Greystar on the globalization of living

This article is sponsored by Greystar

What have been the key events for your firm over the past 12 months?

In November 2019, we closed Greystar Equity Partners X, our 10th value-add US multifamily fund, which hit its $2 billion hard-cap. Globally, we have started about $8 billion of development over the last 12 months in 30 projects and anticipate about 40 new starts in 2020, including conventional, student and active adult products.

We also closed $550 million for our China development fund, launched a pan-European residential strategy to target acquisition and select development opportunities across key European markets, and expanded our presence to Ireland and Japan.

In the last few weeks we have: closed on the first two seed assets for our AS$350 million ($235 million; €217 million) Australian fund focused on developing multifamily rental assets in the greater Sydney and Melbourne markets; are raising £750 million ($976 million; €901 million) for our UK development fund; and have closed on $2 billion for build-to-core programs in the US.

In Spain, where we are already the largest owner-operator of student housing, we recently acquired two multifamily developments in Madrid.

What has the operating environment been like?

We are following one of the great global megatrends: continued urbanization and the growth of the world’s great cities. That creates an opportunity recognized by global institutional capital, which has an enormous appetite for exposure to rental residential property. This space is driven more by demographics than business cycles, so while returns are just as high as the other sectors, it has lower volatility.

We saw that in the global financial crisis when occupancy in rental residential in the US dropped from 97 percent to 92.5 percent, office occupancy declined from 97 percent to 83 percent.

What key challenges did you have to overcome?

Investing can be tricky if the regulatory environment in a city is unsettled, or changes during your investment period. Transaction volumes tend to decline in periods of uncertainty, which we have seen in New York City and Berlin recently.

When you are developing you have to keep a very close eye on supply and demand within each micro-market. In the US the number of apartments being added each year is still well within the new demand that is created, but there can be pockets of oversupply that create weakness until the new supply is absorbed.

What or who is mainly responsible for your success?

We have 15,000 team members and this really is a team game, but some of the leaders within the firm deserve a special mention: Kevin Kaberna runs our US investment management business and GEP X has been his focus; Wes Fuller is responsible for our global investment management business and has focused on growing our international businesses; Adam Pillay moved to Sydney to run our APAC business and has been a key contributor on the fundraising side; and Mark Allnutt runs our European business and has done a great job navigating Brexit and our growth across Europe.

Individual country leaders have had huge successes: Claire Solon in Ireland, where we recently did our first deal; Chris Key, who closed our Australia multifamily fund; Juan Acosta and Mark Kuijpers, who run our Spain and Netherlands businesses; and Charles Ma, who helped establish the first ever China multifamily fund. We have a remarkable team at Greystar, so it would be impossible to list them all.