Brookfield, Airbnb hook up in US$200M deal

Sub-leases in apartment towers in Florida

NEW YORK • To expand its portfolio of U.S. apartment properties,

is striking an alliance with a company that other landlords are trying to fight.

Brookfield plans to invest as much as US$200 million in a joint venture with Niido, the multifamily development partner of homesharing website Airbnb Inc., according to statement Monday. The funds will be used to buy as many as six apartment complexes in Florida and develop them into communities where tenants may rent out their units through Airbnb for almost half the year — and would share the profits with the landlord.

Niido plans to purchase new and under-construction rental properties in cities including Miami, Fort Lauderdale and Tampa, and convert them to home-sharing towers. Brookfield will make an initial investment of US$20 million for the first building, a 324-unit property in Kissimmee, near Orlando, the firms said. As an equity investor, Brookfield will share in the 25-per-cent cut Brookfield is partnering with Airbnb to buy as many as six apartment complexes in Florida and develop them into communities where tenants may rent out their units through Airbnb for almost half the year. of the revenue from each apartment subleased on Airbnb. New York-based Silverpeak Real Estate Partners is also committing US$20 million.

“Brookfield is well-positioned to apply its investment capital and experience to help Niido take homesharing to major cities in the U.S.” Jonathan Moore, managing director of Brookfield’s apartment business, said in the statement.

Brookfield and its Torontobased parent, have expanded their apartment holdings in recent years, co-developing Brooklyn waterfront towers and even acquiring a multifamily real estate investment trust. With the Niido deal, the landlord is embracing homesharing as an essential part of its rental investing strategy, rather than just a nuisance.

It’s a potentially lucrative proposition. Of all the nights booked last year on Airbnb, 65 per cent were in apartment or condo buildings, according to a survey by homesharing platform Pillow included in a presentation to members of the National Multifamily Housing Council, a landlords group.

In a separate survey, the council and Kingsley Associates found that 49 per cent of renters under the age of 25 are interested in generating extra income through homesharing, underscoring the upside to owning properties that are friendly to Airbnb or similar sites.

“It certainly gives you a competitive advantage because it’s different,” Cindy Diffenderfer, co-founder of Niido, said in an interview. “You’ve got a ton of inventory coming to the marketplace, especially in Florida.”

Landlords have taken mixed views on how to deal with tenants who profit from leasing out their units. On one end, publicly traded

is suing Airbnb to stop its tenants from subleasing, arguing that tourists are overrunning its pools and gyms. Other owners have given verbal warnings to their renters or terminated leases, according to a survey last year by the National Multifamily Housing Council. Still, 47 per cent of landlords said they’d taken no action against renters who have used homesharing sites.

Airbnb, which has been reaching out to apartment owners in hopes of softening their opposition to homesharing, said Brookfield’s investment shows that landlords, developers and Airbnb “can work together to create value for everyone,” Jaja Jackson, the San Franciscobased startup’s director of global multifamily partnerships, said in a statement.

Niido’s Kissimmee building expects to begin leasing to tenants in the first quarter of 2018, Diffenderfer said. Tenants there, who will pay market-rate rents estimated at US$1,300 a month for a one-bedroom, can then lease out their units for as many as 180 days of their yearlong lease.

And there’s a system that makes it easy for them to do so. A mobile app allows tenants to manage their calendar of bookings and request housekeeping, linen changes and even fresh flowers to be set up in between guests. Doors will be keyless, meaning entry codes can be changed remotely with every new arrival.

The app tracks each tenant’s leasing calendar and even suggests rates for nightly rentals, taking into account local festivals and major events that might allow for higher prices, Diffenderfer said.