Several newspapers, for instance, wrote about Rochester, NY-based Morgan Communities’ No Fear Lease, a warranty of sorts, which the company had printed on parchment paper, that gives new and renewing renters the option to break their leases if they lose their jobs, or to continue to rent at a 20 percent discount for up to three months while they search for new employment.
When Cleveland, Ohio-based Goldberg Companies’ announced its Layoff Proof Lease, which allows newly unemployed residents to remain in their apartments rent-free for two months while they look for another job, the story was picked up by Fox News, CBS and CNN, as well as a number of local and national print publications.
And, when Phoenix-based Mark-Taylor Residential donated 12 rent-free apartments to homeless families in Phoenix for a full year, NBC Nightly News with Brian Williams broadcast a story about that life-changing outreach program.
Media attention never hurts. And today, amidst the gloom and doom stories that dominate the headlines and help to pump up the fear level, any positive story is good news.
“We wanted to take some of that fear off the table and show goodwill in these tough times,” said Morgan Management VP Kevin Morgan about the No Fear Lease rolled out in late January by the company his uncle, President and CEO Bob Morgan, launched 30 years ago.
“We want long-term residents at our communities and we want people to come back to us, if they decide to leave for any reason. We get a lot of repeat business and I think it is because of the way we operate,” he said.
Morgan Management started out in the manufactured home business, moved into RV resorts, self-storage facilities and other commercial real estate, and is a relative newcomer to the multifamily sector. But over the past four years, the family-owned firm has assembled a portfolio of 13,000 units along the East Coast and in Texas and still is in acquisition mode.
Although occupancy across the company’s owned and self-managed portfolio averages around 95 percent, a number of residents have had to utilize both options of the No Fear Lease.
“On the 20 percent discount side of things it has worked out and people appreciate us allowing them not to have to be strapped, when they are without a job. And they have gotten back on their feet and their rent has returned to market. We’ve also had several early terminations with 30-day notice. It’s going to happen anyway and we would rather it happens on friendly terms, in case they decide to come back around when they do find a job,” he said.
Despite the credit freeze and the economic downturn, Morgan Management is building and buying apartments. “There are a lot of good assets out there that can be bought and we have a very good reputation with lenders, so things are still moving for us. But there certainly has been a wake-up call and sellers are not going to get the prices they were getting two years ago,” said Morgan.
His company, which acquired the 372-unit Regency Club apartments in Jackson, N.J., from multifamily REIT Home Properties in February, and several other apartment assets in New York’s Westchester County this year, is looking to buy in traditional growth markets like New Jersey and the Washington D.C. area, where cap rates were running five and even sub-five percent a couple of years ago. “Now we are seeing them up a point and a half, sometimes two points, depending on the asset and how motivated the seller is,” he said about the mostly Class B long-term holds.
And, while Morgan’s apartment component mainly grows through acquisition, the firm is about to break ground on two new town home-style rental communities in Rochester, N.Y., sub-markets, where it still sees pent-up demand for new product. “We closed recently on our construction financing from a local bank with which we have a close relationship,” said Morgan.
Soon to break ground are the 103-unit first phase of the 296-unit Saratoga Crossing and the 100-unit Preserve at Wood Creek, both three-, four- and six-unit town homes designed by local architect James Fahy Design. First occupants are expected to move in during the high leasing season early in the spring of 2010. Rents for the mix of two- and three-bedroom units will average 1,300 sq. ft. Community amenities include a clubhouse and fitness center, a swimming pool and free golf at Morgan’s nine-hole executive golf course adjacent to the Saratoga Crossing property. “We create quality market-rate apartments for people to live in and employ great onsite community managers and leasing staff who cater to our residents needs. That’s our goal and that was our idea with the No Fear Lease,” said Morgan.