Timberland Partners Launches New $50M Apartment Fund
Bloomington-based Timberland Partners is launching its eighth multi-asset real estate fund – Timberland Partners Apartment Fund VIII – with a goal of raising $50 million. This follows its previous fund, which closed in December after raising $80 million.
Timberland is not looking to Wall Street or large institutional investors.
“It’s predominantly retail investors. I would say it’s 90 percent individual high-net worth investors,” said Sam Eaton, director of investor relations for Timberland. “We do have a number of private family offices and wealth managers who place their clients with us as well.”
There are some emerging signs of trouble in the national apartment market after several years of nonstop development. Twin Cities Business reported last week on data from New York-based Trepp that found many markets where numerous apartment projects have occupancy under 80 percent.
Eaton said that Timberland isn’t buying Class A downtown apartment towers but focuses on suburban markets where the cost of living is lower.
“Our model is focused on these lower cost-of-living markets in the central and southeastern U.S. We’re not buying urban properties and we’re not buying anything in tier one or gateway cities on the coasts. Those are markets that seem to be struggling the most right now,” said Eaton. “We tend to stay in markets that we think are more overlooked.”
Timberland currently owns 82 properties across 15 states with a total of 17,911 rental units. In connection with its new fund, the company plans to close on the acquisition of properties in Tulsa and St. Louis in May. Timberland’s total portfolio has an estimated value of $2.2 billion.
Timberland is not just an apartment investor and manager; it’s also a developer. Its newest project, the 218-unit Sundance Woodbury, is close to wrapping up construction.
“The development arm is growing,” said Eaton. “We expect that to be a very high-growth area.”
Overall, Eaton sees several factors keeping their portfolio in solid shape. The for-sale housing market has gone bonkers. As home prices climb ever higher, some would-be buyers are getting priced out and staying in rental property. Eaton said that the company’s suburban locations are also an attraction to people who can now work from home and are moving out of the core city.
The pandemic barely dented the company’s apartment occupancy rates.
“Our occupancy has remained at 95 percent or higher throughout 2020 and into 2021,” said Eaton.