Singapore-based CapitaLand, one of Asia’s largest real estate companies, has acquired a portfolio of 16 multifamily properties comprising 3,787 apartment units in the U.S. for $835 million, or $220,000 per unit. The investment is being seen as a low-risk endeavor, as CapitaLand notes that the “multifamily sector in the U.S. has the highest average returns in the commercial real estate asset class, offering close to 10% annually in the last three decades.”
The U.S. multifamily sector “is broad, scalable, and [is] a growth sector marked with long-term secular trends. … this multifamily portfolio offers attractive risk-adjusted returns for CapitaLand,” said Lee Chee Koon, president and CEO of CapitaLand Group, in a statement. “Beyond expanding the long-term rental housing platform in the U.S., a market which we have ventured into since 2015, we also see potential to build this business in other fast-growing markets, such as China.”
CapitaLand builds and sells homes and owns and operates shopping malls, office buildings, and real estate investment trusts. This strategic move in the multifamily arena may reflect a trend of acquiring more U.S.-based assets—primarily in affluent suburbs of major cities.
“We’re acquiring a well-diversified portfolio of multifamily assets across several suburban markets in a single transaction, each [in a] regional market with a critical mass of over 1,000 units. The stable, reliable cash flows of these Class B multifamily properties make this suburban portfolio more attractive than the higher-priced urban core segment,” said Gerald Yong, CEO of CapitaLand International, in a statement.
Upon entering the U.S. market three years ago, CapitaLand acquired five properties, in Manhattan and Silicon Valley, that included over 1,200 units. The firm also owns a majority stake in Synergy Global Housing, which specializes in corporate leased apartments.
CapitaLand’s latest multifamily portfolio acquisition will more than double its investment in the States, to over $1.5 billion, and increase the company’s presence in the market to more than 6,500 units.
