"We remain cautiously optimistic and very encouraged," says executive vice president Steve F. Hallsey. "The momentum is strengthening and occupancy has stabilized across the submarkets."
During the first six months, AMLI Residential officials sold off $120 million in properties at a capitalization rate less than 7%, while buying newer assets for $100 million at a cap rate slightly below 6%, says president Allan J. Sweet. The REIT is continuing a strategy of selling older, class B properties in favor of newer, class A assets. It hopes to close on $175 million in acquisitions while selling less than $100 million during the second half of the year, he adds.
The REIT's lowest occupancy here is 91% at its AMLI at Seven Bridges. However, the $83-million, 520-unit development in southwest suburban Woodridge has been open for less than a year. Among its older properties, occupancy is 93.4% at the 483-unit AMLI at Osprey Lake in north suburban Gurnee. However, the REIT gets an average of $1,141 per unit in month rent, the highest in its entire 27,120-unit portfolio.
Sweet says the company has seen cost increases approaching double digits in building materials, but that is not expected to affect the company's current projects, which include the 294-unit AMLI at Museum Gardens in Vernon Hills.
The REIT took out a $45-million mortgage in mid-July on its AMLI at Riverbend property in Indianapolis. The 10-year loan is at a $4.85% fixed rate for the first nine years. AMLI Residential used the mortgage proceeds to pay down its line of credit, leaving a balance of $55 million, says chief financial officer Robert Chapman. "Our floating-rate debt exposure is virtually non-existent today," he adds.
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