It has been a rather exciting time for Reynolds Asset Management, the Paramus, New Jersey-based commercial real estate investment and development firm that primarily focuses on the multifamily apartment space. Among its most notable endeavors were the acquisition last month of two multifamily properties in Texarkana, Texas, which marked its first foray into the Lone Star State, and the greenlight in December to revitalize the Princeton Pike Office Park in Lawrence Township, New Jersey, as a mixed-use property with 204 rental residences and 17,000 square feet of retail space.
Weekly Real Estate News caught up with founder and CEO Lou Reynolds to discuss his company’s recent activities and its upcoming projects.
Your company has a lot going on at the moment. What is fueling this new activity?
We are very busy primarily because – and I’m trying to say this in the nicest way – there are a lot of poorly capitalized sponsors that are out there that got themselves into value-add properties, and they never really added the value. They’ve got loans that are coming due and they’ve got to exit. So, there are forced sellers in a market where you don’t want to sell unless you have to.
How do you decide about which projects to go after?
We are looking primarily at 1983 and newer. We want 150 units, but we’re looking for a demographic detail – basically, we’re looking for housing where the rents in place today are under the affordable index for the median income of the market. And we look for that all over the country – we analyze markets everywhere, looking specifically for those metrics. And once we find it, we dig deeper and start looking for opportunities.
Let’s talk about your deal in Texas, which is your first for that market. What can you tell me about the genesis of that project?
We were in Shreveport and Bossier City, Louisiana, and those markets are about an hour northwest was the Texarkana property. It came to our attention near the end of October last year, and the metrics that I mentioned were exactly what we were looking for.
We decided to take a better look at it, and we really liked the property. We liked the demographics, we liked the physical construction of the property, and we we felt it hit all of our criteria. We just closed on Feb. 22.
Your company is working with Jeff Juster’s Newport Capital Advisors LLC to invest $3 million into renovations and enhancements of the Texas properties. What’s the timeline on the project? When do you expect work to be completed?
It is an ongoing project. The previous owners did a pretty good job at keeping it full and occupied, but they just didn’t have the capital to invest in the capex the way they needed to, and that’s what we’re really bringing to the table. We think it will take us approximately six to eight months to really do all the heavy lifting, and then another six to eight months from there to bring the rents up to where we think they’ve probably should be. At that point, we’ll be looking for some supplemental financing or potential refinance.
Let’s move north to discuss the 3131 Princeton Pike project in New Jersey. In connection with this endeavor, you were quoted in another publication saying that you wanted to provide opportunities for young professionals and older individuals in the housing market – and two demographics have the hardest time obtaining affordable housing. Are you identifying something that your competition seems to be overlooking?
It seems obvious, right? You have these single-family resident communities – and they’re fantastic communities, well-regarded great places to raise a family. But once you’re an empty nester and your kids have left the house, and you’ve grown accustomed to this community, where do you go? Do you have to stay in your four- or five-bedroom home with a yard and maintenance and all this other stuff? I’m an empty nester and the last thing I want to do now is maintain a big house with just my wife and me.
We identified the need to create quality, luxury equivalent apartment-style living for people that don’t want to maintain a big home but want to stay in their community. We want to provide them that opportunity to have high quality of living in the community they love at an affordable price.
And then simultaneously, when they move out of their home, it gives an opportunity for a new young family to come into that into that community. And new young families bring a new vibrancy – they’re going to bring new money, they’re going to perform renovations on these homes. So, it’s vital to build these homes in great neighborhoods.
Then, there is the second component. A lot of these kids love their town, they grew up in the town, they love the town, they would like to go back to the town, but maybe they can’t necessarily afford it. We’re going to be able to offer them a place to live in their community at a price that’s affordable for them, even at their early-stage jobs.
What projects are you currently working on?
We just finished 103 units multifamily in Orange, New Jersey – the 606 Freeman St. property called The Mural. We’re in process of leasing up – we’re about 50%, leased, and we just opened our doors on Jan. 18. And we’ve got 1,137 units that we’re building in Cape Coral, Florida. We’re about to break ground on that in March – it is affordable luxury housing.
I have this notion of a bell curve – there is the bottom 20%, the top 20%, but there are a lot of places where those segments of the population who need to be serviced are the middle 60% That’s what we focus on – the people in the middle of the income bracket and the median income, and we try to build housing that is better than what they might expect, but affordable for the dollars they make.
