October 25, 2021
By any definition, the CRE investment market is booming right now, and that’s a great thing. . .unless you’re in the hunt for new deals, because it’s a crowded marketplace. As we regularly highlight on our LinkedIn page with examples from around the country, the multifamily sector has proven its resilience during the horrors of the recent past. And as the economy inches back to pre-pandemic levels, investors have found rents not only holding steady but dramatically rising in many markets. People are moving between cities and suburbs seeking new residential options, and new developments with flexible living arrangements mushrooming.
Most significantly, funds are pouring into the system as more and more capital moves to the multifamily sector. Just this week, a prestigious investment firm closed its latest real estate fund with commitments exceeding $10 billion, and that was on top of another raise that netted $7.6 billion. Meanwhile, there are new models emerging: One online crowdfunding site has garnered attention by drawing 200,000-plus investors across a $3.7 billion portfolio that includes more than 18,000 multifamily units.
At Offerd, we’re in the thick of it.
We’re proud to have pioneered Acquisitions as a Service, helping investors source properties and make deals around the country. At the same time, through our network of equity and debt partners, we lead the way in helping source capital to help our partners grow and get deals done. We advise on, manage and of course make investments ourselves in this dynamic market.
For example, consider how we help our partners structure their capital stack. It’s easy to go deep into the weeds on this, so here’s a topline view. As you know, this covers all of the funds raised to finance a real estate transaction—who controls the deal, who gets how much of the profits, etc. Even sophisticated investors can have a hard time tracking the specifics, but it’s important because they determine the distribution of risks and rewards.
At the bottom of the stack, the true foundation, is senior debt: If the deal goes well, these holders get their share first. On the flip side, if the deal underperforms or involves defaults, they have the authority to initiate foreclosure and liquidation. At the top, meanwhile, we find the common equity holders. They get paid last and so have the most to lose, but also have a higher return rate and other benefits. And in between is the mezzanine—hybrid investments that rank below senior debt but with a pledge of ownership interest and some foreclosure rights.
The Offerd team is at home in this complex, dynamic and economy-boosting environment. We’ve amassed years of expertise in every aspect of this internecine process, and our professionals leverage that experience and networks to offer advice and solutions on how best to structure the stack. We’ve developed a rich database of debt sources and equity sources around the country, and that puts us in a unique position to help our partners initiate, negotiate, structure and manage deals that make the best sense even in this hyper-competitive marketplace.
There are seldom easy and obvious options: It takes diligence, experience, expertise and connections—the perfect combination of skills and assets that encompass deal sourcing, underwriting, equity, debt solutions and more. We think it’s rare to have such a variety of skills in the multifamily world. And we’re proud to put it to work for you.