Apartment REP Multifamily Blog

Competition Among Banks Heating Up for CRE Lending (Multifamily as "Preferred Target")

Mike@ApartmentREP.com — Fri, 04 May 2012 15:51:00 GMT

Written by Mark Heschmeyer | COSTAR GROUP

While a host of banks are still working through mounds of distressed commercial real estate assets, a number have decided the time is right to jump back in. Those banks that are lending again see lower risk owner-occupied properties and multifamily properties as preferred targets. But with lenders focusing on the same 'safe shelter' property sectors, it is creating widespread competition for the better-quality borrowers in those areas.

The real battle ground may be next year from the coming opportunities in construction and development lending - the one area that more than any other brought down a significant number of banks when the subprime housing loan market collapsed and drove the world economies into a Great Recession.

"The area [of lending] that we see being the most competitive on pricing continues to be the commercial real estate arena, with a lot of players in and including the life insurance companies," said Kirk W. Walters, senior executive vice president and CFO of People's United Financial Inc., a $27 billion bank holding company in Bridgeport, CT, speaking on the company's earnings conference call this past week.

People's United has been active in the New York commercial real estate lending market for a number of years but said it is still under-represented relative to its size and geography.

It recently added to its commercial lending teams on Long Island, as well as in Westchester County.

Robert B. Kaminski, chief operating officer, executive vice president of Mercantile Bank Corp., noted in his call that, "while we are engaging some great new clients, the market still remains very competitive with some banks continuing to lead with low-priced banking."

Mercantile Bank is a$1.4 billion in Grand Rapids, MI. In its first quarter, the bank posted new loan volumes in owner-occupied commercial real estate of $23 million and non-owner-occupied commercial real estate of $14.3 million and commercial/industrial lending of $13.4 million.

Kelly S. King, chairman, CEO and president of the $172 billion BB&T Corp. in Winston-Salem, NC, said the competition is not yet so fierce that existing customers are getting picked off, but he did say that banks are looking for more diversity as their own customer base is dwindling.

"What we have is basically clients that have had real challenges in the marketplace understandably," King to analysts. "In some cases, they've gone out of business. In some cases, their volumes were just really low. And frankly, we're not looking for anything new, and so we are focusing on our risk diversification strategy."

For its part, BB&T is looking to Florida.

"I would say the real estate market in Florida is stabilized and improving. For example, if you go to the Gulf Coast, clearly, prices have firmed up and beginning to go up. Activity is substantially up," King said. "If you go to Miami where, as you recall, there was a huge glut from 28,000 condo units on the market. There's been a major surge of Latin America investors coming in, and the latest report I saw was there's a -- is a 90% -- 93% occupancy. So all of that is because they turned the condos into rental properties. So I'm sure you could probably find some spots of Florida that still have some issues. But overall, I'd [say] it's stabilized to improving."

Where King won't go he said is back to financing the super high-rise, office buildings and hotels that other banks may be doing.

Monte N. Redman, president and CEO of the $17 billion Astoria Financial Corp. in Lake Success, NY, said, "The vast majority of the pipeline is multifamily. In fact, previously we had probably a 75%-25% breakdown between multifamily and commercial real estate with our legacy loans, but in terms of our new closings and new pipeline it is much more weighted toward multifamily."

In the first quarter, Astoria closed about the $340 million of loans, almost $200 million of that was in March.

On the West Coast, Cort O'Haver, executive vice president commercial banking of at the $12 billion Umpqua Holdings Corp. in Portland, also said apartments are the property of choice.

"Last year we put into place couple of real estate teams in the Seattle, Portland and now we have a team in Walnut Creek, CA. So, the growth is primarily coming out of those metropolitan markets," O'Haver said. "The product of choice right now is mostly apartments which we started seeing some opportunities in early last year."

"We are seeing a lot of aggressive pricing and we walk away from a good percentage of deals on price," O'Haver said.

Fighting for Stabilized Class A CRE

Richard K. Davis, chairman, president and CEO, of the $336 billion U.S. Bancorp in Minneapolis, MN, said the two coasts are where the activity is most competitive.

"For commercial real estate, where we'll see strength are on the coasts and the larger cities that kind of line the two oceans," Davis said. "We don't see any other distinct geography to note."

U.S. Bancorp is picking up loan growth in stabilized properties Class A properties, a lot of them with institutional investors.

Joseph Ficarola, chairman, president and CEO of New York Community Bancorp, said that his $42 billion holding company in Westbury, NY, is only targeting the best borrowers.

"We had a couple of very attractive large commercial loans that we decided that we would actually do. The market is rich with assets of that caliber," Ficarola said. "We have not chosen to continually add these large loans to the portfolio. There were only two out of the ordinary in the quarter."

The two loans in size were about $400 million in combination and one of the borrowers was Vornado Realty Trust.

"Vornado is a party that we've been doing business with in the past, obviously a very strong sponsor, very, very attractive property, very good loan," Ficarola said. "So it's not something that we're actively involved in, meaning there is far more product on the table that we could choose to do than we obviously do, and in that unique circumstance we decided that that was a loan that we'd be willing to do."

Continuing, Ficarola said, "This is maybe unique to us and not to others, but the reality is we lose less money on commercial than we lose on multifamily, and it doesn't change our risk profile at all," he said. "So the way we lend is demonstrated by the way we lose, as is the case for every single lender in the nation. Certainly, we have lost significantly less on commercial than we've lost on multifamily."

Gerald P. Plush, president and COO of Webster Financial Corp., a $19 billion institution in Waterbury, CT, is also sticking to nonresidential.

"Our commercial real estate lending is another bright spot with investor and owner-occupied CRE balances up about $41 million, or 2% on a linked quarter basis and $211 million or 9.5% year-over-year with originations more than doubling year-over-year," Plush reported.

Between the coasts, many of the regional Midwest bank holding companies are following the $54 billion Huntington Bancshares Inc.'s lead.

"The natural resources boom from the Utica and Marcellus shale covers half the states in our footprint, and the multiplier effect of the E&P, exploration and production, investment is clearly evident within the commercial real estate and the growth in jobs relating to steel, construction, and broader chemical industrial complexes," said Stephen D. Steinour, chairman, president, and CEO of the Columbus, OH-based Huntington. "We are clearly capitalizing on the benefits of this recovery, as evidenced by improving credit quality, growth in SBA loans, and eight consecutive quarters in commercial loan growth. The Midwest is an exciting place to be and Huntington is right in the middle in capturing a disproportionate benefit from this recovery."

Construction & Development Lending: It's What We Do Best

The most unapologetic return to aggressive lending for commecial real estate though was heard from George Gleason, chairman and CEO of the $3.8 billion Bank of the Ozarks Inc. in Little Rock, AR.

"In the quarter, our commercial real estate book went up $30 million," Gleason told analyst. "It went from 37.6% of the portfolio at year-end 2011 to 39%. Our construction and development loan book went up $10 million from 25.4% of the total portfolio to 25.8%. Our multifamily went down $10 million and part of that was - we had about $15 million pay-off in that book."

"So, the commercial real estate and the construction development book both grew in the quarter and I would expect that's going to be just the way we are going - that's what we do best. We are really good at that and that's what we are going to continue to do and that's where most of our growth is coming," Gleason said.

"If we generate the growth in that book that I would expect over 2012, '13, '14 and probably continuing beyond that, we will have a really high concentration of those types of loans and we totally understand that," Gleason said. "But we are looking at it within those categories we are looking at broad based diversification of the portfolio based on geography; broad based diversification of the portfolio based on product type, tenant, users and the real key is not how much of it you have, the real key is how well unwritten is it."

"We're going to live in [that] world and if you are [a] shareholder in our company, you are going to be investing in a company that is a construction and development and CRE lender," Gleason said. "We are really, really good at it and we know we are heavily concentrated in it."

Bank of the Ozarks will be opening a new office in Atlanta in June that will be a satellite office of its Real Estate Specialties Group team. The bank will also be opening a second office in Mobile, AL, later this year. It is relocating its Bluffton, SC, and Wilmington, NC, offices to new expanded facilities and relocating its Charlotte loan production office into a full-service banking operation in a new facility it is building there.

"We think there is really good potential in the Southeast and that's going to be a real important growth area for us in the future," Gleason said. "That's going to be much more 2013, 2014, 2015, than it is 2012 growth, but you've got to put the platforms in place and build what you need to capitalize on those future opportunities now. So we want to start getting in and really carefully cherry pick and mining some good business opportunities."

Market Conditions Improve for Apartment Industry

Mike@ApartmentREP.com — Mon, 30 Apr 2012 18:54:00 GMT

Written by MULTIFAMILYBIZ.COM

WASHINGTON, DC - Optimism continues for the apartment industry, according to the latest results of the National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The findings reflect a gradual recovery for the multifamily sector that faced a 50-year low in apartment starts in 2009.

The Q1 2012 survey’s four indexes measuring Market Tightness (74), Sales Volume (57), Equity Financing (62) and Debt Financing (65) remained above 50 for the eighth time in the past nine quarters. Any number above 50 indicates quarter-to-quarter growth.

“Market conditions improved across the board, even from the rather strong level of three months ago,” said NMHC Chief Economist Mark Obrinsky. “Demand for apartment residences – and apartment properties – continues to grow. We anticipate this increasing further in the coming years due in part to the large number of younger households moving into the housing market and a greater preference shown for renting.”

