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NAA and NMHC Announce Continued Partnership
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NAA and NMHC Announce Continued Partnership
Industry News
Fannie, Freddie Woes Hurt Apartments
SARES REGIS Group Adds 12 Apartment Communities to Portfolio
Smaller Apartment Communities Still Popular in Denver
West Texas Apartments Offer Incentives to Attract Residents
U.S. Home Building Unexpectedly Slumps in October
Post Properties Founder Named To Rentech Board
Bosses Are Becoming More Creative in Finding the Best Hires
Ottawa Apartment Construction Costs Drop Faster in Q3
Legislative/Legal News
Earning a Profit by Ending Energy Waste
Apartment Owners Sue Delaware City Over Fees
Arizona Settles Cases With Apartment Owners and Vonage
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NAA and NMHC Announce Continued Partnership
Digested From "National Multi Housing Council and National Apartment Association Announce Continued Partnership"
NAA News Release (11/18/2009)
The National Multi Housing Council (NMHC) and National Apartment Association (NAA) announced Nov. 18 that they have agreed to continue their joint legislative program, working together to best represent the apartment industry. For nearly two decades, the groups have jointly advocated on behalf of the apartment industry through the NMHC/NAA Joint Legislative Program (JLP). The groups agreed today to extend their unique partnership for at least another three years. NAA President Douglas S. Culkin comments, "The continuation of NAA's longstanding partnership with NMHC provides tremendous value for members of both organizations, as, together, we continue to grow our grassroots campaign, giving the apartment industry a stronger voice on Capitol Hill." Ron Shelton, NAA's 2009 chairman, said, "During this critical legislative time, it is important for our industry to be heard as we continue to advocate for a balanced housing policy in Washington. The tremendous strength in numbers from the NAA/NMHC grassroots efforts enables us to make a powerful impact on policymaking decisions."
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Industry News
Fannie, Freddie Woes Hurt Apartments
Digested From "Fannie, Freddie Woes Hurt Apartments"
Wall Street Journal (11/18/09) P. C1; by Nick Timiraos
Fannie Mae and Freddie Mac upped their lending for apartment communities as the commercial property sector neared its peak, and both now face rapidly growing loan losses as delinquencies climb. The Federal Housing Finance Agency reports that the two mortgage financiers were responsible for 84 percent of all multifamily lending in 2008, up from 34 percent two years earlier. Harvard University's Joint Center for Housing Studies has cautioned that without Fannie Mae and Freddie Mac's continued purchases, "apartment transactions could come to a near standstill." This could potentially create a scenario where even "cash-flow-positive projects may not be able to get refinanced and will be pushed towards default." However, most of the multifamily loans held by the government-sponsored entities will not mature for several years, enabling rent and vacancy rates time to rebound.
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SARES REGIS Group Adds 12 Apartment Communities to Portfolio
Digested From "SARES REGIS Group Adds 12 Apartment Communities to Management Portfolio Totaling 3,649 Units"
Marketwire (11/19/09)
SARES REGIS Group's Multifamily Property Management Division confirms that it has added a dozen apartment communities to its management portfolio. Together, these communities total 3,649 rental units. The division now manages 59 properties containing 16,850 units in three states -- Arizona, California and Colorado -- ranging from mature garden-style communities to new Class-A, mixed-use and transit-oriented urban developments. SRG developed three of the properties, including a couple of Southern California communities registered with the U.S. Green Building Council and built to Leadership in Energy and Environmental Design standards. The company has not only earned No. 1 rankings in blind resident satisfaction polls and independent national benchmarking surveys, it has also implemented a highly successful "rent optimizer program" that maximizes revenues in a similar way to sophisticated pricing models used by the hotel and airline industry. Michael Bissell, the division's president, comments, "In a strong market, the program tells you how and when to push rents up faster. In a down market, you don't lose tenants and revenues as fast as your competitors."
