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LEM Capital Announces Fifth Fund Closing Since Inception and additional 2020 Capital Markets Activity

Philadelphia, PA – LEM Capital, L.P. (“LEM”) today announced the closing of its fifth private equity fund with total capital commitments of $330.8 million. The Fund will invest in Class B value-add multifamily properties in primary and secondary suburban markets across the United States. Over eighty percent of investors in the Fund were repeat investors from previous private equity offerings including the two lead investors. “Given the uncertain environment, we feel fortunate to have exceeded our internal target of $300 million. We are grateful to all of our investors for their continued support of LEM, but especially to our lead investors who each increased the commitments to this Fund,” said Jay Eisner, a founding partner of LEM. To date, the Firm has raised over $1.3 billion in investor commitments. ¹

Despite the economic shutdown and overall slowdown in activity, LEM has continued to find ways to transact. Since 2011, LEM has invested in 94 multifamily properties across 27 markets and has realized 51 of those investments. ¹ Between March and May of 2020, LEM acquired one property, sold another, and completed two refinancings. ¹ LEM is actively negotiating the sale of four additional properties with additional sales on the horizon.

“On the acquisition front, we are starting to see more ‘green shoots’ with more deals coming to market,” said Allison Bradshaw, Managing Director of LEM.  “Deal volume is certainly lower than it was this time last year, but we believe that our disciplined fund size and diligent investment process should allow us to find investments that offer the opportunity to achieve our targeted returns. “

LEM invests in apartment properties located in primary and secondary markets on the east and west coasts, the four major cities in Texas, Phoenix, Denver, Minneapolis, Chicago, Nashville and other cities on a select basis. “Multifamily has a proven history of performing well through previous economic downturns, which is one of the factors that attracted us to the asset class. So far through the pandemic, our portfolios have held up well with strong collections and retention rates. While there is some near term uncertainty, we remain confident in this sector and the longer-term fundamentals,” said Herb Miller, a founding partner of LEM, “People need a place to live and the existing imbalance between demand and supply for multifamily should continue to help support the need for this property type.”

Notes:
1 – As of July 22, 2020.

Renting affords a high degree of mobility. With changes in attitudes towards home ownership coupled with high barriers to entry for new buyers, more people of all demographics are renting today. In fact, over 75% of the growth in renters from 2010-2018 was driven by higher income households. The Harvard Joint Center for Housing Studies’ recent report, “America’s Rental Housing 2020” takes a look at what is driving the Rental Housing market today. Click Here for the Harvard JCHS Americas Rental Housing Report 2020

LEM Capital reflects on 2019 year in review and 2020 acquisition goals

Philadelphia, PA – LEM Capital, L.P. (“LEM”) today announced the achievement of several important milestones during 2019.  “We continue to focus on generating consistent risk-adjusted returns for our investors by investing in value-add multifamily properties and creating investment portfolios that seek to generate a combination of current cash flow, downside protection and upside for our investors,” said Jay Eisner, a founding partner of LEM.  “Last year we were active buyers and sellers with a total transactional volume of over $630 million, which included the acquisition of 12 properties totaling 2,690 units and the sale of 5 properties totaling approximately 1,120 units. In addition, we fully realized one of our value-add multifamily funds,“ said Herb Miller, a founding partner of LEM, “2019’s results bring our total volume of transactions since 2011 to a total of 92 acquisitions and 49 sales.”  Since the firm was founded in 2002, LEM has raised over $1.1 billion of committed capital.¹

LEM also announced the firm’s 2020 acquisition goals, continuing the firm’s business of partnering with high-quality, local real estate operating companies to acquire value-add multifamily properties. “Our target for 2020 is to acquire approximately $500 million of apartment properties located in primary markets on the east and west coasts, the four major cities in Texas, Nashville, Chicago, Minneapolis, Phoenix, Denver and other cities on a select basis,” said Allison Bradshaw, a managing director of LEM. “In today’s competitive market, we believe the institutional quality of the LEM team, our dedicated focus on multifamily, and the unique way we integrate our expertise and capabilities with our reliable operating partners across the country sets us up for success.”

