Wednesday, February 29, 2012

Among Secondary Markets, Texas Metros Stand Out via Property Management Insider

Job growth is registering all across Texas – even in smaller metros. And that is boosting apartment fundamentals all across the state. We take a look at three particular hotspots: Midland/Odessa, Corpus Christi and McAllen/Brownsville.

Watch Video...Among Secondary Markets, Texas Metros Stand Out | Property Management Insider

Dallas Beige Book, February 29, 2012 - FRB Dallas

The Eleventh District economy continued to grow at a moderate pace, and outlooks were more positive than in the last report. Manufacturers reported increased activity. Demand for business services was solid, and activity in transportation services rose modestly. Housing and commercial real estate markets continued to improve. Overall building activity remained subdued, with the major exception being robust multifamily construction activity. Contacts said retail sales growth was tepid and automobile sales held steady. Financial services respondents said overall loan demand edged up. Energy activity was strong, and agricultural conditions improved. Employment levels were flat to up slightly. Price and wage pressures were modest.

Contacts across most industries said prices held steady. The exceptions were some producers of transportation equipment, fabricated metals and food who noted slight increases in selling prices to partially offset higher input costs. Airlines reported higher fares, and shipping firms noted an increase in express package and freight delivery rates.

Read more...Dallas Beige Book, February 29, 2012 - Economic Research Publications - FRB Dallas

Vacancy Rates, Rents Signal a Landlord’s Market via American Apartment Owners Association

According to research from the National Association of Realtors®, multifamily housing is becoming a landlord’s market commanding bigger rent increases.

Lawrence Yun, NAR chief economist, points to sustained job creation as a major factor in the apartment market turnaround. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”

NAR forecasts vacancy rates over the next year to decline another 0.2 percentage point in the multifamily rental market.

“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”

Read more...Vacancy Rates, Rents Signal a Landlord’s Market via American Apartment Owners Association

Students Rely on Google & Friends to Find Housing via

Google scores highest among college students looking for an apartment as students continue to turn away from traditional advertising – such as ads in campus newspapers – and instead go online to shop for a new place to live, according to a nationwide survey of more than 500 college students.

The survey was conducted by Catalyst, an Austin-based marketing firm that specializes in the student housing industry, and asked students about their use of digital/social media and the types of marketing tactics that typically impact their housing decisions.

Fifty-three percent of students surveyed ranked Google/internet searches as most important in helping them find a place to live. Friends' recommendations and those from parents followed at 37 percent and 27 percent, respectively. They identified Facebook, ads in the student newspaper, student activities sponsored by apartment communities and online ads/promotions as least important in helping them find an apartment.

Read more...Students Rely on Google & Friends to Find Housing via

How to Beat Unfair CRE Tax Assessments via

In North Texas, it’s the time of year during which the frigid, 55-degree temperatures give way to the more temperate weather and the Bradford trees begin to flower. And, for commercial real estate owners throughout the Lone Star State, it’s that time of year to ensure the right paperwork, numbers and other information are on hand and ready in the event a property tax appeal need to be filed.

Experts tell that, no matter when the assessment date or appeal date in a particular taxing jurisdiction, the best way to beat unfair tax rates is by having information ready. “What we’re doing at this point in time is assembling support data from our clients to build cases so we can determine if appeals are warranted,” says Jeff Kurz with locally based Kurz Group Inc. In other words, from the moment a commercial real estate owner receives his or her notice of appraised value, it’s a race against the clock to determine if a value is fair, and if an appeal is necessary.

Let’s take a look at Texas. January 1 is assessment day for the coming year with CRE owners receiving valuations by spring. After those valuations are received, commercial real estate owners have an eight-week window to file any kind of appeal, with that window snapping shut in July. Overall, it seems as though owners with commercial property in Texas are in luck -- Rick Kurz, also with the Kurz Group says that, during the past three years, tax values have trended downward, with most of the county appraisal districts recognizing the impact of the economic downturn on real estate values.

Read - How to Beat Unfair CRE Tax Assessments - Daily News Article

Here We Go Again via

Just as banks and special servicers are starting to make headway on resolving the existing commercial real estate loans that have gone into default, 2012 promises to bring a new wave of defaults as a new crop of loans comes to maturity. Since CRE loans are typically written for terms of five, seven or 10 years, this means that 2012 will be the year when five-year loans written in 2007—the height of the bubble—will come due. This has implications for banks and other lenders, for borrowers, and especially for investors hoping to take advantage of opportunities presented by the new wave.

For lenders, the question—as always—will be whether to refinance, foreclose, extend or sell the loans. For borrowers, decisions will be based in large part upon what lenders are willing to do. And for investors, the trick will be to sort through it all in search of bargains.

Exactly how much will be coming due in maturing loans and how much of that will be attractive to investors is hard to pinpoint, according to Thomas Fink, senior vice president and managing director at Trepp LLC in New York City. Fink says that, except for CMBS, where actual figures are available, any number as to the size of the maturing debt is an estimate. He estimates that the overall figure will be about $1 trillion over the next three years, which includes CMBS, bank CRE lending, GSE's and insurance companies.

Read - Here We Go Again - Daily News Article

Tuesday, February 28, 2012

Bulk REO pilot plan disappoints: Capital Economics via HousingWire

The Federal Housing Finance Agency's pilot to sell real estate owned homes to investors disappoints as it singles out properties already occupied by tenants, according to a new report from Paul Dales, senior U.S. economist for Capital Economics.

The pilot program will involve the sale of 2,490 REOs, or 1% of the REO assets held by Fannie Mae and Freddie Mac, to investors in an REO-to-rental plan.

Dale said he is "disappointed that 85% of the REO units due to be sold are already occupied by tenants."

"The pilot plan will therefore do almost nothing to reduce the number of vacant homes for sale or provide more homes to rent," he said.

Read more...Bulk REO pilot plan disappoints: Capital Economics via HousingWire

Texas Ahead: Tracking the Texas Economy via Susan Combs, Texas Comptroller

Updated February 24, 2012

Texas total nonfarm employment increased by 20,200 from November to December. Between December 2010 and December 2011, Texas gained 204.500 jobs, a 2.0 percent increase.

Over the past year, Texas added jobs in eight of the eleven major industries sectors, including educational and health services, professional and business services, trade, transportation and utilities, leisure and hospitality, manufacturing and mining and logging.

During the 12 months ending in December 2011, 30,180 multi-family building permits were issued, 59 percent more than the same period ending in December 2010.

In January 2012, the Texas foreclosure rate was one in every 1,098 mortgages, substantially better than Nevada's one in 198, California's one in 265 and Arizona's one in 325.

The Texas region's Consumer Confidence Index (CCI) for January 2012 topped out at 88.9, a 19.5 percent increase from its level one year ago. The January mark and November's 91.0 are the highest the region's CCI have been since September 2008 (93.0). The CCI is a barometer of the country's economic health from the perspective of the consumer. It is compiled through a survey of 5,000 households, which gathers consumers' opinions on current conditions and future expectations of the economy.

Read more...Texas Ahead: Tracking the Texas Economy via Susan Combs, Texas Comptroller

Susan Gwin: Early Signs Indicate a Strong 2012 via D magazine

Two months into 2012, and indicators are signaling a local market uptick and a healing in our economy. We are seeing more of a promise of sovereign funds entering our office market in a potentially significant way, and it is bringing a renewed excitement to the landscape. Whereas in days gone by we were passed over by those same funds for the higher profile “gateway” cities, mirrored more recently by certain institutional players who narrowed their focus and abandoned various primary markets to the gateways for liquidity purposes, the foreign players are now taking note of the pluses in the Lone Star State. So also are new capital and acquisition players that have never previously entered our market, and some who did indeed enter it only in the last couple of years have loudly said they are here to stay.

Even better news yet, the lending community for the most part is predicting more capital is targeted at commercial real estate in 2012 and in much greater volumes and across multiple sources, i.e., commercial banks, life companies, and, yes, even CMBS originators. Unlike the roller-coaster ride last year, CMBS originators are predicting a 2012 volume as high as $50 billion. Last Friday’s market rally was an uplifting indication of good things to come, fueled by better than expected U.S. home sales and higher consumer confidence levels.

Read more...Real Points » Blog Archive » Susan Gwin: Early Signs Indicate a Strong 2012 via D magazine

Employment Forecast Raised by U.S. Business Economists in Fillip to Growth via Bloomberg

Employment will improve more this year than economists previously estimated, helping the world’s largest economy to keep growing, a private survey showed.

Payrolls will rise 170,000 a month on average in 2012, up from a November projection of 127,000, according to the results of a survey by the National Association for Business Economics issued today in Washington. Unemployment will average 8.3 percent, down from 8.9 percent in the prior forecast.

The better outlook for jobs coincides with larger gains in business investment and homebuilding than were anticipated, the survey showed. At the same time, economists maintained forecasts for consumer spending, which may rise 2.1 percent, and predicted economic growth of 2.4 percent in the fourth quarter from a year earlier, unchanged from the November survey.

