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The Winning Streak Continues for U.S. Apartments in Third Quarter
Industry News
San Diego Apartment Vacancies Could Drop to 3.5 Percent by 2015
Some Apartment Owners Lenient on Credit Histories
AIMCO Amends Revolving Credit Facility
Highridge, Citi, Costa to Manage $3.4B Multifamily Housing Portfolio
Home Properties Launches New Corporate Website
Charleston-Area Apartment Vacancy Rate Falls, Real Data Reports
Equity Residential Acquires 679-Unit Apartment Tower in San Diego
Apartments Dominate New Area Building Permits in Twin Cities
NWP Services Acquires Provider of Specialty Billing Services to Apartments
Legislative/Legal News
Voters Could Add Tax Limits to Indiana Constitution
Opposition From Apartment Owners Leads to Delay in Illinois City Ordinance
San Antonio Postpones Apartment Recycling Vote
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The Winning Streak Continues for U.S. Apartments in Third Quarter
Digested From "The Winning Streak Continues for U.S. Apartments in Third Quarter"
Property Management Insider (10/01/10)
Preliminary data from MPF Research shows that the recovery of the U.S. apartment market continued at full steam during this year's July-through-September period. In fact, annual same-store rent change turned positive for the first time in two years. Meanwhile, the overall occupancy rate is back around 94 percent because of robust apartment demand and dwindling new supply volumes. Preliminary results from the company's third-quarter survey show that the national apartment occupancy is now up to 93.9 percent -- an improvement of 0.5 percentage points. Effective rents, meanwhile, rose by 1.2 percent. The MPF Research analysis further shows that absorption in 2010 through the third quarter totaled 283,000 rental units, one of the most robust totals recorded over the last two decades. Greg Willett, MPF Research's vice president of research and analysis, remarks, "While sluggish employment growth has triggered only mild new household formation, apartments are capturing a disproportionately large share of total housing demand. That pattern is likely to be sustained for a while, in part because current mortgage qualifications standards have made it tougher to buy a home." During the past year, the nation's strongest rent growth occurred in El Paso, where monthly rates have risen 11.7 percent. Several other markets have registered year-over-year increases in the 4 percent to 5 percent range, including Albuquerque, Baltimore, Miami, New York, Pittsburgh, and San Jose.
Industry News
San Diego Apartment Vacancies Could Drop to 3.5 Percent by 2015
Digested From "Apartment Vacancies Could Drop to 3.5 Percent by 2015"
Sign-on San Diego (09/30/10) by Roger Showley
The apartment vacancy rate in San Diego is expected to drop, leading to higher rents and dwindling concessions. Peter C. Burley, editor of Real Estate Issues, projected that vacancies will drop from their present 5 percent level to about 3.5 percent by 2014. Rents have already gone from a 1.5 percent quarterly drop in early 2009 to a 1 percent increase this year. Rent concessions have dropped from nearly 4.5 percent of asking rent to 2.5 percent currently, and apartment construction is no longer keeping up with demand. If optimistic estimates are accurate, employment in the area could increase by 120,000 jobs over the next five years. Burley notes that San Diego's selling points include its favorable climate, close proximity to major universities, and strong government and defense sectors. However, he conceded that a high cost of living and a small airport could be hindrances to the area's growth.
Some Apartment Owners Lenient on Credit Histories
Digested From "Some Landlords More Lenient on Credit Histories"
NPR Online (09/28/10) by Yuki Noguchi
For homeowners caught up in the housing market collapse and those looking to rent, apartment owners are looking past foreclosures and taking other factors into account when assessing prospective residents. For instance, some owners are checking to see if applicants have been steadily employed and whether they paid their other bills. While lenders remain tough on credit standards, credit ratings firms and apartment owners are introducing a bit of flexibility to the process. VantageScore senior vice president Sarah Davies says credit scores vary over time, and the scores must take into account the realities of the market. Apartment owners also indicate that good credit does not necessarily translate into good residents, and some say the steadiness of employment should be another factor taken into account when assessing potential renters.
