NAA Industry Insider: Builders Are Sold on New Rental Homes

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TWCFEB13
Builders Are Sold on New Rental Homes
Digested From "New Homes Get Built With Renters in Mind"
Wall Street Journal (11/03/13) Dougherty, Conor

Nationwide, more single-family homes are being built to be rented and not sold -- a shift that mirrors a steady decline in homeownership in the years since the housing boom went bust. In 2012, census figures by the National Association of Homebuilders showed that 5.8 percent of the 535,000 single-family homes started were being built as rentals -- an increase from 4.8 percent the year before and the highest share since 1974. By contrast, only around 2 percent of single-family residences were built for rentals from '74 to the home-price peak in 2006. For investors, the interest reflects their belief that the rental housing market will continue to see strong demand and rising rents. Apartment rents have soared 11.3 percent since 2009, notes Reis Inc. Overall, approximately 15 million of the country's single-family homes were rentals last year. That is up from 10.8 million just seven years earlier, notes Zelman & Associates. Analysts add that the new homes-turned-rentals can be found both in new subdivisions or built on lots in long-standing communities. Among the leaders is Colony American Homes, which has around 1,000 newly built homes out of a total portfolio of 15,000 rentals. The Colony Capital LLC unit's strategy is to buy them from home builders and customize the building along the way. Colony American Homes CEO Justin Chang remarks, "It's not like a whole subdivision of rental homes. The builder sells us 30 or 50 homes from the last build out."
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Market Trend Insights


RealPageMay13
The West Is the Best for U.S. Multifamily Sales
Digested From "US Multifamily Sales Strengthen"
World Property Channel (10/31/13) Vallecillo, Francys

Jones Lang LaSalle (JLL) is reporting that sales volumes for U.S. multifamily housing soared 47 percent during this year's July-through-September period after a fairly slow second quarter. National sales volumes for multifamily topped $25 billion during the three-month period. Brady Titcomb, multifamily research manager for JLL, states, "Several factors -- such as the 'housing hangover,' the rise in household formation and population growth within two key renter demographics [Echo Boomers and empty nesters] -- continue to support robust demand for rental apartments." The top-ranked metro areas are the District of Columbia, New York, and Los Angeles where $5.8 billion in year-to-date apartment sales were recorded. For the most part, though, third-quarter results were led by activity in the tech-heavy areas of the West. Denver, for instance, ranks within the top 10 markets in the nation based on annual rent growth. During the past three years, the Mile High City has absorbed 4,100 units annually on a net basis. L.A., meanwhile, has the highest rate of renters versus owners of any U.S. metro area. Over in Orange County, Calif., the current apartment vacancy rate is 3.6 percent -- that market's lowest level since 2000. Apartment demand is also tight throughout Phoenix, where the vacancy rate is at a historic low of 5.5 percent. Not to be outdone, Portland's vacancy rate is 2.9 percent -- its lowest level since the mid-1990s. For its part, new deliveries in San Diego have increased inventory by 20 basis points. However, occupancy has increased by 60 basis points to reach 97.7 percent. Finally, Seattle has clocked in with 6.2 percent annual rent growth -- the highest in the nation.
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Three Reasons for Nashville's Record Apartment Rents
Digested From "Nashville's Average Apartment Rents Hit Record $892"
Tennessean (10/30/13) Ward, Getahn

The Greater Nashville Apartment Association reports that average monthly apartment rents in the Nashville metro area climbed to $892 in this year's third quarter -- the highest ever recorded. Analysts attributed the climb in rents -- up 7.5 percent from the same period a year earlier -- to strong demand for multifamily housing thanks to three factors: strong job growth, more people choosing to rent over owning, and more young people in the prime rental age group staying put. Occupancy rates also rose a full percentage point, to 96.1 percent, during the three-month period. That's the highest that rate has been since the mid-1990s. The association tracks apartment trends in Nashville and several surrounding communities like Mt. Juliet and Murfreesboro. Steve Massey, a multifamily broker at CBRE, remarks, "As long as we keep creating jobs, we're going to continue to keep the units full and rents will go up." He went on to describe Nashville as one of the top cities for job growth over the last couple of years. The city's hot apartment sector has drawn both national investors and developers to buy and build rental units locally. More than 2,000 apartments have been completed since Jan. 1, and another 8,444 more are in various stages of development.
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A Nation of Renters? Not So, Delinquent Borrowers Say
Digested From "A Nation of Renters? Not So, Delinquent Borrowers Say"
Housing Wire (10/31/13) Panchuk, Kerri Ann

