Cap Rates | Ashworth Partners

Freddie Mac sees strong apartment rental growth next five years in valuation report.

A very interesting report on apartment building investment posted on the Freddie Mac website discussing Current Multifamily Values & Cap Rates In Historical Context explores where the market is today and where it is likely to be in five years under a number of different interest rate scenarios. Freddie doesn’t do loans smaller than $5 million (implying a minimum deal size of $6.6-7 million) and many of their borrowers are large institutional investors but the forecasting methods and valuation models they use are applicable to apartment building investing on any scale.

Some takeaways from the report:

Rental growth rates are expected to be Continue reading Freddie Mac sees strong apartment rental growth next five years in valuation report.

Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming

My Exec Sum: Seattle apartment building investment results from Essex Property Trust Q1 call:

Seattle demonstrated exceptional same-store NOI and revenue growth of 11.2% driven by very limited supplies of housing and job growth that exceeds national averages
On operating expenses we expect a 2.3% increase for the second quarter ’12 over the second quarter in ’11
Seattle rents were up 6.5% compared to the first quarter of 2011. So depending on the submarket, we are now 4% below to even with our prior rent peaks.
renewal offers for June and July averaged +6% to 8% in Seattle
As of April 30, its occupancy was 96.1% with a net availability of 5.1%.
We view this turnover activity (50-55% YoY) as healthy because it provides us with more opportunity to grow rents. Additionally, we only saw a nominal increase in move-outs due to home purchases and affordability.
Cap rates continue Continue reading Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming

Handy Apartment Building Investment Market Reports- interactive one-pagers from Reis Reports.

Reis puts out these really handy one page reports with all the major QoQ changes broken out by sub-market. Here’s the latest on Portland, OR:

Click on the image above to go to a list of markets then select Continue reading Handy Apartment Building Investment Market Reports- interactive one-pagers from Reis Reports.

Seattle Area Multifamily Report now posted on Reis Reports- Caps flat, rents mixed but vacancy down

See the report here: http://bit.ly/xm8uUG

Why are Cap Rate explanations so complicated?

If you listen to any conversation about commercial real estate (CRE) within a minute the subject of cap rates will come up. Those who are just beginning to explore CRE are often thrown off by what one is and how it is calculated. A cap rate is really a simple thing that is often made overly complicated by the way it is explained. Let’s walk through what a cap rate is and then we’ll look at how they are used so that the next time the conversation turns to CRE you’ll be right there in sixty seconds when they get to cap rates.

A Capitalization Rate or Cap Rate for short is simply what you would earn on a property if you Continue reading Why are Cap Rate explanations so complicated?