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Supply Shortfall Persists for Apartments
Industry News
Study: Energy Efficiency in Apartments Could Save $3.4 Billion
Experts Say Days of Discounted Rent Are Over in N.C. 
Colonial Properties Trust Reports Results for Q4 2011
In Tight Boston Market, No Relief for Apartment Residents or Hunters
Sunbelt Focus for Multifamily Development
More Workers Moving Out of State for Jobs
Morgan Group Refinances Apartment Communities for $146 Million
Private Companies Tapped to Build Dorms for Public Universities
Investors Snap up Older Apartments in Florida
Irvine Apartment Rents up $155 a Month
Legislative/Legal News
Fannie Mae's Multifamily MBS Issuance Jumped 45 Percent in 2011
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Supply Shortfall Persists for Apartments
Digested From "Supply Shortfall Persists for Apartments"
Wall Street Journal (01/24/12) by Dawn Wotapka
According to new research from the National Association of Real Estate Investment Trusts (or NAREIT), weak apartment construction and ever-increasing demand has created a shortfall of 2.5 million apartment units -- the largest the country has seen in more than 50 years. As more Americans rent either by choice or necessity, apartment owners are seeing vacancy rates decline at a significant clip. Pent-up demand could push the rate even lower. The struggling economy left many adult children still living at home with their parents. This has created an unmet demand of approximately 2 million households, with many of these people turning to the rental housing market.
Industry News
Study: Energy Efficiency in Apartments Could Save $3.4 Billion
Digested From "Study: Energy Efficiency in Apartments Could Save $3.4 Billion"
Forbes (01/27/12) by Jennifer Kho
According to a newly released study from think tanks CNT Energy and the American Council for an Energy-Efficient Economy, energy-efficiency upgrades in U.S. apartment communities could slash energy bills by nearly $3.4 billion a year nationwide. The estimate includes $2.03 billion in potential electricity savings, along with $1.34 billion in potential natural-gas savings from such retrofits as more efficient lighting, appliances, and air- and water-heating systems. These types of measures could reduce utility bills for multifamily housing with at least five rental units by as much as 30 percent, the report finds. This should come as welcome news for apartment owners, who often get squeezed when energy rates are hiked. Apartment communities racked up energy bills totaling approximately $18.03 billion in 2005, a number that has almost certainly grown alongside overall residential energy use in the years since. Multifamily housing accounted for 15 percent of U.S. energy consumption in 2005, the last year for which such data is available from the U.S. Department of Energy. Anne McKibbin, CNT Energy policy director and a co-author of the report, concludes, "We have billions essentially sitting untapped in our apartment buildings. We can harness that by simply setting better policies for efficiency for apartment buildings."
Experts Say Days of Discounted Rent Are Over in N.C.
Digested From "Experts Say Days of Discounted Rent Are Over"
WSOCTV.com (NC) (01/26/12) by Allison Latos
Apartment professionals say the days of discounted rent are over in the Charlotte metropolitan area. Among them is Marcie Williams of the Greater Charlotte Apartment Association, who states, "Renters should expect a rent increase but they have to remember, for several years, they didn't see a rent increase at all." Williams adds that the industry is finally gaining momentum following the troubled times of 2009. She further remarks, "People were given anywhere from a month free -- that's 8 percent -- to two months free. Some places were even giving three months free." She now forecasts that rent will rise nearly 6 percent. Developers, though, continue to express concerns about obtaining loans for new construction. Dan Levine of Levine Properties notes, "When developers have money, they build." Levine recently bought property near the Metropolitan Shopping Center in Midtown Charlotte, with plans to erect a 10- or 12-story high-rise apartment building in 2014 with views of the city's skyline.
