NAA Industry Insider: Will Building Boom End the Party for Apartments Investors?

 

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TWCFEB13
Will Building Boom End the Party for Apartments Investors?
Digested From "Will Building Boom End the Party for Apt. Investors?"
CoStar Group (05/22/13) Drummer, Randyl

According to the most recent CoStar Commercial Repeat Sale Indices (CCRSI), apartment developers and investors can look forward to at least another year or two of high occupancy rates and pricing power in a strengthening economy. However, things could slow down in 2015 when the brunt of new supply is expected to be felt across numerous U.S. markets. CCRSI researchers state that multifamily pricing continued to post the strongest results of all product types during the first quarter, despite signs of a deceleration in apartment fundamentals. The sector's impressive performance has been driven in part by stronger fundamentals and loosening lending standards. "Construction is getting back to normal levels and it's changing the way some markets are behaving," said Erica Champion, senior real estate economist with CoStar's Property and Portfolio Research (PPR). With Echo boomers entering adulthood and driving above average household formation, CoStar expects demand to remain above average for the coming year. "Our supply forecast [for the 54 largest U.S. metros] will come in at about 160,000 units, about 40 percent above the average annual supply additions since 2000 and the biggest year of construction deliveries in over a decade," Champion said.
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Market Trend Insights


RealPageMay13
What College Town Is Making the Apartment Sector Honor Roll?
Digested From "Apartment Business Good in IU's Hometown"
Columbus Republic (IN) (05/28/13)

New figures from the Monroe County Apartment Association show that Bloomington, Ind., continues to be a good place for the apartment sector. The association's annual market update puts the local apartment rental rate at 96.6 percent for 2012, which is higher than Indianapolis at 93 percent and nearby Columbus at 95 percent. Bloomington's average apartment rent was $892 a month last year, a nearly $60 increase in two years. According to CBRE Group vice president Steve LaMotte, the city's apartment stock has been helped by the fact that enrollment at Indiana University's main campus has remained over 42,000 students. There has also been local population growth of around 3 percent since 2010. LaMotte does not believe an apartment construction boom in Bloomington is imminent because residents have typically resisted proposals for large new multifamily housing communities.
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Boulder County's Apartment Sector Rolls on
Digested From "Tight Rental Market Spurs Apartments"
Boulder County Business Report (05/24/13) Potter, Beth

ARA Colorado statistics show that around 2,700 apartments are getting built or are in the planning stages in the state's Boulder Valley. There’s been a pent-up demand for rental housing throughout Boulder County for years and only a limited supply. This could change with the new multifamily hosuing coming online, states Terrance Hunt, a principal at ARA's Denver office. But while the new apartment communities opening in the next several months may slow rent hikes in and around Boulder, they will likely not stop them. Hunt states, "[Boulder is one of the most popular places to live on the Front Range, so demand is expected to absorb this pretty quickly. You'll always have people who want to live in Boulder because of the lifestyle." Many of the new apartments are being added in areas originally planned for condominiums. The Boulder South submarket has the second lowest apartment vacancy rate in the metro area at 2.35 percent, notes Apartment Insights. In second place is Longmont, with a 2.94 percent vacancy rate.
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Is Hampton Roads' (Va.) Apartment Market Getting Overbuilt?
Digested From "Hampton Roads Apartment Market Getting Overbuilt?"
Virginian-Pilot (VA) (05/20/13) Varble, Sarah K.

Bulldozers are making room for new high-end apartments and retail space in downtown Norfolk, Va. Developer Buddy Gadams is building 136 luxury rental units from the ground up. He plans to develop three more apartment communities downtown over the next 18 months. Gadams is not the only developer betting that the apartment sector across Hampton Roads still has plenty of steam. At the end of last year, the number of rental units under construction eclipsed 2,000 for the first time since 2005, notes a Real Data report. But the study also stated that vacancy rates are on their way up because supply is outpacing demand, leaving some wondering whether the market will soon be overbuilt. Many builders are including high-end amenities, such as granite countertops and hardwood floors throughout, to entice residents willing to pay higher rents. Local experts say more young professionals, in particular, are willing to pay a premium to live close to work and avoid a 30-year mortgage.
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How Did Downtown Cleveland's Apts Become Almost 100 Pct. Occupied?
Digested From "Cleveland: Downtown Living Sees Growth"
WKYC-TV (OH) (05/23/13)