“The strength of the sector’s recovery has attracted capital to the industry,” said Obrinsky. “But our latest survey finds that capital is largely targeted at top-tier properties in core markets and not widely available throughout the U.S. Fully 79 percent of respondents said capital was constrained either by property type, by market or both.”

Key findings include:

Capital availability lacks uniformity. Only 17 percent of multifamily firms reported that capital is available for all property types in all markets. By contrast, 36 percent said it is constrained in secondary and tertiary markets and 34 percent said it is constrained for all properties other than top-tier ones – even in primary markets. 
The Market Tightness Index increased to 74 from 60. Nearly half (49 percent) reported tighter markets – reflecting lower vacancy rates and/or higher rents – compared to only one percent reporting looser markets. 
The Debt Financing Index declined to 65 from 74. As the only index that dropped below 50 in the past nine quarters (48 in Q4 2010), borrowing conditions continued to improve for the industry. Just four percent believed conditions worsened from last quarter, compared to 34 percent who reported improving conditions. 
The Sales Volume Index rose to 57 from 50. This continues an 11-quarter run above 50, and some reports from the field suggest that volume could be even higher if more product was available. 
The Equity Financing Index grew slightly to 62 from 60. One third of respondents reported quarter-to-quarter equity financing as more available, compared to nine percent reporting less availability.

Full survey data are available at the NMHC Website.

About the survey: The April 2012 Quarterly Survey of Apartment Market Conditions was conducted April 16-23, with 91 CEOs and other senior executives of apartment-related firms nationwide responding.

Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC’s members are the principal officers of firms engaged in all aspects of the apartment industry, including owners, developers, managers and financiers. One-third of Americans rent their housing, and over 14 percent live in a rental apartment.

Source: NMHC / #Apartments #Multifamily

Park & Market Apartments at North Hills in Raleigh Sold for $82 Million

Mike@ApartmentREP.com — Wed, 25 Apr 2012 15:34:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

In a record-breaking deal that further validates investors belief in the strength of the Triangle apartment market, developer John Kane has sold the Park & Market apartments at North Hills for $82 million.

Dallas-based Crow Holdings, the investment arm of the Trammell Crow family, paid $200,489 per unit for the apartments, which opened in 2010 on the east side of Six Forks Road.

That shatters the Triangle record for the most ever paid for an apartment complex on a per unit basis. The previous highest was last year’s sale of the Oberlin Court apartments in West Raleigh for about $180,000 a unit.

To get close to $200,000 a unit you have to go to Charlotte, where The Catalyst apartments in the city’s uptown sold for $195,000 a unit last year.

“It’s a big number,” Kane said of the sale price.

He said it’s a validation of both North Hills’ success and the kind of apartment living that Park & Market offers.

The sale does not include any of the retail beneath the apartments. The complex features elevator access to a Harris Teeter on the ground floor that is open 24 hours.

The price paid for Park & Market is yet another indication of why so many developers are now scrambling to get apartment projects out of the ground. With investors struggling to find good returns elsewhere in a low interest rate environment, apartments have become an attractive asset to own because rent growth in places such as the Triangle has been fairly strong in recent years.

The region’s growing population, and steady stream of new graduates coming out of the local universities, only increases investors belief in the market’s long-term viability.

The Triangle is now on pace to record more than a billion dollars in apartment deals this year, with $342 million completed thus far, according to real estate firm CBRE. Last year, investment sales of apartments in the Triangle totaled $966 million.

New apartment projects are now rising all over the Triangle, including four projects near downtown Raleigh, in Brier Creek and Morrisville. Scores more have been proposed but have yet to secure financing and break ground.

Park & Market’s 409 units were 91 percent occupied as of mid-March, according to data from Karnes Research and the Triangle Apartment Association. Rents in the complex range from $1,030 for a studio to nearly $1,700 for some two-bedroom apartments.

Trammell Crow and Kane Realty know each other well. The two partnered to build the 297-unit Alexan North Hills apartment complex in 2005 on the west side of Six Forks Road. That property was sold in 2006 for what, at the time, was a record price of $159,933 a unit.

Kane said he isn’t looking to sell any other pieces of North Hills. Kane Realty and Concord Hospitality Enterprises are now building a $40 million second hotel in the section of North Hills where Park & Market is located.

Kane also appears to have saved his struggling Ramblewood residential project just south of North Hills. He’s auctioning off 11 condominiums and townhouses in the development next month, and said this week he has brought in an equity partner and reached a deal to buy the debt on the project back from Charlotte-based Mountain Real Estate Group.

Kane was in default on nearly $26 million in loans when Mountain purchased the debt from BB&T in December.

And Kane says he has secured an equity partner for a new apartment project in Ramblewood and expects to begin construction on the project within the next 30 to 45 days. That project, which is expected to include about 420 units, involves tearing down the 1960s-era Lantern Square apartment complex.

“We’re not typically a seller,” Kane said.

Changes coming for Durham's 'homey' Ninth Street with Apartments, Retail and more

Mike@ApartmentREP.com — Wed, 18 Apr 2012 15:36:00 GMT

Written by Jim Wise | TRIANGLE NEWS & OBSERVER

For Ninth Street business people, their area’s near future appears to be, at best, a mixed blessing.

With plans under way for a 303-unit apartment complex , a big-box grocery store, a hotel, maybe a new bank and probably more to come, the old West Durham business district may see a surge in customers.

At the same time, it’s an open question whether Ninth Street can hang onto the qualities that make it Ninth Street in the first place.

“It’s a little bittersweet,” said Carol Anderson, owner of the Vaguely Reminiscent women’s clothing shop. “Change is always scary, and it’s a big change.”

Change includes:

• Circle Ninth Street, a $47 million apartment project that broke ground in February on a six-acre site between Erwin Square and the Erwin Mill Building.

• A 122-room Hilton Garden Inn, expected to open in 2013 on a 2.7-acre tract facing Main Street, next to Circle Ninth Street.

• A 53,000-square-foot Harris Teeter supermarket, on the Hillsborough Road side of Circle Ninth Street beside the former George’s Garage building.

• A 3,400-square-foot bank, with drive-through, on what is now a parking lot on the west side of Ninth Street.

• City leaders’ encouragement for more intense, mixed-use construction around a future light-rail stop.

“There are concerns, certainly,” said Tom Campbell, who opened the Regulator Bookshop on Ninth Street in 1976. “Ninth Street has been a stronghold of locally owned, independent businesses for many years, and the new developments are not going in that direction, to say the least.”

Traffic congestion and lack of parking are already problematic, he said.

“Growth could be a good thing,” said Gary George, who owns the Barnes Supply garden store. “It could increase the (number of customers), but I don’t see how this street or this neighborhood can handle the traffic, especially the parking.”

Ninth Street developed as a business district to serve the village around the Erwin Mills textile complex. It began a transition in the 1970s as entrepreneurs such as Campbell brought a counter-culture flavor onto the street, catering to the Duke University population and the residents reinvigorating what is now Old West Durham.

‘Great, homey feeling’

“It has a great, homey feeling,” said Shelly Green, CEO of the Durham Convention and Visitors Bureau. “There’s great things to see on Ninth Street: the quirky businesses you have there, you have great bars and restaurants, I think it’s just a very desirable location.”

As it stands, Ninth Street is characterized by the two-story brick commercial buildings along the east side, dating mostly from the 1920s. New zoning went into effect in January, intended to protect the existing character and ensure that new development complements it, making gradual transition in scale to bigger buildings to the west and to the residential area on the north.

“Until the Ninth Street plan passed ... someone could have build an eight-story building on Ninth,” said Brett Walters, president of the Old West Durham Neighborhood Association.

Unsure what changes will do

Whether Ninth Street keeps its homey character, though, is “a big question,” he said.

“Our hope is that by limiting the height of buildings on the east side ... the tenants can remain small and local businesses” and the street won’t become a province of chain stores.

But Ninth Street already has some chain operations, said Gary Kueber, creator of the Endangered Durham and Open Durham web sites.

“Bruegger’s (Bagels) is one of the longest-standing businesses on that strip ... and some others that aren’t home-grown Durham,” Kueber said. He is confident that Durham will keep the flavor of Ninth Street.

“It’s really about who the people in Durham are and who’s attracted to Durham,” he said. “And as long as they are who they are, they’re going to be attracted to businesses that are eclectic and different.”

New Apartments Planned Near Crabtree Valley Mall in Raleigh, NC

Mike@ApartmentREP.com — Thu, 12 Apr 2012 10:54:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

When the South Carolina developer EYC Companies bought the 71-unit Richmond Hills Apartments early last year [the sale was represented by Jim Scofield of Apartment REP in Raleigh, NC], the original plan was to spiff up the shuttered complex near Crabtree Valley Mall and reopen it.

After paying $1.65 million for the property, and spending less than $1 million renovating it, Richmond Hills reopened its leasing office in July.

Although the complex has been leasing units at good pace, EYC’s long-term plans changed last fall when four acres of adjacent land came on the market. The company bought those sites for $1.55 million and began making plans to eventually tear down Richmond Hills and replace it with Crabtree North, a new 500-unit apartment complex and parking deck.

The project passed one major hurdle last week, when the Raleigh City Council approved a rezoning request for the 9-acre site.

