September 28th, 2017 ~ Seattle, Washington
L5 Investments' Mike Flaherty will be speaking at the Marcus & Millichap/IPA: Multifamily Forum Seattle 2017.
In its fifth year, this Seattle Multifamily Forum brings together over 450 of the Northwest’s most relevant multifamily developers, investors, owners and operators to discuss current market trends and provide the most up-to-date analysis
The Marcus & Millichap / IPA Multifamily Forums across the U.S. bring together over 6,000 multifamily owners, investors, managers and developers to create an in-person marketplace for learning, discovery, networking and deal making. The sessions address the major issues affecting the apartment and condo markets today, and the networking allows multi-housing principals to meet, talk and source deals and investment capital.
SEATTLE—For apartment renters, it can literally pay to renew their existing leases. Zillow said Friday that market-rate rents increased at a faster pace year over year than did rents for tenants who renewed. The firm analyzed 2015 rent data from the US Census American Community Survey, the most recent data available.
The Y-O-Y increase for renters who renewed in ’15 was 3.6%, compared to a 5.6% rise in rent for beginning a new lease. Dollar-wise, that means a renter who had moved in the past year paid an average of $329 more each month than a renter who had lived in the same place for five years or longer.
In some markets, the gap was even greater. Zillow estimates that Bostonians who stayed in the same rental for five or more years saved as much as 86%, which translated to $8,979 in annual rent payments over the five-year period.
Boston renters also faced the biggest difference between annual market rate rent increases (10.5%) and rent increases for renewing (4.3%). Not far behind in terms of the dollar amount was San Francisco, where renters saved an average of $8,860 over five years for staying in place.
On a percentage basis, the market-rate increases were highest in San Francisco at 12.9% and in Denver at 14.1%. Renters in the New York/New Jersey metro area saved $7,376 during the five-year period by renewing, although on a percentage basis the gap between market rate and renewing was close to the national average.
The number of renter households across the US has risen by four million over the past five years to reach 43 million, Zillow says. The majority of recent household formation occurred on the renter side rather than on the homeowner side, due partly to Millennials reaching the age to move out but not having enough savings to buy a home.
Young adults are also renting longer than ever before buying, says Zillow. The savings of renewing in place could be put toward a down payment on a home, seen as the biggest obstacle toward buying, the firm says.
“Renters have a decision to make almost every year: do they stay in the same place, or should they look for a new unit?” says Svenja Gudell, chief economist at Zillow. “With the country in the middle of an affordability crisis, it’s important for renters to understand how much they can save if they renew their lease instead of finding a new rental.
“Nationally, rental rates have slowed and the savings from renewing are not as significant for renters today,” Gudell continues. “However, in some of the hottest rental markets, where rents are still rising aggressively, continually renewing a lease can mean saving thousands of dollars.”
In related news, Apartment List said Friday that rents nationally grew .05% during June, with 92 of the 100 largest US cities posting Y-O-Y growth. June’s increase over May levels was in line with the monthly growth that the firm has seen over the course of 2017.
Nationally, Y-O-Y growth now stands at 2.9%, surpassing the 2.6% annual in the year-ago period. Apartment List notes that the last month in which year-over-year growth outpaced the level from the year prior was December ‘15, although Y-O-Y growth still lags the 3.5% pace seen in June ‘15.
To read this article at Globest.com click HERE
WASHINGTON, D.C., June 12, 2017 – Delayed marriages, an aging population and international immigration are increasing a pressing need for new apartments, to the tune of 4.6 million by 2030, according to a new study commissioned by the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA). It’s important to note that:
The increased demand for apartments is due in large part to:
“Apartment rentals are on the rise, and this trend is expected to continue at least through 2030, which means we’ll need millions of new apartments in the U.S. to meet the increased demand. The western U.S. as well as states such as Texas, Florida and North Carolina are expected to have the greatest need for new apartment housing through 2030, although all states will need more apartment housing moving forward,” said NAA Chair Cindy Clare, CPM. “The need is for all types of apartments and at all price points.”
