Fri, Oct. 2, 12:02 PM
- The multi-family vacancy rate edged up to 4.3% in Q3, according to Reis, Inc, up from a post-recession low of 4.2% in Q2. With another 200K new units expected to hit the market this year, look for further increases in vacancies, say some economists. The historical average is about 5.5%.
- "I don’t think this is the death knell for the apartment market, but it is going to be more challenging over the next four to five years than it was over the last four to five,” says Reis' Ryan Severino.
- Rents, however, rose 4.2% year-over-year in Q3, the first time since 2007 above the 4% mark. It's not unusual to see higher rents accompany higher vacancies, as higher vacancies mean new units - usually with higher rents - coming to market. Severino doesn't see rents flattening out until 2017.
- Interested parties: Equity Residential (EQR -0.5%), AvalonBay (AVB -1.1%), Essex Property (ESS -0.7%), Post Properties (PPS -0.8%), UDR (UDR -0.4%), Aimco (AIV -1.1%), Camden Property (CPT -0.3%), Mid-America (MAA -0.4%), Independence Realty (IRT +1%), Preferred Apartments (APTS -0.6%), Investors Real Estate (IRET -1.8%).
Thu, Sep. 17, 2:31 PM
- Income favorites like mortgage REITs (REM +1.6%) and equity REITs (IYR +1.4%) are the knee-jerking upward after the FOMC decided to keep ZIRP in place a least a little while longer.
- The "dots" still say a rate hike (and maybe two) is coming before year-end.
- Annaly Capital (NLY +2.1%), American Capital Agency (AGNC +1.6%), Armour Residential (ARR +1.5%), Two Harbors, (TWO +1.3%), Invesco (IVR +1.6%), Dynex Capital (DX +1.5%).
- Spirit Realty (SRC +2.4%), Health Care REIT (HCN +3%), HCP (HCP +2.3%), Gramercy Property (GPT +1.9%), Post Properties (PPS +2.5%), Brixmor (BRX +1.4%), Kimco (KIM +1.6%), Public Storage (PSA +1.1%), Chatham Lodging (CLDT +2.3%), Stag Industrial (STAG +1.8%)
- ETFs: MORL, REM, MORT, LMBS, IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
Wed, Sep. 16, 4:37 PM
Thu, Aug. 13, 1:37 PM
- According to Zillow, renters spent 30.2% of income on rent in Q2, the highest percentage since as far back as the data go (1979). In comparison, the average between 1995 and 2000 was just over 24%.
- Los Angeles is tops for unaffordability at 49%, with San Francisco not far behind at 47%. In NYC, renters historically have paid about 25% of income for rent, but that has gone up to 41%. Known for being more affordable than other major cities, the luxury condo market has transformed Miami, and renters there now pay 44.5%.
- The solution, naturally says Zillow, is to buy. In most cities, buyers can expect to pay less than 30% of income towards mortgage payments. "Rents are crazy right now," says Zillow Chief Economist Dr. Svenja Gudell.
- For apartment REITs, one is left to wonder how much more room there is to boost rents. Names of interest: Equity Residential (NYSE:EQR), AvalonBay (NYSE:AVB), and Essex Property (NYSE:ESS) - a big player on the West Coast - are the most sizable companies. Also: UDR, Post Properties (NYSE:PPS), Aimco (NYSE:AIV), Camden Property (NYSE:CPT), Mid-America (NYSE:MAA), Trade Street Residential (NASDAQ:TSRE), Investors Real Estate (NYSE:IRET), Independence Realty (NYSEMKT:IRT), Bluerock Residential (NYSEMKT:BRG), NexPoint Residential (NYSE:NXRT).
Mon, Aug. 3, 4:33 PM
Sun, Aug. 2, 5:35 PM
- ADUS, AEIS, AIG, ALDW, ALJ, ALL, ANH, APU, BKD, BMRN, BNFT, CAR, CGNX, CHGG, CKP, CTRP, CYH, DAC, DENN, DK, DKL, ELGX, ELNK, ENH, EPIQ, EXP, FIVN, GGP, HIL, IDTI, ININ, INN, KAR, KBR, KONA, LLNW, LMNX, MCEP, MCHP, MDU, MDWD, MIC, MRC, NLS, NVGS, OHI, ONDK, ORA, OTTR, PLOW, PPS, QEP, QLYS, QNST, RBC, RSPP, RTEC, SGMS, SNHY, THC, TNET, TSRA, TXRH, UGI, VECO, VNO, VNR, WSTC, XL
Mon, Jun. 29, 11:11 AM
- With yields sharply lower on Grexit worry, the badly beaten-up REIT sector is seeing green creep into some of its names, but the IYR is lower by 0.1% on the session.
- Among the gainers: Realty Income (O +0.3%), Omega Healthcare (OHI +0.1%), Medical Properties Trust (MPW +0.8%), Post Properties (PPS +0.4%), Simon Properties (SPG +0.1%), CubeSmart (CUBE -0.6%). Office property and lodging names are mostly lower: Boston Properties (BXP -0.4%), First Potomac (FPO -0.5%), Hospitality Properties (HPT -0.7%), Sunstone Hotel (SHO -0.4%).
- The income sector doing the best is the utility group (XLU +0.8%).
- Previously: Rates plunge on Greece gets ready to default (June 29)
- ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
Fri, Jun. 26, 9:55 AM
- Lone Star Funds this week agreed to buy Home Properties for about $7.6B and two months ago Brookfield Asset Management agreed to buy Associated Estates for roughly $2.5B.
- "There is potential for something more to happen," says institutional REIT trader David Auerbach. "The smaller, local operators could be potential targets."
