Bozzuto Group and Invesco Launch $1 Billion East Coast Multifamily Venture
Bozzuto Group and Invesco have formed a $1 billion venture to acquire existing multifamily properties on the East Coast. The initiative focuses on renovating undervalued assets to make them competitive with newer, high-amenity buildings.
Greg Kraus, managing director and head of U.S. transactions at Invesco Real Estate, stated that the strategy aims to leverage recovering market fundamentals by targeting properties with value-add potential.
The venture launches amidst an oversupply in the multifamily market, resulting from a construction boom over the past five years, driven by lower interest rates and demographic shifts.
Toby Bozzuto, CEO of Bozzuto Group, characterized the oversupply as a "temporary phenomenon."
He anticipates market absorption of existing units by 2026 or early 2027, with limited new supply following.
Strategic Advantages of Older Properties
Purchasing older buildings offers significant advantages. These include prices 10% to 20% below replacement costs and faster market entry due to fewer regulatory hurdles compared to new construction.
Market Outlook: Oversupply Reversal Projected
Industry experts project the current oversupply to reverse within a few years due to demographic demand and the high cost of the for-sale housing market, which is increasing the renter pool. Yardi forecasts approximately 450,000 units to be delivered in 2026, a decrease from recent years, though not enough to significantly boost rents.
Investor Confidence Amidst Concerns
Despite weaker rents and consumer sentiment, investor interest in the multifamily sector is increasing. A Berkadia survey revealed that 87% of investors plan to expand their multifamily portfolios this year.
While multifamily loan delinquencies are a concern for some, Bozzuto expects distress to be minimal compared to other asset classes, primarily affecting developers with high leverage or floating-rate loans.
Acquisition Focus
Bozzuto plans to acquire multifamily assets across the East Coast, potentially extending to Chicago. The focus is on properties that are under-managed, unrenovated, or have potential for improvement, anticipating future rent growth.