05 / 01 / 2006
The Sunset Ridge Apartments were in the midst of an $8M rehab on 324 units in 41 buildings during 2004. This charming Class B community had been in existence in the heart of San Antonio, Texas and Alamo Heights since the 1950s. San Miguel Management had been engaged as the asset manager for project with a large, national property management company handling the day-to-day management issues. Until the end of 2005, San Miguel interacted with the property management company to guide decisions, review the monthly operating results, evaluate budgets and communicate operational results with the GP for the asset partnership. Ultimately, San Miguel assumed the property management role beginning in 2006.
Sunset Ridge has always proven to be a little challenging in terms of leasing, in that it only has one and two bedroom floor plans with one bathroom. Furthermore, despite the interior freshness from the renovation, the units don’t offer a lot of square footage to do extensive upgrades. Consequently, as part of this renovation, the targeted improvements were in the kitchens, HVAC, utility room and windows. The community certainly requires targeting specific resident demographics, marketing to young professionals who value the charm, historical presence and location. Even with these challenges over the four year term as property manager, San Miguel was able to obtain the highest occupancy experienced by the investors during their eight years of ownership. Only the model unit remained vacant with no “down” units.
On top of floor plan limitations that required creative, targeted marketing, San Antonio and the nation were experiencing an economic downturn that resulted in several years of lower rental rates and concessions. Despite all this, San Miguel yielded impressive performance results with total revenues increasing 12%, controllable expenses (excludes property taxes, utilities and property insurance) only increasing 3% and NOI increasing 11%. Excluding taxes, insurance and utilities, the NOI with controllable expenses actually increased 14%.