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America Is Becoming a Nation of Renters
Industry News
Greenville to See Flood of New Apartments
MAA Projects Strong 2012 After Record 2011 Results
Company Brings For-Profit Daycare to Toronto Apartments
Home Properties Increases Dividend
Equity Residential's FFO Rises 48 Percent in Q4 2011
Denver Metro Apartment Vacancy Rate in 4th Quarter Lowest Since 2000
Two Apartment Deals Show Building Strength in the Seattle Market
Essex Property 4Q Net Soars; Funds From Operations Rise
AvalonBay Communities' FFO Rises in 4Q
More K.C.-Area Residents Turning to Apartment Living
Renting the New Rage for Newlyweds 
Facebook IPO Filing Puts High Value on Social Network
Legislative/Legal News
Obama Administration to Move Forward With Closing Fannie Mae, Freddie Mac
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America Is Becoming a Nation of Renters
Digested From "America Is Becoming a Nation of Renters"
MSNBC's The Bottom Line (01/31/12) by John Schoen
According to the U.S. Commerce Department, the number of houses occupied by people who rent at the end of the fourth quarter 2011 rose by 749,000. Meanwhile, the number of houses occupied by owners fell by 91,000. The multifamily housing market continues to be a bright spot in housing even with tightened supply and higher rents. Of the new households forming, most are becoming renters. A November Government Accountability Office report based on U.S. Census data found that the number of vacant, non-seasonal, residential properties increased 51 percent nationally from nearly 7 million in 2000 to 10 million in April 2010. Experts say the homeownership rate will likely continue declining, and the for-sale market will continue to feel pressure from lower prices and increased foreclosures. Patrick Newport, an economist at IHS Global Insight, says, "Our view is that foreclosures, excess supply, and weak demand will drive prices down another 5 to 10 percent."
Industry News
Greenville to See Flood of New Apartments
Digested From "Greenville Renters to See Flood of New Apartments"
Greenville News (SC) (02/05/12) by Rudolph Bell
Apartment developers are moving swiftly to satisfy what they see as solid demand for additional multifamily housing in Greenville, S.C. There are currently seven new apartment communities in various stages of planning and development locally. If they all get built, the existing supply will grow by nearly 1,200 rental units. That is much more than Greenville has seen in recent years, reports locally based developer Russ Davis. K.C. Sanjay, senior real estate economist with the Dallas-based AXIOmetrics apartment market research firm, notes that supplies started to dwindle in Greenville and nationwide after the recession hit. Apartment developers and property lenders became increasingly hesitant to build new apartments. Today, by contrast, many more consumers are opting to rent instead of buy their homes. Apartment demand has surged as a result. Sanjay remarks, "Last year, we saw occupancy go up in virtually every market in the U.S., and we saw rent grew also all over the country." In Greenville, AXIOmetrics predicts the apartment vacancy rate will likely decrease from 7.1 percent last year to 5.7 percent in 2012. If so, Davis concludes, conditions will be more than ripe for more new apartment construction.
MAA Projects Strong 2012 After Record 2011 Results
Digested From "MAA Projects Strong 2012 After Record 2011 Results"
Memphis Business Journal (02/02/12) by Andy Ashby
MAA, the Memphis-based apartment REIT, reported strong income and funds from operations in the fourth quarter and full-year 2011. MAA said it has even greater expansion goals in 2012, with more than a quarter of a billion dollars worth of properties in its sights. The company registered a net income of $48.8 million in 2011, which was a 169.6 percent increase over its earnings of $18.1 million in 2010. The company reported fourth-quarter net income of $18.8 million, up 172 percent over the fourth quarter of 2010. MAA further confirmed full-year 2011 funds from operations of $155.5 million, a 25.5 percent increase over the year before. Additionally, the REIT's average apartment rents increased 4.9 percent in the fourth quarter.
Company Brings For-Profit Daycare to Toronto Apartments
Digested From "Company Brings For-Profit Daycare to Toronto Apartment Buildings"
Toronto Globe & Mail (Canada) (02/06/12) by Adrian Morrow
Daycare company Edleun is teaming up with Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) to bring new child-care facilities to apartment communities throughout the Toronto metropolitan area and elsewhere. The move is the latest phase of the Calgary-based company's ambitious expansion of its model of for-profit daycare centers. Under terms of the deal, Edleun will convert common areas, swimming pools, and other spaces in apartment communities owned by CAPREIT into child-care facilities. The first two of these daycares will indeed be built in the Greater Toronto Area, each measuring up to 1,800 square meters in size and able to accommodate about 100 children. Edleun President and CEO Ty Durekas reports that the plan is to have them up and running within the next nine months, adding, "These are in established neighborhoods where we couldn't get in otherwise." The company's plan is to eventually build day-care facilities in CAPREIT apartment communities throughout the province.
