NAA Industry Insider: Inland Group Plans to Raise $1 Billion for Apartment Company | National Apartment Association

NAA Industry Insider: Inland Group Plans to Raise $1 Billion for Apartment Company

 

October 14, 2014
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TimeWarnerCableApril14
Inland Group Plans to Raise $1 Billion for Apartment Company
Digested From "Inland Group Plans to Raise $1 Billion for Apartment Company"
Crain's Chicago Business (10/06/14) Gallun, Alby

The Inland Group Inc. recently filed plans to raise $1 billion for a new REIT that would purchase apartments in major U.S. metro areas. The new company, to be known as Inland Residential Properties Trust Inc., would be the seventh REIT launched by the Illinois-based company that has grown into one of the largest property investment firms headquartered in the Chicago area. Inland Residential plans to purchase both Class A and Class B apartment communities in the top 100 U.S. metro areas, according to an SEC filing. Like many multifamily housing investors, Inland Residential is counting on strong demand for apartments from Baby Boomers and Millennials. In the filing, the company stated: "Demographic studies suggest that Baby Boomers are downsizing their suburban homes and relocating to multifamily units located in urban cultural centers. Millennials are renting multifamily units because they generally have a high level of student debt and credit standards for mortgage loans have increased."

Market Trend Insights


RealPage-Oct14
Percent of One-Person Households Continues to Climb
Digested From "More Americans Are Going Solo"
Builder (10/06/14) Yashinsky, Susan

The latest Bureau of Labor Statistics data shows that roughly 50 percent of all American adults live in one-person households, up from 37 percent of U.S. adults who were single in 1976. Home building in the 21st century likely will be uniquely different as a result of this shift. Apartment and condominium developments already are offering more shared spaces such as home theaters and work areas so that singles can socially connect while still having a private unit; and single-family builders likely will follow suit, with communal sheds for lawn equipment and cars that can be rented as needed. Floor plans are likely to go from static to flexible as living arrangements change more frequently. Other possible changes include evolving live/work spaces to account for the number of entrepreneurs working from a home office and backyard cottages to accommodate single adults sharing the same lot. Analysts further forecast that single Americans will switch jobs more frequently and also bring new types of living arrangements into the housing market (i.e. friends buying homes together and so forth). They will also want their living environments to be able to easily adapt to their frequently changing lifestyles. Finally, affordability has emerged as a crucial factor for most single home buyers and renters as the dual-earner power couple trend of the pre-recession boom years continues to wane.

Raleigh-Cary Apartment Rent Hikes Among the Highest in Nation
Digested From "Raleigh-Cary Apartment Rent Hikes Among the Highest in Nation"
Triangle Business Journal (10/06/14) Hoyle, Amanda Jones

According to a third-quarter survey by research firm Axiometrics, the average rental rate for an apartment in the Raleigh-Cary region has climbed 2.1 percent in the last year -- enough to rank the area at No. 13 in the country among the 50 biggest population markets. Occupancy rates also climbed to 95.2 percent versus the 94.9 percent measured in the third quarter of 2013. This marked the third highest rate since 2007's July-through-September period. The Raleigh market had gotten off to a slow first six months of this year, notes Jay Denton, Axiometrics' senior vice president of research and analytics. However, recent job growth in the region has been the driving factor propelling the improvements. "The Raleigh market was hurt by the amount of new supply being delivered in the last half of 2013 and the first half of 2014," he states. "But, job growth continues to be strong, and new household formation is resulting in increased absorption of the new units, which gave landlords the leeway to increase rents during the third quarter." The average effective monthly rent among apartment communities that have been open one year or more was $920 in the three-month period ended Sept. 30, compared with $899 a year earlier. Nearly 6,800 new apartments were delivered during 2013 and the first nine months of this year, Axiometrics added. More rental units are on the way.

Vacancy Rates Tighten, Rents Rise in Which Wash. County?
Digested From "Thurston Vacancy Rates Tighten, Rents Rise In"
The Olympian (Olympia, Washington) (10/10/2014) Boone, Rolf

In Washington state, Apartment Insights reports that Thurston County apartment vacancy rates tightened in the three-month period ended Sept. 30, increasing average rents by $3 a month. The Seattle-based firm, which monitors the South Sound apartment market, further determined that vacancy rates countywide fell to 4.16 percent in the quarter from .19 percent in the April-through-June period. Tumwater's 3.39 percent vacancy rate in the third quarter was the lowest in the county in over two years. Lower vacancy rates means rents are on the rise, analysts note. They indeed bumped up $3 to $891 in the county during the third quarter, or $1.04 per square foot. More apartment communities are in the works. Over 1,800 rental units are now under construction, with most of them being erected in Pierce and Thurston counties. There are another 1,720 rental units that have completed the design review process and another 1,546 apartments in earlier stages of the development pipeline.

