Author: ipgocorp

MCLEAN, VA – Despite signs of moderation, the fundamentals for multifamily investing are strong both nationally and in most of the 13 major metro markets tracked in the first-quarter Freddie Mac Apartment Investment Market Index (AIMI). AIMI is a free online analysis tool that combines multifamily rental income growth, property price growth and mortgage rates into one Index to give investors and market observers an objective view of market investment conditions.

Nationally, AIMI values increased slightly over the quarter to 107.4 from 107 in the fourth quarter of last year. However, on a year-over-year basis, AIMI continues to trend down — both nationally and in 12 out of the 13 metro areas it tracks — as property value growth exceeds net operating income (NOI) growth in a flat interest rate environment.

A rise in AIMI values from one quarter to the next implies an increasingly favorable environment for multifamily investment opportunities, while a decline suggests that attractive investment opportunities are becoming more difficult to find.

“The stability in national AIMI values underscores the essential strength of the multifamily market for potential investors. Property price and net operating income growth continue to outperform their historical averages in the majority of metros,” said Steve Guggenmos, vice president of Freddie Mac Multifamily Research and Modeling. “What’s more, despite relatively high multifamily construction, the overall strength in the labor market and underlying demographic trends are creating robust demand for new multifamily units.”

Locally, Orlando and San Francisco experienced the largest year-over-year declines, although for different reasons. In Orlando, strong demand for multifamily units drove up NOI and property prices, while in San Francisco, NOI growth has started to moderate. Meanwhile, in Houston, NOI growth fell and property prices flattened in response to low oil prices. 

NASHVILLE, TN – Brookdale Senior Living announced that it has entered into an agreement with a third party to sell 44 communities for an aggregate sales price of $252.5 million.  The 12-state portfolio comprises 2,453 units, including 1,874 assisted living units and 579 memory care units. The portfolio communities’ revenue for the twelve months ended March 31, 2016 was approximately $89 million, and the portfolio’s average occupancy for the first quarter of 2016 was 79%.

Andy Smith, Brookdale’s President and CEO, said, “We are pleased to continue our portfolio rationalization initiative to simplify our business model and divest communities that do not fit with our strategy. This single transaction divests a diverse group of communities spread across 12 states and minimizes any operational disruption.  We expect to use the proceeds of the transaction to primarily repay debt in another step towards deleveraging the balance sheet.”

The closing of the disposition transaction, expected by the end of 2016, is subject to the receipt of regulatory approvals and the satisfaction of other customary closing conditions. There can be no assurance that the disposition transaction will close or, if it does, when the closing will occur.

Brookdale Senior Living Inc. is the leading operator of senior living communities throughout the United States.  Brookdale operates independent living, assisted living, and dementia-care communities and continuing care retirement centers, with approximately 1,114 communities in 47 states and the ability to serve approximately 107,000 residents.

(RECAP: After rising just over a decade ago to its highest level ever, the nation’s homeownership rate fell to match its all-time low and could drop even further in the months to come. In the second quarter of this year, the rate fell to 62.9 percent, not seasonally adjusted, which is the same as it was in 1965, when the U.S. Census started tracking the metric. During the epic housing boom in the mid-2000s, the rate soared as high as 69.2 percent. That was when politicians touted the so-called “ownership society.” The drop in homeownership is largely due to a delay in homebuying by the millennials, who have the lowest ownership rate of their age group in history.)

(RECAP: Construction has started on Columbia Hills Apartments, one of the first projects to be developed on Arlington County’s Columbia Pike Neighborhoods Plan, which has a goal of preserving 3,000 affordable homes along Columbia Pike. The Arlington Partnership for Affordable Housing (APAH) development will include 229 units, all affordable to low-income households earning 60 percent of area median income (AMI). The AMI is $109,200 for a family of four, which means the household would qualify with an income of $65,520 or less. Ten of the units will be reserved for households below 40 percent AMI, and 39 units will be reserved for households earning below 50 percent AMI. The $91 million project is funded by federal low-income-housing tax credits, the Arlington County Affordable Housing Investment Fund, the Federal Home Loan Bank of Atlanta and the Virginia Housing Trust Fund.)

