At Least 15 Apartment Communities in Forsyth County Have Been Sold in 12 Months

The Winston-Salem Journal ran a story in its June 8 edition highlighting the sale of 15 apartment communities in Forsyth County, and just today (June 20) another two were announced. The June 8 article does a nice job summarizing the many factors that contribute to the spike in transactions – demographics, lifestyle, costs – but one facet of the transactions that they pick up on is something that has been observed over the last year by apartment industry observers: a significant increase in out-of-town buyers of apartments. From the June 8 article:

Yet, there have been six apartment-complex purchases in Forsyth over the past three months, all by out-of-region and out-of-state buyers.

“Investors are trying to find what few pockets of value there are left in the apartment market,” said Mark Vitner, a senior economist for Wells Fargo Securities.

“Prices have been bid up so much in larger markets, such as Charlotte, Raleigh and Nashville, that investors are increasingly looking to markets that have been overlooked and show great potential for growth.

“Winston-Salem and Greensboro are at the top of the list of overlooked markets.”

If you’re wondering what the price points were for the transactions, we did a little “back of the napkin” calculating using the information from the article and some data we have in our membership files and found the following;

Those 15 communities have a total of 2,349 units and the combined total of sales prices was $136,640,000, or $58,169 per unit.

REIT Industry Hits Gender Diversity Milestone

The REIT industry is beginning to make some headway on diversity, and this year it hit a significant milestone:

The real-estate investment trust sector has named a record number of women to board positions in 2018, a sign that this mostly male-dominated industry is reacting to pressure on American corporations to diversify.

Of the 94 REIT directors newly elected during the spring proxy season, 49—or 52%—are women, according to a study by Ferguson Partners, a professional services firm specializing in executive and board recruitment. It was the first time men comprised less than the majority of the new directors, Ferguson Partners said.

REITs also did much better than the overall market. In 2018, 32% of newly elected directors in the Russell 3000 are women.

That doesn’t mean there still isn’t work to be done on the diversity front – the article also notes that just 17.5% of all directors on REIT boards – but that number should continue to grow because REITs are starting to adjust outdated recruiting standards so they can consider a more diverse slate of candidates. Oh, and it ends up its good business:

REITs with more than the average percentage of women on its boards (15.5%) achieved higher average price and total returns between 2006-2017, according to a report by Wells Fargo Securities analysts Jeff Donnelly and Dori Kesten published in March. 

REITs With Women on Their Boards Outperform Men-Only Boards

Real estate has a reputation of being an old boys’ network, and while the average female representation on REIT boards has grown from 8.5% in 2006 to 15.5% in 2017, the industry still lags the 22% female representation on other boards of companies in the S&P 500. Now research is showing the lower level of diversity on REIT boards could be having a negative impact on results. From the Wall Street Journal:

That is the conclusion of a new report by Wells Fargo Securities that analyzed 165 equity REITs from 2006 to 2017. The analysis “determined that companies with more than the average percentage of women” on their boards “achieved higher average price and total returns over that period,” the report stated.

The average percentage of women on REIT boards was 15.5%, the report said. The share prices of REITs with higher-than-average percentages outperformed those with no female representation by 1.93 to 2.33 percentage points, according to the report. The outperformance was 1.33 to 1.69 percentage points when both share price and dividend were taken into account…

Of the equity REITs analyzed by Wells Fargo, 34 had no women on their boards. Women made up at least one-quarter of boards at 40 REITs, the report said.

Wells Fargo’s methodology consisted of looking at board compositions at year-end from 2006 to 2017 and calculating share price and total return over a forward three- and five-year period.

Jobs, Jobs, Jobs

It would surprise no one to learn that there’s a tight job market in the rental housing world, but you might be surprised at exactly how many open positions there are in the industry. According to new research from the National Apartment Association, there are about 4,000 open positions nationwide. The largest number of open positions can be found in the “Property Management” category, and not far behind that is the “Maintenance Category.”

Source: National Apartment Association

As you can see the largest number of openings by job title is for Maintenance Technicians – shocking right? – and the researchers were kind enough to dig a little deeper into that position’s data:

Source: National Apartment Association

All of this data is derived from a new monthly NAAEI product called Apartment Jobs Snapshot. Here’s more info about it from NAA’s site:

The Apartment Jobs Snapshot is a new monthly product from NAAEI highlighting labor force trends in the rental housing industry. It examines the total job posting trends by position, category and geography, as well as providing fresh and detailed updates for industry employers. The snapshot will feature enhanced quarterly editions with more expansive data, starting in April 2018.

Brad Bellflower’s Company Acquires for More Than a Song

CoStar Group announced today that it is acquiring, adding it to a portfolio that already included, which it purchased in 2014 and Apartment Finder, which it purchased in 2015. The price tag on this purchase is $385 million, with $350 million in cash and the remainder in stock.

From the Wall Street Journal article about the sale:

Landlords have listed apartments online for more than a decade, partly on sites developed by newspaper owners worried about their loss of traditional print ads. In 1998, a venture of the Times Mirror Co. , Tribune Co. and Washington Post Co. purchased the company that went on to build

In recent years, large investors such as CoStar and Zillow began to make big bets on the business. Currently there are 46 million rental households, up from 35 million in 2004, according to CoStar.

Competitors also include RentPath Inc., which is owned by private equity giants TPG and Providence Equity Partners. Major players like Facebook Inc., Google Inc. and Craigslist also get an enormous amount of traffic from people looking for rental apartments.

The rental segment is now Zillow’s fastest-growing marketplace, according to remarks made by Chief Executive Spencer Rascoff during the company’s second quarter earnings call. He said the business grew 64% year over year in the second quarter.