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Dec 02, 2011

You can also read this article as it appeared in DDC Journal, Winter 2011 here.

After starting out as a small real estate ownership group 18 years ago, the Professional Equity Management (PEM) Real Estate Group has grown into a full-service real estate ownership firm. As the firm continues to grow, PEM traces its success back to its foundation of Core Values: integrity, stewardship, respect, growth and urgency.

"What really led to our success was the establishment of our Core Values and our culture," says Paul Mashni, PEM Real Estate Group CEO. "What we did is take that which is modeled from a small entrepreneurial business and translated it into Core Values, which were later defined throughout our company as our culture."

PEM’s portfolio consists of over 7,000 units across much of the Southwest and Southeast. The company’s management services offer third-party management for clients such as large investment groups, lenders and single property owners. PEM believes its focus and attention to tenants sets it apart from the competition.

"We excel at focusing on and taking care of the tenants," Mashni says. "What we found is when you run a property that is in the best interest of the tenant, you will always meet the owner’s objectives. By doing that, we’ve been able to outperform the market because our renewal rates are higher, our customer care is higher and our employee care is higher."

PORTFOLIO EXPERIENCE

PEM’s portfolio breaks down into assets of approximately 40 percent class A, 40 percent class B and 20 percent class C properties. According to Mashni, PEM’s initial acquisitions consisted of older properties, but the experience gained from overcoming challenges with those aging assets has strengthened the company.

"Starting as an entrepreneur without a lot of money to begin with, we had to take on much more dilapidated properties," Mashni says. "It’s easier to run a ten or 20 or 30-year-old building when you started running and renovating 100-year-old buildings."

Prior to the recent economic downturn, the market created a strong demand for class-A properties, and companies looking to excel like PEM acquired as many as possible. Having a portfolio rich in A properties not only created past success, but has also allowed PEM to weather the economic downturn, which has seen a significant drop in the number of class A properties coming to market. A management company can no longer survive on class A assets alone, however, and PEM realizes the importance of having a varied portfolio in addition to their operational expertise.

"If you are only an A operator, then you would really be struggling in today’s environment," Mashni says. "By having the ability to be highly successful in all different classes of real estate, we’ve proven another competitive advantage because there’s never a time that we have to sit out of a cycle."

EXPANSION PLANS

PEM Real Estate continues to expand, recently acquiring several assets in Florida, Georgia, California and Arizona.

"We like south Florida, we like Atlanta and we clearly like the entire Southwest," Mashni says. "We look at the Sunbelt as a very long-term stabilized growth area for the country, with lower costs of living and not as many challenges."

PEM has developed an assessment strategy when acquiring new properties. The company believes that recent lower-income jobs will boost the apartment market, which is why the company is focusing on locations with increasing apartment demands and trying to identify if they will outlast the current economic downturn. While many properties have become obsolete and have lost value, PEM believes that distressed properties in the right location, with timeless infrastructure combined with the right amount of capital and professional management, can excel in a poor economy.

"When we find what we’re looking for in the markets; we want to be very competitive, very aggressive, pick it up, add the capital and then prolong the ownership as this cycle stabilizes," Mashni says.

PEM Real Estate plans to continue to use this evaluation process as it expands throughout the southern United States.

"We do have some assets in New Mexico and we have been looking in Texas," Mashni says. "I think Texas is a little more of a stabilized market, so it’s a little harder to find what we’re looking for."

According to Mashni, growth and success will continue as long as the company’s culture and core values remain intact.

"Our goal is to create and foster an excellent place to work that serves tenants that can come home at the end of the day and feel safe and feel happy in a well-functioning, well-serviced apartment," he says.

Mashni also says he trusts that PEM’s combination of management experience and attention to tenants will carry the company into the future.

"If we can continue to do that, we’ll not only excel from a financial and business sense for our lenders and our firm, but we’ll also be able to excel in the marketplace because we think that’s a unique characteristic over other property management companies," he says.