Rental Decay Eases a Bit
There’s about two ways to look at data points that reverse a downward or upward trend. One way is to say, “nyah, nyah, nyah, seasonality’s skewing the number,” and count it as a blip in an otherwise uninterrupted further plummet. That way is for those who are unable to get out of the fetal position.
The other way is to note the ever-so-slight upward hook at the tale end of the vertical deterioration picture, and imagine, if nothing else, you could catch a fish with it… or it could be the beginning of a reversal trend. It might not proceed on an upward trajectory uninterrupted by occasional ups and downs.
The NMHC has released its Tightness data for February, which cobbles vacancy and rent price info into a healthiness index. Calculated Risk has tracked the data and created this analysis.
Click on image for Calculated Risk analysis of NMHC release.
It is common in a recession for apartment vacancies to rise, as households double up by moving in with a friend or family member. However an added factor in this recession is all the single family homes being offered as rentals. This is possible additional competition for apartments:
In a special fifth question to NMHC’s Quarterly Survey, one-third (33 percent) said such competition [from condos and single-family rentals] was unchanged. Another four percent thought there was less competition, and 11 percent don’t consider condos and single-family rentals to be significant competition for apartments in their markets. A slightly majority, 52 percent, did report more competition from condos and single-family rentals than in previous years.
Competition from condos and single-family rentals probably depends on location.
Reality Bites as Ratings Agencies Downgrade REIT Debt
From MULTIFAMILY EXECUTIVE, by Les Shaver: Single-family sneezes and the world economy, including apartment real estate investment trusts that are assumed to run contracyclical to single-family for-sale trends, get pneumonia. The reason this venue is called Housing Crisis is that the convulsion hits equally both the supply and the demand side of housing, whether you’re talking for-sale or for rent. And it’s hitting not only the balance sheet but also the daily and weekly access to normal working capital, assuming steady cash flow.
There’s an analysis on how tumbling fundamentals and squeezed access to credit have put a pall on REITs’ business and risk outlooks for the next stretch from Multifamily Executive senior editor Les Shaver.
S&P said the ratings were prompted by constrained access to debt and equity capital and concern that the struggling economy will put even greater pressure on cash flow. The agency said “heavy credit revolver usage (in excess of 50 percent), weak debt service coverage, and an over-reliance on earnings from fee-driven and/or asset sales activity are key areas of focus.” It also views the common dividend coverage as a “drawback,” given the need for REITs to preserve liquidity.
“Fundamentals in the multifamily sector are coming under pressure,” says George Skoufis, a director for Standard & Poor’s. “Their debt protection measures are kind of weak. In the previous cycle, they came in with a little bit more of a cushion. Their numbers are a little weaker, and their leverage is a little higher.”
Multifamily and commercial construction lagged the residential for-sale downturn, and many have another leg or two down as employment deteriorates and corporate earnings erode by virture of more conservative money habits among consumers and challenged consumer sentiment. Too, anecdotally anyway, demand for one- and three-bedroom apartments has decline while demand has stayed strong for two-bedroom apartments–an indicator of increased “doubling-up” among people who might choose to live with roommates to weather the downturn.
Foreclosure Fluency the USA Today Way
35 U.S. counties are responsible for one out of two–or 1.5 million–foreclosure actions in 2008, per a USA Today analysis of RealtyTrak data. Great Flash infographic maps show the velocity of the foreclosure tsunami as it engulfed Rust Belt cities and bubble-market centers in the Southwest and Calilfornia in the two years from 2006 to 2008.
“This crisis was triggered by foreclosures, and a lot of those were in a very small number of areas,” says William Lucy, a University of Virginia professor who has studied the link between lenders and faltering home loans. Banks spread the risk and “it became like a car with no reverse gear. Once it starts to go over the cliff, it’s gone.”
In other parts of the country, the foreclosure wave was barely a ripple — at least until it started swamping major banks that had invested heavily in mortgages. Banking giant Wachovia Corp., for example, was hammered after California and Florida customers of one mortgage firm it bought began defaulting at high rates. The risks of such lending were spread so broadly among financial institutions that, when the loans went bad, it drove the national credit crisis, says Christopher Mayer, who studies real estate at Columbia Business School.
Banks are at the nexus of the problem because their fully compromised investment in real estate has both a home mortgage and a commercial acquisition, construction and development dimension to the startling erosion of their capital base.
