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Multifamily Lending Still in Good Health at Fannie Mae and Freddie Mac
Industry News
Apartments Insulated From Single-Family's Financial Woes, for Now
Apartment Rents Fall on Florida's Treasure Coast
Colonial Properties Trust Reports Q2 2008 Results
Pinnacle Names New President
BRE Properties Adds New Board Member and Promotes Executive
Apartment Donations in Florida Catch on
Apartment Communities Benefiting From International Investment
Apartment and Other Property Prices Chronicled
June Housing Starts Lifted by NYC Apartment-Code Change
AvalonBay Communities Names W. Edward Walter as Independent Director
Legislative/Legal News
Multifamily Housing Moratorium on Agenda in California Market
Falling Debris Halts Trump Apartment Tower in Connecticut
Pittsburgh Housing Authority Pushes for Utility Savings
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Multifamily Lending Still in Good Health at Fannie Mae and Freddie Mac
Digested From "Multifamily Lending Still in Good Health"
Sarasota Herald-Tribune (FL) (07/28/08) P. D8
Fannie Mae and Freddie Mac's multifamily housing loans are performing well because they are underwritten based upon each property's cash flow. Phil Weber, senior vice president of Fannie Mae's multifamily division, reports that the government-sponsored enterprise invested $20 billion in multifamily housing during the first six months of this year and is now looking to expand its product offerings. Freddie Mac, meanwhile, recently launched a multifamily housing initiative focusing on student housing to increase the amount of rental-housing loans it purchases. Multifamily underwriting is trickier than single-family lending, partly due to the fact that such ongoing costs as parking lot repairs and heating and air-conditioning maintenance are variable and difficult to estimate.
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Industry News
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Apartments Insulated From Single-Family's Financial Woes, for Now
Digested From "Apartments Insulated From Single-Family's Financial Woes, for Now"
GlobeSt.com (07/25/08) by Sule Aygoren Carranza
To date, the nation's apartment sector has remained somewhat insulated from the woes of the nation's housing market. Richard Moody of Mission Residential insists that the apartment sector has been on the rise for several years. According to the U.S. Census Bureau, the number of rental households by last year's fourth quarter surpassed the previous peak of 35.65 million in the fourth quarter of 1994. As of Q1 2008, there were 35.68 million rental households nationwide. A recent study conducted by Innes Works Consulting on behalf of the National Multi Housing Council found that former homeowners account for only 2 percent to 6 percent of all apartment applicants. Moody expects the mortgage market will loosen a bit when the economy finally stabilizes, although it will not be nearly as lax as it was in recent years. Consequently, people will not only remain in the rental pool, many--both owners and apartment residents--will be uprooted by foreclosures. It is up for debate how many of those households will opt for traditional apartments or single-family rentals. Moody states, "Having gone through this experience may lead a significant share of such renters to seek the relative safety of larger apartment complexes rather than again renting from individual landlords in single-family homes or smaller multifamily structures."
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Apartment Rents Fall on Florida's Treasure Coast
Digested From "Weakened Housing Market Causing Rent Prices to Fall"
TCPalm (FL) (07/25/08) by Monique Mattiace
Amid continued weakness in the housing market, the average rent at an apartment community on Florida's Treasure Coast has declined. In the second quarter, RealFacts reports that the average two-bedroom, two-bath unit was going for $946 a month, an asking price $100 less than in the same period a year ago. The RealFacts report was not a surprise to housing analysts. Brad Hunter, director of Metrostudy's South Florida market, states, "The reason the rent is coming down is that there are so many single-family homes being rented for cheap." The biggest decrease was measured in the Port St. Lucie area where one-bedroom, one-bath apartments dipped 12 percent. Two-bedroom units, meanwhile, were off 9.6 percent. Since 2007, apartment occupancy has dropped 2 percent in the Treasure Coast area. According to RealFacts, the average monthly rent for all apartments in Florida is $968. The priciest place to rent is in Miami, where the average rent goes for $1,194 a month. The most affordable apartment markets are Palm Bay and Pensacola. Naples, meanwhile, posted the largest drop in rents (10 percent).
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Colonial Properties Trust Reports Q2 2008 Results
Digested From "Colonial Properties Trust Reports Results for Second Quarter 2008"
Business Wire (07/24/08)
Colonial Properties Trust posted Q2 2008 net income of $9.1 million compared with $304.9 million for the same period a year earlier. The year-to-year decrease is mainly due to net gains of $329.2 million, associated with office and retail joint venture transactions and the sale of certain non-core assets that occurred in the April-through-June period of 2007. Funds from operations totaled $32.4 million in this year's period versus $20.2 million a year ago. Colonial Properties Trust is an Alabama-based multifamily REIT that currently owns and/or manages more than 37,100 apartments, along with 16.3 million square feet of offices and 8.1 million square feet of retail space. In the second quarter, multifamily same-property net operating income (NOI) growth rose 3.2 percent. Colonial ended June with same-property occupancy of 96.0 percent after having completed the sale of five wholly-owned apartment communities in two separate transactions for gross proceeds of $81.8 million.
