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AvalonBay To Capitalize On 'Weak' Housing Market
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AvalonBay To Capitalize On 'Weak' Housing Market
Industry News
Dallas-Area Apartment Owners Ramp up Free-Rent Offers
Mid-America Sees Funds From Operations Dip in Q2 2010
Apartment Occupancy Climbs in Florida's Lee County
BRE Properties' Q2 2010 Down 38 Percent On Higher Expenses
Apartment Demand Spikes in La Crosse, Wis. 
Homeownership Rate Continues to Slide
Finding Dollars for Multifamily Housing Construction in D.C.
Apartment Operator UDR Sees Slip in Q2 2010 FFO
Legislative/Legal News
New Mass. Law Toughens Apartment and House Foreclosure Safeguards
Downturn Causes Owners to Rethink Section 8
Jersey Apartments Commit to Seven-Step Plan on Crime Reduction
Apartment Manager Challenges Cincinnati's Nuisance Ordinance
Orlando Apartments Earn 'Crime Free' Seal Of Approval
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AvalonBay To Capitalize On 'Weak' Housing Market
Digested From "AvalonBay To Capitalize On 'Weak' Housing Market"
Banker & Tradesman (08/05/10)
AvalonBay Communities expects to expand its development pipeline and hike rents in the months to come, citing a weak for-sale housing market that is pushing more and more Americans back into apartments. During a conference call with Wall Street analysts late last week, AvalonBay CEO Bryce Blair said historically low homeownership rates will become profit-drivers for AvalonBay and other apartment owners in 2011 and the following year. Indeed, the U.S. homeownership rate fell to 67 percent in the second quarter, its lowest level in a decade. Blair remarks, "This decline is in spite the positive effect of the federal home buying tax credit, which was still available during the second quarter." Without the credit, Blair contends, homeownership rates "would undoubtedly have fallen further." Some analysts share Blair's pessimism, forecasting that homeownership rates could ultimately dip to as low as 62 percent. Even a fall to 64 percent, Blair points out, would create approximately 700,000 new rental households per year. AvalonBay President and COO Tim Naughton confirms that the REIT is already starting to nudge apartment rents upward when it rolls leases over at some of its communities.
Industry News
Dallas-Area Apartment Owners Ramp up Free-Rent Offers
Digested From "With Excess of Space, Dallas-Area Landlords Ramp up Free-Rent Offers"
Dallas Morning News (TX) (08/06/10) by Steve Brown
With high vacancy rates in many parts of the Dallas metro area, apartment analysts expect such incentives as free-rent deals will not go away anytime soon. Greg Willett, vice president of locally based apartment analyst MPF Research Inc., states, "New apartment properties, even in the best of times, always have some kind of incentives because you have so many units to lease in a small time frame." And when one apartment owner starts offering free rent, you can bet others in the same general area will follow suit. The Ambrose apartments in Dallas' Deep Ellum district are more than 90 percent leased, for instance, thanks mainly to the "Free Rent" sign out front helped get them there. Free rent at the community varies from four to eight weeks. Some of Dallas' office properties are following the local apartment sector's cue. In office buildings, "one month per year of a lease is pretty standard -- maybe a little more sometimes," said Jack Eimer, president of Transwestern's Dallas regional office. "Six months on a five-year lease is pretty easy to get."
Mid-America Sees Funds From Operations Dip in Q2 2010
Digested From "Mid-America Sees Funds From Operations Dip"
Memphis Business Journal (08/05/10)
Despite first-quarter revenue gains, Mid-America Apartment Communities Inc. saw a slight drop in funds from operations from April through June. The dip was attributed to recurring capital expenditures, which increased to $9.9 million from $7.6 million one year ago. Occupancy at apartments open for at least a year was up to 96.3 percent from 95.6 percent a year ago, and resident turnover remained well below historic averages for the 12 months ended June 30. "We are encouraged by the continued favorable operating trends throughout our markets," Eric Bolton, chairman and CEO of Mid-America, stated. "Occupancy remains very strong and rents are increasing across the portfolio. We are again increasing our expectations and guidance for operating performance over the balance of this year."
Apartment Occupancy Climbs in Florida's Lee County
Digested From "Lee County Apartment Occupancy Climbs"
Fort Myers News-Press (08/01/10) by Dick Hogan
RealFacts' second-quarter report shows that apartment rents were down but occupancy rates were up throughout Florida's Lee County. Area apartment owners and managers are finding they still have to work hard to attract good residents, especially now as a wave of rental houses comes on the market. The RealFacts report ranked the Lee County area fourth among a dozen major Florida metro areas in terms of year-over-year occupancy growth: up 4 percent to 90.8 percent. At the same time, though, the average rent decreased 9.1 percent to $762 a month -- the steepest decline statewide. Dave Roberts, owner of Dave Roberts Realty, says a harsh local economy is the cause of both trends. Roberts states, "We've seen a lot of people leave the area in search of greener pastures." That, in turn, has driven down rental rates. His firm maintains a database of actively looking tenants and matches them with rental owners.
