Multifamily Boom Pushing Some Apartment Yields Below Office Sector
Wall Street Journal reports: There has been much talk of the rise of the multifamily sector over the past two quarters as fundamentals improved and activity – spurred by increased lending activity – climbed swiftly. Now it would seem that the multifamily sector, particularly mid/high-rise properties in the nation’s top-tier markets, may be challenging the office sector in terms of which is the best investment.
In a recent Wall Street Journal article, it was stated that Hartz Mountain Industries’ April disposition of two well-situated office properties in Jersey City, NJ were purchased by CB Richard Ellis Realty Trust for an initial yield of 7.0%. Hartz then went out to Chicago to purchase an 809-unit multifamily asset – One Superior Place – for an initial yield of just 5.0%. Hartz President Emanuel Stern confirmed the office cap rate was lower than his firm’s acquisition yield in the multifamily sector.
The Journal reminded readers, using data aggregated by Real Capital Analytics (RCA), that the multifamily market has improved markedly over the past year, with transaction volume more than doubling from 2009 to reach $39.0 billion during 2010. The rise in activity is attributable to growing rental demand, rising rents, and relatively easier-to-obtain debt from government-controlled Fannie Mae and Freddie Mac. RCA Managing Director Dan Fasulo chimed in to tell the Journal that, “Apartment properties are less risky and you get super-cheap debt for acquisitions, courtesy of the U.S. taxpayer.” Hartz’ deal for One Superior Place is the largest apartment sale in the US yet during 2011, according to RCA data.
View the full article on Wall Street Journal: Multifamily Boom Pushing Some Apartment Yields Below Office Sector
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Posted by: Nina Turner