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Investor Hunger for Apartments Remains Sharp in Second-Half 2010
Industry News
Housing Sector's Loss Is Apartment Sector's Gain in Orlando
Rancho Cordova Apartment Owners Seek Recycling Chief
Buyers Look to Distressed Las Vegas Apartments
UDR Offers Common Shares
Historic Apartments in Downtown Dallas Up for Sale
Apartments Leading the Way in CBRE Commercial RE Forecast for Recovery
Kennedy Wilson Partners With Fairfax Financial to Acquire International Apartments
Developer Eyes Affordable Apartments in Racine, Wis.
Legislative/Legal News
Houston Apartment Residents Must Know Their Rights 
Rental Housing Is the Focus of Enforcement in Columbia, Mo.
Communities Risk Losing Money for Blighted Apartments and Houses
Push Under Way to Regulate Smoking in Marin Apartment Communities
South Carolina Town Tables Controversial Measure Affecting Apartment Owners
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Investor Hunger for Apartments Remains Sharp in Second-Half 2010
Digested From "Investor Hunger for Apt. Properties Still Sharp in Second-Half 2010"
CoStar Group (09/08/10) by Randyl Drummer
Apartment communities in major metro areas continue to be the asset of choice for many commercial property investors, with momentum fueled by a number of large, late-summer sales transactions following a solid first six months of 2010. CoStar real estate economist Dan Egan remarks, "Investors are continuing to hunt down deals in the apartment space." There have indeed been a number of significant apartment and portfolio sales of more than $100 million in recent weeks, including Grubb & Ellis Apartment REIT recently agreeing to acquire nine apartment communities totaling 2,676 rental units in three states from MR Holdings LLC. Eagle Rock Management LLC acquired seven apartment communities totaling 1,666 units on Long Island. Fairhaven Properties Inc. was the seller. A recent analysis of investment conditions by the Real Estate Research Corp. found that investors rated institutional-quality apartment assets a full point higher on a scale of 1 to 10 during this year's second quarter from the previous three months. The rating for apartment sector investment conditions increased to 7.1 from 6.1 in the first quarter, the highest among all property types surveyed by RERC. It was also the apartment sector's strongest showing in the survey since the second quarter of 2001. RERC President Ken Riggs states, "I wouldn't say the apartment sector is 'recession-proof,' but it is the sector that is regarded as most safe and also seems to garner the most demand when times are tough, whether it is in this recession or the last one."
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Housing Sector's Loss Is Apartment Sector's Gain in Orlando
Digested From "Real Estate: Housing Sector's Loss Is Apartment Sector's Gain"
Orlando Sentinel (FL) (09/12/10) by Mary Shanklin
According to a third-quarter report by Marcus & Millichap, Orlando's apartment sector reached a turning point during the first half of the year. Researchers, though, say a sustained rebound is unlikely until the "economic expansion accelerates." Orlando-area apartment vacancies declined during the first and second quarters, as a number of former homeowners flocked to rental units. Monthly rents also fell in the first half, signaling the continued use of incentives at many apartment communities. Orlando's apartment sector continues to attract investor interest, Marcus & Millichap adds, with experienced local buyers especially active as of late. Their primary focus has been bank-owned, Class B apartments.
Rancho Cordova Apartment Owners Seek Recycling Chief
Digested From "Rancho Cordova Apartment Owners Seek Recycling Chief"
Sacramento Bee (CA) (09/13/10) by Darrell Smith
In California, the Rental Housing Association of Sacramento Valley is currently seeking a multifamily housing recycling coordinator for Rancho Cordova. The call has gone out for someone with prior property management experience and knowledge of recycling issues who can improve and expand the recycling efforts in the city's apartment communities. In addition, the candidate will work with apartment owners and managers, city staffers, and an advisory panel to develop outreach campaigns; train owners and managers how to implement recycling programs; and recruit and recognize apartment residents who coordinate recycling efforts. Cory Koehler, the association's senior deputy director, says that as more cities and jurisdictions require recycling, "the last frontier is apartment communities. There's a lot of waste and recyclables [generated] everyday. If we want to make a dent, we have to look at multifamily."
