Mid-America to Buy Colonial Properties for $2.2 Billion
Digested From "Mid-America to Buy Colonial Properties for $2.2 Billion"
Bloomberg (06/03/13) Callanan, Neil; Wetzel, Kara
Mid-America Apartment Communities Inc. (MAA) has inked a nearly $2.2 billion deal to purchase Colonial Properties Trust. The Memphis-based apartment owner is looking to grow its portfolio as demand continues to climb for U.S. rental apartments. The deal would do just that, creating a REIT with approximately 85,000 rental units focused on the U.S. south. Reis Inc. reports that the country's apartment-vacancy rate was 4.3 percent as of March 31, the lowest in over a decade. MAA Chief Executive H. Eric Bolton Jr. comments, "The scale of the combined company will support accelerated growth. [The merger will] drive higher margins as a result of synergies and advantages generated." MAA shareholders will own roughly 56 percent of the combined company's equity, with Colonial owners holding the remainder. Bolton has agreed to continue serving as chairman and CEO, while Mid-America's CFO and COO will also assume those roles at the combined company. The joint company will own a total of 285 apartment communities, with its biggest markets including Atlanta, Austin, Dallas/Fort Worth, Jacksonville, and Raleigh. The deal was unanimously approved by both companies' boards of directors, but remains subject to shareholder approval. It is expected to be completed by the end of September.
Market Trend Insights
Fair Oaks' (Va.) Apartment Market Is Faring Well
Digested From "Delta Associates: A Mixed Outlook for Fair Oaks"
Washington Post (06/02/13) Norton, Elizabeth
In Northern Virginia, the greater Fair Oaks area grew rapidly in the 1980s due to an influx of technology-related companies. Although demand for office space has weakened in recent months, apartment sector conditions remain healthy. High-end apartments are especially thriving. The market for low-rise units in and around Fair Oaks, for example, experienced a 0.5 percent increase in average rents during March versus a year earlier. Meanwhile, the local apartment vacancy rate dipped to 2.3 percent from 4.4 percent on a year-over-year basis. As of March 31, about 431 rental units in nearby Fairfax City were either under construction or expected to be completed over the next three years, down from 540 units a year earlier. Rents for low-rise apartments averaged $1,676 a month at the end of the first quarter. At that time, concessions represented around 2.3 percent of face rent in this segment of the market. When all of these factors are taken into account, analysts expect Fair Oaks' apartment market to experience gradually improving conditions for at least the remainder of this year.
Where It's Cheaper to Rent Than Buy, Builders Remain Undaunted
Digested From "In Many Markets, it’s Cheaper to Rent Than Buy — But That’s Not Stopping Home Builders"
Marketwatch (05/30/13) Goldstein, Steve
According to a recent analysis done by Stern Agee home-builder analyst Jay McCanless, it's cheaper to rent than buy in many top markets. Of the top 25 markets, it is less expensive to rent instead of buy in 13 of them. Nevertheless, McCanless said builders are still seeing growing demand. Of the 11 builders he follows, orders have gone up an average of 40 percent in the last two quarters. McCanless remarks, "The negative psychological effect of higher mortgage rates may push homebuilder stock prices lower for a period, but assuming competing inventories of existing homes remain low and housing demand stays at current levels, we believe a near-term pullback may represent a long-term buying opportunity."
Generation Y Likely to Spur Mixed-Use Development
Digested From "Is Generation Y a 'Game Changer' for Housing?"
Wall Street Journal (05/15/13) Hudson, Kris
The Urban Land Institute (ULI) is set to release the findings of a survey of generational housing preferences highlighting whether Generation Y (ages 18-34) will outgrow their current preference to rent in walkable neighborhoods with public transportation once they earn higher salaries and have kids. ULI officials call Generation Y a potential "game changer" in the U.S. real estate market. Of survey respondents within that age range, 59 percent prefer their neighborhood to have a variety of housing types; 62 percent favor mixed-use developments with retail, restaurants, and office space; and 52 percent like pedestrian-friendly neighborhoods. Fifty-five percent of Generation Y respondents also said it was important to live near public transportation. ULI Chief Executive Patrick Phillips says many members of Generation Y are unlikely to make the transition to suburban, single-family living, and if this generation's preference for compact, urban living continues, it will result in more mixed-use development. "Over time, we'll see a return to a more compact, metropolitan development pattern," he says.
Why Is Northern Colorado's Apartment Market So Topsy-Turvy?