How Much Does Student Debt Cost Housing Each Year?
Digested From "Student Debt Costs Housing $83B a Year"
Housing Wire (10/08/14) Garrison, Trey

The latest John Burns Real Estate Consulting study calculates that student debt will cost the housing industry approximately $83 billion in sales this year. With college debt increasing by nearly 6 percent annually, this trend will almost certainly continue and very likely worsen in the years to come. Thee researchers estimate that heavy college debt will slash real estate sales by 8 percent for 2014, and that households that pay $750 or more for college loan debt a month will be priced out of the residential real estate market entirely, forcing them to rent or find other living situations. Another recent study determined that when parsing mortgage applications of those with student loan debt, approved borrowers had monthly college loan payments of around $300. Those home-loan applicants paying nearly $500 per month, however, were usually denied. Those researchers wrote: "Using previous academic literature as a benchmark for our own complicated calculation, we then estimated that today's purchase rate is reduced from the normal 8 percent depending on the level of student debt -- ranging from 6.9 percent for those paying less than $100 per month in student loans to less than 1 percent for those paying over $1,300 per month."

What N.C. County Is Seeing Apartment Demand Boom?
Digested From "Gaston Rental Market Robust for Tenants – and Investors"
Gaston Gazette (NC) (10/11/14) Orr, Adam

Renting continues to be quite popular throughout North Carolina's Gaston County. "As an investor, I'm certainly bullish about this local real estate market," states Joseph Biggins, the new owner of Eastover Apartments in Gastonia. "I think this is an opportune time to get in on this market." Even though monthly rents in the county have risen to four-year highs, a variety of factors is making leasing apartments preferable to owning a home. The core Millennial demographic is not typically in the market for a house or all of the expenses and responsibilities that come with it. Even for those who are, the supply of single-family homes throughout much of Gaston remains tight. Mekeal Teshome, an economist with PNC Financial Services Group, states, "So you've got a growing population, but rental prices, probably for multifamily properties in particular, are rising less than single-family units. Rents are still attractive for people that want to rent." The Zillow.com rent index shows Gaston rents indeed at a four-year high, but still lagging behind the Charlotte metro area and the nation as a whole. Ryan Schrift, a financial advisor and founder of R.J. Schrift Private Asset Management, states that falling homeownership rates have increased demand for apartments and construction has not been able to keep up with demand. He adds, "Demand is picking up after an almost complete shut down during the Great Recession."

Deals and Transactions


Lowe's-Oct.14
How Many Apt. Communities Are in the Works in Metro Orlando?
Digested From "19 C. Fla. Apartment Complexes in the Works"
Orlando Business Journal (10/09/14) Fluker, Anjali

Apartments represent one of the hottest segments in metro Orlando’s real estate market -- both for investment sales and new construction. Local developers have been busy with 4,568 rental units currently in various stages of planning and construction throughout the region, according to Real Data LLC. Of those, the central submarket -- which includes downtown Orlando -- accounts for 1,397 of those apartments in the works. Regionwide, there is a plethora of other multifamily housing going up all over Central Florida. One of the most promising is Crescent Central Station. There, Crescent Communities LLC is set to debut the first of 279 rental units at the $50 million community by the second quarter of 2015. With regards to the nearby Gallery at Mills Park, DeBartolo Development Co. is slated to finish construction by the end of December on the remaining 175 rental units, which will be part of the mixed-use Mills Park project near downtown. Also in downtown, GDC Properties LLC is pre-leasing on its $35.9 million, 246-unit luxury apartment community. In suburban Winter Park, meanwhile, Epoch Properties Inc. and Casto Lifestyle Properties LP expect to move in the first residents at its Paseo at Winter Park Village community in December.

