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Housing Gloom Doesn't Extend to Apartments
Industry News
CNBC Survey Charts Changing Attitudes Towards Renting
Double-Digit Rent Increases Possible
Fitch Raises Ratings on BRE Properties
Debt-Backing Commercial RE Falls Again, Including Apts
Apartment Owner Verde Halts Plans for IPO
Texas Co. Buys 4 Jacksonville Apartment Communities
Sonoma County Apartment Rents to Increase 3.5 Percent
CallSource Launches New Online University for NAA
Lubbock's Apartment Occupancy Rate Passes 92 Percent
Legislative/Legal News
NY Apartments Mull Smoking Bans
Charlotte Apartments are Paying Twice for Trash Fees
GOP Takes Aim at Fannie, Freddie
New Plan to Tie Apartment Leases to School Year in Houston 
Charlotte Police Form Alliance to Fight Apartment Crime
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Housing Gloom Doesn't Extend to Apartments
Digested From "Housing Gloom Doesn't Extend to Rentals"
Wall Street Journal (03/21/11) by Kelly Evans
Later this week, the government's index of home prices is expected to register its seventh decrease in eight months. At the same time, economists anticipate new home sales in February will post a monthly increase of only 2 percent coming off of January's almost 13 percent dip. As a result, the rental housing market is heating up. Reis Inc. recently reported that average U.S. apartment vacancy rates declined to 6.6 percent in 2010 from 8 percent the year before. Monthly rents, meanwhile, climbed 2.3 percent. Developers are making moves to take advantage of a possible multi-year rental housing boom. Equity Residential CEO David Neithercut notes that it is "very good to be in the apartment business today." Indeed, occupied apartments increased by nearly 58,000 in the last three months of last year -- the largest gain for that period in a decade. Green Street Advisors, meanwhile, notes that such factors as population growth and a decline in the U.S. homeownership rate to 65 percent could generate approximately 4.5 million new renter households over the next five years -- a level of demand that "will far outstrip supply" through 2015, the firm's researchers note.
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CNBC Survey Charts Changing Attitudes Towards Renting
Digested From "Americans Pessimsitic About Future Economic Growth, According to CNBC All-America Economic Survey"
CNBC News (03/18/11) by Jennifer Dauble
The newly released CNBC All-America Economic Survey found that attitudes towards owning a home have gotten more negative. Only 63 percent of those polled believe it is better to own than rent, which compares with 89 percent in a 1996 Fannie Mae survey. In addition, 48 percent of the country know someone who has been foreclosed upon or is facing the threat of foreclosure. That is an increase from 33 percent in September 2008. Nevertheless, the survey reports that 73 percent of Americans still believe that owning a home is an essential part of "the American dream." CNBC polled 800 Americans from across the country in all income groups, regions, and ages for its results. The survey was conducted from March 7-10.
Double-Digit Rent Increases Possible
Digested From "Renew Your Lease - Rents Could Rise 10 Percent"
CNN Money (03/17/11) by Les Christie
Double-digit rent hikes may be coming soon, as apartment vacancy rates have dipped below the 10 percent mark in many markets. Demand is increasing, according to Rent.com President Peggy Alford, who predicts the vacancy rate will hover at a mere 5 percent by 2012. In the most popular rental housing markets, prices could jump as much as 10 percent, a sharp change from the recession when many Americans could not afford to live on their own. Chris Macke, a real estate analyst with CoStar, says apartment developers may not be able to keep up with this heightened demand, which will force prices upwards. Alford adds, "There's been a shift in the American Dream. We're learning from our surveys that a huge proportion of people are choosing to rent." Still, there is one factor that could rein in rent increases: the huge number of foreclosed homes that could hit the market over the next few years.
Fitch Raises Ratings on BRE Properties
Digested From "Fitch Raises Ratings on BRE Properties"
Business Week (03/15/11)
Fitch Ratings recently upgraded several debt ratings for BRE Properties Inc. with the expectation that the apartment owner's business should improve over the next few years. Fitch raised BRE's issuer default rating, unsecured revolving credit facility and convertible senior notes from "BBB-" to "BBB." In addition, the ratings firm boosted the San Francisco-based REIT's preferred stock from "BB" to "BB+." Fitch anticipates that BRE will see its portfolio's net operating income and other business metrics improve through 2013 after registering declines the last couple of years. BRE's net operating income on apartment communities with residents at least one year slipped 6.4 percent in 2009 and 3.7 percent a year ago. Fitch researchers, though, project that BRE will see that metric grow between as much as 4 percent this year and in 2012. BRE specializes in owning apartment communities in coastal markets where the supply of rental units is constrained. This has traditionally kept demand strong.
