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Multifamily REITs Continue Strong Run
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Multifamily REITs Continue Strong Run
Industry News
Houston's Luxury Apartment Market Remains Hot
Equity Residential Seeks Bigger Slice of Manhattan Apartment Pie
RealPage Goes Public on Nasdaq, Share Price Up After First Day
Apartment Rents Jump in New York and Other Cities Where Job Market Is Up
Boston-Area Rental Housing Harder to Find and Afford
Using Federal Stimulus Money to Renovate N.C. Apartment Community
Rates Rise as Vacancy Falls in North Carolina's Triangle Apartment Market
Developer Sees Hopeful Signs for Apartment Work in Bay Area
Apartment Market Shows Signs of Improvement, MPF Research Reports
Real Estate Revival Seen by Fund Managers
Providence Place Apartments in Tampa Sells for $30 Million
Google and the Search for the Future
Legislative/Legal News
Massachusetts AG Announces Lawsuits Regarding Apartments With Lead Paint
Association to Develop Its Own Home Appliance Sustainability Standards
Feds Rethink Policies That Encourage Homeownership
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Multifamily REITs Continue Strong Run
Digested From "Multifamily REITs Continue Strong Run"
REIT.com (08/11/10) by Allen Kenney
An analysis from SNL Financial LC concludes that strong demand has enabled multifamily housing REITs to continue to outperform the broader REIT market. SNL analyst Chris Henderson attributes the sector's outsized returns to potential homeowners holding off on buying given the troubled residential sales market, as well as a stream of attractive capital thanks to Fannie Mae and Freddie Mac. However, he does note that future developments in the housing market could weaken multifamily REITs' operating fundamentals. "While multifamily REITs have benefited from an economic environment that has discouraged tenants from moving out, multifamily REITs must also be wary of a decrease in the gap of costs related to renting versus buying," Henderson says. "With continued decreases in home pricing, many residents that were previously against taking on the cost of homeownership may be willing to take that plunge going forward. This could have a negative effect on [apartment communities] by either reducing occupancy as residents buy homes at discounted pricing or forcing the REITs to reduce rents further to maintain current occupancy levels."
Industry News
Houston's Luxury Apartment Market Remains Hot
Digested From "Luxury Apartments Sell Like Hotcakes"
Houston Business Journal (08/13/10) by Jennifer Dawson
Houston's luxury apartment market stayed hot last month as dozens of investors vied to acquire three high-end communities throughout the area. Together, the trio of apartment communities -- Alexan Upper Kirby, Uptown Post Oak and The Retreat at Cinco Ranch -- contain 890 Class A rental units. Each was acquired by out-of-town buyers. Dallas-based Trammell Crow Residential sold Alexan Upper Kirby to Invesco Real Estate for an undisclosed sum. Trammell Crow Residential was also involved in the Uptown Post Oak deal, selling the 392-unit community to Dallas-based Behringer Harvard Multifamily REIT I Inc. for $65.5 million. Finally, the Retreat at Cinco Ranch was acquired by Los Angeles-based JRK Property Holdings from a joint venture of Allied Realty Services Ltd. and GE Capital Real Estate. Terms of the deal were not disclosed.
Equity Residential Seeks Bigger Slice of Manhattan Apartment Pie
Digested From "Sam Zell Seeks Bigger Slice of Manhattan"
Wall Street Journal (08/16/10) by A.D. Pruitt
Equity Residential has its sights set on a vacant parcel of land in downtown Manhattan, further proof that the country's biggest apartment operator is bullish on the New York market. The company is one of several investors readying bids on a development site at 133-135 Greenwich St. during a bankruptcy auction scheduled for Wednesday. Journal sources say the minimum bid starts at $14.5 million. The site was purchased three years ago for $45 million by an Ofek International Real Estate subsidiary. The Aug. 18 auction will provide some insight into how far values have declined for Manhattan development sites. If the property goes for the minimum bid, the buyer would be paying about $92 per square foot. Investors, though, could bid more at the auction or Minneapolis-based U.S. Bancorp, which holds a $39 million mortgage on the site, could opt to reject the bids and hold on to the site. Chaired by property mogul Sam Zell, Equity Residential currently owns 137,000 apartments nationwide. It entered the New York market in 2004 and has lately been one of the city's most aggressive buyers of residential property and development sites. Earlier this year, for example, the REIT bought rights to build 111 market-rate apartments and nearly 10,000 square feet of retail space in Manhattan's Chelsea neighborhood.
