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Economic Cycle Research Institute Economist Offers Jobs Forecast 
Industry News
Hard-Luck Tampa Apartment Residents Get Help From an Auto Industry Idea
Charlotte Apartment Residents Opt for Luxury Living
Apartments Seen as Good Investment
Home Properties Announces ATM Common Share Offering Program
Equity Residential Announces Tender Offer by ERP Operating Limited Partnership
San Diego Apartment Vacancies Tighten Up
Mid-America Apartment Communities Announces Quarterly Dividends
Apartment Bargains Abound in Parts of Greater Hartford
The Next Stuyvesant Town? Deutsche Bank Report Examines Fallout
The Evolution of the College Dorm
Legislative/Legal News
Madison Apartment Owners to See Stricter Sanctions
Colorado Apartment Communities Unveil Month-to-Month Leases
Fixing Up L.A.'s Affordable Rental Housing Market
As Funds Increase, Review Finds Nearly 1 in 8 Weatherization Jobs Flawed
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Economic Cycle Research Institute Economist Offers Jobs Forecast
Digested From "Economic Cycle Research Institute Economist Offers Jobs Forecast"
CNBC.com (12/07/09)
Lakshman Achuthan of the Economic Cycle Research Institute gave his assessment of the nation's economy and the current jobs market on the Dec. 7 episode of CNBC's "Monday Morning Strategy Session." He believes the U.S. economy is in the early stages of a recovery, which he calls stronger than the last two recoveries "both in terms of jobs and [gross domestic product]." He adds, "Cyclically . . . this recovery keeps going. There's no double dip anytime soon." However, he pointed to trending data that supports his assertion that there will be smaller, but more frequent recessions in the years to come, which will keep unemployment numbers higher than some will be comfortable with. Achuthan concluded that "it would take a 10-year expansion" for jobs to go back to their pre-recession glory numbers, and he doubts any economist would predict such a lengthy up cycle.
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Industry News
Hard-Luck Tampa Apartment Residents Get Help From an Auto Industry Idea
Digested From "Tampa Bay Leasing Agents Apply Auto Industry Idea to Renters Who Lose Jobs"
St. Petersburg Times (FL) (12/06/09) by Rodney Thrash
As recently as June, Real Data Apartment Market Research reported that apartment vacancies in the Tampa Bay area had climbed to 10 percent -- the highest in over 10 years. In the north Pinellas and east and central Hillsborough communities, apartment vacancies have topped the 13 percent mark. With apartment vacancies continuing to rise, more owners and managers are taking a page from the automobile industry's playbook and covering lease payments of out-of-work residents who are trying to find new employment. One such community is the Breyley Apartments in Clearwater, which has begun to grant extensions on a case-by-case basis to allow residents additional time to come up with rent. Camden Property Trust, which manages a dozen apartment communities in Pinellas and Hillsborough, and GCI Residential are now offering layoff proof leases. If residents lose work and give 30 days' notice, Camden will let them out of their lease without penalty or try to get them into one of its less expensive communities for a lower cost. For its part, GCI Residential will forgive up to two months' rent to residents who lose their jobs. Marcia Woznicki, vice president of GCI Residential, comments, "It takes approximately three weeks to begin receiving unemployment benefits. We are taking that one step further by offering our clients up to eight weeks to re-establish employment." If they have not found work after 60 days, GCI Residential's policy will be to terminate the lease without penalty.
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Charlotte Apartment Residents Opt for Luxury Living
Digested From "Charlotte Renters Choose Living in Luxury"
Charlotte Observer (NC) (12/06/09) by Kirsten Valle
In the Charlotte metro area, apartments have taken their share of hits in this uncertain economy. At the region's newest, luxury apartment communities, though, owners and managers have noticed more interest due to lingering concerns about homeownership and the enticing specials many are offering. Engle Addington of Carolinas Real Data states, "It's great for renters. They're able to get a luxury apartment at a nonluxury price." Opened in the summer of 2007, for instance, The Residence is now 90 percent occupied and 96 percent leased. Monthly rents range from $1,500 to $3,800 per month. Beginning last spring, it started offering new move-in deals, such as three months of free rent, that have proven to be quite popular. Area analysts note that the apartment market soared throughout the 1990s as Charlotte's population mushroomed. Its pace slowed for a few years earlier this decade as apartment residents migrated toward easy mortgages and the promise of rapidly appreciating houses. Luxury communities where rents routinely top $1,000 a month for a one-bedroom unit have been springing up more in recent years to serve the steady flow of young professionals and wealthy transplants from other cities, observes Ken Szymanski, executive director of the Greater Charlotte Apartment Association. As the economy nose-dived, though, more people doubled up with roommates or moved in with family members. The Charlotte area's apartment vacancy rate topped 12.8 percent in August, an increase from 9.1 percent just a year earlier. Real Data statistics show that high-end apartments are indeed currently out in front of the turnaround. Addington remarks, "You would think that in a down economy, luxury apartments wouldn't be in as much demand. But renters are usually drawn to newer communities with amenities such as a pool."
