Private Equity Funds Spend Big to Turn Foreclosures to Rentals
Digested From "Colony Spends $1.5 Billion on Homes as Next REIT Boom: Mortgages"
San Francisco Chronicle (10/26/12) by John Gittelsohn; Heather Perlberg; Jason Kelly
Blackstone Group LP, Colony Capital LLC, Starwood Capital Group LLC, and Waypoint Real Estate Group LLC are just four of the private equity funds paying cash for foreclosed homes to turn into rentals. Their expectation is that institutional financing will develop to enable them to boost their returns. RealtyTrac Inc. notes that demand for single-family rentals has grown as approximately 4.5 million homes have been repossessed since the beginning of 2007. Other factors such as tightened lending standards and limited for-sale inventory continue to keep first-time buyers out of the market. Colony Capital founder Tom Barrack expects the asset class will continue to expand just as apartment REITs have exploded since that industry’s birth in the early 1990s. Indeed, such trusts are now a $71 billion industry. Barrack is betting $1.5 billion that foreclosed single-family homes are indeed the basis for a new class of real estate investment. For its part, Blackstone is buying $100 million of houses a week and has spent more than $1 billion through mid-October.
Chattanooga Apartment Market Among Strongest in Southeast
Digested From "Chattanooga's Apartment Market Is One of Strongest in Southeast"
Chattanooga Times Free Press (TN) (10/28/12) by Mike Pare
Rock Apartment Advisors reports that Chattanooga's apartment sector ranks as one of the strongest in the Southeast. Thanks to a growing employment base, occupancy at the 53 communities surveyed was 96.9 percent this past summer. Of the city's 10 newest apartment communities, occupancy was 97.4 percent -- an increase of 6.2 percent in the last year. David Wilson, primary analyst for Rock Apartment Advisors, comments, "Chattanooga is . . . outperforming a lot of markets." For those 10 newest properties, effective rent growth -- increases without concessions -- rose "a very healthy" 5.2 percent in the last year. The report added: "The burn-off of concessions coupled with increases in quoted rents have resulted in significant widespread effective rent growth." Such growth has been evident across all assets classes and submarkets. Of the 53 total apartment communities surveyed in Hamilton County, 31 were found to have a higher occupancy rate than a year earlier. Meanwhile, only 16 reported lower occupancy. Since the recession, apartment living has become much more of a lifestyle option despite the fact that interest rates for home borrowing have fallen to historic lows. Many would-be buyers simply don't have the credit or the down-payment cash on hand to make the leap. Others do not see near-term appreciation in the value of homeownership. Looking at Chattanooga's various submarkets, Rock Apartment Advisors notes that downtown has a fairly sizable concentration of apartments for a city of its size. Almost all are relatively small communities of under 60 units or "affordable" apartments, though. Looking at the East Ridge/Central area, little new apartment development has occurred in this market over the past 15 years, with the exception of some low-income housing tax credit properties.
Nationwide Realty Unloads Hundreds of Apartments
Digested From "Nationwide Realty Unloads Hundreds of Apartments"
Columbus Business First (10/26/12) by Brian R. Ball
Nationwide Realty Investors Ltd. (NRI) confirms that it has quietly sold 2,899 apartment units in Columbus, Pittsburgh, and Charlotte. The various communities sold to a joint venture of Blackstone Real Estate Partners VII LP and Morgan Communities. They included the 500-apartment Easton Commons in Columbus and eight others. NRI President Brian Ellis remarks, "We thought we had maximized the value of the those assets. [The joint venture] offered us a price we couldn't refuse, as they say." That said, terms of the deal have yet to be officially disclosed. In addition, NRI remains the owner of three multifamily housing communities in downtown Columbus and suburban Grandview Heights
Apartment Supply Growing Fast, Cantor Fitzgerald Reports
Digested From "New Rentals Growing Fast"
NuWire Investor (10/23/12) by Diana Olick
A new Cantor Fitzgerald report indicates that multifamily housing starts of buildings with five or more units rose 93 percent from last year, and that the high number of starts could lead to market over-saturation. "The elevated permitting activity in the five-plus unit segment may set off alarms in apartment-land," says the report. "We expect the multifamily REITs could be under pressure today." These REITs include Equity Residential, AvalonBay, and Apartment Investment and Management Co., among others. One caveat is that the group has been underperforming recently and that concerns about supply already are priced into current valuations. The Cantor report also notes it remains to be seen whether investors have spent too much on new rental apartments, since the new construction will not enter the market for at least another two years, when housing could be surging again. "There is still a tremendous amount of demand for apartments," says Mitch Roschelle of PWC. "The supply side of the equation is a different story, there's clearly been a run-up in building permits and the projections of growth in supply continue to be strong." Roschelle further points out that there has not really been a scenario in the past seven or so years where developers have overbuilt rental units, so there is not an excess of supply, nor is there an excess of financing to pay for future growth in supply.
