Matt joined the firm in 2007 and handles all acquisition, disposition and financing activities, including sourcing, underwriting, market analysis, and due diligence for new property acquisitions.
Why is real estate a good investment?
I think risk-adjusted returns are superior to the stock market. There are some ups and downs, but apartments as a class are largely stable. People are always going to need housing. So, on a risk-adjusted basis, I think that multifamily real estate is a very attractive place to invest capital. People are more accepting of apartments today than they used to be. The American Dream of owning a home is alive to some, but not all. A lot of people like the flexibility of multifamily rental housing. Then, there are also demographic things that come into play, such as student debt. A lot of people coming out of college today are saddled with — I think the average is $30,000 in debt — and it takes them years to save enough money to afford a down payment. So, there are a lot of factors that drive demand in multifamily housing.
How does Timberland Partners approach acquisitions?
At a high level, I’d say we review roughly 350 acquisition opportunities per year. We have a team of four, including myself, who actively look at these properties. If they like what they see, and think that there’s an opportunity, it will come to me. So, as a team, at any given point in time, we’ve got about 30 properties we’re looking at, and that gets whittled down to maybe one or two we’ll pursue.
So, what are you looking for in an acquisition?
We’re looking for some sort of inefficiency in the market. That could be a property that needs capital improvements, a property that’s been owned by the same group for 10-20 years and requires a capital or management infusement, or a situation whereby it is beneficial to add fresh capital. When you have a property that’s been owned by the same group for 20 years, they’ve probably done well with it, but focus sometimes lacks. When we put fresh capital and fresh people on a project, we can help a property rise to the top.
How selective is Timberland Partners in terms of the properties that are acquired?
We’re very selective about the properties we acquire. We have a good, solid base, and we’ve been in the game for a long time. We’ve been through multiple cycles in real estate and have always been able to operate our properties well.
How has your investment outlook changed in these uncertain times?
Right now, we have a heightened sense of focus on our operations platform and asset management. Those roles are paramount within our organization today. However, we are on the outlook for new acquisition opportunities. We’ve been in this business for 28 years. Multifamily is a solid investment in times of uncertainty. People will always need a place to live. That fundamental principle does not change with the economy. Direct government payments and unemployment benefits will help renters replace lost income in the short term, allowing them to continue to pay their rental obligations. Long term, this pandemic is highly unlikely to push prospective renters towards single-family housing as an alternative. Interest rates will likely remain at historic lows for the foreseeable future. As a real estate asset class, multifamily’s relatively safe investment characteristics will continue to attract capital, which should result in continued price appreciation for apartments long term.