The weakening and ultimate failure of many banks burns housing on the non-for-sale side even though many of the multifamily for-rent companies interacting with lenders have maintained surer footing with their construction and development loans to date.
Multifamily Executive magazine senior editor Christopher Wood maps out two indirect but nasty impacts a pulverized lending and credit environment has on multifamily housing players in his article, “Bank Failures Expected to Continue: Multifamily is likely to suffer more indirect damage as financial stabilization efforts arrive too late to save lenders with high residential mortgage exposure.”
One indirect ramification is that–despite the fact that much of multifamily’s financing need is met from government sponsored entity and Wall Street funding–any curtailment in local bank funding pipelines through as a shrunken pool of capital to draw from. The other consequential effect of bank failures on multifamily is job loss, which whacks every part of every economy.
Here’s an excerpt from Wood’s analysis.
Matthew McManus: Click for access to bio. Note: No relation to Housingcrisis blog author.
“Notwithstanding those five- to 10-unit properties where a lot of local banks might have taken on deals, the vast majority of multifamily over the past 10 years has been financed through the agencies or through Wall Street,” says Matt McManus, chairman of NAI BlueStone Real Estate Capital, a Philadelphia-based commercial real estate investment banking and advisory firm that secures debt, mezzanine, equity, and sponsor equity financing for investors, operators, owners, and developers
“I don’t think that there is enough exposure to banks that the number of banks that are failing are going to really have any impact to the multifamily industry,” McManus continues. “But indirectly, whatever bank goes under, there are a few less dollars that can be loaned out to job-creating vehicles.”
Regional unemployment figures catalyzed by bank failure are certain to hit multifamily operators already struggling with tough property fundamentals. “The broader impact is being felt very clearly in higher vacancy rates and falling rents,” says report author Anderson. “But the other 800-pound gorilla is what happens with commercial [and multifamily] real estate. So far, multifamily delinquencies and defaults have not been that bad, but they have spiked significantly upward. By our calculations, there is $210 million in multifamily mortgages coming due between now and 2011. Quite a bit of that will face some difficulty in getting funded, despite the activity of the GSEs.”
Indeed, McManus reports a wide disparity between Freddie Mac re-financing terms and what is readily available in the market for a Class A stabilized apartment property in Philadelphia. “We can’t find a bank that is within 80 percent of Freddie Mac’s proceeds,” McManus says. “That’s how conservative banks are being today. They underwrite to shorter amortizations, higher debt service ratios, and sometimes artificially high constants to make a 60 percent LTV-type loan versus a 75 percent or 80 percent LTV.”
Multifamiliar? Woes Grow as Deal Flow Slows as Rent Trend Goes Who Knows How Low?
Atlanta Fed President Dennis Lockhart clocked in with a “we feel your pain” to multifamly players in his audience as he addressed the Greater Miami Chamber of Commerce yesterday . In the mess that is Miami’s multifamily market environment, Lockhart’s comments hit a nail on the head as he describes a softening business base as a result of massive dislocation in the supply of units, noting that vacancy rates had reached 7.5% by the end of 2008.
I should also comment on the weakening multifamily residential real estate picture. No two rental markets are exactly alike. But to generalize, those markets trending the worst probably share one or more characteristics. They had excessive condo construction or condo conversion activity. Such markets are seeing unsold units return as rentals. They had very high home price appreciation in the years 2004—07 with large amounts of speculative house construction activity. Today, in several markets, houses compete with apartments as rentals. And they have been experiencing high and rising foreclosure rates.2
Multifamily Executive senior editor Les Shaver reports on how demand destruction on the rent side is throwing apartment sale deal flow into nuclear winter. Just as in so many other industries, the fundamental asset building block through which valuations are done by buyers and sellers has been undermined by the fallout of the credit and consumer spending cliff-dive.
The problem: Sellers still aren’t adjusting their prices for the market. “Despite placing so much product on the market, sellers appear to be in denial as asking cap rates have increased only slightly since September to 6.4 percent,” the report said. “Deals have spiked by 50 basis points over the same period, reaching 7 percent in January. Clearly, with so few closed deals, the bid/ask gap remains wide, and it is sellers who must become more realistic.”
Until the gap between buyers and sellers closes, David Schwartz, managing member for Waterton Associates, an apartment firm based in Chicago, doesn’t see things improving. “It will be sellers dropping their prices and then you’ll start seeing transactions clear,” he says.