College Housing Firms Aim Upscale
Digested From "College Housing Firms Aim Upscale"
Wall Street Journal (10/24/12) by Dawn Wotapka
Public companies that operate student housing are trying to tap into the college apartment market. There are currently 35 cottage communities in the United States, with nearly 19,000 beds and another 18 developments with roughly 12,000 beds are in the pipeline, according to CEO Wes Rogers of Landmark Properties Inc. Operators like cottages because the rooms typically command rents at least 10 percent higher than other off-campus residences, and students also prefer them. Landmark's cottage products are 96 percent leased, compared with 93 percent for apartment-style housing.
Colonial Properties Trust Posts Higher Apartment Revenue, FFO
Digested From "Colonial Properties Trust Reports Higher Apartment Revenue, FFO"
Birmingham Business Journal (Alabama) (10/26/12) by Ryan Poe
According to Colonial Properties Trust, an increase in revenues from apartments boosted performance during the July-through-September period. The Alabama-based REIT said its funds from operations (FFO) available to common investors gained 9.8 percent in the third quarter to $28.9 million versus $26.4 million in the same three-month period a year earlier. Colonial Properties Trust registered a net loss of $6.5 million to common shareholders despite the FFO gains because of a $23.7 million sale of a half-dozen apartment communities in 2011 that artificially inflated earnings. Colonial has been aggressively selling off its office and retail property assets and move funds into multifamily housing.
Low Vacancy Rates Drive Apt. Financing Boom in Orlando
Digested From "Low Vacancy Rates Driving Multi-Family Financing Boom"
Orlando Business Journal (10/26/12) by Bill Orben
Larger sums of money are flowing into the Orlando apartment market to finance the purchase of existing multifamily housing. The trend is ultimately benefiting a wide range of area professionals, from lenders and property brokers to contractors and suppliers. According to data from New York-based Real Capital Analytics Inc., loans to purchase or refinance existing Orlando apartment communities almost doubled to $1.32 billion through the first nine months of this year versus $766.2 million in the same time span in 2011. The main reason for the increase in apartment loan activity is investors' eagerness to acquire rental units in and around Orlando so that they can capitalize on currently high occupancy rates.
Metro Denver Apartment Trends Mirror New Resident Lifestyles
Digested From "Metro Denver Apartment Trends Mirror New Tenant Lifestyles"
Denver Business Journal (10/26/12) by Dennis Huspeni
Pierce-Eislen Inc., an Arizona-based apartment information service firm, reports that multifamily housing developers are currently building 7,177 apartment in the seven-county Denver area. The company's research further shows that there are another 8,238 rental units in the planning stages. Architects say the new construction better reflects their respective communities. Brad Buchanan, principal for RNL Design, states, "Each and every one of these projects are so crafted to the demographic and location. Buchanan speaks from experience, having been designing apartment communities in and around Denver for over two decades now.
More Multigenerational Households in Immigrant Areas
Digested From "More Multigenerational Households in Immigrant Areas"
USA Today (10/25/12) P. 3A; by Haya El Nasser
The share of U.S. households that accommodate multiple generations of family has climbed to 5.6 percent -- or 4.3 million homes -- from 3.7 percent in 2000, driven by tough economic times and cultural preferences. According to a new Census brief, multigenerational housing most often is found in areas where immigrants live with relatives and/or housing costs are so steep that family members are forced to double up -- such as in the U.S. West, the southern states, and along the eastern coastline. Additionally, the Census notes that non-Hispanic whites represent the smallest slice of the multigenerational housing market, accounting for just 3.7 percent. That compares to about 9 percent for black and Asian families and more than 10 percent for Hispanic and American Indian households. High unemployment has sent many a young adult back home to live with parents, but demographers say that pattern eventually will play itself out. Demand for multigenerational housing is likely to remain high, however, as Baby Boomers age and adult children divorce or return from the military.
