Dees Stribling, Contributing Editor
Fairfield, NJ–Evergreen Equity Partners is going shopping for multifamily properties in the South, including Florida, North Carolina, South Carolina, Alabama and Texas. It plans to acquire assets in those markets via direct acquisition or JVs to manage and reposition them. Besides apartment buildings, the hunt is also on by the firm for multifamily as a part of mixed-use properties or student housing.
Evergreen Equity Partners, based in Fairfield, NJ, is a private equity fund with a history of acquiring and then developing or repositioning multifamily, mixed-use and student housing assets, especially in the South. In the last decade, the firm has closed on about $2 billion of such properties.
The time may be right for its new foray. According to a recent report on the U.S. apartment market by Marcus & Millichap, the the re-emergence of private buyers represents a signal that prices have adjusted to levels that can be sustained. “Motivated by lower prices, these investors will continue to re evaluate portfolios, using local knowledge and a hands-on approach to acquire properties with the potential to increase in value as a recovery accelerates,” the report notes.
Not only that, the report adds, but with other buyer groups less active, private investors are likely to conduct transactions on highly favorable terms, especially with motivated sellers. The dearth of multifamily development in most markets since the onset of the recession is another factor in the renewed interest in existing properties by such investors as Evergreen.
In metro Houston, for instance, 12,900 apartments came on line in 2009, while no more than about 5,600 units will this year. according to Marcus & Millichap estimates. In metro Atlanta, only 600 units will be complete in 2010, compared with 1,300 last year. Moreover, apartment permit issuance has declined precipitously in both places (and a lot of other markets), making the pipeline very slender indeed. Even modest job growth–which is what most prognosticators are expecting–might put some upward pressure on rents in a few years.
Besides investing in existing multifamily properties, Evergreen is also planning to also acquire, as principal, entitled land for multifamily and student housing development. “We are very aggressive right now and making a bold statement to the commercial real estate finance community,” asserted John Clancy, managing partner of Evergreen, in a statement, adding that such a strategy is fairly unusual these days, but one that looks to long-term gains as multifamily housing recovers.