Crabtree North represents a return to the development arena for EYC, which three years ago moved its headquarters from Raleigh to Folly Beach, just outside Charleston, S.C. Like many real estate firms, EYC has spent the past few years trying to salvage deals that ran into trouble when the market imploded.

“This financial thing hit us really hard,” said Ellis Coleman, 56, the company’s founder. “ ... Just working your way through that sudden devaluation of assets has taken us two solid years.”

EYC jointly owns and manages about 800 apartment units in the Southeast, including the 128-unit Grace Park community in Morrisville. The company’s recent struggles were mostly related to single-family residential and condominium projects that it was involved in when the market turned.

Apartments have been about the only new commercial real estate construction that lenders have been willing to finance. But Coleman said for small companies such as his, financing remains extremely hard to come by.

“We’re starting to talk to some banks just this quarter,” he said.

EYC has majority equity partners in the Crabtree North project that have enabled it to be basically debt-free at this point.

The developer is continuing to lease units in Richmond Hills even while it moves ahead with plans to eventually replace the complex, which was built in the early 1970s.

“It sounds kind of strange to do it that way but it takes so much time to get through the city,” Coleman said.

When EYC bought Richmond Hills it was in a decrepit state. The windows were knocked out, making it a home for vagrants and a destination for anyone looking to steal copper wiring.

If the company had made no improvements to the property, EYC ran the risk that the city might condemn it at some point. Coleman anticipates it will take at least six months to get site-plan approval from the city for Crabtree North, and another six months to get the entire project permitted.

“At some point, if our project is going forward, we’d have to start letting people know when the end of the lease is,” he said. “A year lease right now is not an issue at all.”

If Crabtree North moves forward without any hiccups, Coleman believes EYC and its equity investors will get back the money spent improving Richmond Hills.

As for Crabtree North, it plans to offer rental rates that are on par with nearby competitors such as The Tribute and The Pointe at Crabtree. Coleman believes the project’s location will be appealing to renters seeking close proximity to the greenway and the mall.

As with any project proposed near Crabtree, most of the concerns that have been raised involve traffic. (The City Council voted 7-1 to approve the rezoning, with only the mayor opposing.)

Coleman takes the view that adding more housing close-in will ultimately improve the situation.

“It is the cure to the problem long-term,” he said. “You can build roads until you’re blue in the face, that’s just going to make more people drive.”

As for EYC, it continues to keep its construction office in Raleigh, and the company is now focused more on the site development aspect of its business. Although the company has always been small, the past few years have seen its staff to shrink from a dozen employees to about six today. But that’s preferable to the fate that’s befallen many other developers.

“We’re still around,” Coleman said. “We’re a lot smaller than we were. But we’re still here.”

Rezoning Approved for Redevelopment of Crabtree Valley Mixed Use Residential Project

Mike@ApartmentREP.com — Mon, 09 Apr 2012 20:09:00 GMT

Raleigh, NC - April 9, 2012 – On Tuesday, April 3rd, the owners of a 9-acre property located near Crabtree Valley Mall received a 7 to 1 vote from the City Council to approve their rezoning request, a major step in a plan to bring moderately priced high density housing to this job corridor.

As the property is located on Charles Drive just northwest of the intersection of Lead Mine Road and Glenwood Avenue, the impact to peak hour traffic was studied carefully. A Traffic Impact Analysis reviewed by the City’s Transportation staff determined that compared to the property’s current use, the Crabtree North development would increase overall delay by 6 and 9 percent during peak morning and evening drive times, respectively. The study also analyzed the impact were the property to be developed
under its existing Office and Institution 1 zoning. In comparison, the proposed development would increase overall delay at the intersection by just 3 and 7 percent during peak periods.

Crabtree North, LLC, the property owner, traded their existing O&I zoning for one that allows mixed use residential. Conditions of the rezoning limit the number of homes and retail to reduce the traffic impact. “We believe our plan speaks to the concerns about
traffic in this area by putting workers closer to their places of employment translating to less miles driven and relieving the area of some of the commuter traffic,” states Crabtree North representative Ellis Coleman. “Additionally, high density housing here makes
sense because many primary trips to jobs, greenways and retail can be walked or cycled.”

The City’s Planning Commission, which voted unanimously in favor of the proposal on March 13th, found that the Crabtree North zoning request “is consistent with the Crabtree Area plan” and that “the site is ideal for redevelopment into higher density residential and limited retail uses without significantly impacting the overall traffic circulation in this area.”

Under the conditions of the zoning approval, Crabtree North has dedicated a 60-foot right-of-way needed to facilitate pedestrian and vehicular access to Glenwood. A high level of commitment has also been required regarding the quality and appeal of streetscape elements of the project. The community will include green features relevant to an urban in-fill project including covered bike spaces and parking spaces with outlets for electric car charging.

Mr. Coleman noted that one of the most appealing aspects of Crabtree North is that it is a redevelopment of an obsolete multi-family property designed and built in the early 1970s. “The project will re-energize this corner of the Glenwood/Lead Mine intersection while remaining true to the City’s vision for future development of this corridor,” Mr. Coleman said.

During a March meeting of the Raleigh Comprehensive Planning Committee, a representative for Crabtree Valley Mall publicly stated their support for the addition of nearby high density residential developments and road and pedestrian bridge connections from these areas to the mall property.

Multifamily Mortgage Activity Enjoys Upswing

Mike@ApartmentREP.com — Thu, 29 Mar 2012 19:51:00 GMT

Written by Mark Heschmeyer | COSTAR GROUP

The multifamily mortgage market continues to experience an increase in lending activity from a variety of participants. Although the GSEs and FHA have been the primary participants, there has also been renewed interest from portfolio lenders, banks and thrifts and commercial mortgage-backed securities issuers, according to new research from Fannie Mae.

Based on publicly-available company reports, Kim Betancourt, director multifamily economics and market research for Fannie Mae, said Fannie Mae and Freddie Mac saw the first increase in their total dollar volume of multifamily mortgage and securities acquisitions (purchases and securitizations) last year after three consecutive years of declines. In 2011, Fannie Mae acquired $24.4 billion in multifamily mortgage loans and Freddie Mac acquired $20.3 billion.

During 2011, there was also an increase in multifamily CMBS issuance, totaling 16 deals. The multifamily collateral underlying the securities consisted of traditional multifamily units, manufactured housing parks and mixed-use properties. Although the conduits saw an increase in activity earlier in the year, issuance stalled during the third quarter of 2011, partly exacerbated by the Standard & Poor's ratings withdrawal on the $1.48 billion Goldman Sachs-Citicorp CMBS deal.

While multifamily CMBS saw an increase last year, it is important to note that the segment is still far from its previous issuance levels. For example, multifamily CMBS issuance levels were approximately $36 billion annually in 2006 and 2007.

Life insurers had their second best year on record in multifamily in 2011, reaching $11.1 billion in commitments on 517 loans. This is a significant increase from $4.6 billion in commitments on 244 multifamily loans in 2010. In 2006, during the height of the last commercial real estate cycle, the life insurers had their best year on record in multifamily commitments, reaching $11.2 billion.

Throughout 2011, the life insurers were determinedly competitive in their pursuit of multifamily commitments. At $11.1 billion, multifamily represented nearly 25% of all life insurer commercial real estate loan commitments last year.

Banks and thrifts saw a significant increase in total net multifamily real estate holdings during 2011, with the FDIC reporting a net increase of $5.8 billion. Fourth-quarter 2011 net multifamily holdings rose by $1.6 billion, slightly higher than the $1.1 billion increase during the third-quarter, but still below the second quarter's revised increase of $3.6 billion.

Betancourt said Fannie Mae expects the 2012 multifamily mortgage activity level to be similar to 2011 for a number of reasons, including interest rates likely remaining near or at current levels; low cap rates keeping apartment buyers and sellers in the market; apartment sales staying healthy due to an ongoing dearth of new apartment construction coming online resulting in fewer new competing apartment units; and continued improvement in job growth.

As Lending Has Increased; Delinquencies Have Declined

Commercial and multifamily mortgage delinquency rates declined during the fourth quarter of 2011, and have fared better through the credit crunch and recession than any other major type of loan held by banks and thrifts, according to two reports released by the Mortgage Bankers Association (MBA).

During the fourth quarter, the 60+ day delinquency rate for loans held in life company portfolios fell 0.02 percentage points to 0.17%. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac fell 0.11 percentage points to 0.22%. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts fell 0.20% to 3.55%. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) fell 0.36 percentage points to 8.56%. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae increased 0.02 percentage points to 0.59%. These and other figures come from MBA's Commercial Real Estate/Multifamily Finance Mortgage Delinquency Rates for Major Investor Groups report.

"Commercial and multifamily mortgage delinquency rates continue to stabilize and improve in parallel with the broader economy," said Jamie Woodwell, MBA's vice president of commercial real estate research. "And counter to what many have predicted, commercial mortgages have proved to be neither 'the next shoe to drop' nor a 'ticking time bomb' for the banking sector or the economy as a whole. The data show that, to the contrary, commercial and multifamily mortgages have generally performed well for most investor groups and have been the best performing loans held by banks and thrifts through this recession."

Over the course of 2011, and throughout the credit crunch and recession, commercial and multifamily mortgages have had the lowest charge-off rates of any type of loan held by commercial banks and thrifts. In 2011, banks and thrifts charged off 0.84% of their balance of commercial mortgages and 0.74% of their multifamily mortgages, compared to charge-off rates of 1.22% and 1.24% respectively in 2010.

