Dive Brief:
- Apartment sales fell 16% year over year to $12.4 billion in July, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
- Camden Property Trust’s sale of an 11-property, 3,620-unit Southern California multifamily portfolio to a BlackRock-managed vehicle for $1.6 billion boosted portfolio trades 21% YOY to $3.4 billion. The deal, which officially closed July 29, accounted for 40% of mid- and high-rise portfolio sales.
- Single-asset transactions fell 25% to $9 billion. The trailing 12-month average for apartment cap rates increased 10 basis points YOY to 5.6% in July, according to MSCI. Apartment prices were roughly flat for the month.
Dive Insight:
As apartment deals remain sluggish, commercial real estate trades hit their highest level for July since 2005, according to a second MSCI report shared with Multifamily Dive. A joint venture of Mubadala Investment, BlackRock and several tech firms bought Aligned Data Centers, pushing CRE entity-level sales up 46% YOY in July. Without that transaction, volume would have been flat.
Still, even with declining volume, apartments were the second-most-liquid CRE sector of the month.
Garden-style apartment sales dropped 25% YOY to $6.3 billion in July, while mid- and high-rise sales declined 5% to $6.1 billion, according to MSCI.
Altogether, July appeared to be another month where a large transaction propped up sales. In this case, it was Camden’s decision to move out of California and redeploy capital elsewhere.
“We’re reinvesting those proceeds into our Sun Belt markets because we believe that over a long period of time the Sun Belt will absolutely outperform,” Camden CEO Alex Jessett previously told Multifamily Dive. “We’re also reinvesting some of those proceeds and buying back our own shares because we are a screaming ‘buy’ right now, unfortunately, or fortunately, depending on what side you’re on.”
In August — another large sale, the merger between AvalonBay Communities and Equity Residential — should prop up MSCI’s sales numbers. But until single-asset sales come back, the market won’t have recovered.
“The individual building sales are the truest sign of where investor demand is at because you're underwriting every building based on the health of the local submarket and what's going on with the sector and the income growth,” Jim Costello, executive director of MSCI Research and Development, told Multifamily Dive.
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