Speaking during the Sept. 29 Real Estate Luminary event sponsored by NAREIT and Georgetown University's McDonough School of Business, former NAREIT Chair R. Scot Seller, CEO of Archstone, spoke about his experiences running both a public REIT and a private company.
"I've always been a strong proponent of public ownership of real estate, and being private hasn't changed that," Sellers says.
One of the biggest challenges Archstone has faced as a private company during the economic crisis has been convincing investors to follow the company's sometimes contrarian instincts.
"We tried to do that in early 2009 and it was pretty tough to impossible to raise capital," he says.
One source of capital Archstone has gone to over its history has been Fannie Mae and Freddie Mac, and Sellers says he is keeping his eye on what happens with possible regulation of the GSEs.
"There is no question they should be in that business, but there is a lot of politics involved," Sellers says, adding that the consensus is that they should be involved in the multifamily business but the exact role is still to be determined.
Overall, trends in the apartment sector are heading in the right direction. For Sellers, the best indicator is increasing rental rates.
"We started increasing our rents in early 2010. In a number of our markets, year-over-year rental rates are up as much as 12 percent," Sellers says.
He adds that occupancy rates remained strong for Archstone even during the height of the downturn, and net operating income in 2009 was down less than 1 percent.
Sellers says that biggest concern for Archstone, as well as any real estate owner, is deflation. However, Sellers says he does not expect a deflationary environment.
"That aside, we are looking at when job growth comes back with some level of strength," he says.