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Monogram Apartment REIT Deal is Opportunity for Greystar

Buyer Enhances Class A portfolio

By Louis Rosenthal | Friday, July 14, 2017

 

Greystar Real Estate Partners is set to purchase Monogram Residential and its portfolio of more than 13,000 apartments for $3 billion, just the latest in a series of apartment-REIT transactions.

Given that more than half of Monogram’s properties are Class A apartments in coastal markets, the acquisition by Greystar provides opportunity in an improving apartment market niche.


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Among the coastal metros, Monogram has large concentrations in Washington, DC; Boston; Atlanta; San Francisco; and Southern California. Among interior metros, it has a significant presence in Dallas, Denver and Houston. Additionally, Monogram features the largest share of Class A, luxury units among the apartment REITs tracked by Axiometrics, a RealPage company.


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It’s the market selection that provides the opportunity for Greystar, one of the largest apartment operators in the nation, in assuming Monogram’s portfolio.

The deal, if closed, would bring Greystar into the Providence, RI market and extend its South Florida reach into the West Palm Beach area. It would also bolster the company’s portfolio in high-rent-growth areas in which it already has a strong presence, such as Las Vegas, Atlanta, Anaheim and Los Angeles.

Not to mention the facts that San Francisco and Denver seem to have started rebounding from its recent low points and Houston is gradually ascending back toward positive rent growth, though it’s not there yet.

Greystar’s enhanced presence in high-end, luxury communities in top-tier markets has a large potential for significant returns, since Class A rent growth is on the rise as Class C falls and Class B grows at a slower rate. Moving forward, as new supply levels continue to taper off, Class A assets will face fewer new competitors — all the better for raising rents.

 
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For major players in the space — like Greystar — with the necessary capital and patience, the moment is right to collect assets ripe for performance strengthening in the not-too-distant future. Considering the underlying strength of the national apartment market (e.g., rent growth moderating, not plummeting; and new supply levels plateauing), there is every reason to believe that Greystar’s strategy will pay dividends.

 

Louis Rosenthal

Louis Rosenthal

Real Estate Analyst

Louis Rosenthal researches and analyzes current apartment trends in the United States and correlates them with economic indicators. He also studies the urban landscape and other metrics to develop in-depth reports and presentations for clients. Louis recently earned his Master of Science in Public Policy, focusing on housing, landuse patterns, real-estate dynamics and economic development. He combines that knowledge with his four years of practical experience in tax analysis, regression analysis and presentations to develop insightful analysis. An accomplished writer, Louis’ work has appeared on Forbes.com and Axiometrics’ blogs, among others.

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