AvalonBay Earnings Jump 82 Percent
Digested From "AvalonBay Earnings Jump 82 Percent"
Washington Business Journal (10/24/12) by Jeff Clabaugh
AvalonBay Communities Inc. recorded a big gain in third-quarter earnings, partly from profit gains after it bought out a partner in a California-based apartment community and also from improved occupancy rates and higher rents. The Virginia-based company ranks as one of the country's biggest owners of apartments. In the July-through-September period, it recorded net income of $86.8 million compared with $44.8 million a year ago. Quaterly funds from operations, meanwhile, climbed 23.1 percent to $1.44 per share and revenue was up 7.4 percent to $271.9 million. Additionally, AvalonBay saw average rental rates increase 5.1 percent, with the biggest gains at its apartment communities in Northern California (up 10.5 percent). AvalonBay currently has ownership interests in 205 apartment communities spread throughout nine states and the District of Columbia.
Kids of Boomers Are Smarter About Housing
Digested From "Kids of Boomers Are Smarter About Housing"
MarketWatch (10/22/12) by Amy Hoak
Members of Generation Y believe the recent housing slump has made them more knowledgeable about homeownership than their parents were at their age, based on 1,001 responses to a Better Homes and Garden Real Estate poll. Nearly 70 percent of the 18- to 35-year-olds say they are more savvy about owning than Baby Boomers were at the same age. Most of them -- about 75 percent -- still recognize the value of homeownership and consider it an indicator of success. But despite affordable home prices and favorable borrowing costs right now, 69 percent of survey respondents said they would wait to make a purchase when doing so would be affordable and would not disrupt their lifestyles. Some 40 percent said they would work a second job to save up for a home, while 23 percent would move back in with their parents to prepare financially for ownership. "They're not going to end up getting into a situation that they've seen ... where they can't keep the house" because they cannot afford it any longer," remarked Matt Rand of Better Homes and Gardens Rand Realty. Member of Gen Y "are living at home with their parents, but this [survey] suggests they're being strategic in living at home -- not because they're slacking."
BB&T Real Estate Unit Buys Calif. Lender
Digested From "BB&T Commercial Real Estate Unit Buys Calif. Lender"
American Banker (10/22/12) by Brian Browdie
BB&T's Grandbridge Real Estate Capital unit has agreed to acquire Dwyer-Curlett & Co., a commercial real estate finance firm headquartered in Los Angeles. The deal would give Charlotte-based Grandbridge a trio of offices in Southern California and add to the company's portfolio, which focuses on loans up to roughly $250 million for commercial real estate and multifamily housing nationwide. A final sale price was not disclosed. The deal, which is expected to close by the end of next month, comes amid renewed interest in commercial real estate by BB&T.
More Health-Law Changes Coming in 2013
Digested From "More Health-Law Changes Coming in 2013"
Wall Street Journal (10/21/12) by Avery Johnson
For the millions of Americans with health insurance at their workplaces, this fall's "open enrollment" period will be one of the most important in a long time. Next year will see some of the many significant changes brought on by the Affordable Care Act, most notably caps on flexible spending accounts and easy-to-read plan summaries. Also on its way out is the ability of health insurers to place limits on annual spending. Earlier reforms such as adding adult children to their parents' plans offer entirely new options to consumers. To be sure, most of the really big changes -- such as tax credits to help people purchase coverage -- will not come into play until 2014. The article lists a number of things readers need to know when sifting through their plan options. First, many will likely be paying higher premiums next year, as 13 percent of companies plan to hike their staffers' contributions to health-care costs by 5 percentage points or more The most visible change will be a new form called a "Summary of Benefits and Coverage." The new health-care law requires plans to provide these as of September 2012 as a simple, easy-to-read description of how a plan works, what it covers, and what it doesn't cover. Third, the FSA limits are important to note. For 2013, the amount one can put into a workplace flexible spending account will be capped at $2,500. The limits were previously set by employers.
