NAA Industry Insider: Essex, BRE Will Combine in $15.4B Merger

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TWCFEB13
Essex, BRE Will Combine in $15.4B Merger
Digested From "Essex, BRE Will Combine in $15.4B Merger"
GlobeSt.com (12/19/13) Bubny, Paul

Essex Property Trust Inc. and BRE Properties announced jointly on Thursday that they have officially agreed to merge and create the only publicly traded, pure play apartment REIT on the West Coast. The combined company will have a total market capitalization of approximately $15.4 billion. Each BRE common share will be converted into 0.2971 newly issued shares of Essex common stock plus $12.33 in cash under terms of the agreement. BRE Chief Executive Constance B. Moore notes, "For over a year, BRE's board and management team have been evaluating alternatives to maximize shareholder value." She adds that the merger will create "a must-own sharpshooter REIT." Essex President and CEO Michael Schall states that the combination results in "a stronger platform for sustainable growth and value creation." The combined company will own approximately 56,000 rental units in 239 apartment communities throughout Southern California, Northern California, and Seattle. The merger is on track to be finalized by the end of March.
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Market Trend Insights


RealPageMay13
Could San Francisco's Rent Riot End in 2014?
Digested From "Could San Francisco's Rent Riot End in 2014?"
Fortune (12/18/13) Mangalindan, JP

High rents in San Francisco may be a thing of the past, as nearly 8,500 new rental units will open over the next 14 months, says James Wavro of J. Wavro Associates. The new rentals could come to market in 2014 and cause rents to flatten and possibly decline between 5 percent and 15 percent. The boom in the technology sector has helped push up demand for rental housing, raising rents. This comes as more young workers are expressing a desire to live in the city. The gap between these technology workers with high incomes and the city's working poor and middle class is significant, leaving many lower-class workers little choice but to move outside San Francisco to more affordable areas. According to Skybox Realty's Paul Hwang, rent declines will depend largely on how much hiring the technology sector does in 2014. Wavro says, "Does this mean things will become automatically affordable? No. But the inventory is coming, and the pendulum will swing the other way."
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Three Ways the Triad Apt. Market Shone Bright in 2013
Digested From "Triad Apartment Market Turned Bright in 2013"
Business Journal of the Greater Triad Area (12/20/13) Carlock, Catherine

Columnist Catherine Carlock reports that North Carolina's Greater Triad area saw a healthy apartment sector this past year. Not only is the region's 7.3 percent apartment vacancy rate the lowest in a decade, new apartment development of every shape and size moved forward. Beyond individual projects themselves, several large-scale, multimillion-dollar mixed-use projects got off the ground containing apartments in their development equation. They ranged from the $60 million Smith Crossing development in suburban Kernersville (372 apartments planned) to the $60 million Clemmons Town Center project (312 apartments planned). In addition, Greensboro-based Bell Partners Inc. climbed from the No. 10 spot to be named the nation's seventh-biggest apartment management firm.
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Is Augusta Apartment Market Becoming Overcrowded?
Digested From "Future Apartments Could Make Market Crowded"
Augusta Chronicle (GA) (12/13/13) Martin, Jenna

In Augusta, Ga., the average occupancy rate for most of the 120 apartment communities that report rental listings with Apartment Guide is presently hovering at around 93 percent. Eight apartment communities are now being built that will add an additional 2,250 rental units to the local stock once completed. Lisa McTier, market sales manager for Augusta's Apartment Guide and a member of the Apartment Association of Greater Augusta, predicts, "I think [they are] going to have an impact on our properties that we have now. The older communities are going to start seeing a dip in occupancies." The possibility that Augusta's apartment sector could soon be overbuilt was enough for one firm, Atlanta-based Quintus Development, to nix a 260-unit community. The company has developed approximately 2,000 apartments in Atlanta. It had been under contract with developer MGHerring to buy nearly 26 acres close to the Delta call center for construction of a dozen two- and three-story apartment buildings. The project was on track to start by the first quarter of next year. However, it was ultimately called off this past spring. Quintus Development President Kelly Keappler explained, "You have two new projects coming out of the ground right now [the Gateway development and a new apartment community near CarMax]. They were out ahead of us. We were looking at absorption and new jobs coming into that market and the economics of bringing a third 200-plus units into the market [and] were afraid that it would be too much."
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Deals and Transactions


