Property giant CapitaLand has snapped up 16 multi-family properties in four American metropolitan areas for US$835 million (S$1.14 billion), it announced yesterday.
The firm said it made the investment - its first in this sector of the property market - to capitalise on the growing demand for long-term rental housing. The apartment blocks, which comprise 3,787 units in the suburbs of Seattle, Portland, Greater Los Angeles and Denver, are well connected via highways or commuter rail systems.
CapitaLand noted that there is strong demand from a diverse mix of middle-income professionals working in surrounding areas, which have experienced growing employment rates.
These areas are home to a range of employers, including government agencies, firms in the tech, energy, healthcare and life sciences industries, as well as multinational corporations such as Boeing, Microsoft, Starbucks, Amazon and Nike.
The unit price is US$220,000, which CapitaLand said was consistent with market transactions.
The flats have an occupancy of about 90 per cent, with an average length of stay of about two years.
"This latest acquisition in the United States, the world's biggest economy, would expand CapitaLand's global investment portfolio, diversify our business outside of our two core markets of Singapore and China, and allow us to grow new businesses," said newly appointed president and chief executive Lee Chee Koon.
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3,787
The portfolio's apartment units, located in the suburbs of the metropolitan areas of Seattle, Portland, Greater Los Angeles and Denver.
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90%
Occupancy rate of the properties, with an average length of stay of about two years.
He added that the "portfolio offers attractive risk-adjusted returns for CapitaLand".
The multi-family sector, as this category of the property market is known, has the highest average returns in the commercial real estate asset class in the US, offering close to 10 per cent annually in the last three decades, CapitaLand said.
Factors such as job growth, migration trends, low home ownership rates and the booming millennial generation's preferences for geographic mobility and community living in the suburbs have driven strong demand for rental apartments.
Mr Lee said CapitaLand will add value to the portfolio by enhancing the assets. It will also "be looking out for more opportunities to build up a sizeable platform and strengthen (its) expertise in this asset class".
Mr Lee added that there is the option to spin off these assets into investment vehicles and partnerships.
"We also see potential to build this business in other fast-growing markets such as China," he noted.
The transaction is expected to be completed later this year.
CapitaLand first entered the US market in 2015 and has acquired five properties there through its unit Ascott, which also owns a majority stake in Synergy Global Housing, a firm that offers apartments for corporate lease.
The latest acquisition increases CapitaLand's investment in the US to more than US$1.5 billion with around 6,500 units.
The company will also step up its pace of capital recycling and boost the pipeline in its residential trading business, Mr Lee said at a briefing, Reuters reported.