Read more...Employment Forecast Raised by U.S. Business Economists in Fillip to Growth via Bloomberg

CMBS 2.0: Still in Need of Work | Manatt, Phelps & Phillips, LLP via JDSupra

Since their arrival in the 1980s, commercial mortgage–backed securities (CMBS) have held great promise for commercial real estate borrowers. They greatly increased capital flows into commercial real estate and offered lower-cost loans in exchange for cumbersome loan documentation and less flexibility to make changes to the loan and collateral once it was funded.

Lenders prospered as they collected loan-origination fees while being able to quickly sell those loans to CMBS packagers who seemed to have an unlimited appetite. According to the Compendium of Statistics published October 11, 2011, by the CRE Finance Council, over $1 trillion of commercial real estate loans were originated for securitization during the ten years that ended in January 2007. Call this CMBS 1.0.

However, the residential subprime mortgage crisis in 2007 made it dismayingly clear that elaborate structuring and geographic diversification would not protect investors from ill-conceived loans. The market for CMBS abruptly dried up as buyers lost faith in loan originators and rating agencies.

Read more...CMBS 2.0: Still in Need of Work | Manatt, Phelps & Phillips, LLP via JDSupra

Monday, February 27, 2012

5 Ways to Improve Your Leasing Success with Lisa Trosien - YouTube via AppFolio

Even if you're the "World's Greatest Leasing Professional", this program will help you impact your performance immediately. Learn five ways to improve upon even the best leasing pro's skills in this fast-paced, 45 minute program.

Watch video...5 Ways to Improve Your Leasing Success with Lisa Trosien - YouTube via AppFolio

Resident Retention: The Importance of a Culture of Responsiveness by Jen Piccotti via Multifamily Insiders

Even as we’re able to start pushing rents in the market, it is still “Mission Critical” to increase or, at least, maintain net operating income (NOI) and asset value – which happens when we increase resident retention. However, it isn’t the resident functions or monthly drawings that will help residents feel better about rent increases and renew their leases. In surveys conducted by SatisFacts Research, “office staff responsiveness to calls and emails” still has the greatest impact on the decision to renew. By creating a culture of responsiveness, a property management team can not only increase resident satisfaction, but can even increase retention despite rent increases!

Here are some examples of resident quotes taken from completed resident satisfaction surveys:

Read more...Resident Retention: The Importance of a Culture of Responsiveness by Jen Piccotti | Apartment Marketing | Apartment Leasing | Resident Retention | Apartment Investment | Apartment Jobs via Multifamily Insiders

Motivate Your Leasing Team in the “Slow Season” via National Apartment Association Blog

We recognize that this time of year can be a naturally quieter time for traffic. However, when we know that it is a “slow season” it becomes even more important for your leasing team to inject energy into their working week and be proactive in their activities so that their performance does not lag. Of course we set goals to achieve our business objectives. However, setting goals is sometimes the easy part.

We also need to ensure the right training is in place. This gives our employees the tools to do their jobs effectively and thus realize our business goals. A company that invests in an employee’s professional growth is really investing in its own business. Therefore it is essential to provide the leasing team with appropriate training and also to encourage the members to work on their professional development.

An important management practice is to maintain an open-door policy. Leasing people should feel comfortable communicating to their manager about job dissatisfactions. A good manager makes time to share concerns or give and take constructive feedback from their subordinates. In addition, if a manager becomes aware of an employee’s concerns, they have an opportunity to address any issues at an early stage. This can often resolve a situation before it has escalated. By taking control, the manager can also communicate the official company policy, if that is appropriate, or simply lend a receptive ear. Employees sometimes just want their feelings or concerns to be recognized and an available manager helps to fulfill that purpose. Knowing their manager supports them can be very beneficial to an employee’s morale, which in turn often leads to sustained or increased productivity.

Read more...Motivate Your Leasing Team in the “Slow Season” via National Apartment Association Blog

Nearly 1 in 4 Households Use Over 1/2 of Income for Housing Costs via

Even with falling home prices, a study from the Center for Housing Policy found that affordability is still becoming increasingly out of reach for homeowners and renters. According to the 2012 Housing Landscape report released by the Center, the share of working households paying more than half their income for housing between 2008 and 2010 went up from 21.8 percent to 23.6 percent.

As home prices dropped between 2008 and 2010, working homeowners also dealt with shrinking paychecks. For working homeowners over the two-year period, incomes dropped twice as much as housing costs, according to the study.

Jeffrey Lubell, executive director of the Whington-based Center, said this was primarily due to a drop in average hours worked among moderate-income homeowners.

Read more...Nearly 1 in 4 Households Use Over 1/2 of Income for Housing Costs via

NAR: Commercial Real Estate Has Turned the Corner via

All of the major commercial real estate asset classes are showing improvement—with multifamily blazing the trail, the National Association of Realtors reports in its new quarterly Commercial Real Estate Market Survey.

In short, the worst really is over, NAR economist George Ratiu tells “The commercial real estate industry has worked through its troubled properties much more efficiently than anyone would have expected a few years ago. Now we are seeing a steady improvement in property fundamentals, characterized by strengthened demand as measured by net absorption.”

The report holds bad news for at least one segment of the industry however—investors that have been lining up in the hopes of snagging distressed assets at opportunistic prices. It didn’t happen in the last two years, Ratiu says and such opportunities are unlikely to materialize this year or next, despite the fact that the majority of debt underwritten during the height of the market is now maturing.

Read - NAR: Commercial Real Estate Has Turned the Corner - Daily News Article

Still All Talk, But at Least There's Action via

After years of back-and-forth and shoulds, woulds and coulds, some on Capitol Hill finally took a step toward GSE reformation that extends beyond mere talk. The Federal Housing Finance Agency last week unveiled a strategic plan that would help prepare the market for their eventual absence.

The plan has three main components: build a new infrastructure for the secondary mortgage market; gradually contract the GSEs’ dominant presence in the market while simplifying and shrinking their operations; and maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.

Currently, Fannie and Freddie back about three-quarters of all new mortgages, and other government entities guarantee the balance. And with CMBS fizzling out last year, the securitization market pretty much belongs to Fannie and Freddie as well. Given that the government is basically the backbone of the housing finance system today, as well as the secondary mortgage market, it’s understandable that any change to the GSEs would have a tremendous impact on the industry.

Read - Still All Talk, But at Least There's Action - In the Know Article

Starting a Recycling Program on Your Property via Property Management Insider

The Houston Apartment Association has teamed up with the city of Houston to encourage the implementation of a more comprehensive recycling effort in multifamily properties with the Go Green Community program. The program seeks to establish recycling programs in 50 percent of its member communities by 2013.

The plan was unveiled by Mayor Annise Parker on “Houston Recycles Day” in November 2011, and followed the Environmental Protection Agency’s release a few days earlier of how well America is recycling.

The good news from the EPA report is that America is recycling more by volume, but collections for traditional staples like beer and soda cans and empty juice bottles are down. In 2010, Americans dumped a smaller percentage of those household items in brightly colored bins compared to highs posted since 2006.

Read more...Property Managment Tips: Starting a Recycling Program on Your Property | Property Management Insider

Friday, February 24, 2012

Reis Warns Commercial Real Estate Market to “Buckle Up” in 2012 via Multifamily Executive Magazine

During a conference call yesterday, New York City–based Reis hosted a fourth-quarter capital markets briefing and shared its 2012 commercial real estate outlook.

Ryan Severino, a senior economist at Reis, thinks transaction volume across commercial real estate could be on the brink of resurgence in 2012. But he followed the optimistic statement with words of caution, warning that this year should be a challenging one for the capital markets. Reis issued a modest outlook for commercial mortgage-backed securities (CMBSs) in 2012, following signs of progress seen in issuance levels toward the end of 2011. Yet the slight improvement rolling into January won’t likely be enough to stave off the effects of upcoming term defaults.

“The key concern is debt maturation in 2012. Expect there to be more defaults, and look for us to reap what we had sewn back in 2007,” said Severino, referring to the large number of five-year term loans set to expire this year. He believes there will be opportunity to refinance in 2012 but that it will almost certainly be a bumpy ride, and he warned investors to “buckle up.”

Read more...Reis Warns Commercial Real Estate Market to “Buckle Up” in 2012 - Debt - Multifamily Executive Magazine

Houston is a Beast via Real Estate Center at Texas A&M University

I love Houston. It is a vibrant economic beast, highly competitive in the global economy. If every city in America was like Houston, the Dow would be at 100,000.

The global economy is like a living organism. The ocean shipping channels, railroads and highways are the arteries. The major global ports are like the hearts that pulse night and day with the flow of goods moving from producer to consumer.

The Houston Ship Channel is one of those hearts. One of my favorite restaurants in Houston is Brady’s Landing, which is right on the ship channel. The big freighters come and go, just outside your window. I can feel the pulse of global trade as I enjoy dinner.

I spent two days last week talking to commercial real estate players in the Bayou City and came away with the following observations.

First, job creation in Houston is accelerating. There are 87,900 more jobs than a year ago. Take a look at this chart.

