Diversification among regions and property types will likely be advantageous to many commercial real estate owners when the inevitable slowdown in the economy occurs since some regions and property types will fare better than others. In the meantime, owners are striving to make wise late-cyle investments while searching for opportunities to grow net operating income from existing assets.
The top 10 commercial owners on this year’s list have a national presence, holding properties in at least four different regions of the country. Almost all the top 10 have also diversified their assets across property types—Liberty Property Trust and Duke Realty only own industrial assets. The median portfolio value of the top 20 owners is $4.9 million, with Hines holding the highest portfolio value at almost $45 million. The median debt-to-value ratio of the top 20 owners surveyed was 45 percent.
Our ranking also showed the growing importance of the Leadership in Energy and Environmental Design certification. Among the top commercial owners, 12 reported that a portion of their portfolios have LEED certification. KBS holds the largest LEED-certified portfolio, with approximately 71 percent of its properties having qualified.
This is a challenging time to be a commercial real estate owner since nearly all property consumers—residents, patients, hotel guests, businesses, etc.—are changing their requirements and demanding more technology. But these top commercial property owners will most likely maintain their dominance since they have proven their ability to respond to shifting dynamics.
The top multifamily owners were ranked based on similar categories. Camden Property Trust ranked No. 1 on the multifamily list with a portfolio value of $13 billion and 56,271 units. All top 10 owners were diversified across regions, with all portfolios holding assets in at least three regions of the country. Average occupancy of the top 20 portfolios is approximately 92 percent and the median debt-to-value ratio is 55 percent. Edward Rose Building Enterprise led the group with the largest number of units owned at 65,224, followed by Lincoln Property Co. with 58,375 units.
The 2019 CPE-MHN Ranking of the Top Owners utilized self-reported data for all firms. The ranking results from a weighted formula based on a variety of factors (only a few of which are specified here), including the total square footage and number of units owned, owned portfolio value, historic performance and a focused or diversified participation in property sectors. The ranking represents what we feel is a logical balance between firm growth and market share, as well as property diversity.
Madeline Winship is a senior research analyst at Yardi Matrix.