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Northland and Tarragon Form $2 Billion Multifamily Housing Venture
Industry News
Orlando's Apartment-Occupancy Rate Dips
Apartment Demand High, Supply Low in Washington State County
Multifamily Construction Ban Approved in Louisiana
Apartment REITs Lead Gains
Orange County, Calif., Firms Make Top 50 Apartment Owners/Managers List
Chattanooga Apartment Association President Touts Apartments
Toledo Apartment Market on the Rise
Woes in Condo Market Build as New Supply Floods Cities
Legislative/Legal News
Senate Housing Package Draws Support
Santa Barbara Recommends Changes to Inclusionary Housing Law
City Council in N.Y. Limits Trash Pickup at Apartments
New Trash Fees Anger Apartment Owners in Harrisburg
Mass. Cities Receive HUD Funds to Develop and Acquire Affordable Housing
New Wisconsin Law Affects Apartment Owners
NAA Announcements
2008 NAA PARAGON Awards - Call for Entries
NAA Education Conference (June 26-28 ~ Orlando, FL) – Specialty Housing Education Track
April 15 Deadline for NAA Leadership Lyceum Scholarship Applications
NAA Government Affairs HotSheet—Latest Edition
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Northland and Tarragon Form $2 Billion Multifamily Housing Venture
Digested From "Northland Forms $2 Billion Multifamily Joint Venture"
Business Wire (03/31/08)
Northland Investment Corp. has formed a new $2 billion multifamily joint venture, dubbed Northland Properties LLC, with Tarragon Corp. The deal boosts the former's multifamily housing portfolio by about 50 percent, elevating it into the top 50 apartment owners in the nation. The agreement adds more than 7,400 multifamily housing units to Northland's portfolio, boosting its total number of units to more than 21,000 in such states as Florida, Massachusetts, North Carolina and Texas. Northland will hold a 77.5 percent majority stake in the venture, while Tarragon will hold the remaining 22.5 percent interest. Northland Investment CEO Steven P. Rosenthal stated, "This joint venture increases our access to capital; strengthens our position in several key markets, including Florida and Connecticut; and will provide significant growth and value add opportunities. We are particularly pleased that we will now become one of the Top 50 multifamily owners in the country, and we anticipate using this platform to further advance our aggressive growth plans." Northland is a property investment company that specializes in acquiring, developing and managing commercial and residential properties. For its part, Tarragon is a leading developer of mixed-use properties with a focus on multifamily housing.
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Orlando's Apartment-Occupancy Rate Dips
Digested From "Orlando's Apartment-Occupancy Rate Dips"
Orlando Sentinel (FL) (04/07/08) by Jerry W. Jackson
A new study by Charles Wayne Consulting Inc. shows that the Orlando metro area's apartment-occupancy rate dipped under the 90 percent mark during the last year. Consequently, more and more communities are offering rental discounts to new residents. Of the 139,605 rental apartments available last month locally, a total of 124,763 were rented and occupied for an occupancy rate of 89.4 percent. That was down from a 90.8 percent occupancy rate at the end of last year's third quarter, when the last survey was taken. According to the consulting company, nearly 6,000 units are now in various stages of development throughout the Orlando metro area, with the highest concentration in the east Orange County/University of Central Florida area. In total, 22 new communities are now being built, including three low-income housing tax-credit projects. Of Central Florida's 12 submarkets, the survey found that the Apopka area had the highest rate of occupancy at 93.2 percent. The lowest rate was in Lake County at 82.3 percent. Charles Wayne Consulting analysts added that the major condo-conversion boom that took more than 30,000 apartment units out of the local pool in recent years propelled the occupancy rate past the 96 percent mark in the first quarter of 2006, resulting in higher rental rates. Today, many of the converted condos are coming back onto the market, without residents, driving the occupancy rate down.
