Global, Local Investment in Multifamily Continues at Record Pace

Given that multifamily is a tangible, income-producing asset class that receives the most favorable financing treatment and historically tends to appreciate in value, sponsors and fund managers are seeing record demand for apartment investments. 

That’s how Neil Schimmel, IMG Founder-CEO, sets the stage for the continuing interest in global investment. 

FCP just announced the closing of FCP Realty Fund V, L.P. (Fund V), a $1.188 billion fund targeting multifamily and commercial property opportunities throughout the United States.

Fund V, when fully invested, is expected to accommodate approximately $4 billion of total investment capacity. FCP has already closed on seven investments through Fund V in Texas, Georgia and New York.

“The response to this [fundraising] and to our accompanying stated strategic goals was very strong, with a resulting oversubscription and only four months from first close to final,” said FCP Co-Founder and Managing Partner, Esko Korhonen. “With this fifth fund, we will continue to expand our national platform and invest in both multifamily and commercial assets with the same discipline that has marked our work over the last 20-plus years.”

Korhonen continued, “FCP will continue to focus on moderate income, class B and C apartment sectors that have proven durability of cashflow through all economic cycles. The remainder of the portfolio is targeted to include alpha generating investments in multifamily development and value-add commercial office focusing on adaptive re-use and creative office, which shows great promise as office uses continue to evolve post pandemic. 

“Our access to fully discretionary capital also allows for the flexibility to invest throughout the capital stack as equity, preferred equity, mezzanine debt or any combination of the above. While national in reach, we will continue to emphasize growth markets in the Southeast and Southwest.”

Schimmel said, “With the rise of online syndication and crowdfunding, we’re pooling capital from a wider and more diverse group of accredited investors than the CRE industry has ever seen before. Our year-over-year fundraise volume has more than doubled. It’s allowed our firm to acquire over $340 million in assets since the start of the pandemic.”

IMG’s Recent Texas Offering Off the Charts

In just one of IMG’s recent Texas offerings, he raised $60,000 per minute during a live, 45-minute webinar. 

“The offering was oversubscribed within two weeks, raising more than $18 million from 170 investor clients from 30 different U.S. states,” Schimmel said. “We closed that property with investors on waitlist for our next offering.”

Benjamin L. Kadish, President, Maverick Commercial Mortgage, Inc., said that capital continues to flow to investments in apartments as the demand for all levels of apartments has been very strong in virtually all of the major U.S. markets. 

“Much of the institutional money is chasing Class A product, where there are opportunities to invest and upgrade Class B and Class C apartments,” Kadish said.

“The interest rates offered from banks, debt funds, CMBS and agency lenders are providing buyers positive leverage on Class B and Class C acquisitions, so there are strong returns to the equity, thus attracting huge amounts of capital to these deals.”

Kadish said with the new development of WFH (work from home), many employees are looking for new apartments and are spending much more time within their residences these days.

“The future demand for Class B and Class C office space is up in the air, as so many companies are reevaluating their space needs. The demand for industrial space is at an all-time high in today’s market.”