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U.S. Apartment Vacancy Unchanged at 5.9 Percent, Rents Increase
Industry News
Las Vegas Apartments Hit a Losing Streak
Carlyle Group Plans NY Apartment Towers
Colonial Properties Trust Sells Five Apartment Communities for $82 Million
Zacks Maintains Solid 'Buy' Rating on Equity Residential
Post Properties Sets Date of Q2 2008 Earnings Release and Conference Call
UDR Inc. Declares Quarterly Dividends
Legislative/Legal News
Portland Apartment Residents Guaranteed Recycling Opportunity
Affordable Housing Goals Set in St. Paul, Minn.
San Antonio Launches New Pilot Recycling Program for Apartments
Tampa's Affordable Housing Benefits from Fed Grant
Wisconsin Town Approves Impact Fee for New Housing
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U.S. Apartment Vacancy Unchanged at 5.9 Percent, Rents Increase
Digested From "U.S. Apartment Vacancy Unchanged at 5.9 Percent, Rents Increase"
Bloomberg (07/05/08) by Dan Levy
Reis Inc. reports that the vacancy rate for U.S. rental apartment communities was unchanged at 5.9 percent in the second quarter as a weakening economy and the ongoing housing slump continued to deter people from purchasing homes. The average monthly U.S. asking rent climbed 1 percent to $1,047, the 25th consecutive quarter that rents either rose or stayed the same. Meanwhile, home prices in 20 U.S. metro areas declined during the month of April by the most on record. In addition, new home sales plunged 40 percent in May from a year earlier. Reis chief economist Sam Chandan reports that the slumping housing market means apartment rents should stay level even as gas prices rise and U.S. companies slash payroll. He adds, "Our projection is rent growth will moderate through 2009, but we don't think it will turn negative as it did in the early 2000s. The bias will be weighted toward rental, in our view. People fear home prices will fall further." The last time U.S. apartment rents fell was the January-through-March period of 2002. Reis concludes that New York posted the highest average U.S. rent at $2,847 a month in the second quarter, followed by San Francisco at $1,825 and Fairfield County, Conn., at $1,757.
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Las Vegas Apartments Hit a Losing Streak
Digested From "Las Vegas Property Market Hits a Losing Streak"
Reuters (07/07/08) by Ilaina Jonas
Las Vegas is seeing its hotel and casino businesses sputter, a trend that is also affecting area apartment, office, and retail real estate. Reis Inc. reports that the local apartment vacancy rate in the second quarter was up 0.5 percentage point to 7 percent. Sin City's apartment sector was the third worst performer among major U.S. markets tracked by the New York-based research firm. In comparison, the average overall U.S. apartment vacancy rate was stable at 5.9 percent. Looking at the other sectors, Reis reports that vacancies at the city's strip malls rose 0.3 percentage point to 5.6 percent, while second-quarter office vacancies climbed 3.2 percentage points to 17.3 percent. It was the largest increase of any of the 79 markets the firm monitors.
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Carlyle Group Plans NY Apartment Towers
Digested From "Carlyle, Extell Plan NYC Towers"
Washington Post (07/02/08)
The Carlyle Group, Extell Development and RREEF Alternative Investments this week received the largest construction loan of the year thus far--$613 million--for two luxury residential buildings on Manhattan's Upper West Side. According to the partnership, Deutsche Bank led a group of nine banks in arranging the loan. In recent months, developers have had an increasingly tough time financing new projects as banks have tightened their lending practices. Manhattan luxury apartment prices, though, are rising even as values drop nationally.
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Colonial Properties Trust Sells Five Apartment Communities for $82 Million
Digested From "Colonial Properties Trust Sells Five Multifamily Properties for $82 Million"
finanzen.net (07/02/08)
Colonial Properties Trust has completed the sale of five apartment communities in two separate transactions for gross proceeds of $81.8 million. The identity of the buyer(s) was not disclosed. Together, the communities contain 1,250 rental units and are located in such markets as Dallas, Fort Worth and Memphis. The average age of the four apartment communities in Texas was 23 years, while Colonial Grand at Shelby Farms I & II in Tennessee is a 7- year-old community. Colonial Properties Trust President and CFO Weston Andress states, "These transactions are consistent with our plan to reduce leverage through the sale of primarily older multifamily assets. The pricing demonstrates the value we have created in these properties as well as our ability to execute our plan in a challenging real estate environment." The REIT expects to record a gain on sale of nearly $6.9 million. As of the end of this year's first quarter, Colonial Properties Trust owned or managed 38,822 apartments, in addition to 16.2 million square feet of offices and 8.1 million square feet of retail stores nationwide.
