The Association of Foreign Investors in Real Estate (AFIRE) is an international real estate association focused on U.S. commercial real estate, with members representing approximately 200 organizations in 24 countries, 64% of whom are from outside the U.S., including fund managers, family offices, and public companies and other institutional investors. A 2021 market study of members by AFIRE shows that in the next 3-5 years, 74% of members will increase their investment in U.S. real estate, far more than anywhere else on the planet.

The U.S. real estate market is doing well in the following areas:

• Overall macro environment. (such as general economic and political stability, immigration policy)
• Market transparency and depth. (such as transaction history, volume, institutional participation, opt-out options)
• Mortgage financing supported provided by the financial system.

Multifamily has been the most popular investment strategy in commercial real estate. Regardless of the economic environment, housing is a life necessity. The occupancy rate of multifamily apartment has remained around 95%, making it a recession-proof investment. Investment demand for multifamily apartments has remained steady even during the pandemic.

Managers will renovate and upgrade the property, and gradually increase the rent after repositioning the property. After the rent is stabilized and the property price increases, the property can be sold and cashed in for profit.

Multifamily Apartment in the United States has been in short supply.

According to the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) research, which predicts future demographic trends and rental preferences, to meet the needs of tenants, the market will require an additional 4.6 million units of more than 5 units by 2030. This is equivalent to an average of 328,000 units per year.

For investors, the investment period of the real estate fund is 5 years. After the investment property is refurbished, the annual rental income of the unit can be increased by 10-20%. With the leverage effect of the loan, the Net Operating Income (NOI) can increase by 30- 50%. The rental dividend obtained during the investment period, plus the capital income from the final sale of the property, after deducting various expenses, the net investment income for the whole period can exceed 70%, and the average annual internal rate of return (IRR) is more than 10%.

Investors investing in overseas real estate through funds have the following advantages over buying overseas properties directly: 1. Easier management 2. Controllable risks, and 3. Improved and stable returns.

As a collective investment product, real estate funds manage a larger amount of capital, allowing investors to enjoy scale benefits. 

Individual owners will have to afford marketing and operating expenses through entrusting realty agents, while fund investors will not.

Like REITs, real estate funds are collective investment schemes that invest in real estate projects, providing investors with regular rental income and investment return from real estate projects.

General REITs are traded in the open market, such as Link (823.HK), which can be traded at any time on the exchange. The stock price of REIT is affected by the market sentiment, therefore the price could fluctuate substantially.  There is also a gap with the net asset value (NAV), and thus REIT’s investment return cannot fully reflect the real income of its underlying real estate projects.

In addition, because REIT is a perpetual securities product, the underlying real estate portfolio is highly diversified and is dynamically changing over time.

REIT is suitable for short-term investors to trade, as compared to real estate funds, whose investors are bullish on individual property projects for longer term.

We focus on Multifamily Apartment investment in the United States.  The product is clearly positioned towards a mature and reliable strategy.  The fund’s underlying projects can generate stable rental income and long-term capital appreciation.  

Season Capital has deep roots in Hong Kong.  Season Asset Management holds the Type 4 (Advising on securities) and Type 9 (Asset management) licenses of the Hong Kong Securities and Futures Commission.  The management team members have more than 10 years of experience in the financial industry, from world-class fund houses, investment banks and commercial banks.  The team has the expertise and strong track record to invest across real estate capital structures.