Read more...the Blog of the Real Estate Center | Real Estate Center at Texas A&M University

New Report Shows More Benefits to Greening Apartments - Green Remodeling via Multifamily Executive Magazine

The multifamily sector could save almost $3.4 billion annually, nationwide, on energy costs with a full expansion of efficiency upgrades, according to a new report from the Washington, D.C.-based American Council for an Energy-Efficient Economy and Chicago-based CNT Energy . The report, released January 26, details how energy expenditures have increased by 10.6 percent from 2005 to 2009, but says many owners have been able to reduce their energy bills by 20 percent or more by implementing energy saving measures, including everything from installing energy efficient light bulbs and reducing hot water consumption, to replacing old refrigerator models and adding extra insulation to attics and basements to prevent energy loss.

Both long-time residences and newer buildings can improve on energy savings. But Eric Mackres, senior analyst and local policy lead for the ACEEE and co-author of the report, says owners of older multifamily buildings will find it especially useful. “We were mainly looking at programs and opportunities to improve efficiency in existing buildings to save money for residents and owners,” he says. “There is no one size fits all answer when it comes to efficiency, but just about every building has at least one improvement that can save a significant amount of money.”

Mackres says the key takeaway should be the need for more cooperation between multifamily owners and local utility companies, which often provide financial incentives and programs to help offset installation costs.

Read more...New Report Shows More Benefits to Greening Apartments - Green Remodeling - Multifamily Executive Magazine

Leasing Policies That Attract Bad Tenants via American Apartment Owners Association

If you’ve had to file an eviction, or find that you have more than your fair share of problems with tenants, it may be because you are sending the wrong message.

Your leasing policies can set the stage for problems. Take a moment and get inside a tenant’s head. What would you do if you’ve burned your previous landlord, but you need a new place to rent? Chances are, you will look for a new landlord who appears laid-back, like a part-timer who doesn’t have much experience. How do you spot such a target? It is easier than you think.

Rental ads don’t just highlight a property–they tell a lot about the landlord.

If you want to dissuade bad tenants from applying for your vacancy, then make certain that your rental ads look professional. With today’s technology, it is easy to create a crisp, clear ad. Include the price, the size, a floor plan, and flattering photos or a video tour. The tone of the ad should convey that you are proud of this property. Throw in some rental rules and let the prospect know you will be screening. The very appearance of the ad can be enough to scare off bad candidates.

Read more...Leasing Policies That Attract Bad Tenants via American Apartment Owners Association

Commercial Real Estate Execs - Wary of Ongoing Economic and Political Risks - Forecast Modest Market Growth in 2012 via MarketWatch

Commercial Real Estate Industry Leaders Concerned About Fragile Investment Environment Despite Improved Market Expectations

With commercial real estate market conditions showing partial signs of recovery, The Real Estate Roundtable's Q1 2012 Economic Sentiment Survey reveals that industry executives' expectations for growth this year are improved, but hindered by concerns about underlying macroeconomic and political risks.

"The expectations of leaders in commercial real estate for 2012 are tempered by the whipsaw of last year's experience, when the shocks of possible default in Europe and political gridlock in Washington led to continued economic and regulatory uncertainty. Those worries continue," Roundtable President and CEO Jeffrey DeBoer said. "Although there are hints of cautious optimism in our Q1 Sentiment Index on some asset values, there is significant concern about a wave of commercial loan maturities approaching over the next several years. Industry leaders are anxious about how it will be possible to refinance and conduct transactions as many markets continue to struggle with slow job growth. The industry needs to see as much equity capital as possible enter the market to recapitalize properties throughout the country. It is imperative that policymakers adopt measures now that will encourage increased equity investment."

Read more...Commercial Real Estate Execs - Wary of Ongoing Economic and Political Risks - Forecast Modest Market Growth in 2012 - MarketWatch

Why Renters Rule U.S. Housing Market (Part 3): A. Gary Shilling - Bloomberg

Think of all the recent federal programs to keep people who can’t afford them in their four- bedroom houses.

There are the Home Affordable Modification Program, the Home Affordable Refinancing Program and the Emergency Homeowners’ Loan Program. In addition, there are Hope Now, Hope for Homeowners, the Hardest Hit Funds and, most recently, the proposal to expand HARP to distressed mortgages not covered by Fannie Mae and Freddie Mac.

-- Hopeless HAMP: The administration initially said this program would relieve 3 million to 4 million distressed homeowners, but it’s been a miserable failure. That was to be expected because loose-lending practices put many people in houses so unaffordable that, short of canceling their monthly mortgage payments completely, no modification would return them to financial health. About the only thing HAMP has done is delay foreclosures while lenders, under federal government edict, attempt to modify home loans to reduce total monthly payments on mortgage, credit-card and other debt to 31 percent of income.

Read more...Why Renters Rule U.S. Housing Market (Part 3): A. Gary Shilling - Bloomberg

Thursday, February 23, 2012

Shilling: Why Renters Rule U.S. Housing Market (Part 2) via Bloomberg

In making my case for continued housing weakness, I’ve emphasized the negative effect of excess inventories on house sales, prices, new construction and just about every other aspect of residential real estate.

In housing, as in every goods-producing sector, excess inventories are the mortal enemy of prices. Lower prices are needed to unload surplus inventory, yet they also lead to the creation of more inventory by anxious sellers. The plight of house sellers and the reluctance of buyers are made worse by the realization that house prices can fall, and are falling for the first time in 70 years.

There are about 2 million excess housing units in the U.S., over and above normal inventory working levels. Before the housing collapse began in 2006, housing starts and completions were volatile but averaged about 1.5 million per year. So a 2 million excess is much more than the previous annual average build.
Furthermore, that excess is rising as homeownership declines as a result of foreclosures, unemployment, inability to meet mortgage standards or reluctance to own a depreciating asset.

Read more...Shilling: Why Renters Rule U.S. Housing Market (Part 2) - Bloomberg

Apartment Owners Apprehensive About Fed's REO-to-Rental Program - Distressed Assets via Multifamily Executive Magazine

As the federal REO-to-rental program begins its pilot phase, multifamily owners are anxious to see how it might affect their business.

The shadow market has always been an elusive X-factor in the apartment world. It’s a notoriously difficult part of the rental market to quantify. But now that the shadow market has its own government stimulus program—and with about 250,000 for-sale homes languishing on the agencies’ books—apartment owners are growing a little apprehensive.

Many of the program’s details remain to be seen, but the impact on national vacancy rates is expected to be minimal. Still, real estate is a local business. And in the hardest-hit markets still suffering from a glut of distressed for-sale housing, the program will certainly be a competitive factor for the multifamily industry.

Read more...Apartment Owners Apprehensive About Fed's REO-to-Rental Program - Distressed Assets - Multifamily Executive Magazine

Top Ten Highlights of Cleantech in Dallas, Texas | CleanTechies Blog via

Dallas is the third largest city in all of the state of Texas, as well as the ninth largest city in the United States. The Dallas – Fort Worth Metroplex is the largest metropolitan area in the entire South and the fourth largest in the United States. The city is known for its historical importance throughout the cotton and oil industries as well as the focal point for the interstate system in the south. It is considered an Alpha World City by the Globalization and World Cities Study Group and Network. As per the fact that it is in Texas, which is a cleantech heavy hitter with cities like Austin and Houston leading the pact, Dallas has done much in the way of clean technology. Here are a few of the highlights of the city.

Read more...Top Ten Highlights of Cleantech in Dallas, Texas | CleanTechies Blog -

2012 Moving plans for visitors via Blog

In response to the news that apartment vacancies are the lowest we’ve seen since 2001, we conducted a survey of visitors to find out about their moving plans for 2012, including reasons they are moving, why they are opting to rent versus own property, when they plan to move and which tools they value most during their apartment search. To help break down the results of the survey, we created the infographic below. You can click the image to enlarge it.

Read more...2012 Moving plans for visitors | Blog

Why Renters Rule U.S. Housing Market (Part 1): A. Gary Shilling via Bloomberg

The collapse in housing and the 33 percent plunge in house prices since 2006 are favoring renting over homeownership. This trend will dominate the housing market for the next four or five years, and put additional pressure on a weak economy.

Policy makers in Washington continue to have a soft spot for homeownership. Many recent government actions can be viewed as attempts to keep people in their homes, even owners who clearly can’t afford them. In addition to specific plans such as the Home Affordable Modification Program, or HAMP, and the Home Affordable Refinance Program, or HARP, the Obama administration is trying to revive the moribund housing sector by encouraging mortgage lenders and servicers to refinance loans at lower rates.

This reduces interest income for banks, which are now compelled by the Dodd-Frank law to retain 5 percent of the credit risk on lower-quality residential mortgages that are securitized and sold to others. Furthermore, banks are reluctant to refinance loans that Fannie Mae and Freddie Mac (NMCMFUS) then guarantee and put back to the lenders if they find any defects. The White House plan is a tough sell.

Read more...Why Renters Rule U.S. Housing Market (Part 1): A. Gary Shilling - Bloomberg

Banks face crisis in bungled commercial mortgages via CBS News

The nation's banks are looking at a robo-signing problem with commercial real estate which may dwarf the one for home mortgages, according to a new study.
Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing. According to the report:

This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.