Buyers Look to Distressed Las Vegas Apartments
Digested From "Buyers Look to Distressed Apartments"
Las Vegas Review-Journal (09/10/10)
Apartment rents are falling in Las Vegas, while the area's vacancy rate is rising and owners are giving more concessions to get their units rented amid high inventory. Factor in 14.8 percent unemployment and it's easy to see how Las Vegas apartment communities could be viewed as a risky investment. Still, some investors are considering distressed apartments that can throw off 10 percent returns in the recession when no investment appears safe. One such asset that is drawing interest from opportunistic investors is the Tam Drive Apartments, which is in receivership for $295,000, or $12,292 a unit. While this particular community is located in in a rough neighborhood once known as "Naked City" and needs extensive rehabilitation work, the upside is the reduced price and proximity to the Strip. Geoffrey West, a local vice president of CB Richard Ellis, remarks, "What's so attractive in apartments versus other commercial property types is that it's a critical need. People need to have somewhere to live. That's what investors feel. At its core, Las Vegas is a blue-collar town." In its third-quarter apartment market update, Marcus & Millichap says distressed apartment communities will continue to come on the market in Las Vegas well into next year as lenders remove nonperforming assets from their balance sheets. According to the research, the median Las Vegas apartment price plunged 40 percent over the past 12 months to $37,800 a unit.
UDR Offers Common Shares
Digested From "UDR Offers Common Shares"
Zacks Equity Research (09/08/10)
UDR Inc. has recently announced plans to offer 13.5 million common shares to raise cash. To cover any over-allotments, the apartment REIT will also grant the underwriters an option to purchase an additional two million shares. UDR plans to use the net proceeds from the offer to fund potential acquisition opportunities due to distressed selling by owners unable to refinance their assets. In addition, the REIT expects to utilize a part of the proceeds to pay down its outstanding debt. UDR is among the nation's best-positioned apartment REITs, with the bulk of its portfolio located in California, Florida, and on the Atlantic Coast -- all areas where housing costs have skyrocketed in the last several years and, despite the drop in home values, the rent vs. own spread still remains high.
Historic Apartments in Downtown Dallas Up for Sale
Digested From "Downtown Dallas' Historic Davis Building Up for Sale"
Dallas Morning News (TX) (09/10/10) by Steve Brown
The historic Davis Building in downtown Dallas is now on the selling block. Lenders who financed the apartment high-rise have decided to seek new owners for the property. The building was financed with $32.6 million in commercial mortgage-backed securities debt that has been turned over to a special servicer. While the building is still owned by a partnership established by developer Hamilton Properties, a receiver has been appointed to sell the structure. Tom Huth of Omnium Management Co. has been hired to oversee the Davis Building disposition. He comments, "It's the kind of quality asset that only comes to market once every decade or so. The building is close to 90 percent leased and is doing very well."
Apartments Leading the Way in CBRE Commercial RE Forecast for Recovery
Digested From "CB Richard Ellis Forecasts Incremental Rebound for Commercial Real Estate"
Los Angeles Times (09/12/10) by Roger Vincent
CB Richard Ellis Group Inc. (CBRE) has climbed back to profitability as business has improved and the company has managed to generate new sources of revenue. The industry's largest brokerage firm turned a profit in the last six months of 2009 that was fueled by a real estate rebound in Asia and various internal cuts. Revenue has continued to grow since the first of this year as property sales and leasing gained steam in Europe and the United States. CBRE Chief Executive Brett White remarks, "We are forecasting that vacancies will be declining and rents will be appreciating across all property types by the middle of next year. Recovery will be incremental because job growth is so anemic. Companies are doing anything they can to increase production without hiring more people." He observes that apartments and multifamily housing are among the market leaders currently. "There is a real demand for apartments," he noted, "and rents are going up. Office and retail will follow that. Industrial will be last." White also expects to see a high demand for high-quality, well-leased assets of all classes. While large investors are once again buying property, smaller investors are having to more closely gauge their appetite for risk before making a move.
Kennedy Wilson Partners With Fairfax Financial to Acquire International Apartments
Digested From "Kennedy Wilson and Fairfax Financial Establish $278M Real Estate Partnership"
Business Wire (09/08/10)
Kennedy Wilson has formed a $278 million investment partnership with Fairfax Financial Holdings Ltd. subsidiaries to pursue new property acquisitions. Under terms of the deal, Kennedy Wilson has committed 10 percent of the equity and has agreed to manage the partnership. The venture has already completed its first major transaction, purchasing a 65 percent stake in a Japanese apartment company that has total real estate assets of approximately $600 million. Kennedy Wilson previously owned the other 35 stake in the company, whose portfolio contains 50 apartment communities mostly in Tokyo. Including this acquisition, Kennedy Wilson in conjunction with its partners has acquired more than $1.65 billion of multifamily assets and loans year-to-date predominately in California, Washington state, Hawaii, and Japan.
Developer Eyes Affordable Apartments in Racine, Wis.
Digested From "Developer Eyes Property for Affordable Housing Near Regency Mall"
Racine Journal Times (09/08/10) by Paul Sloth
In an effort to provide affordable housing to Racine-area residents, Regency Apartments West LLC is looking to use federal tax credits to build nine two-story apartment buildings on the city's far western border. The Michigan-based developer plans to spend an estimated $9 million to build "workforce" housing on the empty piece of land. The developer has spent the last 18 months getting financing in order and submitted its proposal to the city last week. Members of Racine's plan commission are scheduled to hold a public hearing on the project on Sept. 14. The developer applied for federal affordable housing tax credits, an IRS program administered locally by the Wisconsin Housing and Economic Development Authority. The project qualified for and will receive $980,000 in annual tax credits over the next decade, which should help to keep the apartments affordable.
