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NAA Was a Major Presence at Democratic Convention
Industry News
Equity Sells Hefty Austin Apartment Portfolio
Utah Market Apartment Rents Increase Despite Vacancy Rise
Apartment Sales Decline in Denver
Pinnacle Appoints Former NAA Director Weston VP, Learning & Development
Orlando Apartment Communities' $118 Million Sale Sets 2008 Record
Pa. Residential Construction Continues to Decrease
Mid-America Apartment Communities Reports on Acquisition Fund
Douglas Emmett Inc. Obtains a $365 Million Term Loan
Legislative/Legal News
NAA Symposium in Denver Focuses on Fannie Mae and Freddie Mac
Use Of Submeters at Connecticut Apartment Community Challenged
Illinois Cities Restrict Apartment Barbecues
Nevada Courts Respect Sanctity of Rental Apartment Contracts
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NAA Was a Major Presence at Democratic Convention
Digested From "The Rental Society"
Forbes (08/26/08) by Joshua Zumbrun
The National Apartment Association (NAA) was in Denver this past week, making sure its members' concerns are heard at the Democratic National Convention. NAA officials point out that the United States currently has around 85 million renters in 35 million units. In 2007, they added, the number of apartments increased by 1.5 million--the largest annual increase since at least 1965. In all the rhetoric concerning the country's housing crisis, however, apartment housing has been mostly left out of the discussion. This discrepancy is what brought NAA President Douglas Culkin together with Pennsylvania Sen. Bob Casey and former HUD Secretary Henry Cisneros in Denver to talk about apartment housing and how so many citizens were able to take out mortgages for homes they had no chance of affording in the long run. Lenders and banks that failed to price risk are only part of the problem in the subprime mortgage meltdown. The NAA also contests the federal government's "homeownership at any cost" policy. According to Culkin, it simply does not make any sense for everybody to own their homes, and renting should not be stigmatized in the process. Culkin concludes, "The American dream has become the American nightmare. We need a balanced housing policy."
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Industry News
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Equity Sells Hefty Austin Apartment Portfolio
Digested From "Equity Sells Hefty Austin Apartment Portfolio"
Austin American-Statesman (TX) (08/26/08) by Shonda Novak
Northland Investment Corp. has inked a $270 million deal to acquire Equity Residential's nine apartment communities in Austin, becoming the Texas state capital's biggest owner of apartments. The purchase of the 2,985-unit portfolio also ranks as the largest multifamily housing acquisition in Austin's history. Chicago-based Equity announced earlier this spring that it would be leaving the Texas market and selling its Austin portfolio, which is currently around 90 percent occupied. Northland Investment's Northland Fund III is the buyer of the portfolio, which includes apartment communities in the city's Arboretum area as well as far North Austin and Southwest Austin. Northland CEO Steven P. Rosenthal remarks, "The Austin market has been attractive to a number of industry sectors, particularly businesses in information technology, creating a strong job market and attracting people to the region. Residential properties that are well-managed and maintained will benefit from this growth." Equity spokesman Marty McKenna adds that the deal reflects her company's strategy of placing greater emphasis on "what we believe are going to be the higher-growth markets in terms of jobs and household formations," in addition to "supply-constrained" markets where it has become increasingly difficult to develop new apartment communities. As of the end of this year's second quarter, M/PF reports that Central Texas' apartment occupancy has fallen from 95.2 percent a year earlier to 93.4 percent. Rents, meanwhile, continue to grow.
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Utah Market Apartment Rents Increase Despite Vacancy Rise
Digested From "Rent Rates Increase Despite Vacancy Rise "
Deseret Morning News (UT) (08/26/08) by Jasen Lee
Apartment vacancy rates rose in three of Utah's four Wasatch Front counties during the second quarter, confirms a new Apartment Realty Advisors report. Vacancies in Salt Lake County rose from 4.5 percent at the end of last year to 5.3 percent as of June 30. Utah County apartment vacancies increased from 3.6 percent to 4.9 percent over that same time span, while Weber County saw a modest jump from 6.3 percent to 7.0 percent. A fourth county, Davis, confirms that its vacancy rate was virtually flat in the first six months of this year. Apartment Realty Advisors spokesman Jeb Millburn notes that part of the reason for the increase in apartment vacancies is the decline in sales felt throughout the entry-level home buyers' market. Builders, speculators and investors who have been unable to secure buyers due to the downturn are renting out myriad new homes and condos. Millburn remarks, "They term this 'the shadow market,' because it's a market that is very difficult to track, and you really can't pin down how many of those homes there are that are being rented." Despite the rising vacancies, the average apartment rent in Salt Lake County increased 9.23 percent versus the same period last year. In Davis County, rents rose 3.7 percent for the first half of the year, while Utah County posted a 1.8 percent rent increase for the first six months of the year.
