Geographic and product-type diversity will likely be advantageous to many commercial real estate owners when the inevitable economic slowdown occurs since some regions and commercial real estate sectors will fare better than others. In the meantime, owners are striving to make wise late-cycle investments while searching for opportunities to grow net operating income from existing assets.
On this year’s list of the leading multifamily owners, Camden Property Trust ranked No. 1 with a portfolio value of $13 billion and 56,271 units. All top 10 multifamily owners are diversified across regions, with all holding assets in at least three regions of the country. Average occupancy of the top 20 portfolios is approximately 92 percent and the median debt-to-value ratio is 55 percent. Edward Rose Building Enterprise led the group with the largest number of units owned at 65,224, followed by Lincoln Property Co. with 58,375 units.
As these top owners continue to navigate the risks associated with rent regulation and increasing expenses, they will continue to lead the pack by relying on sound investment decisions as well as strong property and portfolio management.
The top commercial owners were ranked based on similar categories. The most dominant companies have a national presence, owning properties in at least four different regions of the country. Almost all of the top 10 have also spread their assets across property types—Liberty Property Trust and Duke Realty only own industrial assets. The median portfolio value of the top 20 owners is $4.9 million, with Hines holding the highest portfolio value at almost $45 million. The avreage debt-to-value ratio of the top 20 owners surveyed was 45 percent.
Our ranking also showed the growing importance of the Leadership in Energy and Environmental Design certification. Among the top commercial owners, 12 reported that a portion of their portfolios have LEED certification. KBS holds the largest LEED-certified portfolio, with approximately 71 percent of its properties having qualified.
The 2019 CPE-MHN Ranking of the Top Owners utilized self-reported data for all firms. The ranking results from a weighted formula based on a variety of factors (only a few of which are specified here), including the total square footage and number of units owned, owned portfolio value, historic performance and a focused or diversified participation in property sectors. The ranking represents what we feel is a logical balance between firm growth and market share, as well as property diversity.
Madeline Winship is senior research analyst at Yardi Matrix