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Post Properties Gets $2.1 Billion Offer From Former CEO, Cadim
Industry News
Uncertain Occupancy May Affect Multifamily Housing Finance
CT Realty Forms Joint Venture for Apartment Deals
Apartment Rents in California's Santa Cruz County Soar
Grosvenor Teams With Rockwood for Multifamily Joint Venture
Leveraged Buyout of Apartment REIT Could Hurt Wall Street Firms
Incentives Multiply as More D.C. Condos Turn to Apartments
Sorting Out the New Housing Market
Legislative/Legal News
How Bush's Stimulus Package May Indirectly Affect Apartments
Fed's Recent Rate Cut Is Good News for Apartments
NCTA Challenges Ruling Affecting Apartment Communities and Cable Providers
Dallas Suburb OKs New Anti-Immigrant Rule Regarding Apartments
Disability Policy to Affect Ventura County, Calif., Apartments
Philadelphia Builders Worried About New Workforce Housing Law
Pet Rent Remains an Issue With Some Apartment Residents
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Post Properties Gets $2.1 Billion Offer From Former CEO, Cadim
Digested From "Post Gets $2.1 Billion Offer From Former Chief, Cadim"
Bloomberg (01/23/08) by Sharon L. Lynch
Post Properties Inc. confirms that it has received an unsolicited $2.1 billion buyout offer from former CEO John A. Williams' firm and Cadim, Canada's largest pension fund. Williams Realty Advisors LLC and Cadim bid $44 to $47 a share in cash, with the high end 31 percent more than Jan. 22's closing price. Post Properties CEO David Stockert immediately stated that his company has not made any determination as to the "adequacy" of the Williams-Cadim bid. Post Properties is an Atlanta-based multifamily REIT that owns 22,000 mostly garden-style and high-rise apartments nationwide.
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Industry News
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Uncertain Occupancy May Affect Multifamily Housing Finance
Digested From "Uncertain Occupancy May Affect Multifamily Finance"
GlobeSt.com (01/27/08) by Erika Morphy
Since the credit crisis took hold, the steady stream of capital for multifamily housing development and investment sales has been a bright spot. However, an uncertain outlook in apartment occupancy rates in some markets is becoming a reason for worry. Colin Whittier, vice president of KeyBank Real Estate Capital, remarks, "The apartment market is very interesting now. A lot of lenders are very busy doing agency deals and these are still going strong. But when you look at more recent data, you see that some of it is a little scary." The biggest danger, he notes, is if oversupply erodes projected cash flow in some deals as vacancies start to increase and rents decrease. This trend is such a new one that it is difficult to quantify. Additionally, there are variations of the larger trend in the various individual submarkets.
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CT Realty Forms Joint Venture for Apartment Deals
Digested From "CT Realty Forms JV for Apartment Acquisitions"
Commercial Property News (01/24/08) by Tonie Auer
CT Realty Corp. has partnered with Macbeth Apartment Systems Inc. to pursue multifamily housing acquisitions throughout Southern California. Marcus & Millichap states that the region's apartment sector will experience sustained good health over the next five years due to such factors as foreign immigration and limits on new supply. The joint venture is structured as an equal partnership between the two companies. CT Realty will provide equity financing and strategic planning for the acquisition of apartment communities, using funds from its California Fund V and its new California Fund VI to acquire assets in San Diego, Orange, Riverside, San Bernardino and Los Angeles counties. For its part, Macbeth has agreed to handle construction oversight, marketing and day-to-day management. Apartments that were previously converted to condominiums but failed to attract enough buyers look to be one source of new product for the venture.
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Apartment Rents in California's Santa Cruz County Soar
Digested From "Rents in Santa Cruz County Spike to Some of Highest in State"
Register-Pajaronian (CA) (01/22/08) by Roger Sideman
RealFacts reports that average monthly apartment rents in Santa Cruz County, Calif., reached $1,601 during 2007's fourth quarter. That was a 9 percent increase from the same three-month period a year earlier. Rents were up nearly 15 percent from two years earlier. Santa Cruz County residents are now paying some of the highest rents in the Golden State, ranking third behind only the San Jose-Sunnyvale-Santa Clara and Los Angeles-Long Beach-Santa Ana markets. Shannon Hill, a manager with locally based Oliver Property Management, expects rents in the county to continue spiking through at least 2009. UC Berkeley professor Ken Rosen adds that Santa Cruz's rising rents can be attributed to two factors: a solid local economy and an increase in demand for rental apartments as fewer people are in a position to become homeowners.
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Grosvenor Teams With Rockwood for Multifamily Joint Venture
Digested From "Grosvenor, Rockwood Form Multifamily JV"
GlobeSt.com (01/22/08) by Brian K. Miller
Grosvenor has partnered with Rockwood Capital LLC to acquire and renovate multifamily communities throughout the Seattle metropolitan area. The partnership will focus on purchasing apartment communities that have significant potential to boost value via renovation, repositioning and more aggressive management. The joint venture, which is now actively scouting for Seattle-area communities with more than 100 units, has approximately $100 million of equity to leverage. Grosvenor is a privately owned group of international property firms with nearly $30 billion in assets under management, while Rockwood Capital LLC manages property funds on behalf of institutional investors and wealthy individuals.
