A mentor once told me, “If you’re going to be biased, at least be biased based on data.” 

Some people think we are biased toward multifamily real estate investments because we’ve done so much in this asset class for over 30 years now. I’ll admit that we are indeed a bit biased, but it is a well-informed preference based on significant, considerable experience and data. Although for three decades now, apartments have been our core investment focus, we have owned and operated real estate in multiple asset classes across the country. So, our proclivity toward multifamily is not without firsthand comparative experience with many assets in other asset classes like senior housing, industrial, commercial, and hospitality.  

Some have asked, with all our varied experience investing in various real estate asset classes and with all the real estate investment options available, why are we focused primarily on multifamily residential housing? It’s simple. 

We’ve empirically observed through multiple economic cycles that multifamily tends to be the most consistently stable while still providing strong returns. A big reason for its recession-resistant nature comes from the basic human need for shelter which makes housing so resilient. This helps insulate apartment investments, to a large degree, from the dramatic swings of the market cycles. 

The resiliency of this asset class was demonstrated once again during the recent pandemic-induced economic crisis. The data shows that multifamily weathered the 2020 recession better than almost every other property sector.

This dynamic of strong resilience has played out over multiple economic cycles. According to the National Council of Real Estate Investment Fiduciaries (NCREIF), the average annual total return for multifamily properties was 9.3% from 1991 to 2020.  The data on overall post COVID return trends have been even stronger.  And the markets we focus on have delivered well above these returns for over three decades.  

In comparing multifamily returns to historic returns on other real estate asset classes, CBRE documented how over the last 25-plus years multifamily provided the highest average annual total returns of any commercial real estate sector with the second lowest level of volatility. Our experience transacting a few billion dollars of real estate over the last 30 years has proven the same. We’ve consistently created the highest return from the multifamily asset class compared to any other real estate classes we've invested in. 

With all our multifamily funds that have gone full cycle over the last 30 years, we’ve produced an average IRR of net fees to investors of over 24%. Of course, in our past and present forecasts, we don’t project annualized returns in the 20s. As always, prior performance never guarantees future results. We simply have not found other asset classes that can produce such a strong annualized return through decades of economic cycles. Over the years, we have consistently produced attractive risk-adjusted returns with relatively low volatility from the multifamily asset class. 

The fundamentals point to continued strong performance and lower relative correlation to overall market risks and dynamics. You can see why, regardless of which predictions come true about 2024 and beyond, we are as bullish as ever about investing in multifamily real estate.