Executive Feedback
In the current climate, do the returns you make on value-added properties justify buying these properties?
A: “There are no absolutes. In some markets, deals are priced so high that value-added deals (when all the costs are factored) do not make sense. However, there are other markets where we get paid for the additional risk.” —Greg Fowler, general partner, Fowler Property Acquisitions
A: “Absolutely! Value-added properties are in developed areas that rebound with new job growth fastest. They create a repositioning opportunity to a wider investor interest on reversion, avoid new and higher construction costs and fees, attract the cream of the existing market tenant pool, are able to retain tenants longer, and create a differentiation to old existing condos in amenities and unit upgrades.” —Dave Wedmore, managing partner, Carmel Partners
A: “There should always be tension between return objectives and market behavior. [Western National is] prepared to pay the exorbitant market prices for in-place activity at an apartment community, provided that we can confidently see that a layer of additional capital investments in tenant-paid amenities will result in an acceptable return over a medium to a long-term hold.” —Stephen Duffy, COO, Western National Realty Advisors