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Apartment Sector Has Highest Loan Default Rate, Trepp Reports
Industry News
South Florida Apartment Vacancy Rates Rise From Year Earlier
Advantage Shifts to Residents in Boston Apartment Market
UDR's iPhone App Makes Finding an Apartment Easy
Condo-to-Apartment Conversions to Slow in Charlotte
Virginia's Triangle Region Deals With Apartment Demand Issues
More Commercial Loans Going Sour
Camden Property Trust Announces Q2 2009 Dividend
Legislative/Legal News
HUD Secretary Announces Recovery Act Funds to Clean up Lead in Housing
New California Law Clamps Down on Apartment Landscapers
Colorado Law Prompts Apartment Owners to Buy Detectors
Georgia County to Freeze Apartment Rezoning 
Michigan Police Department Schedules Apartment-Related Meeting
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Apartment Sector Has Highest Loan Default Rate, Trepp Reports
Digested From "Apartments Lead Default Parade; Other Sectors Joining Bandwagon"
Investor's Business Daily (06/19/09) P. A6
According to Trepp LLC, the apartment sector tops all U.S. commercial real estate in having the highest loan default rate. In May, defaulted apartment loans that back commercial mortgage-backed securities (CMBS) surpassed the 5 percent mark, while retail and hotels eclipsed the 3 percent level. Real Estate Econometrics adds that bank loans for apartment communities defaulted at a rate of 2.45 percent in this year's second quarter, while those of all other commercial property mortgages held by depository institutions topped 2.25 percent. According to Real Capital Analytics, apartment community prices peaked in the last three months of 2006. Peak prices for other classes of real estate followed throughout 2007. Real Estate Econometrics President Sam Chandan notes, "Because [apartments] peaked first, some of the deterioration has come on a little earlier." Declining rents and occupancies, coupled with fewer available loans, have dropped values between 35 percent and 40 percent. This, in turn, has resulted in higher defaults. The struggling national economy, meanwhile, has negatively impacted job growth -- a key driver in the demand for apartments. This is affecting all levels of the apartment sector. Higher-end rental units, for example, are no longer commanding top prices in many markets simply for their amenities. Caldera Asset Management President Mike Kelly observes, "Most renters are paying for value. They're not going to pay an extra 50 bucks because you have a cabinet in granite."
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Industry News
South Florida Apartment Vacancy Rates Rise From Year Earlier
Digested From "Apartment Vacancies: South Florida Rental Vacancy Rates Rise From Year Ago but Remain Moderate"
South Florida Sun-Sentinel (FL) (06/20/09) by Paul Owers
A new Reinhold P. Wolff Economic Research Inc. study shows that the vacancy rates for South Florida apartments remain moderate, despite the ongoing recession and a glut of houses for rent. Rent reductions and the region's general lack of apartment construction over the past couple of years have kept vacancies down. At the end of May, Palm Beach County reported an apartment vacancy rate of 7.9 percent, while Broward County's rate stood at 6.8 percent. Both were increases from a year earlier. The research firm expects vacancies will decline in the months and years to come. In fact, by May 2012, it expects apartment vacancies in the two counties to be 3 percent or less.
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Advantage Shifts to Residents in Boston Apartment Market
Digested From "Advantage, Renters"
Boston Globe (06/19/09) by Megan Woolhouse
The Boston metro area has become an apartment residents' market. Vacancy rates are climbing to new highs, pushing down rents after almost a decade of increases. In turn, apartment owners are stepping up with enticing new deals and incentives to keep their communities as full as possible. Boston's upscale Archstone Avenir high-rise, for instance, is offering one month's free rent. At the Lodge at Foxborough, a luxury apartment community near Gillette Stadium, two free months of rent are now being offered. And in suburban Waltham, Archstone Cronin's Landing recently dropped its $525 a month "amenities fee" for vacant apartments. Rents are on the way down due to the Boston area's rising vacancy rate. Reis Inc. reports that area vacancy rates climbed to 6.4 percent in this year's first quarter and will likely climb as high as 7.6 percent by the end of December. Reis researchers note that the region's average monthly rent already slipped to $1,644 during this year's first quarter, a decline from $1,651 a year earlier. Nevertheless, Boston apartment rents remain among the highest in the nation mainly because the supply of rental housing has historically been low. Nine years ago, when the state's unemployment rate hovered under 3 percent and the high-tech boom had yet to go bust, Boston's apartment vacancy rate was a scant 0.7 percent.
