Private Equity Firm KKR Invests $2.1 Billion in Multifamily Market

New York, NY, June 26, 2024-"KKR has completed its largest-ever purchase of apartment buildings, the latest in a string of big-ticket deals, signaling that some of the most prominent investment firms are betting on a broad rebound for multifamily housing,” reports the Wall Street Journal.

“The New York-based private-equity firm paid $2.1 billion for more than 5,200 apartment units across the country, from California and Texas to New Jersey, KKR said. The deal for the multifamily properties, which are 18 new mid- and high-rise buildings, closed Tuesday. 

“The apartment sector has been mostly struggling of late. Rent growth for new leases has been close to flat for more than a year during the biggest construction boom for the multifamily sector in about 40 years. This, along with higher interest rates, has weighed on valuations. 

“Quarterra, the apartment development arm of the home builder Lennar, sold the portfolio. Lennar has said it would sell off additional buildings from its portfolio to different buyers. Lennar has reported losses in its multifamily division during recent quarters, as the luxury rental market struggles somewhat in cities with high levels of new supply, especially in the Sunbelt. Lennar previously said it would look to spin off Quarterra, but those plans have been on hold for more than a year.

“Apartment-building prices were down more than 20% in May from their July 2022 peak, according to data firm MSCI Real Assets. Sales of buildings were 44% lower than year-ago levels in May.

“KKR’s acquisition and other recent major purchases could indicate a growing confidence among large investors that rents and values for apartments will soon begin rising again. Rent is already starting to pick up in several Midwest and Northeast cities.”