In The Spotlight

No stranger to the spotlight—and certainly no stranger to the Top 50 Owners list—is Arlington, Va.–based AvalonBay Communities, which ranks No. 14 among 2011’s top owners. The REIT managed to add nearly 4,000 new units to its portfolio and raised almost $1 billion in new capital for development and other corporate purposes last year. According to the company, it had a very busy year, starting $900 million worth of new construction for 3,071 apartment homes (good for No. 4 on the Top 50 Builders list) and completing $300 million in new construction, delivering 1,160 apartment homes.

Meanwhile, Rochester, N.Y.–based Home Properties jumped one spot in 2011, to No. 30, after holding steady at No. 31 for the past two years, by adding just over 3,000 new units. In addition to acquiring $250 million in assets, the company had same-store NOI growth of 5 percent and strengthened its balance sheet by adding financial flexibility with numerous capital markets initiatives, including issuing $527 million in equity, offering $400 million in unsecured debt, and increasing its line of credit from $175 million to $275 million, which lowered the firm’s debt level, improved its credit metrics, and increased its unencumbered assets.

And then there’s Gardena, Calif.–based Highridge Costa Investors, a newcomer to the Top 50 Owners list, at No. 45. The company saw $23 million in revenue last year from its multifamily operations. With a focus on its West Coast markets, Highridge restructured its debt and equity, received an allocation of tax credits for new senior housing in California, and refinanced a large project in San Jose.

 

View the 2012 MFE Top 50 Owners List

Just like last year’s list, the affordable housing firms dominated the top spots again in 2011. It also seems that many of these multifamily owners were still able to get by just fine without increasing portfolio volume. In fact, almost every company near the top of the owners list this year shed units from their portfolios. Only five of the top 10 owners increased the number of units they owned in 2011.

But that doesn’t mean they weren’t active in the multifamily market last year. The smaller portfolio numbers for many companies were a result of dispositions outweighing acquisitions of units in many cases. And Denver-based Apartment Investment and Management Co. went from 110,946 units in 2010 to 76,717 last year. That represents a 45 percent decrease and amazingly still only takes enough steam away to drop it a few spots, to No. 11.

Another good example of how quickly a portfolio can reshape itself in the multifamily industry is Irvine, Calif.–based Bascom Group (No. 47). For 2011, the company dropped several spots on the list because it clocked in with 26 percent fewer units. But if you consider the fact that 1,580 letters of intent were submitted on behalf of Bascom—with 56 being best and final last year—and that the company plans $70 million in dispositions this year, it could be argued that its portfolio isn’t really moving up or down but rather making lateral moves.

But not every multifamily owner was trimming its portfolio in 2011. There were quite a few that made plenty of room for new acquisitions. Among the biggest gainers in the top 10 was Chicago-based affordable housing firm National Equity Fund (No. 8). During 2011, the company added more than 3,000 new units to its portfolio, a 3 percent increase from 2010. According to the company’s brand manager, Maureen Mullady, National Equity cites its ability to achieve its investment goals as a result of sticking to a conservative game plan.

“We don’t chase market share, and our experience demonstrates why. Even through the economic downturn, our portfolio performed well. Part of that is due to the way we approach asset management: with highly experienced professionals, innovative Web-based technology, and assertive early involvement with sponsors to mitigate problems,” says Mullady.

But the biggest standout in terms of growing a multifamily portfolio last year was El Paso, Texas–based Hunt Cos. (7), which went on an acquisition spree in 2011, adding 52,665 new units.

The reason for the huge spike in units was its addition of three new subsidiary companies at the end of 2010. These firms’ combined acquisitions for the year are what give Hunt such a large total of new units purchased. And don’t expect the company to slow down any in 2012. It plans to continue expanding and improving its asset holdings with a focus on key sectors such as multifamily housing, public–private partnerships, and community ­development.

Holding steady at No. 3 is Boston Financial Investment Management. The affordable housing powerhouse actually owned fewer units in 2011 than it did in 2010, but it still managed to keep hold of the same rank it held last year. But don’t let it be said that Boston Financial wasn’t actively buying in 2011. According to CEO Ken Cutillo, 2011 was a year when momentum continued to grow for new acquisitions. “2011 was the first year we were back in business on the buying side. We raised around $300 million and acquired 44 properties,” says Cutillo. The reason the company closed out the year with fewer units was because of the nature of the affordable housing market.

“We had a lot of assets that reached the end of their 15-year compliance period,” says Cutillo. “When year 15 comes around on a property, we try to sell it as quickly as is feasible. With cap rates so low, we’re seeing tremendous sales opportunities with our assets,” he adds.

The overall attitude of apartment owners for 2012 seems to be one of staying the course and continuing to capitalize on the growth trend that is spiking in the multifamily industry. And that means keeping the momentum going by not slowing down with development, redevelopment, dispositions, and acquisitions, in order to strike while the iron is hot in the months to come.