Analysts expect 2012 to be a record-setting year for commercial real estate defaults. Last week delinquencies for office and retail loans hit their highest-ever levels, according to Fitch Ratings. The value of all delinquent commercial loans is now $57.7 billion, according to Trepp, LLC. Also, while the national office vacancy rate has come down it is still very high: It hit 17.6 percent in the fourth quarter, down from 18.5 percent a year earlier, according to Jones Lang LaSalle.

Read more...Banks face crisis in bungled commercial mortgages - CBS News

Tuesday, February 21, 2012

The Tide Ebbs, Then Flows In Again via

A report last week from Delta Associates, which you read about first here on, charted the continued ebbing of the tide of distress in the US: the tally is down about $25 billion from its October 2010 peak of $191.5 billion. “We think the decline in distress has begun and will continue in a meaningful way in 2012 and beyond if interest rates continue to cooperate and economic expansion picks up pace,” according to the report, written by Delta president Greg Leisch.

Elsewhere on GlobeSt, one of the most widely-read articles as this week began was an excerpt from a Real Estate Forum cover story that featured Brian Watkins, director of Clarion Partners. He predicted more distress opportunities in the next few years for equity players as $1.2 trillion in commercial real estate debt matures.

“It opens up an opportunity for other types of capital,” Watkins said during the recent Transwestern/Real Estate Forum Capital Markets Symposium. “Potential opportunities will include asset recapitalizations and mezzanine financings as well as preferred equity plays.”

Distress is declining. There will be plenty of opportunities ahead in distress. Which is correct?

Read - The Tide Ebbs, Then Flows In Again - In the Know Article

ALN Monthly Newsletter February 2012

ALNData just released their January 2012 stats on occupancy and rents for 23 markets. In Texas, it includes DFW, Austin, Houston, San Antonio, Lubbock, Amarillo, Abilene and Corpus Christi. It is a great read from a great provider of apartment data.

Read more...ALN Monthly Newsletter February 2012

Synergy Between Survey, Title and Client via

Title and Land Survey are two vital facets of due diligence that ensure a successful acquisition in the realm of commercial real estate. While many firms do not provide both title and survey services, it is crucial to understand the synergy between the title, survey and the client – which should be more of a Trifecta than a Bermuda Triangle when the right team is assembled.

The Title Commitment

The importance of the Title Insurance documents (Title Commitment and the documents noted as exceptions on the title) is that they insure the property buyer and/or lender against any title-search errors as well as loss due to disputes over property ownership. The Title Commitment shows all exceptions to title that are recorded against the subject property. These exceptions can range from tax liens to easements to judgments against the property or fee owner. The Commitment shows all the criteria the buyer and seller must comply with for the aqcuisition to close. Typical items include any existing mortgage that must be paid off, and any Deeds that must be recorded. A less common item that would need removal prior to closing would be a Mechanic's Lien; a lien placed on the property resulting from the failure of the current or past owner to pay a contractor for work in place.

read - Synergy Between Survey, Title and Client - The Science of Real Estate Article via

The Myth of the Instant Multifamily Development Boom via

Ronald Reagan said in a famous presidential debate, “There you go again!” and that is the thought on many minds about the emerging apartment market: Are we already overbuilding again? Given the surprisingly rapid recovery in multifamily asset performance and values, clearly a development cycle has begun, more strongly in some markets than in others.

Yet we are far from conditions of “There you go again.” The market data, leading indicators and market experience are actually pointing to the beginning of a development cycle in which demand is accelerating and developers who move quickly will be poised to capture the expansion.

Fears about overly bullish activity, at this point in the cycle, are simply unfounded. We may end up getting to a robust increase leading to oversupply in multifamily supply at some point, but that would take quite some time, plus a full-on expansionary economy, plus a return of easy credit. We are far from that point.

My central conclusion is that we are at the beginning of a multifamily development cycle, and here’s why.

read - The Myth of the Instant Multifamily Development Boom - Building Opportunity Article

Apartment, Office Properties Record Strongest CRE Pricing Recovery In 2011 via CoStar Group

Powered by continuing gains in apartments and growing momentum in the office sector, the CoStar Commercial Repeat Sale Indices (CCRSI) National Composite Index ended 2011 significantly above its cyclical low last March, despite a relatively flat fourth quarter for pricing.

CRE sale prices stalled a bit in December as heavy year-end trading kept pricing stable in the fourth quarter, a trend CoStar has observed in each of the past two years, according to this month’s release of the CCRSI, which tracks sale pair transaction data through Dec. 31. The National Composite Index ended 2011 up a flat 0.2% from year-ago levels, but 5.5% above its low point in March 2011, thanks to a mid-year surge.

The Investment Grade and the General Commercial indices of the CCRSI both followed a similar trajectory in 2011, with prices declining in the first quarter, rallying at midyear and coasting during the flat final quarter. Highlighting the investor flight to safety to major markets and core assets, the Investment Grade Index finished December up a cumulative 14.6% from its March 2011 trough, while the recovering General Commercial Index ended the year up 3.5% from March.

Read more...Apartment, Office Properties Record Strongest CRE Pricing Recovery In 2011 - CoStar Group

Friday, February 17, 2012

Understanding Real Estate Market Cycles via ApartmentVestors

Choosing when and where you are going to invest in real estate is a very critical decision. It can determine how much appreciation or depreciation you will receive during property ownership. It will also influence the type of property you invest in and if you will experience rental rate increases or decreases. Understanding real estate market cycles can help you navigate the waters and make the most of your investments. Paying attentions to the signs that signal market shifts will help you anticipate the future and stay ahead of the masses.

Real estate markets go up and markets go down. The key is to buy the right assets in markets that are poised to grow, providing you with greater appreciation than the average market. You want to avoid depreciating markets where your investment might lose value and invest in appreciating markets where your property has a better chance to increase in value.

Read more...Understanding Real Estate Market Cycles via ApartmentVestors

Developing a Crack Team without Cracking your Budget: Top Ten Tips via Multifamily Insiders

You can spend thousands of dollars and hours on marketing and advertising but one negative interaction will undo all that hard work.

The front-line team is the public face of your organization. If they are frustrated, harried, not knowledgeable, incompetent or rude you will alienate your customer (plus her circle of influence). Numerous retail studies have demonstrated that it is human nature to complain about our negative interactions while we rarely repeat positive ones. While we cannot completely eliminate negative interactions (or at the very least, a perception that a negative interaction has occurred), we can do our best to minimize them by effectively training our team.

We talk about the benefits of training but few want to foot the bill. In fact, throughout the past few years of economic stress, the training budgets of most companies have been whittled away. However, consider the cost of one lost resident—due to a negative showing for example—and you could easily justify the cost of a basic training program.

Read more...Feb 15 2012 Developing a Crack Team without Cracking your Budget: Top Ten Tips via Multifamily Insiders

Building Sustainability Moves from "Optional" to "Must Do" via

While this article uses examples of an office property the concepts have a direct relationship to the multifamily industry. Sustainability is coming to the apartment industry. Not only because of a reduction in energy expenses but in property code standards being implemented by municipalities.  

While the 1.3-million-square-foot Pennzoil Place, an office building in the CBD was being retrofitted, 700 toilets were removed. Rather than discard the older toilets in landfills, however, the apparatuses were cleaned, the porcelain crushed, and sent to the Gulf Coast to help refurbish oyster beds.

Though this is an extreme example of “going green,” it does outline where the green building movement is headed. Soaring energy costs, combined with environmental concerns, tenant demands and even municipal regulations mean commercial real estate property managers and owners are being encouraged to consider ways in which they can get more mileage out of buildings.

According to Victoria Hollon, Transwestern’s senior vice president, innovation and quality assurance, making a building more energy efficient is a powerful money saver. With energy costs being a huge chunk of an office building’s budget, it makes sense to build sustainability initiatives into operations. Furthermore, there is the environmental factor; a building that operates more efficiently is less likely to spew all kinds of junk into the air.

Read - Building Sustainability Moves from "Optional" to "Must Do" - Daily News Article

Resident Retention: Who’s Ready For Lease Renewal Season (and Overcoming Objections)? via Property Management Insider

It’s that time of year! This is historically when leasing teams begin to focus on the annual heavy leasing season, or as we like to call it, Lease Renewal Season! For the first time in a couple of years, we’ve been experiencing a market that allows us to push rental rates. Don’t be surprised when your residents object strongly to this turning of the tide. After all, in the past couple of years, most parts of the country have had minimal or even no rent increases to speak of. In some cases, there have even been decreases in rent. So, now residents are being asked to pay more per month, and they are asking the very valid question, “Pay more for what?”

Now, before we brush these objections aside and settle into a mindset of, “It’s okay if we lose long-term residents. We can make more money by bringing in new residents at the market rate,” we need to revisit the truth about net operating income (NOI) and asset value. Based on 4th quarter national average rental rates, each time a resident chooses not to renew a lease, it costs the property an average of up to $3,900. (To calculate your average apartment turnover cost, click HERE.) This takes into account average vacancy loss, costs to turn and lease the unit, marketing, staffing, etc. Even if you’re able to re-rent that apartment for $100 more per month, it would take you 39 months, or 3.25 years, to recoup that initial loss. Resident retention remains the best way to protect your cash flow, your NOI, and asset value, even as the economy improves.

