As the economy sinks deeper into the abyss and REITs see stock prices fall, those who have access to capital are locking it up. Two of the industry's biggest public firms—Equity Residential, a Chicago-based REIT with nearly 160,000 apartments, and Camden, a Houston-based REIT with 70,000 apartments nationwide—have bolstered their ability to capture distressed properties that come on the market in the next few years.

Eqity closed a $550 million secured loan originated by Wells Fargo for repurchase by Fannie Mae. In March, it close a $500 million secured loan with similar terms. Equity currently has approximately $870 million of unrestricted cash, inclusive of these loan proceeds, and approximately $1.4 billion available on its unsecured revolving credit facility.

Camden followed by announcing its Multifamily Value-Add Fund, which has equity commitments of $375 million. The REIT committed a total of $75 million to the fund, which represents a 20 percent interest. Camden expects to acquire or develop real estate valued at up to $1.25 billion.

Camden CEO Ric Campo thinks multifamily owners will see two kinds of assets hit the market. One will be the commercial mortgage-backed securities deals closed in 2005 through 2007. Most operators won't have to deal with those until after 2010. But merchant builders who took construction loans and expect lease-ups in 2008 or 2009 could be in dire need of refinancing or added equity.

That's where a company such as Camden could step in. Campo says Camden's fund could either take over these assets or offer mezzanine financing. “We might help bridge them to another time in the future,” he says.

David Neither cut, Equity Residential's president and CEO, thinks Equity could see deals even earlier. “It would not surprise me at all if we saw some opportunities as we got closer to the end of the year to look for assets from people who would like to get them off their balance sheet,” he says.