Numerous recent studies suggest that Americans have grown wary of homeownership and are gravitating toward the rental market. However, a recent poll by Fannie Mae finds that the bulk of delinquent borrowers remain committed to the idea of homeownership despite recent difficulties. The research report determined that delinquent borrowers have become much more optimistic about housing in the last year. Nearly three-quarters of those surveyed sided with owning when asked if renting or homeownership is the better wealth-building tool. Another 70 percent of respondents said ownership was better for their overall tax situation, while 73 percent agreed that it is better than renting when it comes overall financial health.
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Durham Sees a Bull Market for Apartment Construction
Digested From "Apartment Construction Helps Drive Residential Construction"
Durham Herald-Sun (NC) (10/27/13) Oleniacz, Laura

Apartment development continues to drive new residential construction activity in Durham, N.C.. During this year's July-through-September period, building permits were filed for 1,770 new residential units throughout the city and county -- a 72 percent increase from a year earlier, according to Durham City-County Building and Inspections data. In the third quarter, more than 60 percent of the estimated residential construction cost in Durham was from apartment developments. Ted Conner, vice president for economic development and community sustainability of the Greater Durham Chamber of Commerce, notes, "[Apartment] vacancies got extremely low. There's money in that sector to support it, [and] it's pretty active right now. I don't think we're going to continue to see that frenetic, high level of activity, but right now it’s still very active." Real Data analyst Engle Addington notes that the apartment construction boom began nearly two years ago in North Carolina's Triangle. Durham County currently accounts for less than 33 percent of the current activity in this region. The Charlotte-based apartment research firm reported that there were 10,076 apartments under construction in Durham, Orange, and Wake counties as of July. Real Data's study cited strong demand for apartments across the Triangle, adding that average rents continued to grow. However, it also projected that vacancy rates will likely increase, while growth in rents is expected to slow. Triangle-wide, the average monthly rent in July 2013 was $913 -- up from July 2012's $864.
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What Would You Do to Get a Resident to Sign?
Digested From "Quirky Trends in Real Estate"
Northwest Herald (10/28/13) Gibbons, Vera

The housing recovery has sparked some quirky trends that aim to help residents make a final decision as to where to live. For instance, luxury apartment communities increasingly are catering to pet owners with pet food-centered room service menus and services that walk, groom, and even arrange play dates for residents' dogs. Some real estate agents are now allowing qualified home buyers to spend the night in the house they are considering to help them make informed decisions -- a trend confident apartment owners and managers may want to consider.
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Deals and Transactions


Lowe'sFeb13-II
Three Reasons Why Cortland Likes Tampa Apartments
Digested From "Atlanta's Cortland Partners Enters Tampa Multifamily Market"
Tampa Bay Business Journal (10/30/13) Holan, Mark

Cortland Partners has spent nearly $69 million to acquire the Preserve at Deer Park and Audubon Village, its first apartment communities in Tampa Bay. Chief Investment Officer Mike Altman said the company likes the Tampa market for three reasons: "People want to live in Tampa," he reasoned. "There's a great mix of lifestyle and commerce that people are drawn to. We want to be in places that people want to be in." The second reason is that although there has been a lot of apartment development in Tampa Bay, such activity has been on the lighter side versus other markets. Finally, the ratio of new jobs to housing starts in and around Tampa is among the highest in the country. Together, the Preserve at Deer Park and Audubon Village total 895 rental units. The Atlanta-based company plans to spend an additional $13 million over the next 20 months renovating both. Nationwide during the third quarter, Cortland expanded its portfolio by 2,889 units with the addition of eight apartment communities.
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What U.S. City Saw a Friday Flurry of Apartment Sales?
Digested From "A Friday Flurry of Apartment Building Sales"
Seattle Times (11/03/13) Bhatt, Sanjay