There will also be a growing need for renovations and improvements on existing apartment buildings, which will provide a boost in jobs (and the economy) nationwide. Hoyt’s research found that 51 percent of the apartment stock was built before 1980, which translates into 11.7 million units that could need upgrading by 2030. The older stock is highly concentrated in the northeast.
“The growing demand for apartments – combined with the need to renovate thousands of apartment buildings across the country – will make a significant and positive impact on our nation’s economy for years to come,” explained NMHC Chair Bob DeWitt. “For frame of reference, apartments and their 39 million residents contribute $1.3 trillion to the national economy. As the industry continues to grow, so will this tremendous economic contribution.”
Other highlights from the report include:
For more information, visit www.WeAreApartments.org.
Read the full article here: http://www.nmhc.org/News/US-Needs-4-6M-New-Apartments-by-2030-to-Keep-Pace-with-Demand/
L5 Investments is pleased to announce the recent, successful closing of the Carlyle Apartments – a value-add investment opportunity. The Carlyle is a 436-unit apartment complex, well located in Shawnee, Kansas – a highly desirable submarket in Kansas City. The property was purchased for $27,550,000 and is 95.41% occupied. The lender’s appraisal value was $27,900,000 with a stabilized, post renovation value of $38,800,000. The Carlyle will be another strong performing asset for our growing portfolio.
This acquisition increases our multifamily holdings in the Kansas City MSA to 1,090 units (soon to increase by an additional 434 units by late June).
The property stands to benefit from our proposed $5,450,000 rehab program which will include an upgraded leasing and fitness center, pool and sundeck, exterior upgrades, an upgraded interior unit technology package, improved landscaping, new signage, and additional exterior lighting. The building interiors 294 of the 436 (67%) apartment units will be fully upgraded over the first three years of ownership. The upgraded units will position us to increase rents and consistently improve the tenant base. Initially, these upgraded units will receive a proposed rent increase of approximately $151/month for upgraded units. The scope of work will update the property for today’s tenant needs/interests, enhance our ability to better market the property, and improve the property aesthetics for the short and long term. More importantly, it will enable us to achieve higher rents and occupancy.
We continue to remove obsolescence from the rental market with communities that offer contemporary housing and services that meet the needs of today’s renter. Whether it is enjoying a coffee in one of our cyber cafés, or relaxing by one of our resort-style swimming pools, we work hard to provide the upscale amenities that many would only expect to find at higher-priced communities.
Please feel free to contact us should you have any questions on our properties or would like more detail about L5 Investments and our services.
MCLEAN, VA—Trading a rental for the dream of homeownership? Not so fast, according to the latest Freddie Mac survey of renters. An even larger majority of those surveyed said they expect to rent their next home: 59%, up from 55% six months ago.
Not surprisingly, the biggest gains in this cohort were seen among younger Millennials, for whom homeownership may be a foreign concept. Seventy-three percent of those surveyed said they planned to rent their next home, compared to 64% in September 2016. Another group that registered a preference for staying in the renter pool was suburban households, up from 48% six months ago to 57% in the most recent Freddie survey.
There were still renters among those surveyed for Freddie who aspire to homeownership, but fewer than last time. The percentage of renters who expect to eventually own declined to 41% from 45% in the previous survey. Along similar lines, the number of renters who said they were working toward homeownership fell from 21% in September to 15% this time around.
Freddie’s latest survey also reveals a preference for living in urban areas even if it means moving into a smaller home. Seventy-five percent of the renters surveyed say they would consider downsizing in order to live in an urban area, with half of those saying they are either “very willing” or “fairly willing” to downsize.
While thoughts of downsizing may imply belt-tightening, that doesn’t appear to be the case among respondents to the latest survey, which found that more renters feel pretty good about their financial situation.
Forty-one percent of renters now say they have enough money to last beyond each payday, up from 34% this past September, while those who said they couldn’t afford essentials fell from 20% to 14%. Those saying they had enough to cover expenses from payday to payday was relatively unchanged at about 45%.
The more positive outlook on personal finances hasn’t really moved the needle on relocation plans, though. Fifty-five percent of all respondents, and 60% of those ages 35 to 49, said they liked where they live and didn’t plan to move if their rents rose.
