Has the COVID-19 pandemic changed your investment and acquisition strategy? If so, how?

The pandemic did not change our investment strategy at all. In fact, six months into this pandemic, it has reaffirmed our belief in the strength of the markets in the Midwest and the Sun Belt states. It did, however, have an impact on the timing. Like many others, we slowed down in March to assess the change happening around us. It gave us a chance to seek some clarity and understand what was happening. But we continued to seek out opportunities quietly and were able to acquire some properties that were sourced off-market.

How is multifamily real estate faring in the wake of this pandemic?

Markets like New York, Chicago, San Francisco and Los Angeles are seeing an exodus of residents, which is reversing a trend of urbanization that has been happening over the last two decades. While this doesn’t bode well for the major markets, it’s a strong indicator for well-located, suburban communities in the Midwest and Sun Belt.

Operationally, multifamily remains the most stable investment of all real estate sectors. The federal stimulus checks, along with extended unemployment benefits, have enabled most residents to continue to pay rent. With people generally reluctant to go out shopping for a new apartment, renewal rates remain strong. All owners in this industry are challenged by the eviction moratoriums across the country.

TPAF VII has purchased five properties to date. How are those acquisitions performing?

The first four acquisitions of this fund, purchased in late January and early February, are either meeting or exceeding our underwriting projections at acquisition. As of July 31, the net cash flow from operations has produced an annualized return of 8.9 percent on the investment base. Occupancy remains strong, too, with an average occupancy rate of 96 percent in August.

We purchased the fifth property, Synergy at the Meadows, at the end of July. As part of our value-add strategy, we purchased this brand-new asset, and assumed the initial lease-up risk. Occupancy at acquisition was at 27 percent. Three weeks into our operations of this property, occupancy has increased to 35 percent, so we are off to a strong start.

How do you see TPAF Fund VII and the associated acquisition strategy progressing through the end of 2020?

I remain confident that our acquisitions team will continue to find quality investment opportunities and that our investment partners and prospects will continue to step up and invest. The number of potential listings has been growing since July, so I am confident that we will find strong investment opportunities throughout the year. Timberland Partners maintains a strong reputation as a company that will close a deal. Brokers and sellers appreciate that. And capital is always attracted to good ideas. We look forward to a strong finish.