Lloyd Jones

MIAMI, Fla. — Lloyd Jones Capital, a private equity multifamily real estate firm headquartered in Miami, Fla., has closed on Palmway Village, a 432-unit apartment complex in St. Petersburg, Fla. The property is located at 411 77th Ave North and consists of 12 apartment buildings, two pools, a fitness center and a library, spread across 15 landscaped acres.

According to Chris Finlay, Chairman and CEO of Lloyd Jones Capital, plans are in place for a large expansion of the fitness building to include a cyber café, meeting areas, and a “gig spot” for high tech collaboration. At the same time, pool decks will be enlarged and refurbished with the addition of summer kitchens and picnic areas.

The dog park will include games and obstacle courses, and even a water feature. Sunny open areas will be turned into organic gardens.
Says Finlay, “Palmway will be re-branded to our Vibe model. Our vision is to create a fun, high-tech community with computer work tables and charging stations, technology and art classes, and of course, parties – in beautiful indoor and outdoor settings.” According to Finlay, the new name will be The Vibe at Gateway.

This is the third closing for Lloyd Jones Capital in recent months. The addition two closings are in Texas, with an additional closing scheduled for early November.

ABOUT LLOYD JONES CAPITAL
Lloyd Jones Capital is a private equity real estate firm that specializes in the multifamily sector. With 35 years of experience in the real estate industry, the firm acquires, improves and operates multifamily real estate in growth markets throughout Texas, Florida and the Southeast.

Lloyd Jones Capital provides a fully integrated investment/operations platform. Its property management arm partners with the investment team to provide unparalleled local expertise in each of its markets. Headquartered in Miami, the firm has offices throughout Texas and Florida. The firm’s investors include institutional partners, private investors and company principals. For more information visit lloydjones.wpengine.com.

MEDIA CONTACT:
Samantha Savory
Director of Marketing/PR
Lloyd Jones Capital
Ssavory@lloydjonescapital.com
O: 305.415.9910

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Miami, Fla. – Lloyd Jones Capital, a private equity multifamily real estate firm headquartered in Miami, Fla., has acquired the Carol Oaks and the Villa Oaks apartment communities in Fort Worth and Houston, respectively. Both are considered exceptional value-add opportunities which the company anticipates improving and rebranding in order to enhance the asset value.

Says Chris Finlay, Chairman/CEO, “These properties are a great fit for our value-add portfolio. They are both currently producing cash flow, and with selective renovations and exciting rebranding they will prove to be fabulous opportunities for our investors.”

The Carol Oaks is a gated community consisting of 224 units on 18 acres. The property is undergoing rebranding to the company’s proprietary ‘The Vibe” concept that offers on-site, high-tech opportunities for its residents with Wi-Fi and collaborative work areas. The property’s new name is The Vibe at Landry Way.

The Houston property, Villa Oaks, with 212 units of affordable housing will be rebranded as TownParc at Sherwood. This townhouse community offers large units with numerous floor plans.

According to Finlay, two additional properties – in St. Petersburg, FL and Houston – are scheduled for closing in the next few weeks. These will add an additional 610 units to the company’s growing investment portfolio. Finlay says “One of the things that gives us great confidence in the ability to turn these C and B properties into C+ and B+ assets is Finlay Management, Inc., our property management arm.” He explains that Finlay Management is an Accredited Management Organization (AMO). In fact, the company was named “AMO of the Year” of North Florida in 2013 by the Institute of Real Estate Management (IREM).

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Last week’s stock market roller coaster ride serves as a good reminder of why it is so important to maintain a diversified investment portfolio. What impact did it have on investment real estate? Absolutely none.

This is why income-producing multifamily real estate makes sense for a portion of your investment portfolio. Real estate does not fluctuate with the equity markets. Plus it has out-performed those markets over the past twelve years. Diversify. Dilute the volatility.

This is how most of the very wealthy individuals have created their wealth. It is said that 90% of the Forbes 400 Index have made or maintain their wealth in income-producing real estate.

Some say you should have 5 to 10 percent of your portfolio in real estate. But I advocate 15 to 25 percent. Yale University’s legendary endowment fund, which has consistently out-performed its counterparts, allocates 17.6 percent to real estate. (Average endowment commitment is only 4.2 %.)

The University’s Endowment Report 2014, reads “Investments in real estate provide meaningful diversification to the Endowment. A steady flow of income with equity upside creates a natural hedge against unanticipated inflation without sacrificing expected return.” That policy has obviously worked well for Yale. Its endowment generated a 20.2 percent return in fiscal 2014.

And in the asset class, multifamily is a top choice. The demand for housing is huge. We all need a place to live, but fewer people are buying homes. Home ownership has declined to the lowest level in 50 years. The U.S. homeownership rate fell to 63.4 percent in the second quarter of 2015, according to the U.S. Census.

Why?

Lack of cash down payment
Unemployment/under-employment.
Burden of student debt
Poor credit rating due to housing crisis.
Delayed marriage and children. (triggers for buying a home) Birthrates for women in their 20’s dropped by 15 percent from 2007 to 2012. Millennials are now the slowest of any generation in US history to have children. (Urban Institute Report, April 28, 2015.)

Furthermore, many people are now renters by choice.

Why?

Flexibility to relocate for job opportunities
Appeal of a low-maintenance lifestyle
Abundance of lifestyle amenities an apartment community provides
Recognition that a house is not an investment

And down-sizing Baby Boomers are on their way. It’s estimated that we’ll see 12.2 million renters age 65 and older within the next fifteen years. That’s on top of the 25 million Millennials (typical renters) who are still living at home. That’s a huge pent up demand.
So my advice? Diversify. Invest in carefully selected multifamily properties. But be careful, because there is a buying frenzy right now. (You can understand why.) Lloyd Jones Capital has many years of experience in finding great opportunities, but it takes a lot of looking. We underwrite as many as 100 properties before we find one that meets our criteria. So you have to be patient – but it will be worth the wait.

