The Growth eREIT II launched in 2018 to invest opportunistically in multifamily assets through direct equity and joint-venture equity partnerships. We favor a strategy weighted toward targeting equity investments with significant potential value creation but that are below the radar of institutional-sized investors in select markets.
Investment strategy drivers:
- Workforce housing: The U.S. has faced a decades-long shortage of middle-income housing near employment hubs, sometimes referred to as workforce housing. This limited supply, coupled with housing inflation outpacing wage growth, means that more affordably-priced housing translates to an attractive risk-adjusted return. We believe this demand-supply imbalance will result in well-located workforce housing continuing to appreciate in value over time.
- Urban infill: By investing in areas often neglected by institutional investors due to the small, fragmented size of the property investments, we can potentially add significant value to both the assets and the emerging character of the neighborhoods through redevelopment efforts.
- Smaller partner groups: At the time of many of our acquisitions, the small balance commercial market was underserved by conventional capital sources, reducing the availability of both debt and equity capital for small property owners and leading to favorable pricing dynamics for the fund.
- Equity capital to address gaps: Increasing pressures in the credit markets have increased standards and reduced proceeds for borrowers, frequently creating a need for new sources of funding and additional equity capital capitalization. This trend has been ongoing since the launch of the fund in 2018 and is only more prevalent today.