(RECAP: After a campaign by architectural archivists and historians to save and repurpose the Marcel Breuer-designed former American Press Institute building in Reston, the building learned its fate Tuesday night. The Fairfax County Board of Supervisors voted unanimously to allow developer Sekas Homes to demolish the 42-year-old Brutalist building and construct in its place 34 townhomes and 10 condos. Hunter Mill Supervisor Cathy Hudgins said while she appreciated efforts to save the building, it did not have historical designation and was not in a historical overlay district. The supervisors and the planning commission have said they would increase efforts to identify potential historic structures so this kind of struggle does not happen again. The supervisors also passed a motion that efforts will be made to preserve an archive of the building and its history.)

(RECAP: Now nearly one year in, Fannie Mae announced changes to its growing low-down-payment program in order to expand access to credit for more borrowers. HomeReady mortgage replaced MyCommunityMortgage, Fannie’s previous affordable lending product that launched the 3% down program at the end of 2014. When the 3% down payment first began, it required at least one co-borrower to be a first-time buyer, but with the adoption of HomeReady last August came the option for both first-time and repeat homebuyers to purchase a home with as little as 3%. Now, Fannie said a further update expands the program to expand access to credit and promote successful homeownership.)

(RECAP: As the housing market continues to get back on its feet in the aftermath of the recession, some experts say the biggest thing holding back single-family housing is a lack of labor, building lots and other supply side issues. Daniel McCue, senior research associate for Harvard University’sJoint Center for Housing Studies, says that labor is a major constrictor of the housing market going forward. Citing information from the U.S. Census Bureau, McCue says some two million construction workers were lost during the recession, and only about 40 percent of them have returned to the industry. Though there’s an increasing demand for housing, builders don’t have the labor force to meet it. Warren Teller, a Richmond area real estate agent for real estate brokerage and technology company Redfin, says the demand for new housing is there – if developers can find the workers to build.)

(RECAP: As home prices and rents continue to rise, confidence in the housing market is starting to wane. It is showing up in weaker traffic at open houses and less interest in taking on a mortgage as some worry about their student debt loads. The numbers are dropping, and a new survey from the National Association of Realtors only adds fodder to the current market’s failings. While three-quarters of Americans surveyed in the second quarter of this year still think now is a good time to buy a home, the numbers are slipping, especially among renters. Just 62 percent of renters said now is the time to move to homeownership, down from 68 percent at the end of last year. Those under the age of 35 were the least confident. Millennials today have the lowest homeownership rate of their age group in recorded history.)

RALEIGH, NC – Officials of The Preiss Company, the nation’s third largest, privately-held, student housing owner-operator, announced that it continues to aggressively add to its student housing portfolio with the acquisition of three properties for an undisclosed amount in joint ventures with a private equity group. The properties include the 4050 Lofts, a 722-bed complex adjacent to the University of South Florida in Tampa; The Avenue, a 358-bed property serving Indiana University-Purdue University Indianapolis (IUPUI); and the 162-bed Campus West at Tyron near North Carolina State University.

In what is shaping up to be a record year for the company, the acquisition marks 10 student housing properties acquired year-to-date. The properties also add two new campuses to the company’s portfolio. The Preiss Company will oversee a renovation/upgrade program at two properties, as well as operate all three complexes.

“We already have achieved our previously stated goal of adding 10 properties in 2016 by the midpoint of the year and continue to have an aggressive appetite for more,” said Donna Preiss, founder and CEO, The Preiss Company. “We remain confident in the student housing outlook and have a very active nationwide pipeline.”

4050 Lofts

Located directly across the street from campus classrooms, the student center, area restaurants and nightlife at 4050 Rocky Circle on 10-plus acres, 4050 Lofts offers three- and four-bedroom units, each with a private bedroom and bath, and common living room and kitchen. The property will undertake a renovation that includes exterior upgrades, updating the swimming pool to include a new grilling station and furniture and individual unit enhancements in each kitchen.

