MIAMI—Lloyd Jones, a multifamily investment firm based in Miami, recently sold Deerwood Park Apartments, an apartment community in Jacksonville, Florida, to provide favorable returns to its investors after adding value to the property through a capital improvement project.
Lloyd Jones acquired the 282-unit, garden-style community in October 2017 and sold it in December 2020 after surpassing the projections of the original business plan. The firm’s joint venture partner in the deal was a Chinese wealth fund group.
“Deerwood Park outperformed our initial underwriting of an anticipated five-year hold period to meet its target yield and IRR parameters within just three years. We consider this a highly successful exit for our partner and ourselves,” said Ashley Socarras, who oversees the entire investment division for Lloyd Jones as the firm’s EVP of Investments.
During the hold period, Deerwood Park Apartments was professionally managed by Lloyd Jones Multifamily Management, who maintained the property at a healthy occupancy while executing the interior and exterior enhancements. Upgrades included converting the indoor basketball court to an oversized fitness center with a yoga studio and creating a co-working lounge.
“The Southside submarket of Jacksonville is one of the area’s strongest for millennial renters and young professionals,” added Stuart Keller, SVP of Asset Management for Lloyd Jones. “The capital improvements we chose to implement at Deerwood were appealing to this growing demographic.” Jacksonville is rapidly expanding in the finance, technology, and healthcare sectors, with major corporations like Florida Blue, Bank of America, and SoFi calling the Southside area home.
“I am thrilled that we produced these results for our multifamily investment partners,” stated Chris Finlay, chairman/CEO of Lloyd Jones. “Our firm is very optimistic for the year ahead.”
ABOUT LLOYD JONES
Lloyd Jones, LLC is a real estate investment and development firm with 40 years in the industry under the continuous direction of Chairman/CEO, Christopher Finlay. Based in Miami, the firm has divisions in multifamily investment, development, management, and senior living. Its investment partners include institutions, private investors, and its own principals. To learn more about Lloyd Jones, visit www.ljasl.wpengine.com.
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The Jacksonville region is one of the most attractive MSAs in the country for multifamily development and investment. Its strong population and employment growth, plus rising income levels continue to drive demand. In fact, 2019 marked the fourth consecutive year that multifamily investment sales crossed the billion-dollar mark in the Jacksonville market. [i] And according to CBRE’s 2021 Market Outlook, Jacksonville is one of the Southeast metro areas that has responded the best to the economic challenges caused by COVID-19 and is consequently well-positioned for solid performance in 2021.[ii]
Attractive Lifestyle Drives Growth
Jacksonville is North Florida’s largest MSA with a population of 1.5 million and is the sixth-fastest-growing MSA in the country.[iii] From 2013 to 2018, Jacksonville’s population grew by over 10%, far outpacing the national average of 3.5%.[iv] According to Colliers International, the primary growth driver is in-migration, fueled by the region’s relative affordability, strong demographics, skilled labor pool, high quality of life, and the state’s business/tax-friendly attitude. EMSI, a labor market analytics firm, ranked Jacksonville as the #1 city for talent acquisitions last year, and Forbes named Jacksonville as the #2 best city for young professionals.[v]
It’s Where the Jobs Are
Bordering the Florida/Georgia line, the Jacksonville region is central to the booming Southeast, and naturally positioned for growth. According to the Jacksonville region’s economic development agency, one in every six jobs is in the health and sciences sector. The region’s healthcare landscape includes Mayo Clinic, a Baptist MD Anderson Cancer Center, the University of Florida Proton Therapy Institute, and cutting-edge medical companies including Medtronic, McKesson, Availity, and Forcura.
In addition to healthcare, job growth is found in manufacturing, logistics, financial services, and technology. Jacksonville is now home to over eighty national/divisional headquarters, three Fortune 500, and five Fortune 1000 companies.
