Polishing an Emerald by Inside Business
FOR IMMEDIATE RELEASE
ARTICLE BY INSIDE BUSINESS
By Pete Humes
What do the Virginia towns of Colonial Beach, Appomattox, Waverly and Louisa all have in common?
They each have populations smaller than the Emerald Point Apartments in Virginia Beach.
Built between 1968 and 1972, the 863-unit property covers 50 acres and is home to an estimated 4,000 people. The mix of apartments and condos is set just off Laskin Road, north of the Hilltop Shopping Center, bordered by Wolfsnare Road and Westminster Lane and tucked into a deep "C" bend of Wolfsnare Creek.
When the Breeden Company decided to renovate each of the 863 units, they knew it was going to take time... and money.
Extending the life of an asset
Chief Operating Officer Tim Faulkner said that Breeden is investing $13,000 per unit on renovations that include new windows, wood cabinets, formica counters, carpeting and HVAC upgrades. Despite the sizable investment, rental prices for the improved units will only increase by $50.
"If you look at the rent premium," Faulkner said, "it would make no economic sense if you were just doing a spreadsheet."
But according to Faulkner, revitalizing key properties in Breeden's massive portfolio - 10,000 apartment units, 2 million square feet of retail and office space, and 1,700 residential homes - was a decision based on more than just numbers.
"About four years ago, we sat down to develop a strategy for repositioning our portfolio," Faulkner said. "There are lots of value-add strategies out there, but we wanted to find a way to improve the quality of housing in Hampton Roads."
The company's renovation strategy for Emerald Point has two main objectives. The first is to extend the life of the asset.
While the structures are creeping up on 50 years, Faulkner says Emerald Point's buildings have "good bones," thanks to solid brick construction.
But no matter how good the bones are, aging properties are going to have issues. Breeden found themselves tackling problems one at time, which, in a property as big as Emerald Point, proved inefficient.
"You can either piecemeal it or you can manage the process," Faulkner said.
Breeden chose to get proactive.
"We could have raised rents a little bit or completely changed the flavor of the property," Faulkner said. "But we said, 'Look, we're going to hold this asset long-term, so we need to upgrade and take care of the property from a deferred maintenance and a useful life-cycle standpoint.'"
The second focus is to provide quality workforce housing.
"We want to make a better product for the community," Faulkner said. "The higher the quality of housing, the better the workforce you can attract."
Breeden acquired the Emerald Point property in 2004 for $63 million from Pennsylvania-based Morgan Properties. Minor exterior renovations were done after the acquisition, but nothing on the scale of the current upgrades.
After refinancing the property, Breeden used the earned capital on improvements. Faulkner said it will spend $11.5 million over two years to renovate the Emerald Point Apartments. In total, the company will be renovating more than 1,800 units in its portfolio, adding up to more than $20 million.
But the Emerald Point project is by far the largest in scope and scale.
"We've spent $450,000 on the landscaping alone," Faulkner said.
Out with the old, in with the new
There is a constant flow of traffic inside the Emerald Point leasing office. Agents and managers field phone calls and chat in-person with prospective tenants.
Barry Tomlin, vice president of property management for Breeden, stands calmly in the center of the action.
"We call it a little city," he said.
A short ride around the property in a golf cart drives that point home. The streets and cul-de-sacs of Emerald Point wind past building after building, broken up by the occasional pool, tennis court or towering, decades-old pine tree.
Tomlin offers a short, three-apartment tour of the Emerald Point renovation lifecycle.
First comes the "before," a modest two-level, two-bedroom with wall-to-wall beige carpeting and bright white walls. The apartment shows its age mostly in the details: heavy iron handrails, '70s cabinet hardware and an old-fashioned metal tissue dispenser set into the counter behind each toilet.
In a unit "in progress," pieces of plaster crunch underfoot. Tentacles of wires splay out from holes in the drywall. A pile of boxes, doors and debris is clustered in the center of the living room. It's a living space that has - and will - see better days.
The renovated unit showcases upgrades that refresh the space with splashes of modernity. New cabinets in the kitchens and bathrooms. Updated countertops, new floors and the confident hum of an updated HVAC system that fills the apartment with crisp cold air.
Too much cold air for Tomlin, who adjusted the new thermostat.
"We probably don't need to keep it that low," he said.
Degrees are dollars, and every degree counts when you're talking about 863 units.
There are fewer than 300 units at Emerald Point left to be renovated. Breeden has been turning over about 10 units per month, which puts completion of the project within the next two years.
According to Tomlin, the renovation process has been well received by tenants.
"Overall, they see it as a positive thing," Tomlin said. "Some have even volunteered to move out for two weeks while we renovate and then move back in."
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ABOUT THE BREEDEN COMPANY:
The Breeden Company is a nationally recognized real estate services company with over 50 years of expertise in every facet of the industry. Breeden Property Management, Breeden Realty and Breeden Construction are the three major subsidiaries of The Breeden Company, with a combined portfolio of nearly 10,000 apartments, over 2 million square feet of retail and office space and an additional 1,700 residential homes. Both Breeden Property Management and Breeden Construction are national award winners on their own merit and provide third party services to select clients. Family-owned and operated since 1961, The Breeden Company has grown into one of the most valued real estate development firms on the East Coast.
For supplemental multimedia or information please visit: www.thebreedencompany.com
DANA E. WILSON
PUBLIC RELATIONS MANAGER
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