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Experts Say U.S. Apartment Market Continues to Roll
Industry News
NAA Celebrates February as Apartment Careers Month
Aimco's Q4 2011 Loss Narrows On Higher Rent
Abilene Apartment Occupancy Rates Dip to State Average
Home Properties Posts Sizable Increase in Revenue and Profit
Memphis Experts Identify Apartments Among the Bright Spots
Boston Capital Closes $350M Tax Credit Fund
Post Properties Expects Favorable Apartment Market Conditions This Year
More Americans Are Choosing to Rent as Homeownership Declines
Portland Apartment Vacancy Rates Drop 
BPG Taps Atlanta-based VP for MultiFamily Arm
Multifamily Mortgage Originations Jump 13 Percent
BRE Properties Q4 2011 Net Soars as FFO Improves
Wells Fargo Named Top Commercial and Multifamily Servicer for 2011
Legislative/Legal News
Mass. Judge Rules Against Upfront Amenities Fees
Indiana Apartment Association, Hammond Agree to Settle Suit
Realtors, Apartment Owners Dispute Sheboygan Vacant Properties Law
Rent Regulation Ruling Cannot Be Used to Scuttle Deal: Court
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Experts Say U.S. Apartment Market Continues to Roll
Digested From "CREShow: US Apartment Market Continues to Roll"
Citybizlist Atlanta (02/06/12)
Several apartment professionals served as guests on a recent episode of the "Commercial Real Estate Show" and shared their observatoins on the market. Topics ranged from occupancy rates to rent growth to future development locations. The overall U.S. apartment occupancy rate was 93.5 percent last year, noted AxioMetrics Inc. President Ronald G. Johnsey. He expects the 2012 rate to increase to 95 percent, adding, "We're going to see the occupancy rates in all classes get closer to 95 percent, and that's going to create really strong pricing power." Also commenting was National Apartment Association President Doug Culkin, who said new development should begin to pick up considerably next year and in 2014. Apartment builders are not only seeking land on the East and West Coasts, he noted, but also in college towns where demand is being created partly by empty nesters "looking for culture." Finally, the various guests touted revenue-management software as an industry "game changer." Such programs set the rent for an apartment using advanced algorithms that take into account everything from the national economy to seasonal demand. Atlanta Apartment Association President Chris Burns reasoned that by taking human nature out of the rent-setting equation, apartments can take in more revenue.
Industry News
NAA Celebrates February as Apartment Careers Month
Digested From "Industry Celebrates February as Apartment Careers Month"
MarketWatch (02/09/12)
February is once again Apartment Careers Month. The National Apartment Association Education Association (NAAEI) launched this annual event two years as a way to spread the word about career opportunities in the multifamily housing industry, which currently employs more than 1 million people. Studies have shown that large, national apartment management companies may hire as many as 2,000 new staff members in any given year, while thousands of other people work in industries that provide products and services to apartment communities. At the same time, the apartment sector has an annual employee turnover rate of between 30 percent to 35 percent, particularly for such jobs as leasing consultants and maintenance technicians. NAAEI President Maitri Johnson, who is also executive vice president-property services at Riverstone Residential, laments that many job seekers do not even consider the apartment industry when looking for work because they are not aware of the many career opportunities available. She adds, "No other industry offers a career that is portable and that welcomes people from so many professional backgrounds. Almost every town -- no matter how small -- has at least one apartment community." NAAEI will be offering a couple of free webinars on Feb. 16 and Feb. 29 to anyone interested in a career in the industry. Separately, NAAEI has agreed to partner with Asset Plus Companies and Campus Apartments in a pilot program to market apartment industry careers to over 60,000 college students who reside in their apartment communities.
Aimco's Q4 2011 Loss Narrows On Higher Rent
Digested From "Apartment Investment 4Q Loss Narrows On Higher Rent"
Wall Street Journal (02/08/12) by Melodie Warner
Apartment Investment & Management Co. (Aimco) confirms that its fourth-quarter loss narrowed as higher rents helped improve the multifamily REIT's margins. Indeed, the company registered a loss of $12.9 million from October through December versus a loss of $21.5 million during the same period a year earlier. Aimco officials also forecast funds from operations of 33 cents to 37 cents a share for the current quarter and $1.72 to $1.82 a share for the year. Analysts polled by Thomson Reuters expect 41 cents and $1.76, respectively. Aimco is focused on owning and operating apartment communities in the 20 biggest U.S. markets. The REIT has recently been posting improved daily occupancy rates and higher average rents.
