U.S. Strategies
For the past 30 years, Paladin Realty’s U.S. investment platforms have primarily focused on “workforce housing” – namely, market-rate affordable housing targeting working-class and middle-income households. Since 1995, the firm has acquired over 110 apartment properties across the U.S. totaling approximately 22,000 rental units and $1.3 billion of total cost, pursuing value-added and core-plus investment strategies.
116
Assets
21,953
Units
$1.3bn
Total Cost
109
Realizations
Value-Added U.S. Apartments
We acquire, renovate and reposition older “Class B” and “Class C” apartment buildings that are under-performing their market potential. Our value-added track record since 1995 is extensive, with about half of these investments located in Southern California:
90
Assets
15,279
Units
$786m
Total Cost
83
Realizations
Key elements of our value-added investment approach:
- Target older under-performing Class B/C properties in stable working-class and middle-income neighborhoods with current rents 20-30% below market
- Capitalize with conservative amounts of fixed-rate debt financing
- Improve the assets with contemporary exterior and interior unit upgrades
- Apply institutional-quality management to optimize operations and increase Net Operating Income (NOI)
- Sell or refinance after renovations are complete to harvest enhanced value
Core-Plus U.S. Apartments
We acquire newer well-located “Class A” and “Class B” stabilized apartment properties across the U.S. with the aim of generating durable cash flow, inflation protection and long-term appreciation potential.
26
Assets
6,674
Units
$557m
Total Cost
26
Realizations
Southern California Focus
A substantial portion of our U.S. apartment investments to date have been in Southern California, a chronically supply-constrained gateway market dominated by a large and fragmented pool of smaller “mom and pop” owners, where our institutional expertise can provide a competitive advantage.
Our Class B and Class C apartment investments in Southern California provide an essential need (affordable workforce housing) to a large permanent renter class that cannot afford to buy a home. As a result, these properties tend to stay fully occupied during good times and bad.
Our current emphasis on Southern California is driven by five unique market characteristics described in this research paper. These five attributes are structurally embedded in the SoCal market and we believe create an asymmetrical return profile (attractive upside potential with strong downside protection) that is difficult to replicate in other U.S. markets.
“Rising cap rates will create excellent buying opportunities in 2023 and 2024.”
—Fred Gortner
Co-Founder & COO