Are Rising Rents Too Much of a Good Thing?

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Oct 19, 2012 12:18 PM, By Bendix Anderson, Contributing Writer

It seems like such good news—apartment rents are rising faster than inflation. That means more profits for real estate investors.

But there’s also a risk. When rents rise faster than the paychecks of your residents, then that puts pressure on their budgets. Eventually they may look for other options. If you’ve carefully marketed your apartment community to a certain set of residents—say retirees or workers at the local hospital—it’s bad news for you if those people can no longer afford… [Full Article]

New Financing Facility Bolsters Waypoint’s Push into Single-Family Rentals

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Oct 9, 2012 11:23 AM, Staff Reports

Waypoint Real Estate Group, which has acquired 2,000 single-family homes since early 2009, has received a $245 million revolving credit facility that will support the continued expansion of a growing portfolio of single family rental homes.

Waypoint is part of a broader trend of large investors attempting to buy up houses in bulk in hopes of institutionalizing the single-family rental market.

The new facility was lined up by members of SNR Denton’s capital markets practice along with Citi.

The facility is for Waypoint’s partnership with Menlo Park, Calif.-based GI Partners. The two entities signed a deal…[Full Article]

Multifamily Occupancy Rates Stabilize, Rent Growth Slows

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Aug 31, 2012 10:32 AM, By Bendix Anderson, Contributing Writer

Apartment rents are still growing across the country, but not as quickly as they were in the summer of 2011, when growth in effective rents peaked.

“Things have slowed since a year ago,” says Jay Denton, vice president of research for data firm Axiometrics Inc., based in Salt Lake City. “The growth rate has slowed for rents… The growth for occupancies is starting to flatten out.”

Axiometrics predicts that average apartment rents will settle into a steady pace of growth over the next few years, similar to rental markets in the mid-1990s, as occupancy rates stay very high.

The percentage of occupied apartments appears to be settling in at close to 95 percent. The national occupancy rate actually dropped very slightly… [Full Article]

Creating Commercial Real Estate Alpha

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by paracap August 9th, 2012

In modern portfolio theory, Alpha is the excess return of an investment above the market or benchmark return. In the capital markets, Alpha is the excess return of common stocks above a benchmark like the S&P 500 Index or the excess return of a portfolio of REIT stocks above the FTSE NAREIT Index.

In CRE, Alpha is the excess return generated by the investment owner/manager above the market return like the NCREIF NPI Index (see the June 15, 2012 VOM for current returns). The Alpha return in CRE as opposed to stocks and bonds is primarily… [Full Article]

Investors Look to Secondary and Tertiary Markets for Multifamily

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Aug 8, 2012 11:53 AM, By Bendix Anderson, Contributing Writer

Investors tired of paying super-high prices for apartment properties might follow the lead of Panther Properties Investment LLC, which just bought the Effingham Parc Apartments, located a few miles outside of Savannah, Ga.

“We are at that point in the cycle when in search of yield, investors look to secondary and even tertiary markets,” says Dan Fasulo, managing director of data firm Real Capital Analytics, regarding the sale, which closed in July.

The Effingham deal could represent the shape of things to come—as investors once again begin to pay respectable prices for class-A assets in these strengthening secondary markets. Panther Properties paid $30.8 million for Effingham, or about $87,500 per apartment for the class-A, 352-unit property. The capitalization rate for the deal.. [Full Article]