Public records show that four Seattle apartment communities were sold this past Friday in separate deals totaling nearly $90 million. Three of the communities that changed hands were in the city's University District. Kirkland-based Absaroka Holdings was the buyer of all three, inking deals that amounted to more than $380,000 per unit. Separately, a Dallas-based real estate investment fund purchased the new 206 Bell building for $41.2 million, or around $338,000 a unit. The sellers were apartment developers Ed Hewson and Jon Breiner.
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Winthrop Realty Trust Scours U.S. for Luxury Apt. Buys
Digested From "Winthrop Realty Trust Acquires Four Class A Luxury Apartment Buildings"
Globe Newswire (10/31/13)

Winthrop Realty Trust has recently been on an acquisition spree, buying up four Class A apartment communities for $246 million. The first was 44 Monroe in Phoenix, which contains 184 rental units that were originally built as for-sale condominiums. On-site amenities range from a spa and swimming pool with sundeck to an outdoor terrace with gas grill and fire pit and a 24-hour lobby attendant. The second was the Highgrove, located in Stamford, Conn. It contains 92 condominium-quality rental apartments, with such amenities as valet parking, a yoga studio, and a sky-lit indoor pool with retractable roof. The third was Mosaic II, located in Houston. This 29-story building boasts 396 rental units and includes a 6,000-square foot wellness center with steam rooms and saunas and a 6,500-square-foot social lounge and recreation area. Finally, Winthrop has acquired San Pedro Lofts in San Pedro, Calif. It contains 89 rental units in two distinct buildings. Luxury amenities include a sun deck with barbeque, a fitness facility, and secured covered parking. Winthrop Realty Trust is a Boston-based REIT.
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Atlanta Firm Makes Ga. History With Macon Apartment Buys
Digested From "Atlanta Company Buys Several Downtown Macon Apartment Buildings"
Macon Telegraph (10/29/13) Lopez, Andres David

Aderhold Properties has acquired four historic apartment communities in downtown Macon. The Atlanta-based real estate investment firm specializes in adapting historic real estate. Together, the new acquisitions contain 154 rental units. Among the purchases was the Katherine Court building, which is almost a century old and was last restored in 2002. A second community, the Terrace Apartments, was erected in 1926 and restored in 2007. It is on the National Register of Historic Places. Together, the four properties are 97 percent occupied. Aderhold Properties President Thomas Aderhold comments, “Macon, we believe, is an up-and-coming area. We believe it's a great place to be."
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Industry Buzz


Sherwin-WilliamsSept13
Four Holiday Ideas Apts Can Use to Build Community
Digested From "Building Community: Four Ideas for Holiday Events"
Multifamily Executive (10/28/13) Machak, Lindsay

The upcoming holiday season should be seen by apartment owners and managers as an opportunity to build community through special, timely events. Many communities take part in some form of charitable donation drive and/or holiday celebration. The article lists four events some of the industry's top owners are participating in this year's fourth quarter. Giving trees have grown in popularity. For the past four years, officials at Landmark Apartment Trust of America's nearly 100 communities have worked with the Salvation Army to set up giving trees around the holidays. Such trees are decorated with tags that have wish-list items written on them for children in the local areas. Community members can choose a tag and purchase the gift for that child. The staff at Seattle-based Pillar Properties brings residents at its Corydon property together with a white elephant gift exchange. Pillar marketing director Loree Wagner says residents gather in the apartment community's theater room and bring a gift of $5 or less for the exchange. Wagner remarks, "It's a great way to bring our residents together and the theme makes it a lot of fun." Other apartment firms and communities bring people together with special holiday galas. At the Crest at Congressional Plaza in Rockville, Md., donations from its gala will come from a silent auction and be sent to Toys for Tots, reports the community's concierge Sandra Combs. Finally, each year, AvalonBay participates in a toy drive with the New Jersey Apartment Association (NJAA). All of the Virginia-based REIT's apartment communities in the Garden State collect toys and are also active in the NJAA Charitable Fund's Children's Holiday Party.
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Building Syracuse Apts w/Recycled Containers
Digested From "Developers to Build Syracuse Apartments With Recycled Shipping Containers"
Syracuse Post-Standard (NY) (11/03/13) Moriarty, Rick

