Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-AMLI Residential Properties Trust is refraining from rolling out concessions to lure renters to increase occupancy in its 27,833-unit multifamily portfolio. Also, the REIT also is backing off on acquisitions even at the expense of lower funds from operations until prices get a little less frothy.

First-quarter occupancy across the portfolio slipped a full percentage point to 89.3%, according to the company’s quarterly report. In the eight-community, 3,243-unit suburban Chicago portfolio, occupancy dipped slightly to 88.6% while net operating income slid 5.7%.

“In our view, it is a mistake to try for 95% occupancy in a market that is 90% occupied, like many of our markets are,” says president Allan J. Sweet. With concessions, the increase in occupancy comes at a cost of lower collected rents, he explains. “Our focus is on how many dollars we collect,” Sweet adds.

AMLI Residential was poised to make a deal worth nearly $50 million but has backed away from the closing table because of the price. “It’s not gone today,” Sweet says. “We’re still talking to them. But it’s on life support.”

The acquisition represents nearly all of the wholly owned deals the company planned to complete in 2003, in addition to $75 million of joint venture deals. Now, though, AMLI Residential says it will likely close on $25 million in joint venture deals.

“We choose to believe it reflects disciplined buying,” says Sweet, noting capitalization rates on potential acquisitions continue to fall.

Meanwhile, the REIT may sell three to six apartment communities during the second half of the year, Sweet adds.

Prospective tenants are shopping the market more extensively than before, Sweet notes. Also, he says AMLI Residential is not losing a higher than usual number of tenants to homeownership, as other REITs have lamented.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. APARTMENTS Fall 2021Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.