Photographer: Andrew Harrer/Bloomberg

Brookfield Finds Common Ground With Airbnb in $200 Million Deal

  • Landlord invests in rentals with partner of home-sharing site
  • Joint venture plans to buy up to six communities in Florida

To expand its portfolio of U.S. apartment properties, Brookfield Property Partners LP is striking an alliance with a company that other landlords are trying to fight.

Brookfield plans to invest as much as $200 million in a joint venture with Niido, the multifamily development partner of home-sharing 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 $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 percent cut of the revenue from each apartment subleased on Airbnb. New York-based Silverpeak Real Estate Partners is also committing $20 million.

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

Brookfield and its Toronto-based parent, Brookfield Asset Management Inc., 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 home-sharing 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 percent were in apartment or condo buildings, according to a survey by home-sharing 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 percent of renters under the age of 25 are interested in generating extra income through home-sharing, underscoring the upside to owning properties that are friendly to Airbnb or similar sites.

Competitive Advantage

“It certainly gives you a competitive advantage because it’s different,” Cindy Diffenderfer, co-founder of Miami-based 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 Apartment Investment & Management Co. 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 percent of landlords said they’d taken no action against renters who have used home-sharing sites.

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

Mobile App

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 $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.

Photo Booth

Properties being redeveloped by Niido will be designed to straddle a line between apartment and hotel. There will be fire pits, interactive art installations and a photo booth in the lobby where nightly guests can Instagram their stay. Each community will also have a “master host” on site -- someone to offer guests restaurant recommendations or assist when the tenant leasing the apartment is away.

Tenants will keep 75 percent of their profits, after local taxes and fees are paid. The landlord will get the other 25 percent.

“We’ve got massive inbound inquires from developers and existing apartment owners,” Diffenderfer said. “There’s going to be more and more demand because home-sharing is occurring everywhere.”

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE