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Disruption in Senior Housing

The senior housing industry is in the midst of a big disruption.  Occupancy in assisted living hit a record low in the first quarter of 2018 – and continues to fall. There could be numerous reasons for this, including a bad flu season, but I think there’s something bigger going on.

At a recent conference I attended, one of the speakers addressed this subject.   He suggested that two major influencers are driving the disruption.

  1. Labor shortage. A labor shortage is anticipated for high-intensity facilities such as assisted living, memory care, skilled nursing facilities. The average wage for a CNA (certified nursing assistant) is currently $11 per hour.  Soon, the speaker projects,  it will be $15. This will cause an 8% drop in NOI which translates to a 27% decline in asset value!  Or, more likely, rents will rise, and such facilities will become even less affordable.
  2. Technology. And this is where it gets cool! Technology is focusing on aging-in-place, allowing seniors to avoid institutional facilities longer. The speaker shared that aging-in-place technology will become a $7 trillion economy. Venture capital is investing 10:1 on technology versus operational improvements.

So how does this affect you and me?

It means we can age in place almost anywhere.  The secret is in choosing the place. If we live long enough, each of us will need assistance at some point, (although most of us refuse to admit it).  But technology will allow us to live wherever we choose with on-demand assistance as necessary.

Even today, technology is available to get us what we need, when we need it: a voice activated communications system connected with family or emergency-response team;  a sensor to monitor activities and detect irregularities;  a wrist band connected to an AI platform that alerts the doctor if anything is out of kilter;  apps to remind us to take our pills; apps to call a ride; apps to order meals; apps to request assistance with dressing or bathing; apps for help hanging pictures or rearranging furniture.

And that’s today.  Just wait until that $7 trillion investment is realized!

I project the future of senior housing will be focused on the independent-living model with limited services – which will be offered a-la-carte.  Technology will replace the need for personal assistance. We will not need (nor can most of us afford) the full staff that comes with assisted-living facilities. With this exciting new technology, we will remain independent much longer as we age in place.

But aging-in-place doesn’t mean staying in your four-bedroom colonial with stairs, narrow doorways, and slippery bathtubs.  Forward-thinking baby boomers are eschewing their large family homesteads that require constant up-keep and high taxes for luxury apartment living.  Here, they can age in place, but in a place with more amenities, more fitness activities, more social involvement, and more companionship.  And that socialization is very important.  Studies show that social isolation increases the risk of death by 30%;  some show it as high as 60%!

Assisted living and memory care facilities, of course, will still be needed, but they will have a much higher cost and be even less affordable to the average senior.  That said, senior housing still ranks as the most attractive property class for investment according to a recent survey of commercial real estate owners, managers, developers, and lenders.

So, we will age, in place, independently, and wherever we want. And I suspect most of us will choose an independent-living community surrounded by like-minded, active, involved friends – and cool technology!


Christopher Finlay  is Chairman/CEO of Lloyd Jones, a real estate investment firm that specializes in the multifamily and senior housing sectors. Based in Miami, the firm acquires, develops, improves, and operates multifamily and senior housing communities in growth markets throughout Texas, Florida, and the Southeast.  The firm’s investment partners include institutions, family offices, and individual accredited investors.

 

 

 

 

Inside the Deal: Lloyd Jones Capital’s Expanding Workforce Housing Portfolio

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

 

Click here for the full article

Lloyd Jones Adds Development Division

Multifamily investment firm names development veteran to head division

Christopher Finlay, chairman and CEO of Lloyd Jones, has announced the appointment of Jamie Telchin as executive vice president of development and construction management. After a ten-year hiatus, Finlay is once again entering the multifamily development field. A prominent developer during the 1990s and through 2008, Finlay has spent the past ten years focused on investing in existing product through his investment company, Lloyd Jones. “It’s time,” he says, “to start ground-up.” He explains, “Active adult housing is a major focus for us, and there is little existing product to renovate to our standards. So, we are going to start from scratch and create communities that meet our specific design and quality criteria.”

