Is this the bottom for multifamily

Approaching a Turning Point

On July 31st, KKR, a major investment management firm with over $600 billion in assets, reported deploying $8 billion in capital, mainly on real estate. This includes acquiring around 5,200 apartments from Quarterra, a Lennar division, for about $2 billion—KKR’s largest multifamily purchase to date. KKR’s CFO Rob Lewin highlighted the deal’s 8% unlevered return with significant upside potential, despite a lower initial yield expected in the low 4% range.

This move echoes Blackstone’s April acquisition of Air Communities for $10 billion, which includes 76 rental housing communities in major coastal markets and a planned $400 million investment for property improvements. Blackstone President Jonathan Gray noted the emerging signs of a real estate recovery and emphasized the value of investing during uncertainty.

Both KKR and Blackstone are making substantial investments, signaling confidence in future real estate growth despite current lower yields. What drives these decisions, particularly KKR’s willingness to accept a lower short-term yield?

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