July 10, 2025 • 8 mins
In this episode, Sandy MacKay kicks off with an exploration of the multifamily real estate sectors, focusing on loan preferences and lease-up strategies. The discussion transitions to current economic trends and their impact on real estate policies. Sandy provides an in-depth market analysis of the Sunbelt region in collaboration with NXRT, highlighting interest rate management and NXRT's financial strategies. The episode also covers developments and cross-border investments in Canadian real estate, offering insights into emerging opportunities. Sandy wraps up with concluding remarks, expressing gratitude to listeners and summarizing the episode's essential insights into multifamily real estate dynamics.
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Episode Transcript
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(00:00):
Ever wondered which real estate sectors areshining bright amidst economic uncertainties?
Multifamily and seniors housing are proving tobe robust performers, even as new supply is
slowing.
Welcome to the Multifamily Real Estate InsightsPodcast.
I'm your host, Sandy MacKay.
Let's get right to it.
According to Sarah Daniels, in a recentarticle, both multifamily and seniors housing
(00:27):
sectors are boasting strong fundamentals andoccupancy rates.
RealPage data indicates that over 138,000apartment units were absorbed in the first
quarter, while NIC MAP data shows seniorshousing occupancy has increased to 87.4
percent, accounting for 621,000 occupied units.
(00:48):
This is a clear indicator of strong demand inthese critical housing sectors.
One of the driving factors behind thisperformance is the interest rates, which
heavily impact lending activity.
Agencies like Freddie Mac, Fannie Mae, and theU.S.
Department of Housing and Urban Developmentremain the primary loan providers supporting
these asset classes.
(01:10):
Since the Federal Reserve decided to hold ratessteady, there's been significant anticipation
around potential rate cuts later this year,which could lead to a spike in lending volumes
for multifamily and seniors housing.
In the multifamily sector, apartment propertyowners are currently favoring short-term,
five-year loans.
However, once rates stabilize in the low fourpercent range, there might be a shift towards
(01:35):
seven- or ten-year loan options.
Interestingly, some borrowers are alreadyopting for these longer-term loans with
flexible pre-payment options, allowing them torefinance based on the loan's back-end
structure.
Both Freddie Mac and Fannie Mae are alsoenhancing their lease-up programs, capturing
deals earlier in the property's lease-up phase.
(01:57):
In seniors housing and healthcare, the increasein unit demand from aging baby boomers gives
agencies and alternative lenders more appetiteto finance properties.
This is positive news for owners and operators,though the sector faces challenges with supply
shortages and high construction costs.
As a result, there's likely to be a spike inthe rehabilitation and enhancement of existing
(02:19):
communities.
While both multifamily and seniors housingremain strong real estate classes, stakeholders
will be closely monitoring policy shifts,interest rates, and the overall economic
performance as they plan for future success.
As certainty increases, we can expect thesesectors to further strengthen.
(02:41):
As we dive into the multifamily real estatesector, we're seeing some exciting developments
in the Sunbelt region, particularly withNexPoint Residential Trust, Incorporated, or
NXRT.
According to Oliver Blake, NXRT has positioneditself as a standout player in the Sunbelt
area, and their upcoming Q2 2025 earningsreport is generating quite the buzz.
(03:06):
Let's break down why this is a compellingopportunity for investors.
The Sunbelt region, which includes markets likeNashville, Phoenix, Las Vegas, and South
Florida, is experiencing significant jobcreation and population growth, all while
facing a limited housing supply.
This combination is driving occupancy and rentgrowth in NXRT's portfolio.
(03:29):
Occupancy trends show that Q1 2025 ended withoccupancy at 94.4 percent, and by April 2025,
it rebounded to 95.5 percent.
Key markets like Las Vegas and Charlotte areleading the way, driven by affordability and
job growth.
Rent growth is also accelerating.
(03:51):
Although Q1 2025 saw muted new lease growth,April 2025 marked a turning point with
effective rents rising to one thousand fourhundred ninety-five dollars.
Las Vegas led with a seven percent rent growth,followed by Tampa and Dallas-Fort Worth.
This suggests a rent inflection point, asNXRT's strategy of prioritizing occupancy over
(04:16):
initial lease hikes appears to be paying off.
NXRT's management is also showing a keendiscipline in capital allocation.
They've been buying back shares at a discountto net asset value, reflecting confidence in
the company's intrinsic value.
In Q1, NXRT repurchased over two hundredthousand shares at an average price of
(04:38):
thirty-four dollars and twenty-nine cents, asignificant discount to its net asset value
midpoint of fifty-one dollars and twenty cents.
This strategic move is aimed at maximizingshareholder value.
Another strategic play by NXRT is theirinterest rate swaps to mitigate borrowing
costs.
They've secured a one hundred million dollarSOFR swap at three point four eight nine
(05:02):
percent for five years, which locks in lowrates despite the Federal Reserve's tightening.
This shields them from rising interestexpenses, a smart defense in a high-rate
environment.
