APARTMENT MANAGEMENT FIRMS UP, OWNERS DOWN
WASHINGTON, D.C. (National Multi Housing Council) – Concentration in the management sector of the apartment industry changed dramatically in 2006, according to the National Multi Housing Council’s (NMHC) 18th annual ranking of the top 50 apartment owners and top 50 apartment managers.
Over the past ten years, most of the concentration documented has been among apartment owners. That changed last year with the emergence of a growing number of medium-to-large firms among the nation’s apartment managers.
The share of apartments managed by the top 50 management firms rose by a record 8.3 percent to 2.6 million units, or 14.7 percent of the nation’s 17.6 million apartments.
“The increasing concentration among apartment managers is the result of two important trends,” NMHC president Doug Bibby said. “First, many institutional owners are more comfortable having a single firm manage all of their apartment holdings. Second, continued technology improvements — including sophisticated property management systems, online rent payment solutions and demand-based pricing models — have made economies of scale achievable in property management.”
Several of the largest apartment owners were substantial net sellers in 2006. The largest apartment owner in the country, Apartment Investment and Management Company (AIMCO), slimmed down by 22,000 units.
NMHC also documented the decreasing role of real estate investment trusts (REIT) in the sector. The number of apartment REITs is down from a high of 14 to 12 as several have been taken private in recent years. For the third year in a row, apartment REITs as a whole were net sellers. REITs now own just 4.7 percent of the total U.S. apartment stock (892,292 units), the lowest figure since 1998, and down from a peak of 6.4 percent.
A complete analysis of the results is available online at www.nmhc.org/Top50/ListYears.cfm.
LAST LA CIMA LAND PURCHASED
PROSPER (The Dallas Morning News) – Shaddock Development Co. has purchased the last vacant property in the Lakes of La Cima community for development of a 400-home subdivision.
The $75 million project will include more than 200 acres near the northeast corner of Preston Road and SH 380. The community will feature a community center, 23 acres of greenbelts and public spaces.
The homes, priced at more than $400,000, will be on large lots. Plano-based Shaddock will begin site development by summer and deliver lots in the second half of 2008.
Colonial Bank provided funding for the land purchase.
MONDAY LAST DAY FOR CONFERENCE REGISTRATION
COLLEGE STATION (Real Estate Center) – Monday is the last day to register for the 17th Annual Outlook for Texas Land Markets conference, which will be held next Thursday and Friday in San Antonio.
The conference will be held at the Hyatt Regency on the Riverwalk. The $220-per-person registration covers the conference and the Texas Real Estate Commission’s legal update, a mandatory continuing education course. Admission to the Realtors Land Institute’s opening reception Wednesday evening at Buckhorn Saloon is $10.
Conference and hotel registration information is available online at recenter.tamu.edu/events/.
SECURLOCK HANDS OVER KEYS
ARLINGTON (globest.com) – America West Financial Corp. of California has purchased the 468-unit Securlock self-storage facility from Houghton Capital Corp. of Dallas for $3.5 million, $40,000 less than the list price.
The almost 58,000-square-foot, seven-year-old gated complex on almost four acres at 4840 Matlock Rd. was 75 percent leased at closing. The facility, featuring an onsite manager's residence, has nine individually metered office/warehouse units, five of which are vacant.
Marcus & Millichap Real Estate Investment Co.'s Dallas and Atlanta offices brokered the transaction, which closed at a 6.63 percent cap rate. America West assumed a $2.1 million loan at a 5.1 percent fixed interest rate and 25-year amortization, with 20 years remaining, from Chicago-based LaSalle Bank.
ALTA VISTA BUSINESS PARK SOLD
KELLER (globest.com) – Marcus & Millichap brokered the $2.2 million sale of Alta Vista Business Park, which has 293 self-storage units plus recreational vehicle and boat storage areas.
The listing price for the 6.5-acre complex at 10395 Alta Vista Rd. was $2.35 million. The local seller signed a 16,000-square-foot sale-leaseback with the buyers, a California partnership, on one of the complex's buildings.
JOSEY LANE APARTMENTS SOLD
CARROLLTON (globest.com) – Autumn Chase Apartments has been purchased by GE Real Estate North America Equity and BH Equities LLC, which will spend $4.4 million for Class-A-minus-style renovations.
