After years of leveraging one-off purchases in the foreclosure market, Greenville-based Serrus Capital Partners is shifting gears to entire development projects, says Serrus co-founder and Chairman Leighton Cubbage.
“The foreclosure markets pretty much are bought up and picked over,” said Cubbage, who led the company in buying, renovating and either leasing or selling distressed real estate during the depths of the financial crisis. The shift to buying halted subdivisions and busted projects came from Serrus CEO Steve Mudge, he said. “We have investors that understand the reason why, and they can see the returns.”
Today, Serrus Capital Partners has around $1.5 million in housing rentals, several million in vacation rentals and expects $11 million in sales this year, up from $8 million last year. The plan for next year is to double that, said Mudge.
To start, Serrus resumed construction on Creekside Village near Asheville. Builders had completed 40 of the 225 planned multifamily units before development stalled in 2009. Serrus purchased the project, then finished and sold 16 multifamily units and are preselling 84 single-family units.
The firm acquired another halted development in Clemson from the bank, which included 40 completed units out of a planned 250. The project – The Falls at Meehan – will include around 200 multifamily units and 350 single-family units to be completed over the next four years.
“Philosophically, what we do is buy a good asset at a good price,” said Mudge, who noted the firm is circling yet another property near Asheville.
The shift also includes a staff reorganization, beginning with the hire of Gary Gosztonyi as president and COO, and Douglas Walker as CFO. Building out the executive team parallels the firm’s ability to handle the logistics of larger deals such as these, said Cubbage.
“Not only was it a timing issue, but … we were getting bigger and bigger. We have hundreds of houses, so we started looking at some of those bigger projects,” said Cubbage. “Real estate in my opinion is thousands of little details that seem to amass like deposits … so it doesn’t come in one fell swoop, but it is deliberate.”