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Apartments Seen as Good Investment
Digested From "Apartments Seen as Good Investment"
Denver Post (CO) (12/05/09) by Margaret Jackson
Rising apartment rents in the Denver metro area are greatly outpacing the increase in the prices of goods and services. To this end, analysts report, investing in apartment communities can serve as a hedge against inflation. According to Grubb & Ellis' research, Denver rents are 37.8 percent higher than inflation. Adjusted for concessions, rents are 26.8 percent over inflation. Steve Rahe, senior vice president of Grubb & Ellis' multi-housing investment group, observes, "Denver has a younger population of people moving into it and renting rather than buying. We have historically good immigration levels, and generally, people rent first." For those looking to buy area apartment communities, now is a good time because of the threat of inflation resulting from government spending and because no new construction is set to hit the market for several years. The apartment-vacancy rate for metro Denver fell to 7.4 percent during the third quarter -- its lowest level since the third quarter of 2008, reports the Apartment Association of Metro Denver and the Department of Local Affairs Division of Housing.
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Home Properties Announces ATM Common Share Offering Program
Digested From "Home Properties Announces ATM Common Share Offering Program"
PRNewswire (12/03/09)
Home Properties has initiated an At-The-Market (ATM) equity offering program through which it may sell as many as 3.7 million common shares. The stock would be sold via BofA Merrill Lynch and BMO Capital Markets, which have agreed to act as sales agents and/or principals. Home Properties President and CEO Edward J. Pettinella comments, "Home Properties' three-year cash flow projection, published with third-quarter 2009 results, shows that the company believes it will end each year with more than adequate cash or line of credit levels to fund normal operations and the dividend. This equity offering program provides us with additional capacity to raise equity quickly and cost effectively." Net proceeds will be used for general corporate purposes, which may include the repayment of debt and the development and redevelopment of apartment communities. Home Properties is a New York-based apartment REIT that owns, operates, develops and rehabilitates apartment communities throughout the Northeast and Mid-Atlantic states and Southeast Florida. Home Properties currently operates a portfolio of 108 apartment communities containing more than 37,100 rental units.
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Equity Residential Announces Tender Offer by ERP Operating Limited Partnership
Digested From "Equity Residential Announces Tender Offer by ERP Operating Limited Partnership for Any and All of Certain of its Outstanding Notes"
Business Wire (12/02/09)
Equity Residential's operating partnership, ERP Operating Limited Partnership, has commenced a couple of cash tender offers for any and all of certain notes outstanding. The goal of these offers is to utilize the more than $400 million of unrestricted cash on hand and available borrowings from the operating partnership's undrawn revolving credit facility in order to retire the Notes prior to their maturity. Doing so will not only reduce debt maturities, but it will also reduce the operating partnership's future interest expense. Equity Residential appears to be well-positioned to take advantage of future acquisition opportunities with nearly $250 million in 1031 exchange funds, funds from continuing property dispositions, the revolving credit facility and an untapped ATM share offering program. The Chicago-based REIT has ownership stakes in 496 apartment communities spread throughout 23 states and Washington, D.C. Together, these communities boast 137,489 rental units.
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San Diego Apartment Vacancies Tighten Up
Digested From "Apartment Vacancies Tighten Up"
San Diego Union-Tribune (12/04/09) by Roger Showley
The San Diego County Apartment Association reports that vacancy rates have dipped to 5 percent at area apartment communities. In its fall survey of 38,207 rental units, the association confirmed that the vacancy had dipped from 5.4 percent last spring to 5 percent, but was still up from 3.6 percent during the same period a year earlier. Meanwhile, the weighted average rent countywide was $1,189 versus $1,192 last spring and $1,188 a year ago. Robert Pinnegar, the association's executive director, states that apartment vacancies were down because of higher resident demand and few if any new communities. He further notes that apartment community sales have begun to increase, indicating an improved investment market. Vacancy rates in the San Diego metro area currently range from a high of 63.6 percent for 11 units surveyed in Cardiff to a low of 1.5 percent on 137 units in San Ysidro. Average rental rates ranged from $475 a month for a studio apartment in Logan Heights to $2,480 for a three-bedroom unit in Carmel Valley. In an earlier MarketPointe Realty Advisors survey, similar trends showed the vacancy rate this fall among large apartment communities was 4.4 percent. That is down from 5.3 percent back in the spring and up from 2.3 percent in the fall of 2008.