Digested From "Vacancy Rates Rise, but So Do Rents"
Northern Colorado Business Report (05/31/13) Armbrister, Molly
The Colorado Division of Housing's latest research shows that the apartment vacancy rate in Fort Collins rose from 2.5 percent at the end of last year to 5.5 percent as of March 31 -- good news for those apartment seekers looking for units in Fort Collins, the region's largest city. The downside is that even though the vacancy rate went up, average rents also climbed. In Fort Collins, average rent has been more than $1,000 per month for five consecutive quarters. In the first three months of this year, it rose from $1,021 to $1,037 a month -- the second-highest in the entire state. First-place Aspen had an average rent of $1,143 in the first quarter. Jason Hansen, owner and broker at Henderson Property Management in Loveland, reports that Fort Collins' resistance to the rules of supply and demand is tied to the kinds of rental apartments that are being built. Costs to build multifamily housing are on the rise, with materials and labor getting pricier as financing remains tight. Hansen concludes that apartment developers need to know that they'll be able to get rents that make the project worthwhile.
Deals and Transactions
What the Hot New Term Is in Dallas Area Multifamily
Digested From "Multifamily: "Value-Add is the Hot Term in the Metroplex""
GlobeSt.com (05/29/13) Sorter, Amy W.
Wells Asset Management recently closed on three "valued-add" apartment communities in different transactions in the Dallas Metroplex area of Texas. They include the 140-unit Westwind Apartments in Forth Worth, the 72-unit Rosegate in suburban Garland, and the 117-unit Foxhollow Apartments in Dallas. According to Wells' senior vice president and principal Robert D. Aiello, Westwind Apartments was sold by an out-of-state seller to an unnamed California buyer in a pure value-add play. "The new owner will put approximately $450,000 in rehab including new appliances and flooring," he said. The same buyer also acquired Rosegate and plans $400,000 in capital expenditures for the property. Meanwhile, a different California group purchased Foxhollow and expects to invest approximately $1.2 million to rehab the property. "Value-add is the new hot term when it comes to multifamily," said Aiello.
Wolff Hunts Down Major Apartment Deal in Las Vegas
Digested From "Wolff Acquires 3,098-Unit Apartment Portfolio in Las Vegas"
Business Wire (05/28/13)
The Wolff Company LLC last week acquired the 3,098-unit "Oasis Portfolio," which contains 14 apartment communities spread across the Las Vegas metro area. The seller was Sierra Nevada Multifamily Investments LLC, a joint venture between DRA Advisors on behalf of an institutional client, and a subsidiary of Camden Property Trust. Wolff Company CEO Fritz H. Wolff remarks, "This portfolio represents an excellent mix of assets with strong in-place operations and a potential value-add opportunity as the market continues its recovery. We are continuously seeking similar opportunities nationally." The Wolff Company focuses on the multifamily housing sector, with a regional emphasis on the West Coast and the Boston-to-Washington corridor. “Wolff executed on the closing of the transaction quickly and consistently with the terms negotiated at the onset of the transaction,” said Bob Fisher, General Counsel of Camden and a representative of the seller.
What Is Associated Estates' Plan to Eliminate Mortgage Debt?
Digested From "Associated Estates Stock Offering Will Leave Apartment REIT With More Debt-Free Real Estate"
Cleveland.com (05/30/13) McFee, Michelle J.
Associated Estates Realty Corp. plans to eliminate mortgage debt on five apartment communities, using the proceeds of its upcoming public stock offering. The apartment owner and manager said this past week that it will offer 6.5 million shares of its common stock at $17.25 per share. Depending on demand, the financial institutions underwriting the deal could offer an additional 975,000 shares. "We have $130 million of debt coming due Oct. 1," said Associated Estates President and CEO Jeffrey Friedman. "It's a high interest rate, and to have paid it off early was cost-prohibitive. By selling shares today that don't settle until October, it minimizes the dilution associated with issuing those additional shares." The company will use the funds to pay off loans tied to the five apartment communities, which are collectively worth more than $230 million.
To Advertise or Not to Advertise on Craigslist?
Digested From "LANDLORD: Why I Will Never Advertise My Apartments on Craigslist"
Business Insider (05/30/13) Roche, Craig
A real-life New York City apartment owner, who writes under the pseudonym Craig Roche, urges other owners and managers not to advertise available apartments on Craigslist. He notes: "Twenty years ago, when the Internet was used mostly by geeky university dwellers, Craigslist was a great idea. Now, putting an apartment on Craigslist, as often as not, is an invitation to scammers, and local 'entrepreneurs' who will pose as me and try to 'rent' my apartments." As a general rule of thumb, he also avoids other such other websites as StreetEasy and Zillow, "who will carefully log the trajectory of rental price changes that I’ve made." Instead he selectively markets his apartments to everyone from friends of friends to employees of top finance companies and law firms to alumni of elite universities and private schools.