The deals that did clear in January were generally small. The largest was $67.4 million for a three-property deal sold by Home Properties, a REIT based in Rochester, N.Y. Only one other deal sold for more than $30 million.
The report also highlighted another trend. “Default and foreclosure filings involving significant apartment properties grew by almost $1.8 billion,” the report said. “At present, distressed apartment assets total $9.2 billion [906 properties], a figure that continues to grow rapidly. Troubled properties are now found in nearly every market.”
Glut, which is at the core of the for-sale new residential meltdown, is putting a hurt on multifamily players as well. Here’s Calculated Risk’s phrasing of the causes:
Although Lockhart mentioned that houses are competing with apartments as rentals, he doesn’t mention that this is happening for two reasons: 1) homeowners who can’t sell their homes (or are “waiting for a better market”) are renting their homes, and 2) many REOs are being purchased by cash flow investors as rentals helping to increase rental supply and push down rents.
Multifamily trade association leadership has been quick to pin the blame for this shadow inventory on the excesses of home builders. Simply, it’s a more complicated matter than that.
Rental Breakdown: Tenants Drive the For-Rent Bus Downward
Theoretically, the rent is the rule, a constant, with incremental increases built in to an inalterable profit model of management for 30-some percent of United States households, and countless businesses.
The rental model, it seems, has gotten the flu when the for-sale model sneezed.
Now the rent, which was once almost as certain as death and taxes, is not a slam dunk any more.
Michael Shedlock, a k a Mish, waxes prophetic in a post that springs off a rental mutiny among retail tenants at Grand Central Market in downtown Los Angeles.
The takeaway?
The mass mutiny at Grand Central Market provides a strong hint at what’s coming.
With rising unemployment and falling discretionary spending, the economy is not coming back anytime soon. Thus, tapping credit lines to pay rent is a tactic guaranteed to fail. Yet, the economic situation is such that using lines to pay bills will continue until every cent of those credit lines are used up. After all, what vendor will voluntarily go out of business now?
Those lines of credit will eventually be defaulted on and that in turn will sink the regional banks who made the loans.
This crisis was “resolved” for now, but how many more rounds like this can the tenants take? Equally important, how many more rounds like this can the Yellin Company take? Next, multiply this scene by every similar market in the US. A conclusion is not hard to reach: A massive fallout on commercial real estate is right around the corner.
This is not to say that Mish has been scooped, but Calculated Risk has been sounding the same alarm about rents–both residential and commercial–for several months.
CR’s spare comments accompany a chart that maps a stark reality ahead for those who’re trying to make a go of it in the for-rent trade who have exposure to tricky capital structures and heavy leverage.
Click on graph for access to original Calculated Risk analysis.
This shows three scenarios for rents in the U.S. over the next two years: Flat, a 10% decline in rents, and a 25% decline in rents.
As I noted yesterday, with the “more severe” scenario and flat rents, the price-to-rent ratio will be slightly below the normal range. If rents fall 10%, this metric would be in the normal range, and with a 25% decline in rents house prices would be too high.
With the largest bubble in history, I’d expect house prices to overshoot and the price-to-rent ratio to decline to the bottom of the normal range. This suggests even a 10% decline in rents would make the “more severe” scenario too mild.
For an applied take on what this heralds for those in the multifamily business, check out an analysis by Multifamily Executive senior editor Les Shaver: “Final Tally for Multifamily is Grim in the Fourth Quarter.”
“The really ugly performance seen for the end of 2008 was in line with what our models predicted in the worst-case scenario,” says Greg Willett, vice president of research and analysis for M/PF Yieldstar. “But you don’t usually expect that everything that can go wrong actually will.”
With massive slowing in places such as Atlanta (which is now in worse shape than any market in Florida), Charlotte, N.C., and Austin, Texas, the South’s vacancy rate rose to a whopping 8.5 percent. The Midwest fell just behind with an 8 percent vacancy rate, while the West had a 7.3 percent rate, and the Northeast returned a 6.2 percent vacancy rate at the end of the quarter.
“It was a little surprising to see just how quickly the Pacific Northwest markets, which had been in such great shape, lost momentum,” Willett says. “And the complete collapse of the performance in Los Angeles was stunning. That metro saw occupancy levels fall nearly five percentage points during 2008, translating to huge net move-outs for a market that contains more than 1 million units.”