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Apartment Demand High, Supply Low in Washington State County
Digested From "Snohomish County Apartment Demand High, Supply Low"
Everett Daily Herald (WA) (04/06/08) by Eric Fetters
In Washington state, researchers report that 95 percent of Snohomish County apartments are currently occupied. With such a low vacancy rate, apartment owners are no longer offering prospective residents generous incentives. In fact, many are hiking monthly rents. Dupre + Scott Apartment Advisors reports that the average rent in the region stretching from Snohomish to Pierce counties increased almost 8 percent to $952 during the last year. Apartments have become a much more attractive option due to continued low unemployment in the area coupled with higher barriers to first-time homeownership on account of the mortgage crisis. Coast Real Estate Services CEO Tom Hoban reasons, "As long as there are jobs and job growth, it will stay strong. And when the housing market becomes more difficult for people to access, people become renters." Despite this trend, construction of new apartments has been at its lowest level since 2005. Until recently, developers focused almost entirely on building more condominiums and single-family homes in Snohomish.
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Multifamily Construction Ban Approved in Louisiana
Digested From "Multifamily Construction Ban OK'd"
New Orleans Times-Picayune (04/04/08) by Mary Sparacello
In Louisiana, the Kenner City Council has unanimously approved a ban on permits for new multifamily housing construction. Multifamily housing is defined by Kenner's code as having five or more apartments, reports Councilwoman Michele Branigan. According to the legislation, Kenner already has an "abundance" of multifamily housing and has "historically imposed unusually high demands on the city's infrastructure," such as streets and sewers. In issuing their ruling, council members stated that the impact of multifamily housing on Kenner's infrastructure should be studied more before any additional building permits can be issued. The moratorium is set to last for one year, although it exempts new apartment communities that received approval before the law went into effect. Councilman Joe Stagni assured, "This is only on new multifamily construction." Kenner officials had considered a similar ban last summer but decided against it at the time.
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Apartment REITs Lead Gains
Digested From "REITs Stage Surprise to the Upside"
Wall Street Journal (04/02/08) P. C12; by Kris Hudson
REIT shares staged a modest rally during the first three months of this year, fueled by strong gains in two industries benefiting from the housing bust: operators of apartment buildings and self-storage facilities. However, analysts note that the momentum may be short-lived as commercial real estate values are on pace to sink further. A Dow Jones index of U.S. equity REITs posted a 1.4 percent increase in total return for the first quarter. Among apartment owners, one of the top-performing stocks was UDR Inc., which posted a 25.7 percent total return versus 11.5 percent for the entire category. Both apartments and self storage are benefiting as people move to rental units from larger homes they can no longer afford. Where REIT stocks go from here is up for debate. Net asset value--an important tool for gauging the value of a given REIT stock--has become more difficult for analysts and investors to calculate because fewer property sales are being completed against which to benchmark those values. As a result, it is possible that those calculations do not capture the full extent of the property-value declines now being absorbed. Real Capital Analytics reports that office-property sales during the month of February were down a whopping 95 percent from the same month a year earlier, while retail-property sales were down 88 percent and industrial sales down 50 percent. Fitch Inc., meanwhile, describes the REIT industry's access to capital as "adequate but weakening." Others say REIT stocks have further to fall, last quarter's rally notwithstanding.
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Orange County, Calif., Firms Make Top 50 Apartment Owners/Managers List
Digested From "Three O.C. Firms on U.S. Top 50 Apartment Owners/Managers List"
Orange County Register (CA) (04/02/08) by Jon Lansner; Mary Ann Milbourn
Three Orange County, Calif., firms made the National Multi Housing Council's list of the top 50 U.S. apartment owners and apartment management companies for 2008. WNC & Associates Inc. in Irvine ranked in the No. 20 spot among apartment owners on the 2008 list, boasting 48,881 rental units. Irvine Apartment Communities in Irvine placed No. 26 among owners, with 39,765 units, improving its standing from No. 32 a year ago. Among apartment managers, Irvine Apartment Communities was No. 27 this year, while Western National Property Management in Irvine maintained its No. 47 ranking. While remaining in place, the latter's number of units under management did increase from 26,596 in 2007 to 27,279 this year. Denver-based Apartment Investment and Management Company (Aimco) continues to rank as the nation's biggest owner and manager of apartments, with a portfolio of 197,158 units owned and 195,888 apartments under management.
