In August, portfolio manager Elias Bachmann toured several Harbor Group properties currently in the BSW portfolio. Trips like these are an integral part of BSW’s on-going due diligence of Harbor Group and are key to understanding and evaluating the execution of value-add strategies.
At Treybrooke, located halfway between Raleigh and Durham, NC, capital improvements have been completed and include new pavement for parking lots, conversion of a tennis court to a children’s game area and updating of apartment interiors. Investments in apartment improvements can pay for themselves in as little as one year. During the summer, the property manager began hosting movie nights by the pool. Such amenities enhance quality of life and build a greater sense of community, which can help reduce the level of resident turnover.
In Tampa – St. Petersburg, contractors were hard at work remodeling the office, club house and fitness center at Sienna Bay Apartments. By updating the look, functionality and feel of these amenities, Harbor Group has been able to increase resident satisfaction. Sienna Bay serves as a good “before” picture of the improvements completed at Treybrooke.
The Metro Baltimore properties exemplify a very different value-add strategy because the properties were already performing at a high level of efficiency and resident satisfaction. In this case the size and complexity of the deal was a significant barrier to entry for other potential buyers and allowed for significant value on the purchase price and the terms of financing.
At the time of the visit Harbor Group had yet to complete the purchase of the Belvedere Tower in Baltimore. Touring the property with the acquisition manager, Elias saw the many improvements Harbor Group planned to make, including; landscaping, pool area maintenance and a broad range of common area updates. AIG, the current owner, assumed building management responsibility after it dissolved a joint venture with the operating partner. Because AIG is not in the business of managing apartments, the property was priced to sell quickly. Harbor saw the opportunity to make improvements in operations and marketing as means to add significant value in a short period of time.
Given the persistence of economic factors that have buoyed the multifamily real estate market, BSW remains bullish on the outlook for this segment. While a rising tide lifts all boats, we are pleased to see how our managers continue to identify compelling opportunities to unlock additional value for our investors.
Elias Bachman, Portfolio Manager