Apartments Challenge 'Crime Index' Law in Texas
Digested From "Apartments Challenge 'Crime Index' Law"
Courthouse News Service (10/23/12) by David Lee
Apartment owners and managers went to court this past week to contest Carrollton, Texas, enacting what they deem an unfair, expensive and unconstitutional "crime index" law that they argue scares away residents. In Dallas County Court, three nearly identical lawsuits claim that the city's flawed law not only requires payment of sizable fees, but also expensive and unfair alterations to properties. Under the contested 2011 law, city officials calculate a numerical value for each apartment community's "crime index." Those communities that exceed a threshold number are enrolled in Carrollton's Mandatory Apartment Crime Reduction Program. According to the plaintiffs, the index is arbitrary and unfair and includes crimes that apartment owners and managers cannot possibly be expected to control. One complaint, in particular, states: "Sometime prior to June 21, 2011, in an apparent effort to address what may have been perceived as a problem with respect to criminal activity believed to have originated in multi-family housing communities, defendant enacted its first version of what it now Ordinance Number 3503. The ordinance provides for a formula to be applied with respect to each multifamily housing community [in Carrollton]." The crime index is recalculated every six months.
2012 NAA Survey of Income & Expenses Data Now Available
The 2012 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 4,645 properties containing 1,159,874 units are represented in this year’s report. Data was reported for 4,114 market rent properties containing 1,087,228 units and 531 subsidized properties containing 72,646 units. The executive summary appeared in the Aug. issue of units magazine. To order, please visit the NAA Store.
This October, Re:Source Your Resources
Join NAA’s drive to add 50 member-submitted materials to the Online Resource Center this October. You probably have materials in your office that can be resourced as learning materials for other NAA members right now!
All materials that are not commercial in nature are welcome to be submitted, especially sample forms, policies, training guidelines and best practices.
Full Re:Source details are available online.
2013 NAAEI “Get Reel” Career Challenge
Looking for a free trip to the 2013 NAA Education Conference & Exposition in San Diego, CA? Enter the 2013 NAAEI “Get Reel” Career Challenge. Submit a 30-second YouTube video about a day in your life as an apartment career professional. Click here for more information.
Independent Rental Owner (IROP) Certification Available Online
Prepare for your IROP Certificate entirely online!
Prepare to earn the Independent Rental Owner Professional (IROP) Designation entirely online. Webinar content is based on the Independent Rental Owner Professional Course which covers the following:
• Media relations • Personal safety • Emergency response and disaster planning • Human resource management • Physical versus economic occupancy • Alternative income opportunities • Scheduling move-ins/outs • Lease terminations (military and domestic violence situations) • Key control • Resident and neighbor relations
This course is ideal for Independent Rental Owners or anyone who manages their own personally-held rental properties.
The Webinar series will begin on Tuesday November 6, 2012 and will run every Tuesday through November 27. All Webinars will be held from 2 p.m. to 5 p.m. ET and includes time for Q&A.
Cost: $349 for members or $499 for non-members. Module prices are or $99 for members or $125 for non-members. NAAEI is offering revenue shares to Affiliates.
Supplier Success Webinar Series
The Supplier Success course is designed to offer an overview of the apartment industry and recommends ways that suppliers can maximize partnerships with apartment owners, apartment management companies and apartment association members.
The course will be held between 2:00 and 4:00 PM ET on the following days:
Tuesday, October 30, Wednesday, October 31 and Tuesday, November 6
Supplier Success Course Objectives include:
• Understand how economic conditions have impacted the apartment industry;
• Define various types of multifamily housing;
• Describe measures of apartment community success;
• Understand the impact of pricing and lease management on a property’s financial performance and much more.
The cost is $99 for members and $129 for non-members.
Make Plans to Vote in This Fall’s Elections
No matter which side of the political aisle you’re on, your vote is needed on Election Day, Tuesday, Nov. 6. A lot is at stake – the next occupant of the White House, control of the House and Senate, control of governors’ mansions, state legislatures, city councils and mayors’ offices, 166 statewide initiatives in 35 states and a staggering number of local community questions.
If you aren’t a registered voter, Register Today. Check here to see if you live in one of 12 states that allow Online Voter Registration.
Find an NAAEI Designation Course Near You!
Roanoke Valley Apartment Association
Washington Multifamily Housing Association
November – December, 2012
Roanoke Valley Apartment Association
To find more courses in your area, click here.
For more information about any of the classes listed, please contact Kimberly McCrossen at email@example.com or 703-518-6141 ext. 121.
Abstract News © Copyright 2012 INFORMATION, INC.