Target Assets: Apartment Communities
Aldwin is assembling an asset base of apartment communities. Aldwin’s acquisition targets have maintained their stability even through the recent financial crises. Demographic trends point to continued strength in multifamily properties.
Less Volatility
Over the last 20 years, the apartment sector has been less volatile, and experienced far fewer negative quarters (only seven), than both the traded REIT index and the S&P 500 (S&P 500; NCREIF Property Index – Apartment Properties (NPI), and NAREIT Index).
Hedge Against Inflation
• Shorter-term leases allow frequent adjustments to the market
• Apartment rents tend to move with inflation
• Therefore, apartment income may respond better during inflation than other fixed-income investments
Favorable Financing
• Current interest rates allow for favorable available dividend payments
• Apartments will maintain a financing advantage over other property types due to availability of government sponsored debt financing
• Government Sponsored Entities account for 60% of new multifamily mortgage originations
• Freddie Mac funded $16.6 billion of debt in 2009 (one of the worst capital markets in history) providing a source of liquidity to the multifamily sector
Unprecedented Demand, Trends, Attitudes, Market Conditions and Restrictions:
Population Growth
• In the 2000 census, the U.S. population was 282 million
• It is expected to grow to 336 million by 2020, continuing the 10% increase per decade that we have experienced since 1970 1
Trends
• A trend towards “lifestyle renting” is emerging for the 78 million strong baby boom generation 2
• More than 80 percent of the 1.6 million U.S. immigrants in 2005 rented 3
• 450,000 new renters will outstrip the supply of apartments despite the current economic downturn 4
Market Conditions
• Tighter lending restrictions for those desiring to purchase their own home
• Instability/uncertainty in housing market pricing
• Despite the upward trend in demand for apartments, the market has not produced a corresponding increase in units; this supply imbalance likely will support strong rental prices for the foreseeable future 5
• Vastly reduced lending to the development community has virtually eliminated the introduction of competitive assets
Attitudes
• People who lost their homes to foreclosure or short sale are apprehensive about making the same mistakes; many are inclined or must rent 6
