Knowing when to hold or fold assets is an integral part of success in managing a portfolio.
Three of the industry's top CEOs weighed in on what 2014 may have in store for their companies in terms of buying and selling during a general session at the MFE Conference in Las Vegas Sept. 9.
Tom Toomey, CEO of UDR, believes the time is right to be net sellers in 2014. UDR has been targeting B-class assets for acq-rehabs, but the pipeline of those is drying up, he says. And since the best urban assets in the best markets are going in the 4 percent cap rate range, Toomey doesn't see UDR being competitive there either.
"I think interest rates are going to stay right around where they are in the next 12 months, I think 25 basis points one way or the other," he says. "So the stuff we’ll sell is going to be very yield-friendly toward buyers who want to use a lot of leverage on it, assuming that Fannie and Freddie are still lending."
Mid-America Apartment Communities is coming off a big year after lining up the acquisition of Colonial Properties Trust to form one of the largest publicly traded REITs in the nation.
Eric Bolton, CEO of MAA, said he also plans to continue with acquisitions while also pruning the portfolio.
"We’re always teeing up a number of properties to sell and certainly hoping to get that capital redeployed," he says. "My guess is that with some of the new supply that’s really starting to come into some of the markets, there very well could be some very attractive buying opportunities that will emerge."
The Bozzuto Group continued to feed their new development pipeline this year after starting 26 percent more units in 2012 compared to the prior year, according to the MFE Top 50 Builders list.
However, the company's CEO, Tom Bozzuto, said despite the robust push to develop more properties, his company is planning to be selling assets in the upcoming year.
"I think we tend to do it as a sort of portfolio balancing strategy. We’ve added a lot of properties over the past couple years, so I suspect we will toward the end of next year begin to look at selling a couple of properties," he says. "It's just really an asset management strategy."
Lindsay Machak is an Assistant Editor for Multifamily Executive. Connect with her on Twitter @LMachak.