A SPECIAL SUPPLEMENT TO NATIONAL REAL ESTATE INVESTOR 2012 The Nation s 50 Largest Apartment Owners and 50 Largest Apartment Managers
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A SPECIAL SUPPLEMENT TO NATIONAL REAL ESTATE INVESTOR NATIONAL REAL ESTATE INVESTOR is pleased to present the 22nd annual NMHC 50, the National Multi Housing Council s authoritative ranking of the nation s 50 largest apartment owners and 50 largest apartment managers. For more than two decades, the NMHC 50 has been a key resource for industry observers. The top owner and manager lists, and the analysis that accompanies them, have provided the only historical benchmark against which to measure industry trends and concentration. Based in Washington, D.C., the National Multi Housing Council provides leadership for the apartment industry. NMHC s members are the principal officers of the larger and more prominent apartment firms and include owners, developers, managers, financiers and service providers. The Council focuses on the four key areas of federal advocacy, strategic business information, industry research and public affairs. Through its federal advocacy program, the Council targets such issues as capital markets, housing policy, energy and environmental affairs, tax policy, fair housing, building codes, technology, human resources, rent control and more. For those interested in joining the apartment industry s leadership, NMHC welcomes inquiries to its Washington office at (202) 974-2300, or you can visit NMHC s web site at www.nmhc.org. Contents Introduction... 2 2012 Apartment Ownership... 4 2012 Apartment Management... 6 Top Apartment Firms Strategically Pursue Surging Rental Market... 8 ON THE COVER: The 327 rental units at luxury apartment community Gables Tanglewood, 40 San Felipe Street, Houston, Texas, will be ready for occupancy in 2013. The Anatomy of a Brand Strategy... 16 Show Me the Money Managers... 19 On a Path of Growth... 22 NMHC Officers... 28 NMHC Board of Directors Executive Committee... 28 NMHC Board of Directors... 32 NMHC Advisory Board... 42 2 NMHC 50 APRIL 2012
A SPECIAL SUPPLEMENT TO NATIONAL REAL ESTATE INVESTOR 2012 Apartment Ownership NATIONAl MUlTI HOUSINg COUNCIl 50 (50 Largest U.S. Apartment Owners as of January 1, 2012) UNITS UNITS 2012 2011 OWNED OWNED CORPORATE RANK RANK COMPANY 2012 2011 OFFICER HQ CITY STATE 1 1 Boston Capital 157,423 158,947 Jack Manning Boston MA 2 2 Centerline Capital Group 150,000 152,600 Rob Levy New York NY Boston Financial Investment 3 3 Management, LP 140,077 145,454 Ken Cutillo Boston MA SunAmerica Affordable Housing 4 4 Partners Inc. 134,882 141,113 Douglas S. Tymins Los Angeles CA 5 6 PNC Real Estate 126,260 123,462 Todd Crow Portland OR 6 5 Equity Residential 119,743 129,604 David J. Neithercut Chicago IL 7 14 Hunt Companies, Inc. 114,712 62,109 Woody Hunt El Paso TX 8 8 National Equity Fund, Inc. 106,772 107,138 Joseph Hagan Chicago IL The Richman Group Affordable 9 10 Housing Corporation 98,770 94,925 Richard Paul Richman Greenwich CT Enterprise Community 10 9 Investment, Inc. 97,822 96,195 Charles R. Werhane Columbia MD 11 7 Aimco 93,630 110,943 Terry Considine Denver CO 12 11 Archstone 73,955 81,613 R. Scot Sellers Englewood CO 13 12 Alliant Capital, Ltd. 71,220 65,245 Brian Goldberg Woodland Hills CA 14 13 Camden Property Trust 66,997 63,316 Richard J. Campo Houston TX 15 15 UDR, Inc. 57,743 58,796 Thomas W. Toomey Highlands Ranch CO 16 18 AvalonBay Communities, Inc. 57,426 54,579 Tim Naughton Arlington VA 17 16 Edward Rose & Sons 56,385 56,025 Warren Rose Farmington Hills MI 18 17 Pinnacle Family of Companies 52,655 55,932 Stan Harrelson Dallas TX 19 20 WNC & Associates, Inc. 51,224 52,134 Wilfred N Cooper, Jr. Irvine CA 20 21 Invesco Real Estate 51,125 50,567 Michael Kirby Dallas TX 21 24 MAA 49,407 46,306 H. Eric Bolton, Jr. Memphis TN 22 33 The Related Companies 48,967 35,637 Jeff Blau New York NY 23 22 Forest City Residential Group, Inc. 48,482 47,384 Ronald A. Ratner Cleveland OH 24 19 J.P. Morgan Asset Management 47,587 52,000 Jean Anderson New York NY 25 25 JRK Property Holdings, Inc. 47,398 43,912 Jim Lippman Los Angeles CA 4 NMHC 50 APRIL 2012
