Headlines
Top Story
Lehman Said to Prepare $1.3 Billion Bid for Archstone Stake
Industry News
Lehman: Archstone Worth More Than Equity Residential Offer
D.C.-Area Class B Apartment Rents Rise as Vacancy Rates Steady
Behringer Harvard's Multifamily REIT Adds Investment Partner
Grimes Named COO of Mid-America Apartment Communities
Equity Residential Joins Toll Brothers to Build NYC Tower
Bell Partners Continues to Expand Apartment Portfolio
Associated Estates Declares Common Share Dividend
Mack-Cali, Ironstate Partner on N.J. Waterfront Rentals
New Deals Add to Robust Year in Indianapolis Apartment Sales
Forest City Enterprises' 3Q Loss Shrinks
Reinventing Historic Assets
Legislative/Legal News
Fort Worth Passes New Apartment Rules 
N.C. Council Considers Giving City More Oversight of Problem Rentals
Nova Scotia Council Proposes Expanding Garbage Collection Policy
Republican Proposes New Corporation to Replace Fannie, Freddie
Top Story
Time Warner Cable Community Solutions has proven success partnering with MDU owners, providing quality voice/video/data products to their residents.
Lehman Said to Prepare $1.3 Billion Bid for Archstone Stake
Digested From "Lehman Said to Prepare $1.3 Billion Bid for Archstone Stake"
Business Week (12/12/11) by Hui-yong Yu
Lehman Brothers Holdings Inc., which has already received approval for a $65 billion bankruptcy liquidation plan, will next ask a judge to let it use $1.3 billion of the estate's money to increase its ownership interest in Archstone, its biggest real estate asset. Earlier this month, Equity Residential offered Bank of America Corp. and Barclays Plc $1.3 billion for 26.5 percent of Archstone, or roughly 50 percent of their stake. Lehman currently owns 47 percent of the apartment company and has an option to inform the banks this week that it will match Equity Residential's offer. It reportedly plans to tell the judge the investment is needed to safeguard the estate's interest in the company. The purchase would be the first step in a Lehman plan to gain control of Englewood, Colorado-based Archstone, which owns an undisclosed number of apartment communities. A Business Week source says the defunct securities firm seeks to sell or liquidate Archstone for at least $6 billion, but that strategy depends on it taking over Archstone. Court papers show that Lehman along with its affiliates has about $23 billion of available cash.
Industry News
Lehman: Archstone Worth More Than Equity Residential Offer
Digested From "Lehman Says Archstone Worth More Than Equity Residential Offer"
Business Week (12/06/11) by Yu. Hui-Yung
Lehman Brothers Holdings Inc. last week stated that Archstone, its biggest real estate asset, is worth "at least" $1 billion more than the $5 billion equity value implied by Equity Residential's bid for a stake in the apartment owner. Equity Residential has agreed to purchase a 26.5 percent interest in Archstone from Bank of America and Barclays for $1.33 billion. The bid is contingent on Lehman not exercising its right to match the offer. The estate of the bankrupt securities firm said in yesterday’s 8-K filing with the SEC: "Lehman believes that the EQR purchase price does not take into consideration the value of Archstone’s platform, including its management, which Lehman believes is the best in the industry, nor does it take into account Archstone’s valuable strategic position within the apartment industry." Equity Residential timed the bid for just before Lehman's hearing to confirm its joint Chapter 11 reorganization plan and the election of a new board in order to optimize the chance Lehman will not exercise its rights.