Read more...Resident Retention: Who’s Ready For Lease Renewal Season (and Overcoming Objections)? via Property Management Insider

Thursday, February 16, 2012

What Have You Done For Your Tenants Today? via Manager Labs

If you think being a Property Manager is about maintenance, utilities, contracting, technology advances or troubleshooting, you are sadly mistaken. Property Management is about “Customer Service” first. The entire purpose and being of a Property Manager is about tenant satisfaction and tenant retention. There is nothing else it is about.

With each maintenance item, utility bill, new technology and contract signed, it is about the end result: Customer Satisfaction and Service. It is probably the last thing you hear folks talk about or plan for or think of, and it should be the first! Each day you are on the job you need to start your day with: What have I done for the tenants today? If you ask that question and honestly address it, you will be an excellent Property Manager. Remember, if the tenants are happy, the building owner should be happy.

Happy Tenants Here!
Now, I know there are some building owners who are never happy and will never care if the tenants are happy. There are always a few bad apples in every batch, but for the most part, savvy building owners who really care about the bottom line do get it. It is really the naive building owner who does not get it. Quite simply, tenant retention is everything about Property Management.

Read more...What Have You Done For Your Tenants Today? | Manager Labs - technology for (visionary) property & facility people.

5 Leadership Lessons From Successful Small-Business Owners via American Express OPEN Forum

Great concepts for property management companies and onsite personnel to implement to improve team work.

No two businesses and industries are alike, but successful leadership principles are largely universal. So, learn by emulating what successful business owners and leaders have done to succeed.

We asked several successful business owners for their best leadership advice. Some fundamental concepts were cited over and over again.

1. Communicate vision and goals

It's not enough for successful leaders to simply have a clear vision. A true leader must communicate that vision and those goals to employees, investors and customers. Without a clear sense of goals, it is easy for everyone involved to lose sight of the larger picture and get lost in the details.

Read more...5 Leadership Lessons From Successful Small-Business Owners via American Express OPEN Forum

First Robotic Convenience Store at U.S. Apartment Community Debuts in Fort Worth via Property Management Insider

Property Management Insider is pleased to introduce Tim Blackwell as a contributing editor and news reporter. His debut article is a follow up to “Are Robotic Convenience Stores the Next New Amenity for Apartment Properties?”

FORT WORTH, Texas — The first robotic convenience store installed at a U.S. apartment community has drawn curious looks and plenty of press from Dallas/Fort Worth media. And one thing is for sure – kids like it.

Takis, a spicy Mexican chip, has been a favorite among young consumers since the store opened February 9 at Ladera Palms, an 800-unit apartment complex in southeast Fort Worth. The kiosk-style unit, which occupies about 40 square feet next to the leasing office, is already making money and will be officially unveiled February 17 at a grand opening to showcase about 200 items from snacks to laundry detergent on sale for residents.

“It’s been amazing,” said property manager Laurel Santiago. “People are attracted to it because they’ve never seen anything like it before. There is something about standing in front of something where you live and being able to buy things that you haven’t ever seen in a machine like it.”

The Robotic Ultra Convenience Store, which is manufactured by Ohio-based Shop24 Global, occupies about 40 square feet outside the gated community’s leasing office and is a vending machine on steroids. A robotic arm fetches items for a complete meal or household items around the clock from a climate controlled storage unit.

Read more...First Robotic Convenience Store at U.S. Apartment Community Debuts in Fort Worth via Property Management Insider

2012 shaping up as a strong year for multifamily construction starts via HousingWire

This year could bring a turnaround in both single-family and multifamily housing construction starts, analysts at Capital Economics said.

Capital Economics made its assertion after the National Association of Home Builders reported homebuilder confidence in the single-family segment rose for the fifth consecutive month in February, marking a four-year high.

Analysts at Barclays Capital ($15.03 0%) see the news as positive for homebuilder performance and said it presents an "compelling opportunity at current valuations," in a note emailed to clients. "We believe this is an early read on a strong Spring selling season," remarked analyst Stephen Kim in regards to the results of the latest homebuilder survey.

In fact, the multifamily segment is braced for a positive year, Capital Economics said, with starts in the segment last year rising 56% to 177,000 units, three times higher than the sector's previous low.

Read more...2012 shaping up as a strong year for multifamily construction starts via HousingWire

Texas Ahead: Tracking the Texas Economy via Susan Combs, Texas Comptroller

Updated February 10, 2012

Texas total nonfarm employment increased by 20,200 from November to December. Between December 2010 and December 2011, Texas gained 204.500 jobs, a 2.0 percent increase.

Over the past year, Texas added jobs in eight of the eleven major industries sectors, including educational and health services, professional and business services, trade, transportation and utilities, leisure and hospitality, manufacturing and mining and logging.

Read more...Texas Ahead: Tracking the Texas Economy via Susan Combs, Texas Comptroller

Agency Finance Is the Driver of the Multifamily Bus via

Fannie Mae and Freddie Mac originated about 60% of all multifamily loans last year, or $32 billion. They will likely exceed that record-- despite the ramped up competition they are seeing from the life insurance industry--in 2012 as originations are expected to reach $75 billion. In short, the GSEs are driving the multifamily bus right now: without the robust financing they provide, price points, cap rates and even supply and demand fundamentals would be entirely different.

Freddie Mac, for example, is expecting to close between $21 billion to $24 billion in originations this year, Tom Hamill, managing director, told the audience at RealShare Apartments East, produced by ALM's Real Estate Media Group. “We have already funded $1.9 billion so far in January.”

The GSEs, though, are facing headwinds, in the form of increased competition from other providers, and in the form of discouraging talk and measures from Capitol Hill. Recently the Treasury Department made a reference to winding down the GSEs, Doug Bibby, president of the National Multi Housing Council, said. “And by wind down, they meant wind down.” It is especially discouraging, he told the audience, because it is apparent that many in Congress don’t understand the role the GSEs play in multifamily.

Read - Agency Finance Is the Driver of the Multifamily Bus - Daily News Article

Wednesday, February 15, 2012

Curb Appeal Case Study: Finding Value in the Crafty and Eccentric

While the examples used deal with single family properties, the concepts definitely apply to apartments.

By Ashley Halligan, a rental property analyst for a Web-based company offering software comparisons and reviews.

First impressions are lasting impressions. When it comes to rental properties, enough cannot be said for the importance of curb appeal. As Cris Sullivan, Senior Vice President and Executive Director of Operations at Gables Residential states:

“You never get a second chance to make a good first impression. No matter how great the service is, or how great the programs are, if the property doesn’t look good you’ll never get the chance to go farther with that prospect. Curb appeal is very important.”

Property owners are familiar with the usual roster of curb appeal improvements, such as repainting the property, mowing the lawn and trimming the hedges. Basic steps like these should be done when preparing any property for rental.

Read more...Curb Appeal Case Study: Finding Value in the Crafty and Eccentric

4 Most Common Tenant Complaints via The Rental Standard

In an ideal world, there would be no disputes between landlords and tenants. Unfortunately, in the course of managing your property, you’ll most likely come across tenants with complaints. Deal with these grievances before they become a major problem and drive a wedge between you and your tenant. The key to dealing with any complaint is good communication.

Here are some of the most common tenant complaints, and how you can effectively resolve them.

Read more...4 Most Common Tenant Complaints via The Rental Standard

2012 promises to take multifamily’s drivers on one hell of a ride via Multifamily Executive Magazine

Ron Johnsey is contrarian by ­nature. When it’s popular to zig, he zags.

In three decades working in and ­studying multifamily, Johnsey, president of Dallas-based research firm Axiometrics, has developed a bias toward an outlier’s view of what’s happening and what’s coming next. This time, though, it’s different. Strangely, he’s finding no counterpoint position to argue.

“Everything is just ripe for a robust apartment market,” Johnsey says. “I’m always looking for problems. But these numbers are just some of the strongest I’ve seen.”

Johnsey has company aplenty. Market researchers, Wall Street analysts, REIT executives, big multifamily players, and small alike can scarcely quell optimism over practically a sure bet for a bountiful 2012. For multifamily enterprises’ most basic building block, rents, is going up. A heady crossroads of undersupply and swelling demand suggests almost assuredly energized net operating incomes, fresh infusions of yield-starved investment, a stream of new construction, and even greater profit in the near term.

Read more...2012 promises to take multifamily’s drivers on one hell of a ride - Rent Trends, Occupancy And Vacancy Rate, Absorption Rates - Multifamily Executive Magazine

Will the Next Real Estate Downturn Have a Different Outcome for CMBS? via

Have CMBS lenders learned from their mistakes that led to today’s high default rates, or will they lapse into making irresponsible loans again as the commercial real estate recovery gains momentum?

Brian Furlong, managing director of New York Life Investments, who oversees the company’s CMBS investments and structured whole loan activities, raised the question Tuesday during a panel discussion at MBA’s commercial/multifamily real estate finance conference in Atlanta.