Cleveland's downtown apartment sector is enjoying a boom period, with the local occupancy rate almost at 100 percent. Fortunately, there is a plethora of new multifamily development on the horizon. For instance, K&D Group confirms that renovations are underway near the city's PlayhouseSquare to create a high-end apartment community called the Residences and the Hanna that will offer downtown living in the Theater District. K&D Group CEO Douglas Price remarks, "It's going to add that 24-hour foot traffic to the streets that retail needs that restaurants need." The Hanna will offer 102 one- and two-bedroom apartments, complete with granite countertops and washer/dryers in each rental unit. The project is already more than 50 percent leased, with the first apartment not even being delivered until July. Price states, "We will be done in October, so I would say by Nov. 30 this building will be full." Those signing leases in downtown Cleveland range from young professionals to empty nesters. In total, nearly 1,000 more housing units are on track to be added to the downtown market in the next 18 months.
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Waypoint Files for Latest Foreclosure-to-Rental IPO
Digested From "Waypoint Files for Latest Foreclosure-to-Rental IPO"
Wall Street Journal (05/21/13) Whelan, Robbie

Momentum for the single-family rental business continues to gain steam, as companies scramble to raise money on public capital markets for this hot trend in real estate. Waypoint Homes Realty Trust Inc., for example, has announced plans to raise up to $100 million in an initial public offering on the Nasdaq. This would be the fifth single-family rental housing owner to file in the past year with plans for an IPO. The first was Minnesota-based Silver Bay Realty Trust Corp., which began trading publicly in December. It was soon followed by the spin-off of Altisource Residential Corp. that, unlike most of its rivals, buys homes via portfolios of non-performing mortgages. Just two weeks ago, American Residential Properties Inc. became the third such publicly traded firm just before Colony American Homes, the rental home division of private equity firm Colony Capital LLC, made filings on May 2 and indicated an IPO would soon follow. Also active is the Blackstone Group LP, which has acquired almost 25,000 homes over the past couple of years. It likely will debut its rental business, Invitation Homes, on the public markets in the near future. Meanwhile, Starwood Properties Trust has publicly discussed a spinoff. All of these IPOs are for companies structured as REITs.
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Deals and Transactions


Lowe'sFeb13-II
Which GSE Is Offering Securities Linked to Apartments?
Digested From "Fannie Mae Said to Sell Boom-Era CMBS to Reduce Holdings"
Business Week (05/21/13) Mulholland, Sarah

In an effort to reduce its illiquid asset holdings, Fannie Mae plans to sell $2 billion of commercial-mortgage bonds issued prior to the credit market collapse, according to sources familiar with the offering. The government-sponsored enterprise (GSE) reportedly is offering securities linked to apartment communities and issued in 2006 and 2007. The GSE may follow up with similar offerings in the coming months. Demand for bonds backed by loans on such income-generating properties as apartments, office buildings, hotels, and strip shopping centers is surging, sending values on the debt up by as much as 25 percent since late last year, reports Deutsche Bank AG.
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Lehman Unit's Offer of AvalonBay Stock Prices at a Discount
Digested From "Lehman Brothers Offer of 7.87 Million AvalonBay Shares Prices at 1.1 Percent Discount"
Wall Street Journal (05/23/13) Warner, Melodie

A Lehman Brothers Holdings Inc. unit's public offering of 7.87 million AvalonBay Communities Inc. (AVB) shares priced at a 1.1 percent discount to the apartment REIT's May 22 close. AvalonBay and Equity Residential purchased Archstone Enterprise LP, a portfolio of apartment communities, from Lehman earlier this year via a $6.5 billion cash-and-stock deal. Late Wednesday, AvalonBay discosed that Lehman's Jupiter Enterprise LP unit had decided to sell 7.87 million of the roughly 14.9 million shares it received in the Archstone acquisition.
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Industry Buzz


Mac-Gray13
Scientists Wage War on Pervasive Stink Bugs
Digested From "Scientists Wage War on Pervasive Stink Bugs"
Washington Post (05/26/13) Fears, Darryl

Entomologists are looking to wage war on stink bugs, studying the mysteries of their behaviors, DNA, and even scent. Stink bugs to date have been heavily concentrated in the Mid-Atlantic region, chiefly Maryland, West Virginia, and Pennsylvania. "The expectation is high infestation this year," lamented Ames Herbert, an entomologist at Virginia Tech. Tracy Leskey, a research entomologist for the Agriculture Department, concurs. "In 2012," she noted, "the population was 60 percent higher than 2011. If they survived the winter, we will have many bugs starting in 2013." Unlike previous years, they will face new weapons designed especially to combat them. USDA scientists and researchers have pinpointed a pheromone that male brown marmorated stink bugs emit while feeding. This pheromone attracts females, other males, and even babies -- dubbed "nymphs" -- to the meal. The scent has been re-created in a laboratory and has been tested along tree lines, on farms, and in crop fields with specially engineered traps. The bugs have indeed been drawn to the scent and subsequently exterminated. The traps, though, are not killing enough stink bugs to make a significant dent in the population. But they have given researchers and farmers a clearer view of how many are lurking and whether they should launch search-and-destroy missions. USDA scientists, meanwhile, have been eyeing an Asian parasite wasp about the size of a pinpoint that has shown to prey on stink bugs' eggs. However, the federal scientists have hesitated for fear this creature might become invasive itself.
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The Two Biggest Factors Boosting REIT Demand
Digested From "Investing in REITs"
Bloomberg TV (05/06/13)

