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Henderson Global Launches Fifth U.S. Apartments Fund
Industry News
Fate Of Apartment and Other REITs May Hinge On Job Growth
Connolly Properties Headed for Liquidation
Home Properties to Start Equity Offering Program
Fannie Mae Survey Shows Allure of Homeownership Dims
Marriott International Expands Furnished Apartment Deal
Orlando Apartment Communities Sell for $47.8 Million
BRE Properties Announces Pricing of Senior Notes Due 2021
Survey Reveals Over Half of Active Apartment Hunters Rent by Choice
Mid-America Apartment Communities Announces Quarterly Dividend
Renting -- Not Buying -- the Dream
Legislative/Legal News
DOJ to Sue Post Properties Under FHA, ADA Acts
Decision on Apartment Ban in Tacoma Apartments Put Off
Archstone Purchases Renewable Energy From Green Mountain
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Henderson Global Launches Fifth U.S. Apartments Fund
Digested From "Henderson Launches Fifth US Apartments Fund"
IPE.com (09/20/10)
Henderson Global Investors has announced plans to launch a fifth fund targeting U.S. apartments, which it has identified as the nation's best-positioned property sector. According to Henderson Global, the latest CASA Partners US Multi-Family Housing fund (CASA V) will target an initial equity raise of at least $100 million by the end of this year. It will employ a three-tiered investment strategy targeting apartment communities with 200 or more rental units situated in urban and suburban areas with strong demographic and economic trends. Tier one will provide the base financing strategy for the portfolio, namely value-added and conventional investments in tax-exempt, bond-financed apartments. Tier two will represent apartment communities with repositioning potential to enhance returns, both directly and via joint ventures. The third and final tier will pursue distressed apartment communities. In the United States, apartments have historically proven less volatile than other sectors. Henderson management believes core apartments are likely to offer attractive total returns with a strong income component. The hope is that the newly acquired unlevered apartments could offer net total returns of 7 percent to 9 percent a year over the next five years.
Industry News
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Fate Of Apartment and Other REITs May Hinge On Job Growth
Digested From "Fate Of REITs May Hinge On Job Growth"
Investor's Business Daily (09/17/10) by Joe Gose
Over the past several months, REITs have raised billions of dollars in equity, debt, and preferred capital in an effort to strengthen their balance sheets. Now, many of these trusts are witnessing an uptick in leasing that is improving or stabilizing occupancy rates and monthly rents. However, a lack of meaningful job growth nationwide threatens to "short-circuit" the slight rebound in property fundamentals. Despite high U.S. unemployment, REITs that own apartments have been able to raise rents by 3 percent to 5 percent in some markets due to such factors as a falling homeownership rate and pent-up demand. Shopping center REITs, meanwhile, are generally gaining the ability to hike rents as consumer spending recovers and retailers look to expand. REIT executives across all sectors report that a drop-off in new development is constricting supply. As a result, they will be able to raise rents more quickly as the economy gains momentum, thus hastening demand for both commercial space and apartments. BMO Capital Markets REIT analyst Richard Anderson remarks, "Despite all the talk about real estate being the next shoe to drop, real estate is here forever. There's not going to be an Internet version of it."
Connolly Properties Headed for Liquidation
Digested From "Plainfield's Connolly Properties Headed for Liquidation"
mycentraljersey.com (09/17/2010) by Mark Spivey
Due to a failure to produce adequately detailed financial disclosures, Federal Bankruptcy Judge Morris Stern late last week approved a recommendation by the Office of the United States Trustee to liquidate Connolly Properties Inc. As recently as last year, the company managed more than 3,000 apartments in five cities throughout New Jersey and Pennsylvania. But Connolly Properties filed for bankruptcy protection in last year's fourth quarter with an intent to reorganize after a period of financial difficulties forced the sale of many of the communities it managed. Thomas Walsh, an attorney for Connolly Properties, recently issued a filing indicating that the company is not opposing the move to convert its bankruptcy case from Chapter 11 to Chapter 7. Connolly has only requested that the court give it sufficient time to sell several more affiliated apartment communities prior to the switch being finalized.
