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Apartment Owners React to Proposed GSE Reform
Industry News
U.S. Apartment Construction Climbs
Home Properties Q4 Earnings Fall, But FFO Rises
NAA President Doug Culkin to Moderate IRHS Panel
Housing Starts Rebound in January Thanks to Multifamily
NAA Teams With NPMA for Bed Bug Workshop Series
Apartment Vacancies Fall Sharply in Northern Colorado
Western National Bullish on Vegas Apartment Market
Blue Asset Management Looks to Buy N.J. Apartments
KBW Report Paints Positive REIT Picture
Downtown Sites Seek Tax Credits to Build Apartments
Legislative/Legal News
NAA/NMHC Says GSE Reform Needs to Factor in Rental Housing 
Feds Target Illegal Hires
Green Bin Program Expanding to Ottawa Apartments
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Apartment Owners React to Proposed GSE Reform
Digested From "Apartment Owners React Cautiously to Proposed GSE Reform"
CoStar Group (02/16/11) by Randyl Drummer
Apartment owners, investors, and industry groups are worried they may become collateral damage in President Obama's plan to reduce the federal government's footprint in the U.S. housing market by winding down and eventually phasing out Fannie Mae and Freddie Mac, which own or guarantee $5 trillion in single-family and apartment mortgages. Falling homeownership rates are historically tied closely to demand for rental apartments. At the same time, so-called "agency debt" provided by government-sponsored enterprises (GSEs) such as Fannie and Freddie currently provides around 80 percent of all financing for multifamily housing transactions. Declines in the rate of single-family homeownership typically contribute to increased demand for apartment units. During the downturn, an estimated 4 million American households have moved from being homeowners to renters -- a number that continues to rise as more young people form households of their own and retiring baby boomers settle into their empty nests. Chris Macke, senior real estate strategist for CoStar, concludes, "Between single-family and multifamily, there's big money at stake here." Deliveries are expected to remain flat this year, but permits for new apartment communities started picking up in the third and fourth quarters of last year and have continued in the early going of 2011.
Industry News
U.S. Apartment Construction Climbs
Digested From "U.S. Apartment Construction Climbs With More Renters"
Bloomberg (02/18/11) by Hui-yong Yu
Such companies as AvalonBay Communities Inc. and Bentall Kennedy are stepping up new apartment construction as vacancy rates decrease and building costs hold steady. The Commerce Department confirms that starts on multifamily homes, which include townhouses and apartments, soared 78 percent in January from the previous month to an annual pace of 183,000 -- the highest since February 2009. By contrast, work on single-family houses decreased 1 percent. The producer price index (PPI) for construction materials climbed 4.9 percent last month from a year ago, according to Associated General Contractors of America. Meanwhile, the PPI for new office buildings -- considered the best proxy for luxury apartments -- gained 0.4 percent. Dean Frankel, who oversees about $1.7 billion of real estate securities as senior portfolio manager for Urdang Securities, concludes, "Nationwide, supply is needed right now and it's going to increase. In the next 24 months, I expect a meaningful pipeline of new apartments."
Home Properties Q4 Earnings Fall, But FFO Rises
Digested From "Home Properties 4Q Earnings Fall But FFO Rises Above Target"
Wall Street Journal (02/17/11) by Joan E. Solsman
Home Properties Inc. reports that its fourth-quarter earnings declined due to the effects of property dispositions. The apartment REIT forecasts that this year's funds from operations will range from $3.30 to $3.46 a share. Analysts report that the fundamentals for apartment REITs have been on an "arc of improvement" following the economic slowdown, which was characterized by high unemployment pushing occupancy and rental rates downward. Home Properties recorded a quarterly profit of $6.8 million, down from $12.2 million a year earlier. Revenue, meanwhile, rose 10 percent to $137.1 million as the average occupancy rate climbed to 95.1 percent from 95 percent a year earlier.
NAA President Doug Culkin to Moderate IRHS Panel
Digested From "NAA President Doug Culkin to Moderate IRHS Panel"
PRLog (02/14/11)
The Institute for Rental Housing Studies (IRHS) confirms that National Apartment Association President Doug Culkin will moderate a special breakfast roundtable discussion, titled "Charting the Future: Multifamily 2011 and Beyond," at this year's IRHS board meeting. The event will take place on the morning of Friday, March 4, in Park City, Utah. Culkin will be joined by other leading multifamily housing industry executives for the discussion.
