Infinity Investment Group, A9 Partner on Apartment Fund

Infinity Investment Group and A9, a family office, announced that they’re forming a $250 million investment fund targeting multifamily. Called the Infinity Multifamily Real Estate Fund I, it looks to tap institutional investors and family offices to fund a multifamily portfolio consisting of “opportunistic and value-add of Class A, B, and C multifamily properties located in the top 20 metropolitan areas in the US.”

Infinity CEO Ahmad Ashrafi said in prepared remarks that he expects “a once-in-a-generation opportunity to invest in multifamily housing when experts predict occupancy levels to remain above 95% for the foreseeable future and nearly 7% growth in effective net rents next year.” Even with inflation, people have to live somewhere.

Reading between the lines—specifically, this one and a preceding lead-in of “The recent increase in interest rates and the likelihood of additional increases in the coming months sidelined many investors worried about a US recession”—the firms are expecting some reduction in funds investing. 

Increased financing costs can make projects financially untenable or, if still profitable, missing the amount of return that a fund’s investors may demand. There’s already been a number of cancelled transactions because of high interest cap rates. The more funds that give up on real estate and move to other areas with greater perceived future returns, the less competition there is. That could start taking pricing pressure off properties and begin increasing cap rates.

The $250 million target is an initial one. The fund looks to invest, over the next three to five years, more than $1 billion “in multifamily assets with significant potential for repositioning.”

There is also a technology twist, apparently using some aspect of crypto to enable greater liquidity. “The portfolio plans to use innovative financial engineering, tactical improvement programs, and active asset management initiatives to target multifamily assets and developers,” the release says. “Once stabilized, the fund will tokenize the properties through its Infinity Platform to exit through an ‘Asset by Asset IPO,’ giving international investors unparalleled access to carefully selected assets with growth and cash-generating strategies.”

Tokenization has been growing in popularity in CRE for a few reasons. One is the ability to break apart parcels of ownership and offer them to investors who had traditionally been locked out by large minimums. That should, in theory, boost demand and increase the ultimate capital a project could bring in.

The tokenization process can also help automate much of the paperwork that occurs around projects that are taken public. That can cut costs and improve regulatory efficiency.

The third expected big draw is greater ease in liquidity. A person ultimately could take the token to an authorized platform and sell, getting an opportunity to sell off an investment and use the money for another.