The national apartment market performed at a historically strong level in 2015. Effective rents grew at their fastest pace since 2005, while average occupancy reached 95 percent for the first time since 2000.
For Price Realty Corporation (Price), 2015 was a similarly strong year. Revenue on the company’s total portfolio increased an average of 6.37 percent year-over-year. The strength of the overall market enabled Price to sell three properties during the year, totaling 858 units, for $68.9 million. This generated a weighted average IRR of 24.48 percent and a total multiple of 2.71 times original invested capital.
Mike Ochstein, founder and president of Price Realty, commented, “Because we remain bullish about the market, we were busy acquirers in 2015. We purchased four assets, totaling 1,122 units, for approximately $125 million. More than $40 million in equity was raised for these purchases.”
The first quarter of 2016 demonstrated that, even with some moderation from previous highs, which were unsustainable in the long-term, the apartment market still offers attractive, solid growth that should carry through the foreseeable future. Price Realty reflected this trend in Q1 2016, with strong performance across most of its portfolio other than Houston, a market that has been impacted by the decline in oil prices.
In Austin and Dallas, Price properties typically outperformed, with occupancies in the mid-90 percent range and collected income that exceeded budget. With the tight occupancy, Price was able to push rents at renewal and still retain residents. Even in Houston, the economy is substantially more diversified than in the past, thus the weakness should be shallower and shorter than in prior slowdowns.
Mike Ochstein summed up the company’s outlook. “We remain positive in our overall outlook. One of our long-term properties in the D/FW market, Polo Run, has officially gone under contract for sale, with a closing set for July 29. While we don’t have immediate plans to sell any other properties, the market is such that we will always investigate an opportunity to sell if we believe we can maximize shareholder returns. Likewise, we remain active on the acquisition side. This is still a fantastic time to be in the apartment market, especially in Texas, and Price Realty is extremely well-positioned to continue taking advantage of this market strength.