By Taylor Williams

Miami-based investment firm Lloyd Jones has acquired Seville at Clay Crossing, a 351-unit apartment community located in the western Houston suburb of Katy that was built in 2020. Units at the property feature granite countertops, private garages and individual washers and dryers. Amenities include a pool, package lockers and a dog park. The seller and sales price were not disclosed.

Lloyd Jones Acquires 351-Unit Multifamily Community in Metro Houston

By Taylor Williams

Miami-based investment firm Lloyd Jones has acquired Seville at Clay Crossing, a 351-unit apartment community located in the western Houston suburb of Katy that was built in 2020. Units at the property feature granite countertops, private garages and individual washers and dryers. Amenities include a pool, package lockers and a dog park. The seller and sales price were not disclosed.

Lloyd Jones Acquires 351-Unit Multifamily Community in Metro Houston

By Taylor Williams

Miami-based investment firm Lloyd Jones has acquired Seville at Clay Crossing, a 351-unit apartment community located in the western Houston suburb of Katy that was built in 2020. Units at the property feature granite countertops, private garages and individual washers and dryers. Amenities include a pool, package lockers and a dog park. The seller and sales price were not disclosed.

Lloyd Jones Acquires 351-Unit Multifamily Community in Metro Houston

ORLANDO, FL—Lloyd Jones, a multifamily investment firm based in Miami, has acquired Arium Grandewood, a 306-unit apartment community built in 2005. The community, which is located in the fast-growing South Orlando submarket, is the fourth property Lloyd Jones owns and operates in the area. Lloyd Jones plans to execute a comprehensive value-add business plan to upgrade the property’s interiors. Arium Grandewood, which will be rebranded as Grandewood Pointe, will be professionally managed by Lloyd Jones Multifamily Management.

Arium Grandewood is a garden-style apartment community with a mix of one- two-, and three-bedroom floor plans and an amenity package that includes a resort-style pool, BBQ pavilion, fitness center, volleyball court, and business center. The South Orlando apartment community is just south of the Beachline Expressway, and within minutes of two Fortune 500 companies (Lockheed Martin and Darden Restaurants), office and industrial parks, Lake Nona Medical District, and the 500-room Ritz-Carlton and 1,000-room JW Marriott.

“The acquisition of Arium Grandewood is part of our strategic investment plan focused on established Orlando properties that are centrally located and well-positioned for value-add opportunities,” said Ashley Socarras, EVP of Investments for Lloyd Jones.

Lloyd Jones’ plans for the property include $2.7 million in capital improvements that include a two-level interior renovation package program comprising 95 percent of the units. “We believe that there is an opportunity to substantially upgrade interiors to create best-in-class units,” explained Stuart Keller, SVP of Asset Management for Lloyd Jones. “The community’s convenient location, and our planned capital improvements will appeal to the growing number of young professionals moving to the area.”

“We are excited to acquire our fourth property in the dynamic Orlando market,” said Christopher Finlay, Chairman/CEO of Lloyd Jones. “We anticipate that the market will continue to benefit from in-migration and favorable employment drivers which will help support demand for a well-located, upgraded multifamily community.”

 

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, family offices, and its own principals. To learn more about Lloyd Jones, visit www.ljasl.wpengine.com.

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If we have learned anything from the COVID-19 pandemic, it is that uncertainty is the only truly certain thing.  For those looking to invest, 2020 has been a stark reminder of the importance of diversification – one of the best ways to protect your overall portfolio.

Historically, economic downturns have translated to increased investment activity in the real estate market. At present, demographic behavior both during and pre-pandemic points to multifamily properties as the go-to real estate investment for people looking to move toward more steadfast opportunities in uncertain times. Multifamily assets have proven resilient during downturns and provide steady income and asset appreciation.

Even before the world was turned on its side by a pandemic, homeownership levels were low compared to previous years.  The high costs of homeownership, the limited inventory of affordable single-family homes, and the millennial generation’s preference for rental housing were the main contributors to the trend, according to this 2020 North American Investment Forecast.

Millennials were already moving to the suburbs looking for more space and affordability as they matured, married, and had children, a migration pattern that accelerated as people moved away from densely populated cities to escape COVID-19.  Since many workers are telecommuting, they can look beyond the urban areas where their offices are located.

