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Greystar Shopping $1.2 Billion Apartment Portfolio Across Three Core Markets

13-Property Assemblage Includes Communities in the Greater Washington, D.C., San Francisco and Los Angeles Markets
May 3, 2018
Pictured: Ellipse at Fairfax Corner, a 404-unit property in Fairfax, VA that is part of the 13-property portfolio offered for sale by Greystar.

Greystar Real Estate Partners is shopping a 13-property apartment portfolio that is expected to command bids of about $1.2 billion.

The Charleston, SC-based multifamily giant has hired Eastdil Secured and Marcus & Millichap’s IPA division to market the 3,374-unit package, which includes properties in Washington, D.C.’s Northern Virginia suburbs, greater San Francisco and Southern California. While it’s possible a single national player could take down the entire portfolio, the properties may end up going to multiple investors given the geographic and quality diversity.

Five of the properties are in Northern Virginia, six are in Northern California and two are located in greater Los Angeles. All three of those core markets remain active for multifamily investors despite nearly a decade of growth.

Meanwhile, a glut of new apartments in the greater Washington DC region has brought Class B offerings - with greater upside through renovations - to the front of many investors’ shopping lists there, something the Greystar offering is said to reflect.

Both San Francisco and Los Angeles are tight rental markets where new construction hasn’t soured the higher-end of the rental market. The properties on offer in those markets are Class A deals and priced accordingly, according to market players.

Eastdil Secured is marketing the Virginia listings and the properties in Northern California's East Bay, and IPA is handling the assets in Southern California and the remaining properties in Northern California. The specific properties included in the sales offering were not available.

Across the board, the rosy fundamentals the apartment sector has enjoyed in recent years are beginning to dim. Vacancy is up, and rent growth is still positive but slowing, according to first quarter data compiled by CoStar.

Despite slower rent growth and increased lease incentives, sales of apartment properties are up. Through the first quarter of 2018, apartment sales of properties totaled $35.3 billion, up from $32.9 billion during the same period last year, according to CoStar information.

But while recent high levels of new multifamily construction and slowing household formation may be taking some of the shine off the rental sector, compared to other commercial real estate sectors, apartments remain a good bet.

Homeownership is still at historic lows, despite an uptick in the last year, and the steady stream of new construction dragging down fundamentals will likely relent in the coming 12 to 24 months, according to CoStar analysts.

Greystar joins Starwood Capital Group reported to be in the market looking to capitalize on continued investor demand for multifamily properties. Reports came out this week indicating that Starwood has begun marketing a 25-property portfolio worth about $1 billion through HFF and CBRE.

John Doherty, Multifamily Reporter  CoStar Group   

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