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Zacks Maintains Solid 'Buy' Rating on Equity Residential
Digested From "Solid Equity Residential Pipeline"
Zacks Equity Research (07/02/08) by Greg Sukenik
Zacks.com analyst Greg Sukenik says his research firm is maintaining its "Buy" rating on Equity Residential (EQR) shares for now. The Chicago-based apartment REIT continues to raise rents in most of its markets, which has resulted in above-average revenue and net operating income growth in its property portfolio. Nearly all of EQR's top 20 markets posted healthy rental rate growth in the first three months of this year. EQR's practice in recent months has been to dispose of assets in lower growth areas to place maximum emphasis on its higher growth assets located in more supply constrained locales. Additionally, EQR's sizable development pipeline is expected to incrementally add to earnings as new apartment communities come on line. Sukenik writes: "We think multifamily fundamentals will remain strong throughout 2008, a byproduct of the failing housing markets. We would overweight multifamily operators in the current recessionary economic environment. The company has a strong balance sheet and plenty of liquidity to be active in acquisitions and development."
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Post Properties Sets Date of Q2 2008 Earnings Release and Conference Call
Digested From "Post Announces Date of Second Quarter 2008 Earnings Release and Conference Call"
Business Wire (07/02/08)
Post Properties Inc. is set to release its Q2 2008 earnings after the market closes on Aug. 4 and will hold its quarterly conference call the following morning. The call will be open to the public and can be listened to live on the Atlanta-based apartment REIT's Web site at www.postproperties.com. Replays will be available soon after. Founded more than 36 years ago, Post Properties today ranks as one of the country's biggest developers and operators of upscale multifamily housing communities. Its focus is on developing and operating branded, resort-style garden and high-density urban apartment communities. In total, Post Properties owns more than 22,400 apartments in 62 such communities.
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UDR Inc. Declares Quarterly Dividends
Digested From "UDR Declares Quarterly Dividends"
Centre Daily Times (PA) (07/01/08)
UDR Inc.'s board of directors has declared a Q2 2008 dividend of $0.33 per common share, which will be payable July 31 to shareholders of record as of July 11. This will mark the 142nd consecutive quarterly dividend paid by the Denver-based apartment REIT on its common stock. UDR's board has also declared a regular quarterly dividend on its Series E Preferred stock for the April-through-June period in the amount of $0.3322 per share. It will also be payable July 31 to Series E preferred stockholders as of July 11. UDR specializes in managing, buying, selling, developing and redeveloping apartment communities in targeted U.S. markets.
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Legislative/Legal News
Portland Apartment Residents Guaranteed Recycling Opportunity
Digested From "Portland Renters Guaranteed Recycling Opportunity"
Oregonian (07/04/08) by Shelby Wood
Oregon state law allows cities to require apartment community owners to provide recycling for residents, and most cities do. Portland goes even further, requiring apartment community owners to make recycling as easy as throwing out the trash . . . or else be hit with fines. Conventional wisdom suggests that apartment residents would be ideal candidates for recycling, as they tend to move around a lot. Many are transplants from cities without a recycling program, and they often move again before establishing recycling as a habit. In addition, apartment residents often have less space than many homeowners to store newspapers and plastic bottles until recycling day. Such obstacles persist even when apartment community owners play by the rules. A recent Environmental Protection Agency study of recycling in multifamily housing estimated that residents recycled 14.6 percent of their waste versus homeowners' 16 percent. Two years ago, the Oregon Department of Environmental Quality compared trash from a sample of Portland-area apartment communities to garbage picked up from single-family residents. Items that apartment residents could have recycled--glass, paper, metal, plastic bottles--made up roughly 25 percent of their trash. For homeowners, the percentage was 23.6 percent.
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Affordable Housing Goals Set in St. Paul, Minn.