The rental delinquency fear proved wrong

Although there were some concerns that delinquent rent payments would increase due to the pandemic, thus far, they have remained steady, according to the National Multifamily Housing Council.

And, while rents in urban areas have plummeted since the start of the pandemic, rent prices in suburban areas have either remained stable or increased, according to research from the Apartment List, which analyzes both data collected by the Census Bureau as well as internal data from apartment listings.

Multifamily offers strong risk-adjusted returns during downturns

There is very little correlation between real estate and stock market volatility. As we saw at the beginning of the pandemic, the stock market can get spooked into a freefall.  Real estate prices, on the other hand, remained steady thus showing their value as a diversification vehicle.

The chart below shows the 20 worst quarters for 60% stock/40% bond portfolio returns between 1978 and 2012, compared to returns of commercial real estate open-end funds from those same quarters.

Source: NCREIF, Barclays Capital, Wilshire, J.P. Morgan Asset Management

In uncertain times such as these, thoughtful investors look to lower risks while still achieving their investment goals, and multifamily real estate investing is one of the surest means of accomplishing this strategy, because it offers steady long-term income with very little volatility.

The advantage multifamily has over single-family rentals is that there is a smaller impact when the occasional collection issue arises. Also, tenants living in carefully screened multifamily apartment complexes are highly motivated to keep paying their rent, making it a much more reliable source of income to investors.

In terms of the best performing markets, 70% of the U.S.’s fastest growing cities in the last four years are in the Sunbelt, where acquisition costs tend to be lower. Businesses and individuals are drawn to these areas due to tax advantages.  U.S. and multinational companies that have seen the supply chain disadvantages to having factories worldwide will look to move manufacturing to locations in the Southeast like Florida and Texas that offer tax incentives.

There is no better time than right now to redeploy some of your stock and bond market assets to multifamily real estate investments.  The continued impact of COVID-19 on our lives and the economy remains unknown, but carefully selected real-estate investments have the ability to add stability and a source of steady income to your portfolio even in uncertain times.

The long-term outlook for the U.S. multifamily market is strong, according to CBRE Economic Advisors’ recent forecast, with a predicted demand for an additional two million units over the next decade.[i] One of the key indicators driving this demand is the millennial generation. Based on data from the U.S. Census, millennials have surpassed baby boomers as the nation’s largest adult generation. There are now 72.1 million millennials, which is defined as anyone born between 1981 and 1996 (ages 24 to 39 in 2020). [ii]

According to results from a national survey conducted by Allegion, a global home security company, 72 percent of millennials live in apartment buildings, and 75 percent plan to stay six months or longer.[iii] With three-quarters of the millennial population living in apartments, multifamily property owners and managers who understand this cohort and how best to retain them as residents will be well-positioned for success.

 

Millennials prefer the suburbs

Demand Institute’s survey of more than 1,000 millennial households revealed that over a five-year period, they spent $600 billion on rent, more on a per-household basis than any other generation.[iv] In that same survey, millennials reported that when they do move to their next apartment, it’s because they’re looking for more space. And where they are finding that space is the suburbs, which runs counter to millennials’ reputation as the quintessential urban dweller.

Nearly half of the millennials surveyed wanted a suburban location for their next rental, with all the attendant benefits: more space and safer streets. Communities that can offer the convenience and walkability of urban living coupled with the larger units will thrive in the next decade. According to research by the Pew Research Center, more than half of millennials are not married, and those who are got married later in life. Women millennials are also less likely than previous generations to have given birth at this stage in their life. Three in ten millennials live with a spouse and child compared to 40 percent of GenXers (individuals born between 1965 and 1980) at a comparable age.[v] So while they are delaying marriage and families, millennials still plan to be married or have kids in the next five years.[vi] This subgroup of “maturing” millennials are often “auditioning” the suburbs before raising a family.  This cohort, in particular, expects amenity-rich communities but at more affordable rents.[vii]

 

Luxury apartment living

The National Multifamily Housing Council reports that in addition to the larger, more affordable space of a suburban development, millennials also want top notch-amenities. Millennials rank the following as the most desirable amenities: fitness centers, kitchen islands, a resident portal, outdoor recreation facilities, and community Wi-Fi.[viii] Beyond those amenities, there’s interest in security and concierge services, in-unit laundry, and conveniences such as dog parks, electric car charging stations, and recycling services. [ix]

