Private Time
Morgan Stanley buys AMLI.
In less than a year, another REIT looks like it’s going private. After ING Clarion Partners bought Gables Residential Trust earlier this year, Morgan Stanley Real Estate’s Prime Property Fund announced in October that it intended to purchase AMLI Residential in an all-cash transaction totaling approximately $2.1 billion.
Price was a key motivator for the Chicago-based REIT. Morgan Stanley is paying $37.75 per share, a 20.7 percent premium over AMLI’s Oct. 21 closing price. After the Gables sale, Morgan Stanley sent AMLI a letter of interest, and at that point, the REIT retained JP Morgan to help the company determine its highest valuation and sift through 10 bids. It chose Morgan Stanley.
“The board concluded that this merger was more likely to provide AMLI shareholders with greater value than our shareholders were likely to receive continuing to operate as an independent public company with more potential risk,” Greg Mutz, the REIT’s chairman and CEO, said in AMLI’s third-quarter conference call. “Essentially, we concluded that we had a relatively small market [and] a small public market capitalization. The increased burdens imposed by Sarbanes-Oxley made continuing as a public company more difficult and certainly more costly.”
Morgan Stanley wants Mutz and his management team to lead the company going forward, says Dave Hardman, managing director and head of U.S real estate investing there. Mutz anticipates that the entire AMLI management team and its development, construction, and accounting and management staff will remain with the company after closing. The deal is expected to close in the first quarter of 2006.
Though Gables and AMLI have already left the public ranks, Brian Harris, a vice president and senior credit officer for Moody’s, thinks the prices being offered today could pull other multifamily REITs to the private side. “When the management of a REIT is looking [at] what kind of returns they can generate for their stakeholders, they have to consider the prices the prices that are being paid today,” he says. “To the extent they can generate risk-adjusted returns, then I think makes it hard to just ignore.”
–L.S.
Hope for the Homeless
Fannie Mae and the National Equity Fund launched a $100 million homeless fund to support low-income housing tax credit developments focused on helping at-risk populations establish and maintain self-sufficiency. The first investment: Lindquist Apartments, a 24-unit permanent supportive housing community in Minneapolis that helps at-risk youth. –Rachel Z. Azoff
Minority Report
Apartment REIT Archstone-Smith was named one of America’s top 50 employers for minorities by Fortune magazine. Fortune polled FORTUNE 1000 companies and the 200 largest privately held U.S. corporations. Rankings were derived from a model that weighed data-driven information such as the percentage of board members, management members, and new hires who are minorities. –R.Z.A.
Trumping Katrina
Donald Trump isn’t letting Hurricane Katrina’s destructive aftermath get in his way. Trump’s organization is going ahead with its pre-hurricane plans to develop the tallest building in New Orleans, a 70-story luxury condo/hotel hybrid, according to The Wall Street Journal. The project is planned for the city’s downtown business district. –R.Z.A.
Location Change
Due to Hurricanes Katrina and Rita, the National Apartment Association moved its 2006 Education Conference & Exposition from New Orleans to Denver. The event will take place June 15-17, 2006, at the Hyatt Regency and Colorado Convention Center. –R.Z.A.
Tax Break
The Hurricane Katrina Relief Act of 2005, a $6.1 billion package of tax credits, extends from two years to five the allotted time that businesses–including apartment owners–with damaged property have to invest their insurance proceeds in repair/replacement property to avoid having the proceeds taxed (as long as the replacement property is within the disaster area). The bill also extends the Work Opportunity Tax Credit to encourage employers to hire people who lived in the disaster area prior to the hurricane. –R.Z.A.
Fighting Homelessness
Denver officials are making a bold move to strike out at homelessness, according to The Rocky Mountain News. But to fight the problem, they’ll need extraordinary public support: The city wants to build 3,000 housing units and expand mental health and substance abuse treatment for chronically homeless people.
To accomplish this mission, it will need private citizens to raise the $7.7 million necessary for the project. The United Way is organizing a drive in which people can help donate through payroll deductions. –L.S.
Smart Growth
A new study from King County, Wash., shows that a city’s commitment to smart growth may actually lead to healthier citizens. The report looks at how communities and transportation systems are built and their effect on everything from driving habits to physical fitness. Among the many findings in the survey were that residents of more walkable areas were more physically active and had fewer weight problems. –L.S.