"When you take $170 billion out of US commercial financing, it leaves a mark."Scott McPherson, principal of Capital Advisory Group LLC in Phoenix, believes that the CMBS source will be for a significant period of time. The life companies that used to step in are suspect because of AIG. Banks, financing companies and credit companies are being selective while private equity, debt and mortgage funds are active. The bottom line is "be very careful who you're dealing with," McPherson cautioned.

Most panelists agreed the region's multifamily market was faring better than other sectors in the down market because Fannie Mae and Freddie Mac were around with the financing. Mark Forrester, partner with Phoenix-based Hendricks & Partners, said the sector is starting to see some correction, with more private capital interested in chasing product.

"I've not seen a lot of these guys in 10 years," Forrester said. "They're coming out and looking now. The question remains are they ready to buy or do they think it's too early. But a few months ago, they weren't even looking."

On the money side, Jay Ganske, senior vice president from Midfirst Bank in Oklahoma City, said his institution is lending selectively, mainly to high-quality deals and repeat borrowers, especially when it comes to construction lending.

Meanwhile, Ericka Deneke, assistant vice president with Diversified Funding Group LLC in Tempe, said the company likes to see 65% loan-to-value on land. "On developments we partnered into about two years ago, we're extending loans and working through it," she admitted.

Infill communities also are good bets, Deneke added. "We're no longer going out to eastern portions of Pinal or southern portions of Buckeye," she said. "We like the major transportation corridors and are sticking to the infills, which will recover a lot faster."

Instant Insights /

Multifamily Sector Draws Buyers Back to Town

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