Why does Lionaire invest in multi-family apartments?
Lionaire believes that apartment complexes offer the most attractive risk-return ratios of all classes of real estate. Apartments comprise 15-20% of the total market of investment grade real estate in the US according to the NCREIF Property Index (NPI). This index tracks return data nationally from 1978 forward. During these years, apartments have had a total return of 10.03%. From a risk perspective, apartment performance, as evidenced by the NPI data, has been less volatile than most other property types. Occupancy levels in most markets over the long term have rarely dipped below 90% for significant time periods. In contrast, office occupancy levels have dipped to 80% or less in several major markets. The commodity nature of apartments tends to produce a more efficient market. Vacancy levels within a sub-market rarely differ by more than 10% among specific apartment properties, but can vary widely for other asset classes.
