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Obama to Name North Carolina Regulator Smith as Fannie, Freddie Overseer
Industry News
Good Times For Apartment REITs, Says Merrill
Apartments Aim High, but Small in Cary, N.C.
Apartment Vacancies at 3-Year Low in Denver Area
Fort Wayne-Area Apartment Owners Team up, Battle Bed Bugs 
UDR Launches Third Generation Apartment Search Web Site
Massive San Francisco Apartment Community Gets LEED Certification
In Tampa's Apartment Industry, Developers Sense a Comeback
Low Rates Hurt Bonds for Housing
Riverside Residential Group Promotes Bishop to Senior VP, Florida Region
Legislative/Legal News
How to Shut Down Fannie and Freddie
Rental Inspection Law Stirs Debate in Valparaiso
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Obama to Name North Carolina Regulator Smith as Fannie, Freddie Overseer
Digested From "Obama to Name North Carolina Regulator Smith as Fannie, Freddie Overseer"
Bloomberg (11/12/10) by Lorraine Woellert
North Carolina Banking Commissioner Joseph Smith Jr. is President Obama's choice to lead the Federal Housing Finance Agency. If confirmed by the Senate, he would become a key figure in the administration's effort to overhaul Fannie Mae and Freddie Mac, which fall under FHFA oversight. Smith told the Senate Banking Committee in 2007 that the firms should focus on affordable housing in a manner that balances market innovation, product choice, credit availability, and consumer protection.
Industry News
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Good Times For Apartment REITs, Says Merrill
Digested From "Good Times For Apartment REITs, Says Merrill"
Barron's (11/12/10) by Tiernan Ray
Late last week, Merrill Lynch analyst Jeffrey Spector upgraded shares of several REITs focused on apartment communities. In doing so, he wrote that select markets such as the American Sunbelt region are on the mend and the market is seeing a broad-based recovery. The cost of financing remains low for apartment communities, meaning that the cap rate is falling. Thus, these apartment stocks have a smaller hurdle to clear on their way to higher stock prices. The current implied cap rate for apartment communities is 5.5 percent, Spector writes. Spector highlights three REITs in the sector -- Apartment Investment and Management Co., American Campus Communities, Equity Lifestyle Properties -- all of which he upgraded from "Neutral" to "Buy." Aimco is witnessing a continued rebound in net operating income from its apartment communities, he writes. Meanwhile, both of the other REITs are showing stable income growth. Spector also raised his rating on Colonial Properties Trust and Post Properties from "Underperform" to "Neutral," while lowering his rating on Home Properties and UDR from "Neutral" to "Underperform." He believes the latter two will have to shoulder higher expenses in the near term, which have a negative impact on operating income growth.
Apartments Aim High, but Small in Cary, N.C.
Digested From "Apartments Aim High, but Small"
Cary News (NC) (11/13/10) by Andrew Kenney
Demand for apartments has surged in Cary, N.C., and the surrounding area as newcomers unable to sell homes continue to move into temporary housing and tight mortgage standards make it difficult for many young adults to buy their first homes. Western Wake County, in particular, has been a hotbed for rental apartment activity. About 5.6 percent of the roughly 17,000 apartments in Cary, Apex, and Morrisville sat vacant at the end of this year's third quarter, down from 7.9 percent a year earlier, reports the Triangle Apartment Association. Across the Triangle region, the apartment vacancy rate fell to 6.7 percent from 9.5 percent during that same time span. One-bedroom apartments have been especially hard to come by. In western Wake, nearly 5.3 percent of one-bedroom units were empty as of Sept. 30. That is down from 6.2 percent. In turn, some local developers are hoping to make big money from small apartments. Cary-based Roy Mashburn is teaming up with Raleigh-based partner, Dominion Realty, to build 254 apartments on a 12.6-acre tract in Cary. Mashburn remarks, "We're proposing something a little unique to Cary. It is a very dense project."