Housing Starts Rebound in January Thanks to Multifamily
Digested From "Housing Startups Rebound in January to Four-Month High"
Portland Press Herald (ME) (02/17/11)
The Commerce Department reports that housing starts rallied in January, surging 14.6 percent -- the fastest clip in four months. Researchers say a sizable jump in multifamily housing construction offset a decline in single-family home projects to bring residential production to a seasonally adjusted annual rate of 596,000. Groundbreaking on multifamily units soared 80 percent last month to 171,000, while starts on single-family homes slipped 1.0 percent to 413,000.
NAA Teams With NPMA for Bed Bug Workshop Series
Digested From "NPMA Announces Traveling Bed Bug Workshop Series"
PCT Media Group (02/22/11)
The National Pest Management Association (NPMA) has partnered with the National Apartment Association, the American Hotel and Lodging Association, the Association of College and University Housing Officers International, and the EPA's Pesticide Environmental Stewardship Program to offer a series of workshops nationwide to educate property and facility managers on how they can effectively respond to the ongoing bed-bug threat. Experts will give presentations on such topics as identifying bed bugs, inspection techniques, and how to deal with public relations issues. Between April 11 and May 24, workshops are scheduled for such major markets as Boston, Chicago, New York, Philadelphia, St. Louis, and Seattle.
Apartment Vacancies Fall Sharply in Northern Colorado
Digested From "Apartment Vacancy Rates Fall Sharply in Region"
Northern Colorado Business Report (02/16/11)
Apartment vacancy rates fell dramatically in Northern Colorado during the fourth quarter of 2010, according to a report by the Colorado Department of Local Affairs' Division of Housing. Vacancy rates in the Fort Collins/Loveland area fell 35 percent during the October-through-December period when compared to the same three-month period in 2009, while vacancy rates in Greeley fell by 30 percent. Grand Junction saw the greatest drop in the fourth quarter, as vacancy rates fell a whopping 43 percent. Apartment vacancies fell year-over-year across all six metropolitan areas the state measures, but median rents "showed limited growth across the state" in the fourth quarter. According to the report, Loveland had one of the lowest vacancy rates in the state at 3.6 percent. Finally, the Fort Collins/Loveland market was the only area to show substantial increases in median rents.
Western National Bullish on Vegas Apartment Market
Digested From "Western National Bullish on LV Rental Market"
Las Vegas Business Press (02/21/11) by Tony Illia
Western National Property Management, the multifamily housing arm of Western National Group, recently opened a branch office in Las Vegas. The new office currently manages six local apartment communities, which together contain 1,346 rental units. The Las Vegas-area apartment sector showed signs of life during the last three months of 2010, with occupancy rates topping 91.6 percent -- 1.5 percent higher than a year earlier, Applied Analysis reports. However, average asking rents have declined 12.6 percent to $756 a month. Applied Analysis principal Brian Gordon states, "Pricing will not return to pre-recession levels in the near term, but indicators suggest that the apartment market may be close to finding a new equilibrium. After a year of double-digit declines in pricing, the latest period represents the smallest price decline in two years." Western National is now looking to capitalize on that small, but significant upswing with plans to double its Las Vegas inventory by the end of this year. Its eventual goal is to reach 10,000 apartments under management within five years. The Irvine, Calif.-based company currently manages around 23,700 apartments in California, Utah, and Nevada.
Blue Asset Management Looks to Buy N.J. Apartments
Digested From "Blue Asset Management in Market for New Jersey Apartment Buildings"
PR-USA.net (02/17/11)
Blue Asset Management LLC is actively scouting apartment communities throughout northern New Jersey for possible purchase. "We believe we are reaching the bottom of the real estate market. The opportunity to buy residential rental properties and the demand for rentals are as good as we have seen in many years," explains Charles Blumenkehl, managing partner for Blue Asset Management LLC, adding that the company is aggressively seeking to add to its inventory. The group was founded by Blumenkehl in 2008 to leverage the opportunities which became available as a result of the real estate and mortgage meltdown of the last few years. Blumenkehl is asking anyone who has apartment inventory for sale or knows of available communities in northern New Jersey to contact him directly.
KBW Report Paints Positive REIT Picture
Digested From "Most REITs Exceed Earnings Expectations in 4Q in KBW Report"
Housing Wire (02/16/11) by Christine Ricciardi
Many firms have upwardly revised their 2011 estimates after reports showed that a majority of REITs tracked by Keefe, Bruyette & Woods (KBW) beat consensus expectations in their latest earnings reports. KBW's report showed earnings exceeded predictions for 28 of the 47 REITs. With that, 21 firms increased earnings estimates for the new year. "We think the national economy may be in line for a stronger 2011 then we anticipated 90 days ago," said Bill Hankowsky, CEO of Liberty Property Trust. Multifamily REIT companies are benefiting from the continued decline in single-family homeownership rate because former owners are moving into apartment communities. This is happening even as existing residents "have wisely reassessed the benefits of single-family homeownership" and are renting longer, according to Equity Residential CEO David Neithercut.