Willet expects vacancies to reach their highest points in late 2009 or early 2010. With vacancies rising, it’s little wonder that rents also took a hit. In institutional-grade units, M/PF Yieldstar reported that rents dropped by 0.3 percent, which was the first decline since the third quarter of 2003. Without adjusting for inflation, rents increased in the Midwest (1.1 percent) and South (0.2 percent) and fell in the West (-1.7 percent) and Northeast (-0.1 percent). With inflation-related adjustments, rents fell in every region.
“Rents are going to be cut significantly during 2009,” Willett says. “We’re expecting rates to come down at least 3 percent for the nation as a whole, which would be the most severe annual slide ever seen.”
Apartment owners are seeing this as well. “We would trend almost every market down a little bit to a lot this year,” says Greg Mutz, CEO of AMLI Residential, an apartment owner with properties in the Midwest, Texas, California, the Northeast, Florida, and Atlanta.
Creative License
On one of our trips to the venue for residency activities, I even saw a lady, outside one of these developments, dressed as an ostrich and shouting entreaties to passers-by: “Come on in! Have a look! This is your new dream home!”
This quote, backed up with a bit of foto candy, is a slice of life take from the traveling wind and string ensemble that’s named itself from a Wallace Stevens poem of all things, Thirteen Ways.
Click on image for access to Thirteen Ways post.
Condo Phobia Grips MultiFamily Starts
From MultiFamily Executive, By Les Shaver: In the the single-family for-sale world, a certain level of speculative building practically needs to go on, seeing as how about half of the half-a-million intrepid souls a year who are still buying new homes want one that’s ready to move into.
That’s not the case with multifamily, where development and construction capitalization and business modeling are night and day different than for single family.
The starts that are still starting are ones that got funding well before credit became as rare as three-dollar bills, and before skittish prospective home buyers’ feet went from cold to frozen.
Multifamily Executive senior editor Les Shaver offers this analysis of multifamily housing starts as reported by the National Association of Home Builders.
The National Association of Home Builders (NAHB) reported yesterday that multifamily starts fell nearly 28 percent to a rate of 119,000 units-the lowest number the trade association has ever recorded.
To some, that news was better than expected. “I could have seen it [the decline in starts] being higher than that,” says Greg Bonifield, a principal with Woodfield Investments, based in Ashburn, Va.
Bonifield isn’t alone. In last week’s Multifamily Rental Market Index (MRMI) and Multifamily Condo Market Index (MCMI), which surveys builder confidence, market conditions fell to 22.4 for affordable apartments and 18.6 for market-rate apartments, compared to 45.3 and 40, respectively, at the same time a year ago.
On the condo side, the supply component fell 11 points from the fourth quarter of 2007, to hit a new record low of 7.8. (These quarterly NAHB surveys have a scale of 0 to 100, with a rating of 50 generally meaning positive and negative responses are the same level.)
The vaunted credit squeeze is behind the cliff dive in recent months, but it’s going to take longer than that to sort out normalized supply and demand levels.
12:15 PM ET, We Get the Obama Housing Plan
Here’s the cliffnotes version of what to know and expect from President Barack Obama’s unveiling of a $50-to-$100 billion foreclosure mitigation program.
First have a look at a 10 minute MSNBC “Hardball” analysis on the massive issues the new Administration is juggling.
The Lennon-McCartney of economics bloggers, Calculated Risk and The Big Picture, each bring pithy, cut-to-the-chase commentary to bear on the details of the housing plan that have come to light.
Here’s Calculated Risk riffing off the New York Times’ David Leonhardt preview of suspected elements of Obama’s strategy to stem the tide of failing homeownerships.
The details of the housing bailout should be available tomorrow (who qualifies, etc.). I’m not sure why the government is bailing speculators (aka homeowners) who bought homes they really couldn’t afford during the housing bubble.
That rhetorical indirect question got more than 250 responses from CR’s audience … after 1:49 a.m. ET.
Now, The Big Picture doesn’t want to leave much to his readers’ own aptitude when it comes to understanding what’s at stake in today’s announcement. So Barry Ritholtz, The Big Picture incarnate, explains it all to us.
Today at 12:15 am, we shall learn of the Obama administration’s new housing plan. I suspect it will have many of the same doomed features as all the other misguided housing plans floating around.