By contrast they charged off 0.89% of their balance of commercial and industrial loans, approximately 1.43% of their one-four family residential loans, 1.25% of other (non-credit card) loans to individuals, 3.33% of their construction loans and 5.45% of their credit card loans. Commercial and multifamily charge-off rates tend not to rise as rapidly as other charge-off rates during the onset of a recession and tend not to decline as rapidly as others during the onset of a recovery.

High-rise Apartments Pitched for Downtown Raleigh

Mike@ApartmentREP.com — Wed, 28 Mar 2012 18:19:00 GMT

Written by Matt Garfield | TRIANGLE NEWS & OBSERVER

RALEIGH -- A Triangle developer has added a high-rise apartment building to plans for the Edison, an ambitious downtown project showing signs of life after a recession-induced slumber.

The glass-and-steel tower will make a bold addition to Raleigh’s skyline, Gregg Sandreuter told City Council members Tuesday at a budget and economic development committee meeting.

At 20 to 22 stories high with ground-level retail, the 320-unit building will anchor the northeastern corner of the Edison development, situated on a downtown block bordered by Blount, Davis, Wilmington and Martin streets.

By comparison, the nearby PNC Plaza tower is 33 stories.

“It’s a pretty exciting project if he can pull it off,” City Manager Russell Allen told council members.

Sandreuter said he’s working with a corporate partner on financing and hopes to submit a site plan in the next two to three months.

“We’re working our best to fast-track the project,” Sandreuter said.

Plans for the Edison have gained momentum in recent months. But the project, which once imagined four towers, has been scaled back since its inception in the mid-2000s.

Sandreuter now proposes a six-story mix of apartments and shops on the southern portion, where a 24-story office tower was part of the original plan.

Construction on the initial phase would begin by October 2013 and be complete by March 2015, according to an agreement with the city.

Urban market a possibility

A grocery store would be a welcome addition, said City Councilman Randy Stagner. Downtown advocates have long pleaded for a grocery within walking distance, calling it a key step in the revival of downtown.

Sandreuter said he would be willing to offer rent-free space to a grocery. But conversations with Harris Teeter and other grocers suggest the market is not ready.

“All grocers that I know of, who have looked at downtown, say we just don’t have enough people yet,” he said. “We just don’t have the demographics to support it.”

About 5,000 people live in downtown, according to the Downtown Raleigh Alliance. A small urban market would be more realistic in the short-term, Sandreuter said.

Parking deck is key

A parking deal with Raleigh is key to getting the Edison project off the ground.

Sandreuter worked out a rent-to-own deal with Raleigh officials for part of the 1,224-space Blount Street parking deck that divides the block on which Edison would be built. Highwoods Properties built the deck in 2008 to support the RBC Plaza.

Sandreuter previously agreed to lease 300 spaces and give the city $8.3 million over 20 years, after which the developer would own the spaces.

To accommodate the proposed high-rise, Sandreuter now proposes a similar rent-to-own deal for the remaining 396 spaces. The City Council will vote Tuesday on the agreement.

The city would be able to collect parking fees from the spaces in the Blount Street deck during hours when many residents are at work, which would help Raleigh generate income to deal with its parking-revenue deficit.

Construction Employment Increases in North Carolina

Mike@ApartmentREP.com — Tue, 27 Mar 2012 16:24:00 GMT

Written by TRIANGLE BUSINESS JOURNAL

Construction employment in January in North Carolina topped levels from a year before, according to data compiled by the Associated General Contractors of America.

Statewide, construction employment — which includes the mining and logging industries — stood at 172,400 in January, compared to 168,000 in January 2011.

West Raleigh Apartments Sell for $42 Million

Mike@ApartmentREP.com — Fri, 23 Mar 2012 14:04:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

An Atlanta real estate company has bought the Villas at Centerview apartments in West Raleigh for $42 million, according to Wake County property records.

Centennial Holding Company purchased the 374-unit complex from Boston Capital Real Estate Partners. Centennial also owns the Century Creek apartments in Durham and the Century Carrington Park apartments in Morrisville.

Villas at Centerview opened in 2007.

It was 94 percent leased as of Dec. 6, according to Karnes Research and the Triangle Apartment Association.

North Carolina braces for 'Hunger Games' impact

Mike@ApartmentREP.com — Fri, 23 Mar 2012 13:53:00 GMT

Written by Dane Huffman | NBC17.com

RALEIGH, N.C. -- From water falls near Hendersonville to abandoned buildings in Shelby, North Carolina expects major exposure – and long-term impact – from the unveiling of “The Hunger Games” film this weekend.

The film, which opens Friday, was shot entirely in North Carolina – “every frame,” Aaron Syrett, director of the North Carolina Film Office, said with pride.

The impact of the film could be far-reaching. The books, by Suzanne Collins, have sold millions of copies. Syrett said Lionsgate Films has an “incredible” marketing campaign behind the film.

“You can’t buy a billboard this large,” Syrett said Wednesday. “It will have a tremendous tourism impact for years to come.”

The film used more than 4,000 extras, all of them from North Carolina, and also had a crew of around 500, the majority of them coming from the state.

The film is about a post-apocalypse society in which the Capitol demands tribute from the surrounding regions by having one boy and one girl compete in the Hunger Games. The games are nationally televised, and only one teen survives.

The filmmakers needed run-down buildings and warehouses for the dark film, and found them in places like Shelby.

"It was a mill town with company houses and all that that we were able to shoot in. That was quite a lucky find," director Gary Ross told NBC.

Shelby became “District 12,” the home of several of the film’s main characters. Shelby officials expect tourists to visit just to see places the film used.

Other areas in western North Carolina became essential to the film as well. “The Hunger Games” was shot at an abandoned cigarette factory around Charlotte. Another scene was shot at Triple Falls, a popular waterfall at DuPont State Forest near Brevard.

Syrett said North Carolina already has 10-15 films either in prepping, shooting or wrapping up now. And “The Hunger Games” will help the state continue to attract the industry.

“It’s really a small industry,” Syrett said. “Everybody knows everyone and they talk. This will be the main topic in Los Angeles for the next few weeks.

“And we’ve done a good job of letting people know it was shot in North Carolina. We certainly have seen a volume of level of interest in North Carolina rise in the past year or so because of it.”

But, he said, “I think Monday will busy day for us.”

And right after “The Hunger Games,” another blockbuster is ahead. Syrett said “Iron Man 3” is in prepping mode now, and shooting will begin soon.

Any hints on where? The Triangle, perhaps?

“I can’t say right now,” he said.

Holly Springs Wants Piece of Apartment Boom

Mike@ApartmentREP.com — Fri, 23 Mar 2012 13:41:00 GMT

Written by Andrew Kenney | CARY NEWS

HOLLY SPRINGS - As a wave of apartment buildings rises across the nation, town leaders hope to direct urban-style development to Holly Springs, which has little high-density housing.

New apartments are crucial to Holly Springs’ maturation, according to town leaders and staff, who are redrafting the town’s policies for high-density residential development.

Strategically-placed apartment projects could bring new transit routes to the area and house the workers of high-tech companies, they say.

“Right now, Holly Springs is still very much family-oriented. But ... you’re turning up with a lot more younger people that aren’t getting married, or getting married later in life, and they like to rent,” said Planning Director Gina Clapp. “Our goal is to make sure we offer the full gamut.”

Single-family homes currently dominate the town of about 25,000 people, with 9 houses to every apartment or attached unit, according to a recent survey. Neighboring towns have 3 to 5 houses per “multi-family” unit, according to the 2010 American Community Survey of a sample of residents.

Town staff want to guide new apartments to a few key, high-density commercial intersections.

Early plans highlight the New Hill Place shopping center, currently under construction on the N.C. 55 Bypass; the Ralph Stephens Loop, near the Walmart south of downtown; and at Kildaire Farm Road and Holly Springs Road, where an I-540 interchange could arrive by the end of the year.

The town currently has a half-dozen apartment or multi-family complexes, plus two more scheduled for construction and three waiting in the wings.

“There’s a need, and we just don’t have a supply,” said Councilman Tim Sack.

Early this month, he and the Holly Springs Town Council approved a reassessment of the documents that govern apartment developers.

Besides defining potential new locations for apartments, the town may also create a new path for denser apartments: The town could allow more units per acre for projects linked to mass transit routes.

Currently, the town caps densities at 15 units per acre, except for mixed commercial-residential projects. High-density residential areas, according to a town report, are key to the success of light rail and bus systems. That’s something the town wants, as its residents have virtually no transit options.

The land surrounding the New Hill Place mall might be prime turf for a “transit-oriented development,” as it’s set to host the town’s first park-and-ride bus station within two years.

The town also will ask just how many apartments the town’s real-estate market can support. Apartment complexes have remained a strong bet for developers and banks, so the town may see more proposals in the coming months and years.

“Most likely, Holly Springs is going to have a limit for the amount of apartments that we can absorb,” Clapp said.

But while the town has seen several new apartment complexes, it may not see the same boom as the heart of the Triangle, said Jim Scofield, of Apartment Real Estate Professionals. Most of the 11,000 apartment units planned for the region are headed for places like Cary and Raleigh, he said.

