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Post Properties Ends Attempt to Sell Company
Industry News
Post Properties' Shares Fall After Calling Off Sale
Orlando's Apartment Market Appeals to Both Brokers and Lenders
Ohio's Fifth Third Halts Loans for Apartments and Other Property
Fuel Costs Shift Equation for Life in Far Suburbs
Southern Nevada Apartment Rents Flatten in 2008
Sacramento Apartment Vacancies Down, Rents Up
California's East Bay Apartment Market Remains Flat
Legislative/Legal News
Dallas Tougher Than Houston on Apartments' Owners
Miami Beach Considers Using Mechanical Parking
Affordable Housing Overhaul Passes New Jersey Senate
New Indiana Law to Protect Those in Rent-to-Own Agreements
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Post Properties Ends Attempt to Sell Company
Digested From "Post Properties Ends Attempt to Sell Company"
Associated Press (06/25/08)
After five months of trying to sell the company and receiving no definitive offers, Post Properties Inc. has decided to formally end the process. Post confirms that all potential bidders have withdrawn from the sale process, which originally began in January after the Atlanta-based apartment REIT received an unsolicited buyout offer from Cadim and Williams Realty Advisors LLC. Post Properties' board of directors will continue to pursue other strategies to increase shareholder value, including asset sales and construction loan financing.
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Post Properties' Shares Fall After Calling Off Sale
Digested From "Post Properties Finds No Takers; Stock Falls"
Wall Street Journal (06/27/08) P. C3; by Nick Timiraos
After announcing on June 25 that "all potential bidders" had withdrawn from its five-month sale process, Post Properties Inc.'s shares fell much further than the overall market the following day--down 6.7 percent to $30.39 in composite trading on the New York Stock Exchange. Last summer, the Atlanta-based apartment REIT rebuffed an offer from founder and former CEO John Williams in the $56-to-$59-a-share range that was not subject to financing. Recently, Williams spurned Post with a bid that rallied the REIT's shares above $43 from the low $30s. But the offer was withdrawn near the end of this year's first quarter. Analysts now expect Post will seek to sell off individual assets or even portfolios of apartment communities. Post currently has a market capitalization of $1.36 billion, owning more than 22,400 apartments in 62 communities.
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Orlando's Apartment Market Appeals to Both Brokers and Lenders
Digested From "Brokers, Lenders Like Prospects for Orlando Apartment Market"
Orlando Sentinel (FL) (06/30/08) by Jerry W. Jackson
According to a newly released annual survey by MPF Research Inc. and CB Richard Ellis, a relative lack of apartment construction in the Orlando metro area has that sector looking more appealing for investment purposes over the next few years. Average Orlando-area apartment rents recorded a rare decline of nearly 1 percent last year. However, the forecast is for a 3.9 percent rent rebound in 2008 and a peak increase of 4.1 percent in 2010, when some researchers project the local apartment vacancy rate could be as tight as 1.4 percent. That would be the tightest local apartment market in over a decade and could be why buyers snapped up approximately 12,000 local apartments in 2007 for a combined $1.06 billion. Although that is substantially below the record $3 billion in sales set in 2006, it was only the fourth year in the Orlando market's history that apartment sales eclipsed the $1 billion mark.
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Ohio's Fifth Third Halts Loans for Apartments and Other Property
Digested From "Fifth Third Halts Loans for Commercial Property"
Toledo Blade (OH) (06/26/08) by Gary T. Pakulski
In an effort to contain problems with bad loans, Ohio-based Fifth Third Bank has temporarily stopped making most loans for the construction and purchase of commercial properties. Specifically, Fifth Third has suspended all new developer and non-owner-occupied commercial property lending, including loans for apartments, shopping centers and office buildings not occupied by the owner. As of presstime, it was not clear how long the suspension will last. Karen Fraker, a Fifth Third spokesperson, remarks, "We're not seeking those types of loans, but if the right deal came along we would do it." The move has stoked fears among Toledo-area apartment owners and commercial developers, who are concerned about where they will obtain financing to complete deals. Harlan Reichle of CB Richard Ellis/Reichle Klein states that Fifth Third's decision to tighten commercial property lending was not prompted by problems specific to the Toledo market, but more to overall difficulties in U.S. credit markets. Apartment communities in the Toledo metro area remain profitable, partly because an influx of new residents that have moved from houses lost or sold in the country's mortgage crisis. Fifth Third Bank provides up to $100 million annually in financing for apartments, offices and other projects in and around Toledo.