AIMCO Amends Revolving Credit Facility
Digested From "Apartment Investment and Management Company Amends Revolving Credit Facility"
MarketWatch (09/30/10) by Elizabeth Coalson
Apartment Investment and Management Company (AIMCO) has amended its revolving credit facility. Amendments include an increase in capacity from $180 million to $300 million, an extension of the maturity date to May 2014, and a decrease in the LIBOR floor on the facility's floating interest rate to 1.50 percent. Bank of America and Key Bank will continue to co-lead the facility, with Wells Fargo serving as the documentation agent. Ernie Freedman, AIMCO's chief financial officer, said the move would provide the apartment REIT with added flexibility and an extended maturity date. He adds, "We are pleased to continue the strong relationship we have with our existing line partners and to have the opportunity to include new participants in the facility."
Highridge, Citi, Costa to Manage $3.4B Multifamily Housing Portfolio
Digested From "Highridge, Citi, Costa to Manage $3.4B Portfolio"
GlobeSt.com (09/30/10) by Bob Howard
Highridge Partners, New York-based Citi, and low income housing tax credit leader Michael Costa have teamed up to form Highridge Costa Housing Partners, a new venture that will own and operate a $3.4 billion portfolio of 275 affordable housing properties totaling 26,000 apartments nationwide. The portfolio is made up primarily of family and senior apartment communities, housing approximately 80,000 residents in 34 states and Puerto Rico. Nearly half of the assets are in California, and all were developed using federal low-income housing tax credits. Highridge Costa Housing Partners also intends to pursue new opportunities in the affordable housing arena.
Home Properties Launches New Corporate Website
Digested From "Home Properties Launches New Corporate Website"
Centre Daily Times (PA) (09/30/10)
Home Properties this past week launched its new corporate Web site at www.homeproperties.com. The new site offers enhanced search capabilities, including the ability for prospects to search for apartment communities that offer specific amenities. Scott Doyle, senior vice president of strategic property management, notes, "The site offers them many different ways to communicate with us, as well, so they can choose what is most comfortable for them." In addition to the improved search capabilities, homeproperties.com continues to offer the option to reserve an apartment online and complete a financial pre-qualification process. As part of the overhaul, Home Properties enhanced the "Join Our Team" career section to allow potential applicants to more easily search for positions of interest. Home Properties is a New York-based multifamily housing REIT that owns, manages, develops, acquires and rehabilitates apartment communities throughout the Northeast and Mid-Atlantic. Its current portfolio contains 113 communities containing more than 38,000 rental units.
Charleston-Area Apartment Vacancy Rate Falls, Real Data Reports
Digested From "Charleston-Area Apartment Vacancy Rate Falls"
Charleston Regional Business Journal (SC) (09/28/10) by Ashley Fletcher Frampton
The latest Real Data report shows that apartment vacancy in the Charleston, S.C., metro area has fallen below the 10 percent mark for the first time in over two years. Based on August data, the area's vacancy rate was 9.8 percent. Also that month, rental rates at existing apartments rose 3.1 percent -- the first gain in a year and a half. Real Data publishes a report on apartment market conditions in and around Charleston area twice a year. For the past couple of years, the company's research has shown vacancy rates intermittently rising and falling, but consistently above levels seen over the last decade. In February's report, Charleston's apartment vacancy rate was 13.7 percent. The highest vacancy rate in the report's history -- 15.3 percent -- came in February 2009. By contrast, the last time the vacancy rate was under 10 percent was February 2008 when Charleston-area apartments were 9.6 percent empty.
Equity Residential Acquires 679-Unit Apartment Tower in San Diego
Digested From "Equity Residential Acquires 679-Unit Apartment Tower in San Diego"
MarketWatch (09/28/10)
Equity Residential has acquired the 40-story Vantage Pointe apartment towner in downtown San Diego for $200 million. Vantage Pointe contains 679 rental apartments, along with 26,425 square feet of retail space and 968 underground parking spaces. The purchase price values the apartments at nearly $291,000 per unit, or $348 per square foot of rentable apartment space. The tower was initially developed as a condominium project and was completed in 2009. Amenities range from a clubhouse and fitness facility to a rooftop pool and sundeck. Equity Residential purchased 100 percent of the units, which are being operated as rental units. The REIT, which has begun a comprehensive marketing and leasing campaign, is projecting a year-three stabilized yield of around 7 percent. Equity Residential President and CEO David J. Neithercut states, "The acquisition of Vantage Pointe is another example of the opportunities we have seized this year to add high quality, well-located assets to our portfolio at prices well below replacement cost." The company now owns and manages 14 apartment communities consisting of 4,963 rental units, in the San Diego metro area.
