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Lawmakers Should Consider Apartments' Needs Amid Reform Talk
Industry News
Who Wins in the New Rental Economy?
German Breweries Find a Second Life as Apartments
Demand for Bedbug-Sniffing Dogs Skyrocketing
South Texas Apartments Deal With Bed Bugs 
Apartment Communities Come Together to Help Joplin
Weilbach to Lead C&W Multifamily Practice
Prince George's (Md.) Apartment Communities Sell for $72M
MAA Adds to Florida Apartment Holdings
Billingsley Plans Offices and Apartments in Far North Dallas
Homeownership Down, Rentals Up in Lackawanna/Luzerne
TGM Associates Unveils New Multifamily Brand
Legislative/Legal News
Rent Regulation Is Not Affordable Housing
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Lawmakers Should Consider Apartments' Needs Amid Reform Talk
Digested From "Lawmakers Must Consider Apartment Sector's Unique Needs as They Weigh Housing Finance Reform Options"
Sacramento Bee (05/26/11)
According to testimony given May 26 by Mark J. Parrell, executive vice president and CFO of Equity Residential, a government-backed secondary market is absolutely critical to the apartment industry if it is to continue meeting the nation's demand for affordable and workforce housing. Parrell testified on behalf of the National Apartment Association and the National Multi Housing Council before the Senate Banking Committee's hearing on housing finance reform. He explained that Fannie Mae and Freddie Mac's multifamily housing programs were not part of the meltdown and are not broken. He also warned lawmakers to be careful not to create a capital shortage for the lower-profile, yet vital, apartment sector as they fix the well-documented single-family problems. The existing federal backstop has allowed the apartment sector to produce more than 10 million apartments affordable to working families since 1996. Removing a federal credit guarantee, he asserted, may prevent the industry from meeting the nation's current or future housing needs. Parrell went on to state that changing demographics and new economic realities are driving more people away from the typical suburban house and causing a surge in rental demand. Parrell urged Congress to retain the successful elements of the current system as they phase out Fannie Mae and Freddie Mac. He concluded, "Their multifamily programs met the mark, even during the financial crisis. They can serve as a model for a continued federal guarantee for rental housing in a reformed housing finance model."
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Who Wins in the New Rental Economy?
Digested From "Winners of the Rental Economy"
Fortune (05/25/11) by Nin-Hai Tseng
Housing analysts expect apartment rents will continue to rise in the months to come driven by such factors as demographic changes, an improving economy, and ongoing foreclosure problems hampering the market for single-family homes. Much of the demand for rental housing will likely come from younger people who tend to rent rather than purchase. The economic recession pushed many jobless people in their 20s and 30s to double up with friends and roommates or move back home with the family. The article takes a look at a few of the winners of our America's burgeoning rental economy. First and foremost, the future looks very bright for builders and developers of apartment communities. In addition, REITs that invest in rental apartments should continue to outperform the S&P 500. In 2010, investments in apartment communities led all gains in the overall REIT market with total returns at 47 percent. In April, Equity Residential and AvalonBay Communities (AVB) -- both among the country's largest apartment owners -- registered higher year-over-year revenue as both REITs hiked rents. Finally, the overall housing market may be poised to benefit from the good times in the apartment sector. After all, renting could become so expensive that it could eventually cost less in certain markets to buy a home and make monthly mortgage payments.
German Breweries Find a Second Life as Apartments
Digested From "German Breweries Have a Second Round"
Wall Street Journal (05/25/11) by Laura Stevens
Property investors are taking more and more of a liking to Germany's breweries. As these properties consolidate and older ones become obsolete, investors are snapping them up to convert to other uses. Many of the projects are being adapted to residential use due to the growing strength of the German housing market. Sales of apartment buildings to investors has been especially strong in recent years. Transaction volume topped US$4.21 billion in 2010. Jones Lang LaSalle reports that investors are on track to double that amount in 2011. About 20 breweries are now in various stages of redevelopment in Hamburg, Frankfurt, Berlin and other cities, with many more such projects having already reached completion. The attractive tax breaks in Germany for redeveloping historic buildings have drawn much of the interest on the part of developers. The locations of these essentially industrial complexes have also proved enticing. Most were built in the 19th and early 20th centuries near water for ice and cooling. In addition, many of them are in the middle of well-developed areas of cities.