GE paid $50.4 million to purchase the 90 percent occupied, 48-building complex on 66 acres at 4600, 4636 and 4700 N. Josey Lane. The 690 units are a mix of one-, two- and three-bedrooms averaging 867 square feet. The average monthly rent is $810.
The Class-B Autumn Chase was sold by Addison-based Price Realty, which had purchased it from Chicago-based AMLI Residential Properties Trust in June 2001.
BH Equities will manage the complex and oversee the renovation.
PORT ARTHUR'S POST-RITA REBUILD
PORT ARTHUR (Texas Association of Realtors) – Realtors throughout the state raised more than $140,000 to fund the construction of two Habitat for Humanity homes for families whose lives were affected by Hurricane Rita.
In addition, more than 170 members of the Texas Association of Realtors (TAR) personally joined Beaumont Habitat for Humanity to assist in the three-week build, coming from the surrounding area as well as from Austin, College Station and even as far away as Fort Worth. Working alongside them were members of other organizations, including AmeriCorp NCCC and Houston's First Church of God.
"Rita forced many Southeast Texans into uninhabitable living conditions,” said John Rosshirt, TAR’s Rita Recovery Task Force chair. "While the strides made by Beaumont Habitat for Humanity have been tremendous, we knew that it would take the cooperative efforts of many to be successful on the long road to recovery.”
These two homes are the first of up to 20 that the Habitat affiliate plans to build in 2007 for hurricane-affected families.
7TH STREET VENTURES
FORT WORTH (costar.com) – Two new developments are bringing condominiums and a significant amount of retail space to the city's west side.
Montgomery Plaza Venture is redeveloping Montgomery Plaza, a mixed-use building at 2600 W. 7th St. Plans call for new retail space and 250 condominiums totaling about 300,000 square feet.
Montgomery Plaza Venture purchased the building in January from Kimco Corp. The retail portion is currently being leased out for $25 to $32 per square foot per year. The condominiums are scheduled to be completed within about 16 months.
The Carlyle Group and Cypress Equities purchased several blocks on the south side of 7th St. between Foch and University Drive North to develop about one million square feet of retail, residential and hospitality space.
About half of the development will likely be retail, said Summer Walden of The Staubach Co. Groundbreaking for the project could be this fall.
CRUCES CRACKS WALNUT
ARLINGTON (globest.com) – A New Mexico–based investor has paid $9.7 million for Walnut Ridge, the 264-unit complex at 2500 Burney Rd.
Cruces Investment Group put a $3.6-million down payment on the 95 percent leased complex and assumed a $6.1 million Freddie Mac loan with a 5.25 percent fixed interest rate and 30-year amortization.
The 13-building Walnut Ridge, a mix of one- and two-bedroom units ranging from 471 to 945 square feet, sits on nearly nine acres. The monthly rents are $409 to $675.
Cruces Investment plans to renovate the property and turn it into a "solid Class-B" to underwrite a $20- to $25-per-month rent hike, said Jay Gunn, senior investment advisor with Hendricks & Partners. Dallas-based Capstone Management Co. will oversee the renovation and manage the 24-year-old complex.
Hendricks & Partners' Dallas office represented the seller, a private investor from Plano.
ONE SIZE FITS ALL
BEAUMONT (The Beaumont Enterprise) – A 50,000-square-foot expansion at the Dillard's in Parkdale Mall will bring the department store to 200,000 square feet, pulling all merchandise into one store and eliminating the need for a separate women's store.
Dillard's women's store occupied more than 166,500 square feet in the mall's northwest section, a section that suffered heavy damage in Hurricane Rita and has since been demolished. The mall's marketing manager, Kathy Chessher, said the space will eventually be reconfigured to accommodate big-box retailers and restaurants.
The existing store will be open throughout the expansion project, which is expected to be complete by next February.
KICKOFF AT POINT WEST
COPPELL (globest.com) – Construction is scheduled to begin this summer on Point West I, the $20 million office building that will kick off Point West, a $200 million, mixed-use development at I-635 and Belt Line Road.