Colonial Properties Trust Reports Results for Q4 2011
Digested From "Colonial Properties Trust Reports Results for Fourth Quarter 2011"
MarketWatch (01/26/12)
Colonial Properties Trust late last week announced its results for the quarter and year ended Dec. 31, 2011. For the fourth quarter, the Alabama-based REIT posted net income available to common shareholders of $9.1 million versus a net loss available to common shareholders of $7.1 million for the same three-month period in 2010. For 2011, Colonial Properties Trust posted net income available to common shareholders of $3.4 million compared with a net loss available to common shareholders of $48.1 million for 2010. Chairman and CEO Thomas H. Lowder remarks, "The operating momentum we established throughout the year resulted in the best percentage year-over-year same-property NOI growth in our company's history. As a result of our improved operating performance and our positive outlook, the board of trustees has voted to increase the quarterly common dividend by $0.03 per quarter, representing a 20 percent increase." Colonial Properties Trust creates value for its shareholders via a multifamily-focused portfolio, along with the management and development of select commercial assets in the nation's Sunbelt region. As of the end of December, the REIT owned or managed 35,167 apartment units and approximately 10.7 million square feet of commercial space.
In Tight Boston Market, No Relief for Apartment Residents or Hunters
Digested From "In Tight Local Market, No Relief for Renters, Apartment Hunters"
Boston Globe (01/26/12) by Jennifer B. McKim
Reis Inc. is reporting that Boston-area apartment rents hit record highs in the fourth quarter of last year, pushed up by declining inventory and increased demand. As a result, the region continues to hold onto its standing and reputation as one of America's priciest places to live. Reis researchers calculate that average monthly rents in the Boston metropolitan area, which they loosely define as within Interstate 495, rose to $1,686 from October through December. That is compared with $1,649 during the fourth quarter of 2010 and $1,600 the year before that. At the same time, the vacancy rate fell to a nine-year low of 4 percent this past fourth quarter. Local rents have been climbing for nearly two years now, despite a sluggish housing market. During the downturn, many apartment residents opted to remain in their rental units instead of making the leap to ownership. Others have been forced to rent due to unemployment or uncertainty regarding their job status. Even with the recent spate of new rental housing construction locally, economists expect Boston-area monthly rents to continue increasing for at least the next several years. Eric S. Belsky, managing director of Harvard University’s Joint Center for Housing Studies, remarks, "It shows there is strength in one side of the Boston housing market. Boston is a desirable place to live."
Sunbelt Focus for Multifamily Development
Digested From "Sunbelt Focus for Multifamily Development"
Memphis Daily News (01/26/12) Vol. 127, No. 17, by Sarah Baker
MMA Chief Executive Eric Bolton said that since the apartment REIT pays out 95 percent of its earnings to shareholders, he spends a good amount of his time chasing money. The company's approach is unique in that the firm's focus is to allocate capital exclusively in the Sunbelt region of the country. MMA, formerly Mid-America Apartment Communities, currently has ownership stakes in 48,813 apartment units. Bolton adds, "This region of the country is going to continue to attract employers." In order to keep up with the increased number of 20- to 35-year-old and 60- to 75-year-old population over the next decade, many of whom will opt to become renters, the country will need to see about 300,000 new apartments every year. Since multifamily housing construction will not reach the 300,000 level again until at least 2014, Bolton expects the Memphis market will garner positive absorption until 2016.
More Workers Moving Out of State for Jobs
Digested From "More Workers Moving Out of State for Jobs"
USA Today (01/24/12) P. 1B; by Paul Davidson
There has been a slight gain in the number of Americans relocating out of state for jobs, according to reports. The past four years, weighed down by recession and unemployment, have seen many people locked into their current locations due to the inability to sell their homes. Those properties have depreciated in value and, frequently, are worth less than what is owed on the mortgages. On top of that, tighter corporate budgets had clipped companies' generosity in terms of footing the bill for the moving costs of new hires. Now, however, more firms are willing to bankroll most relocation costs; and the improving job market is creating more out-of-state work opportunities. The "underwater" mortgage trend continues to be a problem, but lenders and borrowers increasingly are reaching short-sale deals that free up job-hunters to expand their housing search out of state. For the 12 months ended in March, the Census Bureau reports, 4.8 million Americans took up residence in a different state -- up from 4.3 million who did so the year before. By comparison, however, 7.6 million migrated from state to state in 2002.
