A.J. Klenk, Managing Partner, Catalyst Capital Partners
A.J. Klenk, managing partner at Catalyst Capital Partners, sat down with Invest: to discuss the multifamily market’s slower transaction pace amid higher rates, Catalyst’s emphasis on build-to-rent and active-adult projects, and investor activity in Charlotte. “We see more attractive opportunities emerging in the coming months and are positioning the firm to act when the market widens,” said Klenk.
What shifts or trends have emerged in the capital markets that have impacted your investment approach and company operations?
Our focus is the multifamily industry, including conventional, build-to-rent, active adult, affordable, and other residential developments. About a year ago, the phrase was “survive to 25,” reflecting optimism that 2025 would bring renewed transaction activity and liquidity. That has not materialized in a meaningful way so far. The primary headwind has been higher interest rates, which have pressured values and left many sellers unwilling to transact at the lower returns now available. Lenders and borrowers are often negotiating extensions rather than forcing sales, and overall activity has slowed. In the past two to six months, there has been a modest renewed interest as some multifamily supply is absorbed, but operators remain focused on maintaining and driving occupancy rather than launching new projects, so investment flow has not fully reopened.
At Catalyst, we take an entrepreneurial, opportunistic approach. Most of our projects are capitalized with high-net-worth and family-office investors, plus bank debt, rather than institutional equity, which remains largely on the sidelines. Institutional investors have expressed tentative interest in deals meeting certain yield-on-cost thresholds but repeatedly find reasons not to proceed. Our ability to source and capitalize projects more organically has been an advantage. We closed three deals last year and expect new starts this year, outperforming many peers of similar size. We see more attractive opportunities emerging in the coming months and are positioning the firm to act when the market widens. For investors who want exposure to Southeast multifamily, we believe this next window will be one of the most compelling entry points in years, and we are always open to conversations with new capital partners.
What makes Charlotte a compelling long-term base for Catalyst compared to other Southeast or Sun Belt markets?
I grew up in Michigan, attended the University of Michigan, and then moved directly to Charlotte. I continue to see strong migration from the Midwest, and in Charlotte in particular, I’ve noticed more arrivals from California and Illinois than in the previous 10 years. We’re still accustomed to people moving down from the Northeast, but there has also been increased movement from other states. Factors include tax policy, quality of life, and broader geopolitical considerations, and I expect growth to continue.
Compared with other Southeastern markets such as Nashville, Raleigh-Durham, Tampa, Orlando, and Miami, each city has its advantages and drawbacks. I prefer Charlotte to Raleigh-Durham because it feels like a larger city with a more concentrated core. In Raleigh-Durham, you can spend an hour and a half driving across distinct submarkets. Charlotte is more accessible and easier to get in and out of, and it offers a suburban lifestyle while still providing in-town work opportunities. Nashville lacks the mountains and beaches we have within reach, and Florida gets hot. Overall, I think Charlotte is well-positioned for continued growth.
What is your view on investment sentiment in Charlotte, and how are new players approaching the market?
Significant investment interest is coming into Charlotte from New York, Chicago, Los Angeles, and international investors. Some firms have been slow to enter the market, which creates opportunities for companies already positioned here and for local partners who can act quickly. Active capital includes institutional investors, family offices, high-net-worth investors, and private equity groups focused on development and real estate projects. Corporate expansions and relocations would further accelerate investment, and we welcome more companies choosing Charlotte as a base. Raleigh-Durham’s university and research-driven economy remains a strong competitor, but Charlotte offers diversified real estate opportunities and easier market access. The priority is to capture expansion prospects and make sure we are at the table when new deals are being sourced.
How do you build and maintain successful investment partnerships in this evolving real estate landscape?
