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U.S. Reports Upturn in Home Building
Industry News
MF Deals in the State Not Due to Distress, Yet
Davis, Calif., Apartment Vacancy Rate Rises to 4 Percent
A Multifamily Drag on Housing Recovery
UDR Repays Term Loan
Village Green Launches Mobile Wireless Access to Apartment Renting
Foreign Investors Eye U.S. Property
Waterloo Has One of the Lowest Apartment Vacancy Rates in Canada
Legislative/Legal News
Temporary Accord Cuts Rents for Many at Two Complexes
San Fran Apartments to Be Affected by Expanded Smoking Ban
Apartment Inspection Fee Gets Cool Reception in Wisconsin
Indianapolis to Target High-Crime Apartments 
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U.S. Reports Upturn in Home Building
Digested From "U.S. Reports Upturn in Home Building"
New York Times (12/17/09) P. B8; by Javier C. Hernandez
The Commerce Department reports that home construction rose 8.9 percent last month to a seasonally adjusted annual rate of 574,000 due mainly to unexpectedly dry and warm weather. Building permits jumped 6 percent in November from the previous month, as single-family home construction grew 2.1 percent. Even apartment construction backed off from a 40-year low to hit an annual rate of 92,000. Lawler Economic and Housing Consulting founder Thomas Lawler is urging restraint, though, stating, "Everyone still agrees that there is a disturbingly high level of vacant homes still on the market. The best thing that can happen would be a continued subdued pace of construction."
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Industry News
MF Deals in the State Not Due to Distress, Yet
Digested From "MF Deals in the State Not Due to Distress, Yet"
GlobeSt.com (12/16/09) by Alyson Grala
According to a new report from Marcus & Millichap Real Estate Investment Services, New Jersey's statewide apartment vacancy rose 130 basis points to an estimated 4.8 percent in the third quarter versus a year earlier. A total of 1,620 rental units will be added to the state's apartment stock this year, predicts the report, with around 1,330 units to be delivered in Northern New Jersey. At the same time, monthly asking rents have declined 1.5 percent to $1,287, while effective rents have dipped 2.9 percent to $1,233 per month. In the northern portion of the state, apartment revenues fell the least in Passaic County. In the Princeton/East Mercer County submarket, meanwhile, revenues remain stable due to steady demand generated by high student and employer concentrations. Mark Scott, president of Commercial Mortgage Capital, notes that several developers he has talked with recently say the market is still not strong enough to support rent hikes. He adds, "The issue is not really raising the top-line rent. The issue is that we have concessions in the market. There are up to two months free rent in certain markets."
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Davis, Calif., Apartment Vacancy Rate Rises to 4 Percent
Digested From "Davis Apartment Vacancy Rate Increases to 4 Percent"
Sacramento Business Journal (CA) (12/16/09)
The apartment vacancy rate in Davis, Calif., rose to 3.2 percent this fall versus 0.8 percent in October and November of 2008, confirms a survey by the University of California Davis. The year-over-year increase was accompanied by a 1.05 percent average rent hike, which was much less than the 4.36 percent rent increase last fall. Emily Galindo, director of student housing at UC Davis, remarks, "The changes in the vacancy rate and the rental rate this year confirm that a better balance produces a benefit for our students as they seek housing in the Davis community." The average monthly rent for an unfurnished two-bedroom apartment climbed by just $1 from fall 2008 to 2009, to $1,226 a month. Just under half of the rental units in Davis are unfurnished two-bedroom apartments. UC Davis Office of Student Housing conducts the survey every fall, surveying 187 apartment communities. This year, it received responses from 166 of those communities.
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A Multifamily Drag on Housing Recovery
Digested From "A Multifamily Drag on Housing Recovery"
Wall Street Journal (NY) (12/16/09) P. C1; by Mark Gongloff
National Multi Housing Council (NMHC) Chief Economist Mark Obrinsky estimates that apartment and condo construction project completions are 16 percent lower than they were in 2007. In addition, permits authorizing new multifamily projects were issued at a lower annualized rate of 102,000 units in October, compared to the long-term average of 489,000. IHS Global Insight reports that multifamily construction will drop nearly 50 percent, which could further slow the recovery of the housing market.