Strong Multifamily Market
Colliers International reported that the Jacksonville multifamily market continued its strong record of growth in the final months of 2019—with Q4 marking the 19th consecutive quarter that overall multifamily occupancy remained above 94%.[vi] And Mashvisor, in its review of top Florida multifamily markets, ranked Jacksonville #4, with a multifamily cap rate of 2.0%. [vii]
Resilient Multifamily Market
According to YardiMatrix, the Jacksonville metro area ranks #3 in terms of investment activity, with 11 deals closed in the first four months of 2020 for a total of $349 million, up 50 percent from the same time last year.[viii] By year’s end, developers are projected to deliver more than 3,000 units in Jacksonville, but that will depend on the overall impact that the pandemic has on construction activity. Early indications are that the region’s construction sector remains strong, with Jacksonville being the only MSA in Florida to show a rise in construction employment between March and April, the height of the pandemic shutdown.[ix] CBRE, which cited Jacksonville as one of the best opportunities for achieving expected revenues and seeing solid market performance in 2021, also noted that multifamily has weathered the 2020 recession better than most property sectors and is looking at a quicker rebound next year. [x]
The Opportunity
Lloyd Jones, LLC has extensive experience as an investor, owner, and manager in the Jacksonville multifamily market. We have worked with investors to find the right multifamily property to generate the best possible returns for four decades, through numerous economic cycles. If you are looking to capitalize on multifamily opportunities in the Jacksonville market, please let us know. To learn more, visit https://www.ljasl.wpengine.com/
Lloyd Jones Capital’s purchase of The Westcott Apartments marked its second purchase in the market in less than a year. The Miami-based real-estate private equity firm paid $57.8 million for the 444-unit garden-style apartment complex in Tallahassee, Fla., expanding its footprint in multifamily assets located primarily in Florida, Texas and the Southeast.
Lloyd Jones, which specializes in the multifamily and senior housing sectors, was launched just four years ago, but its principals have been active in the industry for 38 years. The firm’s core strategy is to invest in cash-flowing assets that are undercapitalized or poorly managed and therefore offer value-add opportunities.
Lloyd Jones acquires, improves and operates multifamily assets with a holding strategy that ranges from three to 10 years, depending on the needs of its investors, which include institutional partners, family offices, private investors and its own principals.
Despite headwinds faced by multifamily—such as rising interest rates and construction costs as well as concerns about oversupply in some markets–Chris Finlay, chairman & CEO of Lloyd Jones Capital, remains bullish on the sector.
“It’s absolutely the best asset class to invest in, primarily due to demographics,” he said. “You have 75 or 80 million Millennials, and about a third of them are still living with Mom and Dad, so there’s a huge untapped market. On the other side of the spectrum, you have the Baby Boomers, about a third of whom are renting now, and every indicator seems to show that percentage is going to increase as they get older.”
Finlay said he’s not concerned about an oversupply of apartments, an issue he feels has been “exaggerated.” Due to high construction costs, most of the new supply coming online is Class A, he said, but his strategy is to focus on what he calls “market-rate workforce housing,” or housing that’s affordable to a median-income family. Since there’s little new workforce product in the pipeline, Finlay is confident that Lloyd Jones is transacting in a niche that will lead to good returns.
MARKET FUNDAMENTALS
Tallahassee is the state capital of Florida, and the multifamily market there is stable, with further growth projected. According to Yardi Matrix, in the second quarter of 2018, monthly rents averaged $1,173, up from $1,088 in the second quarter of 2016. Yardi forecasts average monthly rents to increase to $1,347 by the end of 2023. Occupancies have been holding steady, at 94.6 percent in the second quarter of 2018 and forecast to rise slightly to 94.8 percent by the end of 2023.
Unit in The Westcott Apartments
“The supply/demand balance is very good there,” Finlay said. “It’s an extremely stable market because the state government is there, and irrespective of the economy, that always chugs along.”
In addition, there are two major universities in Tallahassee—Florida State University and Florida Agricultural and Mechanical (A&M) University—that drive both the student housing and off-campus multifamily markets.
“Tallahassee is one of those markets that don’t boom but they don’t bust,” Finlay said. “It’s just a nice progressive growth—reasonable growth that you can count on.”
Other experts agree. “The Tallahassee market has seen consistent growth over the last few years, both from a value-appreciation standpoint as well as rent growth and stabilized occupancy,” said Jad Richa, managing director of Capstone Apartment Partners in Tampa, who handles investment sales.
Richa said that every deal he’s sold recently in the area “has some value-add component to it.” Cap rates on closed deals range from 6 to 7.5 percent, he said, attracting investors priced out of gateway markets that are “chasing yield” in Tallahassee.
THE DEAL
The Westcott Apartments is a 444-unit Class B+ property located at 3909 Reserve Drive, just five miles from the state capital building. Most of the apartments were built in 2000 (300 units), with an expansion completed in 2005 (144 units). The floor plans include one-, two- and three-bedroom units. Rents at the time of acquisition ranged from $950 to $1,250, and the occupancy rate was about 93 percent. Finlay said the trailing cap rate was 5.5 percent.
