LIVINGSTON, NJ-Some of the strongest signs of economic recovery in the commercial real estate sector are rooted in multifamily investments, as highlighted by the more than 44 deals recorded by locally based Gebroe-Hammer Associates in 2010 thus far.
"Given the current state of the economy, rental living provides a viable and affordable alternative to people who are concerned about their long-term employment outlook, as well as those who are unable or cannot qualify to buy a home," managing director Ken Uranowitz tells GlobeSt.com. "This contributes toward a strong tenant pool, which is very attractive to multifamily investors seeking a sound, safe, performing investment."
Unlike the commercial and retail sectors, apartment buildings are not as "dramatically sensitive to the economic downturn," adds Uranowitz, "and there is a renewed willingness among lenders to finance these deals. Financial institutions recognize the stability of this type of asset, unlike weakly occupied office, retail and industrial properties during recessionary periods." He goes on to say that "more banks, including the smaller regionals that were dormant during the boom years, are now actively providing a steady stream of mortgage money to finance multifamily deals."
What's more, buyers are taking advantage of "Eisenhower-era interest rates and, as a result, sellers are achieving values and cap rates similar to those of a few years ago," Uranowtiz relates. "Combined, all of the above are driving heavy demand for this type of asset--notwithstanding the uncertainty in today's economic climate."
Recent deals closed in New Jersey by Gebroe-Hammer highlighting these trends include two separate transactions involving 243 total units that sold for a combined $16.1 million in Plainfield; the $4.93-million trade of 46 one- and two-bedroom apartment-rental units at 481 S. 2nd Ave. in Highland Park; the $3.1-million sale of 16 units in Hoboken; and the $1.4-million sale of 18 units in South Orange.
Despite the general good health of the multifamily investment market, where demand is greatly exceeding supply, there has been an influx of distressed debt opportunities this year. "This wave of note sales was expected as banks began to shed non-performing debt in order to clear their balance sheets," says Uranowitz.
Between March and September, Gebroe-Hammer negotiated 22 separate note sales involving a total of 1,803 units exceeding $85.35 million on behalf of several major banks. In addition, the firm was retained as exclusive broker by various debtors in chapters 7 and 11 bankruptcy.