Apartment Vacancies at 3-Year Low in Denver Area
Digested From "Apartment Vacancies at 3-Year Low in Denver Area"
Denver Business Journal (11/10/10) by Paula Moore
At 5.3 percent, Metro Denver's apartment market had its lowest vacancy rate in the third quarter since the same three-month period in 2007. Due to lack of local job and wage growth, though, the market continued to face challenges during the July-through-September period. According to a report by the Apartment Association of Metro Denver and the Colorado Division of Housing, the "economic vacancy" rate went up from 18.2 percent a year earlier to 18.9 percent in the third quarter of this year. Tighter apartment vacancies pushed average rents up, as the average metro-area apartment rent climbed from $880.99 a month to $912.68 in last year's third quarter. However, some apartment owners have decided against raising rents in the face of continuing unemployment and lack of salary increases. No significant new apartment construction is happening right now in the Denver metro area, partly because of the high cost of construction.
Fort Wayne-Area Apartment Owners Team up, Battle Bed Bugs
Digested From "Area Landlords Team up, Battle Bed Bugs"
WANE-TV (Fort Wayne, IN) (11/09/10)
Owners and managers of around 100 apartment communities in Fort Wayne, Ind., are battling against the spread of bed bugs. This past week, management from dozens of area apartment communities containing nearly 20,000 rental units came together to learn about the bugs and how to get rid of them. The Apartment Association of Fort Wayne and Northeast Indiana (AAFWNEI) provided the instruction with the goal of preventing the bugs from spreading. Beth Wyatt, executive director of the AAFWNEI, states, "Indianapolis, Ohio, Chicago, Detroit have all had huge problems as seen in the media, and we want to meet this head on before it becomes a problem. We want to be proactive and deal with it."
UDR Launches Third Generation Apartment Search Web Site
Digested From "UDR Launches Third Generation Apartment Search Website"
MarketWatch (11/11/10)
UDR Inc. has taken the wraps off a new version of its UDR.com Web site, which has been redesigned to make finding an apartment easier and more convenient. The new site strengthens the Denver-based apartment REIT's already robust technology platform with new features tailored to appeal to the company's core 25- to 35-year-old customer base. Steve Taraborelli, vice president of sales and marketing for UDR, notes, "Prospects looking for an apartment now have access to our very rich apartment-related content, and the easier navigation has been designed to save time by making the entire process more streamlined and user-friendly." New features range from a simplified layout and the latest version of Google Maps and Street Views technology to conversion Rate Optimization enhancements and the ability to save apartment search results for future reference. The site also features improved apartment community online brochures for easier downloads, along with larger viewable floor plans.
Massive San Francisco Apartment Community Gets LEED Certification
Digested From "S.F.'s Fillmore Center Gets LEED Certification"
San Francisco Chronicle (11/10/10) by Robert Selna
The Fillmore Center in San Francisco has been renovated in ways that will help its residents, its owners, and the environment. The center's managers, the Laramar Group, said the 10-building, 3,000-resident compound has received the LEED Silver certification from the U.S. Green Building Council for saving water and energy and for making units healthier. According to the Green Building Council, The Fillmore Center ranks as the country's largest multifamily property to receive the LEED Silver rating. Retrofits ranged from the installation of dual-flush toilets and improved water fixtures to high-efficiency air handlers and a streamlined waste system that makes it easier for residents to recycle and compost. According to Lamar representatives, the recent LEED renovations cost approximately $520,000. Lighting savings alone at the center are projected to be $360,000 annually, reports Steve Boyack, senior vice president of asset management at Laramar. Developers tend to tout the environmental attributes of new construction, but green supporters note that there are far more existing buildings that use excessive energy. Mark Westlund, spokesman for the San Francisco Department of the Environment, comments, "If we are going to see actual savings and reductions in greenhouse gases, we need to put our efforts into existing buildings." According to Westlund, San Francisco currently has 43 buildings that are LEED certified and 60 more in which part of the structure has been upgraded.
In Tampa's Apartment Industry, Developers Sense a Comeback
Digested From "In Tampa's Apartment Industry, Developers Sense a Comeback"
Tampa Tribune (11/12/10) by Michael Sasso
In Tampa, developers are starting to see the signs of a rally in the apartment sector. Everyone from land brokers to real estate attorneys to real estate finance firms all say developers are increasingly looking at land for future apartment communities in and around the Tampa Bay metro area. Many of these new communities will not break ground for six months or longer and won't be finished until 2012. Developers, though, see enough opportunity in cheap land prices and stabilizing apartment rents that they are clearly emerging from the sidelines -- a potentially good sign for the area economy. Analysts say the apartment sector is often one of the first industries to get hit in a recession. At the same time, it's one of the first to rebound when the economy improves, reports John Stone, an apartment broker with Colliers International Tampa Bay real estate. Camden Property Trust is one such developer that is dusting off some projects it had shelved during the recession, including two new apartment communities in Tampa's Westchase area. Chad Weaver, a vice president for Camden, comments, "People are becoming more confident that they're not going to be laid off."
