The firm is now upgrading the interiors and exteriors of approximately 12,000 units at 40 of its properties. Milestone offers three carefully designed upgrade packages, costing the firm anywhere from $1,700 to $3,600 per unit. The firm typically is able to raise rents by approximately $65 a unit by replacing drab cabinetry, flooring, kitchen appliances, and more. The property management team tirelessly searches for innovative interior finishes, such as faux wood flooring instead of carpeting, six-panel decorative doors, and closet organizational systems, all of which brighten up the apartments without draining a ton of money from the bottom line.
The average return on investment is 32 percent, well above the 15 percent to 20 percent norm, Lamberti says. “On the operating side, occupancies are strong in the markets that we are currently in,” he adds. “Rents are continuing to increase around our upgrade program.”
This value-add arena is a sweet spot in the broader housing market and a smart, safe place to be right now, says Kraus of Invesco. “They hedged themselves in a value investment strategy and really positioned their portfolio to take advantage of the volatility in the single-family residential sector,” Kraus says. “It’s a well capitalized portfolio that is not over-leveraged, and it’s a more durable portfolio than [many] others, which were highly leveraged and speculative.”
SHOW ME THE MONEY Despite volatility in the capital markets, Milestone’s team says investment dollars are still available to firms that can elicit confidence. Milestone’s structure, with services committed to property management, marketing, construction oversight, investor reporting, accounting, human resources, and information technology, does just that. And investors can easily count on the firm’s reporting and communication transparencies.
“The beauty of their platform is that Jeff and Rob can both really fall back on so much data, and it gives them a perspective and an understanding of trends that have begun to materialize before the general market is aware of them,” Kraus says. “They use that internalized business style to mine information that allows them to be very proactive on the decision-making and strategic side of the business.”
In turn, Milestone’s extensive amount of committed capital gives sellers confidence. “When we are in the markets looking at investment opportunities, there are fewer competitors who have the financial wherewithal that we have because there is a great degree of capital markets uncertainty,” says Landin, who adds that as a result of these market conditions, sellers focus less on price and more on the certainty of closure.
To keep the money flowing, though, sometimes you need more than a well structured operations team. Garrison says it’s the team’s personalities that allow Milestone to make and keep crucial relationships with both financial institutions and property sellers. “Goldberg has a great sense of humor, and I’ve rarely seen him not in a good mood,” Garrison says. “Even in the midst of a deal crisis, where something is going wrong, he has always got a positive outlook, and that is what helps him keep deals on track.”
Put the top execs in a room together, and you’ll see exactly what Garrison means. The friendly jokes start flying. “How do we split the work here?” Landin asks, rhetorically. “It’s very simple. Steve does everything; Jeff and I don’t do anything.” Goldberg quickly interjects, “But on odd and even days … so we can split the work.”
It seems a good sense of humor can go a long way toward achieving top-10 status.
LEADERSHIP LESSONS: JEFFREY GOLDBERG
- Age: 46
- First job: Working for our family business, making sour cream, cottage cheese, and yogurt
- Favorite quote: “What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others.”
- Favorite recently read books:Good Night Moon and Curious George
- Ideal leader: Mike Bloomberg. He leads by his compass and not pollsters.
- Favorite comedian: Buddy Hackett
- Greatest challenge as a leader: Creating a shared vision with meaning and significance
- Best advice someone gave you: Rather than pursue happiness, create it!
- Person you most admire: My big sister Lynny because no one is more giving and more loyal
- Hobbies: Skiing, exercising, traveling, and rediscovering games for 5 year olds