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Multifamily Investment, Leasing Off to Solid Start In 2011
Industry News
Aimco Cuts Q2 and 2011 FFO View On Debt Costs
Multifamily Construction Starts Decline in April
UDR Prices Senior Unsecured Notes
St. Louis Apt Vacancy Rates Fall to Pre-Recession Levels
Apartment Residents Now Rule in Metro Atlanta
Home Sales May Grow Thanks to Affordable Housing
Apartment Construction to Spike in D.C. Area
Legislative/Legal News
Apartment Manager Takes Big Bite Out of Crime in Alabama
Members of Congress Call for Probe of HUD Program
Albuqurque Apartments Look to Get Up to Code 
Providence Owners Back Effort to Tax Colleges, Hospitals
Orkin Works With NAA to Address Bedbug Problem
Apartment Residents Need to Buy Insurance Too
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Multifamily Investment, Leasing Off to Solid Start In 2011
Digested From "Multifamily Investment, Leasing Fundamentals Off to Solid Start In 2011"
CoStar Group (05/18/11) by Randyl Drummer
Investor interest in U.S. multifamily housing continued at a healthy clip in the early going of this year, as investment sales dollar volume soared 40 percent from January through March over the same period a year ago. CoStar Group data shows that more deals closed in this year's first quarter than in any three-month reporting period since mid-2005. Just under 4,000 multifamily sales transactions were recorded during the first three months of this year at a total volume of $9.4 billion. That is compared with $6.7 billion in first-quarter 2010 and only $3.76 billion in first-quarter 2009. Despite the heightened activity, though, sales transactions were only 22 percent of their mid-2007 market peak of $43 billion. Among residents, demand for apartments remained solid throughout this year's first three months, as the supply of new rental units continued to dwindle and the national apartment vacancy rate dipped to 7.4 percent. That is a decline of 100 basis points since the fourth quarter of 2009. CoStar real estate strategist Kevin White says that despite an uneven economic expansion, "fundamentally, the outlook for the economy remains one of recovery and growth, and CoStar remains optimistic about its prospects. That is good news for commercial real estate and good news for apartment demand." The District of Columbia and Los Angeles posted the highest year-to-date sales volume at $900 million, followed by the San Francisco Bay Area ($600 million), Phoenix ($500 million), and Long Island ($400 million).
Industry News
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Aimco Cuts Q2 and 2011 FFO View On Debt Costs
Digested From "Apartment Investment Cuts Funds From Operations View On Debt Costs"
Dow Jones Newswires (05/20/11) by Tess Stynes
Apartment Investment & Management Co. (Aimco) has cut its forecast for the second quarter and 2011 funds from operations on debt-refinancing related expenses. The REIT reduced its per-share estimates for FFO on a per-share basis by 15 cents to between 18 cents and 22 cents for the current quarter and $1.34 to $1.44 for the year. In April, Aimco confirmed that its first-quarter loss narrowed amid higher daily occupancy rates and average rents. Among commercial property owners, apartment managers have seen the benefit of economic recovery relatively quickly because the leases they offer are typically for shorter terms. Aimco focuses on owning and managing apartment communities in the 20 largest U.S. markets.
Multifamily Construction Starts Decline in April
Digested From "U.S. Home Construction Tumbles in April"
Washington Post (05/18/11) P. A11
Housing starts fell 11 percent in April to an annual pace of 523,000 and building permits fell 4 percent to 551,000, reports the Commerce Department. Single-family construction fell 5.1 percent to 394,000, and multifamily housing starts skidded 24 percent to the weakest pace of the year at 129,000. Economists polled by Bloomberg had projected a pace of 569,000 for housing starts and a 0.9 percent gain for permits to 590,000.
UDR Prices Senior Unsecured Notes
Digested From "UDR Prices Senior Unsecured Notes"
Zacks Equity Research (05/19/11)
UDR Inc. confirms that it has offered 4.25 percent senior unsecured notes worth $300 million that is scheduled to mature in June 2018. The apartment REIT has priced the notes at 98.988 percent of the face amount to yield 4.42 percent at maturity. UDR's plan is to use the cash raised from the debt offering for general corporate purposes. Increasing its liquidity is also an objective. As of the end of this year's first quarter, UDR had a liquidity of $700 million via a combination of cash and available capacity under its credit facility. UDR is among the best-positioned apartment REITs in the country, with the majority of its portfolio located in California and Florida and along the Atlantic Coast -- areas where housing costs have skyrocketed in the last few years and the rent versus own spread still remains high. Zacks researchers expect the housing meltdown will continue to help apartment REITs such as UDR, as the multifamily housing sector is expected to remain comparatively stable in the coming quarters as well.
