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Mid-Year Overviews Favor Apartments
Industry News
Survey Finds Optimism Among Apartment Owners
Survey Shows CA County Has Lowest U.S. Apt Vacancy Rate
Fogelman Properties Steps Up Apartment Acquisitions
Rental Demand Strong in San Mateo County, Calif.
UDR Raises Quarterly Dividend, Looks Ahead
Tribeca Sheds Nine Apartment Communities
Newest Hope in Real Estate: Rental Housing
Legislative/Legal News
Wooing Developers to Build Affordable Apts in Charlotte
N.H. Apartments Using Dog DNA to Clean up Communities
Wis. Legislation Shifts Unpaid Utility Costs From Apt. Owners
Fannie Mae Hires McFarland as New CFO
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Mid-Year Overviews Favor Apartments
Digested From "Don't Just Take Our Word for It, Upside to CRE Market Has Begun"
CoStar Group (06/22/11) by Mark Heschmeyer
Real estate firms issued their mid-year market overviews in the past week, most of which were positive. Maximus Advisors says the U.S. apartment market is already recovering "at an astounding pace," and will continue to do so for the next four years because there will be little new construction in the sector during the recession. Fannie Mae said in its report that the slowdown in housing starts and multifamily construction is not likely to change, but that this is good news for multifamily as demand will continue to grow, sending rents higher and vacancies and concessions lower. The report noted that 77,600 apartment units will be completed in 2012, but the number drops sharply after that, and there will not be enough supply to meet demand. Credit Suisse urges investors to consider niche income-generating properties such as senior and student housing. Finally, RREEF Global Real Estate Investment said that nearly all property types in all regions are in recovery as fundamentals improve around the world, and the firm suggested investing in multifamily housing and warehouses.
Industry News
Survey Finds Optimism Among Apartment Owners
Digested From "TransUnion Survey: Renters Easy to Find"
GlobeSt.com (06/27/11) by Robert Carr
A new TransUnion survey shows that more apartment owners are optimistic about their communities this year, so much so that many are starting to hike their monthly rents. The firm polled more than 1,250 apartment managers nationwide to check how they and their residents use the credit services. Steve Roe, vice president of TransUnion's Rental Screening Business Unit, says that more than 66 percent of all the managers say they have been able to easily find new apartment residents in the current economy. Roe notes, "This is a big change over a couple of years ago, where they had to do anything to fill apartment units." In addition, almost 90 percent of respondents said their rental units were 10 percent or less vacant. The trend was strongest among the smaller managers polled, of which more than 670 managers said they were completely occupied. Mike Mauseth, another TransUnion vice president, notes that nearly 50 percent of respondents said they are seeing an increase in applicants moving to rental apartments from foreclosed houses. Mauseth concludes that one of managers' top lingering concerns is attracting profitable and reliable residents amid the ongoing foreclosure crisis. He states, "A reliable tenant ensures property managers are both solvent and profitable. Conversely, an unreliable tenant can cost property managers thousands of dollars in lost rent and property damages."
Survey Shows CA County Has Lowest U.S. Apt Vacancy Rate
Digested From "Survey: County Has Lowest Apartment Vacancy Rate in Nation"
San Diego Daily Transcript (06/23/11) by Thor Kamban Biberman
The latest PricewaterhouseCoopers and Reis Inc. investor survey shows that San Diego boasts the lowest apartment vacancy rate of any major metropolitan area in the United States. The report, subtitled "Optimism Prevails Despite Economic Unease," confirms that the average apartment vacancy rate in the market was 3.9 percent during the first quarter of 2011. That is a full percentage point stronger than the 4.9 percent recorded during the same three-month period a year ago and stronger than all other major metro areas chronicled. It was followed by Los Angeles at 4.5 percent and Baltimore at 4.7 percent. For their results, the two firms examined 18 of the country's biggest metropolitan areas. Researchers determined that San Diego County's apartment investment market wil be in a strong recovery period this year and next and will see a substantial increase in demand in 2013 and 2014. Separately, San Diego-based MarketPointe Realty Advisors confirms that its staff has reached similar conclusions, but placed the average vacancy rate at 5.06 percent as of March 31. A 5 percent mark is considered to be ideal by industry standards. Even at that, San Diego would still rank among the nation's top five apartment markets.
