The COVID-19 pandemic led to significant shifts in the real estate industry throughout 2020 and into 2021. As global trade faced uncertainty resulting from government shutdowns and financial markets suffered, investors flocked to real estate as a secure investment. For real estate investor Michael Patrick Carroll, this time period provided unique challenges and opportunities in a constantly evolving industry.
In March 2021, according to the Matrix Multifamily National Report, multifamily rents increased by 0.6 percent year-over-year, while overall rents increased by $6 to $1,407. Of the 134 markets surveyed in the report, 114 had flat or positive year-over-year growth.
As the market gained strength during the pandemic, investors across the United States sought opportunities to leverage their position. Real estate mogul Michael Patrick Carroll set the pace for 2021 by engaging in several such transactions. M. Patrick Carroll is the founder and CEO of the CARROLL Organization, a prominent real estate investment and development company headquartered in Atlanta, GA.
CARROLL Acquires Tortuga Pointe
Acquisitions were challenging to come by in 2020 and early 2021. Many investment firms transitioned to a hold strategy, pending the final impact of the pandemic. As a result, investment opportunities were limited; available assets were often delivered above-market value at compressed cap rates. However, CARROLL was able to acquire a unique value-add asset in Central Florida amidst the chaos - Tortuga Pointe.
Tortuga Pointe is a 295-unit mid-rise multifamily community built in 2010 and located in St. Petersburg, FL. It is the most recent acquisition spearheaded by M. Patrick Carroll. The CARROLL organization acquired the asset on March 11, 2021, through its latest institutional fund vehicle, Carroll Multifamily Venture VI, LP. The asset has been rebranded under the name Tortuga Pointe by ARIUM.
The existing asset offers excellent construction quality with units that are larger than most newly constructed assets. The company was able to acquire the property at a favorable basis, below replacement cost, and at an attractive cap rate. It intends to renovate the units' interiors and enhance the property's amenities and exterior, adding value to the existing high-quality asset.
Entrepreneur M. Patrick Carroll disclosed, "The Tampa-St. Petersburg MSA [metropolitan statistical area] has performed exceptionally well throughout the pandemic and is poised to continue its position as one of the nation's leaders in both population and job growth." He continued, "Tortuga Pointe's central and highly visible location on Gandy Boulevard provides residents with convenient access to all of the metro's largest employment, retail, and entertainment centers. We are thrilled to add another great asset to our portfolio in the dynamic Tampa market."
CARROLL 2021 Dispositions
Leveraging the competitive landscape of today's marketplace, mogul M. Patrick Carroll oversaw the disposition of three existing CARROLL assets: ARIUM Pinnacle Ridge (Raleigh, NC), ARIUM Towne Lake (Houston, TX), and The Marin by ARIUM (Fort Lauderdale, FL). Each transaction provided a unique opportunity for the company.
ARIUM Pinnacle Ridge (Raleigh) and ARIUM Towne Lake (Houston)
In February 2021, CARROLL executed the sale of two of its suburban properties, representing more than $114 million of its portfolio.
ARIUM Pinnacle Ridge is a 350-unit community located two miles south of Duke University in Durham, NC. CARROLL purchased the asset about two years ago after seeing its value-add potential. The company was able to reposition the asset through both interior and exterior renovations, including updating the pool deck, repainting the property, adding amenities such as a dog park and sports facilities, and renovating units with stainless steel appliances, countertops, and other features.
ARIUM Towne Lake is a 366-unit property located in Houston. CARROLL purchased the asset in 2013 with a long-term mindset and drove performance by using a best-in-class operations platform. In 2018, CARROLL refinanced the property, reducing its cost basis in the deal and returning partial capital to investors. During its hold, the asset management team guided the property to deliver 9 percent average cash-on-cash annually and realize strong returns for investors.
The Marin by ARIUM (Fort Lauderdale)
Real estate mogul M. Patrick Carroll's most recent disposition, executed CARROLL, was its South Florida property, The Marin by ARIUM (previously known as Grove East in Plantation). It is a 223-multifamily apartment located less than two miles from I-95, I-595, and the Florida Turnpike. It consists of a combination of luxury apartments with an eclectic urban feel and 14,000 square feet of retail space.
