American Landmark Apartments and its equity partner Electra America are betting big on multifamily investments in the Southeast.
The two firms just closed on a multifamily fund of $462 million this week and are seeking to raise $500 million in another fund.
The closed fund totaled 37 multifamily assets with 12,600 units in the Southeastern United States. Out of the $462 million raised, $392 million has already been invested, according to a release. The company focuses on buying Class B and Class A-minus multifamily properties in the Southeast, including Florida, North Carolina, Tennessee and Texas.
American Landmark and Electra America CEO Joe Lubeck said via email that he is primarily investing in secondary markets in places like Nashville where there is strong growth in both population and jobs and a need for workforce housing.
The company buys apartments, then adds value to them by renovating or updating them and improving services and amenities, with a goal of increasing the return to investors, Lubeck said.
Investors in Electra America’s first two funds include private investors, as well as institutional investors such as the Israeli investment firm Psagot Investment House and Bank Leumi, a large Israeli bank. In total, American Landmark’s portfolio of 28,000 apartment units are valued at roughly $4 billion, according to the release.
Yet, the company avoids apartments in central business districts where there is a great deal of new construction and buildings, according to Lubeck.
In downtown Miami there has been a huge influx of new apartment buildings and rents are now averaging around $2,000 a month for Class A apartment buildings.
From 2014 through 2018, more than 20,000 Class A apartment units came on the market in Miami, according to a TRD analysis of data from Integra Realty Resources, which creates residential reports for the Miami Downtown Development Authority.
“We do think the price points in downtown areas in South Florida are starting to reach their limits for the average resident,” said Lubeck.
But demand for workforce housing and Class B properties remains high. Investors are paying high prices for apartments in Broward and Palm Beach County suburbs due to this supply shortage.
In May, American Landmark paid $91.5 million for a 448-unit apartment complex in Boca Raton at 10235 Boca Entrada Boulevard. It also bought two apartment complexes in November — one in Royal Palm Beach and one in Plantation — for a combined $105 million.
Electra America is based in Lake Park, Florida and is the American subsidiary of Israel’s Electra Real Estate, which is publicly traded on the Tel Aviv stock market.