The Sunbelt's long-term fundamentals continueto attract investors.
With new multifamily deliveries projected todrop significantly by 2027, supply constraints
(05:24):
will likely support occupancy and rent growth.
The region's demographics and affordabilitymake it an appealing market for younger,
working-class households, and NXRT's focus onmiddle-income multifamily properties aligns
perfectly with these needs.
As we approach NXRT's Q2 earnings report,investors should take note of the valuation
discount opportunity.
(05:46):
The company's shares are trading at atwenty-one percent discount to their net asset
value, offering a margin of safety.
With a well-covered quarterly dividend yieldingaround five percent and a payout ratio of
sixty-eight point three percent in Q1, NXRTpresents a solid income play.
In summary, NXRT's Q2 2025 earnings are poisedto reinforce its growth narrative.
(06:11):
With stabilizing occupancy, accelerating rentgrowth, and strategic capital allocation, NXRT
is well-positioned to outperform in theSunbelt.
For those seeking exposure to the multifamilysector, especially those favoring defensive,
value-oriented plays, NXRT is a trust toconsider adding ahead of their earnings call.
(06:33):
Keep an eye on their July 29th earnings callfor updated guidance on occupancy, rent, and
net asset value.
Now, let's talk about some intriguingdevelopments in the Canadian real estate
market.
According to a recent report by Finimize,global investment powerhouses Blackstone and
TPG are in discussions to acquire parts of H&RReal Estate Investment Trust's substantial
(06:55):
$7.67 billion portfolio.
This has certainly caught the attention ofinvestors both in the United States and Canada.
The Toronto-based H&R Real Estate InvestmentTrust, valued at 10.5 billion Canadian dollars,
is becoming a hotbed for investments,especially with activist investor K2 &
(07:16):
Associates advocating for a transparent biddingprocess.
This interest is fueled by a growing demand forresidential and industrial properties, which
aligns with broader investment trends we'reobserving across North America.
The involvement of Blackstone and TPGunderscores a significant trend of increased
cross-border investments in robust propertymarkets.
(07:38):
This could potentially reshape regional marketdynamics and valuations, highlighting the
strategic importance of Canadian real estate inthe broader North American market.
Such movements are pivotal as they fosterdeeper US-Canadian investment partnerships.
With a focus on residential and industrialassets, this potential acquisition by
(07:59):
Blackstone and TPG could transform the Canadianreal estate landscape, offering new
opportunities for growth and collaboration.
It's a testament to the resilience andattractiveness of the Canadian market, and a
development worth watching closely for itspotential ripple effects across the continent.
As we conclude today's episode, remember thatthese trends and strategic plays underscore the
(08:23):
dynamic nature of real estate investment.
Thank you for listening to the Multifamily RealEstate Insights Podcast.
I'm your host, Sandy MacKay.
See you on the next one.
Ever wondered which real estate sectors areshining bright amidst economic uncertainties?
Multifamily and seniors housing are proving tobe robust performers, even as new supply is
slowing.
Welcome to the Multifamily Real Estate InsightsPodcast.
I'm your host, Sandy MacKay.
Let's get right to it.
According to Sarah Daniels, in a recentarticle, both multifamily and seniors housing
(00:27):
sectors are boasting strong fundamentals andoccupancy rates.
RealPage data indicates that over 138,000apartment units were absorbed in the first
quarter, while NIC MAP data shows seniorshousing occupancy has increased to 87.4
percent, accounting for 621,000 occupied units.
(00:48):
This is a clear indicator of strong demand inthese critical housing sectors.
One of the driving factors behind thisperformance is the interest rates, which
heavily impact lending activity.
Agencies like Freddie Mac, Fannie Mae, and theU.S.
Department of Housing and Urban Developmentremain the primary loan providers supporting
these asset classes.
(01:10):
Since the Federal Reserve decided to hold ratessteady, there's been significant anticipation
around potential rate cuts later this year,which could lead to a spike in lending volumes
for multifamily and seniors housing.
In the multifamily sector, apartment propertyowners are currently favoring short-term,
five-year loans.
However, once rates stabilize in the low fourpercent range, there might be a shift towards
(01:35):
seven- or ten-year loan options.
Interestingly, some borrowers are alreadyopting for these longer-term loans with
flexible pre-payment options, allowing them torefinance based on the loan's back-end
structure.
Both Freddie Mac and Fannie Mae are alsoenhancing their lease-up programs, capturing
deals earlier in the property's lease-up phase.
(01:57):
In seniors housing and healthcare, the increasein unit demand from aging baby boomers gives
agencies and alternative lenders more appetiteto finance properties.
This is positive news for owners and operators,though the sector faces challenges with supply
shortages and high construction costs.
As a result, there's likely to be a spike inthe rehabilitation and enhancement of existing
(02:19):
communities.
While both multifamily and seniors housingremain strong real estate classes, stakeholders
will be closely monitoring policy shifts,interest rates, and the overall economic
performance as they plan for future success.