BRE Properties' Q2 2010 Down 38 Percent On Higher Expenses
Digested From "BRE Properties 2Q Down 38 Percent On Higher Expenses; Occupancy Up"
Wall Street Journal (NY) (08/03/10) by John Kell
BRE Properties Inc. reports that its second-quarter profit declined 38 percent as the apartment developer posted higher expenses and lower same-store revenue, although occupancy rose from a year earlier. The REIT also raised its full-year view of funds from operations from $1.72 to $1.87 a share to $1.84 to $1.92. BRE currently owns and operates 75 apartment communities in three Western states -- California, Arizona, and Washington -- in some of the areas hardest hit by the recession. However, Standard & Poor's Ratings Services in June said apartment REITs such as BRE will continue to recover and outperform national and local market trends due to the fact that they typically own above-average, well-located, and professionally managed communities. BRE recorded a profit of $19.6 million, down from $31.7 million in Q2 2009.
Apartment Demand Spikes in La Crosse, Wis.
Digested From "Apartment Rental Market in La Crosse"
WKBT.com (WI) (08/06/10) by Jake Olds
Apartment owners in La Crosse, Wis., say they are witnessing a spike in demand for rental apartments. Demand is especially high among students attending the University of Wisconsin's La Crosse campus and two other nearby colleges. UW-L student Lindsey Malecek remarks, "A lot of people start looking like right when school starts at the beginning of September." Owners and managers say the three universities help drive demand for rental housing and that has proven to be very good for business. Dan Franzini, owner of GEF Rentals, remarks, "Basically everything we have is rented out." Some think the strong market could take a hit in the near future, especially with the three area universities planning to add more on-campus housing options. Others are hopeful that potential residents will continue to recognize the benefits off-campus housing has to offer, such as privacy and better amenities.
Homeownership Rate Continues to Slide
Digested From "Homeownership Rate Continues to Slide"
USA Today (08/02/10) by Haya El Nasser
The drop in the homeownership rate in the second quarter signals a fast plunge in homeownership in the years to come, according to John Burns, CEO of John Burns Real Estate Consulting. The Census Bureau reports that the rate fell to 66.9 percent -- the lowest since 1999 and down from a peak of 69.4 percent in 2004 -- but Burns predicts that it will fall to about 62 percent by 2012, which would put it at its lowest level since 1960. Moreover, the push to own is being questioned, consumers are facing tougher financial criteria, and financial pressures will delay some home buying decisions.
Finding Dollars for Multifamily Housing Construction in D.C.
Digested From "Finding Dollars for Multifamily Construction"
GlobeSt.com (08/04/10) by Erika Morphy
Apartment developers, both national and local, are scouting sites in the Washington, D.C., metro area in the hopes of building multifamily housing that will take advantage of the region's attractive demographics and healthy local economy. The latest example is Atlanta-based Post Properties, which is set to begin building a 344-unit luxury apartment community as part of the second phase of its Carlyle Square project in Northern Virginia. The first of these rental units should be ready for occupancy in the second quarter of 2012. Not all projects, though, are moving forward with such speed. While Post is funding its construction efforts via unsecured lines of credit, other apartment developers with their sights set on the D.C. area remain at the mercy of lenders that are still underwriting to very conservative metrics. Stacey Milam, director of Marcus & Millichap's National Multi-Housing group in Washington, states, "Construction financing has definitely become more available. Banks are very bullish on concrete slabs that are over five stories, Texas donuts [where the parking is below ground], and garden-style projects that are stick built as they are more cost effective."
Apartment Operator UDR Sees Slip in Q2 2010 FFO
Digested From "Apartment Operator UDR Sees Slip in Q2 FFO"
Denver Business Journal (08/02/10)
Colorado-based apartment operator UDR Inc. reported a wider loss in the second quarter of this year compared with the same three-month period a year ago. "Same-store" rental revenue slipped, with the loss for the most recent quarter totaling $26.6 million compared with last year's $14.9 million loss during the same quarter. Funds from operations were also down, falling to $45.7 million from $53.7 million in 2009's second quarter. The apartment REIT took a penny-per-share charge for storm-related expenses in the Nashville area as well as debt repurchase. UDR was able to maintain its apartment occupancy levels above 95 percent throughout the April-through-June period and raised new and renewing rents for the first time since May 2008.