Home Properties to Start Equity Offering Program
Digested From "Home Properties to Start Equity Offering Program"
Rochester Business Journal (09/17/10) by Mary Stone
Home Properties Inc. late last week launched an at-the-market equity offering to sell up to 3.6 million shares. The company plans to start the ATM program in this year's fourth quarter, with proceeds to go towards such general corporate purposes as the repayment of debt, acquisitions, development, and redevelopment of apartment communities. Home Properties specializes in owning and managing apartments, mainly along the East Coast. Home Properties CEO Edward Pettinella states, "Although we have no plans to issue equity immediately, our intent is to have a program in place so that we are in a good position to quickly fund any acquisitions of apartment communities that our pipeline may require going forward."
Fannie Mae Survey Shows Allure of Homeownership Dims
Digested From "Allure of Home Ownership Dims, Fannie Mae Survey Shows"
Wall Street Journal (09/16/10) P. A4; by Nick Timiraos
The number of people who label homeownership a safe investment fell to 67 percent in July from 70 percent in January, finds a Fannie Mae study, while the share of households that say they are more likely to rent than purchase climbed to 33 percent from 30 percent. With tighter lending criteria in place, over 50 percent of renters polled questioned if they could even qualify for a mortgage. Fannie Mae chief economist Douglas Duncan says renting may be up despite lower home prices and favorable borrowing costs largely because more households "are paying down debt and putting their financial house in order."
Marriott International Expands Furnished Apartment Deal
Digested From "Marriott International Expands Furnished Apartment Deal"
Washington Business Journal (09/16/10) by Barton Eckert
Marriott International joined with AMLI Residential to recently add 1,000 upscale apartments to its Marriott ExecuStay unit. ExecuStay, which specializes in temporary housing and furnished apartments, is aiming to be the corporate housing of choice for short-term rentals. AMLI Residential will now have 5,500 turn-key furnished apartments. Also, the partnership will eradicate the need for six-month or year-long leases.
Orlando Apartment Communities Sell for $47.8 Million
Digested From "2 Apartment Complexes Sell for $47.8M"
Orlando Business Journal (09/17/10) by Anjali Fluker
The Orlando metro area's apartment sector continues to see a steady stream of deals. Los Angeles-based Debra Avenue Apartments LLC, an entity related to JKR Property Holdings, acquired the Gates of Harbortown apartments in MetroWest earlier this month for $40 million. Milwaukee-based Northwestern Mutual Life Insurance was the seller of the 428-unit community, which was 94 percent occupied at the time of sale. A week earlier, Tampa-based Woodbridge LLC purchased the 168-unit Woodbridge Apartments near Winter Park for $7.8 million. The community was 91.7 percent occupied at the time of transaction.
BRE Properties Announces Pricing of Senior Notes Due 2021
Digested From "BRE Properties Announces Pricing of Senior Notes Due 2021"
MarketWatch (09/15/10)
BRE Properties Inc. this past week announced the pricing of its underwritten registered public offering of $300 million aggregate principal amount of senior notes due 2021. Interest on the notes is payable semiannually on March 15 and Sept. 15. The notes are due to mature on March 15, 2021. According to BRE, the offering was made pursuant to an effective shelf registration statement filed with the SEC in early November 2007. The offering is expected to close on Wednesday, Sept. 22, with net proceeds to go towards repaying borrowings and for general corporate purposes as new development activities and financing for acquisitions. BRE Properties is a San Francisco-based multifamily REIT that owns and manages apartment communities in various supply-constrained markets of the Western U.S. Its portfolio currently contains 76 apartment communities totaling more than 22,000 rental units in three states -- California, Arizona, and Washington.
Survey Reveals Over Half of Active Apartment Hunters Rent by Choice
Digested From "Apartments.com National Survey Reveals More Than Half of Active Apartment Hunters Are Renting by Choice"
PR Newswire (09/14/10)
According to a recent national Apartments.com survey, nearly 60 percent of respondents prefer to rent because they have convenient access to amenities and do not have to worry about maintenance. Other reasons cited by respondents include being unable to afford homeownership, wanting to live in good neighborhoods, and having greater flexibility to move. About 30 percent of respondents said they had never rented before but are currently looking for an apartment, while 34 percent had been renting for four years or less. Moreover, 43 percent of respondents are switching from being a homeowner to renting, and 32 percent of prior homeowners have never rented before and more than 50 percent say they would prefer to rent. With vacillating house prices, the difficulties associated with selling a house, and ongoing maintenance costs, 65 percent of previous homeowners surveyed said renting is more affordable.
