Article Excerpt:
TWST: We'd like to begin with a brief historical sketch of BNP Residential Properties and a picture of the things you are doing at the present time.Mr. Payne: BNP Residential is a small multi-family REIT headquartered in Charlotte, North Carolina. We currently own and operate 30 apartment properties, which contain a total of 7,946 units. We also serve as the general partner of partnerships that own three other apartment communities with 713 units. All of the apartment properties are in Virginia, North Carolina and South Carolina. Our focus is on the middle of the apartment market. Our typical residents are firemen, policemen, school teachers, office workers and shop managers. Our average revenue for an occupied unit is approximately $750 a month.
TWST: When interest rates were at their all-time low a few years ago,
did you experience difficulties then because it warranted buying houses
and condos and so forth?
Mr. Payne: Several years ago, we went through a period where interest
rates were causing problems for a couple of reasons. One was there was a
migration of residents to single-family home ownership. One of our
primary target markets was the young couple that was trying to save the
down payment for their first home purchase. But when the advent of no
down payment loans combined with low home mortgage rates occurred, it
took a toll on us. So the recent uptick in interest rates has actually
started to help. Also, we're seeing less use of the more creative
mortgages that have no closing costs and low down payments. Those are
starting to disappear from the market and that has also helped. The
other impact of low interest rates was on new construction. It made it
much easier for people to go out and build new product that competed
with us. As interest rates rise, that pushes up the cost of new
construction.
Tickers included in this excerpt: BNP
TWST Newsletter
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.