Seattle-based Security Properties owns more than 17,000 apartments nationwide and has been in business for more than 40 years. That doesn’t mean 2011 won’t be a groundbreaking year for the firm, both literally and figuratively, especially under the direction of CEO John Orehek.
In fact, it didn’t take long for the company to make a big announcement. In early January, Security said it was re-entering property management—a business it exited in 1993—by forming Madrona Ridge Residential as its newly affiliated property management firm. The reason for the launch? Security wants to position itself to manage units that are wholly owned, partially owned, or part of general managed partnerships. Security hopes it will provide its asset management group with a more intimate understanding of how their communities are performing.
If Orehek has his way, though, Security will have a lot more units to potentially manage by the end of 2011. That’s because after sitting out last year and only buying the Entrada Apartments, a 172-unit complex located in downtown San Diego, for $22 million, he’s ready to jump into the acquisition fracas this year.
“Our attitude is to be very aggressive this year,” Orehek says. “Last year, we were a little more selective and cautious about where the market was going. This year, with some stabilization in fundamentals and pricing, I’m ready to be a little more aggressive in my appetite to acquire, as long as the asset is in the right location with the right fundamentals.”
Though Orehek acknowledges an extreme competition for apartments, he feels that properties are still renting at rates lower than at the height of the market, and in many regions, he thinks the firm can still make buys below replacement costs. Instead of the trophy properties that traded last year, he expects to see more Bs and Cs to come loose in 2010. That presents opportunities for the company, which has acquired, operated, and sold 27 properties comprising nearly 5,500 units over the past decade, all in the A or B asset group.
Security also has a development platform that has produced 835 multifamily units over the past decade. So there’s also the potential to start properties in the pipeline, in addition to pursuing tax credits deals.
“These [development] deals are beginning to see potential revenue streams where we believe we can get them financed within the next 12 months,” Orehek says. “We have a number of properties in Seattle and Portland, which I would think we’ll be getting ready to begin construction on in the next 12 months.”