“The Triangle is bracing itself for perhaps even over-construction, but the outlying markets, that are far away from the job centers, are not going to see very much, if at all,” he said. “Until Holly Springs is close to lots of job centers, it will be a secondary development location.”

For towns on the receiving end, apartment growth has brought its pitfalls. In Cary, a developer aggravated a residential neighborhood by proposing a high-end apartment complex for an empty nearby lot. But Holly Springs may avoid that problem, Clapp said, because it’s young enough to shape development and constrain its high-density areas.

But Sack acknowledged that even good planning might not blunt conflicts. “You’re always going to have that,” he said. “You’re going to be locating those places near commercial development, and usually there’s residential near there also.”

Town staff may finish draft changes to the apartment policy in three months, at which point the council will hold a public hearing on the proposal.

Apartments BOOM in Orange County, North Carolina

Mike@ApartmentREP.com — Tue, 13 Mar 2012 14:55:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

The 85-unit Shortbread Lofts is planned for West Rosemary Street, not far from the Greenbridge condominiums.

For the record, the proposed color of the recently approved Shortbread Lofts apartment complex in Chapel Hill isn't technically mustard yellow.

"When you actually see the color and see the color chip, it's more of what I'd call a sandstone color, and it's not a mustard yellow," said Phil Post, an engineering consultant on the project. "Now whether it's going to stay that (color) I don't know."

Given the current strength of the Triangle apartment market - and the Chapel Hill market in particular - one could make the case that the 85-unit project could be royal blue and still succeed.

With its tight supply and high barriers to entry, southern Orange County has long been among the best performing markets in the Triangle. Now, at a time when the apartment market is benefiting from the woes in the housing market, that is even more the case.

"The student population keeps slowly rising every year along with the support staff," said Larry Short, who is developing the project along with brothers Bill and Roy Piscitello, owners of Breadmen's restaurant. "Chapel Hill's pretty insulated from economic fluctuations."

Two-thirds of the apartment properties in Chapel Hill, Carrboro and Hillsborough have vacancy rates of 5 percent or lower, according to MPF Research, which analyzes apartment data in 64 U.S. metro markets. The average monthly rent in Chapel Hill in the fourth quarter of last year was $890, or $43 more than the entire Triangle.

Only north Cary/Morrisville and central Raleigh had higher average rents.

"Chapel Hill is still a strong submarket, and it's still tough to find vacancies in the most desirable apartment properties," said Jay Parsons, a market analyst with MPF.

The town's apartment vacancy rate has actually risen over the past year, from 4.5 percent to 6.3 percent, but Parsons attributed that to high vacancies at a handful of the larger, more affordable properties.

Shortbread's market

Affordability - and color scheme - were among the issues raised by those who had concerns about Shortbread Lofts. The apartments are to built on West Rosemary Street near the Greenbridge condominiums, another project that raised concerns with its design and proximity to established residential neighborhoods.

The project's color and some of its design elements could change, as a community design commission will ultimately have to approve the details in a process that is likely to include several public meetings.

Shortbread Lofts was first proposed in 2007.

The developers shelved the project when the economy tanked and revived it last year.

Short also developed the 54-unit Warehouse apartments, which are next door to Breadmen's restaurant and across the street from the Shortbread Lofts site. Since opening in 1999, Short said the Warehouse units have consistently remained near full occupancy.

The new project will target similar renters - single employees of the university and both undergraduate and graduate students. Rents may be slightly less, as the Shortbread apartments will be more energy efficient, Short said.

Shortbread Lofts will replace an existing 22-unit apartment complex and an office building. There will be retail spaces on the ground floor as well as 121 parking spaces.

The partnership hopes to break ground in late May or early June with an opening planned for the 2013-14 school year. If construction begins any later than that, the project will be postponed for a year.

"It's all a June, July and August rental market," Short said of the Chapel Hill market. "If you opened up in September, everybody's settled already."

Given the lack of other rental options around Franklin Street, Shortbread Lofts' biggest competitor could be the economy. If the recovery stalls, many renters may not be willing to pay more to be in the heart of downtown.

"There just aren't apartments in that location, so they go to the outskirts of town or they go to Durham and take a bus into town," Short said.

Chapel Hill OKs Downtown Apartment Complex

Mike@ApartmentREP.com — Wed, 07 Mar 2012 20:46:00 GMT

Written by Katelyn Ferral | TRIANGLE NEWS & OBSERVER

CHAPEL HILL -- The Town Council unanimously approved the Shortbread Lofts, a seven-story apartment complex on West Rosemary Street, on Monday night.

The vote was 7-0. Council member Donna Bell was absent, and council member Laurin Easthom excused herself from the vote because her husband's law firm represented the developers.

Shortbread Lofts will include 85 apartments, 121 parking spaces and a first floor of retail.

Mayor Pro Tem Ed Harrison said the Shortbread Lofts supplements new downtown buildings like the 10-story Greenbridge and the under-construction eight-story 140 West condominiums. "I think all those add up in making this a 52-week, 24-hour downtown. That's what I like the most about this project," he said.

Council members criticized the project in January for its dark, mustard yellow color and flat, modern façade, and they asked developers to come back with a better design.

The changes presented Monday give the lofts more dimension and variation in setback from the sidewalk, the developers said.

Council member Penny Rich applauded the modern design, but council member Matt Czajkowski asked how new downtown buildings like the Shortbread Lofts are changing the look of downtown. "We are unequivocally reshaping the appearance of downtown," he said.

The developer would pay $25,000 to the town to be given to Empowerment to add to affordable housing options for the Northside neighborhood, which is near where the complex would be built.

About 20 people spoke about the project Monday. Most were supportive and said it would add needed housing for students and relieve pressure from the neighborhood's surrounding downtown.

But Rob Stephens of the Chapel Hill-Carrboro NAACP likened the Shortbread Lofts to the neighboring Greenbridge condominiums.

"What you see in gentrification is you have a squeeze, that's how it works, you get one place then you get another," he said.

Editorial: Growth - Special Operations Expansion Buoys Economy

Mike@ApartmentREP.com — Wed, 22 Feb 2012 14:59:00 GMT

Written by THE FAYETTEVILLE OBSERVER

We have seen the military's future here, and it is a good one. We can thank the special-operations community for that.

While the rest of the military is shrinking - in some cases, dramatically, as Pentagon plans show - special ops funding continues to grow.

As a Newsweek cover story puts it, special operations (especially Navy SEALs of late) has become President Obama's go-to weapon in the war against terrorists. "Obama has come to rely more and more on 'special operators' for many types of missions," reporter Daniel Klaidman wrote. "In an era of dwindling budgets and dispersed, hidden enemies, when Americans have become fatigued by disastrous military occupations, the value of pinprick operations by elite forces is clear."

Special ops gained importance after 9/11. Special operators played a key role in the wars in Iraq and Afghanistan, and pulled off the signature events in both struggles: the capture of Saddam Hussein and the killing of Osama bin Laden.

With that growth comes money. While special ops is still a small slice of military personnel and budget, its numbers in both accounts are growing rapidly. Since 9/11, special operations troops have doubled from 33,000 to 66,000 and their funding has tripled, from $3.3 billion to $10.4 billion.

All of that is significant for Fort Bragg, and by extension, the communities around it. Almost all Army Special Forces troops trained here, at the John F. Kennedy Special Warfare Center and School. The Army Special Operations Command is here. So is the Joint Special Operations Command, from which Adm. William McRaven directed the hunt for bin Laden.

The staffing in special operations will continue to grow. The special operators are trained to do exactly what is needed in today's global conflicts, which includes tracking down terrorists, rescuing hostages and working with local forces to combat insurgencies.

This means more special ops troops at Fort Bragg, and more building as well. While other parts of the Defense Department's construction budget face radical cutbacks, the Pentagon plans to spend more than half a billion dollars on special operations projects at Fort Bragg in the next five years. That much new infrastructure is a likely indicator of the sort of growth we can expect to see here.

Military salaries and spending cushioned this region's journey through the hard times of the recession. Now it appears that the growth of special operations will continue to bring benefits our way.

Fort Bragg may Benefit as Special Ops Budget gets Boost amid Defense Cuts

Mike@ApartmentREP.com — Mon, 20 Feb 2012 15:36:00 GMT

Written by Drew Brooks | THE FAYETTEVILLE OBSERVER

The Navy is preparing to retire ships, the Air Force is looking to streamline its fleet and the Marine Corps and Army are planning for cuts in the number of active-duty troops.

Officials in military communities across the nation are bracing for cuts, but special operations forces on Fort Bragg are looking for a boom.

Plans call for more than half a billion dollars just in construction spending for special operations facilities on Fort Bragg over the next five years, according to defense budget documents.

Special operations troops - from the secretive Delta Force to the growing ranks of Special Forces - have emerged as one of the clear winners in the recently released defense budget.

That's good news for Fort Bragg, which is home to thousands of special operations troops and trains thousands more.

The higher headquarters for the troops - U.S. Special Operations Command - is based at MacDill Air Force Base in Tampa, Fla., and units are spread across the country and around the globe. But the career arc for most special operations troops comes through Fort Bragg, which is home to Joint Special Operations Command, Army Special Operations Command, the John F. Kennedy Special Warfare Center and School, Army Special Forces Command and Army Special Operations Aviation Command.