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Smaller Apartment Communities Still Popular in Denver
Digested From "Real Deals: Smaller Apartment Properties Still Popular"
Denver Business Journal (11/16/09)
A new Marcus & Millichap Real Estate Services Inc. study shows that investors are continuing to buy smaller Denver-area apartment communities priced at less than $3 million. The main reason for this positive trend, which is expected to continue well into 2010, is because such deals have proven relatively easy to finance. While the report shows that local apartment sales velocity has dropped 50 percent during the last 12 months mainly due to buyer caution, investment activity in this year's second and third quarters picked up from the first three months of the year. In the last two quarters, Marcus & Millichap researchers report that about 85 percent of apartment communities sold in the Denver metro area were priced at less than $3 million versus 70 percent in a year-over-year comparison.
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West Texas Apartments Offer Incentives to Attract Residents
Digested From "Apartment Complexes Offering Incentives to Attract Renters"
NewsWest 9 (Texas) (11/19/09)
Throughout West Texas, more and more apartment communities are seeing vacant rental units stay that way. This has prompted many apartment owners and managers to offer a wide range of deals and incentives to attract residents. Free rent for a set amount of time is among the most popular enticements. Sunset Apartments, meanwhile, is holding a raffle just to get people to come and look at their available apartments. Permian Basin Apartment Association President David Pope notes that one city has been more affected than others as a result of the down economy. He reports, "Right now, Odessa is the one that is hurting worse than anyone, because we are so geared to the oil industry."
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U.S. Home Building Unexpectedly Slumps in October
Digested From "U.S. Home Building Unexpectedly Slumps in October"
New York Times (11/19/09) P. B3; by Javier C. Hernandez
The Commerce Department reports that home building braked unexpectedly last month to a seasonally adjusted annual rate of 529,000 units -- the lowest level in six months. Apartment construction slowed to a seasonally adjusted annual rate of 53,000 in October, an all-time low. Analysts attributed this decrease to two factors: soft demand for rental units as vacancies remained abundant and banks' lingering reluctance to back large construction projects. Meanwhile, the overall decline in residential construction may have been due to uncertainty in October over whether Congress would extend a tax credit for first-time home buyers, which lawmakers have since done.
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Post Properties Founder Named To Rentech Board
Digested From "Williams Named To Rentech Board"
Trading Markets (11/19/09)
Post Properties founder John A. Williams has been appointed to Rentech Inc.'s board of directors. Williams founded Post Properties in 1970. Under his leadership, the company went on to become a leading developer, owner and operator of upscale apartment communities. Williams took the company public in 1993 and continued to serve as its chief executive for another nine years. He served on its board from 1970 until 2004. Since November 2004, Williams has served as CEO of Williams Realty Advisors LLC, a real estate fund advisor. In addition to his duties at Rentech, a Los Angeles-based provider of clean energy solutions, he will also continue to serve as a minority owner of the Atlanta Falcons pro football team.
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Bosses Are Becoming More Creative in Finding the Best Hires
Digested From "To Find Best Hires, Firms Become Creative"
Wall Street Journal (11/17/09) by Emily Maltby
Small companies and organizations that are still hiring despite the downturn face the unenviable challenge of too many candidates applying for the small number of open positions. Consequently, some firms are getting creative in finding the best applicants. I Love Rewards Inc., for instance, recently received approximately 1,200 applications for nine job openings. Rather than reading through each resume, an e-mail was sent to each applicant, thanking them for their interest and asking them to attend an open house in Toronto. Only 400 showed up. Founder and CEO Razor Suleman states, "That's self-selection. It's so easy to apply for anything, but 800 didn't take the first step. That lowered the screening process." The cost of advertising a job, paying headhunter fees and finding a successor if a new hire does not work out can be significant financial considerations for smaller organizations. The accounting firm of Fisher, Herbst & Kemble PC in San Antonio is now relying on personality tests by Mercer Systems Inc. before hiring candidates. The 15-minute questionnaires are designed to forecast behaviors such as interpersonal style, outlook and motivators.