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Chattanooga Apartment Association President Touts Apartments
Digested From "Apartments Affordable Option, Experts Say"
Chattanooga Times Free Press (TN) (03/30/08) by Amy O. Williams
Chattanooga Apartment Association (CAA) President Teresa Biggs reports that an unstable economy is drawing more people to apartments as an affordable housing option. Biggs notes that her Tennessee market is one of the more favorable in the country for people looking for a wide selection of rental apartments available at different price points. She states, "Chattanooga has a variety of options for people based on their income. You can actually have low to moderate income where you have affordable housing, but then you also have the luxury high-end apartment communities, as well." In Hamilton County, CAA research shows that residents paid an average of $679 a month for an apartment last year--far lower than 2008's U.S. average of $1,103 a month. In addition, the county's apartment vacancy rate was 9.8 percent last year versus 5.3 percent nationwide. So, units are available. Biggs adds that those families that may be downsizing to rental units may want to take advantage of some of the amenities apartments often boast. Some upscale apartment communities in and around Chattanooga lure residents by offering such on-site features as swimming pools and fitness facilities.
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Toledo Apartment Market on the Rise
Digested From "Local Apartment Market Picks Up"
Toledo Blade (OH) (03/26/08) by Gary T. Pakulski
The apartment sector in Toledo, Ohio, continues to post solid numbers. Since the first of the year, a total of nine major apartment communities have changed hands locally for $80 million. These sales have involved 1,830 units. Dick Smenner, an apartment specialist with ReMax Central Group agency in Sylvania Township, states, "I anticipate that 2008 will be a very good year. But it's still a buyer's market, so prices are lower." He adds that 2007 "was the worst year we've had in 25 years." Some apartment owners interested in selling withheld their communities from the market last year due to the tough conditions. John Aubry, an apartment specialist at Sperry Van Ness InvesTek Realty LLC , remarks that the key to the market's continuing health is whether financing remains available or dries up in the current credit crunch. In some parts of the country, multifamily housing is benefiting from high rates of home foreclosures, which are forcing more and more former owners into rental units. This is not the case in the Toledo area, despite numerous foreclosures.
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Woes in Condo Market Build as New Supply Floods Cities
Digested From "Woes in Condo Market Build as New Supply Floods Cities"
Wall Street Journal (03/23/08) P. A1; by Jennifer S. Forsyth; Jonathan Karp
Cities across the country will soon see the number of condominiums up for sale dramatically swell, as projects started during the housing boom are finished. Reis Inc. expects almost 10,000 new units to go on the market in Miami and Fort Lauderdale, while more than 4,000 new condos in Atlanta and Phoenix and another 2,500 units in San Diego will be completed by year's end. Experts anticipate rising losses for developers as well as lenders--which hold $42 billion in condo debt, according to Foresight Analytics--and they also expect price declines due to the increased inventory. There are some benefits, as so-called vulture buyers seek discounted foreclosures and developers boost rental supply by converting some of the units. Trammell Crow Residential CEO J. Ronald Terwilliger says developers proceeded with these projects despite the housing downturn because the money was lined up, and they hoped the market would rebound by the time the units were completed. Developers whose projects are in the early stages of construction, however, are scrapping development plans--which experts say will reduce the number of completed condos over the next two years. Meanwhile, it remains to be seen whether buyers will abandon their deposits now that prices have dropped or move forward with the purchase; prices at the Quantum on the Bay in Miami, for instance, dropped to $500,000 from the high $700,000s for two-bedroom units. Experts note that price reductions are attracting investors once again, with 700 people in attendance at a recent conference in Miami that focused on distressed real estate.
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Legislative/Legal News
Senate Housing Package Draws Support
Digested From "Senators Move on Housing Relief"
Wall Street Journal (04/03/08) P. A3; by Sarah Lueck
Several key senators this week came to terms on a $15 billion bipartisan plan aimed at bolstering the struggling housing market. To get the package up for debate in front of the full Senate, Democrats dropped a bankruptcy provision opposed by Republicans and agreed to halve funds for counseling at-risk homeowners to $100 million. For their part, GOP lawmakers agreed to a smaller tax credit for homeowners than they initially sought and accepted $4 billion in block grants for communities to buy and refurbish foreclosed homes. The plan would not only increase the size of loans backed by the Federal Housing Administration to $550,000, it also would raise the down-payment requirement to 3.5 percent from 3 percent. Additionally, the legislation includes $10 billion of mortgage-revenue bonds that states can issue for refinancing and for first-time home buyers, a $6 billion tax break for builders, and a provision to allow the nearly 28 million homeowners who do not itemize their taxes to get a deduction on their property taxes.