The nation's special operations forces have doubled from 33,000 to 66,000 since the terrorist attacks of Sept. 11, 2001, and those numbers are still growing, according to the Department of Defense. The budget for special operations has tripled in the past decade, from $3.3 billion to $10.4 billion.

Fort Bragg has seen much of that growth. Despite the loss of more than 2,000 soldiers with the 7th Special Forces Group, which moved to Florida in 2011, Fort Bragg special operations forces are growing with the expansion of the 3rd Special Forces Group, the 95th Civil Affairs Brigade and the 4th and 8th Military Information Support Groups.

Higher profile

Matt Leatherman is an analyst on defense budgeting for the Stimson Center, a national security policy think tank in Washington. Leatherman said planned budget cuts in the Department of Defense - part of the nation's deficit-reduction plan - will slow the expansion of special operations. But he believes that the command will not lose its preferred status.

"Priority in this environment can mean being spared from cuts," Leatherman said.

Special operations troops - who come from all combat branches - make up less than five percent of the military. But their profile has grown significantly over the last decade of war.

They were the first soldiers in Afghanistan in 2001. They captured Saddam Hussein. And, perhaps most memorably, special operations troops - Navy SEALs - killed Osama bin Laden.

"Since 9/11, the role of special operations forces has been highlighted like never before," said Adm. William McRaven, commander of U.S. Special Operations Command. "You can't pick up a paper without seeing some reference to special operations, and I am very proud of that fact."

The first head of U.S. Special Operations Command, retired Gen. James J. Lindsay, said he never envisioned the growth in special operations forces or their emergence into the national spotlight.

Lindsay, who now lives in Vass, said he was originally concerned that special operations forces would be a victim of their own success and, in a rush for growth, be over-expanded.

But current leadership has proven that they have not let up on the rigorous selection process and top-end training for the troops, he said.

Lindsay said he doesn't foresee any sort of drawdown of the elite units. He believes that Fort Bragg will continue to benefit from the growth.

"It's their home," he said. "They're always going to be here."

They are also going to continue to be a big presence in Afghanistan.

Lt. Gen. Curtis Scaparrotti, deputy commander of U.S. Forces-Afghanistan, has said that special operations troops will continue to have a key role as American forces draw down.

Scaparrotti, a former commander of the 82nd Airborne Division at Fort Bragg, said total troop levels would be down to 68,000 by September.

"You know, the special operations forces have been a significant part of this campaign," Scaparrotti said, "and they'll continue to be . both in what they bring to the fight in terms of their own op tempo and their special capabilities, particularly against the select leaders of the insurgency, et cetera, but also in training response forces.

"They bring a quality to the campaign that's very important," he said.

Many of those special operators in Afghanistan are members of Fort Bragg's 3rd Special Forces Group.

Since Sept. 11, 2001, nearly 300 special operations troops have been killed in Afghanistan, according to a tally by the Observer, representing more than 15 percent of all troop deaths in that war.

As troop totals have dropped, levels of special operations forces have been largely unchanged.

Next fiscal year, about 11,500 special operations forces - more than 8,000 from the Army - will be deployed, mostly to Afghanistan, according to defense budget documents. That's a decrease of less than 1,000 from recent years.

"I have no doubt that (special operations forces) will probably be the last folks out of Afghanistan," McRaven said while speaking at a symposium in Washington earlier this month.

The admiral said his relatively small force, at least compared with the general purpose force, had proven to be cost effective during the past decade of war.

While the special operations budget has grown, McRaven said, it remains a relatively small part of the Department of Defense budget at less than two percent.

Success from failure

The special operations force as it exists now grew in part out of a failed mission more than 30 years ago. That was the aborted attempt in 1980 to rescue American hostages in Iran.

The U.S. Special Operations Command was created in the aftermath of that failure. It was activated in 1987, following years of Congressional research and debate.

"In the fall of 1986, all of the services were very opposed," Lindsay said. "We had a lot of battles after that."

But over time, special operations forces proved their worth. They played a key role in the Panama invasion and the first Gulf War, Lindsay said.

And after 10 years of the war on terror, officials say, the reputation of special operations forces has never been higher.

For the past several weeks, defense officials have repeatedly praised special operations forces.

Michael Sheenan, assistant secretary of defense for special operations and low-intensity conflict, told a symposium this month that special operations had a commitment from the highest levels of government as officials seek to limit direct action and place more of an emphasis on working through local nationals in Afghanistan.

"We're going to come out of this pretty well," he said, referring to the defense budget.

Sheenan was echoing the remarks of McRaven, who had, earlier in the same symposium, said there was a "clear recognition of the value of special operations."

"The future of special operations looks bright," he said.

In several public appearances since the budget was released, defense secretary Leon Panetta has repeatedly stated that special operations was among the areas the Department of Defense was prepared to emphasize.

"We can't just cut," Panetta told the Senate Armed Services Committee. "We have to invest."

Raleigh Apartment Complex Sold for $13.7M

Mike@ApartmentREP.com — Fri, 17 Feb 2012 18:50:00 GMT

Written by Amanda Jones Hoyle | TRIANGLE BUSINESS JOURNAL

The 188-unit Lexington Farms apartment complex in west Raleigh has sold for $13.65 million to a Raleigh investor group with strong ties to Medical Mutual Insurance Co., one of the state’s largest malpractice insurance groups.

Church Street Partners, which is led by Raleigh businessmen Billy McClatchey and George DeLoach, closed on the purchase of Lexington Farms on Feb. 1 after securing a $10.92 million mortgage loan from Fannie Mae, according to Wake County deed records.

Lexington Farms, which is located at the intersection of Edwards Mill Road and Glen Eden Drive in Raleigh, was built in 1987 and was formerly owned by a group managed by LaSalle Investment Management of Chicago.

Church Street Partners has also raised $4.6 million from a pool of 19 equity investors who are participating in CSP Lexington Farms LLC, the entity formed to acquire the Raleigh property, according to documents filed Feb. 14 with the U.S. Securities and Exchange Commission.

One of the fund managers of CSP Lexington Farms LLC is Medical Mutual’s CFO P. Mark Davidson. Medical Mutual is also an investor in three other Church Street Partners real estate funds organized in the past year. All total, the four CSP funds have raised $14.1 million to date.

Medical Mutual of Raleigh has been a long-time investor in real estate across North Carolina. In 2007, Medical Mutual reached a settlement with the state Department of Insurance regarding allegations that it broke state law by investing in real estate partnerships meant to compensate top executives. MMIC paid the state $75,000, but its executives did not admit to any wrongdoing in the settlement.

Raleigh-Cary is #1 Real Estate Market to Watch in 2012

Mike@ApartmentREP.com — Thu, 02 Feb 2012 17:06:00 GMT

Written by Andrea V. Brambila | INMAN NEWS

While national home prices and sales may not recover to their historical levels until 2013 at the earliest, some local housing markets always outperform others in any given year.

In this second annual report (see last year's report: Top 10 Markets to Watch in 2011), Inman News examined housing, economic and demographic data for metropolitan areas nationwide to identify 10 housing markets to watch in 2012.

These markets are showing signs of strength in several key metrics, including above-average price appreciation, a flourishing job market, a high rate of sales in proportion to population, a high level of home affordability, low foreclosure activity, a below-average share of distressed sales, a low vacancy rate, and other characteristics indicating a healthy housing market.

While real estate markets in the Midwest and Northeast made up the majority of markets on last year's list of 10 markets to watch, this year the Midwest and the South dominated. Two Northeastern markets, both in New York state, also made the list; and no markets in Western states are on the list.

The 10 markets are, in order: Raleigh-Cary, N.C.; Wichita, Kan.; Rochester, N.Y.; Des Moines-West Des Moines, Iowa; Chattanooga, Tenn.-Ga.; Peoria, Ill.; Amarillo, Texas; Binghamton, N.Y.; Waterloo-Cedar Falls, Iowa; and Bloomington-Normal, Ill. The Des Moines and Bloomington-Normal metros are on the list for the second year in a row.

Nationwide, unemployment is high, though trending down; the median price of an existing home fell over 4 percent in 2011; and existing-home sales rose a modest 1.7 percent last year, according to the National Association of Realtors.

Stan Humphries, chief economist for Zillow, said 2012 will be a "transitional year" in the housing recovery, with an improvement in home sales and prices anticipated to fall to a long-awaited "bottom."

Zillow identified some markets that are "undervalued" on a historical basis in a chart provided for this report, and Inman News reached out to a range of other real estate research and information companies for their insight on those real estate markets expected to outperform others in the year ahead. Those companies' findings were not considered in the review and selection process of the top 10 markets featured in this report.

"While home values are expected to fall further (another 2 to 4 percent) in 2012 with a definitive bottom probably a year away, encouraging precursors to a true stabilization of home values are falling into place as the new year begins," Humphries said in a forecast Tuesday.

"Home sales will show a more consistent upward trend this year, slowly reducing the amount of vacant housing inventory. This increased demand will eventually start to put a floor under home values later this year."

U.S. foreclosure activity hit its lowest level since 2007 last year, though experts largely expect it to ramp up this year, putting downward pressure on home prices.

"There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010," said Brandon Moore, CEO of RealtyTrac, in the company's year-end foreclosure report. RealtyTrac also provided a chart for this report.