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Fuel Costs Shift Equation for Life in Far Suburbs
Digested From "Fuel Costs Shift Equation for Life in Far Suburbs"
New York Times (06/25/08) P. A1; by Peter S. Goodman
Experts says rising gas and energy prices are exacerbating the housing slump, particularly in the far suburbs. Many homeowners in these communities are contemplating moves closer to the inner city, where homes tend to be smaller and cheaper to heat and cool and where commutes to work are shorter. Coldwell Banker reports that over 75 percent of would-be home buyers say high gas prices have made them more willing to settle in an urban locale. Moreover, Moody's Economy.com reports that residential prices in the suburbs of such cities as Philadelphia and San Francisco have declined more sharply than home prices in the urban core. While most observers predict there will be a gradual shift from the suburbs to city centers, some are making more dismal predictions. According to urban land use expert Christopher Leinberger, "Many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and '70s--slums characterized by poverty, crime and decay."
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Southern Nevada Apartment Rents Flatten in 2008
Digested From "Apartment Rents Flatten in 2008"
Las Vegas Business Press (06/25/08) by Tony Illia
Southern Nevada's apartment market has taken its share of hits from a souring economy, rising unemployment and the housing downturn. According to the latest Applied Analysis research, the valley's vacancy rate was 7.3 percent in the first quarter--a 1.4 percent increase from a year earlier. Monthly apartment rents, meanwhile, remained flat at around $888 a month. Garnering the highest rents was the southwest submarket at $1,016 a month. The northeast, meanwhile, had the lowest at $771 a month. Applied Analysis principal Brian Gordon states, "While current conditions remain somewhat challenging, the apartment sector is anticipated to experience a supply shortage during the next several years. More dramatic demand for housing is possible starting in 2010, depending on the performance of land prices, construction costs and other factors." The market's softening became evident in the January-through-March period with 1,678 move-outs. Carl Sims of Hendricks & Partners, a national multifamily real estate specialist, predicts, "Apartment [communities] will continue to face significant competition in 2008 from condo and single-family rentals. The average apartment vacancy rate will remain elevated and is expected to settle at 7.5 percent by year-end, while in 2009, stronger employment growth and an absence of new apartment deliveries will help drive the average vacancy rate down to 6.3 percent."
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Sacramento Apartment Vacancies Down, Rents Up
Digested From "Apartment Vacancies Down, Rents Up"
Sacramento Business Journal (06/24/08) by Michael Shaw
A new Hendricks & Partners report shows that the Sacramento metro area added only 168 new apartments during this year's first quarter, the lowest level for a January-through-March period since 2001. Additionally, building permits were issued for only 208 new rental units, the lowest total in a decade. However, area vacancy rates still managed to dip to 6.0 percent, as rents rose 1.9 percent to an average of $963 per month. Sales of apartment communities fell from 16 transactions in the first quarter of 2007 to just five during this year's period. The price of those transactions, though, climbed from $103 per square foot to $111. Davis was the submarket with the smallest vacancy rate in the first quarter--2.8 percent in communities with 50 or more units. Suburban Antelope had the region's highest vacancy rate at 7.1 percent. Finally, Elk Grove recorded the largest downward shift in apartment vacancies and was the only Sacramento submarket to post a decline in monthly rents. In last year's first quarter, 12.5 percent of apartments there were empty. That rate fell to 4.0 percent by March 31 of this year as average rents declined from $1,145 a month to $1,113.
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California's East Bay Apartment Market Remains Flat
Digested From "East Bay Apartment Market Remains Flat"
East Bay Business Times (06/20/08) by Jennifer Saunders
Analysts expect the multifamily housing investment market in Northern California's East Bay region will remain flat for the rest of this year, with lenders continuing to take a conservative approach to dealmaking. Even though the area's rental apartment sector is strong, with rising rents and relatively low vacancy rates, there is still considerably less credit available. Lenders are scrutinizing deals more closely than in years past, particularly the buyer's credit and each apartment community's recent cash flow. According to Hendricks & Partners research, there were only 11 apartment sector transactions in Alameda and Contra Costa counties during the first three months of this year versus 16 in the first quarter of 2007. Almost 50 percent of the active investors are institutional buyers, and about 25 percent are California-based private investors.
