American Landmark CEO Joe Lubeck Provides Updates On Florida Strategy, $2B Shopping Spree
When Bisnow checked in with American Landmark CEO Joe Lubeck last March, the coronavirus pandemic had just broken out and the stock market crashed 26%, but he was still calmly intent on deploying $2B in capital to buy up apartment complexes.
“We had hoped to acquire a billion last year,” Lubeck said. “We ended up with about $700M. So we didn't quite hit our target. But we were still very comfortable. We managed to take advantage of certain situations, buying largely off-market. And our goal for this year is really the same. We are both buyers and sellers, but we are net buyers.”
Tampa-based American Landmark on April 13 announced it had acquired City West Apartments, a 300-unit multifamily asset in Orlando, and The Marin by Arium, a 223-unit multifamily community in Fort Lauderdale. These were American Landmark's 26th and 27th apartment complexes in Florida.
American Landmark specializes in the opportunistic acquisition and management of value-add multifamily assets. It owns some 34,000 units in Florida, Georgia, North Carolina, South Carolina and Texas. Lubeck said he shoots for a 2-to-1 ratio — buying two for every one the firm sells.
“We would love to buy more in South Florida,” Lubeck said. “We wish we could find more opportunities. But we continue to focus in Florida on what I would call the secondary markets of Orlando, Tampa, Jacksonville, as well as what I see as new growth markets, in Melbourne, for example.”
He said opportunities in South Florida are lacking in part because with so many investors competing for assets, prices can get too high.
Lubeck said he stays away from Southwest Florida because it doesn’t have the same predicted rate of job growth.
“We look at job growth volume, not just by market, but by submarket very specifically. And we look at the ratio between job growth and new apartment construction,” Lubeck said.
In 2015, through the REIT American Landmark Trust, Lubeck sold 22,000 units to an entity of Starwood Capital Group for $1.9B, then went back to work amassing a whole new set of apartments.
The National Multifamily Housing Council on April 14 released its annual ranking of the 50 largest apartment owners in the country. Starwood is ranked No. 3 with 89,339 units and American Landmark is at 33, calculated when the company had 33,000 apartments.
Even with price appreciation in the past few years, Lubeck does not regret having sold out to Starwood.
“When we're able to recognize our target profit margins for ourselves and our investors, we're glad to sell,” Lubeck said. “We’ve been accused of selling too soon, but I'll take that all day long. You know, we want to hit our target returns for our investors. And at the end of the day, that's the primary decision-maker.”
The company's investors are largely institutional, about one-third from the U.S., a third from Europe and a third from the Gulf states.
Lubeck doesn't see much on the horizon that could dent his business model, except high prices.
"Of course, the other thing we look at very carefully are the costs that we don't control," he said. "You know, a lot of jurisdictions have raised real estate taxes dramatically. And we, of course, have to pass along some of that to our residents. So we look at that very carefully. And certainly the real estate tax increases concern us, because that is passed along. And likewise, things like insurance and other costs that we don't control.
"But again, that all goes into the mix, in trying to evaluate what's going to be a fair and reasonable rent, standard for our customers, to keep them happy, and still be able to provide the services that we provide. And of course, we are in business to make money. So we want to make a fair return on our investment as well," Lubeck said.
The coronavirus pandemic didn't hurt much, as American Landmark took in 97% of its rents. It worked to accommodate struggling tenants during the pandemic, but “we can't really forgive rent," Lubeck said.
"Forgiveness of rent on an isolated basis is a fair housing violation. Because if you forgive for one, you really need to forgive for all. But we did try and make reasonable payment arrangements with everybody who wanted to make a good-faith effort. That's been our policy,” he said.
Of course, for any developer with a Florida strategy, climate change could be a concern.
"I leave that [is] in God's hands, but we want to do our part by installing appropriate environmental devices and waste management controls — recycling, low-flow water devices, more efficient energy systems — so that we do our part in trying to maintain a good environmental quality and sensitivity to the environment within all of our communities.
"As far as global change, that's something I don't opine on. I leave that in the hands of people who were far wiser than I am. And frankly, I view that as something that if we all do our part, that God will do his or her part," Lubeck said.