MIAMI—As Miami's multifamily market heats up, the level of investment and activity is rising across key markets in South Florida. GlobeSt.com caught up with Peter Mekras, senior vice president at Continental Real Estate Cos. (CREC), to discuss factors fueling activity in the market.

This year, Mekras has sold and capitalized multifamily communities, land for development and for-sale projects in the region. CREC's multi-family practice for investment sales, debt and equity placements stretches throughout the state.  

GlobeSt.com: International investors have been actively acquiring condos in South Florida, but are multifamily investments a better investment in the long term?

Mekras: International investors have been active acquiring both multifamily communities and individual condominiums. Given the lack of alternatives available for yield and inflation concerns, both are appropriate. While both are very different, it's my opinion that multifamily provides a superior option.  

Rental apartments are a better hedge on inflation due to a superior operating margin. Also, apartment owners have better control over the property as no association of other owners is impacting decisions. And more importantly, rental apartments have a greater ability to be leveraged through a variety of debt sources.

GlobeSt.com: Tell us about the levels of lending activity for multifamily, both new development and acquisitions. Has traditional lending returned?

Mekras: For ground up construction of rental apartments, banks, life companies, and balance sheet lenders are providing between 60% and 75% of project costs. The most significant change from the last development cycle is that construction financing is only available if you are a seasoned developer, well capitalized, and have a compelling product and location.

In addition, how you behaved with your lenders in recent past is also taken into consideration. For existing properties, most lenders are financing up to 75% of the purchase price, but primarily driven by debt service coverage and debt yield limitations. The overall lending climate has improved dramatically since 2011. Capital is available, cheap, and aggressively seeking opportunities in the multifamily arena.

GlobeSt.com: What is the current appetite in the South Florida marketplace for class B and C apartment buildings?

Mekras: There is a very strong appetite. There is exceptional debt available for class B and C apartments, not much different than the debt available for class A apartments. The lenders are different, but the leverage is about the same, up to 75% of the purchase price. The difference is that buyers of class A properties are mostly institutional investors that rarely use leverage greater than 65% and obtain their financing from life companies and the large banks.

Buyers of class B and C communities do borrow up to 75% at interest rates under 5%. Earlier this year some investors were able to borrower under 4% before treasuries moved aggressively over the summer. Irrespective of this change in rates, capital is still extremely cheap.

Be sure to come back for part two of our exclusive interview ihis afternoon. Merkas will discuss which Florida submarkets are most active for multifamily investment, what factors are contributing to the high level of activity, and more.

GlobeSt.com: What is the current appetite in the South Florida marketplace for class B and C apartment buildings?

Mekras: There is a very strong appetite. There is exceptional debt available for class B and C apartments, not much different than the debt available for class A apartments. The lenders are different, but the leverage is about the same, up to 75% of the purchase price. The difference is that buyers of class A properties are mostly institutional investors that rarely use leverage greater than 65% and obtain their financing from life companies and the large banks.

Buyers of class B and C communities do borrow up to 75% at interest rates under 5%. Earlier this year some investors were able to borrower under 4% before treasuries moved aggressively over the summer. Irrespective of this change in rates, capital is still extremely cheap.

Be sure to come back for part two of our exclusive interview ihis afternoon. Merkas will discuss which Florida submarkets are most active for multifamily investment, what factors are contributing to the high level of activity, and more.