The Top Multifamily Stories of 2020

The apartment industry kicked off 2020 in a position of strength, benefitting from job growth, low interest rates and robust sector fundamentals. Nobody could have predicted the turbulent events of March and April, which saw a global pandemic and public health response that affected billions of lives and brought much of the U.S. economy to a standstill.

Multifamily owners and operators were forced to quickly adapt and innovate in the face of new social distancing guidelines and renters’ strained economic circumstances. But, with the federal government propping up residents with stimulus money and additional unemployment benefits, the industry weathered the storm better than most other commercial property sectors. While major hurdles remain, the resiliency of multifamily has enabled allocations to the property type and investment to continue. As the year draws to a close, we review the top stories that shaped the multifamily industry during the past 12 months.

January

Harbor Group International chalked up the fifth-largest apartment portfolio deal in history by acquiring a collection of 36 communities from Aragon Holdings for $1.8 billion. The transaction, part of Aragon’s $2 billion sale of its overall multifamily portfolio, spanned 13,324 units mainly across the South and Sunbelt regions—from Arizona to Florida. Harbor Group, an active player in multifamily and commercial markets, described the blockbuster sale as the largest multifamily deal since 2016.

February

Commercial brokerage Cushman & Wakefield agreed to purchase Dallas-based Pinnacle Property Management Service, establishing a new U.S. Multifamily Property Management platform headed by former Pinnacle chief Rick Graf. Cushman & Wakefield’s management portfolio increased by nearly 870 million square feet through the merger with the country’s third-largest multifamily property management firm.

In the same month, rival operator Waterton moved into Nashville’s thriving apartment market by snapping up a 994-unit development for $140 million, marking one of Music City’s largest property deals in recent years. Other big deals included Invesco’s sale of a Manhattan luxury high-rise to Global Holdings Management Group for $380.6 million.

March

As the COVID-19 crisis halted large swaths of the U.S. economy and caused millions of job losses, President Trump signed into law the CARES Act, a historic $2.2 trillion federal stimulus package, at the end of March. The coronavirus relief bill allowed 90 days of forbearance for multifamily borrowers of federally backed loans who faced pandemic-related financial hardship while banning evictions from those properties during the forbearance period. (Fannie Mae and Freddie Mac recently extended their multifamily forbearance programs through March 31, 2021.) The bill also provided direct cash payments to citizens and $260 billion of additional unemployment benefits, among other measures that were expected to bolster the finances of renters throughout the country.

April

The National Multifamily Housing Council found that nearly 90 percent of renters had paid full or partial rent as of April 19, according to the organization’s newly launched Rent Payment Tracker, which pulled data from 11.5 million apartment units across the U.S. That figure was down a few percentage points from comparable periods—rent collection reached 93 percent from April 1 to April 19, 2019—demonstrating that the multifamily industry had avoided a worse-case scenario despite weeks of unparalleled economic turmoil. The data also suggested that a raft of economic relief measures and the efforts of multifamily operators to proactively work with residents had helped stave off disaster.

May

Apartment owners and operators mobilized to face the challenges posed by the virus, quickly adjusting and rolling out new protocols aimed at keeping residents safe and comfortable. Common measures included offering self-guided and virtual tours, procuring additional cleaning supplies and hand sanitizer, following the CDC’s social distancing guidelines and distributing cloth masks to staff.

Companies such as Camden Property Trust, which operates more than 56,000 apartment homes across the country, closed all offices and amenity spaces to the public, developed new sanitizing protocols for high-touch areas and consulted with industry peers as well as other sectors to develop their reopening plans.

June

Landlords in New York State and Massachusetts filed legal challenges to eviction moratoriums put in place by each state in response to the public health crisis, arguing that the measures were unconstitutional. A nationwide patchwork of state and city eviction bans that emerged in March began to fall apart over the subsequent months, and moratoriums had expired in some 29 states by late July.

The multifamily industry continued to power through the crisis, however, with behemoth Greystar Real Estate Partners buying the property management business of Alliance Residential Co., adding 130,000 units to its portfolio.

July

Significant deals were inked in Texas, with Castle Lanterra Properties buying a 529-unit Austin community from The Dinerstein Cos. for $129 million, while Greystone Affordable Development secured $120.5 million in financing for the redevelopment of affordable housing units throughout the Lone Star State.

