Apartment units
have been among the weakest areas of the REIT market in recent years,
but at least one firm sees a turnaround on the horizon.
And they've created a REIT to back up that view.
Boston Capital Securities Inc. in Boston has launched a publicly registered non-traded REIT-the Boston Capital Real Estate Investment Trust-that is focusing exclusively on multi-family garden style apartment complexes.
While the apartment market has been hurt in recent years by high vacancy rates, oversupply and low interest rates that have created more home ownership opportunities, the company sees the market changing as interest rates continue to rise.
"The softness of the market has primarily been due to low interest rates and the affordability of home buying and condo buying," says Richard DeAgazio, president of Boston Capital. "Cycles always happen and the pendulum is swinging the other way with increased interest rates."
This is the first REIT offered by the company, which was founded in 1974 and previously offered its investments through limited partnerships. The minimum investment requirement is $1,000.
The REIT has purchased $187 million worth of complexes-representing $74 million in equity-in Jacksonville, Fla.; Salt Lake City, Utah; Portland, Ore., and Seattle, Wash., and will continue to pursue purchases in secondary markets as the REIT raises funds, DeAgazio said.
The purchased properties have an occupancy rate of 92%, he adds.