American Landmark Is Still Planning On Going On Its $2B Apartment-Buying Spree
Tampa-based American Landmark Apartments bought $1.5B worth of multifamily properties last year. In January, CEO Joe Lubeck announced that the company wants to pick up an additional $2B in assets this year. That plan is still on.
“We’ve already closed $500M or have it under contract and are well on our way to our goal for the year," Lubeck told Bisnow.
Given the economic disruption from the coronavirus, though, “We’re going to take a brief pause, perhaps of a few weeks," he added.
The National Multifamily Housing Council has recommended that apartment firms halt evictions for 90 days, avoid rent increases for 90 days, and create payment plans and waive late fees for the estimated 40 million apartment renters in the U.S.
NMHC is also asking for relief for landlords, asserting that most rental properties are owned by individuals and small businesses, the organization is calling on Congress to provide disaster housing assistance for renters and extend mortgage forbearance to rental property owners. The Senate is expected to vote Wednesday afternoon on a $2 trillion stimulus package that includes some of those provisions.
Some of the country's biggest apartment owners may be better positioned to weather the storm. Tennessee-based MAA owns 100,000 units — more households than, for instance, the city of Boise, Idaho, which has about 90,000 households. Chicago-based Equity Residential owns over 79,000.
With backing from Israel-based Electra America, Lubeck amassed a portfoilo of 35,000 units under the Landmark Apartment Trust, then sold it to Starwood Capital for $1.9B in 2015. Lubeck then started over, growing his new American Landmark to 32,000 units. NMHC ranked the company the 44th-largest multifamily owner in the U.S. last year.
Privately owned American Landmark deploys cash as needed and didn't really have capital tied up in the markets, Lubeck said. He said the company had not laid off any of its 725 employees and “will honor every deal under contract or letter of intent.”
Lubeck said he has been fielding increased calls from institutional investors who believe that multifamily is a very good space to be in defensively — at least in the South, where American Landmark concentrates, because it doesn’t have the same high barriers to entry or calls for rent control as the Northeast or West Coast.
He said the coming months would likely present a buying opportunity and he will be looking to lock in favorable mortgage rates.
“People will always need a clean, affordable place to live,” he said.
Should tenants face cash flow problems, American Landmark would work with them on payment plans, Lubeck said.
“Our policy is, of course, we expect everyone to pay the rent,” Lubeck said. "But we have offered an incentive to continue to pay rent timely and we will work with residents with good payment histories who have experienced short-term layoffs.”
He pointed out that large employers in American Landmark’s markets, such as Disney and Universal Studios in Orlando, announced they will continue to pay employees while theme parks are shuttered.
Miami-based Starwood Capital, the nation's fourth-largest apartment owner, didn't respond to a request for comment, but speaking on CNBC yesterday, CEO Barry Sternlicht compared the coronavirus to the flu and said that the government should get funding to people who need it and kick-start the real estate industry because people's pensions are dependent upon it. He has also said he sees a coming buying opportunity.
