From Distress to Success: Princeton Properties, Norcross, GA

March 6, 2012 - PRLog -- Reimagining existing residential buildings can often allow the buildings to better reach their fullest potential. With the help of a caring management company and an ardent owner, these assets can become something more than bare shelter. They can be given new life through refocusing and repositioning. A continuing trend "from distress to success" can provide long-term investments in reasonably priced housing, and at the same time work toward stabilizing communities most in need.

On September 1, 2009, Princeton Properties was assigned as the managing agent for 1208 units located between four different apartment communities in Norcross, GA.  

The four properties were in the midst of a downward spiral. The original deal sponsor had triggered a loan default causing the primary source of equity to scramble in order to save the deal and keep it from being foreclosed upon by the lender. Part of this process necessitated putting the properties into bankruptcy.

This is when Princeton took over the day to day operation of the properties. “The effective occupancy was 75%. There were over 200 vacant unturned apartments. The common area capital needs were significant – from roofs to parking lots” comments Dan Endyke, Senior Vice President at Princeton Properties.  He continued, “The staff was disenchanted. Within 60 days of taking over as the managing agent, 22 of the 30 staff positions needed to be replaced by Princeton.”

Princeton Properties had a daunting task ahead of them, turning this portfolio around was going to be no small feat.  In November of 2009, the total revenue collected for the portfolio was $535,000. This was the low point in the operation of the property. To further add to the struggle, the portfolio experienced two significant fire losses during this time. 13 units in total were destroyed.

During the next 4 months, negotiations with the lender took place. The lender accepted a significant write down of the original note. Interim, expensive debt was placed on the properties and the repositioning of these assets began in earnest. At the end of 2010, the sites were infused with the necessary capital campaigns; and slowly but surely the operation stabilized. Non-paying, unqualified residents were replaced with qualified renters. Fortuitously, stabilization of the properties was realized quickly allowing for the temporary, expensive debt to be replaced with long term Agency debt at very attractive and significantly better terms.

The monthly income for the portfolio now exceeds $725,000 (March, 2012). The ongoing capital needs are modest. Resident profile is improving. And the properties are poised to provide significant cash on cash returns to ownership with the real ability to exit the deal within 36 months at an IRR that may realistically exceed 20%.  The job in Norcross was not easy – it was chaotic, frustrating, and a massive challenge. But it is a prime example of chaos breeding productivity with productivity breeding happiness.  "Princeton Properties is very proud to be spearheading this operation - the teams we have on the ground today are an exceptional group of Princeton professionals!", Endyke proudly states.

Princeton Properties seized this opportunity with the Norcross portfolio.  Given the appropriate investment of capital and creativity, these Norcross properties were re-organized to address the current needs of the Georgia renter. While this investment strategy is not new, Princeton’s performance in the Atlanta market encourages greater interest and pursuit of this strategy. Acquiring blighted buildings for the purpose of repositioning and renovation not only improves the entry-level housing stock; it works to revitalize surrounding communities.

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Princeton Properties Management Inc. of Lowell, MA acquires, builds, renovates, leases & manages apartment communities & corporate furnished apartments. Currently, Princeton Properties owns & manages more than 6000 apartment homes in MA, NH, ME & GA.