Downtown Sites Seek Tax Credits to Build Apartments
Digested From "Downtown Sites Seek Tax Credits to Build Apartments"
Milwaukee Journal Sentinel (02/10/11) by Tom Daykin
In Milwaukee, the historic Button Block building in downtown and an empty lot at the former Pabst brewery are two of the local sites being proposed for new apartments for lower income residents. Both projects are currently vying for federal tax credits, which are given to developers who then lease apartments at below-market rates to people earning no more than 60 percent of their area median income. Such credits are typically sold by developers to raise equity financing. At Button Block, 44 loft-style apartments would be built in the vacant upper floors of the seven-story structure. The unit mix would include 15 one-bedroom apartments, with monthly rents ranging from $520 to $640, and 29 two-bedroom apartments, ranging from $610 to $760 a month. Meanwhile, CommonBond Communities Inc. of Minnesota will develop the $8.4 million Brewery Point Apartments, which would offer 48 one- and two-bedroom units for elderly residents with monthly rents ranging from $350 to $900. The four-story building would hold the distinction of being the only tax credit-supported apartment for seniors in downtown.
Legislative/Legal News
NAA/NMHC Says GSE Reform Needs to Factor in Rental Housing
Digested From "GSE Reform Needs to Factor in Rental Housing "
REIT.com (02/16/11)
In this REIT.com video, National Multi Housing Council (NMHC) President Doug Bibby discusses the recent government sponsored enterprise (GSE) reform proposal issued by the White House, which focuses on how the government can disengage from those entities. Of the three options in the proposal, Bibby calls the first two options -- privatization of the entire housing finance market and maintaining a backstop capacity for borrowers in times of financial crisis to keep capital flowing -- impractical. The third option would allow private capital sources to assume primary credit risk in the mortgage market and the government to provide reinsurance on specific mortgages. This option would best meet the needs of the rental apartment market, says Bibby. "The single most important thing that policymakers can focus on is the fact that Fannie Mae's and Freddie Mac's multifamily books of business are platinum. Their serious delinquencies are about half of 1 percent, 50 basis points, versus a serious delinquency rate for CMBS of about 10 percent. These books of business have been profitable for the agencies at a time when their single-family business is in total disarray," he says. Multifamily housing often is misunderstood in this debate, Bibby noted, with one key lawmaker unaware that the GSEs even funded multifamily. He added that demographic changes must be addressed by any reforms for GSEs, especially as more people turn toward renting and away from homeownership. About 85 percent of new households formed in the future will not be married couples with children, which will open up demand for different housing options. Bibby notes, "Up to half the housing units that are going to be built over the next 20 to 25 years are going to have to be rental in order to accommodate that demand." Bibby does not see changes happening until the beginning of 2013.
Feds Target Illegal Hires
Digested From "Feds Target Illegal Hires"
Wall Street Journal (02/17/11) by Miriam Jordan
The federal government is preparing to launch a new crackdown on businesses that hire illegal immigrants. Within the next several days, the government is expected to announce that it will inspect the employment records of as many as 1,000 companies to ensure that their employees are in the country legally. Experts say that such audits are more effective at cracking down on illegal immigration than the workplace raids that were conducted by the Bush administration because they force companies to fire all suspected illegal immigrants that are working for them, not just those that happen to be at work the day a raid takes place. The audits come as some lawmakers are calling for all U.S. companies to use E-Verify, a Web-based system that checks employees' I-9 forms to ensure that they are in the country legally. Only about 11 percent of the nation's employers currently use the system. However, any effort to require all companies to use E-Verify will require a change in federal law, and could run into opposition from the nation's business community.
Green Bin Program Expanding to Ottawa Apartments
Digested From "Green Bin Program Expanding"
Ottawa Citizen (02/16/11) by Joanne Chianello
Ottawa plans to launch a trial green-bin program in select apartment buildings citywide this week, despite evidence that area apartment residents have yet to fully embrace recycling. River ward Councillor Maria McRae states, "Right now, the City of Ottawa delivers direct pickup services for every single apartment building in the city, which is not necessarily a province-wide practice. So if the city's going to provide this service to apartments, then I think we need to work with the superintendents and agencies that represent apartments in the city to increase recycling." The program, which will cost approximately C$200,000, is included in the environment committee's 2011 draft budget. It is expected to initially roll out in 10 Ottawa apartment communities in the first year.
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