Blackstone to Buy Stakes in Apartment Complexes From GE Unit

Blackstone has agreed to buy majority stakes in about 80 apartment complexes from the financing arm of GE.

View the full article on the Wall Street Journal.

Optimism for Apartments Sector for 2013

If we make it over the fiscal cliff, good times may be ahead for apartment builders—though that’s a big “if.”

“Assuming current trends hold, over the rest of this decade, we will need at least 300,000 new apartments annually, and possibly as many as 400,000, to meet demand,” says Mark Obrinsky, vice president of research and chief economist for the National Multi Housing Council.

That would be great news, if it happened. Right now multifamily developers are happy to be building at a rate slightly faster than 250,000 a year. Most apartment analysts think market will be able to absorb that new construction—but not too much more.

NMHC’s Obrinsky says demand for apartments will soon be as strong as it was before the financial crisis. Ostensibly, that is not a radical suggestion, but this week’s events illustrate a potential problem. More chaos in Congress jolted the markets on Friday, driving the Dow Jones Industrial Average down more than 100 points. Investors worry that the collapse of budget talks may lead the country back into recession. It seems that every time our economic recovery has begun to pick up speed over the last few years, something has happened that makes investors question their most basic assumptions about growth and demand. Uncertainty in Europe has been followed by uncertainty in the Middle East, more uncertainty in Europe, and now uncertainty in Washington, D.C.

Despite these challenges, strong demographics help apartments. The number of people who are in the age group most likely to rent apartments—20 to 34 years old—will grow by 2.4 million people over next five years. That’s the fastest rate of growth for that age group since the early 1980s. The demand from Echo Boomers entering the work force and renting apartments plus rising immigration levels will continue to “significantly surpass new construction of rental units,” according to analysis from Marcus & Millichap.

Developers have taken out permits to build new multifamily housing at an annualized, seasonally-adjusted rate of more the 250,000 a year every month since summer 2012, according to Census data. The rate was 296,000 in November—more than twice the rate of construction just after the recession, when almost the only projects built were financed with federal housing subsidies. Housing economists expect “continued, modest growth” in new-home construction through 2013, says David Crowe, chief economist for the National Association of Home Builders.

Before the crash, new construction of more than 300,000 apartments a year was normal. However, to push the new construction towards 400,000 a year will require a stronger recovery than we have seen yet. The number to watch is new household formation. The decade from 2000 to 2010 had the slowest household growth in U.S. history, averaging just 1.0 percent a year. That’s largely because of the Great Recession, which caused many households to double up and led to reduced immigration. In comparison, from 1990 to 2000, the number of households grew by roughly 1.2 percent. The return of that kind of household formation, combined a strong share of those new households choosing to rent apartments will push demand higher, to a maximum of 437,000 a year from 2013 to 2000, say Obrinsky.

Reading today’s bad news, it’s nice to hear something positive. However, even NMHC’s happy prediction comes with a caveat: “Financing constraints, rising construction costs and traditional NIMBY opposition could keep actual construction below that level,” says Obrinsky.

Click here for a link to the article by Bendix Anderson.

Real Estate Investment Firm, Sapp Partners…

Press Release

Real Estate Investment Firm, Sapp Partners, Joins Industry Leader, Alexander Forrest Investments, In Multi-Family Residential properties Acquisition Project

Companies Launch Project Through Multi-million Dollar Investment Fund

PARK CITY, Utah and COLUMBIA, Missouri, October 21, 2011 – Residential real estate investment firm, Sapp Partners, LLC (www.sapppartners.com), today announced that it has aligned with leading industry veteran, Alexander Forrest Investments, LLC (www.alexanderforrest.com), in an effort to build a considerable portfolio of properties throughout the Midwest, South, Southwest, and Southeast U.S. The companies’ efforts will be supported by the Sapp Value Fund I, a multi-million dollar investment fund contributed to by REITs, family offices, private investors, and other institutional investors that want stabilized properties with attractive cash yields for their investors.

“We are absolutely thrilled to work with Alexander Forrest on this exciting project,” said Ryan Sapp, Founder and Managing Partner of Sapp Partners, LLC. “They are an ideal fit with the talents and core competencies of our management team. Together, we expect to build a substantial fund to support our strategic goals of building an impressive portfolio of properties,” he added.

