Strategy

SCP focuses on acquisitions in the following states in the Middle Atlantic and Southeast United States: Virginia, North Carolina, South Carolina, Tennessee, Georgia, Kentucky.

We acquire properties with:

Value Enhancement Opportunities

Properties which can benefit from SCP’s track record in implementing capital upgrade programs and cap ex projects to reposition properties in their respective submarkets.

Undermanaged Properties

Operations and/or failed business plan executions, where the opportunity exists to improve performance by driving revenue and implementing operational efficiencies.

Reasons to aquire properties in the mid-Atlantic & Southeast US:

Right to Work States

Economies in right to work states have seen more of a revival in manufacturing and improved prospects for overall growing employment. This has resulted in a decrease in vacancy for apartments. The Mid-Atlantic and Southeast are right to work states and chosen geographies for SCP.

Higher GDP Growth

GDP growth in the Southeast grew at a higher rate over the last 24 months than the Northeast and “rust belt” states.

Lower Cost of Living

Due to lower cost of living and lower tax bases, individuals as well as companies (non-manufacturing) have operations headquartered in the Southeast. Examples of such companies are FedEx, Delta and Bank of America.

Process

SCP’s investment process creates seamless coordination across multiple disciplines

1—
Deal Sourcing

  • Research Driven Process
  • Comprehensive Pipeline
  • Direct Relationships

2—
Underwriting/
Due Diligence

  • Financial & Market Analysis
  • Site Visit
  • Environmental & Property Condition Assessment
  • Procurement of Debt Financing
  • Title & Legal Work

3—
Ownership

  • Coordinated Property & Portfolio Management
  • Accounting, Financial Reporting & Risk Management
  • Annual Business Planning & Budget Review

4—
Exit

  • Evaluate Exit Alternatives
  • Optimize Investor Returns

Market Opportunity

Multifamily Offers Stability, Diversification, and Current Cash Flow

  • Less volatile than traditional domestic equity investments
  • From 2000–2010, multifamily had approximately half the standard deviation of the S&P 500
  • Shorter lease terms offer an inflation hedge
  • Lack of correlation with other asset classes offers diversification benefits to investor portfolios
  • From 2000–2010, the S&P remained flat while multifamily achieved a 8.75% compounded annual growth rate
  • Tax advantaged distributions vs. many other traditional types of fixed income
  • Multifamily has proven highest risk-adjusted returns and the smallest amount of variation over the last 10, 15, 20, 25 and 30 year periods

Appropriate Timing in the Market for Multifamily Investment

  • $300 Billion of loans maturing over next several years creating a strong buying opportunity
  • Very favorable demographic, homeownership and population trends specifically benefitting “middle-market” multifamily (projects ranging in size from $5.0M–$25M
  • Renter nation—more stringent home mortgage lending standards, economic uncertainties, and current lifestyle choices bolster rental demand
  • Minimal new supply since 2007 has created 700,000 unit shortfall in meeting renter demand and growing
  • Lack of correlation with other asset classes offers diversification benefits to investor portfolios
  • Rising construction and financing costs will enable buyers of existing Class C and B product to have continued advantage of being lower cost providers of housing as a result of a lower going-in basis at acquisition as compared to those investing in new construction

Demographic and Economic Trends in Target Middle Market Segment

  • Echo Boomers expected to add 6.3 million people to the 20–34 year old age bracket, prime apartment renting age
  • These Echo Boomers will also have to pay off approximately $1.0T of student debt, impairing their ability to become home owners for the foreseeable future
  • Economic growth will continue to lead to “de-bundling” of households as people move out from living with parents and roommates.
  • Immigration currently 1.2–1.4 million people annually and household formation projected at 14 million over the next 10 years, the majority of whom will seek lower cost rental housing.