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S&P Proposal Threatens Future Apartment Financing
Industry News
Lembis Expect to Sell Apartment Communities for Loss
New Orleans Apartment Rents Remain High as Does Demand
Maryland Capital Has Become a Resident's Market
Home Properties' Apartment Community Wins Recycling Award
California Apartment Market Favors Residents
Las Vegas Apartment Vacancies Up, Rents Down
Italy's Sorgente Group to Create REIT With Apartments
Mid-America Apartment Communities Announces Preferred H Dividend
Security Concerns With Vacant Apartments Near Virginia Campus 
Report Shows Hattiesburg, Miss., Has Too Many Apartments
Legislative/Legal News
Feds Finally Send Funds to Repair Ike-Damaged Apartment Communities
Crime Free Multi-Housing Program Succeeding in Texas
Oregon Lawmakers Crack Down on Predatory Towing
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S&P Proposal Threatens Future Apartment Financing
Digested From "S&P's Commercial Real Estate Revolt"
CNNMoney (06/02/09)
A recent Standard & Poor's proposal, in which the ratings agency cautioned that it may soon downgrade hundreds of recent bond issues, threatens to complicate a new federal plan to make financing more available for apartment communities, shopping centers and other income-generating properties. Investors have also expressed concern about S&P's recent change in tone on the prospects for the senior-most commercial real estate-backed debt securities. Congress has been critical of S&P and its two main competitors, Moody's and Fitch, for their failure to alert investors to the housing bubble. Some now question whether the agencies are being too hasty in making amends. Steve Jernigan, a director at the NewOak Capital advisory and asset management firm, states, "They've spent 18 months getting raked over the coals for being too lenient, and now they appear to be oversteering." S&P officials insist that politics are not influencing ratings actions. Spokesman Ed Sweeney asserts, "Our ratings are driven only by our best analytical judgment of the creditworthiness of the issuers and securities we rate and are formed independent of other concerns."
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Industry News
Lembis Expect to Sell Apartment Communities for Loss
Digested From "Lembis Expect to Sell Apartment Buildings for Loss"
San Francisco Business Times (05/29/09) by J.K. Dineen
The financially strapped Lembi real estate empire has put a dozen San Francisco apartment communities on the selling block at prices significantly less than what it paid for the communities in 2006 and 2007. Trophy Properties, one of a number of corporations controlled by Frank and Walter Lembi, is hoping to generate $43 million by selling the 12 communities. Analysts are keeping a watchful eye, as successful sales transactions would give investors concrete data on how far values for multifamily housing have plummeted since the recession began a year and a half ago. Only a handful of San Francisco apartment communities with 10 or more rental units have changed hands in the last year, which investors lament is not enough to establish fair market value. Between 2003 and 2007, the Lembi Group dominated San Francisco's apartment sector, shelling out $1.2 billion for more than 200 communities. In a number of cases, it outbid rivals by as much as 30 percent.
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New Orleans Apartment Rents Remain High as Does Demand
Digested From "Rents Remain High - as Does Demand"
WWL-TV [New Orleans] (06/02/09)
Although the New Orleans area's apartment sector continues to be affected by high post-Katrina insurance costs, high rents do not appear to be keeping residents and prospective residents away. Whereas apartment owners in California and Florida are lucky if they can currently achieve 70 percent occupancy rates, New Orleans owners are seeing rates in the upper 80s and low 90s. Tammy Esponge, executive director of the Apartment Association Of Greater New Orleans, confirms, "As far as occupancy goes, Louisiana is one of the states doing better." She adds that with competition for residents so tight locally, a growing number of owners are offering move-in specials. Esponge concludes by confirming that local owners are still encountering costs they incurred in 2005. She remarks, "We're not seeing a huge decrease in insurance rates. We're seeing some, but not near the way rates were before Hurricane Katrina."
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Maryland Capital Has Become a Resident's Market
Digested From "A Renter's Market"
Capital (Annapolis, MD) (06/07/09) by Katie Arcieri
In Annapolis, Md., a growing number of area apartment communities are opting not to raise rents and are instead offering greater incentives as they struggle to attract and retain residents in this harsh economy. Some residents are being offered one month's free rent and flexible renewal plans, while others are being given permission to turn over their lease to someone else instead of breaking a rental agreement. Although apartment communities are indeed becoming increasingly aggressive to keep their units filled, the vacancy rate in newer apartments in the Washington, D.C., metro area -- which includes the Maryland state capital -- has not risen as high as the U.S. rate. Delta Associates reports that the overall vacancy rate for the Washington Class A and B apartments increased slightly in this year's January-through-March period to 4.6 percent, up from 4.5 percent during the same period a year earlier. Meanwhile, the national vacancy rate for both types of apartments was 6.6 percent in the first quarter versus 5.6 percent a year ago. Delta further reports that first-quarter concessions for Class A apartment communities in the D.C area reached 6.5 percent of asking rent compared with 4.9 percent in the first quarter of 2008.
