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Multi-Family Properties Are The Bee’s Knees
June 17th, 2013 3:18 PM

The Carlyle Group, one of this country’s largest private equity groups decided not to follow the same trend as countless others, by investing in single family homes, instead they invested in multi-unit buildings.

Currently the Carlyle Group LP, is a $25 Billion fund, and decided to jump into the distressed real estate game back in 2008.  So far, they have invested in approximately 50 distressed multi-unit buildings a year.  It’s a different strategy than most of the other hedge funds out there, like Blackstone, which concentrates on single family homes.

Robert Stuckey, head of U.S. real-estate investing for Carlyle said, “Our posture is there are better ways to play the housing recovery.  Our approach enabled us to buy at about 30 percent of replacement cost and we don’t have to mow the lawn.”

Most recently, the group has invested in a 255 unit townhome complex in Las Vegas, called Elysian Southern Highlands.  The “west loop” of Chicago is another fresh market for them where they purchased a 45 unit property along with adjacent lots, which will allow for the addition of 100 more units.

With such a high demand for rentals the Carlyle Group is finding that many of their properties are being leased before the completion of the project.  In Dallas they pre-leased 20% of 359 unit property, and in Nashville they pre-leased an incredible 60% of 300 units.

They have not completely dismissed the entire single family home strategy.   They recognize the opportunity and have invested $10 Million of their fund in the Atlanta market.  “It’s a big investment concept and that’s why we’re taking it seriously.  We’ve got a toe in the water,” said Stuckey.

Gary Beasley, CEO of Waypoint Homes said, “It’s hard to find a private-equity firm on the planet that doesn’t have a strategy in this space.”

Carlyle is also expanding their strategy into another aspect of the market that seemingly has been neglected for years, the senior living communities.  With a larger population of seniors, the construction of these facilities has not kept up.

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Posted by Michael Hobbs on June 17th, 2013 3:18 PMPost a Comment

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