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Apartment Vacancies Decline, Rents Expected to Rise
Industry News
AvalonBay Gets Six Apt Communities in Exchange With UDR
Fannie Considers Selling Foreclosed Apts to Related Cos.
It Pays to Own a Multifamily Home
Average Apartment Rents in LA County Expected to Decline
Kearny JV Acquires $196M Loan Portfolio w/Apts
Demographer Sees Surge of Interest in Renting
Mass. Apartment Units Get Affordable Housing Loans
Irvine Co. Apartment Communities Earns National Award
Wells Fargo Tops MBA List of Comm/MF Originators
Delinquency Rate for CMBS Loans Sets Record
NY Apts Eligible for Free Lighting Assessments
Legislative/Legal News
House GSE Bills Expected to Pass Despite Concerns
Downtown Baltimore Plan Urges Apartment Conversions
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Apartment Vacancies Decline, Rents Expected to Rise
Digested From "Apartment Vacancies Decline, Rents Expected to Rise"
Wall Street Journal (04/06/11) by Dawn Wotapka
Reis Inc. reports that vacancy rates among apartments fell to 6.2 percent in the first quarter of 2011 -- the lowest rate in two years -- from 6.6. percent in the fourth quarter of 2010. Heightened demand will lead to fewer choices and higher rents for renters as apartment owners reduce freebies and concessions. Average effective rents increased to $991 in the first quarter, according to Reis. Reis Analyst Rich Anderson says, "You don't often see occupancy and rents increasing at the same time." Meanwhile, apartment owners are increasing construction, and existing apartment communities "are being bid up close to boom levels in some of the hottest markets." CoStar Group estimates that about 22,500 units will be added in 2011, followed by an additional 94,600 in 2012 and more than 109,000 in 2013. These additional units, however, could place downward pressure on rents and occupancy levels, though experts report that market improvements could be stalled or reversed if the employment picture does not improve. Reis reports, "Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace."
Industry News
AvalonBay Gets Six Apt Communities in Exchange With UDR
Digested From "AvalonBay Gets Six Apartment Properties in $263 Million Exchange With UDR"
Bloomberg (04/06/11) by Brian Louis
AvalonBay Communities Inc. this past week exchanged three apartment communities and a parcel of land for a half-dozen UDR Inc. apartment communities and $26 million in cash. The deal is valued at $263 million. The apartments being added to the AvalonBay portfolio are all in Southern California. For its part, UDR will get a couple of properties and land in the Boston metro area, along with an apartment community in San Francisco for an exchange value of $237 million. AvalonBay Chairman and CEO Bryce Blair states, "We are reallocating capital from markets where we have a large portfolio of higher price-point assets into a currently under-allocated region with assets that offer multiple price points. We are exchanging assets in Boston and San Francisco, where we have robust development pipelines, into southern California at a time when the region’s fundamentals are in the early stage of a recovery." U.S. sales of multifamily housing soared 96 percent to $33.7 billion last year from 2009, notes Real Capital Analytics Inc. In the first three months of this year, Reis Inc. reports that apartment vacancies fell to 6.2 percent -- the lowest in almost three years.
Fannie Considers Selling Foreclosed Apts to Related Cos.
Digested From "Related to Buy Stake in Fannie Apartment Portfolio"
Wall Street Journal (04/06/11) by Eliot Brown; Nick Timiraos
Related Cos. is looking to acquire a 25 percent stake in Fannie Mae's apartment inventory, which is valued at about $300 million. Fannie would also sell Related stakes in future foreclosed multifamily properties, which are expected to be added to the portfolio as Fannie takes them over in the coming years. Related would be required to invest in maintenance and management of these properties. The deal would be the first major bulk sale of foreclosed apartments by Fannie Mae, and is a change in strategy for the company which has been selling properties individually, often at distressed prices. As its inventory of owned properties rises, Fannie is seeking an investor to help boost property values while keeping a majority stake on its books. The firm owns 222 multifamily properties after borrower defaults, compared to more than 162,000 single-family houses. Freddie Mac, which has just 14 foreclosed apartment buildings, plans to continue with one-off sales.
