NAA Industry Insider: Wall Street Unlocks Profits From Distress With Rental Revolution

 

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TWCFEB13
Wall Street Unlocks Profits From Distress With Rental Revolution
Digested From "Wall Street Unlocks Profits From Distress With Rental Revolution"
Bloomberg (12/20/13) Perlberg, Heather; Gittelsohn, John

Blackstone Group LP has purchased 41,000 houses in 14 metro areas and hired more than 10,000 plumbers, leasing agents, and lawyers to become the biggest owner of single-family rentals in the United States. However, it remains to be seen how long Blackstone and other investors can continue outbidding first-time house buyers and the impact it will have on rents, with some noting that investors could push up property values to the point where another housing bust occurs. Former Fannie Mae economist Thomas Lawler says, "Early buying by investors actually did serve a public purpose [by soaking up vacant foreclosed houses]. Now it’s just free-market capitalism and big money is coming in because they have an advantage. ... It’s gone from being good to being disturbing." Experts say the success of Blackstone and other investors will depend on demand for rentals, which has soared as foreclosure rates increased and buyers found it harder to secure mortgages. Meanwhile, these investors have sold bonds backed by single-family rentals to generate cash, and some -- including Blackstone and Colony -- are now looking to give loans to small property owners with as few as five houses.
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Market Trend Insights


RealPageMay13
'Hipsters' Fueling Rental Market
Digested From "'Hipsters' Fueling Rental Market"
NuWire Investor (12/20/13) Anderson, Bendix

Multifamily investors increasingly have set their sights on up-and-coming "hipster" neighborhoods that attract young, upwardly mobile renters and pedestrian commuters, moving away from prime rental markets that no longer offer yield growth, according to RealtyTrac and Real Capital Analytics. These trendsetting neighborhoods can be found within such cities as Pittsburgh, Norfolk, Minneapolis, and Seattle. “The culture surrounding the 'hipster' lifestyle has a major impact on local real estate markets, and mostly in a positive way,” says Daren Blomquist, vice president for RealtyTrac. “A neighborhood branded as hipster is likely to see property values and rental rates rise while vacancies and foreclosures decline.” As more restaurants, bars, coffee shops, and other amenities move in to serve younger residents, the value of these neighborhoods will rise even more.
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Where the Renters Live Now
Digested From "Where the Renters Live Now"
The Atlantic Cities (12/18/13) Badger, Emily

The new mapping tool rolled out by the U.S. Census Bureau allows for visualization of individual neighborhoods based on an assortment of data. It is possible, for instance, to pick nearly any city and view the share of residents by census tract who live in houses that they own, which enables observers to gauge homeownership rates and areas where renters make up a large share of residents. Such an analysis indicates that renters generally cluster in urban areas, though patterns vary by city, and it shows where houses are easy to buy and where renting is most popular. Among other things, it shows that Detroit has fewer areas dominated by renters in comparison to New York City and that in the San Francisco and Oakland metros, homeownership rates increase farther inland.
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Corvallis Apartment Owners Helping to Calm the Neighborhoods
Digested From "Corvallis Apartment Owners Helping to Calm the Neighborhoods"
Corvallis Gazette-Times (OR) (12/26/13) Day, James

Apartment managers have taken part in a citywide effort to ease livability problems in neighborhoods near the Oregon State University campus, a program appears to be bearing fruit. Corvallis Police Department reports show significant decreases in quality-of-life violations in the past year. Disturbances, fights, and loud parties all have declined markedly, as have the issuance of special response notices for quality-of-life violations. Property managers and apartment owners have stepped up with more concerted enforcement of rules regarding tenant behavior and greater cooperation on education and outreach. "I'm pleased with the results so far," says Corvallis Police Chief Jon Sassaman. "We anticipated a small degree of success based on the work and publicity these efforts have generated. The current data tells us the structural changes to the ordinances, the enhanced relationship between the city, OSU, the students, the neighborhoods and the property managers/owners is having a positive effect." Property managers have been particularly visible during the campaign. A group led by veteran Corvallis manager Jerry Duerksen of Duerksen Associates has been meeting monthly since March. The group has invited police, firefighters, city housing specialists, and OSU officials to discuss problems and work on solutions. Chris Saltveit of Preferred Properties Northwest says he has received lots of positive feedback for hiring a security group to patrol his properties. A city property maintenance code advisory group, which includes property managers Duerksen, Kari King and Amy Harding as well as city housing officials, finished a cycle of seven public meetings Dec. 17. Duerksen also has hired a fully licensed, bonded and insured general contractor full time "to help monitor the condition of our units."
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Albany Is a Preferred Smaller Apartment Market
Digested From "Albany Is a Preferred Smaller Apartment Market"
Property Management Insider (12/24/13) Willett, Greg

