Katy's Exposure

October 24, 2009

New Growth in Down Atlanta Market

In the midst of all the negative news about the economy and the failing housing market, growth still continues to push forward in several areas of metro Atlanta. While development has become non-existent in many neighborhoods, Trammell Crow Residential (“TCR”) has continued new growth with the development of several new communities.

Trammell Crow Residential (“TCR”) is America’s premier multi-family real estate firm. TCR created the Alexan brand to provide unique, upscale apartment communities at competitive rates. In all communities, renters can enjoy a host of features and services uncommon to typical rental living. Alexan properties give the look and feel of a ‘for sale’ home, boasting state-of-the-art floor plans, remarkable interior design, and extensive amenity packages.

Above all, Alexan properties are well situated, providing excellent access to employment, shopping, cultural activities, and transportation routes. Combining luxury with convenience is what the Alexan brand is all about.

TCR is currently working on 3 new residential apartment communities under their trademark Alexan name in Atlanta: Alexan 360, Alexan Metro West, and Alexan Town Brookhaven.

These properties are all being managed by Riverstone Residential. Riverstone Residential is the flagship brand of CAS Partners, which was formed to provide an all-inclusive range of real estate services including property management, construction management, credit and collections, financial advisory and insurance, purchasing and utility services.

The first of the three properties to open is Alexan 360- located next to downtown Atlanta near Freedom Parkway. Alexan 360 is a 592 unit luxury apartment community centrally located adjacent to I-75/85 and easily accessible to downtown and midtown. Alexan 360 offers open living designs and stylish comforts of an urban lifestyle. This property consists of studio, one, and two bedroom apartment homes with a wide array of views ranging from courtyard pool views to incredible views of the Atlanta skyline.

Alexan 360 offers a more refined option for in town living that is not often found in many of the loft style communities in the area. The finish of this community is highlighted with carpeted hallways, large kitchens, designer cabinetry, granite countertops, walk-in closets and an outdoor living area. Alexan 360 has community amenities that rival an upscale hotel’s with saltwater pools, club rooms with pool tables and wide screen TV’s, a fully equipped fitness center, and two rooftop garden areas with phenomenal views of the Atlanta skyline for residents to enjoy.

Centrally located in Atlanta’s Midtown-West district is Alexan Metrowest.

The property grounds are highlighted by a koi pond, fountains and hardscapes which create a natural backdrop for relaxation and creative inspiration. A beach-entry pool offers just a touch of resort-style luxury. Residents can also enjoy Wi-fi in both the community and club rooms, stand alone glass showers, ample cabinet space, ceiling fans in the living rooms, and tile-floored bathrooms. Alexan Metrowest is scheduled to open in December of 2009 with pre-leasing in progress now.

Located on the northern side of the Atlanta area is Alexan Town Brookhaven.

Alexan Town Brookhaven is located in “Town Brookhaven”, a state-of-the-art, mixed use development in Atlanta’s Brookhaven community, conveniently situated on Peachtree Road, north of Lenox Square Mall and Phipps Plaza and adjacent to historic Oglethorpe University. Town Brookhaven will ultimately consist of approximately 500,000 square feet of retail shops, including popular restaurants and boutiques, a movie theatre and much more. On August 27th, it was announced that anchor tenants of Publix, Costco, LA Fitness, and CineBistro, an upscale dinner-and-a-movie house, will begin construction in the fall. Town Brookhaven provides a pedestrian-friendly urban village built for convenience and accessibility. Alexan Town Brookhaven is scheduled for an October 2009 opening with pre-leasing in progress now as well.

With the housing crisis and the migration of people back to more accessible urban areas, there is new opportunity for apartment housing in the city of Atlanta. New luxury communities such as the Alexan properties give in town residents more options for living spaces while still having the convenience of being close to the many activities that are available in Atlanta.

