CNC’s primary focus for its investors is “Creating Equity for the Future“ by investing primarily in multifamily properties. Typically the properties are undervalued due to institutional ownership or are in distress from lack of maintenance, or capital management.
The Sunbelt multifamily markets entered the 1980’s with generally high occupancies and rising rental rates. During the early part of this decade, the combination of the declining interest rates, deregulation of the Savings and Loan Industry, favorable legislation regarding the tax treatment of real estate investments, increased availability of tax exempt bond financing and the overall growth of the real estate capital syndication industry resulted in a significant increase in the availability of real estate capital. This combination of a healthy multifamily market and significant increases in the availability of development capital resulted in an unprecedented level of new apartment construction during the mid 1980s.
However, toward the end of the 1980s, each of the factors identified above as a stimulus to the decade’s development boom had largely reversed course. The Savings and Loan Industry collapsed; the ability to use tax deductions in order to shelter income was generally eliminated; availability of tax-exempt bond financing was curtailed; and the real estate syndication industry contracted. A glut of newly developed multifamily projects, combined with a weakening regional economy, caused in part by a decline in the oil and gas industry, resulted in predictably disastrous consequences for Texas’ multifamily markets which saw a decline both in occupancy levels and rental rates.
Nevertheless, the region’s economy began to recover in the late 1980s and into the 1990s. As a result, job growth combined with the lack of new construction activity, set the stage for an improving rental market. Although a continuation of these favorable economic trends eventually led to a new development cycle, rental rates in many markets are still well below the level generally believed to be necessary in order to attract new development capital. Consequently, existing multifamily properties are the focus of the acquisition activities of CNC Investments, Inc. While CNC started in Houston, it has begun a drive to diversify throughout the Sunbelt.