Key Takeaways

  • Apartment sales rose 34% year-over-year to $13.5 billion in May, according to data firm MSCI Real Assets, which shared the report with Multifamily Dive, but "the overall apartment sector numbers mask underlying weakness in the market."
  • Apartment prices fell 1.5% year-over-year in May, marking the eighth consecutive monthly decline; the average annualized decline in April and May was 4.7%, indicating further market deterioration. The capitalization rate held steady at 5.6%.
  • May's strong performance was largely driven by the completion of the Veris Residential privatization deal, which MSCI called the first multi-billion-dollar entity-level transaction to reach the finish line since the end of 2024.

Deep Dive

In February, Veris Residential joined the ranks of smaller multifamily REITs that have recently sold. The Northeast-focused company agreed to be acquired by an investor consortium led by Affinius Capital, in partnership with Vista Hill Partners, in an all-cash deal valued at $3.4 billion.

The deal had broad implications across multiple apartment subtypes.

Single-asset sales, which serve as the cornerstone of the apartment transaction market, fell 14% year-over-year in May to $7.4 billion. Meanwhile, portfolio and entity sales surged 311% year-over-year to $6.1 billion, driven primarily by the Veris deal, according to MSCI data.

Garden-style apartment sales fell 28% year-over-year to $4.2 billion, while mid- and high-rise apartment sales rose 121% year-over-year to $9.3 billion, boosted by the Veris transaction.

The market may be facing tough times ahead — the 10-year U.S. Treasury yield briefly surpassed 4.5% in May before retreating. According to another MSCI report shared with Multifamily Dive, the last time it reached that level was in 2024, when transaction volume was in the midst of a 20-month decline.

Despite this, some apartment owners still see opportunities to find deals. For example, Morgan Properties, the second-largest apartment owner in the nation, remains highly active, according to the latest National Multifamily Housing Council (NMHC) Top 50 list.

"We tend to have a longer time horizon," Morgan Properties Chief Operating Officer Greg Curci told Multifamily Dive. "We're not the kind of fund that rushes to deploy equity and return it within five years."

From an underwriting perspective, Morgan typically models a 10-year hold period, which gives it time to ride out market fluctuations.

"When you have that kind of time horizon, you don't have to rush to perfectly time your entry," Curci said.

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