The metropolitan area of Albany, New York, continues to retain a strong position on MPF Research’s list of most-favored secondary apartment markets. But during the third quarter, the city's performance was not as strong as during the past few years. The area's key weakness as of the third quarter was in its recent rent movement. Pricing fell 1.0 percent specifically during the quarter, cooling the annual rent growth pace to 1.2 percent. Albany’s existing stock totals just over 50,000 units, and performance results can move significantly in secondary/tertiary markets merely due to their comparatively small size. Looking at the big picture, yearly rent growth in Albany has averaged a strong 3.1 percent over the past eight quarters, shifting from roughly 1 percent to about 5 percent in any individual quarter. The average occupancy rate at present is 96.5 percent, with rates between 96 percent and 97 percent seen across every product niche and in every neighborhood. Yearly employment growth is rising by about 3,000 positions, or 0.6 percent expansion. This level of generation is sufficient for keeping apartment demand on par with limited construction. During the near term, ongoing development comprises approximately 800 units. Albany’s apartment market will likely be a solid overall performer during the next two years but may display variable quarterly patterns due to a limited base of total inventory.
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The New Year in Green Building
Digested From "The New Year in Green Building"
Constructech (12/23/13)

As 2014 approaches, and the industry is evaluating where it has been and what to expect in the future. Consultant Jerry Yudelson predicts that green building in North America will continue to see robust growth in the new year. In particular, commercial real estate will continue to grow, along with government, university, nonprofit, and school construction, he says. Yudelson furthermore forecasts an increased focus on energy efficiency for buildings as well as building automation systems. He asserts that green building has already "hit the mainstream" but certain building owners and developers want to go further by achieving zero-net-energy. Another prediction is an increase in competition for LEED amid an increasing number of rivals, such as the Green Globes rating system from the Green Building Initiative. "Recent Obama administration actions have now put this system on a par with LEED for federal projects," he notes. Additional trends cited for the coming year include a move toward the "greening" of existing buildings rather than new green building projects and greater use of cloud-based systems for building management and design. Yudelson adds that more cities are requiring commercial building owners to disclose actual green building performance. Building owners also may opt to disclose the use of chemicals used in buildings, based on lists of potential chemicals of concern.
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Condo Owners Should Have More Say, Panel Recommends
Digested From "Condo Owners Should Have More Say, Panel Recommends"
Toronto Star (Canada) (12/25/13) Vincent, Donovan

There are more than 1 million condo owners across the province of Ontario, Canada, but they face such problems as excessive or misused condo fees, financial mismanagement, manipulated contract bidding, and poorly repaired buildings. These problems are prompting the province to evaluate and revise the 1998 Condominium Act to ensure owners have safeguards and can give feedback. The Consumer Services ministry anticipates that new legislation will be introduced in the spring of 2014. The second stage of a review has been finalized, and a third is planned, while an expert panel on condominium issues recently made recommendations to the province on updating the act. Key recommendations include forming an arm’s-length oversight body called the Condominium Office, and the introduction of licensing and mandatory qualifications for condo managers. The Condominium Office would resolve conflicts between owners and managers as well as disputes within condo boards. A licensing system would require managers to take training courses on operating buildings, while licensing fees would be covered by property managers and condominium management companies under a self-regulated system, says Dean McCabe, past-president and a current board member of the Association of Condominium Managers of Ontario. Under a proposed two-stage licensing system, a person’s background and suitability for holing a position of public trust would be examined, followed by ensuring the applicant obtains adequate training and becomes familiar with the Condominium Act, financial management, reporting of records, building management, and administrative and human relations skills, says McCabe.
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Deals and Transactions


LowesAug2013
Apartment Building Designed for Homeless and Low-Income Families
Digested From "Apartment Building Designed for Homeless and Low-Income Families"
Philadelphia Inquirer (12/27/13) Lin, Jennifer

A $16 million, 55-unit apartment building called JBJ Soul Homes is nearing completion in Philadelphia community named Francisville. The complex is intended for homeless and low-income families, and was built by Project HOME, one of the city's most active nonprofit developers. Rents will be low, and the facility will have on-site case managers and support services to assist people deal with mental illness, which is often linked to chronic homelessness. Forty units will allocated for tenants who used to be chronically homeless along with eight for at-risk teens and young adults. The remainder of the units will go to other low-income individuals or couples. Rents will be capped at 30 percent of a person's income. JBJ Soul Homes received funding from private donors like singer Jon Bon Jovi, while investors received federal tax credits in return for pledging $11 million. Land for the project was provided by the Greater Exodus Baptist Church, whose economic development nonprofit called People for People Inc. will oversee the leasing of 12,500 square feet of retail space on the ground floor. Rev. Herb Lusk of Greater Exodus, a former pro football player, says, "We knew we could have made more money if we sold it to someone who wanted to turn it into market-rate housing. But we didn't think it was the right thing to do." City officials estimate a total of 3,400 units of affordable supportive housing are needed to accommodate all of area's homeless and disabled single men and women.
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UNL Apartment Developer Preparing for August Move-In
Digested From "UNL Apartment Developer Preparing for August Move-In"
Lincoln Journal Star (NE) (12/27/13) Abourezk, Kevin

