Net operating income growth will descend commen

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Net operating income growth will descend commen-surately, but gains nevertheless will be investor- and lend-er-friendly. Highlighted by improved performance in the Northeast, Bay Area and Pacific Northwest, RED 50 NOI should advance nearly 5 percent next year.While rent and NOI growth is set to decelerate some-what cap rate trends in 2019 are likely to remain favorable to owners. RCR models do not foresee much additional upward movement in 10-year Treasury and Baa-rated bonds yields, nor is there reason to anticipate a mate-rial change in investor appetite for multifamily assets. Although yields may drift higher for older properties should buyers sour on value-add investments the probabil-ity of an across-the-board repricing seems slight.Considering our outlook for an economic “soft land-ing” and a benign cap rate environment, it stands to reason that expected investment returns should please stakehold-ers. Our models now estimate average RED 50 annual, unlevered five-year expected total returns of 7.0 percent, up about 30 basis points from mid-year. The gain is largely attributable to better forecast 2020-2021 economic perfor-mance and a tighter spread between average purchase (5.10 percent) and projected terminal (5.36 percent) cap rates. In sum, it may be natural for those of us with right-hemi-sphere dominant brains to be inclined toward pessimism. But the multifamily market seems determined to deny us psychic satisfaction, at least for a couple of years. nDanial J. Hogan is nanaging director of RED Capital Research. The views expressed here are Mr. Hogan’s and may not necessarily reflect the official policy of RED Capital Group, LLC. Mr. Hogan’s market research can be found on his Twitter Page (@RED_DanielHogan) and at .com/news-resources/market-overviews/.Learn. more at.Prospects For Multifamily Market Performance In 2019ByDaniel J. Hogan6543296.0%95.595.094.594.0%2015 2016 2017 2018f 2019f 2020f 2021f 2022f 2023f RED 50 Base Rent and Occupancy ForecastSources: Reis, Inc. Histories/ RED Research Econometric ForecastsY-O-Y Rent GrowthOccupancynOccupancy nEffective Rent95.1%94.3%
Outlook: 201953 / NREI Outlook: 2019/ www.nreionline.comNet lease properties can be extremely advantageous for investors who are looking for low-risk real estate invest-ments that produce consistent returns over a long period of time. Not all net lease locations are created equal; they key factors in a strong net lease investment are a well-located property with good access, strong traffic counts, and proxi-mal anchor tenants.As 2019 approaches, net lease properties are moving at a premium rate, particularly in areas that are experi-encing a higher than usual influx of new residents moving in and patronizing the city. Investors should look at population growth over the past 10 years, as well as expected population influxes in the future to find the best cities for net lease investments. Where are people moving at faster than usual rates?

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