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Mid-America Apartment Communities Announces Quarterly Dividends
Digested From "Mid-America Apartment Communities, Inc. Announces Quarterly Common Dividend and Quarterly Preferred Dividend"
PRNewswire (12/02/09)
Mid-America Apartment Communities Inc.'s (MAA's) board of directors has approved a quarterly common dividend of $0.615 per share, which will be payable Jan. 29 to shareholders of record as of Jan. 15. MAA's board has also declared a full quarterly dividend of $0.51875 per outstanding share of its Series H Cumulative Preferred Stock, which will be payable Dec. 23 to shareholders of record as of Dec. 14. MAA is a Memphis-based multifamily REIT, which currently has ownership stakes in 43,120 apartment units across the nation's Sunbelt region.
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Apartment Bargains Abound in Parts of Greater Hartford
Digested From "There Are Plenty Of Rental Bargains Available In Greater Hartford"
Hartford Courant (CT) (12/01/09) by Anne M. Hamilton
Finding an apartment in the Hartford, Conn., metro area these days depends greatly on location. If you are looking for a high-end unit with a downtown view, monthly rents are still going to be high. Those looking for an apartment in the South Windsor, Vernon or Rocky Hill neighborhoods might be able to get several months' free rent or even a flat-screen TV from owners eager to reduce their apartment vacancies. Meanwhile, in the Farmington Valley where zoning laws make building new apartments difficult, there's less of a supply. As a result, fewer discounts or freebies are available to apartment hunters. The apartment occupancy rate in the Hartford area currently stands at 94.5 percent, reports Marc Louargand, co-director of the Center for Real Estate and Urban Economic Studies at the University of Connecticut Business School. That is a decrease of 2 percentage points from three years ago. Although that decline might seem modest compared to other cities faring worse, Marcus & Millichap Real Estate Investment Services broker Victor Nolletti observes that there are "pockets" that are "significantly higher." In the next year, economic conditions are expected to brighten even as continued high unemployment will make a full market recovery a remote possibility at best. Nolletti concludes, "As we gain jobs, that activity will eventually benefit the vacancy rate. [Expect] modest rental growth as we enter the third quarter of 2010."
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The Next Stuyvesant Town? Deutsche Bank Report Examines Fallout
Digested From "The Next Stuyvesant Town? Deutsche Bank Report Examines Fallout"
Wall Street Journal (12/01/09)
A recent report from Deutsche Bank looks at the October ruling on the Stuyvesant Town/Peter Cooper Village apartments in Manhattan and how other apartment owners and real-estate investors in the city could be affected. The ruling stated that the property owners improperly deregulated rents on thousands of units eligible for the J-51 tax break, and renters now are focused on determining how much of their rental payments they will recoup and whether their rents will be lowered. The report indicates that property owners and CMBS holders could record billions of dollars in losses as a result of the ruling, noting that 366 multifamily loans worth $5.8 billion have taken advantage of the tax abatement program. "The owners of these properties face potential lawsuits, the administrative challenge of determining the appropriate legal rent for thousands of units and lower operating income. In the longer term, owners may face decreased investor demand for rent-stabilized properties since the growth rate of cash flow is now severely limited," according to Deutsche Bank. The report also points out that many people living in rent-stabilized buildings in New York City will not see rents rise until 2017.
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The Evolution of the College Dorm
Digested From "The Evolution of the College Dorm"
Time (11/26/09) by M.J. Stephey
The college dorm has undergone a great transformation over the years, from all-male to co-ed, from cinder-block structures meant to shut out the outside world to apartment-style suites decked out with fireplaces, tanning salons, and hot tubs. Just 17 percent of the 113 structures built on college campuses between 1995 and 2004 were traditional dorms, with the trend toward more-luxurious private accommodations driven by student demand, according to school housing administrators. Students want privacy, technology, and the same amenities they had at mom and dad's, according to American Campus Communities CEO Bill Bayless. However, some campuses are creatively altering housing to ensure freshman students still get the interaction among students that traditional dorms used to provide. For instance, Berea College in Kentucky is offering crafts workshops and cafeteria food supplied by the school farm and requiring students to work 10 hours per week in campus jobs.
