A 2X Return in 6 Months? In This Market?

May 2023

Morning and welcome back! Hope you had a great weekend. I spent a little time doing some research on the current job market (no, don’t worry – I’m not looking for a job – you’re stuck with me as long as you’ll suffer through my writing). We’re definitely in some turbulent times. Most folks don’t really feel the pinch of inflation outside of rent and groceries. It’s an interesting dichotomy with the financial industry that is reeling from the extreme increase in interest rates. And the lack of media coverage of the debt ceiling situation is equally odd. The long-term effects of issues around liquidity and the debt ceiling are extremely serious. If we mess up either one, jobs and wages will come to a screeching halt and the entire country will feel the pain of the bad decisions that were made over three years ago. I’m hoping for the best while preparing for less. This is a stressful year – but I know we’re going to come out stronger and better, ready for the next phase in our growth!

In the meantime, we’re in the middle of the best of leasing season and we’re “making hay while the sun is shining”! Last week we had 30 move-ins (short of our goal of 50 move-ins) but we’re nonetheless moving closer to our goal of 90% economic occupancy by the end of Q2. Our new RVP, Carissa, is joining the team this week and will bring her experience and enthusiasm to the team of Luke and Bradly. She’ll be overseeing our Southeast portfolio – which currently encompasses our largest group of properties spread across the largest geographic area. While I wish I would have built out this team a year ago, it’s nonetheless exciting to be investing in our people and culture – and I’m determined to make REM somewhere that our employees love to call home.

St Pete Portfolio – 2X in 6 months?!

One of our investments that have appreciated quite nicely – our land purchase in St Petersburg, FL – is still available for investment! About six months ago we bought three lots in St Petersburg, FL for $11MM. Those lots are now worth $22MM based on a property down the street that just sold for $100k/unit (we’re permitted for 220 units). That’s a 2X return in 6 months! Six months ago we used a $75k/unit comp that also sold in the same neighborhood as part of our initial reason for feeling comfortable with this deal.

Here’s a question for you – if Apple stock was trading at $20/share and I offered to sell you some shares at $10/share, would you take it? You would probably think two things: 1. You’re crazy, why would you do that? and 2. Heck yeah, that’s a good deal. You know I’m not one for hyperbole. I like to keep things pretty straightforward. So when I tell you that you have an opportunity to do the same thing with our St Pete Portfolio development, I’m totally serious.

We still have spots open for our St Pete portfolio and we’re leaving the land basis at $11MM. So effectively when you invest, you’re getting a built-in 2X right out of the gate! I know some of you are leery of development deals. They’re riskier, they don’t produce instant cash flow. I try to do development deals where I can mitigate some of that risk – and having a built-in 2X on your land is a great way to do that. Want to learn more? Click here.

St Pete Portfolio – Groundbreaking Set for June 6

I’d be honored to have you join us for our official groundbreaking ceremony for the St Pete Portfolio on June 6, 2023. That’s just under a month away. We’re going to do the usual shoveling dirt (although we might change it up just a little), have some local media cover the event, and, of course, chat about our plans for what will soon be Ellington Place – a Class A property nestled in the heart of St Pete. This property will offer a timeless and sophisticated living experience for those seeking the perfect blend of luxury and practicality.

From the moment you step through the doors, you’ll be transported to a world of glamour and refinement. The modern industrial design with exterior panels is chic yet functional, offering everything you need and nothing you don’t. Each of the 220 studio and one-bedroom apartments exude a sense of elegance and class, with high-quality finishes and appliances that seamlessly blend style and comfort. But Ellington Place isn’t just about the apartments. It’s about the lifestyle that comes with them. Imagine waking up each morning to a beautiful pool deck and cabanas,
perfect for a morning swim or a lazy day spent lounging in the sun (who needs to work in Florida?!). Or maybe you’ll head to the fitness center for an energizing workout before exploring the neighborhood.

St Pete Portfolio – Is In A Qualified Opportunity Zone

I had not noticed this until just recently – but two of the three lots that we purchased as part of the St Pete Portfolio development are in a Qualified Opportunity Zone. That means that we can defer (and potentially eliminate) capital gains taxes for any investment dollars on this property. Some of you are familiar with these “OZ” properties. If you’ve never looked into it, here’s a great link to get you up to speed.


Where In The World Is Robert?

It’s a good thing the baby got here a little early or I might have gotten in trouble for packing the schedule with this much travel! I would love to connect with you in June and I’ll be at three conferences in the month of June. Please reach out and let me know if you’re planning to attend (or even if you’re in the area) and let’s meet for coffee or grab a bite to eat. Concurrently, I’ll also be doing my quarterly site visits for our properties in the Southeast so hit me up and let’s walk some units!

June 1-2, Atlanta, GA
IMN Southeast Middle Market Conference

  • This is my favorite conference for operators, brokers, lenders, and anyone involved in the middle market (small to mid-sized companies) multifamily space.

June 7-9, Atlanta, GA
NAA Apartmentalize

  • The National Apartment Association has a once/year event called Apartmentalize where you get access to probably the largest group of providers and operators in the multifamily space. Everything you could want related to property management – all in one place!

June 12-14, Charlotte, NC
MFINCON (Multifamily Investor Nation Conference)

  • This is probably the largest meeting in the country for passive and active investors all focused on syndication. I’ll be speaking at MFINCON along with many of my good friends and colleagues in the business.

Next Week – Thoughts On The Fed and Rates

I feel like I’ve given you enough reading for today so even though I’ve got some thoughts to share about the Fed, the banking system, and rates – let’s kick that to next week. These issues aren’t going anywhere anytime soon anyway.

Until next week – good luck with the week ahead and make it a great one!