Blackstone to Slow Down Home Purchases Even Further This Year
Digested From "Blackstone to Slow Down Home Purchases Even Further This Year"
Blackstone Group will continue to slow down the pace of its home purchases in 2014 as the supply of ultra-cheap residential properties thins out, according to Jonathan Gray, the private equity firm's global head of real estate. Blackstone's Invitation Homes unit ranks as the nation's biggest single-family rental business. It hit its peak purchase pace of about $125 million worth of homes per week last summer. Since then, its weekly pace has slipped to around $30 million to $40 million and will likely continue falling further during the remainder of this year as it becomes tougher to find enticing deals. Still, Blackstone will continue to make residential purchases with the expectation that it will enjoy real appreciation down the road. Gray remarks, "We still see a number of years of pretty good [home-price] growth. There's definitely room for more appreciation." Blackstone's buying activities are currently concentrated in such markets as Atlanta, Miami, Orlando, Tampa, and Seattle.
Market Trend Insights
What's So Special About Wilmington, N.C.'s Apt. Market?
Digested From "Report: Apartment Construction Growth to Continue"
Greater Wilmington Business Journal (04/11/14) O'Neal, J. Elias
The apartment unit count continues to grow throughout the greater Wilmington, N.C., market, reports Raleigh-based Multifamily Realty Advisors LLC. The regional commercial property firm calculated that 1,780 new apartments were under construction as of the end of this year's first quarter in and around Wilmington. That is a 415-unit increase from the 1,365 apartments that were being built at the start of the year, according to the study. Of the dozen apartment communities in various stages of development, two -- New Providence Park near Murrayville and Park at Three Oak in Ogden -- are existing apartment communities that are adding new rental units. The lion's share of the new units are being planned and built in northern New Hanover County, particularly in the Porters Neck and Ogden areas. The research showed that the Wilmington market has proven to be "exceptionally strong" for new apartment unit growth, as the average occupancy rate for the area remains strong at 92 percent. One of the biggest apartment communities now under construction is Cambridge Village of Wilmington. The 250-unit community is geared toward seniors.
Why Rent-Controlled Evictions Are Out of Control in L.A.
Digested From "Evictions From Rent-Controlled Units on the Rise in L.A."
Los Angeles Times (04/13/14) Khouri, Andrew
A growing number of rent-controlled apartments are being converted to condominiums or simply flattened in Los Angeles, leaving the city with a dwindling supply and fewer affordable options for residents. Such evictions have surged as building owners have looked to cash in on the recovery. In place of rent-controlled apartments, developers are putting up new condo or luxury apartment communities; modern mansions; or clusters of compact, single-family homes. The evictions are permitted by the state's Ellis Act. Larry Gross, executive director of the Coalition for Economic Survival, laments, "The people who make Los Angeles run -- such as the hotel workers, the service workers, the teachers and the bus drivers and the regular working people -- are being run out of Los Angeles." L.A. passed rent control in 1979, after concerns that rapid rent increases were pricing too many residents out of the city. Today. there are approximately 638,000 such units left in Los Angeles -- a dwindling supply because controls generally apply only to older buildings. In addition to L.A., evictions have exploded in San Francisco and intensified local backlash against the city's tech-driven gentrification.
Why It's a Royal Pain to Find an Apt. in NY's Dutchess County
Digested From "Low Vacancy Rate Makes It Difficult to Find Apartments in Dutchess County"
MidHudson News (NY) (04/12/14)
The Dutchess County (N.Y.) Planning Department's annual housing survey found that the vacancy rate for apartments in Poughkeepsie was 6.5 percent last year. In nearby Rhinebeck, meanwhile, the vacancy rate was near zero. Countywide, the vacancy rate for market-rate apartments was 2.9 percent as of Dec. 31. Consequently, finding an apartment can be rough. Heather LaVarnway, senior planner for the county, remarks, "The vacancy rate has remained low for some time in Dutchess County, and with a lack of construction recently due to the recession, it is difficult to find housing." Fortunately, the average rents for a market-rate apartment have increased only slightly over the past five years. A one-bedroom apartment that rented for $993 a month in 2009 went for $1,047 in 2013. A three-bedroom apartment that rented for $1,693 went for $1,727 during that same time span. In apartment communities of at least 20 rental units, a family needed a combined annual income of $43,200 to afford a one-bedroom unit and a cumulative salary of $71,240 to afford a three-bedroom apartment.
