Lyon Communities may not grab as many headlines as its cofounder’s homebuilding company, but that’s not due to a lack of success at the Newport Beach-based apartment company.
“It’s a great time to be in the rental business,” said Frank Suryan Jr., chairman and chief executive of the apartment developer and owner, which has about 11,000 units in its portfolio.
Suryan started Lyon Communities 25 years ago with Gen. William Lyon, whose longtime area homebuilding company, William Lyon Homes, recently filed plans to raise up to $200 million in an initial public offering.
Gen. Lyon and his family still retain a 50% ownership interest in Lyon Communities, which currently appears to be a more valuable and profitable company than the homebuilder, which felt the brunt of the housing bust.
Market Cap, Properties
Lyon Communities estimates it now has a market capitalization of about $2 billion. The company has apartment properties in California, Colorado, Florida and Georgia, and its portfolio counts an occupancy rate of about 94%.
It has bought more than 20,000 apartments over the years and has helped build and renovate an additional 30,000 units while being an opportunistic seller.
“We’re not trying to be the largest. We’re trying to be the most profitable,” said Suryan, who owns the other 50% stake in Lyon Communities.
The company’s valuation isn’t likely to drop any time soon, with annual rental rate growth approaching 10% or more in some of its larger markets in California, as well as a development pipeline now topping 1,000 units.
Two of the company’s most-anticipated developments are moving ahead in Santa Ana.
The company is well under way with a 300-unit development called The Marke at MacArthur Boulevard and Main Street in the South Coast Metro portion of the city.
Construction at the four- and five-story project, being developed in a partnership with Newport Beach-based Integral Communities, is said to be ahead of schedule and set for completion by November.
The Marke “is the best one we’ve done, so far” in terms of quality, high-tech features and forward-looking tenant amenities, Suryan said.
Among other features, it will hold an outdoor sports bar, resort-style swimming pool, 7,600-square-foot clubhouse, fitness facility, Wi-Fi cafe, gourmet demonstration kitchen, video game area and two bowling lanes.
Also on tap: a pet grooming spa for residents’ furry friends.
“We don’t just want (residents) with pets,” Suryan said. “We’ll take care of your pets.”
The developer’s new project won’t have far to look for competition. The Marke sits just down the street from Essex Property Trust Inc.’s two-building Skyline at MacArthur Place towers, OC’s tallest residential property and one of the county’s most expensive rental projects.
Suryan said he isn’t worried about losing prospective tenants to the 25-story Skyline towers due to what he says are superior amenities at his site.
“All they have is their height,” he said.
There’s expected to be less competition for Lyon Communities’ second Santa Ana project. The company recently closed on the purchase of a 5.2-acre site across the street from the Xerox Centre office tower on East First Street.
Prior owners wanted the site, near the intersection of the Costa Mesa (55) and Santa Ana (I-5) freeways, to hold a pair of 23-story condominium towers during the last housing boom, but Lyon Communities now envisions a midrise project totaling about 200 units.
It’ll be the first major apartment complex to go up in that area in several years. “We’ll be the only game in town,” said Suryan, who noted that his company isn’t likely to build in Irvine due to the heavy amount of apartment construction now under way there.
Suryan envisions the First Street project, which could break ground later this year, as a “mini-Marke” with similar amenities to the South Coast Metro project. He said the site’s location in Tustin’s school district also is expected to draw its share of families.
Suryan said he speaks with Gen. Lyon and his son, Bill H. Lyon—who was recently appointed chief executive of William Lyon Homes—a couple of times a month.
COO Add
Lyon Communities, like the homebuilder, recently saw a switch in its management team, bringing on Trent Brooks late last year as its new chief operating officer, a new position at the company.
Brooks, a former managing director for the Irvine office of real estate finance and investment company CW Capital, oversees business operations for the company, leaving Suryan free to scout development and acquisition sites, as well as line up financing for deals.
Investors in the company’s projects tend to be wealthy individuals, as well as larger institutional investors like UBS, Colony Capital and Cornerstone Real Estate Advisers.
