How Hawthorne Grew

The latest issue of Triad Business Journal has an interview with Hawthorne Residential Partners’ chief investment officer, and PTAA board member, Phil Payonk about how Hawthorne has grown to manage 17,555 units in 76 properties since its founding in 2009. From the interview:

What is the appeal of apartments?

The short-term and long-term fundamentals for apartments look good — there’s some construction coming online, and demographic trends in the U.S. show a tendency to rent for longer as you come out of school. You even see an older generation beginning to downsize and look to renting rather than owning a home…

What is Hawthorne’s core business?

Finding stabilized apartment properties that aren’t performing to their fullest potential. We handle the overall development of a site and the property, but we utilize a general contractor to handle the construction. We’ve partnered with several different builders; we like to utilize the small, local guys to kind of help keep costs down. Now, of our 17,555 units, Hawthorne and its partners have an ownership stake in about 45 percent of those. The balance is owned by a third party but managed by Hawthorne…

The Triad has seen a lot of apartments come online very quickly. Do you think it’s approaching over-built status?

We’re seeing in North Carolina markets in particular that a lot of the supply is being absorbed. As long as we see that at a measured pace, we’re going to hopefully not see too many problems. Even though there’s been a lot of product coming online, it’s been pretty hard to get a loan. The banks have the appetite, but there’s just a lot that has to go into it, from documentation and planning and identifying the site and getting everything together to getting a commitment and a building.