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MPF Research Reports Continued Momentum for U.S. Apartments
Industry News
Two Archstone Owners Decide to Sell Their Stakes
Downtown Norfolk (Va.) Apartments in Hot Demand
Apartment Market for Charleston Improves Over Six Months
Colonial Properties Sells Apartments for $105.8 Million
Tacoma to Welcome First Major Apartments Since Recession Began
San Diego County Apartment Rents Climb
Apartment Owners Bet on Tight Market in Northeast Ohio
Camden Property Trust Announces Restated Credit Facility
IPA Names Lamontagne New Director
Ranieri, Ross Buy Deutsche Bank Unit
Recent L.A. County Apartment Sales Underscore Market Changes
Legislative/Legal News
Calif. Governor Signs Rights Bill for Apartment Residents
Thieves Target Rent Drop Boxes in Houston 
Wisc. City Eyes Penalties to Fight Problem Apartment Communities
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MPF Research Reports Continued Momentum for U.S. Apartments
Digested From "RealPage® MPF Research Division Reports Continued Strong Momentum for the U.S. Apartment Market in the Third Quarter"
MarketWatch (09/27/11)
MPF Research reports that the U.S. apartment sector again registered robust revenue growth in this year's third quarter. During the past three months, national occupancy climbed 0.6 percentage points and effective rents rose 1.6 percent. Greg Willett, MPF Research vice president, remarks, "Top-line revenue growth numbers for apartments remain terrific, despite the struggles seen in the general economy." Occupancy reached 94.8 percent as of Sept. 30, an increase from 93.8 percent a year earlier. Wilett adds, "While occupancy isn't yet at an all-time high, the rate has moved a little ahead of the average level recorded over the course of the past decade or so. The unusually small number of households leaving rental units to buy homes is really the key influence behind today's strong apartment occupancy performance." Rents in U.S. apartments rose 4.2 percent year over year, the research further shows. Looking ahead, MPF Research is anticipating that overall revenue growth for apartments in the new year will look very similar to the results posted in 2011. Occupancy is expected to rise another half percent to 1 percent, while monthly rents are projected to again rise between 4 percent and 5 percent. San Francisco and neighboring San Jose ranked as the country's metro-level rent growth leaders for the third quarter. Prices surged 13.4 percent in the former Francisco and 13.1 percent in the latter.
Industry News
Two Archstone Owners Decide to Sell Their Stakes
Digested From "Two Archstone Owners Decide to Sell Their Stakes"
Wall Street Journal (10/03/11) by Robbie Whelan; Eliot Brown
After months of quarreling with the estate of Lehman Brothers Holdings Inc. over how to unwind Archstone, co-owners Barclays PLC and Bank of America Corp. are now trying to sell their stakes. Together, their ownership interests in the apartment giant total 53 percent and are likely worth between $2 billion and $3 billion. Lehman owns the rest of Archstone, which has full or partial ownership interests in approximately 77,000 apartments. Most of these communities are situated in major U.S. cities. The banks have reportedly had discussions with four major real estate players -- AvalonBay Communities Inc., Blackstone Group LP, Brookfield Asset Management Inc., Equity Residential -- about purchasing their stakes. The Lehman estate and the banks cannot proceed with a disposition strategy for the whole company unless all three agree. Such an accord has proved elusive, as Lehman has favored selling Archstone in a public offering. Barclays, though, has called for a private transaction so it could cash out of its investment now. By contrast, Bank of America has taken more of a middle-of-the-road position, Journal sources say.
