Nevada State Apartment Association News

Apartment Market Statistics: June 2013

Tue, 18 Jun 2013 00:00:00 +0000

Click Here for June 2013 Apartment Market Statistics

Bank lending increased across the board for multifamily properties, income-producing commercial real estate, and owner-occupied commercial real estate, according to Chandan Economics. And the recovery in large and mid-tier banks’ commercial property balance sheets continued into the third quarter, stated Sam Chandan, chief economist.

Apartment equity REITs showed a compound annual increase of 1.30 percent for one year, and 9.67 percent for five years, according to National Association of Real Estate Investment Trusts.

Housing starts for buildings with five or more apartments came in at a seasonally adjusted annual rate of 285,000 units in February 2013. This represented a 1 percent gain versus January, stated the National Association of Home Builders (NAHB). Overall, the recent permit numbers have been strong enough to support a five-plus starts rate in range of 285,000 over the next couple of months, said NAHB.

Prices for building materials used in residential construction have accelerated in recent months, said NAHB. Price pressures have not occurred evenly across the board, but instead have been driven largely by strong increases within a handful of building material categories.

Seasonally adjusted condominium and co-op sales soared 8.8 percent from January, up to a seasonally adjusted 620,000 units, according to NAHB. NAHB states that existing condominium and co-op prices (not seasonally adjusted) expanded nearly 14 percent in the past year, climbing to $172,500 during February.

Apartment Market Summary: May 2013

Wed, 12 Jun 2013 00:00:00 +0000

A number of differences become apparent when breaking the results down by asset class: All three asset classes (A, B, and C) increased effective rent growth from April to May; however, Class A only improved by 5 basis points, thus annual growth now sits at 2.82%. While Class A only showed a small improvement at the national level, there are several individual Metropolitan Statistical Areas (MSAs) that showed a stronger rebound for that class of property. For example, San Francisco, which recently had an annual effective rent growth for Class A of a negative 2.54% in February 2013, has rebounded to a positive 4.75% for May 2013. More details on the San Francisco MSA can be found at the end of the newsletter.

Although San Francisco Class A properties showed positive momentum, in Washington, DC, which has been consistently slowing overall since its peak in December 2010, the story was quite different, with NEGATIVE annual effective rent growth of 2.2% for Class A properties. Class B and C were slightly positive, but DC continues to show the weakest rent growth of the major MSAs.

Effective Rent Growth

Nationally, annual effective rent growth increased from 3.18% in April 2013 to 3.34% in May 2013. This compares to an annual growth rate of 4.10% a year ago. Although the growth rate improved from April to May, it has slowed in nine of the previous ten months as many MSAs are moderating off of very strong rent growth the previous three years. The peak annual growth rate at the national level was 5.32% in July 2011.

Thirteen of the top 88 MSAs had an annual growth rate greater than 5.0%, including Oakland (10.1%), Corpus Christi (8.9%), San Jose (7.4%), Houston (6.0%), and Seattle (5.8%). Washington, DC was in the bottom 10 MSAs with a 0.4% annual growth rate. Seven MSAs had a negative annual growth rate, including Albuquerque (-0.9%) and Tucson (-0.5%). More details on top and bottom performing MSAs can be found at the end of this newsletter.

Asking Rents and Concessions

Nationally, annual asking rent growth increased from 2.23% in April 2013 to 2.42% in May 2013, as compared to an annual growth rate of 2.62% a year ago. While Axiometrics tracks asking rent growth, effective rent growth is our main focus because it matches closest with actual rental revenue growth.

Concession values lowered asking rent 1.36% at the national level in May 2013, which is the equivalent of five days of free rent on a 12-month lease. For comparison, the concession value lowered asking rents 2.33% last year and 3.66% two years ago. The peak for concession value was in December 2009 when asking rents were lowered 7.47% by the use of concessions, which was almost a full month free on a 12 month lease.

Occupancy Rate

Nationally, the occupancy rate increased 17 bps from 94.53% in April 2013 to 94.70% in May 2013. This rate is up 42 bps from May 2012 and 74 bps from May 2011. The latest Axiometrics’ forecast projected the national average occupancy rate to top 95.0% in the third quarter and average 94.7% for the full year.

