News
IMG Hosts Private Investor Events in Portland and Los Angeles
Woodland Hills, CA—October 9, 2024— Investors Management Group, Inc. (IMG) recently hosted two exclusive investor events to discuss trends and challenges in the multifamily sector. Held in Portland, OR, on September 25th, and Westlake Village, CA, on October 8th. Both events featured forums led by IMG principals Neil Schimmel, Karlin Conklin, and Marc Gordon, and moderated by Investor Relations Director Dave Mikkelsen. Panelists addressed key challenges facing the multifamily industry under the company’s theme for 2024, “Recharting the Course.”
I-P-A Leads the Way
In his opening remarks, Mikkelsen set the tone by inviting each principal to share their thoughts on current rental housing market dynamics, posing the question: “What keeps you up at night?”
Neil Schimmel, Founder & CEO, reported an increase in “trip counts,” indicating increased visits to IMG’s portfolio properties as well as to market competitors and new developments. Given the significant rise in uncontrollable costs like property taxes and insurance, asset managers are enhancing their oversight of expenses and property operations to effectively navigate this phase of the market cycle.
Schimmel outlined his focus on markets with emerging growth potential. He discussed IMG’s buying strategy, “I-P-A” (Intrinsic value, Price per pound, Affordability), and the challenges of balancing these factors. He noted that while the beer analogy is now IMG’s nationally recognized catchphrase and may bring a smile, “it’s been our guiding philosophy for multifamily investment decisions for over a decade. Many of us sleep better at night having followed this strategy.”
Marc Gordon, Principal, Co-President & CFO, discussed the impact of rising expenses, particularly insurance, real estate taxes, and debt service, on operators’ bottom lines. He also provided insights on lending and financing for large apartment communities, explaining how many properties are using refinancing to rebalance out of variable-rate loans in order to stabilize financial structures and prepare for future growth.
Since interest rates began rising in 2022, values have fallen by 10-20% in many U.S. markets. The panelists noted that as of Q4 2024, interest rates are stabilizingand transactional volume is expected to increase in the coming years.
Karlin Conklin, Principal, Co-President & COO, highlighted multifamily as a resilient investment but acknowledged the changing return profiles due to higher interest rates and double-digit increases in expenses, most notably insurance, wages and property taxes. She stressed the importance of focusing on the “totality of the investment” during this adjustment period.
Moderator and Director of Investor Relations Dave Mikkelsen echoed the firm’s commitment to disciplined and transparent operations, emphasizing the goal of achieving predictability in today’s market.
The Power of Proactivity
Perhaps one of the most anticipated topics at IMG’s events was the firm’s strategic use of variable loans in recent years. Panelists highlighted how this approach provides flexibility for exiting properties while securing higher loan proceeds. They also examined current refinancing challenges, including loan lockouts and the complexities of moving to fixed-rate financing.
Schimmel pointed out that many U.S. real estate sponsors are facing a challenge where loan proceeds on new loans often fall short of covering existing loan balances, making cash-in refinances the norm, not the exception.
According to Gordon, “We transitioned to fixed-rate loans as the rate outlook dramatically shifted. The magnitude of rate increases overshot almost all industry projections.”
In 2022, more than half of multifamily loans were variable rate. Owners who were highly leveraged certainly felt some pain. Gordon added that “IMG used a lower-leverage strategy that’s allowed us to operate through the interest rate shock. It brings peace of mind now to have that discipline in place.”
Vertical Integration
IMG principals explained their decision to pursue vertical integration in 2023 by forming Parktown Living, LLC to enhance management control, financial transparency, and staff training.
According to Conklin, this approach allows IMG to tailor its “best-in-class” management for IMG-owned properties, ensuring stronger oversight and higher-quality services for residents while enhancing operational efficiency.
“Many people were surprised by our entry into property management. And we were, too, to some extent,” Conklin shared. “But, in the wake of post-pandemic market disruptions, we quickly realized that our decades of experience in this sector offered significant value to our investors. Given the unprecedented operating challenges, it was the smartest way to navigate this new environment.”
For the past year, Parktown Living has managed IMG’s Georgia portfolio and recently assumed management of the firm’s North Carolina portfolio. “The expansion strengthens IMG’s ability to consistently deliver strong performance and further capitalize on growth in key, high-potential markets,” Conklin added.
Revolutionizing Tenant Screening with AI
Conklin applauded her team’s proactive approach to addressing nonpaying residents and fraudulent applicants across their portfolio, which includes properties in eight U.S. states.
“During the pandemic, rental fraud exploded,” Conklin said. “This is a topic that still isn’t getting enough attention. Fraud hurts everyone in the industry, including hardworking, honest renters.”
In a survey of 75 leading apartment owners and managers from the NMHC and NAA, 93% reported experiencing fraud since the pandemic.
IMG was an early adopter of new AI technology for stricter tenant screening. “We were quick to bring on services like SNAPPT to filter out fraudulent applicants, saving our leasing professionals valuable time and safeguarding our investments.” Additionally, AI can support rent collections and help new applicants better understand their upfront move-in costs.
Caution or Confidence? Investor Views on Multifamily Investment
There has been a noticeable shift in commercial real estate investor behavior this year, marked by increased caution and selectivity. Schimmel expressed optimism for seasoned operators to succeed, stating that “complex problem-solving is at the heart of what we do at IMG.”
He also noted that in major development markets like Nashville and Austin, a record number of new units are coming online, even with tech job cuts. Despite this, absorption remains strong, reinforcing reliability in demand.
The principals encouraged investors to view real estate through a long-term lens, emphasizing the importance of strategic holding periods for achieving positive outcomes. The panel concluded with a Q&A session, providing clarity on future strategies and addressing investor concerns about capital preservation amid fluctuating market conditions.
Event photography by Fletcher Wold
ABOUT IMG
Founded by Neil Schimmel, Investors Management Group, Inc. (IMG) is an award-winning real estate sponsor and asset manager specializing in multifamily assets nationwide. Since 2010, IMG has transacted over 12,000 multifamily units, valued at $1.6 billion. The firm focuses on enhancing the resident living experience while maximizing investor value.
For more information about IMG’s investor events and opportunities, please contact investor.relations@imgre.com.