GDL Asset & Greenwater Real Estate Management offer solutions for large apartment properties
In a market that has become crowded with value-added apartment investors who follow fixed and reverse strategies, GDL Asset Management is driven by more than just profits.
“When I founded the company in 2009, my vision was to provide a dignified life for the people who are the economic engine of this country,” says Genaro Díaz, President and CEO of GDL Asset Management and Greenwater Real Estate Management. Díaz strongly believes that these people have the right to live in the same “Class A” as everyone else. The company’s strategy is to buy Class D assets and raise them as close to a Class A property as possible.
Over its 13-year history, GDL Asset Management is a general partner that has acquired over 32 properties and 8,500 units in Texas, Arizona, Florida and New Mexico. “We buy the problems and we solve them,” adds Díaz. The solutions offered by the company go beyond simple repairs and renovations. The company cleans up crime and the bad elements to create safe and secure properties for families with modern amenities, free activities and exceptional customer service. “It’s about creating a community for the people who live there,” he says.
Díaz left Mexico City in the late 1990s with a law degree, a family history in real estate, and a desire to live a better, more meaningful life. Many of the communities he transformed were primarily Hispanic areas struggling with security issues. He has always believed in the power of impact investing, and he strives to empower people and create happier societies where children play outdoors, spend time with their families and feel connected to nature.
For investors, the company follows a 1-2 year strategy to buy, reposition and then sell an asset. “We are focused on the longer-term strategic vision of maximizing the values of each rental property and achieving the highest ROI or ROI for investors,” says Veronica León, Senior Executive Administrator. However, this is not just a one-time investment where the company makes improvements and then moves on to the next project, the philosophy is to create value for investors, residents and the community, he adds. she.
Value-added heavy packages
GDL typically targets deferred maintenance assets that were built in the 1960s, 70s and 80s. “We seek out what we call the ‘diamond in the rough,’ which is often property that has not been touched since it was built” , says Joshua Stewart, District Manager for Greenwater Real Estate Management, GDL’s full-service property management. company that oversees renovation, property management and leasing.
Often the first step is to clean up problem tenants, crime, and create a safe environment for residents. The company is creating gated communities to control access, improving lighting, adding security cameras and working with local police to increase patrols. The renovations involve extensive repairs and upgrades both exterior and interior, including landscaping with new trees, plants, and flowers to create a park-like setting.
“Honestly, the properties are in pretty bad shape when we buy them, but we see so much potential in them,” says León. Typically, the interior and exterior model is complete and there is a whole new tenant base in place one year after the company acquires an asset.
In line with its goal of building communities, adding or improving existing common spaces is another priority. At many of its properties, GDL installs play areas comparable to city parks with equipment, outdoor fitness areas and mini soccer fields for children. If there is a pool in place, the company removes it and installs a new resort-style pool, usually with canopies and exterior grills so people can swim in the pool and have barbecues with their families, notes Stewart.
The property management team is also implementing new services and programs ranging from after-school tutoring to soccer tournaments and movie nights. “We create a pleasant community where, in the end, people and families interact,” Díaz explains. Building relationships and rapport with tenants helps improve the tenant experience and improves tenant retention and return on investment for investors, currently at 30% at the limited partnership level.
GDL has a strong track record of delivering results for its investors. For example, the company acquired the 212-unit Huntington Park Apartments in Tucson in December 2020 for $17.2 million or $81,132 per unit. Management has successfully implemented a repositioning program which has significantly improved the performance and value of the property.
Cap-ex improvements included interior and exterior renovations and repairs, the construction of carports, major landscaping improvements, and the addition of family recreation areas, such as a playground, a mini soccer field and barbecue area. Additionally, GDL has made significant security upgrades, including creating a fenced and gated access, improving exterior lighting and adding closed-circuit surveillance cameras. The project is under sales contract with a pending price of $40.2 million, representing a profit of $15.5 million and a total IRR of 67.4% for investors.
One of the keys to GDL’s success has been to take a hands-on approach to operating and managing its investment properties. While other investment groups typically hire a general contractor or third-party management team, GDL is able to leverage its own in-house team with Greenwater Real Estate Management. Greenwater creates additional cost savings, while ensuring that everything is done as planned and nothing slips through the cracks, notes Stewart.
GDL’s success in repositioning problematic properties is also being noticed by the city and local authorities. The company often gets a warm welcome when it acquires another asset because it knows the company will invest the labor and capital needed to improve those problematic properties, Díaz notes. “We are not just a solution for people, but we are a solution for the city and local government,” he says. GDL has many examples where the company purchased a property or portfolio of properties that had issues with crime and drug trafficking. “We solve these problems by creating a safe atmosphere where people and families can live with dignity and interact,” he adds.
For Díaz, the reward is not just a formula on paper that calls for investing per unit to provide a certain IRR. The payoff is when the hard work and investment results in that “magic” where people have a beautiful community where kids run and play. “There are many places where people don’t live in the right way, and we want to be the solution,” says Díaz.