View the 2012 MFE Top 25 Renovators List

The optimism expressed by some of the renovators in last year’s Top 25 list seems to have been right on the mark when it comes to rehab activity having ridden a tailwind into 2011. In 2010, a little more than 4,300 rehabbed units were enough to land Chicago-based Equity Residential the No. 1 spot for top renovators. In 2011, however, Sherman Oaks, Calif.–based IMT Residential, a newcomer to this list, claims that distinction with a more impressive 9,348 units rehabbed in its core markets in California, Arizona, Florida, and Texas. With 17,697 total units under the company’s management at the end of 2011, the number of units it renovated accounts for more than half of IMT’s entire portfolio.

According to the company’s vice president, Joseph Elbahr, the high volume of renovations was a result of new acquisitions the firm made during the year. “IMT Residential recently purchased a large portfolio in Florida as well as several other assets in California and Texas. As part of our value-add investment strategy, each property acquired was slated for a renovation,” says Elbahr. “The type of renovations that proved to be the most successful in terms of increasing rental rates were common-area renovations to a leasing office, fitness center, pool, recreation room, business center, and building exterior,” he adds. IMT is expecting 2012 to be a year of significant growth, with a number of new construction projects in its pipeline and a number of acquisitions already planned.

Rochester, New York–based Home Properties retained its No. 2 position again this year, rehabbing 5,800 units, a 2,800-unit increase over its tally in 2010. Los Angeles–based JRK Property Holdings, meanwhile, dropped to No. 15 this year after reducing the number of units it rehabbed in 2011 to 1,185, down from the 3,000 it posted in 2010. But the decrease comes with good reason: JRK spent 2011 acquiring several Class A properties that didn’t require any renovations. Plus, the company is nearing the end of a large rehab cycle that gave the firm a strong boost on last year’s list. According to Bobby Lee, president of JRK’s investment division, “the difference [between 2011 and previous years] is we bought a large portfolio in 2008. In 2010, we were still rehabbing those units. [As they’re being completed], the amount of units [being rehabbed] is going down. That’s why our numbers dropped off.”

Elsewhere on the list, Columbia, Md.–based Fincor Construction (No. 9) saw a nice bump in its renovation numbers in 2011. The company adapted its approach to rehab last year to help it rebound from the halt in production it faced in 2009. “After demand fell off a cliff, we really took on more occupied renovations than we have in the past. It’s starting to become our niche,” says Fincor senior vice president Michael Finn. According to Finn, the company renovated nearly triple the units in 2011 that it had the previous year. With occupancy rates nationwide at all-time highs, and the majority of Fincor’s business being interiors, the company’s new approach to renovations has positioned it to further increase the number of units it rehabs through the end of 2012.

Indianapolis-based Flaherty & Collins Properties ranked No. 22 on this year’s list, but the company was ranked No. 1 by the Indianapolis Business Journal as the largest Indianapolis-area multifamily property management firm. For 2012, F&C plans to lease up 15 communities it received in March by the end of the year.

Clearly, momentum is building for renovators looking ahead in 2012 and beyond. But not all markets are created equal. As demand for quality rentals continues to surge, expect renovators that are highly exposed to the fastest-growth markets to be the ones keeping busy with renovations moving forward.