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Capitalization Rates Retreated in March for Apartments and Offices
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Capitalization Rates Retreated in March for Apartments and Offices
Industry News
Full-Paid Registrations for 2010 NAA Education Conference & Exposition Ahead of Last Year's Pace
Study Finds Kids Living in Apartments With Nonsmoking Adults Still Exposed to Secondhand Smoke
Silicon Valley Apartment Rents Nudge Upward, Reports RealFacts
Apartment Vacancies, Rent Down in Denver in Q1
Emmes Group Ramps Up Western Expansion, Including Apartments
Orange County (Calif.) Apartment Rent Down 5 Percent
Equity Residential Fiscal Q1 2010 FFO Dips
Bad Workplace Behavior Often Has Family Ties
Vermont Apartment Owners Defend State's High Rents
AvalonBay Communities Posts Q1 2010 Results
Commercial Real Estate Loan Delinquencies Poised to Escalate in D.C.
Legislative/Legal News
Wisconsin Apartment Owner Likely To Be Cited Following Fire
Bronx Apartment Residents Sue Bank for Repairs
Chicago Apartment Residents to Protest Security Deposit Rule Changes
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Capitalization Rates Retreated in March for Apartments and Offices
Digested From "Capitalization Rates Retreated in March"
Wall Street Journal (04/28/10) P. C9
Capitalization rates -- a calculation real-estate investors use to measure the annual return of income-generating properties -- took a tumble in March. The average cap rate for apartment communities was 6.88 percent, down from 6.93 percent the month before. Meanwhile, the average cap rate for office buildings in central business districts fell from 8.26 percent in February to 7.42 percent.
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Full-Paid Registrations for 2010 NAA Education Conference & Exposition Ahead of Last Year's Pace
Digested From "Full-Paid Registrations for 2010 NAA Education Conference & Exposition Ahead of Last Year's Pace"
NAA News Release (05/04/2010)
Full-paid conference registrations for the 2010 NAA Education Conference & Exposition June 24-26 in New Orleans have significantly improved the past four weeks and have moved ahead of the pace set last year, according to NAA President Doug Culkin, CAE. With seven weeks to go before the industry's biggest event of the year, NAA reports that 172 more full-paid registrations have been submitted compared to this time last year. More than 550 full-paid registrations were submitted in April alone, helping to establish a pace that would break the all-time attendance mark set in 2008.
Study Finds Kids Living in Apartments With Nonsmoking Adults Still Exposed to Secondhand Smoke
Digested From "Children Living in Apartments With Nonsmoking Adults Still Exposed to Secondhand Smoke, Study Finds"
ScienceDaily (05/01/10)
A new study from the University of Rochester Medical Center reports that the majority of children living in apartments are exposed to secondhand smoke, even when they do not live with smokers. The study is the first to examine whether housing type is a potential contributor to children's exposure to cigarette smoke. Among children who lived in an apartment, 84 percent had been exposed to tobacco smoke. Even among children who lived in detached houses, 70 percent showed evidence of exposure. Dr. Karen Wilson, author of the study and an assistant professor of Pediatrics at the University of Rochester Medical Center's Golisano Children's Hospital, states, "We are starting to understand the role that seepage through walls and through shared ventilation may impact tobacco smoke exposure in apartments. We see that children are being exposed in ways we are not picking up, and it's important, for their health, that we figure out where this exposure is taking place, and work to eliminate it." The study analyzed data from nearly 6,000 children between the ages of 6- and 18-years-old in a national database. The research found that apartment living was associated with a 45 percent increase in cotinine levels for African American kids and a 207 percent increase for white children. About 18 percent of U.S. children live in apartments, confirms the study.