LowesAug2013
Atlanta Firm Warms to the Florida Market With Big Buy
Digested From "Firm Buys 6 Volusia Apartment Complexes"
Daytona Beach News-Journal (FL) (12/22/13) Koslow, Bob

Cocke Finklestein Inc., an Atlanta-based real estate and investment management firm, confirms that it has paid nearly $21 million for a half-dozen older apartment communities in Volusia County, Fla. Together, these communities contain 785 rental units. The purchase price averaged $26,687 per apartment. "That's the perfect price for those properties," remarked Claude Gardner, managing director at Prudential Commercial Real Estate FL in Daytona Beach. "It gives them enough room to put some money into them to get them where they need to be." The six apartment communities are located in Daytona Beach, DeLand, and Orange City. All six are one-floor, modular, garden-style communities with multiple buildings that were built between 1979 and 1985. Dan Haefner, president of CFLane, the property management arm of Cocke Finkelstein, concludes, "We like this type of workforce and affordable housing products, and it was an opportunity to expand our portfolio. We have close to 40,000 units."
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GoldOller Sees Treasure in Atlanta Apartments
Digested From "GoldOller Acquires Atlanta Apartment Portfolio"
Sacramento Bee (12/18/13)

GoldOller Real Estate Investments recently announced its participation in the acquisition and assumption of management of a half-dozen apartment communities with more than 1,200 rental units in metro Atlanta. "We believe that Atlanta has rebounded very nicely and is now poised for very significant rental growth," said GoldOller Chairman Richard Oller. "The assets we acquired, all located in the Southside Atlanta submarkets, are expected to yield attractive cash on cash returns before any value enhancements." The acquired apartment communities include: Meadow View and Meadow Springs in College Park, Ga; Peachtree Landing and Hidden Creek in Marrow, Ga; Eastwood Village in Stockbridge, Ga; and Monterey Village in Jonesboro, Ga. The portfolio was acquired from affiliates of PSPIB, a Canadian pension fund, for $87.25 million.
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Green Street Partners Buys Dallas Apartments
Digested From "Green Street Partners Buys Dallas Apartment Communities"
Dallas Business Journal (12/16/13) Carlisle, Candace

Green Street Partners, a California-based multifamily housing investment group, purchased a North Dallas apartment portfolio with plans to spend $2 million renovating the three apartment communities. The portfolio includes: the Clusters Apartments, a 206-unit property; the 192-unit Clubview Gardens; and the 224-unit Northwest Crossing Apartments. Cantrell Co. & Partners brokered the sale of the portfolio on behalf of the seller. The portfolio is 95 percent leased at below-market rents, said partner Sam Pettigrew. The renovations will allow the new owners to push rents for the primarily one-bedroom units.
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In What N.J. Market Did Mack-Cali Buy Apartments?
Digested From "Mack-Cali Buys Three Apartment Buildings in Downtown New Brunswick For $41.1M"
New Brunswick Today (12/22/13) Rabinowitz, Richard

Mack-Cali has inked a $41.1 million deal to acquire three apartment communities in downtown New Brunswick, N.J. The trio of properties contain both two- and one-bedroom units, along with studio apartments and range in size between 623 and 950 square feet. Mack-Cali is leasing 95 percent of the properties from a company affiliated with Ironstate Holdings. Mack-Cali CEO Mitchell E. Hersch comments, "We look forward to upgrading the properties and offering residents an enhanced amenity package." Residents of the three communities already have access to everything from bicycle racks to in-house laundry rooms to fitness facilities. In addition, all three are located close to New Brunswick's train station, Rutgers University, Robert Wood Johnson University Hospital, and Johnson & Johnson's worldwide headquarters. Roseland, a Mack-Cali subsidiary, lease and managed the newly acquired communities. The plan is indeed to renovate the apartments, adding new surface finishes and overhauling all kitchens and bathrooms. Plan are also in the works to add washing machines and dryers to the apartments themselves.
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Berkshire Income Realty Spends Big in Atlanta and Dallas
Digested From "Berkshire Income Realty Enters into Agreements to Acquire Two Multifamily Apartment Communities"
Business Wire (12/18/13)

