Jeffrey Friedman, CEO of Cleveland-based Associated Estates Realty Corporation (AEC), wants the company to be known as more than an exclusively Midwestern operator. By adding units in Texas, the Southeast and mid-Atlantic, it has shed that image. But AEC’s Tuesday night announcement pushes its portfolio even further.
AEC spent $37 million, or about $420,000 per unit, to buy an entitled development site from Legacy Partners along the Miracle Mile in the Wilshire area of Los Angeles, brokered by Friedman’s son. The company had been in that market before, but departed in 2003 before announcing a return late last year.
While analysts at Sandler O'Neill Research raised some concerns about Friedman’s son brokering in the deal, they still feel it’s a good buy. Earlier, the firm said that it would “prefer” AEC not enter California. What do you think? Is it dangerous for a company to move all the way across the country, even if it was in the market a decade earlier and has been doing its long-term due diligence?