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Apartments Try to Stay Afloat
Industry News
Dallas-Fort Worth Apartment Construction Forecast to Fall
Economic Picture Bleak in Fed Report
Manhattan Apartment Rents Fell in Fourth Quarter in Recession
Steven D. Bell Announces Restructuring
BRE Properties Cuts Jobs, Slows Development Plans
Former MBA Leader Joins Behringer Harvard
Post Properties Announces Q4 2008 Earnings Release and Call
Associated Estates Continues to Execute Strategic Plan With Recent Sales
Top 10 Most Popular Apartment Search Sites Listed
Legislative/Legal News
Colorado Apartment Owners Get Behind CO Detector Bill
Ontario Apartment Residents Not Sold on Smart Meters
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Apartments Try to Stay Afloat
Digested From "Apartments Try to Stay Afloat"
Wall Street Journal (01/14/09) P. C11; by Prabha Natarajan
More and more apartment owners and developers are scrambling to stay afloat as escalating job losses and the deteriorating U.S. economy make hiking rents difficult and eat into projected revenues from the various communities. Much the apartment sector's woes have to do with troubles in converting rental apartments into for-sale condominiums. In such states as California, Florida, and Nevada, a flood of unsold condos is choking apartments and has sent rents on a downward spiral, resulting in owner difficulty in keeping up mortgage payments. Fannie Mae and Freddie Mac currently have upwards of $200 million of these loans on their books, and delinquency rates are climbing.
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Industry News
Dallas-Fort Worth Apartment Construction Forecast to Fall
Digested From "Dallas-Fort Worth Apartment Building Forecast to Fall "
Dallas Morning News (01/14/09) by Steve Brown
According to a new forecast by Marcus & Millichap Real Estate Investment Services, Dallas-Fort Worth (D-FW) apartment construction is on pace to fall by nearly 40 percent in 2009. At the same time, apartment vacancy rates will likely rise by more than 1.8 percentage points. In late 2008, North Texas' apartment sector was dealt a major setback with thousands of resident move-outs recorded. Adding to the woes, Marcus & Millichap researchers are forecasting less than 5,000 job gains for the metro area in 2009. Still, conditions in the D-FW apartment market are better than in a lot of other parts of the United States. Tim Speck, regional manager of Marcus & Millichap's Dallas office, comments, "Apartment investment activity in Dallas-Fort Worth will remain more brisk than in much of the nation due to healthy long-term growth prospects." Even with the slowdown in construction, approximately 6,700 new rental units will be added in 2009. Actual apartment rents, meanwhile, are expected to remain flat.
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Economic Picture Bleak in Fed Report
Digested From "Economic Picture Bleak in Fed Report"
Washington Post (01/15/09) P. D1; by Annys Shin
The Federal Reserve's newly released "beige book" reports that business conditions across a wide range of industries and regions have continued to deteriorate in recent weeks. In particular, the analysis confirms that a long-anticipated decline in the construction of apartment communities, office complexes, and shopping centers is in its early stages as commercial projects that had been in the works for several years reach completion and the pipeline for new projects continues to dry up. Blaming lenders for curtailing the flow of money, developers say they have been unable to fund new projects.
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Manhattan Apartment Rents Fell in Fourth Quarter in Recession
Digested From "Manhattan Apartment Rents Fell in Fourth Quarter in Recession"
Bloomberg (01/14/09) by Peter S. Green
Citi-Habitats Inc. reports that Manhattan apartment rents fell in the fourth quarter as the recession and Wall Street job cuts deterred many residents from moving. According to the brokerage's data, monthly rents fell 3.9 percent for studio apartments to an average of $1,841, one-bedroom apartment rents dipped 2.5 percent to $2,527 and rents for two-bedroom apartments declined 4.2 percent to $3,551 from the same period a year earlier. Three-bedroom apartments, meanwhile, fell 0.1 percent to an average of $4,712. The Manhattan apartment market is clearly being affected by job cuts on Wall Street, as banks and securities firms continue to slash payroll after recording more than $677 billion in mortgage-related losses and write downs. The overall U.S. economy is moving into the second year of a recession, which is also discouraging prospective apartment residents from pulling up stakes. Citi-Habitats President Gary Malin remarks, "People are saying, 'Maybe I'll stay on Long Island for another year or get a roommate or get a walk-up.' Right now, the most important thing for a renter is price. Six or nine months ago, amenities played an equal, if not greater role." During the month of December, the cheapest apartment in Manhattan was a studio in Washington Heights at $1,065 a month. By contrast, the priciest studios were in the SoHo/Tribeca area for an average of $2,398 a month. Overall, the most expensive apartments in the survey were in buildings with a doorman that were built in the past five years.