A SPECIAL SUPPLEMENT TO NATIONAL REAL ESTATE INvESTOR UNITS UNITS 2012 2011 OWNED OWNED CORPORATE RANK RANK COMPANY 2012 2011 OFFICER HQ CITY STATE 26 23 Lincoln Property Company 47,245 46,507 Tim Byrne Dallas TX Raymond James Tax Credit 27 29 Funds, Inc. 46,572 43,035 Ronald Diner St. Petersburg FL 28 Newcomer TIAA-CREF 46,489 NA* Thomas Garbutt New York NY 29 27 Michaels Development Company 45,425 44,843 Robert J. Greer Marlton NJ Steven D. Bell and 30 28 Bell Partners Inc. 44,931 43,265 Jonathan D. Bell Greensboro NC Irvine Company Apartment 31 26 Communities 44,545 43,791 Kevin Baldridge Irvine CA 32 31 DRA Advisors LLC 42,515 41,111 David Luski New York NY 33 32 Home Properties, Inc. 41,951 38,861 Edward J. Pettinella Rochester NY Holiday Retirement Corp./ 34 Newcomer Colson & Colson 37,076 36,859 Jack Callison Salem OR 35 36 Lindsey Management Co., Inc. 35,628 34,088 James E. Lindsey Fayetteville AR 36 37 Colonial Properties Trust 33,975 33,569 Thomas H. Lowder Birmingham AL 37 45 Berkshire Property Advisors 33,847 27,906 Frank Apeseche Boston MA 38 34 Sentinel Real Estate Corporation 33,500 35,000 John H. Streicker New York NY 39 40 BH Equities LLC 33,205 30,172 Harry Bookey Des Moines IA 40 41 UBS Realty Investors LLC 32,983 27,452 Matthew Lynch Hartford CT 41 42 Essex Property Trust, Inc. 32,753 29,146 Michael Schall Palo Alto CA 42 39 Concord Management Limited 32,467 32,313 Edward O. Wood, Jr. Maitland FL Westdale Real Estate Investment 43 38 & Management 32,296 32,592 Joseph G. Beard Dallas TX 44 Newcomer Weidner Apartment Homes 31,551 20,508 Jack O Connor Kirkland WA 45 Newcomer Heitman LLC 26,490 21,941 Maury Tognarelli Chicago IL 46 48 Highridge Costa Investors, LLC 26,416 26,335 Michael A. Costa Gardena CA 47 35 Empire American Holdings, LLC 25,859 34,939 Eli Feller Montvale NJ 48 49 BRE Properties, Inc. 25,192 25,174 Constance B. Moore San Francisco CA 49 46 AEW Capital Management, LP 24,891 27,556 Jeffrey Furber Boston MA 50 43 The Bascom Group, LLC 24,877 28,851 Jerome Fink Irvine CA *TIAA-CREF did not provide 2011 unit data. APRIL 2012 NMHC 50 5
A SPECIAL SUPPLEMENT TO NATIONAL REAL ESTATE INVESTOR 2012 apartment Management NaTIONal MUlTI HOUSINg COUNCIl 50 (50 Largest U.S. Apartment Managers as of January 1, 2012) UNITS UNITS 2012 2011 MaNaged MaNaged CORPORaTe RaNK RaNK COMPaNY 2012 2011 OFFICeR HQ CITY STaTe 1 1 Greystar Real Estate Partners LLC 192,711 187,360 Robert A. Faith Charleston SC 2 2 Riverstone Residential Group 170,341 162,182 Walt Smith Dallas TX 3 4 Lincoln Property Company 144,033 133,425 Tim Byrne Dallas TX 4 3 Pinnacle Family of Companies 138,638 151,367 Stan Harrelson Dallas TX 5 5 Equity Residential 119,743 129,604 David J. Neithercut Chicago IL 6 7 WinnCompanies 91,920 84,817 Samuel Ross Boston MA 7 6 Aimco 88,530 116,491 Terry Considine Denver CO 8 8 Archstone 77,997 81,613 R. Scot Sellers Englewood CO 9 9 Camden Property Trust 67,217 63,536 Richard J. Campo Houston TX Steven D. Bell and 10 10 Bell Partners Inc. 65,205 60,182 Jonathan D. Bell Greensboro NC 11 11 FPI Management Inc. 63,002 58,604 Dennis Treadaway Folsom CA Apartment Management 12 Newcomer Consultants, LLC 59,856 52,059 Greg Wiseman Midvale UT 13 12 UDR, Inc. 57,743 58,340 Thomas W. Toomey Highlands Ranch CO 14 14 AvalonBay Communities, Inc. 57,426 54,579 Tim Naughton Arlington VA 15 15 Alliance Residential Company 56,952 48,520 Bruce Ward Phoenix AZ 16 13 Edward Rose & Sons 56,385 56,025 Warren Rose Farmington Hills MI 17 Newcomer* Hunt Companies, Inc. 51,281 34,792 Woody Hunt El Paso TX 18 18 MAA 49,407 46,306 H. Eric Bolton, Jr. Memphis TN 19 17 Fairfield Residential Company LLC 49,053 46,851 Chris Hashioka San Diego CA 20 16 The ConAm Group of Companies 46,700 47,400 Brad Forrester San Diego CA 21 23 BH Management Services, Inc. 45,907 41,641 Nicholas H. Roby Des Moines IA 22 22 JRK Property Holdings, Inc. 45,422 41,934 Jim Lippman Los Angeles CA 23 36 The Related Companies 44,289 34,439 Jeff Blau New York NY Westdale Real Estate Investment 24 20 & Management 43,883 44,765 Joseph G. Beard Dallas TX *Due to changes in reporting, Hunt Companies, Inc. appears for the first time on the top managers list; however, Hunt subsidiary LEDIC Management Group, Inc. ranked No. 48 on the 2011 managers list. 6 NMHC 50 APRIL 2012
A SPECIAL SuPPLEMENT TO NATIONAL REAL ESTATE INVESTOR UNITS UNITS 2012 2011 MaNaged MaNaged CORPORaTe RaNK RaNK COMPaNY 2012 2011 OFFICeR HQ CITY STaTe 25 27 Home Properties, Inc. 41,951 38,861 Edward J. Pettinella Rochester NY 26 26 Michaels Development Company 41,597 39,575 Robert J. Greer Marlton NJ 27 24 The Laramar Group, LLC 41,235 40,521 Thomas Klaess Denver CO 28 25 Village Green 39,500 40,000 Jonathan Holtzman Detroit/Chicago MI 29 31 Multifamily Management Services 39,100 35,800 Jeffrey Goldstein Suffern NY Irvine Company Apartment 30 28 Communities 38,914 38,220 Kevin Baldridge Irvine CA 31 29 Gables Residential 36,896 38,105 David D. Fitch Atlanta GA 32 37 Forest City Residential Group, Inc. 36,053 34,096 Ronald A. Ratner Cleveland OH 33 35 Lindsey Management Co., Inc. 35,980 34,440 James E. Lindsey Fayetteville AR 34 40 The Lynd Company 35,095 32,875 A. David Lynd San Antonio TX 35 39 Colonial Properties Trust 34,681 34,275 Thomas H. Lowder Birmingham AL 36 19 Milestone Management, L.P. 34,439 45,896 Steve Lamberti Dallas TX 37 38 McKinley, Inc. 34,056 33,922 Albert M. Berriz Ann Arbor MI 38 46 Essex Property Trust Inc. 33,924 30,317 Michael Schall Palo Alto CA 39 32 Sentinel Real Estate Corporation 