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Apartment Developer AvalonBay Focuses on Residents in Their 20s
Industry News
Ball State Grad Student Serves on NAA Student Housing Panel
Decaying Apartments Symptom of Housing Crisis
Tennessee Apartment Owners Not So Quick to Evict in Slow Economy
Tepper Joins Stuyvesant Fight
Post Properties Announces Quarterly Dividends
Apartment Vacancy Rate Just 4 Percent in N.Y.'s Jefferson County
US Commercial Mortgage Default Rate More Than Doubles
Calpers Deals With the Fallout of Apartment Deals
Edge Principal Advisors Announces Multifamily Housing Investment Platform
Apartment Supply May Be Slowing New Orleans Home Sales
App Watch: Finding Rentals, Houses and Foreclosures Nationwide
Legislative/Legal News
New Building Fees Proposed in Sacramento to Affect Apartments
Colorado City to Charge Owners Fee for Rental Reinspections
Orlando Cracks Down on Crime at More Apartment Communities
Indiana Rental Panel to Examine Cost of Inspection Plan
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Apartment Developer AvalonBay Focuses on Residents in Their 20s
Digested From "Apartment Developer AvalonBay Focuses on Renters in Their 20s"
Washington Post (03/01/10) by V. Dion Haynes
For the first time in nearly a year, AvalonBay Communities is building two new apartment communities -- one in New Jersey and the other in Massachusetts. In doing so, the Northern Virginia-based developer is looking to take advantage of lower construction costs and the possibility that an improved job market will push twentysomethings out of their parents' homes and into the rental market. AvalonBay owns 23 apartment communities throughout the Washington region, along with properties in California, Illinois and New York. Like many other developers, AvalonBay suspended construction as the economy went south. Credit tightened and rising unemployment rates shrank the renter pool. The country's No. 2 publicly traded apartment management firm is in a better position than most developers because it has a $1 billion credit line to finance construction and $300 million in cash at its disposal. Northborough, Mass., and West Long Branch, N.J. , were picked as new markets for expansion based on lower lumber and labor costs. AvalonBay plans to launch $400 million in other construction projects, primarily in the Northeast, by the end of this year. John Christie, an AvalonBay director of investor relations and market research, states, "People in their 20s have a high propensity to rent instead of buy. We expect demand for that age segment will grow stronger as the economy gets better."
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Ball State Grad Student Serves on NAA Student Housing Panel
Digested From "Ball State Student an Expert on Housing"
The Star Press (IN) (02/25/10) by Ivy Farguheson
T.J. Fields, a graduate student in the Residential Property Management program at Ball State University, was recently asked to serve on a panel about off-campus housing at the National Apartment Association's student housing conference. Conference organizers decided to place him on the panel because he has experience with off-campus housing and has the educational background to relate to his future peers about the marketing tools required to attract students. Fields advised that students were looking for a "cool, cheap place to live, close to campus, and large enough to sleep their closest friends." Through his involvement with the panel, Fields hopes to give companies "a chance to be a little more in tune with the students in the area and provide the housing that students are looking for." NAA staff, meanwhile, is making a concerted effort to obtain feedback from students such as Fields in order to better address the wants and needs of this target demographic.
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Decaying Apartments Symptom of Housing Crisis
Digested From "Decaying Apartments Symptom of Housing Crisis"
Associated Press Worldstream (02/21/10) by Samantha Gross
With a widespread decline in real estate values across the country, many apartment owners are finding themselves underwater on their mortgages. Consequently, a number of these owners are simply walking away from their communities, leading to maintenance issues, unpaid utility bills and ultimately foreclosure. This growing concern has caught the attention of Congress, who earlier this month issued a statement warning about the negative effects that such deterioration could have on the surrounding property values. In places like New York City, these troubled investments are especially problematic as they are clustered in gentrifying neighborhoods such as the Bronx and Harlem. The New York City government has even set aside $750 million to renovate and refinance these distressed communities. Rafael Cestero, commissioner of the city's Department of Housing Preservation and Development, hopes these funds will help avoid a repeat of the 1970s and 1980s, when a growing number of dilapidated buildings led to the abandonment of several neighborhoods.