“This is our fourth campus in Florida, a state in which we have considerable experience,” Preiss said. “The University of South Florida serves 42,000 students and continues to seek out-of-state and international students, as well as expand its enrollment of full-time, in-state students. The property’s location, combined with our proprietary, student-centric operating programs, will give 4050 Lofts a competitive advantage.”

Property amenities include a 24-hour Tech Zone with both PC and Apple computers, cyber café with gourmet coffee bar, two swimming pools with outdoor grills and a club house with Wii gaming area and pool table.

The Avenue

Situated at 930 W. 10th Street across the street from the northern edge of the IUPUI campus, The Avenue is the closest student housing complex to the University, is a short walk to the Indiana University School of Medicine and is adjacent to downtown Indianapolis. The campus serves more than 30,000 students offering more than 200 degree programs and houses the nation’s largest nursing school, the country’s second largest medical school, as well as an acclaimed dental school and law school.

The Avenue offers studio, one-, two-, three- and four-bedroom units, each with its own private bathroom. Amenities include on-site parking, salt-water swimming pool with outdoor kitchen and grill, restaurants and retail stores on the approximate three-acre site. The property also features a fully furnished media room, free Wi-Fi access and full-sized washer and dryer in each unit.

The property will undergo a substantial upgrade to include installing new 50-inch televisions in each unit, replacing corridor carpeting, enhancing the pool and pool deck, upgrading the internet service and renovating the clubhouse. A substantial majority of the one- and two-bedroom units will receive new furniture.

“The Avenue is our first student housing investment in Indiana and marks the 27th campus currently in our portfolio,” Preiss noted. “This property enjoys an irreplaceable location in relationship to the campus and, along with our award-winning operating programs, will allow us take a strong leadership position in student housing serving IUPUI.”

Campus West at Tyron

Developed by Preiss in a joint venture in 2014, Campus West at Tyron is located at 5521 Avent Ferry Road on more than 5.5 acres, approximately 1.5 miles from the North Carolina State University Centennial Campus. Rooms feature state-of-the-art finishes, including granite countertops, stainless steel appliances and private bedrooms and bathrooms.

“We have a deep pool of joint investor partners with different investment strategies,” Preiss commented. “We were fortunate that our prior joint venture partner had achieved its investment goals and wanted to harvest its returns, while the property matched up well to another investment group’s financial strategy. This is a great property in outstanding physical conditions with high satisfaction ratings from our student lessees.”

SEATTLE, WA – Global real estate investment company Kennedy Wilson announced that the company purchased a 430-unit multifamily property in the Seattle suburb of Auburn, Washington, for $81 million. The company invested $19 million of equity (inclusive of closing costs) and secured a 10-year loan of $62.6 million through Freddie Mac at a fixed-rate of 3.63% to acquire this wholly-owned property.

“We are excited to expand our footprint in the Seattle area,” said Shem Streeter, Managing Director of Kennedy Wilson Multifamily Investments. “Kennedy Wilson has been successfully investing in Washington for over a decade, and our deep knowledge of the local market will benefit the implementation of our asset management strategy at this property. This submarket has experienced both high-income job growth and a rapidly growing population, and we will continue to look for opportunities to increase our presence in this area.”

Belara at Lakeland is a 430-unit garden style apartment community located in Auburn, WA. It was built in 2006 and is situated on 40 acres within the Lakeland Hills master-planned community. The property features a resident clubhouse, fitness center, outdoor pool, and playground and is located in the desirable Dieringer School District. Auburn is located at the convergence of the SR-18, SR-167, and 1-5, offering easy access to Seattle, Bellevue, and Tacoma, home to numerous Fortune 500 companies.

Kennedy Wilson’s global apartment portfolio includes 135 communities with approximately 26,000 units. The Company has an ownership interest in 9,893 units across 39 communities in the State of Washington.