“We were a net buyer in 2024 all the way through. And we believe we will continue to be net buyers in 2025,” said Jeff Weller, Co-CEO and Co-founder of Dallas-based Lion Real Estate Group, on the 2025 investment outlook. 

The current year may represent “a generational opportunity” to acquire assets at attractive pricing, added Lion Co-CEO/Co-founder Mory Barak. The firm is currently raising its third Fund and expects to reach its target by the time the Fund closes in March. That being said, Barak and Weller provided plenty of caveats to this outlook in a recent webinar conversation with Daniel Ceniceros, President and CEO of Connect Commercial Real Estate and Connect Money. 

For one thing, there are the challenges posed by the current market, mainly affected by the high-interest rate environment following an extended period in which the Federal Funds Rate was near zero. Weller observed, “I think a lot of people in our industry started to believe their own hype about ‘hey, this is an easy business. You can go in, you can buy something at a three cap, you can turn it into a five cap, and by the way, you may sell for a three cap again and you’re making two or three times your money in three years.’” That was standard operating procedure for a number of investors until late 2022, when the Federal Reserve began raising rates and “the music stopped.” 

When the low-interest-rate momentum stopped, it left some investors extremely burdened with floating-rate debt. However, Weller and Barak stuck to the script. “Where we’ve been very disciplined is in fixed-rate financing,” said Weller. “So the majority of our portfolio has either Fannie Mae or Freddie Mac financing, or we have a couple of insurance companies that have long-term financing and we’re continuing to stay focused on doing five-year, seven-year debt fixed-rate, instead of going to the floating-rate debt.” 

The current market favors self-management of properties, something not all multifamily players are equipped to do. “In good times, a rising tide lifts all boats, right?” Barak said. “It doesn’t matter who manages your properties, you have third party, you can do it yourself. Everything works out and it’s all about buying and having your capital.”  

In 2025, the question of who’s overseeing the properties is of far greater importance. “We feel that because we self-manage, it is a big value-add to our investors,” continued Barak. “You can really keep your finger on the pulse and you can shift quickly.” 

One reason 2025 offers so many acquisition opportunities is because there are fewer investors participating. At one end of the market, deep-pocketed buyers such as Blackstone are acquiring $500-million or $1-billion portfolios. There’s less certainty among investors who aren’t planning to buy on such a scale. 

“When you look at transactions under $75 million or $100 million on a deal-by-deal basis, with people who have discretionary capital, you’re able to get real value, especially if they’re off-market,” said Weller. “That’s because people are having a really hard time understanding where rates are going” and therefore sitting it out or holding off. 

Lion is headquartered in a Sunbelt city and focuses its investment strategy on markets within that region. These are cities with strong population and job growth; conversely, they also pose the challenge of elevated supply impacting absorption. 

“The supply in some of our markets is concerning,” Barak said. Projections call for the pace of new deliveries to taper off over the next 12 to 18 months. “I think we’ll be able to absorb these units, but it’s going to take a little more time.” 

Lion was established in 2007, near the peak of the last cycle and just before commercial real estate reached an extended trough. The current cycle is therefore the second one for the Lion team, and a disciplined approach to underwriting, operational control and financing has been crucial to the company’s longevity. 

“We look at seven- to 10-year holds; we’re not looking to flip properties,” said Barak. That’s always been our primary focus: cash yield. That’s been beneficial in these trying times.” 

In the webinar, Weller and Barak delve more deeply into fundraising, interest rates and avoiding investment pitfalls. Click here to register and gain access.

Pictured: Lion Real Estate Group’s Alister apartments in Austin.