Sam Tenenbaum, Head of Multifamily Insights at Cushman & Wakefield, shares the three main drivers of multifamily investment sales activity so far in 2023 -- trends that are anticipated to continue throughout the year.
ONE
“Loan assumptions are obviously quite attractive to buyers, so if you've locked in low-cost debt, that’s attractive to investors,” Tenenbaum says.
TWO
“Another driver is the ability to realize returns on long held assets. Even if the return on the sale may not be as high as it would have been last year, investors can still get a return well above what was promised.” For example, an investor who may have been able to realize 30% IRR in 2022 may get 20% IRR now, but that could still be well above the expected returns when the asset was acquired.
THREE
“Finally, investors are looking to crystallize liquidity, particularly if they have a loan maturity event or redemption request,” Tenenbaum says. “For example, investors without the cash to plug into a deal or to refinance one building may want to sell a multifamily building in their portfolio to generate the liquidity they need for another investment.”
