NAA Industry Insider: Blackstone to Acquire GE Apartments for $2.7 Billion | National Apartment Association

NAA Industry Insider: Blackstone to Acquire GE Apartments for $2.7 Billion


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Blackstone to Acquire GE Apartments for $2.7 Billion
Digested From "Blackstone Said to Acquire GE Apartments for $2.7 Billion"
Bloomberg (08/13/13) Yu, Hui-Yong

In one of its largest forays into the U.S. multifamily housing market, Blackstone Group LP has agreed to buy 80 apartment communities for about $2.7 billion. The nation's largest manager of private-equity real estate funds is acquiring the communities from General Electric Co.'s GE Capital unit, which has been paring its real estate holdings as part of a larger plan to shrink its finance division. Soaring rental demand has sent U.S. apartment vacancies to their lowest level in a decade, notes Reis Inc. New York-based Blackstone's latest acquisition comes as apartment stocks have fallen from their highs. Indeed, the Bloomberg Apartment Real Estate Investment Trust Index has dipped 1.4 percent in the 12 months through yesterday versus a 23 percent return for the Standard & Poor's 500 Index and a gain of 9.6 percent for the broader Bloomberg REIT Index.
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Market Trend Insights

What Does Freddie Mac's Mid-Year Multifamily Outlook Forecast?
Digested From "Freddie Mac Releases Mid-Year Multifamily Outlook and Investment Index"
Wall Street Journal (08/08/13)

The Freddie Mac Multifamily Research Group last week released its mid-year multifamily housing outlook for 2013, which touts that apartments are still a good investment in most metro areas it tracks. Still, there are some potential pitfalls. While such market fundamentals as rents and vacancies are improving, increased supply remains a key risk for some markets. Recovery of the job market and a strengthening single-family housing market could also shift some demand away from multifamily housing. Among the top 10 growing markets are New York, San Francisco, Denver, Seattle and Los Angeles. The outlook includes a new Freddie Mac Multifamily Investor Index, measuring the relative attractiveness of investing in apartments over time using such considerations as multifamily property values and effective gross income.
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Apartment Construction Booms in the East Bay
Digested From "Apartment Construction Booms in the East Bay, 2,100 Units Coming This Year"
San Francisco Business Journal (08/09/13) Torres, Blanca

Northern California's East Bay region is experiencing a surge in apartment construction. Such developers as AvalonBay, Essex Property Trust, Equity Residential, Madison Park Financial, Mill Creek Residential, and SummerHill Apartment Communities each have new apartment communities in various stages of planning and development locally. This year alone, Marcus & Millichap reports that developers will add approximately 2,100 rental units to East Bay's apartment stock -- a 1.1 percent increase in total inventory. In 2012, by comparison, just 780 new apartments were added to the market.
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Why Are Incentives Drying Up in Brevard (Fla.) Apt. Market?
Digested From "Brevard's Rental Market Comes Roaring Back"
Florida Today (FL) (08/10/13) Nessel, Lee

ALN Apartment Data Inc. reports that Florida's Brevard County has witnessed a bump in occupancy in its 90 apartment communities from 88 percent five years ago to nearly 94 percent. As the supply of rental units has decreased, prices have increased. In turn, special deals and incentives to lure residents are fewer. Brevard apartment rental rates range from $885 for the typical one-bedroom unit to $1,880 for a 2,000-plus-square-foot, three-bedroom apartment at Highlands Viera West. ALN analyzes statistical information monthly on apartment communities in nearly two dozen markets throughout several states. Its researchers say Brevard is trumping Orlando, Tampa, Palm Beach, and Fort Myers in the percent jump of monthly rents. In fact, apartment rental prices in Brevard increased 7.7 percent from July 2012 to last month. ALN further reports that Brevard apartment communities have indeed scaled back concession packages by nearly 60 percent -- three times more than Orlando, the next-closest market. A typical concession last year at this time might have been one month's free rent. That offer is practically non-existent today.
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How Multifamily Factored Into Best Qtr. Ever for 55+ Housing
Digested From "Builders See Best Quarter Ever for 55+ Housing"
Reverse Mortgage Daily (08/08/13) Ecker, Elizabeth

