Projecting who your take-out buyer will be?

Think it's always prudent to at least contemplate the type of buyer who be there to sell to at the end of the hold period.

I'm specifically looking at a Multifamily development in SoCal (good submarket) which is being built as entirely large 3 bedroom townhouse style units. Given a realistic NOI and cap rate, the 200 units would project a value wel north of $100MM at exit/stabilisation. That being said, trying to exit by selling off as individual homes is too time consuming and risky, and selling to a single buyer would be the only way my equity group would consider investing in the development.

I've heard from a number of sources that a public REIT like EQR or Avalon would likely not be a player for this given the lack of balance in the floorplan/unit mix. I'm trying to wrap my head around who the fck would be able to stroke that size check and want to buy this type of asset.

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Mar 9, 2019