Smart apartment features are high on their list as well. With 57 percent of millennials using delivery services, and 63 receiving one or two packages per week, upgraded package centers are a must for multifamily communities. [x] Automated package locker systems are gaining popularity because they help mitigate package clutter and increase security for resident delivery. Ideally, millennials want an automated locker system that’s centrally located, easy to retrieve and with anytime access. According to data from Package Concierge, 83 percent of residents would prefer 24/7 access to their lockers.[xi]

 

What does this mean for the multifamily investor?

The forecast demand for two million additional units over the next decade, creates a dynamic investment environment for the multifamily sector and new opportunities for investors, buyers, and developers. As the largest living generation, millennials know what they want, and the multifamily housing market is responding. Millennials are motivating multifamily operators to provide the amenities, technology, and service that they demand.

Retaining a property management firm with a keen understanding of marketing and leasing to the millennial generation is essential for investors and buyers who want to capitalize on this growing market. Lloyd Jones Multifamily Management, a division of Lloyd Jones LLC, has 5,500 multifamily units under management in key markets through Florida, Texas, and the Southeast. To learn more about our services, visit https://www.ljasl.wpengine.com/.

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[i]     https://www.cbre.com/investor-hub/two-million-demand-for-us-multifamily-to-rise-over-next-decade?article=fadaf913-6ca8-4aca-aa56-0de17a4ff025&feedid=bbc4df08-52a9-40f7-8c05-a316cc1cb8d7&

[ii]    https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/

[iii]   https://us.allegion.com/en/home/markets/multifamily/resources/millennials-in-multifamily.html#

[iv]   https://www.nielsen.com/wp-content/uploads/sites/3/2020/05/millennials-and-their-homes-final.pdf

[v]    https://www.pewsocialtrends.org/2020/05/27/as-millennials-near-40-theyre-approaching-family-life-differently-than-previous-generations/

[vi]   https://www.nielsen.com/wp-content/uploads/sites/3/2020/05/millennials-and-their-homes-final.pdf

[vii]  https://mosaiccons.wpengine.com/how-multifamily-investors-are-urbanizing-the-suburbs/

[viii] https://www.nmhc.org/news/boomer-vs-millennial-wants/

[ix]   https://mosaiccons.wpengine.com/how-millennials-are-influencing-the-multifamily-housing-market/

[x]    https://us.allegion.com/en/home/markets/multifamily/resources/millennials-in-multifamily.html#

[xi]   https://www.multifamilyexecutive.com/technology/integrating-package-lockers-in-2019-what-apartment-managers-need-to-know_o

For renters, the economic uncertainty of the pandemic has meant that homeownership plans have been put on hold. According to a recent study from Yardi’s RENTCafé, due to unforeseeable nature of current events, 43% of renters report that they plan to delay homeownership for five years or longer. The survey, which ran at the end of May 2020, asked 7,000 renters about their housing plans before and after the coronavirus hit. Financial worry is cited as the main reason why 21% of the renters surveyed plan to postpone buying a home for at least five years, while nearly one-quarter of renters said they would never be able to purchase a home.

As renters look forward, they are choosing the housing options that gives them the most financial stability until they have the confidence to undertake bigger financial transactions. Homeownership comes with additional—and often unpredictable expenses—including interest, property taxes, insurance and maintenance. Apartment living, with its consistent monthly rent and one-time deposit, is more appealing to renters than home buying right now. And, in more than half (59%) of housing markets nationwide — 442 of 755 U.S. counties — renting a three-bedroom property is now more affordable than buying a median-priced home.

“We’re seeing higher renewal rates across our portfolio as tenants remained in their apartments during the lockdown,” said Chris Finlay, founder and chairman of Lloyd Jones, LLC. “Those properties that were well-positioned before the pandemic will continue to perform well, with above-average income growth and property price appreciation.”

Across demographics, while younger generations like millennials are more likely to want to own a home—even if it’s five years or more down the road—half of baby boomers said they wouldn’t purchase a home again. The less costly, more convenient apartment lifestyle may play a role. With renter households over 60 increasing considerably in the past decade, boomers seem to be getting more and more comfortable with renting.

