Month: July 2014

Value Add Deals Needed To Keep Up With Apartment Building Demand- Freddie Mac

Apartment building investors should be looking at renovation, value add and repurposing deals according Freddie Mac’s David Brickman, EVP for Multifamily Business. In an Executive Perspective note published last week Brickman covered these points:

  • Demographic forces alone could create as many as 4.7 million more renter households by 2023.
  • That even the 3.1 million new units expected over the next 10 years will not be enough to meet demand.
apartment kitchen remodel
Photo credit: http://www.apartmenttherapy.com
  • Compounding the issue, the existing rental housing stock is aging.  Nearly 60 percent of U.S. rental properties with 20 or more units were built before 1980.
  • Supply already could be 1.5 million

Continue reading Value Add Deals Needed To Keep Up With Apartment Building Demand- Freddie Mac

Apartment Building Investment Still Leads as CRE Prices Up 11% YoY in CoStar’s Repeat Sales Indexes

CoStar is out with their latest Commercial Repeat Sale Indices (CCRSI) showing that:

  • Commercial Real Estate prices post double-digit annual gains in May
  • Momentum picks up in the General Commercial segment
  • Improvements in market fundamentals underpin growth in commercial property pricing
  • Capital flows remain healthy
  • Distress levels continue to dissipate
  • See link for numbers and details-

Commercial Real Estate Up 11% YoY in May 2014

CoStar has been tracking the indexes of repeat commercial real estate sales since 1996. Note that the Value Weighted index is driven mostly by core properties while the Equal Weighted index is mostly driven by smaller, non-core property sales.

For apartment building investors the good news is that Continue reading Apartment Building Investment Still Leads as CRE Prices Up 11% YoY in CoStar’s Repeat Sales Indexes

#Multifamily REITs best performers in 1st half 2014

REIT.com had a piece called REIT Returns Outpace Broader Market in Solid First Half Showing out late last week and the part that caught my eye was the section titled: Apartment REITs Lead the Pack in First Half:

  • Apartment REITs were the strongest performers during the first half.
  • Total returns as of July 7 in the sector stood at 23.8 percent.
Apartment Building Investment REITS perform best during 1H 2014
Click image to view article on REIT.com

“There was increasing comfort in the market that fundamentals in the [apartment] sector were not decelerating as fast as many had feared,” said James Sullivan, managing director at Cowen & Co.

Apartment REIT managers are some of the best multifamily operators in the world and it pays to pay attention to what they’re doing. Unfortunately the returns on REIT shares are too often driven  by capital flows from the stock market rather than the pure performance these managers generate. Patient contrarian investors  can be rewarded however by waiting for apartment REITs  to fall out of favor with stock market investors and pick them up at bargain prices.

Click on the image above or use this link to see the article on REIT.com: REIT Returns Outpace Broader Market in Solid First Half Showing

Apartment Investment Loan Rates Remain in 4.6-4.7% Range As Spread To Treasury 10yr Holds

The apartment building loan rate we track came in today at 4.765% (see below for loan details), making it 22 straight weeks below the five percent mark. The spread to the 10 year Treasury (T10) also remained in the 2.1 and change range where it’s been since the beginning of March, indicating that the very competitive market for multifamily loans continues on.

For the gold plated ULI less than 60% LTV loan the spread dropped into the 1.2s from the 1.3 range where it had been holding since late February, taking the implied rate for these core institutional apartment loans down to 3.77%.

10 Year Treasury versus Apartment Building Investment Loan Rate

Speaking of the spread between the T10 and the Continue reading Apartment Investment Loan Rates Remain in 4.6-4.7% Range As Spread To Treasury 10yr Holds

Apartment Building Investment Rocks Q2 across the US (video)

That happy feet sound you hear is coming from apartment building investors as they see their results from the second quarter:

  • Rents Up
  • Vacancy Down
  • New Supply Being Absorbed as soon and it’s built

Here’s the video report from MPF Research:

And it’s not just the usual Continue reading Apartment Building Investment Rocks Q2 across the US (video)