How Much Did Invesco Pay for Landmark Seattle Tower?
Digested From "Invesco Pays $114M for Vulcan Tower"
Daily Journal of Commerce (10/09/14)

Dallas-based Invesco Real Estate has inked a $114 million deal to acquire The Martin, a landmark apartment tower in Seattle. The seller was an entity related to Vulcan Real Estate. The 24-story building contains 188 rental units, with the price working out to $606,383 per apartment -- the highest price ever paid in for a Seattle apartment building and the second highest in the region. In 2013, Invesco paid Schnitzer West $676,523 per unit for The Bravern Signature Residences in suburban Bellevue, Wash. "The Martin is one of Seattle's premier luxury apartment communities, and there was tremendous interest from the institutional investment market," reports Ada M. Healey, Vulcan's vice president of real estate. "The record sale price is testament to its high quality and unique positioning."

Foreign Investors Get Square With Apartments in NC's Triangle Region
Digested From "Foreign Investors Scoop Up $47M in Triangle Properties"
Triangle Business Journal (10/08/14) Hoyle, Amanda Jones

Several major real estate transactions in North Carolina's Triangle region have been completed in recent weeks, highlighting an increased interest among foreign investors in properties throughout this market. According to a review of deed records, almost $47 million worth of apartment, office, and warehouse properties have been sold in Wake County to investor groups with roots in foreign soil. For instance, the Australian-based Macquarie Group recently agreed to purchase the new, 339-unit Sterling TownCenter apartment community in north Raleigh for $38 million. Sterling TownCenter is located near the Triangle Town Center shopping mall and was developed by Grubb Properties in 2012. The Apartment Realty Advisors team of John Heimburger, Sean Wood, Dean Smith and Blake Okland represented Grubb Properties in the transaction, while the buyer was represented in-house.

Industry Buzz


PartnerSponsor-Sept.14
New Orkin Study Shows What Bugs Apartment Residents
Digested From "Orkin Releases New Findings Regarding Pests in Apartment Homes"
Multi-Housing News (10/14)

According to a new survey released by pest control company Orkin, recurring pest issues cause 60 percent of apartment residents to look for a new place to live -- a finding supported by the National Apartment Association (NAA). Experts say apartment managers should work with pest management professionals to seal all cracks in the building exterior, install weather-stripping and screens, and maintain landscaping in a way that does not attract pests. The survey found that 85 percent of survey participants had encountered a pest in their apartment in the past 12 months. Bed bugs were the most feared pests, but flies were the most often sighted. Ninety-four percent of apartment residents said they would like to be notified of pest issues in their buildings, while 75 percent expected pest issues to be resolved within three days, according to the poll.

Single Family Houses Vs. Multifamily Rentals: Which Is Better?
Digested From "Real Estate Investing: Single Family Houses Versus Multifamily Rentals. Which Is Better?"
Huffington Post (10/12/14) Chautin, Jerry

Columnist Jerry Chautin writes that "comparing the investment benefits derived from buying scattered single-family homes and condominium units versus multifamily rental properties is a no brainier. Purchasing single rental units is not the better option." He concedes that learning how to become a rental house investor is easier to grasp than owning income-generating apartment properties. It entails perfecting one's property management skills, controlling operating expenses, and constantly squeezing out profits. Buying multifamily housing also typically requires a fatter wallet. For novice real estate investors, Chautin states that owning a small multifamily investment is a great way to get the necessary experience to own bigger properties down the line. "You will pay less per unit for a multifamily property than for a comparable house commanding similar rent," he writes. "When you invest in scattered houses, the operating expenses are higher and management is more intense than it would be for a multifamily rental property with all the units on one site." This is why management firms charge more for scattered houses. It's hard to monitor for everything from loud and unruly parties to pet damage to such illegal activities as dealing drugs. Chautin concludes, "You can also compare the expenses to data collected by trade associations such as the National Apartment Association and the Institute for Real Estate Management." He goes on to urge investors still on the fence to factor in costs to eventually replace such items as roofs and heating and air conditioning units. Them subtract the operating expenses and yearly replacement cost allocations from gross effective income to arrive at net operating income.

3 Ways AMLI Residential Reduced Energy Consumption and Expenses
Digested From "3 Ways AMLI Residential Reduced Energy Consumption and Expenses"
Property Management Insider (10/03/14) Blackwell, Tim

Cutting energy costs has become a big initiative in the multifamily housing industry. AMLI Residential has reshaped its brand in recent years to focus on a greener side of apartment living and water savings at its various communities. The recent improvements at each of AMLI's 48 properties, along with a portfolio-wide site lighting upgrade, is netting significant savings in operating expenses. According to Bryan Re, AMLI Residential's National Director of Energy and Building Services, the luxury apartment manager is minimizing the amount of water circulating in its swimming pools and fountains to help reduce electricity usage and lower energy bills.

