NAA Industry Insider: Multifamily Remains Frontrunner in REIT Sector

 

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TWCFEB13
Multifamily Remains Frontrunner in REIT Sector
Digested From "Multifamily Remains Frontrunner in REIT Sector"
Housing Wire (11/13/13) Mlynski, Christina

The macroeconomic backdrop over the last several years has proven to be the perfect landscape for REITs. Not surprisingly, apartments have led the way. With the rise in both single-family home prices and mortgage rates in recent months, apartment demand is expected to remain strong as long as the recovering employment market does not stumble. In particular, multifamily housing will continue to benefit from short-term leases, enabling owners to raise rents as the economy rebounds. While REITs in all sectors will ultimately have to deal with higher interest rates, many analysts believe the impact will be manageable for most. Morningstar Credit Ratings' Todd Lukasik states, "In general, companies with longer average debt maturity schedules and relatively better internal and external growth profiles should be able to mitigate the negative effects on higher interest rates on cash flows a bit better." As REITs continue to progress over the next couple of years, maintaining reasonable leverage portfolios will become a greater concern than maintaining liquidity.
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Market Trend Insights


RealPageMay13
Why Is Triad's Apartment Vacancy Rate Lowering?
Digested From "Triad Average Apartment Vacancy Rate Lowering, Rent Rising"
Greensboro News & Record (NC) (11/12/13)

According to a report by Real Data, the average apartment vacancy rate in North Carolina's Triad region was 7.3 percent in the third quarter -- the lowest number reported in more than a decade. Analysts note that the improving occupancy rates might have contributed to an annualized rent growth of 1.4 percent. Construction has started on less than 500 rental units during the past two quarters, states the report. There are currently more than 1,100 apartments under construction in the Triad and more than 3,500 more units proposed. Finding financing remains a challenge for many developers despite apparent growth in demand. The average rent for a Triad apartment is $705 per month. Apartment communities built in the past five years average $950 a month, while communities erected more than three decades ago currently average $600.
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Young and Smart, But Millennials Face Homebuying Hurdles
Digested From "Young and Smart, But Millennials Face Homebuying Hurdles"
CNNMoney.com (10/31/13) Christie, Les

The percentage of 18-to-32-year olds heading their own households was 34.3 percent this past March, compared to 36.1 percent in 2007, according to a recent Pew survey. And for the first time, the homeownership rate among college graduates was less than that of non-graduates, reports the New York Federal Reserve. High debt levels and the weak job market have made it more difficult for young Americans to get mortgages; and more grads are returning to their parents' home to live, which limits their ability to build credit histories. Danielle DeBacker, 24, a clinical researcher coordinator at Georgetown University Medical Center, shares a house in Alexandria, Va., and cannot afford a car. DeBacker owes $80,000 in school loans and does not believe she will be able to buy a home until she is in her mid-30s at the earliest. The homeownership prospects for Millennials could be a drag on the housing market for years to come.
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Deals and Transactions


LowesAug2013
In What Texas City Did Calif. REIT Make Big Apartment Buy?
Digested From "Steadfast Income REIT on a Houston Apartment Buying Spree"
Houston Chronicle (11/14/13) Feser, Katherine

Steadfast Income REIT has bolstered its Houston portfolio with the acquisition of six apartment communities containing 1,692 rental units. The deal comes after the firm entered the Houston-area market with the purchase of The Heights community in October. "As the fourth largest city in the nation, Houston has not only sustained the effects of the recession but has continued to lead the nation into the recovery and growth period," said Ella Neyland, president of Steadfast Income REIT. As residents move out, the California-based company said it will upgrade each of the apartment interiors.
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All Sixes for Atlanta Firm in Vegas: Six Apt. Buys for $66 Million
Digested From "Atlanta Firm Snatches Six Apartment Complexes for $66 Million"
VEGAS INC (11/14/13) Segall, Eli

