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Macklowe Selling Manhattan Apartments
Industry News
AvalonBay Q4 2009 FFO Rises
Apartment Activity Is on Upswing in San Diego Area
Employees Are More Efficient and Loyal When Work Has Meaning
Dallas-Fort Worth Apartment Market Set for a Slow 2010
NAAEI Selects CallSource to Deliver Custom LMS for NAA Affiliated Associations, Members
New Year Could Bring New Apartments in Minnesota's Twin Cities
Equity Residential 4Q Results Jump 60 Percent
Camden Property Trust Announces Reduced Development Activity
BRE Properties Reports Fourth Quarter and Year 2009 Results
Legislative/Legal News
California Upholds Key Part of Sex Offender Law Affecting Apartments
Some Apartment Residents Want Santa Monica to Further Restrict Smoking
NY Utilities Offer Rebate Program
Philadelphia City Council Seeks Testing of Apartments for Lead
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Macklowe Selling Manhattan Apartments
Digested From "Macklowe Selling Manhattan Towers "
Wall Street Journal (02/02/10) P. C3; by Dawn Wotapka
Harry Macklowe has agreed to sell his last three Manhattan apartment buildings for $475 million, in a move that will provide the ailing developer with sufficient cash to shore up his shrinking real-estate empire. Chicago-based Equity Residential has purchased 777 Sixth Avenue, with 294 units and retail space, and RiverTower, with 323 apartments. The apartment REIT has also inked a deal to acquire the 26-story Longacre House tower with 293 apartments and retail space. The deals come as rising vacancies and declining rents have sent Manhattan apartment values spiraling downward. The price for the three assets represents a 30 percent to 50 percent discount from what they would have sold for near the market's peak, reports J.P. Morgan analyst Anthony Paolone. Macklowe, though, did not have the luxury of waiting until the New York apartment market rebounded. He has been strapped for cash since the first quarter of 2008, when he failed to repay creditors some $7 billion of debt he took on to purchase seven Manhattan office buildings at the market's peak from Blackstone Group LP. Following the close of the three-property transaction, Equity Residential will own and manage 7,320 apartments throughout the New York metro area.
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Industry News
AvalonBay Q4 2009 FFO Rises
Digested From "AvalonBay Quarterly FFO Rises"
Zacks Equity Research (02/04/10)
AvalonBay Communities Inc. posted fiscal Q4 2009 funds from operations (FFO) of $52.7 million versus $23 million for the same period a year earlier. For the full year, FFO totaled $313.2 million compared to $315.9 million the previous year. Quarterly revenues, meanwhile, fell 0.3 percent year-over-year to $220.7 million. For the full year, revenues rose 0.4 percent on a year-over-year basis to $886.7 million. AvalonBay completed development on four apartment communities during the October-through-December stretch, totaling 1,382 rental units. Among them were Avalon White Plains in White Plains, N.Y., and Avalon at Mission Bay North III in San Francisco. For the 12 months ended Dec. 31, the REIT completed a total of nine communities containing more than 2,500 apartments. As of the end of the year, AvalonBay had seven apartment communities in its development pipeline.
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Apartment Activity Is on Upswing in San Diego Area
Digested From "Apartment Activity Is on Upswing"
San Diego Union-Tribune (02/04/10) by Roger Showley
According to Marcus & Millichap's annual apartment report covering 44 metro areas, San Diego County's apartment market ranks second nationwide in its outlook for stability and possible growth in 2010. The county trails only the District of Columbia in the yearly survey. Kent Williams, regional manager of the real estate investment services firm's San Diego office, remarks, "With property performance expected to be steady throughout much of the metro area, investment activity will likely pick up this year." Marcus & Millichap's research shows that twice as many apartments will be completed this year compared with 2009 -- from 541 to 1,100, in fact. Vacancies, meanwhile, are on pace to rise 0.2 of a percentage point to 5.4 percent -- an improvement from the 1.1 percentage point increase last year. After concessions and discounts, the county's average monthly rent is also expected to rise by 0.1 percent to $1,250. Aaron Bove, an apartment expert at Marcus & Millichap, said the outlook for San Diego communities will vary depending on location and quality. He expects middle-market communities charging an average of $950 to $1,200 for two-bedroom apartments, will likely fare the best. One factor that may push vacancies down, he concluded, is the arrival this spring of the aircraft carrier Carl Vinson. Its shipboard crew of 3,200 will be home-ported in San Diego. The carrier Nimitz is also returning this spring, and the military demand on area apartments is likely to increase occupancies at least until the Nimitz relocates for repairs in the Northwest.