33,500 35,000 John H. Streicker New York NY 40 50 Berkshire Property Advisors 32,536 28,085 Frank Apeseche Boston MA 41 41 Concord Management Limited 32,467 32,313 Edward O. Wood, Jr. Maitland FL 42 34 Asset Plus Companies 32,302 34,887 Michael S. McGrath Houston TX 43 Newcomer Weidner Apartment Homes 31,551 20,508 Jack O Connor Kirkland WA 44 30 Capstone Real Estate Services, Inc. 31,044 36,884 James W. Berkey Austin TX 45 45 The John Stewart Company 30,637 30,534 Jack D. Gardner San Francisco CA 46 47 The Bozzuto Group 30,529 32,276 Thomas S. Bozzuto Greenbelt MD 47 42 CAPREIT, Inc. 30,040 31,000 Dick Kadish Rockville MD 48 Newcomer Harbor Group International 28,686 22,000 Jordan Slone Norfolk VA 49 44 Morgan Properties 28,118 30,625 Mitchell L. Morgan King of Prussia PA 50 Newcomer Orion Real Estate Services, Inc. 27,573 26,570 Kirk Tate Houston TX APRIL 2012 NMHC 50 7
A special supplement to NAtIONAL REAL EstAtE INVEstOR Top Apartment Firms Strategically Pursue Surging Rental Market By Mark Obrinsky, Vice President of Research and Chief Economist, National Multi Housing Council OvERviEw Apartment Market Demand for apartment residences continued to surge in 2011 as more households decided that renting was a better fit for their lifestyles, needs and budgets than owning. Overall, the renter share of households rose to 34.0 percent at year-end, the highest level in almost 14 years. Net absorption among investment-grade apartments posted the best back-to-back years since the boom of 1999-2000, while the occupancy rate NMHC 50 PROFilE 2012 Portfolio Size: No. of Apartments Owned 3,003,341 No. of Apartments Managed 2,776,045 Minimum Entry Threshold: No. of Apartments Owned 24,877 No. of Apartments Managed 27,573 DEVELOPMENT FINANCE CONSTRUCTION MANAGEMENT American Campus Communities is a $4.5 billion real estate investment trust (REIT) traded on the NYSE (symbol: ACC). Since 1993 we have structured and closed more than $6 billion of student housing transactions. With business expertise in project design and development, asset acquisition, and management services, we are the nation s premier owner and operator of quality student housing. AMERICANCAMPUS.COM rose 110 basis points (bps) from the fourth quarter of last year to almost 95 percent, an indication of solid recovery from the Great Recession. New supply remained sparse. The historically low level of multifamily starts in 2009 and 2010 led to low completions in 2011. However, starts rebounded significantly, suggesting completions should ramp up in 2012, with stronger deliveries likely for 2013 and beyond. Even so, the level of new multifamily construction in 2011 was barely half of the average annual pace from 1997 to 2006. NMHC s most recent Quarterly Survey of Apartment Market Conditions showed that although new development activity was widespread, starts lagged only one-fifth of respondents indicated that groundbreaking had accelerated. What s more, almost half of respondents indicated that new development was considerably below demand. New construction financing remained an obstacle in many markets, along with outdated zoning codes, unnecessary regulations and NIMBY groups. The boom in renters combined with the near-bust in supply led to strong rent growth. Same-store asking rents APRIL 2012
Working together. $13,860,000 Branchwood Towers Clinton, MD Freddie Mac Affordable Refinance $10,680,000 Carrollton Oaks Carrollton, TX Fannie Mae DUS Acquisition $25,700,000 Monterra Apartments Cooper City, FL Freddie Mac Affordable Construction $24,750,000 Pembrook Club Gurnee, IL Fannie Mae DUS Acquisition $15,700,000 Waterview Apartments Benicia, CA Freddie Mac CME Refinance $5,800,000 Towers on Greenwood Seattle, WA Life Company Refinance With diverse expertise encompassing all components of the real estate capital structure, CW differentiates itself by harnessing its vast resources to develop the most successful, client specific solutions. For more information, contact: Ellen Kantrowitz FHA 781.707.9309 ekantrowitz@cwcapital.com Donald King Fannie Mae & Freddie Mac 781.707.9494 dking@cwcapital.com CWCAPITAL.COM Fannie Mae Freddie Mac FHA Life Co Bridge Conduit Mezz
