A Charleston-based rental housing giant has sealed its biggest investment pool to date, lining up another $2 billion for apartment acquisitions.
It marks the 10th in what Greystar Real Estate Partners calls its "value-added series" of funds, which collectively have raised more than $5.4 billion since 2011.
"We have been laser-focused on continuously refining our value-add strategy and cultivating strong relationships with our investment partners, and we are proud of the outcome here,” company founder and CEO Bob Faith said Tuesday.
The funds committed to Greystar Equity Partners X will likely be locked up for five to seven years, from the acquisition phase to the eventual sales of the properties, he said.
"This is what we use to go buy things that are maybe mismanaged or need a little capital," Faith said. "We go in and spruce them up, apply our technology and people, and increase the cash flow."
Greystar will be scouring high-growth areas around the country for existing apartments that are priced below the cost of replacing them. It will hand the properties off to its in-house construction and property-management divisions, Faith said.
"To many people it looks like brand-new building, but the rents will be less than a brand-new building," he said.
Greystar doesn't anticipate any trouble finding suitable acquisition candidates.
"The good news is that this is still a very fragmented market. ... There are still a lot of mom-and-pop owners that don't have our economies of scale," Faith said.
While some markets are showing signs of oversupply — downtown Charleston included — rental housing trends remain mostly favorable for investors, he added.
"The demographics continue to be our friend," he said. "Single-family homes really have not recovered as far as the amount of new supply like you saw before 2008. Fortunately, the population is still growing, and the 20- to 35-year-old segment is still growing. That's sort of who our target market is."
Greystar's 10th fundraising round included commitments from deep-pocketed investors, such as pension funds, from North America, Europe and the Asia-Pacific region, the company said.
"As we move later into the real estate cycle, we are seeing that global institutional investors are increasingly flocking to more defensive investment strategies with integrated managers,” said Kevin Kaberna, executive director of the firm’s U.S. investment management business.
Headquartered on Meeting Street, Greystar oversees a $150 billion multifamily rental portfolio in 185 markets worldwide. It also is the largest U.S. operator of apartments.
Faith, who was South Carolina's commerce secretary under former Gov. Mark Sanford, started the company in 1993.