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Apartment Sector Stays Afloat Amid Housing Turmoil
Industry News
Apartments Boom in North Carolina's Triad Region
New Orleans Apartment Rents Reach Calm After Katrina
MAA's Net Income Drops, Occupancy Hits Record
Equity Residential Chairman Sees Property Investment Resurging
CB Richard Ellis Investors Appoints Zaleski Head of Multifamily Development
Equity Residential 1Q 2008 Results Fall, but Meet Estimates
UDR Launches Quick Response Bar Code Mobile Marketing Campaign
Legislative/Legal News
California Senate Committee Approves Apartment Smoking Ban
Inclusionary Housing Ordinance Gets Lukewarm Response in Florida
Texas Apartment Manager Looks To Impose Curfew
El Paso Apartment Association Sues Over Storm Water Tax
NY Rep. Seeks Federal Help to Add Affordable Housing
NAA Announcements
NAA Education Conference (June 26-28 ~ Orlando, FL) – Wild Card! Education Track
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NAA Government Affairs HotSheet—Latest Edition
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Apartment Sector Stays Afloat Amid Housing Turmoil
Digested From "Rental Market Stays Afloat Amid Housing Turmoil"
InvestmentNews.com (05/05/08) by Janet Morrissey
As the credit crisis worsens, mortgage defaults rise, and the housing market turmoil shows no signs of abating, apartment community owners and multifamily housing REITs are enjoying the swing back to rentals. Census Bureau data shows that the country's homeownership rate dipped to 67.8 percent in the first three months of this year from its peak of 69.2 percent in the summer of 2004. During that same time span, the rental housing vacancy rate declined to 10.1 percent from 10.4 percent. Green Street Advisors Inc. President Craig Leupold notes that apartment REITs have had little trouble accessing capital despite the credit crisis, adding that his top apartment REIT picks are AvalonBay Communities Inc., UDR Inc., and Post Properties Inc. Michael Cuggino, president and portfolio manager of the Permanent Portfolio Fund in San Francisco, says his top picks in the apartment REIT category include BRE Properties Inc. and AvalonBay Communities.
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Apartments Boom in North Carolina's Triad Region
Digested From "Apartments Boom as Occupancy Rates Decline in the Triad"
Business Journal of the Greater Triad Area (05/05/08) by Lane Harvey Brown
With apartment occupancy rates declining 1.3 percent this past year in North Carolina's Triad region, building owners and managers are watching the local multifamily housing market with caution. It is especially concerning now, considering that approximately 5,500 new apartments are either in the planning or construction stages. Jon D. Bell, principal of Steven D. Bell & Co. in Greensboro, states, "The next six to 12 months look good [and] demand is strong. My greatest concern is what happens 12 months out. I think [the number of new units] could lead to declining or flat rents." Currently, the Triad's occupancy rate (89.7 percent) is lower than the U.S. average, which is hovering in the mid-90s. It is also slightly lower than Raleigh's 91.7 percent and Charlotte's 90.8 percent rate, reports Real Data Apartment Market Research.
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New Orleans Apartment Rents Reach Calm After Katrina
Digested From "Apartment Rental Rates Reach Calm After Storm"
New Orleans Times-Picayune (05/01/08) by Kate Moran
A new Larry G. Schedler & Associates report shows that higher insurance costs and other post-Katrina expenses prompted New Orleans apartment owners to push up rental rates 20 percent to 30 percent practically overnight. Schedler laments that many residents must still compromise about the neighborhood they live in or the number of amenities they can afford with rents now stabilized. On the positive side, the quality of rental housing has improved. When the hurricane inundated thousands of local apartments, it forced owners to renovate communities that in many instances were 20 to 30 years old in need of repair. Apartment communities in the city's historic center have commanded the highest average rents locally--roughly $1,300 per apartment. Such buildings are currently 96 percent full, which is proof that New Orleans' rental market remains tight nearly three years after the devastating storm. St. Tammany dominates the suburbs, according to the survey, with owners there charging an average of $973 per apartment. Eight new apartment communities with a total of 1,775 units are currently being built in the New Orleans metro area, although the credit crunch has helped slow the pace of new development. The two areas of the city that have emerged as centers of apartment activity are eastern New Orleans and the Tulane Avenue corridor in Mid-City.
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MAA's Net Income Drops, Occupancy Hits Record
Digested From "MAA's Net Income Drops, Occupancy Hits Record"
Memphis Business Journal (05/01/08)
Mid-America Apartment Communities Inc.'s (MAA's) Q1 2008 net income plummeted 43 percent from $7.8 million a year ago to $4.46 million. Quarterly funds from operations, though, rose 12.5 percent from $24 million to almost $27 million. Occupancy at the end of March for MAA apartment communities open at least a year was 95.6 percent, a 0.7 percent gain from Q1 2007 and the best January-through-March performance in the Memphis-based REIT's 14-year history. Mid-America currently has ownership stakes in more than 41,100 apartments across the nation's Sunbelt region.