A SPECIAL SuPPLEMENT To NATIoNAL REAL ESTATE INvESToR were up by almost five percent in 2011 nationally, surpassing the previous peak. Adjusted for inflation, however, real rents were still seven percent below the level of 4Q2006. Apartment transaction volume continued to grow in 2011, climbing 54 percent higher than 2010 and more than tripling 2009 levels. Indeed, at nearly $54 billion, volume surpassed 2004 levels, the last year before the condo conversionfueled boom. Apartment prices have risen sharply since the trough the national average is up 25 percent to 35 percent by most measures and recent transactions show that many class-a properties in prime locations have even surpassed their previous peak. Cap rates eased a bit further last year to 6.5 percent, around 50 bps lower than the peak two years earlier. Top 50 Owners and Managers The total number of apartments owned by firms in the NMHC 50 owners list is 8.2 percent greater than the number managed by the Top 50 managers, the largest difference in six years. In line with the previous three years, the mean and median portfolios among apartment owners are also larger than the mean and median management portfolios. But once again, the top management firm has a larger portfolio than the top owner firm, and the entry threshold for NMHC 50 managers is higher than that for the NMHC 50 owners. Most firms are bunched together in a relatively small band: 30 of the top management firms have between 30,000 and 50,000 apartments, as do 24 firms on the owners list. Apartment Ownership Boston Capital topped the NMHC 50 owners list for the third consecutive year. (The firm also marked its 21st straight year among the Top 10 owners.) The next three spots were unchanged as well: Centerline Capital Group, Boston Financial Investment Management LP and SunAmerica Affordable Housing TOp 10 ApArTMeNT OwNer FirMs rank/company No. of Apartments 1 Boston Capital 157,423 2 Centerline Capital Group 150,000 3 Boston Financial Investment Management, LP 140,077 4 SunAmerica Affordable Housing Partners, Inc. 134,882 5 PNC Real Estate 126,260 6 Equity Residential 119,743 7 Hunt Companies, Inc. 114,712 8 National Equity Fund, Inc. 106,772 9 The Richman Group Affordable Housing Corporation 98,770 10 Enterprise Community Investment, Inc. 97,822 NMHC 50 OwNers* Overview Number of Apartments Owned Top 10 1,246,461 Second 10 632,360 Top 25 2,120,662 Second 25 882,679 Top 50 3,003,341 portfolio size Measures Mean 60,067 Median 47,322 No. 1 firm 157,423 No. 50 firm 24,877 share of National Apartment stock Top 10 7.1% Top 25 12.1% Top 50 17.1% * Changes in ownership definition and company response make historical comparisons difficult. Partners Inc. PNC Real Estate moved up a notch to round out the top five, while Equity Residential moved down one spot to No. 6. Hunt Companies, Inc. appears in the Top 10 list for the first time, coming in at No. 7. Rounding out the Top 10 this year are the same firms from last year, although The Richman Group Affordable Housing Corporation and Enterprise Community Investment Inc. swapped order. Four of the Top 10 owner firms increased their portfolios in ApArTMeNT OwNers Largest portfolio Growth Apartments Hunt Companies, Inc. + 52,603 The Related Companies + 13,330 Weidner Apartment Homes + 11,043 Camden Property Trust + 5,975 Berkshire Property Advisors + 5,941 Moving Up in rank slots The Related Companies + 11 Berkshire Property Advisors + 8 Hunt Companies, Inc. + 7 MAA + 3 10 NMHC 50 APRIL 2012
GrandMarc at Westberry Place Fort Worth, TX $54,336,722 Student Housing Investment Sale 360 West Hubbard $140,500,000 Equity Raise/ Construction Financing The Alexander Alexandria City, VA $75,925,000 Investment Sale H191 Portfolio Seattle Metro $155,342,000 Freddie Mac Fixed Rate Financing More than $17 Billion of Multi-Housing Value Creation in 2011 CBRE was once again the leading market-maker for the multi-housing industry in 2011. We ve been the #1 investment sales apartment broker for 10 years running*, and the only commercial real estate brokerage with Fannie Mae, Freddie Mac and HUD FHA direct lending capabilities. We continue to create value for investors as the most robust facilitator of multi-housing capital markets transactions in the United States. *Source: Real Capital Analytics CBRE Multi-Housing Group Market Insight. Capital Access. Execution. www.cbre.com/mhg
A SPECIAL SUPPLEMENT To NATIoNAL REAL ESTATE INvESToR 2011. Hunt Companies, Inc. had the biggest net gain with a pickup of 52,603 apartments, largely a result of the purchase of Capmark Financial Group s affordable housing portfolio. Equity Residential shed the largest number of apartments, downsizing their holdings to the tune of 9,861 units. Thirty-two of the 2012 NMHC 50 owner firms were net acquirers last year, adding a total of 143,200 apartments to their portfolios. By contrast, 17 were net sellers, dropping 78,098 units.