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Apartment Values Rise, as Do Rents
Industry News
AvalonBay FFO Climbs 27 Pct as Apartment Demand Rises
UDR Loss Narrows on Higher Rents, Occupancy Rates
Aimco 3Q Loss Narrows On Improved FFO; Narrows Outlook
Colonial Properties' Strong Q3 2011 Boosted by Apartments
Developer Plans $54 Million in New Apartments in Indianapolis
AvalonBay Taps New Development Head for NYC
Equity Residential Posts Higher Q3 2011 FFO
First Time Homeownership Slips
Seattle Ranks High for Multifamily and Commercial Investment
Apartment Hunting in Orange County is Hardest in Buena Park
Associated Estates Realty Posts Higher Q3 2011 Results
Investors Forecast Weak US Property Market - Survey
Legislative/Legal News
Alameda's City Council to Consider Tough New Rules on Smoking
Texas Apartment Groups Partner With University Club
Probe Finds Seattle Apartments Discriminated Against Certain Applicants
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Time Warner Cable Community Solutions has proven success partnering with MDU owners, providing quality voice/video/data products to their residents.
Apartment Values Rise, as Do Rents
Digested From "Apartment Values Rise, as Do Rents"
Wall Street Journal (10/26/11) by Dawn Wotapka
Strong growth of rents and occupancy levels of rental apartments have pushed some multifamily property values to all-time highs as more and more Americans shift away from homeownership. Analysts say apartment rents and occupancies continue to be boosted by demand from millions of people who are either victims of foreclosure or are unwilling or unable to purchase their own houses. As of Sept. 30, 5.6 percent of the country's apartments were vacant. That is down from 5.9 percent at the end of the second quarter and the lowest level since 2006, states Reis Inc. The research shows that apartment rents are up even in some cities that have been hit the hardest by high joblessness and the housing crash, including Detroit and Phoenix. Effective rents, which include owner discounts in some markets, increased to $1,004 a month in this year's July-through-September period. That is up 2.3 percent from a year ago. Of the more than 80 major markets that Reis tracks, only Las Vegas registered a rent decline versus a year earlier. Forecasters did note that rent hikes could slow or stop altogether if the economy continues to weaken. For now, values of apartment communities in the best locations went into record territory in the third quarter, states Green Street Advisors. The previous record had been set in 2007's second quarter.
Industry News
AvalonBay FFO Climbs 27 Pct as Apartment Demand Rises
Digested From "AvalonBay FFO Climbs 27 Percent as Apartment Demand Rises"
Business Week (10/31/11) by Brian Louis
AvalonBay Communities Inc. confirms that its third-quarter funds from operations (FFO) rose 27 percent as an increase in demand allowed apartment owners to boost rents. Quarterly FFO climbed to $107.6 million from $84.5 million a year ago. The Virginia-based REIT ranks as the nation's second-biggest publicly traded apartment owner. AvalonBay and its competitors are benefiting as tighter mortgage standards and mounting foreclosures continue to turn more would-be homebuyers into renters. AvalonBay plans to step up its development plans in order to capitalize on apartment demand. Robert W. Baird & Co. analyst Paula Poskon states, "They have a very robust development pipeline. It's the largest in the sector." The REIT's rental revenue increased 5.8 percent to $179.1 million from July through September. Net operating income from continuing operations, meanwhile, gained 15 percent to $166.2 million.
UDR Loss Narrows on Higher Rents, Occupancy Rates
Digested From "UDR Loss Narrows on Higher Rents, Occupancy Rates"
MarketWatch (10/31/11)
UDR Inc. reports that its third-quarter loss narrowed to $13.3 million compared with $23.8 million a year ago thanks to an improved occupancy rate and higher rental income. The apartment-focused REIT's top line has gained for the past year as homeownership rates continue to be negatively impacted by such factors as tighter lending practices, a slow economic recovery, and stubbornly high unemployment. UDR has been expanding in major markets via a string of acquisitions, taking advantage of higher rents and rising demand for multifamily housing. UDR's quarterly funds from operations climbed to 32 cents from 27 cents, while rental income rose 25 percent to $187.3 million.
Aimco 3Q Loss Narrows On Improved FFO; Narrows Outlook
Digested From "Apartment Investment 3Q Loss Narrows On Improved FFO; Narrows Outlook"
Wall Street Journal (10/28/11) by Ben Fox Rubin
Apartment Investment & Management Co. (Aimco) confirms that it narrowed its third-quarter loss on higher core funds from operations (FFO). The multifamily housing REIT now expects fourth-quarter FFO of 39 cents to 43 cents. Aimco, which specializes in owning and managing apartment communities in the 20 biggest U.S. markets, has recorded higher daily occupancy rates and average rents in recent quarters. Among the major commercial property owners, apartment owners have been among those to benefit the most from an improving economy as the leases they offer are generally for shorter terms than those for office, retail, or industrial space. Aimco registered a loss of $1.4 million in the third quarter versus a year-earlier loss of $14.9 million. Revenue, meanwhile, climbed 3 percent to $281.4 million.