Morgan Group Refinances Apartment Communities for $146 Million
Digested From "Morgan Group Refinances Multifamily Assets for $146M"
GlobeSt.com (01/26/12) by Amy Wolff Sorter
Attractive interest rates in the capital markets have prompted apartment developer Morgan Group to obtain refinancing of $146 million for five of its apartment communities. The proceeds came from various bank, agency, and insurance company loans. Terms ranged from five to 10 years. The capital markets activities covered more than 1,700 rental units in the Morgan Group portfolio. These included apartment communities in Charlotte, Houston, and Jacksonville. Morgan Group Chairman and CEO Mike Morgan comments, "Current loan rates for multifamily projects were extremely attractive. It appeared to be a good time to lock in terms for stable, core assets."
Private Companies Tapped to Build Dorms for Public Universities
Digested From "Public College, Private Dorm"
New York Times (01/24/12) by Ronda Kaysen
Facing budget constraints and high demand, public universities are contracting with private companies to build on-campus dorms. The benefits of such an arrangement for states is that private companies can build faster and for less money and handle property management, and universities then have more money to build classrooms and laboratories. There are concerns that students will not benefit from lower construction and operating costs afforded by these private partnerships, but universities say the higher price tags for these dorms are justified by the more upscale amenities. A $90 million, 16-story residence hall is being built at Portland State in Oregon as part of a public-private partnership with the student housing REIT American Campus Communities. Meanwhile, the University of Kentucky is entering a partnership with Education Realty Trust that will give the REIT control over all its student housing, amounting to 5,100 beds. Plans to demolish existing buildings and build 9,000 new beds for a total of $500 million would make it the biggest private campus housing transaction so far.
Investors Snap up Older Apartments in Florida
Digested From "Investors Snap up Older Apartment Complexes"
Tampa Bay Times (01/22/12) by Mark Puente
Tampa, Fla., is seeing an increase in older apartment communities being purchased by cash-rich investors, many of whom are then pump large sums of money into upgrading the various properties. The investors are finding that prices for older apartment communities are so low that even after paying to refurbish the various units and the surrounding exterior property and amenities, they can still raise monthly rents and realize healthy profits. According to CoStar Group, a total of 156 apartment communities sold for $1.9 billion in Florida's Pinellas and Hillsborough counties in 2011. Experts say the buying surge is related to the lack of new construction during the housing crisis and low prices on apartment communities exiting foreclosure.
Irvine Apartment Rents up $155 a Month
Digested From "Irvine Apartment Rents up $155 a Month"
Orange County Register (CA) (01/20/12) by Jeff Collins
According to a recent RealFacts survey of large Orange County, Calif., apartment communities, Irvine and Santa Ana had the biggest rent hikes during the fall quarter of 2011. The apartment tracker reports that Santa Ana residents saw rent increases of 10.1 percent during the quarter from the year before. Meanwhile in Irvine, apartment residents saw their rent spike by 8.9 percent from the year before. Of the 23 cities examined in the survey, all but two had year-over-year rent increases.
Legislative/Legal News
Fannie Mae's Multifamily MBS Issuance Jumped 45 Percent in 2011
Digested From "Fannie Mae's Multifamily MBS Issuance Jumped 45 Percent in 2011"
Sacramento Bee (01/24/12)
Fannie Mae issued $7.2 billion multifamily mortgage-backed securities in the fourth quarter of 2011, which is the highest quarterly issuance since 2009. It also resecuritized $6 billion of DUS MBS through its Fannie Mae Guaranteed Multifamily Structures program last year. Total new issuance in 2011 was $23.8 billion, up from $16.4 billion in 2010. Fannie Mae Vice President of Multifamily Capital Markets Kimberly Johnson said, "Market activity in our multifamily securities is clearly gaining momentum. Tradable float, the volume of securities available to investors, has increased significantly over the past few years. Fannie Mae's multifamily MBS outstanding has grown to over $100 billion. As volumes increase and liquidity rises, we expect market participants will focus on Agency multifamily securities in the coming year."
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