Talking With: Jon Bell, CEO of Bell Partners Inc.
A prolific investor/operator offers insights into company strategy, the capital markets and what's on the horizon for multifamily.
Bell Partners Inc. is on the way to a three-peat in 2016. For the third year in a row, the diversified Greensboro, N.C.-based company will wrap $1 billion in deals, reports Jon Bell, its CEO.
As that lofty figure indicates, Bell Partners is an active player in the investment market. Highlights this year include the acquisition of seven properties in Atlanta; Annapolis, Md.; Austin, Texas; Boca Raton, Fla.; Dallas; and Durham, N.C. The company has also sold four assets.
Besides pursuing a robust investment strategy, Bell Partners is among the industry’s most prolific property managers; its portfolio of more than 60,000 units under management ranks 13th on the National Multifamily Housing Council’s annual list.
For Jon Bell’s part, 2016 has been a milestone year, as well. In February, he stepped into the CEO role after serving for seven years as the company’s president. Since joining Bell Partners in 2001, he has overseen company transactions valued at more than $10 billion. Bell holds an MBA in real estate and finance from the University of North Carolina at Chapel Hill and earned a BS in real estate and finance from the University of Georgia. Recently he took time to discuss company strategy, the capital markets and industry trends with MHN.
MHN: You are on track to exceed $1 billion in transaction volume for the third consecutive year. How would you characterize the multifamily sector for the rest of 2016?
Bell: The fundamentals in the apartment sector continue to be very strong, and financing also continues to be available at attractive interest rates, so as a result, we believe the multi-family investment market will continue to be very strong for the balance of the year.
MHN: What are your thoughts on current financing options? What’s expected for multifamily finance for the rest of the year?
Bell: Long-term financing for stabilized properties continues to be very attractive. We have seen, however, some tightening by the banks for development financing, which we think is appropriate. It should provide somewhat of a governor for oversupply, but there’s lender demand because they too see the strong fundamentals in the apartment sector and they know that apartments, as an asset class, have outperformed with low volatility for decades.
MHN: Are any capital sources likely to become either more active or less active lenders in 2016? What effect will that have on the lending climate overall?
Bell: It’s always interesting to see how active financing sources are towards the end of the year. Some lenders may have already hit their annual mandates and they might start dialing back their financing proposals…Sometimes that can create a slightly more attractive buying environment. Typically, a new calendar year starts with fresh financing demands as lenders start the year with new allocations, so it’ll be interesting to see as we head into the fourth quarter, this appetite on the part of the lending sources.
MHN: What does being an election year mean to the multifamily market, if anything?
Bell: I think we’re watching it from a macroeconomic perspective and are curious to see if there are any major shocks. I suspect there would be more uncertainty in a Trump election and I don’t know what the corresponding implications would be to the capital markets. It seems to me like the market is more familiar with the Clinton regime and they feel like they know more about what they’re getting.
MHN: What trends are you following? What’s on your radar in the next 12 months that could affect multi-housing?
Bell: Every asset in the submarket has its own unique attributes, and while there’s been increased demand for the urban properties, driven largely by Millennials and other demographic trends, that’s also where a lot of new construction has occurred, so as a result, we think some of these pockets could experience a deceleration. Everybody likes the shiny new urban asset. I think there have been great growth fundamentals in those markets or submarkets, but as a result of that, there’s been a lot of new supply built in those pockets and a lot of investor demand in those pockets.
In our company we’re focused on the same thing we’ve been focused on for 40 years, and that’s buying good-quality assets in good locations where we can use our platform to add value. It’s not a particularly exotic strategy. It’s just the discipline of sticking to it.
Our formula is time- and cycle-tested, so I don’t see much change on our end. We will likely continue to buy and sell ($1 billion to $2 billion) of apartments each year, just as we have in years past.