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Legislative/Legal News
Madison Apartment Owners to See Stricter Sanctions
Digested From "Landlords to See Stricter Sanctions"
Badger Herald (12/03/09) by Jake Begun
In Wisconsin, Madison's Housing Committee has worked to amend city ordinances regarding the notification of residents and the scheduling for rental property showings. The legislation that is now in place states that an owner may choose to enter the property over a period of three days for no more than three hours per day without at least a 24-hour notice with the intent to show the unit for sale or lease. Committee member David Sparer remarks, "The tenant has the exclusive right of possession of the premises under the state statute unless the landlord is doing a showing with previous notice. We're trying to help people not have disputes by being clearer about it." Sparer and his colleagues have approved an amendment to the legislation so an owner must now provide the date of the intended showing and either a specific time or a four-hour window as part of the notification. Nancy Jensen, executive director of the Apartment Association of South Central Wisconsin, expects the new amendment to be beneficial to both resident and owner alike. She adds, "There are many times when you've established a showing arrangement and being able to have some flexibility in the amount of showing time helps. The ability to have an extra hour of time when you’re trying to match schedules is convenient." Jensen adds that the additional hour helps owners to optimally utilize single days instead of multiple days.
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Colorado Apartment Communities Unveil Month-to-Month Leases
Digested From "Two Colorado Apartment Complexes Unveil Month-to-Month Leases"
Denver Post (CO) (12/06/09) by Margaret Jackson
Utah-based Wasatch Properties is launching a month-to-month leasing program at two of its Colorado apartment communities. Participants in the Simplify Your Life program pay full market rent and a full deposit, with monthly rates ranging from $500 to $1,700. A 30-day notice is required to end the month-to-month lease. Included are Indigo Creek in the Denver suburb of Thornton and Echo Ridge at Metzler Ranch in nearby Castle Rock. Janae Jarvis, Wasatch's regional vice president, states, "We recognized that in light of all the economic upheaval recently, many individuals and families may find themselves in unusual circumstances in which they can't commit to the typical six-month lease required by just about every apartment complex in the country. Our month-by-month leases are perfect for those in transition."
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Fixing Up L.A.'s Affordable Rental Housing Market
Digested From "Fixing Up L.A.'s Rental Market"
Los Angeles Times (11/27/09)
The editors of the Los Angeles Times note that while lawmakers agreed in November to spend an additional $11 billion on federal tax credits for home buyers, affordable rental units remain in short supply. The recession and tight credit markets are especially putting a crimp in efforts to build apartments reserved for people with modest incomes. According to the editors, there are simple things Congress can do to ameliorate this situation without borrowing billions more or increasing the government's involvement in the housing sector. A low-income-housing tax program that Congress created in 1986 already provides each state tax subsidies to allocate to developers through competitive bidding. To raise money to build their projects, developers sell the rights to 10 years of tax credits to banks and other investors. The resulting projects must keep rents for at least 20 percent of their units well below the median cost of housing in the area for a minimum of 30 years. The editorial points out the program "has been quite successful, attracting about $9 billion a year in private investment before the downturn. Since then, however, that investment has dropped by half, even as rising unemployment and underemployment have caused the demand for affordable housing to soar. Developers have been struggling to find buyers for the tax credits, even at steep discounts." To this, the Times staff is calling on Congress to extend for one more year a temporary change that allowed states to give developers cash in exchange for a portion of the credits they'd received but could not sell. To make the credits more attractive to investors, Congress should let them apply half the credits against profits in previous years instead of having to use them all against future earnings.
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As Funds Increase, Review Finds Nearly 1 in 8 Weatherization Jobs Flawed
Digested From "As Funds Increase, Review Finds Nearly 1 in 8 Weatherization Jobs Flawed"
Milwaukee Journal Sentinel (WI) (11/29/09) by Ben Poston
U.S. government stimulus money is set to double Wisconsin's weatherization budget over the next two years. Officials report that a $141.5 million infusion of federal stimulus funds will be used to weatherize more than 33,000 homes and approximately 3,000 apartment units through 2011. This will entail everything from adding attic insulation to installing new furnaces. However, a Milwaukee Journal Sentinel review of state records since 2007 found weatherization work done on hundreds of low-income homes failed to meet federal standards. Inspectors with Wisconsin's Division of Energy Services found 12.3 percent of the performance measures they spot-checked were below standard, potentially threatening the safety of some residents. At three of the state's 22 nonprofit agencies that award weatherization contracts, more than one out of six measures inspected did not meet standards from 2007 to this year. The Ashland County Housing Authority posted the worst results, with one-fifth of spot-checks failing to meet standards.
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