Portfolio Acquisition, Housing Starts: February Multifamily News Roundup

We have summarized the three biggest multifamily and real estate stories to emerge in February. Morgan Properties and Olayan America have expanded their portfolios with a massive portfolio acquisition. Meanwhile, housing starts have declined and JLL has moved into the single-family space with a strategic investment.

Morgan Properties and Olayan America Acquire Massive Portfolio

February saw a massive transaction in multifamily space. Morgan Properties and Olayan America collaborated on a joint venture to acquire the “North Star” portfolio from STAR Real Estate Ventures. Through the deal, the two companies acquired 48 apartment complexes with a combined 14,414 units located in eleven states. These states include Texas, Georgia, and others in which Morgan and Olayan previously had no presence. In addition to the $1.75 spent to acquire the properties, Morgan and Olayan plan to invest a further $100 million to upgrade the portfolio.

Through this acquisition, Morgan now owns some 85,000 apartment units. It has become the second-largest multifamily owner in the country, after Tennessee-based owner MAA.

Housing Starts Decline in January

Numbers released in February indicate that housing starts fell month-over-month in January, for the first time since August of last year. Increased building costs have contributed to the slowdown. These costs include those associated with COVID safety procedures and lumber prices, which reached an all-time high of more than $1,000 per 1,000 board feet in mid-February. As long as prices for construction stay high, developers will continue to trim their pipelines, waiting for costs to lower. Despite this decline, the number of housing starts remains above their levels from before the pandemic, bolstered by low mortgage rates and corresponding consumer demand.

Waterton Closes Latest Fund

Waterton has closed a new fund, dubbed Waterton Residential Property Venture XIV. Waterton raised $1.5 billion to pursue multifamily opportunities made available due to the economic changes caused by the pandemic. The raise took Waterton only eight months, in part due to increased interest in multifamily as other real estate verticals, such as office and hospitality, struggle with decreased interest and traffic due to COVID. Waterton aims to invest in at least 50 multifamily assets, and its first acquisition through the fund occurred in November in Atlanta.

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