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DALLAS-A panel of multifamily brokers, crisscrossing all asset classes, confirmed there is capital on the sidelines, waiting to strike when the time is right. In most cases, that means higher cap rates and distressed owners or properties.

“Much of the money has a predatory angle to it,” Jeff Price, principal of Dallas-based Apartment Group, said at the monthly meeting of the DFW Apartment and Investment Brokers. “There are a lot of institutional investors gathering money to buy. I think the predatory capital is going to buy notes.”

The panel also included Heather Konopka with Sperry Van Ness, Tom Warren, a national partner for Hendricks & Partners, and Chris Paul of Dallas-based La Paul Partners. The most common advice they have for clients is to sit tight or as Price said: “defer sales until after the election and let the bail-out plan sink in a bit.”

Warren said the region’s fundamentals for the multifamily market are far better this time than during the other two downturns that he’s experienced. “But, owners who don’t have to sell aren’t selling,” he said. “They’re sitting on the sidelines.”

The panel agreed the disconnection between buyers and sellers has widened due to the economy and perception of values. “We’re finding the bigger the group, the more cautious they are,” Paul told the roomful of brokers, owners and developers attending the meeting at Prestonwood Country Club in North Dallas.

The quartet agreed that it will be 12 to 18 months before the market’s back on track due to the economic meltdown in credit and debt markets. “I don’t think anything will be decided next Tuesday,” Konopka said.

Cap rates, bid-ask spreads and financing issues dominated the discussion, but Warren cast one more cloud of concern. “Twenty-five to 30% of the people in our business, by this time next year, won’t be in our business,” he said. “Until the national economy restores confidence, you’re going to see things muddle along.”

Price expressed particular concern about the impact of decreased property values on all levels of government. “School districts, counties and cities are going to have to find a way to make their budgets work,” he said, adding increased taxes most likely will be the strategy they use. His advice to the owners in the room: “fight taxes vigorously and manage your properties well.”

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