Wall Street Comes to Main Street as MACK Companies Sells 196 Single-Family Investment Properties to American Residential Properties, Inc.

$28M bulk sale signals largest performing single-family asset deal this year; ARP expects to purchase up to another 1,000 homes from MACK in next two years.

  • Share on TwitterShare on FacebookShare on Google+Share on LinkedInEmail a friend
With good reason, there’s been a significant increase in interest from institutional investors wanting to enter the single-family market this year.

Chicago, IL (PRWEB) January 04, 2013

MACK Companies, the largest owner of single-family investment properties in Chicago, and American Residential Properties, Inc., a real estate investment trust, have announced that MACK recently sold 196 investment properties to American Residential Properties for $28 million. According to James McClelland, president and CEO of Tinley Park, Ill.-based MACK Companies, the bulk sale to American Residential Properties marks the largest performing single-family asset deal in the U.S. this year, and perhaps ever.

“With good reason, there’s been a significant increase in interest from institutional investors wanting to enter the single-family market this year, but the only deals the industry has seen close so far have been bulk foreclosure buys on homes that still need to be redeveloped and leased. There certainly hasn’t been anything on the level of this deal when it comes to performing single-family rentals,” said McClelland.

MACK and ARP have also reached an agreement in principal that would supply ARP with up to 30-50 properties each month during the next 24-36 months. The transactions would mean another 1,000 properties purchased from MACK, said McClelland

“What American Residential Properties smartly realizes is that not only is there a shorter return time on their investment by purchasing performing single-family assets, but they’re also buying properties from a firm with proven experience in managing hundreds of single-family rentals. We’ve been at this a long time, we’re not just figuring this out as we go along because single-family investment properties happen to be the hottest asset class around,” McClelland continued.

For more than 15 years, MACK Companies has been buying foreclosed single-family investment properties in Chicago’s south suburbs, redeveloping them and turning them into rentals – selling hundreds along the way to investors. MACK stays on as property manager for all of its investors.

According to McClelland, individual investors have long realized owning single-family investment properties was one of the best ways to enhance their investment portfolio and build wealth. But it’s really only been in the past two years that institutional investors have started to give this asset class the attention it deserves given its strong returns.

“We’ve been looking at entering the Chicago market for a while given its high foreclosure volume and robust demand for single-family rentals, but we didn’t want to partner with a firm just because it had a large amount of inventory – it had to be the right inventory,” said Steve Schmitz, CEO of Scottsdale, Ariz.-based American Residential Properties, which until now had invested in single-family properties in the Southwestern and Southeastern United States. “MACK doesn’t just grab a random portfolio of distressed properties – it cherry picks its properties. We liked that they were very discerning in their buys, because we’re discerning in ours.”

“Over the past two years we have had a number of institutional investors offer various partnership models, but they just didn’t fit our business philosophy,” said Eric Workman, vice president of Sales for MACK. “What we found with ARP was a true alignment of company cultures and beliefs related to this asset class. Each company believes very strongly in a tenant-focused approach and in a long-term ownership strategy. Those values, along with ARP’s capital structure and commitment to this industry make us confident that this is the right deal for all parties involved.”

Also setting MACK Companies apart from other single-family investment and property management firms is that the firm only sells performing assets. “All 196 of our recently-purchased MACK properties are redeveloped and tenant occupied,” said Schmitz. “We’ll see positive returns on our investment immediately and we’re confident we’ll continue to see healthy returns for the foreseeable future given MACK’s property management model and the strength in the single-family rental market. This is a strategy that we expect to repeat with MACK on an on-going basis.”

According to real estate firm CoreLogic, the demand for single-family investment properties is far outpacing the available supply. In some housing markets, rental demand has jumped more than 25 percent in the last year. As single-family rental inventory is declining, returns have become more attractive, with rents rising by 2 percent last year and 1 percent this year. Leasing activity was up 7 percent from one year ago in August and up 12 percent from the beginning of this year

MACK Companies has had an equally impressive run of investment sales, as the firm surpassed 200 properties sold year-to-date. With the American Residential Properties bulk sale, MACK is on track to significantly outpace last fiscal year’s sales volume.

About MACK Companies
MACK Companies purchases, redevelops and leases a new home every three days. The firm currently manages approximately 600 single-family rentals, of which it owns 350 of those properties. It manages the other 250 single-family homes for real estate investors who purchased the homes through MACK’s AAA+ Investment Properties program.

For more information on MACK Companies and its AAA+ Investment Properties program, which eliminates the hassles and risks for investors of buying and redeveloping distressed property, finding qualified renters and performing day-to-day management, visit the firm’s new website, http://www.MACKcompanies.us.

For more information on the MACK Estates line of luxury resale foreclosures, visit http://www.MACKestates.com

About American Residential Properties
American Residential Properties, Inc. (ARP) is a fully integrated and internally managed real estate investment company that is organized as a real estate investment trust. ARP acquires, renovates, leases and manages single-family properties in select communities nationally.

Editors: For more information or to schedule an interview, contact Mark Thomton at (312) 267-4523 or mthomton (at) taylorjohnson (dot) com.