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What Brown Will Do for the Apartment Industry
Industry News
Tishman Venture Gives Up Stuyvesant Project
A 10-Step Action Plan to Suppress Crime at Apartments
UDR Inc. and Home Properties Upgraded
New York City Tries Saving Apartments Imperiled by Investors
California Apartment Communities Vie for Student Business
Signs Tame Crime at Memphis Apartments
Atlanta Apartment Owner Miles Properties Seeks Chapter 11
Boston Properties to Convert Units to Rentals in Landmark Beantown Project
Jacksonville Apartment Vacancy Rates Increasing, but Rents Not Decreasing
Legislative/Legal News
Indiana House to Consider Apartment Bill About Lease Breaking
Texas City's Crime-Free Program Extends to Apartment Communities 
Arizona Program Finds Adults Engaging Children in Reading at Apartments
Indianapolis Apartment Residents Question Soaring Gas Bills
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What Brown Will Do for the Apartment Industry
Digested From "What Brown Will Do for the Apartment Industry"
UNITS (02/10) by Paul R. Bergeon III
Apartment industry professionals are reacting to Scott Brown's recent stunning and decisive election victory in Massachusetts, which gives Republicans a 41st member in the U.S. Senate and basically allows the GOP to filibuster legislation through a party-line vote. Jim Arbury, Senior Vice President, Government Affairs, for the National Multi Housing Council (NMHC), remarks: "It is amazing how one Senate seat can change the entire political landscape. . . . The shift in legislative power will have a huge impact on many of the issues of concern to the multifamily industry." Peter Donovan, senior managing director at CB Richard Ellis' Boston office, comments, "Being a Massachusetts resident, the effect in our state is seismic. Brown was 30 points behind Coakley and carried little name recognition. But in 60 days he went from being the obligatory Republican opposition candidate to mobilizing the state." Outside of the state, Dallas-based Riverstone Residential CEO Terry Danner was similarly stunned. He stated, "From a property management perspective, in listening to Brown’s acceptance speech, he is a proponent of small business. Democratic initiatives surrounding Card Check and Carried Interest have suffered blows because they will now need major revisions that could go in our industry's favor or be dismissed altogether."
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Tishman Venture Gives Up Stuyvesant Project
Digested From "Tishman Venture Gives Up Stuyvesant Project"
Wall Street Journal (01/25/10) by Lingling Wei; Mike Spector
In the collapse of one of the real-estate boom's most high-profile deals, an investment group led by Tishman Speyer Properties and BlackRock Inc. has decided to give up the massive Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to its creditors. The decision comes after the venture defaulted on the $4.4 billion debt used to help finance the deal. The partners paid $5.4 billion for the sprawling, 56-building property in 2006—the most ever paid for a single residential property in U.S. history. In an official statement released to the Wall Street Journal, the venture commented: "It has become clear to us through this process that the only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives. We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the city." By some accounts, Stuyvesant Town is currently valued at just $1.8 billion. By that measure, all of the equity investors -- including the California Public Employees' Retirement System, a Florida pension fund and the Church of England -- and many of the debtholders are at risk of seeing most, if not all, of their investments wiped out.
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A 10-Step Action Plan to Suppress Crime at Apartments
Digested From "A 10-Step Action Plan to Suppress Crime at Apartments"
UNITS (02/10) by Brent Sobol
Brent Sobol, owner and operator of 1,100 apartments in the Atlanta metro area for TORO Properties, offers 10 tips that can help other owners combat crime. The first rule of thumb is for owners to know who is living in their apartments. He writes: "If they aren't on the lease, politely ask them to leave; most of the time they oblige. Have a police officer assist you when informing the unauthorized occupant that they are criminally trespassing." Step two involves determining which units troublemakers are visiting, and then swiftly evict those residents. Three, do not tolerate parents who do not parent their kids. Sobol states: "It is not against Fair Housing regulations to evict parents who cannot or do not want to curb their children’s repeated, inappropriate conduct." The fourth suggestion is to enforce community rules, from "no littering" to not allowing unlicensed automobiles on the premises. Five, fix any graffiti and vandalism on the same day they are discovered. Sobol writes: "Don't let the troublemakers think they can win. By fixing vandalism promptly upon discovery, vandalism eventually ceases." The sixth tip is to befriend real estate neighbors. Sobol reasons, "The chances are that the type of bad behavior one community experiences carries over to neighboring properties or businesses. Counter that by striking a cordial relationship with neighbors over lunch or hold periodic community meetings so that owners can bond." Tip seven entails working closely with local law enforcement. The eight tip involves reviewing the lease agreement thoroughly with all new leaseholders upon move-in. Nine, do not allow "hanging out" at one's apartment community. Sobol writes, "This often leads to other things, especially when teenagers are involved." Finally, it's a good idea to hire off-duty police for occasional and random enforcement.
