After one of the worst fourth quarter transactional markets in history and additional transactional declines in January, multifamily firms are beginning to again test the disposition waters. REITs including Denver-based AIMCO and San Francisco-based BRE have shown a particular penchant for putting multifamily apartment communities up for sale in the past 30 days.

"We've all heard the stories from REITS that their stock is so undervalued that it makes sense for them to sell properties and buy back stock," says Steve Witten, senior director of the National Multi Housing Group for New Haven, Conn.-based brokerage firm Marcus & Millichap. "I think the assumption is that institutional firms will be the net sellers this year, and the buyers will be predominantly larger private operators."

AIMCO has listed five Class B properties in Phoenix and is seeking to unload the 1,628-unit, 90 percent occupied portfolio as a whole, but the firm is also entertaining one-off deals. According to AIMCO spokesperson Cynthia Duffy, there's nothing inherent to the Phoenix market that is commanding the disposition, nor is AIMCO trending towards a departure from Sun City.

"We are marketing properties within the Phoenix portfolio, and these properties can be sold individually or as a portfolio," Duffy says. "While we are selling some of the properties in the Phoenix area, we are not exiting the Phoenix market. We have several communities for sale across the country and happen to have several units for sale in Phoenix as a matter of course."

That's not quite the case with BRE. The REIT's 512-unit Overlook at Blue Ravine and 240-unit Arbor Pointe are on sale via Atlanta-based Apartment Realty Advisors are the penultimate step to the firm's long-planned exit from the Sacramento market. A BRE spokesperson could not comment on either of the deals, and instead referred to the company's 2008 fourth quarter and annual reports, where CEO Constance Moore pointed to larger inventories of single-family homes in the Sacramento market pressuring property fundamentals and, in part, catalyzing an exit from the region.

When transactional deal flow resumes in multifamily, sector participants predict that buy/ask spreads will likely take the balance of the year to adjust, particularly given the dilutive effect of distressed assets to both cap rates and market volumes. "It is still really dry out there," says Tom Brenneke, president of Portland, Ore.-based Guardian Management, which took on a brokerage role with the acquisition of eight Sperry Van Ness offices in Southern California and Arizona last July.

"We are seeing some properties go on the market, and we're not sure if we are going to see 8 percent and 9 percent caps again," Brenneke says. "You definitely see some distress plays out there that are pretty good assets, but then you have things like the AIMCO properties that are not distressed, that are nice properties, but are being compared in the market to a 9 percent cap distressed deal. I think in another six months or so, we'll see those discrepancies start to shake out."