Downtown Norfolk (Va.) Apartments in Hot Demand
Digested From "Downtown Norfolk Apartments in Hot Demand"
Virginian-Pilot (VA) (10/03/11) by Josh Brown
Real Data research shows that Norfolk, Va.'s apartment vacancy rate, which was at 4.3 percent in April, has remained consistently below that of the region in the last couple of years. Some of the demand comes from people hesitant to become homeowners. Tom Johnston, a senior vice president at S.L. Nusbaum, states, "I think there's still a perception that housing prices are continuing to fall. For the first time in a long time, some people would tell you it's financially more prudent to rent, especially if someone isn't planning on staying in the same place for a while." The region has also experienced a high level of foreclosures, which in turn has forced many former homeowners to become renters. Dan Johnson, a senior vice president at CB Richard Ellis in Norfolk, adds that demand for apartments in downtown Norfolk has been driven by a shortage of upscale apartments. He adds, "These expensive apartments got filled up, and there was no job creation. There had to be a pent-up demand for people living nearer the central business district, but they weren't going to live in some of these older apartments." That's despite a flood of new apartments to open in the past couple of years, most notably the 194-unit River House Apartments community.
Apartment Market for Charleston Improves Over Six Months
Digested From "Apartment Market for Charleston Improves Over Six Months"
Charleston Regional Business Journal (SC) (09/29/11)
Carolinas Real Data is reporting that vacancies have reached near-record lows for the Charleston-area apartment market. Over the past six months, the firm states that the vacancy rate has improved by almost 3 percentage points. Mount Pleasant and James Island were the two submarkets recording the lowest vacancies. The Real Data report added: "Although there was no new supply added to the Charleston apartment market over the past six months, there was an increase in development activity." Researchers note that new apartments units are now under construction in the Mount Pleasant and Goose Creek submarkets. According to Real Data, the average rent for apartments in and around Charleston is $807 per month. Looking ahead, the firm expects occupancies and rent growth for the Charleston area to continue on an upward trend well into 2013.
Colonial Properties Sells Apartments for $105.8 Million
Digested From "Colonial Properties Sells Apartment Communities for $105.8 Million"
Birmingham Business Journal (09/29/11)
Colonial Properties Trust confirms that it has sold six apartment communities and purchased three more as part of a campaign to recycle its older multifamily housing assets. The Alabama-based REIT sold apartment communities in three states -- Georgia, North Carolina, and Texas. Meanwhile, it purchased apartments in North Carolina and South Carolina and Texas. The communities sold had a median age of 21.8 years and totaled $105.8 million. The newly purchased apartments had an average age of 3.7 years and totaled $93.5 million.
Tacoma to Welcome First Major Apartments Since Recession Began
Digested From "Apartment Towers to be Built Near Tacoma Mall"
Tacoma News Tribune (WA) (09/27/11) by John Gillie
Construction work is scheduled to start soon on a couple of seven-story apartment towers near the Tacoma Mall in Tacoma, Wash. The two buildings will include 177 one- and two-bedroom units and will rent for approximately $1.25 per square foot. The towers will be the first major apartment development in the Tacoma metro area since the recession began. Other relatively new buildings on the market were conceived as for-sale condominiums, but were converted to rental apartments when the housing market turned soft. Apartment Insights Washington of Seattle, which tracks rental trends for apartment communities with 50 or more rental units, says that Pierce County’s vacancy rate slipped to 5.7 percent in the second quarter from 6.55 percent in the first three months of the year. The latest apartments near Tacoma Mall will be developed, constructed, and managed by Rush Commercial. On-site amenities will range from underground parking to a recreational center complete with a swimming pool, spa, library, and game room.
San Diego County Apartment Rents Climb
Digested From "Housing: Apartment Rents Climb as House Market Stagnates"
North County Times (CA) (09/28/11) by Eric Wolff
In North San Diego County and in the Inland Empire, apartment demand has escalated to such an extent that owners and managers no longer feel like they need to offer free months of rent as an incentive. At the same time, some people who might have been home buyers in a better market have instead opted to remain in rental situations, with many choosing newer, more expensive apartments with lots of amenities to live in. Bob Pinnegar, executive director of the San Diego County Apartment Association, declares, "The market is stabilizing." MarketPointe Realty Advisors reports that North San Diego County rents reached an average $1,429 a month last month, increasing 3.8 percent from a year earlier. Vacancy rates, meanwhile, rose from 4.13 percent to 4.5 percent over that same time span. In Riverside and San Bernardino counties, meanwhile, RealFacts research shows that the average apartment rent rose 2.8 percent to $1,089 year over year. The apartment vacancy rate decreased slightly to 6.2 percent as of the end of the second quarter from 6.3 percent in June 2010. According to most economists, a 5 percent vacancy rate is about normal. Anything under that mark is considered a very tight market, while anything more is considered oversupplied.
