CapStack’s Stake in Multifamily Investment
- Sep 06, 2017
CapStack Partners was awarded a mandate to make value-add and opportunistic investments across the Southeastern U.S., after recently launching its investment advisory platform. The company will team up with local investors and developers to source the best opportunities for deploying capital. Ben Inman will be leading the efforts as portfolio manager. Inman discussed the firm’s objectives and made a brief evaluation of the U.S. multifamily market for Multi-Housing News.
MHN: What is the focus of CapStack Partners’ multifamily investment strategy?
Ben Inman: CapStack Partners’ multifamily investment strategy is currently focused on acquiring well-located B and C+ multifamily properties in rising markets throughout the Southeast. We are scanning for sound, underlying fundamentals and meaningful growth potential in those markets. Through a value-add program that includes thoughtful renovations, operational improvements and ancillary income development, CapStack Partners aims to reposition each asset with the goal of maximizing property value for our investors.
MHN: How do you see the multifamily market in the Southeastern U.S.?
Inman: The multifamily market throughout the Southeast has been desirable for some time and we do not see that changing much, especially long-term, which is our investment horizon. Our strategy is to take positions in the path of progression. Markets like Nashville, Atlanta, and Charlotte have been hot for three-four years now. As long as we are thoughtful in our acquisitions, we can make favorable investments that limit downside risk while appreciating in value.
MHN: We are seeing more and more major companies in the industry teaming up with local firms for safer, more successful real estate investments. How important is this local factor in multifamily investment?
Inman: Local market knowledge and resources are imperative. We already have deep local relationships in our target markets that stem from our investment banking business with whom we are pursuing investment opportunities. We are entirely comfortable executing on our own, but welcome co-investment opportunities with local firms that have local knowledge and on-the-ground capabilities.
MHN: What are the challenges in the current multifamily market and do you plan to mitigate them?
Inman: From a tenant retention standpoint, we closely track affordability in rising markets. We also track the trends in the for-sale market. From an acquisition standpoint, we closely track the historical and current supply-demand metrics for available and incoming apartment inventory by property class. All these can impact near-term rental rates. The way we overcome the associated challenges is simple—we have a long-term view when it comes to our investments and don’t play a market timing game with a fixed asset like multifamily real estate.
MHN: What do you expect from the multifamily market in the U.S. going forward?
Inman: We apply a macro to micro approach to our investment analysis. We follow job growth, migration trends and monitor the local building permit pipeline in our target markets. As long as we can stay at the forefront of those metrics, we are confident our investment properties will perform well for our investors.
Image courtesy of CapStack Partners