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Stunning growth shakes up top 50; NMHC's annual ranking of the top 50 apartment firms reflects the past year's frenzied pace of property sales.

Improving market fundamentals and record-level sales of apartment properties led to several shakeups in the National Multi Housing Council's (NMHC) 17th annual ranking of the top 50 apartment owners and top 50 apartment managers.

Without a doubt, the biggest story in the apartment sector in 2005 was the frenzied pace of property sales: Thanks to improving market fundamentals, strong demographics favoring apartments in the years ahead and continued demand by condo converters, not only was the volume of apartment property sales 70 percent higher than the record-level set in 2004, but it was greater than the previous two years combined--and each of those was a record at the time. In all, $86 billion in assets changed hands.

Apartment firms responded to the market with different strategies; some took advantage of the rising prices to pare their portfolios, while others jumped into bidding wars and expanded their portfolios.

"The stunning growth in the pace of apartment transactions has quickly changed the apartment sector landscape," NMHC President Doug Bibby said. "All the trading pushed some new firms into the top of the 2006 NMHC 50 owners and propelled others significantly higher in rank." A change in the definition of "ownership" employed by the survey caused some firms counted as owners in the past to be dropped from the rankings, including the former No. 1 owner, CharterMac.

Top Owners and Rising Stars

Apartment Investment and Management Company (AIMCO) reclaimed the title as the nation's largest apartment owner, a position it held from 1999 to 2002. AIMCO's return to the top spot is notable because the firm led in net dispositions for the second consecutive year, with almost 23,000.

Equity Residential returns to the No. 2 spot. Interestingly, the firms switch places on the NMHC 50 Managers list, with Equity Residential taking the top spot. A firm had to own at least 20,641 apartments to make the NMHC 50 rankings, down slightly from last year's 21,560 threshold.

This year's rising star was Wachovia. No. 9 on the top owners list, after adding almost 25,000 apartments to its holdings during 2005. Its net increase exceeds the total holdings of all but 37 of the nation's apartment owners. Boston Capital (No. 4) was the second largest net gainer, adding more than 17,000 units.

The record level of property sales brought six new firms into the ownership rankings. At No. 18, Colonial Properties Trust was the largest, thanks to its merger with former NMHC 50 owner Cornerstone Realty Income Trust.

Long used to measure concentration in the apartment sector, the 2006 NMHC 50 ownership rankings show an increasing number of medium to large firms rather than the emergence of a few giants. Overall, the apartment industry remains less concentrated than many other industries. The 10 largest owners have just less than 1.3 million units--a substantial amount, but only 7.7 percent of the estimated 16.5 million apartments nationally. The 50 largest owners account for just 16.1 percent of the nation's apartment stock.

REITS in the Rankings

"Despite the market-beating returns earned by apartment REITs in the past six years, private investors clearly believe that the public markets continue to undervalue apartment real estate," said Mark Obrinsky, NMHC's Vice President of Research and Chief Economist. "Thus, private investors have been willing to pay a premium to acquire these REITs."

As a result, the real estate investment trust (REIT) landscape has changed considerably during the past 18 months as many REITs have been bought by, or merged with, both public and private firms. They include Gables Residential, Summit Property, Cornerstone Realty Income Trust, AMLI Residential Properties and Town and Country.

Even so, the number of apartment REITs on the NMHC 50 owners list felt by just one from last year to 13, while the total number of units owned by apartment REITs fell only 1 percent to 922,741 units. The REIT share of the total apartment stock continued its downward trend, falling slightly to 5.6 percent (from 5.7 percent last year). This is the lowest share since 2000, when REITs controlled 6.4 percent of the nation's apartment stock.

Rankings of Apartment Managers

Equity Residential's management portfolio of 197,774 units pushed it into the No. 1 manager's spot for the first time. edging long-time leader AIMCO to No. 2. Although the NMHC 50 owners have 10.9 percent more apartments than the top 50 managers do, the largest owner is 18.2 percent bigger than the largest manager, and the median owner has 17.1 percent more apartments than the median manager; nonetheless, management firms needed 9 percent more apartments than owners did to make the management rankings. In fact, the smallest firm on the management list has more apartments in its portfolio than nine of the from on the ownership list.

The biggest portfolio increase in 2005 was recorded by Greystar Real Estate Partners (No. 7), which added 16,471 units under management. Camden Property Trust (No. 8) followed with 13,285 additional units.

The biggest mover in the rankings was Alliance Residential, rising 10 slots to No. 26. Capstone was the second biggest mover, rising nine slots. In just two years. the firm has gone from No. 45 to No. 18.

