Multifamily Trends to Watch in 2014
The year is wrapping up, but we've already got our eye on the next. On the multifamily side, we can expect lots of deliveries, a return of Class-A sales, and a little bit of softness in some markets. (Let's make a New Year's resolution to firm up those markets and our thighs.)
Institutional Property Advisors director Scott Lamontagne (snapped last week at an IPA Texas client appreciation dinner in Dallas) says core assets will come back into the transaction market as cap rates remain compressed, despite the plethora of deliveries expected. Value-add is still a segment working in every Texas market, Scott says. And CMBS loans start rolling over in 2014 in a big way (look who finally decided to wake up), which should create additional sales supply in all classes.
IPA just closed the sale of two San Antonio multifamily communities, The Ridge at Bandera and The Meridian. The Ridge is a 120-unit multifamily community in a killer location (Loop 1604 and Bandera Highway). Scott tells us it was recently upgraded, which has created some positive rent growth, but there's still that all-important potential to increase cash flow. IPA Capital Markets' Brian Adams secured $6.8M in acquisition financing for the buyer, a Kentucky company with a Texas asset manager.
IPA Texas executive director Will Balthrope tells us The Meridian has 146 units and was snapped up by a San Antonio-based firm with institutional equity from Chicago. It's on East Basse Road near The Quarry, a core submarket with high barriers to entry due to the scarcity of raw land. (Will knows all about the area—his dad was the mayor of Alamo Heights for 20 years.) It also has a solid value-add opportunity since existing finishes are from 1996.