Oct
20

How Long Can Cap Rate Compression Last?

By
– Multifamily Executive

Many multifamily buyers and sellers have been surprised at just how quickly, and how steeply, cap rates have fallen this year.

Several factors have conspired to drive down cap rates a little more each month this year. A wealth of opportunity funds looking for acquisitions has resulted in frenzied bidding wars for Class A assets. Low-priced debt from Fannie Mae and Freddie Mac has allowed more deals to pencil out. And stabilizing fundamentals have inspired confidence in the future value proposition.

But just how sustainable is this cap rate compression? Most multifamily finance professionals don’t expect it to last into next year. In a poll of 168 senior-level professionals conducted by Apartment Finance Today conducted in August, half of all respondents expected cap rates to stay flat in 2011, while more see cap rates rising (27 percent) than falling (23 percent) next year.
ARTICLE SHORTENED DUE TO LENGTH….

LINK TO ARTICLE HERE
Be Sociable, Share!
    Categories : National News

    Comments are closed.