News
Multifamily Methodology
September 27, 2010
| Back in the saddle again. Pension funds, that is, says Behringer Harvard Multifamily REIT I COO Mark Alfieri. He spoke Friday at our Bisnow Dallas Multifamily Summit at the Morton H. Meyerson Symphony Center in the Dallas Arts District. Pension funds and advisors have hit reset, he says, and they're starting to invest again. | |
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| We tallied 350 there to see panelists such as Invesco senior director and head of acquisition group Greg Kraus, Mark, Milestone managing partner Jeffrey Goldberg, and Thompson & Knight partner Ted Benn. Mark says there's pent-up demand for Class A well beyond his expectations, and money will start flowing to the Bs before long. He's seeing investment interest from European institutional and sovereign funds. Behringer Harvard partners with a Dutch pension fund with $100M allocated to CRE and increasing to $300M. Mark adds that his fund is entertaining acquiring some older properties, unlike the fund's recent purchases of newer complexes. | |
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| Greg says he's seeing some opportunities as lenders clear assets off their books. As loans mature, owners are looking to recapitalize or get out entirely. With the uncertainly of tax laws heading into 2011, some private owners are looking at disposing of assets from a purely tax-motivated standpoint, he adds. Like Mark, Jeff sees tremendous capital from pension funds, with upwards of $700M flowing into Milestone's open-ended core fund ($300M to $400M of that by year end). He says the fund acquired two multifamily properties in Houston this year and a DFW Airport-area warehouse. | |
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| Home ownership is declining and those occupants are moving into apartments, which translates into actual numbers, Jeff says.Boomer children are getting jobs and moving out, too (hopefully). He says Milestone spends a lot of time on rescue capital working with owners with liquidity issues-whether they're overleveraged or undercapitalized. In the last year and a half, he says the owners' philosophy has been to hold unless they've needed to sell. | |
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| The Apartment Group prez Jeff Price (second from left between Prudential Mortgage Capital Co. managing director Paul Geyer and KeyBank Real Estate Capital Central US multifamily guru David Schmidt, and HFF senior managing director John Brownlee), says now is the time to start building in some markets for 2012 deliveries. About two-thirds of DFW's 600k units are pre-1990, well below what's needed in a market with 6M to 7M people, and demand will outpace supply. Jeff says transactions are picking up, but have only reached about 50% of the 2006-07 peak levels. Good news? He thinks deal volume is going to go up. Uptown is the singular universal market, he says. (Legacy Town Center in Frisco and Grapevine are also hot markets.) | |
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| KeyBank senior analyst Amber Thomas, here with Prudential's GA construction team leader Donna Ellis and asset manager Deanna Farhat, tells us that she's training the bank's expanding national multifamily sales team in KeyBank's agency origination strategy. She agrees with David's sentiments that capital is good and Fannie Mae and Freddie Mac are going to be around. In his commentary, David said delinquency rates for Fannie and Freddie multifamily are below 1%; they have great portfolios and lenders (like KeyBank, hint hint) and a solid platform, so it's business as usual for now, David says. | |
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| A game of peek-a-boo broke out, heralding the return of good spirits. We also found Grubb & Ellis Texas exec managing director Moody Younger chatting with Resolute Commercial Services senior managing director Roger Wyche after the event. | |
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| Munsch Hardt Kopf & Harr associate Aryn Self with shareholder Gregg Cleveland. Both work primarily in multifamily, representing developers and multifamily owners. (So they didn't just come to this event for the coffee.) Aryn tells us she's pleased with some cooler weather finally arriving this week and Gregg is ecstatic (he wasn't really shouting, but very happy) about the Rangers making the playoffs for the first time since 1999. |
