Lou Davis, the head of Cortland Partners’ new Charlotte office, is excited to start remodeling and running the Atlanta-based company’s newly acquired portfolio of thousands of local apartments. He’s also excited to get some office furniture.
Cortland opened its Charlotte office earlier this month, after the company completed its acquisition of nine apartment complexes totaling more than 3,200 units. Davis was waiting for furniture to be delivered Tuesday in the office, where computers were stacked on boxes and employees were still settling in.
The company, which manages more than 30,000 apartment units nationwide, is betting big on Charlotte’s continued growth. And Cortland’s strategy isn’t to build new apartment complexes: The company is buying up apartments that opened in the 1980s and 1990s, fixing them up to new-construction standards and renting them for less than competitors.
“The idea is, if you’re able to buy and fix everything, you’re in at a lower basis,” said Davis. “Our thesis is kind of contrarian.”
The apartment complexes Cortland owns in Charlotte include properties such as Waterford Lakes and Aspen Peaks on South Boulevard, Sardis Place at Matthews and Village Lakes off Independence Boulevard and The Regency in Cotswold.
The garden-style apartments aren’t quite as fashionable as new, mixed-use developments or brand-new apartment complexes under construction in and around uptown. But Davis said once Cortland is finished overhauling them, they will have the same amenities – think built-in Bluetooth speakers, outdoor grills and granite counters – as new apartments, and at a lower rent.
Cortland’s strategy is to save money on renovations by doing its own design, acting as its own general contractor and sourcing materials from overseas, Davis said, all of which can lead to “astronomical savings.”
The end result: He expects the company will be able to rent renovated apartments for about $1.40 per square foot, compared with $2 per square foot for a new apartment. That works out to $1,400 a month vs. $2,000 a month for a 1,000 square-foot apartment.
Cortland is in the design stage right now, Davis said, a process that will take several month. Once renovations start, they should take about a year to complete.
Davis said Cortland, which started out as an apartment developer before acquiring tens of thousands of units, isn’t opposed to developing new complexes. The company hopes to reach 50,000 units, about 20,000 more than it currently owns. But he said many prime spots have already been bought, and construction costs have gone up, making such projects harder to pull off now.
As to the big question on many peoples’ minds: Is Charlotte in an apartment-building bubble? Davis said he doesn’t think so, as long as growth steady growth continues. Something could derail the economy, of course, but in the short to mid-term, Davis said he doesn’t see any major red flags on the horizon.
“I’m glad people are asking that question,” said Davis.