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UDR Inc. and Home Properties Upgraded
Digested From "2 Apartment REITs Upgraded"
Associated Press (01/25/10)
After a recent pullback in the shares of UDR Inc. and Home Properties Inc., Stifel Nicolaus analyst Rod Petrik upgraded the two apartment REITs to the bank's highest rating because of their "defensive" portfolios. Petrik described both stocks as "low-risk," with the possibility of high returns. The two REITs have a large presence in the mid-Atlantic region, which Petrik said contains cities with strong apartment markets, including Baltimore and the District of Columbia. He expects Home Properties' occupancy rates -- already at 95 percent as of Sept. 30 -- could rise even higher in the coming months. Petrik added, "We expect fundamentals to continue to be the best in the sector for 2010 and guidance could surprise investors." Meanwhile, UDR's apartment communities were 95.6 percent occupied as of the end of the third quarter. Consequently, Petrik raised both stocks from "Hold" to "Buy."
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New York City Tries Saving Apartments Imperiled by Investors
Digested From "N.Y.C. Tries Saving Housing Imperiled by Investors"
New York Times (01/22/10)
New York City recently launched a program to rescue moderate-rent apartment buildings that were gobbled up by private equity firms during the boom, then neglected when the owners were unable to repay their loans. Under the plan, the city's housing agencies will have $750 million to lend over the next five years to enable new, responsible owners to purchase and fix up such properties. City officials, working through the Department of Housing Preservation and Development, will focus on the most beleaguered apartments first -- 267 buildings containing more than 3,500 apartments that are in a state of severe disrepair and in or close to foreclosure. Approximately 100,000 apartments throughout the city are in buildings that are carrying too much debt, with the money owed on them greater than their current worth.
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California Apartment Communities Vie for Student Business
Digested From "Apartment Complexes Compete for Student Business"
California Aggie (01/25/10) by Rebecca Shragge
Sequoia Fest is an annual event held by Sequoia Equities to showcase its Tanglewood, University Village and Sharps and Flats apartment communities to University of California Davis students potentially looking for a place to live. However, this year's event sparked some opposition after it was scheduled to take place the same day as the Associated Students of the University of California, Davis' (ASUCD's) Housing Day on Jan. 21. Both events are held as vehicles to publicize the various apartment communities located in and around Davis. Lisa Trapp, director of marketing for Sequoia Equities, states, "Housing Day and Sequoia Fest are separate events, so historically we have hosted each event on separate days. This year, however, we decided that Sequoia Fest and Housing Day would run concurrent with each other in attempt to maximize exposure for both events by combining resources." Sequoia Equities, who has taken part in Housing Day for the past three years, was awarded sponsorship for this year's Housing Day thanks to a $4,000 contribution. Consequently, Sequoia was given priority in setting the date of the ASUCD event. While Housing Day took place, Sequoia Equities had a stretch limo bus with a 30-person carrying capacity shuttling students to its three Sequoia apartment communities. At each location, students were offered free food from the Cheesecake Factory, special leasing rates for the following school year and even free beer for those of age. In total, Housing Day welcomed nearly 1,500 students by the event's end, an increase of about 500 students compared to a year earlier. The 50 apartment communities present at the event was up from 40 the year before.