Legislative/Legal News
New Mass. Law Toughens Apartment and House Foreclosure Safeguards
Digested From "New Mass. Law Toughens Foreclosure Safeguards"
Boston Globe (08/07/10) by Steve LeBlanc
Under a bill signed into law Aug. 7 by Massachusetts Gov. Deval Patrick, residents in foreclosed apartment communities and homeowners facing foreclosure will get extra protections. In doing so, Patrick stated, "Combined with the 2007 comprehensive foreclosure law, we are redoubling our efforts to address the foreclosure crisis." The new law prohibits bankers and lenders from issuing wholesale eviction notices to residents in foreclosed apartment buildings. Under the new law, residents can only be evicted for not paying their rent on time or other violations of their lease. Without the new law, apartment residents could be evicted by a bank even if they had a lease and had been paying their rent on time. According to Lew Finfer of the Massachusetts Communities Action Network, "A lot of tenants immediately get a notice saying we want you out. It's a huge hardship to have to move and pay a new rent and a security deposit." The final version of the bill would still allow an apartment owner who is on the verge of foreclosure, but is able to negotiate a sale agreement with a new buyer, to evict residents. But if the lender or bank seizes control of the property, residents cannot be evicted. For homeowners, the new law temporarily extends an existing 90-day, cooling-off period designed to give owners and their lenders time to negotiate new mortgage terms to 150 days.
Downturn Causes Owners to Rethink Section 8
Digested From "Housing Bust Opens New Doors for Subsidized Tenants"
Wall Street Journal (NY) (08/02/10) by Dawn Wotapka
Some Section 8 renters have found that subsidized housing can be more glamorous than they expected as the housing bust has led to upscale houses becoming available to those with a Section 8 voucher. Because of the housing bubble, more houses were built than were sold, leaving many vacant and desperate for those who rent. Many property owners are wooing Section 8 recipients because of their government subsidies that guarantee rent payments. The abundance of supply has enabled Section 8ers to be more discerning in their selections, and community members say having houses occupied is better than leaving them vacant and vulnerable to crime and vandalism.
Jersey Apartments Commit to Seven-Step Plan on Crime Reduction
Digested From "Bridgeton Apartment Complexes Commit to Seven-Step Plan on Crime Reduction"
NJ.com (08/04/10) by Joe Green
In New Jersey, Bridgeton Mayor Albert Kelly recently joined with various City Council members to unveil a seven-step plan on crime prevention in the area's apartment communities, emphasizing that chasing criminals from the grounds would take the cooperation of owners, managers, residents, and city officials. The plan complements WeTip, a nationwide crime tip line, and encourages apartment community staffer to promote crime-discouraging features. It also requires that all apartment communities run criminal and credit checks on applicants. Additionally, Bridgeton officials will give the police force a list of residents or a rent roll for communities when such documentation is requested. City officials have agreed to host bi-monthly meetings involving themselves, police officers, and apartment managers. At those meetings, law enforcement will share with managers information regarding incidents at their communities.
Apartment Manager Challenges Cincinnati's Nuisance Ordinance
Digested From "Apartment Manager Challenges Cincinnati's Nuisance Ordinance"
Cincinnati Business Courier (08/02/10)
Downtown Property Management Inc. is suing the city of Cincinnati, alleging that its chronic nuisance ordinance violates the U.S. Constitution. The apartment management firm claims the ordinance subjects apartment owners to fines and possible criminal prosecution for actions over which they have no control, including conduct by visitors and even trespassers. Downtown Property Management also contends the ordinance lacks appropriate standards, which renders it unconstitutionally "arbitrary and capricious, overreaching, (and) void for vagueness." Among the 2,000 local apartments the company owns, it currently operates a half-dozen communities that have triggered enforcement actions under the ordinance. Company officials are seeking a court order prohibiting the city from enforcing the ordinance.
Orlando Apartments Earn 'Crime Free' Seal Of Approval
Digested From "Apartments Earn 'Crime Free' Seal Of Approval"
WKMG (Orlando) (08/06/10)
Orlando police respond to dozens of calls for help at local apartment communities in an average month, ranging from burglaries to domestic abuse cases. Now, a new crime prevention program is giving those who live in these communities a greater sense of security and those who manage them the power they need to rid their grounds of crime for good. The city of Orlando has been participating in the Crime Free Multi Housing Program, which currently operates in nearly 2,000 U.S. cities and towns and 12 countries. In the coming months, the Orlando Police Department will certify its first crime-free community -- The Fountains at Millenia. Lori Trainer of Concord Management, which runs The Fountains, is proud of the achievement. However, she notes, "We're never going to get rid of it completely. I always say crime has no address." Trainer introduced the program to Orlando police after witnessing its success in Jacksonville. Now she and officer Derwin Bradley are working together to make sure more and more local communities earn the crime-free seal of approval. Bradley states, "We survey their property. We give them a list of things we want done that meet our security requirements." Some of the more obvious fixes include better exterior lighting and landscaping. Less visible enhancements include front-door strike plates which three-inch screws, which strengthen the door against intruders who might try to break it down. There is also a requirement for 180-degree peepholes, which enable apartment residents to see on either side of the door instead of just straight ahead. Bradley adds that it is the new lease that every resident who lives in a certified crime-free community must sign that keeps the criminals out for good. He remarks, "We're going to add an addendum to your lease that says if you commit a crime in this community, this really great community, we're going to put you out." The rules extend to someone who commits a crime while visiting.
Abstract News © Copyright 2010 INFORMATION, INC.
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