Long considered a bastion of hope in a treacherous real estate climate, the apartment industry is starting to feel the pain. That’s evident in moves made by several apartment REITs at the start of 2009.
Denver-based AIMCO, one of the country’s largest apartment owners, announced that it was cutting about 7 percent of its work force and will take write-off costs for abandoning certain redevelopment projects and deals. The firm also announced it would take impairment losses of $85.4 million for stopping work on three California assets.
Meanwhile, San Francisco-based BRE Properties discontinued predevelopment at three sites and recorded an abandonment charge of $5.1 million. It also eliminated 33 positions, primarily in the development arena. The firm reduced its overall work force by 4 percent and its development staff by 36 percent. It still has five apartment projects under construction.
Karin Ford, a senior analyst and vice president for New York-based Key Banc Capital Markets says there are differences in the two cases. “AIMCO’s pressure is coming from their leverage,” she says. “BRE is abandoning ground-up development and laying off people in their development arm.”
Similarly, Houston-based Camden Property Trust is halting five development projects and has eliminated staff. Altogether, the REIT reduced its total work force by about 3 percent and its development personnel by half. Meanwhile, Atlanta-based Post Properties and Alexandria, Va.-based AvalonBay Communities also announced they would cease development in 2009.