St. Louis Apt Vacancy Rates Fall to Pre-Recession Levels
Digested From "St. Louis Multifamily Vacancy Rates Fall to Pre-Recession Levels"
REJournals.com (05/16/2011) by Dan Rafter
The apartment market recovery in St. Louis is expected to continue through the rest of this year, notes Marcus & Millichap Real Estate Investment Services. The firm recently released its 2011 multifamily housing outlook for the St. Louis metro area, which determined that St. Louis employers are due to add 22,000 jobs this year -- a 1.7 percent increase from 2010. Marcus & Millichap's report further notes that about 310 new apartments will come online in the St. Louis metro area during 2011, a substantial increase from the 38 rental units that were added in all of last year. All of the new units are being added to the St. Louis City South submarket. The firm's researchers further forecast that vacancy levels in the St. Louis apartment sector will drop 80 basis points between now and the end of December to 6.8 percent, which in line with pre-recession levels. In 2010, the vacancy rate slipped 160 basis points. Finally, asking rents in the St. Louis area will climb 2.2 percent in 2011 to $730 a month, as effective rents are on pace to increase 3 percent to $688 a month.
Apartment Residents Now Rule in Metro Atlanta
Digested From "Renters Now Rule in Metro Atlanta"
Atlanta Journal-Constitution (05/13/11) by Katie Leslie; John Perry
Based on new housing data from the U.S. Census Bureau, between 2000 and 2010, new housing units outpaced demand by 50 percent in four of the largest counties in the Atlanta metro area. As a result, more than 143,000 apartments, houses, and other units were vacant in 2010 and about half -- or 67,000 -- were for rent. Renter households find that the market favors them in negotiations, as more homeowners have become renters since the recession and the housing supply is so vast. However, apartment owners find that many current and prospective residents are looking for lower rents. The Connor Group President Larry Connor says as more people reassess the benefits and risks of homeownership, they may realize that "the American dream of having a house maybe isn't the right dream to have." Metro Atlanta has experienced hefty job losses that led to more foreclosures and a glut of low-income apartments on the market. Monthly rents have dropped as much as 20 percent between 2008 and 2010. However, to keep residents, many apartment owners had to offer such incentives as a free month's rent. Analysts are hopeful that the Atlanta region's rental housing market will improve in the coming years.
Home Sales May Grow Thanks to Affordable Housing
Digested From "Home Sales May Grow Thanks to Affordable Housing"
International Business Times (05/20/11) by Phoebe Chongchua
Some housing experts predict home sales will rise between 7 and 10 percent in 2011 from last year, thanks to an improving job market, sustained economic growth, and greater housing affordability. Low interest rates also are helping some transition from renting to owning in a market that is still facing a glut of distressed homes. Based on the National Association of Realtors' Affordability Index, those earning the national median income have 170 percent of the income they need to purchase a median-priced home.
Apartment Construction to Spike in D.C. Area
Digested From "Apartment Construction to Spike in D.C. Area"
Washington Business Journal (05/16/2011) by Tierney Plumb
Approximately 1,800 apartments will be delivered this year in the Washington, D.C., metro area -- nearly 3,600 fewer than in 2010. However, apartment residents will not be left out in the cold for very long. Indeed, a flurry of product is getting ready to flood the market in 2012, notes a Marcus & Millichap forecast. In the last six months, construction has started on 2,000 rental apartments, including around 800 units in D.C. alone. An additional 1,400 rental units will break ground in and around Washington from now until the end of December, creating one of the most extensive pipelines in the country. They range from Kettler Inc. and Douglas Development Corp.'s 250- to 260-unit community in Mount Vernon Triangle to Kettler's Three Metropolitan Park near Arlington, Va.'s Pentagon City Metro subway station. About 3,000 apartments are already in various stages of development and on pace to be ready for occupancy in 2012. A surge in completions may cause local apartment owners some concern. Analysts, though, expect the new rental units will be absorbed fairly quickly because of falling vacancy rates, a relatively healthy jobs market, and a large pool of short-tenure residents. Indeed, the Washington market is set to post one of the country's highest rates of job growth this year, expanding 2.9 percent. At the same time, a slowdown in completions and surging demand will cut the vacancy rate 90 basis points to 4.2 percent between now and the end of the year. Finally, asking rents are expected to increase 4.6 percent to $1,442 per month.
Legislative/Legal News
Apartment Manager Takes Big Bite Out of Crime in Alabama
Digested From "Jenny Moore Taking Back Birmingham and Homewood Apartments From Crime"
Birmingham News (AL) (05/20/11) by Carol Robinson
Apartment manager Jenny Moore is being hailed by police and residents alike for her aggressive approach in turning around formerly crime-ridden apartment communities in Birmingham and Homewood. In fact, the Homewood Police Department recently awarded Moore a Citizen Commendation for her efforts. Homewood Police Chief Jim Roberson states, "I've worked with apartments all over the county, and I can't say I've ever worked with anybody like Jenny Moore. If we had more like her, a lot of the problems we have with apartment complexes wouldn't exist." He is especially impressed with her efforts at two apartment communities in Birmingham -- Highland View and Highland Bluff. When her employer, Abbey Residential LLC, closed on foreclosed apartments in November 2010, Moore said she faced the overwhelming task of dealing with $300,000 in delinquency rent and crime issues among the nearly 1,800 apartments. She statesm "I've been doing this for 16 years, and never in my life have I had such a challenge. We came in with a zero tolerance policy for any criminal behavior." She first dealt with those who were behind on their rent and those living in apartments who were not supposed to be living there at all -- i.e. "squatters." She realized very quickly that she was going to have to work with the local police. She and Abbey Residential President J. Frank Barefield Jr. met with the command staffs of Birmingham and Homewood police and told them of their cleanup plans. Moore established a police substation on the property. In addition to regular police patrols in the area, she paid for two police officers to provide additional time in December and January. Moore, accompanied by at least one officer at all times, spent those first few months going door to door to "ferret out" any and all delinquents. In the first five months alone, she evicted 300 people. Loitering and drug activity remained a problem, particularly with the younger crowd. Those underage were told to be in their apartments or on the playground and not just hanging around in the community's parking lot. Regular cruises through the properties ensured that the rules were being obeyed. Moore states, "The criminal element has really gone down. Either the parents have straightened them out, or we have moved them out."