Low Rates Hurt Bonds for Housing
Digested From "Low Rates Hurt Bonds for Housing"
New York Times (11/09/10) P. B1; by Diana B. Henriques
As interest rates hover near zero, S&P Ratings Services reports that hundreds of affordable housing projects nationwide are facing deep cuts to their investment income. Such projects, which rely on the interest they earn on their spare cash to help them pay off outstanding bonds, are earning significantly less on those cash reserves than ever expected. Their bond ratings are falling sharply as a result, potentially making affordable housing less available or more costly for low-income families and seniors who need it.
Riverside Residential Group Promotes Bishop to Senior VP, Florida Region
Digested From "Riverside Residential Group Promotes Lydia Bishop to Senior Vice President, Florida Region"
San Francisco Chronicle (11/09/10)
Riverstone Residential Group has promoted Lydia Bishop to senior vice president of its Florida Region. Bishop brings more than 20 years of property management experience that includes conventional, mid-rise, affordable, high rise, and garden-style communities. She joined Riverstone through Trammell Crow Residential Services in 1986 and worked on-site for eight years. In 1993, Bishop worked as a project manager and oversaw the company's internal audit functions. From 2000 to the spring of 2003 Bishop worked for ZOM and JMG Realty as a regional manager, after which she rejoined Riverstone. Riverside Residential Group ranks as one of the largest privately-owned, third-party multifamily apartment management companies in the U.S. Approximately 120 apartment communities containing 35,000 rental units make up the company's East Division, with about 12,000 of those apartments in Florida.
Legislative/Legal News
How to Shut Down Fannie and Freddie
Digested From "How to Shut Down Fannie and Freddie"
Wall Street Journal (11/11/10) by Emil W. Henry
The Obama administration has offered numerous explanations for why Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that remain in conservatorship, are not included in Congress' reform plans. The $10 trillion housing finance market is complex, says Treasury Secretary Timothy Geithner, so he is consulting Congress and an assortment of industry stakeholders to review the situation. However, the Treasury does not need Congress or an academic evaluation in order to take on the most important reform goal: scrapping the GSEs and relocating their activities to the private sector. Geithner himself has power to immediately reform the mortgage markets by not approving further debt issuances by the GSEs. That is the most efficient strategy to begin reining in the firms, and it can be accomplished unilaterally. The White House can show it is serious about dealing with the GSEs by re-establishing a thorough review process for all GSE debt issuance. That process should require the GSEs to supply Treasury with complete financial data and explanation for issuances, including statistics that prove the trustworthiness of the agencies after each proffering. Additionally, the Treasury secretary should have to personally okay all new debt issuances.
Rental Inspection Law Stirs Debate in Valparaiso
Digested From "Rental Inspection Law Stirs Debate in Valpo"
Post-Tribune (IN) (11/09/10) by Teresa Auch Schultz
In Indiana, the Valparaiso City Council recently convened to hear public opinion on the new proposed rental inspection ordinance. Opponents were quite vocal. The ordinance, which has seen a number of changes from the one originally proposed back in January, would have apartment owners pay a one-time fee of $10 for each rental unit they own. They would then fork over $25 to have each apartment inspected, with most having to be inspected just once every five years. However, those with two to 10 violations would have to be inspected once every three years. Those with more than 10 violations or serious violations, such as structural failures, would have to be inspected once every year. Bruce Berner, president of the Valparaiso Plan Commission, headed the committee that revised the proposed ordinance. He remarks that every attempt was made to make it as least invasive and onerous as possible. For instance, he noted that the $25 inspection fee was the lowest fee of any similar ordinance officials saw. The Indiana Apartment Association is among the groups opposing the proposed ordinance, calling it an intrusion. The concern is that it will add extra costs to apartment owners' bottom line. The council will have a second reading and then vote on the ordinance at its Nov. 29 meeting.
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