CARROLL purchased the property four years ago and repositioned it through multiple renovations that included updating the pool deck, fitness center, and playground area and renovating all units with stainless steel appliances, fresh paint, faux wood plank flooring, new lighting, and more.
Entrepreneur M. Patrick Carroll shared, "The Marin presented an excellent opportunity to expand our South Florida portfolio based on its highly visible and central location with value-add potential." He continued, "We were able to acquire the property for an attractive basis at a meaningful discount to replacement cost. We elevated the community through strategic enhancements to amenities and unit interiors, bridging the discount in the property's rents relative to nearby competitive properties - ultimately creating value for our investors."
Following a Calculated Investment Strategy
Thus far, CARROLL's 2021 transactions have followed the company's tactically designed investment strategy, which has been at the core of its growth since its inception. CARROLL focuses on acquiring both value-add and core/core+ investments. It seeks value-add investments that offer repositioning opportunities through redevelopment or efficient management implementation and core/core+ investments in stabilized properties located in defensible markets with a predictable cash flow.
Using its in-house capabilities, CARROLL is able to identify underperforming and undervalued assets within its primary markets. No transaction is completed without a comprehensive review of the property's potential. By studying trends and staying up-to-date on the financial markets, CARROLL has been able to leverage its position and grow its brand exponentially.
In addition, real estate expert Michael Patrick Carroll and the CARROLL company have relied on a new variable impacting the multifamily market - the transition to remote working.
In the past, real estate has relied on location - tenants would seek units close to their daily activities, which included work. However, as the pandemic forced individuals to work from home, companies worldwide have adopted a new long-term model based on current trends. A recent study by the freelancing platform Upwork found that an estimated 14 to 23 million Americans are planning to move due to remote work. CARROLL has experienced an increase in tenants working at home from 25 percent pre-COVID to 60 percent currently. As a result, tenants are now seeking rental units with larger square footage and more amenities to facilitate a comfortable remote platform; and CARROLL has strategically identified ways to maximize returns based on changing consumer demands.
Its strategy has proven successful, supported by its Q1 portfolio performance. The average physical occupancy was 94.7 percent, the average economic occupancy was 90.8 percent, and the retail portfolio leased was 98.4 percent - all outperforming current market trends.
About Michael Patrick Carroll
M. Patrick Carroll is recognized as a real estate mogul, American entrepreneur, and philanthropist. He is the founder and CEO of CARROLL, a real estate development and investment company. Born in 1979 in Richmond, VA, M. Patrick Carroll grew up in Tampa, FL. Following high school graduation, M. Patrick Carroll moved to Atlanta. After working in the retail industry, he was inspired to transition into real estate. Fledgling entrepreneur Michael Patrick Carroll pursued his first real estate acquisition - a condo unit with a 100 percent mortgage - and began his journey fixing and flipping residential real estate units. Carroll then moved on to developing real estate and sold a 150-unit housing development just before the 2008 recession. After the sale, Carroll took his proceeds and invested in multiple property management firms, and continued building his portfolio. In 2004, Michael Patrick Carroll founded CARROLL.
As a leader in the industry, M. Patrick Carroll has set a new path for CEOs. His success is driven by dedication to community and employee development. As an active philanthropist, M. Patrick Carroll has notably donated to more than 50 charities worldwide, is a Board member of the Boys and Girls Club of Tampa, signed the CEO Action for Diversity and Inclusion pledge, and often is featured as a motivational speaker and health activist.
CARROLL was founded in 2004 by mogul M. Patrick Carroll. The firm focuses on the acquisition and disposition of multifamily assets throughout the Sunbelt - Florida, Georgia, North Carolina, South Carolina, Tennessee, and Texas. Its investments focus on capital preservation, generation of current cash flow, and the implementation of value creation strategies. Today, M. Patrick Carroll's company has more than $5 billion in managed assets and owns more than 30,000 commercial and residential properties along the East Coast of the United States. CARROLL has acquired more than $7.6 billion in assets, sold more than $4.2 billion, and developed more than $200 million in properties for its institutional partners, private investors, and principals.