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UDR Repays Term Loan
Digested From "UDR Repays Term Loan"
Zacks Equity Research (12/16/09)
UDR Inc. confirms that it has repaid its term loan maturing in 2010 by drawing down its $600 million unsecured bank credit facility and by using proceeds from a new term loan. The new term loan, which was provided by a consortium of a half-dozen banks, carries a floating rate of 350 basis points over LIBOR. It is scheduled to mature in July 2012. UDR continues to rank among the best-positioned apartment REITs in the country, with the majority of its portfolio located in California, Florida and along the Atlantic Coast -- markets where housing costs have skyrocketed in the last few years and the rent vs. own spread remains high. For nearly four decades, UDR has followed a strategy of increasing its presence in markets where solid job growth, low housing affordability and favorable demand/supply ratio for multifamily housing prevail.
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Village Green Launches Mobile Wireless Access to Apartment Renting
Digested From "Village Green Launches Mobile Wireless Access to Apartment Renting"
Fox Business (12/18/09)
Village Green recently launched mobile wireless access to apartments, enabling prospective residents to select a community, tour it and rent an apartment all from their smart phone. This marks the first time a privately held apartment owner and operator has launched complete mobile search and leasing capabilities via individual property Web sites and addressed the exploding growth of Internet access and transactions with mobile devices. Village Green Chairman and CEO Jonathan Holtzman remarks, "As we recognized the frequent use of mobile Internet transactions in other facets of our customers' lives, we created a completely mobile capability that focuses on how prospective residents want to interact and transact with us." By teaming up with VaultWare, Village Green's apartment prospects can search apartments by price, location, service, amenities or close to their current location using their smart phones. The 24/7/365 service works on such mobile platforms as iPhone, BlackBerry and Windows Mobile. Village Green ranks as one of America's biggest privately held owners and managers of luxury apartment communities. Celebrating its 90th year in business, the company operates approximately 40,000 apartments in 140 communities spread throughout 13 states.
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Foreign Investors Eye U.S. Property
Digested From "Foreign Investors Eye U.S. Property"
Investor's Business Daily (12/17/09) by Joe Gose
Hessam Nadji, a managing director at Marcus & Millichap Real Estate Investment Services, reports that foreign investors are currently on pace to acquire nearly $2.5 billion in U.S. commercial properties this year. The value is around 50 percent of what foreigners acquired in 2008. However, with overall sales of U.S. commercial space down more than 60 percent year-over-year through September, the outlook for foreign investment is somewhat promising. A number of foreign funds have teamed up with U.S. investors to acquire assets. For instance, PGGM Private Real Estate Fund and Texas-based Behringer Harvard acquired four U.S. apartment communities between June and early October for $217 million. Other buyers active this year included funds from Germany, Israel, the Netherlands, Switzerland and South Korea. Nadji observes that deal-making has accelerated in the last three months of this year. Looking ahead to the new year, he expects that greater declines in commercial property values, a weak dollar and a stabilizing U.S. economy could fuel many more purchases by offshore money managers.
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Waterloo Has One of the Lowest Apartment Vacancy Rates in Canada
Digested From "Waterloo Has One of the Lowest Apartment Vacancy Rates in Canada"
Waterloo Record (Canada) (12/21/09)
Due to its large number of high-tech workers and university students looking for short-term housing, the city of Waterloo continues to boast one of the lowest apartment vacancy rates in Canada. However, across the rest of Waterloo Region, apartment vacancy rates are on the upswing because of such factors as job losses and low mortgage rates encouraging renters to buy houses. Waterloo's 1-percent vacancy rate also means the city has the highest average rents in the region, confirms the fall 2009 rental market report complied by Canada Mortgage and Housing. The average two-bedroom unit goes for $937 a month in Waterloo versus $835 in Kitchener and $709 in Woolwich and North Dumfries townships. Across Canada, the highest average rent for a two-bedroom apartment was $1,169 in Calgary, where the vacancy rate was 5.3 percent. Toronto was a close second at $1,099, with a 3.1 per cent vacancy rate. Trudy Beaulne, executive director of Kitchener-Waterloo Social Planning council, remarks, "It's more than the availability; it's the cost of it."