The delinquency rate for CMBS multifamily loans in January stood at an unhealthy 15.39 percent, according to Trepp LLC. In sharp contrast, the delinquency rates were well under 1 percent for multifamily loans originated by life companies and loans held or insured by Fannie Mae and Freddie Mac.

“The question becomes what led to that difference among industries, and has it been addressed and has it been fixed?” asked Furlong.

Read more...Will the Next Real Estate Downturn Have a Different Outcome for CMBS? via

Texas Redux, America Restrained - Richard Fisher Speeches, 2-15-2012 via FRB Dallas

Thank you, Lee [Graham] for that kind introduction.

This morning I would like to provide an overview of the Texas economy as we see it from the Federal Reserve Bank of Dallas and then draw some inferences for the nation as a whole.

Texas Redux
In a nutshell, Texas continues on a path it has been on for over two decades, outperforming the nation in economic growth and job expansion. We have fully recovered the jobs lost during the Great Recession and have punched through previous peak employment levels.

The National Bureau of Economic Research, the arbiter of when recessions begin and end, dates the onset of the Great Recession as December 2007. The economic performance of Texas since December 2007 can be summarized with the chart being projected on the screen. It depicts employment growth in the 12 Federal Reserve districts. In the Eleventh Federal Reserve District―or the Dallas Fed’s district—96 percent of the economic production comes from the 25.7 million people of Texas. As you can see by the red line, we now have more people at work than we had before we felt the effects of the Great Recession. All told, in 2011, Texas created 212,000 jobs.[1]

Read more...Texas Redux, America Restrained - Richard Fisher Speeches, 2-15-2012 - News & Events - FRB Dallas

Tuesday, February 14, 2012


Today, U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan addressed the National Association of Regional Councils and announced that HUD’s fiscal year 2013 budget proposal includes $100 million to fund Regional Planning and Community Challenge Grants. The grants are part of the Partnership for Sustainable Communities, which is an association between HUD, the U.S. Department of Transportation, and the U.S. Environmental Protection Agency joining the federal government with local partners in taking a pragmatic, regional approach to problem solving that supports local leadership, local resources, and local innovation.

“An American economy built to last needs strong local and regional economies that include a wide range of businesses and attract a diverse workforce,” said HUD Secretary Shaun Donovan. “The Sustainable Community Grants are a blue print for regional and local governments to plan for their economic future, and in this budget we are seeking restoration of those funds from Congress.”

The Sustainability Grants have been critical to the nation’s economic recovery and over the last two years, HUD has awarded 152 grants, totaling $240 million that have in turn secured almost $253 million in private investment and commitments from local partners. The communities that have received these grants vary from rural communities in West Virginia and South Dakota to cities like Pittsburgh, Indianapolis, Austin and Memphis; who through these grants have partnered with their local business community to create sustainable economic development plans.


Mayor Mike Rawlings: "South Dallas Is Not a Charity Case. It's A Business Opportunity." via

For months, Mayor Mike Rawlings has made it clear that he's got his eye on Southern Dallas. This afternoon, as promised, was the first of three public presentations he'll give on his Southern Dallas Economic Growth Plan, which played to a packed house of bigwigs at the South Side Studios on Lamar. As he's done before, the mayor started by praising that part of town, which he called "the single greatest opportunity for growth in North Texas," and what he claimed is the potential for an increase of $8 billion in revenue for the city.

"It's real money," he told the crowd, adding later, to applause, "Southern Dallas is not a charity case. It's a business opportunity."

But the mayor also presented what he called a "top 10 list for leveraging this opportunity." He ran through a laundry list of to-dos, ranging from the civic equivalent of cheerleading to the very, very specific. It was an almost startlingly business-minded list, one that frequently sounded like a proposal to bolster up a flagging company. At one point, the mayor even referred to himself as "the city's top salesperson."

Read more...Mayor Mike Rawlings: "South Dallas Is Not a Charity Case. It's A Business Opportunity." - Dallas News - Unfair Park via

FORUM: Credit Market Fallout Is Just Starting, Says AEW's Plumb via

The financial mess is just starting, says Robert J. Plumb of AEW Capital Management. As CMBS debt matures over the next three years, “it’s going to be awful.”

Plumb was just one of the participants in the annual Transwestern/Real Estate Forum Capital Markets Symposium, which gathered together decision-makers from some of the nation’s top institutions for a frank discussion on the state of affairs today. The conversation revolved around determining how, when and where to place capital in the midst of an unreliable global economy and credit market upheaval, as well as expectations for the near and long term.

“No one is going to step in to refinance debt because life insurance companies don’t want it, and banks won’t touch it, either,” Plumb noted. “Most borrowers can’t afford to borrow a loan from the bank. So it’s just going to be a train wreck. The issue is about debt, and equity is going to have to become debt.”

Read - FORUM: Credit Market Fallout Is Just Starting, Says AEW's Plumb - Daily News Article

Monday, February 13, 2012

Multifamily: Where Everyone Wants to Be via GlobeSt.TV

There are plenty of reasons to be excited about apartments nowadays. The demographics are right for multifamily assets, the fundamentals are strong and there is a demand for more space, explains Steve Duffy, managing director of Moss Adams Capital LLC. He was interviewed at last year's ULI Fall Conference and is a Thought Leader. Look for his exclusive column next week on and check out the Moss Adams Thought Leadership page.

During his ULI interview, he also touched on:

What kinds of investors are looking at multifamily acquisitions.
Why occupancy rates are favorable right now.
How the recession has impacted the multifamily sector.
How real estate operators can make the right investments.

Watch - Multifamily: Where Everyone Wants to Be via GlobeSt.TV Article

The Apartment Search: How A Renter Searches Online via The Rental Standard

Renters needing to move or find a new apartment head straight for their computers to help start the search for a new home. It can be difficult to figure out what renters are thinking as they go through this process.

Ellen Mae Valdez, a registered nurse, who relocated from California to Texas, told us about her rental search process. Her methods prove that renters are particular and sensitive to many small details that are frequently overlooked by rental professionals.

The search started on Google.

Completely unfamiliar with her new hometown, Valdez started her research for her new Texas home on Google. She searched “Apartments in Temple, Texas,” which is a very common search for people looking for apartments in a specific city. In fact, the most common search word for rental searches is “apartment,” as noted in the guide on creating “Better Rental Websites.”

Read more...The Apartment Search: How A Renter Searches Online via The Rental Standard


The Federal Housing Administration (FHA) today unveiled a new pilot program to test an accelerated approval process for the purchase or refinancing of multi-family rental properties assisted through the Low-Income Housing Tax Credit (LIHTC) Program.

In launching this pilot program in Chicago, Detroit, Boston, and Los Angeles, FHA’s Office of Multifamily Housing Programs believes it can cut the time needed to review and approve financing applications for LIHTC-assisted transactions from approximately one year to just 90 – 120 days. The Hubs will process LIHTC loans for all of their related program centers.

Reducing the time required to review and approve applications under FHA’s Section 223(f) Program helps align FHA-insured financing with the LIHTC Program standards including the need to meet strict time deadlines. Expediting FHA review and approval is needed since failure to meet bond closing or other LIHTC performance deadlines may result in forfeit of the credit allocation or bond reservation and may impair the borrower’s ability to secure tax credits for future transactions. Read FHA’s Housing Notice for details of this pilot program.


Multifamily Units to Lead U.S. Construction Gains via Bloomberg

Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen.

Work will begin on about 260,000 apartment buildings and townhouse developments in 2012, up 45 percent from last year and the most since 2008, according to Meyer, a senior economist at Bank of America Corp. in New York. Chen, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, is even more optimistic, projecting a record 74 percent jump to 310,000.

Home ownership rates, which have declined to the lowest levels since 1998, may keep dropping as the foreclosure crisis turns more Americans into renters. In addition, household formation will probably accelerate as an improving economy and growing employment embolden more people to stop sharing residences and strike out on their own.

Read more...Multifamily Units to Lead U.S. Construction Gains - Bloomberg

Distressed Debt & Asset Update: Rough Path to Recovery via Commercial Property Executive

Hard on the heels of the United States’ economic recession, the nation’s commercial real estate market appears to be on a gradual but uneven path to recovery. Increased transaction flow, driven by real estate investment trusts and distressed deals—in turn aided by improved access to debt and equity capital—has helped revive the commercial real estate markets as property fundamentals continue to improve across sectors.

A bright spot in the commercial real estate recovery process is transaction activity, led by REITs, foreign investors and distressed assets. Net positive acquisitions of $34.1 billion by REITs and $6.1 billion by foreign investors have significantly impacted investment recovery post-recession (2008), according to Real Capital Analytics Inc.

Distressed property transactions continue to rise due to improved financing conditions and favorable convergence of bid-ask spreads. Real Capital Analytics data found that during the first half of 2011, distress-driven sales increased 125 percent year-over-year, to $15.7 billion, and comprised 17 percent of total U.S. commercial real estate sales.

Read more...Distressed Debt & Asset Update: Rough Path to Recovery via Commercial Property Executive

Market-Peak Loan Covenants Mean An Ounce of Prevention Today via

Given the scale and complexity of a commercial mortgage—especially a securitized one—it probably isn’t accurate to compare loan covenants to the fine print in a contract that few bother to read. Yet, as Tanya Little, CEO of Dallas-based Hart Advisors Group, tells Distressed Asset Investments, there is a similarity in that many borrowers at the market’s peak never anticipated that those covenants would someday cause them grief. For an increasing number, someday has arrived.