America First Real Estate Group is developing a 10-story apartment complex and parking garage dubbed 50/50 partly because of its proximity to the University of Nebraska-Lincoln (UNL) campus. Jerry Shoecraft, property manager for the complex, says, "You have the opportunity to live on campus but with an off-campus lifestyle," although anyone can live at the complex. The $42 million structure will have room for 475 residents and 1,605 parking spaces. First-floor apartments will face the street, hiding the first of seven floors of parking. The building will capped by three floors comprising apartments. The 50/50 is expected to be completed by August, in time for the fall semester at UNL. Through an agreement, America First will own the apartments and approximately 20 percent of the parking spaces, with the rest of the spaces belonging to UNL. America First plans to market the property more aggressively after Jan. 1, says Jon Baack, the company’s vice president for construction services. Along with apartments and parking, the 50/50 will feature two tanning beds, a fitness center, 10 study lounges, and two rooftop terraces. Renters will pay for individual rooms in two-, three- or four-bedroom units, with rent varying from $600 to $715 per month, inclusive of utilities.
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Luxury Apartments Planned Next to Buzza Lofts in Uptown
Digested From "Luxury Apartments Planned Next to Buzza Lofts in Uptown"
Minneapolis/St. Paul Business Journal (12/26/13) Halter, Nick

Dominium plans to build a six-level, 130-unit luxury apartment building on the parking lot next to its Buzza Lofts building in Minneapolis. Dominium was awarded historic tax credits for redeveloping the Buzza Lofts in 2012. Neighbors have expressed concern the new building will cover up most of one side of the former manufacturing facility at 1006 Lake St, and will cause parking problems, although plans call for two underground parking levels. Buzza Lofts is a 136-unit affordable-housing building. The building has a 600-person waiting list, but Dominium Vice President Chris Barnes says doing more affordable housing was "tough to get it to pencil out."
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Industry Buzz


National Exemption Service Inc.
Lawsuit Against LeFrak to Move Forward: Judge
Digested From "Lawsuit Against LeFrak to Move Forward: Judge"
Queens Times Ledger (NY) (12/26/13) Bockmann, Rich

A woman living with HIV/AIDS will be allowed to proceed with her discrimination lawsuit against the LeFrak Organization after a federal judge last week denied the apartment owner's motion to dismiss the case. Earlier this year Lorelei Chacon, who receives city housing subsidies for those living with HIV/AIDS, and the Fair Housing Justice Center filed a claim under the federal Fair Housing Act alleging LeFrak discriminated against her when she sought an apartment at LeFrak City in Corona in 2011. Chacon is a client of the HIV/AIDS Services Administration, a subdivision of the city Human Resources Administration, which pays brokers' fees, security deposits and rent to apartment owners in the five boroughs of New York City on behalf of its clients. The lawsuit alleges that in 2011 Chacon called LeFrak looking to rent an apartment for about $1,100 a month, the cost of which HASA would cover. But when she told the rental office HASA would be paying her rent directly, she was allegedly directed to go to a 12th-floor office at LeFrak's headquarters, where she spoke with a representative through a glass window and was required to show documentation as to how she would pay for the apartment. Chacon spoke with her case manager at HASA, who told LeFrak it did not provide such documentation, and the apartment owner canceled her application. The lawsuit alleges that LeFrak treats HASA applicants differently than apartment seekers who pay their own rent, but the apartment owner countered that it asks all applicants for proof of income, and argued that Chacon should have sued HASA for refusing to provide documentation.
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New Apts to Come in for a CityDeck Landing in Green Bay
Digested From "CityDeck Landing Breaks Ground"
Fox11 (Wisconsin) (12/19/13) Krumholz, Ben

Ground was broken this past week on developer Terrence Wall's new CityDeck Landing mixed-use development in downtown Green Bay. The $12 million building will be home to 76 apartments and approximately 7,000 square feet of retail space when it opens in the first quarter of 2015. The apartments will be studios, as well as one- and two-bedroom units and penthouses with private decks on the rooftop. Green Bay Mayor Jim Schmitt called the project a "good start," noting a recent downtown survey that found the need for at least 300 more apartments. Out of the current 500 or so downtown units, just over 90 percent are presently occupied. The demand for downtown condominiums also appears to be on the rise. Three years ago, Re/Max Select Realtors sold a half-dozen condos at Riverside Place. This year, the realty firm sold four times that amount. Schmitt concludes, "We have a lot of buildings with new businesses, and we need quality places for employees to live and for people who maybe want to downsize."
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
Owners to Be Responsible for Water, Sewer Bills in Calaveras County
Digested From "Owners to Be Responsible for Water, Sewer Bills in Calaveras County"
Stockton Record (CA) (12/26/13) Nichols, Dana M.