Christopher Finlay is Chairman/CEO of Lloyd Jones Capital, a private-equity real-estate firm that specializes in the multifamily sector. With 35 years of experience in the real estate industry, the firm acquires, manages and improves multifamily real estate on behalf of its institutional partners, private investors and its own principals. Headquartered in Miami, the firm has operations throughout Texas, Florida and the Southeast. For more information visit: lloydjones.wpengine.com.

Lloyd Jones Capital recently bid on a small $6 million apartment community in a tertiary market. The property was bank-owned and obviously distressed. It needed extensive renovation. Furthermore, its occupancy had been a very low 85% over the past twelve months, despite having third-party, professional management in place. This was, indeed a troubled property.

Guess what! There were twenty-one bidders for this property. (Typically, we see five or six.) We got to the “best and final offer” stage and sharpened our pencils to what we thought was a very aggressive price. Guess what! We didn’t get the deal. I might have expected this in New York or LA, but not in a small, tertiary market of North Florida. I was flabbergasted!

Another missed deal: the winning bidder offered a $500,000 non-refundable, cash down payment – before due diligence! That’s just not good business sense.

So what does this tell me?

1) It takes a lot of looking to find a really good real estate deal in this environment. Real estate is a local business. That’s why we have put more “boots on the ground” in local markets to track down the best opportunities for you. (This has resulted in five new acquisitions, three of which were off-market.)

2) Now is not the time to be overly aggressive in bidding on multifamily real estate. You’ll be paying too much, and returns (if any) will be minimal. Be patient.

3) We must not over-leverage at this stage of the cycle. Today, I would keep LTV below 75%, stabilized.

4) We need to be realistic in our expectations. Be skeptical of spreadsheets that show 10% yields and 20% IRRs. Such properties exist, but they are few and far between. (Luckily, Lloyd Jones Capital is very good at finding them.)

Don’t get me wrong. Multifamily real estate is still one of the best investments in the world.

But now is the time to be disciplined. There is a lot of capital going after multifamily real estate in today’s market. Don’t get caught up in the buying frenzy. My thirty-five years in the multifamily business tells me this will not go on forever. But for now, be patient, be very selective, and don’t overleverage. If you do these things, multifamily real estate will provide you with handsome risk-reward returns.

If you are reading this blog, you are most likely interested in accruing wealth through savvy investment strategies. There are lots of places to put your money; investing is not really the issue. The issue is: what investment options are best for preserving your wealth?
One answer is real estate.

It is said that 90% of the Forbes 400 index of the world’s wealthiest people either made or retained their wealth through real estate. But not just any real estate. These people own high-quality, income-producing real estate, like apartment communities and office buildings. The ultra-wealthy hold real estate long term, because they know that is how to preserve their wealth.

Your luxury home, your Alpine ski chalet, and your “investment” condos in New York and Miami may (if you are lucky) provide some asset appreciation when you sell them, but in the meantime, they are costing you more than you will recoup. My advice: Enjoy them, but do not count on them to preserve your wealth. Do not expect them to be long-term wealth enhancers.

I just read an ad for an exotic car rental company called Lou La Vie. What a great philosophy! Rent the things that add to your enjoyment of life. Whether it’s cars or boats or condos, you can rent them when you want them, and that’s a lot cheaper than owning. But buy future security.

And now is the perfect time. I’ve been in the real estate business for almost 40 years and I’ve never seen a better opportunity to invest in multifamily (apartment communities) real estate in the U.S. Home ownership is at its lowest rate in years, and apartment living is soaring, both for renters by choice and renters by need. U.S. demographics point to continuing demand for rental housing.
Why? Just look at the traditional American first-time home buyers.

They are not buying homes:
1) They are burdened with large student loans and other debt. Unable to find jobs after college, they went to back to school.
2) They don’t have the money for down payment on a home.
3) They are delaying marriage and starting a family which is a driving factor in home ownership.
4) They want flexibility for employment purposes to move to a new job.

So they are renting. And, interestingly enough, so are their parents and grandparents as they down size or retire.

There are many more reasons to choose multifamily real estate to supplement your investment portfolio: on-going income, asset appreciation and tax advantages. Plus, real estate has outperformed all other asset classes over the past 12 years, and its value does not rise and fall with the stock and bond markets. And interest rates! Right now, with low interest rates, we can leverage funds to provide the greatest returns.

I could go on and on about the advantages of multifamily real estate. If you would like to discuss it, don’t hesitate to contact us at info@lloydjonescapital.com.

By the way, there are several ways to invest in real estate. At Lloyd Jones Capital, we offer direct investment (as opposed to a REIT which is like buying stock). We have funds that we co-invest with major institutional partners for maximum leverage; we have individual property investments, and we have funds that target specific categories such as workforce housing. Or we can help you acquire a property and become your asset manager to protect your investment.
Good asset management is one of the keys to successful multifamily investing. But the most important, after analyzing and choosing a property, is the day-to-day property management of the asset. Lloyd Jones Capital partners with its sister company, Finlay Management, Inc. to oversee the operations and maintenance. Finlay Management has been in the business since 1980 and is an Accredited Management Organization.

Let me leave you with this reminder: Rent lifestyle; but for wealth preservation, purchase a quality, U.S. apartment complex.