Colonial Properties' Strong Q3 2011 Boosted by Apartments
Digested From "Colonial Properties' Stronger Quarter Boosted by Multifamily"
Birmingham Business Journal (10/27/11) by Ryan Poe
Colonial Properties reported solid third-quarter results thanks to stronger rental rates and income from the apartment communities in its portfolio. The Birmingham-based REIT recorded $26.4 million in quarterly funds from operations, up significantly from $16.4 million during the same three-month period last year. Additionally, Colonial's $23.7 million in gains from the sale of six apartment communities made an impact. Colonial Properties has sold $106 million in multifamily housing and acquired $90 million worth this year.
Developer Plans $54 Million in New Apartments in Indianapolis
Digested From "Developer Plans $54 Million in New Apartment Projects"
Indianapolis Business Journal (10/28/11) by Cory Schouten
Hearthview Residential has announced plans to invest more than $54 million to build apartment communities adjacent to the Rivers Edge shopping center in Indianapolis and in suburban Plainfield. The plan is another sign of confidence among apartment developers and owners that a shift away from owning and toward renting is a long-term trend. Hearthview's plan calls for 230 high-end rental units within walking distance of the renovated Rivers Edge shopping center. The project will occupy approximately seven acres, including a currently undeveloped field and part of a parking lot. It will cost around $24 million, reports Hearthview Principal Jim Thomas. Hearthview also plans to build 300 apartments on a parcel near the Metropolis mall in Plainfield. That $30 million project, however, is not as far along.
AvalonBay Taps New Development Head for NYC
Digested From "AvalonBay Taps New Development Head"
Crain's New York Business (NY) (10/24/11) by Amanda Fung
AvalonBay Communities has hired Martin Piazzola to serve as its new senior vice president of development for New York City. He will replace Fred Harris, who established AvalonBay's presence in the Big Apple over a decade ago. Harris will be leaving the Virginia-based apartment REIT at the end of the year. Since joining AvalonBay in 1998, Harris has overseen more than $1.8 billion worth of apartment development, totaling more than 5,800 rental units in and around New York. Piazzola will assume Harris' duties and responsibilities in the city Jan. 1. He had been vice president for New York City development at Lincoln Property for the past seven years. William McLaughlin, executive vice president of development and construction in the Northeast for AvalonBay, comments, "We have very big shoes to fill with Fred Harris, but we're confident that Marty has what it takes to build upon Fred's outstanding track record." AvalonBay specializes in purchasing sites and constructing rental apartment communities on them.
Equity Residential Posts Higher Q3 2011 FFO
Digested From "Equity Residential Posts Higher 3Q FFO"
Business Week (10/26/11)
Equity Residential reports that its results improved in the third quarter as rental income rose. The Chicago-based apartment REIT expects demand for rental housing will continue to strengthen amid a limited new supply of apartments in many markets. Management adds that this, in turn, should generate solid returns for the company for years to come despite lingering worries about weak economic growth. Equity Residential posted funds from operations (FFO) of $196.6 million, or 63 cents a share, for the three months ended Sept. 30. That compares with FFO of $166.2 million, or 55 cents a share, during the same period a year earlier.
First Time Homeownership Slips
Digested From "First Time Homeownership Slips"
HousingPredictor (10/27/11) by Mike Colpitts
New CoreLogic research shows that homeownership rates for the 25-to-34 and 35-to-44 year-old age groups were down 10 percent last year compared to 1980. The decline among these groups, which comprise the largest number of first-time home buyers, is due to lingering doubts about the weak economy and falling home prices in most of the country. Additionally, CoreLogic said the real median income for first-time home buyers had not changed since the 1970s until falling 2.3 percent in 2010 at the peak of the recession.
Seattle Ranks High for Multifamily and Commercial Investment
Digested From "Seattle Still Ranks High for Commercial Real-Estate Investment"
Seattle Times (10/25/11) by Eric Pryne
The annual "Emerging Trends in Real Estate" report, compiled by the Urban Land Institute and PricewaterhouseCoopers, ranks the Seattle metro area sixth among the country's top 51 markets for commercial real estate and multifamily investment for 2012. Seattle also placed sixth in last year's forecast. On a scale of 1 (abysmal) to 9 (excellent), though, its overall score rose this year from 6.09 to 6.60. Besides Seattle, so-called "wealth islands" include No. 1-ranked Washington, D.C., along with San Francisco, New York City, and Boston. However, researchers noted that even those cities will continue to fell the drag effects of high unemployment, and growth could be sporadic. The study attributes much of Seattle's relative strength to "its diversified new-age corporate base, including Amazon, Microsoft and Google, as well as other formidable employers like Boeing, Costco and Nordstrom." Greg Johnson, president of locally based developer Wright Runstad, was among those interviewed for the report. He states, "We've got some job generators in this region, and the correlation between jobs and all real-estate sectors is pretty high." Survey respondents went on to give Seattle the top "buy" rating in the country for industrial and retail real-estate investment. Meanwhile, the metro area placed second for office investment and third for apartment investment. Finally, Seattle was one of only eight cities rated as "generally good" for new commercial and multifamily housing development.