“When the values go down and your debt service coverage ratios aren’t there, those covenants can become difficult,” Little says. The watchword here in asset-managing properties subject to these covenants: an ounce of prevention is worth a pound of cure. Education is key, for both the asset manager and the borrower.

Asset management a few years ago rarely was concerned with loan covenants. Today, says Little, “If you’re on the ball, it’s very important that you’re managing the property and you’ve really looked at that loan to make sure that those covenants are being met—and if they’re not being met, that you’re taking the appropriate steps to make sure the loan stays healthy from the standpoint of liability or risk.”

Take DSCRs, for example. In loans originated at the height of the market, “some of those hurdles are quite high,” Little says. A loan covenant that gives the lender approval rights on leases of certain sizes could contain a trigger requiring the bank’s approval on any lease if the DSCR falls below the threshold. “Or the covenant may say that if you’re unable to get a certain rate for the space or you spend over a certain amount for TI, then all those leases need approval.”

Read - Market-Peak Loan Covenants Mean An Ounce of Prevention Today - Daily News Article

Multifamily Property Management: Seven Tips for Hiring a Locksmith via Property Management Insider

Apartment security and locksmiths are now in the spotlight with recent headlines about codes and mandates that require locks to be re-keyed or changed when residents move out of apartment complexes.

Texas has a code that requires property owners to re-key locks and MHN Online recently reported that an Illinois Public Act effective Jan. 1, 2012, says landlords who operate in counties with populations of three million or more must change or re-key locks before new residents with signed lease agreements move in.

In the Lone Star State, a landlord “must re-key or change all the key-operated locks (or other combination locks) on the exterior doors between each tenancy at his expense,” according to The Texas Tenant Advisor. Work must be done within “a reasonable time period, usually with seven days of the request.”

Read more...Multifamily Property Management: Seven Tips for Hiring a Locksmith via Property Management Insider

Friday, February 10, 2012

Industry Celebrates February as Apartment Careers Month via EON: Enhanced Online News

With the housing market still on shaky ground, more than 98 million Americans -- just over one-third of the nation’s households -- are choosing to rent instead of buy, creating a wealth of employment opportunities for job seekers from a wide variety of backgrounds.

“No other industry offers a career that is portable and that welcomes people from so many professional backgrounds”
February marks Apartment Careers Month. The National Apartment Association Education Association (NAAEI) launched this annual event in 2010 as a way to spread the word about multifamily housing industry career opportunities, as well as help recruit and train people for the industry.

The multifamily housing industry employs more than 1 million people. Large, national apartment management companies may hire as many as 2,000 new employees in any given year. Thousands of others work in industries that provide products and services to apartment communities. It’s also an industry that has an annual employee turnover rate of 30 percent to 35 percent, particularly for positions such as maintenance technicians and leasing consultants. So, the industry has a constant need for a steady pipeline of skilled talent.

Read more...Industry Celebrates February as Apartment Careers Month via EON: Enhanced Online News

Ten Landlord Legal Mistakes to Avoid via FindLaw

Being a landlord is a complicated endeavor. Not only do you have to worry about the usual headaches like leaky pipes and broken dishwashers, but there are extensive legal requirements that are waiting to trip you up. Here is a list of the ten most common legal mistakes that landlords make, and tips on how to avoid falling into these traps yourself.

Asking Discriminating Questions

A landlord should refrain from asking certain questions to a prospective tenant. This is one of the more serious legal mistakes that landlords make. Because the federal Fair Housing Act prohibits a landlord from refusing to rent property to a tenant for discriminatory reasons like race, color, religion, national origin, sex or gender, disability, and familial status, a landlord should avoid questions that may appear discriminatory or suggest a discrminatory intent. For instance, questions about the severity of a disability or marital status can result in a lawsuit or in an investigation by the U.S. Department of Housing and Urban Development (HUD). A landlord does, however, have the right to use standard tenant screening methods like credit and reference checks, but weeding out tenants based on the use of discriminatory information is illegal.

Failure to Make Disclosures to Prospective Tenants

One of the less obvious legal mistakes is the failure to disclose important information about the rental property. Every state has different requirements, but common disclosures include the following: notice of mold when the landlord knows or has a reason to believe that it exists, information about a state’s sexual offender registry, notice of sex offenders that live in the area if the landlord has actual knowledge, and disclosure of recent deaths that occurred in the rental unit. Federal law requires that a landlord disclose whether the rental unit contains lead-based paint if the property was built before 1978.

Using Illegal Provisions in a Rental Agreement

Read more...Ten Landlord Legal Mistakes to Avoid via FindLaw

Shelter From the Storm via CCIM Institute

Now that we are several years past the credit crisis of 2008, the world is still in turmoil. The European debt crisis and unrest in the Middle East — these global circumstances set the tenor for U.S. economic concerns. Gross domestic product grew 2.0 percent in 3Q11, but the federal debt grew to $15 trillion in 4Q11. Unemployment remains at 9.0 percent, home prices are still declining, and although the nation has dealt with many of its financial issues, the political climate is the worst we have seen in recent history as attested by Standard & Poor’s downgrading of U.S. credit to AA+.

Not surprisingly, businesses and consumers lack confidence, market volatility has increased, and investors are tentative. It seems the only certainty is that uncertainty will prevail throughout 2012, at least until the fall elections. The year 2012 will serve as a foundation for new business growth, more deals, and getting our ducks in a row for what is to come. Then we can finally turn the page to 2013, when it’s time for commercial real estate to come clean.

Ballast in the Storm
Although the uncertainty is dragging on, investors can take heart in the fact that commercial real estate has been able to more than hold its own in this environment.

Read more...Shelter From the Storm via CCIM Institute

Apartment construction boom under way in San Antonio via San Antonio Express-News

Rents are up, apartments are full, and developers are responding.

More than 4,000 new apartment units should hit the market in the San Antonio area this year, many of them with upscale amenities, as developers and investors respond to demographic trends and the difficulty that would-be first-time homebuyers are having qualifying for a mortgage loan.

Apartment construction slowed in the wake of the 2008 financial crisis. But the research firm Austin Investor Interests expects, conservatively, 10,000 new units will open in the San Antonio area in the next two years.

“The market weathered that financial storm pretty well,” said Janine Claycomb, research director of the San Antonio division of Austin Investor Interests. “We're in a good place.”

Read more...Apartment construction boom under way in San Antonio via San Antonio Express-News

TransUnion Data Shows Vacancies Decreased But Rents Stayed the Same via

Recent findings from TransUnion, a provider of risk management solutions, showed that while, on average, vacancy rates have decreased, rents have remained steady.

MHN interviews Mike Mauseth, president of TransUnion Rental Screening Solutions, and Steve Roe, vice president of sales for TransUnion’s rental screening business unit, on this surprising discovery, as well as the importance of selecting the “right” resident.

MHN: How did you gather your data?
Mike Mauseth: For the purposes of this analysis and to ensure the validity of the information, national data was collected from property managers utilizing TransUnion’s rental screening solutions in both 2010 and 2011. More than 200,000 rental applications were reviewed from TransUnion CreditRetriever for large property management companies and TransUnion SmartMove for independent landlords. So it is a fair representation of the entire rental unit market.

MHN: Describe some of your most interesting findings. For example, you reported that vacancy rates have been the lowest they’ve been in years, but on average, rents haven’t increased. What are your thoughts on this?

Read more...MHN Interview: TransUnion Data Shows Vacancies Decreased But Rents Stayed the Same via

More Than 750 Banks at Risk of Failure over Next Two Years via CoStar Group

Despite last year's dip in U.S. bank failures, at least 758 lending institutions are at risk of failure over the next two years, according to an analysis by Invictus Consulting Group, which conducts stress and sustainability tests on all FDIC-insured banks for regulators, banks and investors.

Based on all publicly available data on banks for the third quarter ended Sept. 30, 2011, Invictus said that, absent corrective action to raise capital or merge, the 758 banks it identified are unlikely to remain viable primarily due to the weak recovery, which could trigger a new wave of loan defaults, according to the consulting firm. Approximately 200 of these banks are subsidiaries of publicly traded bank holding companies.

After stress-testing all FDIC-insured banks using its own proprietary model, Invictus found 758 banks with total assets of around $440 billion, or roughly $580 million on average, at risk.

Read more...More Than 750 Banks at Risk of Failure over Next Two Years via- CoStar Group

Green Homes Market Expected to Increase Five-Fold by 2016 - Up From a $17 Billion Opportunity via MarketWatch

McGraw-Hill Construction, a part of The McGraw-Hill Companies MHP -0.44% , today released findings from a new Green Home Builders and Remodelers Study at the National Association of Home Builders (NAHB) International Builders' Show in Orlando. Green homes comprised 17% of the overall residential construction market in 2011 and are expected to grow to between 29% and 38% of the market by 2016. By value, this equates to a five-fold increase, growing from $17 billion in 2011 to $87-$114 billion in 2016, based on the five-year forecast for overall residential construction.