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Pinnacle Names New President
Digested From "Pinnacle, An American Management Services Company, Names New President"
PRNewswire (07/22/08)
Pinnacle President and CEO Stan Harrelson has named Rick Graf his successor as president of the country's biggest third-party fee manager of multifamily housing. Graf will assume his new position and duties on Sept. 1. He presently serves as the Seattle-based firm's Central region president, where he is in charge of a management portfolio of more than 60,000 apartments. Harrelson has agreed to continue serving as Pinnacle's CEO. He remarks, "Our company is focused on improving and enhancing the services we provide. Rick's highly successful career in property management, including his last 12 years with Pinnacle, has groomed him for this position managing critical day-to-day responsibilities." In the past five years, Pinnacle has opened offices in Beijing and Tokyo and soon expects to launch operations in Korea and the Middle East. Graf is president-elect of the Texas Apartment Association, with his one-year term beginning next April. Additionally, Graf is a regional vice president of the National Apartment Association (NAA) and vice president of the NAA Education Institute. Pinnacle boasts a multifamily housing portfolio of more than 160,000 rental units.
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BRE Properties Adds New Board Member and Promotes Executive
Digested From "BRE Properties Board of Directors Adds New Member and Promotes Senior Executive"
PRNewswire (07/28/08)
BRE Properties Inc.'s board of directors has increased the size of its board of directors from nine members to 10 members, electing COO Edward F. Lange, Jr. Board Chairman Robert A. Fiddaman states, "Over the past eight years, Ed has contributed to the success of BRE on both a strategic and tactical level, helping to shape the organization and create a scalable operating platform. All of our stakeholders will benefit from the addition of his experience and knowledge to the board." The 48-year-old Lange is an eight-year veteran of the San Francisco-based apartment REIT. Additionally, the board has approved the promotion of general counsel Kerry Fanwick to executive vice president, general counsel. Fanwick is the former partner of Miller & Fanwick, LLP, a law firm specializing in business and financial strategies. In addition, he has previously served as general counsel for First Nationwide Bank. Both appointments are effective immediately. BRE Properties currently owns and manages 80 apartment communities in three Western states--California, Arizona and Washington. Together, these communities contain 22,680 rental units.
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Apartment Donations in Florida Catch on
Digested From "UF Program Collects, Donates Apartment Goods"
Independent Florida Alligator (07/24/08) by Christina McGinley
Throughout the latter part of July, several Gainesville, Fla., charities have been benefiting from a unique, apartment-based program. Rather than tossing out used electronics, furniture and other goods, people moving out of their apartments can now toss them into a donation Dumpster at Bivens Cove Apartments. Created by the University of Florida's Center for Leadership and Service, this pilot program for off-campus apartment donations began July 21. Andrew Perrone, assistant director for the center, came up with the idea after some students showed interest in helping local apartment communities donate old or forgotten furniture from residents who had moved out. They surveyed a number of local communities to see what programs were available only to discover that none existed. Perrone remarks, "We thought we would be helping donation drives rather than thinking up our own." He adds that the donations will be picked up for such non-profit organizations as the Alachua County Coalition for the Homeless and Hungry, Christians Concerned for the Community and a program at Gainesville High School. To date, the program has collected clothing, shelves, pots and pans, and even an entire three-bedroom apartment’s worth of furniture courtesy of Cobblestone Apartments. For now, Bivens Cove is the only area apartment community involved in this project, but Perrone insists he and his team have additional communities interested if the program is offered next year. The project is scheduled to last until July 31 in correlation with leases ending.
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Apartment Communities Benefiting From International Investment
Digested From "Top U.S. Real Estate Markets for Investment"
Pittsburgh Post-Gazette (07/24/08) by Matt Woolsey
The latest Association of Foreign Investors in Real Estate (AFIRE) study shows that the U.S. is the top nation for international real estate dollars, even as interest in such Asian markets as China and India continues to rise. AFIRE expects investment in the U.S. to increase by 16 percent from 2007's $230 billion tally. Opportunities in office buildings and whole apartment communities are proving to be the most alluring to overseas investors. Encouraged by a weak dollar and a belief in the resiliency of the U.S. economy, wealthy international individuals and institutional investors are actively seeking development opportunities and investment properties in such markets as New York, Los Angeles, Seattle and San Francisco. However, even with the strong euro and pound, buying has been difficult due to tightness in the credit markets. Francois Ortalo-Magne, an associate professor of real estate and urban land economics at the University of Wisconsin's Graaskamp Center for Real Estate, points out, "Big deals requiring large amounts of structured debt have taken a big hit. Obviously, there are more such deals in the largest cities than in second-tier American markets." European and Asian investors have been favoring markets along the coasts, most notably Boston, New York and L.A. While there remains interest in such cities as Orlando and Phoenix, AFIRE research shows that fading local economies hampered by a slowdown in consumer spending and job growth have resulted in decreased foreign investment.