* On balance, these firms grew by a combined total of 65,102 units. This year s 50 largest firms own 2.4 percent more apartments than last year s Top 50, a growth rate right in line with the average for the past five years. For the second year in a row, Hunt Companies, Inc. posted the biggest increase, which moved them into the Top 10 for the first time. The Related Companies made the biggest jump up the rankings list, shooting up 11 places to the No. 22 slot. For the fourth straight year, Aimco remains the biggest net seller, trimming its portfolio by 17,313 units a strategy that moved the company out of the *Totals do not add up to 50; TIAA-CREF did not provide 2011 unit data. TOp 10 ApARTMENT MANAGEMENT FIRMS Rank/Company No. of Apartments Managed 1 Greystar Real Estate Partners, LLC 192,711 2 Riverstone Residential Group 170,341 3 Lincoln Property Company 144,033 4 Pinnacle Family of Companies 138,638 5 Equity Residential 119,743 6 WinnCompanies 91,920 7 Aimco 88,530 8 Archstone 77,997 9 Camden Property Trust 67,217 10 Bell Partners Inc. 65,205 Top 10 for the first time since 1997. Roughly eight out of 10 Top 50 owners have market-rate apartments in their portfolios while exactly half own taxcredit properties or other subsidized properties. Eighteen firms have senior housing apartments; of those, five have more than 20,000 senior apartments. The NMHC 50 owners are geographically diversified: 90 percent have properties REITs in the Rankings The number of REITs on the 2012 NMHC 50 owners list is unchanged from the previous two years. Total apartment holdings by REITs in the NMHC 50 decreased for the ninth consecutive year. At 1.6 percent, however, it was the smallest decline since 2006. As in past years, the drop had more to do with company-specific strategies than with the character of the REIT model. In fact, seven REITs grew their portfolios, but this was outweighed by downsizing at Aimco, Equity Residential and, to a much lesser extent, UDR, Inc. In principle, apartment owners could be ranked not only by the number of apartments owned but also by the value of those apartments. While capturing such data is impractical, there is an alternative measure available for public companies, namely total capitalization. While not perfect ownership of non-apartment assets can substantially affect overall firm value it provides a useful perspective on relative size among apartment firms. ApARTMENT REIT SIzE ANd RANk Rank Total Cap Rank Units Among Capitalization Among Owned REITs ($ millions) REITs Equity Residential 119,743 1 26,424 1 Aimco 93,630 2 8,221 4 Camden Property Trust 66,997 3 7,028 6 UDR, Inc. 57,743 4 9,680 3 AvalonBay Communities, Inc. 57,426 5 16,218 2 MAA 49,407 6 4,075 9 Home Properties, Inc. 41,951 7 5,893 7 Colonial Properties Trust 33,975 8 3,656 10 Essex Property Trust, Inc. 32,753 9 7,368 5 BRE Properties, Inc. 25,192 10 5,521 8 Note: Company total capitalization sums (1) market value of shares outstanding, including operating partnership units; (2) the value of perpetual preferred stock; and (3) the book value of total debt outstanding. Capitalization estimates for December 31, 2011, were provided by Stifel Nicolaus & Company, Inc. 12 NMHC 50 APRIL 2012
A special supplement To national REAL EsTATE InvEsToR ApArtMeNt MANAGeMeNt by tier Units (thousands) 3,000 2,500 2,000 2,000 1,500 1,000 Top 10 Top 25 Top 50 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 in the South Atlantic region and 64 percent have properties in New England while each of the other seven regions has properties owned by 78 percent to 86 percent of the firms on the NMHC 50 ownership list. Apartment Managers Stability was the theme at the top of the NMHC management list. For the fourth consecutive year, the same firms made up the Top 10. Greystar Real Estate Partners LLC remains in the top spot for the second straight year, while Riverstone Residential Group kept its second place ranking. Lincoln Property Company (No. 3) and Pinnacle Family of Companies (No. 4) switched places the only ranking change among the Top 10. There were five new firms on the management list this year, two of which debuted in the Top 20. Apartment Management Consultants LLC (No. 12) was a first-time survey respondent, while Hunt Companies, Inc. (No. 17) consolidated its reporting, including former Top 50 manager LEDIC under its umbrella this year. The other newcomers Weidner Apartment Homes (No. 43), Harbor Group International (No. 48) and Orion Real Estate Services Inc. (No. 50) rode portfolio increases to a Top 50 ranking. 2,776.0 1,925.6 1,156.3 Hunt Companies, Inc. registered the largest portfolio gain, adding 16,489 units. Five other firms also had portfolio gains of more than 8,000 units. The Related Companies made the biggest jump in the rankings, up 13 slots to No. 23. Berkshire Property Advisors also made a double-digit move, climbing 10 places to the No. 40 position. Overall, firms on this year s management list added a combined 61,628 apartments to their portfolios, as 34 companies grew compared to the 16 firms that shed assets. The total number of apartments managed by the Top 50 companies is the highest on record. The share of the entire apartment stock under management by the NMHC 50 rose to 15.8 percent, also a new high. Both the mean and the median rose and set new all-time highs. The minimum size needed to make it into the Top 50 edged down a bit from last year s record, but