Currently, 45 of the top 88 MSAs have an average occupancy rate greater than 95.0%

Asset Class Performance

At the national level, Class C properties continued to post the best annual effective rent and occupancy growth rates in May 2013. Annual effective rent growth for Class A properties slowed from 4.63% in May 2012 to 2.82% in May 2013. While Class A properties have seen a fairly steady decline for the past two years, all three asset classes experienced a slight bump in annual effective rent growth from April to May. Although revenue growth for May 2013 is positive for all asset classes, Class C, at 5.02%, is demonstrating the most significant revenue growth.

Top and Bottom Performing MSAs

The following table lists some of the top and bottom performing MSAs across the country. Houston, Denver, Oakland, San Jose, Charlotte, and Seattle continue to rank in the top tier for revenue growth. Washington, DC continues to rank among the bottom performing MSAs for both annual effective rent and revenue growth.

?What Renters Want? with Jessica Fiur: What to Do About Residents Who Break Up

Tue, 11 Jun 2013 00:00:00 +0000

But their lease keeps them united under one roof, for better or worse, in sickness and in health, until the lease terms ends do they part.

Seriously, this is a growing phenomenon, according to The New York Times.

Anyway, not to sound too much like a Bond villain with a facial scar stroking a cat, but this could actually work to the benefit of property managers, and they could even make a profit from it.

Couples are going to keep moving in together, whether it be a step before marriage, to save on rent, to make their moms mad, whatever. Unfortunately, not all these couples are going to go the distance. But if the broken up couple is stuck staying with each other, neighbors would possibly have to listen to more fights. Or one could move out in the middle of the night without telling the ex, who might not be able to afford the rent. Or, they could act like they were in an episode of I love Lucy and put a piece of tape down dividing the apartment, so one would have one side and the other would have the other side, which would definitely ruin the apartment paint job when they took the tape off. (OK, maybe this particular scenario isn’t that likely.) Anyway, no one is going to be happy.

But, with two warring people who can no longer stand the sight of each other, much less share an apartment, one person might be more than willing to move out. If your community isn’t 100 percent occupied, maybe if one of these residents comes to you, you could offer up another apartment in the building. You could be collecting rent off of two apartments now, instead of just the one, from the same people whom you’ve already done a background/credit/etc. check on. Instead of having this person sign a full-year lease on the apartment (because when you’re living in the same building as your ex, you’re guaranteed to run into that person roughly a million times a week), you could have them sign a month-to-month lease, or whatever would be most convenient for you.

What if neither of these people can afford to live in the apartment themselves -- after all, this could be one of the reasons they moved in together in the first place? Allow them both to find new roommates, but make them do it through you so that you can do all your checks on the new people. That way it’s all done through you, instead of them illegally subletting the apartment so that they can afford the rent, or worse, start defaulting on payments because they can’t afford it.

Nevada State Bank Economic Briefing for May 2013

Mon, 10 Jun 2013 00:00:00 +0000

Overall in April, gaming stocks were up considerably, with the Applied Analysis Gaming Index increasing 3.2 percent over March of 2013. This compares favorably with the 1.8-percent increase witnessed in the S&P 500 during the same period. Leading the index were Boyd Gaming (BYD), reporring a 45.1-percent increase berween March and April and Pinnacle Entertainment (PNK), reporring a 3004-percent increase during the same period. Both companies managed to report earnings surpassing Wall Street expectations, with fundamental improvements in revenues from each companies' casinos driving improved results. Overall gaming revenue in Nevada improved to $10.9 billion for the 12-months ending in March, which was up 1.2 percent over the prior period.

Notable performances reported by companies during the first quarter in Las Vegas include a 3.6-percentage point increase in hotel occupancy at Wynn and Encore to 82.9 percent. This helped to boost overall revenues at the sister properties to $386.6 million during the first three months of the year, an increase of 6.6 percent year-overyear. Perhaps the biggest shock came from MGM's first quarter report, where CityCenter reported an $11.7 -million profit for the quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), an important measure of casino earnings, were up 1804 percent year-overyear to $297.3 million in the first quarter for MGM's Las Vegas properties (excluding ARIA). This led to $186.9 million in operaring income for these resorts, and $301.8 million in operaring income for the company, bearing Wall Street expectations.