Abilene Apartment Occupancy Rates Dip to State Average
Digested From "Abilene Apartment Occupancy Rates Dip to State Average but Far Behind National Trend"
Abilene Reporter-News (TX) (02/10/12) by Brennan K. Peel
A new ALN Apartment Data survey shows that occupancy rates for Abilene, Texas, apartments fell to 90.7 percent last month, down nearly 3 percentage points from January 2010. While that's no sign of a rental apocalypse, researchers with the Dallas-Fort Worth-based apartment research firm note that local occupancy rates for the past year and a half have trended downward. Shannon Gollihar, president-elect of the Big Country Apartment Association, comments, "I think it's just because it took a little longer for the recession to hit here. We've been seeing here what other parts of the country and even other cities in Texas have already gone through." On average, an apartment community must have no less than 83 percent occupancy to operate in the black. Abilene apartment occupancy rates range from some communities with near 100 percent to others with fewer than 80 percent of their apartments filled, Gollihar noted.
Home Properties Posts Sizable Increase in Revenue and Profit
Digested From "Home Properties Posts Sizable Increase in Revenue and Profit"
Rochester Democrat & Chronicle (NY) (02/09/12)
Last year saw significant increases in Home Properties Inc. revenues and profits, with rents up and expenses down. The New York-based apartment REIT recorded fourth-quarter revenues of $153.3 million, a 12 percent gain from the same period a year earlier. After expenses, its $17 million in profits were up from the $8.2 million of a year earlier. For 2011 overall, Home Properties' revenues climbed more than 12 percent while profits soared 81 percent. Company records show that such apartment community operating expenses as snow removal and natural gas heating costs were down, while average monthly rents rose almost 4 percent over the year before. For 2012, Home Properties is forecasting funds from operations of $3.79 to $3.95 per share, which would be a gain of between 7 percent and almost 12 percent over last year.
Memphis Experts Identify Apartments Among the Bright Spots
Digested From "Memphis Experts Identify a Few Bright Spots in Commercial Real Estate"
Memphis Commercial Appeal (TN) (02/08/12) by Tom Bailey Jr.
In Memphis, a number of local property professionals convened this past week at the annual Commercial Property Forecast Summit to offer their forecasts for what's ahead in the year to come as far as real estate is concerned. Many expressed "near giddiness" over the health of multifamily housing. Among the happiest was Eric Bolton, chairman and chief executive of MAA, a Memphis-based REIT that invests exclusively in apartment communities. With mortgage loans tougher to obtain, student loan debt mounting, and twentysomethings waiting longer to marry and start a family, the demand for apartment living is definitely on the rise. Bolton states, "There's no market I'm aware of in the country where rents are going down." Investors took part in triple the number of apartment transactions in 2011 as they did a year earlier, including $230 million worth in Memphis alone. Bolton concludes, "America is rethinking how it meets its housing needs." Summit attendees also listed outlet shopping malls and farmland among the areas of strength.
Boston Capital Closes $350M Tax Credit Fund
Digested From "Boston Capital Closes $350M Tax Credit Fund"
Citybizlist Boston (02/07/12)
Boston Capital last week closed Boston Capital Tax Credit Fund XXXV, a portfolio of 53 affordable apartment communities in 21 states with a total fund size of $350 million. With this closing, the firm has raised almost $640 million in equity in the past 13 months. The apartment communities acquired add an additional 3,610 rental units to Boston Capital's holdings, including 1,093 newly constructed units and another 2,517 rehabilitated units. The Fund includes 35 apartment communities for families and 18 for seniors. The plan now is launch Fund XXXVI by the end of this month.
Post Properties Expects Favorable Apartment Market Conditions This Year
Digested From "Post Properties Expects Favorable Apartment Market Conditions This Year"
Atlanta Journal-Constitution (02/07/12) by Misty Williams
Post Properties confirms that its fourth-quarter funds from operations fell after a hit from an early debt payoff. The Atlanta-based apartment developer's funds for operations for 2011's October-through-December period totaled $20.9 million versus $21.1 million for the same period a year earlier. Nevertheless, company officials expect to see continued positive apartment market conditions throughout 2012 as multifamily housing has been a bright spot in the country's lagging real estate market. Monthly rents continue to rise as more people either forgo buying homes in a down market, are unable to qualify for a mortgage, or simply prefer the flexibility renting offers over owning. Post CEO Dave Stockert remarks, "2011, which marked our 40th year in business, will go down as one of the most productive in our company." Jamie Teabo, executive vice president of property management, adds that Post's apartment communities in Atlanta, Charlotte, and throughout Texas showed especially solid revenue growth in 2011 -- a trend likely to continue in the first and second quarters of this year and hopefully beyond.