Starting in 2014, renters within the Calaveras County Water District in California will no longer be sent bills for water and sewer service. The decision was made in December after Calaveras County Water District directors voted to approve the change, which district staff say will save approximately $20,000 annually on postage and paper for the bills sent to tenants. Under district policy, property owners will now be responsible for water and sewer bills, although the district had been willing to send duplicates to tenants if requested. The directors voted 4-1 to support the change, with only Director Jeff Davidson opposing. He said the move would be troublesome for landlords because they would need to rewrite lease agreements in order to include the cost of water within rent payments. Lynn Gentry, director of support services for the water district, requested the change. She said printing duplicate bills for tenants is costly and also tends to put the water district in the middle when tenants and landlords have disputes. Gentry added that about 10 percent of water bills in the district are paid by tenants, but issues between tenants and landlords consume roughly 75 percent of the work time of the agency's customer service staff. She noted that tenants still can pay online if that is their agreement with their landlord, but Davidson asserted, "If they can't pay for their water bill, they probably don't have high-speed Internet."
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Apartment Boom Presses Iowa Tax Credit Program
Digested From "Apartment Boom Presses Iowa Tax Credit Program"
Des Moines Register (12/24/13) Aschbrenner, Joel; Patane, Matthew

A tax credit program in Iowa that has helped spur the construction of apartments statewide has reached its capacity, leaving developers uncertain about starting new projects. The program enables developers to sell tax credits to help pay for their projects, but is capped at $3 million annually. Rising demand for apartments and townhouses in the past few years prompted developers to apply to sell more than $11 million in tax credits for 18 housing projects across Iowa, including hundreds of apartment units in Des Moines. The program is solely for market-rate housing; the shortfall does not affect low-income housing developments. Meanwhile, developers are rushing to meet the demand for apartments. In downtown Des Moines, for instance, 500 units are under construction, 500 are poised to break ground, and an additional 500 are in the planning stages, leaders say. Vacancy rates for Des Moines-area apartments have fallen to an 18-year low, causing rents to increase by as much as 6 percent on average, according to the most recent market report from CBRE/Hubbell Commercial this year. The state Legislature is expected to take up the tax credit transfer cap in the spring, according to Iowa officials and developers.
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NAA Announcements


Don’t Drop This Ball Tonight!

The last few hours of 2013 have arrived, so let NAA help you get a jump start on your resolution to better yourself in 2014: Register for the 2014 NAA Student Housing Conference & Exposition, March 3-5 in Las Vegas at the ARIA Resort, before Jan. 10 to take advantage of $300 savings off the price of attendance.

The 2014 NAA Student Housing Conference & Exposition promises a wealth of knowledge designed to give you a leg up on the competition in this rapidly growing niche of the rental housing. 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.

Are you prepared for what’s just over the horizon? Join keynote speaker Peter Sheahan, Founder and CEO of ChangeLabs, who will offer insight into exploiting business trends and new market opportunities during the Opening General Session, 9 a.m. to 10:30 a.m., Tuesday, March 4. Read more about Sheahan’s international renown for inspiring innovative business thinking and creating lasting behavior change to meet the evolving needs of customers—including today’s student renters—in his recent interview with units Magazine.

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 the NAA Student Housing Conference website 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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Need Continuing Education Credits? Why Not Earn Them at the 2014 NAA Education Conference & Exposition?

With six continuing education credits (CECs) available at the 2014 NAA Education Conference & Exposition, June 18-21 in Denver, NAA designates can earn all the credit required to renew their designations in one place and at one time, saving time and money.

Attending the 2014 NAA Education Conference & Exposition will net you up to six credits—exactly enough to reach your renewal goal—as well as a great investment in your career. Attend and earn or renew your Certified Apartment Manager (CAM), Certificate for Apartment Maintenance Technician (CAMT), Certified Apartment Portfolio Supervisor (CAPS), Certified Apartment Supplier (CAS), or National Apartment Leasing Professional (NALP) designation. Visit the NAA website to review designation requirements and submit CECs.

What a great offer, right? Well, only if you’re registered for the 2014 NAA Education Conference & Exposition. 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! 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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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 31, 2013

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