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Santa Barbara Recommends Changes to Inclusionary Housing Law
Digested From "Desperately Seeking Middle-Class Housing"
Santa Barbara Independent (04/03/08) by Bianca Licata
Members of the Santa Barbara, Calif., city council have recommended some changes to the local inclusionary housing law. The current ordinance requires all developments of 10 or more homes to offer at least 15 percent of the units at prices affordable to "middle-income" families. The rule is designed to help the area's workforce purchase homes near where they work. The new proposal would require developments with as few as two units to include affordable housing. Developers of condo projects would be allowed to pay a fee of $17,700 per constructed unit if they did not want to include affordable units. Currently, large projects pay a flat fee of $473,300 if they do not include the require affordable housing. The money would be used to subsidize housing for local middle-income and upper-middle-income employees and to buy housing units that are in default. The city's Ordinance Committee voted to recommend the proposal, even though some community members are against the harsher rules for small-scale developers. One council member who voted against the proposal said that he would support a compromised version that only applied to developments of four or more units.
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City Council in N.Y. Limits Trash Pickup at Apartments
Digested From "Kingston Council Limits Trash Pickup at Apartments"
Daily Freeman (04/03/08) by Paul Kirby
In Kingston, N.Y., the Common Council has unanimously adopted a law that limits how much trash will be picked up at apartment communities citywide. Local legislators have set the weekly limit at nine trash cans of 32 gallons each or 18 trash bags totaling 288 gallons at communities that have four or more apartments. Aldermen Albert Teetsel, R-Ward 1, and Charles Landi, D-Ward 3, recused themselves from voting on the matter because they both own apartment communities that will be affected by the law. Some lawmakers, including Landi, have contended that the new law is unnecessary because there already are trash pickup limitations on commercial properties in the city. They have pointed out that under Kingston's tax code, apartment communities of four or more units are technically considered commercial property. However, supporters of the new law counter that the spirit of the existing trash law is that "commercial property" means a business, not a multi-unit residential dwelling. Alderman Ann Marie DiBella, the Ward 5 Democrat who chairs the council's Laws and Rules Committee, remarked that the new law "clearly delineates commercial/residential as a separate trash pickup entity so they [sic] will be no misunderstanding."
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New Trash Fees Anger Apartment Owners in Harrisburg
Digested From "New Trash Fees Upset City Landlords"
Patriot-News (PA) (04/02/08)
Harrisburg, Pa., is now charging a $19.33-per-month disposal fee for every apartment unit in the city, regardless of how property owners get rid of the trash. Until recently, many owners of large apartment buildings locally had simply paid fees to in the state capital or a private hauler to empty their dumpsters. They were not billed for each unit. But when Harrisburg was forced to increase its disposal rates, City Council members wanted to make sure every apartment was paying its share. Consequently, hundreds of apartments have been added to the billing roles and are now paying the disposal rate. Harrisburg officials are calling the fee a "ready to serve" infrastructure charge that is separate from refuse pickup fees. Apartment owners and managers complain that they are being forced to pay twice. Jody Dimpsey, a property manager with JLD Management Group, laments, "Essentially, we are being charged two disposal fees. We need to have something done about it."
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Mass. Cities Receive HUD Funds to Develop and Acquire Affordable Housing
Digested From "Cities on the Hook for HUD Dollars"
Worcester Business Journal (03/31/08) by Livia Gershon
Cities in the Worcester, Mass., area receive thousands of dollars each year in federal assistance to develop, acquire, and rehabilitate affordable housing. If those units are caught up in the current wave of foreclosures, however, the cities could end up owing some of that money back to HUD. The agency gives $2 billion annually to states and local communities to develop affordable housing. In the past 16 years, the grants have provided Worcester with $26.6 million. Because the funds are intended for affordable housing initiatives, the homes come with a covenant requiring them to stay affordable even if they change hands. Robert Paquin, director of HUD's Boston office, reports that the problem is that the affordability restriction can be lost when a home is foreclosed. HUD then needs to recoup its money in order to finance another affordable community in its place. Dennis E. Hennessy, director of Worcester's Division of Neighborhoods and Housing Development, cautions that it is possible that someone who purchased a residence via the program will eventually find themselves owing more than the home is worth. In such an instance, officials might hammer out a deal in which a housing nonprofit would acquire the property and return it to affordable status.
