Corner of Berkshire & Fairfax Message Board

General Category => General Discussion => Topic started by: thepupil on March 27, 2020, 06:20:13 AM

Title: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on March 27, 2020, 06:20:13 AM
Mentioned on other threads by me and a few others, but I think apartments deserve their own thread, but don't think they all individually deserve their own thread.

No hard science to my picks here, diversification is protection against ignorance and when these stocks fell at the pace they fell, I'm not going to kid myself and say I went through every companies filings or built up a property by property, city by city valuation.

Broadly, these companies have
a) very low leverage, thus a decline in share price is a decline in enterprise value/asset value
b) high occupancy in (mostly) higher barrier to entry high housing cost markets
c) high income yuppie renters (example: EQR's average income renter is makes $165K, that's not a waitress or uber driver), does a coder at GOOG lose her job from COVID-19, what about a big law associate in DC? maybe a financier in NYC does.
d) cap rates blew out to 6% or more (this changes by the day); investment grade spreads have blown out as well, but these have well-termed out debt. once credit stabilizes, these guys are going to print some incredibly low-cost debt as multi-fam debt (agency and corporate IG) will in my view be a safe haven in an otherwise tumultuous commercial real estate credit world (hotels, some office)
e) 4-5%+ divvy yields that appear sustainable.

Risks:
a) rents will surely come down as new supply hits a weaker economy (but these buildings will remain full, in my view)
b) I think one should haircut NOI 5-15%, not 30%
c) these weren't cheap beforehand from a public or private market perspective; i was previously an apartments hater as I thought it was one of the steamier parts of the real estate and real estate finance world. a 30%-40% move down in prices (which at low leverage flows straight to the asset level) makes me an apartment lover (in basket form at 10-15% lower prices than today's levels, but we'll probably get a few more bites at the apple)

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on March 27, 2020, 06:35:58 AM
How do you think about how much rents these guys will be able to collect next 6 months or whatever?

i can see on social media people are passing around the message "don't pay rent even if you still have a job. they can't evict you"

I imagine lots of people who could probably afford it will be able to come up with a decent excuse of how the virus has affected them.

HUD mortgages can be deferred but only half the multi-res mortgages in the US are HUd guaranteed.

Have you looked at BSR REIT? TSX listed in USD (HOM.U.TO), but is pure sunbelt B apartment reit. The listing has historically led to a discount to peers.

Also listed on the TSX, Tricon (TCN.TO) has one of the largest portfolios of rental Single-family homes. how would you rate the economic impact to rents, apartments vs SFH rental?

Thanks. I'm also interested in owning RE here and your posts have been invaluable.


Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on March 27, 2020, 06:41:23 AM
Also, wanted to bring up Senior living companies. Not multi-family, but also essential RE

something like FVE of DHC. There are also some Canadian listed ones. EXE, SIA, CSH.UN

do people think demand will go up after the initial panic is over? Are seniors not safer in a home, where the policies are now changing (limit visits, screen everyone coming in/out) vs having a grandparent living with you and a bunch of kids?

I think covid will be with us for a long time and in that case the demand for retirement home/assisted living will go up.

thoughts?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on March 27, 2020, 09:17:53 AM
I wonder if there will be a lot of shadow-supply/AirBNBs/VRBOs coming on the market to drive down rents.  I keep seeing stories about people who are trying desperately to move their airbnbs to longer term rentals, some pretty troubling stories about people who are engaging in "rent arbitrage"  sounds like of like wework, but worse; of course that's all just narrative/anecdote.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on March 27, 2020, 09:55:26 AM
I wonder if there will be a lot of shadow-supply/AirBNBs/VRBOs coming on the market to drive down rents.  I keep seeing stories about people who are trying desperately to move their airbnbs to longer term rentals, some pretty troubling stories about people who are engaging in "rent arbitrage"  sounds like of like wework, but worse; of course that's all just narrative/anecdote.


stranger things have happened, but it's tough to sneak a pet at these types of institutional quality apartments, much less an Airbnb. The doorman/doorwoman/doorpeople? always knew every resident at each of my yuppie apartments. it may certainly increase overall supply, but I don't think there'd be material Airbnb arbitrage folks at EQR's type of properties.


matts, I can't answer your question with respect to how many people will stop paying rent. My anecdotal gut is a very small number. I am a member of the yuppie scum class; all my friends are paying their rent, have their jobs, and are just working remotely from ther $2/3/4K a month apartment buildings.

haven't looked at BSR, but will.

I just don't really know how to underwrite senior properties. to continue the anecdote fun, I used to trade agency CMBS which is backed by apartments and skilled nursing facilities/senior living. The financials on the senior living/nursing homes was just plain scary, low margins, low DCSR's, medicare volatility/noise. I am sure there are lots of opportunities and I'm missing A LOT of nuance between all the different property types (a 55+ community is very different than hospice/nursing home), but I'm not going to spend time learning about that stuff at this time.

Easier to rent to my fellow yuppie scum, I understand that market better...though these prices are peskily going up by the day. up 7% intraday on some of my adds today.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: johnny on March 27, 2020, 10:25:46 AM
There's just so much emotion-driven anti-landlord sentiment. I don't get putting the best cap rates in the entire real estate world on what I think has the most frightening populist tail risks. You guys need to understand: 75% of dem primary voters under 40 voted for Bernie Sanders. Have you ever listened to Chapo Trap House? When every underemployed 25 year old is on Facebook leftist groups sort-of-joking about putting their landlords into gulags, doesn't this make you think maybe we should be adding a few hundred bps to our required yield to compensate for guillotine risk?

Real estate is the ultimate rule-of-law bet. I've seen way more deterioration in the social contract on that (from both parties) over the past few years than seems priced in by a 20% move.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on March 27, 2020, 10:41:54 AM
I wonder if there will be a lot of shadow-supply/AirBNBs/VRBOs coming on the market to drive down rents.  I keep seeing stories about people who are trying desperately to move their airbnbs to longer term rentals, some pretty troubling stories about people who are engaging in "rent arbitrage"  sounds like of like wework, but worse; of course that's all just narrative/anecdote.


stranger things have happened, but it's tough to sneak a pet at these types of institutional quality apartments, much less an Airbnb. The doorman/doorwoman/doorpeople? always knew every resident at each of my yuppie apartments. it may certainly increase overall supply, but I don't think there'd be material Airbnb arbitrage folks at EQR's type of properties.


matts, I can't answer your question with respect to how many people will stop paying rent. My anecdotal gut is a very small number. I am a member of the yuppie scum class; all my friends are paying their rent, have their jobs, and are just working remotely from ther $2/3/4K a month apartment buildings.

haven't looked at BSR, but will.

I just don't really know how to underwrite senior properties. to continue the anecdote fun, I used to trade agency CMBS which is backed by apartments and skilled nursing facilities/senior living. The financials on the senior living/nursing homes was just plain scary, low margins, low DCSR's, medicare volatility/noise. I am sure there are lots of opportunities and I'm missing A LOT of nuance between all the different property types (a 55+ community is very different than hospice/nursing home), but I'm not going to spend time learning about that stuff at this time.

Easier to rent to my fellow yuppie scum, I understand that market better...though these prices are peskily going up by the day. up 7% intraday on some of my adds today.

Thanks. Any thoughts on Single-family rental vs multi-unit?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on March 27, 2020, 10:58:39 AM
I wonder if there will be a lot of shadow-supply/AirBNBs/VRBOs coming on the market to drive down rents.  I keep seeing stories about people who are trying desperately to move their airbnbs to longer term rentals, some pretty troubling stories about people who are engaging in "rent arbitrage"  sounds like of like wework, but worse; of course that's all just narrative/anecdote.


stranger things have happened, but it's tough to sneak a pet at these types of institutional quality apartments, much less an Airbnb. The doorman/doorwoman/doorpeople? always knew every resident at each of my yuppie apartments. it may certainly increase overall supply, but I don't think there'd be material Airbnb arbitrage folks at EQR's type of properties.


matts, I can't answer your question with respect to how many people will stop paying rent. My anecdotal gut is a very small number. I am a member of the yuppie scum class; all my friends are paying their rent, have their jobs, and are just working remotely from ther $2/3/4K a month apartment buildings.

haven't looked at BSR, but will.

I just don't really know how to underwrite senior properties. to continue the anecdote fun, I used to trade agency CMBS which is backed by apartments and skilled nursing facilities/senior living. The financials on the senior living/nursing homes was just plain scary, low margins, low DCSR's, medicare volatility/noise. I am sure there are lots of opportunities and I'm missing A LOT of nuance between all the different property types (a 55+ community is very different than hospice/nursing home), but I'm not going to spend time learning about that stuff at this time.

Easier to rent to my fellow yuppie scum, I understand that market better...though these prices are peskily going up by the day. up 7% intraday on some of my adds today.

Thanks. Any thoughts on Single-family rental vs multi-unit?

I don't really believe in the long-run economics of single-family rentals. just less efficient/benefits of scale. When I think about my old apartment in DC metro. It occupied a very small piece of land above high quality retail, with 200 units paying on average $2500 / monthor $3K. That's $6-$7mm / year of high quality rent being serviced by not that much in costs: 3 front desk staff, 2 leasing professionals, occasional temps and maybe 2 or 3 full time garbage/repairs folks with the occasional external contractor coming in. only one roof.

I just think the long run capex needs and unit economics of SFR ownership are less attractive. I'll own anything at a price but haven't looked at SFR much lately.

in short, I don't really believe the NOI margins put out there by SFR rental when they say they can just as efficient. I simply prefer dense high income buildings in dense high income cities, like most of what these REITs own.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Orchard on March 27, 2020, 11:17:01 AM
I think most upper income buildings with doormen have cracked down on air bnb subleasing. I'd be surprised to find much of this going on in any bigger building.

From what i see, the air bnb subleasing tends to be in smaller buildings i.e. less than 10 units with no doormen.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on March 27, 2020, 11:24:46 AM
There's just so much emotion-driven anti-landlord sentiment. I don't get putting the best cap rates in the entire real estate world on what I think has the most frightening populist tail risks. You guys need to understand: 75% of dem primary voters under 40 voted for Bernie Sanders. Have you ever listened to Chapo Trap House? When every underemployed 25 year old is on Facebook leftist groups sort-of-joking about putting their landlords into gulags, doesn't this make you think maybe we should be adding a few hundred bps to our required yield to compensate for guillotine risk?

Real estate is the ultimate rule-of-law bet. I've seen way more deterioration in the social contract on that (from both parties) over the past few years than seems priced in by a 20% move.

interesting, haven't really felt the need to thoroughly quantify this risk as it relates to luxury/semi-luxury housing, saw it as more of a risk to my NEN which is more of a slumlord type in boston. (which I actually completely blew out of at a 25% loss to add to this basket). NEN is/was cheaper, thought this stuff was lower risk/more liquid/higher quality.

The most direct address of it I've seen is in Essex's deck (slide 21), text copied below:



Housing costs remain a key political and business issue across the country with many states implementing various forms of rent control legislation including Oregon, Colorado, Florida, Illinois, Massachusetts, and New York
California’s AB 1482 will cap renewal rents at CPI + 5%, providing renter protectionswhile not destroying the incentive for new home development
Essex has a long-standing guideline capping renewals at 10% and expects AB 1482 will result in approximately 10 bps impact to 2020 same-property revenues, primarily due to short-term rentals
California’s legislatures passed several housing related bills aimed at incentivizing affordable housing development
A referendum to amend Costa Hawkins will be on the November 2020 ballot. A similar proposal was soundly defeated by voters in 2018 and the apartment industry is aligned to protect the incentive to build new homes
It is highly likely that California’s 2020 ballot will contain a proposal to modify Prop 13 for Commercial and Industrial Properties, creating a rolling 3 year re-assessment for property taxes.  Fortunately, Apartment properties are not affected by the proposal
“Since 2005 California has only produced 308 housing units for every 1,000 new residents. Add in the fact that California will be home to 50 million people by 2050, and it’s obvious we’re not on pace to meet that demand…we need to generate more funding for affordable housing, implement regulatory reform and create new financial incentives” –
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on March 27, 2020, 11:32:13 AM
What about the manufactured housing park owners? ELS, SUI, UMH

I understand that today they are a bit higher on the risk spectrum, but ELS and SUI have a great track record, and long term, they offer the most affordable kind of housing to a country where housing affordability is a problem for many.

They also own the appreciating part of RE, the land, while letting the "owners" pay for the depreciating "home". Similar to multi-family, they benefit from density and economies of scale (1 security guard, 1 pool etc.). the houses are technically mobile, but in reality, it costs 5-10k to move one, so the vast majority of tenants have no choice but to eat the regular rent escalations.

SUI and ELS have been great investments for years, and now you can get them at a 20-25% discount (from peak).
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on March 27, 2020, 11:33:52 AM
have always thought those too expensive but awesome companies/biz models. maybe I'll have another look, thanks.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: shhughes1116 on March 27, 2020, 11:35:14 AM
I wonder if there will be a lot of shadow-supply/AirBNBs/VRBOs coming on the market to drive down rents.  I keep seeing stories about people who are trying desperately to move their airbnbs to longer term rentals, some pretty troubling stories about people who are engaging in "rent arbitrage"  sounds like of like wework, but worse; of course that's all just narrative/anecdote.

There is a bit of this in my area.  Anecdotally, I know a few of these coming to to the rental market were purchased at insane prices.  I went into these looking for additional rental properties at about 15-20X TTM AFFO.  These were purchased by AirBNB "speculators" at 25-30X TTM AFFO. 

Shortterm, I think there will be a little bit of downward pressure on rental prices in my area.  Longer term, I expect these AirBNB speculators to become insolvent, and these properties will come to the market, leading to some downward pressure on purchase prices.  The inventory for purchase and rental is pretty tight in the DC area (Virginia for me), so I don't expect much long-term impact.   
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on March 27, 2020, 11:37:56 AM
have always thought those too expensive but awesome companies/biz models. maybe I'll have another look, thanks.

sure. would appreciate it if you give us a heads up about what you find. You have been looking very closely across the whole RE asset space so you are in a great position to speak to the relative value of the opportunities.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on March 27, 2020, 11:40:34 AM
have always thought those too expensive but awesome companies/biz models. maybe I'll have another look, thanks.

sure. would appreciate it if you give us a heads up about what you find. You have been looking very closely across the whole RE asset space so you are in a great position to speak to the relative value of the opportunities.

well... I think if you were to pop open the performanceanalyzer on my interactive brokers account, ya might feel differently!
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Scuttlebutt Plunger on March 28, 2020, 07:21:17 PM
Manufacturer housing, ELS and SUI, is probably the best sub-sector among REITs.

