From the building and management of multi-family and senior apartments in the 1980’s, to the construction of single family housing tracts in the 1990’s, Mr. Michelson has been focused on residential real estate for more than 30 years. We have successfully navigated the peaks and valleys of the housing market during that time. In response to the next chapter in the residential housing recovery that began in 2013, our development strategy has changed significantly.
Accurately predicting the housing meltdown in 2007, Three Arch Investors shifted our development focus by scaling back on new construction projects while looking for new opportunities. Our patience paid off when we identified a prime market for purchasing distressed real estate and re-selling these properties in a relatively short time period. Beginning in 2010, we acquired more than 100 foreclosed homes which were rehabbed and sold in a series of six partnerships. On average, our properties under this program yielded exceptional mid-teen returns for our investors. Actual performance details are posted in the password protected section of our web site.
During June 2013, as the single family home market recovered, we came full circle. We once again believed in the building of new multi-family communities in solid core markets with good job growth and strong rental demand. We found these conditions in areas such as Denver, CO; Seattle, WA; Portland, OR; Las Vegas, NV; and Orlando, FL, to name a few. To support our efforts to reach a larger cross section of markets and opportunities, Three Arch Investors teamed up with a leading development company which hag organized, acquired or developed over $4 billion of residential projects throughout North America.
Three Arch Investors and our co-sponsors have a history of working together, having formed seven past joint venture partnerships that met or exceeded their initial projections. We both saw 2013 as an ideal time for investing in the construction of multi-family projects, as well as acquiring existing value-added apartments which we believed we could substantially improve in overall condition and thus achieve higher rent levels. Our management teams brought together two dedicated residential firms that have completed more than 20,000 apartments units since 1976.
While Three Arch Investors and our co-sponsors have maintained a low profile, our long and successful past history – in conjunction with the volume of business achieved – allows us to quickly respond to markets when they become compelling and the timing is right.
Our initial project, which closed funding in September 2013, was the Somerset Hills Apartments which is being built in a strong area known as Southern Highlands, an upscale neighborhood in the Southwest area of Las Vegas. This 360-unit development is financed by Wells Fargo Bank, and has begun construction. In a joint venture with Fore Property Company and DG Development Corporation, this quality Humphreys and Partners “Big House” style project hs become the singular upscale multi-family development in this submarket. Click here to read a summary of the Somerset Hills project.
We are very enthusiastic about the recovery of the Las Vegas market, and believe that Somerset Hills is taking advantage of ideal timing, given its early position in supplying a depressed housing market that has taken more than five years to recover. The recovery is now well-documented, and it is apparent that new housing inventory is currently in very limited supply. While we believe the multi-family sector will attract new developments in 2014-2015, Somerset Hills enjoys an almost exclusive position in the Southwest Las Vegas market where there currently is a reported 3.6% vacancy (as reported by ARA Real Estate Investment Services).
Three Arch Investors 2013 will focus on parallel alternative investments that either can produce current income from existing residential units, or capital gains from apartments to be built in the future. We strive to seek a balance between current income (from rentals or loans secured by real property), and achieving capital appreciation that maintains an overall mid-teen return to our investors.
We invite you to explore our website, inquire about our offerings, and speak directly to us about our current opportunities. From our perspective, in 2014 the U.S. residential real estate appears to be one of the best opportunities for outsized returns in today’s economic environment.