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Home Properties' Apartment Community Wins Recycling Award
Digested From "Tamarron's 'Green' Community Wins 2009 County Recycling Award"
PRNewswire (06/04/09)
Home Properties' Tamarron Apartments community in Olney, Md., has received Montgomery County's 2009 Recycling Achievement Award. Recycling has been an important part of Home Properties' overall operation for years. Tamarron property manager Pat Eacho comments, "Our recycling program has been an on-going effort since the 1990s. Home Properties provided us with a budget this year that allowed us to purchase several additional recycling toters and invest in a new scrap metal program. We now have 12 toters overall for the 132 apartment homes here." Tamarron's recycling success can be attributed to several other factors. The first is education, as the community hosts bi-annual, on-site seminars in which a county recycling expert visits and distributes up-to-date information on area recycling. Community management also keeps residents informed by sending out event fliers and posting announcements on the community's Web site. Home Properties is a Virginia-based apartment REIT that owns and manages multifamily housing communities throughout the Northeast, Mid-Atlantic and Southeast Florida regions. Currently, the company's portfolio contains 109 apartment communities boasting 37,539 rental units.
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California Apartment Market Favors Residents
Digested From "San Mateo County Tenants Have Reason to Smile"
San Francisco Examiner (06/03/09)
California's San Mateo County has become a residents' market as far as apartments are concerned. Indeed, area apartment residents currently have the upper hand in negotiating rents as owners are staying flexible in order to keep their units occupied. As of the end of this year's first quarter, monthly rents for San Mateo County apartment communities had fallen 1.9 percent from a year earlier -- a larger decline than in Alameda, Contra Costa, Marin and San Francisco counties. Joshua Howard, executive director of the California Apartment Association's Tri-County Division, attributed the downward trend to the economy and a corresponding lack of job growth. At the same time, more and more apartment residents have been taking advantage of low interest rates and falling prices to buy homes. High-end apartment communities, in particular, are hurting as people are being more financially conservative and opting for a less expensive lifestyle.
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Las Vegas Apartment Vacancies Up, Rents Down
Digested From "Apartments: Vacancy Up, Rents Down, Sales Gone"
GlobeSt.com (06/02/09) by Brian K. Miller
A soft job market coupled with eroding for-sale housing prices has resulted in a challenging environment for Las Vegas-area apartment owners. A new Applied Analysis (AA) study shows that apartment vacancies rose 70 basis points from the end of December to 8.7 percent as of March 31. Meanwhile, the average asking rent slipped 1.4 percent to $868 a month during that time span. Compared to a year earlier, vacancies are up 140 basis points while rents have fallen 2.4 percent. AA project manager Jake Joyce comments, "Negative rent growth is likely to continue through the balance of 2009 as net population growth remains down to flat, the job market continues to adjust to new market realities and residential foreclosure activity continues." Separately, a CB Richard Ellis (CBRE) study shows that Las Vegas' apartment vacancy rate hit 10.96 percent in December before slowly dipping to 9.91 percent as of the end of this year's first quarter. CBRE senior vice president Spence Ballif attributes the improvement to lower rents and higher concessions as apartment owners compete against the growing "shadow" rental housing market. He expects the pool of single-family homes being rented out will increase throughout the rest of this year -- a trend that does not bode well for Vegas-area apartments.
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Italy's Sorgente Group to Create REIT With Apartments
Digested From "Sorgente, Owner of Flatiron Building, to Create REIT in U.S."
Bloomberg (06/04/09) by Armorel Kenna
Italy's Sorgente Group has announced plans to establish a U.S. REIT to take advantage of an economic recovery that it expects may start as soon as next year's first quarter. Sorgente Group CEO Valter Mainetti states, "We believe in the U.S. market so we want to set up the trust this year to help fund real-estate purchases. We're very liquid and there are many opportunities out there." Sorgente is currently converting a building in New York's Soho district into luxury apartments and retail space. It next may acquire a property in Lower Manhattan's Tribeca neighborhood and turn it into apartments at a cost of approximately $71 million. Mainetti remarks, "We're trying to create a brand, finding historic buildings, creating interiors with a modern Italian design." Earlier in the year, Sorgente disclosed that it may seek acquisition opportunities in London. So far, though, the firm has been too focused on its U.S. projects to make any U.K. deals. The Italian investment company's most well-known holding is Manhattan's landmark Flatiron building.
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Mid-America Apartment Communities Announces Preferred H Dividend
Digested From "Mid-America Apartment Communities Inc. Announces Preferred H Dividend"
PRNewswire (06/03/09)
Mid-America Apartment Communities Inc.'s board of directors has declared a quarterly dividend of $0.51875 per outstanding share of its Series H Cumulative Preferred Stock, which will be payable June 23 to shareholders of record as of June 12. MAA is a Tennessee-based apartment REIT that has ownership stakes in 42,157 rental units throughout the nation's Sunbelt region.