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Steven D. Bell Announces Restructuring
Digested From "Steven D. Bell Announces Restructuring"
Business Journal of the Greater Triad Area (01/13/09)
Steven D. Bell & Co. has kicked off a major restructuring initiative that includes a new name--Bell Partners--along with changes to its leadership team, a structural reorganization and a narrowed acquisition focus. The North Carolina-based property investment and management firm has a real estate portfolio worth more than $5 billion, including approximately 55,000 apartments and more than 5 million square feet of retail and office space. Founded in 1976 by Steven D. Bell, it today employs more than 2,750 people in 16 states. The 63-year-old Bell will remain an active chairman at Bell Partners. Moving forward, his task will be to narrow the firm's focus to concentrate "on what we do best, institutional quality apartments and senior housing." Three service groups will be used to run the business, including: Investment Services, directed by Jon Bell; Asset Services, managed by Robert Slater; and Financial Services, under John Tomlinson's command. Slater previously served as executive vice president of property operations at AvalonBay Communities, while Tomlinson is a former executive vice president and chief accounting officer at Colonial Properties Trust.
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BRE Properties Cuts Jobs, Slows Development Plans
Digested From "BRE Properties Cuts Jobs, Slows Development Plans"
Associated Press (01/12/09)
BRE Properties Inc. has slashed payroll by 4 percent and slowed down its development pipeline amid the troubled economy. A BRE news release states: "Management's decision is in response to current and expected economic conditions, which have fostered uncertainty regarding unemployment levels and credit availability, and have weakened real estate fundamentals." The San Francisco-based apartment REIT pink-slipped a total of 33 employees late last week, most of them management and staff-level associates in the development area. The developer expects to have cash severance charges totaling about $1.5 million in 2009's first quarter. The REIT has also decided to halt predevelopment activities on three sites under option agreements or letters of intent, resulting in an abandonment charge of nearly $5.1 million. Five BRE apartment communities now under construction will not be affected by the moves.
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Former MBA Leader Joins Behringer Harvard
Digested From "Former MBA Leader Joins Behringer Harvard"
Dallas Business Journal (01/13/09)
Former Mortgage Bankers Association President and CEO Jonathan Kempner has agreed to join Behringer Harvard Multifamily REIT I. Inc.'s board as an independent director. In his new capacity, Kempner will apply his experience in multifamily housing to some of the issues and initiatives that Behringer Harvard will be sifting through in the commercial markets. Kempner previously served the National Multi Housing Council and is a former vice president and general counsel of Oxford Development Corp. Robert Aisner, CEO of Behringer Harvard Multifamily, remarks, "[Kempner has] developed extensive experience in both the multifamily property sector and commercial lending, as well as deep relationships with leaders in both industries. We believe his mortgage banking experience will be especially valuable during this challenging time in the capital markets."
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Post Properties Announces Q4 2008 Earnings Release and Call
Digested From "Post Announces Date of Fourth Quarter 2008 Earnings Release and Conference Call"
Business Wire (01/14/09)
Post Properties Inc. is set to release its fourth-quarter 2008 earnings results after the market closes on Feb. 11. It will hold its quarterly conference call the following morning at 10 a.m. Eastern. Founded in the early 1970s, Post Properties ranks as one of the country's biggest developers and managers of upscale apartment communities. The Atlanta-based REIT currently owns 21,190 apartments in 58 such communities, including 1,736 apartments in five communities currently under construction or in lease-up.
