FAQ - What is an Asset Class?

As you may know, there are many types of commercial property, for example Industrial, Office, Hospitality and Retail.  With our focus on the Multifamily type, I will describe the typical identifiers of its several classifications. 

Class A Multifamily

  • Generally, garden product built within the last 10 years
  • Generally the highest valuations, cost/door and the lowest Cap Rates
  • Bought for the appreciation
  • High-rise product in select Central Business District may be over 20 years old
  • Commands highest rents in the submarket and is predominantly white-collar
  • Well merchandised with landscaping, attractive rental office and/or club building
  • High-end exterior and interior amenities as dictated by other Class “A” products in the market
  • High quality construction with highest quality materials

Class B Multifamily

  • Generally, product built within the last 20-25 years
  • Bought for some appreciation and cash flow
  • Mixed tenant base of white and blue-collar
  • Cap Rate is higher than Class A and lower than Class C
  • Exterior and interior amenity package is dated and less than what is offered by properties in the high end of the market
  • Good quality construction with little deferred maintenance
  • Commands rents within the range of Class “B” rents in the submarket

Class C Multifamily

  • Generally, product built within the last 30-40 years
  • Best cash-flowing asset class
  • Below market rents with low to moderate income tenants
  • Limited, dated exterior and interior amenity package
  • Improvements show some age and deferred maintenance
  • Commands rents below Class “B” rents in submarket
  • Majority of appliances are “original"

Class D Multifamily

  • Generally, product over 40 years old, worn properties, operationally more transient, situated in fringe or mediocre locations
  • Larger % of Section 8 and government-subsidized tenants 
  • Shorter remaining economic lives for the system components
  • No amenity package offered
  • Higher vacancies
  • Marginal construction quality and condition
  • Lower side of the market unit rent range, coupled with intensive use of the property (turnover and density of use) combine to constrain budget for operations