Dan Fasulo, managing director for New York-based research firm Real Capital Analytics, says one-off property sales of less than $50 million are still fairly strong. But he also thinks the continued implications from the credit fallout will make bigger deals more difficult to complete.
“It’s very difficult in this type of environment to structure a deal for a mega-portfolio trade,” Fasulo says. “The banks aren’t willing to go out on that limb right now.”
With this tougher market, things could get tougher for companies such as UDR as they try to prune their balance sheets and improve performance company-wide. “Whether our deal would have gotten done or not now, who knows?” Wallis says.
Here’s a snapshot of the Top 10 multifamily deals from the first three quarters of 2008. The following list was compiled based on data from Real Capital Analytics and ranked by total sales price.
1)UDR PORTFOLIO SELLER: UDR
BUYER: DRA Advisors; Steven D. Bell & Co.
MARKET: Multiple
TOTAL RICE: $1.7 billion
NO. OF UNITS: 25,684
PRICE PER UNIT: $65,403
PROPERTIES: 86
MONTH: March
2) AMERICAN CAMPUS/GMH MERGER SELLER: GMH
BUYER: American Campus Communities
MARKET: Multiple
TOTAL PRICE: $1.2 billion
NO. OF UNITS: 1,323
PRICE PER UNIT: $90,689
PROPERTIES: 71
MONTH: June
3) RACOLIN FAMILY’S NEW YORK PORTFOLIO SELLER: Racolin Family
BUYER: Maurice Mann; RREEF Funds
MARKET: Multiple
TOTAL PRICE: $311 million
NO. OF UNITS: 846
PRICE PER UNIT: $367,855
PROPERTIES: 9
MONTH: January
4) TIMARCHI MANAGEMENT/CAPRI CAPITAL ADVISORS PORTFOLIO SELLER: Internacional Realty
BUYER: Trimarchi Management; Capri Capital Partners
MARKET: Dallas area
TOTAL PRICE: $300 million
NO. OF UNITS: 3,039
PRICE PER UNIT: $98,717
PROPERTIES: 10
MONTH: February
5) VANTAGE PROPERTIES PORTFOLIO SELLER: Nicholas Haros
BUYER: Vantage Properties
MARKET: Multiple
TOTAL PRICE: $300 million
NO. OF UNITS: 1,948
PRICE PER UNIT: $154,004
PROPERTIES: 47
MONTH: February
6) EQUITY’S AUSTIN PORTFOLIO SELLER: Equity Residential
BUYER: Northland Investment Corp.
MARKET: Austin, Texas
TOTAL PRICE: $270 million
NO. OF UNITS: 2,985
PRICE PER UNIT: $90,452
PROPERTIES: 9
MONTH: August
7) BOSTON CAPITAL/BPG PORTFOLIO SELLER: Boston Capital
BUYER: BPG Properties
MARKET: Multiple
TOTAL PRICE: $260 million
NO. OF UNITS: 3,098
PRICE PER UNIT: $83,925
PROPERTIES: 11
MONTH: June
8) THE PARK KIELY SELLER: Lehman Brothers; Tishman Speyer
BUYER: Laramar Group
MARKET: San Jose, Calif.
TOTAL PRICE: $191 million
NO. OF UNITS: 948
PRICE PER UNIT: $201,477
PROPERTIES: 1
MONTH: June
9) TARRAGON’S SOUTHEAST PORTFOLIO SELLER: Tarragon Corp.
BUYER: Northland Investment
MARKET: Central/Northern Florida
TOTAL PRICE: $156 million
NO. OF UNITS: 1,804
PRICE PER UNIT: $86,475
PROPERTIES: 6
MONTH: January
T10) THE WIMBLEDON SELLER: P & H Associates
BUYER: Adellco JV JP Morgan Investment Management
MARKET: New York
TOTAL PRICE: $150 million
NO. OF UNITS: 230
PRICE PER UNIT: $653,696
PROPERTIES: 1 MONTH: June
T10) CLK PROPERTIES PORTFOLIO SELLER: RP Management
BUYER: CLK Properties
MARKET: Multiple
TOTAL PRICE: $150 million
NO. OF UNITS: 2,500
PRICE PER UNIT: $60,000
PROPERTIES: 14
MONTH: March
LESSONS LEARNED Mark Wallis, a senior executive vice president at UDR in Highlands Ranch, Colo., has three tips for executives thinking about selling assets in tough times.
- 1.Don’t wait around. If UDR had waited for due diligence to complete its mega deal, it may never have happened. “We made a decision to get the financial due diligence started; we felt that would be critical,” Wallis says.
- 2.Gauge the market. UDR watched its other properties to determine when to sell the larger portfolio. “Based on the prior two years, it was our judgment that the window could be closing for these prices,” Wallis says.
- 3.Class matters. If you want to sell Class A or B-plus properties, prices haven’t moved much. But you may have to take less for lower level apartments, Wallis says.