“It would appear from our new survey that renters today feel better about their finances, like where they are living, and view renting favorably,” says David Brickman, EVP of Freddie Mac Multifamily. “This is consistent with findings from earlier surveys that show a steadily growing number of renters have a positive view of renting.”
Such favorable fundamentals for the long-term apartment outlook help underpin the GSE’s outlook for multifamily originations this year. Freddie said this past Friday that lending volume in the sector could increase by 3% to 6% in 2017, depending on movement in the 10-year Treasury rate.
If the 10-year stays in the range of 2.5%, multifamily volume is estimated to grow to around $295 billion for the year. Conversely, growth could slow to 3% if the 10-year rises more abruptly.
Observes Steve Guggenmos, Freddie Mac Multifamily VP of research and modeling, “The multifamily market is poised for growth and record origination volumes in 2017 under either interest rate scenario. This fact underscores the underlying strength of the multifamily sector thanks to a strong labor market, demand from new households and steady absorption rates.” As a result, he adds, “a moderate rise in interest rates alone will not be enough to cause any significant disruption to the multifamily investment market.”
Read the article on Globest.com: http://www.globest.com/sites/paulbubny/2017/04/11/more-renters-expect-to-keep-on-renting/?kw=More%20Renters%20Expect%20to%20Keep%20On%20Renting&et=editorial&bu=REM&cn=20170411&src=EMC-Email&pt=National
The Panoramic is a mixed-use project across the street from the Twitter headquarters.SAN FRANCISCO—Demographics and living preferences are shaping the multifamily sector. The number of millennials (75.4 million) has now surpassed the number of baby boomers (74.9 million). As the largest generation, millennials will be a major force in future housing demand due to sheer numbers and lifestyle choices.
According to a Gallup poll, 27% of millennials are currently married compared with 48% of baby boomers that were married at the same age based on US Census Bureau data. Those who are seeking to purchase a home however may face obstacles, including more stringent lending requirements. According to Experian, millennials have the lowest average credit score of all the generational cohorts.
Baby boomers, on the other hand, do not want to be tied down to larger, underutilized suburban homes as they age. As a result, they are downsizing to smaller rental quarters. Baby boomers also want the flexibility that a multifamily rental can provide so they can pick up and move to be near children and grandchildren.
“Although age may be the great divide between millennials and baby boomers, housing preferences at present are not,” Larry Kay of Koll Bond Rating Agency tells GlobeSt.com.
To meet different lifestyle preferences, micro-unit apartment buildings are on the rise. The first New York City apartment building with only micro-units opened last year on the east side of Manhattan. Micro-units, ideal for youth, singles and seniors, are being designed and built in other cities such as Vancouver, Tokyo, Austin, Phoenix and San Francisco.
In 2011, the San Francisco Housing Action Coalition worked with District 8 supervisor Scott Wiener to pass legislation that allows for the construction of micro-units, also known as “efficiency dwelling units.” The legislation allows for units as small as 220 square feet comprised of 150 square feet of living space, plus a bathroom and kitchen.
One project with micro-units, 333 12th St. in SoMa, received approval which will also include affordable housing units. As a result, the property can rise 35% higher utilizing the state’s density program. Micro-units will not be the silver bullet to solve the city’s affordability problem, but have become one available housing product to improve the efficiency of land that is available for housing, according to the San Francisco Housing Action Coalition.
Another project is the second CITYSPACES micro-apartment project. The Panoramic is a dense (761 du/acre) mixed-use project also located in SoMa (across the street from the Twitter headquarters) at 1321 Mission St. With 120 studios and 40 suites in 11 stories, it has a rooftop garden, public lounges on every floor, and a ground floor cafe/lobby. The project is car free but has a City CarShare vehicle on-site, along with bike storage for residents. The project is 108,000 square feet on a lot size of 9,208 square feet.
The building includes built-in storage, stainless steel Energy Star appliances, energy recovery ventilation, engineered soundproofing, and oversized windows and city views in every unit. Sustainable materials and construction methods were used including high-efficiency lighting and low-flow plumbing fixtures, enhanced indoor air quality, laminated heat resistant glass, and double-gasketed windows, GlobeSt.com learns.
