Casey Siggins, Senior Director of Capital Advisory with Franklin Street, recently spoke at the Crittenden’s Real Estate Finance & Investment Conference in Tampa Bay.
Appearing on a panel titled, “How to Find the Right Private Equity Provider,” he and other CRE finance leaders shared insight on the current state of investor interest and the shift in equity strategy in the market.
While some equity partners have pulled back due to concerns of a recession, Casey said other investors have simply shifted their approach on value-add properties and are leaning more toward low-risk assets.
“In the last few years, equity largely went toward value-add multifamily properties, but investors have done the research and are now focused on lower risk deals,” he said. “When rates were low and deal flow was high, it made it very easy to find deals that made sense on paper. This meant equity partners could be less disciplined with their approach, but with the market shifting, we’re seeing that discipline return.”
Equity partners today are exercising patience and being more strategic with their investments, Casey explained. They are also implementing more specific requirements and often looking for deals that fall within smaller niches. Recently, Casey and his team have seen an increase in interest in ’90s and 2000s built developments as opposed to older properties. Further, 90% of the equity assignments they are taking on right now are between $3 to $20 million, with LP equity partners typically coming through with 65%-75% of the equity or more.
“We have spent a lot of time and effort building our equity platform at Franklin Street. Our database contains nearly 1,000 LP and joint venture equity partners, all of whom have been thoroughly vetted and categorized into groups that will best fit our clients’ needs in the future,” Casey added.