Fogelman Properties Steps Up Apartment Acquisitions
Digested From "Fogelman Finds Timing Right for New Acquisitions"
Memphis Business Journal (06/24/11) by Alan Ashby
Fogelman Properties has been out of the apartment acquisition game since 2007. Now, the Memphis-based company and its affiliates are resuming such activity, having recently taken advantage of favorable market conditions to purchase three apartment communities in Tennessee for $60 million. Among them was The Orchards at Collierville. It is now under contract to buy a fourth property. President and CEO Rick Fogelman confirms, "This year, we've spent a lot of time and energy ramping up our acquisition programs. Looking back at the last cycle, multifamily property values peaked in 2007-2008 and then declined significantly with the overall downturn in the economy."
Rental Demand Strong in San Mateo County, Calif.
Digested From "Rental Demand Strong as Home Vacancies up in San Mateo County"
San Francisco Examiner (06/23/11) by Niko Kyriakou
Although San Mateo ranks as one of California's most affluent counties, the number of vacant homes has still double in the last decade. New census data shows that roughly 5 percent of the county’s 271,031 housing units currently sit empty, which is twice the rate from 2000. Janet Stone, a county housing policy and development manager, remarks, "Rising vacancy rates are due more to foreclosures and vacant homes than to apartments that are sitting vacant." In fact, she adds, demand for rental apartments is on the rise as people downsize their expenses after losing jobs or homes. Joe Kirchofer of the San Mateo Mid-Pen Housing Coalition confirms, "In San Mateo and all over the Bay Area, we are seeing a pretty overwhelming demand for rental housing, especially at lower income levels."
UDR Raises Quarterly Dividend, Looks Ahead
Digested From "UDR Raises Quarterly Dividend"
DailyMarkets.com (06/22/11)
UDR Inc. has recently increased its second-quarter 2011 dividend from 18.5 cents to 20 cents, which will be payable on Aug. 1 to shareholders of record as of July 11. This marks the apartment REIT's 155th consecutive quarterly dividend. According to company management, a steady dividend facilitates the long-term strategy of UDR to provide attractive risk-adjusted returns to its shareholders. UDR remains one of the best-positioned apartment REITs in the country, with the majority of its portfolio in California, Florida, and along the Atlantic Coast -- areas where housing costs have skyrocketed in the boom years. Despite the more recent drop in home values, the rent-versus-own spread still remains high in these locales. Analysts expect the housing meltdown will continue to help apartment REITs such as UDR. UDR benefits from a geographic diversification that decreases the risk associated with cyclical local real estate markets and economies and increases investment opportunity. UDR has also served both its bottom line and long-term prospects well by continuously upgrading the overall quality of its apartment portfolio. It has done so by selling older assets and apartment communities in smaller markets and replacing them with newer multifamily housing in better long-term markets.
Tribeca Sheds Nine Apartment Communities
Digested From "Tribeca Sheds Nine Apartment Buildings"
GlobeSt.com (06/21/11) by Natalie Dolce
Tribeca Cos. confirms that it has sold nine apartment communities and one retail space in San Francisco and suburban Burlingame, Calif. The assets are part of a 12-property portfolio that Tribeca acquired via a loan purchase from lender UBS in late 2009 and immediately acquired the fee title through foreclosure of the properties previously owned by the Lembi Group. The apartments are located in such prime areas of San Francisco as Pacific Heights, Cow Hollow, and lower Nob Hill. They were sold to a series of single-purpose entities of the Prado Group, a private real estate investment management and development firm headquartered in San Francisco. Terms of the deal were not disclosed. A Tribeca statement read: "The sale of the remaining properties reflects the healthy return of the San Francisco and Bay Area rental property market from the depths of the recession of the past two years. Prado’s acquisition comes at a time when San Francisco occupancies have tightened considerably and rental demand is strong, with little to no new competing product opening in the near term."
Newest Hope in Real Estate: Rental Housing
Digested From "Newest Hope in Real Estate: Rentals"
Houston Chronicle (06/17/11) by Jennifer Hiller
The outlook for the housing market remains bleak, with foreclosures and unemployment still high and changes on the horizon that will make it harder to get a mortgage, all of which makes rental housing into the one bright spot on the residential property scene. "The stage is being set for very strong rent increases," said Stan Humphries, chief economist of Zillow, speaking at the annual meeting of the National Association of Real Estate Editors. He said as many as 2.2 million people are moving from homeownership to renting after foreclosure, and that number will continue to rise as foreclosures have not yet peaked. The only place in the country that lacks strong demand for multifamily housing is Las Vegas, said Gregg Willett of MPF Research. Meanwhile, Stacy Hunt of Greystar said she hopes that greater challenges to getting financing will prevent too much overbuilding. It is still uncertain what will happen to Fannie Mae and Freddie Mac, which back not only home loans but multifamily ones as well.