Read on Globest.com http://www.globest.com/sites/lisabrown/2017/03/30/millennials-and-boomers-consider-similar-housing/?kw=Millennials%20and%20Boomers%20Consider%20Similar%20Housing&et=editorial&bu=REM&cn=20170330&src=EMC-Email&pt=California
SAN DIEGO—Trying to understand the new administration’s direction, with its pros and cons, and a feeling that Trump’s focus could potentially extend the multifamily cycle a little longer were the event’s main themes, L5’s Michael Flaherty tells
Flaherty: “What stood out were the very positive impressions of the economy and industry going into 2017.”
SAN DIEGO—Trying to understand the new administration’s direction, with its pros and cons, and a feeling that President Trump’s focus could potentially extend the multifamily cycle a little longer were the main themes of the NMHC Conference and Annual Meeting here last month, L5 Investments’ Michael Flaherty tells GlobeSt.com. The founder and managing partner of the El Dorado Hills, CA-based firm attended the conference, and we caught up with him to get his views on the takeaways.
GlobeSt.com: What stood out for you at the NMHC Conference or Annual Meeting?
Flaherty: What stood out is there were a lot of people, as always. It’s my favorite event from a volume-of-people standpoint, and San Diego is a great venue for the events. I love La Quinta and will miss that, but for the most part, what stood out were the very positive impressions of the economy and industry going into 2017.
GlobeSt.com: What were the major themes running through the conference this year?
Flaherty: Politics was one of them—trying to understand the new administration’s direction. There are certainly pros and cons to it. One positive is that economically there is certainly an emphasis and focus from the Trump administration that could potentially extend the multifamily cycle a little longer. Interest rates are always the topic of discussion at any annual event certainly, and they’ve been on the rise and a bit more volatile lately. But this is always part of our underwriting. We will have rate bumps this year, but most of that is accounted for in our numbers, and it will level off, hopefully. Deal flow at this event was a little bit lighter than it had been in the past. Potentially, this had to do with where we are in the cycle—the volume of marketed deals was lighter. It’s not concerning at all, just something I personally noticed.
GlobeSt.com: What unexpected things did you learn at the conference?
Flaherty: Nothing, really. For us, the unexpected things that come from this conference are who we meet, new people and new relationships that fuel the pipeline on new deals, whether this year or next. That’s the beauty of the conference.
GlobeSt.com: What else should our readers know about your experience at the conference?
Flaherty: Our outlook is still very positive. We’re a little unique. We’re not a fund, so we have the flexibility to hold short or long term. From a long-term standpoint, we really still believe in the market. We believe it still has legs to it, and we’re still in buy mode right now. Every deal has a different business plan—some are short-term exit with heavy value add, while others are more long-term strategy that’s more yield focused—and we believe we could still implement either of those strategies at this stage of the market.
NMHC is a great way industrywide to rekindle old relationships and create new ones in one spot over a three-day period. San Diego is very unique in and of itself, and good things always come from that venue for us—new relationships and new deals.
Read this article on Globest.com HERE
RICHARDSON, TX—“Rent growth doesn’t have to reach best-ever readings to be strong,” says Greg Willett, chief economist at RealPage. The firm said Tuesday that while rent growth is expected to slow in the near term from the 5%-plus pace set in 2015, cooling to 3.8% in the year that just ended, it’s still well above historical norms.
RealPage says the nation’s 100 largest metro areas saw apartment demand of 328,559 units in 2016, up 24% from the previous year’s net move-in total. Demand recorded for ’16 was the third largest calendar year volume posted during the past three decades, just behind 2000 and 2010.
“The apartment sector’s winning streak has run seven full years so far,” Willett says. “Job production continues at solid levels, encouraging new household formation. While apartment construction is substantial, significant building is justified by the very strong demand tallies,” which last year exceeded deliveries by more than 30,000 units nationwide.
As is usually the case, fourth-quarter renter demand didn’t keep pace with deliveries. Q4 saw completion of 87,939 units nationwide, representing the biggest block of quarterly new supply seen since the mid-1980s.
