Henderson Global Investors has announced the launch of the next fund in its CASA Partners US Multi-Family Housing series - CASA V - which will target an initial equity raise of at least US $100 million (approx. 76 million) by the end of this year.
CASA V is projected to be the largest fund in Henderson's multi-family CASA Fund Series to date, targeting a total US $400 million total equity raise, representing up to a US $1.1 billion portfolio. It is the fifth in a series of successful housing funds that integrate value-enhancing strategies with proven experience in low-cost tax-exempt bond financing.
CASA V will utilize a three tiered investment strategy targeting apartment properties with 200+ units located in urban and suburban markets with strong demographic and economic trends:
- Tier 1: Value added and conventional investments in Tax-exempt Bond Financed Apartments provide the base financing strategy for the portfolio.
- Tier 2: Acquisition of repositioning opportunities to enhance returns, both directly and through strategic joint venturing with partners that provide focused expertise, access to a pipeline of properties and enhanced returns for the Fund.
- Tier 3: Today's distressed environment offers select opportunities to invest in prime core apartment assets that may generate enhanced returns. These conventional apartments may also be used to balance the Fund from a loan-to-value, geographic or strategic perspective.
Henderson regards the US apartment market as the best-positioned sector of the four major US property types over the next five years. Apartments have historically proven less volatile than other property sectors, and core apartments are likely to offer attractive total returns with a strong income component. The apartment sector has established itself over the last 25 years as having the best track record for risk-adjusted returns and recognized diversification benefits for real estate portfolios. Multi-family housing is widely recognized as one of the nation's largest and healthiest real estate sectors. Apartments are anticipated to have the most favorable occupancy and rent growth conditions of all asset classes.
Institutional investors have significantly increased their ownership of the apartment asset class over the past two and a half decades due to its stable cash flows, diversification benefits and abundance of advantageous debt financing.
Henderson believes that newly-acquired unlevered apartments can offer total returns of 7-9% (net) per year over the five-year horizon. Tax-exempt bond financing is also expected to continue to provide the lowest cost means of financing apartment investment opportunities. For tax-exempt bond financed apartment properties, total return expectations are for annual returns of 11-13% (net) over the next five years.
Sue Motowidlak, Co-Portfolio Manager for CASA V said: "We are very pleased to be growing our multi-family platform further. It is exciting to be able to be an active buyer at this point in the cycle. Unlike the period of the 80's ad the early 90's, this time around, multi-family is not overbuilt. The overall economy will improve and, in most markets, multi-family will recover quickly. Maintaining occupancy, price point and expense controls are the three main ingredients of weathering this storm."
Jay Martha, Head of Henderson's North America property business, and Co-Portfolio Manager along with Sue for CASA V, added: "'Henderson's CASA fund series has been very well received by investors, having successfully invested, operated and liquidated through all points in the investment cycle. In 2010, transaction activity has allowed Henderson to successfully invest its equity in CASA IV in quality assets for its investors. The concurrent closing of CASA V will place Henderson in a strategic position to take advantage of the team's active transaction pipeline. The launching of CASA V, at this point in the cycle, will allow us to take full advantage of market and operator distress while remaining true to o