It may be a relative newcomer to the national multifamily market, but The RMR Group is making a big splash and placing an even greater bet on strengthening its foothold in the real estate sector as it scoops up properties in some of the nation's fastest-growing regions.

The Massachusetts-based alternative asset manager dropped $70 million to close on a 240-unit complex in Denver, marking the firm's first purchase since its initial foray into apartments last year.

RMR, which up until last December had primarily focused on office, industrial, hospitality, retail and senior living properties, is now doubling down on plans to expand its apartment portfolio and is pursuing a pipeline worth up to $3 billion of on- and off-market deals, CEO Adam Portnoy told analysts on the firm's recent earnings call.

"We continue to have conviction that the United States' multifamily market is prime for long-term growth, supported by an overall shortage of housing, the high cost of home ownership and favorable demographic tailwinds for the Sun Belt market, which is where RMR Residential has extensive operating experience," he said, adding that the firm has more than "125 deals in various stages of review that we hope to capitalize on now that we have demonstrated RMR Residential is again an active market participant."

RMR closed on the property at 10000 E. Alameda Ave., which it has since rebranded as Arium at Lowry, late last month. California-based investment firm MIG Real Estate was the seller in the deal, the purchase price for which equates to upward of $291,650 per unit. RMR financed the acquisition through the combination of a $46.5 million mortgage loan and cash on hand.

The firm is planning to make additional investments in "extensive interior and exterior renovations" to help upgrade the early 2000s-era property. Rents there currently average about $2,040 per month, according to CoStar data, and the complex was about 92.5% occupied at the time of the sale.

The deal comes as U.S. multifamily acquisitions appear poised for a rebound. After largely sitting on the sidelines for the first half of the year, some of the largest multifamily owners in the country have returned to purchases with much of the focus on the Sun Belt.

Equity Residential has already closed on two properties in the first month of the third quarter and is under contract for a third. Those deals in Dallas, Atlanta and Denver total nearly $294 million and follow just a single $62.6 million investment made by the company in the second quarter.

AvalonBay, whose portfolio has historically been focused on coastal markets, has made three acquisitions in the past two months totaling more than $223 million in Texas, North Carolina and Colorado. The company said property sellers it has encountered have largely been institutional owners that bought properties 10 or more years ago with capital from limited-period funds that have reached the end of their life. AvalonBay expected those sellers to have already realized significant gains.

It’s a pattern that tracks with the Arium at Lowry transaction. RMR’s $70 million purchase price represents an increase of more than 135% from when MIG bought the property in 2011 for $29.7 million.

With strong demand drivers showing little sign of slowing and few construction starts feeding the supply pipeline much beyond the end of the year, buyers are motivated by a predicted bottom of new lease pricing that could quickly increase property values.

“With the national rent growth holding steady for the past four quarters and the vacancy rate holding steady between the first and second quarters, investors may feel that the market is at an inflection point and now is the time to begin buying again before [capitalization] rates begin declining,” said Jay Lybik, national director of multifamily analytics at CoStar Group, referring to the measure of property yield that moves inversely from prices.

Despite being its inaugural multifamily purchase, RMR's Denver deal adds to an extensive portfolio of apartment properties that the firm assumed ownership of through its late 2023 acquisition of Carroll, which included about $5.5 billion of assets under management across 66 properties with more than 21,000 units. Much of that portfolio is concentrated in Sun Belt regions such as Las Vegas, Atlanta and various cities throughout Florida.

As other pockets of the national commercial real estate market — primarily the office and industrial sectors — try to find their post-pandemic footing, RMR's Portnoy said the firm would prioritize investments in the multifamily segment, which he said has been capable of steady growth despite some of the surrounding economic volatility.

Similar to other markets that boomed in the early years of the pandemic, Denver multifamily rents jumped from about $1,500 a month in 2020 to the current average of nearly $1,900 per month, according to CoStar data. What's more, the area has one of the most active apartment construction pipelines in the country, and with most of the units underway concentrated at the higher end of the development spectrum, asking rents have largely been driven even higher.

Combined with the portfolio it inherited from Carroll, RMR's residential arm now oversees a footprint that includes nearly 700 units in the greater Denver area.

Market optimism aside, Portnoy said a primary hurdle to the firm's ambitious acquisition plans is financing. The combination of a motivated seller and a limited window of time meant RMR decided to be opportunistic and fund most of the purchase on its own, something Portnoy said it wouldn't be able to do to accommodate the volume of purchases it hopes to make through the rest of the year.

"Going forward, I would imagine that most deals will be syndicated before we actually close," the CEO said. "So the more we're able to syndicate deals prior to closing, the higher the volume."

Walker & Dunlop brokers Dan Woodward, Dave Potarf, Matt Barnett and Jake Young represented MIG in the deal.