As featured in Richmond Times-Dispatch –
Real estate investment company 37th Parallel Properties owns more than 2,000 apartment units. The Henrico County-based company’s properties are predominantly located in Texas — from Dallas to San Antonio to Houston. The company originally targeted Texas because of its economy.
“It avoided the real estate downturn almost completely,” said Chad A. Doty, the CEO of 37th Parallel Properties. “It has a really stable job story. Jobs are diversified. Also, there is no false bubble in their market.”
But 37th Parallel Properties doesn’t own any property in the Richmond region, even though the area has been home to the company since it was founded in 2008.
Doty hopes to change that and one day have investments in the Richmond area. He and Dan Chamberlain, the company’s chief operating officer, live in the Richmond region.
“We love Richmond. It’s home,” he said. “It’s so stable — with long-term unemployment rates better than the national economy. Investment wise, we’re just able to find a little more value with similar stability in a few other markets. We’ll eventually start acquiring here, but we’re pretty far in the cycle and we’d like to see pricing come down a little bit.”
The company, for instance, has properties in Atlanta and is pursing some investments in North Carolina and South Carolina, Doty said.
It works with investors primarily in the U.S. but it does have a few international investors as well.
Doty said 37th Parallel Properties focuses on commercial multifamily acquisitions because it offers investors predictable returns in a stable industry.
The number of apartment households represented 37 percent of all U.S. households last year, according to the National Multifamily Housing Council.
“It’s a huge market,” Doty said.
37th Parallel Properties finds, analyzes and brings stable B-grade, or middle market or median income, apartment investments to investors.
“All we do is middle market B-grade multifamily housing, and that’s the biggest part of the rental market,” Doty said.
The company works with accredited high net-worth investors.
“We provide them access to investments that provide direct economic results,” said Doty, who started the company in 2008. “Our typical investment is $100,000 to $500,000 per investor.”
The commercial real estate investments the company brings to the table are mutually beneficial.
“Residents have a nice, safe place to live. We make money and our investors make money,” he said.
The company currently has more than 2,000 units in management and over $120 million in asset value.
Economist Mike Arnold of Marin County, Calif., has been an investor with the company for about seven years.
“As an economist, their business model made sense. I am a finance guy and they know what they are doing,” Arnold said. “When you are investing in 37th Parallel, you are investing in specific projects. You can be in one project and not in another. They bring everything to you.”
All of the company’s investments have been profitable, he said.
“We have never lost a deal,” Doty said. “We want to generate income day one and hold the property as long as it’s doing well.”
The company was listed No. 931 in Inc. magazine’s 5000 list of the fastest growing private companies in the U.S. in 2016. 37th Parallel Properties had a three-year growth of 424 percent and 2015 revenue of $2.4 million.
“We expect to make the 2017 list as well,” Doty said. “Growth-wise, we’d like to see $50 million to $75 million in new acquisitions per year with an interim goal of $500 million in assets under management.”
Cutt Ableson, senior managing director for commercial mortgage lender Berkadia’s Houston office, has provided financing for the company’s multifamily projects.
“They are sophisticated multifamily owners and operators,” he said, noting that their deals are always well received by capital sources because of “their reputation in the market.”