Demand for REITs, including those in the apartment sector, has been boosted by low borrowing costs and a rebounding economy. Marcus & Millichap says REIT returns have even outpaced the S&P 500 since the 2009 market bottom. Hessam Nadji, managing director of research and advisory services for Marcus & Millichap, says that apartments have been out in front of the recovery. "Renter demand is still very strong," Nadji states. "We're seeing enough pent-up demand both for the for-sale side and the rental side." Nadji is considering expert in rendering such analysis, considering he has 25 years of experience in investment advising. In general, he likes REITs as an investment moving forward to their dividend payouts and the quality of the players in each sector.
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Why Affordable Housing Is So Important to Tennessee
Digested From "New Program To Address Lack Of Affordable Housing In Tennessee"
Chattanoogan (05/22/13)

Pathway Lending is teaming up with the Tennessee Bankers Association and its member banks to provide developers a long-term, fixed-rate financing option for the new construction and rehabilitation of affordable multifamily housing communities. Pathway Lending will also work with the Tennessee Housing Development Agency (THDA). The program, which was approved by the TBA's board of directors earlier this month, will provide a source of first lien permanent financing that will be leveraged with federal Low Income Housing Tax Credits (LIHTC). According to a recent housing needs assessment study by THDA, approximately 150,000 more affordable rental apartments are needed throughout the state. The group said that more than one in four residents in Tennessee experience some sort of housing difficulty due to the high costs. "By leveraging our public and private resources, we will be able to provide more quality affordable housing opportunities in communities across the state," said Ralph Perrey, executive director of THDA.
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AvalonBay Declares Q2 2013 Dividend
Digested From "AvalonBay Communities Inc. Declares Second Quarter 2013 Dividends"
Fort Mill Times (05/22/13)

AvalonBay Communities Inc.'s board of directors declared a second-quarter dividend of $1.07 per common share, which will be payable July 15 to shareholders of record as of June 28. The REIT owns one of the biggest portfolios of high-quality apartment communities in the country mostly in the high barrier-to-entry markets of the Northeast, Mid-Atlantic, and West Coast regions. In total, the Company has ownership stakes in 272 apartment communities containing more than 81,200 rental units. These communities are spread throughout a dozen states and Washington, D.C.
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
Iowa Bedbug Lawsuit Could Bite Apartment Owners
Digested From "Bedbug Lawsuit to Proceed"
GlobeGazette (05/11/2013)

Hundreds of residents from a couple of Des Moines apartment communities may move forward with a class-action lawsuit over a bedbug infestation. Observers say this may be one of the country's first class-action cases against apartment owners and managers regarding damages from bedbugs. The Iowa Supreme Court said earlier this month that it was deadlocked. This means Polk County Judge Joel Novak's 2011 ruling certifying class-action status stands. Under Iowa law, when the state Supreme Court is equally divided in opinion, the judgment of a lower court stands affirmed. The lawsuit, which alleges violations of Iowa's consumer protection law, holds that the apartment managers assured residents that their rental units were habitable despite knowing of the bedbug problem. Court documents indicate the residents say their apartments have had bedbugs for years and they have been bitten, scarred, and deprived of sleep. Jeffrey Lipman, an attorney representing many of the elderly residents in the two apartment communities, said the number of residents to be included in the class-action suit will likely surpass 300.
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Is FHA's New 'No-Tolerance" Stance Freezing Condos Out?
Digested From "FHA Policy Shift Leaves Many Condos Ineligible for Financing"
Inman News (05/21/13) Harney, Ken

Columnist Ken Harney writes that FHA officials have assured him the agency is not trying to exclude hundreds or thousands of condominiums nationwide from qualifying for financing under its mortgage insurance program. Still, FHA's abrupt, new "no-tolerance" stance has many condo associations wondering if the agency is trying to jettison them. The issue involves language tucked away in covenants, conditions, and restrictions ("CC&Rs") that prohibits condos in a given development from being leased for periods of less than 30 days. However, many condo associations' CC&Rs contain a seemingly innocuous exception for units taken back via foreclosure by mortgage lenders or investors. Until recently, FHA showed little interest in the 30-day language. A few weeks ago, however, it started rejecting applications because the underlying CC&Rs allowed transient leases by mortgagees "in possession" of foreclosed condos. HUD attorneys argue that this is a violation of a 1994 amendment to the National Housing Act. The Community Associations Institute has received numerous complaints from members upset by what they consider a sudden and unannounced policy shift.
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NAA Announcements


Behr.May13
Last Chance to Save $150 on Registration for the 2013 NAA Education Conference & Exposition

Have you made plans to attend the largest, most important multifamily housing industry event of the year? There’s still time to register for the 2013 NAA Education Conference & Exposition, June 19-22 in San Diego—but the opportunity to save $150 on your registration investment ends next Friday, June 7.

