Nontraded REIT specialist Inland plans to raise $1 billion for apartment company

The Inland Group Inc. is rolling out another real estate investment trust, filing plans last week to raise $1 billion for a new company that would buy apartments in major U.S. metropolitan areas. The company, Inland Residential Properties Trust Inc., would be the seventh REIT launched by Inland Group, an Oak Brook, Ill.-based company founded by four school teachers in the late 1960s that has grown into one of the biggest real estate investment firms headquartered in the Chicago area. Inland specializes in nontraded REITs, public companies whose shares are not listed on a stock exchange. Unlike traded REITs, which sell their stock in a single day, they raise money over time, sometimes taking several years before closing an offering. (See also: Giant Inland REIT to spin off lodging portfolio into separate company) COUNTING ON HIGH DEMAND Inland Residential plans to buy Class A and Class B multifamily properties in the top 100 U.S. metropolitan areas, according to a filing with the Securities and Exchange Commission. Like many apartment investors, Inland Residential is counting on strong demand for apartments from baby boomers and millennials. “Demographic studies suggest that baby boomers are downsizing their suburban homes and relocating to multifamily units located in urban cultural centers,” the company said in the filing. “Millennials are renting multifamily units because they generally have a high level of student debt and credit standards for mortgage loans have increased, both of which hinder millennials from buying traditional single-family detached houses.” Inland Group declined to comment, citing federal law that limits what companies can say ahead of stock offerings. Inland Group was the top fundraiser in the non-traded REIT industry during the boom. Its REITs and other Inland investment vehicles raked in more than $18.3 billion in the 10-year period ended June 30, according to the filing. Yet the company fell off its perch after the crash amid increased competition and struggles at two of its REITs, Retail Properties of America Inc. and Inland American Real Estate Trust Inc. Its sixth REIT, Inland Real Estate Income Trust, launched about two years ago, had raised just $262.2 million through Sept. 15, according to the SEC filing, a small amount compared with other non-traded REITs. Alby Gallun is a reporter at sister publication Crain's Chicago Business.