Kairoi CEO says apartment owners are stalling on sales

Apartment owners who hold buildings in hopes of a sudden rental rebound are "opting to kick the can down the road," Kairoi Residential CEO Michael Lynd told Multifamily Dive.

Third-party management accounts for 75% of Kairoi's apartment management business, a high-end niche serving institutional clients and core and core-plus properties, Lynd said. The San Antonio-based firm ranked No. 45 on the most recent National Multifamily Housing Council Top 50 Managers list. It will turn down assignments in markets it does not consider core.

For allocators, an owner who defers a sale keeps the management assignment with Kairoi but postpones the transaction that would put new assignments in play.

Kairoi's institutional clients are consolidating management rosters among fewer firms, Lynd said. "Our clients continue to show an interest in working with less management companies, not more," he said. Kairoi wants to serve that demand without buying its way into new cities. "We don't just want to be everywhere," Lynd said. "We'll turn down assignments if it's a non-core market for us. We don't have an ambition to be in every market in the United States."

Lynd also criticized competitors that buy operators to expand. "If it's just a roll-up game that you're hoping to play without an outcome, I think that's a different business model than what we're living under," Lynd said. Property management groups nationally are growing by acquiring smaller operators to enter new markets, Multifamily Dive reported.

Kairoi's goal is 8,000 to 10,000 units per market. The firm hires management talent ahead of expansion and subsidizes new markets until they reach operating scale.