Apartment Investors Begin to Navigate COVID-19 Deal Landscape

The properties hitting the market today tend to be smaller. Investors are holding onto stabilized assets if they can and distressed deals haven’t hit the market yet.

Verde Capital Corp., a private equity and investment management company, is negotiating a sale of several hundred apartments in Northern New Jersey. A buyer has agreed to pay $75 million, or roughly $250,000 per unit for the property, which Verde owns in partnership with a local real estate family.

“That’s the exact price we would have sold it for a year ago,” says Jacob Reiter, president of Verde Capital Corp., based in Conshohocken, Penn. He expects the sale to close in fall 2020 after several months of due diligence.

Deals like this illustrate there are signs of life in the market to buy and sell apartment properties, despite the economic crisis caused by the spread of the novel coronavirus. But deal volume remains down significantly year-over-year and buyers and sellers are continuing to navigate the re-set in property values resulting from the massive economic disruptions of recent months.

In May 2020, investors paid a total $3.1 billion to buy apartment properties in the U.S. That roughly one-fifth of the amount they spent in the same period the year before, according to data from Real Capital Analytics (RCA), a data firm based in New York City. It’s also even less than the $3.4 billion that investors spent in April.

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