Before getting to those specifics, let’s revisit and recognize several truths:
• Home prices remain elevated;
• Artificially propping up prices is counter-productive;
• Home owers (No equity, 100%+ debt) who are in houses they cannot afford are going to have to move to homes or apartments they can afford;
• Foreclosures/REOs are often costly to banks; The lenders that made these bad loans to unqualified borrowers will suffer write-downs;
• It is not the responsibility of Taxpayers to bailout borrowers who are in over their heads, or lenders that made bad loans.
What are we likely to see from the White House today? I expect to see an over emphasis at stopping foreclosures; a reliance on foreclosure moratoriums; Involuntary loan modifications a/k/a cramdowns; and last, Interest rate deductions;
We would be much better off if we did 3 things:
Recognize that falling prices will help return the Housing market and the economy back to normalcy. On the basis of either median income to median home price, or Housing value as a percentage of GDP, homes remains significantly overpriced, and need to continue come down in cost; Identify those people who cannot afford to be in their houses (Underwater, overpriced, too little income) and help them move into more affordable housing (rental or purchased); Keeping people in homes they cannot afford is counter-productive Identify those people who can afford to stay in their homes with a modicum of loan mods/work out. These are the best targets for legitimate foreclosure avoidance.
Still, like it or not, as National Community Reinvestment Center president and ceo John Taylor said on CNBC this a.m., “all of us have a dog in this hunt” to stop foreclosures.
There’s a fork in the road, and there’s no choice but to take it.
See you on CNBC at 12:15 pm, as the President delivers the framework to mitigate what some estimate to be a 10 million home foreclosure problem if nothing effective is done. Yes, and we’ll all be watching the stock market fever chart in the background as he speaks.
Got Rent?
There used to be an unspoken newsroom guideline. Find three examples and call that a trend.
So is doubling, and tripling up in apartments a trend for real? Or could it be a hodgepodge of supposition, anecdotes and mother-in-law research? Remember Baby Boomers were supposed to pull up stakes in the suburbs and move to urban centers in droves? It’s a trend in the minds of media, but one that’s waiting to happen in real life.
Should we start writing a heartwarming chapter in the history of American society and culture based on families and extended families living in new harmony under a single roof?
We can almost hear the refrain now, “A Great Depression is a terrible thing to waste.”
Odd thing is, the multifamily world should be heroes right now. And they’re not.
They should be heroes because of the extraordinarily misguided and scandalous way that policy (deregulation with impunity), business (invention of mini-U.S. mints with no recognition of actual risk) and personal acquisitiveness converged to move more people into homeownership than should have been permitted, and more people into the business of real estate speculation than had any business being there.
Multifamily should be heroes now because apartments are the efficient, job-center centric, smart communities that address affordability and amenity with intelligence and profitability. Multifamily should be heroes because single-family mistook a quarter of the demand for three or four years as real, when all it was was wishful thinking–investor buyers.
Unfortunately, multifamily as an industry finds itself on “the line.” The apartment folks are not heroes because their model broke too, i.e. they believed their own hype like the rest of us, and got too greedy, and studied “the fundamentals” and “the fundamentals” were sound and strong, and wound up being very, very wrong.
[Reset button: Now we talk about "the longterm fundamentals" being strong.]
Now this:
NMHC President Doug Bibby in announcing the four-point program. “In the next two years, an estimated $80-$100 billion in multifamily mortgages will mature and need to be refinanced. With credit markets virtually collapsed, however, owners who are meeting their financial obligations but who—by sheer timing—are in the unlucky position of having their mortgages mature in 2009 and 2010 may be forced into foreclosure.”
Click on Doug Bibby
“We are facing serious risk of waves of defaults and bankruptcies of otherwise performing apartment properties unless the Federal Reserve and the Treasury Department take action,” said
Multifamily could have been the heroes right about now. But instead, they’re part an ever-lengthening queue of supplicants for special consideration and cash from an ever-more questionable pool of U.S. resources and tax payer money.
And it’s not that multifamily is not a big part of the answer for a housing crisis that–whatever the cause–must wrestle with demand destruction across every industry, job destruction, wealth destruction, and confidence destruction. Multifamily is part of the way of today and tomorrow. It’s smart community, and it’s better for the planet, and it’s easier on pocketbooks, and it’s largely connected with where we house our next generation of societal leaders, as well as a host of critical but less-well-heeled populations. Not to mention people who just plain want to live in apartments.
