

bidding war, offered better relationship than aggressive funds

UNIQUE STRATEGIES BY FAMILY OFFICES

• Lending through the construction phase to earn equity when stabilized/cash-flowing

• Dominating a secondary/tertiary market

• Taking advantage of green incentives and energy efficiency

• Developing a proprietary broker/seller network

• Use of technology on properties• Negotiating sweetheart deals w/

contractors across multiple properties, leveraging a 3000 unit portfolio etc.

• Different lease agreement term lengths

MISTAKES

• Undefined co-investing terms• Poor due diligence• Tax inefficiency• Buying at the top or in an

oversaturated market• Failing to budget for rehab or

problems within the portfolio (fire, repair, etc.)

• One family office: “I always invest with the understanding that I’ll have to commit more than the initial ask.”

• Poor attention to tenants.• First-time property manager• Cost overrun

Key Biscayne, FL

Our Offices

Richard C. WilsonFounder - Wilson Holding Company

Direct Line: (503) 922-1811328 Crandon Blvd. #223Key Biscayne, FL 33149

Richard@FamilyOffices.com

Theodore O’BrienManaging Partner – Multifamily Lending Partners

Direct Line: (305) 677-3338328 Crandon Blvd. #223Key Biscayne, FL 33149

Theodore@MultifamilyLendingPartners.com

VISIT OUR OFFICES

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