On Monday, Singapore’s CapitaLand, one of Asia’s largest diversified real estate and alternative asset managers, with over S$133 billion ($100 billion) in managed client assets across 20 global funds and six REITs, announced the launch of a new joint venture to scale its U.S. multifamily housing portfolio in strategic Sun Belt cities.
CapitaLand will work strategically with its joint venture partner, an Austin, Texas-headquartered real estate investment, development and property management firm, to acquire and develop multifamily assets totaling S$416.1 million ($300 million) in gross asset value. The venture will invest in multifamily assets in the U.S. Southeast and Southwest markets, initially focusing on Austin.
For its first multifamily project, CapitaLand and its partner have acquired a freehold land parcel in Austin, characterized by high population growth and technology industry economic growth drivers. CapitaLand holds an 80 percent stake in the project while its partner holds the remaining 20 percent. The 4.71-acre land parcel will be developed into a modern, mid-rise and green 341-unit suburban multifamily property, with completion expected 2023.
CapitaLand’s partner has developed over 25,000 multifamily units across high growth and resilient markets in the U.S. since its inception 25 years ago.
For its part, CapitaLand currently manages a portfolio of 16 freehold suburban multifamily properties, containing more than 3,700 apartment units, which it acquired in 2018. These properties are located in suburbs connected to the Seattle, Portland, Greater Los Angeles and Denver metropolitan areas. With this new investment, CapitaLand will have S$4.7 billion ($3.5 billion) of assets under management in the U.S., having first entered the market in 2015.
“Development is one of CapitaLand’s key strategic growth pillars, along with lodging and fund management,” CapitaLand Group President for Singapore & International, Jason Leow, said upon announcing the venture. “CapitaLand’s acquisition of this prime site to develop our first multifamily property in Austin and…a potential pipeline of projects in the Southeast and Southwest markets of the USA will accelerate CapitaLand’s growth in the resilient multifamily sector.
“We will continue to seek attractive investment opportunities to build upon our diversified and well-balanced portfolio to deliver long-term value for our stakeholders.”
CapitaLand International U.S. Managing Director Dang Phan noted that since acquiring its suburban multifamily portfolio in 2018, the firm has value-added to the assets through progressive refurbishment to enhance returns. Overall, multifamily properties have remained resilient and have a current committed occupancy rate of approximately 95 percent.
Accelerated preferences
Countrywide, Phan said, multifamily rents have recovered faster than other asset types in previous recessions. Pre-covid, investment capital allocation into multifamily housing assets was already outpacing other property types, which he attributed to the sector’s resilience, liquidity and stable yields. He said the pandemic has only accelerated this preference.
“Despite covid-19, Austin continues to be an attractive technology, business, government and investment hub with a steady outlook, an ideal base for CapitaLand to scale our multifamily portfolio in the USA,” Phan said. “Austin’s business-friendly policies, high quality of life and skilled workforce have attracted major technology and Internet companies such as Amazon, Apple, Google, IBM, Oracle and Tesla to set up substantial operations in the city. The city’s focus on technology has also fuelled its population and job growth, consistently outpacing the national average. The demand for quality housing has risen correspondingly, with rents increasing 50 percent over the past decade.”
The 341-unit, planned multifamily development in Austin will be built in a bustling area, convenient to commercial, residential and leisure activities, and a five-minute drive from The Domain, a mixed-use development commonly referred to as “Austin’s second downtown.” The Domain comprises over 1.8 million square feet of retail amenities and over 3.4 million square feet of office space, as well as 3,700 apartments and 900 hotel rooms.
Designed to meet resident demand in the post-covid socioeconomic landscape, the property will include features such as keyless apartment entry and other smart home features within each unit. Hand sanitizing stations and anti-microbial surfaces will be installed throughout shared spaces, while community bathrooms will provide hand-free amenities such as contactless faucets and soap dispensers.
The property will feature about 1.4 acres of expansive outdoor recreational spaces to accommodate the needs of a burgeoning population of professionals working from home. The property will offer a mix of studios, one- and two-bedroom apartments with separate work and living areas for residents to work from home efficiently.
Elsewhere in the U.S.
Having launched Singapore’s first REIT in 2002, CapitaLand’s portfolio today spans across diversified real estate classes, which includes commercial, retail; business park, industrial and logistics; integrated development, urban development; as well as lodging and residential. Invested across more than 220 cities in over 30 countries, the Group focuses on Singapore and China as its core markets, and continues to expand in markets such as India, Vietnam, Australia, Europe and the U.S.
Through its wholly owned lodging business unit, The Ascott Limited (Ascott) and its hospitality trust, Ascott Residence Trust (ART), CapitaLand has five hotels with over 1,200 units across the U.S. Ascott also owns a majority stake in Synergy Global Housing (Synergy), which offers apartments for corporate lease. Synergy has over 1,700 units in the U.S., primarily in the West Coast urban regions of Los Angeles, Orange County, San Diego, Seattle, as well as New York.
Through Ascendas Real Estate Investment Trust (Ascendas REIT), the Group has 28 freehold office properties located across six business parks in three tech cities: San Diego, Raleigh and Portland. In November 2020, Ascendas REIT acquired two office properties in the South of Market district of San Francisco for S$768.0 million ($575 million).