Berkshire Income Realty recently announced that the firm has entered into agreements to purchase Eon at Lindbergh, a 325-unit multifamily apartment community located in Atlanta and Pavilion Townplace, a 326-unit apartment community in Dallas. The combined purchase price for the deal is $120 million. The sellers are unaffiliated third parties.
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Industry Buzz


National Exemption Service Inc.
How Can Green Infrastructure Investments Boost the Bottom Line?
Digested From "How Green Infrastructure Investments Can Create Commercial Property Value"
Natural Resources Defense Council (12/19/13) Benfield, Kaid

A new publication by the Natural Resources Defense Council's (NRDC's) water program shows how green infrastructure practices can help advance the bottom line for owners of income-generating properties. By assessing common commercial real estate portfolio types -- including midrise apartment buildings, medium-sized office buildings, and retail centers -- the article shows that cumulative benefits to property owners can exceed millions of dollars over the long term. Titled "The Green Edge: How Commercial Property Investment in Green Infrastructure Creates Value," it captures the multitude of quantifiable financial benefits that green infrastructure investments can generate for building owners and their occupants. Potential benefits range from higher rents and property values to energy savings and reduced life-cycle and maintenance costs.
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MetLife Is Looking for ... Roommates?
Digested From "MetLife Looks for Roommates"
Wall Street Journal (12/18/13) P. C8 Wotapka, Dawn

In 2006, MetLife Inc. sold a myriad of apartment communities it owned for $5.4 billion, reducing its real-estate holdings by 50 percent. The company is now rebuilding its apartment portfolio and teaming up with other apartment owners, like UDR Inc., to erect smaller developments such as a 450-unit apartment community in San Francisco. UDR will own about 51 percent of the development, provide the equity, find the residents, and manage the community when it opens in 2016. MetLife is working with partners to diversify its portfolio as well as lower risk. "They have opportunities where they've been able to secure great sites," says Robert Merck, a senior managing director at MetLife who heads the global real-estate investment group. UDR Chief Executive Tom Toomey says, "[MetLife] provides a stable source of long-term capital for us. They see a number of opportunities that we may not see and vice versa." Because Millennials are less likely to see homeownership as a priority, multifamily housing is poised to play a larger role in where people want to live.
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
Why Is the U.S. Giving More Housing Aid to the Rich Than the Poor?
Digested From "The Government Is Quietly Giving Way More Housing Aid To Rich People Than Poor People"
Business Insider (12/18/13) Vinik, Danny

The Center for Budget Policy Priorities last week released several charts that show how much the U.S. government favors high-income households over low-income ones in terms of housing benefits. This is mainly due to the fact that those who own homes receive substantially more federal aid than those who rent. Last year, the federal government gave out approximately $240 billion in housing aid. Available income data notes that over 50 percent went to those with incomes greater than $100,000 and only $40 billion went to those with incomes under $50,000. The mortgage interest deduction is perhaps the most well-known program that subsidizes homeownership -- a deduction that, by itself, is bigger than all federal rental aid combined. While low-income households receive the bulk of rental aid, the opposite is true of aid to homeowners. This disparity comes at a time when renter households are having a tough time keeping pace with rising housing costs. Center researchers state that 50 percent of those Americans who rent now spend over 30 percent of their income on housing. Such folks are more likely to face a severe cost burden -- defined as spending at least 50 percent of income on housing -- than homeowners are. The affordability problem is only going expected to get worse as millions of seniors find themselves in need of rental housing in the coming decades.
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Recycling for Nev. Apartment Residents Is About to Get Easier
Digested From "Republic Services to Make Push to Widen Recycling at Apartment Complexes"
Las Vegas Sun (12/22/13) DeVargas, Christopher

For more than 200,000 residences in Clark County, Nev., recycling bottles, paper, and cans is about to get easier as they transition from separate red, white, and blue bins to a single recycling card over the next few years. Approved by the Clark County Commission, the move is part of the growing push to improve the region's low recycling rates. While Henderson and North Las Vegas already switched to a single-stream program, those living in apartments and/or condominiums throughout the valley sometimes find it difficult to dispose of recyclables. "Going into 2014, we're starting to make a push to educate property managers. Some are still not aware that we offer the service," said Len Christopher, general manager at Republic Services. "It's an add-on to their standard trash service, and anybody qualifies." However, the service comes at a fee of less than $1 per resident per month.
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Berkeley Rental Units Will Soon Be Smoke-Free
Digested From "Berkeley Rental Units Will Soon Be Smoke-Free"
Inside Bay Area (CA) (12/04/13) Scherr, Judith