A new National Association of Home Builders (NAHB) study shows that builders witnessed a record quarter for interest in and development of age-restricted housing from April through June, with the pace expected to continue in the coming months and even years. Researchers add that the market appears to be expanding for both multifamily and single-family construction. Robert Karen, chairman of NAHB's 50+ Housing Council, remarks, "Builders and developers for the 55+ housing sector are feeling optimistic as they are seeing more consumers return to the marketplace. With existing home prices rising, consumers are able to sell their current homes and make the move toward either purchasing a home or renting an apartment that is designed to more specifically suit their lifestyle." As of June 30, there had been an increase of 24 points on the group’s index from the previous three months -- the highest second-quarter measure since the scale's 2008 debut. The improvement marks the seventh quarter in a row of year-over-year improvement in 55+ housing. The 55+ multifamily outlook was notably strong, having climbed two dozen points to a 43 level on the scale.
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How Did Alaska Get to Be Such a Hot Apartment Market?
Digested From "Rent Prices Rise in Anchorage and Across Alaska"
Anchorage Daily News (AK) (08/08/13) Herz, Nathaniel

Last last week, Alaska's Department of Labor and Alaska Housing Finance Corp. released a joint report confirming that rental housing in the state, and in Anchorage especially, is getting more expensive. Median monthly rents in Alaska's major population centers have increased 5 percent over a year ago from $1,065 to $1,119, including utility costs. At $1,154 a month, Anchorage's rents were the second-highest out of the 10 areas surveyed statewide, trailing only the Kodiak Island Island Borough. The median price for a one-bedroom apartment in the city is now just under $1,100, a 7 percent increase from 2012. Residents would have to make $44,000 a year to avoid spending more than the generally accepted standard of 30 percent of their salary on housing, notes the National Low Income Housing Coalition. At the same time, there are more vacant apartments in Anchorage and throughout the state than there were a year earlier. In Anchorage, the vacancy rate is 3.3 percent, a year-over-year increase from 2.6 percent. Across Alaska, the apartment vacancy rate climbed from 4.4 percent to 5.2 percent over that same time span.
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Deals and Transactions

Achtung! Equity Residential & Archstone to Sell German Firm
Digested From "Equity Residential Said to Prepare Sale of German Landlord"
Bloomberg BusinessWeek (08/07/13) Fahmy, Dalia; David, Ruth; Kirchfield, Aaron

Equity Residential and AvalonBay Communities are preparing the sale of DeWAG Management, which owns 14,500 residential properties in such German cities as Cologne, Frankfurt, and Munich. The German company is reportedly valued at 1.3 billion euros. Equity Residential CEO David Neithercut remarks, "An important driver of the Archstone transaction was the ability it provided us to accelerate the sale of so many of these non-core assets, and we're very pleased that the market has been extremely receptive to our offerings." Equity Residential and AvalonBay acquired DeWAG Management as part of their purchase of Archstone Inc. from Lehman Brothers Holdings Inc. earlier in the year year.
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The Wheeling and Dealing for N. Texas Apartments Continues
Digested From "Florida Investor Buys Two Dallas Properties"
Dallas Business Journal (08/09/13) Carlisle, Candace

Miami-based property investment firm Pensam Capital purchased a couple of Dallas apartment communities -- St. Andrews, a 312-unit apartment property, and Montclair, a 324-unit apartment property -- for an undisclosed amount. This latest deal is part of a trend of companies targeting North Texas for such property investment. Earlier this past week, an unnamed Wisconsin company also bought a large apartment community in the Dallas-Fort Worth area. St. Andrews and Montclair have a wide array of amenities for active residents, including walking trails and fitness facilities. They were sold by Strategic Capital Partners LLC of Chicago and locally based Crest Asset Management, which was represented by CBRE.
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MLG Capital Completes Apt. Buys in Dallas and Jacksonville
Digested From "MLG Capital Acquires Large Apartments in Dallas, Jacksonville"
Milwaukee Business Journal (08/02/13) Ryan, Sean

MLG Capital recently announced the acquisition of two large apartment communities in Jacksonville and Dallas for undisclosed sums. The former is currently 50 percent vacant and undergoing a significant rehab to broaden its appeal, while the latter's apartments are in good shape. An investment fund organized by MLG Capital bought the 720-unit Windridge Apartments in Dallas from a Texas family. The Florida acquisition is a different kind of deal altogether. MLG Capital purchased the 195-unit Saddlebrook Landings Townhomes from the U.S. Navy.
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Industry Buzz

National Exemption Service Inc.
Columnist Asks President Obama to Not Veto Renting
Digested From "Obama Should Stop Talking About How Great Homeownership is"
Business Insider (08/06/13) Barro, Josh

