From his perch as vice president of investments at multifamily real estate manager CP Capital US, Logan King has a good view of the operations of many large apartment developers, like Greystar Real Estate Partners, Alliance Residential and Wood Partners.
“We've been investing in multifamily for over 30 years,” King told Multifamily Dive. “So over the years, we've cultivated a number of deep relationships with a lot of our sponsor partners, which is great.”
Like many investors, CP Capital US (formerly HQ Capital Real Estate) has been busy over the past couple of years. Since 2021 began, the company has made six investments representing over 1,700 residential units.
Here, King talks with Multifamily Dive about what he looks for in partners, building innovations and affordability.
This interview has been edited for brevity and clarity.
MULTIFAMILY DIVE: How do you choose your partners?
LOGAN KING: Who we choose as our partner is probably the most important aspect of our investment process. We're trying to choose best-in-class development partners, so we've done business over the years with partners like Greystar and Alliance Residential.
Those national multifamily developers have boots on the ground in a lot of the markets that we're looking to invest in. They have the experience and the expertise. We have had deep relationships with them over many years and a number of real estate cycles.
Are you generally seeking partnerships with big, established developers?
In our view, development is an inherently risky business. We have a lot of expertise and relationships. The best way to mitigate a lot of that risk is to work with these best-in-class development partners.
Now, having said that, we're always looking for new relationships. And we're constantly looking for more regionally focused development groups or even super micro-focused ones. But in our view, having those national developer partners brings the track record, the expertise, the balance sheet, the ability and the experience to thrive throughout cycles. That's typically the focus, but we're always looking out for new relationships.
Affordability is a huge issue. Is it something you’re thinking about in your investments?
Affordability is a major issue across the country, and it's one that we discuss a lot. Most of our investment strategy actually is focused with a preference toward developing suburban garden apartments with surface parking. These have Class A, top-of-the line amenities.
But in terms of the kind of chunk rent that we're targeting, it is a broader swath of the potential tenant pool as opposed to more urban mid-rise or high-rise projects. That's really not our investment strategy.
So, we think we're kind of tailored toward a little bit more affordability play now. But it's not necessarily the traditional low-income housing.
Are there ways you’re seeing developers build more efficiently and save construction costs?
We're seeing that a lot of development partners have created a more affordable design. It’s slightly slimmed down in terms of maybe total square footage for, say, the clubhouse or amenities. And it's something they can replicate in many markets. So on that front, it saves some costs.
Is there technology out there that can help build more efficiently?
On the technology side, I'm really hopeful. There have been a few large technology companies that have worked toward building more efficiently and might not have had the most success historically. I'm really hopeful that technology is something that can help us on that cost side because the real estate industry as a whole has been a relatively slow adopter of technology. And I think it's very much needed in our industry.
On the private merchant build side, they’re creating more savings on the design or more soft side, as opposed to the hard cost side. And that helps a little bit. But outside of technology, there just needs to be a little bit more work with private-public partnerships in terms of addressing the affordability issue and what can be done to create the right incentives and get the housing the country really needs.
Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.