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National Apartment Market Maintains Momentum in July
Industry News
Freddie to Step Up Multifamily Loans
Cassidy Turley Bullish on Twin Cities Apartments
Bell Partners Boosts Apartment Portfolio
Changing Demographics Boost Rental Housing
First-Ever LEED Platinum Student Housing at USC
Apartment Vacancies in Longmont (Colo.) Match 10-Year Low
Cortland Partners Buys Five Building Apartment Portfolio
Rent-vs.-Own Equation Changed
Rothschild Realty Managers Fund Invests in Calif. Multifamily
About 250 New Apartments Proposed Near Ball State University
Legislative/Legal News
Plans to Fix Fannie and Freddie's Foreclosure Mess Could Misfire
Minn. County Considers Smoking Ban for Health of Residents
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National Apartment Market Maintains Momentum in July
Digested From "After Strong First Half, National Apartment Market Maintains Momentum in July"
MarketWatch (08/31/11)
The newest research by Axiometrics Inc., a provider of data and analysis on the multifamily housing sector, shows that the strong upward momentum on apartment rents in the first six months of the year continued throughout July, as annual effective rent growth reached 5.36 percent for the month. This compares optimistically to the peak growth rate of 5.94 percent for the United States, which took place during the previous growth period in the second quarter of 2006. Year-to-date effective rental rates -- rents net of concessions -- through July 31 increased by 4.80 percent, which is not only ahead of the 4.01 percent growth rate at the same point 12 months ago, but also ahead of the full-year growth rate for 2010 of 4.64 percent. The national occupancy rate in July essentially remained flat compared to the previous month, at 93.95 percent. "Effective rents increased 0.64 percent nationally between June and July, which was higher than for the same period in 2010, but the lowest monthly rate so far this year," said Axiometrics Inc. President Ron Johnsey. "However, we believe that the low relative rank is more a testament of how strong 2011 has been so far than it is a sign that the market is slipping."
Industry News
Freddie to Step Up Multifamily Loans
Digested From "Freddie to Step Up Multifamily Loans"
Wall Street Journal (08/31/11) by Al Yoon
Freddie Mac plans to ramp up its program to buy loans backed by apartment communities, making financing more available for landlords and helping to shore up the multifamily housing market. Freddie Mac, the government-backed mortgage-financing behemoth, will likely finance more than $16 billion in apartment-building loans this year, up from $14.8 billion in 2010, said David Brickman, head of multifamily funding for Freddie Mac, based in McLean, Va. More than 50 percent of this year's total will come in the latter half, including a recently-closed $73.5 million loan on Rosslyn Heights apartments, a 366-unit development in Arlington, Va. The majority of the loans will be bundled into commercial mortgage-backed securities (CMBS) and sold to investors, which have demonstrated hearty demand for CMBS that are issued by government-backed entities such as Freddie Mac and Fannie Mae.
Cassidy Turley Bullish on Twin Cities Apartments
Digested From "Cassidy Turley Bullish on Apartments"
Minneapolis / St. Paul Business Journal (08/29/11) by Sam Black
Cassidy Turley this past week issued its Multifamily Market Snapshot report, in which it revealed that it remains quite bullish on Minnesota's Twin Cities apartment market. In the study, the firm details the low metro vacancy rate (2.4 percent) and rising rents (above $2 per square foot in Uptown and Downtown Minneapolis) as the main reason why dozens of new apartment communities are now in the planning and development stages. According to the research, there were 829 units of market-rate apartments under construction as of July 1 along with 418 units of student housing, 404 units of senior housing, and 163 units of affordable housing. Cassidy Turley adds that the total units under construction -- 1,814 -- is only a fraction of the nearly 8,600 proposed apartments in the Twin Cities that the firm is now tracking. So far, over-building is not a cause for concern. The report concludes: "The old saying is to 'never count your chickens before they hatch,' but Cassidy Turley is confident the multifamily housing market is something we can count on. With Minnesota consistently being one of the top economically performing states in the country that also has a constantly upward trending population growth, demand for rental properties is going to grow for quite some time."