Business Insider columnist Josh Barro argues that President Obama should not make homeownership sound so great. Barro writes that politicians are part of the reason Americans purchased homes they could not afford before the housing bubble burst. "I've come to Phoenix to talk about that second, most tangible cornerstone at the heart of middle-class life: the chance to own your own home," said Obama in a recent housing policy speech in Phoenix. Barro notes that too many policy-makers continue to tell people that if they are responsible and work hard, they can obtain homeownership. Instead, he believes politicians should emphasize that renting is a valid life choice, even for the middle-class. Barro said it is important for people in power to clarify that it is okay to rent and to tout the fact that a large number of people even choose to rent.
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Which Apartment REIT Just Celebrated 20 Years on the NYSE?
Digested From "Equity Residential Celebrates 20 Years of Trading"
Automated Trader (08/07/13)

On Aug. 7, executives and guests of Chicago-based Equity Residential visited the New York Stock Exchange to celebrate the apartment REIT's 20th anniversary of listing on the exchange. Equity Residential CEO David J. Neithercut rang the Closing Bell in honor of the occasion.
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Behringer Harvard Apartment Firm to Become Self-Managed
Digested From "Behringer Harvard Apartment Firm to Become Self-Managed"
Dallas Morning News (TX) (08/06/13) Brown, Steve

Behringer Harvard Holdings LLC is taking steps to make one of its REITs operate more independently. According to the Texas-based investment firm, directors of its Behringer Harvard Multifamily REIT I Inc. -- which owns and builds apartment communities nationwide -- have initiated the process of making the company a self-managed REIT that will replace services currently provided by Behringer Harvard. Behringer Harvard Chief Executive Robert S. Aisner will stay as top officer of the REIT until the transition is finished. The REIT's executive Mark Alfieri will then become CEO. Aisner remarks, "In our ongoing efforts to maximize long-term shareholder value, we expect this change to provide the REIT with structural flexibility that will facilitate execution of a future liquidity event." Behringer Harvard Multifamily REIT I currently has investments in 55 apartment communities in 14 states. Together, these properties contain 15,394 rental units.
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Legal/Legislative Did You Know

2013 Diamond Sponsors with correct Azuma logo
Why Is This Shareholder Suing Colonial Over MAA Merger?
Digested From "Shareholder Sues Colonial Over MAA Merger"
Birmingham Business Journal (Alabama) (08/07/13) Poe, Ryan

Bobby F. Williams, an Alabama resident who owns 5,000 shares of Colonial Properties Trust's stock, has sued the REIT claiming that company officials are lining their own and Mid-America Apartment Communities Inc.'s pockets to the detriment of Colonial shareholders through their impending merger. Colonial said in a 10-Q filing with the SEC that Williams' lawsuit was "baseless" and that it intends to fight his claims in court. Williams argues in his complaint that Colonial is well positioned to take advantage of the improving apartment property sector and that a merger with Memphis-based MAA would "deprive" Colonial shareholders of the full value of their stock. He further claims that Colonial Chairman and CEO Thomas Lowder and other Colonial executives are biased for the merger. Williams contends in his complaint that Lowder will receive a "lucrative and lump sum severance payment equal to two times the average annual incentive compensation paid to him for the three complete fiscal years immediately preceding the sale."
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Is Mortgage-Interest Deduction in the Cross Hairs?
Digested From "Is Mortgage-Interest Deduction in the Cross Hairs?"
Sarasota Herald-Tribune (FL) (08/11/13) P. D8 Hielscher, John

As Capitol Hill lawmakers take a comprehensive look at tax reform this year, there appears to be a growing chorus calling for an overhaul or elimination of the mortgage interest tax deduction. Housing professionals contend that the incentive makes it possible for mostly middle-class families to achieve the dream of homeownership. Among them is Alan Anderson, executive vice president of the Home Builders Association Manatee-Sarasota. He asks, "Why would anyone want to take away something that instrumental to our economy and home building? There would be no incentive to be homeowners. We would have a whole nation of renters." However, some economists and tax reformers counter that the deduction benefits primarily higher-income homeowners who could afford to purchase a house without it. They point to a new study by the Center on Budget and Policy Priorities that maintains that the provision does little to boost homeownership. Last year, according to the nonprofit think tank, 77 percent of the deduction's benefits went to homeowners with incomes above $100,000 and nearly 50 percent of homeowners with mortgages -- mostly middle- and lower-income households -- received no benefit.
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Iowa County Gives Apt Residents Recycling Options
Digested From "Linn County Apartment Recycling Options"
KGAN-TV (Iowa) (08/09/13)