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Security Concerns With Vacant Apartments Near Virginia Campus
Digested From "Security Concerns with Vacant Apartments"
WHSV-3 (Va) (06/02/09)
Harrisonburg, Va., is falling prey to the same kind of crimes affecting some other college towns around the country. Burglaries have been an issue at apartment communities that house James Madison University (JMU) students. With the recent end of the spring semester, many students have moved away and left vacant rental units as possible targets for burglars. Earlier in the year, five people were arrested in connection with 14 burglaries that occurred while JMU students were on Spring Break. Now, students are away on summer break, and with year-long leases, many are still renting and leaving their belongings in otherwise empty apartments. Officials at Central Security Bureau (CSB) urge apartment owners and managers to tighten their security measures while students are gone. To this end, professional security companies have been hired to watch a number of the communities. Corporate security manager Bill Hamblin states, "If we are there, and observe and report with a security presence, it usually deters anyone from breaking in." Since the end of the recent school year, CSB security officers have assisted police in making three arrests involving burglaries of student apartments.
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Report Shows Hattiesburg, Miss., Has Too Many Apartments
Digested From "Report: Hattiesburg Has Too Many Apartments"
NBC 15 (Alabama) (06/02/09)
A new Hattiesburg City Council study confirms what many city officials have been saying for months, that this Mississippi market has too many apartments. According to the current draft of the Hattiesburg Area Rental Housing Survey, Hattiesburg's apartment vacancy rate has experienced a more than sixfold increase from 2.1 percent in 2005 to 13.4 percent in spring 2009. Researchers attribute this four-year spike to two factors: the troubled economy and the number of new apartments that have been added to the area -- approximately 1,600 -- in the past four years. The study was conducted between January and April of this year by the University of Southern Mississippi's Department of Economic and Workforce Development.
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Legislative/Legal News
Feds Finally Send Funds to Repair Ike-Damaged Apartment Communities
Digested From "City Gets Big Check for Renovations"
KTRK-TV (Houston) (06/04/09) by Miya Shay
Nine months after Hurricane Ike wreaked its havoc, federal funds have finally started to arrive to repair damaged apartment communities in and around Houston. Mayor Bill White toured one such community, the Reserve at Bankside Apartments in Southwest Houston, this past week and saw newly renovated apartments. White, though, is still irked with what he says are consistent delays in receiving federal dollars for the needed fixes. In total, Houston stands to get approximately $87 million to repair its damaged apartment communities. White is hopeful the money, which will help rehabilitate 14 apartment communities throughout the city, has not come too late. He remarks, "There's too many cooks in the kitchen, too many layers of HUD, too many layers of government."
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Crime Free Multi-Housing Program Succeeding in Texas
Digested From "Crime Free Multi-Housing Program Gaining in Popularity"
Wichita Falls Times Record News (TX) (06/07/09) by Marissa Millender
The Crime Free Multi-Housing program continues to make strides in Wichita Falls, Texas, and elsewhere. The Wichita Falls Police Department is making plans to host another training class on June 11 for any apartment managers who missed the first few classes or are new to the manager role. Word of program and its success has spread to apartment professionals in such nearby markets as Lawton, Okla., where the local police department has also received training in the program. Sgt. Joe Snyder, public information officer with the Wichita Falls Police Department, is glad the program is making its mark. He states, "I think most people may not learn about it from Wichita Falls. It's around the world, but we do everything we can to put the word out and help other communities and agencies." Since the program's launch in Wichita Falls, Snyder has seen an overall decrease in the number of calls to apartment communities. This, in turn, has freed up emergency services. Snyder notes, "The program teaches crime prevention, but more specific than that, it targets their industry." Indeed, in the Level 1 training class, apartment managers learn how to screen applicants to determine who will be a good resident. In addition, they are taught how to enforce a "One Strike and You're Out" policy that can be written into residents' leases. Snyder concludes, "Managers are taking a no-tolerance policy to crime" with this program.
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Oregon Lawmakers Crack Down on Predatory Towing
Digested From "Lawmakers Crack Down on Predatory Towing"
KVAL 13 (OR) (06/07/09)
Predatory or "patrol" towing has been a practice in Oregon for some time, in which tow truck drivers essentially just drive around looking for cars to tow. This past week, state elected officials essentially banned this practice. With the new law, tow truck drivers are now required to take a picture of the car in violation and record the date and time of the incident. In addition, drivers must contact the property owner before towing any vehicle. If any driver returns to their car or truck while it is been towed, the driver must release the vehicle back to the owner. Jeff White, a driver for Farwells Towing in Eugene, laments that the new law adds more stress for both drivers and property owners. For apartment residents with limited parking, cars that are in their reserved spots now might not be towed. White observes that many Oregon apartment communities use predatory towing. The new law will affect that "because we are going to have to call the property owner at 3 in the morning."
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