JF 3882: Doubling NOI, Public-Private Partnerships, and Midwest Value-Add Ft. John Casmon & Kent Ritter
Apr 21, 2025
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In this engaging discussion, John Casmon, Managing Partner at Casmon Capital, and Kent Ritter, CEO of Hudson Investing, delve into the multifamily real estate landscape. John reveals how he doubled NOI by uncovering hidden value in properties. Kent emphasizes the importance of public-private partnerships for financing development projects, showcasing a transformative mixed-use project in Indiana. They explore investor sentiment shifts, effective fundraising strategies, and navigating complex negotiations, providing invaluable insights for anyone interested in real estate investing.
John Casmon highlights the importance of identifying hidden upside to successfully double NOI on Midwest multifamily assets.
Kent Ritter emphasizes that public-private partnerships are crucial for financing development projects in today's high-interest rate environment.
Investors are advised to actively engage with current market conditions, potentially selling assets to capitalize on favorable trends instead of holding indefinitely.
Deep dives
Investment Opportunity in Peoria Gateway
Peoria Gateway is a new 200-unit luxury apartment community set to open in 2026 in Peoria, Arizona, which is experiencing a housing shortage. This development aims to cater to the growing demand for modern rental living in a rapidly expanding city along the Phoenix growth corridor. The project's appeal is bolstered by the limited housing supply and increasing population, creating conditions favorable for premium rents and long-term appreciation. Viking Capital's extensive background, including $800 million in assets and over 5,000 units managed, positions them as a credible partner in this investment opportunity.
Market Trends and Development Insights
Investors are focusing on specific micro-level conditions rather than broader market trends, with a keen eye on their portfolios in the multifamily sector. John Kasman notes that, even in challenging market conditions, his investments in growing parts of the Midwest have yielded promising returns, driving confidence for future opportunities. Kent Ritter highlights his recent pivot toward development, driven by limited acquisition options and a surge in demand from Millennials moving out of their parents’ homes. Both speakers underscore the importance of monitoring local dynamics and being adaptable to shifts in market needs.
Challenges and Strategies in Development
A significant challenge discussed by developers is securing public-private partnerships, which have become essential for making projects financially viable in today's higher interest rate environment. Ritter shares that collaborations with local municipalities have enabled him to reduce costs through benefits like tax increment financing and land contributions. Establishing trust with local government is highlighted as a critical factor, requiring time and relationship-building to get needed approvals and cooperation. Understanding and navigating these local complexities can ultimately streamline the development process and enhance project success.
Testing the Market for Portfolio Assets
Investors are urged to actively test market conditions for possible asset sales rather than holding indefinitely, given the uncertainty around future cap rate movements. Kasman emphasizes the importance of being in a position of leverage and exploring options for asset exits if favorable market conditions arise. By periodically obtaining broker opinions of value, investors can gauge current market sentiment and determine the optimal time for selling assets. This proactive market engagement can allow investors to capitalize on favorable conditions or adapt strategies if current expectations don't align with market realities.
Understanding Investor Preferences
The discussion also revealed a shift in investor preferences, with many seeking debt positions instead of equity due to perceived safety in capital stack hierarchy. However, it is stressed that the quality of the deal is paramount, as a bad deal remains risky regardless of its structuring. Investors are encouraged to define their specific goals and align their investment choices with those objectives, reevaluating opportunities against their established criteria. This approach helps ensure that investments are not merely metrics-driven but also fit within a broader, strategic investment framework.
On this episode of the Best Ever CRE Show, Joe Fairless interviews John Casmon of Casmon Capital and Kent Ritter of Hudson Investing to explore the current state of multifamily investing and development. John shares insights on exiting value-add multifamily assets in the Midwest, strategic refinancing, and how he doubled NOI on a key property by identifying hidden upside. Kent dives into public-private partnerships as the secret to making development deals pencil in today’s environment and highlights a mixed-use project in Westfield, Indiana, backed by city support and creative financing. They also discuss investor sentiment, capital raising challenges, and how to identify stalled listings that can be repositioned into winning deals.
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