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Tennessee Apartment Owners Not So Quick to Evict in Slow Economy
Digested From "Landlords Not So Quick to Evict in Slow Economy"
Tennessean (TN) (02/26/10) by Janell Ross
Evictions in Davidson County, Tenn., fell by almost 10 percent last month from a year earlier, and they are on pace to decline even further this month. Analysts report that apartment owners know they will have difficulty finding new residents if they lose the ones they have, so some are more willing to give those struggling a break. Brad Cathers, past president of the Tennessee Apartment Association, comments, "The economy has hit the apartment industry in a lot of different ways. It's changed the way a lot of people live, who is looking to rent, how many units are rented, and it's certainly true -- some companies are giving a little more latitude to renters who find themselves in trouble." He adds that the change may have taken root in 2008 and intensified last year. Davidson records show that 7 percent fewer detainer warrants, which are typically filed for failure to pay rent, were filed in 2009 than in 2007. Cathers notes that the cost of removing someone from a unit, cleaning, painting and maybe even laying new carpet has a lot to do with owners and managers' hesitance to evict. Another reason? Cathers states, "The pool of potential renters is just smaller. Young people are moving back in with parents, and older people are moving in with children. And roommates . . . they are going two to three to a unit today instead of renting the two or three separate apartments they might have occupied before the recession began." Indeed, recent Tennessee Apartment Association data shows that the number of units available for rent has reached levels unseen in Nashville since the 1980s.
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Tepper Joins Stuyvesant Fight
Digested From "Tepper Joins Stuyvesant Fight"
Wall Street Journal (02/25/10) P. C8; by Lingling Wei; Gregory Zuckerman
Hedge-fund investor David Tepper last week joined the battle over the fate of Peter Cooper Village and Stuyvesant Town, the enormous New York City apartment community involved in one of the country's biggest commercial-property failures. Tepper, who runs hedge-fund firm Appaloosa Management, filed a complaint seeking to delay the foreclosure action launched by the so-called special servicer representing investors who own the $3 billion first mortgage on the property. That mortgage was bundled into commercial mortgage-backed securities, which were then sold to such investors as Tepper's company. Appaloosa charges that the servicer, CW Capital, has "irreconcilable conflicts of interest" because it owns some of the junior commercial mortgage-backed security (CMBS) debt. CW Capital has categorically denied these accusations. Some of the most recognizable names in finance and commercial real estate are circling the 56-building apartment community, which was purchased at the peak of the market by a group led by Tishman Speyer Properties and BlackRock Inc. Tepper, who currently owns more than $750 million of the CMBS debt, is among the biggest investors in the debt.
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Post Properties Announces Quarterly Dividends
Digested From "Post Properties Announces Quarterly Dividends"
Business Wire (02/25/10)
Post Properties Inc. has announced a first-quarter dividend of $0.20 per common share, which will be payable April 15 to all common shareholders of record as of the end of March. The Atlanta-based REIT owns 19,863 apartments in 55 communities, including 1,428 rental units in four communities now under construction and/or in lease-up. Founded more than 38 years ago, it ranks as one of the country's biggest developers and operators of upscale apartment communities.
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Apartment Vacancy Rate Just 4 Percent in N.Y.'s Jefferson County
Digested From "Apartment Vacancy Rate Just 4 Percent in Jefferson County"
Watertown Daily Times (NY) (02/23/10) by Robert Brauchle
Kevin J. Jordan, director of project development for the Development Authority of the North Country, observes that roughly 4 percent of apartments in Jefferson County, N.Y., are currently vacant. He remarks, "That includes somewhere in the neighborhood of 3,500 units that cover several multifamily housing projects. The vacancy rate, in general, ebbs and flows with deployments to a great extent." Indeed, the county's housing market is impacted greatly by the presence of Fort Drum. Jordan states, "The rental market is really unique compared to a lot of other rental markets. It's fairly rural, but there's also a high degree of military families woven into it." Subsequently, the change in apartment vacancies can hit as high as 11 percent at times. At other times, it can swing well below the 5 percent mark as it is now.
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US Commercial Mortgage Default Rate More Than Doubles
Digested From "US Commercial Mortgage Default Rate More Than Doubles"
Property Week (02/24/10)
Real Capital Analytics reports that the default rate for commercial property mortgages held by U.S. banks more than doubled in the last three months of 2009 and may peak at 5.4 percent by the end of 2011. According to the real estate research firm, the default rate for loans on apartment communities rose to 4.4 percent from 1.8 percent. Meanwhile, the default rate for loans on office, retail, hotel, and industrial properties soared to 3.8 percent from 1.6 percent a year earlier.
