RealSource Properties Inc. has launched RealSource Properties REIT, a $390-million, 10-multifamily property real estate investment trust. The REIT is the Salt Lake City firm’s first investment offering to accredited investors.
“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. said Nate Hanks, chief executive officer. “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 REIT portfolio consists of 2,987 Class B apartment units located in Colorado, North Carolina, Ohio and Texas. Additional properties are in the pipeline, with each assessed to align with RealSource Property’s value-add strategy. The company’s approach focuses on buying properties at a meaningful discount to replacement cost, then implementing operational efficiencies and asset and property management improvements to increase value.
“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,” Hanks said.
Hanks explained that demand for rental product continues to outweigh supply, even as the COVID-19 pandemic led to demographic shifts. “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,” he said, adding that proper timing of local real estate cycles can lead to higher returns.
Continually escalating single-family housing prices also encourages longer-term renters, also boosting demand. As a result, Hanks noted, “multifamily vacancies in many metros are at near all-time low levels, and are naturally pushing rental rates upward in many of the largest 50 metros.”
RealSource Properties is a commercial real estate investment manager, and since its 2002 launch, has acquired 46 properties at an aggregate purchase price of nearly $1 billion.