To that end, Finlay has named Jamie Telchin executive vice president of development and construction management for Lloyd Jones.

Telchin is a twenty-year veteran of the real estate development industry. He has led development of over 1,500,000 square feet of vertical construction across 12 major projects and $800 million in total development costs.

He began his career developing and managing medical office buildings throughout Florida.   He then spent the next eleven years serving as president of development for Luxury Resorts & Hotels, an affiliate of The Blackstone Group, where he led the renovation of the Boca Beach Club and the ground-up development of the luxury condominium, One Thousand Ocean, along with the entitlement of numerous projects across the portfolio.

Most recently he led the development of The Bristol in West Palm Beach, an ultra-luxury condominium.  Both One Thousand Ocean and The Bristol broke sales pricing records in Palm Beach County.

Says Finlay, “We are thrilled to have someone of Jamie’s stature and knowledge to run our development division. Jamie has managed every phase of the development process: entitlements, design, construction, marketing, sales, leasing, and asset management. And he has an impressive record of landmark projects. He is a great addition to the Lloyd Jones team.”

At Lloyd Jones, Telchin directs all entities/departments involved in the development and construction of ground-up projects.  In addition, he oversees the construction management team responsible for the value-add campaigns on existing assets.

Telchin holds an MBA from the University of Colorado at Denver and is active in the Urban Land Institute where he serves as chair of the Multifamily Development Council for Florida and the Caribbean.

 

About Lloyd Jones

Lloyd Jones is a real estate investment firm that specializes in the multifamily and senior housing sectors. Building on thirty-eight years in the real estate industry, the firm acquires, develops, improves, and operates multifamily real estate in growth markets throughout Florida, Texas, and the Southeast. Its investors include institutional partners, private investors, and its own principals. Based in Miami, the firm maintains offices and staff throughout its market areas.

Lloyd Jones Names COO of Property Management

MIAMI — Lloyd Jones has named Steven Druth its chief operating officer of property management. Druth brings over 30 years of real estate experience to the Miami- based, real estate private equity firm.

As a commercial brokerage and management specialist, Druth operated his own Boston based firm for ten years before moving to Manhattan’s largest independent real estate agency.

“I am very excited about my expanded role at Lloyd Jones and look forward to further increasing efficiency and resident satisfaction at all of our properties,” said Druth.

Throughout his career, operational efficiency and strategic leadership have been the trademark skills that Druth will now add to the Lloyd Jones executive team.

“I’ve known Steve for many years and his people management skills are exceptional,” said Lloyd Jones chairman, Chris Finlay. “With his extensive experience in our industry, I am very confident that he will take our operating platform to a new level.”

 

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, improves, and operates 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.

Choosing a Real Estate Investment Partner? Six Questions to Ask

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:

  1. 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.

  1. 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.

  1. How long have you been in business? In the specific asset class? In the specific market?

Experience is priceless.

  1. 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?

  1. 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.

  1. 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.

How to Make Inflation Your Friend

Central banks like the Federal Reserve battle inflation – the general rise in prices—by boosting interest rates. In a benign environment, the rate of inflation is low, but as the economy heats up, inflation increases and robs the local currency of some of its buying power. By lifting interest rates in small increments, the Fed moderates the economy by increasing the cost of capital, that is, how much interest you have to pay to finance a project with borrowed money. Some potential projects will not go forward because they can’t generate the required rate of return necessary for investment due to the higher cost of capital. After all, the more of the project’s revenues that must be spent on interest and higher costs leaves less to compensate investors for committing their money to the investment.

As inflation and interest rates rise, what happens to multifamily real estate investment? In general, real estate values rise along with, and act as a hedge against, inflation. But the devil is in the details, and it takes the right combination of management, financing and location for a particular real-estate investment to benefit from inflation.

Make Inflation Your Friend 

Inflation and its accompanying interest rate increases affect a multifamily real estate investment in several ways. Let’s break it down.

