Dive Brief:
- Chicago-based Nuveen has acquired a portfolio of more than 12,000 units concentrated in New York City from New York-based Omni Holding Co., according to a Tuesday news release.
- The portfolio includes several large apartment properties in the Bronx, Brooklyn and Queens, as well as buildings in Maryland, Massachusetts, Texas and other states. With developable land and properties in need of renovation, the portfolio gives Nuveen the ability to produce an additional 8,000 units of housing, Nuveen told The Wall Street Journal.
- Nuveen, which is the nearly $1.1 trillion asset manager for the Teachers Insurance and Annuity Association of America, wouldn’t reveal the price of the portfolio, but it did tell The Journal that the deal is part of $3 billion in recent acquisitions. Those purchases have doubled its affordable housing holdings to $6.4 billion and make it one of the largest institutional managers of affordable housing.
Dive Insight:
Nuveen was already a large presence in the apartment industry, ranking as the No. 7 largest apartment owner in the most recent National Multifamily Housing Council Top 50 list.
The bulk of the properties that Nuveen purchased from Omni, which was founded by former major league baseball player Mo Vaughn, were government subsidized with tax credits or residents that hold housing vouchers.
"The acquisition strongly advances our ability to promote greater financial inclusivity and health and wellness in communities that have lacked meaningful and lasting investment," said Nadir Settles, global head of impact investing at Nuveen Real Estate, in the release.
Although some of the properties will see their affordability protections expire, Pamela West, portfolio manager of impact investing in Nuveen’s Real Estate Impact Group indicated the company will preserve those units.
"Our goal is to meaningfully invest in the preservation and expansion of high-quality affordable housing to support the well-being of rent-burdened residents within local communities," she said in the press release. "With the Omni transaction, we can develop and manage properties across the U.S. and achieve the desired outcomes for residents and investors."
Portfolio activity slows
Nuveen’s acquisition comes at a time when the larger apartment transaction market has seen sales fall dramatically year over year. In the first quarter, apartment sales fell 64% year over year to $25.4 billion, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
As the sales market has slowed, large transactions have become more rare. Portfolio and entity-level apartment transactions fell 58% to $5.4 billion in the first quarter of 2023.
However, on the affordable side, which has stable occupancies and rent, things are slightly different. In April, Goldman Sachs Group Inc.’s Urban Investment Group, the Michaels Organization and the Community Development Trust bought a $1.15 billion portfolio of 90 affordable housing complexes from Harmony Housing.
In general, the financing market for properties with an affordability element is easier because Fannie Mae and Freddie Mac’s focus on that part of the housing sector. The Federal Housing Finance Agency requires that 50% of the agencies’ lending be directed toward affordable housing.
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