As usual, tax credit syndicators dominate the top of the NMHC 50 Owners rankings. A full five such firms appear on the list before a pure owner, Chicago-based REIT Equity Residential (EQR). But this year’s list isn’t the same as past years’: Driven by the tremendous consolidation the industry has experienced since 2012, several new names have vaulted into play.

A series of acquisitions over the past half decade drove Hunt Cos. to the top spot last year. Having bought Hunt’s tax credit syndication platform, Alden Torch Financial takes the top spot for 2016, while Hunt falls to No. 18. On the conventional side, newcomer and ­private-equity powerhouse Starwood Capital Group rode a host of major acquisitions to the 30th slot on the list. While Starwood amassed its units in some headline-grabbing transactions, ­Monarch Investment and Management Group (No. 41) quietly collected 8,161 units.

In all three cases, the theme was consolidation. While REITs pared down their portfolios (or went out of existence) in 2015, these private buyers, fueled by unprecedented investor interest in apartments and a healthy debt market, appeared among the NMHC 50 Owners for the first time.

Alden Torch Financial

Alan Fair, Alden Torch Financial
Alan Fair, Alden Torch Financial

2015 Units Owned: 191,759
2016 owners Rank: 1

Many in the market-rate world might never have heard of Alden Torch Financial. But the executives behind the nation’s top apartment owner need no introduction to the affordable housing ecosystem.

The firm’s senior leadership has deep experience in the low-income housing tax credit (LIHTC) industry. Alden Torch’s CEO is industry veteran Alan Fair, who was executive managing director of Hunt Capital Partners after a long stint with SunAmerica Affordable Housing Partners. The company traces its roots to 2010, when Hunt Capital Partners was formed by Fair and senior management in conjunction with Hunt Cos. Over the next few years, the firm grew exponentially.

In April 2015, Alden was formed in connection with purchasing Hunt’s interests in the platform.

“The one constant theme—whether we’re buying tax credits or partnership interests, or whether we’re loaning into the tax credit space—is that we dedicate ourselves to the tax credit industry,” says Fair.

The firm has molded itself as something of a one-stop shop for LIHTC developers and owners. In addition to tax credit syndication and acquiring LIHTC partnership interests, the company holds a Freddie Mac affordable license, allowing it to serve both sides of the capital stack.

“Our tax credit business will continue to grow at a measured rate—we don’t chase volume for the sake of volume,” says Fair. “We’re patient, we have access to capital, and we have a robust platform. We anticipate even more consolidation in the industry over the next several years.”

Indeed, if one were to chart the growth of the company’s LIHTC syndication business—which includes the assimilation of two massive platforms—and extrapolate five years out, more growth could be expected.

Starwood Capital Group

Chris Graham, Starwood Capital Group
Chris Graham, Starwood Capital Group

2015 Units Owned: 42,702
2016 owners Rank: 30

Starwood Capital Group makes its first appearance in this year’s NMHC 50 Owners rankings—but next year’s showing will undoubtedly be even more impressive for the Greenwich, Conn.–based firm.

The private-equity firm hit the charts with a bullet, ranking as the 30th-largest owner in the nation, with 42,702 units. But that figure doesn’t quite reflect reality. When you factor in the two mega-deals Starwood closed in January 2016—the acquisition of nearly 23,000 units from EQR, for $5.4 billion, and the $1.9 billion purchase of Landmark Apartment Trust’s portfolio of 24,000 units—Starwood should easily rank in the top 10 next year. In fact, Starwood may just be the biggest ­market-rate owner in the nation. But it’s attained that level by bucking conventional wisdom.

“If you look at the market-rate units we own, 95% of them are in suburban markets,” says Chris Graham, senior managing director and head of real estate acquisitions for the Americas for Starwood. “There’s this myth about millennials only living in cities, but 90% of them live in the suburbs or exurbs.”

The EQR deal is a great example of this contrarian view. The percentage of new supply coming on line in downtown Denver, Seattle, or Miami is nearly 4%, but in the suburbs of those cities, the new supply percentage is around 2%, Graham says. And unlike many other opportunity funds, Starwood is taking a longer-term view.

“Our hold periods tend to be a little longer vis-à-vis other opportunity funds, because we’ve never been quick flippers,” says Graham. “We’d rather have a 20% IRR over five years than a 30% IRR over two.”

Graham, who’s been with Starwood since 2002, after serving as a director with CB Richard Ellis, has seen his share of market cycles. And while cap rates are at their lowest levels in nearly a decade, he sees the possibility of further compression.

“We’re not betting on cap rate compression; our assumption in our apartment pro formas is that they’ll expand moderately,” says Graham. “But when you look at all the other asset classes, and all the other alternative investments out there, like the yield on the 10-year Treasury, there very well can be a scenario where they compress further.”

Monarch Investment and Management Group

Bob Nicolls, Monarch Investment
Bob Nicolls, Monarch Investment

2015 Units Owned: 28,547
2016 owners Rank: 41

Monarch Investment and Management Group often flies under the radar in discussions of the nation’s top owners. And that’s just the way the company likes it.

Monarch founder Bob Nicolls plays in many secondary markets—the “flyover” states—with a footprint concentrated around the Sun Belt and the Midwest. The company’s corporate culture is quiet and humble—and ultra-savvy.

The firm has grown steadily since its founding in 2004, moving from just 50 employees to its current staff of nearly 900. Last year was a particularly active year for the company.

“Last year, we bought about 8,000 units. It was our biggest year,” says Nicolls, a CPA who cut his teeth in the multifamily world by doing work-out deals following the Tax Reform Act of 1986. “We’d buy two or three a year until the financial crisis in 2008—then, we recognized, ‘This is going to be one of the greatest times to buy apartment buildings ever,’ so we started buying in the Midwest, where you could buy high cap rates and the fundamentals were great.”

Nearly 50% of Monarch’s portfolio comprises Class C assets, with only 15% in Class A and 35% in Class B. And that concentration toward workforce housing in the Midwest presents something of a bulletproof business plan.

“Bs and Cs in the Midwest have a moat around them—you can’t build a B or C these days; it costs too much in land, labor, and materials,” Nicolls says, “so, in most of our markets, we have a supply-constrained business.”

Though 2015 was a record-breaking year for Monarch, the company—which self-manages all of its units—is preparing for another busy year of acquisitions. The firm is active in 16 states and is looking to expand elsewhere.

“Over the last year or two, in the middle of the country, pricing and cap rates seem to have stabilized,” says Nicolls. “So you’re still able to make bread-and-butter deals work. This year feels the same, and we’re just getting started.”