Deals and Transactions
Where in N.C. Is This Philly Investor Buying Apartments?
Digested From "Philadelphia-Based Investor Acquires Three Raleigh Apartment Complexes"
Raleigh News & Observer (North Carolina) (04/09/14) Bracken, David
A Philadelphia-based private equity real estate fund recently acquired a portfolio of three Raleigh apartment communities. The acquisition by Equus Capital Partners consisted of the 180-unit Hunters Glen apartments, the 122-unit Laurel Springs community, and the 164-unit Laurel Oaks community. According to Equus, the three properties' 466 rental units were 96 percent occupied at the time of sale. The firm plans to invest $4 million in improving the communities. The transaction was conducted as part of Equus' $310 million BPG Investment Partnership IX fund. The purchase price was not disclosed.
Mapping the Multifamily Customer Journey: A Visual Guide
Digested From "Mapping the Multifamily Customer Journey: A Visual Guide"
Apartment Internet Marketing (04/15/14)
Looking for some new Pinterest boards to follow that you can substantiate as “work research?” Of course you are, and the Apartment Internet Marketing Conference is here to help. Check out these awesome boards with detailed maps and graphics highlighting customer journeys and the user experience in all kinds of industries, from the emotional experience of a customer taking their first subway ride to the decisions behind buying a car, which aren’t that far off from renting an apartment.
Bozzuto Seeks to Become the First Name in Apartment Concierges
Digested From "Bozzuto Turns to Concierges to Make Apartment Living Worthwhile"
Washington Post (04/13/14) Orton, Kathy
The Bozzuto Group is wagering that good customer service will have a positive impact on its bottom line. To this end, the Maryland-based company is spending resources on training employees on the best ways to interact with residents in their apartment communities and with prospective residents. Bozzuto Management Co. President Julie A. Smith remarks, "The return is evidenced in buildings that are fully occupied with residents who are happy living in them. We can easily connect what we invest in all of our employee trainings by operating well-run buildings that received consistent and positive resident reviews and by the number of incoming residents who are a result of their referrals." Bozzuto currently manages more than 150 apartment communities up and down the East Coast. It regards its front desk workers as the face of its buildings. They are not only the problem solvers, they are also part of its brand. The company trains them to do more than just accept residents' UPS or FedEx parcels and process service requests. From tickets to a local sporting event to reservations at a restaurant to picking up dry cleaning, no request is too trivial for a Bozzuto Group concierge. The firm's concierge training is in addition to other training these staffers receive, including an eight-hour orientation, an eight-hour "Bozzuto Basics" class, and some online training.
Steven Fretwell, director of learning and development, came to the Bozzuto Group after working at both Marriott and Ritz Carlton. He developed the apartment firm's concierge training about a year ago. Fretwell eventually wants the concierges to undergo a total of 40 hours of training, stating, "I think we've gotten our money's worth if these people understand how important they are to our brand and to our residents." He adds that customer service can be a way for apartment owners and managers to distinguish their properties and lure residents away from rival communities. Harry McNeil, a Bozzuto Group concierge, marvels, "If you're looking for scissors, they're all in the exact same place. Once you're trained at one property, you can work at any of them because it’s really that detailed." Bozzuto Group concierges are also expected to know their local neighborhoods, to network with area eateries and stores, and to plan events for their residents. They are also taught how to dress -- not in uniforms, but in so-called "power suits." Finally, these concierges are charged with arranging the move-in gifts for residents -- packages that typically include such items as a card signed by the entire staff, dish detergent, paper towels, candy, a robe, and so forth.
