WASHINGTON, DC-For the most part, since its inception in 2009, the Jefferson Apartment Group has focused on development. It has gotten to the point where it is clocking in about five construction projects a year and has a $250-million pipeline, CEO Jim Butz tells GlobeSt.com. That certainly won’t change—the company, for example, recently began development of Jefferson at Market Place near DC’s Convention Center.
But a shift in focus is underway: in short, the firm has its eye on acquisitions–2,500 units over the next two years to be precise–and its targeted seller will be REITs looking to rebalance their portfolios. In many cases it expects it will be partnering with Starwood Capital for these deals. Not that the company is shunning non-REITs, Butz adds. “What we are looking for are growth opportunities for investors seeking good, long-term yields in the funds. We see buying and renovating class B properties as a way to deliver that.”
The company hopes to close on a $40-million, 240-unit acquisition in Fairfax, VA within the next 90 days that meets that description. If all works out, JAG will be partnering with a long-term equity partner to close the deal.
Another element of JAG’s go-to-market plan is a focus on young professionals that can’t afford the new high-rises and other high-end apartment buildings under development but still want a nice place to live. Finally, like most active firms now, “we’re taking advantage of the low interest rates in the capital markets and benefiting from the lack of new supply,” Butz says. The company is doubling its acquisition staff to about six individuals to put this strategy into play.
JAG is also stepping up its focus on property management. “We started this initiative about six months ago and we have 2,000 units and four properties coming online. Our goal is to manage 5,000 units,” he says.