Apartment Owners Bet on Tight Market in Northeast Ohio
Digested From "Apartment Owners Bet on Tight Market, Try Selling Nearly 550 Units in Beachwood, Mayfield Heights"
Cleveland Plain Dealer (OH) (09/27/11) by Michelle Jarboe McFee
The Northeast Ohio Apartment Association reports that apartment vacancies are at a near-record low of 3.2 percent in the Beachwood and Mayfield Heights region. The association's most recent research -- for June -- showed a mere 1.8 percent vacancy rate in the northeast section of the market. Looking to take advantage of that tight market, Wolf Real Estate Management LLC and its partners have put four area apartment communities they developed on the selling block. In total, the longtime family-owned company and its investors are offering up nearly 550 rental units for $30.4 million. Michael Barron, a broker in the Independence office of Marcus & Millichap Real Estate Investment Services, remarks, "There's been nothing available in the city of Beachwood, to my knowledge, for people who want to buy apartments. They're being offered for sale now because the generations [of owners] are turning." Barron's firm is marketing the Wolf properties.
Camden Property Trust Announces Restated Credit Facility
Digested From "Camden Property Trust Announces Amended and Restated $500 Million Unsecured Credit Facility"
MarketWatch (09/26/11)
Camden Property Trust last week announced the closing of an amended and restated $500 million unsecured revolving credit facility. The term of the credit facility is four years, but it may be extended at the REIT's option for an additional year. In addition, the credit facility contains an accordion feature that allows Camden to increase its amount up to $750 million. Camden Property Trust currently has ownership stakes in 197 apartment communities containing 67,452 rental units throughout the country. Upon completion of eight communities now under development, Camden's portfolio will increase to 69,661 apartments in 205 properties.
IPA Names Lamontagne New Director
Digested From "IPA Names Scott Lamontagne Director of Balthrope Group"
Citybizlist Dallas (09/28/11)
Institutional Property Advisors (IPA), Marcus & Millichap's multifamily housing brokerage division, last week named Scott Lamontagne as its new director. Lamontagne will be based in IPA's Austin, Texas, office and will arrange the sale of apartment communities on behalf of institutions and major private owners in the area. Prior to joining IPA, Lamontagne worked for Marcus & Millichap Real Estate Investment Services as a multifamily investment professional.
Ranieri, Ross Buy Deutsche Bank Unit
Digested From "Ranieri, Ross Buy Deutsche Bank Unit"
Wall Street Journal (09/26/11) by Eliot Brown
Ranieri Real Estate Partners LP has teamed with private-equity funds affiliated with WL Ross & Co. to buy Deutsche Bank Berkshire Mortgage, a key lender to investors in U.S. apartment communities. The Deutsche Bank AG unit, which specializes in making loans to apartment owners and then selling them to Fannie Mae and Freddie Mac, is the No. 2 originator of Fannie Mae-backed multifamily loans. The deal reflects the strength of the apartment sector, which has rebounded faster than other types of commercial space.