Nevada's gaming manufacturers also fared well during April 2013. SHFL Entertainment (SHFL) was the only operator to report a decline in stock price when compared to the prior month, falling 4.7 percent. International Game Technology (lGT) reported the greatest increase, rising 2.7 percent, while Bally Technologies (BY!) was up 2.5 percent and WMS Industries (WMS) increased 0.7 percent. These performances suggest that casinos are becoming more willing to invest in new technologies ...

Check Out the Rest of the Report Here

Nevada Becomes The Tenth State To Prohibit The Use Of Consumer Credit Reports Or Other Credit Information For Employment Purposes

Wed, 05 Jun 2013 00:00:00 +0000

Senator Parks introduced Nevada’s Senate Bill 127 on February 18, 2013, which was intended to, among other things, “prohibit employers from conditioning employment on a consumer credit report or other credit information.” Nevada Governor Brian Sandoval signed the bill into law on May 25, 2013 and it goes into effect on October 1, 2013.

Prohibitions Under The New Law:

Chapter 613 of the Nevada Revised Statutes covers “Employment Practices,” including various unlawful employment practices. Senate Bill 127, as enacted, amends Chapter 613 to add a new unlawful employment practice -- employers conditioning employment on a consumer credit report or other credit information.

The new law adopts a very broad definition of employer to include private employers and “any person acting directly or indirectly in the interest of an employer in relation to an employee or prospective employee.” With limited exceptions, this wide array of Nevada “employers” is now prohibited in their attempts to:

Directly or indirectly, require, request, suggest or cause any employee or prospective employee to submit a consumer credit report or other credit information as a condition of employment;
Use, accept, refer to or inquire concerning a consumer credit report or other credit information;
Discharge, discipline, discriminate against in any manner or deny employment or promotion to, or threaten to take any such action against any employee or prospective employee: (a) who refuses, declines or fails to submit a consumer credit report or other credit information; or (b) on the basis of the results of a consumer credit report or other credit information; or
Discharge, discipline, discriminate against in any manner or deny employment or promotion to, or threaten to take any such action against any employee or prospective employee who has pursuant to the new law: (a) filed any complaint or instituted or caused to be instituted any legal proceeding; (b) testified or may testify in any legal proceeding instituted; or (c) exercised his or her rights, or has exercised on behalf of another person the rights afforded to him or her.

Exceptions Under The New Law:

When Senate Bill 127 was first introduced, it did not provide for any exceptions from its prohibitions. This meant, for example, that employees who handle large sums of money -- such as bank and casino employees -- could not be subjected to pre-employment credit checks under the state law. Both advocates and opponents of the bill debated this issue at a February 22, 2013 Senate Commerce, Labor and Energy Committee hearing. The opponents prevailed and the bill now provides for exceptions from the preceding prohibitions. Under these exceptions, an employer may request or consider a consumer credit report or other credit information for the purpose of evaluating an employee or prospective employee for employment, promotion, reassignment or retention as an employee if:

The employer is required or authorized, pursuant to state or federal law, to use a consumer credit report or other credit information for that purpose;
The employer reasonably believes that the employee or prospective employee has engaged in specific activity which may constitute a violation of state or federal law; or
The information contained in the consumer credit report or other credit information is “job related” or reasonably related to the position for which the employee or prospective employee is being evaluated for employment, promotion, reassignment or retention as an employee.

The “job relatedness” requirement from this final exception is met if the duties of the position involve: (a) responsibility for financial assets or employment with a financial institution; (b) access to confidential information; (c) managerial or supervisory responsibility; (d) direct exercise of law enforcement authority; (e) responsibility for or access to another person’s financial information; and of course (because this is Nevada) (f) employment with a licensed gaming establishment.

Remedies Under The New Law:

Senate Bill 217, as enacted, allows for both a private and public right of recovery under a three-year statute of limitations.

