Salt Lake City-based RealSource Properties has launched a multifamily-focused real estate investment trust (REIT). Since starting its investment and management platform two decades ago, the firm is extending an opportunity to accredited investors to join it in a portfolio of multifamily communities.

The Fairways at Royal Oaks in Cincinnati.
The Fairways at Royal Oaks in Cincinnati.

The $390 million RealSource Properties REIT targets multifamily communities, with 10 assets already owned and more in the pipeline.

“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 CEO Nate Hanks, CCIM. “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 10 multifamily communities already owned by the REIT include 2,897 units in Colorado, North Carolina, Ohio, and Texas. According to RealSource, the acquisition process relied on an econometric model that evaluates market subcategories, factoring such areas as market, migration, income, social indicators, state GDP and tax rates, and growth. This allows for in-depth comparison over periods of time and markets, submarkets, and regions.

In addition to the market research, each acquired community by the REIT is evaluated to align with its value-add strategy. It seeks to acquire properties at a meaningful discount to replacement costs as well as ones that will benefit from value-add property and asset management initiatives.

“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,” added Hanks. “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.”