Digested From "Affordability Is Tough Sell in Suburbia"
St. Paul Pioneer Press (06/30/08) by Bob Shaw
In St. Paul, Minn,. the Metropolitan Council has set goals for new affordable housing through 2020--assigning 86 percent to the suburbs. The plan calls for nearly one in three new housing units to be affordable, which is defined as housing for which residents pay no more than 30 percent of their monthly income. Chip Halbach, director of the nonprofit Minnesota Housing Partnership, says the suburbs have avoided their responsibilities in this area for long enough. He remarks, "We would like to see a fair share of affordable housing in every community." The Met Council has established goals for affordable housing construction based on a formula that considers such factors as availability of nearby jobs, proximity to mass transit, and land availability and prices. The Council has the authority to force suburbs to plan for regional infrastructure such as sewers or roads. However, to promote affordable housing, it can only offer such incentives as payments for future projects to cities that cooperate. This, in turn, has left suburbs free to ignore the goals. Area supporters of affordable housing are honing their arguments, stressing that such communities are not like the crime-ridden tenements of previous decades. Instead, new affordable units are generally well managed, keep crime controlled, and are built attractively to fit into existing neighborhoods. In addition, more areas are viewing affordable housing as "workforce housing," where local workers can afford to live. Businesses benefit by having lower-wage workers living nearby, supporters contend.
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San Antonio Launches New Pilot Recycling Program for Apartments
Digested From "San Antonio Launches New Pilot Recycling Program for Apartments"
San Antonio Business Journal (07/03/08) by Yvonne Freckmann
The city of San Antonio has announced that it is expanding its residential recycling program to include apartment communities. The pilot recycling program for multifamily housing communities is slated to begin by the end of this summer and operate over a period of six months. Apartment owners may be required to provide start-up costs, such as a concrete pad for a compactor, but the city has pledged to pay for all operation costs. Apartment residents will have the opportunity to recycle all items that are currently being accepted in the residential recycling program. There will be a limited number of communities selected based on such factors as their logistical feasibility. At the end of the pilot program, apartment community owners will have the option to discontinue the program or continue at their own expense. This latest initiative augments the city's existing recycling efforts. Using vehicles with a mechanical arm that picks up city-issued 96-gallon containers, San Antonio recently began automated neighborhood waste collections. The same kind of truck also retrieves recycling items, quadrupling residents' recycling capacity with the new carts. According to the city, the mechanized collection system requires only a one-person crew who remains in the cab at all times.
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Tampa's Affordable Housing Benefits from Fed Grant
Digested From "Housing Grants Earmarked for Tampa"
Tampa Bay Business Journal (06/26/08)
Tampa will be able to use a grant from the Federal Home Loan Bank of San Francisco for affordable housing development. The bank has awarded $37.3 million in grants to communities in Florida, Arizona, California, Illinois, Nevada, Pennsylvania, Texas and Washington as part of its Affordable Housing Program. In Florida, Fort Lauderdale and Miami will also receive some of the money. The bank says the grants will go toward 80 different single-family and multifamily housing communities and help build 4,510 units of affordable housing for low- to moderate-income households. "These grants highlight the important role a healthy and financially strong bank plays in helping our members and their community partners expand the supply of quality affordable housing for lower-income families and individuals," according to Jim Yacenda, vice president and community investment officer of the San Francisco FHLB.
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Wisconsin Town Approves Impact Fee for New Housing
Digested From "Little Chute Approves Fee for New Housing"
Appleton Post-Crescent (06/19/08) by J.E. Espino
In Wisconsin's more rapidly growing communities, local officials may be holding property taxes down, but the creation of impact fees continues upward. The recent approval of a one-time park development fee in Little Chute, Wis., is one example. Beginning in August, the village will add $200 to the permitting cost of new single-family and multifamily homes. Nearby Kaukauna already has a $250 park development fee in place but is about to launch a comprehensive survey of all future public facilities. When finalized, the consulting firm hired by Kaukauna could lay out a series of recommendations for additional impact fees. The upcoming fees in both towns will be passed on to future homeowners as a way of offsetting costs while sparing existing residents. This trend is a cause of concern for developers and Realtors alike because it makes new homes less affordable and is one more headache to deal with at a time when the housing market is shaky.
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