Add NXRT to your list for multi-family apartments.  Smaller and more leverage though.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on March 28, 2020, 11:43:09 PM
Manufacturer housing, ELS and SUI, is probably the best sub-sector among REITs.

Add NXRT to your list for multi-family apartments.  Smaller and more leverage though.

In normal times that is true. but as pupil mentioned, in the short-term, upper-middle-class yuppies will keep their jobs and pay rent. The types of people that live in parks.... much more concentrated in blue-collar workers. UMH especially caters to the low-income crowd. i believe els and sui have much higher average rents.

If you look longer term, parks have the best economics, but I'm trying to figure out if they might not get even cheaper in the short term as they start reporting massive delinquencies across their portfolios.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on March 29, 2020, 07:49:10 AM
Trailer parks are great (unless covid-19 rages through sun communities ELS sunbelt retirement parks and takes out like 15% of the demand) and seem priced accordingly. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 01, 2020, 09:02:15 AM
more negative headlines and these are starting to come down again, may get another bite at the apple/average down opportunity.

there's a Bloomberg intelligence article out today pointing out the following:

Property level expenses are about 30% of rents (70% NOI margin) in coastal markets, giving a big cushion and insulating from some rent/occupancy declines and or cost increase (property tax hikes). Costs are mostly fixed (property taxes and insurance are 40% of property level costs). Even the lower rent / non coastal ones like Camden are at 35% (65% NOI margin).

The apartment REITs on average have 5x EBITDA / Interest. They have low leverage that has low cost giving them an ample runway. In 2008 (before the crash), this number was 2.5x for perspective. Apartment REITs have locked in long and low leverage and (if spreads normalize) that costs is going lower, they've spent the past few years selling non-core assets to opportunity funds/locals and upgraded their portfolio quality / age through development and acquisition.

that a storm is coming is certain, that they are more than ready is my opinion.

that they are cheap..well I don't think they are SUPER cheap. EQR is at about a 5.7% cap right now. ($1.7 billion / $9B Debt + $21 Billion market cap); i like them more as that gets to a 6 or even (gasp) a 7 handle. think about what huge institutional pools of capital are going to be faced with rates at 0%-1%. What is TIAA traditional and TIAA real estate account going to buy? What about Metlife?

 I'd say high quality multi-family in gateway cities at unlevered 5,6% yields fits that bill just fine (for a portion of the balance sheet). I don't think we're going to see multi-fam cap rates blow out to 8% or something, and if they do, then EQR and its friends are probably still going to have capital markets access and will be buying buildings.

EQR owns about 70,000 apartment units and trades for $30 billion. That's about $422K / unit.

Can someone please direct me to condo listings in NYC/DC/LA/Boston, where I can buy a new-ish condo next to the metro/soulcycle/sweetgreen for $422K? After you do that, can you provide me with 4% interest only financing at say 27 years (EQR's 2047's have a 4% coupon). Okay great, now can you buy 70,000 of those and manage it all professionally for me? K thanks. Oh wait, that doesn't exist in real life.

anecdotal survey for the crowd, has anyone heard of people with "good" jobs getting fired/laid off. Here is my anecdote: Marriott corporate HQ in Bethesda furloughed a large percentage of their corporate folks; that likley includes some very good jobs. I don't think people who rent yuppie apartments are completely immune, but I'd be surprised if a very large percent aren't able to make rent/lose their jobs; Ive been wrong before so we'll have to see.

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 01, 2020, 09:42:29 AM
I agree with your general thought process. But I also agree that some of the headlines from property owners will be pretty dismal next few weeks so we might get chances at better prices.

Also wanted to add that I like how you try to simplify the value proposition. Like price/unit or the price/room as you did with HST.

What I really want to do is take advantage of this crisis to buy into real estate assets at cheap prices. The public market is falling faster than the private so maybe after the reits recover I'll roll the money into the deals on the private side. At the end of the day I'm agnostic to the avenue of purchase.

Big picture, western governments can't stomach residential RE falling more than maybe 20%. When the stock market falls, the (incorrect) perception is that only a few rich pricks get hurt. But falling residential RE hits many (most?) voters hard and they start sharpening the pitchforks. Politicians realize this.

 

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 01, 2020, 10:17:01 AM
we are thinking about it the same way.

haven't pulled trigger on HST or anything hospitality related. There I think the EV / Key comparison is a harder to make at this time because you could be looking at a (maybe only slightly) different cap structure.

Big picture, if on January 1 you knew this was going to happen and you asked how much would EQR/HST/VNO be down, I would think that most would guess HST would be down the most (75-100% of its tenants aren't paying rent for the next 2-undefined months)

In actuality, HST is down 45%, VNO is down 51% and EQR is down 32%.

Now YTD stock moves is not indicative of price to "value" gap. HST traded at a discount to replacement costs beforehand and had issues beforehand (EQR arguably did not) and Host now trades at a (using a sell side estimate) 50-60% discount to replacement cost.

I'm not saying that HST isn't cheaper than the other two on a very long term basis, but I think the others (just using them as proxies for other type of RE and because I know VNO to an unfortunate degree) are safer and still offer upside.

In a year, stodgy institutional investors will be bidding for / lending to EQR type of properties, but I think hospitality will have a longer and stronger taint/increase in the cost of capital
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 02, 2020, 03:37:30 AM
we are thinking about it the same way.

haven't pulled trigger on HST or anything hospitality related. There I think the EV / Key comparison is a harder to make at this time because you could be looking at a (maybe only slightly) different cap structure.

Big picture, if on January 1 you knew this was going to happen and you asked how much would EQR/HST/VNO be down, I would think that most would guess HST would be down the most (75-100% of its tenants aren't paying rent for the next 2-undefined months)

In actuality, HST is down 45%, VNO is down 51% and EQR is down 32%.

Now YTD stock moves is not indicative of price to "value" gap. HST traded at a discount to replacement costs beforehand and had issues beforehand (EQR arguably did not) and Host now trades at a (using a sell side estimate) 50-60% discount to replacement cost.

I'm not saying that HST isn't cheaper than the other two on a very long term basis, but I think the others (just using them as proxies for other type of RE and because I know VNO to an unfortunate degree) are safer and still offer upside.

In a year, stodgy institutional investors will be bidding for / lending to EQR type of properties, but I think hospitality will have a longer and stronger taint/increase in the cost of capital

Agreed. I only mentioned HST due to the method.

Have you looked at the manufactured housing space?

By that simple approach:

ELS - 12.2Bn EV / 156,513 sites = 78k per site (but 80k of the 156k sites is RV)   -  average rent $675, sites mostly on the coasts. 90% of revenue is annual recurring. only 10% is seasonal/transient RV.

SUI 14Bn EV / 141k sites = 99k per site        -  average rent 997, site mostly on coasts. half the communities are age restricted

UMH 1.3Bn EV/ 23,100 sites = 56k per site  - average rent $447, sites mostly in Pennsylvania and Ohio. UMH also has a growing business of buying and owning the homes in order to rent them. This speeds up the turnaround of their communities since they tend to buy crappy parks that are ~60% occupied when acquired. They demolish the old houses, stick their brand new houses for rent, and that then make the community much more appealing for regular clients who buy their own home. On the negative side, UMH is family-controlled and shareholders have been complaining about the value leakage to the family for years.

UMH and ELS look most attractive to me depending on your risk tolerance. The cheaper tenants at UMH are more likely to lose jobs, go delinquent etc.  ELS also has better management and shareholder track record.
 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 02, 2020, 04:04:20 AM
I would like to buy ELS at an $8 billion EV, but Bloomberg says $9.6 billion market cap and $12 billion EV. Likewise SUI is at $14 billion EV.

Is there some discrepancy on BBG or subtlety/ adjustment here that I’m missing or are your EV’s off?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 02, 2020, 04:34:02 AM
No. I just used a bad source. I'll update the post above
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: rb on April 02, 2020, 10:57:39 AM
Well EQR took in 2.7 billion in rents last year. At an EV of 30 billion. That's a 9% gross rent yield.

Now if you found a property in EQR's markets that gives you a 9% gross yield don't you buy it in a nanosecond?


I'm asking for a friend   ;)
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 02, 2020, 12:35:56 PM
potentially so. I'll give you an example in my backyard.

Behold this Zillow listing:

https://www.zillow.com/homedetails/5500-Friendship-Blvd-APT-817N-Chevy-Chase-MD-20815/37195057_zpid/

this is in a well-located but tired building, it is spitting distance from Whole Foods the Friendship Heights metro, etc.

$500K gets you a 1200 sq foot 2/2 with some outdoor space that would rent for $2,500 - $3000 (the listing shows a rental at $2,950, I assume someone would rent a little lower than that). If you paid cash, you'd still have a $1000 / month HOA. this is a decent albeit somewhat unhip location. the building was built in 1968. I think its a terrible investment proposition. $2600 /month rent less $1000 HOA = $1600 / month before any other expenses. We're already at an extremely low cap rate. Maybe it goes for lower, but I happen to know a lot of investors own units in this building (let's just say I know a former tenant very well); the units seem to move slowly but they do sell at prices indicating ridiculously low cap rates.

Let's walk across the street, to EQR's property (formerly owned by Archstone), Wisconsin Place. Wisconsin Place sits atop Whole Foods (shared parking garage) which also connects to the Friendship Heights metro, which connects to a little retail center that includes movie theater, department store, restaurants, gyms, etc. This was built in 2009 and is in good shape.

https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments
https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments##bedroom-type-section-2

A 1000 square foot two bedroom is listed for $3600 / month and up. studio's and one bedrooms $2,100-$2,200 and up.

this is kind of a contrived comparison using anecdotes, but the first one trades at an 6%-7% rental yield or so and as you point out EQR is closing in on a 9%. But the maintaince and capex and running cost of that 9% are LOWER because the building is newer and the room for error is higher because the rents are high because of the quality.

you are buying property in areas where even old kind of tired buildings still command high prices because (in this instance) this is metro-accessible high rent areas with amenities and stuff.

and jsut for shits and giggles, you all will be happy to know that GEICO's corporate headquarters is right next to both buildings:



Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 03, 2020, 06:03:42 AM
Someone sent me a private message about UMH, asking about their occupancy during the GFC. I'm posting my response in case others are looking at it.


Hey,

Please post in the thread so we can all benefit from the info.

congrats on the great entry. I also own the D prefs.

You can look at the occupancy disclosed in the annual 10-k report on sec edgar

the occupancy did not fall significantly in 2009, 2010, or 2011. I was surprised myself. Some people moved out but many moved in to replace them. I was likely because it's so expensive to move these "mobile" homes.

The provisions for doubtful accounts did go up during that time, however. They are not a bank so their disclosures don't make it easy to see how those accounts resolved.

I think what is different this time vs 08 is that many more people are losing their jobs all at the same time and politicians like Chuck Schumer are on tv telling people they don't have to pay rents.

UMH has a significant amount of Fannie/Freddie guaranteed mortgages which allow them to defer mortgage payments if they agree not to evict. I forget if I ever found a % number for guaranteed mortgages but the 10-k shows most of the recent refinances have been with Fannie.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: HalfMeasure on April 03, 2020, 06:56:02 AM
Well EQR took in 2.7 billion in rents last year. At an EV of 30 billion. That's a 9% gross rent yield.

Now if you found a property in EQR's markets that gives you a 9% gross yield don't you buy it in a nanosecond?


I'm asking for a friend   ;)

This is a great point.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 08, 2020, 05:19:37 AM
Initial look shows big drop in those paying rent

Only 69% tenants paid any of their rent in April's first five days, according to the National Multifamily Housing Council. That compares to 81% in March's first week, and 82% in April's first week one year ago.
• The actual situation for most (tenants and landlords) may be somewhat worse as the data is from a survey of 13.4M investment-grade rental apartments, i.e. likely to be occupied by higher-income tenants.
• While this doesn't necessarily mean a wave of evictions (new laws around the country kind of prevent this), the delinquent rent is likely to move up the chain as landlords then struggle with mortgage payments, possibly setting off a wave of losses in CMBS-land.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: lnofeisone on April 08, 2020, 06:03:42 AM
potentially so. I'll give you an example in my backyard.

Behold this Zillow listing:

https://www.zillow.com/homedetails/5500-Friendship-Blvd-APT-817N-Chevy-Chase-MD-20815/37195057_zpid/

this is in a well-located but tired building, it is spitting distance from Whole Foods the Friendship Heights metro, etc.

$500K gets you a 1200 sq foot 2/2 with some outdoor space that would rent for $2,500 - $3000 (the listing shows a rental at $2,950, I assume someone would rent a little lower than that). If you paid cash, you'd still have a $1000 / month HOA. this is a decent albeit somewhat unhip location. the building was built in 1968. I think its a terrible investment proposition. $2600 /month rent less $1000 HOA = $1600 / month before any other expenses. We're already at an extremely low cap rate. Maybe it goes for lower, but I happen to know a lot of investors own units in this building (let's just say I know a former tenant very well); the units seem to move slowly but they do sell at prices indicating ridiculously low cap rates.

