Multifamily Anticipates New Development

A limited supply of new development coupled with a growing number of college graduate renters will ensure continued strength in the multifamily sector, according to Susan Ansel, executive vice president and chief operating officer of Gables Residential.

"We have the demographics behind us with the age cohorts, and we'll continue to grow into the foreseeable future," Ansel said during a video interview with REIT.com at the Akerman U.S. Real Estate Summit this month in Miami.

Ansel said Gables Residential has a number of new projects already under construction in light of the favorable market dynamics.

"That will be a big part of our growth, but we anticipate strong growth from our stable, core properties as well," she said.

Ansel said there's a good amount of debt and equity capital available to both public and private real estate companies. In the past, equity capital went to sponsors who were able to provide a quantity of deals, according to Ansel. However, she said that has changed in the past five years, adding that quality has become more important.

"It's been a difficult market, and today the equity market is really looking for those sponsors who delivered quality, those that had the reputation and delivered on the reputation," Ansel said. "No one made the returns that they hoped for in the last couple of years, but if the sponsors did what they said they were going to do and were being a good partner, that's where the equity is being redirected today."

Uncertainty concerning Fannie Mae and Freddie Mac has had an impact on the multifamily sector, Ansel said. She added that the GSEs (government-sponsored enterprises) in the last year have provided about 70 percent of origination for multifamily loans.

"So that's a huge impact on liquidity," she said.

In the future it will be important to have strong GSEs available "to provide the backstop" in the capital markets, according to Ansel. She said most of the institutional capital is going to the highest class of assets and core markets.