Legislative/Legal News
Houston Apartment Residents Must Know Their Rights
Digested From "Official: Houston Apartment Renters Must Know Their Rights"
KHOU.com--11 News (Texas) (09/12/10) by Gabe Gutierrez
With renters making up almost 50 percent of Houston's population, it is important for apartment residents to know what their rights are. There are currently more than 500,000 apartments in the Houston metro area. Every year, the Houston Apartment Association (HAA) deals with at least 10,000 complaints. Michelle Gates, a Property Supervisor for Greystar and a member of HAA's Media Relations Committee states, "Most apartment communities and management accept oral service requests as a courtesy to the residents, but the lease actually requires a written notice." The Houston Apartment Association's Residents Relations Committee has been set up to mediate complaints. Gates says the best advice she could give is to keep all documentation, adding, "Texas property code allows for a resident to actually terminate the leasing agreement if certain significant maintenance issues are not addressed."
Rental Housing Is the Focus of Enforcement in Columbia, Mo.
Digested From "Rental Units Are Focus of Enforcement"
Columbia Daily Tribune (MO) (09/09/10) by Rudi Keller
In Missouri, apartment owners who have yet to register their properties with the city of Columbia will get a chance to do so without penalty under a new amnesty program. According to Columbia's Office of Neighborhood Services, there are 22,715 rental units citywide. Since the first of the year, just over 200 units have been registered. City officials suspect many of those were being offered for rent without the required inspections designed to protect residents' health and well being. These same officials will look to promote the amnesty program, which is scheduled to run from Oct. 1 through Nov. 15, both as a way to increase compliance and to make residents aware of their rights to live in well-maintained apartments and houses. Columbia Apartment Association President Mark Stevenson says the amnesty program is a good idea if it brings owners and managers into compliance. Nevertheless, he questions why rental housing is the only property type regularly inspected by the city. He points out that neither rented commercial properties nor owner-occupied homes are not subject to the same rules. He concludes, "It is something to consider if you are trying to protect everyone's safety."
Communities Risk Losing Money for Blighted Apartments and Houses
Digested From "Communities Risk Losing Money for Blighted Properties"
USA Today (09/10/10) by Jeff Schweers
HUD has made $3.92 billion available to 309 cities, counties, and states for the purchase, renovation, and resale of bank-foreclosed or abandoned homes and apartment communities under its Neighborhood Stabilization Program announced two years ago. But some jurisdictions could lose their funding for failing to commit to spend those dollars within 18 months. About 95 percent of the money has been committed, HUD confirms. However, three Florida communities have missed deadlines to fully obligate their grants, while others have earmarked some of the funding but not the full amount.
Push Under Way to Regulate Smoking in Marin Apartment Communities
Digested From "Push Under Way to Regulate Smoking in Marin Apartment Complexes"
Marin Independent Journal (CA) (09/08/10) by Richard Halstead
In California, Marin County and four municipalities -- including Fairfax and Larkspur -- are exploring the possibility of regulating smoking in apartment communities. When the American Lung Association issued its annual report card on tobacco control earlier this year, a total of five Marin municipalities posted failing grades. Four others -- Fairfax, Larkspur, San Anselmo, and San Rafael -- were given a grade of D. Last week, Fairfax Town Council members discussed an ordinance that would require existing apartment communities with six or more units to be 50 percent nonsmoking, and new communities of like size to be 75 percent nonsmoking within a year. In addition, it would prohibit smoking in apartment community common areas. The council subsequently postponed any action, agreeing to continue discussion at its October meeting. Smoke Free Marin will present arguments for tightening smoking regulations to Larkspur residents during a public forum on Sept. 29. The anti-smoking efforts of this coalition of tobacco activists, community groups, and health agencies are funded by a state tobacco tax.
South Carolina Town Tables Controversial Measure Affecting Apartment Owners
Digested From "Summerville Votes Down Immigration Reform"
WMBF-TV (09/09/10) by Anthony Miller
The Summerville, S.C., Town Council has tabled a controversial ordinance that requires employers and apartment owners to try harder to screen illegal immigrants. Instead, the town council has endorsed a newer version of the ordinance. The older version was cut due to the fear of costly legislation. Victoria Cowart of Darby Development Company made her displeasure known. She stated, "Landlords were not here asking to rent to illegal aliens, we're not asking to do anything illegal. We're simply asking not to be turned into Homeland Security unlike any other business in the city."
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