Check out RISE management's philosophy and approach in WP's free Sept. 14 webinar
If you want to learn about a real estate fund that has a great management team and time-proven strategy, and whose interests align with its investors, check RISE Properties Trust’s $380 million fund during our Tuesday, September 14 noon webinar, “Investing in Rental Apartments in the United States”.
“We are apartment people who started a fund. We are not capital market fund people who decided that apartments were a good investment,” RISE’s CEO, Dave Kirzinger, told WP. He is one of the webinar presenters. The other is RISE’s President, Barrett Sigmund.
While prior returns may not be indicative of future returns, to date RISE has delivered average annual returns of just over 13% for investors who have reinvested their distributions.
With professional investment portfolios rapidly increasing their real estate allocations, and billions of dollars competing for deals in the heated sellers’ U.S. market, Kirzinger and Sigmund will look at the scale of the US apartment industry, private versus public REITs, what RISE offers, and why it invests In the U.S. Pacific Northwest. Check here to register.
The Canadian-born Kirzinger, who has spent 32 years working with U.S. apartments, is looking forward to sharing the wisdom that underpins his fund.
“A financial advisor once told me that it’s all about management, strategy, and alignment,” he said, “and that really resonated with me.”
- Management:
RISE’s senior management is experienced in apartment property management, renovations, and acquisitions. The U.S. market is also more landlord-friendly than the Canadian market, so there’s more latitude to take possession of apartments, renovate them, and raise rents.
RISE’s fund now owns 5,000 apartments and manages about 11,000 apartments for other owners, meaning total management of about 16,000. It is currently focused on Portland and Seattle, where it employs 500 people and has also renovated more than 5,000 apartments for RISE and other clients.
“We have scale and boots on the ground,” said Kirzinger. “We’re not going into various cities and just buying buildings and letting other people manage them. We have a great deal of expertise, and many relationships in Seattle and Portland, so we can go in and add a lot of value to these apartment buildings and thereby deliver better returns than just a passive investment.”
- Strategy
RISE focuses on primary residential markets and, so far, has only chosen Portland and Seattle – though it may consider a third as the fund grows. Their 30-year job and population growth are roughly 60% higher than the U.S. average. Both have growth constraints – Seattle by the geography of its ocean, mountains, and river and Portland because of urban rules.
“If you have extraordinary job growth and extraordinary population growth, and then you have a geographic barrier to growth, all of those things lead to real estate values going up at a greater rate than the average because you’ve got a combination of very good demand with limited supply,” said Kirzinger, noting how that differs from cities like Phoenix and Houston, which have room to sprawl.
RISE also controls all aspects of its acquisition, renovation, and ongoing ownership of its properties.
“It’s a very competitive market, but because we’re managing so many apartments in these markets and we have relationships with the brokerage community and with owners, we have real time market information that an outside investor would never have,” he said. “So, over half of what we’ve bought has not been listed for sale.”
- Alignment
Kirzinger said RISE’s interests are aligned with its investors because its management team has invested over $30 million of its own money in the fund. It also provides 100% of its pre-tax returns in a calendar year to its investors until it has achieved at least an 8% return for the year, then the fund gets a performance fee of 20% of everything over 8%.
RISE is also very transparent about its unit values with its investors. “We’re the only fund that we know of where we get all of our properties appraised every quarter of every year,” he said. “We only use a national appraisal firm, and we change it every three years, so we’re creating an arm’s length, transparent process for determining unit value.”
It’s been a winning combination that RISE is inviting financial advisors to learn more about by joining our free webinar on September 14.
“If people get good at residential real estate, and buy it in primary markets, then hold it long-term and are conservative with their balance sheet and look after it well,” said Kirzinger. “I just don’t see how they can’t, over a long period of time, end up really doing quite well.”
