"The IRR in Jackson, MS is just as competitive as the IRR in SanFrancisco," Eric Bolton, chairman and CEO of Memphis-basedMid-America Apartment Communities Inc., told the audience at theBoca Raton Resort & Club. "You can compete just as well in theSoutheast as you can in larger gateway cities."

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Bolton notes that secondary markets appear to have more stablefundamentals over the long term than the nation's largest cities,many of which were besieged with heavy job losses over the pastyear. This presents opportunities for apartment investors in localmarkets to purchase class B and C properties that most REITs mightnot be interested in pursuing.

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Yet while finding discounted apartment complexes was relativelyeasy last year, those buying opportunities might be fewer in 2010."It appears a lot of the low-hanging fruit has been picked,"observed John Adair, principal of San Francisco-based PrimeGroup.

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David Olney, senior partner and chief investment officer ofBoston-based Berkshire Property Advisors, said other deals belowreplacement costs are likely to be found this year: "A lot of theLibor floaters just blew up," he said, adding that apartmentinvestors should expect to see more capitulation of distressedassets this year.

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Mark Alfieri, COO-multifamily with Dallas-based BehringerHarvard, said even though job creation is expected to be tepid thisyear, the current bogging down in asking rents should not last muchlonger. "We believe we are heading into a historic period of rentgrowth," he said.

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Government-sponsored enterprises should remain primary sourcesof financing for apartment investors this year, according to HessamNadji, managing director of research services with Marcus &Millichap in Walnut Creek, CA. He noted that Fannie Mae and FreddieMac, along with some banks, could be the only debt available insidethe US."This year, more foreign investors, REITs and institutionswill join private investors, who dominated acquisitions last year,"Nadji stated in Marcus & Millichap's 2010 apartment researchreport, released at the NMHC conference. He added that near-termweakness in the sector will be overshadowed by more reasonable caprates and prospects for above-trend rent growth in comingyears.

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Prominent US apartment investors identified their favoritemarkets for the coming year as Boston, Denver and Washington, DC.However, they express concern about Atlanta, Phoenix and most majormarkets in Florida.

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In another panel discussion about the differences between thecurrent recession and the one nearly 20 years ago, speakers pointedout such differences as prevention of oversupply being limited by alack of capital. Greater availability of market data and otherinformation also has a better impact now.

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"You could build based on pro forma in those days," said GaryKachadurian, chairman of Chicago-based Apartment Realty Advisors."There are no secrets anymore."

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