MACK, ARP in Largest Performing Single-Family Asset Deal of 2012

    CHICAGO – MACK Companies, the largest owner of single-family investment properties in Chicago, sold 196 investment properties to American Residential Properties Inc., a real estate investment trust, for $28 million.

    The sale marks the biggest performing single-family asset deal in the United States this year, according to James McClelland, MACK president and CEO.     MACK and ARP have also reached an agreement in principal that would supply ARP with up to 30-50 properties each month over the next 24-36 months. The transactions could mean another 1,000 properties purchased from MACK, McClelland says.    For over 15 years, MACK, has been buying foreclosed single-family homes in Chicago’s south suburbs. It redevelops them, turns them into rentals and then sells them to investors. MACK stays on as property manager.      “With good reason there’s been a significant increase in interest from institutional investors wanting to enter the single-family market this year,” McClelland says in a press release, “But the only deals the industry has seen close so far have been bulk foreclosure buys on homes that still need to be redeveloped and leased.”    MACK,  based in Tinley Park,  IL,  only sells performing assets.     ”We’ve been looking at entering the Chicago market for a while given its high foreclosure volume and robust demand for single-family rentals, but we didn’t want to partner with a firm just because it had a large amount of inventory – it had to be the right inventory,” says Steve Schmitz, CEO of ARP. Until now, ARP, which is based in Scottsdale, AZ, had only invested in single-family properties in the Southwest and Southeast.     ”All 196 of our recently-purchased MACK properties are redeveloped and tenant occupied,” Schmitz says, adding that ARP will see positive returns on their investment immediately.    Individual investors have long known that owning single-family rental property is one of the best ways to build and retain wealth, but McClelland says it has only been in the past few years that institutional investors have started to pay attention to this opportunity.    ”Over the past two years we have had a number of institutional investors offer various partnership models, but they just didn’t fit our business philosophy,” says Eric Workman, MACK vice president of sales.  ”What we found with ARP was a true alignment of company cultures…each company believes very strongly in a tenant-focused approach and in a long-term ownership strategy.”