LEM’s value-add multifamily equity program targets equity investments ranging between $5 million and $20 million per property, with total capitalizations ranging from $20 million to $50 million or higher. “LEM’s value-add business plans typically contemplate upgrades to apartment interiors, common areas and a particular focus on the amenities with the goal of providing a ‘like-new’ experience at a moderate price point for the average working-class American renter.  We work closely with our operating partners through the bidding and acquisition process to develop and implement business plans that seek to create value over our typical 5-year hold period,” said David Lazarus, a managing director on the acquisitions team.

In 2019, we both grew the LEM team and acknowledged their hard work. At the start of the year, Allison Bradshaw, a Managing Director on the Acquisitions Team and member of the Senior Leadership Team joined the firm from a national multifamily platform in New York. Sam Ward joined as an Analyst on the Acquisitions Team in May; he was previously working for a regional industrial and multifamily developer. Two members of the team were promoted. Kevin Weidman, a member of the Acquisitions Team was promoted from Associate to Senior Associate. Emily Strickman, previously an Analyst on the Asset Management and Portfolio Management teams, was promoted to Associate and joined the Investor Relations Team while retaining her Portfolio Management responsibilities.

Additionally, in the Summer of 2019, LEM relocated its headquarters, taking new space at 2400 Market Street in Philadelphia.  Situated along the Schuylkill River, the existing structure, originally built as a Hudson Motor Car Company plant in the 1920s, was redeveloped into a modern, 600,000 square foot, nine-story building with an emphasis on innovation, sustainability and green space.²  “The new space will provide the team with a modern work environment which should enable us to continue providing investment expertise to our investors,” said Eisner.

Notes:
1 – As of February 3, 2020.
2 – https://www.aramark.com/about-us/news/aramark-general/new-global-headquarters

Managing Director, Allison Bradshaw, judges the Young Guns Pitch at the 2020 NMHC Conference

Orlando, FL – LEM Capital, L.P. (“LEM”) Managing Director, Allison Bradshaw, participated as a judge at the Annual National Multifamily Housing Council (“NMHC”) Young Guns Pitch at this year’s conference in Orlando. Three up-and-coming industry professionals  presented their best investment opportunities and a team of judges, including Allison, acted as a mock investment committee debating and analyzing the merits of each opportunity. See the full summary blast from NMHC highlighting this event and key takeaways from this year’s conference. NMHC 2020 Roundup

Magnolia Capital’s Justin Maturo (center right), winner of the 2020 Young Guns Pitch to Senior Leaders competition, accepts his trophy with judges John Gray of LMC Investments (left), LEM Capital’s Allison Bradshaw (center left) and Griffis Residential’s Chris Leggee (right).

LEM Capital acquires boutique Phoenix apartments

Philadelphia, PA – LEM Capital, L.P. (“LEM”) has acquired The Montana (or the “Property), a 134-unit garden-style apartment community built in 1998 and centrally located within the South Phoenix submarket. The Property is located on East Baseline Road – a major east/west thoroughfare between South Phoenix and Tempe. Residents of The Montana enjoy accessibility to Downtown Phoenix via I-10, a major north-south highway that connects Downtown Phoenix to Tempe and Chandler. The Property also benefits from proximity to major employment hubs in Downtown Phoenix, Tempe, the Sky Harbor Airport, and Ahwatukee – all within a 15-minute drive from The Montana.

The Property – LEM’s third investment in Phoenix – was acquired on an off-market basis with a long-time operating partner. The Seller had owned the Property since 2017 and invested minimal capital towards unit interior improvements. LEM’s business plan contemplates upgrading 100% of unit interiors to a high-end renovation level, improving curb appeal with new signage and paint, expanding the fitness center, installing a new dog park, and improving the landscaping throughout the Property to enhance the boutique community feel.  The Property should attract the growing number of renters in Phoenix looking for modern apartments with contemporary amenities and finishes at a more affordable price point, without having to sacrifice accessibility to major employment areas.

“In 2018 we entered the Phoenix market because the city had changed from a heavily construction-based economy to one driven by a variety of industries including healthcare, bioscience, education, and manufacturing,” said David Lazarus, a Managing Director at LEM. “Meanwhile, we believe Phoenix continues to be an attractive and affordable place to live.”