And remember to consider group discounts: register five or more attendees and save your organization up to $400! Visit the official conference site before it’s too late!
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Five Ways to Prepare for the 2013 NAA Education Conference & Exposition

Finalizing plans for a business trip in three weeks? Be in the know before you go: with 6,200 attendees, more than 40 breakout sessions and four football fields-worth of multifamily housing supplier partner exhibits, you’ll want to heed the following five tips to make the most of your experience attending the 2013 NAA Education Conference & Exposition, June 19-22 in San Diego.

1. Use myNAAPlanner.
A convenient tool that offers attendees the ability to the schedule their conference experience in advance, choosing the plan that offers the best return on your time and money investments.

2. Download the mobile app. NAA’s Education Conference and Exposition app, sponsored by Apartment Guide, is available for Apple and Android smartphones and tablets, and offers a conference dashboard, scheduling functionality, event overviews and much more. View the downloading instructions.

3. Keep An Eye on #naaeduconf Get yourself and your tweets in front of influential multifamily housing proessionals, follow what’s trending and be the first to know of special announcements and offers.

4. Join the National Apartment Association Community on Linkedin and become a fan of NAA on Facebook. Use social media to its fullest potential: communicate with like-minded peers and connect with each other before arriving onsite.

5. Connect on www.naahq.org. Formerly the NAA Community and now the Connect tab on the new www.naahq.org, getting involved here means becoming a part of the virtual community convening in San Diego. Keep in touch with new friends year-round with this virtual networking opportunity from NAA.

Catching this wave doesn’t require a surfboard, but you will need to register. Visit the conference website and remember to consider group discounts: register five or more attendees and save your organization up to $400!
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National Hurricane Preparedness Week, May 26-June 1

Hurricane preparedness, akin to other forms of awareness, strives to spread information about the dangers and hazards of hurricanes.

According to the National Weather Service’s National Hurricane Center (http://www.nhc.noaa.gov/prepare/), understanding in advance vulnerabilities and actions to be taken in the event of an emergency can reduce the effects of a hurricane disaster.

Each day this week will feature specific hurricane-related resources and information, from hurricane hazards to disater/planning preparation. The goal is to ensure that every family has a disaster plan and every business has a disaster checklist.

This week is especially important in light of the National Oceanic and Atmospheric Administration’s May 23 predications for the Atlantic hurricane season, including 13 to 20 named storms possible, 7 to 11 of those that could become hurricanes and the formation of up to six major hurricanes—category 3, 4 or 5.

Visit NAA’s Disaster and Emergency Preparedness library for of wealth of resources, checklists and other insight critical for weathering major disasters.
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Webinar Wednesdays with NAAEI, Apartment All Stars and Multifamily Insiders

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.

The Webinars:

- will cover industry trends and timely topics that benefit both on and offsite staff
are available at a one-time or subscription price
- offer NAAEI Continuing Education Credits (CEC)

Cost: The webinar series averages two webinars per month, and for a limited time, we have discounted this subscription rate to $39.99/month, a discount of 17%.

Register today!
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Now Is the Time to Plan Meetings With Your Congressmen During Their Summer Recesses

Your involvement with your members of Congress is a year-round commitment to support the apartment industry. Take advantage of their in-district work periods by scheduling meetings with them now. Congress will be in recess the week of the Fourth of July (July 1 – 5) and for five weeks beginning August 5. Now is the time to make your appointments. More information is available in the Congressional Recess Program Toolkit.
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Is Your Company Military Friendly With Job Openings Across the US?

Exhibit at the 2013 NAAEI Military Career Fair in San Diego and fill those open positions with veterans, military spouses and transitioning military members who are looking for a career “back home”.

When: Wednesday, June 19, 2013
Time: 9 a.m. to 3 p.m.
Where: San Diego Convention Center

Register for a booth at the Apartment Careers website.

For more information, contact Vicki Sharp at 512/550-2021.
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NAAEI Designation Courses Offered Near You!

CAM:

Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

CAM Online

CAMT:

Chicagoland Apartment Association
July - August, 2013

Central Iowa Apartment Alliance
September - October, 2013

Greater Charlotte Apartment Association
October - November, 2013

Apartment Association of Greater Los Angeles
November - December, 2013

CAS:

Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

NALP Online

NALP:

Greater Charlotte Apartment Association
August, 2013

Roanoke Valley Apartment Association
September, 2013

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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May 28, 2013

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