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Leveraged Buyout of Apartment REIT Could Hurt Wall Street Firms
Digested From "Archstone LBO Could Hurt Wall Street Firms"
Reuters (01/20/08)
Barron's officials are concerned that a leveraged buyout of Archstone-Smith may leave Wall Street firms vulnerable if they are left holding some equity in the deal. A fund run by Tishman Speyer and Lehman Brothers Holdings Inc closed the $22.2 billion purchase of the apartment REIT last fall. Funds managed by both acquiring firms each put up $250 million for control of Archstone-Smith. To seal the deal, Lehman; Banc of America Strategic Ventures, a Bank of America affiliate; and Barclays Capital provided a $4.6 billion bridge-equity loan. Tishman Speyer and Lehman expected only $500 million of the bridge-equity loan to be sold at closing, with the rest of the equity to be sold within one year. Soon after the deal was finalized, though, prices of apartment REITs went south. According to Barron's, Lehman and Tishman Speyer may have encountered significant difficulty in selling the equity, leaving Lehman, Banc of America Strategic Ventures and Barclays holding the proverbial bag.
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Incentives Multiply as More D.C. Condos Turn to Apartments
Digested From "Renters on Top"
Washington Post (01/19/08) P. F1; by Allan Lengel
A new Delta Associates study shows that the Washington, D.C., metro area's apartment supply has grown in the last year, due mainly to an infusion of approximately 10,000 new units--25 percent of which initially were slated as condos. Consequently, the average rental vacancy rate in the D.C. region during last year's October-through-December period rose from 2.9 percent a year earlier to 3.7 percent. Area rents have risen 1.8 percent in the last year, the smallest increase in five years. No longer an owner's market, management firms are reporting that more prospective residents are taking their time before settling on an apartment, with many pushing for such enticements as free rent or a flat-screen TV. Delta reports that concessions averaged 4.8 percent of the asking rent in the fourth quarter of 2007, a gain from 2.4 percent in the same period a year earlier. As the demand to purchase condominiums has slowed locally, some developers have converted those buildings to rental apartments. In just the last couple of years, Delta reports that developers have converted approximately 21,000 D.C.-area condos to apartments in the planning stage, under construction or delivered. Of the local market's three primary areas--the nation's capital, suburban Maryland and Northern Virginia--D.C. has the fewest new apartments in the pipeline. Virginia, meanwhile, has the most apartments in the pipeline.
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Sorting Out the New Housing Market
Digested From "Sorting Out the New Housing Market"
New York Times (01/18/08) by Floyd Norris
The post-bubble housing market is beginning to take shape. In a reverse of what was true for years, the ideal home buyer now is a renter who is unburdened with a house. Such a buyer will need a down payment from somewhere, along with sufficient income to meet monthly mortgage payments. Previously, having a home that had appreciated in value meant that the owner could trade up to a more pricey residence. Now, it means that the homeowner cannot move until the old house sells, which is getting more difficult in a growing number of markets. Often, selling one home depends on the buyer's selling his/her house, and that deal in turn depends on yet another sale and so on. Columnist Floyd Norris concludes that, barring a huge government program, the nation's housing decline "may be prolonged and bitter for nearly all involved. The worse it gets, the bigger the losses for financial institutions and the less able they may be to make the loans to turn things around."
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Legislative/Legal News
How Bush's Stimulus Package May Indirectly Affect Apartments
Digested From "Bush's Stimulus Package Would Have Positive Effect on Commercial Real Estate--Indirectly"
Commercial Property News (01/24/08) by Barbra Murray
The National Association of Realtors (NAR) reports that elements of President Bush's plan to help stabilize the housing market would actually help lessen the negative impact of the credit crisis on commercial real estate. Mary Trupo, NAR's public issues director, states, "By adding liquidity to the market, it will help not just individuals, but it will add capital to the financing market for commercial endeavors, as well. There will be more funds available for projects." One of the plan's provisions would also indirectly impact the multifamily housing sector, in particular. Trupo explains, "The way the stimulus package is designed now, there are no conforming loan limits. Because loans are above the limit of what Fannie Mae and Freddie Mac will insure, property owners--including multifamily property owners--pay higher loan costs." Consequently, increasing the conforming loan limits would have an immediate impact.
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Fed's Recent Rate Cut Is Good News for Apartments
Digested From "Recent Rate Cuts Mean Add Up to News for Multifamily Owners"
Multi-Housing News (01/08) by Anuradha Kher
The Federal Reserve's recent move to slash three-quarters of a point off the federal funds rate is being viewed as positive news for apartment residents and owners. Timothy L. White, president of multifamily housing lender PNC ARCS, predicts, "We will see a downward trend in the rates of adjustable rate loan products. As a result, we will see an increase in the demand for the loans and when the interest rates go down, there will be fewer foreclosures and fewer multifamily projects vacant on the market." The federal funds rate is the interest banks charge each other for short-term loans.