Bell Partners Boosts Apartment Portfolio
Digested From "Bell Partners Boosts Apartment Portfolio"
Business Journal of the Greater Triad Area (09/02/11) by Owen Covington
Bell Partners recently purchased a couple of new apartment communities in Dallas and Nashville as part of a $310 million deal. The purchases demonstrate the company's focus on multifamily housing after getting rid of its senior living assets and commercial properties. Specifically, Bell Partners has purchased The Ansley at Park Central Apartments in Dallas with 490 units for $51.5 million. Its other recent acquisition was 1700 Midtown Apartments in Nashville for $27.4 Million. The new additions brings the company's acquisition total to $160 million since the first of this year. The company owns and/or manages around 220 apartment communities nationwide and was ranked as the 10th biggest apartment operator in the United States by the National Multi-Housing Council as of Jan. 1.
Changing Demographics Boost Rental Housing
Digested From "Stat of the Day: The Rise of the Renter"
AdAge.com (08/29/11) by Peter Francese
According to 2010 Census data, nearly all of the household growth between 2000 and 2010 took place among Baby Boomer and older households, with a smaller increase among millennial renters. Experts expect the next decade of household growth to be among millennials as boomers become senior citizens, with millennials making up to 84.7 million households compared to 81.5 percent of baby boomers. Millennial and Generation X households comprise 38 percent of the 116.7 million U.S. households, but they do not outnumber the Boomer households. As the impact of the housing bust continues to be felt along with the impact of widespread foreclosures, those who rent their homes have risen faster than those who own as part of the age distribution.
First-Ever LEED Platinum Student Housing at USC
Digested From "First-Ever LEED Platinum Student Housing at USC"
SustainableBusiness.com (08/29/11)
The University of Southern California (USC) expects to receive the first-ever LEED platinum certification for a student housing community when it opens West 27th Place later this week. The eco-friendly aspects of the mixed-use development start with location. The project is located near public transportation, including a station on the new Expo light rail line and a stop on USC Transit's A Route. The parking garage, meanwhile, offers preferred spaces for low-emitting and fuel-efficient vehicles along with abundant bicycle storage. David Hilliard, president of Symphony Development, the developer of West 27th Place, adds, "We have high quality flooring in both the laminated hardwood and carpeted areas. We were able to receive LEED points because the flooring was LEED-rated based on recycled materials." Other features range from a saltwater swimming pool and spa that uses fewer chemicals than a conventional pool and a 24-hour fitness center and computer lab designed with recycle materials in the furnishings and floor coverings. The eco-friendly amenities also include motion-sensing lights in common areas, drought-resistant landscaping, and Energy Star appliances in all of the 161 apartments. Finally, West 27th Place generated approximately 95 percent less construction waste than other similar projects through the use of modular framing and the recycling of materials like wallboard.
Apartment Vacancies in Longmont (Colo.) Match 10-Year Low
Digested From "Apartment Vacancies Match 10-Year Low"
Longmont Daily Times-Call (CO) (08/28/11) by Tony Kindelspire
The apartment vacancy rate in Longmont, Colo. matched a decade low in this year's second quarter at 2.6 percent. Longmont hit 2.6 percent in the fourth quarter of 2010. Prior to that, the last time the vacancy rate was this low was when it fell to 2.2 percent in the third quarter of 2000. Ryan McMaken, spokesman for the Colorado Division of Housing, remarks, "Anything below 5 percent shows you're moving toward a really, really tight market. It's a very new experience for a lot of people in the industry. It's certainly very new for people in their 20s who have never experienced these tight markets before." Statewide, the combined vacancy rate for apartments in all metro areas was 5.2 percent during the April-through-June period -- also a 10-year low. The Division of Housing partnered with the Apartment Association of Metro Denver to conduct the study. McMaken said he doesn't think foreclosures have had much any significant effect on apartment vacancy rates in Colorado, adding, "The larger effect seems to be from people who, five years ago, were renting but then decided to go buy a house."
Cortland Partners Buys Five Building Apartment Portfolio
Digested From "Cortland Partners Buys Five Building Apartment Portfolio"
Citybizlist Atlanta (09/01/11)
Cortland Partners has acquired a portfolio of five Atlanta-area apartment communities containing more than 1,500 rental units. The total purchase price was $37.5 million. The properties, which were owned by Bethany Group, had fallen into receivership. Among the communities changing hands are: Somerset at the Cross Apartments in Tucker, Ga.; Steeple Chase Apartments and Sinclair Apartments in Norcross, Ga.; and Alden Ridge Apartments in nearby Clarkston. Three of the properties are more than 93 percent leased and the other two are more than 82 percent full. The acquisition brings the Atlanta-based company's portfolio to more than 5,900 apartments.