RealPage Goes Public on Nasdaq, Share Price Up After First Day
Digested From "MakeMyTrip, Up 89 Percent, Has Best IPO Since 2007"
Wall Street Journal (08/12/10) by Lynn Cowan
The U.S. initial-public-offering market received a much-needed boost last week, thanks to travel site MakeMyTrip Ltd. generating the best first-day gain in three years and Texas-based rental housing software company RealPage Inc. rising 32 percent. RealPage saw its stock closed at $14.52 a share on the Nasdaq Aug. 11, an increase from its IPO price of $11. A total of 12.3 million shares were sold at a price below its projected $13 to $15 range. The firm's software provides numerous functions, from screening potential residents to basic accounting. The goal of the programs is to increase revenue and cut costs via improved occupancy, pricing, and collections. Although revenue has increased at RealPage throughout the economic downturn, the company has a track record of losses. It became profitable for the first time last year, generating net income of $28.4 million and operating income of $6.9 million. For the first and second quarters of this year, revenue climbed 28 percent to $86 million. Operating income, meanwhile, fell 31 percent to $2.9 million as every operating expense line rose.
Apartment Rents Jump in New York and Other Cities Where Job Market Is Up
Digested From "Apartment Rents Jump in Cities Where Job Trends Are Mending"
Investor's Business Daily (08/13/10) P. A10; by Marilyn Alva
The rental apartment market is recovering in markets where new job opportunities are opening up, namely: Washington, D.C.; Chicago; San Francisco; San Jose; and Seattle. But New York could beat them all in rent growth. Wall Street is hiring again and "rents are rising, concessions are going away and vacancy rates have gone down each month since November," said Gary Malin, president of the residential brokerage Citi Habitat. "The market has done a complete 180-degree turn from a year ago." Manhattan's inventory of rental housing dropped 32 percent in the second quarter versus the previous year to 4,972, adds Prudential Douglas Elliman.
Boston-Area Rental Housing Harder to Find and Afford
Digested From "Rentals in Boston Area Harder to Find, Afford"
Boston Herald (08/10/10)
Reis Inc., which tracks occupancy in communities with 40 units or more, reports that apartment vacancy rates in greater Boston fell to 6.2 percent in the second quarter -- the lowest level in 18 months. Average rents rose for the first time since 2008, increasing 1.2 percent to $1,717 a month. Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, calls the situation "extraordinary," because a 6 percent vacancy rate is consistent with a strong economy. Industry observers say people who have lost their homes to foreclosure seek to rent instead, while tight credit and an uncertain housing market keep many apartment residents from becoming homeowners.
Using Federal Stimulus Money to Renovate N.C. Apartment Community
Digested From "Apartments' Renovation Possible With Stimulus Money"
Greensboro News & Record (NC) (08/11/10) by Amanda Lehmert
Affordable Housing Management plans to use federal stimulus funds to renovate a 1960s-era apartment community in Greensboro, N.C., for low-income, disabled, and homeless residents. The $2 million project was made possible through $1.2 million in stimulus funds approved by the Greensboro City Council and funds from the North Carolina Housing Financing Agency. David Levy, executive director of Affordable Housing Management, states, "It takes a property that was largely vacant and rundown and gets it back, recycled into being a productive use." Affordable Housing Management owns and manages 500 apartments in 13 communities in Greensboro. The apartments are offered to residents who earn below the median income for local families.