at 27,573 units is still the second-highest threshold since the rankings began. Concentration trends were mixed last year. The portfolios of the 10 largest firms make up 41.7 percent of the Top 50, down from 43 percent last year the group s lowest share in 18 years. Apartments managed by the next 10 firms (No. 11 through No. 20 in the rankings) rose to 19.7 percent from 18.6 percent a year ago. The percentage marks a sizable share but is below 2005 s high-water mark of 20.8 percent. All of the Top 50 firms manage market-rate apartments. In addition, 32 companies have Low-Income Housing Tax Credit (LIHTC) properties in their portfolios and of those, 19 also manage non-lihtc affordable properties. Eighteen firms have senior housing apartments under management, although only Pinnacle Family of Companies has more than 20,000 such units. The South Atlantic region is home to properties from 44 of the Top 50 managers, the most of any region. At the other end of the spectrum, 23 of the Top 50 manage properties in the New England region. ApArtMeNt MANAGers Largest portfolio Growth Apartments Hunt Companies, Inc. + 16,489 Weidner Apartment Homes + 11,043 Lincoln Property Company + 10,608 The Related Companies + 9,850 Alliance Residential Company + 8,432 Riverstone Residential Group + 8,159 Moving Up in rank slots The Related Companies + 13 Berkshire Property Advisors + 10 Essex Property Trust, Inc. + 8 The Lynd Company + 6 Forest City Residential Group, Inc. + 5 14 NMHC 50 APRIL 2012
A SpeciAl SuppleMeNT To NATioNAl real estate investor NMHC 50 MaNagers Number of apartments Managed 2012 2011 2010 2009 2008 2007 2006 Top 10 1,156,335 1,171,167 1,195,881 1,224,042 1,194,108 1,106,880 1,051,603 Second 10 547,805 505,197 496,740 487,528 523,614 498,472 469,786 Top 25 1,925,592 1,885,014 1,890,933 1,915,170 1,930,162 1,810,315 1,703,865 Second 25 850,453 837,880 798,786 754,002 797,946 770,885 680,091 Top 50 2,776,045 2,722,894 2,689,719 2,669,172 2,728,108 2,581,200 2,383,956 Portfolio size Measures Mean 55,521 54,458 53,794 53,383 54,562 51,624 47,679 Median 41,774 39,788 37,767 37,871 40,578 40,010 33,150 No. 1 firm 192,711 187,360 183,877 185,219 195,888 209,412 197,774 No. 50 firm 27,573 28,085 26,845 23,730 25,852 25,277 22,500 share of National apartment stock Top 10 6.6% 6.7% 6.9% 7.0% 6.9% 6.4% 6.0% Top 25 11.0% 10.8% 10.9% 11.0% 11.1% 10.4% 9.7% Top 50 15.8% 15.6% 15.5% 15.3% 15.7% 14.8% 13.6% MetHodology The National Multi Housing Council (NMHC) partnered with Kingsley Associates to handle the NMHC 50 survey process (though NMHC remains solely responsible for any errors). To compile the NMHC 50 lists, both organizations gather names of owners and managers from as wide a range of sources as possible, and staff from each firm complete the survey online. Over the years, improved outreach and increased publicity associated with the rankings have resulted in more firms responding to the survey. For the purposes of this survey, investment fund managers are treated as owners only if they retain substantial equity in the apartment property or if they maintain effective responsibility and decision-making over the investment property. Similarly, tax credit syndicators and franchisers are regarded as owners only if they retain a fiduciary responsibility. (When firms function strictly as advisers rather than investors, they are not regarded as owners.) The rankings do not distinguish between partial and full ownership. Some firms own sizable apartment properties through joint ventures in which their share could range anywhere from 1 to 99 percent. Others are primarily the sole owners of their apartments. In principle, it would be desirable to account for partial ownership treating 50 percent ownership of 100 apartments as equivalent to full ownership of 50 units, for example. In practice, it is not feasible to make such distinctions. The survey excludes condominiums, cooperatives, hotel rooms, nursing homes, hospital rooms, mobile homes and houses with rental units. Rental housing for seniors (age-restricted apartments) is included, although assisted living and congregate care facilities are not. Finally, since we measure industry concentration by comparing the Top 50 owners and managers against the nation s entire apartment stock, only U.S. apartments are included. At times, a firm may debut on the NMHC 50 at a high level. Generally, this means the firm is responding to the survey for the first time, rather than an indication of an outsized portfolio gain although that, too, happens on occasion. Nonetheless, despite many improvements and everyone s best efforts, the process remains imperfect: It relies on both accurate reporting and surveying of the complete universe, both of which can be fraught with problems. There are two caveats in comparing the lists over time. First, the definition