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Associated Estates Continues to Execute Strategic Plan With Recent Sales
Digested From "Associated Estates Realty Corporation Continues to Execute Strategic Plan With Recent Midwest Property Sales"
PRNewswire (01/12/09)
Associated Estates Realty Corp. has completed the sale of two Midwest apartment communities. One was the 108-unit Lakeshore Village in Cleveland, which was the last affordable housing community in which the Ohio-based apartment REIT had an ownership stake. The second was Bay Club, a 96-unit community in the Cleveland suburb of Willowick. John Shannon, senior vice president of operations, states, "These property sales are consistent with our plan to sell non-core assets and reduce our exposure to the Midwest." A member of the Russell 2000, Associated Estates' portfolio consists of 52 apartment communities containing more than 13,100 rental units in nine states.
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Top 10 Most Popular Apartment Search Sites Listed
Digested From "Top Ten Most Popular Apartment Search Websites in Fourth Quarter 2008"
PRNewswire (01/12/09)
Realty DataTrust has issued its list of the 10 most popular apartment search Web sites during the fourth quarter of 2008. The rankings are based on the number of times apartment residents "check availability" online per community. Company officials note that checking availability is typically the first step in the rental process after viewing an apartment community online. Topping the list was Rent.com, followed by 4walls.net, ForRent.com, ApartmentGuide.com and Apartments.com. Also ranking high were ApartmentShowcase.com (sixth), Move.com (eighth) and ApartmentSearch.com (10th). Realty DataTrust Corporation is a leading provider of Web-based leasing solutions for the multifamily housing industry. More than 100 management firms nationwide use the Arizona-based company's VaultWare check availability and reservation system, which enables consumers to easily find and reserve an available rental unit while giving apartment management companies reservations from qualified prospects. The top 10 Web sites are part of the more than 160 VaultWare-powered sites with online leasing functionality in the United States.
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Legislative/Legal News
Colorado Apartment Owners Get Behind CO Detector Bill
Digested From "Apartment Owners Get Behind Carbon-Monoxide Detector Bill"
Denver Post (01/13/09) by Tim Hoover
Nancy Burke, a lobbyist with the Colorado Apartment Association and the Apartment Association of Metro Denver, said apartment owners have changed their position and now support legislation that mandates the installation of carbon monoxide detectors in units. The bill, HB 1091, still must undergo an amendment phase before the state's House Business Affairs and Labor Committee votes on it. The state is still affected by the deaths of Denver residents Parker and Caroline Lofgren and their children. The family was found dead Nov. 28 in an Aspen home where they were staying after winning a weekend at the house in a fundraiser. Authorities have confirmed that a disconnected boiler exhaust pipe spread carbon monoxide throughout the residence. Burke remarks, "We realize that the recent deaths are not something we want to see again in the news."
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Ontario Apartment Residents Not Sold on Smart Meters
Digested From "Renters Not Sold on Smart Meters"
CBC News (Canada) (01/13/09)
In Canada, the Ontario government's plan to install so-called smart meters in every home by the end of the decade is moving full steam ahead, but apartment owners and residents are already quarreling over the cost of electricity. The meters record energy consumption hour by hour, sending consumers' electricity provider through special technology. The old way entailed manually reading meters that measured total electricity used over an entire billing period. Currently, most apartment residents throughout the province have their electricity bills included in monthly rents. As the government plan moves forward, though, individuals will have specific bills for specific rental units. Many residents do not believe apartment owners are reducing the rent in proportion to the expected cost of electricity. However, Greater Toronto Apartment Association President Brad Butt thinks individual meters will end up being good, energy-saving devices. He reasons, "If residents see a bill, if they know exactly what they are using on a regular basis, they're going to reduce the amount [of electricity] that they're using."
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