Atlanta-based Trimont Real Estate Advisors has been on a Las Vegas buying binge lately, acquiring at least four distressed apartment communities in October and two others earlier this spring for $66 million. The company purchased the six communities from Fannie Mae, which had acquired them through the foreclosure process. So far this year, Las Vegas apartment communities are selling for an average of $61,400 per unit, reports Colliers International. Trimont's acquisitions come at a time when investors are snapping up apartment communities throughout the metro area due to low prices, cheap financing, and a large base of potential residents who are not in a position to make the leap to homeownership. According to Colliers, Southern Nevada's apartment sector had a 5.9 percent vacancy rate in 2013's second quarter and average asking rents of $807 a month. Two years ago, it had an 8.3 percent vacancy rate and average asking rents of $770 a month.
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Aimco Brings Apartments to Boston's Big Dig
Digested From "Aimco Lands $114M Pru Loan for Boston MF"
GlobeSt.com (11/13/13) Bubny, Paul

Prudential Mortgage Capital Co. (PMCC) has provided a $114 million construction loan to Apartment Investment and Management Co. (Aimco) to develop a 12-story apartment community in Boston's Bulfinch Triangle. Aimco is developing the 310-unit property, dubbed One Canal, in partnership with locally based Trinity Financial. Kip Kimble, a principal with PMCC's multifamily originations team, states, "The Bulfinch Triangle/North Station area is one of the top residential locations in Boston because of its location between the West End and the North End. It is within walking distance of the Financial District, Massachusetts General Hospital, Government Center, and Beacon Hill." One Canal is notable for being located directly above Boston's Big Dig project, which re-routed I-93 underneath the city through a 3.5-mile tunnel and created several plots of land open to developers. Trinity and its development team will be responsible for construction, while Aimco will own and manage the site after completion. Aimco Chairman and CEO Terry Considine states, "Aimco's recent investment activities in Boston are an important step to achieving our stated goal of upgrading our locations in that market. While we like our allocation to the area, we seek to own and operate properties at a higher price point than that of what has been a primarily suburban portfolio."
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Denver Apartment Firm Goes Mile High for Motown
Digested From "Triton Properties Buys 4 Apartment Buildings Along Detroit Riverfront"
Crain's Detroit Business (11/10/13) Pinho, Kirk

Denver-based Triton Properties Inc. has purchased four apartment communities near and along the east Detroit riverfront for an undisclosed sum. The seller was locally based Cynex Enterprises. The acquisition is the latest in the city for Triton, which bought the Alden Park Towers for $2 million in August 2012 and subsequently spent around $5 million in renovations. April Sedillos, executive vice president of Triton, said the company typically addresses deferred building maintenance first after taking ownership of an apartment community. Triton is still in the process of developing budgets for capital improvements at each of the newly acquired sites.
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Industry Buzz


Sherwin-WilliamsSept13
Dallas Apartment REIT Takes Stock in Canada
Digested From "U.S. Companies Increasingly Going North of the Border to List Their Stock"
Dallas Morning News (TX) (11/18/13) Deener, Will

More and more U.S. companies are finding an alternative for their financing needs on the Toronto Stock Exchange (TSX). Almost 4,000 companies are now listed on this all-electronic exchange, and approximately 350 of them are based outside of Canada. One such company is Dallas-based Milestone Apartments REIT, which owns approximately 17,000 apartments. It raised $228 million when it went public and listed on the TSX earlier in the year. Milestone CEO Robert Landin notes that the public offering was actually oversubscribed, meaning there was more demand for the REIT's shares than supply. Milestone would have been a relatively small player on the New York Stock Exchange, but it ranks as the largest U.S.-based commercial REIT on the TSX. That translates into robust analyst coverage.
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Water Often Overlooked as Part of Energy Benchmarking
Digested From "Water Often Overlooked As Part of Energy Benchmarking"
National Real Estate Investor (11/11/13) Hughes, Jennifer V.

When building owners and managers think about benchmarking utilities and conserving energy, they sometimes forget about a commodity in addition to fuel and electricity: water. Benchmarking -- keeping track of a property's water and energy use in order for green improvements to be implemented -- is an emerging issue in the commercial real estate industry, especially in multifamily housing. Water, though, sometimes gets lost in the shuffle. Part of the reason is that water utilities are not decoupled like electricity and gas markets in a number of states. Additionally, fewer buildings are submetered for water. Finally, water utilities are often behind the times in terms of technology in online billing and monitoring. Fortunately, technological advances have resulted in such things as low-flow toilets and fixture aerators that provide a better tenant experience and are less susceptible to single-user interference. The John M. Corcoran and Co. began efficiency projects that included water five years ago, notes Peter Mahoney, the firm's senior project director. At one apartment community, benchmarking showed that one unit used 175 gallons per bedroom each day and another just 80 gallons per bedroom a day. Corcoran spent approximately $225,000 replacing hundreds of toilets and installing faucet aerators and low-flow shower heads at four of tis multifamily properties. The savings amounted to $140,000 a year.
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New Group Helps Find NY Homes for Those With Disabilities
Digested From "Jackie Roth, Deaf Since Birth, Is an Advocate and a Broker for the Disabled"
New York Daily News (11/15/13) Chaban, Matt