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Apartment Sales Decline in Denver
Digested From "Apartment Sales Decline in Denver"
Denver Business Journal (08/28/08)
A new CB Richard Ellis reports shows that the Denver metro area's apartment sector tallied $140.3 million in sales during this year's second quarter--its lowest sales since the first quarter of 2005. During the April-through-June period, a total of 2,096 units in apartment communities of 50 units or more were sold for roughly $66,934 a unit. That marked a decline of 19 percent from this year's first quarter. For this year’s first half, a total of 3,925 apartments in 22 communities sold for $312.5 million, or $79,605 a unit. The Denver area's second-quarter apartment vacancy rate remained flat at 6.2 percent compared to the same three-month period of 2007. Average rent, meanwhile, increased to $886.14 a month from $863.53 in last year's second quarter. CBRE expects to see no more than 2,700 new apartments added to the market in all of 2008 and another 3,300 or so units in 2009. The study concluded: "In spite of the apparent national recession, we are hopeful that the Colorado new job creation numbers will continue to be positive. . . . As we have said in the past, new job creation is the fuel for the multifamily engine."
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Pinnacle Appoints Former NAA Director Weston VP, Learning & Development
Digested From "Pinnacle Appoints New Vice President, Learning & Development"
PRNewswire (08/25/08)
Pinnacle, an American Management Services Company, has promoted Susan Weston to vice president of learning & development. Effective Sept. 1, she will be in charge of overseeing training and curriculum development, as well as creating a Web-based knowledge management system for Pinnacle staffers. In addition, she will provide support to the firm's new employee recruitment, orientation and retention programs. Weston, who has three decades of experience in the property management field, has worked as Pinnacle's Central Region education director since 2005. Prior to that, she served for three years as the National Apartment Association's (NAA's) director of education, where she was responsible for the national designation programs and association education initiatives. Weston has also been an active member of the NAA Education Institute, the Texas Apartment Association and the Dallas and Tarrant County Apartment Associations. Pinnacle ranks as the country's leader in third-party fee management, managing a portfolio of apartment communities and other assets valued at more than $17 billion. Pinnacle's multifamily housing portfolio consists of more than 160,000 apartments.
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Orlando Apartment Communities' $118 Million Sale Sets 2008 Record
Digested From "Apartment Complexes' $118M Sale Sets Record for 2008"
Orlando Business Journal (08/22/08) by Anjali Fluker
In Orlando, a couple of foreclosed apartment communities on the market since last year has finally sold for $118 million--a record amount for multifamily housing sales in the city this year. TA Associates Realty of Boston acquired the Cottages at Hunter's Creek and LaPalazza at MetroWest, which together have 1,042 rental units. Both are fairly new Class A communities. Prior to the sale, the largest apartment transaction in 2008 was the $50.1 million sale of the 371-unit Place at Millenia community. Jeff Morris, managing director of capital markets for Jones Lang LaSalle, co-brokered the deal on behalf of Trimont Real Estate Advisors. He states, "I think [the price] will serve as a data point for buyers who are looking."
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Pa. Residential Construction Continues to Decrease
Digested From "Residential Construction Continues to Decrease"
Norristown Times Herald (PA) (08/18/08) by Margaret Gibbons
Montgomery County, Pa., staff planner Scott France blames the weak economy, the lack of land available for residential development, zoning, worsening affordability, and rising materials costs for the drop in local housing construction to a 24-year-low of 2,109 in 2007. France notes that multifamily housing units have accounted for over half of new residential building over the past four years, with a bulk of the decline attributed to single-family construction. Of the 2,109 new homes built last year, France says 446 were age-restricted dwellings.
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Mid-America Apartment Communities Reports on Acquisition Fund
Digested From "Mid-America Apartment Communities Reports on Acquisition Fund"
PRNewswire (08/25/08)
Mid-America Apartment Communities Inc. (MAA) confirms that Mid-America Multifamily Fund I LLC, a joint venture in which it has a 33 percent interest, will not make additional acquisitions. The plan now is for Fund I to maintain its ownership of the apartment communities it previously purchased and to continue their scheduled redevelopment plan. MAA Chairman and CEO Eric Bolton remarks, "We're pleased with the progress of the venture. However, Fund I will not expand any further at this time. MAA will continue to acquire properties for its own account, and anticipates putting in place a new acquisition fund." MAA is a multifamily housing REIT that owns or has ownership stakes in more than 42,200 apartments across the nation's Sunbelt region.
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Douglas Emmett Inc. Obtains a $365 Million Term Loan
Digested From "Douglas Emmett Inc. Obtains a $365 Million Term Loan"
Centre Daily Times (PA) (08/18/08)
Douglas Emmett Inc. has obtained a non-recourse $365 million term loan to refinance the bridge loan that was obtained in connection with the REIT's purchase of a six-building office portfolio near the end of this year's first quarter. The new loan is secured by the portfolio and bears interest at a floating rate equal to LIBOR plus 165 basis points. However, Douglas Emmett has entered into interest rate swap contracts that effectively fix the interest rate at 5.515 percent until Sept. 4, 2012. Douglas Emmett ranks as one of the biggest owners and managers of high-quality apartment communities and office properties in California and Hawaii. The REIT's properties are located in 10 key submarkets, including Beverly Hills, Brentwood, Burbank, Century City, Santa Monica and Honolulu.