This is how stock markets sometimes operate, with seemingly endless trends suddenly interrupted and/or reversed. A long bull market tends to attract ‘’weak” investors who are not accustomed to, and can’t stomach, a sudden sell-off. Weak investors are the first to sell their stocks when prices begin declining, which can have a snowball effect that causes volatility to skyrocket.

Net Operating Income (NOI) 

A property’s NOI is its revenues from rents and fees minus the costs of operating the property. For a property to benefit from inflation, its income must grow faster than its expenses. In the context of a multifamily property, this means that the rent increases must at least keep pace with the inflation rate, while costs require tight control to keep their rise below the inflation rate.

A good investment property in an inflationary environment will support sufficient rent increases with each lease renewal, which in turn depends upon the value perception of tenants, lease terms, and the availability of competing rentals. Improved property management can increase occupancy rates and rents by addressing structural and operational problems. Operating expenses can be controlled in numerous ways by better, hands-on property management, including switching to lower cost vendors and suppliers, more cost-efficient and effective marketing, and repairing costly problems. All of these are features of a value-add strategy, the hallmark of Lloyd Jones investment properties. The ideal property must pass our proprietary screening protocols that evaluate a property’s suitability for value-add. In other words, we need to make sure the value we add through rehabbing and better management will increase NOI. At Lloyd Jones, very few properties make it through our tough screening.

Net Profits

NOI does not include the cost to finance a property with debt – that is, the interest rate on the underlying mortgage. Net profits, on the other hand, do indeed depend on ensuring that financing is structured to provide maximum protection from the rising interest rates that accompany inflation. Here are several of the strategies we use:

1. Sensitivity analysis: Our screening protocol projects how a property’s value will fare if interest rates rise when we refinance the property (to unlock and extract equity) at the end of the value-add period, typically two to three years after purchase. We model the sensitivity of the investment’s return to a wide spectrum of interest rates so that we can quantify the risk involved in refinancing during an unfavorable borrowing environment.

2. Control leverage: Debt is indispensable to most real estate projects, but too much debt, or leverage, can swamp an investment with unsustainable interest expenses. We typically structure multifamily investments with a 70 percent cap on loan-to-value. In other words, our financing requires 30 percent equity contribution from investors to limit exposure to rising interest rates. We also observe conservative borrowing standards – we take only non-recourse loans (the property alone serves as collateral, and the lender cannot attach other investor assets), and never cross-collateralize our properties (meaning the default of one property doesn’t affect the financing of any other property).

3. Build a cash cushion: By specializing in value-add properties, we have the ability to build a cash cushion that wouldn’t be available from a stabilized property. This cushion can help protect the investment even if high interest rates negatively affect property values and cash flows.

4. Flexible debt: We often use a mix of fixed and floating-rate debt with staggered maturities. This helps keep interest costs low during the value-add period and helps us avoid overly-large refinancing tranches. We also like to structure our loans for terms of at least five years, which gives us a two-to-three-year cushion following the value-add period to refinance. This can come in handy if interest rates spike two to three years after property acquisition.

5. Reap what ye sow: We constantly evaluate whether it would benefit investors more to sell the property rather than hold it. This reduces our investment exposure during periods of rising interest rates. At the same time, we carefully manage our own cash position and debt facilities to weather rough market conditions without having to succumb to panic selling due to a cash crunch.

Property Value

The total return from a real estate investment is composed of the net cash flows and capital appreciation. The value of a properly selected and managed multifamily property should appreciate with inflation. Two factors are at play:

1. Higher rents: The value of a rental property is fundamentally tied to the rents it generates. Periods of high inflation produce rising wages and profits, conditioning tenants to pay higher rents for a given space and thereby boosting property values. Consumers with a greater sense of wealth will be motivated to move to nicer apartments, creating higher demand and higher rents.

2. Restricted construction: As inflation increases, construction costs rise (due to higher material and labor costs) as does the amount of interest charged for construction loans. These factors tend to restrict new construction, helping to limit the supply of competing housing.