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Employees Are More Efficient and Loyal When Work Has Meaning
Digested From "More Than a Paycheck"
Wall Street Journal (02/05/10) P. W11; by Philip Delves Broughton
Author Philip Delves Broughton reviews Daniel Pink's new book, "Drive: The Surprising Truth About What Motivates Us," which finds that workers are more efficient and even more creative when their work has personal meaning. Pink finds that too many workplaces are looking to optimize efficiency by making their employees clock in and out, attend compulsory meetings, and receive pay for performance. He calls this "de-motivating through excessive control." What they should be doing, he contends, is giving staffers the opportunity to do their best work by granting them higher levels of autonomy. Broughton recommends the book and agrees with most of Broughton's findings, concluding, "Work that allows us to feel in control of our lives is better than work that does not."
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Dallas-Fort Worth Apartment Market Set for a Slow 2010
Digested From "Area Apartment Market Set for a Slow 2010"
Fort Worth Business Press (02/08/10) by Aleshia Howe
Dallas/Fort Worth's apartment sector rose six places to place in the No. 23 spot on Marcus & Millichap Real Estate Investment Services' newly released 2010 National Apartment Report. The study ranks 44 apartment markets based on a series of year-long, forward-looking supply and demand indicators. Even with Dallas/Fort Worth moving up in the rankings, researchers surmise the Metroplex is due for a slow 2010 because of affordable home prices and oversupply concerns. The report reads: "Vacancy is set to hit a cyclical high, driving operators to widen concessions to nearly seven weeks of free rent by year end." Meanwhile, the hyper-competitive submarkets that emerged in last year's fourth quarter are expected to transition into groups of adjacent areas competing for tenants. The report expects the late arrival of the recession to the Dallas-Fort Worth Metroplex has enabled area apartment owners to study its impact on multifamily housing fundamentals in alternative metro areas. Consequently, some operators are facing negative net operating income and "refinancing may preserve equity by selling assets in advance."
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NAAEI Selects CallSource to Deliver Custom LMS for NAA Affiliated Associations, Members
Digested From "NAAEI Selects CallSource to Deliver Custom LMS for NAA Affiliated Associations, Members"
UNITS (02/10)
CallSource has announced the expansion of beta testing of the Learning Management System (LMS) it is developing for the National Apartment Association Education Institute (NAAEI). Maureen Lambe, NAAEI's executive vice president, states, "The NAAEI seeks to improve communication with and provide additional value to its local and state apartment associations around the country. After reviewing proposals from various education and technology companies, the NAAEI selected CallSource to design a customized learning management platform and to help develop content for the benefit of all our affiliates and their members." The LMS makes Web-based education accessible 24 hours of day, 365 days a year. It can deliver course and seminar content from the NAAEI and individual affiliates, with each individual's certification and training history to now remain visible to NAAEI even when they move from region to region or company to company. Lambe adds, "This highly affordable system will . . . give local and state apartment associations an option to license or otherwise share content with one another." The National Apartment Association Education Institute (NAAEI) is the education arm of the National Apartment Association. For its part, CallSource has trained tens of thousands of multifamily housing professionals.
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New Year Could Bring New Apartments in Minnesota's Twin Cities
Digested From "2010 Could Mean More New Homes, Apartments in Twin Cities"
Finance and Commerce (02/03/10) by Bob Geiger
Marcus & Millichap Real Estate Investment Services forecast that 480 apartments will be completed by developers in 2010 throughout the Minneapolis-St. Paul area. This number represents a 0.3 percent expansion for the Twin Cities' inventory. Marcus & Millichap added that the Twin Cities economy "is poised to be one of the first metros in the Midwest to emerge from the recession." The region's diverse employment base, including 22,000 new positions primarily in education and the health services sector, is the key enabler for new apartment development. Apartment vacancy is forecast at 5 percent for the end of the year, which has Marcus & Millichap predicting that owners will continue to reduce rent by 2.3 percent in an effort to maintain occupancy.
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Equity Residential 4Q Results Jump 60 Percent
Digested From "Equity Residential 4Q Results Jump 60 Percent"
Associated Press (02/03/10)
Equity Residential's Q4 2009 results soared nearly 60 percent, but the Chicago-based apartment REIT missed Wall Street analysts' consensus estimates. After distribution of preferred shares, Equity Residential reported quarterly funds from operations of $126.9 million for the three months ended Dec. 31 versus FFO of $79.1 million in the same period a year earlier. Fourth-quarter results included a 40-cent-per-share charge from a write-down on land parcels the REIT booked in the year-earlier period. Total revenue, meanwhile, fell to $483 million from $501 million year over year.