Alexander Forrest Investments President, Paxton Schneider, added, “Our alliance with Sapp Partners will greatly enhance our offering to the industry. Their finance relationships, coupled with their deep understanding of the acquisition, renovation and re-stabilization process, will allow us to be a greater force in the space.”

The recent economic and housing downturn has raised the promise of multi-family properties as a robust investment opportunity. Class B and Class C properties, in particular, are experiencing tremendous demand as viable alternatives to home ownership. The Sapp-Alexander Forrest effort will focus primarily on the sourcing, acquisition, renovation and re-stabilization, and management of such properties; a process in which both companies have proven expertise.

About Sapp Partners, LLC

Sapp Partners, LLC (www.sapppartners.com) is a real estate investment firm focused on the burgeoning multi-family residential real estate industry. The firm is poised to capitalize on the unique opportunity present in the apartment investment sector, targeting assets in the Class B and Class C apartment communities of the Midwest, South, Southeast, and Southwest U.S. markets. Sapp Partners will leverage two key indicators for success: 60 years of real estate experience, with a golden market opportunity. The Sapp Partners value proposition lies in its ability to target an opportunity, make necessary capital improvements, and install a highly respected management team to the site, raising occupancy and revenue. Its operational mantra is simple: maximize profit through sourcing, selection, strengthening, then stabilizing.

About Alexander Forrest Investments, LLC

Alexander Forrest Investments, LLC (www.alexanderforrest.com), headquartered in Columbia, Missouri, has been a leader in the real estate investment sector since 1987. Since its inception, the firm has acquired, managed and sold over 3,500 multi-family residential real estate units. They currently manage 2,000 apartment home units, plus 150,000 square feet of commercial space. They are highly respected for their targeted approach to sourcing properties, their precise due diligence process, thorough project analysis, efficient renovation, and exemplary property management program.

Contact:
Ryan Sapp
435.513.5454
ryan@sapppartners.com

Paxton Schneider
573.449.7332
paxton@alexanderforrest.com

Real Estate Investment Firm…

Press Release

Real Estate Investment Firm, Sapp Partners, Chooses Rothstein Kass as its Business Advisor

Companies Launch Project Through Multi-million Dollar Investment Fund

PARK CITY, Utah and NEW YORK, New York, October 21, 2011 – Residential real estate investment firm, Sapp Partners, LLC (www.sapppartners.com), today announced it has chosen Rothstein Kass (www.rkco.com)to provide business advisory services to the firm. Sapp Partners will utilize the renowned expertise of Rothstein Kass for strategic business consulting, regulatory compliance, SEC advisory services, insurance, and risk management consulting for their investment fund, the Sapp Value Fund I, L.P

“The development and management of an investment fund requires thoughtful strategy and diligent adherence to regulatory guidelines, and we think Rothstein Kass is the ideal firm to help us in this mission critical process,” said Ryan Sapp, Founder and Managing Partner of Sapp Partners, LLC.

Rothstein Kass will provide guidance to Sapp Partners in the management of the Sapp Value Fund I, L.P., a multi-million dollar investment fund contributed to by REITs, family offices, private investors, and other institutional investors that want stabilized properties with attractive cash yields for their investors.

About Sapp Partners, LLC

Sapp Partners, LLC (www.sapppartners.com) is a real estate investment firm focused on the burgeoning multi-family residential real estate industry. The firm is poised to capitalize on the unique opportunity present in the apartment investment sector, targeting assets in the Class B and Class C apartment communities of the Midwest, South, Southeast, and Southwest U.S. markets. Sapp Partners will leverage two key indicators for success: 60 years of real estate experience, with a golden market opportunity. The Sapp Partners value proposition lies in its ability to target an opportunity, make necessary capital improvements, and install a highly respected management team to the site, raising occupancy and revenue. Its operational mantra is simple: maximize profit through sourcing, selection, strengthening, then stabilizing.

About Rothstein Kass

Rothstein Kass Business Advisory Services, LLC (www.rkco.com)professionals provide value-added and result-oriented consulting services to clients across industries in the areas of strategy, operations, technology, risk, compliance, dispute resolution and investigations. Rothstein Kass Business Advisory Services, LLC is an affiliate of Rothstein, Kass & Company, P.C., a premier professional services firm serving clients for more than 50 years.

Contact:
Ryan Sapp
435.513.5454
ryan@sapppartners.com

Rob Soloman / Erin Oliveri
Rothstein Kass
917.438.3918
Follow Rothstein Kass on Twitter @Rothstein_Kass