Increased demand and decreased supply equates to higher property values and the prospect of greater capital appreciation during times of high inflation.

In summary, multifamily real estate investments can perform well during inflationary times if the properties have the right characteristics and are managed with a strong, knowledgeable hand. We invite you to speak with us about our past performance during all types of economic environments, and the opportunities we see right now in the multifamily and senior community market segment.

About Christopher Finlay
Christopher Finlay is chairman/CEO of Lloyd Jones Capital, a private-equity real estate firm that specializes in the multifamily sector. For the past thirty-seven years, and through every economic cycle, he has owned and operated successful multifamily businesses. Predecessor companies include commercial brokerage, appraisal, property and asset management, construction, and development.

Headquartered in Miami, Lloyd Jones Capital acquires, improves, and operates multifamily real estate in growth markets throughout Texas, Florida, and the Southeast on behalf of institutional partners, private investors, and its own principals.

How Does Stock Market Volatility Affect Multifamily Real Estate Investment?

The short answer is that stock market volatility increases demand for multifamily real estate investment, because real estate is much less volatile than stocks. For those who don’t want to invest all their money in the roller coaster stock market, real estate is, over the long run, a relatively tranquil alternative. Let’s dig deeper into the concept of volatility to explore the differences between the stock and real estate asset classes.

Something’s Happening Here

Volatility is, according to Investopedia, “the amount of uncertainty or risk about the size of changes in a security’s value.” The higher the volatility, the greater the chance that a stock’s or index’s value will suddenly and dramatically change.

A volatility spike in February 2018 awakened many stock investors to the fact the fact that stocks also go down. It’s been a long bull market, and we haven’t had a meaningful correction in more than two years. Suddenly, the Dow Jones Industrial Average dropped more than 1,000 points twice in February, a clear sign of heightened volatility, if not outright panic.

Now, take a look at the following chart. It’s a one-year chart of the Chicago Board of Exchange’s VIX Index, which measures the volatility of stock futures and options. The spike in February is all the more startling when seen against the flat backdrop over the last year.

This is how stock markets sometimes operate, with seemingly endless trends suddenly interrupted and/or reversed. A long bull market tends to attract ‘’weak” investors who are not accustomed to, and can’t stomach, a sudden sell-off. Weak investors are the first to sell their stocks when prices begin declining, which can have a snowball effect that causes volatility to skyrocket.

The Volatility Opportunity

Sudden bouts of volatility create an opportunity for you to think about your own tolerance for risk. Perhaps you invest in the stock market to reap current dividend income, only to realize in horror that a sudden decline in stock value can wipe out years of dividend payments. By the way, the so-called safer bond market is also vulnerable to abrupt bouts of volatility, creating losses that overwhelm interest income. Which brings us to our point: Thoughtful investors look to lower their risks as they seek to achieve 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. Let’s see why:

  1. Diversification: Real estate market returns are not closely correlated to those from stocks, creating an excellent vehicle for diversification. As stocks bounce higher and lower, real estate follows its own course that can help steady the value of your total portfolio. Many financial advisors recommend prudent investors allocate at least 25 percent of their portfolios to alternate investments such as real estate.
  2. Rents vs dividends: During bear markets, companies that find themselves in financial distress often cut their dividends to conserve cash, which takes only a vote by the board of directors to accomplish. Tenants, especially ones living in carefully screened multifamily apartment complexes and senior communities, are highly motivated to keep paying their rent, making it a much more reliable source of income to investors. The multifamily advantage over single-family rentals is due to economies of scale: More separate rental cash flows per square foot. That translates into lower overall management costs and a smaller impact when the occasional collection issue arises.
  3. Alignment of interests: It’s upsetting enough when your stock suddenly loses a good share of its value in a volatile market. Adding insult is the fact that the stock broker or analyst who recommended the stock need not own a single share. Brokers make their living from commissions, which gives them a financial incentive to favor volatility and the churn it creates. By the way, fund managers don’t have to invest in their own funds either. We do things differently at Lloyd Jones, in that we take an equity stake in every one of our properties. In other words, we align our interests with those of our investors.

