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Bull Run in Nation’s Apartment Market; But Texas Multifamily Firms Not High on the Leader Board

(By Dale King)  – Record high demand for rental units nationwide continues to fuel hot apartment industry growth. But the response in Texas is generally unremarkable, as evidenced in the National Multifamily Housing Council’s (NMHC) newly released 2016 NMHC 50, a ranking of the country’s largest apartment owners, managers, developers and contractors.

The list shows that many of the nation’s largest players are shoring up their positions and balancing their portfolios as both new and smaller participants look to capture market share and move up in the ranks.

The portions of charted results reflecting top-notch performers in the Lone Star State were a bit slim. On the graph for 50 largest apartment owners Texas doesn’t show up until No. 14 with Houston-based Camden Property Trust increasing the number of its owned units from 58,948 to 59,782.

At the same time, Denver-based Alden Torch Financial listed ownership of 191,759 units to top the list for two straight years. Second place went to Portland, Ore.-based PNC Real Estate with 134,346 owned units and the Bay State’s Boston Capital, third, with 129,936 rentals.

In the list of 50 firms owning the most rental units, Dallas-based companies placed four: Lincoln Property, No. 24, 49,024 units; Invesco Real Estate, No. 37, 31,744 units; Westdale Real Estate Investment and Management, No. 39, 30,448 and Milestone Management LLC, No. 48, 25,073 rentals.

Hunt Companies of El Paso placed 18th with 52,225 units and American Campus Communities of Austin placed 38th with 30,973 rentals.

Among top firm on the property management list, Greystar Real Estate Partners rose to the top after adding 20,600 units to its portfolio and becoming the first property leader to break the 400,000-unit threshold. Dallas-based Lincoln Property Co. reported managing 165,251 units to place second on the list and Pinnacle, also in Dallas, raised the number of units it manages from 131,190 to 134,725 to finish third.

Of the 11 Texas firms on the list of 50 top managers, Houston placed two: Camden Property Trust in 15th place with 59,357 rentals and Asset Plus Companies, 17th place with 56,357 rentals under management. Dallas had a total of five, including Westdale Real Estate Investment and Management, 27th place with 43,390; US Residential Group LLC, 31st place with 40,011 and Milestone Management LLC, No. 40 with 32,245.

Also on the list: Hunt/LEDIC Realty Co. Associates of El Paso, No. 18 with 53,829 rentals under management; American Campus Communities of Austin, No. 29 with 41,845; Capstone Real Estate Services Inc. of Austin, No. 36 with 34,360 and The Lynd Companies of San Antonio, No. 37 with 32,245 units under management.

On a national level, said Mark Obrinsky, NHMC’s senior vice president of research and chief economist, “The apartment industry continued its bull run in 2015, as demand for both apartment homes and apartment properties intensified. Big transactions were more common than usual, causing some noteworthy changes in the NMHC 50 rankings.”

Several multi-billion-dollar portfolio sales led industry consolidation, pushing some companies off the list and reshuffling others. The largest transaction was Lone Star Funds’ purchase of Home Properties for $7.2 billion. Lone Star has offices in Dallas and New York, Canada and several nations overseas.

Other significant transactions include: Clarion’s buyout of Gables Residential, Brookfield Asset Management’s buyout of Associated Estates and Blackstone’s purchase of part of Greystar Real Estate Partners’ portfolio.

Additional industry and NMHC 50 highlights include:

  • 8 million – Growth in the number of renter households from 2005 to 2015, according to the Census Bureau.
  • 384,400 – Starts in multifamily buildings with at least five units, the highest level in 28 years, with more than 90 percent being apartment homes (versus condos), according to Census.
  • $150 billion– Total value of apartment transactions in 2015, which was a new record high at almost one-third more than the previous year’s record high, according to Real Capital Analytics.
  • 2 million – Total number of apartment units sold in 2015, another record, according to Real Capital Analytics.
  • Four – Number of firms to debut on the NMHC 50 owners list: Denver, Colo.-based Alden Torch Financial, LLC (No. 1), Madison, N.J.-based Prudential Real Estate Investors (No. 28), Starwood Capital Group (No. 30), Franktown, Colo.-based Monarch Investment and Management Group (No. 41).
  • Seven – Number of new companies on the NMHC 50 managers list: Philadelphia, Pa.-based GoldOller Real Estate Companies (No. 30), Irvine, Calif.-based Steadfast Companies (No. 34), Atlanta, Ga.-based Cortland Partners, LLC (No. 41), McLean, Va.-based Kettler Management (No. 44), Orlando, Fla.-based ZRS Management, LLC (No. 45), Franktown, Colo.-based Monarch Investment and Management Group (No. 48), Alpharetta, Ga.-based Pegasus Residential (No. 50).

April 20, 2016

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