Let's walk across the street, to EQR's property (formerly owned by Archstone), Wisconsin Place. Wisconsin Place sits atop Whole Foods (shared parking garage) which also connects to the Friendship Heights metro, which connects to a little retail center that includes movie theater, department store, restaurants, gyms, etc. This was built in 2009 and is in good shape.

https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments
https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments##bedroom-type-section-2

A 1000 square foot two bedroom is listed for $3600 / month and up. studio's and one bedrooms $2,100-$2,200 and up.

this is kind of a contrived comparison using anecdotes, but the first one trades at an 6%-7% rental yield or so and as you point out EQR is closing in on a 9%. But the maintaince and capex and running cost of that 9% are LOWER because the building is newer and the room for error is higher because the rents are high because of the quality.

you are buying property in areas where even old kind of tired buildings still command high prices because (in this instance) this is metro-accessible high rent areas with amenities and stuff.

and jsut for shits and giggles, you all will be happy to know that GEICO's corporate headquarters is right next to both buildings:

Few things here to unpack.
1) Many of the new buildings give 2 months free for a 13 month lease.  They don't' advertise it but if you go to the leasing office it's the first thing they bring up. I have friends who are literally moving apartments every 1-2 years. One of them moved within the same buildings 4 times now (around Mt. Vernon in DC).
2) You hit the nail on the head. The premium here is metro accessibility which in DC is paramount. Getting a similar apartment, 15 minute drive/bus ride will be going for 50% off. Check out 7 corners in Virginia where you are 15 minutes to either blue or orange/silver lines.
3) Here is a fun little special situation right next to a metro - https://www.zillow.com/homedetails/1111-Arlington-Blvd-APT-925-Arlington-VA-22209/2080716875_zpid/
there is a reason, of course. :)
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 08, 2020, 07:20:01 AM
Initial look shows big drop in those paying rent

Only 69% tenants paid any of their rent in April's first five days, according to the National Multifamily Housing Council. That compares to 81% in March's first week, and 82% in April's first week one year ago.
• The actual situation for most (tenants and landlords) may be somewhat worse as the data is from a survey of 13.4M investment-grade rental apartments, i.e. likely to be occupied by higher-income tenants.
• While this doesn't necessarily mean a wave of evictions (new laws around the country kind of prevent this), the delinquent rent is likely to move up the chain as landlords then struggle with mortgage payments, possibly setting off a wave of losses in CMBS-land.

I may be weighting this data point too much, but I sized down my exposure by 1/4 at 5-15% profits. Given this is a starter basket approach as I don't think they're quite "cheap" enough, I think it is appropriate to be a little more risk averse. I will await further changes to price / fundamental data to make any more moves. Given the low leverage a 15% move in stock price is basically an equivalent move in the asset.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 08, 2020, 02:17:59 PM
Equity Residential (NYSE: EQR) today announced that through April 7, the Company collected approximately 93% of its monthly residential cash receipts for April 2020 and the Company is working with the remainder of its residents on payment options.

http://investors.equityapartments.com/file/Index?KeyFile=403555723

I guess they have better tenants than average
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on April 08, 2020, 04:15:35 PM
Equity Residential (NYSE: EQR) today announced that through April 7, the Company collected approximately 93% of its monthly residential cash receipts for April 2020 and the Company is working with the remainder of its residents on payment options.

http://investors.equityapartments.com/file/Index?KeyFile=403555723

I guess they have better tenants than average

Ha completely missed that, dumbass move on my part, remaining EQR lots are up 27%, AVB up 20%, CPT just a little, Essex up 15%.

I’m not going to chase these up, but perhaps more inclined to average down with that datapoint in line with my gut feel/ read of the asset/tenant quality...maybe the hard relief rally is just getting to me

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 02:33:14 AM
Agreed. By May 1, everyone will know whether their job is steady, or they will have some cash from the feds in their accounts. I'm still a bit worried many will not pay even if they could. You see that already in CRE. This is from a Prologis investor update a few days ago:

Look, a substantial amount of that 24% are Fortune 100 companies. And somebody in their legal department probably said, "Send a letter to all your landlords and ask for rent deferral. Why not?" We're not going to give those people. I mean I think people should not use this market condition opportunistically. I think that's really a bad thing to do. I think people should do the right thing. We should be here helping the people that really need help as opposed to trying to extract an economic advantage. We're just not going to stand for that. They're valued customers, but they need to behave themselves.
 We're not going to take money out of our shareholders' pockets and put in other major companies' shareholder pockets just because they ask for it.

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 07:46:12 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent? 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 07:53:26 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent?

I'm almost sure turning off electricity would open up massive legal liabilities that landlords would lose in court. I know it is illegal in canada to turn off electricity or the heating source to delinquent renters. I imagine it is the same in the US, nevermind during this crisis.

As for cable/internet...not sure how it works in US, but again in Canada, most renters even in apartment buildings have individual agreements with their telcos. yes, technically the buildings allow the telcos to run their hardware through common areas, but the rent is separate. landlords would have no legal right to turn off a third party service. Is it generally different in the US? Is the internet explicitly bundled with rent?

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 10:42:10 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent?

I'm almost sure turning off electricity would open up massive legal liabilities that landlords would lose in court. I know it is illegal in canada to turn off electricity or the heating source to delinquent renters. I imagine it is the same in the US, nevermind during this crisis.

As for cable/internet...not sure how it works in US, but again in Canada, most renters even in apartment buildings have individual agreements with their telcos. yes, technically the buildings allow the telcos to run their hardware through common areas, but the rent is separate. landlords would have no legal right to turn off a third party service. Is it generally different in the US? Is the internet explicitly bundled with rent?

Obviously case by case basis here and we're generalizing, so it's prob not great to extrapolate.  However, if the reason why renters aren't paying is b/c they think the courts will be stuck with too many cases, then it goes for landlords too.  ANd in terms of liabilities - outside of physical harm (so heat being one of the "Essential" items), what could be claimed?  No legal expert here but can someone really claim that they are entitled to free rent?  Again, I'm not suggesting that this is just a legal issue.  If I were a landlord and I have tenants who I know are employed, able to pay, and won't even have a conversation about rent and is telling me to go pound sand to take advantage of a pandemic, then I have no problem letting him or her know that electricity is not a "right."

In terms of internet / cable - depends on the building.  Many large buildings include it as a part of the rent / HOA.  It's just easier to negotiate on behalf of 100 units and get economies of scale and service. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: KJP on April 09, 2020, 11:02:13 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

I believe it will make a big difference who the tenants are.  Many people in the US are effectively judgment proof, because they have no assets.  So, it's ordinarily a waste of time to sue them, and that is why debt buyers generally can buy debts for pennies on the dollar.  But there are others who do have plenty of assets and very good credit ratings.  This is the group that, for example, can't simply give the keys of a house back to the bank if its underwater (at least in states that have recourse mortgages).

My understanding of the thesis articulated in the original post was something like EQR likely has many fewer judgment proof tenants than something like NEN and so should be priced accordingly.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on April 09, 2020, 11:06:16 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent?

Dude, what state and city do you live in?  You will be skinned and boiled alive for even thinking about cutting off utilities etc as a landlord in NYC.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: lnofeisone on April 09, 2020, 11:06:24 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent?

I'm almost sure turning off electricity would open up massive legal liabilities that landlords would lose in court. I know it is illegal in canada to turn off electricity or the heating source to delinquent renters. I imagine it is the same in the US, nevermind during this crisis.

As for cable/internet...not sure how it works in US, but again in Canada, most renters even in apartment buildings have individual agreements with their telcos. yes, technically the buildings allow the telcos to run their hardware through common areas, but the rent is separate. landlords would have no legal right to turn off a third party service. Is it generally different in the US? Is the internet explicitly bundled with rent?

Making unit uninhabitable by landlord is called constructive eviction and opens up landlord to civil lawsuit/liabilities. Depending on the state these could very stiff.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 11:09:33 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent?

I'm almost sure turning off electricity would open up massive legal liabilities that landlords would lose in court. I know it is illegal in canada to turn off electricity or the heating source to delinquent renters. I imagine it is the same in the US, nevermind during this crisis.

As for cable/internet...not sure how it works in US, but again in Canada, most renters even in apartment buildings have individual agreements with their telcos. yes, technically the buildings allow the telcos to run their hardware through common areas, but the rent is separate. landlords would have no legal right to turn off a third party service. Is it generally different in the US? Is the internet explicitly bundled with rent?

Obviously case by case basis here and we're generalizing, so it's prob not great to extrapolate.  However, if the reason why renters aren't paying is b/c they think the courts will be stuck with too many cases, then it goes for landlords too.  ANd in terms of liabilities - outside of physical harm (so heat being one of the "Essential" items), what could be claimed?  No legal expert here but can someone really claim that they are entitled to free rent?  Again, I'm not suggesting that this is just a legal issue.  If I were a landlord and I have tenants who I know are employed, able to pay, and won't even have a conversation about rent and is telling me to go pound sand to take advantage of a pandemic, then I have no problem letting him or her know that electricity is not a "right."

In terms of internet / cable - depends on the building.  Many large buildings include it as a part of the rent / HOA.  It's just easier to negotiate on behalf of 100 units and get economies of scale and service.

All due respect, I think you are just thinking about this incorrectly and i doubt you have ever been a landlord. There is absolutely a double standard. No one thinks tenants are entitled to free rent. But the government has mandated that you can't evict them. So no, you can't cut off their electricity because that is how they would boil water, see in the dark etc. That's not part of your recourse. Your recourse is eviction and it is the government that has taken that recourse away from you. You cut off their electricity, and the only thing you will get is a giant lawsuit for "pain and suffering" once the courts get back to work. Whether electricity is a right is not up to you to determine.

In Ontario

https://stepstojustice.ca/questions/housing-law/can-my-landlord-cut-my-electricity-or-other-utilities

In california (i suspect the rules are very similar in all other states)

https://homeguides.sfgate.com/illegal-landlord-shut-off-electricity-61431.html

"Electricity is an essential service to make a rental unit habitable.

Turning off the electricity as punishment for non-payment of rent or in retaliation for filing a complaint is tantamount to constructive eviction. Constructive eviction occurs when the landlord makes the residence uninhabitable in an effort to remove you from the property. Legal eviction requires the landlord jump through specific legal hoops to get you out. Constructive eviction bypasses these requirements by forcing you to find new accommodations.

Every state provides its own legal recourse for tenants who are aggrieved by the landlord. California Civil Code 789.3 makes it illegal for the landlord to shut off the electricity to force a tenant out of the property. You may sue your landlord in civil court for actual damages, attorneys fees and other damages if he does so. The statute allows an amount up to $100 per day for each day the electricity was turned off ."

The next point is I'm not suggesting anyone is stupid enough to tell their landlord "I can pay, but I just won't." They will tell you their hours were reduced, their aunt has the virus and she needs help etc. And you can't ask them for financials to prove anything like you can with a commercial tenant. They don't need to provide proof of anything. If they don't pay, your recourse is to go through the courts. You can't change the tenant-landlord bylaws just because the courts are closed.

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 11:22:31 AM
YOu're all right - not a landlord, never been a landlord, never want to be a landlord (at least directly).  Also never missed rent when I was renting, so total ignorance here for sure. 

Is internet access considered essential service?  Is there nothing that is available to a landlord outside of the courts? 

BTW - renting was when I lived in TX, so maybe the laws / enforcement is different from rest of the country.  I just remember even getting some basic stuff fixed was a real pain.  Perhaps this is also because the apartments were very cheap, so you sort of get what you pay for, and I certainly had no money to go sue...   

Edit - to be clear, I'm not advocating just forcing someone out because they can't make payment.  If I'm a landlord and I underwrote a tenant based on his/her financial situation, then I made that call and it's my responsibility to bear.  However, if *having a conversation* is too much, then that's when I become unsympathetic.  I'm merely trying to tease out ways in which to force a conversation.  Perhaps that's not legal in any form, but if I'm being screwed over then I'm going to use whatever legal means I do have to hit back...
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 11:24:50 AM

Now landlords have leverage over commercial tenants because "normal" rules still apply. But what about residential where new rules say you can't get evicted if you don't pay? I still worry about that.

You have a valid point, but if it really gets to that level is there really nothing that can be done as a land lord?  Especially in this high rise buildings, are there no options (cutting internet, for example) to at least force a conversation around ability to pay?  It's one thing to not be able to pay, it's another thing to choose to not pay.  So if one wants electricity or cable or internet, assuming they could be cut off unit by unit, why is a landlord obligated to provide that if the renter isn't paying rent?

I'm almost sure turning off electricity would open up massive legal liabilities that landlords would lose in court. I know it is illegal in canada to turn off electricity or the heating source to delinquent renters. I imagine it is the same in the US, nevermind during this crisis.

As for cable/internet...not sure how it works in US, but again in Canada, most renters even in apartment buildings have individual agreements with their telcos. yes, technically the buildings allow the telcos to run their hardware through common areas, but the rent is separate. landlords would have no legal right to turn off a third party service. Is it generally different in the US? Is the internet explicitly bundled with rent?

Making unit uninhabitable by landlord is called constructive eviction and opens up landlord to civil lawsuit/liabilities. Depending on the state these could very stiff.

Got it.  Having said that, if courts are packed for a while, isn't this also going to take a long time?  What will they do in the interim?  Are tenants better off just coming to an agreement with the landlord based on ability to pay?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 11:32:36 AM

The next point is I'm not suggesting anyone is stupid enough to tell their landlord "I can pay, but I just won't." They will tell you their hours were reduced, their aunt has the virus and she needs help etc. And you can't ask them for financials to prove anything like you can with a commercial tenant. They don't need to provide proof of anything. If they don't pay, your recourse is to go through the courts. You can't change the tenant-landlord bylaws just because the courts are closed.

Let's play this out. 

Me - Hi Matt, I haven't seen a payment for this month, are you having financial difficulties?
Matt - Yes, reasons XYZ
Me - Understood.  Sorry to hear about your financial difficulties.  I want to work with you through this crisis.  Can you show me something that shows you've been fired or furloughed or some bank statement showing a decline in income?  Let's see what we can work out. 
Matt - No, you have no right to any financial information of mine. 
Me - Well you may be right, but I'm trying to work with you.  You submitted your financial information along with your credit history at time of rental, and so you don't have to provide it, but it'll make it easier for us to work through this together. 

Is that unreasonable?   
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 11:36:59 AM
YOu're all right - not a landlord, never been a landlord, never want to be a landlord (at least directly).  Also never missed rent when I was renting, so total ignorance here for sure. 