D.C.-Area Class B Apartment Rents Rise as Vacancy Rates Steady
Digested From "Delta: Class B Apartment Rents Rise as Vacancy Rates Remain Steady"
Washington Post (12/11/11)
Delta Associates reports that Washington, D.C.-area Class B apartment rents continued to rise and vacancy rates remained steady when compared with last year's third quarter. According to the report, owners are slowly limiting the concessions they are offering to residents. In addition, they are increasingly opting to renovate their communities in order to charge higher rents. The average effective rent in the D.C. metro area for Class B apartments has risen 3.8 percent from a year earlier. Looking at individual markets, garden apartment communities registered a 14.8 percent rent increase in Falls Church-Merrifield, Va. At 6.1 percent, Washington overall posted the strongest effective rent growth compared to the other local areas. However, it also had the highest vacancy rate at 2.2 percent. Overall, the region's apartment vacancy rate continues to be very low at 1.5 percent. At 0.3 percent, D.C. itself had the lowest concessions for the quarter. Northern Virginia and suburban Maryland followed close behind at 1.2 percent and 1.5 percent, respectively. According to Delta analysts, tightening concessions generally reflect increasing demand. As a result, the area's Class B investment market is booming. Through the first nine months of this year, there were 45 Class B apartment sales totaling 12,412 rental units.
Behringer Harvard's Multifamily REIT Adds Investment Partner
Digested From "Behringer Harvard's Multifamily REIT Adds Investment Partner"
D Magazine (12/08/11) by Christine Perez
Behringer Harvard has formed a co-investment partnership with a large global pension fund advised by Heitman LLC. The deal gives the Heitman-managed fund minority ownership interests in 15 apartment communities in eight states. Together, the various communities have approximately 4,100 rental units and are valued at more than $1 billion. They represent nearly 33 percent of Behringer Harvard's Multifamily REIT I portfolio. Mark T. Alfieri, the REIT's COO, states, "This additional infusion of institutional co-investment capital provides further market validation of the institutional quality of the asset portfolio our REIT has assembled thus far, as well as its perceived value. As our REIT continues to expand its asset portfolio, we will constantly evaluate both strategic acquisition opportunities and disposition opportunities, as appropriate, that could provide attractive upside potential for our shareholders."
Grimes Named COO of Mid-America Apartment Communities
Digested From "People in Business"
Memphis Commercial Appeal (TN) (12/09/11)
Thomas L. Grimes Jr. has been appointed executive vice president and chief operating officer of Mid-America Apartment Communities (MAA). Grimes joined Memphis-based MAA in 1994. He most recently served as the company's executive vice president and director of property management operations.
Equity Residential Joins Toll Brothers to Build NYC Tower
Digested From "Equity Residential Joins Toll Brothers to Build NYC Tower"
Business Week (12/08/11) by Brian Louis; John Gittelsohn
Chicago-based Equity Residential has formed a joint venture with luxury-home builder Toll Brothers Inc. to build a 40-story tower on Manhattan's Park Avenue. The bottom 22 floors, which will be operated by Equity Residential, will house retail space and rental apartments. Pennsylvania-based Toll's contribution will consist of an undisclosed number of for-sale condominiums on the building's upper 18 floors. The rental and condominium sections will have separate lobbies and addresses. They will operate independently. Construction is on schedule to commence in the first or second quarter of next year. Toll Brothers has completed more than a dozen properties in the New York metropolitan area under its City Living brand. It is currently building four more. For its part, Equity Residential had 28 properties with 8,290 rental apartments in the New York market as of the end of this year's third quarter. It ranks as the nation's biggest publicly traded apartment owner.
Bell Partners Continues to Expand Apartment Portfolio
Digested From "Bell Partners Continues to Expand Multifamily Portfolio"
Business Journal of the Greater Triad Area (12/09/11) by Owen Covington
Bell Partners has continued the expansion of its multifamily housing portfolio with the $76.3 million purchase of apartment communities in Austin, Texas; Greenville, S.C.; and Lake Mary, Fla. The acquisitions help close out a year in which the Greensboro, N.C.-based real estate investment firm added a total of about $300 million in apartments to its portfolio while shedding retail and senior living properties. Bell Partners plans to continue narrowing its focus to the booming multifamily housing sector in the months to come. To date, its emphasis has been on acquiring quality apartment communities in Sunbelt markets that have seen high population growth in recent years.
