Linwood Thompson, managing director of Marcus & Millichap, will present a wide-ranging forecast of the apartment market at the Apartment Finance Today Conference, held March 30 to April 1 at the Arizona Biltmore in Phoenix.
Thompson will offer a macro overview of the current apartment market while forecasting which markets are the safest bets and which will see the largest declines in values over the next 12 months.
Thompson will also offer insights into which capital sources are providing the best deals, and how apartment owners and developers can stay ahead of the curve by looking beyond the downturn and preparing for when the industry recovers.
Despite the current liquidity crunch, several encouraging signs point to the long-term health of the multifamily sector. The multifamily industry added just 1 percent of existing stock annually in the last decade, a much more sustainable pace than the overbuilding of the 1980s, when 4 percent of existing stock was added each year, leading to severe supply/ demand imbalances.
“We did not overbuild this time around, we were disciplined,” says Thompson. “When the dust settles and people look back at what's gone on, they're going to realize that multifamily held up pretty well.”
While the transaction market has all but ground to a halt, the good news is that liquidity is still available for smaller transactions. Deals of less than $10 million are still finding capital, though financing becomes more constrained the larger the deal. And while large institutional investors are expected to remain cautious this year, smaller private capital investors are re-engaging the market.
“We do see private capital coming back into the market, buyers that hadn't been in the market for the last four or five years,” says Thompson. “Those are the most valuable buyers in the market today.”
These “yield” buyers—mostly experienced private apartment firms with equity at their disposal—sat on the sidelines for the last four or five years as the transaction market grew overheated. But today's buyers see an opportunity to purchase cash-flowing properties at attractive price levels not seen since 2004.
“These are people that want 8 to 10 percent cash flows out of the blocks, and those deals are out there right now,” says Thompson.
Additionally, Thompson plans to speak about the federal government's focus on multifamily housing in the latest round of stimulus measures and the impact those provisions will have on liquidity.
Attendance for the conference is reserved for people who are primarily owners and developers of apartments. The past-year attendee rate is $600, and regular registration is $745.
For more information or to register for the conference, please visit www.AptFinanceConf.com.