Recent L.A. County Apartment Sales Underscore Market Changes
Digested From "$175M in Apartment Sales Underscore Market Changes"
GlobeSt.com (09/26/11) by Bob Howard
Greg Harris, executive vice president with Marcus & Millichap's Institutional Property Advisors (IPA) division, notes that the recent sales of a half-dozen apartment communities in Los Angeles County illustrate a profound change in the market. Harris states that the common thread that tied all of the transactions together is that "given the lack of product in the market, investors are clearly willing to stretch to buy assets that strategically fit in their portfolios." Harris and IPA associate director Kevin Green brokered the deals on behalf of six separate sellers. Together, the properties contained more than 800 rental units and ranged in size from 63 to 220 apartments. Harris remarks, "Having management and operating expertise in specific locations is giving investors the confidence that they can outperform in their best markets. The difference now is that sellers are starting to reap the benefit of the upside they hadn't yet achieved. This is profoundly different than even six months ago." The six properties included the 100-unit Beverly Arnaz in Los Angeles, the 220-unit Pine Club Apartments in Pomona, and the Lindley Apartments in Encino. Harris concludes, "Looking forward, it feels like we will be in a sweet spot in the market where investors will have inexpensive debt and rents continuing to rebound. With this as the backdrop, pent-up investor demand should keep values strong."
Legislative/Legal News
Calif. Governor Signs Rights Bill for Apartment Residents
Digested From "Gov. Signs Tenant Rights Bill"
San Diego Union Tribune (09/30/11) by Christopher Cadelago; Michael Gardner
Under legislation signed late last week by California Gov. Jerry Brown, apartment residents will be permitted to display political signs in their apartments and homes. Senate Bill 337, championed by state Sen. Christine Kehoe (D-San Diego), permits residents to post signs for candidates and ballot measures in the windows of their apartments and homes. Current law only permits those living in mobile-home parks, homeowners’ associations, and common-interest developments to display similar banners and posters. Kehoe states, "Renters deserve the right to participate in our democracy and express their views just as much as homeowners. There is no reason to continue this 'second class' status for the 40 percent of Californians who are renters and wish to post signs supporting candidates." Withdrawing its opposition after several amendments was the San Diego County Apartment Association. A similar bill, also sponsored by Kehoe, was vetoed by then-Gov. Arnold Schwarzenegger in 2010.
Thieves Target Rent Drop Boxes in Houston
Digested From "Tenants Warned About Thieves Targeting Rent Drop Boxes"
KTRK-TV (Houston) (09/27/11) by Jeff Ehling
Throughout Houston, apartment communities have seen a rash of thefts from their nighttime drop boxes in recent weeks. Police detectives say a group of criminals are stealing money orders, in particular, from the drop boxes. The sad fact of the matter is some residents may be forced to pay up a second time. Brittany Williams says she was one such resident who had to come up with an additional month's rent after more than a dozen money orders were stolen from her apartment community's night drop box. Apartment owners and managers lament that theft from drop boxes is not a new phenomenon. However, when it happens to residents paying with money orders, the reaction is always one of shock and surprise. Vesta Management Services' Suan Tinsley, a past president of the Houston Apartment Association, states, "You are responsible until your rent is paid in full. Even though you have apparently put it in the night drop, you still are delinquent." Tinsley adds that it is the resident who must prove the check was stolen, concluding, "If they have a receipt they are going to have to deal with the authorities, contact the sheriff's office. But it is best if you use the U.S. Postal Service."
Wisc. City Eyes Penalties to Fight Problem Apartment Communities
Digested From "City Eyes Penalties to Fight Nuisance Properties"
La Crosse Tribune (WI) (09/24/11) by Betsy Bloom
According to La Crosse, Wis., city officials, adding a nuisance ordinance would bring in new revenue and prompt local apartment owners to fix a bad situation. The rule would allow the city to cite any apartment community that makes five or more calls to law enforcement within one year's time. "These properties take up more than their fair share of resources, so they should pay more," said Rob Abraham, La Crosse Assistant Police Chief. But Pamela Strittmater, president of the Apartment Association of the La Crosse Area, said the initiative would unfairly punish those owners for the behavior of residents who can take months to evict. Strittmater said it would be better to create a new state bill that would allow apartment owners and managers to "quick evict" within five days those residents who commit a criminal offense.
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