SALT LAKE CITY, UT – RealSource Properties, Inc., a leading real estate investment and management firm with nearly $1 billion in commercial multifamily acquisition history, announced the launch of its Real Estate Investment Trust (REIT). For the first time since commencing its investment and management platform two decades ago, the Salt Lake City-based company is now extending an opportunity to accredited investors to join with RealSource in a portfolio of multifamily assets.
“We believe there may be no better time for RealSource to launch a multifamily investment vehicle than now due to the favorable fundamentals being experienced in specific markets across the United States. When we apply our local real estate cycle econometrics and knowledge to ascertain which markets are quickly recovering from the pandemic, it is clear to see that demand for apartments is rising,” said Nate Hanks, CCIM, CEO of RealSource Properties. “This multifamily-focused REIT will open up our company’s track record in value creation to non-institutional investors looking for ways to diversify their portfolio with cash flowing real estate.”
The $390-million RealSource Properties REIT targets multifamily properties, with ten properties already owned with more in the pipeline. Utilizing the firm’s vertically integrated business model, assets in the REIT will be managed by the same value-add real estate strategy currently deployed at RealSource multifamily assets nationwide. RealSource’s in-house team of economists, researchers, and acquisition specialists source viable investments; then, its team of asset management professionals manage and operate the assets identified for the acquisition.
Commercial real estate investments have emerged as a solution for investors looking for portfolio alternatives, and REIT-structured investments like the one offered by RealSource have historically provided investors with risk mitigation, potential attractive and sustainable yields, competitive market performance, streamlined investment management, and potential significant tax advantages. Additionally, investors will have full transparency into the operation and performance of each asset in the REIT.
The ten properties already owned by the RealSource Properties REIT include 2,897 apartment units in Ohio, Texas, North Carolina, and Colorado. The acquisition process for these properties relied on an econometric model that evaluates nearly 40 different market sub-categories, factoring such things as market, migration, income, social indicators, state GDP and tax rates, growth, and more. The development of this unique set of parameters over time allows for in-depth comparison over broad periods and markets, submarkets, and regions.
Hanks explained, “In 2022, we anticipate continued strength for the rental product since demand outweighs supply. To be sure, the pandemic caused dramatic demographic shifts, which pose some lesser-known threats that are beginning to evolve in the industry. Yet we believe there are opportunities to trade in and out MSA’s when savvy investors bring the right business model and execute it correctly. Timing the local real estate cycle correctly can create higher returns in times of bigger upward swings in what is often called the absorption cycle.”
In addition to deep market research, each asset purchased by the REIT is evaluated to align with its value-add strategy. The REIT looks to source assets acquired at meaningful discount to replacement cost – and assets that are determined to benefit from operational efficiencies and improvements through asset management initiatives, property improvement plans, and a series of other contributing variables. For RealSource Properties investors, the REIT’s structure allows the potential for accretive improvements of its value-add strategy results to enhance performance in the long term, as compared to individual property performance.
Hanks concludes, “The axiom, everyone needs a place to live, has never rung truer than during the pandemic. Effectively located apartment homes in booming U.S. metros can be more undervalued than many deep inside the real estate industry realize. Rising costs of living, coupled with rising replacement costs to build new housing, have resulted in a giant macro increase to multifamily values in most markets at the close of 2021. An important market cycle has surfaced: rising single-family prices are causing more people to rent for longer, affecting demand for already near-full apartment inventory. Consequentially, multifamily vacancies in many metros are near all-time low levels and naturally pushing rent rates upward in many of the largest 50 metros.”