The Berkeley (Calif.) City Council recently approved a smoking ban for multi-unit buildings that will be implemented May 1, 2014. Such properties account for 53 percent of the city's housing units. Residents will be required to file formal complaints about secondhand smoke to the city's health department, after which city officials will issue a warning notice to the alleged violator that explains the new law and provides information about smoking cessation classes offered by the city. Administrative citations or infractions will be issued if residents of two separate units in the same building both file complaints within six months of the original notice. Citations can be contested before a city hearing officer, but a more formal judicial process may be required to fight infractions.
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NAA Announcements


Give the Gift of Education Tomorrow: Register Now for the 2014 NAA Student Housing Conference & Exposition

Don’t look now, but there are only 17 days remaining to take advantage of the early-bird registration rate for the 2014 NAA Student Housing Conference & Exposition.
And, in light of tomorrow’s holiday, those in search of last-minute presents should take note (also everybody else who has yet to register).

From ground-floor construction of your community’s social media ecosystem to wrapping your head around the digitally savvy college student, the education lineup at the 2014 NAA Student Housing Conference & Exposition, March 3-5 in Las Vegas at the ARIA Resort, promises a wealth of knowledge designed to give you a leg up on the competition in this rapidly growing niche of the rental housing.

And, until January 10, take $300 off the cost of registration as you prepare to join more than 900 star pupils for two days chock-full of cutting-edge insight into the mind and behavior of the next generation of residents.

Recently announced sessions for this exciting event run the gamut from marketing, leasing and operations to executive strategy, revenue management and social media. Check out the entire lineup of breakout sessions.

Awaiting you is actionable intelligence and turnkey solutions useful in helping you achieve your personal and professional goals. Register today and keep checking www.naahq.org/shc for schedule, housing and the latest announcements. And remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the conference.
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Property Tours Returning to 2014 NAA Education Conference & Exposition

There’s nothing like the tour-de-force that is the property tour, and NAA is excited to announce the return of Property Tours to the 2014 NAA Education Conference & Exposition, June 18-21 in Denver.

Register now and, for an additional $99, embark on Wednesday, June 18 from 1 p.m. to 4:30 p.m. for the Denver Property Tour (ticketed event). Featured on the trip are Alta City House, Cadence Union Station and AMLI at Waterfront. Make sure to stay until the end, where Phil Washington will be speaking to the group on the rooftop of Cadence Union Station.

Visit the NAA website for more information and to register.

Let NAA help you “Reach New Heights” in 2014. More exciting announcements are forthcoming for this can’t-miss event, but no need to wait to register! Visit the NAA Education Conference website and remember that the largest discounts go to those who register early. Have four friends? Register as a group to take advantage of even more savings!
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Attention All Lurkers … Here’s an Incentive to Start Talking

You’ve probably snuck a peek at NAA Connect… but we’re offering an incentive for you to fully participate md reap the full benefits of NAA Connect this month. Eight active Connect users will win just for collaborating, problem solving and networking. Prizes vary, and include a $200 Amazon gift card, a $100 gift card and a $20 Starbucks gift card. But don’t be late to the party—the contest runs throughout December, and the more active you are the more chances you’ll have to win. Learn more.
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Be Part of the 2014 Get Reel Video Challenge

In honor of Apartment Careers Month in February, The National Apartment Association Education Institute (NAAEI) is calling for video submissions for it's 2014 Get Reel Video Challenge. Aimed at promoting careers in the apartment industry in Management, Leasing and Maintenance, videos should highlight a day in your work life and show what you love about your job and the industry. A panel of industry experts will judge all entries and choose the winner who will receive a trip to the NAA Education Conference in June in Denver! View more details on rules and how to enter on the NAA website.
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NAAEI Offers CAMnesty Program to Lapsed Students

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:

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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December 24, 2013

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