To compile the list of 10 markets to watch this year, Inman News looked for markets with above-average median sales price growth, a low unemployment rate, a high rate of sales per population, high affordability, low and falling foreclosure activity, a low share of distressed sales, above-average projected job growth, median household income growth, low and falling vacancy rates, growth in the number of building permits issued, above-average population growth, high projected population growth, and a rise in in-migration from other states.

While no markets on the list fulfilled all of these ideal economic characteristics, they did meet most of them.

Contrary to last year's list, in which most of the resulting markets had populations under 250,000, half of the metros on this year's list had populations above 500,000. This may be partially a result of only considering metros with a population of 150,000 or above, while last year's list did not limit the list by population size.

Among the findings in this report:

Three of the 10 markets on this list are state capitals, and both Illinois markets benefit from proximity to that state's capital, Springfield.
Four of the markets: Bloomington-Normal and Peoria in Illinois as well as Des Moines-West Des Moines and Waterloo-Cedar Falls in Iowa, are no more than 300 or so miles from each other.
Nine of 10 markets had median sales prices below the national median in the third quarter of 2011.
Where affordability rankings were available, the markets on the list had no less than 73.6 percent of homes affordable to those households earning the area's median income in the third quarter.
All had unemployment, foreclosure, and vacancy rates lower than the national average. None of the markets had unemployment rates higher than 7.9 percent. All had lower shares of distressed sales than the national average.
Only two of the markets had populations above 1 million, and three had populations above 500,000. The remainder had populations below that figure, but above a minimum 150,000.
As in last year's report, jobs in the public sector as well as the health care industry were major employers in most markets. This year, however, nine out of 10 markets also counted manufacturing companies among primary employers. Technology companies, energy providers, and universities also boosted many markets.

The 10 markets are ranked according to population, sales volume, and median sales price appreciation. Population was weighted most heavily in the rankings, followed by sales volume in proportion to population, and rate of price appreciation.

To read more and see the report in its entirety, please visit the following weblink:

http://www.inman.com/reports/markets-watch2012

Durham Parcel Sold for $35.25M

Mike@ApartmentREP.com — Tue, 17 Jan 2012 19:25:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

Federal Capital Partners announced Friday its purchase of the first phase of the West Village development in downtown Durham.

The purchase includes 241 apartments and 10,000 square feet of retail and parking.

Washington-based FCP purchased the property for $35.25 million, which is considerably more than The News & Observer reported Tuesday in an article. The deed filed with Durham County shows a purchase price of $18.125 million, but that number is incorrect, an FCP spokeswoman said Friday.

FCP's partner in the deal is Greensboro-based Bell Partners.

West Village was developed by Duke basketball stars Christian Laettner and Brian Davis. Laettner's and Davis' company, Blue Devil Ventures, led a $170 million revitalization effort in Durham that converted an abandoned tobacco factory into a mix of restaurants, offices and apartments.

The two have since run into financial trouble, and owe millions to creditors.

West Village has continued to thrive despite Laettner's and Davis' financial difficulties. Nearly all of the 453 apartments are occupied, and much of the 140,000 square feet of commercial space is leased.

Northwood Ravin buys Aboretum Apartments in Cary for $32 million

Mike@ApartmentREP.com — Tue, 03 Jan 2012 21:21:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

Northwood Ravin, the joint venture between Crosland's former multifamily development arm and Northwood Investors, has bought The Apartments at the Arboretum in Cary for $32 million, according to Wake County property records.

Crosland developed the 205-unit complex, which opened in 2008. Last summer, Crosland, the Charlotte developer that has been among the most active in the Triangle during the past decade, announced that it would divest its retail, multifamily and residential development arms to focus exclusively on managing existing assets.

Crosland's multifamily team became Ravin Partners, led by David Ravin. Ravin Partners and Northwood announced their joint venture in October. The company will both develop and manage apartment projects.

Northwood Investors was founded in 2006 by John Kukral, the former head of Blackstone Real Estate Advisors. Northwood Ravin is developing the 134-unit St. Mary's Square project in Raleigh's Glenwood South area and has also taken over three other Crosland projects in the Triangle: Trinity Commons at Erwin in Durham and Chapel Hill North and Chapel Watch Village.

Northwood Ravin expects to provide property management services for a portfolio that includes 16 properties with a total of 3,100 units.

The Arboretum deal capped a busy year in apartment sales, with nearly $900 million worth of transactions being completed.

Apartments have been far and away the best performing commercial real estate sector in recent years. The turmoil in the residential housing market has increased demand for apartments as more and more people lose their homes to foreclosure or find that they can no longer qualify for a mortgage.

Triangle Market Apartment Deals Close Out 2011

Mike@ApartmentREP.com — Tue, 20 Dec 2011 21:33:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

The year in Triangle commercial real estate is ending much the way it started - with a bunch of apartment deals.

The Preiss Company, the Raleigh-based firm that specializes in student housing, paid $26.5 million for The College Inn, a 121-unit complex on the south side of Western Boulevard near N.C. State University, according to Wake County property records. The seller was the N.C. State Student Aid Association, also known as the Wolfpack Club.

The other deal involved the Mariner's Crossing apartments in North Raleigh, which sold for $29.95 million to Sillman Enterprises, a real estate firm based in Birmingham, Mich., according to property records.

The 306-unit complex was built in 1995.It's located at the intersection of Creedmoor and Millbrook roads.The seller was LaSalle Investment Management, which paid $23.2 million for the property in 1997.

Mariner's Crossing was 97 percent occupied in October, according to data from the Triangle Apartment Association and Karnes Research.

The heavy volume of apartment deals this year is being driven by strong fundamentals in the apartment sector, which has benefited from the turmoil in the single-family housing sector and a general lack of new apartment construction during the economic downturn.

That will change soon, as developers have begun construction on a number of new projects and more are scheduled to break ground next year.

The apartment vacancy rate in the Triangle was 6 percent in September, down from 6.7 percent a year ago, according to data from the TAA and Karnes.

Lender-approved Short Sale of 32-unit Multifamily in Fayetteville NC sells for $750K

Mike@ApartmentREP.com — Thu, 15 Dec 2011 16:28:00 GMT

Apartment REP, a multifamily commercial real estate brokerage and advisory firm headquartered in Raleigh, just completed the sale of the HAYMOUNT COURT in Fayetteville, North Carolina.

Here are the details of the sale:

• PROPERTY NAME: Haymount Court
• TOTAL UNITS: 32
• YEAR BUILT: 1947
• LOCATION: Fayetteville, NC
• SALE DATE: November 17, 2011
• SALE PRICE: $750,000
• SALE PRICE PER UNIT: $23,437
• SALE TYPE: Lender-approved Short Sale
• SELLER REPRESENTED BY: Calhoon Real Estate
• BUYER REPRESENTED BY: Apartment REP

Feel free to contact Apartment REP directly at 919.866.9984 to learn more.

TEAM & CONTACT INFORMATION

Jim Scofield / Wayne Braren / Mike Siciliano

919.866.9984

www.ApartmentREP.com

Oberlin Court in Raleigh Sold for $72.25M

Mike@ApartmentREP.com — Tue, 22 Nov 2011 17:01:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

Oberlin Court, the apartment and retail center at Wade Avenue and Oberlin Road in west Raleigh, has been sold for $72.25 million, according to Wake County property records.

It's the latest in a string of major apartment acquisitions by institutional investors in the Triangle.

The buyer was Atlanta-based Prudential Real Estate Investors. The seller was Northwestern Mutual Life Insurance Co.

Just last month Prudential bought the Woodland Terrace senior living complex in Cary for $53 million.

Developed by Crosland, Oberlin Court opened in 2008. It includes 370 apartments and 30,000 square feet of retail shops.

It was 95 percent occupied in September, according todata from the Triangle Apartment Association and Karnes Research.

The flurry of recent apartment deals is being driven by strong fundamentals in the apartment sector, which has benefited from the turmoil in the single-family housing sector and a general lack of new construction during the economic downturn.

The apartment vacancy rate in the Triangle was 6 percent in September, down from 6.7 percent a year ago, according to data from the TAA and Karnes.

PRICE REDUCED: Now 81% Loan-to-Value with 6.05% Interest on Assumable Loan

Mike@ApartmentREP.com — Mon, 14 Nov 2011 18:34:00 GMT

CREEKSIDE APARTMENTS
60-Unit Multifamily Property in Fayetteville, North Carolina
REDUCED PRICE: $3,250,000

HIGHLIGHTS
• PRICE JUST REDUCED!
• Assumable Loan in place at 81% loan-to-value with a 6.05% interest rate
• Built in two phases for a total of 60 units, with newer phase completed in 2005
• Located within the booming Fayetteville and Fort Bragg MSA
• About two miles from Wal-Mart Supercenter and I-95
• Option 1-acre parcel available to add 15 additional units

LEARN MORE

Visit http://www.apartmentrep.com/PropertiesForSale.aspx

Apartment REP
5640 Six Forks Road - Suite 101
Raleigh, NC 27609
919.866.9984
ApartmentREP.com

MAJOR PRICE REDUCTION on 216-unit "Class A" Multifamily in Fayetteville NC

Mike@ApartmentREP.com — Tue, 25 Oct 2011 15:42:00 GMT

ADAMS LAKE APARTMENTS
216-Unit “Class A” Multifamily Property in Fayetteville, North Carolina
REDUCED PRICE: $18,550,000

HIGHLIGHTS
• PRICE JUST REDUCED!
• Assumable Loan in place at approximately 70% loan-to-value with a 5.91% interest rate
• Beautiful “Class A” multifamily near Fort Bragg with full amenities and a 20-acre lake
• Stable operations with outstanding short and long-term growth potential
• Near shops, restaurants and services, and only minutes from downtown Fayetteville
• Excellent opportunity to capitalize on the booming Fayetteville and Fort Bragg market

LEARN MORE

Visit http://www.apartmentrep.com/PropertiesForSale.aspx

Apartment REP
5640 Six Forks Road - Suite 101
Raleigh, NC 27609
919.866.9984
ApartmentREP.com

Three Cary Apartment Complexes Sold for More than $90 Million

Mike@ApartmentREP.com — Wed, 19 Oct 2011 18:16:00 GMT

Written by David Bracken | TRIANGLE NEWS & OBSERVER

Another week. Another flurry of apartment deals in the Triangle.