It Pays to Own a Multifamily Home
Digested From "It Pays to Own a Multi-Family Home"
MarketWatch (04/11/11) by Charles Passy
As single-family home prices continue their freefall in many parts of the country, a growing number of buyers have set their sights on multifamily homes as investment opportunities and are becoming live-in landlords. In parts of New York, for instance, multifamily sales climbed 26 percent in last year's third quarter versus a year earlier. In Chicago's popular Lakeview and North Center neighborhoods, meanwhile, the growth was even more dramatic -- a 77 percent multifamily housing uptick by last year's midpoint. So, what are the reasons behind this surge of interest in multifamily housing? Realtors and buyers say point to the federal government encouraging the purchase of multifamily homes by hiking the amount buyers can borrow while still qualifying for a lower-rate "conforming" loan. Buyers also like that they have the ability to use their rental income to offset a chunk of the mortgage payment. To be sure, this strategy comes has its share of caveats. For one, there is no guarantee that prices will rise. In addition, buyers must be comfortable with the idea of having tenants and tending to their needs. Hilary Kramer, a real estate investor and author of "Ahead of the Curve," states, "You shouldn't do this if you have no ability to do repairs or to be on site at any time."
Average Apartment Rents in LA County Expected to Decline
Digested From "Study: Average Apartment Rents in LA County Expected to Decline"
Los Angeles Daily News (04/06/11)
A study released this past week by the Lusk Center for Real Estate at the University of Southern California forecasts that average apartment rents in Los Angeles County will decline 3.2 percent by the end of 2012. According to the Casden Multifamily Forecast, average rents rose by 0.9 percent in 2010 to $1,501, while occupancy rates climbed 0.2 percent to 94.1 percent. In Orange County specifically, rents averaged $1,475 last year, a 0.8 percent increase from a year earlier. Richard Green, director of the USC Lusk Center and co-author of the Casden Forecast, remarks, "While we are no longer hemorrhaging jobs, home affordability remains bleak in some areas, both of which bode well for the multifamily market. However, it is unlikely that rents will rise until the greater economic health of the region improves and some of the excess inventory in the housing market disappears."
Kearny JV Acquires $196M Loan Portfolio w/Apts
Digested From "Kearny JV Acquires $196M Loan Portfolio"
GlobeSt.com (04/10/11) by Bob Howard
Kearny Real Estate Co. has partnered with Morgan Stanley Real Estate Investing to purchase a $196 million portfolio of performing, sub-performing, and non-performing loans. According to Kearney managing partner Jeff Dritley, the portfolio is comprised of 45 assets and is secured by properties in five states -- California, Nevada, New Jersey, New York, and Washington. The properties range from apartment communities and retail space to office complexes and industrial facilities. Also included is an undisclosed amount of land zoned for residential use. Notable assets include loans on new condominium projects in Northern and Southern California and the historic Col. Fletcher Building in downtown San Diego. Dritley concludes, "Many of these troubled loans were more the result of the depressed credit market and the economic downturn than the underlying asset. As the market begins to stabilize, we have the resources and experience to create value for this portfolio."
Demographer Sees Surge of Interest in Renting
Digested From "Demographer Sees Surge of Interest in Renting Rather Than Buying a Home"
Los Angeles Times (04/03/11) by Mary Umberger
Demographer Cheryl Russell says the real estate market is undergoing a significant shift as attitudes about housing change, especially among young adults. Russell says homeownership rates will decline further over the next several years and possibly hover at about 64 percent. The loss of wealth among the middle class and higher levels of student debt are likely to cause younger generations to pause before buying houses, especially since they will not have the family wealth to help them buy. Those between the ages 25 and 29 -- the group that usually makes the transition to homeownership -- say that buying a house is not for them and that they need to be more flexible given high unemployment rates and the uncertain job market. Russell sees a resurgence in renting, and as those who rent age, they will look for more specific features in their apartments. She notes that apartment developers and owners should be interested in improving those units to attract younger residents.
Mass. Apartment Units Get Affordable Housing Loans
Digested From "Apartment Units Get Affordable Housing Loans"
Boston Globe (04/11/11)
MassHousing this week announced loan closings aimed at preserving apartment communities in Framingham and Lawrence, Mass., as affordable housing. They include the 110-unit Framingham Green Apartments and the 150-unit Valebrook Apartments. both of which were in danger of converting to market-rate rents. MassHousing is the state's affordable housing bank.
Irvine Co. Apartment Communities Earns National Award
Digested From "Irvine Co. Apartment Communities Earns National Award"
OC Metro (04/07/11)
The Irvine Co. Apartment Communities has garnered national recognition for its MyRental-Living.com iPhone app, recently earning the Best Real Estate Application award in the Web Marketing Association's ninth Internet Advertising Competition. The company recently launched the mobile-friendly version of its website. Consequently, Irvine's apartment division now offers four different ways for residents to access MyRental-Living.com: the mobile version, the iPhone and Android apps, and the website itself. Using these services, apartment residents are able to submit maintenance requests, access community news , view coupons, and even respond to classified ads. Irvine Co. Apartment Communities Vice President of Marketing Nicole Conniff remarks, "Mobile is global. Our residents choose to use mobile devices for many of their daily business and lifestyle activities, and we want to make those activities as easy as possible."