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Calpers Deals With the Fallout of Apartment Deals
Digested From "Backlash Hits Calpers Property Deals"
Wall Street Journal (02/24/10) P. C1; by Craig Karmin
The California Public Employees' Retirement System (Calpers) took a hit last year when its investment in Manhattan's massive Peter Cooper Village and Stuyvesant Town apartment community fell apart. However, Stuyvesant Town was not the pension fund's only foray into property investments that involved ousting low-rent residents. Calpers has teamed up with companies that have purchased and converted rent-regulated apartments in East Palo Alto, Calif., and in such other New York City neighborhoods as Harlem and Manhattan's Upper East Side. Calpers has technically been a passive investor in these deals. In some cases, Calpers hasn't even been aware of residents' complaints. Regardless of the investment result, the conversion of low-rent apartments to market-rent units -- and the ejection of some residents in the process -- has raised red flags within and outside of Calpers with regards to its role in these transactions. Calpers spokesman Brad Pacheco responds, "These historical investments were made under previous investment leaders [and outside managers who handle Calpers real-estate investments]. Nevertheless, our current investment staff has this issue under study, and hopes to bring forward a policy discussion in the months ahead."
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Edge Principal Advisors Announces Multifamily Housing Investment Platform
Digested From "Edge Principal Advisors Announces Multifamily Investment Platform"
TheStreet.com (02/23/10)
Edge Principal Advisors LLC last week announced its commitment to a dedicated investment program for multifamily housing. To this end, the New York-based property investment firm will target institutional quality apartment communities located in markets its expects will benefit from outsized rental demand over the next several years. These markets include Atlanta and Chicago. Matthew Ross, an Edge Principal Advisors managing director, has been placed in charge of the firm's multifamily housing efforts. He remarks, "I am thrilled to be a part of the talented Edge team. It is a highly entrepreneurial environment and they [has] the right approach and resources."
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Apartment Supply May Be Slowing New Orleans Home Sales
Digested From "With About 5,000 New Units Set to Debut, Some Say Apartment Complexes May Be Slowing Home Sales"
New Orleans Times-Picayune (LA) (02/21/10) by Rebecca Mowbray
With home prices still on the decline in and around New Orleans, local sellers are placing part of the blame on the plethora of rental apartments now available. The New Orleans metro area rehabilitated thousands of apartments after Hurricane Katrina and began building thousands of new units, many of them with federal tax credits. Over the next couple of years, approximately 5,000 new apartments are on pace to open for residents. About 1,250 of them are being rented at competitive market rates, with the rest available at reduced rates to people below certain income thresholds on account of the federal tax credits that helped build them. Real Property Associates President Wade Ragas is among those who think the new inventory of apartments might be one reason for sluggish sales, especially in places where new rental units have recently been added. These areas include Mid-City, eastern New Orleans and suburban Slidell. Traditionally, the home-sale and apartment-rental markets have been regarded as two separate worlds. However, at a time of great economic uncertainty when people are concerned about the risks of signing onto a mortgage, the proliferation of top-quality rental units makes it easier for people to choose not to buy. Ragas reasons, "Your rent is less than a monthly note, and you don't have to do a down payment. . . . I think the multifamily market interacts with the first-time home buyer market."
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App Watch: Finding Rentals, Houses and Foreclosures Nationwide
Digested From "App Watch: Finding Rentals, Houses and Foreclosures Nationwide"
Wall Street Journal (02/22/10)
Visionary Apps has rolled out a few iPhone apps that can be used by Realtors, home buyers and sellers, and home renters for free. Renters, for example, can search for apartments and other for-lease units with the Complete Rentals app. Buyers can locate foreclosed properties by price range and features using the Complete Foreclosures app -- which provides photos, driving directions, and information about buying foreclosed properties. Realtors, meanwhile, can benefit from the app by identifying preforeclosed homes and contacting the owners to offer assistance in marketing them.
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Legislative/Legal News
New Building Fees Proposed in Sacramento to Affect Apartments
Digested From "Sacramento Proposes New-Building Fees for Road Projects"
Sacramento Bee (CA) (03/01/10) by Tony Bizjak
On March 1, Sacramento city officials will propose a fee on new buildings to help pay for more than $700 million in transportation projects over the next 20 or so years. If enacted, the fees will vary. For a new, 10-story apartment community, the city suggests $2,176 per rental unit. But the fee would be less if it the new community is situated near transit, and even less if it includes units for lower-income residents. Meanwhile, the fee for new office complexes could be as high as $10,213 per 1,000 square foot, but again less if near public transit. Some developers, though, are wary. Their concern is that the fees will make new office buildings and homes more expensive for the next generation of Sacramento residents. However, with city funds tight and transportation needs great, the city has little choice but to move forward with the fees. Supporters point to the fact that most cities in the region already have a fee. In the case of Sacramento, much of the money would go to new major connector roads and bridges. Developer Steve Goodwin, whose company is clearing ground for a residential and office community on Richards Boulevard, says he has mixed feelings on the matter. He remarks, "I understand why cities need to do this, but it's a balancing act. The key is not to make the fees onerous."
