Capital Flows to Apartment Sector.

San Diego -- The head of Fannie Mae's multifamily division tried to put a good face on his unit's lackluster 2004 performance at last week's Commercial Real Estate Finance/Multi-Family Housing Conference here.

But there was no hiding the fact that in last year's highly competitive apartment arena, the big government-sponsored enterprise didn't do nearly as well as it had in 2003.

In a year when investors were falling all over themselves to finance apartments, leading to record originations, Fannie Mae and its lender and housing partners weren't always the first choice of would-be borrowers.

"Let's face it, there were times last year when we weren't the best execution," Kenneth Bacon, senior vice president of multifamily lending and investment, told an overflow audience at the Mortgage Bankers Association-sponsored conference.

"Investors all over the world decided that they really loved apartments, and that created huge competition and an abundance of capital. It was a great time, a wonderful year, to be a borrower."

"The noise in the marketplace is deafening," added senior vice president Richard Lawch. "It was in 2004, and it will be in 2005."

Still, with $21.2 billion invested in rental housing last year, compared to some $36 billion the previous year, Mr. Bacon was able to cite the company's "strong performance." And he promised to do even better in 2005.