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CBRE to Market Carmel Cos. Apartment Portfolio
Industry News
Huntsville Area Apartment Market Gets 'a Breather'
Study Shows Colorado Apartment Vacancies Drop
BRE Completes Secondary Offering
Two New Buildings Kick Off Next Seattle Apartment Boom
Rental Rates Escalate All Over Austin 
Apartment Guide to Be Acquired by TPG Capital
AvalonBay Communities Declares Q2 2011 Dividend
Pittsburgh Residents Prefer Apartments Over Condos
Hartz Mountain Building Its Apartment Portfolio
Apartment Vacancy Rate Falling in Milwaukee
Weidner Apt Homes Buys Four Phoenix Communities
Legislative/Legal News
GOP Continues Piecemeal Reform of Fannie and Freddie
Bill Proposes Mortgage Shake-Up
AvalonBay Settles Suit Over Massachusetts Eviction
NAAEI Honors Texas Apartment Association Foundation
A Trail of Stalled or Abandoned HUD Projects
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CBRE to Market Carmel Cos. Apartment Portfolio
Digested From "CBRE to Sell 8,000-Unit Colorado Apartment Portfolio for Zeff’s Carmel Cos."
Denver Business Journal (05/13/11)
Carmel Cos. has hired CB Richard Ellis (CBRE) to sell its Colorado portfolio of apartment communities, which CBRE has described as the "largest multifamily offering in the nation." The portfolio contains approximately 8,000 rental units in 24 communities. Carmel COO Don Campbell states, "This is really a business decision. The portfolio is operating well and the Denver market is strong and desirable. This is a large transaction and there's going to be a number of very strong buyers interested in this." Tyler Anderson in Phoenix and Dan Woodward in Denver are among the members of CBRE's Multi-Housing Group handling the Carmel account. Anderson states, "The Carmel Cos. portfolio presents a tremendous opportunity to purchase multifamily assets within the Denver market in preparation for the substantial increase in rental rates we expect to see over the next five years." He adds that CBRE was selected because it is "the broker best capable of executing a transaction of this size."
Industry News
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Huntsville Area Apartment Market Gets 'a Breather'
Digested From "Huntsville Area Apartment Market Gets 'a Breather'"
Huntsville Times (AL) (05/14/11) by Marian Accardi
Multifamily housing analysts expect occupancy rates for Huntsville, Ala.-area apartments will improve in the months to come mainly because no conventional apartment communities are in the development pipeline right now. At the same time, local leasing activity has gained steam due to last month's tornadoes and storm activity. Combined, these factors "will give the market a chance to heal and absorb a lot of vacancies," reports David Wilson, an agent with Birmingham-based Rock Apartment Advisors who has tracked Huntsville's apartment sector for the past 17 years. In late 2010, the Class A apartment market -- which includes newer, upscale apartments -- had stabilized with an overall occupancy rate of 93.5 percent. The rates for older communities were bit more mixed, Wilson noted, but appeared to be around 90 percent occupied. The recent tornadoes have definitely had a "major impact" on leasing, he adds. Some local apartment owners and managers reported as many as 30 to 40 additional leases the week after the storms. Those in charge of some of Huntsville's older communities have not seen as many of the displaced. Even worse, some of their residents whose incomes have taken a hit are having trouble paying their rents.
Study Shows Colorado Apartment Vacancies Drop
Digested From "Colorado Apartment Vacancies Drop, Rents Soar in Q1 Outside Denver"
Denver Business Journal (05/12/11) by Dennis Huspeni
Throughout Colorado, apartment vacancies continue to drop as evidenced by the latest report from the Colorado Division of Housing. According to the research, first-quarter vacancy rates fell in all five metro areas -- Fort Collins/Loveland, Greeley, Grand Junction, Colorado Springs, and Pueblo -- covered versus the same period a year earlier. The biggest decline was measured in Grand Junction, where the apartment vacancy rate plummeted from 11.6 percent to 6.3 percent. The report shows that Pueblo and Greeley were a close second and third, as their vacancy rates dipped 44 percent and 41 percent, respectively. Gordon Von Stroh, University of Denver professor, states: "The vacancy rates in Greeley and Colorado Springs are both now at nine-year lows. Looking at the large market areas, we're going to see some serious rent increases in the next few years." Looking at the Denver area, its apartment vacancy rate fell from 6.5 percent to 5.5 percent year over year. Overall, Von Stroh notes that the vacancy rates were lowest in markets with declining unemployment numbers. Looking at apartment rents, average first-quarter rents rose in three of the measured markets -- Colorado Springs, Fort Collins-Loveland, and Pueblo. Rents climbed the most in the Fort Collins-Loveland region, increasing 7.5 percent from $837 to $901. The average metro Denver apartment rent for the first three months of 2011 grew 3.8 percent from a year ago to $911 a month.