As certainty increases, we can expect thesesectors to further strengthen.
(02:41):
As we dive into the multifamily real estatesector, we're seeing some exciting developments
in the Sunbelt region, particularly withNexPoint Residential Trust, Incorporated, or
NXRT.
According to Oliver Blake, NXRT has positioneditself as a standout player in the Sunbelt
area, and their upcoming Q2 2025 earningsreport is generating quite the buzz.
(03:06):
Let's break down why this is a compellingopportunity for investors.
The Sunbelt region, which includes markets likeNashville, Phoenix, Las Vegas, and South
Florida, is experiencing significant jobcreation and population growth, all while
facing a limited housing supply.
This combination is driving occupancy and rentgrowth in NXRT's portfolio.
(03:29):
Occupancy trends show that Q1 2025 ended withoccupancy at 94.4 percent, and by April 2025,
it rebounded to 95.5 percent.
Key markets like Las Vegas and Charlotte areleading the way, driven by affordability and
job growth.
Rent growth is also accelerating.
(03:51):
Although Q1 2025 saw muted new lease growth,April 2025 marked a turning point with
effective rents rising to one thousand fourhundred ninety-five dollars.
Las Vegas led with a seven percent rent growth,followed by Tampa and Dallas-Fort Worth.
This suggests a rent inflection point, asNXRT's strategy of prioritizing occupancy over
(04:16):
initial lease hikes appears to be paying off.
NXRT's management is also showing a keendiscipline in capital allocation.
They've been buying back shares at a discountto net asset value, reflecting confidence in
the company's intrinsic value.
In Q1, NXRT repurchased over two hundredthousand shares at an average price of
(04:38):
thirty-four dollars and twenty-nine cents, asignificant discount to its net asset value
midpoint of fifty-one dollars and twenty cents.
This strategic move is aimed at maximizingshareholder value.
Another strategic play by NXRT is theirinterest rate swaps to mitigate borrowing
costs.
They've secured a one hundred million dollarSOFR swap at three point four eight nine
(05:02):
percent for five years, which locks in lowrates despite the Federal Reserve's tightening.
This shields them from rising interestexpenses, a smart defense in a high-rate
environment.
The Sunbelt's long-term fundamentals continueto attract investors.
With new multifamily deliveries projected todrop significantly by 2027, supply constraints
(05:24):
will likely support occupancy and rent growth.
The region's demographics and affordabilitymake it an appealing market for younger,
working-class households, and NXRT's focus onmiddle-income multifamily properties aligns
perfectly with these needs.
As we approach NXRT's Q2 earnings report,investors should take note of the valuation
discount opportunity.
(05:46):
The company's shares are trading at atwenty-one percent discount to their net asset
value, offering a margin of safety.
With a well-covered quarterly dividend yieldingaround five percent and a payout ratio of
sixty-eight point three percent in Q1, NXRTpresents a solid income play.
In summary, NXRT's Q2 2025 earnings are poisedto reinforce its growth narrative.
(06:11):
With stabilizing occupancy, accelerating rentgrowth, and strategic capital allocation, NXRT
is well-positioned to outperform in theSunbelt.
For those seeking exposure to the multifamilysector, especially those favoring defensive,
value-oriented plays, NXRT is a trust toconsider adding ahead of their earnings call.
(06:33):
Keep an eye on their July 29th earnings callfor updated guidance on occupancy, rent, and
net asset value.
Now, let's talk about some intriguingdevelopments in the Canadian real estate
market.
According to a recent report by Finimize,global investment powerhouses Blackstone and
TPG are in discussions to acquire parts of H&RReal Estate Investment Trust's substantial
(06:55):
$7.67 billion portfolio.
This has certainly caught the attention ofinvestors both in the United States and Canada.
The Toronto-based H&R Real Estate InvestmentTrust, valued at 10.5 billion Canadian dollars,
is becoming a hotbed for investments,especially with activist investor K2 &
(07:16):
Associates advocating for a transparent biddingprocess.
This interest is fueled by a growing demand forresidential and industrial properties, which
aligns with broader investment trends we'reobserving across North America.
The involvement of Blackstone and TPGunderscores a significant trend of increased
cross-border investments in robust propertymarkets.
(07:38):
This could potentially reshape regional marketdynamics and valuations, highlighting the
strategic importance of Canadian real estate inthe broader North American market.
Such movements are pivotal as they fosterdeeper US-Canadian investment partnerships.
With a focus on residential and industrialassets, this potential acquisition by
(07:59):
Blackstone and TPG could transform the Canadianreal estate landscape, offering new
opportunities for growth and collaboration.
It's a testament to the resilience andattractiveness of the Canadian market, and a
development worth watching closely for itspotential ripple effects across the continent.
As we conclude today's episode, remember thatthese trends and strategic plays underscore the
(08:23):
dynamic nature of real estate investment.
Thank you for listening to the Multifamily RealEstate Insights Podcast.
I'm your host, Sandy MacKay.
See you on the next one.
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