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Apartment Industry Wants New Jobs Act to Protect Industry
Industry News
Apartment Association in Texas Disputes Vacancies
Lehman Still Looms Large in Real Estate With Archstone and More
Inland Goes REIT, Intends to Raise $1.8 Billion
IMT Capital Closes $350M Multifamily Fund
Crescent Resources Hires Exec for Mid-Atlantic Region
Watt Companies Launches New Acquisition Division
Housing Survey Shows Pessimism Deepening
Venture Expands Apartment and Retail Portfolio
Legislative/Legal News
Calif. Governor Signs Landmark State Apartment Recycling Law
Ohio Town Agrees on Apartment Rental Inspection Plan
Illinois Town Considering Limits on Apartment Construction
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Apartment Industry Wants New Jobs Act to Protect Industry
Digested From "Apartment Industry Wants Obama's Jobs Act to Better Protect Rental Industry"
World Property Channel (09/13/11) by David Barley
The National Apartment Association (NAA) and the National Multi Housing Council (NMHC) are calling on Capitol Hill lawmakers to protect rental housing as they tackle the jobs bill recently proposed by the White House. The proposal would increase the tax on carried interest as a way to pay for the bill's initiatives, and an increase in the tax on carried interest would be detrimental to real estate partnerships, say the groups. The proposed tax increase would not only increase housing costs for new developments, but also would decrease the supply that makes deals financially viable. Causing a decline in rental housing supply at a time when demand is on the rise and supply is short is foolhardy, they say. The groups also indicate that the changes in the jobs bill would eliminate jobs and depress income for cities and counties. "The apartment industry supports sound economic policy that helps restore job growth, but a tax increase on carried interest is bad for our economy and bad for our housing supply," notes Cindy Vosper Chetti, NMHC/NAA Senior Vice President for Government Affairs.
Industry News
Apartment Association in Texas Disputes Vacancies
Digested From "Apartment Association Disputes Vacancies "
Galveston County Daily News (09/15/11) by Amanda Casanova
In Texas, the Galveston County Apartment Association released the results of its sixth assessment of the area's housing market since Hurricane Ike. Researchers found that Galveston has approximately 1,096 vacant units, not including apartments that are either closed or undergoing renovations. The report was released in opposition of a proposed mixed-income community that will rebuild about 569 public housing units that were destroyed in the storm. Critics have raised concerns that the new apartments would compete with an already soft housing market. The study comes weeks after a Houston company complete an assessment of the island's housing market and reported there are approximately 168 units available for rent. A 2009 HUD market analysis said that "during the next three years, after accounting for current excess supply of vacant available units, no demand is expected for additional new market-rate rental units in the Galveston County submarket."
Lehman Still Looms Large in Real Estate With Archstone and More
Digested From "Lehman Still Looms Large in Commercial Real Estate"
Wall Street Journal (09/13/11)
Lehman Brothers Holdings Inc. once ranked among the biggest players in commercial real estate before its collapse. With this week's third anniversary of its bankruptcy filing, observers note that it continues to play a major role in the industry as an owner and seller. The estate of the collapsed investment bank valued its real estate holdings at $23 billion when it failed. Since then, the bank has reinvested in certain properties, sold several others, and been foreclosed out of still others. In total, Lehman expects to receive approximately $13.2 billion between 2011 and 2014, after having received returns of $3 billion between the bankruptcy filing and this year. Among the properties Lehman has sold are a 10-office building portfolio in Northern Virginia and a failed condo conversion project in New York City. By far, the biggest asset it still holds is apartment giant Archstone, which it acquired in a 2007 deal valued at $22 billion. Currently, its fate is unclear given a dispute with other owners. For the most part, the Lehman estate -- managed by restructuring firm Alvarez & Marsal -- has managed to hold onto its biggest holdings. In fact, it has reworked most of them during the economic downturn that followed the bank's collapse.
Inland Goes REIT, Intends to Raise $1.8 Billion
Digested From "Inland Goes REIT, Intends to Raise $1.8 Billion"
Housing Wire (09/14/11) by Jon Prior
A recent SEC filing shows that Inland Core Assets Real Estate Trust is attempting to raise $1.8 billion from investors to acquire a portfolio of U.S. commercial properties. The company's plan is to offer 150 million shares at $10 per share via its deal manager Inland Securities Corp. In addition, it will offer up to 30 million shares at $9.50 per share to investors who opt to take part in a distribution reinvestment plan. Moving forward, it will focus on multifamily housing, office properties, retail venues, and warehouses. Investors will be required to buy a minimum of 300 shares.
IMT Capital Closes $350M Multifamily Fund
Digested From "IMT Capital Closes $350M Multifamily Fund"
GlobeSt.com (09/13/11) by Bob Howard
IMT Capital LLC this week closed on its IMT Capital Fund II LP, an investment fund with $350 million in committed equity that plans to acquire multifamily housing in major U.S. markets. IMT Capital co-founder Michael H. Browne confirms that the fund has already acquired four apartment communities in the Los Angeles metro area. The fund is expected to deploy the remainder of the capital in IMT Capital Fund II over the next three years. The plan moving forward will be to add value through its in-house management, asset renovation and repositioning, leasing, development and capital markets expertise. In certain instances, the fund may provide equity or debt to recapitalize properties and is generally seeking class A and B communities.
Crescent Resources Hires Exec for Mid-Atlantic Region
Digested From "Crescent Resources Hires Development Leader for Mid-Atlantic Region"
Sacramento Bee (09/13/11)
Crescent Resources has announced the appointment of real estate insider Michael Blackwell to lead development of new multifamily housing in Virginia, Maryland, and the District of Columbia. Blackwell will assist the company in identifying and developing luxury apartment communities and mixed-use projects in the D.C. metro area and Mid-Atlantic region. Blackwell was previously with national apartment developer JPI where he was in charge of the development of 734 units and $160 million of high-density, mixed-use projects in and around Washington. He is also a member of the Urban Land Institute.
