Buying and Selling Once SSR acquires a core property, it usually holds it for five to seven years. Lately, however, the firm has been more of a seller than a buyer. The multifamily division bought about 40 percent fewer multifamily properties over the past couple of years because of the higher prices apartments are fetching around the country, according to Ron Zuzack, executive managing director of SSR. The decision to buy and sell is usually made by the portfolio manager, though there is an investment committee that approves the final decision to buy a property. While the company has no hard and fast rules on when to sell, it will put a property on the market when it has met its investment objectives.
The company’s cautious approach toward buying and its ability to rid itself of questionable properties is one thing that endears it to institutional investors. “We like the fact that they sell properties when they need to and that they are cautious buyers,” says Jim Hurley, CalSTRS’ residential portfolio manager.
The company’s acquisitions team is responsible for finding properties for all of SSR’s business units. Sometimes the team will discover an apartment complex as it is looking at an office or industrial park for one of the other business units, Allen says. Other multifamily firms, which are just seeking multifamily properties, may not have the same number of people looking for real estate acquisitions. Still, it is not easy to find properties in today’s climate. “We have to turn over a lot of rocks to find the nuggets that we get today,” Allen says. “We are focusing a lot of attention on the acquisitions effort.”
The company puts so much focus on acquisitions that even Allen gets into the act. “Even though I am not a member of the acquisitions staff, I am constantly looking for new product because I have been in the industry a long time and have a lot of contacts,” he says.
The Metric System When deciding to buy a property, SSR has one other asset to help it make the decision–Metric, its property management company, which is solely devoted to the Multi-Housing unit. To know what is going on in a given market as far as rents, concessions, operating costs, and taxes, SSR turns to Metric for the answers.
Metric, which only manages SSR’s multifamily properties, also gives the firm efficiencies in the various markets it is in around the company, such as the Northeast and California. It also helps open up the communication pipeline at the management level. For instance, if there is a problem at one property, the portfolio manager can simply walk down the hall and get the problem addressed. Allen says this serves the company much better than going to a third-party manager, which would be off site. “The communication flow is a lot more direct and a lot easier,” he says. “You get the attention of senior people right off the bat.”
Metric helps complement the portfolio management group and, to a lesser degree, to provide the best returns for its institutional investors. Allen has used his resources at SSR to guide an organization that not only has the respect of its investors, but also of its colleagues. His friends and colleagues in the industry will attest to this. “We have found them to be very intelligent, straightforward, and easy to deal with,” Jacobson says. “We would do business with them every time.”
With this kind of respect, it is easy to see what Allen’s ultimate goal is for all three parts of the Multi-Housing unit– “just to maintain and enhance our reputation,” he says.