was refined in 2006 to eliminate those investment fund managers with neither substantial equity nor effective control over the investment property. Second, occasionally firms that have previously been among the Top 50 owners or managers have not responded to the NMHC survey. When that occurs, companies appear on the list that otherwise might not have been large enough. In addition, this affects the total number of apartments owned by the Top 50 firms, as well as other measures of concentration such as the mean and median portfolio size. (Note that this did not affect the management list.) For these reasons, year-to-year comparisons must be made with great care. Note: In some cases, newly introduced policies prohibited firms from sharing the kind of information needed for these rankings. April 2012 NMHC 50 15
A special supplement to national ReAL estate InVestoR The Anatomy of a Brand Strategy Changing demographics lead some apartment firms to pursue new brand segmentation strategies. By Bill Gloede GenerATion Y energy: AvalonBay s AVA communities target the highly social, super-connected echo boomer demographic. When Arlington, Va.-based AvalonBay Communities, Inc. announced in December that it was splitting its communities into three distinct brands, many in the industry took the news as a sign that the apartment rental industry had fully shaken off the dust from the downturn. With rents and renewals rising, business was back on a growth track, and the future looked promising. Not only were consumers beginning to question the value of homeownership, but Generation Y s throngs of echo boomers were coming of age, creating a huge, emerging demographic market for apartment rentals. Not since the upscale rental segment took off back in the late 1990s had there been such a clearly defined marketing opportunity. Under AvalonBay s new structure, the company s core brand, Avalon, will continue as the company s flagship. Located in bigger urban and suburban markets, Avalon communities will include high-end amenities and services and continue as the publicly traded REIT s primary growth engine through new development, according to the company s Senior Vice President for Brand Strategy Kurt Conway. Apartments will be larger and include premium finishes, lighting, appliances and amenities. The second brand in AvalonBay s portfolio, called Eaves by Avalon, will include communities located in mostly suburban locations and target more cost-conscious, value-oriented renters. The final brand is dubbed AVA, partly because, as Conway puts it, The word AVA underscores the brand s social elements. After all, it s a person s name. The brand is squarely targeted to the highly social, super-connected Generation Y demographic. These communities will be in transit-friendly and urban settings in energized neighborhoods, as Conway calls them. Properties will feature smaller apartments 16 nmhc 50 APRIL 2012
A special A special supplement to national to real estate investor as well as units more conducive to roommate living. Conway points to a new AVA community under construction in the H-Street district of Washington, D.C., as representative of the new brand. Situated in an emerging youthful, walkable neighborhood, the property offers Generation Y residents ready access to transit, nightlife, galleries and restaurants. Apartments range from 450 square feet for a studio to 550- to 650-sq.-ft. one-bedrooms and roommate-friendly units in the 750- to 1,050-sq.-ft. range. While the brands are new for the company, which ranked No. 16 on the NMHC 50 Owners list and No. 14 on the NMHC 50 Managers list, the underlying strategy is really reflective of something the company s been doing for the past 25 years investing in locations where people want to live. [We re] focusing on the best performing markets and submarkets in the U.S, and within these markets, we are putting the right product that best matches customer needs, Conway says. But while some in the industry see new branding strategies similar to AvalonBay s as an extension of existing target marketing efforts, others disagree, arguing that the industry, in general, has placed more emphasis on the transaction and the property than the end user, or resident. Jonathan Holtzman, chairman and CEO of Farmington Hills, Mich.