Investors Gear Up to Buy After Worst Year on Record

NEW YORK CITY-In spite of a slight uptick in the fourth quarter, 2009 went down in the record books as the worst year for apartment sales volume. Some $14.1 billion in multifamily properties were sold in traditional investment deals last year, according to Real Capital Analytics, with $5 billion of that in the last three months of the year. That’s a 63% drop from 2008′s dollar volume and a significant decline from the $101 billion of properties that changed hands in 2007, the peak year for investment sales. Whereas portfolio deals dominated the prior years’ activity, they were rare in the market last year, with only $1.6 billion in portfolios sold.

The most active players on the buying front were private players, who were responsible for almost three-quarters of all the deals that closed in 2009. Most of those investors were small and local shops, and many of them completed single transactions. Among the most active buyers last year were Behringer Harvard, with 10 new assets worth $483.1 million, and Inland Real Estate Group, with seven deals worth $190.2 million, according to RCA. (Inland has its 2009 acquisition volume for Inland American Real Estate Trust Inc. at 9 assets totaling $201 million.) Some public REITs were also in the market, particularly AvalonBay Communities and Equity Residential. They were the seventh and 10th most active buyers by dollar volume, respectively, having spent $146.4 million on three properties and $127.7 on two assets last year.

Private REITs came in second in terms of activity by a group, accounting for 6% of all multifamily acquisitions. They primarily went after core or traditional deals, avoiding the distressed situations.