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Legislative/Legal News
Dallas Tougher Than Houston on Apartments' Owners
Digested From "Dallas Tougher Than Houston on Apartments' Owners"
Dallas Morning News (06/29/08)
An examination of Dallas' code enforcement system shows that the Lone Star State's third most populous city has been more aggressive than Houston, Texas' largest market, in demanding that apartment owners maintain decent conditions for residents. The latest Census Bureau estimates show that Dallas has approximately 235,000 homes occupied by residents who rent, while Houston has about 400,000. In addition to filing lawsuits, Dallas enforces a strict, graded inspection system for multifamily housing communities, inspecting every development at least once every three years and imposing administrative fees that can total thousands of dollars for code failures. This system, which has been in place since 1995, has managed to diminish resident complaints as the city moves toward annual inspections of every community. In Houston, city officials said earlier in June that they will soon begin regular inspections of all multifamily housing communities, but an exact timetable has yet to be set. Until now, the city has inspected communities mainly in response to complaints or when they were erected, remodeled or sold. Robert Doggett, who helped establish the Dallas city attorney's code enforcement section eight years ago, says any system driven by complaints is unlikely to be effective because many residents fear eviction or other forms of retaliation. Jennifer Richey, a Dallas executive assistant city attorney who heads the office's code compliance section, laments, "Some of the most horrific conditions we've seen have not been based on complaints."
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Miami Beach Considers Using Mechanical Parking
Digested From "Miami Beach Considers Using Mechanical Parking"
Miami Herald (06/28/08) by Tania Valdemoro
In Miami Beach, city commissioners are considering allowing multifamily residential developments and private commercial businesses to use mechanical parking. Such systems stack cars on top of each other or on specialized elevators to hoist them off the ground into a holding area. Commissioners gave preliminary approval on June 25 to a new ordinance that would result in the city's first privately owned mechanical parking systems. The goal is to revise the proposal at the Land Use Committee meeting in August before returning to the commission for final reading on Sept. 10. Since the mechanical systems allow developers to offer more parking than if they built a conventional garage, city planners crafted the ordinance to explicitly prevent developers from building more residential units than would have been permitted had they only been allowed to use a conventional garage. New hotels in Miami Beach's historic districts--which cannot add garages onto their structures--also could use mechanical garages to satisfy their parking requirements as long as 50 percent of their spaces were designated for public parking. Commissioner Saul Gross said he liked the measure, but adds, "'We need to discuss the formula we'd use for mechanical parking--how many parking spaces the public gets from this, how many developers would get and what happens to the parking impact fee."
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Affordable Housing Overhaul Passes New Jersey Senate
Digested From "Affordable Housing Overhaul Passes in the Senate"
Newark Star-Ledger (NJ) (06/24/08) by Tom Hester
The New Jersey Senate on June 23 approved legislation to reform the state's housing policies. The bill would use $20 million to finance affordable housing projects in urban areas. The money would be generated by a 2.5-percent fee on the value of commercial projects. However, some are concerned that this fee will be inadequate to cover the affordable housing funding, which would subsequently need to be paid for through higher property taxes. Gov. Jon Corzine assured Assembly Speaker Joseph Roberts that he would sign the legislation, which would also increase the maximum household income to qualify for affordable housing from $63,000 to $87,000. Corzine wants to create or rehabilitate 100,000 affordable homes over the next 10 years. Lawmakers will meet in the fall to discuss changes that would prevent suburban and rural towns from paying poorer areas to cover their affordable housing obligations and how these changes will be applied to projects already in the pipeline. Legislators will also consider reducing the number of new affordable homes that a town would have to produce by giving them credit for rehabilitated apartments that can be used as affordable housing.
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New Indiana Law to Protect Those in Rent-to-Own Agreements
Digested From "New State Law Will Protect Families in Rent-to-Own Agreements"
Muncie Free Press (IN) (06/20/08)
In Indiana, a new state law to expand "landlord-tenant" protections to rent-to-own agreements is set to take effect on July 1. According to state Sen. Tim Lanane (D-Anderson), a sponsor of Public Law 62, the change was made to ensure safe and affordable housing options for residents statewide. He notes, "Rent-to-own agreements are becoming increasingly popular as economic strains push families to seek alternative housing options. We want to ensure that those families and their landlords are protected under the law." The state's General Assembly last overhauled these laws six years ago, stepping up regulations on rental housing conditions and utility provision standards. According to current law, an owner is required to maintain electrical, plumbing, sanitary, and heating and cooling systems in safe working condition for the entire rental property. Among other provisions, owners are required to make reasonable efforts to keep common areas clean and in proper condition. For their part, residents are required to keep the rental property reasonably clean and to refrain from defacing, damaging, destroying or removing any part of the premises.
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