How Online Reputations Are Being Lost With Yahoo's Switch to Yelp
Digested From "Online Reputations Lost As Yahoo Switches to Yelp"
Wall Street Journal (04/10/14) Loten, Angus
Yelp Inc.'s recent agreement to provide business listings for Internet searches on Yahoo Inc. is getting poor reviews from some small-business owners, who lament that years of positive feedback from customers have now vanished from Yahoo. For instance, Colonial Hardwood Flooring of Lexington, Mass., amassed six years of mostly positive reviews on its Yahoo Local listing. Owner Dan Tringale says that after Yahoo started posting Yelp reviews several weeks ago, nearly 50 Yahoo write-ups disappeared. Yahoo has declined comment on specific businesses. One unnamed company spokeswoman did respond, "We partnered with Yelp, one of the most trusted, relevant sources of consumer business reviews, to provide a richer search experience for Yahoo users. That's why when Yelp's reviews are available for U.S. businesses, they will replace Yahoo Local reviews." Approximately 95 percent of consumers say they go online to find local businesses, reports search-engine-optimization consultant BrightLocal, and 85 percent say they read reviews posted on the Internet. Having multiple reviews is critical for businesses, because it provides consumers with diverse, trustworthy opinions. Bala Iyer, who teaches Internet business strategy at Babson College in Massachusetts, states that more and more businesses "live or die by their online reputation." Yelp touts that the majority of its reviewers use their real names and that it has systems in place to protect the site from fake reviews. Only reviews that are cleared by a software filter will appear in Yahoo search, Yelp notes.
The Five Energy-Saving Features of Hoboken's New Luxury Apts
Digested From "Hoboken Breaks Ground on Luxury Apartment Building"
Another luxury apartment tower is set to rise in Hoboken, N.J., but this one is set to feature some very innovative energy saving features and amenities. Located at 900 Monroe St., the $83 million, 11-story building will boast 135 rental units. Mayor Dawn Zimmer said the building is designed for the future and fits into her vision of a Hoboken that is more resilient against flooding and power outages. It will indeed incorporate a wide array of energy-efficient features, including high-efficiency heating and cooling systems, LED lighting, bike racks, and electric car-charging stations. It will also include low-flow fixtures that will help reduce the stress on the city’s sewer system. "Citywide," Zimmer states, "we need to be doing as much as we can to reduce the amount of rainwater that goes into our combined sewer system." The development is a joint venture between Intercontinental Real Estate Corp. and Bijou Properties and will be located next to the Hudson-Bergen Light Rail. It is on pace to be completed in the fall of 2015. Pending approval from state and federal legislators, the building's cogeneration energy system will be able to tie into a micro-grid system. That will ensure that residents living there will have hot water and electricity even if a power outage strikes the city. Zimmer says she would love to see the energy features at 900 Monroe implemented in all future buildings citywide.
UDR Rating Reiterated by Zacks
Digested From "UDR Rating Reiterated by Zacks"
Zolmax News (04/14/14) Powley, Bonnie
Zacks issued a report late last week in which it restated its neutral rating on shares of UDR Inc. There is currently a $27.00 target price on the stock. The apartment REIT is scheduled to release its first-quarter results before the opening bell on April 29. The Zacks report read: "The ongoing extensive development and redevelopment activities position the company well in upscale markets and enhance its growth prospects and the recent dividend hike boosts investors’ confidence. Nevertheless, a huge development and redevelopment pipeline increases operational risks. Additionally, stiff competition from other housing alternatives and a weak Mid-Atlantic market remain our concerns." Rising interest rates could also affect both the company's of debt and its quarterly dividend payout, hence Zacks' "neutral" stance on the stock. UDR owns and manages an undisclosed number of apartment communities across the United States.
Legal/Legislative Did You Know
Utah City Halts Apartment Construction Permits ... Why?