Private Right. When an employer violates the new law, the civil remedies available to affected persons include; (a) employment if they were prospective employees or reinstatement or promotion if they already were employees; (b) payment of lost wages and benefits; and (c) the award of reasonable costs and attorneys’ fees. The new law also presumably permits recovery through class actions because it allows an “action to recover” to be brought “[o]n behalf of other employees or prospective employees similarly situated.”

Public Right. The new law also authorizes the Labor Commissioner to impose an administrative penalty against an employer (not to exceed $9,000 for each violation) and to bring a civil action against the employer. The administrative penalty is separate and apart from any civil action brought under the new law.

Recommendations For Employers:

Nevada joins California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington in enacting legislation to restrict employer’s ability to use credit information for employment purposes. Several other states and the Equal Employment Opportunity Commission (EEOC) are also focused on this area and additional laws and guidance are expected this year. Given the Nevada law’s high penalties for non-compliance (civil actions, $9,000 per incident administrative penalty, and possible class actions) and the national focus on the use of credit information for employment purposes -- employers in Nevada that use credit reports or credit information for employment purposes are well advised to evaluate and reassess their practices and procedures in anticipation of the new law’s October 1, 2013 effective date.

Attorney Advertising. This Management Alert is a periodical publication of Seyfarth Shaw LLP and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have. Any tax information or written tax advice contained herein (including any attachments) is not intended to be and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)

Griffis Residential Enters Las Vegas Market with $41.1M Buy

Tue, 04 Jun 2013 00:00:00 +0000

“This will be a pivotal point in the market’s recovery and bolsters the argument that market fundamentals are improving as evidenced by job growth and improving unemployment figures,” says Jonathan Fore of Fore Property Company. “Investors are getting back into this market to capitalize on rising gaming and hotel revenues and the market’s current low interest rate environment.”

Quest was 95 percent occupied at the time of sale. Community amenities include a swimming pool, business center, covered parking, playground, conference room, clubhouse, fitness center, gated access, hot tub and garages.

In Many Markets, It?s Cheaper to Rent Than Buy -- But That?s Not Stopping Home Builders

Mon, 03 Jun 2013 00:00:00 +0000

That’s according to an analysis done by Stern Agee home-builder analyst Jay McCanless, who compared the “fully-loaded price” (mortgage + fees, insurance and taxes) vs. renting. In the 25 top markets of the builders he follows (which excludes New York and Los Angeles but includes Chicago, Indianapolis, Houston, Washington D.C. and San Francisco among others), it’s cheaper to rent instead of buy in 13 markets at an interest rate of 3.5%.

That number grows to 17 in the “rent” camp when rates reach 4%, and to 20 when rates reach 5%. The five markets where it would still be better to buy than rent at rates of 5% are Chicago, Tampa, Sarasota, Miami and Atlanta.

The interesting takeaway is that builders are seeing growing demand anyway.

Of the 11 builders he follows, in the last two quarters, orders have gone up an average 40% and 29.8%, average closing prices have gone up 7.7% and 10.5%, and unit closings have gained 31.5% and 37.6%. And he points out that mortgage rates have climbed since reaching a cycle low of 3.47% in the week ending Dec. 7. According to Freddie Mac, the 30-year fixed-rate mortgage hit the highest level in a year in the week ending May 30, at 3.81%.

“We view this as an indication that consumer demand for home ownership is increasing,” said McCanless, who kept buy ratings on D.R. Horton DHI, Meritage Homes MTH, PulteGroup PHM and Ryland Group RYL.

“The negative psychological effect of higher mortgage rates may push homebuilder stock prices lower for a period, but assuming competing inventories of existing homes remain low and housing demand stays at current levels, we believe a near-term pullback may represent a long-term buying opportunity,” he said in a note to clients.

Wolff Acquires 3,098-Unit Apartment Portfolio in Las Vegas

Tue, 28 May 2013 00:00:00 +0000

“This portfolio represents an excellent mix of assets with strong in-place operations and a potential value-add opportunity as the market continues its recovery,” said Fritz H. Wolff, CEO of The Wolff Company. “We are continuously seeking similar opportunities nationally.”