Re, who is a LEED Accredited Professional, joined AMLI Residential in 2012 and began visiting the company's apartment communities to find cost savings. He identified three things that would provide a quick return on investment and reduce energy costs: one, replacing existing pool pumps with variable speed circulation systems; two, installing timers on fountains to reduce run times; and, three, replacing HID site lighting with compact fluorescent lamps (or CFLs). "The savings were unreal," Re said.

Will Apartment Managers Be Hot for This New Stove?
Digested From "Brown Stove Works Launches Industry's First Heat-Sensing Range That Reduces Risk of Cooking Fires"
Marketwired (10/09/14)

Brown Stove Works recently took the wraps off the cooking appliance industry's first and only electric range designed to reduce the risk of range cooking fires. The new HeatSense Range uses an innovative heat-sensing technology, which monitors the cooking temperatures of cookware and modulates the top coil elements to keep the cooking temperatures below the ignition point of standard cooking oils. "Multifamily housing, apartment managers, and public housing directors constantly seek ways to reduce the risk of cooking fires, and we responded by developing the HeatSense Range," said Jeff Essenburg, vice president of sales for the manufacturer of gas and electric cooking appliances. "The National Fire Protection Association considers unattended cooking fires to be the leading source of home fires and home fire injuries." The new range is available in three sizes and three different colors.

Legal/Legislative Did You Know


MissionSponsor-Sept.14-use
HUD Takes Action Against Apartment Rules Singling Out Kids
Digested From "HUD Takes Action Against Hostile Apartment Rules Against Children Included no Playing Outside"
Lake County News (CA) (10/08/14)

The U.S. Department of Housing and Urban Development (HUD) has reached a discrimination settlement agreement with a Napa Valley apartment owner and charged the owners of a Lenexa, Kan., apartment community with discrimination as a result of management at two sites allegedly putting overly restrictive rules in place to control the movement of children. The allegations include apartment managers placing restrictions on children playing outside, and in one case, forcing kids to clean the manager's office toilet when found outside unaccompanied by an adult. "Placing special rules on families with children unfairly singles them out and creates a hostile living environment that is authoritarian and unequal," said Gustavo Valesquez, HUD assistance secretary for Fair Housing and Equal Opportunity.

Seven families and the nonprofit group Fair Housing of Napa Valley filed complaints with HUD alleging that the manager of the River Park Manor Apartments cursed at children when he found them playing outside unaccompanied. Under the terms of the agreement, the owners and manager of the facility will pay Fair Housing of Napa Valley $3,750; waive four months of rent for five of the families; pay two former residents a total of $7,000; and obtain fair housing training for employees.

NAA Announcements


Understand Your Future Residents Today at the 2015 Student Housing Conference & Exposition

Plan to learn everything there is to know about housing the next generation—and make it a team effort—February 17-18, 2015, as NAA convenes the 2015 Student Housing Conference & Exposition in Las Vegas at the ARIA Resort.

For a limited time, save $275 on the cost of registration and, to sweeten the deal, groups of five or more have the opportunity to save another $75 each by registering together.

Join multifamily housing’s star pupils for two days chock-full of education and networking opportunities, from general and breakout sessions led by recognized experts in the student housing business, to reception and time spent interacting with exhibitors on the trade show floor. Position yourself at the top of this expanding sector of rental housing and better understand the next generation of residents—how they communicate, where to find them and what amenities will bring them to your community and keep them happy.

Visitthe NAA Student Housing Conference website for registration, schedule and the latest announcements. Breathe easy—no admissions essay required!

Remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
Find Out How You Measure Up With NAA’s Survey of Operating Income & Expenses and Individual Market Data

Just in time for budget season, results of the 26th annual NAA Survey of Operating Income and Expenses in Rental Apartment Communities are now available.
Read the Executive Summary, and visit the NAA website on for a full survey report and individual market data.

The report presents data from garden and mid-rise/high-rise properties, and is further segmented by individually metered and master-metered utilities. Survey data is presented in three forms: Dollars per unit, dollars per square foot of rentable area and as a percentage of gross potential rent (GPR). The survey includes an executive summary, detailed data, reports and charts about rental communities. A total of 3,698 properties containing 966,296 units are represented in this year’s report. Data was reported for 3,366 market-rent properties containing 906,562 units and 332 subsidized properties containing 59,734 units. Data for the 2014 survey is based on data for fiscal year 2013. To order your copy of the survey, contact NAA’s David Edwards.
The 2014 NAA Education Conference & Exposition: These Are The Common Roadblocks to Leasing Success

Every so often, leasing professionals demonstrate behaviors that can sometimes prevent them from achieving their professional goals. A detailed study was undertaken of thousands of leasing professionals in an effort to understand these actions and attitudes and why they occur.

