Mike Hung
Subtext Mike Hung

As part of its strategic expansion, real estate development firm Subtext launched a new acquisitions vertical last month and appointed Mike Hung to spearhead the initiative as partner and executive vice president, acquisitions.

Focused on elevating the resident experience for students and professionals, Subtext develops purpose-built multifamily housing across the country and will now also acquire properties to expand its growing portfolio. To find out more about Subtext’s goals for 2024 and beyond, MFE chatted with Hung.

What prompted the launch of the acquisitions vertical?
The launch of the acquisitions vertical at Subtext was prompted by our long-term vision to establish ourselves as a premier, vertically integrated real estate operator. As we continuously strive to enhance our capabilities and broaden our scope within the industry, the addition of the acquisitions vertical was deemed a logical next step in our company's evolution. This strategic move reflects our commitment to positioning Subtext at the forefront of the real estate market, allowing us to adapt to changing landscapes and better serve the diverse needs of our clients and stakeholders.

Why do you think now is a good time for this launch in the market?
At Subtext, our robust internal capabilities and operational maturity have reached a point where we are well equipped to navigate the complexities associated with acquisitions. The groundwork laid in our existing portfolio, along with a comprehensive understanding of market trends, empowers us to make informed decisions and maximize success in this new vertical.

From a broader market perspective, in the environment of rising construction costs and higher interest rates, we believe that acquisitions provide us a unique opportunity to add to our growing portfolio by acquiring existing assets at or below replacement cost.

Furthermore, the strategic considerations align with my appointment as a key leader in our acquisitions vertical. To this role, I am bringing 15 years of real estate expertise, having transacted over $1 billion in student housing throughout my career, elevating our team's capabilities and adding valuable insight to our acquisitions endeavors. My knowledge and successful track record align seamlessly with Subtext's commitment to excellence and strategic growth. With my appointment and the current market conditions, the timing is ideal for us to leverage this expertise effectively and make impactful strides in our acquisitions vertical.

For the long term, adding the acquisitions vertical is a logical progression in our company's evolution and demonstrates our work toward enhancing our capabilities and broaden our industry scope.

How can/will the diversification impact Subtext?
The strategic move of diversifying into the acquisitions vertical is set to bring about a considerable and positive transformation for Subtext in various crucial aspects. One significant impact lies in the broadening of our business structure. The inclusion of acquisitions serves to expand and diversify Subtext's operations, moving beyond the confines of its current business segments. This expansion not only provides new opportunities within the real estate market but also contributes to a more comprehensive and resilient business structure. Diversification, in this context, acts as a crucial layer of resilience to Subtext's overall portfolio.

The ability to build up our assets under management and grow the acquisitions platform also ultimately contributes to our ability to create a top-notch living experience for our tenants.

As the company engages in acquisitions, it gains the ability to better navigate market fluctuations and economic uncertainties, benefiting from the varied responses of different segments to external factors. In essence, this diversification strategy is a forward-thinking approach aimed at ensuring the long-term sustainability of Subtext. It reflects the company's adaptive stance toward changing market dynamics, solidifying its capacity to thrive in evolving economic landscapes.

Do you have any strategies you’re planning to implement immediately?
Our strategy and focus will be reflective of Subtext’s existing approach to the sector—build and acquire the best assets in high-demand markets and deliver our tenants a best-in-class living experience. We believe that acquisitions will broaden our reach and allow us to enter new markets with attractive metrics that may not be currently suited for new development.

What’s your outlook for the rest of 2024? Do you think there will be an abundance of properties available?
As we look ahead to 2024, we are optimistic that equity will be coming off the sidelines and ready to transact on both the buy and sell side. We expect that there will be compelling opportunities to acquire assets but will remain steadfast in our approach and only pursue assets and markets that align with our long-term vision for platform growth.