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Colorado City to Charge Owners Fee for Rental Reinspections
Digested From "City Implements $100 Fee for Rental Reinspections"
Littleton Independent (02/26/10) by Heather Sackett
The city of Littleton, Colo., has begun charging a rental reinspection fee of $100 per apartment in an effort to get apartment owners to comply with local property maintenance codes. Under this new resolution, the first and second inspections are free. Littleton will begin charging for the third inspection. Jim Thelen, the city's director of codes and inspections, comments, "If we are not getting anywhere, we will take them to municipal court and they can explain to the judge why it's impossible for them to meet those minimum standards. We just get frustrated with the amount of time we are spending." Littleton launched a rental housing inspection program in the fourth quarter of 2008 after receiving complaints from residents about everything from bed bugs and cockroaches to damaged carpet and inconsistent heat. The goal of the program is to inspect all rental communities with three or more units within the next three years. Thelen reports that the fee is not designed to be a revenue stream for the city, but as a way of ensuring people will get their apartments up to Littleton's minimum standards in order to ensure public health and safety. He concludes, "All I want to do is provide motivation to get into compliance. I don't want to take away money they could be using to clean up their apartments." Of course, not everyone supports such a program. Apartment owner John Measner blames Littleton's rental reinspection program and the slow-acting bureaucracy that has resulted for his high vacancy rate. He laments, "The city is trying to do everything to keep people from making a profit."
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Orlando Cracks Down on Crime at More Apartment Communities
Digested From "Orlando Cracks Down on Crime at More Apartment Complexes"
Orlando Sentinel (FL) (02/27/10) by Mark Schlueb
Orlando law enforcement officials say dozens of the city's roughly 225 apartment communities have signed up for the "Crime Free Multi-Housing Program" to help ensure a safer living environment for their residents. Mayor Buddy Dyer remarks, "People say you have to get rid of the crime before you improve the neighborhood. But it's really the other way around: You have to improve the neighborhood to get rid of the crime." The Palms Apartments is one such community that has benefited from the program. It had been a hotbed of violent crime for years. A triple homicide in the summer of 2008 prompted city police to finally change their approach. They and local elected leaders decided that instead of responding to repeated 911 calls, they could prevent crime by improving living conditions at The Palms and weeding out problem residents. Dyer observes that much of the crime that had been happening at The Palms was committed by people who should not have even been living there. To change that, new rental applicants were given thorough criminal background checks. This research found that a large number of current residents were single mothers, many of whom allowed their boyfriends or children with criminal records to move in while management ignored the trend. Under the new program, the worst of these offenders were evicted. Two police officers are now assigned full time to The Palms. When they are not on duty, other officers patrol the community until private, armed security guards report for the overnight shift. At the same time, security cameras at the apartment community are now monitored back at police headquarters. Also under terms of the program, Orlando Police have spearheaded the formation of a trio of residents' committees that address quality-of-life issues. Together, they have done everything from plant trees and improved landscaping to enrolling many of The Palms' estimated 600 children in after-school activities. Orlando officials are also working with a nonprofit group to build a playground.
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Indiana Rental Panel to Examine Cost of Inspection Plan
Digested From "Valpo Rental Panel to Examine Cost of Inspection Plan"
Northwest Indiana Times (02/25/10) by Phil Wieland
In Valparaiso, Ind., apartment residents and owners alike have voiced their opposition to a new city plan to enact a rental registration ordinance that would require all owners to register and pay an inspection fee for each unit they own or manage. Said one unnamed resident, "The city is charging $25 [for the inspection], and it's not going to fix anything. I'm tired of you taking my money, and I want none of this." Mark Conover of the Indiana Apartment Association reports that similar ordinances have been springing up in various other localities lately. Conover notes that some communities pass these ordinances and collect the fees, but never get around to doing the inspections or enforcing them.
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