BRE Completes Secondary Offering
Digested From "BRE Completes Secondary Offering"
Zacks Equity Research (05/13/11)
BRE Properties Inc. recently completed its secondary offering of 9.2 million common shares at $48 each, including 1.2 million shares bought by the underwriters to fully cover any over-allotment options. Serving as joint book-running managers for the offering were BofA Merrill Lynch, J.P. Morgan Securities LLC, and Wells Fargo Securities. The apartment REIT plans to use the proceeds from the equity offer to repay its debt under its revolving credit facility, redeem the outstanding shares of its 6.75% Series C preferred stock, and fund future acquisition and development activity. BRE Properties specializes in acquiring, developing, and operating apartment communities across the Western U.S. It currently has assets in three states -- California, Washington, and Arizona.
Two New Buildings Kick Off Next Seattle Apartment Boom
Digested From "Two New Buildings Kick Off Next Seattle Apartment Boom"
Seattle Post-Intelligencer (WA) (05/13/11) by Aubrey Cohen
Two new apartment projects could soon be steering a multifamily housing boom in Seattle. Harbor Properties' new LINK Apartments in West Seattle celebrated its grand opening last week. To date, it has leased 44 percent of its 195 apartments. In Rainier Valley, meanwhile, the new Station at Othello Park has leased more than 40 of its 351 apartments and has been in full lease-up mode for about a month. Steve Rauf, president and chief executive officer of developer Othello Partners, states, "I'm pleased with the leasing progress. We want to see somewhere in the neighborhood of maybe about 20 units a month on average moving forward." Seattle's apartment market vacancy rate dipped to 3.5 percent this spring from 5.2 percent a year ago. Meanwhile, the average rent increased 2.9 percent to $1,118 from $1,087, reports Dupre + Scott Apartment Advisors. Market vacancy excludes properties like LINK and The Station at Othello Park, which are still in the lease-up phase. "We could be on the biggest bull market relative to apartments that we've seen since the 1980s," declares Matthew Gardner, a Seattle land-use economist who works with developers. "We got oversupplied in 2009, 2010, but we're burning through that excess of supply very quickly."
Rental Rates Escalate All Over Austin
Digested From "Rental Rates Escalate All Over Austin"
YNN-TV (Austin) (05/11/11)
Apartment living is getting more and more expensive in the Austin metro area. According to the Austin Apartment Association, rental rates have increased in the downtown and University of Texas areas by 7.7 percent in the past year. Even larger spikes are being reported in just the last three months in north, northwest, and southeast areas of the city. According to the association, apartment residents in those parts of town can expect to pay at least 11 percent more than they are now. Sarah Thompson, an executive with the Austin Apartment Association, says rental units for newcomers to Central Texas are being snapped up at a rapid pace. She remarks, "Twenty-seven brought their operations to Austin just in 2010, so that's helping. As is the fact that the lenders are obviously getting more stringent on their credit guidelines." Thompson went on to urge residents to first try and negotiate with the apartment owner, but to keep in mind that demand is outpacing growth. Only around 8,000 new units were built in 2010 in the Austin area.
Apartment Guide to Be Acquired by TPG Capital
Digested From "PRIMEDIA Inc. to Be Acquired by TPG Capital for $7.10 Per Share in Cash"
Business Wire (05/16/11)
PRIMEDIA Inc. has entered into a definitive agreement to be acquired by affiliates of TPG Capital. Under terms of the deal, PRIMEDIA's common shareholders will receive $7.10 per share in cash, representing a total transaction enterprise value of around $525 million. TPG Principal David Trujillo states, "PRIMEDIA is a leading resource for consumers in search of housing. We believe the Company will benefit from the continuing secular transition from print to digital media, and we look forward to building upon the company's innovative products and services for consumers searching for the ideal place to live." Indeed, PRIMEDIA helps millions of consumers across the country find apartments, houses for rent, or new homes for sale via its Internet, mobile, and print solutions. From publishing Apartment Guide since 1975 to launching such Web-based real estate destinations as ApartmentGuide.com and Rentals.com, PRIMEDIA drives leads that result in occupancy for apartment owners, home builders, property management firms, and other real-estate professionals.
AvalonBay Communities Declares Q2 2011 Dividend
Digested From "AvalonBay Communities, Inc. Declares Second Quarter 2011 Dividends "
TradersHuddle.com (05/12/11)
AvalonBay Communities Inc.'s board of directors has declared a second-quarter cash dividend of $0.8925 per common share, which will be payable July 15 to shareholders of record as of June 30. At the end of this year's first quarter, the REIT had ownership stakes in 187 apartment communities containing more than 55,000 rental units. These communities are spread across 10 states and Washington, D.C., including 11 that are now under construction and nine others under reconstruction. AvalonBay has long specialized in developing, redeveloping, acquiring, and operating apartments in high barrier-to-entry markets of the United States.
