But those who do want to be long-term holders of apartments and can put up a healthy dose of equity can still be players in deals for larger multifamily portfolios. “Multifamily remains a respected and demanded asset class that is easily understood by institutional investors, insurance companies, pension plans, and well-capitalized banks,” Wimmer says.
One group of buyers that could be a formidable force are the other REITs, who have swallowed up their peers in the past. “Because of their valuations, it would be a lot smarter for REITs to be sellers and use that capital to buy back their stock at such a significant discount,” Fitch says.
THE FINAL BELL Post, which declined to comment for this article, said in a press release that it is accepting bids. And despite some potential buyers falling out of the market, most observers think a deal could happen. Sure, the commercial mortgage-backed security (CMBS) market slowed up, but it’s still possible to use Freddie Mac or Fannie Mae to finance large apartment deals.
“In this environment, you can get deals done,” says Greg Mutz, CEO of AMLI. “You simply need more equity and less leverage, plus the price will be less than a year ago.”
In fact, the share prices where REITs such as Post are trading today make conditions ripe for a deal. “REITs, in general, have come way off their share price highs,” Wimmer says. “That, in and of itself, suggests you will get a good share price.”
Still, with all of this happening, it’s no done deal that Post will be sold. “There can be no assurance that the process will ultimately result in a sale or other business combination,” said Janie Maddox, senior vice president of communications for the REIT, in a recent conference call.
Indeed, buyers seem interested in the stock; meanwhile some of Post’s more activist investment groups dissatisfied with management and agitating for a sale. As a result, Leupold says there’s about a 75 percent chance the REIT is eventually sold, but as he learned last summer, nothing is for sure. “We’re in uncertain times in markets that are very volatile,” Leupold says.
