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Editor’s Note: Review copies and graphs and charts available to media on request; contact Sharon Peters (312-329-6067), speters@irem.org.  For regional breakout information, contact Matt O’Hara (312-329-6025), mohara@irem.org.

General Information
2006 Income/Expense Analysis: Conventional Apartments, Institute of Real Estate Management, 232 pages, soft cover, charts/graphs, $374.95 (plus $13.25 shipping and applicable state sales tax); $187.95 IREM Members. In addition to the traditional printed format, the new 2005 Edition is available for purchase online at www.irem.org.  The data is easily downloadable in both Excel and PDF file formats, and is completely customizable in Excel.

(CHICAGO, IL, Aug. 29, 2006) Total expenses rose in 2005 from the prior year for all major types of conventional rental apartments. With the exception of low-rise buildings with 25 or more units, net operating income increased across the conventional rental apartment spectrum while uncollected income for all building types due to vacancy and other forms of rent loss declined slightly from 2004.

These are among the key findings reported in the 2006 edition of the Income/Expense Analysis^®: Conventional Apartments, a new benchmarking study published by the Institute of Real Estate Management (IREM^®). Now in its 51st year, this annual study by IREM^® analyzes the previous year’s operating income and cost figures for nearly 4,000 multi-family rental properties across the United States and Canada.  It is designed to help real estate professionals evaluate multi-family development and investment options, benchmark the performance of properties they own or manage as well as to develop budgets, feasibility studies, appraisals, loan requests, etc.

NOI GENERALLY UP
Of the four building types analyzed (garden; low-rise, 12 to 24 units; low-rise, 25-plus units; elevator), NOI for elevator buildings in 2005 rose 5.1 percent to $6.21 per square foot; NOI for low-rise buildings with 12 to 24 units increased 4.6 percent to $4.32 per square foot; and NOI for garden apartments increased a mere 0.4 percent to $4.76 per square foot. In contrast, NOI for low-rise buildings with 25-plus units declined 4.3 percent during the year to a still strong $4.89 per square foot.

VACANCY AND RENT LOSS LEVELS DIP SLIGHTLY
A 2005 vs. 2004 comparison of vacancy and rent loss as a percentage of gross possible income shows that garden apartments experienced a  2.2 percent year-to-year decline; elevator buildings experienced a 1.2 percent decline; and low-rise buildings with 12 to 24 units as well as those with 25-plus units each showed decreases 0.9 percent. The lowest vacancy and rent loss level in the U.S. occurred in Los Angeles. Differing economic conditions and levels of multi-family development experienced by each metropolitan area analyzed showed significant differences in vacancy and rent loss levels.

TOTAL EXPENSES INCREASE SLIGHTLY
Owners of all of the building types analyzed found them slightly more expensive to operate in 2005 than in 2004. Total expenses for low-rise buildings with 12 to 24 units rose 4.0 percent to $4.65 per square foot; those for low-rise buildings with 25-plus units increased 2.9 percent to $4.62 per square foot; those for garden apartments rose 1.8 percent to $4.44 per square foot; and those for elevator buildings increased just 0.7 percent to $6.74 per square foot. 

MAINTENANCE/REPAIR COSTS FOR ELEVATOR BUILDINGS UP 14 PERCENT
Maintenance and repair costs per square foot for elevator buildings and low-rise buildings with 12 to 24 units increased in 2005 from 2004, with no comparative year-to-year figures available for low-rise buildings with 25-plus units and garden buildings. Elevator buildings spent 14 percent more for maintenance and repair in 2005 than the prior year, with costs totaling $0.65 per square foot.  Low-rise buildings with 12 to 24 units spent 8.2 percent more than in 2004, with costs totaling $0.53 per square foot.

OPERATING RATIOS ESSENTIALLY UNCHANGED
For all building types in 2005, less than 53 percent of a typical property’s annual collections were used to cover operating costs, versus less than 54.3 percent in 2004. Garden buildings experienced no change in year-to-year operating expenses; low-rise buildings with 25-plus units saw a 1.5 percent increase; and elevator buildings and low-rise buildings with 12-24 units experienced declines of just 1.4 percent and 0.5 percent, respectively. The best operating ratios for most property types were found in the Pacific Coast region.

