While fundraising levels have declined a bit from previous years, consistent returns, tax credits and lower risk continue to attract equity from a variety of investor types.
Activist investor Jonathan Litt has tried to portray the sector as heading for a similar fate as traditional office buildings. Market data and investor activity paint a much more complex picture.
While much of the sector continues to be dominated by small owners/operators, its solid property fundamentals, credit tenants and low capital expenditures are beginning to bring in institutional money.
As the amount of troubled loans mounts, real estate lenders are revisiting strategies from the Great Recession to avoid taking back the keys on some assets.
With solid property fundamentals and plenty of potential demand, both institutional and high-net-worth investors have been working with firms that specialize in BTRs.
The “denominator effect” put institutions in a position where real estate allocations exceeded target levels, but observers expect that issue has begun to resolve itself as values of other investments have recovered.
