Shopping Cart  |  My Account  |  Log In


 
Great Time to be Apartment REIT
3/22/2011 | By Matt Bechard
The current economic environment makes this "a great time" to be an apartment REIT, according to Mike Kelly, president and co-founder of Caldera Asset Management.

In a video interview with REIT.com at NAREIT's offices in Washington, D.C., Kelly said multifamily REITs shouldn't see much competition for the assets that they target.

REITs "don't have to get the debt on a property-specific asset, so they can be more strategic on what they're looking for," he said. "They can use their balance sheets to their strengths."

While foreign investors may decide to invest more money in the U.S. commercial real estate market in the next year, REITs and pension funds are likely to be the only major players in multifamily property acquisitions, according to Kelly. "In general, it's going to be REITs and pension funds that continue to gobble up things," he said.

Right now, the biggest risks facing the apartment market involve the remnants of debt deals completed between 2005 and 2007, Kelly said. He noted that in the next 24 months, $20 billion in commercial mortgage-backed securities (CMBS) will be maturing.

"Most of that cannot be refinanced dollar for dollar, so those assets are going to hit the street, or they will have to be recapitalized, or they will go into foreclosure," Kelly said. However, he said the majority of those assets won't appeal to apartment REITs.

A "mismatch" in terms of agency debt is also creating challenges for the multifamily market, according to Kelly. He pointed out that while agencies are offering "very good pricing" to lenders, they're using "in-place numbers," whereas buyers are looking to the future.

"You have to bring a whole lot more equity to the table," Kelly said.

Kelly also discussed the location of the major deals being done in the apartment sector. He pointed out that in 2010, 40 percent of transactions took place in the top 15 markets in the U.S. The focus on large locales means sellers in smaller markets are struggling to move their properties.

"In some markets, there are no buyers," Kelly said. "There are no buyers right now in C assets in general if you get outside the top 10 markets."
Comments on - Great Time to be Apartment REIT
No Comments To Display.
Showing 0 to 0 of 0 comments | Previous | Next
User Name:
Comment:
Enter Code: *
Thank you for your comment.

Please click here to add more comments.
Related Videos
Related Articles
More Videos from REIT.com
REITs Continue Accumulating Capital
2/16/2012 5:40
Commercial Building Owners Face Uncertain Times
2/10/2012 4:00
U.S. CRE Viewed as Stable, Secure Place to Invest
2/8/2012 3:08
January Payroll Numbers Bode Well for Industrial Sector
2/7/2012 5:46
Dividends Help REITs Outpace Market in January
2/2/2012 3:40
Dividend Growth Potential Key Part of REIT Story
1/30/2012 3:36
Multihousing Momentum to Remain Strong
1/26/2012 4:14
Looking for Low Volatility REIT Stocks
1/19/2012 4:30
Analytics Important to Energy Efficiency Efforts
1/17/2012 4:15
Federal Government Focuses on Sustainable Buildings
1/12/2012 3:45
Advertise | Contact Us | Privacy | Terms of Use
Switch To Mobile Site