Ron Terwilliger knows a thing or two about surviving market cycles.

The former CEO of Trammell Crow Residential retired a few years back after a nearly 40-year run in the industry. But he remains a highly visible thought leader in the multifamily world, as a board member of Habitat for Humanity International and as chair of Enterprise Community Partners and the Terwilliger Center at the Urban Land Institute, to name a few.

And Terwilliger—the man likely responsible for developing more multifamily housing than anyone in the nation—will share his insights as keynote speaker at the Apartment Finance Today Conference, April 2 and 3, in Las Vegas.

His speech, titled “My Life as a Developer,” will look at how this cycle differs from previous cycles, where developers will find the most opportunity and how to engineer a recession-proof business model. Terwilliger will also draw upon his work as part of the Bipartisan Policy Center’s Housing Commission and address the need for housing finance reform.

Words of Advice

One of the themes of Terwilliger’s speech will be the future of development and the importance of measuring demand drivers to target specific opportunities, such as urban and workforce housing.

Transforming cold, hard data into real world success was a lesson learned the hard way. In the early 1990s, as the industry struggled through a recession following the overbuilding that occurred in the late 1980s, Trammel Crow looked to re-engineer its approach.

The company went looking for comprehensive research on historical supply and demand patterns. The problem was, it didn’t exist. So, the company took it into its own hands and contracted with MPF Research to fill the gap.

“Very few development companies spend much time and energy analyzing historical supply and demand trends,” he says. “Because developers need the fees associated with development, supply frequently follows the cost and availability of financing rather than a logical analysis of demand.”

But using the ability to get financing as a governor on your pipeline isn’t an efficient approach—it’s like putting the cart before the horse. “Unfortunately, our system of real estate finance typically does not anticipate markets coming into balance, is late getting back into lending and seems always to be late in anticipating overbuilding,” he says.

One of Terwilliger’s key findings was that supply and demand is not a smooth function and that periodic overbuilding is inevitable. The lessons of a downturn like today's should inform the investment decisions made in any upturn. Developers would do best to structure their deals with a prudent level of leverage, stay away from short-term loan maturities, always keep a serious downside analysis close, and ultimately, diversify their revenue stream. These are just some of the takeaways Terwilliger will impart at the show.

Meet the Money

The theme of the 8th annual Apartment Finance Today Conference is “Meet the Money,” and representatives from the nation’s leading debt and equity sources will be there, including Wells Fargo, PNC Real Estate, Freddie Mac, Northwestern Mutual, Prudential Mortgage Capital, CBRE Capital Markets, Johnson Capital, Red Mortgage Capital, Centerline Capital, CWCapital and Walker & Dunlop, among many others.