Legislative/Legal News
Wooing Developers to Build Affordable Apts in Charlotte
Digested From "'Incenting' Developers to Make Apartments Affordable"
WFAE 90.7 FM (Charlotte) (06/27/11) by Julie Rose
Charlotte has a shortage of affordable housing, but convincing developers to build more has proven to be tricky. This week, the Charlotte City Council begin debating a plan to give builders incentives if they include affordable units in their construction projects. Mayor Anthony Foxx is pushing hard for the city to offer incentives to builders so they will include some affordable units in their developments, alongside apartments and condos that rent and sell for top dollar. Mary Klenz, chairwoman of the Mixed Income Housing Coalition, says income segregation that has developed over the years has kept poorer people from having access to everything from jobs to good schools. City officials are expected to encourage more mixing, rather than the old model of building low-income housing projects. The city council has a preliminary list of incentives that includes waiving development fees and fast tracking permits for such projects. Ken Szymanski of the Greater Charlotte Apartment Association remarks, "I think most would say it may not be a deep enough series of incentives . . . to make a developer act." He adds that developers will need more money to cover the loss they will certainly take on affordable units.
N.H. Apartments Using Dog DNA to Clean up Communities
Digested From "Apartments Using Dog DNA to Catch Poop-Scoop Scofflaws"
Toronto Star (Canada) (06/27/11)
In New Hampshire, a number of apartment communities are using DNA testing on dog excrement to find out which residents are not cleaning up after their pets. The Timberwood Commons in Lebanon, N.H., is one such community that has gone this route. Apartment manager Debbie Violette is using commercially available DNA sampling kits to check the DNA that dogs leave behind when they go. Violette states, "We've tried doing the warning letters. We've tried all sorts of things. It's always a problem. It's just that the majority of people are responsible pet owners and there are a few who are not." Residents were recently informed they must submit samples from their canines so DNA profiles can be put on file. Among the companies providing sampling services is PooPrints, a Knoxville-based subsidiary of BioPet Vet Lab that currently has contracts with about 20 apartment communities nationwide to use the kits. The company provides a feces-collection kit, which the lab later uses to checks to see if it matches any of the profiles listed for that particular apartment community. The Twin Ponds Development in Nashua, N.H., is another community that has identified some problem pet owners via such tests. Violette advises owners who are thinking of going this route to include language about the DNA testing in a lease addendum addressing pet issues. To date, she adds, she has gotten mostly positive responses from dog owners.
Wis. Legislation Shifts Unpaid Utility Costs From Apt. Owners
Digested From "Wisconsin Legislation Shifts Unpaid Utility Costs From Landlords"
Oshkosh Northwestern (06/26/11) by Jeff Bollier
In Wisconsin, Oshkosh officials say a bill sponsored by state Rep. Michelle Litjens would shift the burden and costs to collect unpaid utility bills off apartment owners and onto taxpayers. Meanwhile, a government watchdog group says it raises ethical questions about the benefit to her family's property management business. Litjens (R-Town of Vinland) helped lead the introduction of Assembly Bill 182, which would prohibit municipal utilities from placing residents' unpaid utility bills on an apartment owner's property tax bill at the end of each year. City and state Department of Financial Institutions records show that Litjens and her husband own and operate two dozen apartment communities throughout Oshkosh. Litjens remarks, "I've talked to apartment owners across the state. This is a big concern to them, and there are some municipalities that pursue their delinquent users more than other municipalities." Earlier this month, Oshkosh City Manager Mark Rohloff and Finance Director Peggy Steeno sent Litjens a letter out of concern the legislation could "affect the vast majority of the citizens in Oshkosh, as well as Wisconsin overall, in a negative manner." Current state law requires municipal utilities to send both apartment owners and the resident a letter notifying them of any delinquency by Oct. 15 of each year. The customers then have until Nov. 15 to pay off the delinquent charge or the utility adds it to the owner's property tax bill at the end of the year. Winnebago Apartment Association President Jeff Wicinsky recently stated that his organization supports Litjens' bill, explaining that apartment owners and managers have repeatedly called on the city to shut off water to delinquent residents and they refuse to do so.
Fannie Mae Hires McFarland as New CFO
Digested From "Fannie Mae's New CFO: Banking Vet Susan McFarland, Former Chief Accountant at Capital One"
Washington Post (06/23/11) P. A12
Fannie Mae has appointed Susan McFarland to serve as chief financial officer, effective July 11. McFarland, who also will be an executive vice president at the mortgage financier, previously served as executive vice president for finance and principal accounting officer at Capital One Financial Corp.
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