Digested From "Layton City Council Halts Permits for Apartment Buildings"
Fox 13 (Utah) (04/08/2014)
In Utah, Layton City Mayor Bob Stevenston and city council members have enacted a resolution that will not grant building permits for apartments. Stevenson noted that in the past couple of years, banks have loosened up the loans for developers on multi-unit properties. This has resulted in an unhealthy balance in the city. With a population of more than 70,000, Layton ranks as Davis County’s biggest city. It remains a growth market today. More than 800 rental apartments have been constructed in the past couple of years. Stevenson comments, "We felt that was quite an impact on the community to be adding more apartments than single family. So we took the stand that it was important to build our base as far as the single family goes, to strengthen the community." He added that the decision to halt construction of new multifamily housing is not a statement about people who live in apartments.
What Portland Apt. Owners Need to Know About New Ordinance
Digested From "New Portland Ordinance Will Require Multiunit Apartment Buildings to Recycle"
Bangor Daily News (Maine) (04/08/14) Koenig, Seth
Portland, Maine, has for years offered curbside recycling pickup for homeowners. However, municipal officials have long struggled to bump up the city's overall recycling rates because thousands of residents lived in apartments away from curbs. Under recently approved ordinance language, owners of multi-unit apartment communities in the city will be required to make recycling as accessible to residents as trash disposal. Troy Moon, Portland's environmental program manager, states, "The ordinance really leaves it up to the property owners to develop their own system. Every property is different, so every property owner will be able to develop a different strategy. But it has to be equally convenient to recycle as to trash something." City Council members agreed to pass the language back in March after kicking it back to Portland's Transportation, Sustainability, and Energy Committee nine months earlier following concerns that Portland apartment owners were not given sufficient notice regarding the demands soon to be placed on them. The ordinance implementation date was subsequently pushed to Jan. 1, 2015, to give multi-unit apartment community owners additional time to step up their recycling efforts. The ordinance also allows apartment owners to apply for up to two years of extensions if they can show they have a plan to comply and are making progress toward their objective.
LA Mayor Wants City's Buildings Graded for Seismic Safety
Digested From "Mayor Eric Garcetti Seeks Rating System for Buildings' Seismic Safety"
Los Angeles Times (04/11/14) Lin II, Rong-Gong; Xia, Rosanna; Smith, Doug
Los Angeles Mayor Eric Garcetti wants buildings throughout the city to be graded for their seismic safety as part of an aggressive campaign to help residents understand the earthquake risks of their office buildings and apartments. According to Lucy Jones, a U.S. Geological Survey seismologist, grading quake risk in this regard would be a giant undertaking. First, L.A. officials would have to agree on a standard for evaluating buildings. Then, the city would have to come up with a process for inspecting each building, which could be long and quite complex. Finally, officials would have to agree on how to publicize the grades, either using placards on buildings or on a website. Garcetti announced what would be the country's first seismic safety grading system for buildings during his April 10 State of the City address. For the first time, he announced his support for some type of mandatory retrofitting of older buildings that have a risk of collapse in a major earthquake. L.A. is not alone in its efforts. New Zealand, for instance, is currently developing its own building rating system after a devastating 2011 earthquake killed 185 people. The details of L.A.'s rating system are still being hammered out, but it would involve some type of scientific assessment that would rank the safety of various structures.
Are Fannie-Freddie's Apt.-Lending Units a Model for Mortgages?
Digested From "Fannie-Freddie Elimination Model in Apartments: Mortgages"
Bloomberg (04/07/14) Mulholland, Sarah
Following the U.S. housing collapse, the apartment-lending units of Fannie Mae and Freddie Mac were among the two government-sponsored enterprises' (GSEs') few money makers. Now they should help transform America's mortgage industry. Federal legislators seeking to eliminate the two GSEs see an antidote to the reckless lending that blew up the country's housing sector in the structure of their multifamily housing operations, which share risks with lenders. Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) are proposing legislation to create a new government-backed reinsurer of mortgage bonds that would require private investors to bear losses on the first 10 percent of capital. The model for the provision mirrors Fannie Mae and Freddie Mac multifamily lending operations, mandating that lenders to shoulder some of the risk on loans they originate.
Deadline Alert! Only 3 Days Left for Discounted Registration to the 2014 NAA Education Conference & Exposition
Save up to $275 by registering before April 18 for the largest, most exciting multifamily housing event of the year: the 2014 NAA Education Conference & Exposition, June 18-21 in Denver.