The Value of Specialization

Many stock investors seek to lower their risks through the purchase of mutual funds and exchange-traded funds. True, this will lower non-systemic risk, but at a cost – you have no control over the choices made by the portfolio manager. If you seek out the best fund managers, you should keep in mind that they will probably charge higher fees and in the long run will likely underperform the market – just ask Warren Buffet.

Purchasing an index fund doesn’t solve the control problem. They are cheap, but by definition give you average returns and average risk, meaning you don’t benefit from expert specialized knowledge since these funds run on auto-pilot.

Lloyd Jones believes you can do better than average when you apply specialized expertise to given segments of a market. We do this through first through geographical specialization, by investing in business-friendly, low-tax states in the Southeast, especially Florida and Texas. Senior and multifamily housing investments are favored in this region due to warm weather, low costs and low taxes.

Geography is a good start, but it takes a lot more to identify real-estate investments with solid cash flow prospects and low risk. We select properties with good cash flows that would benefit from more capitalization or better management. Only one percent of properties make it through our screening process. These are the ones we acquire and operate, and in doing so add value for all investors, including ourselves.

Specialization pays off in this context without sacrificing the benefits of diversification. For one thing, each property stands alone, without cross-collateralization, to isolate any problems from affecting other properties. Our funds provide diversification by spreading risk across eight to ten properties in at least four different markets, and specialization by choosing our markets, property types and properties carefully – a small subset of the total market.

There is no better time than right now to redeploy some of your stock and bond market assets to multifamily real estate investments. Recent volatility spikes are a warning of rough seas ahead, but carefully selected real-estate investments have the ability to steady your portfolio in the most turbulent times.

Post Script:  Based on the front page of the Wall Street Journal of 2/26/18, margin bets will continue to fuel market volatility.

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About Christopher Finlay
Christopher Finlay is chairman/CEO of Lloyd Jones Capital, a private-equity real estate firm that specializes in the multifamily sector. For the past thirty-seven years, and through every economic cycle, he has owned and operated successful multifamily businesses. Predecessor companies include commercial brokerage, appraisal, property and asset management, construction, and development.

Headquartered in Miami, Lloyd Jones Capital acquires, improves, and operates multifamily real estate in growth markets throughout Texas, Florida, and the Southeast on behalf of institutional partners, private investors, and its own principals.

Lloyd Jones Capital Announces Vice President of Acquisitions

Private Equity Real Estate Firm Expands Its Texas Presence

MIAMI – Lloyd Jones Capital, a Miami-based multifamily investment firm, has announced the appointment of Neil Bertrand, vice president of acquisitions. Neil will lead the company’s acquisition effort for the Texas market.

“The addition of Neil to our team is instrumental as we continue to seek acquisition opportunities in Texas, one of our key strategic markets,” commented Chris Finlay, Lloyd Jones Capital, chairman and CEO.

Neil Bertrand’s 20-year real estate career includes positions with four of National Multifamily Housing Council’s Top 50 Firms. Throughout the course of his career, Neil has been responsible for the oversight of conventional, tax credit, senior housing, and student housing portfolios. Neil has led projects including acquisition analysis, due diligence, renovation, new construction, and lease-up of assets in Texas, Arizona, New Mexico, Oklahoma, Louisiana, Arkansas, Missouri and North Carolina.

“I am excited to join the Lloyd Jones Capital team. With a successful history of more than 35 years in real estate, the company continues to produce positive results for its investors. Leading the state’s acquisition efforts should yield long-term results as Texas continues to lead the nation in employment growth,” remarked Neil Bertrand.

Neil attended Lubbock Christian University in Lubbock, Texas, and holds the Certified Apartment Portfolio Supervisor (CAPS®) designation from the National Apartment Association. He is also an Accredited Residential Manager (ARM®) and a Certified Property Manager (CPM®) Candidate with the Institute of Real Estate Management.