Rent-vs.-Own Equation Changed
Digested From "Rent-vs.-Own Equation Changed"
Washington Times (08/26/11) P. D15; by Michele Lerner
Before the financial crisis, mortgages were easier to obtain without hefty down payments or high credit scores and property prices were moving upward, making homeownership a seemingly good investment. However, today's buyers need to more carefully consider their finances, current lifestyle, and the lifestyle they want five years from now before making a purchase. "I tell everyone, 'Make sure you like the place you are buying, because you may have to live in it for a long, long time,'" says Washington, D.C.-based Realtor David Getson of Coldwell Banker Residential Brokerage. He says buyers should consider renting if they plan to temporarily or permanently leave the area in the short term. Others say buyers need to make purchase decisions with their retirement goals in mind, and they also need to consider their long-term job security. Mark Goldstein, president of Rockville, Md.-based Capitol Funding, says unless they plan to stay put for six years or more, purchasing a home does not make sense right now for many would-be buyers.
Rothschild Realty Managers Fund Invests in Calif. Multifamily
Digested From "Rothschild Realty Managers Fund Invests in CA MF"
GlobeSt.com (09/01/11) by Carl Gaines
Five Arrows V, an investment fund managed by Rothschild Realty Managers, has committed to fund JH Real Estate Operating Partners (JHREOP) up to $100 million for the acquisition of apartment communities across California. NorthMarq Capital senior director Ory Schwartz served as the broker and advisor in the transaction. The fund has already made its initial purchase, acquiring Waterstone Apartments in Riverside for $32.5 million. The terms of the transaction will allow JHREOP to access the funds provided to pursue the acquisition of multifamily properties and development sites. Schwartz confirms that all investment will take place in California. Rothschild Realty Managers director Justin Hakimian states, "The principals of JHREOP have a long and successful track record as owners/operators of multifamily properties in California. We believe the team has a great opportunity to grow its portfolio and are excited to be able to participate in its future growth."
About 250 New Apartments Proposed Near Ball State University
Digested From "About 250 New Apartments Proposed Near Ball State University"
Muncie Star Press (IN) (08/29/11) by Seth Slabaugh
Two new apartment communities are being proposed near Ball State University in Muncie, Ind. -- one catering to student life, and the other geared toward families and working adults. Illinois-based BDCIN has filed a zoning petition for two identical apartment buildings, each of which would contain 16 units. Additionally, Charlotte-based Campus Crest Communities filed a zoning petition for a 216-unit apartment community in a large grassy field nearby. Campus Crest CEO Ted Rollins says the company's apartments are much different than most off-campus student housing communities. He states, "We have a proprietary program that we've developed . . . called SCORES, which stands for social, cultural, outreach, recreational, educational, and spiritual." The new communities will include fire pits, grilling areas, swimming pools, volleyball and basketball courts, tavern-style game rooms, exercise rooms, coffee bistros, and libraries with long Ivy League-like wooden tables. Both must go before the city's planning commission, who will conduct hearings on the matter.
Legislative/Legal News
Plans to Fix Fannie and Freddie's Foreclosure Mess Could Misfire
Digested From "Why Grand Plans to Fix Fannie and Freddie's Foreclosure Mess Could Misfire"
Forbes (08/31/11) by Stan Humphries
The U.S. government is currently planning to convert hundreds of thousands of foreclosures owned by Fannie Mae and Freddie Mac into rentals. On the surface, this plan sounds great. It would help the housing market by getting rid of much of the foreclosure inventory while creating rental options for many homeowners who are being supplanted by foreclosure. The flip side of the unfavorable purchase market has indeed been a booming rental housing market. Supply is reportedly as tight now as it was prior to the recession, and effective rents are slated to increase 4 percent this year. Similarly, the foreclosure epidemic is converting many homeowners into renters, thus increasing demand. Investors see a unique opportunity at hand: to purchase an asset cheaply and rent it out profitably.
Minn. County Considers Smoking Ban for Health of Residents
Digested From "County Considers Smoking Ban for Health of Residents, Buildings"
Minnesota Public Radio (MN) (08/31/11) by Mark Steil
As the number of smoking bans in apartment communities grows throughout Minnesota, Blue Earth County is considering one on its 84 public housing units for the health of residents and the sake of the buildings. County commissioners in charge of public housing are worried about the effects of second-hand smoke and building damage associated with smoking. Julie Hawker, president of the Greater Mankato Multi-Housing Association, said the elimination of smoking in the apartments would make it easier to rent the units. "You can advertise it as a smoke-free building," she notes. Mankato, Minn., is considering a similar ban with regards to its public multifamily housing.
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