Passco Hires Local, Furthers Buying Spree
Orange County-based Passco Cos has hired Colin Gillis as its local talent as it expands its Southeast holdings. We chatted with Colin about why the focus on the Southeast, where Passco has acquired some $500M in properties since 2010, or 90% of the firm's overall buys. “That says a lot about the attractiveness of a region from the perspective of a company based in Southern California who has their eyes on the whole country,” Colin says. He says the region, which lagged out of the recession, has come roaring back for Passco. Its portfolio outperformed the national average on rent and occupancy growth, Colin says, especially in secondary Southeastern markets. “With the majority of developing taking place in and around the main and mains of the best submarkets in town, we are focusing to acquire the well-located, newer assets on the outskirts,” he says.
Most recently, Passco purchased Azure Luxury Apartments, a 308-unit complex in St. Petersburg for $54M from Hines Interests. And it's on the hunt for more throughout the Southeast and Eastern Mid-Atlantic. Colin says its emblematic of the company's target: well-located assets in solid job growth secondary markets with good rent and occupancy history. “It all comes down to location, which for me has to be either a no-brainer or one that is in an obvious period of transition for the better,” he says. But Passco must tread carefully, he says: the Southeast is filled with '70s- and '80s-vintage apartments with $700/month rents that can't be given much more value, even with a major interior overhaul. “A $2,500 interior renovation only makes sense if it can generate at a minimum an additional $40/month rent, which may not make sense to a resident paying $700/month.”