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UDR's iPhone App Makes Finding an Apartment Easy
Digested From "UDR's iPhone App Makes Finding an Apartment for Rent as Easy as Possible"
Business Wire (06/16/09)
UDR Inc. has made it easy for prospective residents to find an apartment anywhere using the iPhone or iPod Touch. The Denver-based apartment REIT's new and free iPhone apartment search application is now available in Apple's iStore. Perhaps the best feature of this application is the ability for users to place a hold on an apartment from anywhere around the globe. Other features include: detailed listings of apartment amenities and floor plans; mapping and directions to various apartment communities; and a search engine that enables users to look for apartments according to city, state, price, number of bedrooms and so forth. Additionally, UDR has a WAP and iPhone compatible Web site. Steve Taraborelli, UDR's vice president of sales and marketing, states, "UDR's apartment finder iPhone app is targeted to a growing smartphone audience that is replacing their landline and/or home PC because mobile users are realizing that smartphone's are basically mini-computers in their pocket." As of the end of this year's first quarter, UDR owned 44,571 apartments and had another 2,046 rental units in various stages of development.
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Condo-to-Apartment Conversions to Slow in Charlotte
Digested From "Fat City Lofts Will Become Rentals"
Charlotte Observer (NC) (06/19/09) by Kerry Hall Singe
Charlotte has seen a number of condominium projects converted to rental apartments amid rising uncertainty in the metro area's residential real estate market. The latest is the 26-unit Fat City Lofts, located in the heart of the city's NoDa neighborhood. Fat City is the third Charlotte condo building to convert to apartments this year, and the first to do so outside of uptown. Analysts are now wondering whether more such conversions are on the way locally. Real estate experts do not think so, especially with first-time buyers now eligible for up to $8,000 in tax credits. Multifamily housing analyst Emma Littlejohn of The Littlejohn Group adds that there is a limited number of condo conversion candidates for whom the move would make sense. Indeed, viable communities would need to be newer and in a great location. Littlejohn adds, "The strategy is great [for Fat City] because long term, they've built a nice property that will likely increase in value because of the type of building, location and quality. We love their building. It really anchors NoDa." Real Data apartment analyst Engle Addington reports that the neighborhood could use the rental units. Indeed, the vacancy rate for NoDa and the surrounding area was 10.2 percent as of February. Addington concludes, "Vacancy rates aren't doing so great now because of lost jobs. But there's just not a whole lot else to choose from out there."
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Virginia's Triangle Region Deals With Apartment Demand Issues
Digested From "Rental Market: Supply Is There, but What About the Demand?"
Hampton Roads Daily Press (VA) (06/16/09) by Veronica Chufo
Dan W. Johnson, senior vice president of CB Richard Ellis in Norfolk, believes that Virginia's Peninsula region will need more apartments in the coming years. Others like economist Larry Filer are not as convinced. Filer, an associate professor of economics at Old Dominion University, has studied recent job-creation announcements in the area. He believes it is just as likely new hires will buy homes as rent apartments. Those who do opt to rent will likely find a significant amount of vacant apartments to choose from without causing a demand for new multifamily housing construction. He states, "I think it is safe to say that any additional construction in the next two years [particularly for rentals] will likely worsen the absorption rate on the Peninsula." Looking at individual markets, Real Data reports that the apartment vacancy rate in Hampton Roads is 7.3 percent -- the highest it has been since at least 2000. Vacancies in that city have risen in the last six months because of two reasons: one, the economy is prompting more apartment residents to look for roommates; and, two, there is growing competition from single-family homes that have been converted to rentals. Southern Newport News, meanwhile, is 7.5 percent vacant with monthly rents averaging $664. Nearby York's apartment vacancy rate is 7.7 percent, with monthly rents averaging $921. Williamsburg is 7.9 percent vacant, with rents also averaging $921 a month. While the Peninsula has had some success landing job-creating ventures and corporate expansions, most of the new apartments are being erected in south Hampton Roads.
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More Commercial Loans Going Sour
Digested From "More Commercial Loans Going Sour"
American Banker (06/16/09)
Fitch Inc. reports that delinquencies on commercial mortgage-backed securities continued to mount in May, partly due to the poor performance of multifamily housing communities and retail properties. The total monthly delinquency rate climbed to 2.07 percent from the previous month, the highest percentage since Fitch started tracking such data eight years ago. The multifamily delinquency rate was 4.55 percent, the highest of all property types, due to declining performance.
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Camden Property Trust Announces Q2 2009 Dividend
Digested From "Camden Property Trust Announces Second Quarter 2009 Dividend"
Business Wire (06/15/09)
Camden Property Trust's Board of Trust Managers has declared a Q2 2009 dividend of $0.45 per share, which will be payable July 17 to shareholders of record as of June 30. Camden Property Trust is a Houston-based REIT that has ownership stakes in 182 apartment communities containing 63,269 rental units. Upon completion of four communities currently in various stages of development, its portfolio will increase to 64,329 apartments. Additionally, Fortune Magazine recently named Camden one of the country's "100 Best Companies to Work For."