Is internet access considered essential service?  Is there nothing that is available to a landlord outside of the courts? 

BTW - renting was when I lived in TX, so maybe the laws / enforcement is different from rest of the country.  I just remember even getting some basic stuff fixed was a real pain.  Perhaps this is also because the apartments were very cheap, so you sort of get what you pay for, and I certainly had no money to go sue...   

Edit - to be clear, I'm not advocating just forcing someone out because they can't make payment.  If I'm a landlord and I underwrote a tenant based on his/her financial situation, then I made that call and it's my responsibility to bear.  However, if *having a conversation* is too much, then that's when I become unsympathetic.  I'm merely trying to tease out ways in which to force a conversation.  Perhaps that's not legal in any form, but if I'm being screwed over then I'm going to use whatever legal means I do have to hit back...

I don't think you are a bad guy for brainstorming your recourse as a landlord. But i think, unfortunately, your last sentence is correct. You are just screwed as a landlord here. Which is why i bring it up as a concern. As someone mentioned, the one thing that DOES scare tenants is a hit to their credit score, IF you rent to the kind of person who has a score and cares about it.

From a little bit of googling, if internet access in specifically mentioned in the lease agreement then it can indeed fall under "utilities" and therefore be included under the shadow eviction clauses of most city/state bylaws. It's not black and white however.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 11:41:48 AM
Let's play this out. 

Me - Hi Matt, I haven't seen a payment for this month, are you having financial difficulties?
Matt - Yes, reasons XYZ
Me - Understood.  Sorry to hear about your financial difficulties.  I want to work with you through this crisis.  Can you show me something that shows you've been fired or furloughed or some bank statement showing a decline in income?  Let's see what we can work out. 
Matt - No, you have no right to any financial information of mine. 
Me - Well you may be right, but I'm trying to work with you.  You submitted your financial information along with your credit history at time of rental, and so you don't have to provide it, but it'll make it easier for us to work through this together. 

Is that unreasonable?

Let's play this out more realistically:

Me - Hi Matt, I haven't seen a payment for this month, are you having financial difficulties?
Matt - Yes, reasons XYZ
Me - Understood.  Sorry to hear about your financial difficulties.  I want to work with you through this crisis.  Can you show me something that shows you've been fired or furloughed or some bank statement showing a decline in income?  Let's see what we can work out. 
Matt - I don't have any paperwork to prove to you my boss cut my hours in half. (or) My business revenues are way down. My aunt is sick, you want me to ask her doctor right now for a note? 
Me - Well you may be right, but I'm trying to work with you.  You submitted your financial information along with your credit history at time of rental, and so you don't have to provide it, but it'll make it easier for us to work through this together. 

Matt - I'm doing my best here man, but you know, it's a tough time. My family is scared. My wife won't stop crying. Sorry, but there is nothing I can do here. I'm doing all I can, but my rent will be paid as soon as I am able. I hope you understand. BTW, I hear the government has announced some programs to help you out so maybe look into that. Stay safe. Matt
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: lnofeisone on April 09, 2020, 11:50:09 AM
YOu're all right - not a landlord, never been a landlord, never want to be a landlord (at least directly).  Also never missed rent when I was renting, so total ignorance here for sure. 

Is internet access considered essential service?  Is there nothing that is available to a landlord outside of the courts? 

BTW - renting was when I lived in TX, so maybe the laws / enforcement is different from rest of the country.  I just remember even getting some basic stuff fixed was a real pain.  Perhaps this is also because the apartments were very cheap, so you sort of get what you pay for, and I certainly had no money to go sue...

In many homes, internet goes beyond just browsing (think alarm systems, Alexa, etc.). In many locales tenants sign up and pay for utilities and cutting that off can be challenging (have to validate identify) and all. Long way of saying, landlords should stick to courts.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 11:57:49 AM
Let's play this out more realistically:

Me - Hi Matt, I haven't seen a payment for this month, are you having financial difficulties?
Matt - Yes, reasons XYZ
Me - Understood.  Sorry to hear about your financial difficulties.  I want to work with you through this crisis.  Can you show me something that shows you've been fired or furloughed or some bank statement showing a decline in income?  Let's see what we can work out. 
Matt - I don't have any paperwork to prove to you my boss cut my hours in half. (or) My business revenues are way down. My aunt is sick, you want me to ask her doctor right now for a note? 
Me - Well you may be right, but I'm trying to work with you.  You submitted your financial information along with your credit history at time of rental, and so you don't have to provide it, but it'll make it easier for us to work through this together. 

Matt - I'm doing my best here man, but you know, it's a tough time. My family is scared. My wife won't stop crying. Sorry, but there is nothing I can do here. I'm doing all I can, but my rent will be paid as soon as I am able. I hope you understand. BTW, I hear the government has announced some programs to help you out so maybe look into that. Stay safe. Matt

HOurs cut in half - ok, so based on the information you submitted during time of lease, that's a $xxx reduction in income.  I assume some of your other expenses are down as well, so can you pay 50% and we'll put the balance to be due later, and have another conversation next month? 

Aunt sick - really sorry to hear, hope she feels better.  Listen I know it's tough time for everyone, but I also have people I need to pay to run the building, people who are in equally tough situation as you, and I'm trying to not cut them back.  Also I have to pay the bank, etc.  How long do you think you're in a place to start paying?  If it's 6 months from now I will not have any choice but to start an eviction process. 

I like the credit score point.  And I'm not trying to paint this as a black and white picture - I realize that it's state by state and said that extrapolating is probably not a good idea previously.  I just think there are ways in which different situatiosn can be worked through vs. not doing anything on non-paying tenants. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 12:01:19 PM
YOu're all right - not a landlord, never been a landlord, never want to be a landlord (at least directly).  Also never missed rent when I was renting, so total ignorance here for sure. 

Is internet access considered essential service?  Is there nothing that is available to a landlord outside of the courts? 

BTW - renting was when I lived in TX, so maybe the laws / enforcement is different from rest of the country.  I just remember even getting some basic stuff fixed was a real pain.  Perhaps this is also because the apartments were very cheap, so you sort of get what you pay for, and I certainly had no money to go sue...

In many homes, internet goes beyond just browsing (think alarm systems, Alexa, etc.). In many locales tenants sign up and pay for utilities and cutting that off can be challenging (have to validate identify) and all. Long way of saying, landlords should stick to courts.

So perhaps I could have clarified that my comments are for the securities listed in the title of this thread.  If it's a single family it's a different story.  However, if it's a high rise in NY it's very likely that tenants do not have a choice on their internet provider.  It's either bundled in rent, or it runs through the central infrastructure of the building (with one provider and zero choice unless cellular).  Having listed in 6 different buildings in NY that has consistently been the case (4 bundle with cable, 2 individually billed, but zero choice on provider). 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 12:10:18 PM
Let's play this out more realistically:

Me - Hi Matt, I haven't seen a payment for this month, are you having financial difficulties?
Matt - Yes, reasons XYZ
Me - Understood.  Sorry to hear about your financial difficulties.  I want to work with you through this crisis.  Can you show me something that shows you've been fired or furloughed or some bank statement showing a decline in income?  Let's see what we can work out. 
Matt - I don't have any paperwork to prove to you my boss cut my hours in half. (or) My business revenues are way down. My aunt is sick, you want me to ask her doctor right now for a note? 
Me - Well you may be right, but I'm trying to work with you.  You submitted your financial information along with your credit history at time of rental, and so you don't have to provide it, but it'll make it easier for us to work through this together. 

Matt - I'm doing my best here man, but you know, it's a tough time. My family is scared. My wife won't stop crying. Sorry, but there is nothing I can do here. I'm doing all I can, but my rent will be paid as soon as I am able. I hope you understand. BTW, I hear the government has announced some programs to help you out so maybe look into that. Stay safe. Matt

HOurs cut in half - ok, so based on the information you submitted during time of lease, that's a $xxx reduction in income.  I assume some of your other expenses are down as well, so can you pay 50% and we'll put the balance to be due later, and have another conversation next month? 

(I wait, 2 or 3 days to get back to you) Unfortunately, I don't have savings and my boss is a bit late on his payments to his employees as I'm sure you can understand. sure, I will try to pay as soon as I am able, so maybe that paycheck from trump is coming. Thanks for your understanding

Aunt sick - really sorry to hear, hope she feels better.  Listen I know it's tough time for everyone, but I also have people I need to pay to run the building, people who are in equally tough situation as you, and I'm trying to not cut them back.  Also I have to pay the bank, etc.  How long do you think you're in a place to start paying?  If it's 6 months from now I will not have any choice but to start an eviction process.

(also wait a couple days) Thanks for your understanding and well wishes.  I feel your pain and I really want to pay,  but I also have car payments, drugs for my family i need to refill (i don't have medical insurance). I think that check from the feds is coming any day now and so what i don't need for my basic necessities (which i won't list for you) I hope i can catch up on at least some of the rents. Let's touch base then. 

I like the credit score point.  And I'm not trying to paint this as a black and white picture - I realize that it's state by state and said that extrapolating is probably not a good idea previously.  I just think there are ways in which different situatiosn can be worked through vs. not doing anything on non-paying tenants.

This roleplaying is fun. All of the above assumes the guy even takes your calls.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 09, 2020, 12:13:49 PM
YOu're all right - not a landlord, never been a landlord, never want to be a landlord (at least directly).  Also never missed rent when I was renting, so total ignorance here for sure. 

Is internet access considered essential service?  Is there nothing that is available to a landlord outside of the courts? 

BTW - renting was when I lived in TX, so maybe the laws / enforcement is different from rest of the country.  I just remember even getting some basic stuff fixed was a real pain.  Perhaps this is also because the apartments were very cheap, so you sort of get what you pay for, and I certainly had no money to go sue...

In many homes, internet goes beyond just browsing (think alarm systems, Alexa, etc.). In many locales tenants sign up and pay for utilities and cutting that off can be challenging (have to validate identify) and all. Long way of saying, landlords should stick to courts.

So perhaps I could have clarified that my comments are for the securities listed in the title of this thread.  If it's a single family it's a different story.  However, if it's a high rise in NY it's very likely that tenants do not have a choice on their internet provider.  It's either bundled in rent, or it runs through the central infrastructure of the building (with one provider and zero choice unless cellular).  Having listed in 6 different buildings in NY that has consistently been the case (4 bundle with cable, 2 individually billed, but zero choice on provider).

If it's bundled in rent it would most likely be classified as a utility by the tenant-landlord bylaws. If it's zero choice, that's still not building infrastructure. The equipment belongs to verizon. The building has an agreement with verizon to host the equipment and that's it. The individual service agreements to the units don't include the building as a party. You would have no legal right to mess with it. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on April 09, 2020, 12:40:59 PM

This roleplaying is fun. All of the above assumes the guy even takes your calls.

Fair.  Perhaps professionally managed buildings are different. 

In my experience in lower income housing growing up, the landlord isn't without leverage.  That's why I even brought up the point around negotiating a bit. 

Anyway, we've gotten off track on topic.  Apologies for the detour. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 17, 2020, 11:59:50 AM
BSR REIT (sunbelt multifamily) gave an update

https://web.tmxmoney.com/article.php?newsid=6676403039637442&qm_symbol=HOM.U

As of April 15, 2020, the REIT has collected 93.3% of total revenue for the month. Historically, by the 15th of the month the REIT has collected 97.0% of its total revenue. Total revenue includes rental income, fees associated with moving in or out such as application and cleaning fees, parking fees, renters' liability insurance and utility charges.

To date, the REIT has received 100 requests from residents for a deferral of April rent payments. This represents approximately 1.1% of the apartment units in the portfolio and is not expected to materially impact the REIT's financial performance. The REIT will continue to monitor the situation closely and provide a further update if it receives a material increase in rent deferral requests in the weeks ahead.


Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on April 17, 2020, 12:54:50 PM

This roleplaying is fun. All of the above assumes the guy even takes your calls.

Fair.  Perhaps professionally managed buildings are different. 

In my experience in lower income housing growing up, the landlord isn't without leverage.  That's why I even brought up the point around negotiating a bit. 

Anyway, we've gotten off track on topic.  Apologies for the detour.

What kind of leverage are you talking about?  Do tell.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: LC on April 17, 2020, 01:22:36 PM
Quote
What kind of leverage are you talking about?  Do tell.

You're a NYC landlord and don't know any slumlord tactics? C'mon :D
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 20, 2020, 10:52:45 PM
Rent strike groups are starting to pop up

https://therealdeal.com/2020/04/16/tenant-groups-set-rent-strike-for-may-1/

any thoughts on how widespread the movement will get? and then how successful?

My answer would be pretty widespread in the large blue cities and will be meaningful on the margins for large landlords in those cities and a much bigger deal to small landlords.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on April 22, 2020, 06:42:56 AM
Looks like the stimulus is working. From the Firstcash (pawn shops) call on April 21:

“Our U.S. business has been further impacted in April as customers started receiving federal stimulus payments, which are in effect a “second tax refund,” assuming a stimulus payment of $3,400 for the typical family of four. Despite the severe and broad-based economic impacts of COVID-19 on so many businesses and individuals, many of our U.S. customers appear to be somewhat more liquid than would be expected given increased unemployment rates. In addition to stimulus payments, we believe that many of our customers have temporarily reduced their normal levels of spending significantly, as they adhere to strict “shelter-in-place” regulations resulting in reduced expenditures on gasoline, dining out, travel, entertainment, childcare and other services.

“Accordingly, the U.S. results so far in April have seen both extremely strong retail sales and loan redemptions, coupled with a lower than normal volume of new loans being written. Currently, U.S. pawn loans are down 14% since the beginning of April, when normal seasonal trends for the month would typically see flat to slightly increased pawn balances. While the increased volume of loan redemptions is to date driving a 12% increase in collected pawn fees for April compared to last year, expected fee income after April will be impacted by the reduced loan balances.

“Offsetting much of the near term impact of lower pawn balances is the strength of the U.S. retail business, where same-store retail sales in the first three weeks of April are up approximately 29% versus the same period last year while being able to maintain margins consistent with the first quarter. Much of the retail sales growth has been driven by strong demand for essential “stay at home” product categories, including electronics utilized for remote work or online learning and other “home-based” recreational products, such as gaming consoles and sporting goods."

