Market Pulse

The Fed / FOMC seem to be cementing the “higher for longer” narrative as it relates to interest rates going forward. That’s bad news for real estate valuations.

​

Despite the amount of dry powder seemingly in the space, buyers have shown to be more judicious than most sellers & brokers expected coming into 2023.

​

Every deal has its nuances, but by and large we are seeing sellers hoping to sell multifamily properties in South Florida between a 4.75–5.00 cap rate while most buyers are bidding at pro forma cap rates between 5.25–5.75, depending how aggressively they're underwriting rents and insurance in Year 1.

​

With acquisition loans between 5.75–6.25%, it seems buyers are willing to take a year or two of negative to neutral leverage to acquire multifamily properties in South Florida.

​

To the buyer’s credit, the risk in these tight underwriting returns is translating to them acquiring properties around 20-30% below replacement cost.

​

Acquiring new, recently stabilized, cash flowing properties in South Florida 20-30% below replacement cost doesn't sound all that bad.

​

*PS - when i started writing this issue last week, the 10YR Treasury was at 4.30%. It is now at 4.60%. Do with that what you will..

Multifamily Trends

Higher interest rates lowers asset valuations. The more expensive money becomes, the less people are willing and able to pay.

​

This is true not only in real estate but in startups, stocks, and everything in between.

​

It’s not all bad news, however.

​

Interestingly, multifamily assets also stand to benefit from a higher interest rate environment.

​

Here’s why:

​

The U.S. is currently witnessing the biggest gap in cost between owning a home and renting in over 50 years.

​

Said differently, it has never made more financial sense to be renting an apartment as opposed to buying one.

​

With home prices still increasing (due to low inventory), and 30-YR mortgage rates north of +7%, would-be homebuyers will continue renting for longer than they ever expected.

​

This is an extremely powerful and positive trend for multifamily property owners.

News & Noteworthy

​Brightline launches high-speed train route from Miami to Orlando​

​

​Lalezarian Properties, the New York-based family-owned company, proposes three towers with +2,000 apartment units at Miami World Center​

​

​We just sold a 120-unit, 0.8-acre development site for $14.3M ($120K/per buildable unit) in Coral Gables, Miami​

Select Active Opportunities

Resia Biscayne Drive

We are currently marketing this brand new 216-unit, recently stabilized, Garden-style property in Miami Dade for $60M ($278K/door). It would cost you +$300K/door to build this deal again today, if you could even find the land.

Off-Market Development Site

We are also marketing an 8-acre, 200-unit, surface-parked development site that is site plan approved in Palm Beach County. This deal can only go out to qualified groups, so please send me an email with some background to see if I'm able to show you the site.

​

$19M QOZ Equity Request ($5M Min.)

One of the best developers in South Florida has put +3 acres of land under contract across 20+ parcels in Greater Downtown Miami. They are going to be building feasible mid-rise product in the urban core (i.e. lower mid-rise development costs with high rise rents). We are currently raising $19M of equity for investors to be able to partner up with a top-tier sponsor at the "ground level" during the predevelopment / land acquisition phase of a generational deal in Greater Downtown Miami.

​

​Click here to send me an email!

I'd love to hear from you.

Happy Hunting! Omar Morales ​​​

​

​Unsubscribe · Preferences​