The Milestone Group, a multifamily specialist that acquired a $1 billion portfolio of apartments in the Sunbelt last year, anticipates that 2006 will be as active. The privately held real estate investment company has completed $1.6 billion of acquisitions since its inception three years ago, Jeffrey Goldberg, principal.
The company buys and builds multifamily properties. Most recently, Milestone developed The Gantry, the first condominium development in Long Island City, New York. Milestone sees opportunities in Class B and B+ properties. “As interest rates rise, we expect to see a lift in rental rates and a lift in that sector,” said Robert Landin, a principal in the company’s Dallas office.
Milestone owns and manages 30,000 units and targets core-plus and value-added properties, Goldberg said. Its core market is the Sunbelt. The company owns and manages properties in Florida, Georgia, Tennessee, Texas, Arizona, Utah, New York, Michigan, Ohio and Virginia. “The Sunbelt is really our bread and butter,” Landin said. “We looked at California, but with pricing the way it is, it’s hard to get too excited about that.” In the $1 billion apartment acquisition, which was completed with the Crown Prince of Dubai, the company acquired 69 multifamily communities in the Dallas, Houston, Austin, Tampa, Jacksonville, Nashville, Phoenix and Atlanta markets. “We believe this was good timing to ride the improving economy,” he said.
The company’s transactions have included the acquisition of six apartments for high-net-worth clients of Deutsche Bank. “High-net-worth clients don’t have that many opportunities to buy institutional-quality real estate,” he said.
In general, the company makes acquisitions where it can influence the outcome of a property. “We are more market-driven than tenant-driven,” Goldberg said. “If you look at our ownership we are focused on asset improvement and seek situations where we can get improved occupancy and rental rates.” He added that the company is factoring in big increases in construction costs in its new developments. In addition to commodity pricing, the cost of labor has increased by about 30%.