Close to home
Local players dominated the buying arena in 2009, a trend that likely will continue this year. After bidding on more than 50 properties, Raintree Partners of Laguna Niguel, Calif. closed on a couple of assets in the Golden State last year -- the 204-unit Trellis Square in Sunnyvale in the second quarter and the 168-unit Mountain View in San Dimas in the fourth.
At the height of the market a few years ago, reports of a firm purchasing two properties in a year's time would have registered as a mere blip on the industry radar screen. Today, those deals could indicate a turning point in the marketplace.
According to Marcus & Millichap's The Apartment Outlook 2010, the emergence of private local buyers may represent the clearest signal yet that prices have adjusted to levels that can be sustained by current operations. Motivated by lower prices, these investors will continue to re-evaluate portfolios, using local knowledge and a hands-on approach to acquire properties with the potential to increase in value as a recovery accelerates. With other buyer groups less active, private local investors are likely to conduct transactions on highly favorable terms, especially with motivated sellers, according to the report.
Not that they will have an easy row to hoe. Raintree Partners CEO Jeffrey Allen said his greatest challenge is finding property that generates an appropriate risk-adjusted return given the current state of the economy.
"It's been extremely hard to find attractive opportunities and we've turned over a lot of rocks in our search. We seriously reviewed 150 projects over the past year, not all of which