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New Wisconsin Law Affects Apartment Owners
Digested From "New State Law Intended to Help the Abused"
Green Bay Press-Gazette (WI) (03/29/08) by Mike Hoeft
The Safe Housing Act was unanimously approved in March by Wisconsin's Assembly and Senate and signed into law by Gov. Jim Doyle. It allows domestic abuse victims to break rental agreements without penalty, providing them with an added safety measure. The legislation was supported by the Wisconsin Realtors Association, the Wisconsin Coalition Against Domestic Violence and the Wisconsin Coalition Against Sexual Assault, among others. "If you're required to stay with an abuser because of a lease, you can feel trapped in your residence," said Kathryn Chapman, executive director of the Golden House shelter in Green Bay. A property management executive who represents building owners, however, said she was concerned the law would burden apartment owners. Kathy Kintopf, account executive with Start Renting and board member of the Fox Valley Apartment Association, commented, "I feel it targets landlords. I don't know if it really protects anyone else in the building if that victim moves out. Where does it stop? Would the bank let me out of my mortgage?" Additionally, the new law makes leases void if building owners punish residents for calling police or emergency services and prohibits municipalities from enforcing ordinances that charge fees to owners when residents call the cops for help in domestic violence, sexual assault or stalking situations.
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NAA Announcements
2008 NAA PARAGON Awards - Call for Entries
Each year, the National Apartment Association recognizes the distinguished efforts of builders, individual professionals and affiliated apartment associations and the unique contributions they make to the multifamily housing industry through its premier, national awards program—the PARAGON Awards.
The Call for Entries for the 2008 PARAGON Awards is now open! If you would like to nominate an individual, affiliated association or community that represents our industry's models of excellence, please visit the PARAGON Awards Overview page. Entries are due by April 18, 2008.
Winners will be recognized at the NAA PARAGON Awards Ceremony at the 2008 NAA Education Conference & Exposition in Orlando, Fla., in June.
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NAA Education Conference (June 26-28 ~ Orlando, FL) – Specialty Housing Education Track
Register today for the NAA Education Conference and take advantage of the Specialty Housing Track. The multifaceted Specialty Housing track will encompass accessible, student, senior housing and key HUD issues. Sessions will provide a look at innovations in these areas, and highlight the latest developments to keep your operations on course. Attendees are sure to go back to the office ready to work with great take-away ideas from these sessions!
Choose from more than 50 education sessions divided into nine education tracks including: Executive, Development & Rehab, Marketing & Leasing, Human Resources, Independent/Small Owner, Specialty Housing, Personal Development, Wild Card! and Shared Interest Roundtables.
Register for the conference and book your hotel room TODAY! Be a part of the largest show in the multifamily housing industry. Group discounts are also available for companies purchasing five or more full conference registrations.
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April 15 Deadline for NAA Leadership Lyceum Scholarship Applications
Two affiliate scholarships are available for NAA’s acclaimed Leadership Lyceum. Scholarship recipients will receive airfare, lodging, applicable registration fees and class materials for the three major national NAA meetings at which the Lyceum sessions are held: NAA Education Conference & Exposition, June 26 – 28, 2008; Assembly of Delegates, November 13 – 15, 2008; and, Capitol Conference, March 7 – 10, 2009.
The primary purpose of these scholarships is to empower recipients with the knowledge they need to succeed in developing their local affiliates. The secondary goal is to facilitate the recipients also becoming productive members of NAA at the state and national level. Therefore, applications will only be accepted from affiliates, not directly from potential scholarship recipients.
The deadline for applications is April 15, 2008. Scholarship recipients will be announced May 1, 2008. For additional information contact Sandra Bowman, NAA’s Manager of Governance by e-mail sandra@naahq.org or phone 703-518-6141, ext 253.
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NAA Government Affairs HotSheet—Latest Edition
NAA's Government Affairs Department HotSheet highlights critical state and local legislative activity affecting the multifamily housing industry. This electronic newsletter is delivered by NAA once per month. Visit the Web Link below to access the latest edition.
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