Does Sam Zell know something the rest of us don't? Obviously he knows more about making money, but whether he's prescient about market timing remains to be seen. Equity Residential's sell-off of a 23,262-unit apartment portfolio for $5.37 billion to Starwood Capital caused some industry watchers to recall Zell's nicely timed 2007 sale of a $39 billion office property portfolio to Blackstone, just before the market crashed.
However, this time Zell is cleaning house: selling secondary market and suburban assets to focus on the urban core. The 72 properties, which sold for an average of $230,634, are in South Florida, Denver, Seattle, Washington, D.C., and Inland Empire, Calif., markets. Equity also plans to sell 26 additional properties in Connecticut and Massachusetts later this year. “Our belief is that long-term risk-adjusted returns in the urban core will exceed those in other markets,” said David Neithercut, Equity Residential's CEO. “Core, high-density urban markets will drive Equity Residential's performance for many years to come.”
Hospitality: Have We Peaked Yet?
Nearly 3,000 hotel owners, operators, and investors attended the American Lodging Summit in Los Angeles in January, where the buoyant mood seemed to be tempered by stock market gyrations, according to HotelNewsNow.com. At the meeting, they debated whether the hotel market had reached its peak or had further to go. The hotel industry is coming off a strong 2015, in terms of fundamentals, but publicly traded hotel real estate investment trusts are wary of what the future holds. “Over the short term, investors are concerned that with public REITs sitting on the sidelines, it could affect the pricing of assets and buyers won't want to take a hit,” reported HNN.com editor-in-chief Stephanie Ricca. However, “Many private investors said they plan to continue buying - and even building here and there - and recognize that operating fundamentals are at great levels. Right now, the overall consensus is that buyers now should look for assets they'd like to hold through the next downturn.”
Bay Area Tops Multifamily Index
Four California multifamily markets held onto the top slots on Marcus & Millichap's 2016 Multifamily Index, with three of them clustered in the Bay Area. The index is based on strong job growth and low vacancy rates that will boost rental rates.
“Cambridge, Mass., remains one of the most desirable and tightest office markets in the country with a direct vacancy rate of 4.9 percent. Overall asking rent in the class A market jumped an unprecedented $3.41 to surpass all previous highs and reach $70.19 psf gross.” - Lisa Strope, JLL New England Research Manager