Multifamily Firm Targets Sunbelt After Raising $1.5B

Multifamily real estate firm Cortland has raised $1.5 billion through a private equity funding round and is now looking to seize opportunities in the Sunbelt region.

The Atlanta-based company originally set a target of $1 billion but it was oversubscribed due to support from new and legacy investors. The Cortland Enhanced Value Fund received 80 percent of the commitments from institutional firms, and about a quarter from foreign ones.

This marks Cortland’s sixth multifamily value-add multifamily fund it has closed.

“Cortland has been patient and disciplined in not deploying abundant available value-add capital from mid-2022 to late 2023 during a challenging acquisition environment that corresponded with the unprecedented rise in US interest rates,” Jason Kern, the firm’s president of investment management, said in a statement.

“However, Cortland is now capitalizing on discounted asset prices and higher yields in an improving operating and capital markets environment, and Fund VI is now nearly 30% committed. By exceeding our initial target by 50%, it’s clear the opportunity to invest with Cortland in this sector at this time resonated strongly with investors.”

As the company looks for opportunities, the expected cut in interest rates should open some doors.  KPG funds estimates the central bank will reduce rates by 200 basis points in the next year. That could lead to more eagerness for CRE buyers to add to their portfolios.

At the same time, there are clear signs the multifamily market is starting to stabilize. Absorption rates have notably risen from 118,000 units in the first quarter to 166,000 in the three months through June, according to CoStar Group. However, the Sunbelt market is a different story. All of the 10 worst performers in terms of rent growth were located in the region. Austin led the way, seeing a 5.7 percent drop in the second quarter.

Cortland manages more than 80,000 homes and over 250 apartment communities in the U.S. The investment firm has offices in Denver, Houston, Orlando, Phoenix, and Charlotte.