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Signs Tame Crime at Memphis Apartments
Digested From "Signs Tame Crime at Memphis Apartments"
Jackson Sun (TN) (01/22/10) by Zack McMillin
In Tennessee, the Memphis Police Department (MPD) and the Shelby County District Attorney General's say their latest crime-fighting tool is simply a "No Trespassing" sign. Residents and guests at two area apartment communities -- Autumn Ridge in Hickory Hill and Kensington Manor in Parkway Village -- have been impressed so far with the test results. The signs sport a logo on them for Project SAFEWAYS, an initiative aimed at reducing crime in apartment communities that involves Memphis police, the DA's office, the University of Memphis' CBANA program and the Southeast Shelby County Community Development Corporation. The project does include some new cameras. Most concerned, though, believe the DA office's decision to use trespassing as sufficient cause for arrest or search deserves most of the credit for huge reductions in crime at the two communities. SAFEWAYS was tested first at Autumn Ridge this past spring and yielded fast results. Those involved say the success there is part of a promising trend of crime reduction in Hickory Hill. Autumn Ridge residents are encouraged to notify the property management office or police whenever they see suspicious activity. Law enforcement can then show up and demand the suspicious parties say where they lived or name an apartment resident they were visiting. If they had no answer, they were subject to arrest or warrant search as the "No Trespassing" SAFEWAYS signs posted prominently throughout the community clearly state.
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Atlanta Apartment Owner Miles Properties Seeks Chapter 11
Digested From "Atlanta Apartment Building Owner Seeks Bankruptcy Protection"
Atlanta Journal-Constitution (01/15/10) by Kelly Yamanouchi
Atlanta-based Miles Properties Inc. and a dozen affiliated companies have filed for Chapter 11 bankruptcy protection earlier this month. The recent filing included companies that own five Georgia apartment communities. Some of the company's apartment communities in other states were also included. The move follows the Chapter 7 bankruptcy filing of Miles Properties owner Daniel J. Miles late last year. Ron Glass of financial advisory firm GlassRatner Advisory & Capital Group has agreed to overseeing Miles Properties' reorganization. He hopes to get court approval a week from now to continue business as usual, stating, "There probably are some 15,000 to 20,000 people living in these apartments who so far have had uninterrupted service. That will stop happening if we can't pay [employees], so hopefully we can continue" by getting court approval. The 20 biggest creditors in the case, which include Wachovia Financial Services, have claims worth more than $18 million. Miles Properties currently manages approximately 9,000 rental units at 36 different apartment communities.
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Boston Properties to Convert Units to Rentals in Landmark Beantown Project
Digested From "Boston Properties Looking To Convert Russia Wharf Residential Units To Rentals"
Banker & Tradesman (01/22/10) by Paul McMorrow
Boston Properties has decided to convert the 65 remaining condominiums at its landmark, $550 million Russia Wharf development in Boston into rental apartments. The REIT previously had sought city approval to reduce the number of residential units in the mixed-use project from 215 to 65 in order to secure the necessary construction financing for the 31-story tower. Even with Boston Properties cutting Russia Wharf's residential component, a consortium of five banks offered the REIT only a $215 million loan and with strict recourse provisions. Lenders' reluctance to fund new condo construction recently deep-sixed financing for Vornado and Gale International's Filene's store redevelopment in downtown Boston. It also forced Lincoln Property Co. to abandon condos in favor of offices in suburban Fort Point. By comparison, many lenders remain willing to finance new rental housing partly due to the fact that the secondary market remains more liquid than other areas of commercial finance. Swapping for-sale condos for rental apartments will now enable Boston Properties to generate immediate cash flow from the Russia Wharf's residential units. The building remains on track for a first-quarter 2011 grand opening.
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Jacksonville Apartment Vacancy Rates Increasing, but Rents Not Decreasing
Digested From "Jacksonville Apartment Vacancy Rates Increasing, but Rents Not Decreasing"
Florida Times-Union (01/18/10) by Kevin Turner
Reis Inc. reports that Jacksonville's apartment market now leads the country in terms of vacancy rate after a 0.7 percent increase from the third to fourth quarters of 2009. Although the metro area's vacancies spiked during the quarter, average apartment rents have remained steady throughout. Reis research shows that average rents in and around the Jacksonville area rose by only two-tenths of 1 percent from the third to fourth quarters and by the same rate from the second to the third. At the same time, Jacksonville's apartment rent was fairly low compared to the 78 other U.S. markets Reis researchers monitor. In fact, the metropolitan area's average rent ranked 42nd. Separately, Reis data shows that Jacksonville's office vacancy came in at 20.6 percent as of the end of last year. That is compared to a Cushman and Wakefield fourth-quarter study that put the city's office vacancy rate at 22.4 percent.
