Apartment Management Firms Get Larger While Apartment Owners Slim Down According to NMHC's Annual Ranking of Top 50 Apartment Firms

WASHINGTON, April 5 /PRNewswire-USNewswire/ -- Concentration in the management sector of the apartment industry changed dramatically in 2006, according to the National Multi Housing Council's (NMHC) 18th annual ranking of the top 50 apartment owners and top 50 apartment managers.

The NMHC 50 rankings have long been used to measure concentration in the apartment industry, but over the past 10 years, most of the concentration documented has been among apartment owners. That changed last year with the emergence of a growing number of medium-to-large firms among the nation's apartment managers.

The share of apartments managed by the top 50 management firms rose by a record 8.3 percent to 2.6 million units. The top 50 apartment management firms now oversee 14.7 percent of the nation's 17.6 million apartments. As further evidence of the growing size of the nation's apartment managers, a firm had to own 19,759 units to make the NMHC 50 owners list, but it took another 5,518 units for a total of 25,277 to make the NMHC 50 managers list. In fact, the portfolio of the smallest NMHC 50 apartment manager is larger than 12 of the NMHC 50 owner firms.

''The increasing concentration among apartment managers is the result of two important trends,'' noted Doug Bibby, NMHC's President. ''First, many institutional owners are more comfortable having a single firm manage all of their apartment holdings. Second, continued technology improvements -- including sophisticated property management systems, online rent payment solutions and demand-based pricing models -- have made economies of scale achievable in property management.''

In stark contrast to the growing portfolios of the nation's apartment managers, several of the largest apartment owners were substantial net sellers in 2006. The largest apartment owner in the country, Apartment Investment and Management Company (AIMCO), slimmed down by 22,000 units. Last year's No. 2 firm, Equity Residential, followed suit with a 30,000-unit net reduction, pushing the firm into the No. 3 spot this year.

The 2007 NMHC 50 rankings also documented the decreasing role of real estate investment trusts (REIT) in the sector. The number of apartment REITs is down from a high of 14 to 12 now, as several have been taken private in recent years. For the third year in a row, apartment REITs as a whole were net sellers. REITs now own just 4.7 percent of the total U.S. apartment stock (892,292 units), the lowest figure since 1998, and down from a peak of 6.4 percent.

''The REIT dispositions are not unexpected,'' said Bibby. ''Many apartment properties continue to command a premium in the private market over their value in the portfolios of publicly traded companies. The best way for a firm to capture that premium is to sell those properties that no longer fit its strategic direction or market focus.''

The latest rankings are attached. Highlights of this year's survey follow, and a complete analysis of the results is available on NMHC's web site at http://www.nmhc.org/Top50/ListYears.cfm or by calling 202/974-2354.

Largest Portfolio Gains among NMHC 50 Owners

Not all of the nation's apartment firms were in disposition mode in 2006, however. Several firms significantly increased their portfolios. For the second year in a row, Wachovia (No. 19) had the biggest net pickup, adding 16,042 units to its portfolio. BlackRock Realty, also one of the biggest gainers last year, was close behind this year with a 15,500-unit gain. The firm's $5.4 billion purchase of the landmark New York City Peter Cooper Village and Stuyvesant Town apartments added 11,000 units and helped propel BlackRock up 13 slots in the NMHC 50 rankings to No. 17. This was the biggest jump in rank recorded for the year.

Largest Portfolio Gains among NMHC 50 Managers

The portfolio gains were even more significant among the NMHC 50 managers. The biggest by far was CAS, Riverstone/Banyan (No. 5), which added 36,250 units to its portfolio. BlackRock Realty, the second-largest gainer among the NMHC 50 owners was also the second-largest gainer among the NMHC 50 managers, adding 23,255 apartments, and pushing the firm up 26 slots to No. 16.

  Additional Apartment Ownership Findings

  $  The five largest apartment firms in the country are:
       1. Denver's AIMCO (211,800 units);
       2. Baltimore's MMA Financial, LLC (177,062 units);
       3. Chicago's Equity Residential (165,716 units);
       4. Boston's Boston Capital (156,758 units); and
       5. Los Angeles's SunAmerica Affordable Housing Partners (145,224
          units).
  $  As of January 1, 2007, the top 50 apartment owners held 2.66 million
     apartments, or 15.2 percent of the nation's estimated 17.6 million
     apartments.
  $  There were five new firms added to the NMHC 50 owners this year:  CnC
     Investments (No. 25), Alliant Capital (No. 28), BH Management Services
     (No. 37), Lindsey Management (No. 38), and Berkshire Property (No. 49).

  Additional Apartment Management Findings

  $  The five largest apartment managers in the country are:
       1. Denver's AIMCO (209,412 units);
       2. Chicago's Equity Residential (165,716 units);
       3. Seattle's American Management Services (dba Pinnacle) (144,327
          units);
       4. Dallas's Lincoln Property Company (126,104 units); and
       5. CAS, Riverstone/Baynan (91,250) with executive offices in Dallas
          and Rockville, MD.
  $  Seven new firms joined the NMHC 50 managers this year: CnC Investments
     (No. 28), JPI (No. 29), Forest City Residential (No. 37), Steven D.
     Bell & Co (No. 38), Milestone Management (No. 41), Realty Management
     (No. 45) and Lindsey Management (No. 49).

EDITOR'S NOTE: The full 2007 rankings are available on NMHC's web site at http://www.nmhc.org/Top50/ListYears.cfm or by calling 202/974-2354.

Methodology

To ensure that the 2006 NMHC 50 is as complete and accurate as possible, NMHC staff gathered names of apartment owners and managers from a wide range of sources. A senior officer from each firm was contacted for the information included in the rankings, which are for property owned or managed as of January 1, 2007. Although membership in the National Multi Housing Council is not required for inclusion in the survey, 92 percent of the firms appearing in this year's rankings are NMHC members. To be considered an owner, a firm must have an equity stake in an apartment property or be a general partner with effective responsibility and decision-making over the investment property owned by the partnership. The NMHC 50 does not distinguish between partial and full ownership.

The NMHC 50 tallies rental apartments, including rental housing for seniors. Condominiums and cooperatives are excluded, as are hotel rooms, nursing homes, hospital rooms, and mobile homes. Pension fund advisory firms are listed only if they have direct ownership interests (as opposed to interests as fiduciaries) or serve directly as property managers. While this survey represents NMHC's best effort to include all eligible companies, it is possible that some eligible companies have been left out inadvertently.

Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC's members are the principal officers of firms engaged in all aspects of the apartment industry, including owners, developers, managers and financiers. Nearly one-third of Americans rent their housing, and almost 14 percent live in a rental apartment. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's web site at http://www.nmhc.org/.