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REIT Chiefs See Growth Through 2007

At a recent CEO roundtable hosted by Bank of America, the heads of three of the biggest apartment REITs expressed optimism that the industry will continue to grow through 2006 and into 2007. David Neithercut, president and CEO of Equity Residential in Chicago, Ric Campo, Houston-based Camden Properties Trust's chairman and chief executive officer, and Tom Toomey, president and CEO of United Dominion Realty Trust Inc. of Richmond, VA, agreed that while they won't likely see double-digit growth in net operating income in some areas, growth in the high single digits should be the norm, at least through next spring.

By Sule Aygoren Carranza | Updated on September 26, 2006

Sule Aygoren Carranza is managing editor of Real Estate Forum and editor of Multi Housing forum, from which this article is excerpted.

New York City—At a recent CEO roundtable hosted by Bank of America, the heads of three of the biggest apartment REITs expressed optimism that the industry will continue to grow through 2006 and into 2007. David Neithercut, president and CEO of Equity Residential in Chicago, Ric Campo, Houston-based Camden Properties Trust‘s chairperson and chief executive officer, and Tom Toomey, president and CEO of United Dominion Realty Trust Inc. of Richmond, VA, agreed that while they won’t likely see double-digit growth in net operating income in some areas, growth in the high single digits should be the norm, at least through next spring.

In terms of geography, the executives concurred that the Northern California and Seattle areas are among the best markets in the nation and should remain so over the next year. These markets should generate rent growth of as much as 15%, fueled by strong demand, limited new supply and high single-family home prices. So much so, in fact, that Toomey revealed that UDRT is looking to increase its market share in Seattle–that is, if the right opportunity comes along. While Phoenix is also performing well, with NOI growth expected to be in the mid- to high single digits, the slowing single-family home market remains a concern. According to the executives, the issue there isn’t a potential increase in supply, but rather, that employment could cool since much of the job growth experienced in the area was a result of the booming housing market.

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