Pittsburgh Residents Prefer Apartments Over Condos
Digested From "Downtown Pittsburgh Offers Plenty of Condos, but Apartments Prove More Popular"
Pittsburgh Business Times (05/13/11) by Tim Schooley
Downtown Pittsburgh has seen a number of new restaurants open in the Cultural District. At the same time, the revitalization of Market Square remains on track and local office space is going fast. It's the residential property market that holds the surprises. More people are renting apartments downtown than buying condominiums. Plenty of for-sale units are still available at such buildings as The Encore on 7th, the new Three PNC Plaza building, and Gateway Towers. Meanwhile, a whole host of downtown Pittsburgh apartment properties currently boast long waiting lists and monthly asking rents unheard of not much more than a decade ago.
Hartz Mountain Building Its Apartment Portfolio
Digested From "Hartz Mountain Takes a New Route"
Wall Street Journal (05/11/11) by Maura Webber Sadovi
Hartz Mountain Industries is looking to be a big player in the apartment industry. Run by the Stern family, the closely held company recently paid more than $300 million for One Superior Place, a 52-story luxury rental-apartment building in Chicago. Hartz President Emanuel Stern says his company is joining a growing investment wave in the sector. Indeed, in the last year, approximately $39 billion in apartment deals valued at $2.5 million or more were completed in the U.S. -- an increase from just $14.8 billion in 2009, notes Real Capital Analytics. Buyers have been attracted to rental apartments due to such trends as rising rents, falling vacancies, and increased demand resulting from stagnation in the home-sales market. They have also been helped by Freddie Mac and Fannie Mae, which provide low-cost financing. Dan Fasulo, managing director at Real Capital Analytics, comments, "Apartment properties are less risky and you get super-cheap debt for acquisitions, courtesy of the U.S. taxpayer." For Hartz Mountain, the deal is also about diversification as its portfolio includes nearly 38 million square feet of industrial, office, and retail properties, along with such hotels as the Tribeca Grand in New York. The firm started acquiring apartments in 2010. With this latest Chicago purchase, its portfolio now boasts about 1,600 rental units. Finally, it has plans in the works to build hundreds of new apartments on New Jersey land it already owns.
Apartment Vacancy Rate Falling in Milwaukee
Digested From "Marcus & Millichap: Watch for Falling Vacancy Rates in Milwaukee Multi-Family Market"
REJournals.com (05/10/2011)
A new Marcus & Millichap report forecasts that Milwaukee apartment vacancy rates will continue to fall this year, with owners expected to see rises in both asking and effective rents. According to the research, the vacancy rate among apartment communities in Milwaukee should fall 50 basis points in 2011 to 4 percent, following a drop of 60 basis points last year. At the same time, the study predicts that a rise in occupancy rates will enable owners and managers to increase asking rents by 2 percent this year to an average of $830 a month. Effective rents, meanwhile, are on pace to rise 2.4 percent to an average of $800 a month. Finally, Marcus & Millichap predicts concessions will drop to an average of 13 days of free rent -- the lowest in a decade.
Weidner Apt Homes Buys Four Phoenix Communities
Digested From "Investment Firm Buys 4 Phoenix-Area Apartment Communities"
Arizona Republic (05/12/11) by J. Craig Anderson
Weidner Apartment Homes, which has long had its sights set on distressed apartment assets in Arizona, has purchased four such communities in Phoenix. The investment firm paid a combined total of nearly $68 million, reports commercial property brokers involved in the deals. Weidner now owns a total of 13 apartment communities in the Phoenix and Tucson metro areas. The latest deals added around 1,160 additional rental units to the company's Arizona portfolio, which now totals approximately 4,250 apartments. Weidner has been purchasing apartment properties in both of the state's major markets since the first quarter of last year. It has plans to acquire 6,500 total units in Arizona, notes Kevin Colard, senior acquisitions manager.
Legislative/Legal News
GOP Continues Piecemeal Reform of Fannie and Freddie
Digested From "GOP Continues Piecemeal Reform of Fannie and Freddie"
The Atlantic (05/16/11)
House Republicans are looking to reform Fannie Mae and Freddie Mac with a steady stream of small bills. To date, though, only a couple have garnered broad bipartisan support. For example, one bill that seeks to subject the two government-sponsored enterprises to the same risk retention rules that banks must follow passed 34 to 0. Another approved by a voice vote aims to strip the affordable housing goals from Fannie Mae and Freddie Mac's mission statements. Seven additional draft bills, meanwhile, were announced late last week. A few of those are expected to achieve bipartisan support, most notably one that would subject both GSEs to Freedom of Information Act requests. That bill, introduced by Rep. Jason Chaffetz (R-Utah), would provide a tool to journalists who want to better understand these firms' past and present portfolios and underwriting criteria.
