Where is the distress with apartment owners?

[Greg Scott]

I’ve been hearing for months that we will soon see a wave of distressed assets and forced sales. I’ve heard of numerous people raising “opportunity funds” to take advantage of what they call the “fire sale pricing” that will soon be here.

I agree that there are more distressed sellers than in the past, and we have seen pricing become a little more reasonable than it was in 2022. On the other hand, there appears to be a lot of money looking for deals. Here is one proof point.

This past week a friend of mine was putting an offer in on a Midwest apartment portfolio. The winning bidder outbid him by more than $1M and well above broker whisper numbers. The winning bidder offered a lot of non-refundable earnest money. By “a lot” I mean 100% of the purchase price was offered as non-refundable earnest money. Slam dunk.

Is 2024 more frothy than 2022? This is the most aggressive offer I have heard of.