Home Properties Increases Dividend
Digested From "Home Properties Increases Dividend"
MarketWatch (02/06/12)
Home Properties has announced a $0.04 per share increase to its regular quarterly cash dividend on common shares, which will be payable on Feb. 28 to shareholders of record as of Feb. 16. The apartment REIT's common stock will begin trading ex-dividend on Valentine's Day. An S&P 400 Company, Home Properties indeed specializes in owning, operating, developing, and rehabilitating apartment communities primarily in the Northeast and Mid-Atlantic regions of the country. It currently owns and manages 124 communities containing 41,909 rental units.
Equity Residential's FFO Rises 48 Percent in Q4 2011
Digested From "Equity Residential's FFO Rises 48 pct. in 4Q"
Associated Press (02/02/12)
Equity Residential confirms that its results improved in the fourth quarter as rental income increased and its one-time charges decreased. Equity Residential President and CEO David J Neithercut said the apartment REIT has not seen a letup in demand for rentals. Due to a lack of new apartment construction, Neithercut said he expects the market to remain strong for a while. The REIT's quarterly funds from operations (FFO) rose to $201.4 million in the quarter ended Dec. 31, up 48 percent compared to $136.4 million a year earlier. The company also reported net income of $99 million, plunging from 2010's tally of $185.9 million. Equity Residential's total revenue increased 13 percent to $516.9 million. Finally, the REIT's full-year revenue increased from $1.77 billion in 2010 to nearly $2 billion in 2011.
Denver Metro Apartment Vacancy Rate in 4th Quarter Lowest Since 2000
Digested From "Denver Metro Apartment Vacancy Rate in 4th Quarter Lowest Since 2000"
Denver Post (CO) (02/02/12) by Howard Pankratz
According to a new report by the Apartment Association of Metro Denver and the Colorado Division of Housing, the apartment vacancy rate in the Denver metro area fell to 5.4 percent in the fourth quarter of 2011. That was the lowest fourth-quarter rate since 2000. Meanwhile, the median rent in the region increased from $846 in the fourth-quarter of 2010, to $870 in the fourth-quarter of 2011. "The rent growth we're now seeing is more robust than what we saw during the last expansion between 2002 and 2008," said Ryan McMaken, a spokesman for the Colorado Division of Housing.
Two Apartment Deals Show Building Strength in the Seattle Market
Digested From "$118.8M in Deals Shows Commercial Property Market Improvement"
Puget Sound Business Journal (Seattle) (02/02/12) by Jeanne Lang Jones
In the Seattle metro area, analysts point to three major property deals in less than a week as proof that the commercial real estate market continues to thaw. On Jan. 27, longtime local apartment developer Claudio Guincher of Bellevue-based Continental Properties Inc. sold two apartment communities in Kirkland to Archstone, a Colorado-based apartment investor. The total sales price was $47.46 million. Four days later, Los Angeles-based Arden Realty LP sold the West Willows Technology Center in nearby Redmond for $40 million. Griffin Capital New Lease REIT Inc. was the buyer of the three-building, 155,830-square-foot office park, which is 100-percent occupied by AT&T Wireless Services Inc. under a long-term lease. That same day, San Diego-based Redhill Realty Investors sold the 304-unit Hampton Bay Apartments in Kent to Hampton Bay of Vancouver, Wash. The total purchase price was $31.4 million.
Essex Property 4Q Net Soars; Funds From Operations Rise
Digested From "Essex Property 4Q Net Soars; Funds From Operations Rise"
Wall Street Journal (02/01/12) by Drew FitzGerald
Essex Property Trust Inc.'s fourth-quarter profit nearly tripled from $4.8 million a year earlier to $13.9 million. The apartment owner continues to benefit from its exposure to heavily populated West Coast markets where housing prices escaped the housing bust barely scathed compared with overbuilt markets elsewhere. Quarterly funds from operations, meanwhile, rose from $1.31 a share to $1.55 year over year. Analysts surveyed by Thomson Reuters had projected FFO of $1.53 a share. Finally, same-property revenue increased 6.5 percent as the Southern California market lagged Northern California and Seattle.
