Apartment Downturn Still Not Over but Prospects for Multifamily REITs are Improving, Says Moody’s Report
- Jun 11, 2010
Multifamily performance over the next few quarter may experience some turbulence, according to analysis by Moody’s Investor Services.
In moody’s “US REIT and REOC Review & Outlook” report, the rating agency maintained a stable rating for the multifamily REITs sector. However, it cited “the magnitude of the economic downturn” and “market correction” as contributing factors to a cloudy outlook for the apartment industry in the near term.
Moody’s said in its report that challenges to REITs continue to be high U.S. unemployment levels, now 9.7 percent; a supply overhang from weak single-family and condo markets; and the increasing affordability of homeownership.
Philip Kibel, senior vice president and team leader of Moody’s rated REITs, tells MHN that the majority of Moody’s rated REITs have a stable outlook. And Moody’s report said it anticipated rating actions for multifamily REITs will be less negative than in the previous two years.
Moody’s has pointed out that a reasonable case can be made that “near-term supply and demand conditions pointed to the potential for a strong recovery for apartments.”
“Very little new supply is coming on line in 2010 or thereafter and demand has been building in the form of would-be renters who will be looking for apartments when they are hired or re-hired. It is worth noting as well the positive effect on multifamily demand of the echo boomers who are graduating college and reaching prime rental age,” Moody’s REITs report stated.