About Lloyd Jones Capital

Lloyd Jones Capital is a private-equity real estate firm that specializes in the multifamily sector. With 37 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 local expertise in each of its markets.

Headquartered in Miami, the firm has offices throughout Texas, Florida, and the Southeast, plus New York City.  The firm’s investors include institutional partners, private investors, and its own principals. For more information visit: lloydjonesllc.com.

Lloyd Jones Capital Acquires Jacksonville Apartment Community

MIAMI –  Lloyd Jones Capital, a Miami-based multifamily investment firm, has acquired the Deerwood Park apartment community in Jacksonville, Florida. The property is located in the Deerwood Office Park on Touchton Road, home to 5.2 million square feet of office space and the largest employers in the MSA. Residents of Deerwood Park enjoy an address that offers a live, work and play lifestyle in Southside, one of Jacksonville’s most desirable neighborhoods.

The 282-unit acquisition brings the Lloyd Jones Capital multifamily portfolio to nearly 5,000 units spread across Texas, Florida, and the Southeast.

“We are elated with the acquisition of Deerwood Park. Jacksonville is a key market for us and Deerwood Park is a value-add asset with tremendous upside opportunity,” commented Chris Finlay, chairman and CEO of Lloyd Jones Capital. “Lloyd Jones Capital plans to enhance the property with a value-add program that we anticipate will yield rent and occupancy growth for our investors.”

Built in 2002, the gated property offers one-, two-, and three-bedroom apartments with highly sought-after amenities including attached garages, a resort luxury style pool, outdoor kitchen with gas grills and a dog park.

Deerwood Park will be managed by Finlay Management, the operations group at Lloyd Jones Capital.  Finlay Management is an Accredited Management Organization (AMO®) as designated by the Institute of Real Estate Management (IREM®) and has a 37-year history in the industry.

About Lloyd Jones Capital

Lloyd Jones Capital is a private-equity real estate firm that specializes in the multifamily sector. With 37 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 local expertise in each of its markets.

Headquartered in Miami, the firm has offices throughout Texas, Florida, and the Southeast, plus New York City.  The firm’s investors include institutional partners, private investors, and its own principals. For more information visit: lloydjonesllc.com.

 

Lloyd Jones Capital Acquires 242-Unit Tallahassee Apartment Community

MIAMI –  Lloyd Jones Capital, a Miami-based multifamily investment firm, has purchased the Jackson Square apartment community in Tallahassee, the Florida state capital. The property is located at 1767 Hermitage Boulevard which connects Thomasville Road and Capital Circle, NE, just south of I-10. The 242-unit acquisition brings the Lloyd Jones Capital portfolio to 4,500 units spread across Texas, Florida, and the Southeast.

Says Chris Finlay, chairman/CEO of Lloyd Jones Capital, “This is a well-maintained property, with every amenity, in one of the best neighborhoods of Tallahassee.  We expect it to provide steady income and capital appreciation for our investors.”

Built in 1996, the property offers one-, two-, and 3-bedroom apartments; garages; and a modern clubhouse that includes an interior racquetball court.  Lloyd Jones Capital will continue a value-add program initiated by the previous owner. Finlay adds, “Our local teams scour Texas, Florida, and the Southeast for good investment properties; they are hard to find. Jackson Square is one of the best.”

According to Finlay, property management will be handled by Finlay Management, the operations group at Lloyd Jones Capital.  Finlay Management is an Accredited Management Organization (AMO®) as designated by the Institute of Real Estate Management (IREM®) and has a 37-year history in the industry.

About Lloyd Jones Capital

Lloyd Jones Capital is a private-equity real estate firm that specializes in the multifamily sector. With 37 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 local expertise in each of its markets.

Headquartered in Miami, the firm has offices throughout Texas, Florida, and the Southeast, plus New York City.  The firm’s investors include institutional partners, private investors, and its own principals.

For more information visit:  lloydjonesllc.com.