Rates Rise as Vacancy Falls in North Carolina's Triangle Apartment Market
Digested From "Rates Rise as Vacancy Falls in Triangle Apartment Market"
Triangle Business Journal (08/10/10) by Amanda Jones Hoyle
With strengthened demand and slowed new construction, apartment rental and vacancy rates improved in the Raleigh-Durham, N.C., region in the first half of 2010. Real Data of Charlotte reports that the average vacancy fell to 8.7 percent in July, compared with 9.9 percent in January and 10.4 percent in July 2009. Between February and July, renters signed leases on 2,912 vacant units, a marked improvement on the 604 unit leases that were signed in the same period one year prior. The average rental rate in July was up 2.5 percent from the past six months to $786. Average rents and occupancy levels are expected to rise over the next year.
Developer Sees Hopeful Signs for Apartment Work in Bay Area
Digested From "Developer Sees Hopeful Signs for Apartment Work"
San Francisco Business Times (08/13/10) by Blanca Torres
Oakland-based developer John Protopappas of Madison Park Financial Corp. believes the time is right to start building new apartment communities locally and perhaps elsewhere. Not only are construction costs currently low, rents are stabilizing and no competing apartments are under construction in his home market. A tight credit market, though, has scuttled many apartment development plans in the last three years. Protopappas is hopeful, though, because the lending climate appears to be loosening up for multifamily housing in particular. For example, he recently refinanced a completed Oakland apartment community at 5.03 percent. Protopappas comments, "The lending climate is much more positive. It's a better climate now than I've seen in the last three years."
Apartment Market Shows Signs of Improvement, MPF Research Reports
Digested From "Apartment Market Shows Signs of Improvement"
MarketWatch (08/09/10) by Amy Hoak
Recent data indicate that vacancy rates are falling and confidence is rising in apartment communities, even as the job market continues to struggle. Greg Willett, vice president of research and analysis for MPF Research, notes demand for apartments has risen significantly in 2010. "There's no way to look at these apartment numbers and not be impressed," he says, adding that rents are also on the rise. MPF Research reports that June vacancy rates in the largest 64 markets in the country averaged 6.6 percent, down from 8.2 percent at the end of 2009. Willett admits that with the job market still struggling, it is difficult to explain the growing demand. "It's one of those situations where it's hard to fully explain where the demand is coming from," Willett says. He further points out that parents appear more willing to co-sign leases for their children. Also, apartment managers are doing a better job at retaining the residents they already have.
Real Estate Revival Seen by Fund Managers
Digested From "Real Estate Revival Seen by Fund Managers"
TheStreet.com (08/09/10) by Stan Luxenberg
During the past year, real estate mutual funds returned 39 percent, outpacing the S&P 500 by 25 percentage points. The outstanding performance has been driven by an improving outlook for commercial real estate. "Many markets are strengthening, and we should have good demand for real estate for at least the next three or four years," says Marc Halle, manager of Prudential Global Real Estate. Paul Curbo, manager of Invesco Real Estate Fund, says investors should consider apartments. Demand for apartments is growing as owners leave single-family homes to become renters. With bankruptcies and unemployment increasing in the last several years, 3.5 million households have moved from single-family homes to apartments, according to CoStar Group. "We are in the midst of a long-term decline in home ownership," says Curbo. Halle notes that fewer markets are overbuilt than were during the last property recession, which began in the late 1980s.
Providence Place Apartments in Tampa Sells for $30 Million
Digested From "Providence Place Apartments Sells for $30 Million"
Tampa Bay Business Journal (08/10/10) by Michael Hinman
Brandon Multifamily Partners LLC, a Tennessee private equity firm, paid more than $69,400 a unit for the 432-unit Providence Place Apartments, bringing the total purchase cost to $30 million. The complex, which last sold in 1998 for $11.9 million, was sold by Providence Place Apartments LP, Providence Apartments LP and Sentinel Estate Corp. Brandon is affiliated with Covenant Capital Group, which typically looks for multifamily assets with value-added potential or growth opportunity and has completed more than 121 transactions. Covenant Capital used money from its Covenant Apartment Fund VI to fund its involvement in the purchase. The Tampa-Southeast region where the apartments are located has one of the lowest vacancy rate of the surrounding submarkets, and rents in the region average $822.