- Valuation helps too, and though apartments have been one of the best-performing segments in real estate - with near-record occupancy, and rising rents and property values - the stock prices of apartment REITs have failed to keep up.
- Potential targets, according to Jeffrey Langbaum of Bloomberg Intelligence, could be Mid-America Apartments (NYSE:MAA), Camden Property Trust (NYSE:CPT), or Post Properties (NYSE:PPS). All three operate in the South and trade at discounts to the sector's median price/FFO multiple. Their market caps are in the $3B-$6.5B range.
- Other possible targets include Bluerock Residential Growth (NYSEMKT:BRG) and Preferred Apartments (NYSEMKT:APTS) - both with market caps of about $200M, making them easily digestible.
Mon, Jun. 22, 12:48 PM
- Home Properties is up 2.3% after agreeing to sell itself to Lone Star Funds, but the news isn't doing a whole lot to lift M&A animal spirits in the sector for now.
- As part of the deal UDR (UDR +0.5%) will acquire from Lone Star up to $908M of Home Properties' apartments in the D.C. area. The purchase is expected to boost AFFO by $0.015 per share in 2016.
- Presentation slides
- Earlier this year, Associated Estates agreed to sell itself to a Brookfield Asset Management fund, and last year there was Essex Property Trust's purchase of BRE Properties.
- Equity Residential (EQR -0.3%), AvalonBay (AVB), Post Properties (PPS -0.2%), Aimco (AIV +0.2%), Camden Property (CPT +0.1%), Mid-America (MAA +0.2%), Trade Street Residential (TSRE), Investors Real Estate (IRET -0.4%), NexPoint Residential (NXRT -0.5%), Bluerock Residential (BRG -1.4%).
Fri, Jun. 5, 8:20 AM
Wed, Jun. 3, 4:34 PM
Thu, May 14, 4:49 PM
- The team at Wells Fargo finds seven REITs most at risk of a takeover, writes Jake Mooney at SNL Financial. What they have in common are sustained discounts to NAV, market caps less than $5B, and relatively low debt ratios - important because it allows added leverage without violating debt covenants.
- At risk? The higher debt loads following a privatization could be harmful to existing bondholders. Stockholders, of course, might feel differently.
- The seven: Mack-Cali (NYSE:CLI), Education Realty Trust (NYSE:EDR), Equity One (NYSE:EQY), Healthcare Realty (NYSE:HR), Retail Opportunity Investments (NASDAQ:ROIC), Post Properties (NYSE:PPS), and Washington Real Estate (NYSE:WRE).
- In the right environment, why limit candidates to smaller REITs? Stifel's Daniel Bernstein suggests Ventas (NYSE:VTR) could go for the equivalent of a 5% cap rate or $90 per share, given Blackstone paid a 6.2% cap rate for Excel Trust, and Associated Estates sold with a cap rate below 5%. Similar cap rates would produce tasty premiums for HCP, Health Care REIT (NYSE:HCN), Healthcare Realty Trust (HR), and Healthcare Trust of America (NYSE:HTA).
Mon, May 4, 4:40 PM
- Q1 FFO of $38.5M or $0.70 per share vs. $35.1M and $0.64 one year ago.
- Same store communities (50) contain 18.780 apartments. Revenues up 2.4% Y/Y, with operating expenses up 4.3%, producing a NOI gain of 1.2%.
- Average monthly rental rate growth of 2.5%. Average economic occupancy of 94.9% down 40 basis points.
- Announced today is the development of Post Millennium Midtown in Atlanta - 356 luxury apartments in a 25-story high-rise. Total development cost is expected to bey about $90.6M, with a stabilized yield on cost of 6.5%. First apartment deliveries are expected in Q1 2017.
- Conference call tomorrow at 10 ET
- Previously: Post Properties FFO in-line, beats on revenue (May 4)
- PPS flat after hours
Mon, May 4, 4:32 PM
Sun, May 3, 5:35 PM
- ADEP, AEGR, AEIS, APC, APU, ATEN, BALT, BBRG, BKH, CAR, CDE, CGNX, CHUY, CKEC, CXO, DENN, DNB, DVA, ECOM, EGOV, ELNK, ENH, EOG, EOX, FBP, FN, FNF, HIL, IDTI, IM, ININ, INN, INVN, IRG, ITRI, KS, LMNX, LSCC, MATX, MCEP, MDU, MERU, MIC, MUSA, NLS, NUVA, ONDK, OTTR, PACD, PLOW, PPS, PQ, PTCT, QLYS, RAIL, RGR, ROSE, RWT, SGY, SHO, SNHY, STAG, THC, TXRH, UGI, VNO, XEC, XPO
Wed, Apr. 22, 10:02 AM
- Deals in the REIT space are picking up steam, with the latest being today's sale of Associated Estates to a Brookfield fund for $2.5B. Associated Estates has been under activist pressure for a number of months, and one wonders if any other apartment names might be next in line.
- Sector giants Equity Residential (EQR +1.3%), AvalonBay (AVB +1.2%), and Essex Property (ESS +1.2%) don't seem like likely targets, but are nicely higher on the session.
- Others: Post Properties (PPS +1.7%), UDR (UDR +1.6%), Aimco (AIV +1.3%), Camden Property (CPT +1.2%), Home Properties (HME +1.4%), Mid-America Apartments (MAA +1.1%), Investors Real Estate (IRET +0.8%).
- ETFs: IYR, VNQ, DRN, URE, SCHH, ICF, SRS, RWR, KBWY, DRV, REK, FRI, FTY, PSR, FREL, WREI
PPS vs. ETF Alternatives
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