Published on Wednesday, February 21, 2024

BCT Development to build communities in highest-growth suburban markets.


A partnership between Bain Capital Real Estate and Cherry Tree Capital Partners is planning to build new rental townhome communities in Southern California.

The joint venture, to be known as BCT Development, will deploy "several hundred million dollars of gross capital" in the next few years on the ground-up development of rental townhome communities in SoCal's highest growth suburban markets, according to a release issued by the partners.

Chris March and Tim Stanley, former Irvine Company executives who launched Newport Beach-based Cherry Tree Capital Partners in 2021, will lead BCT Development. At the Irvine Co., the pair oversaw a multifamily development pipeline.

The partners said they would focus on acquiring, entitling and developing land in growing Southern California neighborhoods with "best-in-class amenities, schools and entertainment options."

"Aging millennials are the fastest-growing demographic in Southern California. As individuals and families continue to migrate to the suburbs, they're faced with a lack of attainable for-sale housing, and quality alternatives," Stanley said, in a statement.

BCT Development will "prioritize affordability by design," he added,

"Our multifamily strategy is closely aligned with our thematic investment approach. In a supply constrained market with growing consumer demand, we believe there is a significant opportunity to develop premier townhome communities for the high concentration of households in Southern California that have been priced out of homeownership," said Martha Kelley, a managing director at Bain.

The average price of a new home in Southern California is about $820K, according to a recent report in the Los Angeles Times.

According to a survey conducted by the California Association of Realtors in Q3 2023, only 11% of households in Los Angeles County and Orange County could afford a median-price house. In San Bernardino County, that percentage rises to 25%, the report said.

In November, the median rent for vacant units of all sizes across Los Angeles County was $1,900, down 1.9% from a year earlier, according to data from Apartment List.

Cherry Tree also is partnering with Newport Beach-based private equity platform Revitate to acquire, reposition, and manage multifamily real estate properties across several U.S. markets. The primary focus of Revitate Cherry Tree Multifamily Fund I is Sunbelt value-add multifamily and Midwest workforce housing.

Revitate also focuses on Opportunity Zones and sports-anchored real estate.