Concentration in the apartment management industry fell for the third consecutive year. The 2006 Management NMHC 50 operate 14.5 percent of the nation's apartments, the smallest share in seven years. The peak was reached in 2002-2003 when they managed 15.3 percent.

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 properties owned or managed as of Jan. 1, 2006. NMHC membership is not required for inclusion in the survey.

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.
Top 10 Apartment Owners

Following are the top 10 apartment owners in the United States
as of Jan. 1, 2006, based on data provided by NMHC.

2005 2004
Rank Rank Company Headquarters

1 2 AIMCO Denver
2 3 Equity Residential Chicago
3 4 MMA Financial LLC Baltimore
4 6 Boston Capital Corp. Boston
5 5 SunAmerica Affordable Housing Los Angeles
 Partners Inc.
6 9 Archstone-Smith Englewood, Colo.
7 8 United Dominion Realty Trust Richmond, Va.
 Inc.
8 11 ESIC Realty Partners Columbia, Md.
9 20 Wachovia Charlotte, N.C.
10 13 The Richman Affordable Greenwich, Conn.
 Housing Corp.

2005 2004 Corporate
Rank Rank Company Officer

1 2 AIMCO Terry Considine
2 3 Equity Residential David J. Neithercut
3 4 MMA Financial LLC Michael L. Falcone
4 6 Boston Capital Corp. John P Manning
5 5 SunAmerica Affordable Housing Michael L. Fowler
 Partners Inc.
6 9 Archstone-Smith R. Scot Sellers
7 8 United Dominion Realty Trust Thomas W. Toomey
 Inc.
8 11 ESIC Realty Partners Jeffrey H. Donahue
9 20 Wachovia G. Kennedy Thompson
10 13 The Richman Affordable Richard P. Richman
 Housing Corp.

 Apartments
 with Ownership
 Interest
2005 2004
Rank Rank Company 2005 2008

1 2 AIMCO 233,738 256,608
2 3 Equity Residential 197,404 200,149
3 4 MMA Financial LLC 179,133 181,501
4 6 Boston Capital Corp. 147,000 129,971
5 5 SunAmerica Affordable Housing 143,702 136,539
 Partners Inc.
6 9 Archstone-Smith 81,914 75,959
7 8 United Dominion Realty Trust 74,875 79,291
 Inc.
8 11 ESIC Realty Partners 74,778 68,261
9 20 Wachovia 70,429 45,903
10 13 The Richman Affordable 67,501 57,505
 Housing Corp.

Top 10 Apartment Managers

Following are the top 10 apartment managers in the United States
as of Jan. 1, 2006, based on data provided by NMHC.

2005 2004
Rank Rank Company Headquarters

1 2 Equity Residential Chicago
2 1 AIMCO Denver
3 3 American Management Services Seattle
 (dba Pinnacle)
4 4 Lincoln Property Co. Dallas
5 6 Archstone-Smith Englewood, Colo.
6 5 United Dominion Realty Trust Littleton, Colo.
7 12 Greystar Real Estate Partners Houston
8 15 Camden Property Trust Houston
9 13 WinnCompanies Boston
10 14 Fairfield Residential LLC San Diego

2005 2004 Corporate
Rank Rank Company Officer

1 2 Equity Residential David J. Neithercut
2 1 AIMCO Terry Considine
3 3 American Management Services Stan J. Harrelson
 (dba Pinnacle)
4 4 Lincoln Property Co. J. Timothy Byrne
5 6 Archstone-Smith R. Scot Sellers
6 5 United Dominion Realty Trust Thomas W. Toomey
7 12 Greystar Real Estate Partners Robert A. Faith
8 15 Camden Property Trust Richard J. Campo
9 13 WinnCompanies Samuel Ross
10 14 Fairfield Residential LLC Christopher E. Hashioka

 Apartments
 with Ownership
 Interest
2005 2004
Rank Rank Company 2005 2008

1 2 Equity Residential 197,774 203,490
2 1 AIMCO 191,951 215,256
3 3 American Management Services 135,525 132,327
 (dba Pinnacle)
4 4 Lincoln Property Co. 112,928 107,877
5 6 Archstone-Smith 81,165 75,046
6 5 United Dominion Realty Trust 74,708 80,137
7 12 Greystar Real Estate Partners 72,981 56,510
8 15 Camden Property Trust 65,800 52,515
9 13 WinnCompanies 61.427 55,856
10 14 Fairfield Residential LLC 57,344 53,766
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Publication:Units
Date:May 1, 2006
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