In Iowa, officials in Linn County and Cedar Rapids are teaming up with Green Iowa AmeriCorps members to inform apartment residents about their recycling options. For people living in their own homes, the city provides them with recycling bins. However, people living in local apartment communities do not have that same service. Now through mid-September, Green Iowa AmeriCorps members are going door-to-door at Linn County apartment communities to speak with residents about the three recycling drop-off sites in their area. Green Iowa Americorp member Rose Pollock remarks, "I'm hoping that people who are interested in it will get the information they need to be able to go to drop off sites cause a lot of people don't know where they are or what they accept." It's part of a collective campaign that includes the Cedar Rapids-Linn County Solid Waste Agency, city carton recycling and the City of Cedar Rapids. Because it is up to each individual apartment community to do their own recycling collection, this program will hopefully help residents who want to do more.
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Obama Stresses Affordable Renting Options Amid GSE Reform
Digested From "Affordable Housing Will Be Key Challenge in GSE Reform Debate"
American Banker (08/08/13) Finkle, Victoria

As debate continues over the federal government's future role in the mortgage market, affordable housing is likely to prove a significant hurdle on the road to housing finance reform. President Obama on Aug. 7 remarked, "Families who are working to climb their way into the middle class, we've got to do what we can to make housing affordable." However, he also stressed the growing need for affordable rental options. Fannie Mae and Freddie Mac have operated with explicit affordable housing goals for more than two decades. But policymakers now must determine what should replace those goals and how much support Washington should lend to housing aid for low- and moderate-income borrowers. While those questions are yet to be answered, there does seem to be consensus that mandated affordable housing goals are not the answer.
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NAA Announcements

Tomorrow is Your Last Chance to Take Advantage of Discounted Registration to the 2013 Apartment Revenue Conference

It’s time to move quick: Wednesday, August 14 is your last opportunity to save $100 off the price of registration for the 2013 Apartment Revenue Management Conference, September 23-25 at the Turnberry Isle Resort in Miami.

The 2013 Apartment Revenue Management Conference, now in its third year, is the multifamily housing industry’s sole event dedicated to staying ahead of the ever-evolving operational curve and universally recognized as a tremendous value for rental housing professionals. Nowhere else can you find world-class education and first-rate networking, as well as ideas and strategies for boosting net operating income.

In addition to benchmarking and best practices, attendees can look forward to an expanded program focusing on new topics such as ancillary revenue, expense management and business intelligence. Keynote speaker Greg Cross, Senior Vice President of Revenue Management for Hyatt Hotels Corporation, will share current trends in lodging and potential parallels in the multifamily marketplace.

“NOI is Everywhere,” as the conference’s theme promises; but there is only one place to learn all about it. Register before it’s too late!
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It's So Easy to Connect

Is a fear of change keeping you from joining the newest and most exclusive industry social network around?
If you haven’t joined NAA ConnectM, yes, then you’re missing tons of valuable collaboration to boost your career.

Learn all about Connect including different ways to make this members-only tool work for you. If you need a little extra help, check out our series of short video tutorials to see how you can join a community, join a conversation, start a new discussion or share a document.

Don’t miss all of the great ideas and discussion in NAA Connect. Get started today.
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Learn Right From Your Desk 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.

Upcoming Webinars:

8/21/13 Stephanie Graves - How To Make Your Residents Work For You - Resident Referral Ideas That Work

9/4/13 Mike Whaling - Get Yours Wheels Turning! HOW TO: Apply and Measure the “Hub-and-Spoke” Model of Online Marketing to Apartment Marketing

9/18/13 Eric Broughton - Beyond Craigslist

Learn more and register today!
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NEW! Individual 'REWIND' Education Sessions Available

Couldn’t attend the 2013 NAA Education Conference & Exposition in San Diego, or missed a great session? Don’t despair—you still can enjoy the best education sessions in the apartment industry, including video!

NAA’s Education Institute (NAAEI) is once again presenting its “Rewind” program, offering 21 recorded video sessions and 20 PowerPoint-synced audio sessions from the 2013 NAA Education Conference & Exposition—all for just $299!
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NAAEI Designation Courses Offered Near You!


Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

CAM Online


Central Iowa Apartment Alliance
September - October, 2013

Hampton Roads Apartment Council
October - December, 2013

Greater Charlotte Apartment Association
October - November, 2013

Apartment Association of Greater Los Angeles
November - December, 2013


Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

NALP Online


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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August 13, 2013

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