-based Village Green, which ranked No. 28 on the NMHC 50 Managers list, would agree that the apartment industry, in general, has been behind the curve in terms of consumer segmentation. However, he points out that some companies strategies aimed at capturing Generation Y s attention aren t so much new as newly launched. As he explains it, somewhat diplomatically, The apartment business has historically been behind the retail, hospitality and food industries. The fact that some companies are now acting like this is a fresh idea is not respectful of apartment firms that have had branding since the 1960s. For example, Holtzman says Village Green, which now owns or manages approximately 40,000 apartments in 16 states, adopted a brand strategy after witnessing the growth of this company called Holiday Inn. It was the first branded chain of motels, and it grew, quickly, to a dominant position in the industry. Along with Village Green in the move to branding back then, says Holzman, were Oakwood, now Oakwood Worldwide, and Post April 2012 [We re] focusing on the best performing markets and submarkets in the u.s, and within these markets, we are putting the right product that best matches customer needs. Kurt conway, AvalonBay communities, inc. Properties. And even before them, the LeFrak Organization. Holtzman s take on the industry reflects his background; he is the third generation of his family to run the company, which was founded by his grandfather in 1919. When the first wave of branding and segmentation took place in the 1960s, he says, the apartment companies that bought in were asking the same question: How can you call an urban high-rise building with BUILDING COMMUNITY BUILDS VALUE. Occupancy. Rent Values. Retention. Regardless of your 2012 focus, ours continues to be delivering ROI through community. Call 877.785.2963 or visit CARESprogram.org Check out the new CARESprogram.org. New Look, Same Focus.
A SPecIAL SuPPLeMeNt to NAtIoNAL ReAL estate INveStoR live, work, play: Generation Y s housing preferences are driving apartment firms toward urban, transit-oriented development like this community by Somerset Development, located three subway stops from Midtown Manhattan in Wood-Ridge, N.J. high rents the same name as a 20-year-old garden apartment community in the suburbs? No other industry would do that. So, in 1989, company executives decided to do something different. Rather than market their properties based on their location, amenities and rent levels, which is what most firms were doing, executives moved to launch two distinct brands. Village Green became a single brand, made up of DEVELOPMENT FINANCE CONSTRUCTION MANAGEMENT American Campus Communities is a $4.5 billion real estate investment trust (REIT) traded on the NYSE (symbol: ACC). Since 1993 we have structured and closed more than $6 billion of student housing transactions. With business expertise in project design and development, asset acquisition, and management services, we are the nation s premier owner and operator of quality student housing. AMERICANCAMPUS.COM older, suburban garden apartment complexes; Village Park became a new brand characterized by apartments with cathedral ceilings, in-unit washers and dryers, fireplaces, pools and clubhouses aimed at increasingly affluent baby boomers closer in to urban cores. And that trend continued through the decades to follow. In the late 1990s, company executives rolled out the City brand as Village Green began building environmentally friendly urban apartments with ready access to transit, featuring island kitchens, upscale appliances, upgraded flooring and bathrooms and rooftop pools. In the early 2000s, the company unveiled its Regents Park brand, which targets an older, upscale demographic looking for a more suburban setting. The company also added fifth brand aimed at the corporate relocation and temporary housing market that offers wellappointed, furnished shorter-term rentals. However, some apartment executives remain skeptical of the long-term value and effectiveness of a multi-brand strategy. Greensboro, N.C.-based Bell Partners, No. 30 on the NMHC 50 Owners list and No. 10 on the NMHC 50 Managers list, markets properties using its core brand proposition, apartment living at its best. The tagline is trademarked and used across its entire portfolio in conjunction with micro-brands created for individual communities. This strategy reflects a view that apartments are largely commodity products, and each community offers apartments designed to address unique tastes and needs. The consumers own the brand, and they define what that brand stands for, says Kevin Thompson, senior vice president of marketing for Bell. For Bell, apartment living at its best, is a blanket marketing strategy that can just as easily define a 595-sq.- ft. studio at Bell Park Central in Dallas or a two-bedroom, two-bath suite at the Bell Midtown in Nashville or even a 1,500-sq.-ft. three-bedroom, twobath family apartment at Bell Preston Reserve in Cary, N.C. Bell s strategy is more akin to a mass marketer than those of Village Green and AvalonBay. Think Ford. Every Ford is called a Ford. Every Bell apartment is called a Bell apartment. That s by design, according to Thompson. We should always be cautious before we do brand extensions, he says. You can easily cannibalize your core brand. 18 NMHC 50 APRIL 2012