Greystar is a leading, fully integrated real estate company offering expertise in investment management, development, and construction services in institutional-quality rental housing, logistics, and life sciences sectors.  Headquartered in Charleston, South Carolina, Greystar manages and operates more than $280 billion¹ of real estate in 241¹ markets globally with offices throughout North America, Europe, South America and the Asia-Pacific region.  Greystar is the largest operator of apartments in the United States, manages more than 822,000¹ units/beds globally, and has a robust institutional investment management platform comprised of more than $75 billion¹ of assets under management, including nearly $32 billion of assets under development. Greystar was founded by Bob Faith in 1993 to become a provider of world-class service in the rental residential real estate business. To learn more, visit www.greystar.com.

¹ Key Metrics is as of end of 2Q23. 

Sector forecasts

INDUSTRIAL:

Interest in Logistics is largely driven by excess demand for warehouse space in and around major metropolitan areas where Greystar already has a significant presence. Greystar’s study of Logistics demand since 2000 reveals two inflection points that have indelibly altered the market for warehouse space. The first was in the early 2010s with the increasing adoption of e-commerce; the second began in 2020 with the outbreak of COVID-19 and consequent disruption to global supply chains. Today’s Logistics opportunity benefits from three secular tailwinds which complement broader economic growth: increasing e-commerce adoption, more defensive inventory management, and a supply-chain re-configuration around strengthened resilience. Aided by these powerful and diverse demand drivers, Greystar believes that Logistics real estate absorption will remain healthy, keeping vacancies low despite elevated new supply. However, new supply is already in retreat, as two years of elevated construction activity is coming to an end. New construction is restrained by rising costs of land, materials, labor, and tighter financing as well as stretched construction timelines.

Greystar believes there are two unmet needs in the Logistics space today that offer compelling value to investors: 1) ground-up development to serve increasing demand for space and 2) attractive long-term cash flow stability from well-constructed portfolios anchored to growing metros. The present supply-demand conditions present a window for seasoned developers to take on new warehouse projects with confidence in a successful delivery and stabilization. Given Greystar’s positioning as a well-capitalized developer and global investment manager, we believe it is a natural fit for the opportunity.

RESIDENTIAL (USA):

Greystar’s forecast for rental housing remains constructive. Despite a softening macroeconomic environment, the long-term U.S. multifamily outlook remains positive amidst continued supply-demand housing imbalances. These attractive tailwinds are supported by a longstanding global shift towards more service-based economies driving urbanisation and requiring more efficient land use and higher density housing that multifamily offers. Also, Greystar observes consumers increasingly prefer the flexibility and benefits such as on-site services and amenities provided by multifamily housing. Together, these secular trends have resulted in growing demand for rental housing globally.

Greystar expects affordability constraints in accessing homeownership will continue, which support long-term demand for institutional rental product, especially in core property markets where renters live. Despite recent rent increases, Greystar believes the value proposition increasingly favors rent versus own as home prices remain high. Rising mortgage rates also lead to a more favorable cost of rentership versus ownership. Further, single-family housing starts fell +20% year-over-year in 1H23. With for-sale supply limitations and increasing ownership costs, Greystar recognizes the multifamily sector presents as a relatively affordable value option. 

While multifamily development completions currently outpace post-2000 averages, development remains well below prior cycle peaks. Despite a notable amount of construction set to deliver in 2023-24, higher financing costs are impacting new projects. As a result, multifamily supply growth estimates in 2025 and 2026 have fallen significantly. Greystar believes this culling of supply may provide more favorable supply-demand dynamics and NOI upside for existing assets than current third-party forecasts contemplate. Consequently, Greystar believes the risk of widespread national overdevelopment is unlikely. 