Three complexes in Cary have sold in recent days for a total of just over $90 million.

The most noteworthy was the sale of the Preston Reserve apartments in Cary for $40.5 million, according to Wake County property records.

That price was $6.5 million more than the seller, Centennial Holding Co., a private Atlanta real estate firm, paid for the 360-unit complex in February 2010.

The buyer was a group of investors led by Greensboro-based Bell Partners.

The other two apartment deals involved Chancery Village at the Park in Cary and Boundary Village.

Chancery Village sold for $35.9 million, according to property records. The 276-unit complex opened last year. The buyer was Simpson Housing of Denver, which bought it from the developer, Woodfield Investments of Ashburn, Virginia.

Boundary Village, built in 1999, was purchased for $13.7 million by an LLC with a Raleigh address. The complex opened in 1999 and has 186 units.

The sales are further proof that investors strong appetite for multifamily properties is showing no signs of waning. The apartment market is one of the few commercial real estate sectors to bounce back quickly following the recession.

The turmoil in the single-family housing market, combined with the lack of new construction in recent years, is causing both occupancy and rental rates to rise in the Triangle and elsewhere.

The Triangle apartment market had an occupancy rate of 95.3 percent in the third quarter, up 1.8 percentage points from a year earlier, according to MPF Research, which analyzes apartment data in 64 U.S. metro markets.

The average monthly rent in the Triangle was $851, up 4.6 percent from the same period a year ago and up 3.1 percent from the previous quarter.

The quarterly increase was the largest seen in the Triangle in the two decades that MPF has been tracking the market, the firm reported.

RARE OPPORTUNITY: 694-unit Multifamily Portfolio in Wilmington NC (by UNC Wilmington)

Mike@ApartmentREP.com — Thu, 06 Oct 2011 16:08:00 GMT

This WILMINGTON MULTIFAMILY PORTFOLIO (4 Properties, 694 Units) offers an incredible opportunity for a multifamily investor to nearly dominate a market overnight!

WILMINGTON MULTIFAMILY PORTFOLIO
694-Unit Multifamily Portfolio in Wilmington, North Carolina
CALL FOR OFFERS – Due October 28, 2011

HIGHLIGHTS

694-unit portfolio in high-demand coastal market
3 of the 4 communities within walking distance to UNC Wilmington and the 4th is only 1.8 miles from campus
Prime locations in the heart of Wilmington convenient to shopping and entertainment
Huge upside potential from below-market rents in strong rental market with rising occupancy and increasing rental rates
Call For Offers - Due October 28, 2011

EXECUTIVE SUMMARY

· View Executive Summary

CONFIDENTIALITY AGREEMENT

· To access the full details, please complete and return the Confidentiality Agreement at this link: Click Here for Confidentiality Agreement

CONTACT US

Jim Scofield / Wayne Braren / Mike Siciliano
919.866.9984

Visit www.ApartmentREP.com for more details!

Durham inspires 123 West Franklin Mixed Development in Chapel Hill

Mike@ApartmentREP.com — Tue, 13 Sep 2011 15:24:00 GMT

Written by Mark Schultz | TRIANGLE NEWS & OBSERVER

CHAPEL HILL -- The developers of the University Square property on Franklin Street are taking a lesson from one of the Triangle's most successful downtown makeovers: Durham's American Tobacco Campus.

At a meeting Thursday, John McColl, executive vice president of development for Cousins Properties, said the company plans a grass quad inside the Chapel Hill site "similar to the American Tobacco interior."

The American Tobacco Campus across from the Durham Bulls Athletic Park has a long courtyard with a waterway and stage surrounded by a lawn and outdoor dining.

McColl told about 30 people at Chapel Hill Town Hall that the grass quad idea grew out of public meetings Cousins Properties and the UNC-Chapel Hill Foundation have held since the foundation bought the property for $45.75 million from US/GT, LLC, a company affiliated with the Kenan family, in 2009. The foundation is private, and the property will remain on the tax roll.

The current project covers half the 12-acre site. The Granville Towers dormitories are not part of the project and "are staying right where they are for now and the foreseeable future," McColl said.

The project would raze the retail/office buildings now standing between a parking lot and the Franklin Street sidewalk.

New buildings, including one rising 118 feet but only three stories along the sidewalk, would include 40,000 square feet of retail space; 300,000 square feet of office space, up from 80,000 square feet now; 90,000 square feet of "flex space" that could house an entertainment venue; and 150,000 square feet of rental housing, McColl said.

An underground parking garage doubling the number of spaces to about 1,000 would replace most of the surface parking.

Questions Thursday included how Cousins will connect the property to its surroundings, how much office space would cost, and whether the property, now marked by fences and sometimes driveway chains, would become more open.

"Anything you can do to enhance people cutting through this property would be really great," said Will Raymond.

McColl said the developers plan two Franklin Street entrances and a new entrance off Cameron Avenue.

Office space will rent for $30 to $33 per square foot, slightly higher than downtown rates now but in line with newly constructed space.

And yes, McColl said, the goal is to make the property "permeable," with people walking through 24/7.

"Our goal is to make this a place," he said, meaning a destination spot like American Tobacco with its restaurants, concerts and movies on the lawn.

Ruby Sinreich, a former member of the town's planning board, echoed that.

"Durham has been kicking our (expletive)," she said. "Chapel Hill has to catch up."

Jim Scofield Rides Again!!! (for Multiple Sclerosis, that is)

Mike@ApartmentREP.com — Fri, 09 Sep 2011 15:15:00 GMT

The cure for MS can't be found fast enough!

The world is really struggling, the U.S. economy remains difficult with nagging high unemployment and economic uncertainty is at an all-time high.

But as difficult as these troubles are they aren't even in the same universe as the challenges of those suffering from multiple sclerosis. Having multiple sclerosis means that you may suddenly have blurry vision. Or that your memory will fail you for no apparent reason. Or that you may not always be able to walk, let alone ride a bike. The symptoms of MS are different, and devastating, for everyone - the only certainty is that it will affect yet another person every hour of every day.

That's why your donation is so important! In fact it's a matter of life and death for many of those with MS! Ongoing research is certainly making a difference and will speed the day when we have a cure. But research and trials cost lots of money.

How about helping the fight against MS anyway. I guarantee I'll finish the ride if you'll support me.

By renewing your pledge or making one for the first time you'll be part of an exceptionally loving and generous group of people who have loyally supported my MS 150 rides through the years.

Click here to pledge and help cure MS!

Since I began riding in these events in 1996 you've donated $32,758.75 for the 2,225 miles I've ridden!

This year I'd like to add at least $3,000 to that total and another 150 miles.

The 150 miles are a "Done Deal". With your help we can say the same for this ride's $3,000 fundraising goal.

CO-PILOTS NEEDED

The more I ride for MS the more people I meet who suffer from this insidious disease or who have family members and friends who suffer from it.

I never want to forget these courageous people so I wear a laminated placard like the one in the photo below during the ride to encourage and commemorate their fight.

Please send me the names and photos of those you know with MS and I will gladly add them to my placard and take them on the ride as my honorary "Co-Pilots".

SPONSOR ME TODAY & HELP CURE MULTIPLE SCLEROSIS

Click here to help cure MS!

Thanks so much for your support. Words can’t explain how much my friends with MS appreciate it.

Gratefully yours,

Jim Scofield

JUST LISTED: 216-unit "Class A" Multifamily in booming Fayetteville NC / Fort Bragg market!

Mike@ApartmentREP.com — Thu, 08 Sep 2011 18:20:00 GMT

Apartment REP just listed ADAMS LAKE APARTMENTS, a 216-unit "Class A" multifamily property in the booming Fayetteville NC / Fort Bragg market!

An overview of the property is shown below, and you can access the full details online at http://www.apartmentrep.com/PropertiesForSale.aspx

ADAMS LAKE APARTMENTS
216-Unit “Class A” Multifamily Property in Fayetteville, North Carolina
PRICE: $19,500,000

HIGHLIGHTS

Assumable Loan in place at approximately 70% loan-to-value with a 5.91% interest rate
Beautiful “Class A” multifamily near Fort Bragg with full amenities and a 20-acre lake
Stable operations with outstanding short and long-term growth potential
Near shops, restaurants and services, and only minutes from downtown Fayetteville
Excellent opportunity to capitalize on the booming Fayetteville and Fort Bragg market

Visit www.ApartmentREP.com for more details!