Stoneleigh Companies LLC

StoneleighStoneleigh Companies’ skillset includes acquisition, development and project management so it can make the best long-term decisions for its projects.

By Eric Slack

Founded in 2007 by President and CEO Rick Cavenaugh, Stoneleigh Companies is a private real estate investment company focused on the acquisition and development of income-producing multifamily properties. Stoneleigh’s team is experienced in all facets of commercial real estate development, finance and operations. It has an extensive multifamily portfolio, having targeted the acquisition of existing apartment properties as well as the development of new luxury apartment communities in select markets to build a portfolio of institutional quality properties.

“When the company started, the market was shifting,” Development Manager Ryan Swingruber says. “The downturn and recession meant there would be opportunities to acquire assets through value play opportunities. Stoneleigh began as a real estate acquisition company, but as the market has rebounded and values went up, multifamily became a hot market, so we decided to start developing to expand our portfolio.”Stoneleigh info box

Today, Stoneleigh Companies operates around 3,600 units. It also has three new communities under construction in Houston and Dallas, and it is developing six to seven new communities in Chicago, Houston, Dallas and Denver.

“We’re very bullish on Texas,” Swingruber says. “The development team is overseeing about 1,400 units under construction right now, working in strong markets with good rental rates, occupancy and job growth.”

Diversification Effort

As Stoneleigh saw rising construction costs with many parties flocking to the multi-family sector, it saw the opportunity to begin self-performing work on complex projects as a general contractor and construction manager. The company brought in superintendents and now has an on-the-ground presence at several of its projects.

“Overall we are an acquisition and development company, and self-performing projects provides greater oversight and control and ultimately allows our construction division to be a profit center for the company,” Swingruber says.

For example, Stoneleigh is doing work such as procuring concrete material. Rather than hire a turnkey contractor for flatwork, forming, rebar and other miscellaneous material, its staff procures material, negotiates labor with third-party contractor and deals directly with vendors.

“We are determining areas that are advantageous for us to acquire and manage materials and have subs perform the labor,” Swingruber says. “Previously an acquisitions, development and construction management company, we are now looking to have a greater presence on the ground through a new self-perform general contracting arm of the company.”

As the company develops its projects, it stays at the forefront of the most desirable amenities that renters’ desire, which can vary from market to market. Typically, an approximately 300- to 350-unit project is the company’s sweet spot in terms of absorption, market presence and the cost of construction. These will include around 10,000-square-feet of amenity space adapted to resident needs for common work, relaxation, technology, entertainment and fitness space. Stoneleigh has seen market competition trends such as increasing square footage for common space. Its projects are now adding elements such as interactive fitness studios, technology lounges, coffee bars and other amenities that are common in urban markets, but yet have become more desirable in suburban markets.

“People want lifestyle choices like healthy vending, full coffee bars, Internet cafes and juice bars with free Wi-Fi,” Swingruber says. “These are now becoming expectations and not just perks, even in suburban markets. People also want more efficient units complimented with upgraded finishes, such as compartmentalized closet systems that can be adapted to the tenants needs. Units are shrinking but becoming more efficient, so we are adding perks like what we call an urban mudroom, which is a built-in closet for storage at apartment entries. They also want technology throughout, like USB plugs and wireless speaker systems. Upgraded finishes such as stainless steel appliances and quartz countertops are becoming the norm.”

The Long View

The company’s approach is to be a long-term holder for its projects. Stoneleigh looks for the right metrics to indicate a property is a good long-term asset. That is a positive element of the company because it is not building a reputation as an entity that looks to build cheaply and flip quickly for a profit.

“As long-term holders, we make the best decision for the project value over the long term, which ultimately benefits all stakeholders involved,” Swingruber says. “We have created a contracting company within the organization so we can make the best possible construction decisions on behalf of the asset, investors and tenants as opposed to what’s best for the GC. We’re diversifying our staff, bringing in more marketing, construction and interior design minded staff while also focusing on property management and maintenance needs long term. It is all about better serving the asset long term.”

One of the projects that illustrates this mindset is Stoneleigh’s One Uptown project located in Dallas, Texas. One Uptown is designed to be a best-in-class residential high-rise rental building in Texas because of its modern elegant architecture, its unsurpassed amenity offering and its premier location. One Uptown will consist of 20 floors including 198 luxury apartments, a 490-space parking garage, and 25,081-square-feet of world-class restaurant space. It is located in Uptown, an upscale neighborhood adjacent to downtown Dallas. The project topped out in June of this year and is scheduled for completion in January 2017.

“For example, at that project we made a commitment to do a VRF air conditioning system in the high rise,” Swingruber says. “That increases the cost of the project, but it is more efficient than traditional AC units, and that means lower utility bills for our residents. It also improves the view from the building by removing the space that was allocated for an AC condenser farm on the rooftop. With no condenser farm, it allows us to better utilize space and add additional rooftop amenities not typically seen in this market, which justifies higher rents and a greater amenity experience.”

As it looks ahead, Stoneleigh understands the pressure in its industry with so many new participants flocking to multifamily. Many projects are pressured to get finished as quickly as possible so rental revenue can begin to flow. But Stoneleigh has learned that it is best to focus on having as comprehensive a plan in place from the outset. Markets can change dramatically and costs can fluctuate. By engaging all parties involved in the projects as early as it can, Stoneleigh believes it can continue to bring a comprehensive, long-term value approach, which translates into high value assets.

“One of our many goals includes growing the Stoneleigh portfolio while identifying strong long-term value markets, projects and communities where multifamily projects make sense, and where we can commit to them for a significant period of time,” Swingruber says. “These are desirable projects that local stakeholders and residents will want. We are identifying those communities, projects and markets that are sustainable and allow opportunities for intelligent growth. That way, we can build a company that is more valuable not only to our investors and employees, but to the communities and markets we strive to be a part of.”

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