Similar to historical periods, interest rates have been more volatile than cap rates. Greystar maintains conviction in the top-line growth potential for the sector, shielding residential assets from any major rerating in pricing. While financing costs and SOFR curve volatility may thin highly levered buyer pools, Greystar expects sustained capital appetite for the sector and healthy fundamentals should buoy valuations. Greystar anticipates a prolonged lower transaction environment through 2H23, but observes investors remain interested in the sector. Also, real estate dry powder likely keeps markets liquid over the medium-term, particularly in sectors with strong underlying demand fundamentals and an ability to offset inflationary risk (i.e., apartments and logistics).

Greystar expects that multifamily demand will remain solid in the U.S. in coming years. Greystar’s positive outlook is driven by a combination of solid household formation and sustained population growth, deteriorating homeownership affordability, and reasonable, albeit growing, overall residential housing supply. Homeownership remains unaffordable and has shifted consumer attitudes to favoring sharing and renting versus conventional ownership. Persistent demand tailwinds and continued pressure on homeownership help foster a favorable demand backdrop that should produce healthy, positive operating performance and capital growth into the foreseeable future.

OTHER:

The life science industry experienced tremendous growth over the last five years, fueled by new innovations and increasing capital appetite. Public and private funding from the National Institutes of Health (NIH), private equity, and venture capital help in the development of and testing for new treatments. Greystar anticipates investor appetite for life science exposure will likely remain strong over the long-term, as the sector continues to offer solid fundamentals including healthy employment growth and relative work-from-home resiliency versus office product. The pandemic highlighted the long-term demand for innovation in medical research and pharmaceutical production. Greystar expects a disciplined investment strategy focused on purpose-built, Class A lab space in globally renowned clusters will provide the most attractive opportunity for outsized risk-adjusted returns.

Investment principles & strategy 

With over 30 years of experience investing in residential rental housing, Greystar has developed a successful investment approach focused on identifying and executing opportunities that seek to drive value at the property-level. Greystar believes that proven purpose-built rental design and operational excellence lead to a premium over market rents, often above-inflation growth, while offering security of income and a lower volatility outcome. Greystar continually seeks to deploy capital in markets with strong fundamentals while executing the investment strategies it has agreed upon with its capital partners. These strategies benefit from the company’s extensive information networks and relationships, including property management clients, lenders, developers and institutions to identify investment opportunities. Greystar’s vertically integrated, global platform is well-suited to source off-market opportunities and quickly analyze, underwrite and execute on single-asset acquisitions and developments, as well as large portfolios. Greystar believes that compelling opportunities typically include characteristics that fit within the following profile: (i) assets in attractive locations within high-barrier-to-entry submarkets in a strategy’s target markets that are poised for outperformance due to strong residential fundamentals; (ii) assets that exhibit potential for operational improvements leveraging Greystar’s property management expertise and scale; and (iii) assets that display upside potential through executing Greystar’s historically proven capital renovation program.

Strategic corporate development

By methodically growing the company over the last 30+ years, Greystar has become the largest operator of apartments in the United States and expects to continue delivering industry leading service to the capital partners, clients and residents it serves. Greystar intends to remain a private company, allowing it the maximum flexibility necessary to achieve its business plans and navigate markets to capitalize on attractive opportunities. While the company’s operating platform has achieved scale in the US, the company will seek to grow organically and through strategic acquisitions. Greystar’s investment management and development businesses are expected to grow as investors increasingly allocate capital to specialist operators in an effort to mitigate intermediary fees and take advantage of operators’ deep local market expertise. Greystar will continue to offer opportunities across the risk return spectrum with investment strategies tailored to the needs of its partners and clients.

COMPLIANCE STATEMENT

The information contained in this document is provided as of the date below, unless noted. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. Any such offer/solicitation can only be made by the applicable offering documents furnished to qualified investors in jurisdictions where permitted by law. Any opinions, forecasts, projections or other statements, other than statements of historical fact, that are made in this document are forward-looking statements. Greystar gives no express or implied representation or warranty, and no responsibility is accepted with respect to the adequacy, accuracy, completeness or reasonableness of any information set out in this document, and nothing contained herein shall be relied upon as a promise regarding any future performance.