Rothschild Realty sees fresh prospects for US housing

UNITED STATES - Rothschild Realty Managers has made a $100m (€74.9m) equity investment with Summit Housing Partners based in Montgomery, Alabama, on the back of renewed confidence in the housing market.

D. Pike Aloian, a partner with Rothschild, said the firm is starting to see some stability in the US apartments sector.

"We do think that we are beginning to see signs that the market is no longer dropping but there is instead some stability," said Aloian. "We are hoping for future improvements in the marketplace in the months ahead."

Job growth will still be the driving force behind a major recovery for the housing sector, according to Rothschild, and this will need to occur before there are major changes to the improvements in the housing market.  Most industry players predict the major in the employment market is unlikely to be seen until the end of this year at the earliest.

Rothscild has opted for its investment as the firm believes Summit Housing is advantaged. Its apartment projects are government-assisted affordable housing developments.

"We zero in on the moderate income element of the marketplace and people with incomes of $50,000 or less," said Daniel Hughes, Summit's chief executive officer.

Summit is planning to use the Rothschild capital to expand its existing 13,000 apartment unit portfolio with acquisitions in Texas and the Southeast.

"We like to invest in markets where there is low unemployment and potential job growth for the future," continued Hughes. "This would be in markets such as Austin, San Antonio, Dallas and Houston in Texas, Tulsa, Oklahoma and Baton Rouge in Louisiana."

Rothschild Realty made its investment in Summit for its commingled fund, Five Arrows Realty Securities V. It now has two other deals in the works totaling $150m of equity.

The Five Arrows V fund is giving its existing investors the opportunity to participate in the deal on a co-investment basis, so has thrown open the offer to US pension fund clients such as Texas Teachers and Ohio Public Employees Retirement System.