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Ottawa Apartment Construction Costs Drop Faster in Q3
Digested From "Apartment Construction Costs Drop Faster in Q3"
Ottawa Business Journal (11/20/09)
Statistics Canada reports that the cost of constructing new apartment communities in Ottawa fell 3.2 percent during this year's third quarter versus the same period a year ago. The local composite price index for apartment construction fell to 135 on a year-over-year basis. The 12-month drop was substantially bigger than the 0.8-percent seen in the April-through-June period compared to the second quarter of 2008. Similarly, the national index saw greater deflation in apartment construction costs, with the decline accelerating 2.7 percentage points to 9.6 percent in the third quarter versus a year earlier. Only Halifax and Montreal reported higher costs year-over-year among the seven major Canadian metro areas surveyed. Even then, the price increases were not as big as in the previous quarter.
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Legislative/Legal News
Earning a Profit by Ending Energy Waste
Digested From "Earning a Profit by Ending Energy Waste"
New York Times (11/18/09) P. B7; by Alec Appelbaum
The Community Preservation Corporation is offering $1 billion in credit to New York State apartment owners who fix wasteful energy and water systems in their buildings or communities. The initiative presumes that savings from such retrofitting efforts will be big enough for the owner to cover a loan with profit to spare. Sadie McKeown, a senior vice president with the organization, remarks, "We want to empirically show upside after a retrofit." The initiative's supporters range from Freddie Mac to New York City and State public employee pension funds, all of whom have worked with the corporation over the years to assemble financing for buildings with low-income residents. Now, some of these properties are in dire need of retrofits in order to become profitable or at least saleable. Michael D. Lappin, the Community Preservation Corporation's chief executive, notes that the idea for this latest initiative came to him last summer when he commissioned a study of the energy costs in the corporation's portfolio. Its findings uncovered extreme variations. The Community Preservation Corporation is a 35-year-old nonprofit lender, which has long specialized in issuing mortgages to owners of small buildings and properties receiving public subsidies.
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Apartment Owners Sue Delaware City Over Fees
Digested From "Landlords Sue City of Newark Over Fees"
Delaware Online (11/09/09) by Robin Brown
In Newark, Del., a group of apartment owners has filed a class action lawsuit against the city for more than $3 million, claiming the excessive rental permit fees they have been subjected to are illegal. The owners are seeking refunds of all fees paid in the past five years with interest. They are also petitioning for details as to where the money went, along with an order to halt the fees. The lawsuit's basic premise is fees should cover just permits and inspections. A legal brief reads: "Under Delaware law, a license fee or rental permit fee must be reasonably related to the cost of regulating the licensed or permitted activity." The owners contend that the fees instead illegally raise money for the general fund to run the city. Additionally, the apartment owners dispute the city using the fees for 40 percent of the building department budget. Their argument is that not all sites are inspected each year and some inspections may take only 15 minutes. City Solicitor Roger A. Akin responds, "The city will let the facts speak for themselves in a court of law with regard to the nature and amount of city resources that are devoted to the maintenance and enforcement of the rental permit program."
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Arizona Settles Cases With Apartment Owners and Vonage
Digested From "State Settles With Cases With Vonage, Apartment Landlords"
Phoenix Business Journal (11/18/09) by Mike Sunnucks
The State of Arizona has not only reached a $150,000 settlement with apartment owners over their treatment of a disabled resident, it is also part of a $3 million, multi-state settlement with Internet phone service provider Vonage over consumer cancellations. With regards to the former, Arizona Attorney Terry Goddard says the state reached the settlement with National City Neighborhood LLC and its principals to resolve charges that the Tucson-based apartment owner failed to provide an accessible parking space and make sorely needed repairs to an apartment rented by James Larson and his wife, Sabrina Ezell. While the settlement does not include any admission of wrongdoing from National City Neighborhood, the company has agreed to pay Larson and Ezell $100,000 and the state $50,000 to settle. Meanwhile, Arizona is getting $45,000 from the Vonage settlement, which includes money for 30 other states along with refunds to customers who had problems cancelling their service.
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