“It’s a great asset in a great location,” he added. “It’s in an area of Tallahassee that we see a lot of expansion happening, so there’s still room for growth. And it’s very easy to get to downtown.”
Public records disclose that Lloyd Jones, which took title to the property in the name of an affiliated entity named LJC Westcott LLC, paid $54.6 million for the property. The $57.8 million purchase price reported by the company represents its total investment, including its anticipated capital expenditures and rehab costs.
The Westcott Apartments Amenities
Finlay said he was presented with the opportunity by the listing broker, Jones Lang LaSalle’s Capital Markets Group, which also arranged a $40.3 million 10-year floating-rate mortgage through Freddie Mac on behalf of the buyer. The seller was Irvine, Calif.-based Oaktree Capital, and the deal took about 90 days to close.
The prior owners invested $4.8 million in capital improvements such as landscaping, playground updates, exterior painting, two clubhouse remodels, two fitness center upgrades and unit upgrades. In line with its management strategy, Lloyd Jones plans value-add upgrades and improvements to The Westcott’s existing amenities, which include two swimming pools, two fitness centers, playgrounds and tennis courts.
Finlay said he’s spending some $7,000 per unit to upgrade about a quarter of the units, adding granite countertops, tile backsplashes, stainless-steel appliances, vinyl-plank flooring, and washers and dryers—what Finlay calls “a standard upgrade package typical in a value-add strategy.” Although the program hasn’t been implemented yet, plans call for an average $125 rent premium for upgraded units.
After improving the units, repositioning the project and raising rents, Finlay expects to sell. “This will probably be a five-year hold,” he said. “The strategy is to do the improvements and try to operate the property more efficiently and then position it to sell in five or seven years.”
CRITICAL NEED
The Westcott is just one example of Finlay’s strategy to capitalize on the critical need for workforce housing in the United States. According to the Joint Center for Housing Studies of Harvard University’s “The State of the Nation’s Housing 2018,” nearly one-third of all U.S. households paid more than 30 percent of their incomes for housing in 2016. For renters alone, however, the cost-burdened share is 47 percent. And of the 20.8 million renter households that are burdened, some 11 million pay more than half their incomes for housing and are severely burdened.
“What we focus on is something that differentiates us from a lot of investment firms,” Finlay said. “We focus on the affordability of workforce housing.”
He added that the firm’s first-year projected rents at The Westcott are at 25 percent of the median income for Tallahassee. “HUD basically stipulates that 30 percent is the guideline, and anything above 30 percent is considered rent-burdened,” he said. “We’re not even close to that 30 percent. We’re providing great housing for workforce families in that market when all the new stuff is unaffordable.”
by Robyn A. Friedman
Fountains at Forestwood, Coastal Village trade hands in recent deals
A pair of recent apartment sales in Estero and Fort Myers have generated nearly $100 million in proceeds, according to Lee County property records.
Miami-based Lloyd Jones Capital acquired the Fountains at Forestwood community in Fort Myers for $55 million, adding to its portfolio of 18 multifamily rental complexes in Florida containing 3,600 units.
The 397-unit complex, at 1735 Brantley Road, was completed in 1985 and features amenities such as a resort-style swimming pool; 24-hour fitness center; lakefront jogging trails; and a car wash center.
The property also is located in close proximity to both Florida Southwestern State College and Interstate 75.
Lloyd Jones completed the transaction with roughly $38.21 million in financing provided by the South Florida office of Berkadia Proprietary Holding LLC, a joint venture between Omaha-based Berkshire Hathaway and Leucadia National Corp.
Berkadia obtained the funds from Freddie Mac’s “Green Up” program, which stipulates borrowers must commit to initiatives including water usage reduction. Freddie Mac’s loan to Lloyd Jones carries a fixed rate and matures in 2028.
Lloyd Jones officials did not return telephone calls for comment on the purchase. In all, the company owns 31 complexes in six states: Florida, Texas, New Hampshire, Michigan, Virginia and South Carolina. In Florida, the company’s portfolio includes the 432-unit Vibe at Gateway in St. Petersburg and the 160-unit Meetinghouse at Bartow.
In the other deal, Coastal Ridge Real Estate bought the 800-unit Coastal Village apartments in Estero for $44 million.