More Americans Are Choosing to Rent as Homeownership Declines
Digested From "Renters on the Rise as Homeownership Declines"
Shreveport Times (LA) (02/07/12) by Adam Duvernay
Even as house prices have fallen, more Americans are choosing to rent. Harvard University's Joint Center for Housing Studies says that the number of renters in the United States rose by nearly 4 million from 2005 to 2010. Researchers forecast that renter households will grow by 360,000 to 470,000 per year over the next 10 years. Stacy Waters, a property manager for U.L. Coleman Companies, remarks, "If it fits your lifestyle, renting is not a bad investment. Young people don't want to be tied down. They're at the beginning of their lives, and they want to avoid the commitment and the cost of homeownership." On the downside for apartment owners is the affordability question for some. An August 2011 report by Trulia stated that buying a home is cheaper than renting in 74 percent of major U.S. cities. Researchers, though, noted that it is still cheaper to rent in such cities as New York City; Fort Worth, Texas; Omaha, Neb.; Seattle; San Francisco; and Kansas City, Mo.
Portland Apartment Vacancy Rates Drop
Digested From "Portland Apartment Vacancy Rates Drop"
KGW.com (Portland, Ore.) (02/06/12) by Joe Smith
Marcus & Millichap has ranked Portland as one of the nation's tightest apartment markets. Oregon's largest city ranks in the No. 11 spot on the firm's 2012 list, up from 17th place a year earlier. Tony Cassie, regional manager for Marcus & Millichap, states, "It's no surprise vacancy has come down. . . . The improvements in the economy are really driving where the apartment market is going today." Locally, it was just a few years ago that apartment owners and managers were offering everything from deep rent discounts to free TVs to keep units filled. Today, those forced out of their homes and into apartments as a result of the bad economy are driving historically low vacancy rates. Tight supply has also been a factor. Cassie concludes, "The time associated with bringing new rental product to market, the cost associated with it can be somewhat prohibitive, which prevents additional new units in the pipeline."
BPG Taps Atlanta-based VP for MultiFamily Arm
Digested From "BPG Taps Atlanta-based VP for MultiFamily Arm"
Citybizlist Atlanta (02/07/12)
Madison Apartment Group LP, the multifamily operating arm of Philadelphia-based BPG Properties, has named Scott Gilpatrick as its new division vice president. In this position, Gilpatrick will be in charge of the operations of 28 apartment communities spread throughout the South. Together, they contain more than 8,000 apartments. Before joining Madison, Gilpatrick served as regional vice president for Berkshire Property Advisors, where he was responsible for all aspects of portfolio management for the firm's Southeast Region. Prior to that, he served as vice president of real estate for Sawyer Realty Holdings LLC, a position in that placed him in charge of 35 apartment communities containing 10,400 rental units. Gilpatrick is a member of numerous industry groups, ranging from the National Apartment Association to the Atlanta Apartment Association to the Georgia Apartment Association.
Multifamily Mortgage Originations Jump 13 Percent
Digested From "Multifamily Mortgage Originations Jump 13 Percent"
Housing Wire (02/06/12) by Kerri Panchuk
The Mortgage Bankers Association reported that origination of commercial and multifamily loans rose 13 percent year-over-year in the final quarter of 2011, though it declined from the third quarter figures by 7 percent. The quarterly survey demonstrates an increase in commercial lending driven by originations for multifamily and industrial properties. Multifamily loans increased 31 percent in the last three months of 2011. Commercial bank portfolio loans rose 122 percent from 2010 and loans for the government-sponsored enterprises rose 17 percent, while loans for insurance companies and loans for conduits for CMBS fell 13 percent and 50 percent, respectively.
BRE Properties Q4 2011 Net Soars as FFO Improves
Digested From "BRE Properties 4Q Net Soars as FFO Improves"
Wall Street Journal (02/06/12) by Nathalie Tadena
BRE Properties Inc.'s fourth-quarter profit soared profit to $33.6 million from $149,000 a year earlier, as the apartment REIT forecast full-year funds from operations (FFO) of $2.30 to $2.40. For this year's first quarter, BRE is forecasting FFO of 54 cents to 56 cents. The company owns and manages apartment communities mostly in California and Washington state. In other results, same-store revenue for stabilized apartment communities owned by the REIT since Jan. 1, 2010, climbed 5.5 percent on the year.
Wells Fargo Named Top Commercial and Multifamily Servicer for 2011
Digested From "Wells Fargo Named Top Commercial and Multifamily Servicer for 2011"
MortgageOrb.com (02/06/12)
The Mortgage Bankers Association reports that Wells Fargo was the leading master and primary servicer of commercial and multifamily loans last year. It also made a showing in several other categories, including as the top servicer for loans held in warehouses. PNC Real Estate/Midland Loan Services ranked second among commercial/multifamily servicers and also was identified the No. 1 servicer of FHA and Ginnie Mae loans as well as commercial bank and savings institution loans. Both Wells and PNC were listed as top servicers of commercial/multifamily loans in U.S. CMBS and other asset-backed bonds.
