Maryland-based apartment rental company Bozzuto Group is partnering with Invesco in a $1 billion venture to buy existing multifamily assets on the East Coast, renovate them and repackage them to compete with newer, amenity-filled buildings.
It’s a bet that older can be better.
The partners’ strategy is “to capitalize on recovering market fundamentals” by focusing on assets that have the capacity to gain value, said Greg Kraus, Managing Director and Head of U.S. transactions at Invesco Real Estate.
Their new fund takes off against a backdrop of oversupply in the market, CNBC noted.
Multifamily saw a major construction boom in the past five years, thanks to lower interest rates at the start of the pandemic and demographic drivers, CNBC reported. Much of the supply is still making its way through the pipeline, now in a higher interest rate environment, CNBC said.
Bozzuto Group CEO Toby Bozzuto said the oversupply is a “temporary phenomenon.”
The Future of Affordability
“Where supply is currently the problem, supply is also the solution in the future for affordability,” he told CNBC. “So it’s a very interesting dynamic, because what we’re doing now is absorbing the overhang of the units in the market. … The vacancy will dissipate over ’26 and, in worst cases, early ’27, but there’s nothing behind it.”
CNBC noted that buying older buildings now can be done at prices well below the cost to build from the ground up, which Bozzuto traditionally and still does.
Existing buildings are often priced at 10% to 20% below replacement costs, CNBC said.
“Secondly, there’s speed to market. If you buy a building, you’re not going through the regulatory morass that, candidly, has exacerbated some of this problem, the supply problem,” Bozzuto said.
Most experts said they anticipate the current oversupply situation to reverse itself in just a few years, given that demographic demand and the fact that the for-sale housing market is so expensive, it meaning more renters are waiting to become buyers.
“A sharp drop in apartment starts provides hope that the robust delivery pipeline will slow and alleviate some pressure on lease-ups in rapidly growing markets,” according to a report from Yardi, which forecasts 450,000 units to be delivered in 2026, which is a drop from recent years. Still, that shift is “not enough of a decline to push rents to robust levels,” it said.
Multifamily Receives Investor Interest
Despite weaker rents and a weaker consumer, CNBC noted that investors are increasingly interested in deploying capital into the multifamily sector.
Berkadia’s 2026 Multifamily Investor Sentiment Survey, which surveyed 249 investors to assess anticipated transaction activity and opportunities within the sector, revealed that 87% of investors plan to moderately or aggressively expand their multifamily portfolios this year, “demonstrating cautious optimism despite ongoing challenges,” CNBC reported.
Some of those challenges are in multifamily loans, where delinquencies are rising and weighing on property valuations, CNBC reported.
Bozzuto appears less concerned.
“I think the distress will be relatively de minimis, particularly compared to some of the other asset classes,” he said. “There are some buildings where developers really pushed on leverage or on floating rate, and when they price into a permanent loan — perhaps they were on a four- or five-year construction loan — when they flip to a perm loan, we may see some issues.”
The distress, Bozzuto said, will be short-lived and it provides opportunity.
“We will go up and down the East Coast, maybe all the way to Chicago, and buy multifamily assets that we can — ‘value add,’ the idea being that they’re either under-managed or haven’t been renovated, or there’s something that can be done better with these assets,” said Bozzuto. “And over time, rents will grow.”
