Multi-Housing News - November 2008 - (Page 17)

special report Dealing with the Crisis Transwestern Executives Roundtable discusses markets and strategies in time of turmoil Transwestern Institutional Multifamily Group recently sponsored a multifamily executives roundtable that took place during Transwestern’s annual market forecast and awards conference. Transwestern’s Scott Melnick and Al Cissel co-moderated the discussion, held in October at The Ritz-Carlton Hotel in Washington, D.C., with Keat Foong, MHN’s executive editor. While the participants expressed uncertainty about the fast-changing economic scene, they also discussed business opportunities presented by the financial turmoil. (The roundtable coverage continues at www.multi-housingnews.com/transwestern.) Scott Melnick: One question we wanted to start off with is who is actively buying in Washington, D.C. and looking for properties now? There are some groups that have just stopped buying anywhere. In this room, it’s pretty much a microcosm of different types of buyers. Roundtable Participants. Top Row [l. to r.]: Lacy Rice, Federal Capital Lacy Rice: A lot of work and not a lot of action. We make a point to look at a big deal across each of the product sectors in this market and we bid on a lot of them. We’re having more success working with operators to help restructure by providing capital in their field of expertise. Particularly on the mezz side compared to the equity side, there is generally a big spread that’s derivative of fundamental disconnects on where the cap rates are at or going. have we just stayed in Philadelphia or why have we stayed in New York City or White Plains or Long Island?” It’s interesting and it’s good for you guys. John Majeski: As a company, we are a selective buyer, similar to Alec’s platform. We are focusing on what we consider the top 20 markets in the country, D.C. being one of them. We’re also making sure we keep a diversified portfolio. On the sale side, we’ve had many people look at our deals. We are also offering seller financing, in some cases, to make the deal work. Bill Revers: It’s just not what it was a short time ago. You can’t finance anywhere as well as you used to be able to. It’s not had so much of an impact in Washington, D.C., but other markets have gone way down. We’re at a point where apartment rehab and the value add that you see—well, “distress” is what you’re going to have to put on most of your flyers going forward in order to get the same velocity. Partners; Todd Grasinger, Archstone; John Majeski, AIMCO; Timothy Bright, ING Timothy Bright: We have clients who have Clarion Partners; Greg Lamb, JPI; Robert Ryan, M & T Bank. Front Row [l. to r.]: Richard Schechter: Right now, we’re havmoney for a select core of opportunities. We Al Cissel, Transwestern; Alec Brackenridge, Equity Residential; Bill Revers, ing some luck selling some brand new properare raising mezzanine debt fund, and the value Fairfield Residential; Scott Ross, Ross Development and Investment; Keat ties that we just built. Brand new core assets fund is also replacing some resident debt. Foong, Multi-Housing News; Scott Melnick, Transwestern. Not in Photo: Richard are still up pretty good, and some of those Underwriting is more conservative. It’s focused Schechter, Bainbridge Cos. buyers are not using any debt. We’re not lookon trailing numbers, and assumptions from our ing at traditional value add opportunities anyresearch group fluctuate as does everything more. We’re looking at high distressed situations Scott Ross: We’ve been trying to buy. Actually, a else today. [Core] buyers are focused on yield. If and we’re looking at substantial rehab or more number of people at this roundtable are people you’re looking at development opportunity, it’s really development deals like the deal that we bought we’ve been working with. We’re in the middle of about the location and the managing partner. from Equity. refinancing, financing and acquisitions, and we find lenders’ underwriting and coverage have changed. Alec Brackenridge: We have $700 million in Greg Lamb: We are absolutely looking for opporThe dynamics that have occurred in the last 30 cash sitting in the bank and a $1.4 billion line of tunities. I have a story like all of you. We’re all trydays, which may be different tomorrow, are really credit. We have $500 million in product out of maring to put professional management in place, and unsettling. What you’ve underwritten and your ket. To the extent that you’re selling and to the that’s more of a story today than putting in cabinets. underwriting theories very rapidly change. extent the opportunities make sense to us, we’ll be a On the sales side, we’re a seller, but we’re not the big buyer. Our company is built on opportunity and mandatory seller. The days of selling a project at Robert Ryan: In the last 30 or 45 days, we’ve had buying what other people aren’t. As to underwritfirst CO are over, and unfortunately, we underwrote an unusual number of our clients that have been ing, you just have to give us a chance to fall in love, to hold these assets through stabilization. That’s sleeping for a year or two and didn’t want to buy and we’ll come up with our reasons. when there should be a real sale. call us up. With cap rates [rising], big families, even some big funds, are saying “We’re really interested Todd Grasinger: We’ve had a couple of 1031 in a couple thousand units in the District.” They’ve exchange hands we were buying. It’s not on the scale MHN ONLINE woken up family members or board members and that we had in the past, but we’re still active buyers. I Roundtable coverage continues at said, “Let’s get in here. The jobs are great, everywould say that it’s much more conservative, and anywww.multi-housingnews.com/transwestern thing about it. Why haven’t we been doing it? Why thing with any hair on it just won’t fly these days. www.multi-housingnews.com | November 2008 17 http://www.multi-housingnews.com/transwestern http://www.multi-housingnews.com/transwestern http://www.multi-housingnews.com

Table of Contents for the Digital Edition of Multi-Housing News - November 2008

Multi-Housing News - November 2008
Contents
From the Editor
Perspective: The Economy
Market Pulse
Special Report: People to Watch
Market Report: Southwest
Executive Roundtable: Dealing with the Crisis
Development & Design: TOD
Finance: Workforce Housing
Green Awards/Perspective
Sell Me: Renters Insurance
Products: Recycled Content
Solutions: Security
Property Showcase: Chelsea Modern

Multi-Housing News - November 2008