The 19401 Skidmore Way complex last traded for $32 million in January 2015, property records show. The community is located just a few miles from Gulf Coast University.
Coastal Village becomes the company’s fifth Florida holding, according to its website. It also owns multifamily rental properties in Gainesville, Panama City Beach and Lutz.
Earlier this year, Coastal Ridge spent $71.4 million to buy the 324-unit Spectra Apartments in Fort Myers, which had been completed in mid-2017 by Naples-based Stock Development.
Founded in 2013, Columbus, Ohio-based Coastal Ridge owns more than 4,300 apartments nationwide valued in excess of $1.6 billion, according to its website.
The Westcott Apartments in Tallahassee (Credit Rent.com)
Lloyd Jones Capital, a Miami-based private equity firm, acquired a recently renovated apartment complex in Tallahassee for $57.8 million.
Lloyd Jones’ per-unit cost was about $120,000 for the 444-unit complex at 3909 Reserve Drive in Tallahassee, located five miles from the Capitol Building.
The rental complex, called The Westcott Apartments, was built in two phases, 300 units in 2000 and 144 in 2005.
It is the second apartment property in Tallahassee that Lloyd Jones has acquired. The Miami firm also owns Jackson Square Apartments, located six miles from The Westcott Apartments.
The Westcott has one-, two- and three-bedroom units, and its amenities include two swimming pools, two gyms, playgrounds and tennis courts.
Lloyd Jones Capital, a private equity firm based in Miami, acquired Westcott Apartments for $57.8 million.Lloyd Jones Capital website.
Miami-based private equity firm Lloyd Jones Capital purchased Westcott Apartments near Tom Brown Park for $57.8 million.
Built in 2000 off Conner Boulevard, the apartment complex has 444 units ranging from one to three bedrooms. It also features two pools, tennis courts and two fully-equipped gyms.
This marks the company’s second acquisition in Tallahassee following the purchase of Jackson Square Apartments.
Lloyd Jones Capital specializes in multi-family and senior housing properties in growth markets throughout Florida and the Southeast. Contact TaMaryn Waters at tlwaters@tallahassee.com or follow @TaMarynWaters on Twitter.
TALLAHASEE – Real estate private-equity firm Lloyd Jones has purchased The Westcott Apartments on the east side of Tallahassee for $57.8M. The 444-unit apartment complex at 3909 Reserve Drive is a newly renovated multifamily residence located five miles from the Capitol Building.
The Westcott was built in 2000 (300 units)/2005 (144 units) near Tom Brown Park and offers one, two- and three-bedroom floor plans. A key feature is the property’s metro connectivity and its direct access to downtown Tallahassee.
The Westcott is the private equity company’s second acquisition in the Tallahassee area, only six miles from its Jackson Square Apartments.
In line with its management strategy, Lloyd Jones plans value-add upgrades and improvements upon the Westcott’s already numerous amenities which include two swimming pools, two fitness centers, playgrounds, and tennis courts.
__________________________________________ About Lloyd Jones
Lloyd Jones is a private-equity real estate firm that specializes in the multifamily and senior housing sectors. Building on thirty-eight years in the real estate industry, the firm acquires, manages, and develops multifamily real estate in growth markets throughout Florida, Texas, and the Southeast. Its investors include institutional partners, family offices, private investors, and its own principals.
MIAMI – Lloyd Jones, a multifamily real estate investment firm has purchased the Anatole Apartment Homes in Daytona Beach. The 208- unit apartment community enjoys a central location at 1690 Dunn Avenue, near retail shopping and dining, and minutes to the beach.
The investment strategy is a light value-add program: upgrading units and creating expanded outdoor entertaining opportunities. Says Chris Finlay, chairman of Lloyd Jones, “It is always fun to provide new and improved amenities for our residents. I know they will love the results. And our investors will love the steady income and capital appreciation this property will provide.”
This is the firm’s third community in Daytona, after the Granite at Porpoise Bay and The Meetinghouse at Daytona Beach, a 55+ senior living complex. Says Finlay, “We’ve been in Daytona for ten years now. It’s a fabulous market. Our properties perform exceedingly well, and we are thrilled to continue to expand our presence here.”
As an owner/operator, Lloyd Jones manages its own properties with its long-established operations team, formerly called Finlay Management.