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Legislative/Legal News
HUD Secretary Announces Recovery Act Funds to Clean up Lead in Housing
Digested From "HUD Secretary Donovan Announces Nearly $100 Million in Recovery Act Funds to Clean up Dangerous Lead in Housing"
RealEstateRama (05/15/2009)
HUD Secretary Shaun Donovan last month announced that his agency is making nearly $100 million in Recovery Act funding available to help eliminate lead-based paint and other health hazards from the nation's low-income housing. Together, these grants will help more than 50 local programs in 20 states and Washington, D.C., to safeguard young children from lead poisoning and create so-called "green collar jobs." HUD Deputy Secretary Ronald Sims remarked, "Not only will this program contribute to healthy, safe homes for all children and families, which is a top priority for HUD, but it will also support shovel-ready projects that are essential to getting Americans back to work and fixing the nation's economic crisis quickly and efficiently." Funded through the American Recovery and Reinvestment Act of 2009, the grants are being offered via HUD's Office of Healthy Homes and Lead Hazard Control. The recipients were qualified applicants in the fiscal 2008 funding cycle, but were not initially awarded grants because of the dearth of available funds at that time.
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New California Law Clamps Down on Apartment Landscapers
Digested From "Landscapers No Longer Have Option of Leaving Leaves in Street"
Chico Enterprise-Record (CA) (06/20/09)
In Chico, Calif., commercial landscapers servicing apartment communities will now have to take leaves to designated drop-off sites instead of leaving them in the street. The Chico City Council this past week adopted the changed ordinance. When landscapers and residents were previously permitted to pile leaves on the street during peak leaf season, they clogged the city's storm drains, left unsightly debris in the streets and created hazards for both drivers and bicyclists alike. Under the amended ordinance, Chico residents will still be allowed to place leaves in the street for pick up during peak leaf season. However, landscapers servicing apartment communities with four or more rental units will now be required to bring leaves to drop-off sites.
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Colorado Law Prompts Apartment Owners to Buy Detectors
Digested From "New Law Prompts Brisk Business for Carbon Monoxide Detectors"
Colorado Springs Gazette (06/18/09) by Paul Zubeck
In Colorado, sales of carbon-monoxide detectors have been brisk due to a state law that goes into effect July 1. In response to a string of carbon-monoxide poisoning deaths last winter, the measure requires detectors to be placed in homes and apartments when new residents move in. In particular, apartment owners wanting to retrofit their communities all at once have created a booming market for the devices, which typically run between $25 and $30 each in stores. Casey Hampton of Wilmar Industries in Aurora claims he has sold 10,000 of the detectors to apartment owners on the Front Range alone in just the last month. He marvels, "We can't keep them in stock. We're on back-order status." Beginning in July, the law requires carbon-monoxide detectors to be placed within 15 feet of bedrooms. Not included are apartments with long-term residents, existing homes that do not change hands and business offices. Laura Russmann, executive director of the Apartment Association of Colorado Springs, remarks, "A lot of properties are going to install them all and be done with it to be on the safe side." Russmann's organization initially opposed such laws, citing reliability concerns. Ultimately, though, the association offered its support because of the number of deaths involved and residents' desire for optimal safety. Still, she notes that the added expense is still not welcome during a recession when so many apartment owners are under such financial pressure. She states, "Some of the big management companies that handle 5,000 units might get a quantity [price] break, but still, it's significant"
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Georgia County to Freeze Apartment Rezoning
Digested From "Columbia County Issues 'Time Out' on Apartments"
WRDW-TV (GA) (06/17/09) by Katie Beasley
Commissioners in Georgia's Columbia County have voted in favor of a one-year moratorium on apartment rezoning. The county is issuing the freeze after receiving numerous citizen complaints about a perceived glut of apartments across the region. While the Columbia County Sheriff's Office supports the board's decision, others have called officials to task for placing limits on who can live in the county. Commissioners counter that the market for apartments is just not there at the moment, adding that they are seeing a boom in single-family housing permits.
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Michigan Police Department Schedules Apartment-Related Meeting
Digested From "ERPD Schedules Residential Rental Property Meeting"
Lansing State Journal (MI) (06/21/09)
In Michigan, the Eaton Rapids Police Department is set to host an organizational meeting for the owners of area apartment communities and other rental housing on July 1. The meeting will center around minimizing rowdiness, domestic disputes and other related problems in and around the Lansing suburb of Eaton Rapids. Local authorities have discovered that certain individuals move from property to property and present the same behavioral problems no matter where they live. By organizing area apartment owners for the purposes of information sharing, Eaton's police officers are hoping to alleviate many of these problems.
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