Demand for Bedbug-Sniffing Dogs Skyrocketing
Digested From "Demand for Bedbug-Sniffing Dogs Skyrocketing"
Washington Post (05/29/11) by Lena H. Sun
With bedbugs often very difficult to find, demand for bedbug-sniffing dogs is soaring. The recent nationwide resurgence in the pests has prompted an increasing number of pest control companies to call on specially trained dogs to help locate the bugs and their eggs. At a three-day conference in Philadelphia beginning June 1, the National Pest Management Association and several scent detection firms will be on hand to provide certification to teams of handlers and dogs, along with training for handlers. To obtain certification, the dog and handler must demonstrate they can find mesh-covered vials of five to 20 bedbugs hidden in hotel guest rooms. Experts are reporting the highest incidences in private residences, followed by hotels and motels, college dormitories, laundry facilities, and movie theaters. They believe the resurgence is related to resistance to available pesticides, greater mobility and travel, and lack of knowledge about the pests that were virtually eradicated during the 1940s and 1950s. Because trained dogs can cost anywhere from $10,000 to $12,000, some companies have used dogs that were not sufficiently trained.
South Texas Apartments Deal With Bed Bugs
Digested From "Eww! Bed Bug Outbreak Plagues S.A. Apartment Complexes"
KENS5.com (TX) (05/24/11) by Christopher Heath
Bed bugs have been reported in apartment communities, motels, and various housing environments throughout South Texas. Eliminating the parasite has proven to be a challenging task for those who find their spaces infested. There are very few over-the-counter treatments for bed bugs, and hiring an exterminator can be very costly depending on the severity of the infestation. In multifamily housing, where residents share a common wall, the infestation in one apartment can easily move to the next. This, in turn, creates a major problem when it comes to removing the bugs since the entire building often has to be cleaned to completely remove them. The most common method of treating an infestation is through extreme temperatures -- either heat or cold -- coupled with pesticide. However, even exterminators admit that the explosion of bed bugs has left many in the industry scrambling to keep up.
Apartment Communities Come Together to Help Joplin
Digested From "Apartment Communities Come Together to Help Joplin"
Kansas City Star (MO) (05/26/11)
The Apartment Association of Kansas City along with local apartment communities and other affiliates of the National Apartment Association are coming together to provide donations for apartment residents affected by the tornado in Joplin, Mo. Association vendors, apartment communities, and their residents will be able to donate supplies that will be delivered directly to Joplin by truck. They also have the opportunity to give money by donating to "Convoy of Hope."
Weilbach to Lead C&W Multifamily Practice
Digested From "Weilbach to Lead C&W Multifamily Practice"
GlobeSt.com (05/24/11) by Natalie Dolce
Steven Weilbach this week joined Cushman & Wakefield as head of the firm's growing multifamily practice as U.S. multifamily practice leader. He will work out of the firm's San Francisco office. Weilbach is a 20-year commercial real estate industry veteran with extensive experience in the apartment sector. He most recently served as a principal, managing director and CIO of Pacific Property Co. where he directed all investment activity for the firm. During his tenure, the firm acquired more than 100 apartment communities valued at more than $2.4 billion, many in joint ventures with the leading institutional equity investors in multifamily housing. At Cushman & Wakefield, his duties will include overseeing the firm's continued growth in the multifamily sector, directing strategic initiatives, and maintaining client service. Weilbach remarks, "Cushman & Wakefield has clearly made a renewed and significant commitment to the multifamily sector. . . . I'm excited to be a part of the team pursuing an aggressive growth strategy and building around some of the highest-caliber multifamily talent in the industry, many of whom I’ve had the privilege of working with previously."
Prince George's (Md.) Apartment Communities Sell for $72M
Digested From "Commercial Real Estate: Four Prince George's Apartment Properties Sell for $72M"
Gazette.Net (05/27/11) by Sonny Goldreich
United Investors Management has completed the sale of four Prince George's County, Md., apartment communities comprising 1,107 units for $72 million. Transwestern's Mid-Atlantic Multifamily Group represented the seller. The buyer of the portfolio was a joint venture of Foulger-Pratt of Rockville, Md., and New York-based DLJ Real Estate Capital Partners. The four apartment communities were built in the 1960s, contain nearly 1 million square feet of rentable space, and are located in the Washington, D.C., suburbs of Cheverly and Forestville. Fewer than 200 of the apartment units' interiors have been renovated, giving the new owners an opportunity to capitalize on higher rents following extensive renovations. Delta Associates reports that such factors as constrained mortgage financing, solid area employment growth, and continued high prices for housing of all types will put added demand on Class B apartments in and around the nation's capital. Researchers expect Class B apartment rents to increase nearly 7 percent over the next year.