LEM Capital closes $14.6 million joint venture transaction in Eagan, MN

Philadelphia, PA – LEM Capital, L.P. (“LEM”) has closed on a $14.6 million joint venture investment for the acquisition and renovation of Cedarvale Highlands (“Cedarvale” or the “Property”).  Cedarvale is a three-story, 108-unit apartment community located in Eagan, MN, one of suburban Minneapolis’ most desirable submarkets offering robust median incomes, high median home values, a strong public-school system and substantial barriers to entry for new construction. The Property has direct access to the major I-77 and I-35E motorways, which connect to the region’s most important job hubs including the Minneapolis-St Paul International Airport, the Mall of America and the downtowns of Minneapolis, St. Paul, Eagan and Bloomington. The Twin Cities is home to the headquarters of eighteen Fortune 500 companies and the region’s highly educated population and anticipated corporate expansions are projected to drive job growth going forward.

The Property was acquired from a private owner and offers physical and management upside.  The seller has invested in the Property to minimize deferred maintenance but has not spent money on substantial amenity or common area improvements that would appeal to tenants. The seller has executed light upgrades on 52 of the 108 units and is achieving strong rental premiums. The business plan contemplates upgrading all unit interiors, improving curb appeal and common areas, refreshing the landscaping, renovating the existing amenities and building a fitness center.  LEM’s operating partner will utilize a more professional approach to property management and marketing and institute market-level utility reimbursement charges and garage fees.  On a post-renovated basis, the Property should attract the area’s many blue/grey collar workers who desire professionally managed, high quality apartments in an accessible location.

“We are very excited about the opportunity to acquire a well-built property in a desirable suburban neighborhood with high barriers to entry,” said Joshua Grossman, a senior vice president at LEM. “Our business plan anticipates generating value for our investors by creating a property that offers tenants modern finishes and enhanced amenities in a submarket with limited apartment stock.”

LEM Capital Announces 2018 Year in Review and 2019 Value-Add Multifamily Origination Goals; Allison Bradshaw joins the firm as Senior Vice President

Philadelphia, PA – LEM Capital, L.P. (“LEM”) today announced the achievement of several important milestones during 2018.  “We continue to focus on generating strong risk-adjusted returns for our investors by investing in value-add multifamily properties and creating investment portfolios that seek to generate a combination of current cash flow, downside protection and upside for our investors,” said Jay Eisner, a founding partner of LEM.  “We were very active both buying and selling in 2018 with total transactional volume of over $1.0 billion, which included the acquisition of 11 properties totaling 2,690 units with a total capitalization of $508 million and the sale of 12 properties totaling  3,389 units with a total sale price of $503 million,“ said Herb Miller, a founding partner of LEM, “2018’s results bring our total volume of transactions since 2011 to a total of 80 property acquisitions and 43 property sales.”  Since the firm was founded in 2002, LEM has raised over $1.1 billion of committed capital.¹

LEM also announced the firm’s 2019 acquisition goals, continuing the firm’s business of partnering with high-quality, local real estate operating companies to acquire value-add multifamily properties. “Our target for 2019 is to acquire between $400 and $500 million of apartment properties located in primary markets on the east and west coasts, the four major cities in Texas, Nashville, Chicago, Minneapolis, Phoenix, Denver and other cities on a select basis,” said David Lazarus, a partner of LEM. “In today’s competitive market, we believe the team we have built at LEM and the unique way we integrate our expertise and capabilities with our strong and reliable operating partners across the country sets us up for success.”

LEM’s value-add multifamily equity program typically provides up to 85% of the required equity behind the senior mortgage debt, targeting equity investments ranging between $5 million and $20 million per property, with total capitalizations ranging from $20 million to $50 million or higher. “LEM’s value-add business plans typically contemplate upgrades to apartment interiors, common areas and a particular focus on the amenities with the goal of providing a “like new” experience at a moderate price point for renters.  We work closely with our operating partners through the bidding and acquisition process to develop and implement business plans that seek to create value over our typical 5-year hold period,” said Josh Grossman, a senior vice president on the acquisitions team.