Members of Congress Call for Probe of HUD Program
Digested From "Members of Congress Call for Probe of HUD's HOME Affordable-Housing Program"
Washington Post (05/18/11) P. A13; by Debbie Cenziper
Citing a series of breakdowns that have stymied the development of hundreds of affordable housing projects, a bipartisan group of U.S. legislators is pressing Congress to review HUD's HOME program. Senate Banking Chairman Tim Johnson (D-S.D.) has joined with Sen. Richard Shelby (R-Ala.) to push for an investigation of the country's top housing-construction program for the poor, which provides $2 billion annually to local housing agencies to build and renovate homes nationwide.
Albuqurque Apartments Look to Get Up to Code
Digested From "Apartments Not Up to Code Could Be a Matter of Life or Death "
KOBTV-4 (05/17/11) by Christina Rodda
Each year, Albuquerque receives 200 complaints into the 311 call center about apartment communities, and Safe City Strike Force Director Joe Martinez says those calls often lead to the discovery of dozens of code violations, including non-working smoke detectors, heaters and air conditioners. Other calls have led to the discovery of missing fire escapes and even bed bug infestations and overflowing trash. With just a staff of seven, Albuquerque's Safe City Strike Force cannot do yearly inspections, placing the onus on the tenant to report many problems. Residents can demand that apartment managers fix a problem in a week by filling out a form and giving it to the landlord, and they are allowed to break their lease if the problem is not resolved. The city has a tenant/owner act, which states that apartment residents have the right to a safe place to live, which includes working smoke detectors and fire alarms, functioning heating and cooling units, and hot water among many other basic needs.
Providence Owners Back Effort to Tax Colleges, Hospitals
Digested From "Providence Landlords Back Effort to Tax Colleges, Hospitals"
Providence Journal (RI) (05/18/11)
Apartment owners and managers in Providence, R.I., have expressed their support for a bill that would give cities and towns the option to assess taxes on tax-exempt colleges and hospitals. They say the time has come for these nonprofit institutions to make a more substantial financial contribution to the cash-strapped city. "These are not your mom and pop's colleges. They are true economic powerhouses," said Mike Patch, president of the Providence Apartment Association. "They are not deserving of the public support that they once had." The proposal would allow cities and towns to charge up to 25 percent of what large nonprofit institutions would owe in taxes if their properties were not tax-exempt.
Orkin Works With NAA to Address Bedbug Problem
Digested From "Orkin Issues Statement on Recent Bedbugs Study"
Infection Control Today (05/15/11)
Orkin is working with litigation, risk management, and employment law professionals to develop a comprehensive plan to help address the operational implications of bed bugs. In partnership with the National Apartment Association (NAA), the American Hotel and Lodging Association (AH&LA), and the Building Owners and Managers Association (BOMA International), the pest-control company's on-demand webinar features association leaders conversing about the specific business challenges posed by bed bugs and experts addressing the complex operational implications of bed bug infestations. The webinar also touches on how affected industries can work together to help stop the cycle of bed bugs. Orkin this past week released a statement regarding a study published in Emerging Infectious Diseases, a publication of the U.S. Centers for Disease Control and Prevention (CDC), which reports that Canadian scientists detected drug-resistant staph bacteria in bed bugs from three hospital patients, thus suggesting that bed bugs may be involved in transmitting disease. Orkin's parent company, Rollins Inc., recently committed more than $200,000 to a major multi-year project with the University of Kentucky to conduct extensive bed bug research on bed bug biology, behavior, and control aspects.
Apartment Residents Need to Buy Insurance Too
Digested From "Renters Beware: You Need to Buy Insurance Too"
Daily Finance (05/16/2011) by Sheryl Nance-Nash
National Association of Insurance Commissioners President Susan Voss is urging apartment residents to purchase adequate insurance coverage. Voss, who also serves as Iowa Insurance Commissioner, states, "Some think that because the landlord has an umbrella policy, they don't need additional coverage. Then there are college students who believe their parents' homeowners insurance covers their apartment. People somehow don't think about renters insurance because their home is not a house that they own." She adds that people forget that even though they may not own the building, they own the contents of their apartment and replacing those possessions could be a major expense. Sadly, a lot of apartment residents affected by the recent tornadoes in the Midwest did not have renters insurance.
Abstract News © Copyright 2011 INFORMATION, INC.
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