“Tenants who move to buy a home is one of the main reason for vacancies,” said Finlay. “Considering the current market conditions, renting appears to remain the lifestyle of choice for many, including a growing market of seniors. There continues to be a tremendous demand for affordable, highly amenitized rental communities for seniors to age in place, and we believe is this an excellent investment opportunity that offers lower risks and excellent returns.”

Chris Finlay, Founder, Chairman of Lloyd Jones, LLC, and Tod Petty, Executive Vice President of Lloyd Jones Senior Living, recently presented a webinar to members of FLAIA, an open access platform of alternative investments for institutions, wealth advisors, family offices, RIAs, and accredited investors.

Finlay, who has led the firm through four decades of economic cycles, and Petty, a 30-year veteran of the senior housing industry, offered their insights on the anticipated demographic changes in senior housing post COVID-19, and what opportunities lie ahead for investors.

In an overview of the current senior housing demographics, Finlay said, “We’re at the beginning of a ‘senior tsunami’,” as 10,000 people turn 65 every day in the U.S., and the 75+ population will double in the next two decades.” Yet despite the changing demographic landscape, “We have a massive shortage of appropriate housing for seniors to successfully age in place.”

Post COVID-19, seniors will feel the financial impact in myriad ways, according to Tod Petty. “Most of our older population will have reduced liquidity, and nearly half of consumers over 55 don’t have a retirement plan.” As a result, the high-rent, highly amenitized housing communities that dominate the senior housing landscape will continue to be out of reach for all but seniors in the top 10 percent income bracket.

With the demographic shift, and the growing demand for senior housing that includes health and wellness services, Lloyd Jones LLC sees the greatest opportunity for its investors in the middle- market senior housing sector. “Up until now, the middle market had a high barrier of entry due to the high construction costs of new builds,” said Petty. “But, the acquisition of distressed assets in highly desirable locations now presents new opportunities.”

In particular, the acquisition of distressed hotels and assets disposed of by national REIT organizations are the most attractive opportunities. According to the American Hotel & Lodging Association (AHLA), 8,000 hotels could close by September, and these acquisitions are trading at 75% plus below replacement cost. “By repurposing distressed hotels into middle-market senior living communities, the rents will be $500-$1,000 less than comparable new builds in the same market,” said Finlay. “These acquisitions offer lower risk, excellent returns and affordability.”

There is also a large inventory of distressed senior housing assets—typically assisted living or memory care facilities older than 20 years—that investors can acquire below replacement value. “REITs’ disposal of portfolio assets is attractive in a post-COVID world,” said Petty. “We’re able to develop a ‘new’ housing venue with lower than market rent, that will provide access to the 40 percent of seniors who aren’t able to pay the current rate offered by the resort-style models.”

“Lloyd Jones is poised to come out of the post COVID-19 economy very strong, with opportunities to grow even stronger,” said Finlay. “Our Aviva-branded portfolio will create new communities for active adults needing affordable, highly amenitized, life transitioning options to successfully age in place. For investors, Aviva active adult communities will have space for health and wellness programs and other amenities difficult to replicate in the current offerings in the senior housing space.”

MIAMI – Lloyd Jones, a real estate investment firm based in Miami, has recently acquired a 292-unit apartment community, Avisa Lakes Apartments. Conveniently located in East Orlando, Avisa Lakes is the third property Lloyd Jones owns and operates in the area.
Built in the mid-1980s, the property features an all-encompassing amenity package including a newly renovated fitness center, resident game room, outdoor summer kitchen, sports court, and two pet parks. Additionally, it is walking distance to AdventHealth East Orlando, a 295-bed facility that was ranked the number one hospital in Florida in 2019.

“The explosive economic growth in the area indicates a strong demand for multifamily properties,” explains Christopher Finlay, CEO/Chairman of Lloyd Jones. “We are thrilled to further expand the firm’s portfolio to support nearby major employment centers including Downtown Orlando, Winter Park, the airport, and various theme parks,” he continues. According to the U.S. Census Bureau, Orlando continues to be one of the fastest-growing cities in the country, welcoming over 60,000 new residents in the past two years.

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.
For more information about Lloyd Jones, visit www.LloydJonesLLC.com