Silicon Valley Apartment Rents Nudge Upward, Reports RealFacts
Digested From "Silicon Valley Apartment Rents Nudge Upward"
San Jose Mercury News (05/02/10) by Sue McAllister
RealFacts confirms that apartment rents rose in this year's first quarter in both California's Santa Clara and San Mateo counties. Analysts say this is the latest sign that the region's economy is stabilizing. According to the research, the average monthly rent for all types of apartments in large communities climbed to $1,510 in Santa Clara County -- a nearly 2 percent increase from $1,482 in the fourth quarter of 2009. In addition, San Mateo County's average rent inched up half a percent to $1,636 from $1,628. Both in the Bay Area and nationwide, rents peaked in the third quarter of 2008, then declined as unemployment deepened. Sarah Bridge, owner of RealFacts, remarks, "My guess is we're not going to go back down. We'll either level off, or there will be a continued increase in asking rents and occupancy."
Apartment Vacancies, Rent Down in Denver in Q1
Digested From "Apartment Vacancies, Rent Down in Q1"
Denver Business Journal (04/30/10) by Paula Moore
According to the Colorado Division of Housing, apartment vacancies and average rents in the metro Denver area dropped in the first quarter. Apartment managers offered discounts on rent in an effort to fill vacant units, which contributed to both lowered rates and lowered vacancies. The average vacancy decreased to 6.5 percent in the first quarter of 2010 from 8.4 percent in the first quarter of 2009. Average rent in the area fell to $877.16 per month in the first quarter, compared to $881.92 in the first quarter of 2009. Ryan McMaken, the Colorado Division of Housing's spokesman, said it would be challenging for apartment managers to raise rents at this point because of a lack of job growth and renters' desires to cut costs. Meanwhile, Lauren Brockman, principal at apartment management company Orion Real Estate Services Inc., pointed out that a strong demand for housing in the metro Denver area remains despite the economic downturn because people are staying rather than transitioning to other markets in search of a job.
Emmes Group Ramps Up Western Expansion, Including Apartments
Digested From "NYC's Emmes Ramps Up Western Expansion"
GlobeSt.com (05/03/10) by Bob Howard
New York-based Emmes Group of Cos. has hired longtime Southern California commercial real estate executive Robert Shibuya to serve as its new managing director to spearhead the company's western expansion. Shibuya most recently served as North American COO for DTZ Holdings of London. Emmes, which entered the Southern California market with its $160 million acquisition of an office building in Irvine last year, will continue to scout for value-added apartment, office, retail, and industrial acquisitions. In addition, it will provide asset management services for such clients as institutional investors and financial institutions. The focus initially will be on California, specifically Los Angeles, San Diego, San Francisco and the Silicon Valley. Shibuya confirms that Emmes will not only acquire properties, but also debt with the intention of controlling properties.
Orange County (Calif.) Apartment Rent Down 5 Percent
Digested From "O.C. Apartment Rent Down 5 Percent"
Orange County Register (CA) (04/30/10) by Jeff Collins
RealFacts reports that the average monthly rent for a unit in a large Orange County, Calif., apartment community declined 4.8 percent to $1,475 during the first three months of this year. On the positive side, the average asking rent pulled out of its nose dive, rising $2 a month from the previous quarter. This prompted Craig Zimmerman of Essex Property Trust to optimistically declare: "Rents aren't going down any more. Rents are stable." The RealFacts findings are based on surveys of 492 apartment communities with 100 or more units, representing roughly 33 percent of all Orange County rentals. Other findings include: rents declining 8 percent, or $128 a month, on average from their peak of $1,603 in the third quarter of 2008; Newport Beach having the county's highest asking rent, at $1,898 a month; and, finally, Orange County's vacancy rate coming in at 6.4 percent as of the end of the first quarter.