About Lloyd Jones
Lloyd Jones is a private-equity real estate firm that specializes in the multifamily and senior housing sectors. Building on thirty-eight years real estate industry, the firm acquires, manages, and develops multifamily real estate in growth markets throughout Florida, Texas, and the Southeast. Its investors include institutional partners, private investors, and its own principals.
Before you entrust your funds to a real estate investment partner, ask some questions.
First: Is your real estate investment partner an Allocator or an Operator? There is a big difference. Allocators distribute capital on your behalf to Operators. Allocators seek the best operators and invest, on your behalf, in whatever funds and deals operators bring to them. Allocators make sense if you are a pension fund (or similar) with no expertise in real estate investment. You are basically outsourcing that function and knowledge; however, it comes at a cost. You have no input in asset selection or fund strategy. And of course, the Allocator charges fees. This adds an additional layer of costs to you, and these fees come out of the investment thus reducing your returns. An Operator, on the other hand, is the preferred solution if you have the resources to analyze a specific fund or an individual deal. If you invest directly with a real estate operator, you will not only save a layer of expensive fees, but also get to choose a fund investment strategy, (or particular asset), its geography, investment term, and even the potential returns. But be careful how you choose an operator. They are not all the same.
Six questions you should ask your operator:
Focus. What asset class do you specialize in?
If the answer is “retail, industrial, and student housing…” Run! An operator must be an expert in a specific asset class.
Market. What markets do you specialize in?
The same applies to markets. A real estate operator must have a physical presence in the target market to really understand its nuances and trends.
How long have you been in business? In the specific asset class? In the specific market?
Experience is priceless.
How many economic cycles have you experienced? How did you weather the market crashes of early ’90s and ’08?
Real estate is great while the market is booming. Does your operator know what to do in a crash?
Who manages your investment properties? Do you outsource to a 3rd party management company?
There is no substitute for your own, on-site management of your assets. As a wise farmer once told me, “The best fertilizer is the farmer’s foot on the soil.” This applies to property management, as well. You must have your foot – and your hands, eyes, and ears — on the property, at all times. The 3rd party manager has no skin in the game. It’s not his money at risk if there is a budget shortfall.
A word about property management: It is local, hands-on, and very difficult – and probably the most important aspect of a real estate investment. Your management team, especially at the site level, is critical to your property’s success. Few investors/operators pay enough attention to this fact. Let me assure you, it’s very, very difficult to assemble the right team. I can hire 1,000 financial analysts more easily than one, excellent on-site property manager. It’s that hard.
How much of your own money are you putting in the deal?
Most sophisticated investors want to see the operator have money in the deal. It gives them comfort knowing that if the investment is not successful, the operator will share the pain.
At Lloyd Jones Capital, we always invest alongside our real estate investment partners, but, in fact, maintaining our good reputation and strong track record is what motivates us to succeed. With the transparency in the market today, an operator’s reputation is far more valuable than his money.
In summary, when choosing a real estate investment partner, ask these questions and remember: Real estate is local and hands-on. Your partner should be, too. Christopher Finlay is Chairman/CEO of Lloyd Jones Capital, a private-equity real estate operator that specializes in the multifamily and senior housing sectors. Headquartered in Miami, the firm acquires, improves, and operates multifamily real estate in growth markets throughout Texas, Florida, and the Southeast. Its affiliated management group is an Accredited Management Organization (AMO®) with a thirty-five-year history in multifamily real estate.
Deerwood Park apartments in Jacksonville
A Miami firm acquired a 15-year-old apartment complex in Jacksonville for $40.8 million, the Jacksonville Times-Union newspaper.
Lloyd Jones Capital, a Miami-based rental property investment firm, acquired the 282-unit Deerwood Park complex for about $145,000 per apartment.
A spokeswoman for Lloyd Jones Capital told the Times-Union that the firm plans to remodel the clubhouse at Deerwood Park and upgrade apartment interiors.
Lloyd Jones owns to other Jacksonville-area apartment complexes called The Meeting House at Collins Cove and Laurel Pointe.
In a press release, Lloyd Jones said its latest apartment-complex acquisition in the Jacksonville area is located in the Deerwood Office Park, which has 5.2 million square feet of office space and houses some of area’s largest employers.
Lloyd Jones also said in the release that its acquisition of the Deerwood Park apartment complex brought to nearly 5,000 the number of apartment units the firm owns. [Jacksonville Times-Union] — Mike Seemuth
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