In New York City, top-producing Douglas Elliman broker Jackie Roth is building a group designed to cater to the needs of clients with disabilities. The real estate heavyweight, who was born deaf, explains, "Because I hear differently, I see and experience the city differently, and I want to bring that experience to others to help them find a home." The team she is assembling is growing a network that aims to help buyers and renters across the country find homes. "So many brokers think a building is accessible because it has an elevator, but you show up and there's two steps to get in the door," says Miss Wheelchair America 2011 Alexandra McArthur, who faced a number of hurdles before finally moving into a new apartment in Alphabet City. "Having a brokerage that really gets it would be a godsend."
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New Building Designers Yell, 'Timber!'
Digested From "Timber Towers"
Architect's Newspaper (11/14/13) Bentley, Chris

The environmental cost of concrete and steel construction is spurring a new generation of designers to consider wood, particularly for high-rise buildings. The concept is gaining ground among designers in Canada, Europe, and Australia, but is slower to catch on in the United States. Some forward-thinking designers and engineers seek to revitalize wood construction by tapping the potential of manufacturing breakthroughs. One example is London's Graphite Apartments, which are completely made from cross-laminated timber (CLT). CLT assembly cuts down on construction errors and time by being factory-based, and allows for faster building. Heavy timber and CLT also feature built-in fire protection as dense wood burns slowly, charring rather than catching fire all at once. CLT towers also have better acoustics. Meanwhile, Skidmore, Owings & Merrill (SOM) has proposed a timber tower standard based on the 1965 DeWitt-Chestnut Apartment Building in Chicago. The prototype employs a concrete core and joints so that the system uses about 25 percent as much concrete as the actual Dewitt-Chestnut. Structural steel fixes the building at its base, using about 15 percent as much steel as a typical composite system. SOM reports that building the structure would consume about 12 million cubic yards of timber, less than one-hundredth of 1 percent of the annual North American timber harvest. Because wood rots, it must be kept out of the rain, and SOM's system swaps wood for a steel frame at the building's base to prevent water damage during flooding.
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
What Chicago Suburb Is Expanding Apartment Regulation?
Digested From "Batavia to Expand Program to Regulate Apartment Buildings"
Beacon News Online (11/15/13) Girardi, Linda

After a two-year pilot program that focused on regulating apartment communities with a focus on criminal activity, the Chicago suburb of Batavia has decided to expand the program and make it permanent. Near the end of 2011's third quarter, city officials launched a "Crime Free Rental Housing" program to regulate licensing, education, and operation of apartment communities with 10 or more rental units. At the time, Batavia aldermen regarded it as a "crime-fighting tool" to improve the quality of life for local residents, especially for residents of apartment communities where there were repeated calls for police assistance. The pilot program required apartment owners to obtain a license and for the owner and/or apartment manager to attend a training seminar. In addition, it required an addendum to apartment leases that gave owners leverage to terminate leases and evict residents who become embroiled in criminal activity. Aldermen recently approved renaming it the "City of Batavia Rental Property Licensing Program," making it more comprehensive, and including buildings with six or more rental units. The changes call for each apartment owner to pass a property maintenance inspection of the exterior of the building grounds and common areas within the building, such as laundry rooms, prior to receiving a rental property license. Police training is another requirement.
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Two Factors Driving Largo's (Fla.) Apartment Boom
Digested From "Largo Waives Fees, See Apartment Boom"
St. Petersburg Times (FL) (11/11/13) Boatwright, Josh

