Case Studies

CAPREIT

Making it in unlikely places in the multifamily market

Since inception in 1993, CAPREIT has emerged as one of the nation’s leading real estate and multifamily housing experts and the Maryland-based company is doing some of its best work in not-so-glamourous, unlikely neighborhoods. “We’re working in St. Louis, Indianapolis and suburban Detroit; markets that traditionally you won’t find on the cover of a magazine,” shares Andrew Kadish, second-generation president of CAPREIT. “Sure, they’re no South Beach or San Francisco, but each community has far exceeded our investor expectations.”

Based in Rockville, Maryland, CAPREIT acquires and manages both market rate and affordable housing communities, specializing in value-add renovation. The company currently owns and manages some 54 multifamily apartment communities across the U.S.

20 years of family ties

Over its history, CAPREIT has been involved in more than 200 multifamily communities containing 30,000 rental and condominium apartment homes, housing more than 100,000 families. The company’s adept experience in the industry stems from long running family ties.

“My father, Dick Kadish, founded CAPREIT in 1994,” tells Kadish. “We’ve been a family-owned and -operated company for more than 20 years now.”

While many companies maintain family ownership, Kadish says it’s a highly experienced, longstanding executive and management team that’s different about CAPREIT. “What’s unique about us is that pretty much all members of our 11 person senior staff have worked together since inception for the last 20 years,” he reveals. “I’m considered a rookie and I’ve been here for nine years.”

Kadish started working for the family firm when he was just 14 years old as a high school intern. “We’re truly a family company in every sense of the word,” he measures. “My father is still involved and my older sister, Jennifer. We’re not just colleagues, we’re partners and as my father’s always said, ‘you can yell at each other all day, but at the end of the day, we’re still family.'”

CAPREIT

Driving more value

Today, CAPREIT’s family is a rather large one – the company employs 450 associates. “Our properties span the Southeast and into the Mid-Atlantic, heading into the Rust Belt and into the Midwest,” describes Kadish. “We’re in Minneapolis, Wisconsin and down into Kansas City, St. Louis and even Texas, as well.”

Kadish explains CAPREIT’s perspective as real estate experts focusing on secondary and tertiary markets. “Generally, we take B-grade residential properties and bring them back up to a B+ or A-,” he says. “Our interior value-add programs encompass intensive kitchen and bathroom renovations with the goal of significantly raising rents while maximizing customer satisfaction. On the other hand, we also are capable of owning and managing affordable housing communities. Currently, we own and manage several thousand tax credit units across the country.”

CAPREIT has cultivated success in lower-level markets through management’s implementation of a savvy acquisition strategy, innovative financial structures and professional property management focused on residential satisfaction and retention.

Golden opportunity

Over the last decade, Detroit’s real estate market has plummeted, leaving the area housing market at a near standstill and relatively devoid of investor interest. However, in the Motor City suburbs, CAPREIT has been able to attain significant financial success.

“To the outside world, investing in some of these places we have, such as Detroit, seems risky, but we’ve managed to achieve $200 rental premiums,” tells Kadish. “The Detroit metro area has exceeded our expectations and made our investors very happy.”

One property in particular is The Kensington at Beverly Hills in Southfield. The stately archway welcomes residents and visitors to The Kensington at Beverly Hills, followed by spectacular grounds, flowers and a fountain.

The community boasts an array of distinctive floor plans, walk-in closets and storage, cathedral ceilings and private patios. True to form, CAPREIT has also infused significant monies into renovating interior units, dramatically enhancing the community’s NOI. Property amenities feature a resort-class pool with a cascading waterfall, hot tubs, sundecks and a clubhouse, as well as a gym and business center with high-speed Internet.

“Another city we’re active and proud of our success in is Minneapolis,” tell Kadish. “We have a heavy presence here because we like the market fundamentals, specifically considerable job growth and a well-educated workforce.”

A tour of the town

To ensure that all properties are up to CAPREIT’s high standards, Kadish says the company sends its team all over the country to get to know each and every location. “We truly believe that we must know the property before we invest in it,” he says. “Our management flies in, as well as acquisition professionals and renovation and construction teams. This is how my father always wanted it to be.”

“Another factor is excellent people,” adds Kadish. Chris Pilato and Steve Catarinella lead CAPREIT’s renovation teams. “They work in tandem running the renovation schemes and while we subcontract some work for some units, we mostly have our own teams in place.”

Growing on a national scale means costly travel expenses as well as competing with national prices and interest rates. “We’re currently working on national contracts with vendors to help control costs,” tells Kadish. “We’re being proactive in creating these contracts so that no matter where we are geographically, prices are fixed.”

“Interest rates seem to be steadily creeping up,” he adds. “We’ve enjoyed the low interest rate environment over the last year but I’m worried that rates will climb again. We’re going to acquire what we can now while they’re low.”

Family first

Fortunately for CAPREIT, no matter the industry challenges, Kadish says the firm has a strong and steady team to lean on. “Some companies promote a family atmosphere, but it’s really true here; we’ve watched each other and our kids grow,” he compares. “When my daughter was born two months premature in March 2011, my family spent six weeks in the NICU waiting for her to recuperate and come home. When my wife went into early labor, I was just about to close on two deals. I didn’t have to worry though – my coworkers took care of the closings. I was taking care of my family and they took care of me; that’s just how it is around here. We don’t just say we’re family, we truly live it.”

And this family tradition continues as Kadish begins the process of assuming ownership. “My father has been grooming me for the top role for a long time and on December 10, 2014, I was appointed as president,” Kadish tells. “It is a very exciting time for the company, as well as myself, personally.”

Owning and managing 54 multifamily communities across the U.S. takes a team that can trust one another and that’s been CAPREIT’s strength for more than 20 years. Now one of the leading real estate and multifamily housing operators in the country, CAPREIT continues to succeed in surprising places.

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