Article Excerpt:
TWST: What is BNP Residential Properties?Mr. Payne: BNP is a mid-sized apartment REIT based in the Southeast. We operate in North Carolina, South Carolina and Virginia. At present, we own or have an economic interest in 32 apartment communities containing approximately 8,000 units. We are focused on the middle of the apartment market or what many people would refer to as work force housing. Our mission is to provide high quality, moderately priced housing to middle- income residents; people such as firefighters, police officers, manufacturing workers, store clerks, office staff and teachers. We believe this segment of the market has been underserved by the apartment industry; this is especially true of the publicly traded real estate investment trusts. While there has been a lot of emphasis among REITs on the luxury apartment market, the middle of the apartment market has been largely ignored by the major REITs. Our goal has been to fill this unfulfilled need by providing high quality, well located, exceptionally maintained and skillfully managed apartment communities at rents that middle-income people can afford.
TWST: What's your outlook at this point for that segment of the
marketplace in terms of supply/demand characteristics,
vacancy/occupancy, and pricing?
Mr. Payne: Our outlook for the middle of the apartment market is very
positive. Our two biggest sources of competition for residents over the
past few years have been single-family homes and new apartment
construction. The advent of no-down payment single-family home mortgages
combined with historic low interest rates has posed a challenge for us
for the past few years. However, significant increases in construction
costs and rising home mortgage rates appear to be resolving this issue.
The same is true for new apartment construction, as rising construction
costs are making it more difficult to build new apartments that are
similar in size, quality and location to ours that can be profitably
rented for rents competitive to ours. As a result, we believe that going
forward we are well positioned to compete on price with single-family
homes and new apartment construction.
Tickers included in this excerpt: BNP
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