Dive Brief:
- Apartment sales slid yet again in April, falling 49% year over year to 4.5% billion, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
- Cap rates increased 50 basis points over the last year to hit 5.4% in April. However, they have been flat over the past three months. MSCI noted that pressure on yields is moderating, with most of the increases occurring in 2023.
- The Real Capital Analytics Commercial Property Price Indices dropped 6.9% in April, also showing slowing rates of decline. In 2023, values had been falling more than 10% YOY.
Dive Insight:
April’s decline in sales volume was driven by a decline in portfolio sales, according to MSCI. Those transactions fell 89% YOY to $232 million. In April, large trades normally hit about $1 billion.
The sales of individual apartments dropped 36% year over year, as trades of mid- and high-rise assets fell 49%. Transactions involving garden properties decreased by 27%.
Despite declines in transaction volume, apartments remain the most heavily traded asset class among the commercial real estate sectors, according to MSCI. Executives on the latest round of apartment earnings calls said there are positive signs in the sales market.
On Memphis-based REIT MAA’s earnings call earlier this month, president and chief investment officer Brad Hill said he was seeing signs of improvement, which could help the company reach its goal of roughly $400 million in acquisitions this year.
“Just looking at our underwriting on deals that we’ve reviewed, the volume is up,” Hill said. “There’s more coming out. There’s more in the market right now.”
Ric Campo, CEO of Houston-based REIT Camden, also sees potential for more transactions in the future. “There should be some interesting opportunities to buy and sell … just to move the deck chairs around on our portfolio to improve the quality and ultimately the growth rate going forward,” he said on the company’s earnings call earlier this month.
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