360aroundatlanta.blogspot.com

Note – Information on Riverstone Residential knowingly exposing tenants to extreme amounts of mold toxins at Toxic Mold Infested Jefferson Lakes Apartments in Baton Rouge, Louisiana.  katy

Toxic Mold Infested Jefferson Lakes Apartments managed by Riverstone Residential

Riverstone Residential Litigation

Mold Inspection Reports

Photos of Mold in Apartment

Attorney Malpractice

10-22-09
Jeffrey Lee – Staff Writer NAA

Distressed assets are a hot topic among real estate investors, with many funds pooling their capital to snap up value-priced properties from reluctant bank owners or borrowers unable to refinance their loans. But while investors may find a couple of deals on the market, they will most likely be frustrated if they’re expecting a flood of assets for sale at cut-rate prices, according to a trio of apartment executives at the Multifamily Executive Conference’s CEO Power Panel in Las Vegas last week.

Some distressed communities–properties with borrowers in default on their loans or with loans coming due and unable to refinance or sell–will be available, but the total amount will be very small, said Tom Toomey, President and CEO of UDR, a multifamily REIT that owns almost 45,000 apartments. “I don’t know that there will be that many opportunities,” he said, explaining that many banks will continue to extend loans rather than foreclose and sell the properties. “Investors that raced to get into distress funds are going to be disappointed.”

Dave Woodward, Managing Partner and CEO of Laramar Group, said distress is the new value-add, alluding to the trendy investment rationale many companies favored several years ago. “There is a lot of capital building up and getting ready to be invested soon–our company included,” he said. Laramar, an apartment investment and management firm with more than 30,000 communities in 18 markets, is putting together a fund to invest in distressed properties.

“There are going to be deals out there,” he said. But companies should not expect a large-scale clearance reminiscent of the U.S. government’s Resolution Trust Corporation that liquefied many non-performing assets in the late 1980s and early 1990s, he said. “I don’t see that happening.”

Part of the issue is that special servicers, which represent multiple lenders in commercial mortgage-backed security (CMBS) loans, have little incentive to sell properties at a discount right now, said Christy Freeland, who was recently named Chairman of Riverstone Residential Group, which manages 185,000 apartments across the country. “Servicers can wait three or four years and see if the property’s value or NOI goes up,” she said.

The lack of value opportunities for investors may actually create new opportunities for property management firms such as Laramar, which is doing fee-management work for some special servicers. But such work can often be resource-intensive, especially when many of the communities going into default first are what Woodward described as “C minus minus.” Nevertheless, he said, “You want to get in the door with them and say ‘Yes’ in hopes of getting future business with them.”

Borrowers that own troubled communities, on the other hand, have not been eager so far to change managers, the executives said. “I thought there would be more owners wanting to have a different manager take a look at their community,” Freeland said. “But [owners] are still concerned about change. They’re trying to get financing, so they don’t want to make a wave.” She added, however, that the fear of changing is actually costing owners money because the expense efficiencies with a national management firm are substantial.

While a vibrant, distressed asset market has not materialized, prices are still down about 15 percent to 20 percent, partially because of rising cap rates, Woodward said. But he adds that with increasing competition to bid on available assets, cap rates could begin to stabilize or even drop in the next few months. “People who are waiting for six caps that became seven-and-a-half caps to become nine caps, I think they’re going to be disappointed,” he said.

One property UDR was interested in received bids from 38 companies. “That doesn’t sound like distress to me,” Toomey laughed.

With so much capital going after so few distressed opportunities, investors will have to lower their expectations, Toomey said, and UDR is having that ongoing dialogue with its investors. Rather than focusing on internal rate of return, the company is beginning to measure investments by price-per-door, knowing rents will go up when the economy improves. “I think we’re just lulling through the bottom of this recession,” Toomey said.

Because most lenders will not be offering construction loans for the next two years, the company is considering using its capital to purchase existing communities that are selling at the same price per door for which they were available in 2005.
 
The CEOs also said they’re turning their focus this year to initiatives that maximize NOI. For more on those initiatives, check out the November issue of UNITS magazine.
 
Are any NAA members seeing more or fewer distressed properties on the market than they expected? I’d love to hear what our readers have to say.

naahq.org