Immobilien-FondsNews - Interview with Jeremy Katz

What is your track record?
CP Capital US (formerly HQ Capital Real Estate) is a U.S. real estate investment manager specializing in multifamily. Since its inception in 1989, with the Harald Quandt Family, the firm has invested in approximately 15 billion US-Dollar of U.S. real estate assets on behalf of largely German institutions, family offices, and high-net-worth individuals.

Why do you focus on multifamily properties?
We focus on U.S. multifamily opportunities for a number of reasons. First, there is continued demand for the product – regardless of market conditions, people need a place to live. Then, living preferences have changed – people are renting for longer, both by choice and out of necessity. And not to mention: The stability of the asset class – U.S. multifamily real estate has historically outperformed other property types.

What type of multifamily properties meets your requirements?
Since we build new properties, location is one of our most important factors. We select markets based on a combination of: population and employment growth, supply projections, access to major roads and public transportation, and proximity to jobs, retail, entertainment and recreation. We seek to build high-quality (Class A), highly-amenitized projects typically ranging in size from 100-400 units and 50-$125 million US-Dollar in project cost.

What is your geographic investment strategy?
We invest in high-growth markets throughout the United States, with a focus on Sunbelt and coastal markets. According to the U.S. Census Bureau, from 2010-2020, Sunbelt states like Georgia, Florida, Texas, South Carolina, and Arizona experienced double-digit population increases—the bulk of the population influx has been concentrated in and around the largest cities within each state.

You have a very low average holding period. Why?
Our niche strategy is making opportunistic investments. This strategy is focused on building, leasing, and selling properties upon stabilization. A typical construction period for our projects ranges from 18-24 months, with lease-up typically taking 12-18 months, resulting in an average holding period of four years for each investment – this quick return of equity is appreciated by our mostly German investors.

Are there any current challenges to investing in US multifamily?
The primary issues potentially impacting U.S. multifamily at the moment are cost inflation, supply chain disruptions, rising interest rates, and the possibility of a recession. Despite these challenges, the persistent undersupply of rental housing should continue to support the case for investment in multifamily.

Is ESG one of your key factors?
We believe ESG is important for all industries, especially real estate. As a capital provider, we are limited in the decision-making of our developer partner’s specific project plans and budget. However, we see it as our key responsibility to collaborate with our partners to encourage best practices. Wherever possible, we include energy-saving appliances, water-saving fixtures, waste management systems, and resident wellness programs.

Looking ahead, how will the multifamily market develop in the US?
Strong underlying fundamentals are the reason we remain optimistic about this asset class. Largely, this is due to favorable supply-demand imbalances. The overall lack of housing availability and affordability in the U.S. supports demand for multifamily. Investor appetite remains strong, with significant levels of “dry powder” to be deployed. We believe the strong risk-adjusted returns for multifamily development will continue to be attractive.