NO COMPANY ENJOYED A MORE DYNAMIC YEAR in 2001 than New York-based Related Capital Co., according to the National Multi Housing Council's (NMHC) annual ranking of the largest apartment owners. At the beginning of this year, the company and its affiliates held an ownership interest in 246,918 apartment units, a whopping increase of more than 53% from the same period one year earlier. No other apartment owner's portfolio grew by more units. Related placed second overall on the NMHC's 2002 ranking of the largest apartment owners.

According to statistics provided by the company, the overwhelming portion of that growth — just more than 85% of the apartment units — stems from the purchase of New York-based PW Funding by CharterMac (AMEX: CHC), a publicly traded, direct mortgage lender that Related Capital manages.

There is more growth to come. Stuart Boesky, senior managing director of Related Capital, estimates that the company will add approximately 30,000 units in calendar year 2002.

Founded in 1972, Related Capital focuses on the production of affordable housing units by providing equity and debt financing to multifamily developers. According to the company, it has financed the construction and rehabilitation of more than 90,000 affordable housing apartment units in 44 states and Puerto Rico. In 2001, the company raised $490 million in equity and originated $317 million in debt.

In the company's complex corporate structure, Related also manages CharterMac and American Mortgage Acceptance Co. (AMEX: AMC), a REIT. CharterMac, which has a market capitalization of $737 million, focuses on investing in tax-exempt bonds for the development and acquisition of affordable multifamily properties, while American Mortgage, which has a market capitalization of $53 million, concentrates on taxable financings for market-rate apartment units.

On June 19, CharterMac's stock price closed at $17.70, down from a 52-week high of $17.91. The stock's 52-week low was $14.60. As for American Mortgage, the company's stock price closed at $13.97 on June 19, down from a 52-week high of $15.50. The stock's 52-week low was $10.93.

Approximately 70% of the units in which Related Capital and its affiliates have an ownership interest are affordable units, defined as apartments reserved for households making no more than 80% of the area median income, according to Alan Hirmes, senior managing director of Related Capital, who adds that the majority of the units acquired through the PW Funding transaction were market-rate.

One of the appeals of investing in affordable apartments is the supply and demand situation, Boesky says. A recent Congress-mandated report by the Millennial Housing Commission stated that 13.4 million renter households are spending more than 30% of their income on housing, the federal government's definition of unaffordable housing.

By contrast, only about 100,000 new affordable units are produced each year through various federal and state initiatives, according to Boesky. Couple that with the fact that almost as many older affordable apartments are being converted to market-rate properties each year or are deemed functionally obsolete, and there is a healthy demand for affordable properties, he adds.

“What you really have in this country right now is large demand, an undersupply and no positive momentum toward satisfying that demand because as fast as new affordable units are being built, older affordable units are being taken off the rent roll,” Boesky says.

In one of its more recent noteworthy affordable deals, Related Capital and its affiliates provided $29 million in debt and equity financing to Dallas-based Southwest Housing Development Co. for the construction of three affordable housing complexes in Texas and Colorado. The communities will total 464 units.

National Multi Housing Council (NMHC) Top 25 Apartment Owners

The following list is a condensed version of the apartment owners portion of the 2002 NMHC 50, an annual ranking of the 50 largest U.S. apartment owners and the 50 largest U.S. apartment managers published in NREI's March issue. The companies below are ranked according to the number of apartment units in which they had an ownership interest as of Jan. 1, 2002.

1. Apartment Investment and Management Company
   Headquarters: Denver, CO
   CEO: Terry Considine
   Apartments With Ownership Interest: 251,201

2. Related Capital Company
   Headquarters: New York, NY
   CEO: Marc D. Schnitzer
   Apartments With Ownership 246,918

3. Equity Residential Properties Trust
   Headquarters: Chicago, IL
   CEO: Douglas Crocker, II
   Apartments With Ownership Interest: 226,314

4. Lend Lease Real Estate Investments
   Headquarters: Atlanta, GA
   CEO: Fred N. Pratt, Jr.
   Apartments With Ownership Interest: 129,962

5. Boston Capital
   Headquarters: Boston, MA
   CEO: John P. Manning
   Apartments With Ownership Interest: 110,000

6. SunAmerica Affordable Housing Partners, Inc.
   Headquarters: Los Angeles, CA
   CEO: Michael L. Fowler
   Apartments With Ownership Interest: 107,000

7. Archstone-Smith
   Headquarters: Englewood, CO
   CEO: R. Scot Sellers
   Apartments With Ownership Interest: 99,000

8. United Dominion Realty Trust, Inc.
   Headquarters: Richmond, VA
   CEO: Thomas W. Toomey
   Apartments With Ownership Interest: 77,567

9. Whitehall Funds
   Headquarters: New York, NY
   CEO: Daniel Neidich
   Apartments With Ownership Interest: 76,000

10. Lefrak Organization, Inc.
    Headquarters: Rego Park, NY
    CEO: Samuel J. LeFrak
    Apartments With Ownership Interest: 71,000

11. Sentinel Real Estate Corporation
    Headquarters: New York, NY
    CEO: John H. Streicker
    Apartments With Ownership Interest: 62,737

12. Casden Properties, Inc.
    Headquarters: Beverly Hills, CA
    CEO: Alan I. Casden
    Apartments With Ownership Interest: 59,510

13. GE Capital Real Estate
    Headquarters: Stamford, CT
    CEO: Michael Pralle
    Apartments With Ownership Interest: 54,726

14. Alliance Holdings, L.L.C.
    Headquarters: Chicago, IL
    CEO: Andrew W. Schor
    Apartments With Ownership Interest: 52,691

15. Camden Property Trust
    Headquarters: Houston, TX
    CEO: Richard J. Campo
    Apartments With Ownership Interest: 51,345

16. Edward Rose Building Enterprises
    Headquarters: Farmington Hills, MI
    CEO: Sheldon Rose
    Apartments With Ownership Interest: 48,078

17. Home Properties
    Headquarters: Rochester, NY
    CEO: Norman Leenhouts/Nelson Leenhouts
    Apartments With Ownership Interest: 48,066

18. Lincoln Property Company
    Headquarters: Dallas, TX
    CEO: J. Timothy Byrne
    Apartments With Ownership Interest: 47,691

19. Key Global Capital
    Headquarters: Cleveland, OH
    CEO: Edward Chu
    Apartments With Ownership Interest: 45,797

20. Richman Group Capital Corporation
    Headquarters: Greenwich, CT
    CEO: Richard P. Richman
    Apartments With Ownership Interest: 42,526

21. AvalonBay Communities, Inc.
    Headquarters: Alexandria, VA
    CEO: Bryce Blair
    Apartments With Ownership Interest: 41,212

22. Walden
    Headquarters: Dallas, TX
    CEO: John B. Bartling
    Apartments With Ownership Interest: 40,297

23. Wachovia Securities Tax Credit Investments
    Headquarters: Charlotte, NC
    CEO: Ken Thompson
    Apartments With Ownership Interest: 37,254

24. Milstein Properties
    Headquarters: New York, NY
    CEO: Howard P. Milstein
    Apartments With Ownership Interest: 37,000

25. Fairfield Residential, L.L.C.
    Headquarters: San Diego, CA
    CEO: Christopher E. Hashioka
    Apartments With Ownership Interest: 36,500