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Legislative/Legal News
Temporary Accord Cuts Rents for Many at Two Complexes
Digested From "Temporary Accord Cuts Rents for Many at Two Complexes"
New York Times (12/15/09) by Charles V. Bagli
The New York State Court of Appeals ruled in October that Tishman Speyer Properties and BlackRock Realty, owners of the Stuyvesant Town and Peter Cooper Village apartment communities on New York City's East River, wrongfully deregulated rents on 4,400 of 11,227 units. The companies, which purchased the assets in 2006 for $5.4 billion, were receiving special tax breaks from the city at the time they increased rents on the apartments. As part of a temporary agreement forged in the State Supreme Court, the companies will add a rider to the leases associated with these units to reduce rents and treat them as rent-regulated apartments. While the owners and the residents' attorneys agreed to hire an independent consultant to determine permissible rents for the units -- with the report slated for completion in 2010 -- Tishman Speyer has no plans to rent any vacant apartments until the matter is permanently settled. Although Tishman Speyer and BlackRock Realty are in the process of negotiating a deal with a "special servicer," experts predict that the companies will exhaust their funds by Dec. 25 and default on the Stuyvesant Town and Peter Cooper Village's mortgage.
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San Fran Apartments to Be Affected by Expanded Smoking Ban
Digested From "San Francisco May Expand Smoking Ban"
San Francisco Chronicle (12/16/09) by Rachel Gordon
San Francisco is preparing to enact much tougher restrictions on smoking in public places. Under the more stringent ban, smokers would no longer be permitted to light up near the doors, vents and operable windows of any building, including apartment communities, restaurants, shops and offices. Smoking would also be banned from farmers' markets, lines for movie theaters and other events, near ATMs and cab stands. If approved, San Francisco would join a growing number of Bay Area communities -- among them Belmont, Berkeley and Palo Alto -- that have made it increasingly difficult for people to find a legal place to smoke. Alyonik Hrushow, head of the Department of Public Health's Tobacco Free Project, remarks, "The ordinance really is trying to reflect the current research on secondhand smoke." In terms of apartment living, the San Francisco proposal seeks to prohibit smoking in all courtyards, yards, hallways, elevators, lobbies, stairwells and other common areas of any residential property with two or more units. People who smoke outside would be required to stand at least 10 feet away from all doors and windows. In addition, anyone who smokes inside their own apartment would be required to keep their doors closed. The San Francisco Apartment Association, which represents the interests of apartment owners in and around the city, has yet to take a public position on the matter. However, executive director Janan New says the organization generally "supports the concept."
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Apartment Inspection Fee Gets Cool Reception in Wisconsin
Digested From "Rental Unit Inspection Fee Gets Chilly Reception"
Sheboygan Press (Wis.) (12/15/09) by Bob Petrie
In Sheboygan, Wis., a proposal to create a fee-based annual inspection of the city's approximately 9,000 rental housing units recently got a chilly reception from several area apartment owners during the Common Council's Finance Committee meeting. Under the proposal, the fees would be $120 for a three-year period, which would be payable in installments of $40 per year. There would be a cap of fees on multifamily housing with more than eight units of $320 annually per building. Inspections would ensure the properties meet basic livability requirements. Owners opposed to the proposal said the fees would be an undue hardship on them in such a down economy. Lakeshore Apartment Association President John Kittelson states, "The rental market is depressed right now. Many people said you can pass that money onto your renters. You can't pass it onto your renters." Attorney Jason Dierkes cautioned that if the council approves the fees, it would be a case of discriminate against apartment owners. To this end, he vowed, "If the city passes the ordinance as is, we're going to challenge it the next day." Sheboygan officials say the fee could raise approximately $240,000 a year. The funds could be used to retain three building inspectors whose jobs are being targeted on account of budget cuts.
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Indianapolis to Target High-Crime Apartments
Digested From "City To Target High-Crime Apartments"
WRTV (Indianapolis) (12/16/09)
Indianapolis police and various outreach agencies are joining together to help families who live in troubled apartment communities locally. Residents of four Northeast Indianapolis apartment communities called cops for help nearly 4,000 times this past year. One resident at the Heart's Landing Apartments lamented, "There aren't enough police to protect the whole apartments." At the nearby Oaktree Apartments, for instance, police have answered approximately 800 calls since January. East side community groups, city agencies, concerned clergy and Indianapolis police are now putting together a multi-pronged strategy to deal with the problems. Mellisa Drew with the Far Eastside Action Coalition remarks, "We're hoping to get a residents council started to work with them, the residents, about what their needs are." In addition to crime, these apartments have such maintenance issues as a lack of heat and hot running water. Local police insist that the high number of 911 calls at the four communities requires a multi-agency solution. The coalition also plans to meet separately with the owners and managers of the four communities.
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