The Never-Ending Search for Yield

When it is all said and done, 2012 will likely be recorded in industry annals as the year deals finally closed—unlike in 2010 and '11, when buyers and sellers would find one reason or another to hit the brakes on transactions. “We are in a unique period right now when both parties are inspired to get deals done,” says Kevin White, director of business development for Virtus Real Estate Capital. And financing? That is a nobrainer, he says, and indeed the Austin, TX-based real estate private equity sponsor is moving forward with its own transactions with an eye to locking in as much debt as possible. “That way, if we hit the wrong end of the cycle, we have enough term left on the loan to ride it through,” he says.

Fortunately for White, the securitization markets are happy to oblige. Earlier this year the company acquired a 264-unit, 1,056-bed student housing community near East Carolina University in Greenville, NC. It secured 10-year debt from Freddie Mac with a two-year IO term at a 4.16% interest rate.