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Apartment Q&A: Laguna Point’s Campbell Shares Why It’s a Great Time to Sell
By Dennis Kaiser
Connect Apartments is coming up on June 20 in Los Angeles. The conference features a host of commercial real estate experts who will cover a wide range of topics including the economy, institutional investment, affordable housing, multifamily finance, development and how apartment leaders are getting deals done today.
Leading up to the event, Connect Media asked Laguna Point Properties’ Greg Campbell to share his insights into the market, investment decisions and what’s hot (and not). Check out our latest 3 CRE Q&A to see what he thinks about the apartment sector.
Campbell
Q: What are some of the overarching trends you see driving the apartment market as the year progresses?
A: The decrease in interest rates is only serving to keep cap rates low and further fuel the desire for multifamily product. We see heavy competition for B and C product, and typically experience 20+ offers when disposing of assets. It’s a great time to sell. There is just so much equity looking for multifamily, and buyers are climbing over each other for the right to pay the highest price for these auction-style offerings. We just don’t see this changing this year.
Q: How can and should investors approach their decisions today, given the length of the cycle, interest rates and overall economic conditions?
A: We feel it’s prudent to use longer-term financing on our investments, like a lot of other groups are doing. We have been focused more than ever on basis, making sure that we are buying existing product at a palpable discount to current replacement cost. In addition, investors have to be prepared for slower market rent growth than in years past. The rapid wealth creation that we’ve seen in recent years from apartment investing is likely evolving into a make-money-more-slowly approach in the coming years.
Q: What are some examples of the types of assets or deals you are looking at and why?
A: We have been buying in markets with low state income taxes. These states have been experiencing strong population and employment growth. We are able to achieve meaningful returns from our value-added approach to B and C assets in these markets. The demand for rental housing has been high, and occupancies remain in the upper 90’s.
For comments, questions or concerns, please contact Dennis Kaiser
