Acquisitions deal flow
People in Acquisitions,
Have you guys done much in the past 24 months?
Early career and I've been getting a lot of underwriting reps but none have actually worked out....
Want to know if it's my company or just the market right now
Closed a few deals beg/mid last year. Been a slog ever since. Most reasonable groups are generally out of the market right now. I wouldn’t worry about lack of closing deals right now. Stay put if other aspects of the job are ok and those higher up than you know what they are doing. When you’re interviewing elsewhere in 2 years, anyone that asks why you didn’t close a deal in 2023/2024 is an idiot.
Managed to close one in December 2022 and had another tied up last Fall that we dropped but otherwise it’s been very very slow. Limited deals and a general unwillingness to be the tip of the spear in the market from my firm and many others. The boredom is really starting to wear on me.
LP or GP?
GP
Our firm has underwritten roughly $29B in multifamily in about the last two years. We've closed on $100MM.
Oftentimes, I can't make any sense of where some of these trades actually take place. Sub 5 caps. Sometimes sub 4.5 caps on poorly run assets. Groups underwriting 100 basis points of cap rate movement in one year when rents continue to remain pretty flat in a lot of markets. On the back end, you're either banking on outsized rent growth starting in 2026 and/or rate cuts to get these to somewhat pencil. Even then, some of these trades end up at a like a 7% unlevered IRR in my model. I think a lot of groups just have to get out capital and the lack of deal flow is pushing pricing up. Lot of brokers telling me that groups are underwriting to a 10 year hold, buying, and worrying about the exit later. So if you're underwriting to a shorter term hold and specific return metrics, might as well continue to take a seat until the market shifts.
Closed the last deal in Feb as co-GP. Deals are harder to find!
First off, even in the best of times, the vast majority of deals you underwrite won't turn into anything. That's life.
We've closed or gone into contract on half a dozen or so deals since the beginning of 2023 and might get into another 2-3 by year end. But we focus on affordable housing - different market dynamic.
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