Debt-Backing Commercial RE Falls Again, Including Apts
Digested From "Commercial Real Estate Debt Levels Fall -- Again"
Wall Street Journal (03/17/11) by Eliot Brown
According to data released Thursday by the Mortgage Bankers Association (MBA), the level of commercial mortgage debt decreased by $12.1 billion during last year's fourth quarter. This marked the fifth consecutive three-month period that the amount of debt backing commercial real estate has declined. Commercial real estate debt is a broad category that includes mortgages tied to apartment communities, offices, hotels, retail space, and industrial facilities. Broken down, the amount of multifamily lending actually rose by $3 billion as Fannie Mae and Freddie Mac expanded their portfolios. This was the second consecutive quarter that it grew. In total, there was $2.4 trillion in commercial mortgage debt outstanding as of Dec. 31, the MBA reports. While the level declined, it fell by the lowest amount since the end of 2009's third quarter as banks slowly emerged from the sidelines and back into the lending world.
Apartment Owner Verde Halts Plans for IPO
Digested From "Verde Realty Drops Plans for IPO"
El Paso Times (TX) (03/16/11) by Vic Kolenc
Verde Realty last week confirmed that it has dropped plans to go public with a $300 million stock offering that was to help the company buy more apartment communities and industrial facilities. In a letter to the SEC, Verde said "current market conditions make it inadvisable to proceed at this time" with the proposed IPO announced in the first quarter of last year. The Houston-based REIT owns and manages 89 industrial properties and 14 apartment communities with 4,790 rental units in the Southwest and Mexico. In addition to more industrial space, Verde planned to use money generated from the stock offering to purchase apartments in a half-dozen selected markets throughout the Southwest.
Texas Co. Buys 4 Jacksonville Apartment Communities
Digested From "Austin Company Buys 4 Jax Apartment Complexes"
Jacksonville Business Journal (FL) (03/16/11) by Ashley Gurbal
Castle Hill Partners of Texas confirms that it has acquired a $23.6 million portfolio of four Class C apartment communities in the Jacksonville metro area. The Austin-based company purchased The Woods at Mandarin, City Rich in Arlington, the Club at Charter Point in Arlington, and Cross Creek on the Westside. Together, these four communities contain a total of 1,239 rental units. All four were foreclosed on last year, and Walchle Lear Multifamily Advisors began marketing them back in October. With only one apartment community on track to be completed in Jacksonville this year, an increase in demand and investor interest in rental housing is expected.
Sonoma County Apartment Rents to Increase 3.5 Percent
Digested From "Sonoma County Apartments: Rents Forecast to Increase 3.5 Percent as Vacancies Dip"
North Bay Business Journal (03/14/11) by Scott Gerber
Analysts expect apartment rents in Sonoma County, Calif., will increase by 3.5 percent across the board in 2011 as vacancy rates dip to nearly zero. At the same time, rents could increase by as much as 10 percent in areas of Marin, San Francisco, San Mateo, and Santa Clara counties. The North Bay apartment market gained positive footing last year, a trend that has continued into the first quarter of 2011. The combination of low vacancy and high demand coupled with no new supply have set the stage for a continued recovery in this traditionally strong market sector. When you factor in interest rates at historically low levels, multifamily housing investors are being presented with a golden opportunity to achieve positive leverage by acquiring apartment communities at 6 percent or higher capitalization rates and financing them with fixed 5 percent debt. With starting cash flows in the 5 percent to 7 percent range, such deals could increase in the months to come.
CallSource Launches New Online University for NAA
Digested From "CallSource Launches New Online University for National Apartment Association (NAA), and All Affiliated Apartment Associations"
Business Wire (03/15/11)
Earlier this month, the National Apartment Association (NAA) and 18 affiliated associations released a learning management system (LMS) known as The Online University. CallSource will host The Online University for the National Apartment Association Education Institute (NAAEI), the NAA, and all affiliated associations. The Online University will deliver e-learning content to multifamily housing professionals employed by members of the 170 apartment associations affiliated with the NAA, offering skill and compliance training developed by CallSource and the NAAEI. It will also enhance the ability of the NAA and affiliated associations to efficiently educate the employees of the management companies and owners that comprise their membership, as well as track their course completions, designations, and certifications within the industry. Finally, the Online University's e-commerce feature will help the associations enhance training revenues.
Lubbock's Apartment Occupancy Rate Passes 92 Percent
Digested From "Squeezing Space: Lubbock Apartment Occupancy Rate Passes 92 Percent"
Lubbock Online (03/12/11) by Walt Nett
Apartment rents in Lubbock, Texas, are expected to hold the line or rise slightly, as occupancy rates are above the 90 percent mark for the third straight year. According to top officers of the Lubbock Apartment Association (LAA), semi-annual property survey results showed more than 92 percent of the apartments at properties that responded to the association survey were occupied -- the highest percentage since 2003. LAA President Gary Mitchel of Jack Thompson Investments says conversations with apartment owners and management company executives here and elsewhere seem to indicate a strong rental market is to come for several years. Jeff Lowry, president-elect of the Texas Apartment Association, agrees. He adds that many property managers are hoping to recoup revenue that was given up in rental concessions two to three years ago across the market. Still, there is a fair amount of upward mobility of residents within inventory, and there are at least half a dozen apartment communities in various stages of planning locally.
