Making Old New Again
- Feb 27, 2015
Tampa, Fla.—McKinley will execute more than $50 million in major renovations and repositionings of its existing residential portfolio and new acquisitions in 2015. These efforts will be undertaken in its core markets of Orlando and Tampa, Indianapolis, Champaign, Ill., and its headquarters city, Ann Arbor, Mich.
McKinley is currently undertaking a complete refinancing through Hosham, Pa.-based Berkadia, the company’s mortgage banker. It is executing $1.3 billion in HUD financing on all its buildings. “A variety of improvements made at the properties are required by the lender, based on an engineering assessment,” Albert M. Berriz, CEO of McKinley, told MHN.
“These are the things the lender wants to see done so all the moving parts of the building are in excellent shape before closing. This refinancing effort has yielded significant capital for us, and we’re moving on a property-by-property basis to make improvements that really create value for the residents. Improvements include all new appliances, all new countertops and all new lighting.”
In addition, McKinley has focused special attention on the building exteriors, striving to make them look new again. “We’ve painted all buildings, added new windows, re-roofed the buildings, added new sales centers and changed mechanical systems throughout,” Berriz says. “When you look at the windows, insulation and mechanical systems, we’ve created a skin that will radically reduce our utility costs. In the past year, on buildings we’ve already done, we’ve seen a trailing reduction in utility costs of 25 percent.”
Any time a company like McKinley tackles so many improvements, including enhancements to recently purchased properties, the biggest issue executives worry about is execution risk, Berriz added.
“We spent a lot of time breaking down the project into smaller, property-by-property components,” he reported. “We were able to focus our efforts on one property at a time. Unlike other people, we are going to own these buildings for the long-term, so the improvements we make need to be very high quality.”
The enhancements have brought highly positive comments from residents of the properties, according to Berriz.
“We’ve gotten the most feedback on installation of in-unit washers and dryers,” he reports. “It’s been a phenomenal response. Residents are overjoyed.”
Additional enhancements include granite countertops, stainless steel appliances, superior lighting trim and finish and sophisticated flooring options. These will allow McKinley to generate better-than-anticipated financial results on its newest investments, said Kenneth P. Polsinelli, McKinley chief real estate officer.