AvalonBay Communities' FFO Rises in 4Q
Digested From "AvalonBay Communities' FFO Rises in 4Q"
Business Week (02/01/12)
AvalonBay Communities Inc. is reporting improved fourth-quarter results thanks to higher rental revenue and real estate sales. The apartment owner registered funds from operations (FFO) of $113.4 million in the last three months of 2011 compared with FFO of $86.8 million in the year-earlier period. Meanwhile, quarterly net income jumped more than twelvefold to $323.1 million from $26.7 million in the fourth quarter of 2010. AvalonBay management attributed the year-over-year increase primarily to an increase in property sales and related gains, as well as improved net operating income from its apartment communities. The company further reports that rental revenue increased 6.2 percent, while average rental rates rose 5.8 percent. For 2011, AvalonBay posted FFO of $414.5 million compared with FFO of $338.4 million the year before.
More K.C.-Area Residents Turning to Apartment Living
Digested From "Many in KC Area are Turning to Apartment Living"
Kansas City Star (MO) (01/30/12) by Kevin Collison
Thousands of people in Kansas City, Mo., are choosing apartments over homeownership, partly due to an increase in the number of apartment communities being built or planned near the city's urban core. New apartment residents include the traditional group of renters, but also others who have recently been through a foreclosure, those unable to qualify for a mortgage, and those who are disillusioned by the idea of owning their own home. Additionally, many of the new apartment communities offer upscale amenities including high-end interiors and even on-site yoga classes. "They're not just renting an apartment, they're buying into a lifestyle," said Steve Coon, a principal at Land Development Strategies.
Renting the New Rage for Newlyweds
Digested From "Renting the New Rage for Newlyweds?"
FOX Charlotte (01/28/12) by Kate Bruce
Zillow.com reports that vacancy rates in apartments have dropped from 8 percent in 2009 to 5.6 percent at the end of 2011. More and more newlyweds are saving their cash and deciding to rent rather than buy, making the American Dream of getting married and buying a house a thing of the past for many. Keatley Wealth Management President Karen Keatley says, "Renting offers flexibility and freedom to walk away and call someone else if something breaks or goes wrong." Home Collection Developer James Funderburk offers further insight into the allure of renting as opposed to owning. He says, "Renting is a way to have what you want right now without having to wait until you can afford it." Finally, Jay and Jessica Masanotti say that their rental in the Charlotte, N.C., market has "afforded us an opportunity to live in an area where we could never afford to purchase a house."
Facebook IPO Filing Puts High Value on Social Network
Digested From "Facebook IPO Filing Puts High Value on Social Network"
USA Today (02/01/12) by Jon Swartz; Scott Martin; Matt Krantz
In what could be the largest-ever Internet initial public offering (IPO), Facebook last week filed to go public and raise $5 billion. The mammoth IPO values the social-networking giant at between $75 billion and $100 billion. There may be some trouble spots, however. Facebook ad sales worldwide are slackening. They increased a robust 104 percent last year, but eMarketer expects them to increase only 52 percent to $5.8 billion this year and just 21 percent to $7 billion in 2013. Dave Beltramini, director of online strategy for G5, remarks, "Facebook is not as effective as paid search [on Google, Yahoo and Microsoft]. The intent of consumers on Google is more about shopping. On Facebook, people are more social, looking at photos of their friends' kids." In addition, Facebook has fared poorly in a key industry pricing metric to measure the value of ad inventory in reaching an audience. Its CPM, or cost per thousand impressions, is 22 cents. That is less than half the industry average for the Internet (50 cents) and quite minuscule compared with Google's.
Legislative/Legal News
Obama Administration to Move Forward With Closing Fannie Mae, Freddie Mac
Digested From "Obama Administration to Move Forward With Closing Fannie Mae, Freddie Mac"
Washington Post (02/03/12) P. A14; by Brady Dennis
Treasury Secretary Timothy Geithner on Feb. 2 confirmed that the White House will be proceeding with plans to wind down Fannie Mae and Freddie Mac and draw more private funding to the mortgage markets. He told news media that administration officials have started to more aggressively explore legislative options for revamping the U.S. housing finance system, but said that solid change will not occur in the short term.
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