Equity Residential Fiscal Q1 2010 FFO Dips
Digested From "Equity Residential FFO Dips"
Zacks Equity Research (04/29/10)
Equity Residential posted fiscal Q1 2010 funds from operations (FFO) of $145.6 million versus $166.1 million a year earlier. Quarterly FFO included a negative impact due to bad weather conditions on the East Coast, California, and Arizona. Total revenues during the three-month period were $488.7 million, compared to $483.1 million in a year ago. During the quarter, Equity Residential acquired six apartment communities totaling 1,467 rental units for $639.3 million at a weighted average cap rate of 5.6 percent. The Chicago-based REIT also sold eight consolidated communities, consisting of 2,011 apartment units, for an aggregate price of $145.9 million.
Bad Workplace Behavior Often Has Family Ties
Digested From "How Dad's Yelling Can Spawn an Office Tyrant"
Wall Street Journal (04/27/10) by Sue Shellenberger
Some managers and coaches are using new techniques to identify the childhood origins of harmful behavior at work and then rout out those patterns through training or outright bans on bad behavior. Wall Street Journal "Work & Family" columnist Sue Shellenbarger notes that bosses and managers who are considered "tyrants" are often the products of strict upbringing. Those whose parents were tough and blunt with them growing up often don't realize they are now repeating this behavior with others in work settings. Sylvia LaFair, a leadership coach and psychologist, has identified 13 different patterns of office behavior along with the corresponding family dynamics that likely shaped them. Among the types she identified are the "persecutor," who micromanages or abuses others; the "super-achiever," who is driven to excel at everything; the "denier," who pretends problems do not exist; and "avoiders," who are aware of problems but will not talk about them. LaFair urges that the first step toward defusing patterns of bad behavior is for everybody involved to become aware of them. There are, of course, ground rules for raising such issues in the workplace. LaFair recommends making truthful observations in short, simple sentences, without blaming or attacking the other person, helping the co-worker become conscious of how his or her bad behavior is affecting others - the first step toward change. Robert Sutton, a professor of management science and engineering at Stanford University and an author of a book on bad workplace behavior, says employees can also band together to point out problem. He reports incidents of success when employees keep written records of co-workers behavior and detail the specific effects it has on the workplace.
Vermont Apartment Owners Defend State's High Rents
Digested From "Vt. Landlords Defend State's High Rents"
Times Argus (04/29/10) by Bruce Edwards
Stuart Bennett, director of the Vermont Apartment Owners Association, insists that apartment owners are not to blame for making Vermont one of the least affordable states to rent an apartment. He remarks, "Landlords and builders want their costs as low as possible. Costs associated with labor, materials, debt service, taxes, insurance, utilities, repairs, maintenance, impact and permit fees, code compliance [including lead removal] and uncollectible back rent, make housing increasingly expensive to create and maintain." A new report from the National Low Income Housing Coalition and the Vermont Affordable Housing Coalition shows that Vermont is the 15th least affordable state for those who rent apartments. To afford a modest two-bedroom unit and utilities, a person must earn at least $17.70 per hour, or $36,812 a year. Researchers note that the wage is based on a statewide average "fair market rent" of $920 a month. Earlier last month, the Vermont Affordable Housing Coalition identified several factors that have contributed to Vermont being one of the least affordable states, including a lack of new construction, an aging housing stock, and a shortage of public resources dedicated to new rental housing. Hawaii took the top spot as the least affordable state for apartment rentals. Other states placing high on the list ahead of Vermont range from California and Florida to New York and New Jersey.
AvalonBay Communities Posts Q1 2010 Results
Digested From "AvalonBay Communities, Inc. Announces First Quarter 2010 Operating Results"
Bradenton Herald (FL) (04/28/10)
AvalonBay Communities Inc. announced a 49.2 percent increase in earnings per share for its fiscal first quarter ended March 1, 2010, compared to the same period in 2009. The improvement is due primarily to gains on asset sales. The company's earnings per share were negatively impacted by the harsh winter weather experienced by East Coast communities, and the company expects second-quarter expenses to be elevated as they continue to repair storm-related damage. AvalonBay Chairman and CEO Bryce Blair comments, "Our first-quarter results reflect a recovery in apartment market conditions that is occurring sooner than anticipated. Declining homeownership, favorable demographics and limited new rental supply are all contributing to improved fundamentals."
