Greystar Nears First Closing of $1B APAC Multi-family Venture: MTD TV APAC Residential Forum 2022

 
Greystar is nearing a first close for its $1 billion regional multi-family vehicle targeting Asia Pacific according to one of the US rental housing operator’s top representatives for the region, as major institutions continue to add build-to-rent investments to their portfolios.

Ed Boyd, senior managing director for APAC investment management at Greystar, told MTD TV’s APAC Residential Forum on Tuesday that his company’s first pan-APAC multi-family strategy will likely achieve its first closing in the coming weeks as total funds committed so far have already reached or potentially surpassed the initial target, which is understood to be $1.05 billion.

“It’s kind of a unique offering, because I guess to our knowledge, there isn’t a regional fund investing in the Asia Pacific region focused on rental residential sponsored by a manager with extensive operating experience,” Boyd said. “I guess we’re very excited to bring this unique venture to the market and we’ll have the ability to invest capital across gateway markets.”

This latest milestone for the global multi-family developer and fund manager approaches as investors continue to warm to APAC’s multi-family market thanks to its proven resiliency and healthy tenant demand, Dominic Doran, director of private real estate for Asia Pacific at Dutch pension fund manager APG Asset Management said at the forum, which was sponsored by Yardi.

Capital to Be Deployed in Q2

Boyd said Greystar will begin deploying the funds from its new venture across the region during the second quarter of this year, starting with key markets where the company already has projects, such as China, Japan and Australia. The value-add fund is expected to achieve its final closing by the fourth quarter, according to earlier statements by the company.

With APG, Quebec’s Ivanhoe Cambridge and other institutions having backed earlier Greystar funds in the region, Boyd said investors in this latest venture include both existing and new partners.

Less than two years after entering the Japanese market through a $278-million joint venture with a Middle Eastern sovereign wealth fund in 2019, the Greystone executive said the South Carolina-based firm continues to see “compelling opportunity” to acquire multi-family assets with strong cash flow despite increasing competition.

In addition to its Japan strategy, Greystar in 2019 closed its Greystar China Multifamily Venture in 2019 with more than $500 million in capital and reached an A$1.3-billion ($930 million) final closing on its Greystar Australia Multifamily Venture I in February last year.

“The opportunity in markets outside of Japan lies in our ability to reposition or develop purpose-built products that are highly amenitized and come with excellent customer service,” he said. “We’ll look to deliver these assets to undersupplied markets, which currently only provide shadow market offerings.  The product doesn’t exist so we’ve got to get creative.”

More Capital on the Way

Investor interest in APAC’s multi-family sector has been rising in recent years as countries beyond Japan have begun developing more robust rental housing markets and governments have rolled out policy support, observed APG’s Doran.

“It was quite hard for the market to sort of establish itself or to gain entry in the market on a bilateral basis because we really think that policy support is quite important for the sector,” he said. “[But since the policy support has] become more apparent in the last few years, particularly in China and in Australia, the opportunity to make viable returns is now more pronounced than it was 5-10 years ago, which is why I think you’re seeing more activity now than in previous years.”

Looking at investment vehicles that closed last year, cash raised for strategies that include multi-family assets in Asia Pacific more than doubled to over $6.6 billion last year compared to the year prior according to figures from real assets data provider Realfin, while the commitments to funds globally that target the sector rose to $68.2 billion.

Both Boyd and Doran expressed optimism regarding growth opportunities in the APAC multi-family sector on the back of strong demand drivers such as urbanisation, rising housing prices and growing demand for professionally managed housing.

“I think it is just a general trend that people do want better service, they do want amenities, they want security of tenure, they want to know that if something breaks down, someone can come quickly to fix it and do it in an efficient manner,” Doran said. “So these are all common trends that we feel that multifamily as an asset class, you can tap into that and you can really draw some really attractive risk adjusted returns.”

Residential Forum Continues

This first episode in MIngtiandi’s APAC Residential Forum will be followed by two panel discussions focused on multi-family investments in Greater China and Japan next week.

On Tuesday, 22 March guests LaSalle Investment Management, PGIM Real Estate, Greystar and Weave Living will explore the sector’s future in Greater China while experts from AXA IM Alts, Allianz Real Estate, TE Capital Partners and Tokyo Trust Capital will speak about the Japanese multi-family market on 24 March.

On 29 March, a panel of experts from firms including Hines and Ivanhoe Cambridge will be discussing multi-family investment in Australia, while the forum will wind up on 31 March with a panel on debt financing opportunities with guests from Phoenix Property Investors, Haitong Securities International and more.