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Multifamily specialist pivots toward alternative lenders ahead of $1.5b acquisition push

The company has found that debt funds are providing more proceeds and better pricing.

ZMR Capital, a Tampa-based investment management company that specializes in the multifamily sector, anticipates working closely with debt funds as it prepares for a year in which it could expand its portfolio by about $1.5 billion.

The move is a shift for the company, which has a roughly 6,000-unit portfolio. 

We historically did work with agencies. But the debt funds have been so aggressive in pricing and in terms of leverage and dollars [that] everything we’ve done this year has been through a debt fund,” founder Zamir Kazi told Real Estate Capital USA.

Debt funds tend to have shorter and more flexible loan lengths than agencies, which makes them a better fit for ZMR’s strategy of holding onto a property for three to five years. “It just makes sense to go that route versus a seven- to 10-year agency [deal],” he added.

The company focuses on acquiring and updating aging multifamily complexes in emerging Sunbelt markets in states that include Florida, Arizona and Texas. 

“We’re looking for 1970s to 2000s vintage deals that need work. We’ll go in and spend five, six or seven million [dollars] on a project and really renovate them and modernize them, improve the amenities and give a tenant something they haven’t had for a while. Ultimately, [we’ll give them] a better place to live,” Zamir said.

Most recently, ZMR has turned its focus to Dallas, where it believes there is a multifamily growth story. The company recently announced the purchase of two Dallas-area apartment complexes totaling 1,000 units, bringing its Texas total to 2,500. For Zamir, Texas, and Dallas specifically, have all the hallmarks of a good long-term investment.

“Texas is very business-friendly, it is a landlord friendly state. You [have] a lot of jobs coming into Dallas. You have a lot of financial firms moving from New York to Dallas,” he said.

Billion dollar plans

After an active 2021, ZMR has no plans to slow down in 2022. “I want to do 25 deals next year [and I think] the target will probably be a billion and a half. And I think we can hit it,” Zamir said. 

Zamir sees supply chain issues and rising prices as major headwinds for new development, driving up demand for the type of acquisitions that the company focuses on.

“Growth is going to continue to trend up, especially given where supply is right now. As for demand, you got a lot of people moving into the states in the markets that we’re in and supplies have not caught up with where the demand is at,” Zamir said.