Also in July, an NMHC survey found that 57 percent of multifamily developers reported ongoing construction delays in their jurisdictions, more than four months into the pandemic. According to the COVID-19 Construction Survey, 83 percent of those facing delays said permitting delays were an issue, while 71 percent saw delays in starts. Reasons cited for the lag in construction starts included permitting, entitlement and professional services; economic uncertainty; and availability of construction financing.

August

Matter Real Estate Group started construction of UnCommons, a 40-acre mixed-use project in southwest Las Vegas. The first phase is slated to offer 385 rental apartments upon completion in early 2022, as part of a $400 million development that will eventually total more than 830 residential units.

The adoption of remote work across the country had shifted rental demand from urban to suburban areas, according to a report by Marcus & Millichap, which found that suburban vacancy had dipped below urban vacancy in the second quarter of 2020. Health concerns driving people away from crowded areas, the shuttering of urban amenities and ongoing work-from-home policies prompted many employees to seek more living space at a lower cost, the brokerage reckoned. Supporting those findings, U.S. Postal Service change-of-address records pointed to a significant exodus from several urban hubs, with Manhattan, Brooklyn, San Francisco, Los Angeles and Chicago collectively losing hundreds of thousands of residents from February through July.

September

The Centers for Disease Control and Prevention announced a nationwide eviction moratorium at the start of September, a sweeping emergency order intended to prevent the further spread of COVID-19. Originally due to expire on December 31, the ban on residential evictions was extended until the end of January 2021, thanks to the latest federal stimulus bill. The unprecedented order requires renters to sign a declaration that they do not earn more than $99,000 a year in income and would likely become homeless if evicted. Renters may not be evicted for nonpayment of rent but are still responsible for rent payments and may also be responsible for any fees, penalties or interest accrued.

October

The single-family rental sector continued to heat up, with SFR operator Amherst Residential agreeing to acquire Front Yard Residential in a deal valued at $2.3 billion. The watershed transaction encompassed Front Yard’s operating platform and assets, including a portfolio of 15,000 SFR homes then managed by HavenBrook Homes, Front Yard’s operator. Earlier in the month, Haven Realty Capital teamed up with an affiliate of Walton Street Capital LLC to acquire six SFR communities in the Atlanta area for $133.7 million. Developer ResiBuilt Homes sold the portfolio of 536 newly constructed SFR homes.

Nuveen Real Estate, $131 billion investment manager, also made its first foray into the rising niche asset class at the end of September. Nuveen said it would invest up to $400 million in a Scottsdale, Ariz.-based single-family rental startup called Sparrow, which will build its portfolio in targeted cities in Arizona, Florida and Texas.

November

Bain Capital Real Estate and Magnolia Capital forged a new joint venture to invest more than $900 million in multifamily assets across the U.S. over the next several years. The partners will focus on buying, renovating and operating garden-style, middle-income apartment communities in strong Sunbelt markets. In the same month, multifamily firm RangeWater Real Estate launched a new build-to-rent SFR platform, Storia, with plans to deploy $800 million in the business over the ensuing 18 months.

Following the presidential election in November, multifamily experts anticipate that housing issues will play a major role in the next administration. A wide-ranging housing policy paper released earlier in the year by then-candidate Joe Biden called for $640 billion to be invested over 10 years to provide access to affordable, safe and energy-efficient housing for every American. The plan includes improved public housing and more forms of rental assistance, including Section 8 housing vouchers. An infrastructure package may also be on the agenda, while the outlook for tax reform and the Qualified Opportunity Zone program remain unclear.

December

The year closed with a number of major deals, including a $300 million joint venture between Singaporean property giant CapitaLand and an Austin, Texas-based partner to acquire and develop multifamily assets in Southeast and Southwest markets. Also in December, Security Properties and an affiliate of Rockwood Capital boosted their Western footprint by acquiring three apartment assets in Oregon and Colorado, totaling 938 units. Private equity real estate firm Turner Impact Capital also closed its second affordable workforce housing fund with more than $350 million of committed capital and $1.25 billion of investment potential, aiming to acquire and manage up to 10,000 multifamily units.

In the policy realm, a $2.4 trillion federal spending and stimulus package was signed into law this past Sunday, providing $25 billion in rental assistance, a one-month extension of the CDC’s eviction ban and $600 stimulus checks, among other forms of economic and housing relief.