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ortland, the eighth-largest apartment owner in the US with over 80,000 homes, has entered the fixed-income market through a joint venture with Declaration Partners Real Estate (DPRE). The $100 million programmatic investment will provide preferred equity capital to multifamily real estate assets, seeking investments of $5-35 million subordinate to senior lenders' debt. This move leverages Cortland's existing strengths and capabilities in underwriting multifamily deals.

    "It's a natural extension for us," said Jason Kern, Cortland President of Investment Management. "We already have the ability to structure deals from an equity perspective, so switching to the debt side shouldn't be difficult." Cortland has invested in several multifamily assets with DPRE over the past five years and recently closed its Cortland Enhanced Value Fund VI, securing $1.5 billion in commitments.

    The fixed-income offering won't require new skills or hires, but rather a diversification of Cortland's capital and activities. Kern sees opportunities for preferred equity in development and gap capital situations, where owners need to refinance debt but can't afford to inject additional equity. As the market recovers, Cortland expects more development starts.

    The apartment sales market has been recovering since the fourth quarter of last year, with a narrowing bid-ask spread and motivated sellers emerging. The recent 50 basis point interest rate cut by the Federal Reserve is seen as a positive step, supporting going-in cap rates and potentially leading to improved values.