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Caldera Newsletter • December 2010

Salient Graphs

Multifamily Transactions Multifamily Transactions

CMBS vs. other Multifamily Loan Delinquencies Delinquent Multifamily Loans

Multifamily CMBS Loan Delinqencies

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The Bifurcating Apartment Market

By Michael Kelly
President of Caldera Asset Management

To help our clients make better decisions, we always look at the bigger picture to understand possible trends in the apartment transaction world. It is pretty clear that there is a bifurcation of equity that has become more profound than most apartment watchers would have projected.

The slogan of “Core and to the Coasts” has been the mantra of REITs and institutional buyers for all of 2010. We believe this dedicated shift will continue well into the future. Five of the largest eight apartment REITs have effectively bet their multiples on this strategy. The metros areas of Washington DC, New York City, Boston, San Francisco, Seattle and Los Angeles are the locations of choice. It is currently paying off as rents and occupancy have recovered much quicker and the projections for growth are quite compelling. It’s not just apartments either; institutional investors in all asset classes are following this mantra.

Here is a chart that amplifies the direction of capital flow:

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Continued Single Family Slump Could
Weigh Down Multifamily Recovery
Karsang Sherpa
Senior Vice President, Caldera Asset Management

A silver lining to the continued single family housing market slump has been the increasing affordability, due to the reduction in cost of ownership, for many home owners. According to the U.S. Census Bureau, the monthly median cost of ownership in 2009 was down to $1,000 – fairly comparable to $808 for renters. This difference of $192 has been the lowest in the past twenty years. The gap may further narrow down as the housing market continues to go down.
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Caldera in the News:

UNITS - April 2010
Loan to Own Challenges

All Eyes Ahead

Outlook for Distress
Access Denied

The Health of
Commercial Real Estate

Recovery Rates on
Distressed Assets Vary