In Largo, Fla., two factors -- a strong rental apartment market and the city's suspension of some development fees -- are driving one of the biggest residential development booms the community has seen in decades. Developers currently have more than 1,200 apartments and townhouses either in the planning stages or under construction locally, including the first market-rate rental units to be built here in over 20 years. The appetite for more housing locally has moved Largo commissioners to extend a moratorium on two development fees from 2014 to 2016 to maintain the momentum. Developers of the Gateway North apartments were the first to urge city officials to either lower or suspend its parkland impact and capital improvement fees, which combined would run about $2,500 per apartment. Largo had lowered the parkland fee in 2009 from more than $2,800 per unit to about $1,900. But commissioners last year approved a moratorium on both charges to spur sorely needed rental housing development. Since Largo's moratorium went into effect in the spring of 2012, a half-dozen apartment communities have either resumed construction or submitted plans to the city.
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Newly Passed NYC Building Codes to Affect Apartments
Digested From "New Building Codes Passed After Lessons From Hurricane Sandy"
The New York Times (11/15/13) P. A27 Navarro, Mireya

The New York City Council approved new building codes, which were recommended by the task force convened after Superstorm Sandy. The new codes are expected to ensure structures are more sustainable during emergencies. Among the changes are that residential buildings of five stories or more have to add faucets in common areas, so that residents on higher floors have some access to water for drinking, flushing toilets, and other uses. New construction must comply immediately, while existing buildings have eight years to comply.
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NAA Announcements


Behr.July13
Turn Good Ideas Into Great Results at the 2014 NAA Student Housing Conference & Exposition—And Save Big By Registering Now

Position yourself to meet the challenges and take advantage of the opportunities presented by the growing and changing industry segment of student housing—and earn a $300 discount on attendance—by registering now for the 2014 NAA Student Housing Conference & Exposition, March 3-5 in Las Vegas at the ARIA Resort.

The next generation of students have grown up in a world where technology and communication methods are on-demand, customizable and ever-changing—are you ready to turn these expectations into revenue by meeting the needs of this growing segment of residents?

To help unleash your entrepreneurial spirit and turn your good ideas into great results, the 2014 NAA Student Housing Conference & Exposition Opening General Session will feature remarks from Peter Sheahan, founder and CEO of ChangeLabs and internationally recognized for inspiring innovation and creating lasting behavioral change among organizations.

Attendees should expect to hear insights into business trends and the changing needs of customers and staff, from Sheahan, who recently released his sixth book, “Making It Happen,” offering his unique perspective on the execution of ideas through business growth, understanding consumer behavior and compelling market positioning.

With accolades including 2006 National Speakers Association Keynote Speaker of the Year, one of the 25 Hottest New Speakers in America and one of the 25 Most Influential Speakers in the Industry, Sheahan’s presentation is not to be missed.

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.

High-caliber sessions, great networking opportunities and the latest technology await you in Las Vegas March 3-5, 2014. Visit the NAA Student Conference & Exposition 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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Owners and Employers: ROI of 2014 NAA Education Conference & Exposition Attendance Is Second-To-None

With regard to return on investment, nowhere else can you get so much for one price as you can by attending the 2014 NAA Education Conference & Exposition, June 18-21 in Denver.

The Mile-High City will be the place to slingshot your business and career to new heights through the practical know-how, classroom education and industry networking opportunities offered to attendees, not to mention the hundreds of supplier partners ready to fill you in on the latest in technology, products and services.

For NAA members, consider that full conference registration includes:

** General sessions led by world-renowned speakers—representative of some of the greatest minds and business entrepreneurs in the world—the value of which alone covers the price of admission.

** More than 40 breakout sessions covering the gamut of multifamily housing operations and ownership, including marketing, sales, technology, industry trends, executive issues and so much more.

** Two days of NAA Exposition exploration featuring the newest, most innovative products and services from hundreds of leading-edge rental housing supplier partners.

** Receptions, meetings and interactive education sessions where attendees can share ideas and build their network of professional colleagues and potential service partners.

** Six available continuing-education credits offer NAA designates the chance to reach their designation renewal goal (not to mention the career investment) in one place and at one time, saving time and money.

What are you waiting for? Invest in your company and your career today. Visit the NAA Education Conference website and remember that 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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NAAEI Leadership Experience Program Starts Today

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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NAAEI Designation Courses Offered Near You!

CAM:

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

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 19, 2013

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