Associated Estates Declares Common Share Dividend
Digested From "Associated Estates Declares Common Share Dividend"
Sacramento Bee (12/08/11)
Associated Estates Realty Corp. has declared a quarterly dividend of $0.17 per share, which will be payable Feb. 1, 2012 to shareholders of record as of Jan. 13. The Ohio-based apartment REIT is a member of the Russell 2000 and the MSCI US REIT Indices. Its portfolio is comprised of 53 apartment communities containing 13,908 rental units in eight states.
Mack-Cali, Ironstate Partner on N.J. Waterfront Rentals
Digested From "Mack-Cali, Ironstate Partner on Waterfront Rentals"
NJBIZ (12/07/11) by Melinda Caliendo
Mack-Cali Realty Corp. is teaming up with Ironstate Development Co. to develop a couple of residential towers on the Jersey City waterfront using land it already owns. The project will be part of the former's Harborside Financial Center, which is currently the location of five class A office buildings, retail stores, and several restaurants. Mack-Cali President and CEO Mitchell E. Hersh states, "It's all part of the strategic vision, which is to complement a very premiere office development we have down at Harborside, and complemented by our 101 Hudson Street high-rise building down there with a full complement of amenities and uses that create this 24/7 work/live environment." He adds that the majority of the rental units in the initial phase will be one-bedroom and studio apartments, fit for its target demographic of young professionals. With them in mind, the Harborside development is being designed to offer an affordable living option, especially for those who work in Jersey City and Lower Manhattan. Hersh states that "our residential product on a comparative basis will be a very good price point compared with what's available in Manhattan."
New Deals Add to Robust Year in Indianapolis Apartment Sales
Digested From "New Deals Add to Robust Year in Apartment Sales"
Indianapolis Business Journal (12/06/11) by Tom Harton
At least four apartment communities have changed hands in Indianapolis during the past month, continuing a robust year of buying and selling in the local multifamily housing sector. Through last week, a total of 30 apartment communities had been bought and sold citywide since the first of the year. Tikijian Associates has been involved in a number of those transactions, including the four that were recently completed. Founder George Tikijian notes that the number of transactions has more than doubled compared with 2010. This spike in deal flow is due to everything from healthy occupancy rates and ample supply to low borrowing costs. With the Federal Reserve pledging earlier in the year to keep interest rates low into 2013, buyers are expediting apartment deals by lining up short-term loans that are replaced with permanent financing at attractive rates following each deal's close. Tikijian notes, "Back in 2009 and 2010, people weren't willing to borrow short term." If there is a sense rates are going up, he adds, buyers typically look to lock in permanent financing up front. This, in turn, adds significantly to deal times.
Forest City Enterprises' 3Q Loss Shrinks
Digested From "Forest City Enterprises' 3Q Loss Shrinks"
Business Week (12/08/11)
Forest City Enterprises Inc. posted a smaller fiscal third-quarter loss this week thanks partly to reduced interest expenses. After paying preferred dividends, Forest City lost $41.9 million in the three months ended Oct. 31. That compares with a $50.6 million loss in the same period a year year earlier. Revenue, meanwhile, dipped 9 percent to $261.2 million largely because of a drop in revenue at the company's commercial group segment. Forest City CEO David J. LaRue remarked that he feels confident in the underlying strength of the company's business. However, he added that the sluggish economy coupled with high unemployment has given him reason to remain cautious in his outlook. Forest City is a leading developer of apartment communities, shopping centers, and office buildings.
Reinventing Historic Assets
Digested From "Reinventing Historic Assets"
Urban Land (12/11) Vol. 70, No. 12, P. 78; by Robert J. Verrier; Michael D. Binette
Instead of tearing down aging structures to create new projects, many developers are making them the centerpiece of urban revitalization efforts. Large-scale historic reuse initiatives sometimes involve historic preservation tax credits, affordable housing credits, or both. At the 14-acre Baker Chocolate Factory site in Dorchester, Mass., several mill buildings have been converted into residential spaces while preserving and restoring the original structures. The area now boasts boutiques and cafes and has attracted young families. In Danvers, Mass., an abandoned 1878 state asylum on a 77-acre site was converted into 433 new apartments by multifamily housing REIT AvalonBay. The project was unveiled in 2007 and features the original Victorian-Gothic facades. It is situated only a mile from Interstate 95 and a large shopping mall. Potential places that could serve as historic redevelopments include an urban or urban-edge area that needs to be revitalized yet is close to dense populations. The structures themselves are typically underused or defunct, yet possess architectural and regional significance. Tracts of useable land and sometimes water features may surround the sites.