Legislative/Legal News
Mass. Judge Rules Against Upfront Amenities Fees
Digested From "Hank Investigates: Apartment Rental Fees"
WHDH (Boston) (02/09/12) by Hank Phillippi Ryan
Apartment residents are typically attracted to communities that offer such on-site amenities as swimming pools, clubhouses, fitness facilities, and business centers. Recently, in Boston's federal court, a judge ruled that apartment owners and managers cannot require residents to pay an upfront amenities fee. Attorney Matt Fogelman, the lawyer for the plaintiffs, remarks, "Anyone who has paid this fee in the last four years has a claim to get that money back." It all began with a lawsuit involving Archstone-owned apartments in Reading. According to the lawsuit, the management was charging residents an upfront $475 fee to use the pool, gym, and the outdoor grills. Fogelman remarks, "The average tenant has no idea what fees are permissible, and what fees are not permissible. . . . All they want to do is live somewhere." Two people who lived in the apartments in question sued, contending that Massachusetts law only permits apartment owners to charge first and last month's rent, a security deposit, and the cost of a new lock and key. They took their case to a judge and won on behalf of themselves and their neighbors. The judge's decision means everyone who lived at the apartment community and paid that fee over the last four years will get some money back. Archstone, it should be noted, no longer owns that particular apartment comunnity and declined comment on the matter. Now, apartment residents who paid amenities fees in other places are also asking for money back.
Indiana Apartment Association, Hammond Agree to Settle Suit
Digested From "Indiana Apartment Association, Hammond Reach Deal in Discrimination Lawsuit"
Northwest Indiana News (02/10/12)
The Indiana Apartment Association and the city of Hammond have reached an agreement in principle to settle the association's civil lawsuit. The apartment group sued Hammond in 2010, contending that a local ordinance creating rental registration fees was unconstitutional. The suit charged the city with discriminating against out-of-state and nonlocal apartment owners by charging them a heftier fee than owners who live within city limits. The ordinance imposed an $80 annual registration fee for existing rental units and a $250 annual fee for apartments built after April 2010. However, under the ordinance, the registration fee is $20 for certain apartments owned by people who are Hammond residents, according to the association's complaint. A document filed Feb. 10 shows that lawyers for both sides reached an agreement in principle to settle the civil suit, but will need at least a couple of months to put it in writing. The parties have asked the court to hold off on any pending deadlines until after April 9.
Realtors, Apartment Owners Dispute Sheboygan Vacant Properties Law
Digested From "Landlords, Realtors Dispute Sheboygan Vacant Properties Law"
Sheboygan Press (WI) (02/03/12) by Dan Benson
In Sheboygan, local Realtors and apartment owners say they want a new city program that catalogs vacant properties to either be altered or scrapped altogether. Lakeshore Apartment Association President Sandy Bahr says, "This is an illegal ordinance. I don't think there can be a compromise here. They have to throw it out and come up with something else." Under the new ordinance, owners of vacant buildings in Sheboygan must register those structures with the city or be fined. Among the properties that would be exempt from registering would be apartments or condominiums in buildings where the vacancy rate does not exceed 95 percent or a single-family home or owner-occupied two-family dwelling that has been occupied at least three months out of the previous nine months. Fines for failing to register can range from $500 to $2,000 per day the property is not registered. The ordinance also requires owners to secure a vacant building, maintain the property, and keep liability insurance policies up to date. Both Bahr and the Sheboygan Board of Realtors have been in contact with city officials regarding the new ordinance. John Rohde, president of the Board of Realtors, says, "We have some concerns about the new ordinance and a separate committee is getting together next week to address it."
Rent Regulation Ruling Cannot Be Used to Scuttle Deal: Court
Digested From "Rent Regulation Ruling Cannot Be Used to Scuttle Deal: Court"
Reuters (02/03/12) by Kevin Nash; Matthew Greenblatt
In a recent unanimous ruling by the Appellate Division, First Department affirmed its own landmark 2009 judgment in Roberts vs. Tishman Speyer Properties that stipulated the real estate firm could not back out of a $6.2 million deal for an apartment community after benefiting from J-51 tax benefits and then convert the rent-stabilized apartments to fair-market value apartments. In the current case, Latipac Corp. vs. BMH Realty, Latipac agreed to buy an apartment community from BMH Realty, and at the time of the agreement nine of the 22 rent-stabilized apartments were deregulated and converted to fair-market rental units. Latipac had argued that the Roberts ruling indicated that it should not longer be bound by the purchase agreement because it had nine fair-market units. The five-judge panel said, "It is well established that, unless a contract for the sale of real property expressly provides otherwise, the buyer bears the risk that the property's value will be reduced by a change in the law between the execution of the contract and the closing."
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