How Vendor Members Can Move Forward at NSAA's Reverse Trade Show
Digested From "NSAA Reverse Trade Show Three Weeks Away"
Nevada Business Magazine (05/13) Mollak, Chelsea
The Nevada State Apartment Association (NSAA) is due to hold its annual Reverse Trade Show on June 14 at South Point Casino. The annual event aims to be a fun twist on the familiar, where property management firms are the exhibitors and the vendor members are the attendees. Participating companies will staff their booths with anywhere from two to four representatives -- everyone from property managers to regional supervisors to maintenance professionals -- at a time. Vendor members will rotate around the booths for 10-minute interviews, getting "quality-time" with key decision makers from the state's top apartment owners and managers. The goal of the forum is to provide a level playing field for all NSAA vendor members as no sponsorships or preferences are available. So far, such property management companies as Advanced Management Group, Alliance Residential, Camden Property Trust, Fore Property Company, Gillespie Properties, Mark-Taylor Residential, Picerne Real Estate Group, Pinnacle, Prime Residential, and Western National Property Management, among others, have confirmed participation. It should be noted that all event proceeds will benefit the NSAA's Legislative Affairs Fund.
Legal/Legislative Did You Know
Weeding Out the Garden State's Overregulation
Digested From "N.J. Apartment Industry Hopes for Less Regulation"
Press of Atlantic City (NJ) (05/26/13) Post, Kevin
At the recent annual conference of the New Jersey Apartment Association (NJAA) in Atlantic City, many attendees said the main issue facing apartment owners and managers in the Garden State is overregulation. NJAA executive director Jean Maddalon said New Jersey is a very regulated state, with not just registrations and inspections required by the state Department of Community Affairs but also at the local level. "Each municipality having its own set of rules is a challenge for everybody," she said. Maddalon said the association welcomes the efforts of Gov. Chris Christie's administration to reduce regulatory redundancies. The trade group is currently supporting two bills in the Legislature that would eliminate duplication and redundancy in the registration of many apartment communities. "That would benefit us and also the residents," she said. "Any costs added onto the owner will ultimately get passed down to the renters. You have to make money on your business."
New Orleans Apartments May Charge More ... Just Not in Rent?
Digested From "No Increase in New Orleans Area Rents Seen, Despite Insurance Worries"
WWL 870 AM/FM 105.3 (05/27/13) Ames, Don
New Orleans-area apartment rents appear to have stabilized, even as some analysts warn that residents will be paying more one way or another if flood insurance premiums increase as feared. The state's Congressional delegates are pushing hard to stave off big impending rate hikes for the National Flood Insurance Program. According to Congressmen Steve Scalise and Cedric Richmond, the 2012 Biggert-Waters Flood Insurance Reform Act would mean rate hikes of as much as 20 percent a year over a four-year span. They are co-sponsoring a bill to delay those premium increases for at least three years. Meanwhile, Sen. Mary Landrieu has companion legislation now moving through the U.S. Senate. Apartment Association of Greater New Orleans executive director Tammy Esponge says it is more likely apartment residents would see an increase in service charges than monthly rent, especially if owners and managers are forced to absorb an increase in their operating expenses. Esponge concludes, "If, in the parish you live in, the water increased or the garbage collection increased or the insurance increased . . . it could be any number of services involved in that service charge that could increase."
Study Shows Va. Latinos Treated Poorly When Apartment Hunting
Digested From "Study: Virginia's Latino Renters Treated Differently From Whites"
Washington Post (06/01/13) P. 3
Latinos attempting to rent homes in Virginia often are treated differently from whites, according to a recent survey by the Equal Rights Center and the law firm Drinker Biddle & Reath. Pairs of Latino and white testers were sent to apartment communities to attempt to rent a unit. Latinos were treated differently from whites 55 percent of the time, according to the research. Also, 24 percent of the time, Latinos were told there would be different requirements than the white testers, such as a criminal background check and a credit check, along with proof of a Social Security card. Moreover, at various communities, Latinos were shown fewer available homes, were told apartments would not be available when they needed to move, were quoted a higher rent, and were not offered the same incentives.
IRS Puts Foot in Door of Holiday Rental Apartments
Digested From "US Taxman Puts Foot in the Door of Holiday Rental Apartments"
CNBC News (05/28/13) Dembosky, April
Just when thousands of urbanites in Silicon Valley thought they had discovered a gold mine in renting out their apartments on the website Airbnb, tax collectors are flexing their power. Airbnb and other online peer-to-peer home rental sites have shot to popularity in recent years, but are now facing policy battles in cities where local laws limit short-term rentals. In particular, authorities are zeroing in on the ways in which short-term rental sites run foul of local residency and zoning laws and may be evading local taxes. An Airbnb host in New York was recently fined $2,400 when an administrative law judge determined it had violated a city law that prohibits rentals for less than 30 days. Officials in San Francisco are among the first in the world drafting new legislation that softens restrictions and adds a tax to such rentals.