Watt Companies Launches New Acquisition Division
Digested From "Watt Companies Launches New Acquisition Division"
MarketWatch (09/12/11)
Watt Companies has launched Watt Investment Partners, a new acquisition arm. In doing so, Watt has committed an initial $60 million to invest in a variety of projects ranging from multifamily housing to performing and non-performing debt. Former Watt President and CEO Jim Maginn has agreed to head the new venture in collaboration with former CIO Dean Pentikis. Watt Investment Partners' plan is to leverage the collective experience of Maginn and Pentikis, while tapping into Watt Companies' extensive real estate industry network to identify opportunities in the marketplace. Maginn comments, "The real estate market has changed dramatically over the past few years, and this is truly an ideal time for Watt Companies to begin deploying capital, creating new joint ventures, and identifying acquisition opportunities in the marketplace. We are expecting continued volatility for the foreseeable future, but that uncertainty is exactly what will create many different real estate opportunities for a nimble and flexible investment vehicle like Watt Investment Partners."
Housing Survey Shows Pessimism Deepening
Digested From "Housing Survey Shows Pessimism Deepening"
LoanRateUpdate.com (09/09/11) by Chris Moore
Fannie Mae's August National Housing Survey shows that pessimism about the economy has prevented people from making home purchases despite historically low interest rates. The report indicates that 78 percent of respondents believe the economy is moving in the wrong direction, and 27 percent expect home prices to depreciate even more during the next year. Although 69 percent agree it is a good time to buy a home, just 9 percent of sellers say it is a good time to sell. The survey also reveals that 22 percent of those polled anticipate their financial situation to worsen during the next 12 months; 17 percent said their incomes have fallen since August 2010; and 41 percent experienced a sharp rise in expenses over the last year.
Venture Expands Apartment and Retail Portfolio
Digested From "Venture Expands Retail Portfolio"
Wall Street Journal (09/12/11) by Craig Karmin; Peter Grant
A joint venture led by SL Green Realty Corp. and investor Jeff Sutton has agreed to pay more than $400 million for a New York property portfolio that includes scores of Upper East Side apartments along with the buildings that house the Prada store at 724 Fifth Ave. and the Armani store at 760 Madison Ave. Stonehenge Partners, one of the participants in the buying group, reportedly expects to convert the rental apartments in two buildings to for-sale condominiums. David Frankel Realty, a family-owned real estate company founded in 1938, was the seller. The sale is the latest example of investors paying top dollar for high fashion sites in Manhattan.
Legislative/Legal News
Calif. Governor Signs Landmark State Apartment Recycling Law
Digested From "Governor Signs Landmark State Apartment Recycling Law"
Van Nuys News Press (09/13/11)
California Gov. Jerry Brown has signed legislation authored by Assemblymember Bob Blumenfield (D-San Fernando Valley), establishing the Renter's Right to Recycle Act. Assembly Bill (AB) 818 requires apartment owners with five or more rental units to provide paper, plastic, and can recycling services to their residents starting in 2012. Blumenfield remarks, "We have finally overcome a great inequity. . . . Before this bill, many renters could recycle only by hauling their waste across town to a recycling center. Green living is the future and nothing is more basic than being able to recycle where you live." Blumenfield authored similar legislation in 2009, but it was vetoed by former Governor Arnold Schwarzenegger despite some key strides Blumenfield made in addressing apartment owners' concerns. AB 818 received the support of a wide array of environmental organizations, cities, and counties.
Ohio Town Agrees on Apartment Rental Inspection Plan
Digested From "Solon Agrees on Apartment Rental Inspection Plan"
Cleveland.com (09/13/11) by Thomas Jewell
After two years of debate and fine-tuning, Solon, Ohio will launch its new rental inspection program in 2012 that will include its larger apartment communities. Amended at City Council's Sept. 7 meeting, the program will cover more than 1,200 units in town and will run on a three-year inspection cycle. Interim inspections will be carried out "when feasible" under the new plan, but they will not have to be conducted at every change of ownership or occupancy, according to Councilman Rick Bell. Still, despite the efforts being made, it will take a considerable amount of time and energy to have the plan in place by the beginning of January. The Council was provided with a recommendation from the Planning Commission this past March to use a registration-only plan for occupancy permits. The move propelled Councilman Robert Pelunis to reject the recommendation and proceed with the plan that called for inspections. Council members then began meeting with officials from different apartment communities and found that many owners preferred to do their own inspections. However, the group of owners knew that without certified state inspectors it would not be meaningful. They agreed to allow larger communities to get their private inspectors certified through the state at a later date.
Illinois Town Considering Limits on Apartment Construction
Digested From "Chatham Considering Limits on Apartment Construction"
State Journal-Register (IL) (09/09/11)
In Chatham, Ill., the Village Board could soon begin to limit construction of apartment communities in areas that are newly annexed to the village. The idea was introduced last month by Trustee Chuck Herr, who said more multifamily housing could strain the village's services, infrastructure, and school districts. While Herr acknowledged the need for additional types of housing, he promised to work with Chatham public works director Meredith Branham and village attorney John Myers to come up with other options. While the board cannot change the current R-3 zoning, which allows for three- to eight-unit apartment communities, it can decide if what is currently on the books is enough. Since 2003, 313 multifamily units have been built in the town and Branham said there has been at least 425 apartments total added locally since 1990. Herr said he hopes to have a proposal for board members to review in the next month and a half.
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