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on May 06, 2020, 06:20:18 AM
Speaking of Sam Zell...


EQR reported yesterday. I think it illustrates what's good/bad about these things generally. what's good is that nothing looks dire and they are keeping the buildings relatively full, NOI flat-ish, the exodus from the $2,800 / month (EQR's average) apartments hasn't started just yet. they sold $370mm of apartments at good cap rates (4.5-5.0%) of course that's 1% of their asset base and printed a nice $450mm secured loan at 2.6% interest only for 10 years (that's 4-5% of their debt).

this was a lower conviction basket for me that has already been sized down significantly (AVB is gone, CPT/ESS are trimmed, and EQR has not been touched).

I think these guys have a big cost of capital advantage and are well positioned to step in and buy assets if things get worse, but don't see them as super "cheap" at this time (18x annualized 1Q FFO with guidance withdrawn)

my thoughts remain unchanged. Using EQR as a proxy, the sharp move from $90 to $50 was an opportunity (really it was a REIT-wide opportunity as IYR gave up 9 years of price appreciation as of March 23rd) even the darling-est of darlings (industrial bellwether PLD) went down a lot. it still wasn't all that cheap on an absolute basis given multifamily has been a darling for a decade, but if you don't buy anything when prices go down by an almost unlevered 35%, I don't think you'll buy if/when they're down 50% (if you think that they're going down 80%, well you can look at me in pity while I'm in the soup line).

the move from $50 to $70 was adjusting to a more appropriate move down (in my humble opinion).

I think they're kind of myeh and will wait for more clarity on fundamentals and / or lower prices. i think they are far superior to investment in private residential real estate.

insert folksy metaphor about a manic depressive neighboring farmer offering to buy your farm for wildly different prices here.



Collections were good, but even EQR's affluent tenants have had some issues with delinquency going to 5.4% (up from 2.5% last year)
Quote
The Company’s Residential collections are strong. During April 2020, Residential Cash Collections were approximately 97% of Residential Cash Collections in March 2020. As of the end of April 2020, current residents at same store properties had cumulative outstanding Residential Delinquency balances of approximately $11.0 million, representing a same store Residential Delinquency percentage of 5.4%. This compares to cumulative outstanding same store Residential Delinquency balances of approximately $5.4 million, representing a same store Residential Delinquency percentage of 2.6% at the end of March 2020, prior to the impact of COVID-19. The Company continues to work with residents to collect these outstanding balances including through the establishment of payment plans

Sold $478 million of property weighted toward San Francisco at 4.5% - 5.0% cap rates (prices agreed to pre-covid I assume)
Quote
The Company sold two wholly-owned properties in the San Francisco Bay Area and one partially-owned consolidated property in Phoenix during the first quarter of 2020, totaling 897 apartment units, for an aggregate sale price of approximately $370.2 million at a weighted average Disposition Yield of 5.0%, generating an Unlevered IRR of 12.9%. The Company did not acquire any apartment properties during the first quarter of 2020.
Subsequent to quarter-end, the Company sold one wholly-owned property located in the San Francisco Bay Area for approximately $108.0 million at a Disposition Yield of 4.5%.

Borrowed at 2.6% interest only 10 years....as The Mask would say...Smoooookin! $2 bilsky's of revolver and de minims maturities/development commitments..though given where rates are you'd want more maturities.
Quote
On April 30, 2020, the Company closed on a $495.0 million secured loan. The loan has a ten-year term, is interest only, and carries a fixed interest rate of 2.60%.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Kaegi2011 on May 06, 2020, 07:39:01 AM

What kind of leverage are you talking about?  Do tell.

Growing up my neighbor's kid (same age as me so we were friends) always complained about not getting cable and spotty telephone connection.  He'd come over to watch batman after school.  We never had an issue nor did I hear about it from others in the small complex.  When his apt would have issues it seems that maintenance always takes forever to fix issues.  Again, nothing to definitively prove that it's related to payments but it's strange when there was a guy on premise to do this type of stuff.  His family was basically living paycheck to paycheck but we were not. 

When I was in NY I complained about my heater for a month to the landlord b/c it was working intermittently (and I was in banking working 18 hours a day, so it wasn't a huge deal).  Then I wrote him a letter stating that I'm paying someone else to fix it and taking it out of next month's rent.  Guy shows up in two days to fix the issue with a new radiator. 

Lastly, while it's not my personal experience, you can go and look at the netflix show on the kushners.  That's some shady shit. 

Again, I don't expect you to acknowledge that these are tactics that you're using as it's a public board.  However, if you're a small time landlord (and not EQR...) and you feel like you have no lever to collect rent then you're the exception, not the rule, based my experience. 




Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on May 11, 2020, 09:28:26 AM
Pupil, I think i remember reading you owned RESI in the past.

you said you're not a fan of SFR but what do you think of it at 7.15 after the takeover fell through?

someone wrote up a decent thesis here:

http://yetanothervalueblog.com/2020/05/quickie-idea-renting-some-resi.html





Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on May 11, 2020, 10:00:42 AM
Tough to summarize all my thoughts on RESI.

At the risk of carpet-bombing you with a bunch of stuff, I'm going to copy a string of e-mails from 2016 re RESI to provide background on my thoughts.

For additional background (the prequel?), I suggest the AAMC thread.

I'd focus on the leverage and the nature thereof, the money from Amherst may mitigate this and they may have already addressed it, but a decent portion of the assets are still funded with repo that needs to be rolled, right?

Also, I think RESI's lower margins are structural and that the properties are lower quality because of the terribly misaligned structure throughout RESI's life where they were encouraged to grow very quickly to grow AAMC's fees.

it's probably cheap, but I'd rather be buying other stuff (less leverage, higher quality, is this still seriously the same management?)


January 15th 2016
Quote
$9.70, 45% of Book, management was talking $30.00 NAV like 6 months ago, this thing is trading like it will have liquidity issues (which it may given it owns a lot of assets that don't cash flow reliably).

sketchy accounting and sketchy people, i literally got into a long internet argument about why this was a terrible risk reward and the problems with the structure. it was paying a crazy unsustainable dividend and resembled a ponzi scheme, thankfully that's been cut

owns NPL's and houses, levered with securitization financing.

getting incredibly interesting here...buying this creates crappy houses at WAY below market.

January 20th 2016
Quote
we now have activists, a concentrated shareholder base (all of whom have taken a bath), 45% of tangible, 1/3 of $30 management's guesstimate of NAV (but take that w/ a grain of salt), the external manager (AAMC) trades for peanuts ($35MM) and is worthless, the largest  owner of AAMC's preferred and common (Luxor Capital) owns a greater amount of common stock at market value and is therefore aligned with the common.

the cash burn and liquidity are scary, but they have a TON of available financing.

just as an example of the math here. if you just do a simple total liabilities / assets, RESI is levered w/ a 55% LTV and trades 1/2 of book. they just bought 1,324 shitty homes from Blackstone in the atlanta area for $85K / home.

So that home has $46K of liabilities  and $40K of equity. But you are paying $20K by buying the stock at 50% of book (you are actually paying less because of the portion of the balance sheet in cash and they sold 15% of their NPL's for book value in Q4.

So buying RESI is like going to shitty part of atlanta and buying an $85K home for $65K w/ 70% financing that leaves some  room for error.

January 20th 2016
Quote
his has been accelerated to the top of what i'm working on by the activists.

this is a complex beast...attached is my attempt to re-build the balance sheet in a way that makes sense. you have to divide RESI into two beasts.

Beast 1 has $813MM of assets and has issued $684MM non-recourse debt against those assets, which is pretty levered.

Beast 2 has $1.8B of assets or so and $900MM of repurchase agreement liabilities (financing facilities) so that's less levered. BUT $449MM of that expires in 3/2016 or 4/2016!!! So there is some serious risk here with respect to rolling their financing.

To make things fun $111MM of the $1.8B of Beast 2's assets are debt of Beast 1's securitizations. RESI retained some of the securities from their securitizations  and put them in the collateral pool for the CS facility. $70/$111MM are the senior tranche.

it looks like you've got a serious maturity here. But thankfully they should have a lot of cash from this sale:

During the third quarter of 2015, 871 non-performing mortgage loans with a carrying value of $250.3 million were transferred to mortgage loans held for sale and offered for sale to interested bidders. Following the bidding process, in September 2015, we agreed in principle to sell such 871 non-performing mortgage loans, with an aggregate UPB of $346.9 million, or

approximately 15% of our aggregate loan UPB, to an unrelated third party for an aggregate purchase price of approximately $250 million, which is within the range of 1% to 2% of our balance sheet carrying value for the loans. Subject to confirmatory due diligence and negotiation of a definitive purchase agreement, we expect to consummate this transaction in the fourth quarter of 2015. No assurance can be given that we will consummate this sale on a timely basis or at all.

January 28th 2016
Quote
NAME REDACTED, they are indeed doing that, but no one knows why on earth they would and shareholders are attempting to force some kind of change. 

this is basically a ponzi scheme that ran out of buyers, so it had to switch strategies to figure out a new way to get people excited about its stock when it could no longer issue above NAV, pay a dividend/grow NAV, issue again, etc.

it will take you a bit but I recommend the VIC write-ups for starters, then read the COBAF thread on AAMC in its entirety. the history/context is important.

http://www.valueinvestorsclub.com/idea/ALTISOURCE_RESIDENTIAL_CORP/110919
http://www.valueinvestorsclub.com/idea/ALTISOURCE_RESIDENTIAL_CORP/108911
http://www.valueinvestorsclub.com/idea/Altisource_Asset_Management/88060
http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/aamc-altisource-asset-management/

I'm still torn on this one. it's so opaque and the repo facilities scare me a little. I imagine it will take a while to sort out all these NPL's.

February 11th 2016
Quote
how low can it go! 39% of book, definitely pricing in some serious liquidity issues...too much risk here to make it big though (in my opinion), but I think this is very well compensated risk.

May 11th 2016 (in response to shift in strategy)
Quote
This is disappointing. While the intended buyback of $100MM is certainly good news given this trades for about 1/2 book and $100MM is over 15% of the shares at current prices, I think a more sweeping change in management/strategy would be better, or an outright sale of the company. And they haven't bought back that much stock yet, so I'll believe it when I see it.

In the end I don't think the activists had enough muscle or shares (2.5%). I trimmed the lots I bought in the $8's and $9's at prices above $12 and am sitting on a 6% position.

I am probably going to trim a little more. It's cheap and interesting, but look like management is here to stay.

June 16th 2016
Quote
RESI is dropping like a rock despite a pretty hard rally by the single family REIT's.

Industry leader Colony Starwood is trading at a substantial premium to book and probably pretty close to NAV which is a big shift from the begining of the year.

Meanwhile RESI has continued to sell portfolios of loans and increase allocation to single family rental.

While I think management is shitty and I don't like the strategy and the activists lost, I think buying $2.1B of assets levered with $1B of low cost repo and securitization financing for a mere $480mm is a great set up.

June 2016
Quote
continues to drop like a rock, 43% of tangible book. I am not sizing this up (but am instead maintaining constant dollar size). It is not a huge position because of the opacity, but Brexit probably doesn't change the outcome of a low quality NPL / single family rental operation.

December 2016
Quote
FWIW, I'm selling this. I believe it to still have a lot of upside (like 50%+), but I know it the least well, it's the most opaque, pretty levered, and not positive on a cash flow basis yet, so I consider it to be relatively risky and it to be my lowest quality/least aligned management team.

 In the spirit of intellectual honesty, it's probably also a bit of suboptimal yearly performance management (wanting to lock some in and de-lever).

I was going to wait to next year for tax purpose, but I'm only up 20%, so the difference b/w short term and long term is not incredibly dramatic.

March 2017
Quote
this is up another 20% since I sold. They've basically liquidated the entire loan operation and it now trades at 70% of management's stated NAV of ~$20...they've paid out some divvies along the way but it's telling that they used to say NAV was $30...the economics of the NPL operation was worse than expected and it's taking a while to get to cash flow positive on renting out those shitty houses. they seem to be pretty close. 

I am not tempted to get back in.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on May 11, 2020, 11:24:30 AM
just read the results and the call transcript.

my thoughts on RESI are more or less unchanged.

$216mm of revenues
$43mm taxes, insurance, HOA
$47mm of repair maintaince, turn

$126mm of annualized 1Q NOI
$61mm of interest (3.7% rate wgt average, pretty short in nature)

$65mm to pay G&A / give to shareholders / de-lever, maintain the houses
$25-$30mm of G&A
$40-$45mm to maintain the houses / give to shareholders/de-lever.

I mean that's kind of interesting when the equity is $370 million but they own 14.5 thousand homes that aren't in the most wonderful of neighborhoods, that are old and RESI's been a shit show for 7-8 years so I would imagine there's a bunch of deferred maintainance and roof replacements and blah blah blah on the horizon. $1000 / year per home on that is $14 million and that could be too low (potentially very low).

It just doesn't feel like a lot of cash is left over to de-lever or true "owner earnings"

just to throw out a bit of a strawman, Paramount Group owns 1633 Broadway which generates $190 million of rent and $120 million of NOI (63% NOI margin). One building in NYC generates the same amount of NOI as this entire collection of 14,000 homes. 1633 Broadway has a 10 year mortgage at 2.99% interest only maturing in 2029 with the bulk of its IG tenants leases extending well out. I'd rather rent to Allianz, Morgan Stanley, Warner Music Group, New Mountain Capital, etc. for 7,10, 15 year leases and only have to manage one building then have to deal with 14,500 lower to lower middle class renters in  bunch of 40 year old homes that have either been NPL's or owned by this thing for a long time. I'd rather borrow for 10 years at 2.99% interest only with 50% (using bulled up LTV) then borrow in all these 70-80% levered securitizations/repo that mature over the next few years. Now its an unfair comparison because NYC (and particularly NYC office) is super scary right now, but I would be more scared of the RESI's tenants (who are all losing their jobs) than 1633's.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: ratiman on May 11, 2020, 12:00:16 PM
Why does RESI pay a management fee to AAMC? It's like $4M a quarter or something, IIRC.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Spekulatius on May 11, 2020, 03:18:02 PM
Externally managed REITs are almost as bad as SPACS especially when the external managers are AAMC crooks.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: matts on May 14, 2020, 02:26:23 AM
Thanks for the input guys.

