The 10-year Treasury Yield has remained stable keeping in a range of around .60% -.75%. Debt capital is available from the agencies but with reserves. Agencies report loan closings in 2Q in line with 2019.
Below are key takeaways from the following reports:
U.S Multifamily Outlook - Summer 2020 – Yardi Matrix – Link
- Gateway Cities, in particular NYC, are seeing negative rent growth with concessions typically not seen before in the market
- A Class properties in larger cities have declined the most, new product taking longer to lease-up
- Properties have seen expenses decline in the short run which has offset net collections which have declined slightly
- Smaller cities and B type properties have fared better than larger cities and A properties
- Renewals are coming with concessions to keep existing tenants
- Collections continue to be strong, however, have declined slightly in August
- New deliveries will decline in the next few years as projects have struggled to start since March
- Agency volume is back to similar volume as 2019 after a few months of decline
- Capital is abundant in the market which reflects pricing of assets which has seen little if any decline
- Acquisitions have slowed considerably since March. Many buyers are looking for discounts with sellers balking. Activity has picked up as of late as Agency debt is being priced around 3%.
- Cap rates have compressed with lower debt financing to offset lower cash flow projections