New York-based Mascia Development lured to Charlotte apartment market

CHARLOTTE — About eight to 12 months ago, New York-based Mascia Development shifted its focus more toward buying commercial real estate instead of building it.

That change in strategy has brought the company, owned by 31-year-old founder Mark Mascia, to Charlotte, where Mascia bought a small apartment complex, Pines on Wendover, in a deal announced last week.

“Historically, we’ve always been a development shop, but in the last sort of couple of years … we sort of transitioned more to an acquisition or renovation version kind of strategy, and now we do the gamut,” said Mascia, who launched the company in 2006.

Mascia said the company, which has an appetite for buying up smaller apartment complexes — “rather than doing like the 600-unit kind of deal that every institutional player out there is trying to compete with” — is considering buying even more Charlotte apartments.

Last week, Mascia said his company planned to submit offers on at least three multifamily properties in Charlotte, although he would not name them. The complexes, he said, have 22 units on the lower end and 100 on the higher end. He described them as being “under the institutional radar.”

Charlotte apartments aren’t all the company is interested in.

In addition, he said, “We’re looking at some outskirts retail, some mixed-used centers and things like that” in the Charlotte area.

Charlotte interest started in 2009

Mascia said the city grabbed the attention of the company, which is focused primarily on retail, medical office and multifamily properties, in 2009.

“And then we kind of lost focus (on Charlotte) as we started doing some deals in other markets that kind of took us away,” he said.

Then Mascia heard that Pines on Wendover, a 44-unit complex at 628 N. Wendover Road, about two miles southeast of uptown Charlotte, was for sale. Mascia said he bought the complex for $2.6 million in late December.

He said he didn’t know much about the seller, other than it is a family with the last name of Clementi. Mecklenburg County’s online property records database show Clementi Properties bought the apartments in 2001. According to the county, the complex was built in 1985. The county assessed it at $2.2 million last year.

Mascia said he bought the complex in a partnership with Charlotte-based Thomas Real Estate Investments and Beauwright Development, companies that he said will have a minority ownership.

Mascia declined to disclose the names of the heads of those companies. But, according to the North Carolina Secretary of State’s website, Thomas Real Estate Investments is registered to Thomas Norman and its address is 2830 Wickersham Road in Charlotte.

There was no listing on the secretary of state’s website for Beauwright Development.

‘That’s about what you would expect’

Ken Szymanski, executive director of the Greater Charlotte Apartment Association, said he’s never heard of Mascia’s company. But he said it’s not unusual for an out-of-state investor to buy apartments in Charlotte. Indeed, he said, many companies headquartered in other states own apartments here.

He also wasn’t surprised at what Mascia paid for Pines on Wendover, roughly $60,000 per unit.

“In that neighborhood, that’s about what you would expect,” he said.

According to Mascia, Pines on Wendover is 100 percent occupied. Mascia said his purchase was financed with a Fannie Mae loan. His plans are to pump about $75,000 into the property initially, mostly to give the outside a facelift.

“Pavement-type stuff, fixing up the pool area, kind of exterior, touchy-feely parts, landscaping,” he said. “That’s the immediate phase.”

Mascia said a management company is being brought in — the previous owners managed it themselves, he said — and there are plans to make the units more consistent. For example, some apartments have carpeting, others hardwood flooring, he said.

Rents will be raised at the complex, he said, adding that it’s too early to say by how much.

Charlotte’s growth was a draw

Mascia said he was drawn to Pines on Wendover because it’s “not in sort of like the Main and Main location.” In the long term, he said, it appears to have “a lot more upside potential.”

“Being downtown is super-sexy and probably has some stability there,” he said. “But paying a really, really high price just to get that kind of quote/unquote stability, I’d rather have a little bit more risk and a lot more upside potential. That’s just kind of how we generally look at our deals.”

Lately, Mascia’s strategy is to make an acquisition in a market, as the company is doing in Charlotte, rather than build.

“Sometimes it’s better to dip your toe in with an acquisition like we did here versus come out of the ground with a project before you really have your bearings in the market really well,” he said.

He said the company’s acquisitions are typically in the $8 million to $12 million range.

In addition to Charlotte, the company is focused on Boston, Cincinnati, Raleigh and Rochester and Buffalo, N.Y., he said.

“Your (Charlotte’s) story is much more of growth,” he said. “Some of those other cities I mentioned … they’ve kind of been the same sort of slow, steady growth story of like 1 to 2 percent for the last 30 years. I’m not really sure we have a truly growth story-focused city that we focus on more than Charlotte.

“So, I think from a growth angle, that’s probably one of those places we’re the most focused.”

Mascia is entering Charlotte at a time when apartment construction is booming and developers seem to be announcing new projects practically every week.

Szymanski said the city’s apartment industry is seeing strong demand for rentals and rising rents.

“Development is seen as highly feasible because of those factors, and in a number of neighborhoods appreciation potential is strong, but certainly not all,” he said.

Charlotte’s outer belt, Ballantyne, South End and the northwest and northeast parts of the city are where there’s good potential for apartment property values to rise, he said. That’s not the case in east or west Charlotte, he said, adding that in those two places rents are not increasing as much as in others and there’s a lower likelihood of new apartment construction.

ROBERTS can be reached at [email protected].