Ashcroft Capital had an active 2021, acquiring 11 communities in high-growth Sun Belt markets and completing its launch of its in-house property management company, Birchstone Residential. For 2022, the vertically integrated multifamily investment firm has even more ambitious plans, with the goal of acquiring another 20 to 25 communities.
Multifamily Executive caught up with founder and CEO Frank Roessler to talk about his plans for growth and his target markets for the coming year.
MFE: Ashcroft was quite active on the acquisitions front in 2021. Give us a sense of your company’s activity and growth last year.
Roessler: We were extremely active in 2021. We acquired 11 communities totaling 3,513 units across Florida, Georgia, and Texas. We also sold nine assets. The acquired properties total more than $700 million in value, and they increased our portfolio to $1.8 billion in assets under management, with a total of just under 10,000 units. Digging a little deeper, we doubled our presence in Florida in 2021 and now have more than 2,100 units there. We also entered metro Atlanta for the first time and acquired four assets in that market, totaling just over 1,600 units.
While we were active, we were not reckless. We were highly strategic and diligent, and every acquisition fit within our strict investment criteria.
Additionally, we completed the launch of our in-house property management company, Birchstone Residential, which took over the management of our portfolio in 2021. So, it was an extremely busy, exciting, and satisfying year for us.
MFE: What markets are you bullish on for 2022, and what are Ashcroft’s plans for growth in 2022?
Roessler: We’ve always been tremendously bullish on Sun Belt markets. The population is expanding in states like Texas, Georgia, and Florida as renters are drawn by the more-reasonable cost of living and high quality of life in these markets. For 2022, Ashcroft plans to acquire 20 to 25 communities with an aggregate acquisition value of $1.8 billion.
We will pursue opportunities in our existing markets in Texas, Florida, and Georgia, and we will also explore opportunities in new markets like Phoenix, Las Vegas, and Denver, among others. But we will do this with a measured, disciplined approach. The idea isn’t to expand the portfolio for the mere sake of growth, but to grow with a purpose with properties that fit within are investment parameters and are well-positioned to drive the targeted returns for our investors and provide a quality experience for our residents.
MFE: Ashcroft specializes in the acquisition of value-add garden-style communities. What are the kinds of renovations and improvements that most typically add value in today’s market?
Roessler: First, it’s important for owners and operators to understand that there is no foolproof, "one-size-fits-all" renovation or improvement for creating value. Owners should dive into their renter and submarket data to determine the specifics of their renovations.
We often target assets that require milder renovations as opposed to a full-scale overhaul. Our teams often refresh the amenity spaces to give them more of a modern feel, including upgrades to pool areas, clubhouses, leasing offices, and other common spaces. Within the homes, common upgrades include the implementation of wood-style flooring, faux quartz countertops, stainless steel appliances, tile backsplashes, shaker-style cabinet fronts, updated fixtures, and a modern lighting package. We’ll often add washer/dryer sets to homes, as well. These are often assets that are in decent shape to begin with, and our value-add measures significantly increase appeal to potential renters.
MFE: Why do you think garden-style communities are poised to perform well now and in the future?
Roessler: Garden-style communities provide an experience similar to living in a single-family home, in which residents have immediate access to green space, a dog park, and other community features that aren't as readily accessible from other product types. Also, the sizes of garden-style homes are more comparable to a house, which caters to the continually emerging work-from-home trend.
Additionally, renters have favored less densely populated areas and rental properties with larger floor plans since the onset of the pandemic, and garden-style homes address that demand. Regardless of pandemic-related effects, garden-style communities possess a strong quality-of-life factor and often at a lower price point than many mid-rise or high-rise properties.
MFE: As single-family build-to-rent communities gain popularity, what impact will that have on the multifamily industry?
Roessler: The build-to-rent space is an attractive branch of the housing market for both renters and operators. Even as more millennials become renters by choice, the opportunity to live in a house will still have considerable appeal. And this space will enable young professionals and families to live the American Dream without breaking the bank on down payments. We believe the build-to-rent sector will have much more viability in the lower density suburban spaces of certain metros than others.
MFE: Looking broadly at the industry, how do you think it’s set to perform in 2022? What are some factors that could boost or hinder its performance?
Roessler: Broadly speaking, the health of the multifamily industry is very strong, particularly within the Sun Belt. As more Americans choose to move there from parts of the North, the demand for rental housing will continue to grow. Additionally, as more companies opt to relocate headquarters to the Sun Belt, the local economies will flourish and diversify. This trend undoubtedly will be impacted by the rising interest-rate environment that we’ll likely experience in 2022, but it could be offset—at least in part—by increasing wages.