Apartment Hunting in Orange County is Hardest in Buena Park
Digested From "Apartment Hunting is Hardest in Buena Park"
Orange County Register (CA) (10/25/11) by Jeff Collins
According to RealFacts, the town of Buena Parks, Calif., had the highest apartment occupancy rate in Orange County this past summer. The tracking firm found that less than one in 50 apartments in the town's large apartment communities were empty during the summer months compared to nearby Westminster where nearly one of ten was vacant. RealFacts found that Westminster had the highest overall apartment vacancy rate during the summer. The average occupancy rate for all of Orange County was 94.7 percent, remaining flat from the summer of 2010.
Associated Estates Realty Posts Higher Q3 2011 Results
Digested From "Associated Estates Realty Posts Higher Third-Quarter Results"
Crain's Cleveland Business (10/25/11)
Associated Estates Realty recently reported its third-quarter financial results, which showed improvements over the same three-month period last year. The Ohio-based apartment owner said its funds from operations rose to $11.1 million from $7.8 million a year ago. Net income applicable to common shareholders came in at $12.2 million, up significantly from the $1.8 million seen in 2010. Company officials say the higher results can be partially attributed to the sale of two apartment communities in its home state.
Investors Forecast Weak US Property Market - Survey
Digested From "Investors Forecast Weak US Property Market - Survey"
Reuters (10/26/11) by Ilaina Jonas
A new survey by PricewaterhouseCoopers and the Urban Land Institute found that a majority of U.S. real estate investors believe commercial occupancy and rental rates in most U.S. markets will remain weak in the new year. At the same time, they warn that competition to purchase office, retail and other income-generating space in key markets could heat up; and investors risk overpaying for top properties in those areas. The survey also concluded that investors remain high on apartment communities amid an unstable housing market and that lenders are expected to embrace financing of apartment construction.
Legislative/Legal News
Alameda's City Council to Consider Tough New Rules on Smoking
Digested From "Alameda's City Council to Consider Tough New Rules on Smoking Tuesday"
Patch.com (10/31/11) by Dixie Jordan
In California, Alameda City Council members are expected to vote this Tuesday evening on a comprehensive anti-smoking ordinance that would prohibit smoking in local apartment communities, all indoor workplaces, and all outdoor public places. Such city rules if passed would be tougher than existing state law. An alternative proposal would allow apartment owners and managers to designate up to 10 percent of existing rental units as smoking apartments. Alameda officials add that the proposed ordinance would also prohibit smoking in new units of "common interest complexes," a term that includes condominiums and planned developments. However, it would still allow smoking in existing units at those locations.
Texas Apartment Groups Partner With University Club
Digested From "Bauer Real Estate Club Forges Partnership"
Daily Cougar (10/26/11) by Julian Jimenez
In an attempt to create a nationally competitive program, the University of Houston Graduate Real Estate Club has teamed up with the Houston Apartment Association and the Texas Apartment Association Education Foundation to provide students leadership, resources, and support. The HAA and the TAAEF have pledged $153,000 to the Grad RE Program Leadership Campaign over the next three years. "These funds will underwrite the cost of developing the Grad RE Program during its initial three years of development here at Bauer College of Business," said John Walsh, director of the Graduate Real Estate Program. The goal of the partnership is to create a strong foundation for real estate degrees by having experienced property professionals involved and current course offerings. The program will offer students internships, mentorships, and career support during their undergraduate studies on up to their Master's degree.
Probe Finds Seattle Apartments Discriminated Against Certain Applicants
Digested From "City Investigation: Seattle Apartments Discriminated Against Black and Disabled Applicants"
KIROTV.com (10/28/11)
The Seattle's Office for Civil Rights recently conducted an undercover investigation of apartment communities citywide and found that more than half the apartments checked engaged in some kind of discrimination against potential residents. The operation determined that apartment managers favored a white applicant over a black applicant and a not-disabled applicant over a disabled applicant in over 50 percent of the 48 communities surveyed. The Olympus Apartments in Belltown is one of a half-dozen facing discrimination charges that could include financial penalties. The others have been issued warnings. The civil rights office contracted with a non-profit agency and sent teams of undercover black and white applicants, along with disabled and not-disabled applicants, to randomly selected apartment communities to determine the results. Julie Nelson, director of the civil rights office, remarks, "With Seattle's values, we do not want discrimination to take place. And so doing this level of proactive testing makes sure we're living in accordance with our values." Nelson added that most apartment owners and managers comply with anti-discrimination rules once they are presented with the evidence.
Abstract News © Copyright 2011 INFORMATION, INC.
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