Upfront

News, Trends & People

Apartment Finance Today, July/August 2005

NEWS

ING Clarion buys Gables

One of the most innovative real estate investment trusts (REITs) will soon become a private company.

Later this year, Gables Residential Trust will be purchased by a partnership sponsored by ING Clarion Partners. ING Clarion announced the agreement to buy the REIT on June 7.

ING Clarion will pay about $2.8 billion for Gables, including the purchase of all Gable’s common stock and the assumption of $1.2 billion in debt. ING paid cash for the stock at a 14% premium above its June 6 closing price.

“This is great for both our shareholders and associates, allowing us to continue to execute our real estate strategy on a go-forward basis in a private setting,” said David Fitch, Gable’s CEO.

ING Clarion is a real estate investment company with approximately $22 billion under management, including 10,000 apartments. Gables currently manages 41,750 apartments, some of which are so luxurious that the REIT calls them Class AA.

Groups make case for higher-density development

Washington, D.C. – Real estate developers and environmentalists have united on a new public outreach initiative aimed at helping overcome opposition to apartments and higher-density development. “Re-Thinking Density” is a joint effort of the National Multi Housing Council (NMHC), the Sierra Club and the Urban Land Institute.

“To some people ‘density’ is a four-letter word,” said Doug Bibby, NMHC president. “They mistakenly associate it with crime and traffic and a host of other urban problems. But the truth is that well-designed higher-density development creates vibrant neighborhoods with housing, shopping and jobs all nearby. We are seeing that all over the country with successful urban revitalization projects and a return to village-based living in the suburbs.”

As part of the initiative, the groups have produced PowerPoint presentations that users can edit to fit local situations. There is also a narrated DVD that can be shown to community groups and others to illustrate the benefits of higher-density development. The DVD features presentations for both urban and suburban audiences.

The initiative comes at a critical time. The nation is going to need 60 million new housing units by 2030. The fastest-growing households include young professionals, empty-nesters, single parents, couples without children, and seniors. According to the DVD, these people are creating a large demand for the live/work/walk experience, and many of them desire apartments, condominiums and townhomes.

The program explains that higher-density development, when it is done well, can have several benefits, including helping to balance city budgets, transform declining neighborhoods, reducing traffic, providing housing opportunities and preserving space for parks and outdoor recreation.

The groups also published a companion book, Higher-Density Development: Myth and Fact. For more information, visit www.nmhc.org.

MuniMae to buy Glaser Financial

Baltimore – MuniMae announced that it will acquire Glaser Financial Group, Inc., a full-service commercial mortgage banker based in St. Paul, Minn.

The acquisition price is estimated to be about $67 million, payable in cash and stock. The deal is expected to close in the third quarter.

“This acquisition brings significant scale to our origination platform in the upper Midwest as well as our Fannie Mae and Freddie Mac servicing portfolios, and further strengthens our product offerings related to seniors housing,” said MuniMae CEO and President Michael Falcone.

Glaser arranges financing predominantly in the Midwest for multifamily, seniors housing and commercial real estate through Fannie Mae, Freddie Mac, the Federal Housing Administration, and conventional and conduit funding sources. Seniors housing represents about 40% of total originations. Following the closing of the deal, Glaser will operate as part of MMA Financial, one of MuniMae’s operating subsidiaries. Essentially, the Glaser team will remain intact and will continue under the leadership of Glaser CEO David Williams, according to officials. Williams will report to Gary Mentesana, executive vice president and head of the debt group for MuniMae.

Glaser’s $3.5 billion servicing portfolio is composed of approximately 64,000 units. MuniMae and its subsidiaries provide debt and equity financing to developers of multifamily housing and other real estate investments. As of March 31, assets under management totaled $11.9 billion secured by 2,376 properties that have 249,276 units.

HITS & MISSES

Help for fighting meth labs

Illinois had 926 clandestine methamphetamine lab “incidents” in 2004, the fifth highest total of all the states (see Apartment Finance Today, May 2005, page 50). The drug- production sites in apartments can be costly to clean up and their presence can create a danger for other residents and the building’s owners and managers. Many states lack cleanup guidelines to help owners recover from the discovery of such a lab on their property. Now help is on the way for Illinois owners, reports the Chicagoland Apartment Association. Both houses of the state legislature passed HB 3532, which directs the state police to develop a protocol for the cleanup of meth lab sites. The bill was awaiting the governor’s signature at press time.

Build a better bathroom

“The bathroom used to be a place where we took a bath. The bathroom is not a bathroom anymore. It’s a place of personal indulgence.”

– Robert Koch, principal, Fugleberg Koch Architects, urging apartment developers to beef up the accoutrements in their units’ bathrooms, at the National Apartment Association Education Conference & Exposition in June in Orlando

PEOPLE

MBA forms new multifamily leadership

The Mortgage Bankers Association (MBA) has put together its 2006 Commercial Real Estate/Multifamily Finance Board of Governors.

Kieran Quinn, chairman and CEO of Column Financial, Inc., has been named the new chair. Ed Hurley, managing director of Wachovia Securities, and Ed Padilla, CEO of NorthMarq Capital, Inc., are the new vice chairs.

The 30-member board focuses on commercial/multifamily real estate finance policy issues and initiatives with a number of committees and task forces to help set MBA’s strategic direction.

Mills joins MacFarlane

Jeff Mills has joined MacFarlane Partners, a real estate investment manager specializing in urban development/ redevelopment projects. As senior vice president of asset management, he will be responsible for managing completed projects, forming strategic joint ventures, developing property operating budgets and overseeing asset dispositions.

Mills has 15 years of real estate experience, most recently serving as director of asset management and acquisitions for UBS Realty Investors.

Granite Peak hires Hughes

Granite Peak Partners has named Steven Hughes chief financial officer. He was formerly president of Hughes Financial Resources, Inc., a real estate consulting firm.

In his new position, Hughes will oversee the financial operations of the firm. He will also help to develop two strategic business units: industry-focused syndications catering to real estate investors, and the company’s real estate advisory services division for high-net-worth individuals and family foundations seeking to reposition holdings through Sec. 1031 exchanges and portfolio management strategies.

Brownjohn joins Legacy

Richard Brownjohn was named vice president of development for Legacy Partners Residential Development, Inc.’s Dallas office, where he will oversee new multifamily projects in Texas.

Brownjohn has more than 30 years of experience in construction and development. Before joining Legacy, he was senior vice president of development for Palladium, USA, Inc.

TRADE SECRETS

Make money on security

When you install a new facility security system, you can cut your cost and generate residual income if you plan ahead.

Your basic system provides security for the common areas but not the individual units. Tenants may want a security system for their individual units, though. If you make your installer the preferred provider for the property, then tenants go through that provider to select the options they want. A master monitoring system controls the common areas as well as the individual systems.

This is great for the tenants because they get a competitive price, and you get a monthly residual from the provider. I will make about $5 a month per unit in residual fees. Although that might not look like much, it translates into a two- or three-year payback on the installation of my common-area system if half my tenants sign on.

My installer told me that at present, only Home Automation, Inc., supplies a security product that he can modify to provide for a master system for the property and less costly systems for the tenants.

Win $100 and the recognition of your peers

If we publish your clever idea about how apartment owners can cut costs, increase revenue, or attract and retain residents, we’ll send you $100 and an AFT coffee mug. E-mail your Trade Secret to cynthia@housingfinance.com, or fax to (415) 315-1248. We reserve the right to edit any submissions.

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