Fact is, most of multifamily is about profit-making business. It seems that–whatever their respective value to society’s dire needs are right now–no industry escaped self-destructive behavior that came with the desire to grow faster than ever between, say 2002 and 2007.
Blaming an evil single-family, homeownership juggernaut on one’s current capital challenges is disingenuous, and it deflects accountability among leaders who need to take a hard look at the lessons of the past decade of denial, and face them head-on.
We hope Congress and the Federal agencies listen to the NMHC.
The Treasury Department and the Federal Reserve can prevent a complete collapse of the apartment sector under existing authority they have as part of the Troubled Assets Relief Program (TARP). Specifically, they can take action through their previously announced Term Asset-Backed Securities Loan Facility (TALF) to help bring badly needed liquidity to the apartment sector until the credit crisis is resolved. We strongly urge them to take the following actions:
The Federal Reserve should use its authority under TALF to purchase highly rated commercial mortgage-backed securities (CMBS). This would restore investor confidence, restart trading in the frozen CMBS market and establish a market-clearing price for a variety of real estate assets, including commercial and multifamily mortgages.
In separate action, the Federal Housing Finance Agency should exempt multifamily loans from GSE mortgage portfolio limits through December 31, 2010 or until a new secondary market structure for multifamily loans is operational, whichever comes first. Based on Fannie Mae’s and Freddie Mac’s strong multifamily loan portfolio performance, exempting these loans will have virtually no impact on the overall portfolio risk of the two enterprises.
The single-family housing meltdown confirms that homeownership alone is not sufficient to meet our housing and community needs. We need a more balanced housing policy—and that policy needs to begin with ensuring a consistent and abundant flow of capital to rental housing.
We know that embedded within the rhetoric and the antagonism of the association’s statements, there is truth to them. We need a strong apartment business community as we never did before.
We also know that this is not an Us vs. Them issue. Best business practices–single-family for-sale or multifamily for-rent–would have kept companies out of “the line” needing a hand-out from taxpayers.
Let’s hope there are second chances, and that there’s finally some lessons learned from the lunacies of the past.
REIT it and Weep–Levered Mall Developers Face Default
From MULTIFAMILY EXECUTIVE, by Les Shaver: Cash is king. Having it is regal. Needing it urgently now is tantamount to financial D-day. Two of the nation’s largest retail developers were each embroiled in a negotiation moment of truth late Sunday as they sought extensions on huge debt payments due this past Friday at midnight.
Reports The Wall Street Journal:
General Growth, which owns and manages more than 200 U.S. malls, amassed a $27 billion debt load in an acquisition spree in recent years. The $900 million loan General Growth is trying to extend is backed by two luxury malls on the Las Vegas Strip: Fashion Show mall and the Shoppes at the Palazzo.
If the lenders on that loan declare General Growth in default, it would trigger cross defaults of other General Growth debts and force the company to seek bankruptcy-court protection. Though the two-week extension of the loan expired Friday, the lenders didn’t declare General Growth in default as negotiations continued through the weekend.
MultiFamily Executive senior editor Les Shaver takes a look at the leverage positions of top REITs in the multifamily space, observing that most will dodge the bullet on either tripping covenants or needing to rush around to raise capital to repay maturing debt. Why? Even in their exuberance, they tended to keep leverage below the 70% level.
The three apartment REITs with the most leverage on their books are Denver-based AIMCO, Birmingham, Ala.-based Colonial Property Trust, and Richmond Heights, Ohio-based Associated Estates Realty Corp. Alexandria, Va.-based Avalon Bay Communities has the lowest leverage in the sector with 34 percent liquidity leverage and 34 percent solvency leverage, according to Green Street. In fact, AvalonBay came in second in the entire REIT universe.
Expecting cap rates to rise even further, Green Street, the Newport Bach, Calif.-based REIT consulting and research firm, ran a scenario where they go up 150 basis points in the multifamily space. Under that scenario, AIMCO’s liquidity leverage pushed up to 76 percent; its solvency leverage moved to 81 percent. For Colonial, the numbers would edge up to 78 percent and 82 percent, respectively; for Associated, they rise to 77 percent and 83 percent, respectively.