Moran & Company delivers outstanding results with our value-add assignments because we understand the importance of the road map to value. That road map is as much about the journey as it is the destination—it's about how we define the context, scope opportunity and vision the outcome.
Saint Andrews has been fully marketed and sold three times since mid-year 2012, with the sale price increasing incrementally by 12%, 32% and 20% respectively. For the 2013 marketing, Moran advised a comprehensive value add strategy, laying out a scope of renovation that included new stainless steel appliances, updated cabinetry, granite countertops, wood-style flooring, and the addition of full-sized washers and dryers.
The Challenge: With an average household income in excess of $145,000, Johns Creek is highly affluent bedroom community with very little rental product. The few rental communities that are in Johns Creek are 1990’s vintage original spec or modestly renovated product. Relying on the strength of area’s outstanding demographics and exceptional public schools, current and prior owners were able to operate the asset with minimal capital improvements. The result was an apartment asset with enormous value-add potential but the challenge was proving the depth of the demand for modern, contemporary rental product in this affluent bedroom community, specifically whether a comprehensive value-add repositioning would ‘price-out’ the existing renter base.
The Solution: In evaluating the renter demographics at Saint Andrews, Moran & Company identified four types of resident: (1) contract workers assigned to the Johns Creek Technology Park who would be in the area for yearly assignments, (2) Baby boomers who have chosen to stay in the area but downsized from a home, (3) divorcees requiring an apartment within the school district, and (4) neighborhood families needing a temporary apartment while renovating their current homes. Recognizing that not only could all four of these demographic types could absorb significant rent increases but in fact each of these demographic groups had a strong preference for a higher-quality rental product, Moran & Company was able to demonstrate the deeply unmet demand in the market. Once investors were fully educated on the impressive area demographics and Johns Creek’s extremely high-barriers-to-entry attitude toward new product, the potential buyers quickly bought into the comprehensive value-add strategy that Moran had proposed.
The Conclusion: The buyer during the 2013 marketing was so successful with the rent increases achieved (average of $230 per unit on approximately 1/3 of the units), that the current owners chose to sell the asset in 2015. The 2015 buyer has completed additional renovations to 1/3 of the units, along with some very compelling landscape improvements and the addition of an outdoor fitness area. The current owner is enjoying per door rent increases of almost $300 on renovated units.