But Thypin isn’t necessarily ready to declare that there’s a thaw in portfolio offerings. As of press time, neither RCA nor New York-based Reis—companies that track apartment transactions—had seen enough large deal activity to declare a trend.
Sold!
Here’s a look at three notable portfolio sales, as of press time.
1. EQR’s Macklowe Buys: In early February, Chicago-based Equity Residential bought three New York towers from Macklowe Properties. Together, the properties include 910 units, 23,339 square feet of retail space, and 50,000 square feet of parking. All told, the properties cost Equity $475 million, or $470,000 per apartment unit.
2. The Bethany Assets: Standard Austin Fund, a private equity group, bought 5,000 units across 16 properties for $400 million from the Bethany Group multifamily portfolios coming out of Chapter 11. The equity stake in the properties, which are located in Texas and Maryland, went to Standard Austin, while the original lenders stayed in the deal.
3. The Corus Assets: An investment consortium managed by Connecticut’s Starwood Capital Group bought a 40 percent stake in a company that will hold an estimated $4.5 billion in troubled assets that the federal government seized from Chicago-based Corus Bank. The portfolio held 112 construction loans for 102 buildings, including 14 multifamily complexes as well as 79 luxury condominium buildings with more than 12,000 units.
“As for portfolios coming to market, anecdotally, I would have to agree, but I think we need to wait until the end of the quarter to give out any definitive numbers,” Thypin says.
Ryan Severino, an economist with Reis, agrees. “While we don’t have any hard numbers, we are starting to see more transactions at the portfolio level,” he says.
Distress in Bulk
While there may be some voluntary bulk sellers here or there, they’re still rare. More commonplace is what Hawks is doing. He just put three bank properties on the market in Denver. “That’s the first portfolio coming out of Denver,” he says. “There’s been a couple in Arizona, but there’s just not a lot of product.”
Others harbor more doubt that buyers will ultimately see anything more than distressed portfolios in the near future. “I’m not sure we see too many large deals actually coming to market, to be honest,” says Nicholas Michael Ingle, director of capital markets for Hendricks & Partners, a brokerage firm in Phoenix.
And for those owners secure in their loans and capitalization, there’s little interest to sell anything, much less a portfolio. “In our experience talking to our clients, there is very little interest to sell period, portfolio or not,” says Peter Donovan, senior managing director of Los Angeles-based CB Richard Ellis’ Multi-Housing Group. “They’re all waiting for a better time. If they don’t have a gun to their heads because of loan maturities or liquidity needs, their inclination is not to sell. They believe there will be a pick- up in rents in 2012 or 2011.”
ARA’s Hawks agrees but could see older owners who want to exit the space use reduced cap rates to shelve their multi-property assets. “I think the vast majority will wait, but some guys may be able to sell today and get a good price,” he says.