Commercial Real Estate Loan Delinquencies Poised to Escalate in D.C.
Digested From "Commercial Real Estate Loan Delinquencies Poised to Escalate in D.C."
Washington Business Journal (04/30/10) by Darcie Lunsford
Although the Washington, D.C., metro area has managed to avoid an epidemic of troubled commercial real estate, problems are escalating at local properties financed via commercial mortgage-backed securities. While only 2.14 percent of all these securitized loans in the metropolitan statistical area were 90 days or more delinquent as of April 26, nearly 18 percent of all CMBS loans in the region are now on a watch list -- meaning they face challenges that could nudge them into default. CMBS loans make up about 25 percent of all commercial real estate loans nationwide and often represent some of the most aggressive loan deals cut during the boom. A wide cross section of local properties comprise the distressed list, including apartment communities, office buildings, and hotels.
Legislative/Legal News
Wisconsin Apartment Owner Likely To Be Cited Following Fire
Digested From "Landlord Likely To Be Cited Following Apartment Fire"
Channel3000.com (Madison, WI) (04/30/10)
In Wisconsin, Madison-based apartment owner T.R. McKenzie Inc. is facing a citation in the aftermath of an apartment community fire early last month. Madison firefighters have confirmed that discarded smoking materials started the fire at the Silverstone Apartment community earlier this month. In addition, firefighters said they were nearly injured while battling the flames when a grill's propane tank exploded. As a result, T.R. McKenzie faces a $175 fine because propane gas grills are not permitted on balconies in Madison. The city's fire department is now working with the Apartment Association of South Central Wisconsin on providing more education to apartment owners and residents about fire safety as a result of this fire.
Bronx Apartment Residents Sue Bank for Repairs
Digested From "Tenants Sue Bank for Repairs"
New York Post (04/30/10) by Patrick Rocchio
Residents of 10 apartment communities in the Bronx that are now part of a distressed portfolio in foreclosure are suing the lending bank for failing to make needed repairs since the apartment manager is now unable to do so. The legal claim was filed in Bronx Supreme Court late last month and argues that a mortgage holder can be held liable for maintaining building conditions after foreclosure action is initiated and the court-appointed receiver is in place. Residents complain of exposed wiring, pealing lead paint, broken locks and intercoms, rat and roach infestations, and electrical fires. City Council Speaker Christine Quinn remarks, "Through this lawsuit, we're saying that lenders must be held accountable for the properties they help finance. No family should have to live in deplorable conditions because of the unsustainable investments someone else made." The case involves more than 500 families living in buildings that were foreclosed on after a private equity firm defaulted on its $35 million mortgage. Borough President Ruben Diaz Jr. is calling on the bank to make any and all needed repairs and perform maintenance regardless of what the real estate market does.
Chicago Apartment Residents to Protest Security Deposit Rule Changes
Digested From "Renters To Protest Security Deposit Rule Changes"
CBS 2 Chicago (04/27/10)
The Metropolitan Tenants Organization recently organized a demonstration for apartment residents from across Chicago to petition public officials to vote against an amendment that would put the burden on tenants to get their security deposits returned. Mayor Richard M. Daley proposed the bill in response to the foreclosure crisis that would make banks who complete foreclosures responsible for returning security deposits. The Chicagoland Apartment Association applied an amendment to the bill that made it the responsibility of residents to request their deposits in writing. If a written request was not made, according to the amendment, apartment managers and management companies would be permitted to keep the funds. The amendment would also remove the strong penalties currently enforced upon apartment managers who do not willingly return the deposits. On its Web site, the MTO said: "This amendment puts the burden on the tenant to annually notify the landlord to fulfill their legal obligations. It will have a disparate impact on the most vulnerable tenants, particularly those with literacy, writing, and language issues, and for those tenants with landlords who are hard to contact."
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