Apartments Dominate New Area Building Permits in Twin Cities
Digested From "Apartments Dominate New Area Building Permits"
Minneapolis Star Tribune (MN) (09/30/10) by Jennifer Bjorhus
New residential construction in and around Minnesota's Twin Cities continues to plod along, led primarily by apartment communities. Municipalities issued 228 construction permits during the month of September, down slightly from 235 a year earlier. However, the total number of units permitted rose 38 percent to 604 from 437 as more permits were issued for apartments, notes the monthly Keystone Report that the Builders Association of the Twin Cities issued Sept. 30. Minnetonka was tops during the month with 149 new apartments permitted. Year-to-date, researchers note, building permits continue to outpace 2009 by about 30 percent. Approximately 50 percent of the activity is multifamily.
NWP Services Acquires Provider of Specialty Billing Services to Apartments
Digested From "NWP Services Corporation Acquires Sierra Utility Billing Services"
Marketwire (09/27/10)
NWP Services Corp., a leading provider of financial transaction processing solutions to the multifamily housing industry, has completed its acquisition of Sierra Utility Billing Services. Sierra is a Texas-based provider of utility and specialty billing services to apartment communities nationwide. Sierra President and CEO Cary Frieden comments, "The decision to proceed with this transaction was driven by Sierra's principal goal: enabling Sierra customers to further strengthen their bottom line. By utilizing the quality and breadth of products offered by NWP, this will be accomplished in ways we would be proud to offer."
Legislative/Legal News
Voters Could Add Tax Limits to Indiana Constitution
Digested From "Voters Could Add Tax Limits to Indiana Constitution"
Evansville Courier & Press (IN) (10/04/10) by Lesley Stedman Weidenbener
Indiana voters will go to the polls Nov. 2 to decide whether to amend the state's Constitution to limit property tax bills. The amendment mirrors current state law, which limits residential tax bills to 1 percent of the property's assessed value. Tax bills for rental properties, vacation homes, and agricultural land is limited to 2 percent of assessed value, while the limit for commercial property is 3 percent of assessed value. The Hoosier Property Tax Reform Alliance -- a coalition of individuals and groups -- has launched a campaign in support of the amendment. Among its members is the Indiana Apartment Association, the Indiana Association of Realtors, and the Indiana Builders Association. The alliance is currently conducting a statewide tour to support the amendment’s passage.
Opposition From Apartment Owners Leads to Delay in Illinois City Ordinance
Digested From "'This Isn't Good for Collinsville': Opposition From Landlords Leads to Delay in City Ordinance"
Belleville News-Democrat (IL) (10/04/10) by Elizabeth Donald
After strong opposition from local apartment owners and managers, the city of Collinsville, Ill., is setting aside part of its controversial health and safety ordinance for now. Council members, though, still plan to vote on a "crime-free housing" initiative that was bundled into the occupancy permit and safety inspection proposals that caused considerable resistance. The council had initially combined a "crime-free" landlord education and cooperation program with an occupancy permit and health/safety initiative for rental properties. It would have required that apartment owners conduct background checks on residents and allow health and safety inspections of rental units as well as owner-occupied property when it changes owners or residents. The council ultimately opted to table the occupancy permit and health/safety inspection portion of the proposal and proceed with the crime-free program only. Police Detective Eric Zaber said those who have taken part have generally been willing to cooperate with authorities. Still, he adds, some of Collinsville's rental housing stock simply should not be rented. Specifically, he cited investigations that uncovered a number of highly overpopulated units with as many as eight people living in a one-room apartment.
San Antonio Postpones Apartment Recycling Vote
Digested From "City Postpones Apartment Recycling Vote"
Mysa.com (09/30/10) by Josh Baugh
San Antonio officials have agreed to postpone a vote on an ordinance requiring apartment communities to offer recycling for residents and have directed staff to strengthen the proposal before a December vote. Mayor Julian Castro said he thought the proposed minimum required volume for recycling at apartment communities, which was marked as 10 percent of their waste capacity, could be higher. By comparison, single-family homes have a 50-50 split. The city agreed to a request from the San Antonio Apartment Association to postpone the adoption of an ordinance to allow its members more time to prepare for the new requirement, and the council will now issue a vote on Dec. 9. If the ordinance is adopted, San Antonio will become the second city in Texas to require recycling for multifamily housing.
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