The 185-acre Point West, being developed by Indianapolis-based Duke Realty Corp. on the former Lesley Farm, has been mapped out for 2.1 million square feet of industrial space, and more than 22 acres is earmarked for a 300-room hotel and nine retail pad sites.
The 180,000-square-foot Point West I is the first part of a planned 800,000-square-foot office component. The three-story spec project, which closely resembles Duke's Frisco Bridges (see RECON article "Frisco Bridges to House Development"), will be completed next February. The building was designed by Corgan Associates Inc.'s Dallas team.
PLAIN SPEAKING
AUSTIN (Austin American-Statesman) – Haas & Haynie, a San Francisco construction company, will develop a luxury community on the former Covert family ranch on Lake Travis' south shore.
Called “Vizcaya,” Spanish for “an elevated plain,” the project will be built over a ten-year period on 1,050 acres off Bee Creek Road toward Pace Bend Park. Vizcaya will include trails, a marina and an 18-hole Reese Jones–designed golf course.
A preliminary subdivision plat will be filed soon with Travis County. Phase one infrastructure work is targeted to start next spring, followed by construction of the golf course and water and wastewater plants.
Construction on the first of the planned 450 to 500 custom homes is expected to start in 2009.
The project is large, "but not in terms of density," said Austin lawyer David Armbrust, Haas & Haynie's attorney. The lots will range in size from about half an acre up to 2.5 acres.
In December, the Lower Colorado River Authority board approved water contracts for the project. A municipal utility district will be created to issue bonds to finance water, wastewater and drainage facilities.
NEW HOME STARTS SLOWING
AUSTIN (Austin American-Statesman) – New home starts fell by nearly 28 percent in the first quarter compared with a year ago, according to a report from Residential Strategies Inc.
"The large-production builders are battling inventory issues elsewhere in the country, and are thus conservative right now," said Mark Sprague, head of Residential Strategies' Austin office. "Moreover, with the rules being changed today regarding mortgage qualifications, builders are being careful until they can determine the extent of the fallout."
Austin is one of the few exceptions to a slowing housing market. Builders closed on a record 16,249 homes in the first quarter, up 4.3 percent from the first quarter of 2006.
However, first-quarter new home starts numbered 3,327, down from the record 4,613 a year ago.
APARTMENT LEASINGS' DRASTIC DROP
DALLAS (The Dallas Morning News) – Although this year’s first-quarter apartment leasing of only 480 net leases recorded is a significant drop from the more than 5,600 units leased in the same quarter of 2006, overall occupancy edged to over 93 percent.
Average rents rose to just over $700 a month, an increase of about 2 percent in the first quarter from a year earlier.
With the slowdown in leasing, apartment construction far outpaces demand. Builders completed more than 1,300 units in the first quarter. About 10,600 units remained under construction at the end of March.
Apartment markets are tightest in central Fort Worth, Las Colinas, Richardson and Allen-McKinney, according to M/PF YieldStar's report.
Because 6,300 apartments were taken out of the market during the year ending in March due to demolition or conversion into condominiums, occupancy rates in some neighborhoods are increasing.
“We are still seeing a lot of demand for houses," said Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University. "The difficulties in the mortgage market haven’t become extreme enough to create a stampede to apartments. In fact, the high levels of investment in single-family homes in recent years has created more competition for apartments as investors buy new homes and rent them.”
DEMOLITION SET FOR NINE COMPLEXES
ADDISON (The Dallas Morning News) – United Dominion Realty Trust Inc. is purchasing nine apartment complexes totaling more than 2,400 rental units along Brookhaven Club Drive near Brookhaven College.
The company’s six-year plan is to replace the '70s-era units, which include the Addison at Brookhaven and Greenhaven Village apartments, with townhouse-style apartments, flats and possibly some for-sale units.
"We will probably double the density," said company senior vice president Mark Culwell.
Based in Virginia, United Dominion is one of the country's largest apartment landlords, with more than 70,000 units. Locally, the company has more than a dozen rental communities.
Demolition will begin late this year. United Dominion will work to help relocate residents, said Culwell.
The Addison apartment district is the latest in a series of rental areas recently targeted for redevelopment. More than 4,500 rental units in the Dallas–Fort Worth area were demolished in 2006.
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