News
BAY BUILDS
May 11, 2010
| AvalonBay has proof of a rising rental apartment sector. Northeast development and construction chief Bill McLaughlin tells us that the Arlington, Va.-based REIT plans $400M in 2010 starts, with at least two in Massachusetts. |
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| We snapped (seated) Michael Roberts, Sara Mathewson and Bill McLaughlin; and Beth Wurth, Marilyn Belyea, Kate Brown,David Gillespie and Scott Dale in their Fort Point office. Overall, Bill says the rental sector is seeing ?some light at the end of the macroeconomic tunnel.? (And it's not a macroeconomic train.) AvalonBay?s Q1 net income, $72M, was up from $47M a year ago but FFO fell 24% due to adverse weather and storm damage. (The firm has a market cap of $8 billion and a portfolio of 50,000 apartments.) Fundamentals look better than anticipated and a big cohort of 18-25 year olds, the initial rental age, is hitting the market. In Boston, with little new product, Bill aims in the near future to build transit-oriented projects in neighborhoods where young tenants want to live and work like Somerville and Brighton. |
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| We snapped Bill, Scott Kinter, and Scott Dale working on the 85 new homes they're building at Avalon at Pinehills in Plymouth, which already has 101 units in Phase I. Although AvalonBay reined in its new construction during the recession and re-started carefully in Q4 '09 at sites where infrastructure was already installed, Bill says whatever it builds is self-financed: ?We have a lot of equity, little debt, a steady cash flow and relatively young assets.? Despite today's austerity mindset, AvalonBay is still building a luxury rental product, which amounts to a ?clean, straight forward investment; a long term hold and income producing.? |
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| David, Mike, and Joseph Ssentongo talking about the projects Mike is managing. In Q4 '09, he got construction underway on a 219-unit building at the The Loop in Northborough where AvalonBay already built 163 apartments rather than the 382 planned. Before year?s end, Mike is likely to start a residential tower in Boston. AvalonBay also has Northeast projects under construction in Brooklyn (630 apartments), Rockville Center, NY (349), Norwalk (311) and West Long Branch, NJ (180). Other than the Northeast, the only markets Bill likes are DC and San Fran. Born in Arlington, raised in Belmont, Bill has faith that the Boston rental market is on solid ground. In a 2-year-old AvalonBay community in Hingham, ?rents are up more than $100 from 60 days ago,? he says. |