Legislative/Legal News
Fort Worth Passes New Apartment Rules
Digested From "Fort Worth Passes New Apartment Rules"
NBC Dallas Fort Worth (12/07/11) by Chris Van Horne
In Texas this past week, the Fort Worth City Council approved new rules for apartment communities in an effort to reduce crime and improve public safety. The new rules not only require crime-free leasing language that will make it easier for owners and managers to remove problem residents, they also require owners to submit pet information to code compliance. In addition, the rules mandate that owners must properly train leasing staffers and allow additional inspections of electric meters, which have been troublesome in certain apartment communities. City officials say most local apartment communities are already doing many of the things the ordinance requires. However, the Code Compliance Department says it is trying to clean up the 3 to 5 percent that are not. To be sure, not all Fort Worth apartment owners and managers are accepting of the new rules. Alan Small of Panther City Properties remarks, "We do have the tools already to make these things better instead of more regulation for people."
N.C. Council Considers Giving City More Oversight of Problem Rentals
Digested From "Fayetteville Council to Hear Plan to Give City More Oversight of Problem Rentals"
Fayetteville Observer (NC) (12/11/11) by Andrew Barksdale
In North Carolina, Fayetteville apartment owners could face $1,000 fines and even the loss of rental income if their communities run afoul of too many code violations or police calls under new rules being considered by the City Council. According to the latest draft, owners whose properties accumulate more than three code violations in a year would face such consequences. So would those apartment owners whose communities rank in the top 10 percent of properties getting the most police calls. These rankings would be calculated every six months. Such owners would have to attend a meeting with city officials and possibly develop a crime-management plan. In addition, they would have to pay a $1,000 fee and, if the problems persist, would be restricted from receiving rental income from the property for one year. Some apartment owners and managers have complained that the ordinance would unfairly penalize them for residents who misbehave. Carey Petricka of the Cumberland County Apartment Association remarks, "We have some serious concerns." So does Caviness & Cates Property Management CEO Bill Nye, who likened the proposal to the city penalizing gas station owners when people drive off without paying. Caviness & Cates owns and manages a half-dozen apartment communities throughout Cumberland County.
Nova Scotia Council Proposes Expanding Garbage Collection Policy
Digested From "Council Proposes Expanding Garbage Collection Policy"
Truro Daily News (12/09/11) by Harry Sullivan
In Nova Scotia, Colchester County is preparing to expand its garbage collection policy to include apartment communities comprised of up to six rental units. Councillor Christine Blair would like to see that effort expanded even further, commenting, "I agree, six is fine. It will do, but I would prefer to see eight-unit buildings included." Since 1996, the municipality has provided trash pick-up services to apartment communities consisting of no more than three units.
Republican Proposes New Corporation to Replace Fannie, Freddie
Digested From "Republican Proposes New Corporation to Replace Fannie, Freddie"
Wall Street Journal (12/07/11) by Nick Timiraos
Sen. Johnny Isakson (R-Ga.) is sponsoring legislation to replace Fannie Mae and Freddie Mac with a government-owned entity that ultimately could be sold off to the private sector. The measure aims to bridge the partisan gap between conservatives who oppose continued federal guarantees for the private sector and liberal Democrats and real estate professionals, who warn of higher mortgage costs if Washington does not provide a backstop to at least part of the market. Isakson's bill would create a new government agency that would not buy loans directly; instead, it would guarantee mortgage securities pooled by private-sector entities.
Abstract News © Copyright 2011 INFORMATION, INC.
|