Lynd Sees Ripples in Multifamily Waters

Save the date: RealShare Apartments East comes to the Hyatt Regency in Miami, FL, on February 26.

MIAMI—Last week, we caught up with Elliott Throne, a director at HFF in Miami, to get his take on the Southeast's multifamily market. How does that compare to other industry views?

We asked David Lynd for his thoughts. As COO and president of Lynd, a national real estate investment, development and management company that specializes in the multifamily sector, Lynd has a different perspective.

Both Throne and Lynd will be at RealShare Apartments East next week to has out the multifamily trends on a national level. In the meantime, we asked Lynd for views on the Southeast.

GlobeSt.com: I recently spoke with Elliot Throne over at HFF. He's pretty bullish on multifamily. What's your take?

Lynd: We're bullish for several reasons. First, as home ownership declines to the historical 64 percentage average, each percentage point drop translates into 1 million households. Over the next few years, several million households will become renters. Second, we talk with our residents on a regular basis. They tell us that the days of people owning a home as a sign of personal success is over. Owning a home doesn't mean as much as it once did.

Third, people want to be mobile. Many want to be able to move quickly, and not be committed to staying in one place because they own a home and have to sell it before they move. Fourth, our parents taught us a bunch of lessons, and the financial community taught us a bunch of lessons. They told us that property values always go up. And they didn't. Everyone knows someone who got burned by falling home prices.

Fifth, we have all these Baby Boomers that are staying in the workforce and are renting as they downsize. They are cutting expenses and renting in communities that offer safety and security. Last, most new construction is condominiums. Right now, 19 towers are planned for Downtown Miami. Most are condos. Not all will be built. Banks and equity sources are more cautious this go-round because they got burned the last time.

GlobeSt.com: What about multifamily investment? What's your appetite?

Lynd: We are leaning toward development of high-rise rentals. For example, at Mary Brickell Village our project is 39 floors and about 390 units. We're adding multi-use in terms of a grocery and hair salon. We have few competitors that can build high-rise. The companies left standing today after the housing crisis are gold-standard companies.

On the distressed side, we are still looking. Most of the opportunities will come in 2014 when CMBS loans and investment-bank loans will come due. That's when there will be a thin buyer pool of buyers that can execute.

GlobeSt.com: Is now the time to sell?

Lynd: Rents are rising, but debt is so cheap that it is a good time to sell. It seems today that developers and acquisitions groups are getting financing first and then buying a building. We bought a building in Houston that was 2.8% on the debt. It's still cheaper to buy existing units. However, the difference in return on what you can build versus what you can buy for is a nice gap, and you can make a nice profit.

GlobeSt.com: How much movement are you seeing movement outside core markets?

Lynd: There's a glut of capital chasing distressed properties, especially on the East Coast. Buyers are moving to tertiary markets because too much competition in the primary markets has driven down the yields on properties. As a result, buyers are going to tertiary markets to find properties that produce yields that they promised their investors.