I found another possible way to play it. would appreciate any input.

Bluerock reit Pref shares BRG.PR.A trade at 20.62 (around 10% yield). Bluerock is a multifamily reit mostly in the sunbelt. They just had their Q1

Quickly put together highlights:

Occupancy at April end - 94%
Collected 97% april rents, 92% may rents through May 12 (includes 2% on payment plans)

These guys are constantly buying new buildings, renovating new units etc, so they are constantly issuing new prefs. They said that even in april, they were issuing new prefs at an annual run-rate of 200MM. I think for the next little bit they will keep diluting common and raising new prefs in order to pay the old prefs.

cap structure ooks like this:

2.5B assets (2B of depreciated buildings)

1.45B Mortgages (80% of that is GSE)

100MM revolver

715MM in pref shares

many pref shares recovered, but these still trade at a good discount which i think should close leading the way to a decent IRR

rents look like they are getting paid (if not, they can always stop paying the GSE mortgages for a few months) and they will likely keep issuing prefs to retail investors that want the yield.


Any thoughts appreciated.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: KJP on July 23, 2020, 08:17:15 AM
Mentioned on other threads by me and a few others, but I think apartments deserve their own thread, but don't think they all individually deserve their own thread.

No hard science to my picks here, diversification is protection against ignorance and when these stocks fell at the pace they fell, I'm not going to kid myself and say I went through every companies filings or built up a property by property, city by city valuation.

Broadly, these companies have
a) very low leverage, thus a decline in share price is a decline in enterprise value/asset value
b) high occupancy in (mostly) higher barrier to entry high housing cost markets
c) high income yuppie renters (example: EQR's average income renter is makes $165K, that's not a waitress or uber driver), does a coder at GOOG lose her job from COVID-19, what about a big law associate in DC? maybe a financier in NYC does.
d) cap rates blew out to 6% or more (this changes by the day); investment grade spreads have blown out as well, but these have well-termed out debt. once credit stabilizes, these guys are going to print some incredibly low-cost debt as multi-fam debt (agency and corporate IG) will in my view be a safe haven in an otherwise tumultuous commercial real estate credit world (hotels, some office)
e) 4-5%+ divvy yields that appear sustainable.

Risks:
a) rents will surely come down as new supply hits a weaker economy (but these buildings will remain full, in my view)
b) I think one should haircut NOI 5-15%, not 30%
c) these weren't cheap beforehand from a public or private market perspective; i was previously an apartments hater as I thought it was one of the steamier parts of the real estate and real estate finance world. a 30%-40% move down in prices (which at low leverage flows straight to the asset level) makes me an apartment lover (in basket form at 10-15% lower prices than today's levels, but we'll probably get a few more bites at the apple)

Another bite at the apple is now here as EQR approaches the 3/23 low.  Have your thoughts changed at all?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on July 24, 2020, 06:08:30 AM
My original idea was based on a few things

1. Yuppie High income renters were good credit risk and would mostly keep their jobs and pay their contractual rent.

I think this was valid and played  out in the results.Collections have been good.

2. Multi-family is the one of the most finance-able CRE classes out there and these REITs have access to very cheap, bank, bond, and agency financing

I think this was and is valid and will continue for the foreseeable future. Their bonds trade at very low yields and others have accessed the agency market successfully (see recent JBGS press release re non recourse Freddie K loans at L+275 w/ 5 year IO.

3. High quality yuppie apartment have high NOI margins and use dynamic pricing to keep the buildings full; leading to less volatile NOI in the face of decreasing rents / increasing concessions. NOI will go down and there will be disruption, but it will be manageable.

I think this has been somewhat proved  out in the short term numbers but I have less conviction on this going forward based on anecdote and intuition. Summer, is the primary leasing / re-leasing season and I think that this summer is going to prove pretty bad for these guys as your older yuppie scum have been catalyzed to buy burbs houses a little earlier than they otherwise would and your younger yuppie scum are working remotely from their parents homes/second homes. I am a 31 year old member of the yuppie scum class. My wealthiest of friends have kept their apartments in SF/NYC but are living with their parents or renting Airbnb’s in less dense places. Others have let their leases lapse or paid a contractual break fee. And the throngs of new employees that move into cities are also at home with their jobs either remote or deferred.

I probably expect more disruption to demand than I did a few months ago, and unlike office, the leases here are all 1 year. Office is more scary from a secular perspective, but I actually think urban multi family may see more short term fundamental issues.

I haven’t bought any more multi family since my initial slug and used the rally to de risk substantially. I will probably catch the falling knife to keep it at similar size, but am not aggressively buying. Very long term, I love the idea of buying REITs with the lowest cost of capital, low leverage at cheaper than PMV and I think they fit this description.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: KJP on July 24, 2020, 10:13:11 AM

 I am a 31 year old member of the yuppie scum class. My wealthiest of friends have kept their apartments in SF/NYC but are living with their parents or renting Airbnb’s in less dense places. Others have let their leases lapse or paid a contractual break fee. And the throngs of new employees that move into cities are also at home with their jobs either remote or deferred.


I agree that there may be some short-term pain here, but what you wrote is why this is still compelling to me longer-term.  No need to repeat what BG has written about the unique appeal of cities for the 21-35 crowd.  The suburbs or their parents' basement cannot compete. 

Deals like this suggest the private market (for now at least) agrees:  https://therealdeal.com/2020/07/23/record-setting-multifamily-deal-comes-together-in-brooklyn-for-1-25b/ 
Portfolio of Brooklyn apartments selling for ~$1 million/unit or $833/sq ft.

And as you have mentioned, what cap rate would a life insurer or pension plan pay for a high quality residential building in the very best US cities when the 30-year Treasury is yielding 1.25%?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on July 24, 2020, 10:21:54 AM
My original idea was based on a few things

1. Yuppie High income renters were good credit risk and would mostly keep their jobs and pay their contractual rent.

I think this was valid and played  out in the results.Collections have been good.

2. Multi-family is the one of the most finance-able CRE classes out there and these REITs have access to very cheap, bank, bond, and agency financing

I think this was and is valid and will continue for the foreseeable future. Their bonds trade at very low yields and others have accessed the agency market successfully (see recent JBGS press release re non recourse Freddie K loans at L+275 w/ 5 year IO.

3. High quality yuppie apartment have high NOI margins and use dynamic pricing to keep the buildings full; leading to less volatile NOI in the face of decreasing rents / increasing concessions. NOI will go down and there will be disruption, but it will be manageable.

I think this has been somewhat proved  out in the short term numbers but I have less conviction on this going forward based on anecdote and intuition. Summer, is the primary leasing / re-leasing season and I think that this summer is going to prove pretty bad for these guys as your older yuppie scum have been catalyzed to buy burbs houses a little earlier than they otherwise would and your younger yuppie scum are working remotely from their parents homes/second homes. I am a 31 year old member of the yuppie scum class. My wealthiest of friends have kept their apartments in SF/NYC but are living with their parents or renting Airbnb’s in less dense places. Others have let their leases lapse or paid a contractual break fee. And the throngs of new employees that move into cities are also at home with their jobs either remote or deferred.

I probably expect more disruption to demand than I did a few months ago, and unlike office, the leases here are all 1 year. Office is more scary from a secular perspective, but I actually think urban multi family may see more short term fundamental issues.

I haven’t bought any more multi family since my initial slug and used the rally to de risk substantially. I will probably catch the falling knife to keep it at similar size, but am not aggressively buying. Very long term, I love the idea of buying REITs with the lowest cost of capital, low leverage at cheaper than PMV and I think they fit this description.

If anything, I think we know that the public market just can't stomach YOY declines.  If you hold out 2-3 years, things tend to work out best.   I generally like this asset class as there are less long term secular 4-D chess that you are playing.  Sure YOY rent, occupancy, etc will look bad.  But if you own stuff that has 5-6% yield.   You can create your own form of share buybacks. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on July 25, 2020, 10:22:05 AM
i think we are all in agreement, I'm just saying i'm not going to be super aggressive on the average down; that may have more to do with the state of the rest of my portfolio and inflows more than the merit of the idea!  ;D

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Spekulatius on July 25, 2020, 11:04:37 AM
Any idea why EQR appears to be the dog in the apartment Reit space? MAA seems to be the top performer.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: fareastwarriors on July 28, 2020, 09:27:18 AM
Recession Proof’ Apartment Buildings Set for $12 Billion Test

 JLL is marketing deals to investors on promise of rent growth
 Layoffs, expiring unemployment benefits pose new hurdles

https://www.bloomberg.com/news/articles/2020-07-28/-recession-proof-apartment-buildings-set-for-12-billion-test?srnd=premium
 (https://www.bloomberg.com/news/articles/2020-07-28/-recession-proof-apartment-buildings-set-for-12-billion-test?srnd=premium)
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on July 28, 2020, 02:44:07 PM
http://investors.equityapartments.com/Cache/IRCache/e03b3c04-78b4-8606-37bf-384a94da468a.PDF?O=PDF&T=&Y=&D=&FID=e03b3c04-78b4-8606-37bf-384a94da468a&iid=103054

looks okay to me. i mean definitely some impact, but the apocalypse is at least on the come rather than here. rents are dropping though. see slide 15 with the same store rent changes. -5% to -10%. that's how they're maintaining occupancy.



Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: HalfMeasure on July 29, 2020, 08:13:08 AM
http://investors.equityapartments.com/Cache/IRCache/e03b3c04-78b4-8606-37bf-384a94da468a.PDF?O=PDF&T=&Y=&D=&FID=e03b3c04-78b4-8606-37bf-384a94da468a&iid=103054

looks okay to me. i mean definitely some impact, but the apocalypse is at least on the come rather than here. rents are dropping though. see slide 15 with the same store rent changes. -5% to -10%. that's how they're maintaining occupancy.

No position here, but doesn't it seem like a 5-10% rent decline across the portfolio is already priced in at today's levels? Does anyone have a good sense for what kind of cap rate these assets would transact at in normal times on a stable rent base?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on July 29, 2020, 09:05:53 AM
http://investors.equityapartments.com/Cache/IRCache/e03b3c04-78b4-8606-37bf-384a94da468a.PDF?O=PDF&T=&Y=&D=&FID=e03b3c04-78b4-8606-37bf-384a94da468a&iid=103054

looks okay to me. i mean definitely some impact, but the apocalypse is at least on the come rather than here. rents are dropping though. see slide 15 with the same store rent changes. -5% to -10%. that's how they're maintaining occupancy.

Pupil, what's your take on the offsetting effects of lower interest rates vs lower rent/occupancy?  I feel like they wind up being a draw.  Thoughts?  I'm talking specifically multi-family. 

Heck, maybe we should hedge our MF exposure with some homebuilders as post 2009, there was a decade where young people moved into the city to work and fornicate.  That huge demographics group now has kids and are likely looking to buy houses. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on July 30, 2020, 04:33:41 AM
http://investors.equityapartments.com/Cache/IRCache/e03b3c04-78b4-8606-37bf-384a94da468a.PDF?O=PDF&T=&Y=&D=&FID=e03b3c04-78b4-8606-37bf-384a94da468a&iid=103054

looks okay to me. i mean definitely some impact, but the apocalypse is at least on the come rather than here. rents are dropping though. see slide 15 with the same store rent changes. -5% to -10%. that's how they're maintaining occupancy.

Pupil, what's your take on the offsetting effects of lower interest rates vs lower rent/occupancy?  I feel like they wind up being a draw.  Thoughts?  I'm talking specifically multi-family. 

Heck, maybe we should hedge our MF exposure with some homebuilders as post 2009, there was a decade where young people moved into the city to work and fornicate.  That huge demographics group now has kids and are likely looking to buy houses.

I think rates are an important consideration.

The most obvious would be in what EQR pays on its borrowing:

EQR primarily issues in the unsecured IG bond market and its bonds have spreads ranging from 52-170 which at current rates leads to absolute yields of 0.5% - 2.6%. the actual coupons are higher (3.5% or so), so over time EQR's cost of interest should come down. 

But whether EQR pays 3.5% or 2.5% on its debt isn't really that important from an income statement perspective in that EQR only has about $105K of debt per unit. So on a unit level it's a question of whther you are paying $2.5K or $3.5K/year (which isn't really important or material). Considering that each unit commands about $33K of rent / year and has $11.8K of cash opex + g&a / year, changes in either rent or opex are far more important. A 10% decline in rent has 3x the impact of a 100 bp decline in interest expense AND EQR's interest expense is mostly locked in because a lot of the "high" coupons of say 4% are locked in for as long as 30 years; EQR would have to tender for bonds at a premium.

Where low rates are important is simply supporting the whole market for high quality multi-family and helping control cap rate expansion. EQR operates with very low leverage, but obviously not all multifamily people do. As an example, we know that FRPH and MRP own Dock79 which has $295K / unit of debt ($90mm / 305 ) at 4.125% w/ 4 years of interest only. this is much more typical. As a former Agency CMBS trader, I can tell you that the vast majority of Fannie Mae DUS and Ginnie Mae project loans and Freddie K deals that I was buying for securitization / trading had DSCR's of 1.1-1.3x often with rosy occupancy assumptions.

The availability of that extremely low cost and favorable debt supports the whole multi-family market (and single family market for that matter) and is the reason why EQR can exit its lower quality apartments at <5% cap rates. They're selling to a leverage junkies running 80%+ non recourse LTV who still is getting a decent cash flow/total return to equity because of the great financing. I do not look down on the leverage junkies; I am one myself with my personal residence.

In sum, low rates are simply a market support for the value, but aren't important to the income statement, particularly for EQR. From a stock perspective, they also support the demand for yieldy REITs.