Act Before It’s Too Late: Friday is Your Last Chance to Save on Registration for the 2013 NAA Education Conference & Exposition
Register by this Friday, June 7, to save $150 on registration for the 2013 NAA Education Conference & Exposition, June 19-22 in San Diego.
The largest multifamily housing event of the year, the 2013 NAA Education Conference & Exposition promises inspiration, innovation and connection as you join more than 6,200 of your closest friends for insight from world-class speakers, including Virgin Group Chairman Sir Richard Branson, Life is good® co-founder Bert Jacobs and entrepreneur, author and artist extraordinaire Erik Wahl (to name just a few; preview these and other exciting speakers [http://educonf.naahq.org/education to]), to the latest and greatest from the multifamily supplier partners in an exhibit space equal to that of four football fields.
The benefits of attendance don’t end there—awaiting you in San Diego are practical, take-home tactics from the more than 40 breakout sessions, as well as the opportunity to engage like-minded professionals during the plethora of networking events NAA has scheduled, including the Opening Party: NAA Rocks The Block, which spans two full blocks of the famed Gaslamp Quarter.
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!
Get Your Tool Belts and Work Orders Ready: Maintenance Mania® National Championship To Be Held During the 2013 NAA Education Conference & Exposition
Maintenance Mania®, the national program offered by NAA and presenting sponsor HD Supply, will host its National Championship from 5 p.m. to 6:15 p.m. on Thursday, June 20, during the 2013 NAA Education Conference & Exposition, June 19-22, in San Diego, Calif.
Throughout the year, NAA affiliates host Maintenance Mania® events across the country to recognize the skill and speed with which apartment maintenance technicians keep their communities running smooth. Winners from each local event then get a chance to qualify for a spot at the National Championship.
The championship will feature games developed from standard events, and the quickest competitors from each of the 10 NAA regions, as well as wild-card competitors with the top times nationally, will compete to see who will be crowned 2013’s Maintenance Mania® Champion.
Be sure to check out http://bit.ly/Yt0vRV to see what Maintenance Mania® is all about—then make plans to come cheer on your favorite competitors. While in San Diego, make sure to stay for the world-class education, second-to-none networking and all the latest and greatest products and services offered by multifamily housing supplier partners on the trade show floor at the 2013 NAA Education Conference & Exposition.
Register now for the 2013 NAA Education Conference & Exposition by visiting http://educonf.naahq.org/emailregister and remember to consider group discounts: register five or more attendees and save your organization up to $400!
Why Wait To Arrive in San Diego to Connect with Your Colleagues?
the 2013 NAA Education Conference & Exposition, June 19-22 in San Diego, offers the ability to schedule your conference experience and plan appointments in advance, ensuring the best return on your time and financial investments.
See who is attending, explore programming and speakers and make one-on-one appointments with exhibitors and fellow attendees.
NEW FOR 2013! All attendees of the 2013 NAA Education Conference & Exposition are able to participate in Advanced Networking, a tool designed to facilitate even more face-to-face connections. With Advanced Networking, you’ll be able to:
1. View all those who are registered and strategically connect with other attendees;
2. Set up meetings with current and potential business partners; and
3. If desired, connect your profile to your LinkedIn account.
Why wait to arrive in sunny California to start networking? Visit myNAAPlanner and get started connecting today!
Last Call to Order 2013 NAA Education Conference Sessions for Only $99
It’s not too late to pre-order REWIND, the Education Sessions from the 2013 NAA Education Conference & Exposition. Now through June 6, you can purchase 21 video and 20 PowerPoint-synced audio sessions for only $99. After June 6, the price goes up to $199.
Order your sessions today!
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.
Looking for a Few More Great Companies!
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
A special thanks to the following companies for their participation:
Alliance Residential Company, American Campus Communities, Appliance Warehouse of America, Inc., AvalonBay Communities, Inc., Balfour Beatty Communities, Camden Property Trust, Equity Residential, Forest City Residential Management, Gables Residential, Greystar, H. G. Fenton, HD Supply – Facilities Maintenance, Liberty Group, Lincoln Property Conventional, Lincoln Military Housing, Madera Residential, McKinley, Inc., Olympus Property, The Dolben Company, Inc., The Kamson Corporation, Waterton Residential, WinnResidential, Winthrop Management
Register for a booth at the Apartment Careers website.
For more information, contact Vicki Sharp at 512/550-2021.
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.
- 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%.
NAAEI Designation Courses Offered Near You!
Nevada State Apartment Association
Roanoke Valley Apartment Association
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
Nevada State Apartment Association
Roanoke Valley Apartment Association
Greater Charlotte Apartment Association
Roanoke Valley 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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