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After Spending $462MM in the Puget Sound in 2021, RISE Properties Trust Talks CRE Strategy

RISE Properties Trust, Pacific Northwest, Portland
Courtesy RISE Properties Trust

By Meghan Hall

RISE Properties Trust has invested heavily in Seattle and Portland over the past year, and the firm is most definitely here to stay. To date, RISE’s portfolio includes 6,200 apartment homes across the Puget Sound and Portland markets. The Registry spoke with RISE’s Chief Executive Officer Barrett Sigmund on the company’s strategy in the region and its outlook for the coming year. 

RISE Properties Trust purchased nine properties across the Pacific Northwest this year, investing $462 million in the region. Can RISE talk a little bit about its investment strategy in the PNW during 2021? What is it about the area’s fundamentals that make it good for investing?

The core of RISE’s investment strategy concentrates on acquiring and transforming underperforming multifamily properties in the Puget Sound and Portland areas. We endeavor to make significant improvements to the communities we invest in through renovation and by ensuring we offer exceptional customer service to our residents. The Pacific Northwest is a desirable place to live and features a flourishing and diverse economy that will continue to entice in migration for the foreseeable future. At the same time, our housing market is severely underserved. This presents unique investment opportunities to reposition existing housing assets. 

What has been RISE’s strategy when evaluating what properties to purchase/renovate/sell? How has this strategy been successful? Where could it be improved?

At RISE, we believe improving lives is a good investment. We look for properties that are underperforming from both a customer service and physical perspective – be it deferred maintenance, a lackluster amenity package, or interior finishes that are no longer attractive. Our targeted focus, reputation and experience in the region allow us to identify and value these opportunities where others do not. Further, we often buy these assets outside of a traditional marketing process at a better basis, in return for an exceptional execution for the seller. Our process is highly tied to the labor and construction industries, both of which have been particularly volatile. Stability in both is key to successful investing and we do our best to mitigate these risks for our investors. 

Seattle (and its suburban extensions) have been a hub of activity for major companies and investors. Portland, by many accounts, is now just beginning to come into its own. How do you view the Portland multifamily market? How is it similar to Seattle? Different?

Although about half the size of Seattle by many metrics, Portland is very similar in that it is a desirable place to live. Like Seattle, this fact attracts both employers and employees. It also has its own variety of housing constraints. Along with having a growth boundary and other existing constraints, Portland passed an inclusionary zoning law in early 2017 that significantly impacted the economics of developing. After a rush of development to be ahead of the new legislation, the supply of housing over the last year and going into the future is much more curtailed. This will provide favorable investment fundamentals over the coming decade. In addition, like Seattle, the trend in the average age of a typical resident continues to shift. This creates a compelling investment opportunity for operators like RISE to transform and improve our region’s housing inventory. 

Given RISE’s 2021 activity, what are its plans for the region in 2022? Does RISE have any intention of growing beyond the PNW? Why or why not? 

To be the best we believe we need to deeply penetrate our chosen markets. Staying true to that belief, we consider ourselves sharpshooters in the Pacific Northwest and will continue to expand in the region. Before targeting markets beyond Washington and Oregon, we need to ensure we can deliver the same level of customer service and physical improvements to our residents. More to come in the coming years! 

Overall, what is your perspective on the multifamily industry for 2022? What are you most excited about? Conversely, what challenges do you think the industry will face this year? Why?

We are looking forward to strong growth in 2022. This is an exciting time for the industry as inflation becomes a pressing concern and institutional portfolios significantly ramp up their allocations to multifamily. Labor cost, materials cost and inventory, and volatility in the larger economy will continue to add to the challenges investors face this year. Given this, we expect the acquisitions market to be extremely competitive. We believe these factors will improve our competitive edge in the Pacific Northwest given our local expertise and our reputation of executing transactions. 

Is there anything you would like to add? Anything we should be asking?

We are celebrating the ten-year anniversary of RISE Properties Trust this year. We are pleased to have generated exceptional returns to our investors since inception and are very thankful to all the investors, partners and employees of RISE that have made that possible. We look forward to continuing our mission of improving the lives of all our stakeholders.