Bill Proposes Mortgage Shake-Up
Digested From "Bill Proposes Mortgage Shake-Up"
Wall Street Journal (05/12/11) P. A2; by Nick Timiraos
Conservative lawmakers have reached a compromise to replace Fannie Mae and Freddie Mac with at least five private firms that would issue mortgage-backed securities with explicit federal guarantees. Analysts say the legislation from Rep. John Campbell (R-Calif.) and Rep. Gary Peters (D-Mich.) may be the only plan able to draw enough support for building a private mortgage-finance system that does not entirely exclude the government. The new entities would have to buy loans that meet certain standards and hold much more capital than Fannie Mae and Freddie Mac.
AvalonBay Settles Suit Over Massachusetts Eviction
Digested From "Developer Settles Suit Over Eviction in Woburn"
Boston Globe (05/13/11) by Jenifer B. McKim
AvalonBay Communities Inc., which allegedly attempted to evict a woman and her two kids under the age of 5 from their Woburn, Mass., apartment over noise complaints, has agreed to settle a civil rights lawsuit filed by Massachusetts Attorney General Martha Coakley's office. Under terms of the settlement, the Virginia-based apartment developer has agreed to put in place measures to guarantee that it is in compliance with fair housing laws. In addition, it will pay $6,500 in restitution to the alleged victim and the state. State officials charged that AvalonBay, which owns 25 apartment communities throughout Massachusetts, moved to evict the family without investigating the complaints. Coakley stated, "Parents with small children should not be subjected to additional burdens or barriers in housing rentals. Realtors, brokers, and landlords in Massachusetts must understand that discrimination against families with young children is illegal and we will seek to hold accountable those who break the law." AvalonBay settled the lawsuit without admitting any liability. John Christie, AvalonBay's senior director of investor relations, says the company "has always valued the rights of our residents, including those with children. In fact, there are many families with children living at the community in question. We would rather put our efforts into assuring that our associate training is effective than into litigating the case."
NAAEI Honors Texas Apartment Association Foundation
Digested From "NAAEI Recognizes Texas Apartment Association Education Foundation for Efforts to Promote Apartment Industry Careers"
Sacramento Bee (05/11/11)
The National Apartment Association Education Institute (NAAEI) this past week named the Texas Apartment Association Education Foundation (TAAEF) as the first recipient of its new Anthony V. Pusateri Apartment Career Promotion Award. The honor will recognizes excellence and leadership in promoting the three apartment career paths: Maintenance, Leasing and Management. It will be given to the individual, company, or association that has made the biggest impact in creating awareness of apartment careers among military veterans, high school and college students, or career changers via outreach activities. NAAEI President Jeff Lowry states, "TAAEF also is reinforcing the need for continuing education for people already working in the industry." Established by the Texas Apartment Association nine years ago, TAAEF continues to raise awareness about career opportunities in the industry. Among its biggest achievements is a four-year undergraduate degree in Residential Property Management (RPM) offered through the University of North Texas. This program prepares students for careers in multifamily housing by providing them with the necessary skills, training, and certification they need to succeed in the industry.
A Trail of Stalled or Abandoned HUD Projects
Digested From "A Trail of Stalled or Abandoned HUD Projects"
Washington Post (05/15/11) P. A1; by Debbie Cenziper; Jonathan Mummolo
A Washington Post analysis has determined that the federal government's biggest housing construction program for the poor has squandered hundreds of millions of dollars on stalled or abandoned projects. It has also routinely failed to crack down on derelict developers or the local housing agencies that funded them. Across the U.S., nearly 700 projects awarded $400 million have been idling for years, Post investigators found. Some have languished for a decade or longer even as much of the nation has continued to deal with record-high foreclosures and a dramatic loss of affordable housing. Fields where apartment communities were promised continue to sit empty, undeveloped, and neglected. Houses that were supposed to be renovated remain boarded up and in a state of disrepair. The article lists several examples of such failures in markets as diverse as Inglewood, Calif.; Newark, N.J.; and Orange, Tex. The Post examined every major project currently funded under the HUD program for its results. In doing so, it analyzed a database of approximately 5,100 projects worth an estimated $3.2 billion, studying more than 600 satellite images and collecting information from 165 different housing agencies nationwide. The yearlong probe uncovered a dysfunctional system that delivers billions of dollars to local housing agencies with few rules, safeguards, or even a reliable way to track projects.
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