From world-famous speakers to the latest and greatest from multifamily supplier partners, if career enhancement is what you seek, then this is the one event you can’t afford to miss. Want to talk ROI? Where else can you get benefits like these for one low investment?
** General sessions led by world-renowned speakers representative of some of the greatest minds and business entrepreneurs in the world—the value of which alone covers the price of admission. This year’s big names include critically acclaimed international star Michael J. Fox; ABC’s “Shark Tank” co-stars Barbara Corcoran and Daymond John; Travelocity.com Founder Terry Jones; HGTV Co-Founder Susan Packard; “America Now” host and First “Apprentice” winner Bill Rancic and many others!
** More than 40 breakout sessions covering the gamut of multifamily housing operations and ownership, including marketing, sales, technology, industry trends, executive issues and so much more.
** Two days of NAA Exposition exploration featuring the newest, most innovative products and services from hundreds of leading-edge rental housing supplier partners.
** Receptions, meetings and interactive education sessions where attendees can share ideas and build their network of professional colleagues and potential service partners.
** Six available continuing-education credits offer NAA designates the chance to reach their designation renewal goal (not to mention the career investment) in one place and at one time, saving time and money.
What are you waiting for? Invest in your company and your career today. Visit the NAA Education Conference website and remember that the largest discounts go to those who register early. Have four friends? Register as a group to take advantage of even more savings!
Take Your Multifamily Assets To the Max
New name, same great tactics for taking operating income to the next level The 2014 Maximize: The Multifamily Asset Management Conference—October 13-15 at the Amelia Island Plantation Resort in Amelia Island, Fla.— is the industry’s only event dedicated to staying ahead of the ever-evolving operational curve. The new name for the hugely successful Apartment Revenue Management Conference reflects the important role that revenue management plays in professional apartment management.
Nowhere else but the The Multifamily Asset Management Conference can you find world-class education and first-rate networking, as well as ideas and strategies for boosting net operating income.
Rental housing owners, operators and asset manager attendees will have unique access to insight on operational best practices, supplier and system recommendations, ideal benchmarking metrics and much more.
Register today and be first in line for the information, insight and answers to questions necessary to boost your bottom line.
Advance Your Career with Webinar Wednesdays
Join NAAEI, Apartment All Stars and Multifamily Insiders for Webinar Wednesdays, the largest premium webinar series in the industry to provide state and local association members with access to industry thought leaders to discuss innovative ideas, best practices and emerging industry trends. These webinars will give participants the tools they need to become industry superstars in their own right.
March 26, 2014
The Five Keys to Increasing Sales with Tech-Savvy Prospects
Presenter: Donald Davidoff
April 9, 2014
Think You Know Fair Housing? Guess Again!
Presenter: Anne Sadovsky
Participate Today: 2014 NAA Survey of Income and Expenses
It’s a win-win when your company participates in the 2014 NAA Survey of Income & Expenses in Rental Apartment Communities.
All participants receive a complimentary copy (a $599 value) of the final report which contains:
•Valuable information your staff needs to prepare for the upcoming budget season.
•Detailed local market and national economic analysis that will help ensure accurate financial and benchmarking information for your company.
•Data that will help you compare your community’s performance against your peers.
There are two methods for your company to complete the survey including using our designated Excel file to download data directly from your internal data systems or using our secure survey website.
Contact Janet Gora of CEL at 310-207-7328 to determine the best response method for your company (via Excel or Online). If your company has previously participated, be sure to contact Janet via email before you get started as she can also assist in pre-loading base property data for you.
If you missed last year’s 2013 NAA Income & Expense Survey—here’s the 2013 IES Executive Summary. To purchase your copy today, visit the NAA Bookstore.
NAAEI Designation Courses Offered Near You!
Rental Housing Association of Boston
April – May, 2014
Chicagoland Apartment Association
May – June, 2014
Chicagoland Apartment Association
Find more courses in your area on the NAA website.
For more information about any of the classes listed, please contact Kimberly McCrossen at 703-518-6141 ext. 121.
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