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Apartment and Other Property Prices Chronicled
Digested From "Plots & Ploys: Price Is Right?"
Wall Street Journal (07/23/08) P. C12; by Ruth Simon; Lingling Wei; Michael Corkery
The major rating and research firms are sending mixed messages regarding the current state of the nation's commercial property sector. A Moody's Investors Service index shows that prices of apartment, office, and retail properties dipped 5.7 percent during the month of May from a year earlier and have logged three straight months of declines. However, Standard & Poor's latest commercial real estate indexes show that prices are up 3.1 percent from a year earlier. The disparity may be caused by different methodologies. S&P results include one-off building sales, while Moody's researchers look at repeat sales of the same building, resulting in a smaller sample size.
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June Housing Starts Lifted by NYC Apartment-Code Change
Digested From "Housing Starts Are Lifted by Building-Code Change"
Wall Street Journal (07/17/08)
The Commerce Department reports that housing starts increased 9.1 percent in June from a month earlier to a seasonally adjusted 1.1 million annual rate. The gain was driven by soaring apartment construction related to New York City enacting a new set of construction codes effective for permits authorized as of July 1. This deadline triggered a sizable increase in the number of building permits issued during June for apartment buildings citywide. MFR Inc. analyst Joshua Shapiro reasons, "Builders wanted to get in the ground in June ahead of the new, more stringent regulations."
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AvalonBay Communities Names W. Edward Walter as Independent Director
Digested From "AvalonBay Communities, Inc. Announces Appointment of W. Edward Walter as New Independent Director"
Business Wire (07/14/08)
W. Edward Walter has been appointed to AvalonBay Communities Inc.'s board of directors, effective Sept. 16. Walter, who is currently president and CEO of Host Hotels & Resorts Inc., will serve as an independent director of the Virginia-based apartment REIT. AvalonBay Chairman and CEO Bryce Blair remarks, "Ed brings significant relevant experience to the AvalonBay board from a long and successful career in the real estate industry. AvalonBay will benefit from Ed's business and investment expertise." AvalonBay currently has ownership stakes in 180 apartment communities that together contain more than 51,000 rental units. These communities are located in 10 states and the nation's capital.
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Legislative/Legal News
Multifamily Housing Moratorium on Agenda in California Market
Digested From "Housing Moratorium on Council Agenda"
Ventura County Star (CA) (07/26/08) by Carolyn Quinn
In California this week, the Santa Paula City Council will discuss the possibility of a moratorium on multifamily housing. A recent petition circulated by city residents gathered 375 signatures in favor of banning the construction of subsidized and market-rate low-cost units until that type of housing comprises no more than 15 percent of all housing in Santa Paula. The council's task now is to define multifamily housing. "Strictly speaking, it's two or more units," said City Manager Wally Bobkiewicz. However, council members could choose to look exclusively at low-income or other types of housing. No ordinance has been drafted to date.
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Falling Debris Halts Trump Apartment Tower in Connecticut
Digested From "Stamford to Trump Team: Stop Falling Debris"
Journal Inquirer (07/25/08)
In Stamford, Conn., another incident of falling debris has compelled local officials to temporarily halt construction of a 34-story apartment tower being developed by real estate mogul Donald Trump. According to Stamford Mayor Dannel P. Malloy, a city building inspector is being assigned to the site to monitor the development of the Trump Parc luxury apartment tower after construction crews were accused of not taking the proper safety measures. On July 23, debris from the project crashed into a University of Connecticut building located across the street. It marked the third time in as many months that falling debris from the building site has caused damage.
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Pittsburgh Housing Authority Pushes for Utility Savings
Digested From "Housing Authority Pushes for Utility Savings"
Pittsburgh Post-Gazette (07/24/08) by Rich Lord
The Pittsburgh Housing Authority board recently voted to start a $25.1 million push to reduce utility costs at most of its units citywide. By September, residents will begin getting visits from contractors assigned to alter their long-inefficient apartments. The agency has selected Minneapolis-based Honeywell International, who has guaranteed that the authority will see its utility bills drop at least enough to repay the debt over 12 years. If the savings do not match or exceed the cost, Honeywell will be legally obligated to make up the difference. Authority Executive Director A. Fulton Meachem Jr. said the first phase of the process will involve a September "energy fair" during which apartment residents will be taught how to conserve resources. Shortly after, Honeywell subcontractors will come calling and add water regulators, put in more efficient toilets, change heating and cooling systems and make other efficiency improvements. The process, which will last about a year and a half, will involve changes to most of the authority's 5,000-plus apartments.
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