Not only the pace but also the market concentration of new completions factored into the recent vacancy picture. Apartment occupancy stood at 96.3% at year’s end, up from 95.9% in late ’15, and RealPage notes that nearly all of today’s vacancies in most locales can be found in the very expensive brand new completions moving through initial lease-up. Conversely, “it can be very tough to find available units in the middle-tier to lower-end price ranges,” according to RealPage.
And while rent growth nationally is occurring at a slower pace lately, several metro areas are continuing to post above-average annual increases for new renters. Leading the way in ’16 was Sacramento at 9.3%, followed by Riverside-San Bernardino at 8.5%, Seattle at 7.8%, Phoenix at 7.1% and Las Vegas at 6.8%.
Read the full article on Globest.com
Between mid-October and mid-November this year, Sacramento, Calif.–based L5 Investments acquired 529 apartment units across three properties for a total of $37.82 million. Each of the transactions was conducted in partnership with a different equity or architecture firm:
The Columbian Apartments in Seattle are owned with Schuler Architects; the Marina Gardens Apartments in Sparks, Nev., was acquired with Alamo Equities; and the Lenexa Pointe Apartments in Lenexa, Kans., were acquired with BH Equities.
The 40-unit, $5.82 million Columbian Apartments acquisition took place in mid-October. The L5/Schuler Architects partnership plans to invest $1.4 million in improvements for the 1960s-era building, including a contemporary remodel of the common areas, new appliances and laundry units in each apartment, and modernized exterior spaces.
Michael Flaherty, founder and CEO of L5 Investments, noted the value of the Columbian as a high-quality asset in the growing Seattle residential market, given its location. Beacon Hill is described as an emerging neighborhood, and the apartments are only a short walk from light rail and metro bus stops. “The Columbian presented us with an ideal opportunity to take a well-located apartment community with significant maintenance and management issues and transform it into a coveted place to live,” he said in a release.
L5 and Alamo Equities acquired the 200-unit Marina Gardens Apartments for $14.25 million in October. The 1973-vintage, garden-style community contains 60 one-bedroom units, 100 two-bedroom units, and 40 three-bedroom units across 31 two-story buildings. The property also includes two playgrounds, several barbecue areas, and three laundry spaces.
L5 and Alamo plan to invest nearly $4 million in upgrades, renovations, and modernization for Marina Gardens, which will be rebranded and renamed Marina’s Edge when the upgrades are complete. Improvements will include in-unit laundry, landscaping enhancements, and professional management from FPI.
The community provides easy access to the Tahoe Reno Industrial Center, a 107,000-acre park that's slated to be the world’s largest manufacturing complex upon completion. Upward of 50,000 jobs are expected to enter the area through the Industrial Center by 2017. Amazon, Apple, and SuperNAP have also opened operations in the area, and Tesla’s “gigafactory” is under construction nearby.
“Marina Gardens is a perfect fit for L5’s value-add investment strategy,” Flaherty said in the release. “It is well-located in an explosive growth job market and provides us with the opportunity to add significant value by improving overall management; resolving significant deferred-maintenance issues; and adding features and amenities that will attract renters seeking a quality rental living environment.”
The Lenexa Pointe Apartments in Lenexa, Kans.In mid-November, L5 partnered with BH Equities to purchase the 289-unit Lenexa Pointe Apartments for $17.75 million. The garden-style community is located 12 miles south of Kansas City, Kans., and contains 145 one-bedroom units, 144 two-bedrooms, and a swimming pool and clubhouse.
BH Equities will manage Lenexa Pointe through BH Management Services, its property management arm. The partnership’s $6 million renovation plan is set to add a new leasing center, business and fitness centers, and landscaping improvements, plus new finishes, flooring, lighting, appliances, and en-suite laundry in the apartment units.
“L5 continues to be bullish on seeking apartment assets in strategic locations that offer a favorable upside,” Flaherty said. “We are pleased to partner on another multifamily acquisition with BH Equities and believe our very comprehensive property renovation plans for Lenexa Pointe will provide residents with a quality, amenity-rich, and well-managed community.”
