There may be some signs of new life for the affordable housing sector with Starwood Real Estate Income Trust’s (SREIT) acquisition of 4,618 units in 32 communities throughout the Mid-Atlantic and Sun Belt markets. SREIT, a subsidiary of Starwood Capital Group currently has a portfolio valued at over $4.3B across 106 properties.
Jacksonville Florida and Washington DC make up 57% of the portfolio, which have both witnessed double-digit growth compared to the national average. Government jobs remain stable in the Washington area, and with Amazon’s HQ2, the story doesn’t look like it’s going to change. Jacksonville has experienced a 16% employment growth, and with the new stadium, the city looks to be a promising bet. Targeted cities within the portfolio also include Charlotte, Raleigh, and Nashville, which are all on pace to outperform national growth rates.
“These transactions are an extension of SREIT’s successful investments in the affordable multifamily housing sector, providing us with a unique opportunity to acquire high-quality, well-located assets in scale,” said Mark Keatley, Managing Director at Starwood Capital. “These investments have good downside protection provided by highly occupied properties with in-place rents that are 26% below comparable market-rate apartment rents, thus generating strong and dependable cash flow. Furthermore, these portfolios are well positioned to deliver attractive risk-adjusted returns given the persistent supply/demand imbalance for high-quality affordable housing, and we see long-term benefit for residents across the country in maintaining the sustainability of affordable housing. We are pleased to add these residential communities to the SREIT portfolio and intend to continue to invest in the affordable housing sector.”
“Our experience with both affordable and market rate multifamily properties in these markets allowed us to underwrite and execute these transactions quickly and efficiently,” added Andrew Coren, Senior Vice President at Starwood Capital. “These portfolios provide substantial and defensive in-place cash yields, illustrated by stable performance and collections through COVID-19. The affordable housing sector has significant barriers to entry and these acquisitions also possess high growth potential based on demographic trends in these markets.”
About Starwood Real Estate Income Trust
Starwood Real Estate Income Trust, Inc. is a perpetual-life, monthly NAV REIT that directly invests in high quality, stabilized, income-producing real estate. SREIT is managed by Starwood REIT Advisors L.L.C., a subsidiary of Starwood Capital Group.