At Archstone, we have developed an intentionally simple yet effective investment philosophy: generate returns by adding value. This has been our north star, informing all of our projects and investment decisions to date.
Our process is rigorous and begins by identifying strong submarkets and tailoring our capital structure accordingly. From there, we develop an informed business plan. What’s key, however, is that that this strategy is spearheaded by a team of experts, working within a vertical structure to optimize efficiency and results.
Identifying value-add opportunities
We begin by looking for underperforming or sub-optimal assets where we can apply our capabilities. Exploring our core markets, we target Class C to B+ properties with at least 150 units, valued between $15—$50 million, and built in 1980 or later.
As we’ve established ourselves in these markets, this process has only gotten easier. We have developed strong local relationships, making the task of identifying assets a natural extension of our daily operations. We’re always aware of new investment opportunities and use our expertise to zero in on the most attractive, risk-averse properties.
Strategic renovation
Once we have acquired a property, our team begins cataloging unit-specific renovation needs. Then, working with our in-house team, we begin updating high-value interior assets. That includes renovations to specific interior units, as well as exteriors, landscaping, and hallways.
This vertically-integrated structure is core to the Archstone approach and our continued success. It’s a competitive advantage for both margin control and project management.
Within this structure, we’re able to streamline our communication. Construction leads, property managers, and investors are all in continuous contact. That reduces complexities while ensuring strategic alignment and smoother execution.
Our direct oversight also allows for timely project completion—with flexibility in scope. Being able to minimize delays is critical to revenue generations. But we’re also able to look at evolving market needs in real-time, alongside our investment strategies, and adjust accordingly.
Price Optimization
As we begin to re-rent units, we consider both broad market and asset-specific factors to calculate appropriate rates. With proper attention and renovation, the rent for a distressed unit can be raised by several hundred dollars. In some cases, a simple appliance upgrade is enough to both raise rents and sign leases.
Tenant Retention & Marketing
Archstone Residential serves as the wholly-owned property management subsidiary of Archstone Capital. With a people-first property management team, we can provide exceptional tenant experiences by overseeing the daily management of our portfolio
With enhanced oversight of our properties, we’re ensuring adherence to our operating standards. Amenities and services can be customized to both a property’s needs and its tenants demographics. Plus, it allows us to rapidly respond to maintenance needs and tenant concerns.
Our structure also creates broader advantages for our company. It eliminates the need for third-party management costs, improving our net operating income (NOI). And since we’ve developed such a close understanding of our tenants and properties, we’re better informed to make strategic decisions and plan for future investments.
Exits and returns
We consider a variety of factors when it comes time to exit a property. For us, this is an art—not just a science.
Each quarter, our teams review properties in which we’ve completed our business plans. Based on financial models, if we can achieve projected returns or higher, we will look to sell. While a holding period typically lasts three to five years, if we can achieve strong returns for our investors sooner, we will sell before that period.
If our value-add approach resonates with you—as it already has with our stakeholders—you can begin by learning more on our Investing page.
Comments