Origin is one of our key partners. We have three or four projects with the firm, including preferred equity investments and a joint-venture development. Partnerships evolve when both sides deliver: do good work, keep commitments, show integrity, attend to detail, stay coachable, and leave ego at the door. Origin is a high-growth company based in Chicago with a local presence in Charlotte. As both firms have scaled, they have formalized more of their standard operating procedures, and we’ve worked together to align processes. We aim to treat every investor partner well and deliver consistently on their expectations. At the end of the day, the key is being a great partner, being honest, working hard, and working together. As we grow, we are actively expanding our base of like-minded investor partners who share that approach.
What makes build-to-rent an attractive product, and how are you scaling it in the Charlotte region?
Catalyst developed Charlotte’s first build-to-rent community and is now the largest owner of such communities in the Charlotte metropolitan area, with more than 100 units. The build-to-rent segment will continue to grow because it offers renters a homeownership-style experience: privacy and space in detached single-family homes or community settings. These projects face stiff competition from experienced single-family builders and rising construction costs, prompting many investors to partner with national builders to lower expenses. Expect more integration between build-to-rent and traditional multifamily product types. We currently have active developments in the Mason and University areas, which include a mix of flats and townhomes.
How are tenant expectations shifting, and how are you adapting product design and amenities accordingly?
Technology is top of mind and central to project design. There are so many new technological advancements. Renters have varying preferences and options now. Gen Z renters tend to prefer online discovery, self-guided tours, and tech-enabled services. Being thoughtful about programming spaces for those residents to get together is key. There is a focus on outdoor gathering spaces, wellness, fitness amenities, and lifestyle programming. We are seeing demand from property managers to partner with Built on Hospitality, Catalyst’s affiliated hospitality and restaurant group, for tenant events. This creates community “stickiness,” which results in happy tenants and renewed leases. On the wellness side, there is an increase in demand for yoga classes, saunas, cold plunges, and meditation facilities.
How are environmental considerations and site resilience shaping your development strategy?
All of our projects meet the National Green Building Standard certification. Sustainability guides our practices but does not dictate site selection. For example, a Chapel Hill project required assembling 55 acres while developing only 12% of the land because of a watershed overlay, demonstrating how environmental rules shape design and density. Catalyst has four projects in Asheville, including River Blue, which sat on high ground and was unaffected by a recent hurricane. That project emphasizes community connections to nature, with greenways, walking trails, disc golf, and other outdoor amenities that encourage residents to explore their surroundings. We have evaluated solar for several communities, but have not yet implemented it at scale because of current cost and return-on-investment constraints.
What are your top priorities for growth over the next two to three years, and how is technology shaping that path?
I am focused on being among the top 5% of industry leaders using automation, AI, and technology to grow the business. We are developing an AI-powered tool, LandLink.ai, to maintain stronger contact with brokers and sellers and to automate site analysis. Our strategy is to double down on core strengths: sourcing opportunities, building front-end relationships, designing thoughtful projects, positioning them for capital, and bringing them to market. We plan to ramp up development activity and production, with a particular emphasis on active-adult communities. Catalyst maintains a broad development mandate that includes build-to-rent, conventional multifamily, active adult, lot development, and affordable housing, and we have been intentional about keeping our options wide. I have even launched Apex Residential, a fully AI-enabled multifamily and land investment sales brokerage, to continue to build the flywheel around our focus areas. This space comes naturally to me after founding and growing Capstone Companies into the largest privately owned multifamily investment sales firm nationwide before exiting last year. Across Catalyst and our affiliate companies, we are growing the team and always looking for entrepreneurial, high-character people who want to build, whether in development, brokerage, hospitality, or AI and technology.
What role does philanthropy play in your mission, and how do you weave it into your company’s success?
Philanthropy is central to Catalyst’s mission. The company operates a 501(c)(3) called Catalyst Cares, and supports local and global efforts through its Build On initiative, which funds housing and education projects. Catalyst requires that each new development fund the construction of a school; team members travel to build and live with the community during projects. I have personally helped build seven schools in Bolivia, Guatemala, and Nepal, and this year I took my nine-year-old son to Guatemala to participate. My long-term goal is to build 1,900 schools, and we have several efforts underway to pursue that target. It is also one of the biggest reasons people choose to join and stay with our team.
