August 2023 – A new definition of inflation
The Multifamily Investment Environment
Are We There Yet?
Transaction volume is down 80-85% from 12 months ago.
Rental growth rates have slowed and turned negative in some markets.
Values are down, Cap rates are up – 15%-20% off the highs.
$1 trillion of bridge loans maturing – will be a big, big problem.
Essential anticipates the second half of 2023 will result in a pricing reset that will catch many multifamily owners off guard. The catalyst for this reset will be a wave of floating rate debt maturities that cannot be refinanced – resulting in a distressed sale or foreclosure.
Industry veterans that have been through multiple cycles understand the financial metrics that have proven reliable in anticipating where pricing will settle and are positioning themselves accordingly.
So, are we there yet? Yes – we are at the beginning of a timely opportunity to acquire some of the best assets at prices that provide strong value and growth potential.
Last Month in Essential Realty Partners
In addition to building our acquisitions pipeline, our other focus has been on accumulating dry powder for the upcoming opportunistic investment environment.
During July, we entered into joint venture understandings with two additional capital partners that once finalized could add up to $900M in buying power for our new national portfolio build.
Essential’s systems are tracking every debt maturity in the country, with our pipeline now focusing on 727 properties consisting of 310,000 units.
On other fronts, our CEO, Rick Courtney, was video interviewed by the Family Office Real Estate (FORE) institute where he shared his perspective on how the higher interest rate environment has impacted the multifamily market and values.
Exclusive Invitation to the Upcoming FORE Conference
We are delighted to extend complimentary access to the upcoming Family Office Real Estate Institute Conference, taking place from September 14-16 at the University of Denver.
This event is exclusively limited to 60 Family Offices, providing a unique platform to connect with distinguished industry experts and fellow Family Offices.
Essential's Rick Courtney will be speaking at a panel discussion on "Understanding Real Estate Pricing: Strategies, Trends, and Market Insights". Renowned Family Offices and other experts from the real estate industry will also deliver valuable knowledge and their perspective on generating alpha in this unique investment environment.
Reserve your spot today by referring to Essential Realty Partners.
