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Allied Orion Group is preparing to buy multifamily communities across the Sun Belt and in Colorado.
The investment firm plans to acquire up to 10,000 units over the next five to 10 years, Allied Orion CEO Ricardo Rivas said. The Houston-based company currently owns 2,000 multifamily units and has a growing management portfolio with more than 23,000 units throughout the nation.
Rivas, who is one of the panelists at the Bisnow Multifamily Annual Conference on Oct. 3 in Houston, said he is in talks with one strategic investor for a programmatic investment while also evaluating one-off deals with its typical investors.
He is considering partnerships with financial institutions, sovereign wealth funds and other capital investors. Target cities to acquire or manage properties in include Houston, Austin, Dallas, Phoenix and Denver. The firm also manages a property in North Carolina and one in Arkansas and is considering two or three properties in South Carolina.
The attraction to the Sun Belt is the outward migration of U.S. cities like Chicago, Los Angeles and New York, which are grappling with housing affordability and a higher cost of living, making Sun Belt cities look better in comparison.
“The Sun Belt is the growth area of the country,” Rivas said. “That is where we are seeing the growth opportunities and the new multifamily supply. That is why we are focusing our expansion there first.”
Earlier this year, Allied Orion acquired its first property in nearly 20 years. The firm purchased Ashford Apartments, formerly Alexan Ashford, in Houston's Energy Corridor. Built in 2017, Ashford has one- and two-bedroom upscale units at 1200 North Dairy Ashford Road near Interstate 10.
Allied Orion acquired Ashford within 60 days and below replacement costs. Rivas said it would have taken four years to develop and stabilize the site.
“We have been evaluating hundreds of acquisitions opportunities, and Ashford met our core-plus criteria,” Rivas said about the acquisition at the time. “The projected pro-forma rents were already achieved in the current market, and at a 10% discount to replacement costs, it made perfect sense for us."
While acquiring more apartments is on the horizon, the firm has also increased its third-party property management portfolio. Since the beginning of this year, the firm has added more than 2,000 managed units to its books.
Allied Orion was selected to manage FalconView Apartments, a 288-unit luxury complex under construction in Colorado Springs and expected to open in October. The developer is launching other projects in Colorado, and Rivas expects the firm's footprint to grow simultaneously.
The firm will manage new communities Park at Estancia in Austin and Park at Crystal Falls in Leander, an Austin suburb, and Mountain View Heights, a 365-unit in Hot Springs, Arkansas.
In Houston, the portfolio includes Smart Living at Telephone Road, a 240-unit property in Southeast Houston, and The Heights at 2121, a 504-unit complex in The Heights, and Bella Palazzo, a 242-unit complex in the Energy Corridor.
Expanding the company's personnel has been an important first step in growing its portfolio.
“We have some good hires for our company that bring a lot of expertise, which will help us polish our services,” Rivas said.
Last month, Allied Orion hired Loyal Proffitt as president of the firm's property management arm.
Bringing more than 30 years of multifamily leadership, he will oversee the day-to-day operations, including supervising personnel and implementing policies and procedures.
Proffitt was president at The Related Group in South Florida and chief operating officer at US Residential, managing 14,000 and 44,000 units, respectively.
“We brought in Loyal to enhance the institutional quality, knowledge and experience of our operations as we pursue our commitment to exceed our clients’ expectations by providing a level of service that is second to none,” Rivas said.
Rivas was tapped to lead Allied Orion in March 2018. He oversees the company's strategic and operational growth, which includes ramping up development and acquisition activity.
His rise to that role was rapid. He joined Allied Orion in 2001 as an assistant superintendent and later moved to an assistant property manager position. He was promoted to development officer a year later, then vice president of development. In 2013, he was selected as chief investment officer and he was made principal in 2016. Rivas has developed more than 3,600 multifamily units valued at $460M.
“Ricardo’s proven leadership skills, impeccable track record over his 17-year tenure, industry knowledge, and expertise make him the perfect choice to be at the helm of our firm and lead our executive team,” Allied Orion Group principal Gene Blevins said at the time of his promotion. “We are confident he will help propel us forward, extend our reach across the country and internationally, and strengthen our market position.”