Mid-America Apartment Communities Announces Quarterly Dividend
Digested From "Mid-America Apartment Communities Announces Quarterly Dividend"
RTTNews (09/14/10)
Mid-America Apartment Communities Inc.'s board of directors has approved a quarterly common dividend of $0.615 per share, which will be payable Oct. 29 to shareholders of record as of Oct. 15. As established in prior quarters, the apartment REIT is declaring its quarterly common dividend payout in advance of its earnings announcement, which it expects to make on Nov. 4.
Renting -- Not Buying -- the Dream
Digested From "Renting -- Not Buying -- the Dream"
Chicago Now (09/10/10) by Erin M. Sarris
The Joint Center for Housing Studies reports a 3.4 million increase in the number of renters between 2004 and 2009, and a Trulia.com survey indicates that more than 25 percent of renters polled have no plans to become homeowners. Renters who are happy with their choice cite convenience, mobility, and cost savings. "Since college, I've thought that Americans are generally obsessed with the idea of homeownership being some kind of superior lifestyle, but I think we get more for our money renting," says Stina Fish, a 33-year-old Chicago resident who prefers renting despite being able to afford a house purchase. "We don't worry about special assessments. We don't worry about having to replace the dishwasher or the furnace. Even though I've been in the same apartment since 2003, there's still the idea that I'm free to pick up and move anywhere, at any time." Meanwhile, Thiyag Chinnappan, a 35-year-old marketing analyst based in Chicago, says homeownership does not make someone feel more mature. He says, "It's a personal decision. [Renting] just fits my lifestyle better."
Legislative/Legal News
DOJ to Sue Post Properties Under FHA, ADA Acts
Digested From "DOJ to Sue Post Properties Under FHA, ADA Acts"
Bizjournals (09/15/10)
The U.S. Department of Justice (DOJ) has filed a lawsuit again Post Properties Inc., claiming they built apartment communities in Washington, D.C., and six states that are not in compliance with the Americans with Disabilities Act (ADA) or the Fair Housing Act (FHA). Post Properties received a letter from the DOJ on Aug. 17 alerting them to the fact that they had just finished an investigation under the ADA and FHA and they had found Post Properties to not be in compliance. Post Properties claimed that the agency was amenable to a pre-suit negotiation. But after lawyers finished initial talks, it was decided that they would not be able to come to an agreement. The DOJ is expected to file a complaint in the near future. In November 2006, the Equal Rights Center filed a comparable lawsuit that was dismissed a year ago this month. Post Properties said it is unaware of how much potential damage this suit could cause to them.
Decision on Apartment Ban in Tacoma Apartments Put Off
Digested From "Decision on Apartment Ban in Tacoma Apartments Put Off"
Tacoma News Tribune (WA) (09/16/10) by Rob Carson
During a study session at the Tacoma-Pierce County Board of Health this past Wednesday, members discussed the idea of a ban on smoking in apartment buildings. The subject was requested by a Pierce County anti-smoking group called PUSH (People United for Smoke-Free Housing), as they feel the second-hand effects of tobacco smoke in someone's home or apartment could have negative consequences for non-smokers. While the matter was argued vigorously, ultimately the board decided to pursue more information before making any decisions and put it off until at least next month. PUSH supporters claim they are not looking to evict apartment residents who smoke, but rather to have a policy set in place so that apartment residents and owners could hopefully resolve the smoke-related complaints. This comes on the heels of eight communities in California that have similar ordinances.
Archstone Purchases Renewable Energy From Green Mountain
Digested From "Company Purchases Clean Renewable Energy From Green Mountain Energy Company for 12 NYC Properties"
AltEnergyMag.com (09/16/10)
Archstone confirms that it has purchased clean electricity for a dozen of its New York City and Brooklyn apartment communities from Green Mountain Energy (GME). GME holds the distinction of being the only electric services company in New York that is focused solely on cleaner energy. Archstone's plan is to buy renewable energy from U.S. sources to fully match its usage at these facilities and offset an estimated 19 million pounds of carbon dioxide. Scott Hart, President of Commercial Services, Green Mountain Energy Company, states, "Their power consumption or purchase of renewable energy will be 14,621,564 million kilowatt hours (kWh) of renewable energy from Green Mountain Energy Company over the one year. The purchase is for the electrical usage at the 12 Archstone New York City apartment communities. This includes powering the facilities lobbies and other common areas such as laundry rooms and exterior lighting."
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