HHHunt isn't just sitting back and celebrating its 50th anniversary. From home building, to land development, to senior living, and to a major push in its apartment division, Dan Schmitt, president and COO, has a lot to oversee.
The Blacksburg, Va.-based company has built apartments since 1966 and currently operates 15 communities and 7,100 units in Virginia, Maryland, North Carolina, and South Carolina. In 2016, it will have five additional projects under construction (three already are being built) as it aims to expand its foothold in the Mid-Atlantic market.
Two projects broke ground in early fall: Abberly Square in Waldor, Md. will consist of 288 apartment units and Abberly at Southpoint in Fredericksburg, Va. will feature 280 luxury apartments. In January, the company also started building Abberly Waterstone, which will have 288 units in Stafford County, Va.
Each of the communities under construction will include one-, two-, and three-bedroom floorplans with nine-foot ceilings, “gourmet kitchens with granite countertops, expansive windows and spa-like bathrooms with oversized garden tubs or walk-in showers. Standard amenities at each of these apartment communities will include a clubhouse with business lounge, game area with pool and foosball tables, swimming pool with a social shelf, fitness center with yoga studio, outdoor covered gathering area with fireplace.”
Schmitt says now is a great time to build apartments in the region. “We’ve been rolling along at a steady pace,” he says, “but we see a fundamental shift, especially since the Great Recession, in the philosophy on renting. In the old days you would live in an apartment until you could afford a home. We believe, going forward, we’re much more of a rental nation than in the past. People are renting by choice.”
Another 271-unit development – Abberly Center Point – will break ground this summer in Richmond and the 336-unit Abberly at University Village do the same in Prince William County, Md.
The targeted rents at each of the five projects will hover in the mid-$1,000s, according to Jim Nicholson, senior vice president of properties development, with exceptions on both ends of the spectrum.
Nicholson says HHHunt aims to build projects and execute a long-term hold, citing one community in Blacksburg, Va. that was built in 1972 and still under the company’s operation. HHHunt is familiar with each of these markets, he adds, and knows what potential renters want in an apartment.
HHHunt’s reputation, Schmitt says, goes a long way in the Mid-Atlantic region. “What’s really driving our success is we’ve established this brand,” he says. “We’ve got great synergy in the company right now.”
The company has explored expanding to the Nashville market, Nicholson says, but now it’s busy enough in its existing markets.” I think we’re really trying to exploit the areas we’re in before going another 300 miles to build another community,” he says.
The region can absorb more apartment units, Schmitt adds, but it’s important to have a game plan. “Invariably, we build a community and then six months, one year later there’s another one being built right across the street,” he says.
“We’re developers, we’re optimistic, and we’re human, so over-building is what the industry does and will do in some markets,” he adds. “We’re trying to be very careful in terms of selecting the markets and the locations that we believe have plenty of demand.”
But how long will that demand last and how does Schmitt make sure each of HHHunt’s divisions stay ahead of the curve?
According to Schmitt, HHHunt is experiencing record growth across the board in its fifth decade of existence. It’s also building five senior living communities in 2016, and its home building operation closed 495 homes in 2015, a 40% jump compared to 2014. This year, Schmitt expects to close on about 700 homes.
Even though the apartment business has been good to HHHunt, Schmitt explains it’s no longer the company’s bell cow. “In 2014, 59% of our income came from the apartment living area of our company, and about 21% came from our senior living,” he says. “With the economy growing, we’ve invested in for-sale housing, and we’ve really grown that side of our business very rapidly. This past year, apartments were 37%, which doesn’t mean our income came down in that area, it just means income from home building in particular has grown at far faster pace.”
And although times have never been better, Schmitt is already eyeing an exit strategy. Currently, the company is investing fairly equally in its platforms – Schmitt says 90% of all of its profit goes directly back into the company for future growth.
“It’s like a snowball rolling down a hill,” he says. “That’s why it’s so important to understand the economic drivers. Rather than reinvest blindly and enthusiastically, we’ve got to be careful and read the tea leaves of the economy so we’re investing in the right places in our company.”
So when will the shoe drop? “We believe there’s another downturn coming within the next few years,” he Schmitt says. “So we’ll take our investment down a little bit in the home building and land development side and then we’ll begin to push more investment into our multifamily.”
Whether they’re renting apartments or buying homes, people still need a place to live, Schmitt notes, which keeps HHHunt in a good position.