Multifamily Update (Q2 2012) - L5 Investments

[Mike Flaherty]

The 1st quarter of 2012 ended as another strong period for L5 Investments. Rents, occupancies and values continue to increase across our entire portfolio as demand for apartments strengthens.  This demand is directly aligned with our strategy to invest in relatively low-risk, stabilized and value-add opportunities as supply lags, stringent loan requirements delay future homeowners, and as the Echo-Boomer generation enters the rental market. 

 

Performance: Our current portfolio continues to exceed expectations and we are in the process of acquiring A $8.5M, 132-unit, off market asset that will continue the trend.  Property occupancy rates across all of our assets are at their highest levels and growing demand is anticipated to continue as we enter the prime rental season.

 

Market Outlook: Despite strong multi-family fundamentals, the U.S. economy is still trying to gain traction and has yet to achieve a consistent cycle where job creation supports consumer spending, which in turn supports business capital spending and hence more job creation.  However, from a microeconomic standpoint, specific markets are making significant progress and some - such as Odessa, TX - are thriving.  As of April, Odessa had the 2nd lowest unemployment rate in the country at 4.5% and experienced 10% job growth - the 2nd largest year-over-year percentage gain in employment of all 372 metro areas.  We own two properties totaling 312 units in Odessa and continue to focus on other such emerging growth markets. 

 

As always, below are some interesting articles on the current multi-family state of affairs and expected 2012 growth markets: 

 

Multifamily Real Estate Taking Off (Financial Advisor News, 03/30/2...

While the single-family housing market remains stagnant, demand for apartments is on a tear, making the multifamily segment very attractive for non-traded REIT investors, say executives at Orlando-based CNL Financial Group.

 

U.S. Apartment Vacancy Rate Falls to Decade Low (Reuters, 04/04/2012)

The U.S. apartment vacancy rate in the first quarter fell to its lowest level in more than a decade, and rents posted their biggest jump in four years, as Americans eschewed home ownership and renting retained its popularity. 

 

The Best and Worst Cities for Jobs This Spring (Forbes, 03/13/2012)

The country added 227,000 new jobs in February, according to the Bureau of Labor Statistics, the third consecutive month of gains of more than 200,000. That’s a good sign that the labor market is strengthening and the economy is finally on the mend, even if unemployment remains at 8.3%.

 

L5 Investments continues to focus on best in class asset management while remaining patient and prudent as we source new investment opportunities.  We continue to expand our target markets as new regions improve economically and as local apartment markets provide new assets that fit our investment criteria. 

 

 

Michael Flaherty

Managing Partner

L5 Real Estate Investments

Apartment Acquisition & Asset Management with High-Yield Performance

www.Lfiveinvestments.com

1926 S. Pacific Coast Highway, Suite 231, Redondo Beach, CA  90277

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