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Camden Property Trust Announces Reduced Development Activity
Digested From "Camden Property Trust Announces Reduced Development Activity and Related Charges to Earnings"
Business Wire (02/02/09)
Camden Property Trust last week announced a reduction in the number of planned apartment development projects it expects to undertake and the charges related to such actions. The REIT's decisions were the result of Camden's quarterly strategic review taking into consideration the current and anticipated economic climate. Camden will recognize a charge of approximately $85.6 million in last year's fourth quarter, reflecting a $72.2 million non-cash reduction to the previous carrying value of $109.9 million for land holdings for eight future apartment communities the company has postponed for the foreseeable future and a $13.4 million charge associated with a land development joint venture. Camden presently has five wholly owned land parcels held for future apartment development, which are not affected by these actions. Camden plans to continue its predevelopment activities for each of these five parcels in the year ahead. The company currently does not expect to start work on any new development during the first and second quarters. Future construction starts will be evaluated based on the REIT's then current assessment of market, economic and capital markets conditions. Camden Chairman and CEO Richard Campo remarks, "Development remains a core competency for Camden. We believe that market conditions will improve in the future, allowing us to start some of the projects we have delayed."
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BRE Properties Reports Fourth Quarter and Year 2009 Results
Digested From "BRE Properties Reports Fourth Quarter and Year 2009 Results"
Business Wire (02/02/10)
BRE Properties Inc. this past week posted operating results for the quarter and year ended Dec. 31. Fourth-quarter funds from operations (FFO) totaled $16 million as compared with $36.1 million for the same three-month period a year earlier. For the annual period, FFO tallied $120.8 million compared with $141.8 million for 2008. The San Francisco-based REIT owns and manages apartment communities, mostly in various supply-constrained Western U.S. markets. BRE's portfolio currently includes 73 apartment communities totaling more than 21,200 rental units in California, Arizona and Washington.
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Legislative/Legal News
California Upholds Key Part of Sex Offender Law Affecting Apartments
Digested From "California Supreme Court Upholds Key Part of Sex Offender Law"
Sacramento Bee (CA) (02/03/10) by Denny Walsh
Last week, the California Supreme Court voted 5-2 in rejecting some challenges to residency restrictions for sex offenders and sent others back to lower courts. Four paroled sex offenders argued that the 2006 Jessica's Law, which requires them and thousands like them to live at least 2,000 feet away from local parks and schools, has been applied retroactively in violation of the state Penal Code and U.S. Constitution. The high court turned back those challenges. However, the majority also ruled that any decision must be based on how the statute was applied to an individual. The court ordered those parts of the four cases sent back to their respective trial courts to flesh out the factual scenarios.
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Some Apartment Residents Want Santa Monica to Further Restrict Smoking
Digested From "Some Renters Want Santa Monica to Further Restrict Smoking"
Los Angeles Times (02/03/10) by Martha Groves
Santa Monica has already outlawed smoking in such public spaces as beaches and parks, outdoor dining areas, bus stops and farmers markets. In 2009, over the objections of many rent-control advocates, the city adopted an ordinance banning tobacco smoke in indoor and outdoor common areas of apartment communities. However, a prohibition on smoking on private patios and balconies marks a line that Santa Monica politicians seem hesitant to cross for fear of offending the powerful Santa Monicans for Renters' Rights group in an election year. The issue is particularly potent in Santa Monica, where nearly 70 percent of residents rent their housing. Patricia Hoffman, chairwoman of the rights group, states, "You can't just pull away rights. You can ban smoking in new buildings. You can ban smoking in leases with new tenants. But if somebody is an existing tenant and has essentially the right to smoke, and smoking is a legal behavior, then it's pretty hard to take away a legal right from someone." Some apartment owners are requiring that new residents agree not to smoke. Bill Dawson, vice president of the locally based Sullivan-Dituri property management company, recently instituted such a policy at one of the courtyard apartment communities he oversees.
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NY Utilities Offer Rebate Program
Digested From "NYSEG and RG&E Announce Rebate Program"
WICZ 40 (NY) (02/04/10)
New York State Electric and Gas (NYSEG) and Rochester Gas and Electric (RG&E) have instituted a replacement and rebate program for refrigerators and lighting in five- to 50-unit apartment and condominium communities. Replacing common area lighting with energy efficient lighting, installing up to six compact fluorescent light bulbs in living areas, and replacing refrigerators can garner rebates of up to 50 percent of the cost or up to $300 toward replacement costs for eligible models. Mark Lynch, president of NYSEG and RG&E, said the improvements "will help property owners and [residents] reduce their energy costs immediately and for years to come." The rebates are offered in accordance with a July 2009 order from the New York State Public Service Commission that approved multifamily housing efficiency programs for utilities across the state.
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Philadelphia City Council Seeks Testing of Apartments for Lead
Digested From "City Council Seeks Testing of Rental Properties for Lead"
Examiner (Baltimore) (01/31/10) by Jennifer Ellis May
City councilors in Philadelphia have proposed mandatory lead testing in city apartments constructed prior to 1978, the year that lead was banned in all housing. The legislation is being endorsed by Mayor Michael Nutter and, if passed, will compel landlords to prove that their buildings are safe for habitation by kids. According to the Philadelphia Citizen for Children and Youth, an estimated 2,500 kids in the city are diagnosed with lead poisoning each year -- in part, it argues, because many landlords fail to comply with municipal housing codes governing lead-based paint.
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