According to officials at Grubb & Ellis Co. who arranged the $29 million loan to refinance 24 apartment communities owned and operated by Fifteen Group of Miami, a stable tenant base and less downside risk are attracting buyers to similar B and C buildings. The Fifteen Group portfolio includes 6,868 apartments located in major metro markets including Atlanta, Dallas, Houston, Miami, San Francisco, Sacramento, Tampa and Birmingham.

"What we are seeing is that in times of economic volatility, like we are experiencing now, B and C apartment properties may prove to be a more stable investment," says G&E senior vice president Herb Chase, brokered the deal along with fellow senior vice presidents Curtis Palmer and John Brown. The lender was Philadelphia-based investment fund CMS, which replaced the equity and mezzanine capital of Credit Suisse First Boston.

"B and C level apartments usually have more blue-collar-type residents who earn a modest but steady income," says Keith Misner, managing director of G&E's Multi-Housing Investment Group. "They tend to remain residents for longer periods of time, which keeps tenant turnover and vacancy rates down." Misner adds that renters at B and C properties "tend to remain residents for longer periods of time," and "may hold off planned home purchases and remain in cost effective apartments longer, thus helping to strengthen demand.