The Wolff Company focuses on the multifamily sector and makes investments nationally, with a regional emphasis on the West Coast and the Boston to D.C. corridor. Wolff has been acquiring, developing and managing multifamily assets for more than 60 years.

The seller, Sierra Nevada Multifamily Investments, LLC, is a joint venture between DRA Advisors on behalf of an institutional client, and a subsidiary of Camden Property Trust.

“Wolff executed on the closing of the transaction quickly and consistently with the terms negotiated at the onset of the transaction,” said Bob Fisher, General Counsel of Camden and a representative of the seller.

About The Wolff Company

The Wolff Company, a national real estate private equity firm with 60 years of operating experience, focused on the acquisition and development of institutional quality multifamily assets. Contact us at (480) 315-9595 or visit us online at awolff.com.

About DRA Advisors

DRA Advisors is a registered investment advisor specializing in real estate investment and management services for institutional and private investors. DRA currently has over $10.5 billion in assets under management, including over 145 apartment communities.

About Camden Property Trust

Camden Property Trust, an S&P 400 Company, is a real estate company engaged in the ownership, development, acquisition, management and disposition of multifamily apartment communities. As of March 1, 2013, Camden owned interests in and operated 192 properties containing 65,005 apartment homes across the United States. Camden was recently named by FORTUNE® Magazine for the sixth consecutive year as one of the “100 Best Companies to Work For” in America, ranking #10.

Contacts

DRA Strategic Communications
Denise D. Resnik, 602-956-8834, x111
denise@dracommunications.com

Apartment Market Summary: April 2013

Thu, 23 May 2013 00:00:00 +0000

As 2Q 2013 began, national effective rent growth softened to its slowest pace in the past 32 months. The growth rate had held fairly steady between 3.53% and 3.84% from June 2012 to February 2013, slowed to 3.22% in March 2013, and declined to a low of 3.11% in April 2013. While effective rent growth was weaker than in prior periods, the occupancy rate continued to strengthen, with a national average of 94.60% in April and with 44 of the top 88 Metropolitan Statistical Areas (MSAs) generating an average rate above 95.0%.

Class A properties continue to be a drag on national rent growth. Annual effective rent growth for these properties slowed to 2.8% in April though occupancy increased from 95.0% in March to 95.12% in April. There was very little separation between Class A occupancy (95.13%) and Class B occupancy (94.96%) in April. However, Class B properties increased effective rents at a slightly better pace–3.2%–than Class A properties over the past year, but fell behind Class C properties, which produced a growth rate of 4.0%. Class C properties also have the best absorption rates, and this trend will likely continue as the occupancy rate still averages just 93.2%.

One of the questions we are constantly asked is whether the market will get oversupplied. Our forecast is for supply to begin to slow over the next couple years, which we outline in the Pipeline section of this newsletter. The primary drivers for this are increased construction costs, declining Class A rental rates, and oversupply in core submarkets.

View the rest of this email below:

Apartment Market Summary: April 2013, courtesy of Axiometrics Inc.

Las Vegas Apartment Market Overview - April 2013

sales@alnsystems.com (ALN Apartment Data) — Wed, 22 May 2013 00:00:00 +0000

ALN Apartment Data was founded in 1991 to provide Apartment Locator Handbooks and computer software for virtually every Apartment Locator throughout the Dallas-Fort Worth Metroplex. Since that time, ALN has built a database of highly detailed apartment information which is updated monthly. With the expansion of the internet, ALN created the first ever web-based Apartment Locator Program and soon moved all the Locator traffic to this site. Starting in 1997, ALN expanded our services into Austin, San Antonio and Houston.

In early 1993, ALN introduced a program (which eventually became what is now called ALN OnLine) for brokers, appraisers, management companies and others to allow fast access to Market Data and Statistical Analysis of any apartment in our database. Detailed listings of current rents, specials, occupancy rates and more on any property, as well as statistical informaiton of other properties in any area are also available in a quick, easy to use package.

In late 2003, ALN started its expansion outside the Texas markets. Florida and Arizona were natural areas for us to target since so many of our Online clients also service those markets. Atlanta and Las Vegas were added in 2004 and we are now collecting the initial data for many other markets throughout the country.

Download April 2013 Occupancy Report Here