Dive Brief:
- Seattle-based Security Properties announced Wednesday that Bozzuto will operate half of its apartment properties in the Pacific Northwest, joining the list of apartment owners transitioning their property management business to other providers.
- By transitioning out of management, Security Properties will tighten its focus on market-rate acquisitions, affordable housing and investment management, according to the press release. Approximately half of the company’s properties will transition to Bozzuto, while the remaining assets will be evaluated through a competitive process.
- With the agreement, Greenbelt, Maryland-based Bozzuto will beef up its portfolio in the Pacific Northwest, especially in Seattle, which will become its fourth-largest market. “We’ve been excited about the Pacific Northwest for some time,” said Toby Bozzuto, president and CEO of Bozzuto, in the release.
Dive Insight:
Moving out of property management allows Security Properties, which has been in business for half a century, to simplify its operating platform and double down on its core strengths as a real estate investor, per the release.
Last year, the company made eight market-rate acquisitions totaling nearly $700 million, including the September purchase of 903 apartments across five properties from Washington Holdings for $400.8 million.
Security Properties CEO Dan Byrnes told Multifamily Dive in a conversation last year that the firm was eyeing growth in Denver; Nashville, Tennessee; Phoenix; Austin, Texas; and Northern California. He said the firm’s institutional equity sources, which include Fortune 100 insurance companies, private equity funds and ultra-high-net-worth family offices, show strong demand for properties in those markets.
“Our real leading indicator is how active are institutional equity sources — the insurance companies, the opportunity funds, the endowments, pension funds,” Byrnes told Multifamily Dive. “How strong is their appetite for multifamily product? And it has not been stronger at any point in the last several years.”
By transitioning out of the third-party property management model, Security Properties aims to accelerate its growth and expand its investment footprint across key U.S. markets.
“As the industry evolves, we believe the best way to scale our impact is to partner with best-in-class operators while concentrating our internal resources on market-rate acquisitions, affordable housing and investment management,” Byrnes said in the release. “This transition positions us to extend our investment platform nationally while maintaining the high operating standards our partners and residents expect.”
Security Properties is just the latest firm to transition out of the management business over the last couple of years as they focus on its core competency.
Last May, Blue Ridge Cos. moved its management portfolio of over 10,000 units across 35 properties to Dallas-based Willow Bridge Property Co. Exiting day-to-day management allowed the High Point, North Carolina-based firm to focus on future development and long-term asset performance.
In February 2024, Atlanta-based Wood Partners transferred property management operations for its roughly 38,000 units across 17 states to Charleston, South Carolina-based Greystar, the largest apartment manager in the country.
Arlington, Virginia-based AvalonBay Communities and Atlanta-based Gables Residential announced that they had entered into an agreement for AvalonBay’s centralized service center to provide back-office financial administrative support services to Gables, which manages and builds apartments, in April 2023.
In March 2023, Altman Management Co. partnered with Atlanta-based third-party residential property management firm RAM Partners to provide back-office management services. AMC, the property management division of Fort Lauderdale, Florida-based developer, builder and manager The Altman Cos., continued to handle resident-facing functions.
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