A couple of developers have proposed using recycled shipping containers to erect a mixed-use building on Syracuse's east side that will offer 36 one-bedroom apartments and some commercial space. Christopher Geiger and Scott Smith's plan is to demolish a one-story medical equipment sales building and construct a five-story structure in its place. The first floor and covered parking area will be built using concrete. But the upper four floors -- where the apartments will be located -- will be built with 130 used shipping containers, the kind used on cargo ships. The use of recycled shipping containers as a building material is a growing trend in the nation among builders looking for a green alternative to traditional building materials. There is currently a surplus of shipping containers at U.S. ports because the country imports many more goods than it exports, and it's costly to ship empty containers back to Europe and Asia. Geiger and Smith hope to have the apartments ready for residents by next fall. Rents have yet to be set, but Geiger expects them to be in the $1,100- to $1,200-a-month range.
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Two Reasons Why Equity Residential's Q3 Earnings Soared
Digested From "Equity Residential 3rd-Quarter Net Rises 72 Percent Amid Gains From Sales, Rising Revenue"
Wall Street Journal (10/30/13) Prior, Anna

Equity Residential's third-quarter earnings skyrocketed 72 percent for two reasons -- increased revenue and higher gains from property sales. The Chicago-based apartment owner raised the lower end of its full-year outlook for normalized funds from operations by three cents a share. Equity Residential ranks as America's biggest apartment developer and manager. From July through September, the Chicago-based REIT sold 10 apartment communities for an aggregate sale price of $657.6 million. Also during the third quarter, Equity Residential sold a couple of land parcels for $44.3 million. Overall for the quarter, the company posted a profit of $376.2 million -- an increase from $218.6 million a year earlier. Quarterly revenue soared 39 percent to $629.4 million, while rental income climbed 40 percent to $626.9 million.
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
Why Did GSC Stop Accepting Section 8 Vouchers?
Digested From "Apartment Firm Stops Accepting Section 8 Vouchers, Forces People to Move"
Daily Tar Heel (NC) (10/30/13) Hudson, Caroline

GSC Apartment Homes recently stopped accepting Section 8 vouchers. One of the largest multifamily housing management firms in North Carolina, GSC operates nine apartment communities in the Chapel Hill and Carrboro areas. Terry Meyers, the company's regional vice president, assures that residents affected by the change will not have to move until their lease ends. Meyers went on to describe the company’s decision to stop accepting Section 8 vouchers as a business decision. "We are not a Section 8 housing property," he remarked. "We are a conventional property." Increasing property taxes have prompted numerous apartment communities in North Carolina to renovate into higher-priced student housing, pushing out many low-income families.
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Scottsdale Council to Revisit Low-Income Apartments
Digested From "Scottsdale Council to Revisit Low-Income Apartment Buildings"
Azcentral.com (10/31/13) Duckett, Beth

In Arizona, the Scottsdale City Council recently held a special meeting to discuss options for low-income apartment communities on Belleview Street in the southern part of the city. Last month, council members voted 4-3 to approve a $636,966 construction contract with Habitat for Humanity of Central Arizona to rebuild the aging apartments. The decision to proceed on construction allowed the city to avoid an $825,000 penalty from the U.S. government, although Scottdale's mayor was opposed. A new option now being considered allows the council to rescind prior decisions and terminate the contract. Rather than repaying the federal government $825,000, city officials found out that Scottsdale could use the funds to pay for other local housing and housing rehabilitation and infrastructure-related projects.
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NAA Announcements


Behr.July13
Best-Selling Business Author and Behavioral Change Expert to Deliver Keynote at the 2014 NAA Student Housing Conference & Exposition

Peter Sheahan, founder and CEO of ChangeLabs and considered a leading expert in how the world’s most effective companies and individuals distinguish themselves in rapidly evolving marketplace, will deliver the keynote address at the 2014 Student Housing Conference & Exposition, March 3-5, 2014 in Las Vegas at the ARIA Resort.

