Rental Market Stays Afloat Amid Housing Turmoil

InvestmentNews.com (05/05/08); Morrissey, Janet
As the credit crisis worsens, mortgage defaults rise and the housing market turmoil shows no signs of abating, apartment community owners and multifamily housing REITs are enjoying the swing back to rentals. Census Bureau data shows that the country's homeownership rate dipped to 67.8 percent in the first three months of this year from its peak of 69.2 percent in the summer of 2004; during that same time span, the rental housing vacancy rate declined to 10.1 percent from 10.4 percent. Green Street Advisors Inc. President Craig Leupold note that apartment REITs have had little trouble accessing capital despite the credit crisis, adding that his top apartment REIT picks are AvalonBay Communities Inc., UDR Inc. and Post Properties Inc. He further notes that there has been speculation that Starwood Capital Group Global LLC and Walton Street Capital LLC--two private players--may be eyeing Post Properties for a possible takeover. Michael Cuggino, president and portfolio manager of the Permanent Portfolio Fund in San Francisco, says his top picks in the apartment REIT category include BRE Properties Inc. and AvalonBay Communities.