2014 Top Multifamily Owners

In it for the Long Haul
Mike Ratliff and Jack Kern

This month we salute the largest multifamily owners. The apartment sector has enjoyed a considerable amount of success coming out of the recession due to both demographic and economic drivers, though other sectors are beginning to catch up. (Check out a list of the top commercial owners in the month’s issue of Commercial Property Executive to see how multifamily stacks up against the competition.)

There are a few aspects of this year’s list worth noting. First, notice that Mid-Atlantic Apartment Communities Inc. and Essex Property Trust Inc. have made big gains in their unit count after acquiring Colonial Properties Trust and BRE Properties, respectively. Average occupancy remains unchanged from last year at 94.5 percent. This was expected. Demand still outweighs supply even as new unit delivery ramps up. Rents, unsurprisingly, increased on average as well.

Average monthly rents for the firms that chose to disclose stood at $1,241, up from the $1,186 figure we saw last year. (Due to the nature of companies that participate in our listings, rental rates tend to run higher than the national average, which Reis reported as $1,099 for 2Q14). Data collected also shows a strong development pipeline of 12,270 units and an additional 98 communities.

Most of these owners pursue a buy and hold strategy. Our observation over the years has been that the most successful owners are not rampant apartment traders that jump in and out of a property each time a cap rate adjustment occurs. Instead, they place capital in geographic areas and properties poised for growth. Value-add plays are becoming an increasingly popular strategy in major metro markets where the cost of trophy assets and land are limiting potential investment strategies.

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*Denotes unit count from NMHC 2014.