Counting Apple, Google, Coca-Cola and Ernst & Young among his many clients, Sheahan recently released his sixth book, “Making It Happen,” which offers his unique insights into execution of ideas through business growth, understanding consumer behavior and compelling market positioning.

Register now for the 2014 NAA Student Housing Conference & Exposition to hear this 2012 National Speakers Association Hall of Fame inductee give you the inside track into exploiting business trends and new market opportunities.
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300 Reasons to Register Today for the 2014 NAA Student Housing Conference & Exposition

OK—so it’s technically one reason 300 times, but it doesn’t change the fact that, for a limited time, attendees can save $300 off the cost of registration to the 2014 Student Housing Conference & Exposition, March 3-5, 2014 in Las Vegas at the ARIA Resort.

Plan to learn everything there is to know about housing the next generation, and make it a team effort—groups of five or more have the opportunity to another $400 by registering together for two days 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 leading-edge exhibitors on the trade show floor.

And, new this year, NAA is excited to announce “Unsessions,” hyper-interactive education opportunities that will maximize the brilliant insights of both speakers and attendees. Be sure to check back (naahq.org/SHC) often for more details.

Visit the NAA Student Conference website for registration, schedule and the latest announcements, and remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
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Take Your Business to New Heights by Registering Now for the 2014 NAA Education Conference & Exposition

Good things may come to those who wait, but great things come to those that act now: Register today to avoid missing the opportunity to “Reach New Heights” as more than 6,600 multifamily professionals convene in Denver June 18-21 for the 2014 NAA Education Conference & Exposition.

From world-famous speakers to the latest and greatest from multifamily supplier partners, if career enhancement is what you seek, then this is the one event you can’t afford to miss. Don’t delay—the largest discounts go to those who register early.

And, make sure to book your housing as soon as you register—rooms will go fast and you will be unable to book without first registering. Visit the Education Conference website for information and reservations for all official NAA Education Conference hotels.
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Are You A Regional Supervisor or Corporate Department Head?

NAAEI has partnered with Dale Carnegie Training to deliver a world-class pilot program called the NAAEI Leadership Experience. Are you looking to lead effectively across generations, delegate tasks to develop and train others and most importantly, find time to work on future business growth? The NAAEI Leadership Experience is an investment you cannot afford to pass up! This course will be held Nov. 19-21, 2013, in Atlanta at a one-time discounted rate. For information or to register contact Kim McCrossen at 703-797-0610.
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Budget Blahs? 2013 NAA Survey of Income & Expenses Data Now Available

The 2013 NAA Survey of Income & Expenses is now available. The survey includes an executive summary, detailed data, reports and charts about rental communities.

A total of 4,526 properties containing 1,138,056 units are represented in this year's report. Data was reported for 4,117 market rent properties containing 1,077,468 units and 409 subsidized properties containing 60,588 units. The executive summary appeared in the Sept. issue of units magazine. To order, please visit the NAA Store.
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Students Get a Second Chance with NAAEI's CAMnesty Program

CAMnesty is a new program that offers individuals who have started but may not have completed their Certified Apartment Manager (CAM) designation the opportunity to pick up where they left off and earn the CAM designation. Learn more about the CAMnesty program.
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NAAEI Designation Courses Offered Near You!

CAM:

Roanoke Valley Apartment Association
November, 2013

CAM Online

CAMT:

Columbus Apartment Association
January – February, 2014

El Paso Apartment Association
January – April, 2014

Austin Apartment Association
February – March, 2014

Roanoke Valley Apartment Association
February-March 2014

CAS:

Roanoke Valley Apartment Association
November, 2013

NALP:

Apartment and Office Building Association of Metropolitan Washington
February, 2014

NALP Online

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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November 5, 2013

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This one-minute video promotes the apartment industry’s national advocacy event on March 17-18. Under the theme “One Industry. One Voice,” the video encourages people to be informed, get involved and...