Wells Fargo Tops MBA List of Comm/MF Originators
Digested From "Wells Fargo Tops MBA's 2010 List of Commercial/Multifamily Originators"
National Mortgage Professional (04/05/11)
According to a set of listings released by the Mortgage Bankers Association (MBA), Wells Fargo Bank was ranked the top commercial/multifamily mortgage originator for 2010. Other originators placing high on the MBA's "Commercial Real Estate/Multifamily Finance Firms—Annual Origination Volumes" range from CBRE Capital Markets Inc. and MetLife Real Estate Investments to Deutsche Bank Commercial Real Estate and PNC Real Estate. The association's study presents a comprehensive set of listings of commercial/multifamily mortgage originators and the different roles they play. The report presents origination volumes in over 140 categories, including by investor group, by property type, by financing structure type, and by the location of the originating office.
Delinquency Rate for CMBS Loans Sets Record
Digested From "Delinquency Rate Hits Record for Mortgage-Backed Commercial Loans"
Wall Street Journal (04/06/11) by Eliot Brown
Trepp LLC reports that loans tied to commercial mortgage-backed securities (CMBS) hit a record delinquency rate last month, with 9.42 percent of all such loans having missed payments. The rate has been on the rise ever since the property market started to turn in the fourth quarter of 2007. Facing substantially lower values than when loans were taken out during the boom years of 2005 to 2007, a number of building owners have been unable to pay off loans as they come due. To date, the hardest-hit sector has been multifamily housing, with 16.2 percent of loans delinquent. On the positive side, the pace of the increase in the delinquency rate has slowed in recent months. At the same time, the commercial mortgage-backed securities sector is once again making new loans and is on pace to issue approximately $40 billion in securities for the year.
NY Apts Eligible for Free Lighting Assessments
Digested From "Some Condos, Apartment Buildings Eligible for Free NYSEG Lighting Assessments"
Ithaca Journal (NY) (04/08/11)
New York State Electric & Gas Corp (NYSEG). is reporting that free lighting assessments of five- to 50-unit apartment and condominium communities are now available in the Ithaca, N.Y., area. RISE Engineering has been contracted to inspect such sites at no cost and install energy-saving compact fluorescent lights in up to a half-dozen fixtures in each apartment or condo. Also being offered are rebates of as much as 50 percent of the cost of replacing common-area lighting with energy-efficient lighting in qualifying multifamilyresidences. Owners or managers of qualifying communities with NYSEG electricity service may request a lighting assessment by contacting RISE Engineering or NYSEG directly. Apartment and condominium communities with fewer than five units or more than 50 units per building are not eligible for the program. However, they may be eligible for other state-funded energy programs.
Legislative/Legal News
House GSE Bills Expected to Pass Despite Concerns
Digested From "House GSE Bills Expected to Pass Despite Concerns"
American Banker (04/06/11) P. 3; by Donna Borak
A House Financial Services subcommittee was expected to pass as early as late Tuesday eight bills aimed at reforming Fannie Mae and Freddie Mac. Included are a measure to suspend the current compensation system for the firms' employees; one to permanently abolish their affordable housing goals; and another to set annual limits on the size of their retained portfolios. Democrats oppose the bills, preferring a comprehensive solution; and trade groups like the National Association of Realtors and the National Association of Home Builders also want Congress to act slowly and deliberately.
Downtown Baltimore Plan Urges Apartment Conversions
Digested From "Downtown Plan Urges Conversion of Vacant Office Space"
Baltimore Sun (04/06/11) by Edward Gunts
The Downtown Partnership this week is set to issue a strategic plan in which it recommends that some vacant office space in Baltimore's city center be converted to apartments. The group urges, "New uses must be found for older towers that no longer work as office space." With downtown Charm City's commercial vacancy rate hovering around 19 percent and with plans for additional space to be added on its periphery, the Downtown Partnership's new plan recommends several steps to keep that part of the city from stagnating further. They range from the creation of a Tax Increment Finance, or TIF, district in the oldest parts of downtown to condemning and acquiring certain vacant properties when owners let them fall into disrepair. The Partnership is also urging that time limits be set for developers to move ahead with renovation of properties awarded to them by the city. According to the group, aging infrastructure must be updated even though drastic budget shortfalls now loom. Kirby Fowler, executive director of the partnership, notes that the plan is the culmination of two years of work by members of the group and other downtown interests in consultation with former Pittsburgh Mayor Tom Murphy.
Abstract News © Copyright 2011 INFORMATION, INC.
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