For the full story check out June's Distressed Assets Investor

Investors looking for distressed multifamily opportunities have so far had slim pickings. But the flow of deals may grow stronger in the second half and into 2011. Distress transaction activity has already started picking up for multifamily assets; sales of distressed properties accounted for 31% of the nearly $1 billion of apartment assets that changed hands in April, a larger share than nearly every other property sector, according to the latest data for Real Capital Analytics.

While the increase in distressed sales is promising, it's still not anywhere near the numbers most market watchers were expecting. Considering the total amount of outstanding distress in the apartment sector—some $33 billion at the end of the first quarter, as per RCA—the distressed sales that have taken place so far are a mere drop in the bucket.

The deals that have been closing involve primarily class A properties where the owner cannot meet its debt obligations, or those that banks, servicers and other lenders decide to part with, according to Mike Kelly, Denver-based president and co-founder of Caldera Asset Management, a multifamily consulting and turnaround services firm. Those deals have been moving at extremely aggressive cap rates, but there doesn't seem to be as much interest in properties that are class B and below.