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Legislative/Legal News
Indiana House to Consider Apartment Bill About Lease Breaking
Digested From "Indiana House to Air Bill Inspired by Bristol Death"
South Bend Tribune (IN) (01/21/10) by Kevin Allen
Legislation that would allow apartment residents to break their leases without penalty if they are victims of such property crimes as burglary and criminal trespass is now eligible for a vote in Indiana's House of Representatives. The law already provides such relief for victims of violent crimes, including domestic violence and sexual offenses. The bill was written by Rep. Craig Fry (D-Mishawaka) and inspired by the murder of Sheena Kiska, a 23-year-old Bristol woman who was killed nearly two years ago at her River Shores apartment. Kiska had wanted to move out of her unit after it was burglarized a month earlier, but she did not have the $2,500 required to end her lease. Fry remarked, "Most renters . . . they don't have control over their own security. Other people determine what locks they have on their doors. Other people have keys to those locks. Basically, people are unsecured in their own homes." On Jan. 20, committee members voted unanimously in favor of Fry's bill, making it eligible for a vote in the full House. If passed and signed into law, a crime victim who wants to break his/her lease would only need to obtain an official police report to verify the crime occurred at the apartment community.
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Texas City's Crime-Free Program Extends to Apartment Communities
Digested From "WFPD Crime-Free Program Extends to Apartment Complexes"
KAUZ-TV (Texas) (01/23/10)
In Wichita Falls, Texas, local police are looking to keep even more of the area's population safe by expanding a successful, crime-free program that was first enacted nearly a year ago. The program is a citywide initiative focused on keeping apartment communities and self-storage facilities as free of crime as possible. Since launching the crime-free program, service calls from certified locations -- such as Greenbriar Apartments -- have decreased by a considerable margin. Peggy Selder, manager at the community, remarks, "I think it makes [residents] feel safer knowing there's nothing going on here and happier knowing their kids can go out in the courtyard and play and don't have to worry about it." Not only is the crime-free program helping apartment residents, but now officers are able to spend more time patrolling other areas in the community. Because the program has been so successful with apartments and industrial complexes, it is now being expanded to hotels and motels.
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Arizona Program Finds Adults Engaging Children in Reading at Apartments
Digested From "Program Encourages Adults to Engage Children in Reading"
Arizona Republic (01/24/10) by Sadie Jo Smokey
Southwest Human Development has partnered with the Arizona Multihousing Agency to offer a proven literacy program at apartment communities throughout central and north Phoenix. The multi-year Raising A Reader Initiative links free literacy training with outreach activities in the various apartment communities to help kids 5 years old and younger develop the necessary skills to become successful readers. To date, 20 apartment communities and 16 child-care centers have agreed to participate in the project.
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Indianapolis Apartment Residents Question Soaring Gas Bills
Digested From "Tenants Question Skyrocketing Gas Bills"
WTHR-TV (Indianapolis) (01/22/10) by Sandra Chapman
In Indianapolis, hundreds of apartment residents are complaining that they are paying more than their fair share of their utility bills. Local apartment resident Samaya Murphy claims she was recently assessed a gas bill that was seven times the amount she paid a month ago. Her neighbors back her up, displaying bills that were just $9 in October and $10 in November but shot up to over $70 in December. The bills are from American Utility Management (AUM), a third-party company contracted by area apartment communities to divide up the master monthly gas bills based on square footage. The problem is residents like Murphy have ended up paying for what everyone else uses, plus a fee to AUM. She laments, "They create a bill. Whatever their gas bill amount is, they use AUM to create some kind of bill for all of us, and they charge us for using the service, for them using the service. We didn't ask them to use AUM." Citizens Gas reports that there is currently no requirement for each apartment to have it's own meter. In addition, there is no state law that gives the Indiana Utility Regulatory Commission the power to halt the third-party billing. Similar complaints have surfaced in California and elsewhere.
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