American Residential Properties Sees Opportunities in Sector Outstripping Available Capital

Stephen Schmitz, chairman and CEO of American Residential Properties (NYSE: ARPI), and Laurie Hawkes, the company’s president and COO, joined REIT.com for a video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

American Residential Properties acquires, renovates, leases and manages single-family properties across 13 states. The company is located in Scottsdale, AZ.

Schmitz discussed the current state of the acquisitions market for single-family properties.

“It’s very strong. The opportunities today still outstrip the available capital, so we couldn’t be more excited about it,” he said.

In addition, the company has refined its acquisition metrics, enabling it to acquire homes through the multiple listing service (MLS), auctions and portfolio sales, Schmitz noted.

Meanwhile, Hawkes observed that one of the biggest operational opportunities for the company is to find ways to increase cost efficiencies.

“We look at whether there are any opportunities for national purchasing programs where we can get better volume discounts,” she said.

Schmitz also underscored the importance of efficiencies in the single-family sector.

“This is a business of pennies,” he said. “You want to deliver the best experience you can to the customer, yet do it on a very cost effective basis.”

Hawkes added that she sees increased opportunities for expansion in the single-family sector.

“Right now, there are a handful of companies. There will be others we believe, but it’s so small relative to the vast opportunity. We have $2.7 trillion worth of real estate, and the amount that has been raised institutionally is closer to $20 to $25 billion,” Hawkes said.

Hawkes also described the advent of securitization in the single-family sector during the past year as a “game changer.” Hawkes said securitization is allowing the single-family sector to finally reach the capital markets, where it has been well-received.

“For the biggest companies, it will mean increased access to capital in addition to the equity markets. It will make a big difference,” she noted.