L5 currently has over $165 million in assets under management in seven states and focuses its investment efforts on value-add multifamily properties in emerging markets.
Read article on Multifamily Executive website: http://www.multifamilyexecutive.com/business-finance/transactions/l5-investments-acquires-529-units-across-3-partnerships_o
ABOUT THE AUTHOR
Mary SalmonsenMary Salmonsen is a recent graduate of the S.I. Newhouse School of Public Communications at Syracuse University. As an Editorial Intern with Hanley Wood's residential construction group, she covers demographics, local markets, and finance for Builder and Multifamily Executive magazines.
L5 Investments Partnership Completes $17.75 Million Acquisition of 289-Unit Apartment Community in Lenexa, Kansas
Partnership plans $6 million renovation to property
Lenexa, KS, November 15, 2016 – A partnership between L5 Investments and BH Equities has acquired Lenexa Pointe Apartments, a 289-unit apartment community for $17.75 million. The property is situated on 20.46 acres and is located at 12000 W. 77th Terrace in Lenexa, KS, a city approximately 12 miles south of Kansas City, MO.
Built in 1972 and renovated in 1992, Lenexa Pointe is a garden-style apartment community that includes 145 one-bedroom units and 144 two-bedroom units. The on-site amenities include a swimming pool, clubhouse, and picnic areas with charcoal grills. Its location provides excellent access to Interstates 35 and 435, retail, dining, and award-winning schools.
The partnership is planning a major renovation of the property estimated at more than $6 million and will include construction of a new leasing center, business and fitness center; landscaping enhancements; new lighting; and exterior signage. Improvements will also be made to the majority of unit interiors which will include the installation of new flooring, cabinets, counters, lighting, fixtures, appliances, and washers and dryers. Additionally, in a strategic move to improve Lenexa Point’s operational functions, BH Equities will manage the property through BH Management Services, its property management arm.
“L5 continues to be bullish on seeking apartment assets in strategic locations that offer a favorable upside,” said Michael Flaherty, founder and managing partner of L5 Investments, a Northern California-based multifamily investment firm. “We are pleased to partner on another multifamily acquisition with BH Equities and believe our very comprehensive property renovation plans for Lenexa Pointe will provide residents with a quality, amenity-rich, and well-managed community.”
“This is BH’s second venture with L5 in the greater Kansas City Metro, and part of an overall relationship that spans from Texas to the East Coast,” said Kelly Weber, director of marketing for BH Management Services. “Our similar philosophies of maximizing value for our residents through amenity-rich community enhancements make for an excellent partnership.”
With more than 50,000 residents, the City of Lenexa boasts one of the top school districts in the state and nation. It also has a strong business community with a number of high tech and bioscience companies located there. The city also provides a favorable commuting environment for those driving or taking public transportation to Kansas City and surrounding areas. The job market throughout the greater region continues to expand as major companies such as Google Fiber, Federal Express, Wausau Supply, Procter & Gamble and H&R Block have made recently announcements to relocate operations or expand their presence in the area.
Dustin Dulin with JLL arranged the debt on behalf of the partnership. Brandon Grisham with CBRE brokered the deal with both the buyer, and the seller, a private investor.
About L5 Investments
Founded in 2009, L5 Real Estate Investments, LLC (DBA L5 Investments) is a privately held investment firm focused on value-add, income-producing multifamily properties in emerging U.S. markets. The firm currently has in excess of $165 million of assets under management in seven states. The company targets opportunities that provide high-yield, passive cash flow and long-term capital appreciation for its investors through strategic acquisition, renovation, and superior asset management. With over 50 years of real estate experience, L5 and its partners continue to capitalize on opportunities to own multifamily properties in premier locations. These properties generate attractive short-term income and long-term wealth potential. L5’s success and reputation has been built on its track record, conservatism, passion, attention to detail and the belief that trust starts and ends with honesty and integrity. L5 is based in the Sacramento area. www.L5invest.com.
L5 Real Estate Investments, LLC is a privately held investment firm focused on stable, income producing multi-family opportunities in emerging U.S. markets.