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NCTA Challenges Ruling Affecting Apartment Communities and Cable Providers
Digested From "FCC Challenged on Cable Ruling"
Wall Street Journal (01/24/08) P. B5
The National Cable & Telecommunications Association (NCTA) this past week filed notice that it was challenging part of a recent U.S. government ruling that struck down exclusive contracts between apartment communities and cable providers. NCTA officials filed a motion to stay part of the rule approved by the FCC in 2007 that rendered illegal the contracts between multifamily property owners and cable companies. The lobby group contends that in 2003, the FCC opted not to interfere in the agreements between the two sides. This, in turn, emboldened cable operators to aggressively sign more of the contracts.
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Dallas Suburb OKs New Anti-Immigrant Rule Regarding Apartments
Digested From "Suburb Adopts New Anti-Immigrant Rule"
Associated Press (01/22/08) by Anabelle Garay
Elected officials in Farmers Branch, Texas, unanimously approved a new rule earlier this month to require prospective apartment residents to get a city license to rent their units. These same leaders had earlier been blocked from enforcing a ban on leasing apartments to illegal immigrants. This latest proposal would require residents to provide information to the city, which would then check with the U.S. government to determine the individual's immigration status. Those deemed an illegal immigrant would be prohibited from renting an apartment. The issue has split local and national pundits alike. Maria Elena Garcia-Upson of U.S. Citizenship and Immigration Services states, "There is no database where the city or anyone can pick up the phone and give alienage, like 'Yes, this person is legal' or 'No, that person isn't legal.' There is no such database." Councilman Jim Smith counters, "This may be in the courts forever. I hope not, but the decision is: Let's go for it."
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Disability Policy to Affect Ventura County, Calif., Apartments
Digested From "Policy to Affect Apartments Used by the Disabled"
Ventura County Star (CA) (01/22/08) by Sam Richard
Essex Property Trust Inc. is carrying out a new policy of documenting requests from people with disabilities at its 11 apartment communities in Ventura County, Calif. Liam Garland of the Housing Rights Center states, "An effort like this makes [residents] more aware of their rights to reasonable accommodations." Federal law defines a "reasonable accommodation" as a change in environment, policies or services to give disabled people an equal opportunity to use and enjoy living quarters. For instance, an apartment property owner should permit a blind person with a seeing eye dog to keep the pet due to his or her disability, even if the apartment community has a no-pets policy. Essex's 11 apartment communities in the county boast a total of 2,850 apartments. The REIT will receive instruction from the Housing Rights Center on fair housing and protections for disabled people.
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Philadelphia Builders Worried About New Workforce Housing Law
Digested From "'Inclusion' May Exclude Developers"
Philadelphia Business Journal (01/21/08) by Natalie Kostelni
Builders in Philadelphia are worried that a new law requiring workforce housing to be a component of every residential project could have a negative impact on future development in the market. Under the law, a developer erecting a project with 20 or more units, either for sale or rental, would be obliged to allocate one-tenth of the units as affordable to prospective buyers who meet income parameters. For instance, if a market rate unit costs $300,000, an affordable unit in the same development would be priced at about $130,000. The law was signed by former mayor John Street in the last days of his term. However, it will not become official until builders and members of Philadelphia's City Council come up with a way to offset what developers are condemning as a new, onerous tax on construction. Supporters assert that market-rate developers need to become much more aggressive in adding affordable housing citywide. However, Westrum Development Corp. CEO John Westrum counters, "No educated investor or bank would invest in any new market-rate project. The bill possibly kills the goose that lays the golden egg. If there's no investment, there's no affordable housing, no new jobs, no new revenues for the city."
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Pet Rent Remains an Issue With Some Apartment Residents
Digested From "The Reason for Pet Rent: Thoughts From the Other Side"
Washington Post (01/19/08) P. T13; by Sara Gebhardt
Apartment owners often charge something known as "pet rent" to help them cover damage and maintenance costs related to residents with dogs, cats and other critters. Pet units are generally more trouble to keep up than pet-free apartments. Pat Rheams, who has owned and managed multifamily communities in Northern Virginia for the better part of three decades, reasons, "When I rented to tenants with dogs, I had dogs chew up the baseboards, windowsills and TV cables. Dogs scratched the storm doors, which had to be replaced. . . . Although we can usually just patch and touch up wall paint between tenants, we had to totally repaint after every dog left." As for cats, Rheams reports that she has had prospective residents walk away from her communities because they were sneezing from feline dander or repelled by a unit's lingering litter-box smell. To this end, she now charges a $250 refundable pet deposit and $25 per month pet rent. Rheams remarks, "Should we still have problems, at least the accrued pet rent helps take some of the sting out."
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