Legislative/Legal News
NY Apartments Mull Smoking Bans
Digested From "Smoking Bans Hitting Home"
Wall Street Journal (03/16/11) by Craig Karmin
New York City has been taking an increasingly tough stance against smoking. However, nearly all residential buildings have drawn the line at telling residents they can't smoke in their own apartments. That soon may no longer be the case, as no less than six Manhattan co-ops will likely ask shareholders during this spring's annual meetings to vote on an all-out smoking ban that would prohibit residents from lighting up in their own units. At least another 12 co-op or condo buildings are considering such a vote. New York City has already outlawed smoking in public areas at any building with at least 10 apartments. Among the reasons why some buildings are pursuing a total prohibition are growing concerns over secondhand smoke and concerns that residents will eventually sue each other -- or the building -- over smoking disputes. Studies show that younger residents who grew up in smoke-free public environments tend to be more anti-smoking than older residents. New York's Health Department states that only around 16 percent of city residents currently describe themselves as smokers. It should be noted that most co-ops require at least two-thirds of all shares to vote in favor of a ban for it to pass. Condos, meanwhile, may require at least 75 percent of all unit owners to approve a ban. Finally, some apartment developers have already instituted partial bans. Related Cos. owns two downtown and one Upper West Side residential properties where existing residents can smoke in their apartments but new residents cannot. Related Management President Jeff Brodsky remarks, "We expect those buildings will be at least 97 percent smoke-free within three years. And we could add new buildings that will be entirely smoke-free."
Charlotte Apartments are Paying Twice for Trash Fees
Digested From "Charlotte Apartment Dwellers are Paying Twice for Trash Fees"
Charlotte Observer (NC) (03/18/11) by Ken Szymanski
According to Ken Szymanski, executive director of the Greater Charlotte Apartment Association & Apartment Association of North Carolina, Charlotte apartment residents are getting a bad deal on trash fees as a result of the way the city government selectively applies them. Apartments pay yearly disposal fees of $27 per unit to the City of Charlotte, but those same apartment communities are subjected to another "supplemental refuse disposal charge" unless they contract for supplemental refuse collection (a second pick-up each week) with the same firm that is the city's hauler. The decision to use a different hauler results in apartment owners paying twice for the same service. Szymanski says the monopolistic approach of selectively recognizing disposal fees forces apartment owners to engage in pricier-than-need-be second pick-ups each week, which ultimately means that apartment owners and residents are paying hundreds of thousands of dollars more than they need to for trash collection.
GOP Takes Aim at Fannie, Freddie
Digested From "GOP Takes Aim at Fannie, Freddie"
Orlando Business Journal (03/21/11)
Capitol Hill's GOP lawmakers are moving to scale back the role of Fannie Mae and Freddie Mac. One measure would more quickly wind down the two government-sponsored enterprises' combined $1.5 trillion mortgage portfolios, while other bills would eliminate their collective federal affordable-housing goals and gradually hike the guarantee fees they charge lenders. Fannie Mae and Freddie Mac together guarantee some $5 trillion of mortgages, backing nearly nine in 10 new loans.
New Plan to Tie Apartment Leases to School Year in Houston
Digested From "New Initiative to Tie Apartment Leases to School Year"
KTRK-TV (Houston) (03/17/11) by Andy Cerota
Throughout the Houston metro area, tens of thousands of locals live in apartments. Often when families move from apartment to apartment, children are forced to change schools. A new effort is underway to make those transitions easier by coordinating lease agreements with school schedules. A lot of Houstonians who rent go where the incentives are. Consequently, when those move-in specials expire, they move on even if it is in the middle of a school year. Richard Rodriguez with the Brays Oaks Management District states, "Children who have been ferried from one school to another, it's been shown statistically they are not performing at the level of someone who has a more stable and consistent attendance at a particular school." The Brays Oaks Management District is seeking to change that. Through its Project Stay program, participating apartment owners and managers would agree to tailor their apartment leases to the school year as a means of decreasing mobility rates among school-age kids. Brays Oaks is teaming up with the Houston Apartment Association and the Houston Independent School District to make this happen, with a meeting scheduled for April 1 to finalize the plan.
Charlotte Police Form Alliance to Fight Apartment Crime
Digested From "CMPD Forming Alliance to Fight Crime in Apartment Communities"
WBTV (N.C.) (03/17/11)
In North Carolina, the Charlotte Mecklenburg Police Department (CMPD) is working with east Charlotte apartment owners and managers to help fight crime. The new alliance is already starting to pay dividends. Nicole Cruse says her meetings with CMPD officials have helped her zero in on crime trends such as burglary and car break-ins that could affect her apartment community. She adds, "Every area has a different trend. As property managers and community leaders, we need to be able to address those trends." At such meetings, Officer Wes Correll states, "We get suspect information and find out where the problems are in the apartment complexes and the type of issues they're dealing with." Because apartment managers are now talking, those being evicted for such behavior are no longer moving from apartment community to apartment community.
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