Mid Atlantic Real Estate Journal — Spring Preview — April 27 - May 10, 2012 — 27A
www.marejournal.com
M ulti - family
By Ken Uranowitz, Gebroe-Hammer Associates Multi-family’s investment star continues to rise
M
ulti-family housing has shored up its spot on the commercial
current economy. In spite of deferred maintenance and other related issues, investors are competing vigorously for these “turn around” opportunities that allow them to purchase notes at discounts, well below the collateral’s market value. As the exclusive broker for a prominent New York bank, Gebroe-Hammer Associates is currently marketing various note sales on the institution’s behalf. During the last several months, the firm has orches- trated 10 transactions for this large regional lender throughout the New York tri-state area. Notes sales have involved 19
residential units and a ground- floor retail unit in Union City, NJ, as well as debt purchased on several properties totaling 124 multi-family and 6 commercial units located in Union and Es- sex counties, NJ. Another hotbed for multi- family investing is income- and age-restricted properties. Like many HUD properties, these communities are continuing to operate in the face of escalat- ing non-performing debt and exponentially accumulating interest, penalties and other fees. Although these sales can be complex in nature, they often involve buyers who are willing
to assume the debt because the properties are characteristi- cally well-occupied and, inmany cases, well-maintained. Despite their designation under HUD and Section 8, age- and income- restricted property investments are top income-producers for for-profit owners. Today’s multi-family market fundamentals have come a long way in the past 24 months, when forecasters predicted a lengthy transition period for ALL commercial real estate categories. As a result of this surging investment demand, there is an influx of long-time building owners who never con-
sidered selling and are nowwill- ing to sell into this dynamic to monetize their multi-family as- sets and take advantage of this new uptick cycle that has taken hold. While there is a renewed recognition that the time is right to sell, there still remains a shortfall in supply to meet the overwhelming demand. The apartment-rental market has once again proved that it is virtually recession proof, as characterized by tightening inventory and steadily rising rents. Overall, the multi-family market is expected to tighten even more, as it will still take continued on page 31A
real es tate walk of fame, consistently ou t s h i n i ng the office, in- dustrial and retail sectors. A distressed housing mar- ket , s t rong
Ken Uranowitz
tenant retention, record-low interest rates and a volatile stock market are luring inves- tors to this commercial real es- tate darling. Along the nation’s healthiest multi-family corri- dor, extending fromNewYork to Philadelphia, heated competi- tion is driving values upward, compressing cap rates and the bid/ask gap between sellers and buyers is narrowing to levels of those pre-recession. Despite boasting some of the highest median income levels in the United States, a significant majority of New Yorkers, New Jerseyans and Philadelphians are renters by choice – particu- larly in the current economy. The region’s sheer number of units and strong occupancy rates consistently outpace the national average thanks to a tenant pool with tremendous depth. Comprised of young professionals; future homebuy- ers waiting for the residential housing market to stabilize; and working-class families, there is a new phenomenon feeding our “renter nation” – the 18- to 34- year-old demographic. Industry experts are predicting a lifelong preference for renting among this age group after experienc- ing the impact of the foreclosure fallout of their parents’ genera- tion. As a result of the above, multi- family sales volume is surging. Investors are willing and able to pay a premium for single build- ings and apartment complexes in close proximity to mass tran- sit and employment hubs. In a recent four-week timeframe, Gebroe-Hammer Associates recorded seven transactions, involving a total of 874 units that sold for $55.15 million. All were within densely populated commuter hubs and garnered high per-unit pricing driven by profitability growth. In addition to stabilized in- come-producing acquisitions, savvy buyers see the upside potential associated with pur- chasing non-performing debt for distressed buildings in the
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New Jersey’s dominant brokerage firm specializing in the sale of multi-family, retail, and commercial investment properties for private investors, REITS, and other institutional clients.
INVESTMENT REAL ESTATE 2 West Northfield Road, Livingston, NJ 07039 Tel. (973) 994-4500 Fax (973) 994-9752 Visit us on the web at: www.gebroehammer.com Email: info@gebroehammer.com
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