Equity Residential went on a major shopping spree last year. Its biggest purchase: the $809 million acquisition of Trump Place, a collection of three high-rise apartment towers on Manhattan's Upper West Side. "It's fun to be in the multifamily business again," says David Neithercut, president of the Chicago-based REIT. "We ended the year well above plan on our operating performance, and we exceeded our expectations on our transaction volume."

Indeed. Equity Residential (ranked No. 1 on this year's MFE Top 50 owners list) deployed its capital in existing core markets and acquired about $2.5 billion worth of property–up from about $1 billion in 2004. "Through a lot of hard work, we found good acquisition opportunities, so we put our capital there," says Neithercut. Like most REITs, the company continued its strategy of selling older stock and buying Class A properties in top locations such as Seattle, Southern California, Florida, and Washington, D.C.

Equity Residential, led by David Neithercut, took a bite out of the Big Apple with the $810 million acquisition of Trump Place on the Upper West Side.
Lisa Quinones/Black Star Equity Residential, led by David Neithercut, took a bite out of the Big Apple with the $810 million acquisition of Trump Place on the Upper West Side.

Equity Residential wasn't the only company pulling out its checkbook last year. After years as net sellers, more multifamily owners were finally able to increase their acquisition volume, often with the help of marketplace connections. "Equity Residential's 2005 acquisition volume was driven by two large deals: our $809 million acquisition of Trump Place in Manhattan and the $217 million Harbor Steps deal in downtown Seattle," says Neithercut. "These assets were not marketed, but were brought directly to us because of relationships we had with the sellers and their confidence in our ability to quickly and confidentially underwrite large, complex transactions."

Despite such successes, individual acquisitions of apartment properties continued to be quite challenging due to strong bids from institutional investors and condo converters. One solution: Acquire an entire company. That's exactly what Camden Property Trust did as it completed its merger with Summit Properties in early 2005 and jumped from a $4 billion company to a $6 billion one. "It's much more efficient to buy a company like Summit than it is to buy one off," says Ric Campo, CEO and chairman of the Houston-based REIT. "Individual acquisitions have been very difficult to complete as evidenced by the fact that we have only bought two properties in the past three years." The merger allowed Camden to move into the valuable Washington, D.C., South Florida, and Atlanta markets.

But not all big owners saw a similar surge in buying activity. For example, United Dominion Realty Trust came in flat even last year with about $400 million in both acquisitions and sales. "It was nearly impossible to buy," says Tom Toomey, president and CEO of the Richmond, Va.-based REIT. Instead, United Dominion and others took advantage of the strong condo conversion market. United Dominion sold about $250 million worth of assets to condo converters, while fellow REIT AvalonBay Communities experienced similar sales activity. AvalonBay sold about $350 million worth of assets with 90 percent of the volume to condo converters. (The company only bought about $100 million worth of assets, not including joint venture partnerships.)

"We expect the seller's market to continue into 2006," says Tim Naughton, president of AvalonBay Communities. "Most companies have increased their target investment levels over last year's levels, which should continue to stimulate demand and keep pricing very competitive."