RENTS GENERALLY STAY THE SAME
Gross possible apartment rents reported in 2005 for the four building types examined generally stayed the same as those in 2004.  According to the study, rents per square foot for low-rise buildings with 25-plus units dipped just 0.2 percent to $10.01 per square foot, while those for the other building types increased no more than 1.6 percent.  Rents for elevator buildings in 2005 were the highest at $12.92 per square foot.  Those for low-rise buildings with 12 to 24 units were $10.31 per square foot and those for garden buildings were $9.93 per square foot.  Low-rise buildings with 12 to 24 units in the Plains region reported the lowest median rents at $5.89 per square foot, whereas elevator buildings in the Pacific Coast region reflected the highest gross possible rents at $18.38 per square foot.

ANNUAL TENANT TURNOVER TOPS OUT AT 60 PERCENT
Tenant turnover in 2005 for operators of all multi-family property types decreased 2.8 percent or less from the prior year.  Garden buildings reported the highest turnover of all building types, with 60 percent of their tenants classified as new. In descending order, 58.2 percent of tenants in low-rise buildings with 25-plus units were new, 57.8 percent of those in low-rise buildings with 12 to 24 units were new, and 45.3 percent of those in elevator buildings were new.

MORE STUDY SPECIFICS
The IREM^® Income/Expense Analysis^® research study summarizes data by building type, age, Section 42 properties, turnover and more. The income and expense data for each sample is presented in dollars per square foot of rentable area and as a percentage of gross possible income and dollars per unit.  Individual metro market reports for more than 150 cities also are included along with an analysis of vacancy rates and operating unit trends plus a variety of historical trend reports.

PRICE AND ORDERING INFORMATION
The 232-page Income/Expense Analysis^®: Conventional Apartments is available for $374.95 (plus $13.25 shipping and applicable state sales tax).  The IREM member price is $187.95. To order, contact IREM’s Customer Service Department at 430 N. Michigan Ave., Chicago, IL 60611-4090 or call toll-free at (800) 837-0706, ext. 4650. Credit card orders (VISA, MasterCard, Discover or American Express) can be faxed toll-free to (800) 338-4736 or e-mailed to custserv@irem.org.  Internet users can order the study in soft cover or in the new downloadable format by accessing IREM’s website at www.irem.org.

FOUR OTHER 2006 I/E ANALYSIS BENCHMARKING STUDIES AVAILABLE
IREM^® also has just published new 2006 editions of its four other annual Income/Expense Analysis^® studies: Shopping Centers ($374.95); Condominiums, Cooperatives & Planned Unit Developments ($329.95); Office Buildings ($374.95); and Federally Assisted Apartments ($329.95). IREM members receive a 50 percent discount on each study; member and non-member purchasers of all five studies receive a 15 percent discount on their total order.

ABOUT THE INSTITUTE OF REAL ESTATE MANAGEMENT
The Institute of Real Estate Management (IREM^®) has been the source for education, resources, information and membership for real estate management professionals for more than 70 years. An affiliate of the NATIONAL ASSOCIATION OF REALTORS^®, IREM is the only professional real estate management association serving both the multi-family and commercial real estate sectors.

With 81 U.S. chapters, eight international chapters and several other partnerships around the globe, IREM is an international organization that also serves as an advocate on issues affecting the real estate management industry.

Membership includes over 17,000 individual members and 525 corporate members.  IREM promotes ethical real estate management practices through its credentialed membership programs, including the Certified Property Manager^® (CPM^®) designation, the Accredited Residential Manager^® (ARM^®) certification, the Accredited Commercial Manager certification, and the Accredited Management Organization^® (AMO^®) accreditation.  These esteemed credentials certify competence and professionalism for those engaged in real estate management.  In addition, IREM offers Associate, Student and Academic memberships.
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To learn more about the Institute of Real Estate Management and its chapter network, call (800) 837-0706, Ext. 4650 (outside the U.S. call (312) 329-6000) or visit www.irem.org.