Crow Holdings Capital (CHC) is a real estate investment management company specializing in multifamily, industrial, and specialty property types delivered through strategies that span the risk-return spectrum. For 25 years, CHC has sought out a diversified portfolio in partnership with leading global investors and generating attractive returns across market cycles. Led by a highly experienced leadership team, CHC manages $16bn in real estate assets and is a subsidiary of Crow Holdings, a privately owned real estate investment and development firm with 75 years of history, $30bn of assets under management, and an established platform with a vision for continued success. The firm’s ongoing legacy is rooted in its founding principles: partnership, collaboration, and alignment of interests. For more information, please visit www.crowholdings.com.
Investment principles & strategy
Since 1948, founder Trammell Crow’s business practices and cultural principles remain paramount throughout the company today. It is the strength of relationships over time that often provides the first call, the last look, and the experience to react quickly to changes in the market environment and capitalise on windows of opportunity in the real estate market by allocating equity where value creation potential is identified.
CHC’s track record has been tested across all market cycles during the past 25 years since the first fund was established. CHC’s investment strategies, disciplined and methodical investment process, and prudent financial structures have delivered positive results over time, while mitigating risk and volatility.
Performance verification
Crow Holdings Capital closely monitors and reports transparently to investors on the performance of active funds and other investment structures. An external audit is performed annually over the active real estate funds by nationally recognised third-party accounting firms.
Sector forecasts
INDUSTRIAL: We believe the industrial market continues to be driven by the broadening adoption of e-commerce, macroeconomic trends, and the obsolescence of existing industrial stock. These factors have contributed to an undersupplied industrial market. Occupancy rates remain well ahead of their 10-year average, with favourable supply demand conditions in over 90% of the metro areas covered by Crow Holdings Capital. CHC believes the COVID-19 pandemic accelerated previously observed macro trends in industrial real estate, consistent with the following three key themes: (i) growing e-commerce penetration; (ii) emphasis on inventory management, and (iii) shift to domestic onshoring. A product of these strong trends is healthy fundamentals, and, while rental and occupancy rates show signs of stabilisation after historic pacing, CHC believes these forces will drive sustained revenue growth and demand for high-quality, well-located industrial real estate for years to come as overall consumption growth continues to increase, especially in high-barrier, high-growth markets.
RESIDENTIAL: Crow Holdings Capital continues to see opportunity within the multifamily space due to a shortage in housing, declining supply, lack of affordability in single-family housing, and a rise in home mortgage rates. Modest headwinds are expected in the sector due to new construction, rising interest rates, and increases in uncontrollable expenses. Despite these challenges, multifamily remains a preferred investment sector for global capital, given the sector’s sustained high-occupancy rate and rent growth.
Similarly, with the backdrop of high costs of homeownership nationwide, CHC believes manufactured housing provides a necessary option for growing segments of the population. CHC believes secular trends will continue to drive manufactured housing demand from a tenant and investor perspective due to negligible new supply, solid demand growth, and low capital requirements. Further, high barriers to entry continue to exist on new development, as entitlements remain difficult to obtain, which has significantly benefitted the performance of existing communities.
Student housing, despite facing similar challenges as conventional multifamily, has continued to prove its resiliency and is enjoying its strongest performance since the GFC. Leasing velocity, occupancy, and rent growth set records for the 2022-23 school year, and every indication suggests these trends have accelerated for the following year. CHC views the positive fundamental forecast for 2023 and beyond to be a bright spot among various commercial real estate sectors, especially considering purpose-built student housing tends to outperform during economic downturns, evidenced by enrollment spikes and increased demand for housing near major universities during prior downturns.
RETAIL: The retail sector has demonstrated accelerating rent growth and tightened vacancy rates across most US markets in recent years, reflecting continued consumer demand recovery from the COVID-19 pandemic. CHC has shifted its focus to smaller-format, food and service neighbourhood and strip retail to reflect the influence of e-commerce on consumer behaviour. CHC has observed many tenants are opting for smaller footprints, which are often leased to food and service-oriented tenants. Accordingly, neighbourhood centers have experienced the highest annualised base rent growth and occupancy rates compared to other retail subsectors since 2019 and is considered lower risk given its focus on needs-based tenancy and lower capital expenditure requirements. As technology makes the near-immediate purchase of many goods online a reality, CHC maintains the belief that the convenience of accessing food and services locally, combined with the shopping experience, will continue to drive success within the retail property segment.
OTHER: Crow Holdings Capital believes its experience investing in certain specialty property types alongside more traditional property types enhances overall portfolio diversification and may provide a more defensive investment.
Specifically, the self-storage sector is believed to be inflation resistant and has countercyclical renter-demand factors, driven by relocation, ongoing population growth, and homeownership hurdles. This sector has also not been immune to elevated input prices, labour and materials shortages, and limited availability of financing options. As a result, supply growth has narrowed, making investment opportunities more unique and therefore attractive. While pandemic-related demand drivers have lessened, CHC believes the wide variety of storage use-cases, bolstered by aging millennials and lifestyle factors, provide a strong floor for storage demand.
Another sector supported by needs-based demand is convenience & gas (C&G). CHC considers this sector resistant to e-commerce due to the necessity-driven demand for gasoline, which CHC believes offers less correlation to market cycles and can provide steady cash flows. Additionally, as C&G sites often represent top real estate locations and are the primary source of fuel for vehicles today, CHC believes they are a key candidate for EV charging stations as the infrastructure in the US progresses. Strong demand promotes sticky tenancy and longer-term leases with built-in escalations.
Strategic corporate development
Crow Holdings Capital consistently seeks new opportunities to build upon the success of its existing businesses in a thoughtful and discerning manner. The company’s primary focus is on the ability to bring to its partners new and differentiated ideas that leverage CHC’s market relationships and strengths as asset owners, operators, and investors. CHC is currently focused on sectors benefitting from secular trends, such as e-commerce and US demographics, and across markets with growing populations and diversified economies. Crow Holdings is focused on growing new investment opportunities and strategies for the overall business, including but not limited to attainable housing, credit, core-plus, and secondaries offerings.
COMPLIANCE STATEMENT
The information contained herein is for illustrative purposes only and is intended for qualified investors and is not to be construed as an offer, solicitation, or recommendation with respect to the purchase or sale of any security and is not intended to constitute and may not be relied upon for legal, tax, or accounting advice. Investors should consult their legal and tax counsel to determine which opportunity is best for their investment. The information shown is considered to be accurate as of the date of delivery or as otherwise indicated in the material, and CHC has no obligation to disseminate any updates or revisions to any information contained herein. Certain information in these materials may be deemed to constitute “forward-looking statements, which are necessarily based upon speculation, expectations, projections, and assumptions that are inherently unreliable and subject to certain significant business, economic, market, and competitive uncertainties and contingencies”. Sources can be provided upon request.
