In June, Los Angeles–based value-add multifamily investor TruAmerica acquired a 1,004-unit apartment portfolio comprising three Maryland properties: the 158-unit Bayshore Landing in Annapolis, the 634-unit Sherwood Crossing in Elkridge, and the 212-unit Southfield in Nottingham (pictured). The $187 million portfolio marks TruAmerica’s first acquisition on the East Coast and the beginning of its nationwide expansion plan, which takes another step forward with the opening of an East Coast satellite office in Washington, D.C., led by Matt Ferrari.
“Real estate is a local business, and as we expand our investment platform across the United States, it was a logical and inevitable step to have boots on the ground on the East Coast,” said Robert E. Hart, TruAmerica’s CEO, in a statement. “Not only will we be able to better identify investment opportunities in key multifamily markets in the Mid-Atlantic, Tri-State area, and the Southeast, [but] the new office allows us to further our current relationships here and develop new ones.”
TruAmerica is one of the most active multifamily investors in the country. Since 2013, when the company was founded as a joint venture between Hart and The Guardian Life Insurance Company of America, it has acquired over 29,000 apartment units, with a market capitalization of approximately $6.2 billion.
Greg Campbell, senior managing director of acquisitions and dispositions, attributes TruAmerica’s rapid growth to its off-market acquisition strategy. “We’ve closed about two-thirds of our properties off market,” he says. “Everyone’s competing for these marketed deals. We still win our fair share [of them], but [with] a few quieter deals with lesser competition, you have a higher probability of making them work.”
This off-market purchasing process led TruAmerica to the Baltimore and Annapolis portfolio specifically. “We chose to focus on the Mid-Atlantic area, and Maryland is where these opportunities have come first,” Campbell says. “We like suburban Maryland, for example, because there’s not as much new construction there as there is in northern Virginia and in DC… [and] we felt like there’s been strong growth in Class B properties. …There’s a lot of opportunity to perform a renovation with an interior upgrade scope and be able to raise our values.”
With more East Coast expansion yet to come, TruAmerica brought in Ferrari to direct its new D.C. office as the Eastern U.S. director of acquisitions. Formerly the investments director of AvalonBay Communities in Arlington, Va., and operations manager at Archstone, Ferrari’s experience combines an already successful career in acquisitions and dispositions at two major multifamily companies with a wealth of Mid-Atlantic market knowledge.
“I think I can bring some best practices to the organization that I’ve learned at my two previous jobs,” Ferrari says. “The geographic knowledge I have, combined with knowing who the players and the brokers are, will prove to be a good addition to the organization.”
David Myers will also join the new D.C. regional office, as director of capital improvements, and Benjamin Miller will serve as director of asset management.
TruAmerica plans to make “modest interior upgrades” to its newly acquired properties, according to Campbell. For the most part, these improvements will consist of adding new common areas and amenities, renovating apartment interiors, and performing needed maintenance. The company’s existing renovation plans will be adapted slightly to the new market: “We want to make sure that we’re sensitive to the demographics here in the East and what they like to see in a unit interior,” Campbell says.
TruAmerica currently has another Maryland portfolio under consideration, although a deal has not yet been closed. The firm plans to pursue more properties in the Mid-Atlantic and is currently considering expansion into the suburban Boston, Florida, and New Jersey markets.
“Now is a great time to be entering the market,” Ferrari says. “Job growth seems to be much stronger this year relative to the previous two years. So there’s a combination of market timing, scale, and opportunity, in order to enter the East Coast where [TruAmerica] didn’t have a presence before.”