According to the study, construction industry professionals report an even steeper increase in green home remodeling; 34% of remodelers expect to be doing mostly green work by 2016, a 150% increase over 2011 activity levels. Many home builders have shifted to the remodeling market due to the drastic drop in new home construction. In fact, 62% of the builders who do both new and remodeling work verified that the economy has increased their renovation work.

"The housing market is critical to the U.S. economy," said Harvey M. Bernstein, VP of Industry Insights and Alliances, McGraw-Hill Construction, "and the results of our study show that despite the drastic downturn in housing starts since 2008, green has grown significantly as a share of activity-- indicating that the green market is becoming an important part of our overall economic landscape.

Read more...Green Homes Market Expected to Increase Five-Fold by 2016 - Up From a $17 Billion Opportunity Today - Says New McGraw-Hill Construction Study via MarketWatch

Thursday, February 9, 2012

New York Loans Distort Multifamily CMBS Performance via CoStar Group

Multifamily property loans, along with those for hotels, have shown the best performance rebound over the past 24 months of all commercial real estate property types, according to Fitch Ratings. As the economy has stabilized, the two have been able to mark-to-market more quickly due to shorter term rentals than other property types that have stickier rental streams as a result of longer-term leases.

So why then are these two property types among the worst performing in Fitch Ratings' Loan Delinquency Index?

One answer is for exactly the same reason that they are currently performing better; they marked-to-market earlier on the downside too. And once a loan becomes 60+ days delinquent, its ability to extricate itself becomes difficult as the borrower has less cash flow available to ensure the property remains competitive with its peers.

Some initial analysis Fitch has done shows what multifamily delinquencies look like when the 'rent-stabilized' New York multifamily loans and 'small balance' loans are stripped out.

Read more...New York Loans Distort Multifamily CMBS Performance via CoStar Group

Fed may need to buy more mortgage bonds-Williams via Reuters

The U.S. central bank may need to buy more bonds to bolster a housing market whose distress is at the heart of a weak economic recovery, a top Federal Reserve official said on Wednesday.

"Looking ahead, we may still need to provide more policy accommodation if the economy loses momentum or inflation remains well below 2 percent," San Francisco Fed President John Williams said in remarks prepared for delivery to the Bishop Ranch Forum in the San Francisco suburb. "Should that occur, restarting our program of purchasing mortgage-backed securities would likely be the best way to provide a boost to the economy."

Williams is the second regional Fed president inside of a week to make the case for more monetary policy accommodation through the purchase of more mortgage-backed securities. Chicago Fed President Charles Evans last Thursday said he would be "aggressive" in seeking more help for the economy through the purchase of such bonds.

Read more...Fed may need to buy more mortgage bonds-Williams via Reuters

Multifamily permits outpace construction in 2011 via HousingWire

Multifamily permits surpassed the sector's construction rate for the last three quarters of 2011, while single-family construction remained flat.

Prior to the housing collapse, the country built five to six times more single-family homes than apartment buildings, said Polina Vlasenko, a fellow at the American Institute for Economic Research. Today, that ratio is about three to one.

New permits for multifamity buildings doubled since mid-2009, and permits exceed completions by a healthy margin. Most of the increase in overall housing permits results from the construction of multifamily structures, as shown below.

The relationship between new building permits, an approximation of future construction, and completed housing units indicates whether a market is booming, flat or retracting. When the number of permits is above the number of units completed, as it was for most of 2011 in the multifamily sector, construction will probably increase.

Read more...Multifamily permits outpace construction in 2011 via HousingWire

Good Vibrations the Continuing Theme for the Multifamily Business via CoStar Group

Overlooking the fact that the 20- to 34-year-old renters driving the robust apartment market are probably too young to remember the Beach Boys, apartment REIT Camden Property Trust played the surfer anthem on its pre-earnings conference call music to set the theme for the ongoing apartment industry rebound.

"Our pre-conference music was chosen today to commemorate the 50th anniversary of the Beach Boys," explained Richard J. Campo, chairman and CEO of Camden. "I know we've received a number of emails about the Beach Boys being maybe a little too old for this crowd on the call, but for some of us, the 'Good Vibrations' is definitely a continuing theme in the multifamily business. We are looking forward to catching the wave of continued strong operating performance in 2012."

Major publicly traded owners and operators of apartments reported that market conditions continued to improve across all areas in 2011, with occupancy, sales volume, equity and debt financing all showing continued signs of improvement.

"Investors continue to view apartments as a preferred asset class in today's environment and long-term demographic changes favor rental housing," said Mark Obrinsky, chief economist of the National Multi Housing Council in Washington, DC. "In the face of an unprecedented virtual shutdown of development, the apartment market continues its strong recovery as developers play catch-up to the growing demand for rental housing."

Read more...Good Vibrations the Continuing Theme for the Multifamily Business via CoStar Group

Community Outlook Survey (COS) - Community Affairs - Federal Reserve Bank of Dallas

The Community Outlook Survey (COS), a quarterly online survey by the Federal Reserve Bank of Dallas, helps assess community and economic development in the Eleventh District of the Federal Reserve System—Texas, northern Louisiana and southern New Mexico. [1] The community organizations participating in the survey provide housing, health and nutrition, financial aid, workforce development and education services to cities and counties in the Eleventh District, with a focus on low- and moderate-income (LMI) communities.

The Dallas Fed's latest Regional Economic Update reports that as a whole, economic growth continued at a modest pace in the fourth quarter 2011. Employment rebounded to its prerecession level, with the oil and gas sector leading the surge. Although construction in Texas was flat, housing prices increased slightly, as mortgage delinquencies continued to fall.[2]

For the LMI populations in the Eleventh District, modest improvements are surfacing, although concerns about credit and financial literacy continue to be strong. Organizational sustainability concerns still plague some service providers, but many others are increasingly optimistic about their ability to meet LMI client needs. The following report highlights this quarter’s COS results.

Read more...Community Outlook Survey (COS) - Community Affairs - Federal Reserve Bank of Dallas

Distressed CRE Continues to Ebb via

Distressed commercial real estate is slowly climbing down from the heights it reached in October 2010, of $191.5 billion. Forthcoming figures by Delta Associates and Real Capital Analytics will show that distressed commercial real estate in the US totaled $166.9 billion in January 2012, down $4.7 billion since October 2011. “We think the decline in distress has begun and will continue in a meaningful way in 2012 and beyond if interest rates continue to cooperate and economic expansion picks up pace,” says the report, authored by Greg Leisch, president of Delta Associates.

The decline in distress is attributed to a mix of circumstances, starting with extend and pretend. Also, commercial valuations have begun rising in most metro markets, nudging properties up above the water line. In a separate report released last week by Green Street Advisors, it found that its Commercial Property Price Index was unchanged in January—namely that commercial property values have stalled over the past several months. A low-return environment, the primary catalyst for earlier gains, is still here, it says, but an uncertain economic outlook has held back gains for now.

Read - Distressed CRE Continues to Ebb - Daily News Article

Wednesday, February 8, 2012

Trepp: Percentage of Loans Paying Off at Maturity Inches Higher via Citybizlist New York

The percentage of loans paying off at their maturity date inched higher in January according to the just-released Trepp January Pay Off Report.

In January, 40.8% of loans reaching their balloon date paid off. This was up about three points from December's 37.5% reading. The December reading had been the lowest in eight months.

The January number of 40.8% was below the 12 month rolling average of 44.1%.

By loan count (as opposed to balance), 51.3% percent of the loans paid off. This was virtually unchanged from December's reading of 51.2%. On the basis of loan count, the 12 month rolling average is now 50.2%.

Read more...Trepp: Percentage of Loans Paying Off at Maturity Inches Higher via Citybizlist New York

MBA Attendees Expect Continued Growth in 2012 via NREI

Commercial real estate lenders are aiming to build on the momentum of a strong 2011 and increase volumes even further in 2012. Most are aware that external shocks—such as a sovereign default in Europe or a confrontation with Iran in the Middle East that disrupts oil flows—remain a risk. But few see dangers within the internal dynamics of the industry.

That was the mood at this year’s Mortgage Bankers Association’s (MBA) annual Commercial Real Estate Finance/Multifamily Housing Convention and Expo in Atlanta. The MBA’s inaugural forecast of industry volume projects originations of commercial and multifamily mortgages will hit $230 billion in 2012, an increase of 17 percent from 2011 volumes, and continue to rise to $290 billion in 2015.

“We’re in a period of stability. Everyone is talking about increasing volume. Barring a major dislocation in capital markets, it should be a strong year,” said Tom Fish, executive managing director with Jones Lang LaSalle’s Americas Real Estate Investment Banking division.

For example, anecdotally, one attendee pointed out that an informal survey of conduit lenders targets for the year amounted to $60 billion. That’s double the volume the CMBS sector originated in 2011. To be sure, not every firm will likely be achieve its goals, but it does indicate that the CMBS sector—which faced some issues in the late summer of 2011—is functioning again.

Read more...MBA Attendees Expect Continued Growth in 2012 via NREI