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: rb on July 30, 2020, 04:45:51 AM
http://investors.equityapartments.com/Cache/IRCache/e03b3c04-78b4-8606-37bf-384a94da468a.PDF?O=PDF&T=&Y=&D=&FID=e03b3c04-78b4-8606-37bf-384a94da468a&iid=103054

looks okay to me. i mean definitely some impact, but the apocalypse is at least on the come rather than here. rents are dropping though. see slide 15 with the same store rent changes. -5% to -10%. that's how they're maintaining occupancy.

No position here, but doesn't it seem like a 5-10% rent decline across the portfolio is already priced in at today's levels? Does anyone have a good sense for what kind of cap rate these assets would transact at in normal times on a stable rent base?
They would transact around a 4% cap. You can get a better idea from the annual reports as EQR does transact fairly regularly and release the info.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on July 30, 2020, 04:47:30 AM
http://investors.equityapartments.com/Cache/IRCache/e03b3c04-78b4-8606-37bf-384a94da468a.PDF?O=PDF&T=&Y=&D=&FID=e03b3c04-78b4-8606-37bf-384a94da468a&iid=103054

looks okay to me. i mean definitely some impact, but the apocalypse is at least on the come rather than here. rents are dropping though. see slide 15 with the same store rent changes. -5% to -10%. that's how they're maintaining occupancy.

No position here, but doesn't it seem like a 5-10% rent decline across the portfolio is already priced in at today's levels? Does anyone have a good sense for what kind of cap rate these assets would transact at in normal times on a stable rent base?

If Mr. Market was given perfect foresight ans was told that rents would decline by 7.5% and nothing else would change, then the stock would probably go up. But that's really not the extent of the risk.

I see EQR at a 5.8% cap rate right now with a high 6's cash on cash return to the equity. If I shock all rent down 10%, I get about a 5 cap. At 30%, I get a 3 cap. At 15% decrease in rent plus a 10% increase in opex / unit (from a 25% hike in property taxes for example), I get to a 4% cap. All of those are assuming current and high occupancy levels. 

For context, if I had to put one number on what cap rate high quality multi-family transacts, I'd say 4.5%; the lowest I've seen was 3.7% on national landing multi-family private deal after AMZN where the underwriting baked in big rent growth/redevelopment (shameless plug for JBGS here which trades FAR wider). Others can chime in. EQR generally prints 4-4.75 caps when they sell Search the Q's / K's for "disposition yield".

This data says its above 5 though.
https://www.nar.realtor/blogs/economists-outlook/2020-q1-nar-commercial-survey-shows-early-impact-of-coronavirus
https://mf.freddiemac.com/docs/multifamily_2020_outlook.pdf

If you start to tweak the cap rate up and bake in declines in rent/NOI, there's still plenty of downside that's not priced in.

But I think it's also important to consider it all on a per unit basis and what that would imply. For example, if someone said "i think rent goes down 15%, opex goes up 30% and it should trade at a 7% cap rate, this would imply a value of $217K per unit (down from $370K now and $530K at peak price of $87).

$217K per unit would represent an extreme value proposition for end users of highly amenitized well located modern apartments and the argument for EQR to start doing condo conversions would be compelling. Recall that EQR's tenants make $165K / year. Even if that drops, think how affordable such apartments would be with a 30 year mortgage at 3%.

I guess what I'm saying is, one can very easily dream up negative scenarios that are not priced in; these aren't insanely cheap and one could easily argue fundamentals are only starting to come down, but I think the underlying pure real estate value starts to bail you out at those negative scenarios (assuming urban living is desirable again at some point).

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: rb on July 30, 2020, 05:02:45 AM
Just thinking a bit about occupancy here. I don't have the numbers handy. But as I recall in ancient times (pre-covid) vacancy was really low in EQR's markets. So it doesn't make much sense that a big occupancy drop is coming. Where would these tenants actually go to live? No way you get a lot of new supply coming to mark if rents are soft.

I guess the only wild card is the airbnbs coming into the rental market. I have no idea how many of those are around.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on July 30, 2020, 05:10:38 AM
Just thinking a bit about occupancy here. I don't have the numbers handy. But as I recall in ancient times (pre-covid) vacancy was really low in EQR's markets. So it doesn't make much sense that a big occupancy drop is coming. Where would these tenants actually go to live? No way you get a lot of new supply coming to mark if rents are soft.

I guess the only wild card is the airbnbs coming into the rental market. I have no idea how many of those are around.

Well 50% of EQR's NYC moveouts gave an out of state forwarding address.

Be trigger warned of my overprivileged statements below, but just to give some anecdotal flavor
I live in wealthy DC Burbs. Two software engineers from NYC just bought a $2mm+ house down the street from me. they aren't going back. the headwinds are real as it relates to the 30+ year old accelerating their moves to the burbs. EQR has also noted international students as an issue. My sister went to school in Boston and rented at an Archstone owned apartment (now owned by EQR). She rented a $2K / month apartment. to the extent college kids aren't going back (temporarily) that hurts. I know some investment banking graduates that are training remotely. There's a a big disruption coming. Will this be important in 3 years or 5 years, maybe not (I would wager not). But we should acknowledge the headwinds. The 30+ year olds are buying houses and the 23 year olds are at their parents' house.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: Cigarbutt on July 30, 2020, 05:41:04 AM
...
Be trigger warned of my overprivileged statements below, but just to give some anecdotal flavor
I live in wealthy DC Burbs. Two software engineers from NYC just bought a $2mm+ house down the street from me. they aren't going back. the headwinds are real as it relates to the 30+ year old accelerating their moves to the burbs. EQR has also noted international students as an issue. My sister went to school in Boston and rented at an Archstone owned apartment (now owned by EQR). She rented a $2K / month apartment. to the extent college kids aren't going back (temporarily) that hurts. I know some investment banking graduates that are training remotely. There's a a big disruption coming. Will this be important in 3 years or 5 years, maybe not (I would wager not). But we should acknowledge the headwinds. The 30+ year olds are buying houses and the 23 year olds are at their parents' house.
More anecdotal flavor.
i typically rent an apartment close to a metropolitan university that has a significant international student participation. Every year, at this time of year, the apartment is offered. Typically, there is significant pricing power and a very large number of applicants and it's possible to use a multi-layer filter process. This year: minimal "views" and zero demand. FWIW, i think this short term noise is likely to accelerate underlying trends, for the longer term.
https://www.spglobal.com/ratings/en/research/articles/200709-student-housing-in-the-covid-19-pandemic-era-school-s-out-but-for-how-long-11566259
---) back to REITs etc
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on July 30, 2020, 06:07:33 PM
Any idea why EQR appears to be the dog in the apartment Reit space? MAA seems to be the top performer.

My (casual/tourist to the space) understanding is that EQR is perceived as more exposed to the urban flight risk/covid impacts and MAA is more exposed to second and third tier cities in the sun-belt which are perceived to be increasing in desirability if remote work truly comes to pass.

I haven't yet figured out who, if anyone, is in control/behind MAA.  I don't love rolling with organizations controlled by hired hand, sales guys.

I agree with the general sentiment in the thread that the sector ain't cheap enough now.

In my opinion, this covid, remote work, protests combo could really touch of a feedback loop of urban flight (maybe like in the 70's); this could include clobbered state and local budgets and ham handed (or otherwise) attempts to fix that with taxes combined with "eating the rich."  The covid thing and protests are almost worst case scenario for cities...like almost every reason to live there is moot right now, but we will just have to see if it touches off a little (or big) feedback loop. 

All that said, I guess I'm saying I could see it being an "intermediate term" problem; but I wouldn't bet against the power of the network effects of cities long term.  Can you imagine how awesome they could be with real live-work-play design and no commuter car infrastructure?  Oh yeah, sort of like Europe, but bigger and more functional.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on August 09, 2020, 07:11:52 AM
https://www.google.com/amp/s/therealdeal.com/2020/08/07/kkr-teams-up-with-dalan-on-big-brooklyn-multifamily-buy/amp/

KKR buying shiny new Brooklyn portfoli for $675K/ unit. It was rumored to be in talks originally at $980K/ unit. It didn’t mention average rent/unit.

Just a data point / context for EQR at $370K EV / unit and the type of haircut people are taking. Of course only 9000 of EQR’s 78K are in NYC they are at average $3900/month versus total EQR of $2800.  I’m not saying all of EQR is “worth” $675K just pointing out that there’s a real post COVID trade at that level.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on August 11, 2020, 09:45:55 AM
Alright, I'ma buy a little EQR. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on September 10, 2020, 04:05:03 AM


https://seekingalpha.com/news/3612778-manhattan-rental-market-sinks-number-of-empty-apartments-triple
Manhattan rental market sinks as number of empty apartments triple
Sep. 10, 2020 5:19 AM ET|About: Equity Residential (EQR)|By: Yoel Minkoff, SA News Editor
There were more than 15,000 empty rental apartments in Manhattan in August, up from 5,600 a year ago, as more New Yorkers fled the city amid the coronavirus crisis, according to a report by Douglas Elliman and Miller Samuel.

The inventory of empty units is the largest ever recorded since data started being collected 14 years ago, dashing hopes for a rebound in the fall or the end of 2020.

Rental prices have come down - median rental prices fell 4% in August - but the discounts don't appear steep enough yet to lure new renters back to the city. The average rental price for a two-bedroom in Manhattan is still $4,756/month.

While REITs and real estate companies have more access to capital, smaller landlords with just one or two buildings may have trouble paying their mortgages and property taxes, which could impact banks and lenders.

Related: Equity Residential, (NYSE:EQR), AvalonBay (NYSE:AVB), UDR (NYSE:UDR), Apartment Investment and Management (NYSE:AIV), Essex Property Trust (NYSE:ESS), Camden Property Trust (NYSE:CPT), Mid-America Apartments (NYSE:MAA), Invitation Homes (NYSE:INVH)
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on September 10, 2020, 08:10:32 AM
Thanks for head's up on this JGBS.  I am thinking about their focus on walkability.  In my ideal personal scenario, I have enough personal capital to justify an office space (maybe with a BBG) a couple of blocks away from my home, where I can walk or bike when I want (and store my junk, some books, and other stuff there).  As a compromise, working for someone else, I still like having that space, preferably with a view and some people standing by that I can get to help do stuff when I want/need.  If they are going to take that away, I'ma need a raise dawg (or I'm likely to look to hop to somewhere that does offer it that....all else being equal). 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on September 14, 2020, 09:16:34 AM
https://seekingalpha.com/news/3613573-apartment-investment-and-management-plans-spinoff-jv

https://seekingalpha.com/pr/18004279-aimco-announces-formation-of-apartment-income-reit-self-managed-10-billion-reit-and-closing

AIMCO splitting into a development company / stabilized company, since the market hates development and will probably value the stabilized better.

I'm not really familiar with AIV / AIMCO. Just skimmed.

Also, a nice 4.2% cap rate / $592K / unit california sale in the press release. That's a strong comp as it relates to ESS.

I found this the other day on twitter as it related to ESS.

https://www.privateeyecapital.com/why-would-any-long-term-investor/

Quote
Aimco also announced, as part of its longer-term strategy to reduce financial leverage and to rebalance its capital allocation among target markets, that it has entered into a ten-year joint venture with a passive institutional investor to own jointly 12 multi-family properties with 4,051 units located in California. The properties were valued at $2.4 billion, or approximately $592,000 per unit, equivalent to an implied NOI cap rate of ~4.2% and an implied free cash flow cap rate of ~4.0% (based upon NOI and free cash flow annualized for the six months ended June 30, 2020). The properties secure non-recourse property debt of $1.22 billion with a weighted average interest rate of 3.17% and have an implied equity value of $1.18 billion. In exchange for a 39% interest subject to $475 million of property debt, Aimco received $461 million cash plus an additional $24 million for future redevelopment spending. Aimco retains ownership of the remaining 61% interest and is responsible to operate the properties, earning property and asset management fees. The valuation is equal to 97% of the Gross Asset Value (“GAV”), as of 1Q20, previously calculated and published by Aimco.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on September 14, 2020, 09:49:34 AM
Pupil,

We are either on the cusp of making a ton of money investing in these REITs or we are too dumb and too stubborn for our own good
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on September 14, 2020, 10:33:25 AM
https://seekingalpha.com/news/3613573-apartment-investment-and-management-plans-spinoff-jv

https://seekingalpha.com/pr/18004279-aimco-announces-formation-of-apartment-income-reit-self-managed-10-billion-reit-and-closing

AIMCO splitting into a development company / stabilized company, since the market hates development and will probably value the stabilized better.

I'm not really familiar with AIV / AIMCO. Just skimmed.

Also, a nice 4.2% cap rate / $592K / unit california sale in the press release. That's a strong comp as it relates to ESS.

I found this the other day on twitter as it related to ESS.

https://www.privateeyecapital.com/why-would-any-long-term-investor/

Quote
Aimco also announced, as part of its longer-term strategy to reduce financial leverage and to rebalance its capital allocation among target markets, that it has entered into a ten-year joint venture with a passive institutional investor to own jointly 12 multi-family properties with 4,051 units located in California. The properties were valued at $2.4 billion, or approximately $592,000 per unit, equivalent to an implied NOI cap rate of ~4.2% and an implied free cash flow cap rate of ~4.0% (based upon NOI and free cash flow annualized for the six months ended June 30, 2020). The properties secure non-recourse property debt of $1.22 billion with a weighted average interest rate of 3.17% and have an implied equity value of $1.18 billion. In exchange for a 39% interest subject to $475 million of property debt, Aimco received $461 million cash plus an additional $24 million for future redevelopment spending. Aimco retains ownership of the remaining 61% interest and is responsible to operate the properties, earning property and asset management fees. The valuation is equal to 97% of the Gross Asset Value (“GAV”), as of 1Q20, previously calculated and published by Aimco.

Haha!  I was just looking at that.  Terry Considine is CEO/founder (old guy).  Internally managed... AIR will hold stabilized/developed apartments and AIV will take development ops.  Lots of cross rights of refusal (to develop properties; right of first refusal to buy developed properties, etc).

Watched a couple of youtube talks he gave...comes off as a good guy, but is that a toupe'? 

Edit: wow they are doing a reverse (taxable) spin; citing potential changes in tax law...no vote and they are sending people a tax bill. 