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Legislative/Legal News
NAA Symposium in Denver Focuses on Fannie Mae and Freddie Mac
Digested From "Fannie, Freddie Remain In Focus For Dems In Denver"
CNN Money (08/26/08) by Michael R. Crittenden
This past week, housing policymakers were on hand at the Democratic National Convention in Denver to discuss the finances of Fannie Mae and Freddie Mac and whether the Treasury Department plans to shore up the two government-sponsored enterprises (GSEs). Sen. Robert Casey Jr. (D-Pa.) spoke at a housing symposium sponsored by the National Apartment Association (NAA). He stated, "I want to make sure we stay in touch with Treasury to find out as much as we can." Casey used his time at the podium to praise Treasury Secretary Henry Paulson for orchestrating a government backstop for the GSEs. Casey's comments were echoed by other speakers at the NAA symposium, including Rep. Baron Hill (D-Ind.) and former HUD Secretary Henry Cisneros. The latter said: "I worry that we cannot see how all the cards are interconnected when something like that occurs and has repercussions for the global markets."
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Use Of Submeters at Connecticut Apartment Community Challenged
Digested From "Use Of Gas-Heat 'Submeters' At Bloomfield Complex Challenged"
Hartford Courant (CT) (08/28/08) by Lynn Doan
In Connecticut, Greater Hartford Legal Aid has petitioned state regulators to investigate the illegal use of "submeters" at a Bloomfield apartment community that bill each resident individually for gas heating. In a 2007 decision, the state Department of Public Utility Control (DPUC) decreed that submeters cannot be used in Connecticut because the accuracy of the devices is not regulated by the same federal and state laws as those applying to meters manufactured by gas utilities. Opponents further note that the private billing firms that manage submeter systems are not required to file records with the state to help resolve customer disputes. Legal Aid filed a complaint with the DPUC on Aug. 27, contending that the managers of the East Wintonbury Apartments decided in 2005 to begin individually charging residents for natural gas by hiring a submetering company. The cost of heat was previously included in each resident's monthly rent. David Pels, an attorney with Legal Aid, notes that some residents have fallen thousands of dollars behind on their gas payments. Others have questioned the accuracy of their bills. During some summer months when natural gas usage is typically low, Pels points out that some residents have received unusually high bills. Even when meter readings have been recorded as "zero usage," Pels contends that residents have been charged.
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Illinois Cities Restrict Apartment Barbecues
Digested From "Many Cities Restrict Apartment Barbecues"
Chicago Daily Herald (08/19/08) by Jake Griffin
Towns and cities throughout Illinois are bound by a 2001 International Fire Code that stipulates grills be restricted on balconies, decks and patios of multifamily housing structures unless there are overhead fire sprinklers or the deck and housing material is noncombustible. West Chicago goes so far as to send code enforcement officers to caution residents who have grills on apartment decks and given the authority to issue citations for those who fail to comply. Nearby Naperville cracked down on apartment and condominium grills two years ago, but residents fought back. Eventually, the Chicago suburb amended its code to allow deck grills as long as an adult was constantly supervising and the deck was outfitted with a proper fire extinguisher. According to the most recent statistics from the National Fire Protection Association, more than 3,400 structure fires were caused by barbecue grills in 2005. The study, however, does not separate structure fires at apartment communities from single-family residences.
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Nevada Courts Respect Sanctity of Rental Apartment Contracts
Digested From "Nevada Courts Respect Sanctity of Rental Contracts"
Reno Gazette-Journal (08/16/08) by Michael Cirac
In Nevada, apartment owners and residents have a good amount of flexibility in negotiating the terms of the rental agreement. Such issues as the amount of the rent and deposit, responsibility for payment of utilities, permitted occupancy of the apartment and whether pets are allowed are left to the agreement of the owner and resident. The article's author, Michael E. Cirac, writes: "We are fortunate that the Nevada courts respect the sanctity of rental contracts and permit both landlords and tenant to make the best deal they can." He notes that there is no rent control in Nevada. Furthermore, Nevada apartment owners are required to provide such essential services as heat, running water and plumbing facilities in good working order. Owners also have access to summary eviction remedies to remove problem residents. Residents are entitled to both notice and a hearing before being evicted. Additionally, residents are protected from discrimination on the basis of race, religious creed, color, national origin, disability, ancestry, familial status or gender. The article's author, a member of the Northern Nevada Apartment Association, is a licensed Nevada attorney practicing primarily in the area of apartment law.
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