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THIS IS THE NEXT BIG PROPERTY INVESTMENT

Rent hikes are dogging tenants, but big money investors say the season of love for residential, multi-family rental properties is only getting started.

"Property is in a sweet spot, slow (economic) growth is good for us," Barry Sternlicht, chairman and chief executive of Starwood Capital, told CNBC in an exclusive interview. "It doesn't induce new supply and rents are going up, particularly in the U.S."

Starwood Capital's lyrics match its tune, with the company making big bets on multi-family properties -- or properties designed to house multiple families in separate units, such as apartment buildings, duplexes and townhomes. In late October, Starwood teamed up with the Milestone Apartments REIT to buy the Landmark Apartment Trust in an all-cash $1.9 billion deal, giving the partners control of 78 apartment developments in eight U.S. states. Starwood will take 63 of the developments and Milestone the remaining 15. 
 That deal was followed in quick step by Starwood's $5.37 billion purchase of more than 23,000 units across five states from Equity Residential.

Starwood Capital isn't alone. Blackstone Group last month partnered with Canadian real estate investor Ivanhoe Cambridge to buy Manhattan's biggest apartment complex, Stuyvesant Town-Peter Cooper Village, for $5.3 billion. That followed Blackstone's September purchase of 24 buildings in Manhattan.

Property looks good compared with the alternatives, Sternlicht said. 


Rent hikes are dogging tenants, but big money investors say the season of love for residential, multi-family rental properties is only getting started.

"Property is in a sweet spot, slow (economic) growth is good for us," Barry Sternlicht, chairman and chief executive of Starwood Capital, told CNBC in an exclusive interview. "It doesn't induce new supply and rents are going up, particularly in the U.S."

Starwood Capital's lyrics match its tune, with the company making big bets on multi-family properties -- or properties designed to house multiple families in separate units, such as apartment buildings, duplexes and townhomes. In late October, Starwood teamed up with the Milestone Apartments REIT to buy the Landmark Apartment Trust in an all-cash $1.9 billion deal, giving the partners control of 78 apartment developments in eight U.S. states. Starwood will take 63 of the developments and Milestone the remaining 15.

Read More Renters, get out your checkbooks, hikes are coming

That deal was followed in quick step by Starwood's $5.37 billion purchase of more than 23,000 units across five states from Equity Residential.

Starwood Capital isn't alone. Blackstone Group last month partnered with Canadian real estate investor Ivanhoe Cambridge to buy Manhattan's biggest apartment complex, Stuyvesant Town-Peter Cooper Village, for $5.3 billion. That followed Blackstone's September purchase of 24 buildings in Manhattan.

Property looks good compared with the alternatives, Sternlicht said.
A for lease sign is posted in front of home in San Francisco.
Getty Images
A for lease sign is posted in front of home in San Francisco.

"The hedge funds have not done very well, the equity markets are flat (and) the debt-to-GDP (gross domestic product) of the world is climbing," he said. "Property is a great spot to invest today because we can get close to double-digit cash yields out of the box, leverage is available, it's plentiful, it's at reasonable cost and there's not a lot of new supply."

But it's about location, location, location, he noted. 


Rent hikes are dogging tenants, but big money investors say the season of love for residential, multi-family rental properties is only getting started.

"Property is in a sweet spot, slow (economic) growth is good for us," Barry Sternlicht, chairman and chief executive of Starwood Capital, told CNBC in an exclusive interview. "It doesn't induce new supply and rents are going up, particularly in the U.S."

Starwood Capital's lyrics match its tune, with the company making big bets on multi-family properties -- or properties designed to house multiple families in separate units, such as apartment buildings, duplexes and townhomes. In late October, Starwood teamed up with the Milestone Apartments REIT to buy the Landmark Apartment Trust in an all-cash $1.9 billion deal, giving the partners control of 78 apartment developments in eight U.S. states. Starwood will take 63 of the developments and Milestone the remaining 15.

Read More Renters, get out your checkbooks, hikes are coming

That deal was followed in quick step by Starwood's $5.37 billion purchase of more than 23,000 units across five states from Equity Residential.

Starwood Capital isn't alone. Blackstone Group last month partnered with Canadian real estate investor Ivanhoe Cambridge to buy Manhattan's biggest apartment complex, Stuyvesant Town-Peter Cooper Village, for $5.3 billion. That followed Blackstone's September purchase of 24 buildings in Manhattan.

Property looks good compared with the alternatives, Sternlicht said.
A for lease sign is posted in front of home in San Francisco.
Getty Images
A for lease sign is posted in front of home in San Francisco.

"The hedge funds have not done very well, the equity markets are flat (and) the debt-to-GDP (gross domestic product) of the world is climbing," he said. "Property is a great spot to invest today because we can get close to double-digit cash yields out of the box, leverage is available, it's plentiful, it's at reasonable cost and there's not a lot of new supply."

But it's about location, location, location, he noted.

Read More Barry Sternlicht: Stocks tell me 'party is over'

Source:  http://www.cnbc.com/2015/11/02/starwood-capital-ceo-this-is-the-next-big-property-investment.html