Lincoln Property, Cadillac Fairview Begin Multifamily Fund Acquisitions

Lincoln Property Co. and partner Cadillac Fairview began their multifamily fund purchases with the acquisition of Alexan Earl, a 12-story apartment community in the heart of Arlington, Va.

The Alexan Earl, soon to be renamed The Earl, is the first existing asset acquisition from the $800 million and growing US multifamily fund, co-sponsored by the two companies. The purchase of The Earl jumpstarts their core acquisition initiative. In addition, several assets are expected to close in 2021 across top US markets.

“The purchase of The Earl is the beginning of our long-term acquisition strategy for the fund, adding existing high-quality multifamily assets to our portfolio across major markets,” said Chase Erickson, Lincoln’s Vice President of Investments, in a prepared statement. “Our acquisition plan works in tandem with our construction goals for the fund—with several apartment communities under construction in metros from Dallas to Fort Lauderdale to Boston.”

Lincoln and Cadillac Fairview are pursuing acquisitions in a very competitive market. Nationally, the average apartment cap rates stand at 5.1%, but that’s for closed transactions, according to John Chang, senior vice president and director of research services at Marcus & Millichap.

“The demographics and the housing needs point to particularly strong demand over the next few years,” he said. “Based on what investors are telling me today, the bid climate is particularly aggressive, putting downward pressure on cap rates.” 

Investors have flocked to SFR, BFR, and multifamily over the course of the pandemic, with major institutional investors primarily leading the way. That demand showed up in second-quarter transactions as the US commercial real estate sales market passed pre-pandemic levels in the second quarter, according to Real Capital Analytics. In addition, investment activity grew at a triple-digit rate compared to the pandemic-plagued second quarter of 2020.