Yields Coming Down for Class-A Assets

LOS ANGELES—In the hyper active class-A markets, yields are being crushed, according to Scot Cunningham, VP sales manager of the multifamily division at AmericanWest Bank, and one of the speakers on the Stacking the Debt, Capital Markets Overview panel at Marcus & Millichap‘s second annual Multifamily Forum. Cunningham was not alone, the other panelists, who included Tony Fire, SVP and regional director at Intervest/Umpqua Bank; Edward Ratinoff, managing principal at James Investment Partners; Lydia Shen, managing director at Cornerstone Advisors; and Carlo Tabibi, co-Founder and CEO at Patch of Land, agreed that either B and C product or assets in secondary markets are becoming a more attractive place to invest capital.

Although yields are coming down, Shen says that may be a good thing because it leaves a space for developers to launch more projects. In Shen’s opinion, new development is the most compelling sector. “The demand for apartments is rising, from millennials to echo boomers who have a different lifestyle,” she said. “The existing stock doesn’t meet those needs. We are looking at was to provide financing for those projects geared toward a new generation of renters, and in general, we are staying away from properties built before 2000.”