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Colonial Looks to Enhance Multifamily Assets

12/17/2012 | By Carisa Chappell

Tom Lowder, chairman and CEO of Colonial Properties Trust (NYSE: CLP), joined REIT.com for a CEO Spotlight video interview at REITWorld 2012: NAREIT's Annual Convention for All Things REIT at the Manchester Grand Hyatt in San Diego.

Colonial Properties Trust has a multifamily-focused portfolio but also invest in select office and retail commercial assets located in the Sunbelt region of the United States. The Alabama-based REIT owns or manages 35,517 apartment homes.

In terms of leasing activity and rental rates, Lowder compares the past two years.

"2011 was a record year for us and we see 2012 being a mirror image of 2011. It's the best time that I can remember in our core portfolio," he said, adding that revenues will likely end up at between 5 and 5.5 percent growth.

Colonial Properties Trust has been working to not only grow the size of its portfolio but the quality of assets as well. Lowder explained that the company has been focused on moving its portfolio to primarily multifamily assets.

"We think overall that 90 percent of our income will come from the multifamily business in 2013. So we've reached that primary goal," Lowder said. "We've also been recycling some of our older multifamily product and we anticipate that we'll have another four or five properties that will probably be sold by the end of this year or first of next year.

Lowder said that the company plans to take those proceeds and reinvest in properties that are 20 to 25 years old to properties that are under five years old. With that plan it gives Colonial Properties Trust better rent growth and lower capital expenses, according to Lowder.

After reclaiming its investment grade rating from Standard and Poors earlier in 2012 and from Moody's at the end of the summer, Lowder said "it was very satisfying. A lot of hard work went into that over the last four years."

He said there is still work to be done, adding that the company isn't going to "rest on our laurels."

Lowder explained that Colonial's leverage went down from about 60 percent to under 45 percent. Additionally he said the company's plan includes moving that leverage down even lower.