Semon, spent the last 10 years at Con Am Investment Group, most recently as vice president, supervising acquisitions east of the Rockies. The San Diego-based company has some 50,000 rental units in its portfolio. By contrast, Price owns and manages fewer than 5,000 units. "Price has bought 'onesies' and 'twosies' over a period of time," Semon says. "It hasn't been a portfolio buyer. It has a strong presence in the Dallas area but is not much known outside of it. We're going to change that."
Semon says negotiations already have begun for a possible $70-million buy, but he can't give any details, other than to note the property is not under contract. "If that goes forward, in two to three months we'll be half way to meeting our first year's goal," he points out. "But no goal is easy to hit right now. There's still hot money in a lot of markets. Unless you're willing to over pay, you can't count on getting what you want."
What Price wants are class A- and B properties with 200 units or more, priced in the $15-million to $25-million range in major metro markets. "We're not an institutional, core-type buyer," Semon emphasizes. At the same time, he adds, the company will be moving up from its past buying habit. "We can do smaller projects here in Dallas, but outside we need to scale up to larger properties at least till we have a sizable presence in an individual market. Then we can go smaller again," he says.
The exec tells GlobeSt.com that Price is going against the grain of current non-institutional investment by focusing on long-term holds rather than value-add plays. The goal is not to make quick improvements and raise rents in order to sell. "We have patient money. Our primary focus has been stable ownership. We can come in and operate as is," he explains. "We don't have to come in and reposition and be out."
The strategy has apparently paid off. According to Semon, the company has built sufficient capital to make its move largely with its own equity. "The owners have been sitting on their hands and their cash for the last couple years. They've got a sizable chunk to play with," he says. He adds, however, that Price will partner with institutional money for the largest acquisitions and occasionally will bring in smaller investors who have been working with the company for the past 20 years.
In general, Semon sums up that the expansion will be cautious and focused. "It's not an absolute, where we have to place the money," he says. "We're not going to compete on four and five cap deals just because we want to be in the market. We can afford to take our time."
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