I don't get why they are doing the spin.  Their combined estimated NAVs in the presentation are $7.8 billion for AIR (with a woooo 5% increase in distribution) and $1.2 billion for AIV; current EV (admittedly after a ~7% move on announcement) is ~10B.

CEO/Founder is going with AIR (apartment holdco).  Also going to be on board of AIV.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on September 22, 2020, 06:59:56 AM
Jonathan Litt is coming at AIV, speaking to potential motivations on the transaction:

https://landandbuildings.com/land-buildings-sends-letter-to-aiv-board-of-directors/
https://landandbuildings.com/wp-content/uploads/2020/09/LandB-Press-Release-Letter-to-AIV-Board-9-22-20.pdf

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on September 23, 2020, 07:48:56 PM
Interesting.  Thanks for sharing. 

Bilerman @ citi pretty much reflects my impression of the deal, like wtf are they doing...they have all these cross-company options and other inter-party relationships they are setting up to "simplify" things and they are sticking holders with a phantom tax bill (!) because they think they can predict the future (wow that would probably be a malpractice suit for me) to close a discount to mgmt's estimate of NAV? 

Looks like L&B owns ~1.4% percent of the outstanding as of last q.   
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: TrashIsCash on September 28, 2020, 04:13:49 PM
I sell Class C apartment buildings in Southern California.  One of my `mom&pop' clients held an open house for a vacant apartment unit located in Long Beach, CA.  They had several interested people who are moving from San Francisco tour the unit.  The prospective tenants were WFM tech workers who wanted to live in a less expensive, lower density area.  I have a family member who owns a few small apartment buildings in San Francisco.  They have two vacant units, which are proving to be very tough to rent.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on September 28, 2020, 04:48:32 PM
I sell Class C apartment buildings in Southern California.  One of my `mom&pop' clients held an open house for a vacant apartment unit located in Long Beach, CA.  They had several interested people who are moving from San Francisco tour the unit.  The prospective tenants were WFM tech workers who wanted to live in a less expensive, lower density area.  I have a family member who owns a few small apartment buildings in San Francisco.  They have two vacant units, which are proving to be very tough to rent.

So are you saying that people are moving from where 21% of EQR's units are (SF) to where 27% are (SoCal)?

In all seriousness, I agree with you that the near term disruption in urban multifamily (NYC and SF) is bad and getting worse.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: fareastwarriors on September 28, 2020, 05:30:05 PM
I sell Class C apartment buildings in Southern California.  One of my `mom&pop' clients held an open house for a vacant apartment unit located in Long Beach, CA.  They had several interested people who are moving from San Francisco tour the unit.  The prospective tenants were WFM tech workers who wanted to live in a less expensive, lower density area.  I have a family member who owns a few small apartment buildings in San Francisco.  They have two vacant units, which are proving to be very tough to rent.

Looking at Class C apartments, not even a SFH in a B neighborhood?
Geez.

I'm over in the East Bay so the world is not as crazy as SF. I rented out a 2bed/1bath unit back in August for $1,900. It's completely renovated. Pre-pandemic I was hoping to rent at $2,300-2,400 but I was getting little to no inquiries at $2,400 in June. Once I lowered it to $1,900, I had plenty of candidates.  Price matters.

Quote
As such, the average asking rent for an average apartment in the city, which measures 2.4 bedrooms when counting a studio as having one, is now 18 percent ($725 a month) cheaper than just seven months ago, with the average asking rent for a one-bedroom in the city having just dropped to around $2,800 a month (which is down from closer to $3,700 at peak).

At the same time, offers of complimentary rent and cash concessions haven’t waned, driving effective rents down even more.

And a we noted earlier this month, rents in Oakland are now dropping as well, with the average asking rent for an apartment in Oakland having just dropped to under $2,500 a month (versus nearly $3,000 a month at peak), which is down nearly 6 percent over the past month as well.

https://socketsite.com/archives/2020/09/drop-in-s-f-rents-accelerates-down-nearly-25-percent-from-peak.html (https://socketsite.com/archives/2020/09/drop-in-s-f-rents-accelerates-down-nearly-25-percent-from-peak.html)

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: rb on October 04, 2020, 07:08:04 AM
potentially so. I'll give you an example in my backyard.

Behold this Zillow listing:

https://www.zillow.com/homedetails/5500-Friendship-Blvd-APT-817N-Chevy-Chase-MD-20815/37195057_zpid/

this is in a well-located but tired building, it is spitting distance from Whole Foods the Friendship Heights metro, etc.

$500K gets you a 1200 sq foot 2/2 with some outdoor space that would rent for $2,500 - $3000 (the listing shows a rental at $2,950, I assume someone would rent a little lower than that). If you paid cash, you'd still have a $1000 / month HOA. this is a decent albeit somewhat unhip location. the building was built in 1968. I think its a terrible investment proposition. $2600 /month rent less $1000 HOA = $1600 / month before any other expenses. We're already at an extremely low cap rate. Maybe it goes for lower, but I happen to know a lot of investors own units in this building (let's just say I know a former tenant very well); the units seem to move slowly but they do sell at prices indicating ridiculously low cap rates.

Let's walk across the street, to EQR's property (formerly owned by Archstone), Wisconsin Place. Wisconsin Place sits atop Whole Foods (shared parking garage) which also connects to the Friendship Heights metro, which connects to a little retail center that includes movie theater, department store, restaurants, gyms, etc. This was built in 2009 and is in good shape.

https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments
https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments##bedroom-type-section-2

A 1000 square foot two bedroom is listed for $3600 / month and up. studio's and one bedrooms $2,100-$2,200 and up.

this is kind of a contrived comparison using anecdotes, but the first one trades at an 6%-7% rental yield or so and as you point out EQR is closing in on a 9%. But the maintaince and capex and running cost of that 9% are LOWER because the building is newer and the room for error is higher because the rents are high because of the quality.

you are buying property in areas where even old kind of tired buildings still command high prices because (in this instance) this is metro-accessible high rent areas with amenities and stuff.

and jsut for shits and giggles, you all will be happy to know that GEICO's corporate headquarters is right next to both buildings:
I have to thank the pupil again for this excellent post. Especially for the fact that he placed some markers. From the longer post I'll pick this.

A 1000 square foot two bedroom is listed for $3600 / month and up. studio's and one bedrooms $2,100-$2,200 and up.

His post was made at the beginning of April and the numbers checked out. If you go now to the Wisconsin place website you'll see that the 1000 sqft 2 bedrooms are starting at $2400 (It was $2600 when I checked a few weeks ago). The studios are now at $1600.

I think this may be an indication that something very bad may have happened to the rental markets. I cannot remember any rental drops comparable to these in 08/09.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 04, 2020, 07:41:53 AM
Most of the large multi family operators all use the same occupancy management software / tool. I’m not sure exactly what it’s called, but as a renter, I’ve experienced this when trying to get apartments and the same building will vary their pricing by the day, sometimes by several hundred dollars/ month (pre covid).

It looks at the market and comparable and how full the building is and spits out a number for the leasing agent to tell you. I actually used this to time a lease in a FRT building where I rented a previously $3500/ month 2 bedroom for $3100 + free parking and locked it in for 24 months because a couple building opened up recently nearby.

The tool is designed to dynamically change prices to keep the building close to full.

Gateway multi family is rapidly taking pricing down because of this. They all operate in similar fashion and I imagine this is feeding on itself.

This is just a long winded way of saying that multi family reflects supply/demand in real time to
A much greater degree than say office or even retail.

For this reason, the near term looks pretty bad. And it’s easy to understand why: older yuppies bought houses, younger yuppies are at their parents, 30% of student deferred, few international students came back. Supply continues to come on line.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 05, 2020, 05:35:42 AM
there's a bloomberg intelligence article today that summarizes what we know about the apartment REITs robust financial condition.

AIV, AVB, CPT, EQR, ESS, MAA, UDR collectively have $9 billion of available credit on their revolvers and over $10 billion of cash and available credit. EQR, AVB, and ESS have over $1.5B each.

unsecured spreads have tightened from 280 bps (march peak) to 110 bps.

Since April, Camden, AvalonBay, UDR, Mid-America and Essex have raised a total of $2.8 billion at a blended 2.3% coupon.

and the agency mortgage market is wide open: 
Spreads on apartment mortgages are tighter than most other asset classes, especially for fixed-rate debt. In the commercial mortgage-backed-securities market, agency-backed apartment issuance is highest among all property types, even as overall volume has fallen in 2020.

since beginning of thread, I think we've seen fundamentals deteriorate more quickly and more severely than expected, but financing has also recovered more quickly than expected and is pretty much better than pre-covid.

I think this combination suggests that eventually these REITs become acquisitive; using their huge balance sheet capacity as an offensive, rather than defensive weapon. For now though, I think they're using it to keep the buildings full and pretty much engage in what could be called a value destructive price war to keep the buildings full.

All-in, my exposure to multifamily has decreased (ex JBGS). bought basket in March, took profits on the way up, and have not been averaging down.

I think we'll see lower, potentially significantly lower prices as the changes in rent make their way into the financials as pre-covid leases roll off. a peak rent 12 month lease signed in February has only 5 months left.

that said, it's not like every apartment these guys own is in Manhattan and San Francisco CBD and the situation is not nearly as bad as you move out from there. so i could be erring on the side of bearish.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on October 05, 2020, 07:25:56 AM
there's a bloomberg intelligence article today that summarizes what we know about the apartment REITs robust financial condition.

AIV, AVB, CPT, EQR, ESS, MAA, UDR collectively have $9 billion of available credit on their revolvers and over $10 billion of cash and available credit. EQR, AVB, and ESS have over $1.5B each.

unsecured spreads have tightened from 280 bps (march peak) to 110 bps.

Since April, Camden, AvalonBay, UDR, Mid-America and Essex have raised a total of $2.8 billion at a blended 2.3% coupon.

and the agency mortgage market is wide open: 
Spreads on apartment mortgages are tighter than most other asset classes, especially for fixed-rate debt. In the commercial mortgage-backed-securities market, agency-backed apartment issuance is highest among all property types, even as overall volume has fallen in 2020.

since beginning of thread, I think we've seen fundamentals deteriorate more quickly and more severely than expected, but financing has also recovered more quickly than expected and is pretty much better than pre-covid.

I think this combination suggests that eventually these REITs become acquisitive; using their huge balance sheet capacity as an offensive, rather than defensive weapon. For now though, I think they're using it to keep the buildings full and pretty much engage in what could be called a value destructive price war to keep the buildings full.

All-in, my exposure to multifamily has decreased (ex JBGS). bought basket in March, took profits on the way up, and have not been averaging down.

I think we'll see lower, potentially significantly lower prices as the changes in rent make their way into the financials as pre-covid leases roll off. a peak rent 12 month lease signed in February has only 5 months left.

that said, it's not like every apartment these guys own is in Manhattan and San Francisco CBD and the situation is not nearly as bad as you move out from there. so i could be erring on the side of bearish.

Wimp,

The way to make money in NYC is to buy and never sell through thick and thin.  With 2% financing, these bad boys will trade at 3% cap rate eventually.  :P :P  I'm joking, but kind of serious at the same time. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 05, 2020, 08:04:14 AM
this guy is arguing that as well. the United States does actually have cheaper urban real estate compared to much of the developed world even though people (including me) like to complain / point out about how "expensive" it is.

I don't agree we'll see 3% cap rates, but I would assign a higher probability to that scenario than most market participants.

https://www.privateeyecapital.com/germanys-vonovia-the-case-for-cap-rate-compression-at-essex/
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 16, 2020, 12:52:12 PM
https://www.costar.com/article/1866671625/apartment-tower-sale-smashes-atlanta-price-record

KKR and a partner paying $180 million for Hanover Midtown in Atlanta. This appears to be quite a sexy building, 350 units.

https://www.hanovermidtown.com/hanover-midtown-atlanta-ga/location
https://www.apartments.com/hanover-midtown-atlanta-ga/pfsrw7t/

another article says the building also has some retail and 2 floors of office leased to WeWork, so I'm not sure if the price includes or excludes that (I don't have acess t the costar article). If I chop off $0-$40mm for that, this is $400K - $515K / unit. If the retail and office is more then it's less per unit.

Nevertheless a strong print for multifamily.

Earlier upthread KKR paid $800K+ unit for brooklyn multifamily.

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on October 16, 2020, 12:57:14 PM
I didn't save the tweet, but there a handful of RE Twittter personalities saying that they can find any MF at 4% cap rate in Dallas. 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 27, 2020, 02:06:33 PM
EQR results look pretty bad, as expected.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: BG2008 on October 27, 2020, 03:20:11 PM
I didn't save the tweet, but there a handful of RE Twittter personalities saying that they can find any MF at 4% cap rate in Dallas.

I meant to say "Can't"
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: CorpRaider on October 28, 2020, 06:23:16 AM
What's your @twitter BG?
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: rb on October 28, 2020, 07:06:09 AM
Wow! This thing looks like a slasher film today.
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 28, 2020, 07:24:42 AM
$337K / unit, 5.8% cap on new fundamentals, bought a little more but by no means a material position yet. waiting for and expect more pain, many years of pain.

 
Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on October 30, 2020, 06:09:08 AM
https://www.privateeyecapital.com/essex-property-trust-3q-results-pretty-pretty-good/

Title: Re: High Quality Multi-family REITs - EQR, CPT, ESS, AVB
Post by: thepupil on November 20, 2020, 06:48:28 AM

https://twitter.com/tradedny/status/1329792838138290177

luxury building on union square south going for $884K / unit. without knowledge of the value of the retail, difficult to figure out an "apartment only" price.

an NYC bear say "you can't count this one, because it has high value retail near/on union square. that's not a real per unit price"...to which i'd respond" so you're saying well-located NYC retail has a  lot of value?

this is a pretty expensive building: https://streeteasy.com/building/1-union-square-south-new_york#tab_building_detail=1

a penthouse 1BR is $6K and a studio is $3.5K.

bonus points to who knows who owns the whole foods next door on Union Square, Whole Foods first location in NYC. i'll give you a hint. it rhymes with Tornado.