The Siegel Group Snaps Up 18 Multifamily Properties for Renovation in Las Vegas
- Feb 23, 2011
Las Vegas–The Siegel Group Nevada Inc. continues to capitalize on the opportunities presented by foreclosures with the recent acquisition of 18 Class B and C apartment properties in Las Vegas from a private seller. At $1.8 million, the purchase price for the 78-unit portfolio was deeply discounted and well below replacement cost.
Located just outside of the Paradise Corridor submarket, the group of 18 assets consists of 15 four-unit buildings and three six-unit buildings near the famed Las Vegas Strip and the 3.2 million square-foot Las Vegas Convention Center. For a decade, Siegel has been in the business of buying distressed properties and transforming them into livable residences through skilled management and upgrades, so the commercial real estate and development company is well-equipped to handle the challenges presented by its newly acquired portfolio. The properties languished under the oversight of the previous ownership, which was slow to address maintenance issues and failed to ensure the timely collection of rent payments.
“Our whole philosophy is to buy B and C properties in B locations,” Michael Crandall, director of business affairs with The Siegel Group, a division of The Siegel Group Nevada Inc., tells MHN. “While we definitely look at other deals, we specialize in taking over distressed or mismanaged assets.”
In addition to targeting a particular property class, Siegel is currently focusing its multifamily acquisition efforts in neighborhoods that cater to blue-collar workers and a Hispanic demographic. “We’ve created a niche in not going after the high-end renter. All people who spend money on rent should get what others get for spending money on rent. They should get amenities and quality accommodations.”
Targeting the blue-collar and Hispanic market in Las Vegas right now makes a great deal of sense, Michael Belnick, apartment market specialist and producer of the Apartment Insider market report, tells MHN. “What kind of jobs are out here? Casino jobs. We lost 30 percent of our Hispanic population because of the loss of jobs. Casinos laid off and there were no construction jobs, but these are the jobs that are the first to come back, and that’s starting to happen.”
Siegel’s investment in rehabilitating these properties will pay off not only in cash flow, but also in increased value, and those entities that have the cash on hand or are able to secure the small amount of financing needed to acquire distressed apartments with four to six units are well aware of those benefits. “They’re going out there and buying these properties and they’re going to have to do rehabs, but they understand that they’re going to be able to get money out of it in a couple of years,” Belnick says.
Siegel does not have flipping in mind for its new acquisitions. “We’re owners and operators; we don’t use third-party management so we can operate our properties and create cash flow,” Crandall notes. “We don’t plan on flipping right away, but if the right offer comes along and it makes sense for us, we would have no problem selling.”
The real estate concern is on a shopping spree, relying on a bit of cash on hand, as well as financing. “We’re aggressively looking to acquire a lot more properties,” says Crandall. “We’re looking at a variety of property types including hotels, casinos and definitely multifamily. We want to grow our multifamily portfolio tremendously over the next few years. And we’re interested in properties that are distressed or in good shape.”