Sam Zell’s Equity Residential has invested over half a billion dollars recently in portfolio additions…but they are also upgrading a number of their units and repositioning others. These are irrefutable signs that they see enhanced rents around the corner. For those of you who don’t know who Sam Zell is…he’s so rich that when Trump stands next to him…the Donald looks like just another guy having a bad hair day life.
My suggestion: Read the article, then contact us to start acquiring additional multifamily assets for your portfolio! 503.577.1034
Apartment REITs Go On The Offensive
By Brad Berton, 03.16.10, 11:24 AM EDT
Equity Residential signals recovery with pace-setting deals.
How do some of the smartest real estate outfits begin buying and building again after a major economic collapse? Suddenly.
Adding to its recent $475 million purchase of apartment high-rise properties from the troubled Macklowe family, Equity Residential ( EQR – news – people ) has paid $45 million for an apartment complex rental community a mile from the beach in tony Del Mar, Calif., Forbes has learned. San Diego County real estate records of the deal, which closed Jan. 12, indicate the seller was DMG Associates, a company headed by developer Stuart R. Posnock. The complex, called Del Mar Ridge, includes 181 apartments built in the 1990s.
The Chicago-based apartment giant, headed by billionaire Samuel Zell, hasn’t disclosed the purchase price of this deal in SEC filings. For a company with an $11 billion stock market value, that’s not surprising. But at nearly $250,000 per apartment, Equity Residential’s deal in Del Mar is a significant outlay.
Equity Residential plans to invest more, too, on improvements to the property’s 181 apartments as tenants turn over–also part of a pattern of things to come. After a couple years marked by mostly defensive maneuverings, Equity Residential and other apartment REITs are returning to more offensive-minded investments. They aim to boost property values and rents by sprucing up properties like Del Mar Ridge, finishing up partially completed projects, redeveloping older communities or even launching entirely new developments.
Equity Residential Chief Executive David Neithercut cited the Del Mar deal while explaining the REIT’s renewed offensive strategy in a Feb. 4 conference call to discuss the company’s fourth-quarter earnings. Equity Residential plans to renovate and seek higher rents as tenants turn over.
“We’re going to do a repositioning on this asset, and we projected a year-two yield of 6.7%,” said Neithercut.