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Equity Residential Chairman Sees Property Investment Resurging
Digested From "Zell Sees Commercial Real Estate Investment Resurging"
Bloomberg (05/01/08) by Bob Ivry
Equity Residential Chairman Sam Zell reports that institutional investors are starting to return to the market for mortgage-backed securities that finance commercial property deals and new construction. The 66-year-old REIT mogul states, "I believe the overall market has already started to ease. Is it in large volumes? No. Is it the first natural step in the evolution? Yes." For the first time since last July, investors are beginning to move their money from Treasury bonds into commercial mortgage-backed securities. Zell notes that pension funds and insurance firms need to earn at least 6 percent to cover their liabilities. Looking at individual property sectors, Zell believes the value of the best office buildings in city centers will weather the slowing economy. He remarks, "I'm sure there's going to be some casualties, particularly in what I would call ex-urban, the glass-block commodity office building. I don't think there is going to be any casualties in Manhattan, I don't think there's going to be any casualties in any of the first-class office space around the country." Zell concludes that international investments will also continue to boost U.S. commercial real estate. Zell's Equity Residential ranks as the nation's largest apartment owner.
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CB Richard Ellis Investors Appoints Zaleski Head of Multifamily Development
Digested From "CB Richard Ellis Investors Names New Division Head"
Los Angeles Business Journal (05/01/08)
Stephen Zaleski has been appointed head of CB Richard Ellis Investors' multifamily housing development and investment division. Zaleski, who will be based in Boston, previously served as head of acquisitions at Berkshire Property Advisors. Prior to that, he was multifamily acquisitions director at Lend Lease Real Estate. Zaleski is also a member of National Multi Housing Council's advisory committee.
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Equity Residential 1Q 2008 Results Fall, but Meet Estimates
Digested From "Equity Residential 1Q Results but Meets Estimates"
Associated Press (05/01/08)
Although Equity Residential's Q1 2008 results fell slightly, they still managed to meet Wall Street projections. After distribution of preferred shares, the Chicago-based apartment REIT recorded funds from operations (FFO) of $170.7 million versus FFO of $173.2 million for the same three-month period a year earlier. Net income, meanwhile, increased from $118.8 million to $136.8 million over that same time span. Finally, revenue at apartment communities open at least a year climbed 3.5 percent due mainly to an increase in rental rates.
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UDR Launches Quick Response Bar Code Mobile Marketing Campaign
Digested From "UDR Inc. Launches Innovative Quick Response (QR) Bar Code Mobile Marketing Campaign"
Business Wire (04/28/08)
UDR Inc. is looking to enhance its online marketing program with the recent introduction of Quick Response (QR) bar code technology. QR bar codes are designed to store a lot more data than traditional UPC bar codes. The plan is for the Denver-based REIT to add these bar codes to its print advertising, marketing collateral, Web site pages and its apartment community locations. Prospects and customers will be able to scan the QR bar code with their mobile devices and be directed to UDR's Web site, where they can view apartment related-digital media or receive other pertinent information about the company. Dhrubo Sircar, senior vice president of technology for UDR, remarks, "By combining this technology with geographic positioning system [GPS] capabilities, we can offer customers and prospects instant directions to our UDR communities. This not only makes shopping for an apartment much easier for prospects, it also enables us to track the effectiveness of our print advertising and sales collateral."
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Legislative/Legal News
California Senate Committee Approves Apartment Smoking Ban
Digested From "Senate Committee Approves Apartment Smoking Ban"
News10 (CA) (04/29/08) by Ayesha Thomas
A plan to make California apartment communities smoke-free was approved by the state's Senate Judiciary Committee on April 29. Sen. Alex Padilla's bill looks to ensure that owners of rental housing communities have the option to ban smoking on all or a portion of their property, including inside individual apartments. A violation would be considered a breach of the resident's lease agreement and could result in eviction. Supporters say the legislation will help protect apartment residents from the dangers of secondhand smoke, which can infiltrate shared ventilation systems. Senate Bill 1598 now heads to the full Senate floor for a vote later this month.