MAA Adds to Florida Apartment Holdings
Digested From "Memphis REIT MAA Adds to Florida Multifamily Holdings"
CoStar Group (05/25/11)
Mid-America Apartment Communities (MAA) recently closed on the acquisition of two apartment communities in Florida. The first is the Atlantic Crossing in Jacksonville, containing 200 rental units. The second is The Retreat at Magnolia Parke Apartments in Gainesville. It offers 204 apartments and is situated in the city's Magnolia Parke submarket. The acquisitions, which total $42.8 million, were funded by borrowings under existing credit facilities and common stock issuances via MAA's at-the-market program. MAA is a Memphis-based REIT that owns and manages apartments throughout the nation's sunbelt region.
Billingsley Plans Offices and Apartments in Far North Dallas
Digested From "Billingsley Plans Big Office and Apartment Complex in Far North Dallas"
Dallas Morning News (TX) (05/23/11) by Steve Brown
Billingsley Co. is now seeking approval to construct a mixed-use development at a key North Texas intersection. Billingsley owns all four corners at the Dallas North Tollway and State Highway 190 and is seeking city approval to ultimately erect high-rise office buildings and apartment units on the more than 30-acre parcel. The plans call for more than 1.4 million square feet of construction and would take years to complete. Developer Lucy Billingsley said Monday there is no specific start date for the project, adding "[We're] just setting up the right zoning to be able to deliver an exciting development for the future." Billingsley Co. has already developed a large apartment community -- dubbed The Gramercy on the Park -- near the southeast corner of the tollway and Highway 190. The company still has more than five acres left on the corner that would be used for more apartments. This will more than likely be the first area developed.
Homeownership Down, Rentals Up in Lackawanna/Luzerne
Digested From "Homeownership Down, Rentals Up in Lackawanna/Luzerne"
Scranton Times-Tribune (PA) (05/23/11) by Josh Mrozinski
New Census statistics reveal that Pennsylvania's Lackawanna and Luzerne counties today are home to more renters and fewer owner-occupants than in the last decade. The number of rental housing units jumped to 29,873 from 27,975 in Lackawanna and to 42,190 from 38,773 in Luzerne. By contrast, the tally of homes owned by their occupants fell in the former to 57,353 from 58,243 and in the latter to 89,742 from 91,914. Teri Ooms of the Institute for Public Policy & Economic Development explains that more residents are moving into the counties than out, "and that is putting a demand on the houses, and prices are going up." Not only are newcomers migrating to the area in search of cheaper housing as wage growth remains stagnant, she says, but the booming natural gas industry is drawing more people to apartments in Lackawanna and Luzerne counties. Foreclosure and the recession have perhaps been the biggest drivers of the housing shift, however, as residents were forced to move in with family or accept other nontraditional living arrangements. "The foreclosure issue has hit our area," acknowledges Jesse Ergott of Neighborhood Housing Services. "It is taking some people out of homeownership just because they can't afford to pay the mortgage, and that is driving them back into the rental market."
TGM Associates Unveils New Multifamily Brand
Digested From "TGM Associates Unveils New Consumer Brand"
StreetInsider.com (05/26/11)
TGM Associates has unveiled a new multifamily consumer brand called TGM Communities to represent its property management and operations division. The firm's goal is to be able to communicate its corporate culture to the people it interfaces with, chiefly other TGM staffers, apartment residents, business partners, and investors. John Gochberg, TGM's chief operating officer, comments, "Our mission is to create value by providing a living and working environment of quality at a premier community. We strive to be the best investment and management company in the multifamily industry."
Legislative/Legal News
Rent Regulation Is Not Affordable Housing
Digested From "Rent Regulation Is Not Affordable Housing"
Huffington Post (05/23/11) by Carol Kellermann
The laws that authorize New York City's rent regulation system are scheduled to expire on June 15. With this in mind, Citizens Budget Commission President Carol Kellermann writes: "Expansion of rent regulations will not provide affordable housing to more low- and middle-income families in New York City and will only deepen and perpetuate the subsidy that families in unregulated housing are giving to those at all income levels fortunate enough to have rent-regulated apartments." The current system originated from national price controls implemented after World War II. The goal was to prevent price-gouging at a time of low construction and high demand. "They were not intended to provide affordable housing," Kellermann asserts. "The resulting rent discounts are, therefore, not well-targeted to low- and moderate-income households." She further points out that the system has one link to income known as high-income, high-rent vacancy decontrol: an apartment owner can deregulate a unit if the resident's annual income tops $175,000 for two years and the rent is above $2,000 a month. "Among all private-sector renters with incomes below $50,000," she adds, "35.8 percent are in unregulated units. For the 314,027 households in this category without access to any form of government housing assistance, only 19.6 percent have affordable housing." By removing a large segment of the rental market from competitive pressures, Kellermann concludes, the supply of available housing is constricted. This, in turn, causes rents to go higher. "Additionally," she writes, "lower rents in the regulated sector reduce property values and, therefore, property tax liability by about $283 million annually."
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