LOS ANGELES— “Most JV equity partners are being selective right now.” So said Bob Hart, founder, CEO and president of TruAmerica Multifamily, at a recent RealShare conference. While discussing his strategy for targeting equity during the capital markets panel at RealShare Apartments, he said that his firm looks to target the equity at the project specifically.
“We have stuck largely in between the box of urban and suburban,” he explained. “We have tried to stay as close to urban as we can.”
Another thing his company is trying to do is value add. “That is what investors are looking for.”
When the moderator asked if value-add is in vogue today, Hart said that it really depends on your starting point.
“Most of the equity we deal with has a rational return, but a lot of people push too far,” he said. “We are typically adding 15 to 20% of the total project cost on the purchase price.”
For panelist Tim Hennessey, managing director of PGIM Real Estate, when asked about looking in the marketplace for institutional investors to buy out their development partners on deals, he says that the primary driver for that is that a lot of the capital for the deals is coming from private REITs. “What we try to do is be fair,” he said. “At the end of the day it isn't about the fair market value of the asset. The capital doesn't have to write you a check.”
He continued that “if you want to hit the buy it now button after two years, ok, let's sit down and talk, but if you want liquidity and you went into the deal knowing that you couldn't get it until two years and now you want it after one year, then, our view is that we don't have anything prescribed in our documents by which there is a mechanism by which this occurs, but it isn't an easy situation.”
Brett Kahn, executive director of J.P. Morgan Asset Management of Global Real Assets – Americas, says it could be a win-win in that situation. “We are generally collaborating with a development partner that is timeless and with a product we are proud of. We know going into it what our exit strategy is. We win because we are able to negotiate off market and the developer wins because they can put that money into the next deal.”
Click the articles below for more coverage from the recent RealShare Apartments event:
Should Multifamily Developers Focus on Suburban Locations?
Industry Leaders Talk Construction Costs, Lending and Investors
A Closer Look at Suburban Markets and Their Urban Counterparts
Are Equity Valuations Connected to Fundamentals?
What Challenges Are Facing Developers Today?
Choose Your Apps By Asking the Right Questions
Tech Platform Communication is Key in Asset Management
LOS ANGELES— “Most JV equity partners are being selective right now.” So said Bob Hart, founder, CEO and president of TruAmerica Multifamily, at a recent RealShare conference. While discussing his strategy for targeting equity during the capital markets panel at RealShare Apartments, he said that his firm looks to target the equity at the project specifically.
“We have stuck largely in between the box of urban and suburban,” he explained. “We have tried to stay as close to urban as we can.”
Another thing his company is trying to do is value add. “That is what investors are looking for.”
When the moderator asked if value-add is in vogue today, Hart said that it really depends on your starting point.
“Most of the equity we deal with has a rational return, but a lot of people push too far,” he said. “We are typically adding 15 to 20% of the total project cost on the purchase price.”
For panelist Tim Hennessey, managing director of PGIM Real Estate, when asked about looking in the marketplace for institutional investors to buy out their development partners on deals, he says that the primary driver for that is that a lot of the capital for the deals is coming from private REITs. “What we try to do is be fair,” he said. “At the end of the day it isn't about the fair market value of the asset. The capital doesn't have to write you a check.”
He continued that “if you want to hit the buy it now button after two years, ok, let's sit down and talk, but if you want liquidity and you went into the deal knowing that you couldn't get it until two years and now you want it after one year, then, our view is that we don't have anything prescribed in our documents by which there is a mechanism by which this occurs, but it isn't an easy situation.”
Brett Kahn, executive director of J.P. Morgan Asset Management of Global Real Assets – Americas, says it could be a win-win in that situation. “We are generally collaborating with a development partner that is timeless and with a product we are proud of. We know going into it what our exit strategy is. We win because we are able to negotiate off market and the developer wins because they can put that money into the next deal.”
Click the articles below for more coverage from the recent RealShare Apartments event:
Should Multifamily Developers Focus on Suburban Locations?
Industry Leaders Talk Construction Costs, Lending and Investors
A Closer Look at Suburban Markets and Their Urban Counterparts
Are Equity Valuations Connected to Fundamentals?
What Challenges Are Facing Developers Today?
Choose Your Apps By Asking the Right Questions
Tech Platform Communication is Key in Asset Management
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