The session, “The Path of Lease Resistance: Common Roadblocks to Leasing Success”—one of more than 50 offered in Denver during the 2014 NAA Education Conference & Exposition—examines the seven significant obstacles to leasing success identified by the study.

Searching for strategies to not only identify and resolve leasing issues, but also prevent them from happening to your leasing team in the future? You’re in luck: “The Path of Lease Resistance: Common Roadblocks to Leasing Success”— as well as other unparalleled education sessions focused on Marketing and Leasing such as “Truth or Dare: Responding to Online Reviews”—are now available to you as part of the NAA Education Institute’s (NAAEI) “REWIND” program, offering 20 video recorded sessions and 22 audio-synched PowerPoint sessions from the 2014 NAA Education Conference & Exposition. Order your sessions today!
Become a Stronger Industry Advocate with These Advocacy Webinar

Why Some Citizen-Advocates (i.e. YOU) Are More Important Than Others
This webinar will discuss the committee structure, demonstrating the power of citizens represented by committee chairs, and provide strategies for advocates seeking to advance their agenda through relationships with their lawmakers.

2 p.m. ET Oct. 30. Register now.

Getting to Know New Legislators: How to Hug a Porcupine
Participants will learn who new federal and state legislators listen to, what congressional staffers believe are the most effective communications tactics for influencing undecided Congressmen, and how to conduct effective meetings and influence legislators at town hall meetings, and effective advocacy in the state/district.

2 p.m. ET Dec. 11. Register now.

Presenters will be Brad Fitch, President and CEO, and Susie Gorden, Vice President, Congressional Management Foundation (CMF); and Kathleen Gamble, NAA Director of Political Affairs. CMF is a nonpartisan nonprofit dedicated to helping Congress meet the evolving needs and expectations of an engaged and informed 21st century citizenry.
NAAEI Designation Courses Offered Near You!

CAM:

Roanoke Valley Apartment Association
November, 2014

El Paso Apartment Association
January, 2015

Greater Gulf Coast Apartment Association
January, 2015

CAM Online

CAMT:

Connecticut Apartment Association
October - December, 2014

Austin Apartment Association
January – February, 2015

San Antonio Apartment Association
January – February, 2015

El Paso Apartment Association
March, 2015

Rental Housing Association of Boston
April – May, 2015

Roanoke Valley Apartment Association
April – May, 2015

Chicagoland Apartment Association
July – August, 2015

Greater Charlotte Apartment Association
August – September, 2015

Greater Memphis Apartment Association
September – October, 2015

CAPS:

Chicagoland Apartment Association
February, 2015

NALP:


February, 2015

NALP Online

CAS:

Roanoke Valley Apartment Association
November, 2014

NAAEI Leadership Experience: Powered by Dale Carnegie:

Greater Cincinnati Northern Kentucky Apartment Association
October, 2014

Webinar Wednesday

The Path of Lease Resistance with Lisa Trosien
Oct. 8, 2014

15 Tips to Making Yourself Indispensible at Work with Alexandra Jackiw
Oct. 22, 2014

Outreach Marketing: It’s More Than Coupons! With Heather Blume
Nov. 5, 2014

Getting to “I Do” Again and Again. Keeping the Resident Romance Alive with Rebecca Rosario
Nov. 19, 2014

What Your Residents Won’t Tell You AND Your Mangers Don’t Know with Kiley Haught
Dec. 3, 2014

Your 2015 Marketing Playbook with Kate Good
Dec. 17, 2014

Register Today!

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.
Did You Know?

NAA Turns 75! Yep, we made it: 75 years. Industry luminaries take a look at how far we've come and where we are heading. Learn more.
Upcoming Events

2014 Multifamily Asset Management Conference
October 13-15, 2014
Amelia Island Plantation Resort
Amelia Island, Fla.

2014 NAA Assembly of Delegates
Nov. 13-15, 2015
Intercontinental Boston

2015 NAA Capitol Conference
March 17-18, 2015
JW Marriott – Washington, D.C.



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