LEM Capital is also pleased to announce that Allison Bradshaw has joined the firm as senior vice president. She will play a lead role on the originations team and works with the managing partners to oversee the strategic growth of the firm. “We are extremely pleased to have Allison join our team at LEM,” said Herb Miller, a founding partner at LEM, “Her real estate investment skills will broaden our platform and strengthen our ability to execute our investment strategy.” Ms. Bradshaw joins the firm from Greystar, where she was a Managing Director on Greystar’s Investment Management team with direct oversight of a $1.9 billion multifamily portfolio and led acquisitions, dispositions, asset management and business development in the Northeast region.

1 –As of December 1, 2018.

LEM Capital closes $49.1 million joint venture transaction in Sanford, FL

Philadelphia, PA – LEM Capital, L.P. (“LEM”) has closed on a $49.1 million joint venture investment for the acquisition and renovation of Solara (or the “Property”), a 272-unit mid-rise apartment community in Orlando’s Lake Mary submarket, a growing, amenity-rich area north of Orlando that offers prominent access to diverse employment and demand drivers. The Property was acquired off-market with a repeat LEM sponsor at a basis below recent sales and current replacement costs. Our value-add business plan includes physical and management improvements through light unit interior upgrades, amenity enhancements, and instituting more professional and experienced management.

Solara was built in 2014 and features 4-story, elevator serviced buildings with conditioned interior hallway corridors, 9-foot ceilings, and a large, open outdoor amenity space. Situated on the border of Sanford and Lake Mary, the Property offers residents prominent access to I-4 and Route 417, two of the main thoroughfares in Orlando that provide connections to major employment hubs and lifestyle destinations throughout the MSA including: the Maitland office parks totaling over 8.5 million square feet, the downtown Orlando office market totaling over 10.5 million square feet, the Orlando International Airport, the University of Central Florida, and Lake Nona. The submarket is primarily driven by high wage jobs generated from over 9 million SF of office nearby, including 4 million SF of Class A space. Companies are drawn to Lake Mary largely due to the public schools, proximity to lifestyle and retail amenities, affordability, and talent pool to fill positions.¹

“We are very excited about the opportunity to acquire a well-built, newer vintage property in one of Orlando’s high-growth submarkets,” said Jay Eisner, a partner at LEM.

1 – Market information on Lake Mary and surrounding Orlando submarkets sourced from the Legends of Lake Mary Offering Memorandum prepared by ARA Newmark, which lists specific supporting sources.

Entering what many are calling the ninth inning of the current real estate market, we believe the most prudent investment is one offering the most downside protection and dependable upside. In real estate, that is an asset class that provides relatively low vacancy rates and above-average rent growth, attributes exhibited by workforce housing. CBRE Research explores how property market fundamentals and supply and demand trends have helped workforce housing outperform other types of multifamily.

LEM Capital closes $38.4 million joint venture transaction in Glenview, IL

Philadelphia, PA – LEM Capital, L.P. (“LEM”) has closed on a $38.4 million joint venture investment for the acquisition and renovation of Valley Lo Towers (“Valley Lo” or the “Property”).  Valley Lo is a five-story, 112-unit apartment community located in the village of Glenview in Chicago’s prestigious North Shore submarket. The Property is a garden style community that features ample green space, large floorplans, elevators and conditioned underground parking. Glenview offers strong public schools, excellent demographics, desirable retail amenities and high single-family home prices.  Residents benefit from the Property’s proximity to northern Cook County’s major commuting routes; the I-94 to the east, the I-90 to the south and the I-294 to the west as well as Glenview’s three Metra commuter rail stations. These public and private transportation links provide residents with direct access to Chicago’s major urban and suburban employment hubs.

The Property was acquired from a private owner and offers physical and management upside.  The business plan contemplates upgrading unit interiors, improving curb appeal, refreshing the landscaping, renovating the existing amenities and building a fitness center.  LEM’s operating partner will utilize a more professional approach to property management and marketing and institute market-level utility reimbursement charges and underground parking fees.  On a post-renovated basis, the Property should attract a high-quality tenant that is looking for larger floorplans with contemporary finishes and access to appealing amenities at a more affordable price point than nearby newer vintage apartments.

“We are very excited about the opportunity to acquire a unique and well-built property in a desirable suburban neighborhood with high barriers to entry,” said Joshua Grossman, a senior vice president at LEM. “Our business plan anticipates generating value for our investors by creating a property that offers tenants outstanding customer service, modern finishes and enhanced amenities.”