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Inclusionary Housing Ordinance Gets Lukewarm Response in Florida
Digested From "Inclusionary Housing Ordinance Receives Lukewarm Reception"
Tampa Bay Newspapers (04/29/08) by Suzette Porter
Pinellas County, Fla., commissioners and county Community Development department members have been appearing at municipal meetings to discuss a recommended ordinance to create an inclusionary housing initiative. The proposed initiative would mandate that housing communities of 20 units or more include a percentage of units affordable to the area workforce or offer affordable housing by another means. In addition, the program lists affordable housing mandates, development alternatives, and program incentives. The ordinance would enable municipalities to opt out or sanction their own affordable housing initiatives and incentives. The Pinellas County Community Development will advertise a workshop meeting for June 4 that will permit the public and municipalities to meet to talk about any potential changes to the ordinance. Certain municipalities are contesting the plan's structure, including coastal communities, which say they do not expect a lot of housing construction because there is not much open land. Other municipalities are concerned about some of the ordinance's requirements.
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Texas Apartment Manager Looks To Impose Curfew
Digested From "Arlington Apartment Manager Tries To Impose Curfew"
CBS-TV 11 (Dallas/Fort Worth) (04/29/08) by Katherine Blake
In an effort to crack down on troublemakers, the manager of a North Arlington, Texas, apartment community wants residents to be in their apartments by 9 p.m. every night. The manager at Southern Hills Apartment Complex, whose name was not disclosed in this article, says she is merely attempting to make the community a safer place to live. Some residents, though, say she has no legal right to tell them when they can come and go. The apartment community draws its fair share of people mulling about until all hours of the night, partying, doing drugs, and even breaking into cars. In trying to combat this activity, the property manager initially sent a letter to each apartment telling residents they and their guests must be inside by 9 p.m. each night or they will be cited by the Arlington Police Department. The Arlington Police Department then stepped in, stating that officers cannot enforce such time restrictions because the city itself does not have a curfew. After meeting with Arlington police, the property manager has since revised the policy, asking residents to voluntarily obey the curfew as part of their lease agreement. She adds that she will still call the police on non-residents who are hanging around after 9 p.m., and violators could be cited for trespassing.
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El Paso Apartment Association Sues Over Storm Water Tax
Digested From "El Paso Apartment Association Sues City"
KFOXTV.com (04/29/08)
In late April, the El Paso Apartment Association (EPAA) filed a lawsuit with the city and the public service board over a new storm water tax to improve city drainage. EPAA attorney James Martinez states, "They are charging more for apartment tenants than residents of single-family homes. We don't think that is rational and violates the equal protection clause." The association further alleges that the city and the Public Service Board (PSB) are in violation of the Fair Housing Act and may be targeting racial minorities, who they think typically rent apartments. According to the EPAA, the tax is unconstitutional and unfair since a homeowner does not have to pay for a paved driveway but an apartment resident does. Mayor John Cook has released a statement regarding the lawsuit: "The city acted legally and appropriately in establishing the Municipal Drainage District so we are confident we can defend it against a legal challenge. Given the fact that the PSB has publicly committed to revisit the fee structure to assure that it is reasonable and equitable, it is most unfortunate that the Apartment Association is acting impatiently."
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NY Rep. Seeks Federal Help to Add Affordable Housing
Digested From "Weiner Seeks Federal Help to Add 'Affordable' Housing"
New York Sun (04/30/08) by Benjamin Sarlin
New York Rep. Anthony Weiner is proposing a plan to expand affordable housing in New York City that would obtain billions of additional dollars from the U.S. government to increase Section 8 vouchers and stimulate private construction of housing for low- and middle-income citizens. An estimated 28 percent of the city's renters, or 529,000 individuals, spend over 50 percent of their income on rent, compared to 22.7 percent in 2002, the Queens lawmaker claims. Staten Island inhabitants were hit hardest by rising rents; the number of tenants in that area spending more than half their income on rent rose to 27.3 percent in 2006 from 19.4 percent in 1999. About 33 percent of renters in the Bronx spent over half of their income on housing two years ago--more than any other borough--compared to 22.6 percent in Manhattan, the lowest amount. Weiner recommends that New York City overhaul its "80/20" initiative, through which tax-exempt bonds are disbursed to fund structures with 80-percent market-rate housing and 20-percent low-income housing. He suggests that New York City finance a "60/20/20" initiative, under which a fifth of housing would be reserved for middle-income housing and 20 percent for low-income housing.
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NAA Announcements
NAA Education Conference (June 26-28 ~ Orlando, FL) – Wild Card! Education Track
Register today for the NAA Education Conference and take advantage of the Wild Card! Education Track.
What is the Wild Card! track? This track is comprised of education sessions that simply couldn’t be left out – or classified. They will entertain and inspire and should not be missed. Sessions in this track include Time Management, Industry Awareness and Chad Hymas’, “Motivational Leadership” to be held on Friday. 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. Web Link | Return to Headlines
Is Your Team a Certified Success?
Learn some of the benefits of employees with NAA Education Institute professional designations. Click on the Web Link below or contact Julie Barden at 703/518-6141, Ext. 691 or juliebarden@naahq.org for more information.
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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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