Upfront
APARTMENT FINANCE TODAY • MAY 2006
NEWS
Apartment sales hit record high
Not only did apartment property sales in 2005 rise 70% higher than the record level set in 2004, but it was greater than the previous two years combined, according to the National Multi Housing Council (NMHC). About $86 billion in assets changed hands last year.
PEOPLE
Fannie Mae promotes Knight
Fannie Mae promoted Linda Knight to executive vice president for capital markets. She previously had been senior vice president and treasurer.
“[Knight’s] new role in our organization will direct our focus on active management and accountability, as we take the necessary steps to build the Fannie Mae we want to become, one that is worthy of our public purpose – to serve affordable housing,” said Peter Niculescu, executive vice president for capital markets.
Fannie Mae also appointed four senior vice presidents to the capital markets team: David Benson, Ramon de Castro, Andrew Bon Salle and William Quinn.
Bell to help lead Lane’s development group
Lane Investment & Development, LLC, a subsidiary of Lane Co., hired John Bell as its Southeast regional partner.
Bell was previously managing director and Atlanta development partner for Trammell Crow Residential and vice president of Atlanta development for AMLI Residential, Inc.
Evergreen hires Strauss
Angela Strauss joined Evergreen Realty Group, LLC, in the newly created position of chief operating officer. She will direct a new asset management function, as well as due diligence, product development and broker/dealer relations.
Evergreen, based in Pasadena, Calif., is a sponsor of tax-deferred Sec. 1031 exchange real estate investments and a diversified real estate investment trust. |
“The stunning growth in the pace of apartment transactions has changed the apartment sector landscape quickly,” said NMHC President Doug Bibby.
In NMHC’s 2006 report of the top apartment owners last year, Apartment Investment and Management Co. (AIMCO) reclaimed its title as the nation’s largest apartment owner, a position it held from 1999 to 2002. The previous leader, CharterMac, dropped off the list after NMHC revised its definition of “ownership.” AIMCO’s return to the top is also notable because the firm had the most net dispositions for the second year in a row, with almost 23,000 units sold.
The top rising star was Wachovia at ninth place after adding almost 25,000 apartments to its holdings in 2005. Wachovia was in 20th place in 2004.
Six new firms joined the ownership rankings: Colonial Properties Trust (at No. 18 after it merged with Cornerstone Realty Income Trust), Westdale Asset Management (No. 37), Prudential Real Estate Investors (No. 41), Madison Apartment Group (No. 44), Milestone Management (No. 46) and Investors Management Real Estate Group (No. 49).
NMHC also ranked the top apartment managers; Equity Residential ranked first with a portfolio of 197,774 units.
To see the full list of top apartment firms, visit www.nmhc.org.
TRENDS
NYC to entice teachers with housing subsidies
New York City announced it will offer housing subsidies to attract new math, science and special education teachers to work in the city’s most challenging schools.
The incentive will include an initial payment of up to $5,000 for housing-related expenses such as relocation, downpayment and mortgage fees.
The program would also provide a $400 monthly housing stipend for two years. The teachers must commit to teach in the city for at least three years.
On the West Coast, the middle-market will be targeted in a new $50 million California Urban Housing Fund formed by Phoenix Realty Group (PRG).
The fund will provide equity and mezzanine financing for ownership and rental housing across the state. Teachers, police officers, firefighters and office workers are among the people who would likely qualify for the housing.
The fund will help provide capital to emerging and under-served urban markets in the state, according to Michael Fried, PRG founder and chief executive officer. The fund may also invest in some commercial projects.
PRG said the new fund will not compete with the firm’s $103 million Genesis Workforce Housing Fund in the Los Angeles area and $90 million San Diego Smart Growth Fund.
NEWS
Treasuries begin to pinch; Fed may sit back
Ten-year Treasury yields rose above the sensitive 5% level in April for the first time since mid-2002. The rise sparked speculation that borrowers of all types would really begin to feel the pinch of increasing inflation and rising interest rates after enjoying many years of abnormally low rates, noted Bloomberg News.
There were a number of signs that the real estate industry was at least taking a pause after years of sometimes frenetic activity. One multifamily construction lender told Apartment Finance Today that he had seen several recent construction loan deals collapse as a result of the borrowers’ concerns over the rising interest rates. The Mortgage Bankers Association announced in late April that the volume of applications for new mortgages had dropped slightly that month. The Commerce Department reported a 7.8% monthly decline in new housing starts in March, which some observers attributed at least in part to rising interest rates. And the National Association of Home Builders reported that its index of builder sentiment about the market for housing was at its lowest level since the terrorist attacks of Sept. 11, 2001.
One positive result may be that the Federal Reserve might be ready to stop raising interest rates after it hikes them in May, as expected. At the late March meeting of the Federal Reserve’s Federal Open Markets Committee, “most members thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much,” said the meeting’s minutes, which were released in April.
U.S. swap spreads – the market’s measure of expected risk and liquidity – decreased 0.75 basis points April 17 as a result of the expected change in Fed policy, according to Reuters.
HUD replaces HANO receiver team
New Orleans – The Department of Housing and Urban Development (HUD) is replacing its top two officials at the Housing Authority of New Orleans (HANO). This move comes at a critical time for the city’s public housing agency, which had lost more than half of its 7,300 units in last year’s hurricane disaster.
C. Donald Babers, a 35-year HUD veteran, was appointed HANO’s recovery advisor, and William Thorson, another HUD manager with more than 30 years of experience, was named receiver.
They will replace current receiver Nadine Jarmon and deputy receiver Lori Moon, as well as Mirza Morales, HANO’s one-person board of commissioners, in mid-May.
As recovery advisor, Baber will be responsible for overseeing practices and procedures necessary for HANO’s recovery from the damage caused by Hurricane Katrina. As receiver, Thorson will manage HANO’s day-to-day operations and develop a comprehensive redevelopment plan.
HUD took control of the failing housing authority in 2002 to address serious problems that had plagued the agency for years and led to deterioration of the public housing units prior to Katrina. HUD’s receiver team has begun a massive redevelopment effort of the city’s public housing using HUD capital improvement programs.
TRADE SECRETS
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E-mail your Trade Secret to christine@housingfinance.com, or fax to (415) 315-1248. For more information, call (800) 989-7255. We reserve the right to edit any submissions.
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