Google and the Search for the Future
Digested From "Google and the Search for the Future"
Wall Street Journal (08/14/10) by Holman W. Jenkins Jr.
Google estimates that approximately 200,000 Android smartphones are being activated daily by cell carriers on behalf of customers -- a doubling in just three months. Since the first of this year, Android phones have been outselling iPhones by an increasing clip and appear poised to eventually outstrip Apple in global market share. Google CEO Eric Schmidt is preparing for the day when the Google search box -- and the activity known as Googling -- will no longer be at the center of our online lives. He concedes, "We're trying to figure out what the future of search is. I mean that in a positive way. We're still happy to be in search, believe me. But one idea is that more and more searches are done on your behalf without you needing to type." He goes to state that most people really do not want Google to answer their questions. Instead, he reasons, "They want Google to tell them what they should be doing next."
Legislative/Legal News
Massachusetts AG Announces Lawsuits Regarding Apartments With Lead Paint
Digested From "AG: Lead Paint Law Brushed Off"
Boston Herald (08/11/10) by Jerry Kronenberg
Massachusetts Attorney General Martha Coakley announced lawsuits against three Massachusetts real estate firms for allegedly "steering" apartment residents with young children away from units with lead paint. Under state law, apartment owners are banned from renting homes or apartments with potentially toxic lead paint to any family with a child under the age of six. But the law also stipulates that the apartment owners cannot simply refuse to lease the apartments. Instead, they must de-lead the units regardless of who wants to rent them. Coakley's office discovered rental ads that seemed to hint that apartments had lead paint, so undercover testers were sent in to pose as potential residents. The testers reported being steered away from the apartments, confirming that "brokers who advertised the lead status of rental units were likely to discriminate against families with (young) children," according to Coakley. One of the firms has agreed not to steer residents with young children away from any apartments from now on.
Association to Develop Its Own Home Appliance Sustainability Standards
Digested From "AHAM to Develop Home Appliance Sustainability Standards with CSA and UL"
Appliance (08/10)
The Association of Home Appliance Manufacturers (AHAM) has partnered with two standards organizations, CSA Standards and UL Environment, to jointly develop voluntary sustainability standards for home appliances as part of an effort to identify environmentally responsible products. "Manufacturers are committed to providing this solution to their customers," says Joseph McGuire, president of AHAM. "This partnership provides the necessary expertise to produce credible sustainability standards for home appliances." A major factor in appliance sustainability is energy consumption, McGuire points out. "We will build on our expertise in the energy area but will also employ a life cycle approach to identify and measure other significant environmental aspects of appliances," he says. "UL and CSA Standards, leading North American standards development organizations for appliances, have the credibility and expertise for this initiative."
Feds Rethink Policies That Encourage Homeownership
Digested From "Feds Rethink Policies That Encourage Home Ownership"
USA Today (08/10/10) by Paul Wiseman
U.S. policymakers are stopping to reconsider the 20th-century attitude to homeownership that says the federal government should do whatever it takes to drive the market. This reevaluation could lead to a shake-up for a mortgage industry weaned on government subsidies. "This process of figuring out the government's role is going to involve some hard choices," says Alyssa Katz, author of "Our Lot: How Real Estate Came to Own Us." "The moment you start changing the nature of what is guaranteed by the government, what is subsidized, you start to change the alignment of winners and losers. ... We took for granted that anyone could get a mortgage." These days, Washington is gearing to rebuild the national mortgage market atop the shells of Fannie Mae and Freddie Mac. An Obama administration proposal due out early next year could make it more difficult to purchase a home by reducing available credit or requiring larger downpayments. Low-income renters may receive additional government assistance. Many renters could use the assistance, the Congressional Budget Office says. In 2007, 45 percent of tenants spent more than 30 percent of their incomes on their residences -- the maximum for affordable housing -- compared with 30 percent of homeowners.
Abstract News © Copyright 2010 INFORMATION, INC.
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