Our New Construction Volume Will be Much Less in 2010-11

W. Dean Henry (pictured) is president of Legacy Partners Residential Inc., where he oversees the multifamily portfolio spanning across Northern and Southern California, Arizona, Colorado, Washington and Texas. During his career, Henry has been responsible for the development of more than 50,000 multifamily units.He joined Legacy Partners in 1973 after graduating from the University of Puget Sound in 1969 with a bachelor’s degree in Political Science. During his college years, he entered the multifamily housing industry working with United Homes in Seattle and later with the L.B. Nelson Corp. developing apartment communities. Legacy completed its 40th anniversary last month. Henry talks to MHN’s Online News Editor Anuradha Kher about changes in multifamily in the last 40 years, financing in the current market and when he expects things to return to normal.MHN: How has business changed in the last 40 years since Legacy Partners has been in business?Henry: The business has been in a constant state of change since I started in 1969. Needs have changed, product has changed the financing structures have varied greatly, as has the risk factor.  I think today we are much more aware of our customers’ needs and desires, as well as the risks we must consider in providing them.MHN: Will there be any significant changes in the direction Legacy will now take?Henry: The changes occurring in the capital markets right now will result in the direction Legacy will now take. It will be more difficult to make deals work, obtain the proper equity and financing. As a result, we anticipate fewer deals getting done.MHN: How difficult has it been to do deals in the current market?Henry: We have $700 million under construction, which were financed over the past couple of years. However, today it is very difficult to obtain adequate equity and debt financing for new projects. As a result, our new construction volume will be much less in 2010 and 2011 than it will be for this year and next.MHN: What are the most significant national trends in the multifamily industry that you have noticed?Henry: One of the things we’re observing in major urban areas is the popularity of urban infill and mixed-use products. This trend is particularly noticeable today with the cost of commuting having increased substantially over the past couple of years. MHN: How is Legacy coping with the market right now?Henry: Legacy has been in the multifamily business for over 40 years. We have seen all the peaks and valleys during that time and we’re still standing. While financing future projects in this market is very difficult, we are looking at the size of our company and will be making adjustments according to our ability to create volume.MHN: When do you think things will get back to normal for the housing market?Henry: The fundamentals of the multifamily rental housing business are as good as they have ever been, but things will not get back to normal until the capital markets settle down. We’re not anticipating this to happen until late 2009 or 2010.